Staffing Industry Spotlight: Ken Schumacher

In this installment of Staffing Industry Spotlight (sponsored by Ascen, a leading back-office and employer-of-record for staffing agencies), we sit down with Ken Schumacher, Founder & CEO of Ropes, to tackle one of the most pressing threats to modern recruitment: candidate fraud.

Drawing on his background as a software engineer at the high-growth startup, Ken shares a deep dive into the dual challenges of "personhood" and "skills" fraud—a "cat and mouse" game fueled by the rise of AI tools like ChatGPT and real-time interview proxies. The conversation explores the shifting landscape of technical interviewing, the emergence of "ghost payroll" scams, and how savvy staffing firms are turning rigorous verification processes into a powerful sales differentiator to win exclusive contracts with Fortune 100 clients.

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Francis Larson

Ken, thank you so much for being on the Staffing Industry Spotlight. The first thing we'd like to know is who you are and what you do.

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Ken Schumacher

Excited to be here, Francis. My name is Ken, and I'm the founder of a company called Ropes. We are trying to fight the candidate fraud problem that seems to be getting worse week over week. Essentially, we help our staffing partners fight two kinds of fraud:

First is personhood fraud: when a candidate applies, is this candidate real? Am I really Ken? Am I really in New York City? Do I have a valid driver's license? Am I the person that I claim to be?

Second is skills fraud. Once you know I really am Ken, do I have the skills I claim? Things like ChatGPT make it really easy to write anything on a resume. There are tools that help people cheat through recruiter interviews. Those are the two things we're really trying to fight: personhood fraud and skills fraud. It’s been a fun journey, and I'm excited to jam on it.

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Francis Larson

How did you get to this? I know you focus on staffing companies, but how did you get into this whole fraud thing?

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Ken Schumacher

I was an engineer at Retool, a startup that is an incredible place to work. I got to hack on AI projects back in the early days of ChatGPT 3.5. The one part of my job that I did not enjoy was giving technical interviews. I would sit in a phone booth, give a coding algorithm question, and watch people code for 45 minutes. It’s incredibly boring, but it had to be done because hiring is really important.

The original thesis of Ropes was: could we build a technical test that mimicked a live interview? Retool could win back many hours and hire people more quickly. We were one of those hot Silicon Valley startups that could source from Harvard, Penn, Stanford, and Berkeley. But we received hundreds of thousands of applications from people who didn't attend those schools but were still great programmers. If you had a test that could democratize access (where everyone gets the equivalent of a live interview) the best people would get hired.

That ethos is still baked into Ropes. We originally sold it to in-house Talent Acquisition. A staffing firm accidentally picked up Ropes (I won't name who), and a seller hopped back on a call with me, bragging, "Ken, I just closed a three-quarters of a million dollar deal with your product." I asked what he meant by signing revenue with my product, since I was only used to people saving hours. He went to a major BFSI client and said, "If you are willing to come on paper with me, I will test every candidate I send to you on Ropes."

Our challenges are built as job simulations, so you can build them custom to a job requisition. That set off the alarm bell that Ropes is a real differentiator for staffing firms. We pivoted hard into the staffing market about 18 months ago and have found a number of great customers since.

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Francis Larson

You mentioned technical interviewing. How did the fraud piece evolve? With this staffing customer, were they selling the fraud piece like personhood, or was it really on technical interviewing? How did that develop into these two types of fraud?

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Ken Schumacher

The problem they were solving, although they didn't think about it this way at the time, was skills fraud. They had recruiters reviewing resumes, but they were starting to learn that resumes don't provide much signal about whether a candidate is actually good. Their goal was to use this test to go to a client and say, "Everyone else is sending you a resume, but I'm going to send you Ken's resume and Ken's result on Ropes." Fraud became much worse, and we were in the right place at the right time to address both. When someone shows up for a 20-minute skills check, it's a good time to verify their ID and confirm their location and address.

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Francis Larson

That makes sense. First of all, what's a BFSI client? You said that word a couple times.

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Ken Schumacher

Banking and Financial Services. Think about the larger banking vertical.

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Francis Larson

They really care about this because it's so sensitive. For the skills component, how does Ropes ensure that, during this test, they're not being coached by Cluey in the background? How do you prevent that kind of fraud that is very hard to detect, like another screen or a listening device?

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Ken Schumacher

It's hard, and we see all kinds of wacky stuff. You called out one of the big tools we worry about, called Cluey. You can think of them like a teleprompter. It's looking and listening to the questions you ask and feeding answers. A recruiter might ask, "Ken, tell me about your React experience at JP Morgan Chase," and it starts feeding me a script to read. The funny part is that the recruiters asking the questions are also using AI to generate them. It’s like a cat-and-mouse game.

We rely on proof. I never want to take somebody's word, whether it's a LinkedIn profile, a resume, or even a background check. We want the user to prove in the moment that they know Java or that they are in the right location and have a valid green card. We don't ask candidates to describe their coding experience; we ask them to write a little bit of code. Because the user takes a test on Ropes, we have monitoring in place to detect some of the things you mentioned. Prove to me you know these items. That matters for our clients and their Fortune 100 clients.

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Francis Larson

It sounds like you're adding a level of friction. Cluey can help you answer questions, but you have to be so sophisticated to go into someone else's environment and solve the challenge on the fly. Do you think we'll ever be at a point where you have to do it in person, like a proctored exam?

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Ken Schumacher

Without a tool like this, that's where the world's going. You’ve heard of Google, Meta, and some of the big tech firms literally flying people out to interview in person. People are having those real conversations because the issue is so bad. I don't want to get there because that's extremely expensive. More generally, people will hire fewer people. This problem is preventing hiring or delaying time-to-fill. It’s really hurting the staffing space because when a hiring manager goes for a contingent worker, and that worker is fake, it's a horrible experience. The next time around, they're just going to reach for a full-time employee or one of the big firms. That’s what we're trying to avoid, but there's no doubt that it's a real problem.

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Francis Larson

Let's talk about personhood fraud for a second. What kind of fraud vectors are there? What are they trying to do, and who are they?

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Ken Schumacher

I could fill hours with that, but I'll hit on a couple of the big ones. First, you read a lot of headlines on North Korea or bad nation states. Those headlines are very real; we see that stuff literally every single day. However, most bad actors are simply people who want jobs. Whether it's resume puffery or bait and switch, it's a tough job market and people are motivated to find work.

The number one target of these schemes is staffing firms. You can go on Facebook and type in "IT interview proxy" and see groups with tens of thousands of members sharing which firms are easiest to target. We see baseline fraud rates of 35%-40%. Proxy interviewers are one example: you pay someone to take a technical interview on your behalf. People will also pull a bait-and-switch, where a real, experienced candidate interviews and then outsources the work to someone else after securing the job. We also see people in the wrong location who are willing to lie to secure a job and plan to move after they secure it. There are dozens of use cases that staffing experiences every day.

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Francis Larson

I'm curious about criminal hackers—people who are just trying to get into company systems. Do you see that too? Hacking or social engineering attempts?

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Ken Schumacher

Yes and no. Sometimes the scheme is to obtain a job through contingent labor to access data or passwords. Hiring can be a vector for that, but honestly, it’s used less in hiring because it’s easy enough to just trick one firm. Staffing firms are being targeted because there’s not a lot of tech in place to stop them, so it's relatively easy to get to the client. There are only one or two interviews to pass once you're there. It's a fast path to enter the Fortune 100, which creates a significant challenge for these companies. The community is coming together to try to find ways to stop this.

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Francis Larson

So it's less about criminal hacking and more about somebody trying to get a job while not being who they say they are. One thing we've seen is a worker who's overemployed, working with multiple companies or outsourcing. Does that come up too?

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Ken Schumacher

Moonlighting, as our customers call it, is huge. Someone will be working one job during the day and another at night. There was a story of a guy working in startup-land who was working at seven companies at once. A lot of those bad actors are actually really great developers. There was a story about a Fortune 100 client whose infosec team discovered that someone was lying about their location. They went to the hiring manager and told him the employee was a bad actor and needed to be let go immediately. The hiring manager asked, "Do I have to? He's my best developer. Can he finish his project first?" These guys are great, and that's how they're able to work multiple jobs, but from an enterprise standpoint, there's a huge security risk.

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Francis Larson

Where do you see this trust layer stuff going? Do you see expanding into other parts of staffing companies' business, or working with non-staffing companies? Is it only for developers?

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Ken Schumacher

Both. The problem is widespread, but we focus on the areas most affected: IT and staffing. The platform already offers a wide range of skills we test and jobs we support, including cyber, front-end, back-end, infrastructure, and AI. We focus on contingent and IT because many roles are remote, and staffing is where these bad actors are lining up.

Staffing has always been about trust. The big transition we see even in our customer base is people moving to more exclusive requisitions—moving from a Vendor Management System to an exclusive or Statement of Work model. Contingent leaders are shortening their programs to rely on fewer vendors while maintaining strong trust in those vendors.

While this candidate fraud stuff sucks, we see it as a huge opportunity. Every contingent leader has an infosec team that really cares about this problem, and they have a reason to buy. If we can equip our staffing partners with the right answers to those RFPs or compelling proof points for every candidate they submit, they can win a lot of business. That’s the reason why we’ve found a lot of success over the last 18 months.

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Francis Larson

Have you seen ghost payroll issues come up?

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Ken Schumacher

That’s more in your world, but tell me more about ghost payroll.

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Francis Larson

Ghost payroll is a problem with staffing companies. Basically, someone tells a staffing company they are a software client, and they have ten people to put on your payroll because they can't get the right insurance or their payroll provider no longer works. They ask the staffing company to pay these people, and they'll reimburse them right away. These people aren't real, or they are stolen identities. The staffing company starts paying these people and billing the client, but the client doesn't pay. These people walk away with $100,000. It's a really easy way to clip $100,000. There are variations, such as creating a fake client through a middleman or using slightly off invoices and domains. BlackRock just lost like $500 million from this. The domain names were just a little bit off from major telecoms, like "AT&TT." They got $500 million from this little scam. In the staffing space, the money goes through people who are fake.

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Ken Schumacher

It overlaps in our world for sure. There are a lot of good people in these firms trying to smell this stuff out, and they're sometimes pretty good at it. Recruiters play detective with weird tricks like asking for your favorite coffee shop or cross-referencing on LinkedIn. It’s not a very consistent approach, though, and someday you’re going to miss the extra letter. Software tends to do it a bit better.

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Francis Larson

I'm assuming with Ropes, by confirming personhood and skills, you're stopping a lot of attacks even though you don't have to understand why they are attacking you. You just need to know that this is the person they say they are, and they have the skills.

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Ken Schumacher

That’s exactly right. There’s a lot of surface area for these folks to attack. If you’ve got these mechanisms in place, they tend to just go next door. There are both the real and perceived notions of safety. We’re actually not in the business of failing candidates; we’re in the business of passing candidates and labeling people as good. There are a lot of really great authentic candidates, but they don't have the very best resumes because ChatGPT wrote a better one, or they don't bubble up to the top of your search. We feel best when we can find that authentic candidate in the rough and share that with a firm like JP Morgan, BlackRock, or Apple to get them an interview and a job.

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Francis Larson

It's interesting because people can basically write a resume that fits the job description so nicely that you really can't tell. Like you mentioned, it's AI on AI, a cat and mouse game. Stepping back a bit: how are you using AI today, and where do you see it helping in the future?

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Ken Schumacher

Internally, as a tech company, we leverage this stuff a ton, mostly on the engineering side. I tell our customers that I expect these job requisitions to change a lot. There’s a lag from new capabilities coming out to a Fortune 100 firm hiring for those positions. Ropes probably sits very near the top of the tree. The moment new capabilities are available, our engineering team is scouring at the bit to use them. Some of these models are impractical; most of our engineers are currently writing code in English. It's a completely different paradigm. It will take time to trickle down, but it will.

I’m pretty excited about the future. Staffing has always been about trust. The fact that the industry continues to operate so well despite all the very severe problems in our space is a testament to how robust it is. If we can start weeding out some of these fakes, reducing time-to-fill, and delivering better experiences with contingent labor, they'll continue to reach for it. If you're a staffing firm and you didn't adopt tech 10 years ago, you were all right, but I don't think that's true now, and it definitely won't be true in two or three years.

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Francis Larson

Let's talk about interviewing. Video interviews for remote work are very difficult. Do you guys have an interview tool in your product?

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Ken Schumacher

We try to focus on the areas that we can really deliver well. Staffing firms are my customers, but their clients are also my customers. Often, a customer of ours will bring Ropes to their client, and the client will already be familiar with them. We want Ropes to be really trustworthy. We focus on technical testing and personhood—the black-and-white checks. We don't do soft skill interviewing like "is this candidate motivated?" or "are they a good person to work with?" We do some video interviews where people want to hear a candidate talk for a couple of minutes about their background while still looking at those integrity checks, but we don't try to replace that human-to-human interview.

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Francis Larson

I'm curious if you've heard about this strategy. I heard of a recruiter who tells candidates to close their eyes during technical video interviews so they can't read from Cluey. That could obviously be hacked, but have you seen other wild ways people try to do this?

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Ken Schumacher

I've heard of wanting them to hold their phone behind them so the interviewer can see their screen. Some interviewers take candidates for a walk during the interview so they can't be in front of a fake screen. I commend people for going for it, but at the end of the day, there's just going to be more ways to get around this stuff. Interviewing is challenging, and we spend a lot of time with our clients helping them pair on what a final interview could look like.

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Francis Larson

I'm curious what's going to happen with the AI on AI stuff. Congratulations on winning the Collaboration X Shark Tank back in September. Since then, the product has developed quite a bit, and you've sold it to some amazing staffing companies. Are you seeing larger companies sending every candidate through you, or only a subset?

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Ken Schumacher

Short answer is yes. There are some roles that we just don't need to run. If you are doing industrial engineering and someone's going to show up on-site five days a week, it doesn't make sense to deploy Ropes. However, our customers range from shops with a couple of people using this as a sales tool to win business, to Randstad Digital and some of the largest enterprises. People end up deploying wall-to-wall for defense and offense. Defense means let's keep the bad guys out. Offense means we know clients care about this, so the more candidates we can attach a Ropes result to, the more interviews we'll win and the more we can contribute to the firm's P&L. Ropes often grows very organically. Success travels very quickly in staffing. For tech companies in the space, let the product speak for itself. We remain on the staffing firm side and have a range of initiatives planned over the next couple of years to help our partners be as profitable and successful as possible. I don't think they all know it yet, but I do think they are set up for success.

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Francis Larson

I think for the next 10 to 20 years, fraud with AI is the biggest problem in staffing and also in employer of record, which is our business. AI lowers the cost of being a fraudster to the point that we see all sorts of attacks. I think you are on the absolutely right product, and you picked a cool space.

Congratulations on the success, and thank you for being in the spotlight.

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Ken Schumacher

I appreciate you having us. We have a lot of work still to do. We're technologists and relatively new to staffing, but we're growing alongside our partners. The war is not over.

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