Can an HR tech unicorn’s CEO balance growth with impact?

The elevators and escalators were branded. All 1,250 generic hotel conference chairs in the sprawling ballroom were filled. The big user conference is a status signal among tech and business titans, and after three years of pandemic delay, this was Bayireddi’s big moment.

His first move? He introduced someone else to lead event attendees in meditation.

Bayireddi and team say they are doing something different at Phenom, the HR tech company that has spent the last decade outgrowing the categories in which they’ve been slotted. At present, Phenom counts 1,500 employees and 600 clients, including many as big as Mastercard, Southwest Airlines and Hewlett Packard. Customers use its suite of tools for recruiting and managing employees.

In 2013, Technical.ly reported that a tiny startup recruiting platform called iMomentus raised $250,000 from state-backed investment firm Ben Franklin Technology Partners. Three years later, the company now called Phenom People had 70 employees, and in 2018, its $22 million Series B powered 275 employees into the frenzied final years of the world’s low-interest, easy-money tech bonanza. In 2021, the company, now shortened to just Phenom, announced that a $100 million Series D gave them a $1.4 billion valuation — unicorn status — and Bayireddi told Technical.ly “there’s no doubt” they’d go public.

In that time, Phenom was always on the list of the Philadelphia region’s tech companies worth betting on. As far back as 2015, Technical.ly credited them with setting a new standard for software business growth: Hire globally, sell nationally, raise bicoastally.

As it went from homegrown startup to ambitious industry upstart, cracks emerged. Early product launches were criticized by demanding corporate expectations — a charge Phenom leadership says they long ago solved. Former employees lobbed criticisms of dogged pressure and unrealistic expectations. The Great Resignation sent shockwaves through Phenom’s business.

But a decade of endless tech growth has cooled. In the last six months, tech valuations collapsed and nearly 250,000 tech workers were laid off. The tech industry is entering a new phase. Phenom has, too.

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Phenom last held their conference, IAMPHENOM, in early 2020 for 800, as the COVID-19 pandemic swelled. Three years later, Phenom boasted 1,400 attendees in Center City Philadelphia’s expansive Downtown Marriott.

“This is the biggest place that can hold us in Philadelphia,” other than the adjacent Pennsylvania Convention Center, Phenom VP of Marketing Jonathan Dale said.

Mahe Bayireddi speaks at Phenom’s IAMPHENOM conference in March 2023. (Courtesy photo)

The “user conference” has long been an in-person staple of enterprise software. Esri, an industry giant that helped establish the so-called GIS or “geographic information systems” category, has hosted an annual summit since 1981. Salesforce’s Dreamforce and SAP Sapphire are standard confabs for thousands of customers. Though consumer tech has its own versions (think: Apple product launches) and many host developer conferences, it is the sleepy category of enterprise software, with long sales cycles shaped by personal relationships, that has established the form.

They follow a standard model: The CEO gives a big speech, sessions mix industry trends with company updates, and organizers add flair with music performances, celebrity appearances and other destination-specific activities. Host companies court business and develop fans, while attendees come for professional development and a bit of fun.

“Why do a user conference that is competing with YouTube?” Bayireddi told me. “The learning and interaction that can take place in person can’t happen otherwise.”

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Bayireddi’s big onstage moment had a clear purpose: Set a vision that inspires employees, customers and prospects alike. How then does a “human capital management” CEO who sells job-site chatbots and internal-candidate recommendation engines deliver inspiration?

Phenom staffers have long repeated one big, easy-to-understand goal: Help a billion people find the “right job.” Unlike the “we’re changing the world” trope that became a Silicon Valley punchline, Phenom’s core business does match its vision. Quibble with how much Walmart would hire with or without Phenom, but the company’s technology is what hundreds of big companies use to find and promote employees — not just elite technologists, but retail clerks and machine operators.

The day before the conference, Phenom hosted an analyst day, common practice for companies intending to go public. One speaker was Chief Financial Officer Davinder Athwal. He lingered on the so-called “Rule of 40,” a wonky principle that a software company’s combined growth rate and profit margin should exceed 40%. Athwal said Phenom is targeting 50%, a financially prudent boast fitting of tech’s new era.

After the group meditation, Bayireddi returned to the stage. He spoke with discipline, restraint and conviction. One of his presentation highlights was that Gartner predicts enterprise software spending will grow 9.3% in 2023, impressive in the face of recessionary fears but paltry compared to the rapacious growth of tech CEOs before him.

The moment calls for a new kind of CEO, and Bayireddi has a shot at being one of them. But he could fall short. The road to IPO is an intentionally rigorous one, and tech companies aren’t magic anymore. In his keynote, Bayireddi praised a more thoughtful adoption of AI and railed against the displacement of too many workers, sounding very unlike tech CEOs I’ve seen on other stages.

“We are in the people business,” Bayireddi said, “and have always been.”