On realizing her Superpower, closing a $6M round in February, and the future for workforce talent
by Sally Sorte
What if finding your job of best fit had less to do with your resume, and more to do with your innate talents and drives? This is the evidence base that EduLab Capital portfolio company Plum’s psychometric assessment rests on, helping hiring managers surface hidden gems and hire or promote the right match for the role.
Caitlin MacGregor, founder and CEO, identified this “gaping hole” in the HR industry that had previously relied on resume parsing, matching keywords, and so-called “pattern recognition” where unless you’ve done something before, you won’t be hired to do it.
As MacGregor puts it, “It starts with understanding the human behind the work.”
For MacGregor and the Plum team, it’s about unleashing a person’s potential as opposed to limiting someone to their track record.
Hiring the right person is not only about productivity and employee satisfaction, it translates into company bottom lines, to the tune of tens of thousands of dollars, at least 30% of the employee’s first-year expected earnings according to the U.S. Department of Labor.
“Hiring and talent management is a top 3 priority for C-level executives,” says MacGregor.
Plum closed a $6M round in February, and is poised for growth as a platform that can help companies better hire and leverage their talent.
Caitlin’s Entrepreneurial Journey
But let’s go back to Plum’s roots.
After majoring in International Development at the University of Guelph in Ontario, Canada, MacGregor went in for an informational interview at a Canadian non-profit looking to start a social enterprise focused on sweatshop-free clothing.
MacGregor impressed the interviewer with her preparation and research, and was hired as the first employee for this fledgling social enterprise when “they didn’t really know what they were going to be yet.”
“My boss handled sales & finance and I was in charge of building this business from scratch. He never put a ceiling on me, the sky was the limit. I quickly became the Director of Operations, figured out the supply chain and handled product and everything else,” says MacGregor.
“I realized, holy $#!%, I’m an entrepreneur! My superpower is creating something from nothing.”
MacGregor credits her boss with believing in her; “He completely changed my trajectory because he saw potential in me.”
Three years later, she moved on to become the President of an EdTech company looking to expand from Canada into the U.S. She went to make her first hire and was told it would be a $300k cost to the company if she screwed it up.
“Not wanting to make a mistake, that’s when I was exposed to psychometric data and used an assessment to screen the 80+ candidates for the position. Two stood out for different reasons.”
MacGregor goes on to detail how one candidate was your stereotypical ‘golden boy’ with all the right ingredients on the resume, but the assessment revealed a mediocre work ethic.
“This other candidate was top 3% for productivity. My Executive Coach said I would be an idiot if I didn’t hire her, she was 1 in a 1000.”
“So I ran an experiment and hired both of them.”
The first candidate underperformed and was let go within three months. And the other person, who was doing all of her work plus his, within a year and a half had replaced Caitlin as acting President when she went on maternity leave.
“The punchline is: She had two art degrees, her only work experience was 7 years of waitressing, and she didn’t know how to use Excel. So if I had relied on a resume, there is no way I would have interviewed or hired her.”
“And I was frustrated that without this psychometric data, I wouldn’t be able to find these diamonds in the rough… Every business owner needs this data, in order to ensure they’re hiring the right people and set up to nurture and grow and retain them to continue to be successful.”
And so Plum was born.
“I saw an opportunity to build Plum. Democratize access to this highly predictive data — by taking best in class industrial organizational psychology and best in class technology and marrying the two to really be able to match every person to every job, based on data that is 4x more accurate than a resume.”
“And that’s what we set out to do a decade ago, and it’s been a massive journey… of redefining a legacy space” and going beyond that to “what does it mean to be a technology platform powered by this predictive data.”
HR Managers & the HR Tech Industry
So what does that look like in practice? MacGregor speaks with HR managers of large global enterprises across industry types.
“A lot of times [HR managers] are at the point where they recognize that things are not working, but they don’t necessarily know how to solve it.”
“Universally, with our prospects and customers, they are feeling this labor crisis. We call it a leaky bucket: where they don’t have enough skilled labor at the top of the funnel to bring into their organization, that talent pool is shrinking, and the competition for that shrinking talent pool is getting more and more fierce.”
This labor supply shortage requires a more innovative approach than the way things have always been done. According to the US Chamber of Commerce, there are over 10 million job openings in the U.S., but only 5.7M unemployed workers.
Caitlin describes how even though we are seeing sweeping layoffs in large tech companies, that is not what is happening in other industries.
“There’s historic low unemployment, a historic high of unfilled jobs, and then at the same time [companies] are having a hard time holding onto the employees they do have… Post-Covid, employees can change jobs without changing geographies, so they can jump around until they find something they like, even if that employer is halfway across the continent.”
Due to this confluence of factors, “There’s this need to start screening in talent that the competition is not looking at, looking at talent with those transferable soft skills that can be upskilled on the job.”
“Our customers are feeling the labor crisis from both a talent acquisition and a talent management perspective. They are looking to change things and future-proof their organization. That’s where Plum comes in.”
“This data is 4x more accurate than past education and employment. And it changes the equation. Maybe you’re happy with someone with 3 years of experience rather than 10… because in 6 months they’ll be outperforming [the more experienced candidate], with greater loyalty and at a lower cost.”
Even in this more austere financial environment, MacGregor notes that “HR tech spend across the board is up right now, people are having to figure out how to do more with less. So even if they are letting go of headcount, they are making investments in technology to improve efficiency.”
Raising a $6M round this past Fall
Caitlin reflects on her experience fundraising during a time of tidal change and increasing uncertainty in the macroeconomic climate.
“In the summer we started to hear of really low valuations, but summer can sometimes be really quiet, plus it was the first summer after Covid where everyone could go on vacation everywhere,” says MacGregor.
So they waited until after Labor Day to launch fundraising conversations.
“In September and October there was lots of positivity and interest.”
But in November, that changed almost overnight.
“As we got close to the interim elections, the general consensus was that 2023 was going to be even worse from an economic perspective and that investors were going to just not deploy capital in 2023 and if they did it was often to rescue their own portfolio companies who were going to be struggling because they could not access capital.”
“It was kind of like this game of telephone where everyone got the same message at the same time and nobody wanted to go outside of what the trends were saying. Within a few weeks everything stopped… It was if everybody closed up shop… and said we’ll be back in 2024… things will be better then.”
But that wasn’t the end of the story for Plum.
“We had a lot of conversations in play, and we were able to wrap those up. We did get multiple offers (term sheets) and what was great is that we found incredible alignment with our lead investor. We got a fantastic deal in this market because of that alignment.”
“We got really great support from two new impact investors that really cared about the impact we are having on the economy and support from existing investors like EduLab.”
“EduLab Capital has a wide network, you brought in new impact investors… helped us bring in new sources of capital, and really expanded our own network. EduLab Capital comes with an enormous amount of credibility, your name was very much recognized when we talked to other people.”
“You brought us capital, brought us credibility, but you also just really support [us] and we have that alignment in vision, which is the number one thing that I think is important… And you’re just great to work with!”
Plum closed a $6M round in February, led by Pearson Ventures and supported by JFF Ventures, Strada Education Network, Export Development Canada, Real Ventures, BDC Capital’s Women in Technology Venture Fund, Impact Engine, and EduLab Capital Partners.
Caitlin’s Advice for Founders in 2023
It’s no secret that it’s a tough fundraising environment right now.
MacGregor says, “I do tell other founders, if you can avoid it I don’t recommend fundraising in 2023. Do everything you can to increase your metrics, to increase your sales, to increase your proof points so you can hit the ground running in 2024, because I imagine there will be fierce competition for capital in 2024 as everybody comes back out and starts looking for money.”
A CEO’s time and energy are finite, so she says it’s important to consider the tradeoff, especially in an environment where the juice may not be worth the squeeze.
“I wish someone had told me that sooner. I would have put more time into selling customers and less time into selling investors. Not this round, but earlier.”
“If you think about $1M in investment versus $1M in sales, that $1M in sales will make it so much easier to get that $1M investment later on.”
“There are lots of companies who aren’t going to make it right now. Companies that may have raised money before at higher valuation and they’re struggling with their own growth because they made lofty promises and may not be hitting their targets. Everyone is having to navigate this climate, how can you use it to get ahead?”
Life as a Female Founder & Leader
When asked to reflect on her experience fundraising as a female founder and CEO, MacGregor says “It’s hard to know how it would be different.”
She sees parallels between Hollywood in the 90's and the venture capital fundraising environment of today.
“I have a feeling the VC community is in the same place as Hollywood in the 90s. Where they are very excited to do the casting calls and there are lots and lots of auditions, and that’s an important, positive step. But I’m not sure, especially if you look at the metrics, that we’re actually getting investments. So we need investors — like the Reese Witherspoons and Drew Barrymores — that are making those conscious efforts to change the pattern and show the ROI with a more diverse pattern match.”
“I think the time is coming where we will get to the next step. But I think we’re twenty — thirty years behind Hollywood right now.”
“Everyone wants to say: ‘We invest in the best people.’ And yet, there’s a step that happens beforehand… We have to make a conscious effort with conscious KPIs.”
While funding is a long ways off from equitable distribution, with the share of VC funding going to female founders falling below 2% in 2022, MacGregor considers being a female leader an opportunity.
“As a woman, I have a different viewpoint than the vast majority of my peers. How is that a competitive advantage? How does that allow me to attract talent that wants to be treated differently?”
“We naturally, without effort, have 50% of employees who are women, because they want to work for a woman CEO. We do not look and sound and operate like every other business.”
Caitlin describes how Plum’s leadership team encourages employees to block 15 minutes or half an hour in their calendar to pick up kids from school at the end of the day, or to block a lunch hour to go out and walk. Best practices that the company started during the pandemic have been continued to support employee mental health, physical health, and productivity.
As a parent herself, Caitlin models these practices from the top down.
“If you are going to trust people to grow your business, how are you going to not trust them to go to a doctor’s appointment if they need it or to go pick up their kids?”
MacGregor says they have a high bar to meet because Plum needs to demonstrate what it preaches and use its own tool for internal mobility and employee retention.
“At Plum, we believe that when people flourish, business thrives. So you’ve got to focus on what you are doing as a leader to make sure your people are flourishing, and then as an outcome your business will be successful.”
At the micro scale, MacGregor is motivated by her children.
“When I think about my two sons who are going to enter the workforce in about 10 years… what are their chances of somebody seeing their potential and them early in their career lucking out and finding that job that makes them happy, fulfilled, and thriving?”
“If I look around, there isn’t a solution to help them on that path, and to see their potential and match them to the right job. But Plum can do that.”
On the macro scale, MacGregor sees the “huge repercussions on a global economic level” that will occur if the talent shortage and current “leaky bucket” mismatching of potential continues without course correction.
“I am very motivated to create that better future for my kids, for my country, for the global economy.”
Caitlin says she feels very lucky.
“I get out of bed every single day [and] I am happy, fulfilled, and thriving in my career because I am matched to a job that is leveraging my natural talents, the things that naturally drive me.”
She can also identify what drains her, and hire a team around her to pick up these pieces.
Caitlin wishes for this same level of satisfaction and fulfillment for all people, which is why she is passionate about scaling Plum and putting this knowledge into the hands of all workers.
And, she reminds me, if you think that Plum might be the right fit for you, “We’re hiring!” Open positions are listed at https://www.plum.io/careers
Here at EduLab Capital Partners, we can’t wait to see where Plum goes next.