The Bowery Capital team is continuing our blog series covering B2B Marketplaces. We are doing deep dives on various companies, interviewing founders and investors, and learning what it takes to build success in the B2B Marketplace arena. This week, Jeremy Johnson, Co-Founder & CEO of Andela, answers some of our questions. You can read all of the posts in our series by going here.
What inspired you to launch Andela?
In 2014, I gave a talk for the Mastercard Foundation in Nairobi focused on job creation in emerging markets. Global hiring, and therefore access to opportunity, is still broken today, but it was way worse then. In essence, it was virtually impossible for even the smartest, most talented technologists in emerging markets to build global careers without leaving their home country. Many of the challenges, then and now, stem from a lack of understanding that people across all cultures actually want fairly similar things - opportunity, fairness and recognition. At Andela, we want to make it easy for the world to work together and to break down some of the barriers that prevent people from seeing each other as fellow travelers. Further, employers are already starting to realize that they can dramatically improve the ROI of their hiring decisions by looking for the best person regardless of country. There are many variables that matter - skillset, experience, drive, language, time zone being just a few. But country? In the future it will matter less and less, and Andela makes borderless hiring possible today.
Can you tell us a little about the typical companies and technical talent that you see collaborating through Andela? And as a follow-up, how do you assess applicants on the talent side?
We work with a variety of B2B and B2C companies; including 15% of the Fortune 500 and we vet the talent on Andela through a series of online assessments. We actually recently acquired a company called Qualified, which is a developer assessment platform, to help us get even better at that technical assessment piece. Then, we put Andela candidates through a soft skills assessment to understand how they will engage with their future teammates and to better understand their preferences around work. Lastly, we undertake a broader leadership assessment test that further helps us to match each candidate with the right company. We use all of this data, combined with what we know about the company and hiring manager, to create a “match fitness score” to predict the probability that a given candidate will be successful in a specific role.
How long are the typical assignments that talent finds themselves matched with on Andela?
Andela is closer to being seen as a hiring partner than a gig marketplace. The average relationship that Andela facilitates between a technologist and a company is around 18 months. Talent comes to Andela because they are looking to solve interesting problems with great companies. If you are one of the best developers in Argentina or Brazil, and you are interested in working at GitHub, Andela is a way to make that happen. Companies also seek us out for similar reasons, they want talent that wants to build a career path as opposed to individuals just churning through projects.
What impact did COVID and the increasing prevalence of remote work have on Andela's growth trajectory?
Companies that work with us are reimagining their workforce strategy and how they think about hiring and managing technical talent around the world. Ten years from now, Andela believes that every company that hires engineering talent will think about the world as borderless. The companies that rely on Andela come to us for candidate matching, as well as the ability to utilize the back-end payroll and compliance infrastructure we have built which allows us to serve as an end-to-end solution for managing a global team. When companies leverage Andela, they are able to access specialized talent faster, while still being able to dynamically scale labor spend and make it more efficient. Labor is the biggest cost for all technology businesses so optimizing that can be really meaningful.
What type of engineers are the clients that come to Andela typically looking to hire?
The most common roles we support are for full stack & React engineers. If you look at industry reports around specific skills, Java is the most common skill requirement across the industry. I will say, we have seen a really meaningful spike over the past six months around generative AI and the need for machine learning talent to support those businesses. Data engineering has also been a big category for us. Since we have this visibility into what companies are looking for, we then share these insights with the engineers in our ecosystem, to help them chart out their own career paths; this helps them with upskilling and making sure they are learning skills that will enhance their own marketability as professionals.
As Andela began to get initial momentum, were there any levers you were able to pull that supercharged user growth on either the supply or demand side?
In the early days, the major unlock for us in terms of onboarding talent at scale was being proactive about upskilling. Andela launched in Lagos, Nigeria and we then expanded throughout the continent. As we have expanded, Andela trained 35% of the engineering population of African engineers. Our core realization and passion at Andela is that we believe brilliance is evenly distributed, but opportunity is not. In the early days, we had tens of thousands of applicants to Andela and we were able to identify and select extraordinarily gifted and driven people. Eventually, these people began to create impressions with companies around the world and the reputation of Africa in the tech ecosystem has grown accordingly. When we were getting started, no one in the US or EU was talking about Africa as a tech hub, but now it is widely considered an emerging tech frontier.
As for the client side (the demand side), the strategy for getting initial momentum was much simpler. You need to make sure that your first 10 to 15 clients are obsessed with you and that you have done everything you possibly can to make sure they have an amazing experience. At Andela, we were successful in nailing that initial rollout and that was a huge early driver for the business. Ultimately, how your clients describe you to their contacts at peer companies has a much bigger impact than whatever your marketing messaging is. Responsiveness and proactivity are key in the services world.
How has this strategy changed over time as the company has gone through different phases?
It has been a bit of a seesaw over the past four years. But when you really break it down, high quality talent is always in demand and for our clients, building these relationships with global talent has historically been a struggle. It is less about balancing supply and demand at a high level, and more about balancing skill set requirements in different verticals. For example, we think about React engineers in Latin America as one vertical we cover, and then Java engineers in Eastern Europe as its own separate vertical. As you grow and begin to combine these verticals together horizontally, then they start to look like a broad engineering marketplace. Technology has a life cycle - what is new, and what is in demand, drives which verticals we decide to target. A big part of our job as a global talent marketplace is to solve these supply and demand imbalances as they occur and to have as much effective liquidity for both sides of the marketplace so we can provide the best possible experience for all participants.
How have you tracked marketplace health as Andela has scaled over time?
We have a number of metrics we look at internally to track the health of our marketplace. One key metric we track is how much of our talent base is actively working with clients which helps us understand utilization - measuring churn on both sides of the market and tracking net dollar retention are two really important ways of understanding marketplace health. We also try to monitor Net Promoter Scores for both sides of Andela (e.g., talent and clients) to understand what types of clients are thrilled with the talent that we are bringing to them, and where talent are saying, “Wow, this is the best experience they have ever had in a marketplace.” If we can get NPS to increase continuously for both sides of the marketplace, we know that all stakeholders are seeing real value from their Andela experience.
What is the process and timeline for getting one of your talent partners assigned to a client?
We focus less on the speed of getting someone assigned to a client and more on what the quality of that experience is. Being part of Andela is much more than just getting a client assignment, you become part of a network of some of the most driven engineers in your country. And from a career development standpoint, you have access to learning opportunities that you would not otherwise be able to tap into. For us, an important part of the onboarding process is getting our talent stakeholders to understand what it means to be accepted into Andela, and how to really leverage that value. Throughout this onboarding, we are also learning more about the skills and preferences of that individual and where they are most likely to succeed.
What are the most common requests clients are coming to you for these days? And are they usually looking for one person or are they looking for a distributed team?
Clients come to us with requests for both teams and individual people. We are definitely seeing a rising demand from clients for scrum teams that can look at potential proof of concepts around generative AI and spin up new AI projects really quickly. Today, I would say we are split pretty evenly between clients who require a full team and clients who turn up looking for a single individual.
How fixed are the lengths of these client engagements - is there a component of flexibility baked in?
It varies dramatically. What we see often is that clients will engage talent stakeholders for a six-month long engagement, and then over the course of those six months they realize there is a lot of work to go around and they do not want to lose the talent. At this point, the talent now understands their code base, gets their team and has won their trust - this often leads to engagements getting extended and they will find additional projects for the talent to work on as they start to view them as more of a team member.
What is Andela's current monetization model?
We apply a traditional take rate to our marketplace. However, this take rate varies based on the geographies and time zones involved, the urgency, the skills required, etc. Ultimately, we are focused on aligning our monetization with the factors driving value for the client. Our goal is to be the best dollar-for-dollar investment someone can make when they are thinking about scaling out their engineering team globally. So we try to really align our revenue with the work to be done so our incentives are in line with our clients. Procurement also becomes an important part of these conversations. We are typically dealing with line of business leaders as opposed to procurement departments, but when dealing with larger companies, the more you need to ensure that procurement sees you as an ally.
How do you deal with disintermediation (i.e., talent and clients taking their relationship off platform)? Do you have a way to monetize on a referral fee for a full-time hire?
If a client wants to bring on one of our talent partners full-time, we offer them the ability to do so in exchange for a hiring fee and we have not had any issues with that. Our take rates are above our overhead at this point, but they are still low enough that when people run the numbers, they find that they are likely to have a better and more cost-effective experience by managing the entire contracting process through Andela, rather than trying to handle it themselves.
Many organizations also leverage us as an employer of record and we assist with things like handling payroll. Also, if a given talent partner rolls off, we have someone ready who can step in and replace them. We do not worry too much about disintermediation because many of the companies that use Andela really think of us as a hiring partner. Our take rates are competitive in the industry and we are focused on creating the simplest experience for our clients.
What is your advice for any B2B marketplace founder starting their startup journey?
Understand your buyer, what they are looking for, and why they are having trouble finding what they are looking for. Attempt to differentiate in the most specific way possible and be obsessed with understanding how your customer sees value. Know what your customers want and wait to build until you really invest in understanding their motivations. Once you feel like you really understand the drivers on both sides then it makes sense to invest more in the platform and infrastructure around it. Love your customers and desire to solve problems for them. Think long term about shifting how the world works.
If you liked “From The Front Lines: Jeremy Johnson (Andela)” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. Look out for more content on B2B Marketplaces from us in the coming weeks.
