Busy bees at Honeypot keep the tech head-hunters swarming
Systems developer job platform co-founded by Rathmines woman has sold for €57m
Picking absentmindedly at a bowl of shakshuka in a café in Berlin’s Neukölln neighbourhood, she explains how she once made herself a promise to live on every continent before she was 24.
Listening to her talk, it sounds like she kept her promise. If, that is, you exclude Antarctica.
Deciding she wanted to move into tech, she came to Berlin, did a master’s in economics and set up a disruptive tech company she and her co-founder have just sold for €57 million.
But let’s back up a minute. How did this 31-year-old Rathmines native get to here?
Tracey went to school at Muckross Park in Donnybrook and studied English and Film at Trinity. She credits her work ethic to her teacher father and a mother who owns Keegan’s Laundrette, an intrinsic part of Ranelagh for almost 60 years.
“I used to work in the laundrette when I was a teenager, which I hated, but am really grateful for now,” she says. “It gave me a chance to see what’s involved with running a business. Teaches you what hard work is too.”
Setting up Applift had confronted Taner with the challenges all new companies face these days: finding the right system developers when he needed them.
This reflects a chronic, global shortage of computer experts with the skills to create the programming backbone every modern business requires. But, as Taner learned from developers who had the right skills, being in demand can lose its novelty – even tip over into harassment – when you are pursued by headhunters and companies desperate to fill yawning personnel gaps.
Taner’s idea: flip the situation, make everything transparent and give developers and other tech professionals the ability to be open about the work they wanted, and the conditions that would make them take on the work. The hunted became the hunter.
Tracey gives Taner full credit for their business idea and says she was curious about the concept of a recruitment business for candidates over companies.
Though intrigued, Tracey says she still had plans to go off and set up her own tech company. But Taner realised she had skills complementary to his own and convinced her to stay, taking her on as co-founder. She took his idea gave it a name, face and following.
Honeypot launched in October 2015, hitting the sweet spot almost too early. When a leading tech website profiled their company and explained its novel idea as a developer-focused job platform, 800 developers signed up within 12 hours.
“We were like, ‘f**k’, but also incredibly happy because this was a real justification, these are the people we made this for,” she says. “We knew we were onto something because we didn’t have to do paid advertising for 10 months.”
In hindsight, it was a bit much at once for Honeypot at the time, given it had just four employees and 20 client companies. The co-founders were open about their struggle, worked hard to grow their client base and systems, and then got in touch again when they were ready.
A rollercoaster ride followed, which saw them operating on a hand-to-mouth, month-by-month basis where a run of bad revenue meant having to let staff go. Apart from a small amount of angel funding, Tracey says she and her co-founder were determined to have a watertight business model before bringing in outside investors.
“We never took on venture capital, which I am really happy about because, in the startup industry, there is a bit of fetishisation of venture capital,” she says. “Often it can be like putting a plaster over an open wound, it doesn’t always make people focus on what the core of their business is.”
They were reaching a critical, sink-or-swim moment last year when things turned a corner. Tracey attended a talk where the speaker gave an unexpected shout-out to her company. Felix Plog, of food-ordering marketplace Delivery Hero AG, told his audience that successful companies needed to be as innovative about their recruitment as anything else – and flagged Honeypot as the way to go.
A week later Plog and Tracey had lunch, he came on board as investor and brought others with him. It was their input, Tracey says, that confirmed for her and Taner the value of what they had created, easing the path to the market for investors. Among many conversations, they felt drawn most to Hamburg-based Xing, a European career social network with revenues nearing €200 million.
Xing was anxious to expand into tech recruitment and, when it asked its own developers for ideas, the answer was the same: Honeypot.
Last December Tracey and Taner gave the Hamburg company exclusivity and entered due diligence, which concluded in April. The final deal has a total value of €57 million: an initial price of €22 million, and additional investment up to €35 million if they hit certain goals. As well as buying Honeypot, Xing is investing several millions to grow its new subsidiary.
For the first time, the Honeypot co-founders have money to spend in a big way: on a tech team, to hire more developers, grow their product and expand its base. At present Honeypot has over 1,500 clients in Germany and the Netherlands but hopes to expand to 10 European countries in next three years, including Ireland.
Honeypot prides itself on going beyond traditional recruiters and head-hunters by offering a transparent process for all involved. It screens and skill-tests all developers who sign up: in communication and languages and, through regular programming challenges, the skills the developers say they have. Honeypot offers free visa and relocation support for non-EU candidates. On the platform, developers spell out their skills, salary and workplace expectations. Honeypot promises a faster turnaround than traditional recruiters: 95 per cent of hires happen within a month. If a developer stays, Honeypot collects its fee from the client company.
Should headhunters around the continent soon come looking to Honeypot for new jobs?
“We do hear a bit about what they say about us,” says Tracey with a tight smile, without going into any detail.
By rethinking the recruitment business, and listening closely to all sides, Honeypot found that salary is never the most important issue for developers. It can be as low as fourth place, says Tracey.
Their experience shows a candidate may not go with the company offering the most money, but the company with the best package: good company structure; ability to work autonomously and learn new things; ability to work with and develop new projects, in particular open-source.
This last point – open-source software – is one close to developers’ hearts and one Tracey encourages client companies take seriously from the start.
“I don’t like when people consider developers to be strange creatures when they are motivated by the same things other people are,” she says. Many developers, she realised early on with Honeypot, are passionate about giving back in their own way: to open-source software that quietly runs most of the world’s computer systems, including apps on that phone in your pocket.
Today’s digital world would be be very different, she argues, without the ideals of developers and their collective agreement not to charge for using programming languages. For that alone, developers are for her a special subset within the tech industry that is built on and around their talent.
“I see a lot of bullshit in the tech industry, which you get everywhere, but that is the fluff on top,” she says. “Below that are developers’ ideas of openness and sharing.”
So what advice does Tracey have for companies fighting on the open market for developers? Make themselves more attractive to developers, she says, by rethinking their personnel policies for the 21st century and allowing their developers greater leeway to work on open-source projects – on company time if need be.
After five years, what does she see when she surveys the Berlin tech scene: ambitious growth industry or an industry drunk on its own hype?
She views the tech scene here as a three-city affair. Hamburg is developing strongly while Munich is in some respects growing faster than Berlin.
The German capital is struggling to shake off its reputation from a decade ago as a tech copy shop. Leading the way then was local company Rocket Internet which took successful ideas like Facebook and Ebay and copied them for the local market, until the original moved in and bought them out. Now Rocket has evolved into a listed internet incubator and can claim credit for successful companies such as Zalando and Delivery Hero.
Tracey sees Rocket Internet as indicative of the strengths and weakness of the German tech scene: ideas of “questionable origin” and weak on brand-building but strong on building systems that can lead to replicable success. Silicon Valley may be the home of innovative tech ideas but Berlin’s Silicon Allee, as locals call it, has its own end of the market.
“What Berlin will be good at, if it focuses, is engineering the products which fuel other companies,” says Tracey.
Focus is needed too, she thinks, within the German government. To get serious about throwing open its doors to developers, it needs to keep last century’s German manufacturing and automotive giants relevant in the 21st century.
With new legislation working its way through the German political system, Honeypot finds itself at the sweet spot: matching local and international companies with local and international workers. If anything, Honeypot has confirmed an old wisdom among German-Irish business circles that Germans’ strengths lie in backroom engineering work, delivering reliably on time to clients, while Irish cultural strengths lie in selling, client interaction and new business acquisition. And yet the Honeypot co-founders are not the usual tech team. As a first-generation Turkish-German, Taner is no stranger to negative stereotypes, says Tracey. And she herself has an archive of chauvinist encounters in Germany, such as the would-be investor who asked how she planned to spend his money.
“He said: ‘Are you planning to buy yourself some shoes?’ When he wanted to invest later, I said no.”
After five years in Berlin, is she getting itchy feet again? Tracey says real challenges lie ahead in bedding Honeypot down inside Xing. Her reading material today in the café - a book on the dangers of corporate silos – reflects her concern that she and her co-founder will no longer have an overview of everything that is happening inside their company.
But she is curious as to what lies ahead for Honeypot, and for herself in Berlin and a life that is more diverse than the tech world.
“Most of my friends don’t work in tech, there’s so much going on here, there’s a huge amount of space, massive history, architecture I think is the best in the world,” she says. Berlin is changing around her at speed, with tech creating new opportunities in a capital with few other real industries.
But the tech squeeze is making itself more apparent on the office and residential property markets. Berlin is a long way from San Francisco or even Dublin in terms of housing crises but Tracey says companies in the tech field have a responsibility to realise their effect on the world around them.
“I believe in what developers do,” she says. “But I think tech people could ruin Berlin.”