Tech hiring is in kind of a weird place right now. Newsworthy layoffs, artificial intelligence threats and a down economy mean a lot of indecision and uncertainty. Many companies are just pushing pause as a result. All this makes for a tricky environment for any and all startups looking to place high-tech workers. InSquad, a one-click solution to source and hire top-quality vetted remote software developers, ain’t scared though. That’s why CEO Alex Svinov decided to face the Firing Squad. He thinks he has a better mousetrap than the likes of Upwork, Turing, Andela and many others. Is he right? Gotta listen to find out.
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Intro: Like Shark Tank? Then you'll love Firing Squad. Chad Sowash and Joel Cheesman are here to put the recruiting industry's bravest, ballsiest and baddest startups through the gauntlet to see if they've got what it takes to make it out alive. Dig a foxhole and duck for cover, kids. The Chad and Cheese podcast is taking it to a whole other level.
Joel: All right, time for another Firing Squad. What's up everybody? This is the Chad and Cheese podcast. I'm your co-host, Joel Cheeseman, joined as always, the Daffy to my Donald, Chad Sowash is in the house. And today we welcome to Firing Squad, Alex Svinov CEO at Insquad. Alex, how are you?
Alex Svinov: I'm doing great. Thank you very much. Joel, Chad, nice to meet you and nice to meet everybody out there. Hello.
[chuckle]
Chad: All the way from Serbia. Wow.
Joel: Yeah.
Alex Svinov: Yeah.
Joel: Sorry for butchering your name. Svivno... Swivnov? Is that correct?
Alex Svinov: Svinov.
Joel: Thank God you're Alex.
Chad: Svinov.
Joel: I can do that one. I can say that one.
Alex Svinov: Oh, you don't know my real name. [laughter] It's actually Alexander.
Joel: Oh, that's easy too. I can do that one.
Alex Svinov: Oh, Sorry. Sorry.
[laughter]
Joel: All right, so we know a little bit about you personally. For our listeners out there that don't know you, give them a Twitter bio and... Give us a window into Alex. What's he all about?
Alex Svinov: I am a computer science graduate. For 15 years after that I've been doing finance and investment banking. And then I felt like I had it all. I knew it all, and it didn't feel like fun at all. So I, maybe nine, 10 years ago, I switched to startups. Founded my first startup in 2014, which went very well. Founded second startup, which also went well. And they're still profitable and running businesses. And then I felt like, startups is something that I really enjoyed doing. And, then I failed few times. And, here I am, now doing my sixth startup that's Insquad.
Joel: And father of three. So he does get out. He does get out and live a little bit.
[laughter]
Alex Svinov: Well, yeah, my wife says, you should be more with kids. So I'm working on that. That's my KPI for this year.
Joel: Now, does that mean have more kids or just spend more time with the ones you have?
Alex Svinov: No, she's not ready for more kids. She is like, first take care of these ones, then we'll talk about new ones [laughter]
Joel: All right.
Chad: Always a good idea. Always a good idea.
Joel: I can do that.
Alex Svinov: Yeah. Yeah, that's true. I love kids.
Joel: Welcome to the squad, Chad. Tell him what he's won today.
Chad: Well, welcome Alex. This is how Firing Squad is gonna work my friend. At the sound of the bell, you'll have two minutes to pitch Insquad. At the end of two minutes, we're gonna hit you up with about 20 minutes of Q&A. Be sure to be concise with all of your answers or you're going to get hit with the crickets? That just means tighten it up, move out swiftly. At the end of Q&A, you're gonna receive one of three of these from either Joel or myself. A big applause.
[applause]
Chad: Grab that checkered flag and take a big chug of milk because you just won the race, baby. Golf clap. You're not the fastest in the race, but you're in the race so knuckle down and focus on getting better, faster. And last but not least, we have brought a horse to the Indy 500. Pack it up and take that walk to the glue factory, my friend, because you are done here. That's the Firing Squad. Do you have any questions.
Joel: That is a tyre in the parking lot is that sound right there. Alex, are you ready to pitch Insquad?
Alex Svinov: Ready as I am.
Joel: All right. In three, two.
Alex Svinov: Yeah, here we go. When I was at my last startup, it's a FinTech company, I had a great issue of building a software engineering team. And it's like I've been interviewing lots of developers, lots of data scientists, and so on and so forth, but once I would find some really good ones. They would either ask for too much money or they would look for something else. And, essentially it took me like a half a year to build this, a good team. And then I figured out that this is problem, not just my own problem, but pretty much everybody in the market is having the same problems. Now, that was back in 2020 when this was much more acute than today. However, that, finding talented engineers is still a huge problem for any startups, but particularly for a startup because engineers always want stability.
Alex Svinov: They want some good big projects. So if I'm a small startup, where I'm gonna find talent, right? And startups always depend on this talent. So that's why we built Insquad. What we did is we went out to remote locations like Latin America, Eastern Europe, Far East, and we've built a pipeline of software engineers, which we would vet with machine and with the human. And then we would get them matched with the cool startups in US. And that played out very nicely because US's startup get a great talent, which you wouldn't be able to get at home at very good prices, which are again, like have their level of the price at the US software engineer.
Alex Svinov: And you would get them right immediately, right? Because all the engineers we have on our platform are available to start in two weeks. So, yeah, that's where we are. And so far we've helped over 50 startups and we have over 200 engineers working for them, and about 3,000 guys in the vetted pool. That's it.
Joel: Pretty close. Pretty close to time. Pretty close to time. Let's talk about the name. Insquad. How'd you come up with it? What's the story? Give us the 411.
Alex Svinov: Yeah. Well actually when we're talking about this name, we're thinking about the best software engineering team, it's like a small squad, right? Where everybody is working towards the same goal, everybody's supporting each other, and it is a little bit like an army. It's definitely not like an army in a big sense, but a little bit like an army in the sense that you've got your own task and you gotta finish it no matter what. And that's why we thought that, having people in squad somewhat reminds you of these values, of these goals.
Joel: Okay, I can buy that. I can buy that. All right, so money-wise, you've generated 200K in investment. The last round was in 2021, which seems quite a while to wait for another round of investment. Talk about that. Are you just that profitable now that you don't need money to take on the big dogs or what's up with investment?
Alex Svinov: We used the initial investment to actually generate the product which is a portal where we source engineers. When we, in 2022, the market changed a lot because the demand for engineers has gone down significantly. And so what we've done, essentially we use this time to build our funnel of engineers and bring more on board. So by the time when the next growth phase comes which we already see, it kind of the market stabilized and we already see the demand we would have good pipeline of engineers, we'll definitely go to the market to raise our Series E. But I'm assuming later this year or maybe early next year, because our businesses actually it is, we're profitable these days. However, we would still need the investments for things like marketing, brand building, and expanding our franchise. So.
Joel: Okay. Let's go back to something that you just said. You said the market for developers has slowed down significantly, which I would agree, but then you also said that you think it'll pick up based on everything that we hear with AI taking jobs from developers, being able to do code turning, entry-level coders into 10x developers. Why do you think it's gonna come back?
Alex Svinov: Well, there are a few things we should separate. First is AI is really taking jobs away from developers. And my answer is, no. It is certainly taking some, it can complete certain tasks. It can work as a junior level developer. However, in our case, we don't work with a junior level developers per se, only, we only offer senior level, architect level team lead level engineers. So that is something AI cannot do now, it may do it sometime in the future, but not as for now. However AI also needs engineers and these engineers are called data scientists. The guys that are training models and aggregating data, building the silos and so on and so forth, which is again, something that AI cannot really do at this moment. More to that we actually are seeing increased demand. We, like, for example, our first client asked for a prompt engineer, which is a new profession that came into play with the rise of chatGPT. So the first request we had in January, and now we have more and more to that. So if we're not gonna need any more engineers or developers, then probably we're not gonna, we will not need anybody else guaranteed because the engineer is to, in my view, engineer is the future of any profession because you need more and more software. We're going away from the hardware into software and that's why you will need more the data scientists, more test automation guys more engineers that will invent our future.
Chad: All right, so taking that and actually just spinning it more onto the competitor side. So Hacker Inc has 103 million in funding and they've been around since 2009, Turing 160 million TestGorilla has over 80 million. Then there's Coder bike Codility, HackerEarth, and a list of other somewhat like platforms that are out there. What makes Insquad different from all of those other than the lack of funding and lack of use in service?
Alex Svinov: Well, we are very much product-focused and what we are trying to do is to have only superb talent on our platform. Now that everybody would say nobody would try to sell you some lousy engineers. Everybody would be saying that we've got great talents. However, this is what I hear from our customers that they come back to us and ask for more because of the quality they get with our platform is outstanding. And that's what we strive to go through to get only the superior talents on our platform. I wouldn't say that our biggest competitors are these platforms. I would say our biggest competitors are old style staffing firms, which are only looking for small customers and they have 25 to 50 to 100 engineers on board and they can only do a certain amount of work. Because if you look at the market in general, all these new platforms you're talking about, they adjusted tiniest to the one or two or three percent of the market in general.
Chad: Okay. So more toward what Joel was talking about, today's landscape, GitHub, who owned by Microsoft, is using AI to make mediocre coders good and good coders great. IBM announced that they're slashing 3,900 jobs on the focus of automation and cost cutting in the Tech industry. So there's gonna be a huge change in demand. Here's the hard part. Looking at yourself in the mirror in the morning, you've gotta be afraid of these automated AI engineers that take and again, we're talking about speed. And speed means funding. And we talked about HackerRank and all those others who have the funding. Right now do you have the juice to be able to pivot to all of those other engineers, QA, QC, prompt engineerings, do you have enough juice to pivot and keep up with the others? Not to mention the automation 'cause it's not about is it going to create new jobs? Of course it is, we know that, but do you have the juice to be able to pivot and stay in the race with the rest of them?
Alex Svinov: Well, I'm the CEO of the company as long as I am the CEO and I believe in this idea, definitely I will have the juice and not only will I have it, but we already actually pivoted when we've seen a lot of demand in AI. We've basically focused all our sourcing efforts and all our selling efforts on working with the AI and that played out very nicely, especially last half a year when we got so many startups coming and hey, we wanna automate this with AI, hey we want to integrate chatGPT. And that's where we are getting the biggest chunk of business these days. What, just today we signed a new customer, they are doing animation. They want to automate motion picture creation whereby you would do, you would just type in chatGPT like prompt and it will create animation immediately. So and we see it in every segment in legal, in finance, in creation of movies everywhere.
Joel: You said that you have a higher level of developer in your network, correct?
Alex Svinov: Yeah, that's correct.
Joel: And what makes you think that you have people that aren't in Upwork or aren't in these other platforms that have techies? Like what makes your sauce so secret?
Alex Svinov: We're trying to keep it very personal in the sense that each and every engineer that we have on our platform has a video recording of the actual interview with Insquad recruiter. And that's much different from what you would see at Upwork where it's basically self-serve, right? Which we try to put extra effort to get only the guys that we know, they not only, they have passed tests at a very high level, but we also had the technical recruiter go with them through all their experience. And then if for example, during this interview our technical recruiter is not entirely satisfied with the explanation, what exactly was done on this project and on that project, what kind of technology you have been using and how you've been using where you adjust a code reviewer or did you actually do the code yourself on this project? Then if the tech recruiter is not entirely satisfied with the answer, we would not list that skill with this particular profile. So basically anybody that we bring to our customer, we are certain that we know that this skill and set is actually matched to the resume.
Joel: But there's no exclusive that you sign with the candidate that says you can't go to Upwork. So there's a good chance that these people are all over the place, not just your platform.
Alex Svinov: Well, I wouldn't think that they are at Upwork because Upwork typically is for lower level, lower field gigs. And the guys that we are working with, they are typically interested in some complicated tasks. They want, they don't wanna have a small project. They, because they essentially are looking more for an employment-type relationship, but because they're outside US, they're okay with the contract that would use.
Chad: Turing or HackerRank then? I mean, those are two top tier.
Joel: Yeah. Doesn't have to be Upwork.
Chad: Yeah, those are two top tier. So they could be in those platforms then?
Alex Svinov: Oh yeah, Oh yeah, they could be.
Chad: Okay.
Joel: So when I go to your site and I look at Web3 developers and how many you have, they're typically around the 100 to 125-ish number. Is that what you expected to have after being in business for three years? Is it less than you would like to have as someone who doesn't do this, it feels low to me, but I want you to speak to what your perception is of how you're growing the network.
Alex Svinov: Yeah, if you are talking about Web3, that's a totally new set of technologies and there is just the fact that they're if you would ask how many Rust developers do we have on our platform, it's essentially a function of how many Rust developers are out there. And there ain't many. I mean, if you would look at JavaScript, there are, there good chance there is a few million engineers all over the world. If you are talking about Rust or Solano or some other similar technology, they'll be like 10, 20,000. So that's why we don't have that many of these engineers.
Joel: So okay, so Metaverse, you have 135 Metaverse has been around for 10 years. It's hot. It was really hot a few years ago, so forget about Web3. And I would feel like there'd be a lot more Metaverse developers out there.
Alex Svinov: It's also the question that most of our customers are not looking for that type of engineers.
Joel: Then why feature Metaverse on your website if your customers don't want Metaverse developers?
Alex Svinov: Most of them don't. There are some that would ask for, but most of them want plain strong JavaScript or Python or Java or C++ engineers. So, we do, obviously we do have engineers in Metaverse and in the Blockchain space and in the Web3 space, but it's not the main source of interest for our customers these days.
Chad: I'm gonna take what Joel is doing in the micro, and I'm gonna go macro. Okay. So Statistic says there's around 28 million developers in the world today, which means if you had 2%, you would have half a million developers in your platform. How many developers do you currently have in your platform?
Alex Svinov: 3000.
Chad: So not 2%.
Alex Svinov: Not 2% of it.
Chad: Okay.
Alex Svinov: Of course.
Chad: Okay, okay.
Alex Svinov: Yeah. And my take on this is that the market is huge, right? It's very wide.
Chad: Yeah.
Alex Svinov: And it would be unreasonable to expect that any platform would have like 2% of the entire World market. I mean, there are certain areas in the World like Latin America where we have a very significant chunk of their say JavaScript engineers are on our platform out of all the senior engineers. But I definitely wouldn't think that we're not taking the the 2% of the entire world.
Chad: Okay. Well, on your site it says our vetting process lets in only top 2% developers, right? So they also say it says get 75% interview to hire with Insquad. That's awesome. I love that. I love that. So two questions around that. What's the base number of interviews to hires you're working off on that sample set? What's the total?
Alex Svinov: Right now we have over 200 engineers working with the startups, and if we're taking that over the period of two years it would have been over 300 engineers so that's the data set we have. We use the large data set.
Chad: Okay.
Alex Svinov: And getting back to your first question about 2% that basically means that out of the guys that get into our funnel on the top suppose we would get 200 engineers today try to apply to our platform. And the ultimately we'll get only two out of this 100 that we would put their profile on our platform so that they get matched with the projects. That's what 2% means.
Chad: So they would be qualified at that point?
Alex Svinov: Yeah, exactly. Exactly.
Chad: Okay. So how does your system know the candidate was hired?
Alex Svinov: Every time when we have a company come to us and request an engineer we would sign a contract with them. We're working based on a contract with a company so...
Chad: Kinda like a staffing setup?
Alex Svinov: It's exactly a staffing model. Yeah, so we know everybody who was hired.
Chad: Okay.
Alex Svinov: Access to the platform is free unless you hire somebody.
Chad: Okay, so around the product real quick you've got pre-screening, quizzes, coding challenges, recruiter interview. Is there any training that you keep in the platform to continue to help the individuals become better at what they do and more sticky to your platform?
Alex Svinov: That's a very good point. We are launching this part. It's not yet there. It's got... It's due to be launched this fall. We will have a huge separate part that will take care of their training. Of their... Of taking their career path because obviously we want strong guys to stay with us for longer. So we want to make sure that their project is something that they're interested in or if they wanna try new technology we are there to help them get themselves educated and find themselves a new project.
Joel: Let's talk about marketing real quick. So my perception is there's not a lot going there. You've got three blog posts that I can see on the website. Your last Instagram post was in 2022. If I click Insquad in media on your website it just takes me back to the cases page. So there's... I don't see a lot of press that you're sort of touting. What's going on marketing wise and how are you getting professionals to the site? How are you getting employers to the site? 'Cause I don't see a lot of things going on marketing wise.
Alex Svinov: Yeah. As for professionals we've tried many techniques and we've seen that simple outreach works the best in a sense that we can target our audience very well because when we used marketing tools we would get a lot of entry level guys to try to go through our system and they would never pass. So the conversion ratios were real real low. So what we have then decided is we first we buy databases with the context obviously where it's legally permitted, and then we do cold outreach because in some places it's not allowed so we don't do that there. Now, and that plays out very well meaning that the guys that we outreach in many cases, they are actually they're interested in this type of an offer. As for the customers or for new clients we've found that offline events work much better than online these days. There's just too much of online content that all our target audience, the CEOs and CTOs of the startups that we're trying to target there are getting. We're participating in all sorts of offline events, conferences and that works well.
Joel: It feels like a conference would be a great time to... I don't know, create content for social media. Does that not come into play with you guys? What's going on there?
Alex Svinov: I fully appreciate that and that's the... I've heard these questions before. However, with what we've seen is our sales process is built on a direct B2B communication which does not require a lot of marketing. Now, once we get past the point where we see a lots of demand we use marketing like last year, and we've found that it's not as efficient because marketing helps when you have a high level of demand, and then it marketing helps you convert that potential demand into real demand on your site. What we found last year is that due to the fact that the demand has dropped direct sales are working way better. So when we go to conference we have a direct contact with our target audience. We take... We work with them and help them build their software engineering team.
Joel: You're giving me the same answer so we'll move on from that.
Alex Svinov: Oh, sorry.
Joel: Maybe...
Alex Svinov: Sorry.
Joel: Maybe you could go to Upwork and get a social media manager or something...
Alex Svinov: Okay.
Joel: On an hourly basis.
Alex Svinov: Okay.
Joel: So you mentioned a series A. What do you want to be when you grow up? Do you want to be a huge company? Do you wanna be like a lifestyle thing in central Europe and go to Berlin and Copenhagen on occasionally? What is the end goal for you on in this business?
Alex Svinov: Well, I definitely wanna build it into a large business because I see this business has a very good capitalization in the sense that each and every engineer that we work with, and each and every customer that we work with typically stay with us up for a period of over two years. We have very little churn. So I see that business could be easily capitalized and style it in five years or so when it reaches good numbers. I personally have a number of 1,000 engineers that are working with our platform which is five times this from today. And it's probably gonna take us about two years to reach that number. And then it's gonna be good numbers in terms of valuation.
Chad: So talk to me about staffing you are pretty much a staffing company to some extent, just more focused on online, right? Are you working with any staffing companies whatsoever? What does your go-to market look like, sales-wise, outreach, those types of things? Are you going direct to companies or you actually feeding through staffing companies to be able to supercharge their deliverable?
Alex Svinov: Yeah, with us we could work with the staffing companies or we could work with the and clients. These days we have less staffing. I think we have maybe three staffing companies at all just because they're, when the market is hot everybody is trying to get engineers from anywhere, right? When it's kind of cools down it doesn't really make sense for us to go with the staffing firms because we would take up a lot of their margin or they would take up a lot of our margins. So our goal for this year and up until the point when the market, is gonna, catch up is to work directly with the customers.
Chad: Okay. So pricing, I'm assuming you're going off of just a percentage of margin. What are you working off of there?
Alex Svinov: Yeah. Well, our margin is included in the ultimate price of any engineer.
Chad: Okay. What is it?
Alex Svinov: The margin is?
Chad: Yeah.
Alex Svinov: Anywhere between 10% and 45%, really depending on the exact requirements and complexity of finding that particular candidate.
Alex Svinov: Alright. Alex, the Q&A is over. Its time to face the firing squad. Are you ready my friend?
Alex Svinov: Yes.
[laughter]
Joel: Okay. I'm gonna go ahead and go first. So you got the idea initially for this business in 2015-ish, correct? The idea for this business came when there was a high need for developers. There was a ton of energy when you started the company with the pandemic there was money flowing into startups. I would've loved to see more money raised in 2020 to 2022. I think it's gonna be significantly harder for you to raise that series A going forward. And the fact that it's been two years tells me there's been some hurdles to get that funding. But I also think that from the original idea of this company the world really has changed. I really do believe that Elon Musk laying off 80% of his developers or whatever that is is gonna be a trend in all kinds of companies and not just tech.
Joel: We see IBM to BT to all kinds of companies talk about AI taking jobs, talking about layoffs. So I think you're gonna be, you're gonna struggle just from that fact of the world has changed because of chatGPT. I think that you're bringing a squirt gun to a Howitzer fight. We mentioned Turing and Andela not just Upwork and Fiverr and some other big companies with a lot of money, a lot of brand recognition. At best, you can be like a really laser-focused niche that does have great Web3 developers or Metaverse or like really unique kind of industries.
Joel: But this also feels like a company that has sort of ran outta steam. When I look at your social media, when I look at your content online, when I see links that don't go anywhere to me that says a company that was really pumped up at first was putting out content, and has like just sort of ran outta gas. So for those three reasons for me I can't grade any other way, but the guns, oh, Chad.
Chad: Whew. Okay, Alex, first and foremost, you gotta tighten up that pitch my friend. You gotta tighten up that pitch. It's gotta be tight. A white glove service sounds like your forte, and I think that's awesome. The thing is you can't scale white glove human interaction. It's really hard. Unless what? Unless you're working with an organization that has that kind of scale like a staffing organization. That's the thing is that if you want to be able to grow this is all about scale, all about scale. Not to mention, if you take a look at your outreach and how you explained it to us, the outreach that you're currently doing isn't scalable. You need more traffic at the top end of the funnel that leads down to your screening and coding challenges, you've got the system in place, you just need to feed the beast, man. You gotta feed the beast.
Chad: But manual outreach is not your friend, and it will never be your friend. I love the idea of going out to events and doing those types of things to get the word out there, especially in the community. One thing you're missing a huge gap in the market, especially right now. Joel talked about all the AI taking jobs, blah, blah, blah. Whether that's true or it's not true, doesn't fucking matter, man. What matters is that everybody's hearing it and they know they need to train, they need training, and they need it now.
Chad: It's one of the things that GitHub's doing, HackerRank 's doing. A lot of these organizations are already doing Andela, which Joel just mentioned. They're feeding the beast in training a whole country [laughter] and trying to get this done scale. They're doing this with scale. So everything that you've hit, I agree with Joel with regard to two years ago. I think it would've been an easy big applause, but unfortunately, you're too late. It feels like you're bringing a horse to the Indy 500. You're a little bit too slow. Hopefully, hopefully you can get some funding. You can supercharge some of those areas like training and then also outreach and then you can explode. But until then, I hope you come back and you prove us wrong. But until then, my friend, you're getting the guns ouch.
Joel: Sorry, Alex.
Alex Svinov: Oh, no problem.
[laughter]
Joel: No problem. Well, we appreciate you being on the show. We appreciate you answering our questions. For our listeners out there that do wanna know more about Insquad, and the company, where would you send them?
Alex Svinov: The best way to reach out to us is to contact me on the LinkedIn A-L-E-X S-V-I-N-O-V. And we'll continue communication there.
Joel: You can also go to insquad.com. See I'm helping you with your marketing though, Alex, a little bit. [laughter] We do hope you come back and prove us wrong. But until then, Alex, it sounds like you have your work cut out for you. Chad, that's another one in the Can we out?
Chad: We out.
Outro: This has been the Firing Squad. Be sure to subscribe to the Chad and Cheese podcast so you don't miss an episode. And if you're a startup who wants to face the firing squad, contact the boys at chadcheese.com today. That's www.chadcheese.com.