Plum is a software company based in Kitchener, Ont., which helps companies hire, retain and develop their teams through the use of psychometric data. Their technology is used by large enterprise players like Scotiabank, Whirlpool and Hyundai.
By empowering so many large companies Plum Co-Founder and CEO Caitlin MacGregor has a unique view on the current labour market, as well as what it takes to succeed as a scale-up technology company.
She recently offered her perspective to CCI President Benjamin Bergen. This transcript has been edited for length and clarity.
Benjamin Bergen: Thanks for taking the time to chat, Caitlin. Plum has got some really great technology in terms of helping companies make smarter decisions when they hire people. Can you tell me a little bit about how Plum got started, and what you guys are doing today?
Caitlin MacGregor: Yeah, just over a decade ago I was running the U.S. branch of a Canadian edtech company, and I went to make my first hire. And my executive coach said that if I was to screw that up, it would be a loss of $300,000 on the business. Not wanting to make a mistake, I ended up using a psychometric assessment that assesses people’s innate talents — like their ability to communicate, work well with others, and their transferable soft skills.
I ended up being able to use an assessment that my executive coach had developed while he was teaching at Harvard. And after I used it on all 80 applicants that applied for the job, and I had two candidates stand out for completely different reasons. One that was perfect on paper, he had a master’s education, five years of relevant work experience, he was the golden boy of every measure. But the assessment showed that he had a mediocre work ethic. Then I had this other person who applied who was in the top 3% of the workforce for overall productivity, based on the assessment.
I ran an experiment and hired both the guy that was perfect on paper and the one that had the highest potential. And within three months, the guy’s fantasy football team was doing really well. But he was only doing 10% of his work. He was let go, and the other person, she was doing all of his work plus hers, and within a year and a half had replaced me as acting president when I went on maternity leave. And the punchline is she had two art degrees, her only work experience was seven years of waitressing, and she had never used Excel. So if I had relied on the traditional hiring process, there’s no way I would have interviewed her, let alone hired her.
Then when I looked at the technology landscape — from job boards, to applicant tracking systems, to human capital management systems — the underlying technology is basically matching a bag of keywords in a resume to a bag of keywords in a job description. And yet I had access to this highly predictive data that’s four times more accurate than a resume predicting on the job success. So I created Plum to democratize access to this highly predictive data by taking best-in-class industrial organizational psychology, and marrying it with best-in-class technology.
BB: That’s awesome. So, does this kind of technology help give folks who traditionally are disadvantaged a leg up, or maybe not even a leg up, but just kind of bring them of parity in terms of them being hired?
CM: Absolutely. We’ve had incredible impacts on increasing diversity, equity and inclusion for our companies. Whirlpool has increased their diversity of candidates by 77%, and Scotiabank increasing their hiring of underrepresented minorities to 60%.
We see huge impacts, because the first thing that’s happening in a traditional hiring process is the people at the top of the pile are the ones with the greatest education, the greatest amount of experience, but that doesn’t translate into long-term performance.
But when we focus on the data that’s most predictive of quality of hire and retention, it’s those transferable soft skills. And so Plum changes the equation by putting the people at the top of the pile who have the greatest likelihood to outperform their peers and stay longer. And then what happens is that often people change what is mandatory to even be interviewed for that job. And this allows you to focus on the people who are undervalued and growing in their career, rather than hiring the people who check the right boxes.
As an example, six years ago everyone wanted to hire Ruby On Rails developers, and there weren’t enough of them. So everybody was competing for a very small pool of talent. Now, nobody cares about Ruby on Rails, that’s not a needed skill anymore. The shelf life of those hard skills is shrinking. Instead, we have to start looking at new pools of talent, looking at upskilling, and looking at really going after talent that has that potential, rather than just the ones that look good on paper.
BB: Now, changing gears just a little bit. We’re gonna be publishing this on International Women’s Day. When you look at the data, what’s sort of happening in terms of women’s representation at large corporations here in Canada? And what steps do you think leaders can take to build a more equitable and representative workforce, including in leadership and at the board level?
CM: The first thing we need to do is recognize that so much of human behaviour is de-risking choices. Nobody wants to make the wrong call, hire the wrong person, promote somebody that’s not going to be successful. And as we are trying to mitigate risks, we default into the patterns that seem to represent success. And what happens is, we end up getting in an echo chamber where we just keep reinforcing the same pattern over and over.
Recently I was hearing about a parallel with Hollywood in the 90s. The film industry wanted to be more diverse, so they started doing lots and lots of casting calls, and diverse actors and actresses were getting exhausted because they were kept asked to show up to do these casting calls. But nobody was actually hiring them for the leading role. Because if you looked around in Hollywood, there weren’t examples of huge blockbuster films making money with very diverse storylines and diverse leading actors and actors.
What happened is you had people like Reese Witherspoon’s and Drew Barrymore create production companies and start buying from screenwriters that have diverse storylines and diverse backgrounds and casting diverse actors and actresses. And then they started having these big box office ROIs.
Now it’s like, okay, the pattern has changed. But if you’re constantly just reinforcing the same pattern, there’s no opportunity to get that new cohort in. I don’t think we’ve had that moment in Canada yet, especially in the tech space. I think we’re still in the 90s where we’re doing lots and lots of casting calls, but nobody’s making the actual bets on these leaders. And there’s still a lot of that fear that leads to people saying, ‘I’m only going to bet on somebody that’s already done this exact thing before.’ We’re still at that point where it has to be an intentional act, and we have to really be monitoring, are we really moving the dial? And I don’t think we’ve moved it as much as we would have hoped by this point, we’ve been doing a lot of talking, and a lot of casting calls, not enough of the actual placement of new people at the top in new patterns.
BB: Yeah absolutely, a little less talking, a little more action, please. This also kind of segues into my next question. As a queer man, I bring my identity to the work that I do. As a woman in the tech space you bring that identity. Obviously I know you have more than just obviously your gender identity.
But what does that mean to you? In terms of how you approach leadership, and leadership of a scaling technology company, which historically has really been male dominated?
CM: One of the fascinating things that I realized in my career is that when I was just starting out, I thought that my worth was tied to how much I could produce, how my work ethic showed up, how much I could just show that I was getting lots and lots done. I was constantly in this mode of thinking that I’m just going to prove how hard of a worker I am and how much I can get done, and I’m going to advance in my career in that way. And that was what was also valued by my male leaders.
But then, there was a time where I was going from that role as an individual contributor to a people leader, where I realized that a lot of the characteristics that made me a really good friend, a really good mother, a really good wife and a really good sister, those are a lot of the things that are really naturally needed to be a strong people leader.
I had those characteristics outside of work. It was almost like I had two personalities. I had all the things that would make me a good people leader, but I had kind of left them at home when I went to work, because it was all about just getting the job done. And I had to learn to find examples of leadership that were authentic to me that were more about the nurturing side of who I was. I had to figure out a way to take these two parts of me and integrate them to be a whole person.
It took a couple of years of executive coaching where I had to rewire how I thought about leadership, and I didn’t have a lot of examples around me of what good leadership looked like. I needed to lean on an executive coach that believed that proper leadership came from a place of love and care.
I knew how to love and care outside of work, but I was thinking, what the heck is he talking about? It was a foreign concept to me, leading from a place of supportiveness, rather than cracking a whip and forcing accountability. And then also like turning to people like Brené Brown on, you know, daring to lead and embracing a new model of leading from a place of authenticity and transparency and vulnerability. And these are things that I think are examples of characteristics that you see a lot of women have, but haven’t necessarily been really welcomed in the business community.
I had to do a lot of figuring out who I was as a leader, and find out what was authentic and natural to me. And then I had to kind of integrate these different parts of who I was in order to fully show up. And it’s been a journey, because I was never surrounded by those examples of leadership.
BB: That’s a really great answer. And for me, before my current role at the Council of Canadian Innovators, I worked under one leader who was a queer man in politics, and he was someone who did a lot of firsts. And then I worked for a female politician who also has accomplished a lot of firsts in her role. I think I’ve been lucky to have that kind of representation in front of me, and I think it has informed my approach to leadership. You having to figure out that path and walk down it on your own, I think is a really interesting perspective, and a great illustration of why representation matters so much. But that idea that you’re a leader in so many other facets of life, is so true. And often we obfuscate those skillsets
Now, my last question for you, I wanted to hear a little bit about a capital raise you recently closed. Just a few weeks ago you announced a new investment round; so, congratulations on that! I was wondering if you could tell us a bit about the current economic climate for investment funding, because we’re hearing from CEOs with major concerns about raising money, and making sure that they’ve got enough runway to continue growing. What was your experience like?
CM: First of all, my advice is this: Do not waste your time fundraising in 2023.
Just don’t, if you can manage to wait until 2024.
There’s a lot of fear in the market right now. Everybody’s just kind of holding on to their capital and waiting to see how things go, and the only ones that are actively investing are either trying to support the survival of their existing portfolio companies, or they’re trying to get a bargain deal, you know, to try and get exponential returns in the future. Instead of fundraising, if you can hold off and put that energy into growing sales or something else to build your business, that’s going to be a better use of your time.
Now that I’ve been through it, I think the fact that we were successful really speaks to the strength of Plum as a business. We were very lucky that we found the right investor to be the exception to the rule. We’re very lucky to be the exception.
I knew the market was bad in 2022, I saw that valuations were dropping quite a bit last summer. And I was like, well, that’s just the summer, you know, things will be better in the fall. The economy’s not as bad as people are saying.
I went out seeking capital in September and October, people were really excited. We were getting a lot of positive feedback. But right around the the first week of November, everything just kind of changed. Venture capital investors started pulling back and saying 2023 is going to be a bad year. They started telling their LPs that, and they started rescuing their existing portfolio companies rather than investing in new companies. The whole market just went from bad to worse overnight,
We were very lucky that we had multiple offers. But we were also in a position where one of those offers, if it had been 12 months earlier, that deal would have been 100% better. Like it really was reflective of the time, and it was really kind of tough for us to be in that position.
It really was a lot of fantastic alignment with our lead investor, Pearson Ventures, that we were able to make a deal happen where we got such a phenomenal deal in such a horrible market.
Ultimately I think it comes down to alignment with the investor, the strength of what we’re building at Plum, and frankly, a bit of luck. The fact that everything came together and we fully subscribed, it’s just such a huge outcome that we’re really, really excited about. But at the same time, what I had to go through in the process, I don’t wish that on anybody. And based on what I’ve seen, it is crystal clear that 2023 is going to be a hard year, and a lot of people are not going to deploy capital until 2024.
The Council of Canadian Innovators is a national business council of more than 150 scale-up technology companies headquartered in Canada. Our members are job-creators, philanthropists and leading commercialization experts in the 21st century digital economy.