How Donuts Gave Rise to Site Where Employers Can Bid on Engineers

Photograph by Tom Hawkins

Matt Mickiewicz left 99designs to start DeveloperAuction, an online marketplace that matches engineers and employers.

As co-founder of web startup 99designs, Matt Mickiewicz relied on 30 recruiters to find engineering talent for his company in the hyper-competitive market of San Francisco. Results were so poor that when one finally got a prospect hired, the recruiter sent 99designs a box of Krispy Kreme donuts as a way to say thanks.

It came with a bill for tens of thousands of dollars.

Frustrated by the inefficiency of the hiring process, Mickiewicz left 99designs a year ago to start Developer Auction, an online marketplace that matches engineers and employers. Since starting the service in August, the company has signed on 400 companies and helped facilitate $225 million in job offers.

To keep growing the 13-person startup, Developer Auction announced today that it raised $2.7 million in a venture financing led by New Enterprise Associates and Sierra Ventures. Crosslink Capital, Google Ventures, SoftTech VC and Step Partners also contributed.

“We’re disintermediating recruiters and agencies and allowing companies to compete for talent on equal footing,” said Mickiewicz, 29, who co-founded the company in San Francisco with web entrepreneurs Douglas Feirstein and Allan Grant.

Developer Auction picks 150 candidates every month — out of  thousands of job seekers signing up on its site — to engage in a two-week auction process with employers. Companies get to look at the profiles and submit interview requests to those they like along with compensation information. Engineers can choose to accept the interview and, if there’s a match, an offer is extended.

For successful placements, employers pay Developer Auction 15 percent of the new hire’s first year of salary, and the service then gives 20 percent of that fee to the employee as a signing bonus. In its first year, the company is on track to record millions of dollars in revenue, Mickiewicz said.

In addition to competing with traditional recruiters, Developer Auction is  taking on LinkedIn, which has more than 200 million members. According to Mickiewicz, demand for programming talent is so great in the Bay Area that any engineer with a Stanford degree in computer science and some experience at Google or Facebook is inundated on a daily basis with LinkedIn messages from recruiters. He equated that approach to hiring as spamming, and Mickiewicz avoided using the professional-networking site when he tried to fill positions at 99designs.

He’s now hiring through his own site, competing for talent with his customers. Of the five engineers at Developer Auction, three were hired using the service, Mickiewicz said.

Other companies turning to Developer Auction include Groupon, Lookout, RichRelevance and AdRoll. And, somewhat ironically, news-reading service Pulse is also a client. That’s the startup LinkedIn is reportedly buying for up to $100 million, according to AllThingsD, citing people familiar with the matter.

Hani Durzy, a spokesman for LinkedIn, declined to comment.

 

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