This Baltimore company is using data to change tech hiring, and just raised $27M

Baltimore-based software development firm Catalyte is looking to take its analytics-based approach to finding new software developers to cities across the U.S., said CEO Jacob Hsu.
In recent months, it’s put a couple of key pieces in place to do so.
The company recently closed a $27 million Series A, which included participation from the Rise of the Rest Seed Fund, which was recently created by Revolution, the D.C.–based firm led by AOL cofounder Steve Case. Other investors in the round included Palm Drive Capital, Cross Culture Ventures and Expon Capital.
Using some of that funding, the company acquired Surge, a Seattle-based software development company that Hsu said helps clients who need senior-level engineers. Terms were not disclosed.
With both deals, Catalyte is looking to take steps that could have big implications for U.S. tech hiring.
The company’s roots trace to 2000, when Michael Rosenbaum founded the company as Catalyst Devworks. Rosenbaum, who also founded Baltimore company Arena, is former White House economist with work that focuses on bringing data to the process of hiring and forming teams.
Like many services companies, Catalyte works with other firms to complete software development projects.  It provides teams to work on the projects, as well as consulting services. A glance at its website shows that it works with big companies, as clients include Under Armour, AT&T and Microsoft.
Hsu is proud of the work the company does for clients. And yet it’s the internal hiring process where some of its most intriguing technology is being used. As The New York Times has reported, the firm is among a number of companies who are outsourcing their tech work from inside the U.S. This “onshoring” marks a change from turning to India other companies.
To keep growing, Catalyte needs to keep hiring devs. And finding talent remains a much-talked-about issue as demand picks up.
Instead of looking at other companies or to colleges, Catalyte finds and trains workers who may be in other jobs to become software developers.
The company uses predictive analytics to identify people who show promise for tech careers, but may be otherwise overlooked. One approach is by posting a simple ad on a common jobs board that says ‘Get paid to become a software developer.’
Some think it’s a scam at first, but it’s actually an approach to reduce bias in hiring. Instead of looking at resumes, college degrees or referrals, Catalyte looks at data points around behavior, skills and the ability to adapt thinking quickly.
While there are somewhere around 3,000 variables, “We’re looking for people who are able to solve problems under pressure,” said Hsu, who worked in Silicon Valley before joining the company in last couple years. The devs become full-time employees, working with Catalyte’s clients.

With that comes a recognition. “That ability is very evenly distributed across all strata of society,” Hsu said.
In a field with a diversity problem, Hsu said the approach can open up careers to people regardless of race, gender, age or education level.

“We’re trying to to introduce zero bias,” he said. “It’s literally as broad a brush as we can find.”

The approach is what made investors like Case take note. Catalyte is among the first investments for the Rise of the Rest Seed Fund, which Revolution raised from a host of billionaires to fund companies outside the major tech hubs.
“One of the fundamental ways our economy is going to both remain competitive on the international level and expand opportunities to more Americans is by changing the way we identify talent,” Case, the AOL cofounder, said in a statement (Incidentally, Case will be in Baltimore to speak at a new startup series on Thursday, 2/15). “Catalyte proved to us that not only can it bring new and underrepresented groups into the fold, it can do so while helping its own clients grow.”
With the expansion, it’s also taking a place-based approach. The company currently has two centers drawing employees specifically from the areas where they are located. The center in Baltimore’s Federal Reserve building has 150 employees, and another is in Portland. Plans are in the works to create new centers in Chicago, Salt Lake City and beyond.

“We want to get to 20 development centers by 2020,” Hsu said.

Surge, which already has locations in Baltimore and Salt Lake City, will remain an independent division of Catalyte. The senior-level engineers that company works with on a 1099 basis will handle specialized work that’s being sourced in the centers around the country, Hsu said. It’s another step toward making full U.S. teams available for clients.
“We can use this as a way of revitalizing communities,” Hsu said. “We can build these long-term talent pipelines in every community that we’re in.