The stakes for AI-improved recruitment just got raised (by A LOT)

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What if AI could interview any candidate who applied for a job, assess their answers, match them to open roles and rank them against the competing candidates for each role?

If that AI was consistently and reliably effective, wouldn’t it supersede much of what a recruiter currently does?

Well, the future has arrived, as that capability is now available.

Last week, its owners announced a USD $32 million investment from a handful of Silicon Valley’s most astute investors.

Co-founders Brendan Foody, Adarsh Hiremath and Surya Midha (pictured, right), all 21 years old, dropped out of college after their second year to launch a site that matches software engineers in India with startups needing freelance coding help. Their 15-employee business is already profitable and is growing 50% month over month.

Mercor, a SaaS product that uses artificial intelligence to vet and interview job candidates and match them to open roles, is now valued at $250 million following investments from VC firm Benchmark (most famous for investing $12 million in Uber in 2011, a stake that is now worth just under $18 billion) and personal investments from legendary Silicon Valley investor Peter Thiel, Twitter cofounder Jack Dorsey and two OpenAI board directors, Quora CEO Adam D’Angelo and former Treasury Secretary Larry Summers.

Mercor’s CEO, co-founder Brendan Foody, claims their core product has conducted over 100,000 interviews and evaluated 300,000 people since late 2022.

“We believe that every applicant deserves the opportunity to be interviewed when applying for jobs,” said Foody. “The current hiring process selects candidates based on traditional resume signals, and not human ability. AI can do better.”

Applicants participate by uploading their resumes and then taking a 20-minute video interview with Mercor’s AI. Approximately half of the interview is devoted to questions about the candidate’s skills then presenting the candidate with a case study and asking questions to assess their thinking and knowledge.

The candidate’s application is then matched across all open jobs in Mercor’s marketplace; for more specialised roles, a second, tailored AI interview might follow.

For employers, Mercor promises to quickly connect qualified candidates who can flexibly scale up and down through contracted hourly, part-time and full-time commitments. India is the source of Mercor’s largest talent pool, although the U.S. is close behind.

Foody also claims Mercor’s ability to predict applicant performance, trained against evaluations developed by hiring experts, already surpasses the equivalent capabilities of human recruiters based on the company’s testing and comparisons completed to date. According to Foody, the product’s methodology will be revealed in a paper published in November.

It would appear the product has some way to go, at least for non-tech roles, if this comment from three months ago in a Reddit thread is anything to go by:

“Had one of those interviews. As far as it being a scam I have no clue. But I do think the interview was a complete and utter waste of time and the questions were irrelevant.

I was interviewing for a corporate in-house counsel position. 85% if my resume and my experience is in corporate law, but my last position is in housing law. They did not ask ONE single question about corporate law, nothing relevant to working in-house, and many of the questions were repetitive. They were so specific to my last role to the point of redundancy. I think the AI just picks up on a few random words you say and keeps hammering out questions around those. I was frequently cut off before I got to finish responding.

At least on 2-3 occasions I got visibly frustrated for answering the same (irrelevant) question again.

Got a rejection email the next morning.

No idea how they could possibly find the right fit for the role when they asked zero questions relevant to the position or practice area. Not even one.”

This comment might comfort human recruiters that their jobs are safe for now; however, Foody and his cofounders are using their suddenly cashed-up balance to accelerate their hiring dramatically.

Foody’s LinkedIn post of late last week promotes their current hiring campaign (“I need to hire 200 software engineers this week”), so it’s reasonable to assume their product’s efficacy will improve rapidly.

Foody said success for Mercor means “building a unified global labor market,” one that can learn the ideal job for every person and then provide it to them.

Fellow co-founder Midha put it more simply in an interview for Forbes: “Getting a billion people jobs, that would make me really happy.”

Many jobseekers believe they will get a fairer go from AI than human recruiters. Given the embarrassing results of recruiters’ resume assessment capabilities and how ‘disrespecting my time’ continues to be the major jobseeker complaint about humans in the hiring process, it’s hard not to agree.

Although AI in recruitment suffered significant negative publicity in 2018 when Amazon stopped using AI for hiring when it was found to be biased against women, recent surveys suggest attitudes are changing.

A survey of 3,000 UK and US workers, released two months ago, found that not only do 49% think AI could help the issue of bias and unfair treatment in hiring, but 46% of workers believe AI will be better than humans at being fair in the hiring process and 50% believe that AI could improve the hiring experience.

According to the results of a Bullhorn survey, released today, of 2,400 recruitment agency candidates in North America, the UK and Ireland, Benelux, Germany, Austria, Switzerland and Asia-Pacific, 60% of candidates are comfortable with artificial intelligence managing the entire recruitment process, including job matching, onboarding and interviews. Speed and job fit were the top pain points cited by candidates who were dissatisfied with the current human-centric recruitment process.

Mercor’s co-founders are barely in their twenties yet possess ambition and a clear mission (together with a load of cash) that should make every human recruiter re-think how much value they genuinely provide to their employer, client or candidate.

As Greg Savage put it rather bluntly to recruitment agency audiences a couple of years ago, “When AI can turn around a counteroffer, we’re f**ked.”

That day still seems far off, but last week it might have just gotten a lot closer.

Note: A big shout out to Hung Lee’s most recent edition of Recruiting Brainfood for highlighting Mercor and linking to Foody’s most recent Linkedin post. I recommend you subscribe to Recruiting Brainfood. You can do so here.

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Posted in Recruitment