Ep #88 | The Mental Makeup

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AJ RICHICHI

SENTIO was born from AJ’s dorm room after he and his classmates were fascinated by the fact that the best college athletes don't always become the best professional athletes. AJ worked with professional and NCAA teams to help them with player selection, and as they started to gain traction, they transitioned the tech to also helping companies decide who has what it takes to be successful. SENTIO combines artificial intelligence with psycholinguistics to build personality assessments for 1/1000th the cost of traditional assessment tools so businesses, small and large, can analyze candidates better, faster, and more cost effective than ever before.

AJ’s work has been featured in the Wall Street Journal, Huffington Post, Yahoo! Finance, International Business Times, and Vogue. After winning the New York State Business Plan Competition in 2015, AJ was named as 40 under 40 recipient and “Technology Executive of the Year” in New York. AJ is currently on the board of Charleston Open Source and founded the global human resources conference DisruptHR in Greenville.

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Shantel:  Hi AJ and Chad, welcome to the Imagine More podcast.

AJ: Thanks for having us today, really appreciate it.

Chad: Absolutely.

Shantel: Yeah, of course. We are excited to learn more about SENTIO and I have a personal vested interest in learning more. We recruit, well it feels like a lot of people to us, and so I'm excited to learn more about the back end and the software and how you guys got started. But to kick things off, will you tell our listeners a little bit more about SENTIO?

AJ: Yeah. So SENTIO combines artificial intelligence with psycholinguistics to build personality assessments for 1/1000th the cost of traditional assessment tools. So with SENTIO, it's a self-service online platform where businesses, small and large, can analyze candidates better, faster, and more cost effective than ever before. Our mission is to really make world class hiring and assessment technology available to every company spanning from Fortune 500 technology companies to local coffee shops and restaurants and mechanics and things of that nature.

Shantel: Wow. I have so many questions, a little bit about cost. But let's dive a little deep first, how did this idea come up?

| THE MENTAL MAKEUP |

AJ: Yeah, so I actually started developing the tech in a Phillips Exeter Academy dorm room in 2013. It's a boarding school in New Hampshire where there's lot of academics and also a lot of snow, so I spent a lot of time in my dorm room programming and doing mathematics and arithmetic and things like that. And it actually started in sports, where I was fascinated, and my classmates were fascinated, by the fact that the best college athletes don't always become the best professional athletes. And why do NFL teams with a seemingly unlimited budget, $155 million salary cap, they draft the wrong people? That once they get in the NFL, they bust, like a Johnny Menzel or Vince Young, while people like Tom Brady who dropped to the 199th pick in the NFL draft, 32 teams passing on him six times, become the greatest athletes to ever live.

And so kind of through that project, I discovered that there really wasn't any single attribute or physical skill data point that could point to somebody, hey, this is going to be a successful athlete in the NFL. And so, I started to look at different solutions and what I found was that what was different about Tom Brady and Johnny Manziel and Vince Young, was that Tom Brady has the mental makeup. He's incredibly aggressive, he's a great leader, he's tenacious, and he just has what it takes to be an NFL quarterback while some of these other people fell short. And so SENTIO was born and we started to work with professional and NCAA teams to help them with player selection, and as we started to gain traction there and customers and notoriety, we took on some investment from a few different angel investors and decided that, hey, there's 150 professional sports teams in the US, but there's 27 million small businesses that need help. And so we transitioned the tech, and we still do have a sports wing, but transitioned to tech from simply or exclusively sports to also helping companies decide, hey, who has what it takes to be successful here? Who has the mental makeup to succeed in our unique environment, and at the end of the day who has the highest probability in the candidate pool to be a successful member of our team? And so SENTIO was born there and since then we've actually received more funding, more accolades, and we were able to bring really talented, smart people like Chad here onto the team, and we're in hyper growth stage right now.

Shantel: Wow. So you started this in the dorm room and then have since scaled, taken on investment and continue to grow. So have you been through a job interview yourself and kind of challenged with trying to fit a culture of another company or having experiences there, or this is your first go and you just saw a huge?

AJ: Yeah. I think a really good example of that is I graduated from the academy early to work in the United States Senate, so I worked for Senator Ayotte of New Hampshire. And one thing about being a hill staffer on Capitol Hill is that it takes a very special type of person to be able to be successful under that environment, just like Wall Street where they make you work really hard, you have to be really passionate about the issues, and it's just a very difficult day to day environment to survive in. And I learned, a week or two in, that I really didn't have the mental makeup to be successful there. Not because I wasn't working hard, not because I wasn't putting in the hours, or I wasn't smart enough, but I didn't find much interest in the work that I was doing and therefore I wasn't the best employee or intern that I could be. And so I've learned firsthand what the effects of a bad hire can be, and I wanted to give other companies the tools to make sure that they made the best possible hire so that everyone that they hire has the core values, needs and characteristic traits of the top performers to make amazing hires.

Shantel: Sorry, I think we lost you for a second, are you guys still there? Hello? Hello?

AJ: Yep.

Shantel: Okay. Sorry, it looks like we've lost you guys for a second, so we'll cut that part out.

AJ: It's okay.

Shantel: Sorry about that, not sure what happened. Okay, so I'm gonna jump right back into a question. Okay, so you saw firsthand that you weren't a right fit and so then did you continue to help kind of iterate the software to ... Or actually, back up, how did you figure out what this AI technology is? I'm gonna try to understand kind of what that means, maybe you can break it down for us listeners of like, do you use all these traditional personality assessments and then mold them together? Can you talk a little bit into that?

| PSYCHOLINGUISTICS |

AJ: Yeah, it's a really good question. So, the science of psycholinguistics is not new, it's actually been around since 1936 and it was developed by somebody named Dr. James Cantor. And basically, it states that there's a direct correlation between an individual's psychological characteristics and language they use to write. So when SENTIO analyzes a survey response, we ask all free answer form of questions. Things like, why you want to work here? Tell us a story about your first job, etc., etc. And what SENTIO does is it breaks down that language into millions of data sets, looking at things like word choice, spacing, punctuation, emoticons, syntax, and so much more using machine learning algorithms to build very comprehensive personality assessments based on the natural organic language. Although that science has been around for eight years and validated in research, really until the rise of Artificial Intelligence in the early 2010s, there's really no way for us to sift, soar and use that amount of data instantaneously. Because somebody would have to sit with a book and tally up all the different words, look at the psycholinguistic dictionary as an example, and tally up all of the data sets. So with SENTIO we bring all of those pieces together and build really comprehensive personality assessments that are predictive of an individual's success at a company.

Shantel: Do you find that some of the candidates that are applying, the free form typing, at least for me that would be so intimidating, I know that writing is not a strength of mine. Is there a way that you preface like, it's okay if you're not using the biggest words, or your personality still may fit really well in our organization even if you're not the strongest writer?

Chad: I'll jump in for this one. I actually took the assessment on the way in to my role as the head of marketing here, which I do have a background in writing and definitely was wanting to put that best foot forward in the hiring process. But the way the questions are set up, to go off of a lot of what AJ just gave you, some of them were, tell us where you would like to ... If have three months to go on vacation anywhere in the world, where would you go and why? Those types of questions as well. And it was made known to me at the time that the interviewer doesn't actually see your answers, or your hiring manager doesn't see the answers. So that takes a lot of the pressure off in the sense of, okay, I know nobody's going to see my answer so I don't have to worry about them actually reading the context of what I'm writing. And then the questions themselves start to, again, they're all built to bring that natural language out of you so it's almost it's less about, again, what your actual answer and then what you just have to say. So if you’re somebody, like how we're speaking back and forth right now, if this was transcribed, this could also be utilized in a way for our system because, again, this is how I speak, these are the words that I choose to say, this is the vocabulary that I have and how I emphasize certain words. So all things that, and I don't mean to pretend that I know everything about psycholinguistics, but the intimidation factor I can say personally I was using it, just isn't there because as I got to question two and three, I'm just telling stories at that point. Telling more about my personality and my life.

Shantel: That's so interesting, and such a neat point that the interviewee or interviewer doesn't see the point. So they just see the report at the end to say this person could be a good match?

Chad: Correct.

AJ: I'm sorry, taking that a step further, yeah, they see that somebody would be a good match and it breaks down. We give it a red, yellow, green, kind of score of 9.5 out of 10 is obviously really good versus a 3.2, so you get to see the stacked ranking. But then going with the inside of it, my profile, which I got to see after the fact, of course, my profile shows the attributes of the comparison of the success profile that I was going up against. So I could see, okay, for a piece of my personality like say intellect, where I ranked at intellect wise versus then the rest of the team, or gregariousness, so on and so forth. So you start to see the gap between an employee and your most successful employees as well, so it gives you a lot more detailed information after the stacked ranking.

Shantel: That's so neat. So do employers ... I would love to walk through from step one for someone interested in working with you guys, does the employer give you guys the core values and what's important in an organization? I know you ranked kind of the top employees of that, so how does that process work?

AJ: That's a really good question. So, on our website at www.mysentio.com, employers can sign up for a 14 day unlimited free trial. And during that trial they're asked to send a nine question online SENTIO survey to their top two to five employees in one particular position. So let's say it's like a sales department, the top two to five sales employees completes the SENTIO survey, SENTIO builds all of the mental makeup analyses for the top performers at the company and aggregates all of their collective data to articulate and find what those people have in common mentally. What are the top performers shared characteristic traits, what are their needs, and what are their values via the nine question online survey? Then when you analyze candidates, they take the same exact survey and they're benchmarked against your top performers. So what we think's really important whenever you do predictive analytics is to have a strong baseline. SENTIO does not presume to know anything about your company, we allow the data from the top performers to become that tailored benchmark to ensure that you're only hiring people with the highest possible probability to succeed at your company and your environment and your culture right now.

Shantel: Gotcha. Okay. I feel like I've heard that there's an HR barrier where you can't legally say, "We will not hire you because of this personality assessment." Is that a challenge that you guys you're kind of up against?

AJ: No, we utilize really sophisticated technology, IBM Watson being one of them. So all of the science is validated and the test and personality assessments when administered the same way across the company is completely compliant by all EEOC, Department of Labor and Society of Industrial and Organizational Psychologists.

Shantel: Okay.

AJ: We get that question a lot, so we have a good answer for it.

Shantel: Yeah, no, that's great. I feel like in some of our entrepreneurial conversations, there's some people that are like, "Why I can't have them take a disc profile first and then this, because they may not be compliant." But it's good to hear that you could actually lean on that data and say, "Unfortunately not."

| HIGHEST PROBABILITY TO SUCCEED |

AJ: Yeah. And interestingly enough because of our price point, typically our assessments on average cost 50 cents an assessment. And because of that, we actually find that our users, especially our power users, will introduce it as the first point of contact between a company and the candidate. So when they post a job on Indeed or on their careers page, they actually list the SENTIO survey. So they will look at your SENTIO data first because it's so cost effective, and they'll use it as a screening tool to make sure that they're only interviewing and spending time with candidates that fit their culture and have the highest probability to succeed long term.

Chad: And the thing that's great about that, especially we talk about what HR is concerned about these days, more so than they've ever been, is bias in the hiring process. As somebody that had hired over a hundred individuals myself over the course of my career, there have been plenty of times where I receive a resume and I see the resume, the name on the resume, where they're from geo wise, what school they went to, all this information that allows me to understand instantly am I dealing with a male or female, am I dealing with somebody that is local or they live in another state, or they're somebody that went to college or not, all this kind of stuff as I'm skimming through resumes. Which is a big problem nowadays, you get so many.

If I open up a position, I get about 150 resumes. I can't thoughtfully look at 150 resumes so I have things that I use to skim through them, and this is where a lot of bias comes into the process. I for instance, will instantly reject somebody that's not local because I can't afford to, say, have moving costs incurred with them being hired as an employee. That's one way that somebody might get screened down, which kinda stinks if I was that person that applied for the job because I may be more qualified than anybody else, but was instantly screened out. Now with SENTIO being at the beginning of the process, none of those things are taken to account. As a hiring manager, you wouldn't know anybody's name yet, you wouldn't know where they were from, you wouldn't know anything about their education.

All you would know is that they match up really well with individuals that are already performing really well in your business so that you have to ask yourself, "Wouldn't I want to talk to somebody that has the same characteristics of say, Sarah, who is already a model employee and is doing a great job?" That's kind of a good indicator if they're like her, then I should take the time to talk to them, they might fit ... They at least fit the personality profile, now let's see if they have the actual hard skills to get the job done. So, for us, kind of bouncing out of this question of compliance, not only are we compliant, but we believe we've taken great steps into reducing bias in the hiring process by keeping people out of it from the very beginning until you have a chance to see, hey, are they a good fit for our company, and then in talking to those folks. Does that make sense?

Shantel: Yeah. No, absolutely. I'm sort of starting to think we use an applicant tracking system called Hireology, and they auto send, I think it's 10 questions, it's just a true or false to help weed out some candidates. Because then there's some make or break it questions than if they put yes or no they automatically kind of fail or "fail" that test, but I wonder if there's a way that we can integrate this step in the process of the first one instead of those questions? Do you guys get that question a lot?

AJ: Yeah, we do and we actually have a really good a Google Chrome extension that connects the SENTIO dashboard to any ATS, any job board, any social network, or any email provider. So basically you would go into your current ATS, you'd press the little SENTIO logo and your Chrome extension, it would grab all the existing candidates out of there and with one button you can send them the SENTIO survey and get all of the reports right from your current ATS window.

Shantel: Wow. Okay. Well I'll definitely have to look into that. And let us switch gears a little bit into the pricing. So most of the surveys are less than a dollar, how have you been able to figure out that business model when you're certainly disrupting the industry and I've not heard of something so inexpensive before. So how does that work?

| DISRUPTING THE INDUSTRY |

AJ: Yeah, so we envision, democratize and be use of assessments in the hiring space, and to do so you have to have a low price point. And from our business model, we want to play game of masses where we're working with a bunch of channel partners, we're working with a bunch of consultants, to get to larger numbers faster. And we believe that every company, regardless of size, sophistication and industry deserves the right to have personality assessments. And so with SENTIO, we're typically pitching people who have never used a personality assessment because although the US economy spends $427 billion on hiring, they only spend $3 billion on assessments. And so it's less than a 1% of market share are currently using assessments, and we step in and we're hoping to address the rest of the 99%.

Chad: And to tell you the how, the secret sauce is very much the AI side of things. Like any good technology, it needs to be scalable. So AI and being hooked in with Watson plus then the actual platform that we have on our end, at this point, it's all set up. So our cost of goods sold or our COGS in this are low in comparison to then the market that we're disrupting, which is things like, say, Wonderlic. With a Wonderlic or a disc assessment or anything like that, you actually ... The reason that price point is so high is because they have more mouths to feed in the process, for instance, somebody actually has to come and administer the test, so you're paying for that person to administer the test to your person. And then you're paying that same person to tell you what those results were.

So at that point, when you start to get an actual human being involved, administering the test, reading the results out for you, actually to process the results because they're not being, as we were talking about earlier, somebody's actually taking the time to tabulate all of this out, and I'll put somebody up there that's like this, and that's my wife. My wife is a neuropsychologist and actually does test batteries with patients and she, as a doctor does, has a healthy salary because she's spending the time to actually do the full assessment with somebody and take ... She doesn't do personality assessments, but it's the same concept. So that's why all of our competitors have such a higher price point because they're not actually utilizing technology to run the test, they have human beings doing it. So instead of being 50 cents, they're $250 in assessment.

And that's why you find assessments are only used on C-level, C-suite individuals, or managers in a VP role, things like that, which is good and is important to do, but when we look at who's the face of your brand and the face of your product, usually it's the cashier at Chick-fil-A, it is your outbound sales rep, it is the server at your restaurant. And those are the individuals you want to make sure also are competent and representing your brand well, but you wouldn't be able to or wouldn't be feasible to spend $250 to have an assessment done on them. So that's where we come in with an assessment that actually can be administered easily, self serve and cost effective.

Shantel: I almost see that there could be a place for both, and I'm eager to hear your thoughts on this. For us, I would love to just know is this person going to work out because, I think there's statistics like it's costs you 12 times that hire if it's a wrong hire, so how up front can we figure out if this person is going to be a great fit? But then once they're on board, we found some of these other types of personality assessments really helpful just in understanding how to work with each other better, if you are a D and I'm a C, how can we communicate and bridge that gap because that C may be really helpful for the role. Do you guys kind of find that maybe there is still a place for both, and maybe leaning on some of the other types of assessments once they're in the door to create some nomenclature around different personalities?

AJ: Yeah, absolutely. I think humans are incredibly complicated, the mind is probably the most complicated thing that anybody has ever tried to tackle. And the more data you have to be able to screen somebody, hire somebody, have a conversation with somebody and then work with somebody, the better relationship you're going to have. And although SENTIO is very predictive in nature for the reasons you just mentioned, people still might use some of those older fashioned personality assessments for workforce development, professional development, organizational development. Which I believe people can still use SENTIO but to get it more in depth look, there's certainly other alternatives to that.

Shantel: Let's chat a little bit about maybe the biggest challenge that you guys are facing right now, or one in the past that really comes top of mind that you're excited to be past and learning from?

| A FUN CHALLENGE |

AJ: Yeah, I think right now, we're still trying to determine the appetite for personality assessments in different markets. So the beautiful thing about SENTIO is that there's so many different applications. We can help car dealerships, restaurants, retail, tech startups, colleges, and the list just goes on and on and on. It seems like every single day we have a fun discussion about a different vertical we can go. The biggest challenge I think we have right now is putting our foot in the ground and going up one or two verticals that we know have the highest conversion rates. So, right now from a business perspective, we're doing extensive user testing once people are on the site, but also with marketing to determine where our ads go the furthest.  Where can we place an ad to a specific type of person, they come to our website, they react really well to our content, they sign up for a free trial and in the end they convert to a paid subscription? So although it's a fun challenge, it's a really important one and we certainly want to address that and capitalize on that as quickly as we can.

Shantel: Yeah, I can imagine kind of going down a rabbit hole of, well, we could help this industry, and we could ... It's for everyone, but I certainly from our experience, too have seen the value of creating a niche and being kind of that subject matter expert in a specific field, and then slowly maybe moving onto another one once you've got that.

AJ: Yeah. Our team is amazing, we're all so excitable and passionate and so when we go off on a tangent, we can go really, really far. So it's really important for our team that to stay focused and really go where the metrics take us.

Shantel: And where ... What does that look like right now, today?

Chad: So right now, the audience that this is resonating the most with is, in all the industries that we could tackle, there are certain ones, like you brought up the stat of if you lose an employee, it cost you 14 times what it costs to even get them on boarded and all that kinda good stuff, and all the opportunity costs you lose. Those are all dollar signs and that's important, but there's an industry out there that a bad hire has far more negative affect and that's in the care industry. So when we think about childcare and we think about longterm care for the elderly, it's an unfortunate situation in this day and age that we see articles out there where, for instance, would be a child care facility having a pseudo fight club for toddlers going on underneath somebody else's care.

And that's most certainly not a hard skill thing, that's a behavioral thing, so that is something that a background check can't find. If somebody has been able to hide bad behavior previously or has not actually had any sort of criminal offense, an organization hiring somebody to work with children or with the elderly won't get a chance to see that. Now, on our side, we know that we can tell you more about their personality of course through our system and being able to take your employees that are already good, don't have these kind of bad behaviors going on, and at least then predict their success. And that's really important to those industries because they have core values, they need to know that the personality's right because so much of that job is personality based. Being able to work well with children, to work well with the elderly, so on and so forth, same thing for nonprofits.

So really, the industries that are focused on making sure that their volunteers and their employees are a great behavioral reflection of the business, really care about what their mission is, more so than just I know we all want to work for an organization where we care about their mission, but there are certain ones out there where the mission is the business, and childcare and elderly care is one of those. So that's the audience that is resonating the most right now. So yeah, and we'll want to go after them even harder because that to me is most certainly a noble cause. I'd like to know that we're helping place the proper people inside the care industry.

Shantel: That's a very good point. And I love the point about being noble and that it kind of it tags at your heartstrings and like, wow, what an impact SENTIO software's making on positions and companies that would have otherwise in the past not known how to filter out for that. So I think that's amazing. Just a couple more questions for you guys to wrap things up, would love to hear, one, AJ, are you still coding and behind the scenes revising the software?

| PEDAL TO THE METAL |

AJ: Yes. I don't think that any great software is ever complete, so I'm developing and we're making iterations to the product almost weekly. So three weeks ago we launched Boost, last week we launched ATS functionality to help some of the smaller businesses that don't have ATS right now. So we are pedal to the metal on development and we want to continue to build tools to really change the HR space.

Shantel: That's great. Well, what's next for you guys, what's on the horizon?

Chad: Well honestly, the next horizon since we've locked down the ATS functionality and Boost so now, no matter how you hire or what your hiring processes is or your tech stack, you can utilize the SENTIO assessments, that was a big thing for us to get out of the way. Now it's getting to our next milestone, not to make it too businessy, but our next milestone for customers to get our next round of investment. So we've had great angel investors that have put a significance contribution into this business, and it's our job to get to the next critical mass to go out for the Series A.

So within this year, well actually within the next couple of months, we'll be going out in our next road show to get that next round of funding. But instead of just coming with our first grouping of customers and our concept and the beginnings of the software, the beginnings of the platform, we'll be coming to the table with a more mature piece of software and a far larger customer base and looking to scale up a lot faster than what we currently are not only product wise but customer wise. When we think about what hiring managers and HR professionals need, they need an all in one solution, nobody likes to bounce around from tools to tools. So the future of SENTIO most certainly will be building and buying to make sure that we can be that all in one solution that an HR professional needs on the hiring side or the talent acquisition side of their business.

Shantel: Well, we're certainly excited to cheer you guys on in this next phase. How can people get in touch with you, learn more about SENTIO?

Chad: So, www.mysentio.com is our websites, there you can do a 14 day trial and completely utilize the system. So if you are hiring, Shantel, if you are hiring somebody here in the next two weeks, you can use our software, go ahead and get a profile on some of your top performing staff members, and utilize it all the way through. We don't block anything, we most certainly believe that once you use our product, then you're going to want to come back and use it again and again, and that's been something that's worked out well for us. So definitely go to the website, get a trial, and then call us with any questions. We are always available to walk people through this. As AJ said, for a lot of folks, they haven't been able to afford assessments previously, so they haven't had it as a part of their hiring process. So we're taking the time to educate and more than happy to talk to anybody that wants to give us a call.

AJ: Yeah, and on that, feedback is really important to us as well. We built the business on the backs of case studies with really dedicated people who have helped us get into HR offices, and so we have built a really comprehensive because of amazing feedback we've heard from people who are in the trenches doing this really difficult work. And so as we use the platform, feel free to drop us a line, it's info@mysentio, or we have a chat box inside the platform just to tell us how we're doing. If you'd like a button on a different side, if you'd like additional functionality. I know some tech companies don't like that because they feel like they get too horizontal, but right now we want your business, but we also want to grow with you and we'd love to hear some of the challenges that you're experiencing today in HR.

Shantel: Well, great. Well thank you guys so much for sharing, I'm excited to chat more offline about the software and I appreciate you carving out a few minutes to share your story.

Chad: Absolutely. Thank you for your time.

AJ: Thank you.