William Leonard

Hey, ladies and gentlemen, welcome back to the Atlanta Startup Podcast. I’m William Leonard, your host and investor with Valor Ventures, a leading seed-stage VC firm here in Atlanta, Georgia. Today, I am elated to sit down with Ariel Lopez, founder and CEO of Knac. Ariel, welcome to the podcast. 

Ariel Lopez

Thank you so much for having me, William. I’m excited to be here. 

William Leonard

I’m so excited to jump in and talk about all things hiring, diversity, and human resources. But first, I would think it’s appropriate for us to dig into your story a little bit. How did you get into this world of entrepreneurship?

Ariel Lopez

Yeah, I love that. It’s funny because I just tweeted about it. It’s been nontraditional in a lot of senses. I started my career in recruiting. I didn’t plan to become a recruiter, I don’t think most recruiters do. By way of recruiting, I started working with a number of different startups in New York and some major brands as well, helping them build and scale teams. I really just fell in love with tech. I fell in love with the industry. I saw the opportunity and I just wanted to be a part of it. From there, I kind of transitioned into career coaching. Most recently, I worked at General Assembly, this is before they got acquired. I essentially helped everyone that took the GA program find a job in tech on the other side. I have a really unique lens on what the space looks like not only as a former recruiter, understanding kind of the unique challenges that companies are facing but I also have the empathy of a career coach, working alongside job seekers from all different types of backgrounds and walks of life. I’m very passionate about dismantling and getting rid of any barriers that exist to entry and getting access to this space. I definitely am always thinking about the future of work, what innovation looks like in this space, and ultimately, how can we create more equitable and fair hiring practices for everyone?

William Leonard

I absolutely love that. You and I spoke a few weeks ago, and I mentioned that I love the tagline for that. It is humanizing the hiring process to make it fair and transparent for all. We would love to have you educate our listeners on what Knac is practically doing and what you and the team are enabling for the customers that you serve and build technology for?

Ariel Lopez

I think there’s a couple of things. We have to recognize the pain that most companies face and when you are scaling your business, I think your priority is always how you’re building it and that’s your team. Hiring will always be a top priority for companies. I think it’s a little bit more difficult for recruiting teams because when you’re a high growth-high volume, it usually means that you don’t really have the time or bandwidth to be thoughtful about how you’re doing things. I often argue that productivity has kind of compromised thoughtfulness, especially as it pertains to hiring and recruiting. If you think of a company, let’s say like Twitter, where they’re seeing hundreds and thousands of applications a year, that recruiter doesn’t have the time to look at everyone that’s in their pipeline which means they overlook the majority of the people that apply. And by way of them, overlooking people, they have a tendency to rely on nepotism, referrals, and pattern matching to fill their roles like the homogeneous culture that we see throughout TAC and other industries largely is due to process. I don’t think it has much to do with the recruiters not caring, they just don’t have the time to care. That’s ultimately why we decided to build Knac. We wanted to make the recruiters’ life more efficient, specifically, top of the funnel so when applicants come in, we make sure that every single applicant gets screened properly, in a fair way, for the right reasons. And more importantly, we make sure that that applicant gets funneled to the right place in your system. I kind of mentioned the empathy that I have as a career coach and I just always think back to people that went through really rough job searches, whether you got ghosted, or you got hundreds of canned rejection emails, and you just kind of lost, wondering like, what am I doing wrong? Where do I go next? That relationship between the company and the job seeker has been broken for a really, really long time. I just feel like there’s so much that can be done to improve the candidate experience as well. That’s the unique part of Knac. We’re part ai screening tool, part CRM. We make sure that every applicant gets vetted properly and fairly, but we also make sure that they get some type of signal on how to qualify for the job that they want. even if you’re not a perfect fit for the role today, you know how to qualify and prepare for the role in the future. I think that has so much to do with us caring about how we fill that gap and making sure that people understand from skills and learning perspectives, what they need to do to get one of these high-growth tech jobs.

William Leonard

Now, I think that is kind of the issue that’s going on right now, right? We’ve seen a pretty outdated infrastructure for top-of-funnel hiring systems right now. Oftentimes, that has led to a lot of bias in our process, right? I think there’s been a greater emphasis on hiring with empathy having a more transparent, efficient screening process. Kind of taking a step back right now, looking at hiring and recruiting, what are your general thoughts around the state of the industry as we slowly begin to emerge out of this pandemic environment right now?

Ariel Lopez

It’s been such a whirlwind. And honestly, I have to say, I think there’s a lot of silver linings in the pandemic that are forcing companies to rethink everything, not only their culture but their hiring practices. I think a lot of companies are kind of going back to the drawing board on how they’re attracting talent and also how they’re going to retain them. I think it’s really good news for companies like us because I think there’s a huge need, and there’s an urgency for people to figure out how to continue to hire in a post COVID world. I think a theme that we will continue to see is the embrace of remote work. That’s probably the first silver lining within the pandemic. Everyone realizes, “Hey, people don’t have to be in the office 40 hours a week to get work done.” If we’re thinking about diversity, that’s huge because most tech companies hire from markets like New York, San Francisco, and kind of those emerging markets, and they overlook all of those other cities where there are diverse populations. And now, I think those companies are starting to think about how they target those communities. I think that’s awesome. I’m not sure how long it would have taken to get there without the pandemic. That’s one good thing. I think another great thing, and this is in favor of job seekers, is the talent wars. Everything is starting to shift, I think, pre-COVID, it was very much in favor of the company where you’re just kind of clamoring to get that job. Now I’m seeing that companies are the ones that are clamoring to get talent. I think people have been empowered in a way that we haven’t seen in decades. I think we’re going to continue to see a lot of innovation within the gig economy and people will kind of taking on nontraditional career paths, which I personally love. But I also think it’s going to force companies to really step it up in terms of what they’re offering candidates and that goes beyond a good compensation package. I think companies are starting to really think about their culture, whether or not it’s truly inclusive, and people can really be themselves at work. Do they have the flexibility to not only do work well but still enjoy their personal lives? I hope that the answers to that are yes. Mental health and benefits. Mental health is something that’s always been really important to me because I think you can’t do your best work if you don’t feel your best. I’m seeing so many companies start to have finally that conversation on what mental health benefits look like for our employees, right? I see a really bright future ahead. Sometimes it causes a little chaos. You kind of have to go through the obstacle first, to kind of see the opportunity on the other side. I think in our lane, we’re more so thinking about if you’re not hiring people, in your traditional sense, whether that is inviting them out to a happy hour with the team or going on campus and doing a career fear, a lot of that stuff will start to see it pick up again in the future, but I don’t think it will ever look the way that it did before. I think most companies are thinking about how to hire remotely. How do we do that well? And for us, we want to make sure that they are thinking about how they’re screening people and making sure that they’re doing it in an equitable and fair way across the board.

William Leonard

Oh, yeah, definitely equitable and fair is really what we’re seeking to have within this process now, and you’ve worked in this space for some years right now. Like you mentioned earlier, as a career coach, as a talent manager, as a senior recruiter, what were some of the things or problems that you were seeing that served as forcing functions for you to go out and build Knac? Obviously, you saw some internal issues that were creating inefficiencies creating biases within this process? What were you seeing that really enabled you to go out and build Knac as a solution?

Ariel Lopez

Yeah, so many things. Literally, everything that is a product feature is something that we saw that says, “Let’s address this.” I think the biggest thing is just how people gain visibility in that process, right? You apply for a job, what happens to your application after that? And from a recruiter perspective, I know what it’s like to open up my inbox or open up my ACS which is an applicant tracking system. That’s where all the applications go and get instantly overwhelmed, like, “Oh, God, 1000 people just apply for this job. What do I do now?” And if you think about doing that search 10 times over, and that’s just within one quarter, right? Imagine what happens when the company is hiring like crazy. Things just get lost, things get lost very easily, and I don’t think companies have been doing a good job of tracking the metrics that matter. Top of funnel, especially as it pertains to their applicant and data, because that matters, right? Like the people that are in your pipeline are not just resumes. They are actual people. In addition to being candidates, they’re also consumers. I think a lot of the companies that we’ve worked with would care that you are a big retail brand. Or even if you’re not, I think you always want to be thinking of your users and who’s on the other side. My quest towards diversity as a business case has always been that, right? You want your workforce to actually reflect the people that you’re trying to serve or the people that have been buying your products and services. Just thinking about the visibility piece, and making things more transparent, like there’s no way or no reason why tens of thousands or hundreds of thousands of people should be sitting in your pipeline, and you’re not doing anything with them, and you’re not reviewing them. And then from a job seeker perspective, or thinking on the coaching front, I know what that feels like. That pain, right, of applying for the job, and not thinking that it’s going to get seen. There’s not a lot of trust that exists between candidates and companies, because you kind of know, it’s a crapshoot. I’m gonna apply, we’ll see what happens, right? We just wanted that process to feel better for everyone. I think we optimized for efficiency first because it has to save the recruiter time, it has to save the money. But we also want that process to be more human, right? It shouldn’t feel like it’s this bot, or you’re this black hole that can’t be beaten. And like you’re doomed from the beginning, right? We want to completely change that narrative. I think diversity specifically, so much, right? As a recruiter, I knew the disparity just from recruiting and looking at who was getting hired and who wasn’t. During my time at GA and thinking about the massive skills gap that exists within the economy. Obviously, if you look at those communities that are underrepresented and underserved, they are the people that are kind of not gaining that access that the majority would be able to do. I think we started thinking a lot about how we make sure that companies are actually reaching those people? But more importantly, how do we make sure that they’re hiring those people, too? Post GA, I spent a couple of years working with different tech companies doing programming. Anything that you could think of, in an effort to get them to hire folks. We kind of recognize that it doesn’t matter if I put you in a room full of women or a room full of black and brown people if you’re not going to pull the trigger and hire any of these people anyway, right? I think that was a lightbulb for us where it was like, “Wait, we need to build software out because I think the industry has deemed it as a pipeline problem for so long.” We can’t find them. They don’t exist. We spent a lot of time focusing on the pipeline. Let’s build the pipeline up. And then from building the pipeline up and recognizing the process was really the issue here, right? Like it doesn’t matter how qualified or underqualified these folks are. I think we spent a lot of time focusing on the pipeline just to recognize that process was really the issue. Also the mindset of what matters to organizations, and why they hire the way that they do, right?

William Leonard

Ariel, I know the business kind of started out as a marketplace at the real origins, but since then, you’ve pivoted a little bit. Can you talk to me about why that pivot occurred and kind of the key decisions that went behind that pivot?

Ariel Lopez

Yeah, that’s a great question. It has everything to do with what we just talked about and that’s recognizing those barriers, wanting to make changes, and how the recruiter was making decisions. Recognizing if we want them to do the right things, the tech does it for them. An example of that is when in our beta product, we were kind of hyper-focused on assessing the applicant and making sure that they get feedback. Those are two things that have always mattered to us since the beginning. And I think, in the beginning, our thought process was that the recruiter was going to assess this individual, we were going to make it easier for them to assess them, but that they were still going to do it. They would give this person feedback based on their qualifications. We quickly realized that the recruiter wasn’t going to assess everyone. The whole purpose of building Knac was to make sure that every single applicant gets screened. We couldn’t rely on the recruiter to do it. We needed to make sure that the tech was able to do it. That was the first big pivot. The second piece of that was how the applicant gets feedback. What most job seekers don’t know is recruiters are kind of scared to give feedback for a variety of different reasons. Most of them are on the legal front. They don’t want to get in trouble. God forbid they say something and then they get sued, right? And then on top of that, the volume makes it really, really difficult. If they don’t look at your application, to begin with, how could they possibly ever tell you whether you’re good or not? And in our beta, I remember one of the recruiters that were using the products, sent me an email and said, “Hey, is there a way to make the rejection easier?” And I was like, “Oh, my God, That’s awful. Like, no. That’s not what we’re trying to do here.” But the light bulb went off again, where we said, “Okay, if the recruiter doesn’t necessarily want to give the feedback, if you’re scared to give the feedback, or if they don’t have time to give the feedback, then how will the applicant ever get it is going to have to be Knac that does it.” Going into v2, the big product decisions we’re making are more data-driven and making it more automated. Instead of through recruiter screening the applicant, Knac now auto screens every single person. And in terms of that feedback, which is the CRM function, instead of relying on the recruiter to give the applicant feedback, we automate that feedback loop for everyone. An example of what that looks like is if a recruiter is using Knac, and let’s say you’re recruiting for an engineering role, you have 2000 people that apply for the job, Knac will auto screen every single one of those people. We will route them to the right place kind of based on your qualifications. And as you begin to screen, Knac will recommend outliers that you may not have traditionally looked at on your own. This may be someone that’s a career transitioner, this may be someone that’s self-taught and didn’t go to a top 10 school, because those people deserve some love too in the process. And then when you decide that you want to close the job, or you extend an offer out to someone, instead of ghosting all of your pipelines or sending them hand rejection emails, Knac will actually send out communication on your behalf. And that communication is full of data that we’ve learned throughout the process because the product is running on machine learning, every single time a recruiter does a search, we learn a little bit more about what matters to them in that role. We’re able to use those insights to give it back to the job seeker so they have a better idea of what to do next. Instead of getting that rejection email, you may get something that says, “Hey, these are other jobs that you should apply to based on your background like personalized recommendations, or you may get something that says, “Hey, these are some skills that you should work on based off of what we know about the role, what matters to the company, and what skills are missing in your profile.” I think if we’re thinking about the grand vision, so much of that has to do with the data that we’re able to gather from companies, how we can use those insights to help them make better hiring decisions but also how can we use those insights to help job seekers everywhere, kind of paint that trajectory for themselves in their careers?

William Leonard

I think that’s huge. That’s a game-changer, right? Because you are separating yourself away from the competition in that you’re providing actionable insights and responses that are underpinned by real, unique data that is going to these job seekers. That’s something that just isn’t happening right now. You’re getting as you said, these canned emails, saying, “Oh, sorry, you’re not a fit at this time, please apply later or something like that.” It’s standard, it goes to all the candidates. It’s not unique. It’s nothing special. It gives actionable recommendations to improve your candidacy, going forward or for other positions. I really think that is a unique feature that Knac has, and it’ll yield success for sure. Shifting gears here a little bit you’ve been building Knac, for some time now and you’ve set out on this entrepreneurial journey after leaving the industry. What are some of the lessons that you’ve learned while building this company and maybe some insights, some advice for other founders who were building at the early stages as well?

Ariel Lopez

Yeah. Oh, wow. How much time do we have? I have a podcast full of lessons alone. I think the biggest thing is, there’s never a right time. You just have to do it. I think when I talk to aspiring founders, that’s the first question I get. It’s never about how do I create a business model that works or sales, or how do I get funding? It’s always, how do you know when it’s time to go? I think back to that entrepreneurial leap in my transition out of GA, and there wasn’t an opportune time to do it. I think I just kind of had this gut feeling that I needed to go forth on this quest to figure out how to kind of do it on my own terms. I think the second lesson, and this is huge, is understanding how your previous experiences help predict your future. Not in a bad way, right? Because you don’t want to be tied to your past. But I do think every single job, every single opportunity is a stepping stone to something greater. You don’t realize it at the time, right? I think back to the first recruiting job that I hated, that allowed me to barely pay rent in the most expensive city in the world. And to that time in GA which was very purposeful, it taught me about what that skills gap looks like. It really shed so much light on why people aren’t moving in this economy the way that they should. I don’t think I would have had the motivation that I have, and the passion that I have now, as we think about making this process more equitable and fairer, had it not been for my time there. But even down to understanding what companies to target, having connections at those companies, a lot of these are relationships that stem back to my time as a former recruiter. Every single piece was purposeful. I’m happy that I’m in a position now to make sense of those puzzle pieces and kind of predict what my next steps are going to look like. I think that’s a big lesson for sure. The third one and this is very specific to business is to talk to your customer. Talk to them first before you build anything. I would not spend $1 on development without doing extensive customer discovery, and user research, and a whole ton of testing. I think a lot of startups go wrong, to where you think you have a great idea, you and your team, and then you get hyper-focused on how to bring the idea to fruition without really thinking about how it’s going to affect your target market and whoever that customer may be. I think it can be a little bit challenging for founders that have domain expertise like myself, because you kind of think you already know, right? Like I was a recruiter, I know what recruiters will like, and I know what they won’t like, but I’m not recruiting right now. I’m not an operator in space right now. I have to talk to the operators to make sure that we’re building the right things. I think always build with your target in mind. The last lesson is the most important lesson is resiliency. Because at the end of the day, that’s all that matters, especially in this industry. I think it’s hard because every startup journey is different. You look at startups like a clubhouse that we’re able to come to market relatively quickly, funding out of the gate was only a list of signups right, and some high profile folks. And then you look at companies like a WebFlow or even a Peloton. I forget what Peloton’s cap table looks like. But it’s not pretty at all. Because the founders couldn’t get any funding in the beginning, right? And you hear these stories, I heard of Loom recently, of these companies that get valued at over a billion dollars years later. But in the beginning, it was really, really hard for them to get the funding or get the traction that they needed, right? I think understanding that your journey is inherently going to look different than anyone else’s is where you need to start. The second piece of that is being so committed to your idea and your purpose that you won’t let anything stop you. I think the founders that go on to do well and build really successful businesses that exist are ones that are relentless, and they just kind of hold on to that determination. Those are my lessons for sure.

William Leonard

I think that is great advice. You said something that really stuck out to me, and that it’s so imperative that you sound out the market at the earliest stages, despite having that domain expertise, right? Because you said you were a recruiter, but you haven’t been recruiting for some time, the dynamics of the industry have likely changed a little bit. So important that you are talking to customers, and standing out the marketing, speaking with other people who are constantly immersing themselves and involving themselves in that industry. I think that’s great advice, especially for someone who comes from that industry and thinks they know it. Even though they left that industry two or three years ago, things are totally different now. That’s great advice. As we come to a close here, you moved to Atlanta to really launch Knac, what was the genesis behind relocating to the southeast here?

Ariel Lopez

Yeah, that’s a great question. We love Atlanta, which is why we’re here. While I love the tech industry in New York, I think it’s one of a kind. I do think that Atlanta is an emerging hub. There’s something that’s uniquely exciting about being somewhere where there’s a lot of opportunity. I just feel like New York was very hyper-competitive, very expensive, and we have a diverse team, diversity has always been top of mind for us, we will continue to hire in that way. We want us to be in a diverse market. And not that New York isn’t diverse, but I think Atlanta is one of the most diverse cities in the country. But I do think that it has a very under-tapped talent market that is going to get tapped into a ton more now, especially post COVID because of that embracing of remote work that we talked about earlier. I’m happy that I just kind of saw the writing’s on the wall. I have that as a place to go. I think in terms of scaling our business in a cost efficient way, right, Atlanta made a lot of sense. Thinking about just the core of our business is surrounding hiring. You look at all of the companies that have headquarters in Atlanta, many of the fortune 500 that are here. I’m always thinking about what our product looks like with enterprise companies. I wanted to be in a place where I could still do business, and I didn’t have to get on a plane and travel to San Francisco every week or every two weeks to make sales happen. I kind of talked about the talent, but that has everything to do with a look at all the students that are coming through Georgia Tech and just all of the professionals that are in Atlanta that are transplants from other cities. I think that’s one of the things that makes the area so unique as well. Definitely had the vision of what our team will look like here as we continue to grow and scale. I think personally, how we are involved in local economy and ecosystem building, that’s something that’s always been really important, even during my time in New York. We were super active with the tech talent pipeline there, which was spun out of Mayor de Blasio’s office. Ultimately it was a conglomerate of training providers, companies headquartered in New York, and then also anyone that kind of cared about helping people find jobs. There was a task force of us working to make things happen in the city. Even at one point we served on an advisory board, thinking about what tech curriculum looks like within the colleges, and universities there. I saw the opportunity to kind of do something similar in Atlanta. I think it’s so amazing what’s happening in the city and having a way to kind of impact the local economy is something that I’ve always wanted to do so all roads place it here.

William Leonard

And you mentioned having that vision of building your company here in the city and I can certainly say I think other companies are seeing and realizing that vision as well right. You think about the companies that are here already the Home Depots, the Coca Cola, the MailChimp, the Calendlys, and when you pair that with the university from Georgia Tech, Morehouse, Spellman, Georgia State, and then you think about the companies that are also expanding their infrastructure here already. You’ve got Microsoft that’s going to be coming to the west side of the city, you’ve got Google building another tower in Midtown, and Airbnb. The city is really on fire right now. I think it’s going to be sustained growth over this decade, and hopefully for more decades to come. I’m excited to see Knac evolve and grow, as the city grows. Ariel, I think this was a really insightful podcast episode for our listeners. There’s going to be a lot of value extracted from our conversation. I’m really excited for you and really excited to see the business grow. The impact that you’re going to have on hiring with empathy and inclusion and efficiency for your customers is going to be monumental. We really appreciate your time here, Ariel, and let’s keep in touch. Hopefully, we can get you back on a podcast soon.

Ariel Lopez

Yeah, that would be amazing. Thank you so much, William. I really appreciate the opportunity. I really enjoyed our conversation, and I hope it’s helpful to some folks. 

William Leonard

Yes, it will be for sure. Take care, Ariel. 

Ariel Lopez

You too. Thanks. 

Lisa

Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.