“It took us almost two years and three pivots to finally launch our product” – Jignesh Talasila, cofounder, Loop Reality
Having a vision is one thing but having the conviction to change it to match the ground reality is the real test of an entrepreneur. Talasila started with the vision of creating a world-class 24×7 global education lab using VR applications and devices but had to pivot to the fitness industry and then finally into the $750 Mn worth Indian talent assessment services market. Globally, this market is even bigger with a size of $4 Bn, growing at a rate of 10%-15% Y-o-Y.
Talasila with his four cofounders — Sai Suraj Vanka, Ravi Theja Muthu, Raviteja Koneru, and Karthik KV, had to be alert all through this time and make several tough decisions over the three years for their VR startup Loop Reality. Startups are usually stuck in the dilemma of whether to adopt a B2C or B2B or B2B2C model, and Loop Reality also went through this phase.
Talasila knew that the aim was to use VR technology to fill the existing gaps in the education sector. “That’s [Education] where we come from and this became the foundation for Loop Reality and our flagship product PerspectAI, ending up with B2B talent assessment model,” begins Talasila.
While Talasila and Vanka had earlier cofounded edtech startup Dirt9 Education, the two other cofounders had worked in education brands like XSeed Education, Xamcheck, Helios Training & Consulting and more. “As high-end VR devices like Oculus Rift and HTC Vive were launched for consumer use, for the first time globally, all we knew the timing could not be more perfect for us,” Talasila said.
It’s been nearly a year since the Hyderabad-based company pivoted to a talent assessment service, and it is up against established HRTech players such as Mettl-Mercer, Wheebox, among others. Loop Reality offers an AI-based tool to assess and quantify human potential at modern workplaces, all by using games and simulations on VR and mobile platforms.
Part of T-Hub, Telangana’s state-back incubator, and Facebook’s India Innovation Hub Accelerator Program, Loop Reality, claims a monthly growth rate of 10-15% and counts Maruti Suzuki, Virtusa, Angel Broking, Saint Gobain, KCP Cements among its clients. The company also counts Mettl’s (acquired by Mercer in October 2018) early backer and Chief of Psychology Dr Puranjaya Singh as a strategic investor and Head of Strategy.
Three Great Ideas But No Success
Loop Reality was initially started as a VR-based K-12 education lab. However, the founders realised that they need original educational content and content creation at this scale is a costly affair. At this time, VR device would hit stores with MRPs in the range of INR 80K – INR 90K, which drove up Loop Reality’s VR-education kit price to INR 2 Lakh – INR 3 Lakh.
“We tried getting external funding but were not successful, so the idea was dropped,” recalled Talasila.
That’s when Loop Reality moved towards creating VR content for the automation industry. While they saw initial success and also were able to convince a company to help them create a proof of concept, however, they were not able to commercialise it.
“We waited out the first two months, but then we knew that we are on our own again. At the same time, the cost of VR devices started coming down, so we again shifted our focus to consumers,” he added.
To survive the rough weather, Loop Reality’s team started taking side projects building VR PoCs for enterprises, especially for L&D needs to keep the company running. During one such side project, they realised that gyms have a problem engaging customers. “People Pay for the gyms but rarely uses because of lack of personal attention and engagement. We thus decided to look at VR for Fitness,” he added.
Now, Loop Reality was incorporating their VR hardware into an exercising bicycle and a wearable prototype, named LoopFit. The idea was to turn cycling into a gaming zone where users could cycle with their friends in a VR environment and could compete at different levels and different environments.
The response received was phenomenal. Not only did they get global media coverage but also took their product on a showcase tour around India, in Silicon Valley and Europe.
However, they realised they would need external funding of roughly INR 2 Cr – INR 3 Cr to bring the first 100 pieces to market. And thus, they had to hit the pause button here as well.
“In 6 months, we talked to 55 investors, but VR’s low popularity in India and absence of success stories in the fitness segment made it a risky bet for them. Though a few international investors were interested, we would have had to move our base to their country. With already limited resources and without a proper commitment, it was not a wise decision for us,” reminisced Talasila.
The Ray Of Hope
These failures took a heavy toll on the Loop Reality team, admitted Talasila. “That’s when we met one of our mentors, Abhay Deshpandey who asked us the fundamental question — What problem did you want to solve initially? And as we pondered on it, everything started coming into place.”
That was August 2017 when VR was hitting mainstream and prices had fallen to around INR 25K-INR 30K per unit. But B2C VR education was still not an option as a model like BYJU’S required a lot of capital to start and scale. Talasila focused on three keywords — Enterprise, VR and Education.
As per a World Economic Forum report, by 2020 the most in-demand skills will include complex problem-solving, people management, emotional intelligence and cognitive flexibility, among others. However, Loop Reality found that most of these skills could not be easily measured in a paper-pen test. The problem is especially apparent when administering these tests to tech-savvy candidates who showed better engagement when using technology.
“VR and education is a good model to help companies get successful recruitments and groom the successive leaders in their organisation. This time, we didn’t have the option to fail,” said Talasila.
The VR Opportunity In The Indian Talent Assessment Market
The two fundamental areas of HR industry are diagnostics and development. While diagnostics deal with understanding whether a candidate is a right fit for an organisation, the development aspect is about upskilling internal leaders and top performers with learning programs and ancillary training.
One of the common issues in hiring is candidates not understanding the role they are applying for. Often, this is the case with early-stage workers or entry-level positions. Standardised video interviews fall short in understanding the abilities of the candidate, and thereby can create false positives, or are even prone to bias for a particular type of candidate, rather than the most suitable fit.
At this point, India already had edtech players such as Udemy, upGrad, Unacademy to upskill professionals, but players in talent assessment space were only just scratching the surface. “We decided to keep ourselves focused on diagnostics for a start with standard content, which is applicable to most industries and multiple job roles, and create a differentiation here with VR and games,” he said.
“When we started with VR in candidate assessment in India, this was entirely a new segment. With the help of our mentor, we got a one-year runway with INR 1.2 Cr angel funding in November 2017 at a valuation of $1 Mn. We finally got our much-awaited start,” said Talasila.
When you look outside India, VR-based talent assessment is not a new concept. Globally companies such as KFC, Google, Walmart, and even the US Navy are using virtual reality to help assess their candidates, explain the role and to design training modules for existing employees. Additionally, HRtech companies such as Capp, Actiview, Immersive, STRIVR are increasing the penetration of VR assessment tools in these markets.
In India, however, it is yet to take off. India-based HRtech companies such as Monjin, Wheebox, Centum Learning, Interview Mocha, HackerRank, are largely using social media monitoring, video interviews, skill tests and remote 15-20 minutes online Q&A-based tests to assess candidates.
Other HRtech companies in India are utilising the cloud for gamified assessments. For instance, Talview offers virtual machine-based simulations, while HireVue uses gaming-based cognitive assessments integrated into a video interview panel shared with both the company and the candidate during the assessment process.
Then there is Pymetrics which offers neuroscience and AI-based games for assessment at an early stage of the recruitment, while another company Vervoe provides a library of structured assessments from experts for different industries.
The Long Road To PerspectAI
The Loop Reality team launched the official website of PerspectAI in April 2019. Even though the PoC was ready in February 2018, the team of 11 took more than a year to work with more than 20 companies in different industries and build the solution around specific enterprise needs.
Taking a cue from its global counterparts, Loop Reality started their search for psychology experts and professors who could create and administer content capable of assessing the cognitive abilities of a candidate. In the next three months, they onboarded PHD holders and postgraduates from universities such as Oxford and Cambridge.
Finally, in July 2018, Loop Reality launched its product officially and started reaching out to enterprises. After months of struggling to land big clients, Loop Reality signed up global IT company Virtusa.
“This was a turning point for us. We soon signed Maruti Suzuki and Angel Broking and got in talks with firms like Accenture,” he said.
At this point, the company was working on a pay per candidate per assessment basis, charging between INR 799 and INR 1499. It also started receiving orders for enterprise bulk assessment for 20K – 30K candidates. The company also got a query for campus recruitments.
Campus recruitments are usually a one-day affair and involve 100-200 candidates at least. This prompted Loop Reality to add a mobile app solution similar to global peers using games and simulations along with an AI-based video interview session
How PerspectAI Delivers Value To Organisations?
Loop Reality’s PerspectAI works on predictive analysis methodology. During the interview, the candidate is exposed to immersive VR-based assessment tests, which last for up to 20 minutes. The test gauges the candidate’s cognitive skills, personality fit and culture fit through contextual simulations, and non-contextual games.
Each move the candidate makes (based on what they see, point out or say) is captured and put through deep learning analysis and advanced behaviour monitoring techniques using their proprietary methodology called ” Reactive Index”
The assessment generates behavioral heat maps based on VR simulations, where the density of values is represented as various colors. When this heatmap is overlaid on a 3D model, it provides Loop Reality with spatial information about which behavioural traits have a higher density in a candidate.
Heatmaps are also a lot more visual than standard analytics reports, which make them easier to analyse at a glance. These heat maps allow PerspectAI to understand how a candidate has performed in a given simulation on multiple data points.
When it comes to the scoring, the PerspectAI team collects the job description (JD), key performance areas (KPAs) and key result areas (KRAs) parameters from the company for any given role. For every 100 candidates tested, the team selects the top 30 performers and 30 non-performers. “The game scores collected here is termed as Potential Score whereas the KPAs & KRAs help us create a Performace score and this forms the basis of our data for future reference,” he explained.
In remote assessments, a link is shared with the candidates to download the app. It has video interview along with games, where the relevant questions appear on the screen to which the candidate responds looking into the front camera of their mobile phones. Candidates are assessed on the basis of the words used, expressions, voice modulation by AI algorithms to understand their Personality Traits, Subject Knowledge and Soft Skills. With this, a Speech & Facial response profile is built.
While hiring, the scores of candidates are compared against scores of top performing employees. This is used to produce the final score for each candidate. At the same time, PerspectAI creates a success profile for each role in the company for long-term use.
Targeting Better Revenues, Better Growth Rate In FY20
Talasila believes that PerspectAI has gained an edge by bringing together game science, data science and people science. Onboarding psychologists who are traditional in their approach, making them believe in games and creating VR content was a huge challenge for Loop Reality, which it has overcome.
Loop Reality team had an added advantage of knowing the local context which global companies do not. This is the biggest reason why US-based Mercer acquired Indian startup Mettl. The challenge in developing for India also creates a strong entry barrier for global companies, thus putting the likes of Loop Reality at an advantageous position.
With the official launch of PerspectAI, LoopReality is looking to expand its client portfolio and generate larger revenue. It attained operationally breakeven status in January 2019 and is looking to grow at a rate of 15% -20% on a quarterly basis. It is also looking to create a module repository for different domains such as sales, IT&ITeS and industries such as airlines and oil and gas in the near future.
Further, Loop Reality is hoping to take its India experience and use it to expand to Southeast Asia as well as the US markets.
“That’s the beauty of Indian market. This market is so diverse and poses so many challenges in terms of data collection, validation, along with privacy and protection policies. Capturing this market automatically opens a door to the other side,” said Talasila.