Colin Tenwick, CEO of StepStone seems to like logistical nightmares. If you recently saw a packed four-wheel drive zooming down the motorways towards the French ski resorts, complete with four children, a dog and a Christmas tree strapped on the top you probably saw him. “It is a logistical nightmare,” he says.
“We bought a place outside Val d’IsËre five years ago so we could leave all our stuff there. Now we not only take all our Christmas presents, food and the dog, we also take a Christmas tree. The funny thing is last year I saw someone else with a tree on top as well, so we aren’t the only ones.”
E-recruitment company StepStone was certainly a logistical dog’s dinner when Tenwick arrived there in November 2001. He had a look at the books and discovered that the company was broke, bloated with staff and offices and had an unsustainable business model giving the dot-com bubble had burst.
He had worked in the IT industry for 20 years and had stints at a range of software companies, when he arrived at the e-recruiter. Tenwick was headhunted from vice-president and general manager of Red Hat Europe, where he had been since May 1999. Before that from 1994 to 1999, he held various senior positions with software company Sybase, including vice-president of European marketing and vice-president and general manager of European operations.
He believes that his experience of the software industry has helped him guide StepStone into the online world, which he thinks should be dominated by relationships and people, rather than the technology.
He was asked to StepStone’s then palatial office in Hammersmith to discuss a position, had a look at the books and discovered the company had enough money to last only two or three weeks before it went under.
At the time it had 1,200 employees. One of the first thing he had to do, once he had agreed to take the job, was to cut that number to 300. “Not a pleasant time at all,” he says. He needed to raise enough money to keep the company going and sort out the business direction fast. He needed to find shareholders and investors. On 1st November that year he laid off 700 people and put the UK company into receivership – closing four other country offices. Now StepStone has about 330 staff and two sides to the business, online recruitment advertising and on-demand hosted and managed e-recruitment.
This quick action slowed the flow of cash out of the business and gave him until mid-December to put something more solid in place – finding funding was the key. “We were very lucky,” says Tenwick. “It was at the height of the dot-com bust and fortunately the day we put the UK into receivership, closed European offices and slashed staff, was the same day that Sony announced it was closing its UK manufacturing plant, so we got no press about it all. We limped through the next year, with little attention being paid to us.”
In 2002, StepStone used six different technology platforms and was initially marketed as a consumer brand. “It had spent a lot of money on its brand. It sponsored AC Milan for goodness sake,” says Tenwick.
“It was Siebel’s largest customer in Europe at one point. I had to write off a 40 million euro technical project. No wonder it was running out of money.”
He says he could have walked away having seen the books but he knew the brand was good. “Having spent 200m euro it was a very well known brand. But even back then, when the dot-com bubble was bursting, I felt that recruitment was one industry that the internet could really change. Essentially online recruitment is all about data management, in a way that other, similar classified businesses like property and cars just aren’t.”
StepStone was launched in Norway in 1996 and was one of the pioneers of online recruitment. In 2000 the company made 58m euro but by 2002 it had made a 225m euro loss. “We were far worse than all the other online companies like Boo.com and in 2002, were still in freefall as the whole of the recruitment market collapsed,” says Tenwick. “It was a basket case company. The whole funding and business model was flawed. It had been floated on the London and Oslo Stock Exchanges in 2000 and by 2001 had spent all the money it had raised. We needed to stabilise the company, dress it up and figure out which direction we should be going. By the beginning of 2003 it was evolving and we could see where to go,” says Tenwick.
That year it launched its solutions business, which provides recruitment solutions to European businesses and this is where it becomes clear that Tenwick’s background in the software industry was critical. StepStone had operated in 12 countries and the business was based purely on online recruitment advertising. What it needed was a sustainable direction. Tenwick likens what is now happening in the e-recruitment market to how the CRM market was eight years ago.
A host of options
“In 2002 online recruitment just meant using your own brands and sites. The on-demand business, which we launched in 2003, uses a hosted solution distributed model. There are lots of similarities now to ERP and CRM. On-demand software as a service (SaaS) has relationship management as part of its DNA,” says Tenwick.
“It is about building online groups and communities and working with them. This is what we do. We can look at the talent pool, pre-identifying potential candidates for jobs and keep track of them for six to 12 months, or longer. We manage people for our clients through sifting, testing and grading them, keeping all the data candidates supply from questions and information from psychometric testing.”
At a certain point the systems will put them through to a call centre to speak to someone if necessary. They can book their own appointments and attend studios to be videoed as part of their application. For some clients StepStone manages pre-hiring and the first 60 days post hiring.
“This is all agency management and even the good candidates who don’t get the job can be tagged by source, so that if another job comes up which fits their characteristics and skills, they can be contacted. This is where the CRM element comes in,” he says.
The internet effect
In spite of his convictions, Tenwick seems pretty amazed at how well business is going currently and puts it down in part to the evolution of the internet. “The internet is at last delivering but in a slightly different way to what we originally thought. SaaS on the web has very practical results for our customers.”
The company has around 500 customers and a retention rate of 99 per cent, having lost only three of them in three years. In the transport sector alone, its client list includes BA, Virgin, SAS, BAA, Copenhagen Airport and Transport for London. In line with the international remit of many of its clients, the company is planning some global expansion during the first half of 2007.
“Clients like Virgin are in New York, London, Singapore and Sydney. Cadbury Schweppes is in South America and Ford is now in China so it makes sense for us to provide facilities where our clients want them,” says Tenwick.
For example, luxury goods manufacturer Louis Vuitton Group uses StepStone across its range of brands. This means that each part of the company can see candidates who apply for jobs in different parts of the group and the technology is used globally across the organisation.
The same is true for companies like Amazon, which may be recruiting in India, Scotland or Germany. Because it can use the technology globally and use video interviews for short listed candidates, they can be viewed worldwide. This means it can find better quality staff because it has a bigger pool for identifying them. Developers can be recruited from anywhere in the world and this means the hit rate is much higher.
Tenwick believes video content for recruitment will increase over the next few years, and this will mean organisations will have better access to candidates. “What is surprising is the exhibitionism among the candidates, especially the younger ones which have grown up with YouTube and the like,” he says. “They just plug it in and use it.”
Recently StepStone opened a New York office to cater for its international and US customers. Although there is more competition from other providers in the US, there is also more room for market penetration, says Tenwick.
The last four years have seen StepStone bottom out from a turnover of 19m euro and 6m euro loss in 2003, to 27m euro in 2004 and 34m euros in 2005. It is predicting a 51m euro turnover in 2006.
“Look at any survey of web destinations and you can see it is growing from offline to online at a huge pace,” says Tenwick. “People are looking online first and that side of the business is growing very fast,” he says.
Return to the UK
StepStone is now the second largest recruitment destination after Monster.com, with 1.5 million visitors a week. In the UK it still does not have an online business. A company cannot trade in the UK for five years following its liquidation. But this should change soon, since the deadline for the company ended on the 1 November 2006.
It is StepStone Solutions, the on-demand part of the business where the combination of the evolution of the internet and Tenwick’s experience of the software industry is having such a positive effect. “Recruitment targets are very measurable,” says Tenwick.
“If a client can recruit more people using fewer resources and cost it is a winner. There is a seismic change in recruitment going on and we are starting to see mass changes.”
Analyst Gartner is about to release the results of its first report on e-recruitment, which is an indication of how the momentum is growing. The costs per hire and the effectiveness of using e-recruitment is attracting big names. BAA has saved 400,000 euro a year, according to Tenwick, while the Royal Mail has recruited 25,000 people over the last six months using the service. “The ROI is changing the way they are spending money. It is absolutely extraordinary. We are getting 50 new customers a quarter. We can do everything – booking everything for any part of any group. The web is about people and relationships. That is where we score highly.”
In the last four years there have been very few entrants into this space so there have been huge opportunities and Europe is a massive success story, says Tenwick. But can it continue to grow at present rates? “There is a feeling in the air that it is maybe too much. But investors are much more wary these days and the European economy is much more stable, with a genuine shortage of good people around,” says Tenwick.
He cites the change in StepStone’s shareholder base, which is now made up mostly of blue chip investors and believes the combination of the evolution of the web and a strong solution-based business will ensure continued growth. It just completed the successful placement of its first bond issue, which Tenwick says was four times oversubscribed. “Perhaps people are beginning to realise its true value,” says Tenwick. “There maybe more strategic acquisitions moving forward.”
The company has recently become involved in another challenging logistical escapade. It is sponsoring polar adventurer Rosie Stancer, who is aiming to become the first woman in the world to walk solo to the North Pole. If she manages it, she will also become the only woman in the world to have reached both Poles solo.
The challenges are impressive. She will be hauling her sledge over 415 nautical miles of frozen Arctic Ocean for 60 days, navigating a moving and unstable ice pack. Sounds like a breeze compared to sorting out StepStone and of course planning and executing a family skiing holiday in the Alps.