Talking Gig Economy & the Liquid Workforce

Anil Dharni is the co-founder and CEO of Sense. He founded the company to help fix temporary employment for the 42 percent of the U.S. workforce that are contingent workers. He chatted with Chris Russell on the RecTech podcast recently about the gig economy and what he calls the ‘liquid workforce’.

30 minute listen.

TRANSCRIPT

My guest today is a Anil Dharni, he is the co founder and CEO of Sense. He founded that company, helped fix temporary employment for the 42% of the youth workforce that are contingent workers. Before founding Sense, Anil received his MBA from MIT and was cofounder and COO at Fundzio, which was acquired by GRI in 2012, where Anil continued to work as COO. Anil led Fundzio’s seed round, raised $20 million in series A funding and arranged the sale to GRI. Sense is a company that helps staffing agencies create a better work experience for independent contractors. I’m going to talk about today along with some other stuff around the gig economy. Anil, welcome to RecTech, it’s good to have you.

Hey, thanks so much for that introduction, and glad to be here.

Yeah, yeah. What’s Fundzio do? That’s an interesting name.

Yeah, so that was back in the day in 2009, I founded this company called Fundzio. We were a mobile game company and the big trend that we were falling with too, one was the app store had been launched and lots of mobile games were being created for the app store and were very successful. And then the gap in the market we found was not many games will be created for the traditional gaming enthusiasts, which were primarily more men and males who like action oriented games, role playing games. And that was the market that we targeted. We actually ended up launching a couple of games that reached top grossing. We ended up selling the company in about three years for over $200 million.

Nice. Excellent, cool. All right, let’s talk about a Sense first. I want you to give us a sense of what the origin of Sense was, what that was like, that journey, and then tell us about the problem you’re trying to solve here with this kind of platform.

Yeah, absolutely. So Sense is an all in one communication and engagement solution that has been designed specifically for modern staffing companies to help accelerate their growth. What that really means is we help staffing agencies communicate and engage with hard to include candidates, keep their existing contractors and talent productive and happy when they’re working in the various organizations that they have been placed. So we really focus on two aspects of it. One is automation and automating a lot of workflows, and number two is really driving up the engagement, productivity and happiness of the temp labor that is supplied by staffing agencies and companies. We work with over 200, close to 250 now, staffing companies across the globe. We work with 50% of the top 10 staffing companies in the US, the likes of Kelly Services, Adecco, people like that. And we really focused on high volume hiring, and also people across various industries and verticals.

So it doesn’t matter whether it be supplying into light industrial or blue collar workers, or they might also be supplying into IT or professionals staffing.

Gotcha.

On to your second question, which is more around the pain points that we are trying to solve is, when we looked at this space, we were fascinated by the sheer number of human capital, the number of people that were moving to the space. And are consistently being placed, consistently leaving, and we were amazed by some of the numbers we saw. So this industry actually has a massive problem of attrition. So it has about a notional problem that is people who get offers and people who actually end up starting on their first day. That drop off could be as high as anywhere between 20%-35% of people that don’t show up. So these companies, these staffing companies are spending so many recruiting dollars in building that pipeline, in screening those candidates, in giving them offers, only to see the not show up, which is a huge problem.

The second part of the problem happens, is, and which is where most recruiting software forgets about these people, and that was actually a core inspiration, was what happens to these workers when they actually start the assignment? And even there, we find that when they are on an assignment, about anywhere between 15%-20% of them leave midway during their assignment, which obviously causes a huge headache to the organization. It’s a revenue loss to the middleman, the staffing company, and obviously the contractor is unhappy for whatever reason because of which they left their current assignment.

Why just staffing here? Don’t employers face the same kind of issues with their contingent workforces?

That’s a fantastic question, and yeah, it’s all about, given that this was my torch startup and being a [inaudible 00:06:04] entrepreneur, what we’ve chosen to do first is really focus where the problem is. The sheer magnitude of this problem is immense, that’s number one. Number two, it helps the team really focus and drive for a solution before we go to solving it for everybody. And you’re absolutely right, this problem is not just in the contingent workforce or contracting site. This is probably exists even in tons of industry across the board and within full time highers, too.

Yeah. Okay, the term gig economy is something that I think everyone’s familiar with out there, Anil. But you prefer the term liquid workforce. I want you to explain that and tell us why.

Yeah, the board gig economy was basically coined during the financial recession in 2009. And it basically represented when there was a recession, it was hard to find full time jobs. So people had to pitch together a variety of gigs, I guess, to pay that bills, right?

Yep.

And then the second thing happened, which is the rise of technology and all these apps, service apps that started coming to the market like Uber and Lyft, Postmates, all these companies. So today when you mention gig workers, people typically think about how there’s a market place or there’s an app that is connecting with the technology, that is connecting these people where they can pick their gigs and pick the jobs. But what we are finding is there’s actually such a bigger market here, whereas people are only even, that think about gig workers will only be focused on that.

But people forget about contractors, independent contractors, they forget about consultants, they forget about temp workers that are being supplied by staffing companies, part-time hourly workers. So if you actually think about all those people, and that’s what we define as a liquid workforce, so people who might be part-time seeking opportunities, some gigs, and then maybe three months down the line, switching to a full time opportunity, and two to three years later switching back into gig work. So that definition and how to represent and talks about that labor force, that’s where we came up with the definition of liquid workforce.

And in fact, Chris, if you think about even political value [inaudible 00:08:25] San Francisco, we did 10 years in San Francisco where the startup is now under two years. And I have tons of discussions with HR execs here and how hard they are finding and challenging they are finding, not just to attract but to actually to retain people.

Yeah.

They look at our software and they say, “Well you build the software for contractors or temp workers, but the way I’m looking at my full time workers, is this way. I think of them as temp. They’re here for under two years and they’re going to leave. So how do I increase [00:08:59] from 18 months to 24 months?” And that’s the challenge that I’m trying to solve for them.

Okay. Walk me through some of that user experience for the worker in terms of how your software helps communicate with them and helps the retention problem.

Yeah, absolutely. So, the way to think about Sense is, Sense has been built on top of an applicant tracking system, or a system where you’re record of your employees or contractor lies. So in a full time world, it will be both an applicant tracking system and an HR system. In staffing companies it’s typically only the applicant tracking system and ATS. So we think of Sense as a system of engagement, so we fit right on top of that ATS or the system of record, and we can create… We do two things. One is we created these experiences, these life experiences along the entire life cycle of a talent, whether you’re a candidate, whether you get an offer or post an offer when you start an assignment. So how do we interact, how do we communicate, at what points do we communicate? What kind of touch points we create?

That’s what Sense can do today. So we have a Joanie’s software, and you can specify, let’s say somebody is interviewing with you. So when somebody’s interviewing with me, send them a reminder a day before the interview. Check in with them on the day of the interview, check in with their hiring manager as to how that interview went. So we can start creating these touch points, and not just touch points directly to the talent, but also around the people that could be impacted by the talent or the candidate, the hiring manager, the recruiter, the talent itself. And based on that, we are able to develop a holistic view as to what is happening, and how engaged is that talent? So we look at insights around, did they open that message, did they click on the link? How much time did they spend reading that landing page? When they came in, what did they say? How did they respond to the net promoter score? What open-ended feedback that they give us?

And based on all that, we’re able to build this view of the talent and provide real time analytics to HR practitioners as to whether this person, what’s the likelihood of the sports and actually showing up tomorrow to work? What’s the likelihood that they are happy, they’re unhappy? If they’re unhappy, why are they exactly unhappy? So that’s what Sense tries to do, and we’re trying to do this on an immense scale. Some of our customers, you can imagine… When I listed off some of those top 10 staffing companies, they are supplying and hiring anywhere between 1-3 million people in a year, in a single year. So how do you get these insights in real time on a daily basis when such a large workforce of yours is going work every single day?

Yeah. Does it digitize that entire onboarding process as far as all the paperwork goes and everything for them as well?

Yeah, so that’s a great question, Chris. So we’ve actually stayed away from the transactional piece. And it’s a good point because there are two pieces we think about. One of the transactional piece and the other is actually the touching, feeling piece, right? So our product is completely built on the engagement side, on the happiness side, on the pulse checking side. But it’s all done through automated workflows.

Gotcha, gotcha. Okay. Where do you think all this… What’s this mean for the future of work for companies looking to hire top talent, do you have a crystal ball here you can talk about a bit?

Yeah. So I mean, obviously it’s a candidate driven world. I think one of the things, if I look at it, what’s happening in the recruiting and staffing space. They’ve been traditionally, extremely obsessed around clients and around their customers, their end customers. And they did not focus too much around the talent, the database and the candidate. Now the world has kind of flipped and we are in this space where it’s become so hard to find great candidates with the right skills, and to motivate them to even apply to one of your positions. So what we are seeing is, the leading firms in the industry are really figuring out how to I elevate the candidate experience, the talent experience as high as they’ve been obsessed, I guess, with clients. So I think that’s the number one trend that you’re seeing. Number two, I think, in terms of future of work is, most of the insights are actually separated.

So if you think about, if you ask an HR practitioner today or even a CHRO, and ask them, what do they know about the talent? They’ll probably give you an answer around what they know about the full time talent.

Yeah.

They’ll be able to tell you what the gaps are, they’ll be able to tell you around productivity or on satisfaction scores. They’ll be able to tell you about culture. But now the same company potentially hired 30%-40% of their total talent, is actually contingent workforce. And that’s a big miss. And then when you ask them about how much do they know about this contingent workforce that is actually working for them, that is creating IT for them, that is representing their brand. When they talk, potentially, when their customers talk to customer support, they are clueless. And that’s where we see, in terms of the future of work, as workers are getting more and more flexible and demanding more flexibility, these CHROs and C level execs will need to have better insight into the total talent and not just their full time hires.

Yeah, I agree. Let’s do a quick reset. [inaudible 00:14:58] response is of course, Emissary.AI, the text recruiting platform. Your next superstar is in demand and on the move. [inaudible 00:15:04] the easiest way to connect with them faster and more effectively, wherever they are. They have a number of ways texting to your recruiting processes, putting one [00:15:14] codes, share by text, chat by text, text retargeting, even. All of which allow you to capture more applicants at that point of reply. Go to Emissary.AI for more information and be sure to tell them you heard it on RecTech. Anil, the gig market has a lot of software providers out there from people like One Olo to Shiftgig and such. I think I’m tracking about, at least 15 of those companies out there. I’m curious from your perspective how you look at that market overall. Do you think we’re going to see some consolidation in this space eventually? I’m also curious if you think Uber is going to enter this market with more of a Uber for staffing kind of model, too. Any thoughts there?

Yeah, and that’s a fantastic question. I think those kind of businesses are here to stay. So they are not going to go away from us, and I think one of the secular trends that we see it is timely driven by the customer. So the talent, the talent is the consumer. They want immediate gratification. And over 50% of our talent is already millennials and Gen Zs are coming. So we are not going to see this trend go away, so in fact I think we are going to see more and more adoption of this. Now, having said that, I think the issue right now is it’s super fragmented.

Yep.

It sort of works in certain verticals, like very well in potentially blue collar verticals. But these companies are finding it super challenging to scale, to get to any sort of scale, right? It’s one thing to get to maybe potentially doing it for thousands of people, it’s another thing to get to hundreds of thousands of people. And as I talked about some of the large staffing companies that have been around for decades are in the millions of people. So how do you scale that operation? And it becomes super challenging. Now, if you think about where Uber is, they’re in a fascinating position. Because what they have done is, as they’ve gone from a million to, I don’t know what the count is right now, probably way over a million drivers that they have worldwide. One of the things they’ve done is they’re just like a glorified staffing company, you can think of them as that.

Yeah.

They have now collected a database of people that are interested in driving before Uber. And some of them went through their screening process and some of them failed to go through the screening process. So as Uber looks to diversify, I think they’re thinking about this database just like a staffing company, and saying, “I have all these people who want to work in all these geographies across the globe.” That count might be 5 million, 6 million people. How do I… Maybe they did not qualify to become a driver, maybe they did not have a driver’s license. Maybe they don’t have a car or whatever the ways and means to be an Uber driver. Now, can I find them work somewhere else? And that is, I think, what they’re thinking.

So I think Uber, in search of diversifying the business model, will definitely make a big play here. Already, we’ve heard about that they’re testing already in the Chicago market, but I think the challenge here is how do you bring on technology where, going from a traditional staffing model where your margins are so tiny, 4%-8% or maybe 10% if you’re really lucky, to it’s looking more like a software business or a marketplace business, where you can get to over 50% profit margins. And I think that’s the challenge with all these players in the space.

Yeah, interesting. Yeah, you’re right, you talk about the scaling of it and a lot of these players are launching into certain markets here and there, but they really haven’t gone national yet, also. I’m going to be really curious to see how that shakes out over the next few years, as far as their growth and if they can get to that scale.

Absolutely.

Yeah. All right, last question, I guess, is tips for managing a high performance liquid workforce. So what can you tell us there as far as formalizing communications, just incorporating people into your [inaudible 00:19:20] strategy, things like that?

Yeah, I think it starts really top down. One is accepting the fact that you actually have a large contingent of workforce. I think in most companies that we talked to, they’re trying to ignore it. And obviously, for some because of compliance reasons, but I think the best example is Google, right? I think you might’ve heard, 95,000 full time employee, but at any given time, they had 125,000 contractors working for them.

Yeah.

So if you are such an organization, and this is happening actually more and more in knowledge workspace, in knowledge verticals than in traditional retail manufacturing verticals, because of the, I think, the nature of the business model. The retail manufacturing and logistics, those business models from day one were focused around hourly workers. So they’ve figured it out. But in companies like Google, they’re now trying to figure out how this works.

So I think one is top down acceptance from the C level leadership that our total talent management is probably skewed and we have a view of only one side. And we need to better understand the total labor pool. Where are our gaps, what are the gaps in skillsets? What does wage look like? How do we treat these people? How do we communicate with them? So even that’s an issue, so if you are a Walmart and today you have a shooting in one of your retail spaces, we are hearing the horror stories where these companies cannot communicate to the contingent workforce that’s working for them in that local place where there’s an emergency. That’s shocking to hear. So we are going to start seeing these things change, but it’ll all need to come from top down with this realization. Let’s talk about both full time and contingent workers today.

Number two, I think is really around technology, which is there’s been such an uber focus around looking for point solutions that most… I talked to, again, HR execs and they tell me my recruiters, my HR folks are getting slammed by the number of applications they need to use on a daily basis. And you had rated between 15-25 of them, and this is becoming a really crazy problem because most of those systems don’t talk to each other. So I think the future, the way I see it, is going to be more consolidation. Consolidation of these points solutions, it’s okay to compromise a little bit around best of breed, but it’s better to have this ability that everything is joined together and can talk to each other seamlessly, because only then we can drive real insights and we can drive real actions.