INSUBCONTINENT EXCLUSIVE:
Catalyte, the Baltimore-based coding training and placement service, has launched a new software service designed to take its machine
learning-based skills-assessment and training program to companies around the country.
With revenues already approaching nearly $100 million
for its outsourced software development services, Catalyte is hoping to take the lessons and tools it has learned and developed over the
course of its 18-year history as a staffing and training company for the tech industry and sell them to companies looking to retrain or
provide additional skills development opportunities for their employees.
Even if we were the largest employer in the world we still would
not be able to move the needle on the labor economy,& says Catalyte chief executive, Jacob Hsu.
He sees the company mission as providing a
critical step for companies to identify the employees in their workforce with the skills to become coders and an opportunity for those
employees to then receive the training they need to move into higher-paying roles as software eats into low-skilled, repetitive labor.
We&re
encouraging all of these employers to deploy these up-leveling skills,& Hsu says.
At Catalyte, the company success has hinged on practicing
what it preaches (and what it now selling)
Launched in 2000 as a staffing service in Baltimore called Catalyst Devworks by a former White House economist, Michael Rosenbaum, the
company expanded to locations in Chicago and Portland and offers training and workforce development through contracted consulting projects
with companies.
Photo courtesy of Getty Images
The company recruits come from anywhere and everywhere and hiring hinges on a skills test
would-be employees have to perform that is monitored by software that tracks how test-takers respond to the company questions.
Once an
applicant passes the test, they&re brought in for training and given a two-year contract during which time they&re put to work on
development projects Catalyte has won from customers like Under Armor, Aetna, AT-T and Microsoft .
Catalyte developers are paid roughly
$40,000 per year (less than half of what a developer typically makes) while they&re working under the two-year contract and are then allowed
to seek employment outside of the company
Any employee that breaks the mandatory two-year contract is subject to a $25,000 penalty, according to a report in &Fast Company.& As they
enter the third year, their contract with Catalyte gets renegotiated and employees who stay with the company can earn at least
$75,000.
We&re taking people from all walks of life,& says Hsu
&The average salary is $25,000 for people who have come in to the program… But within five years from working with the company, the
average salary is $98,000.
It this kind of narrative, and the company solid revenue, that attracted investors like Steve Case, who backing
Catalyte through his $150 million Rise of the Rest Seed Fund.
In 2018, Catalyte raised roughly $27 million in a round of funding from Palm
Drive Capital, Cross Culture Ventures, Expon Capital and the Rise of the Rest Seed Fund.
The relatively novel approach to training and
hiring (with some of the company recruits even coming in through Craigslist ads that pitch getting paid for learning to code) has netted
Catalyte some impressive statistics when it comes to the diversity of its workforce — another important criteria for Case Rise of the Rest
fund.
When you use this approach to hiring [in a city]… you end up with a workforce that similar to the demographics of a city,& says Hsu
In Baltimore, the company workforce is about 29% African American and 30% of the developers are women
The average age of a programmer in the company workforce is 33 years old and education levels range from about one quarter with only a
college degree to college-educated candidates.
Catalyte growth over the past three years has been nothing short of explosive
The company went from 50 employees in 2016 to around 800 people on staff now.
That staff is critical not just to the company current
business model, but also served as a training tool for the machine learning and assessment tools that Catalyte is now trying to sell
&We spent over a decade collecting outcome data from engineering projects,& says Hsu
And that data was what was used to create the company metrics for whether or not a candidate for a programming job at the company would be
successful.
The company intends to bring its assessment tool to market in the fourth quarter, but on the back of its recent fundraising,
Catalyte has been ramping up its research and development activities
It wants to begin putting together a curriculum around cybersecurity and site reliability engineers
The software will cost roughly $1,000 per seat for every employee that receives its training regime.
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,& said Case in a statement discussing Catalyte financing last year
&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.
While the company is growing its product pipeline, it also intends to expand the number of development and training centers it
The plan, according to an interview Hsu gave to the local technology news site Technically Baltimore in February, is to have 20 development
centers around the country by 2020.
