How does a founder fix a business that just will not take off?
Art Papas is the founder of Bullhorn, Inc., which makes software for the staffing and recruiting industry. Because of his software, a recruiter can know how many job candidates have blogging experience, get alerts to follow up with each candidate, and know who was rude on a phone call that took place months before.
That’s just one small example of what his software can do. I invited him here to tell the story of how he built up his business.
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Art Papas, Bullhorn
Art Papas is the founder of Bullhorn, Inc., which makes software for the staffing and recruiting industry.
Andrew: Coming up, want to know the best way to come up with revenue-generating ideas? I mean, ideas people are going to be dying, eager for you to build so that they could give you money? Well, we’ve heard it several times in my interviews, but I don’t know if it’s ever been told, ever been explained so well as this story that today’s guest is going to tell you. Listen for the story about the guy who’s like Tony Soprano who yells at today’s guest because I think that might be the best part of this interview.
Also, I know many of you think that I talk too much about revenue. If that is you, if you want to know about the other stuff, the other part of life, listen to the penultimate–that’s a word I’m proud to know–the penultimate section of this interview where we talk about, what’s it called? Here, let me look at my notes. The Career Collaborative. All that and so much more. Really good interview coming up.
Three messages before we get started. If you’re a tech entrepreneur, don’t you have unique legal needs that the average lawyer can’t help you with? That’s why you need Scott Edward Walker of Walker Corporate Law. If you read his articles on VentureBeat, you know that he can help you with issues like raising money or issuing stock options or even deciding whether to form a corporation. Scott Edward Walker is the entrepreneur’s lawyer. See him at walkercorporatelaw.com.
Do you remember when I interviewed Sara Sutton Fell about how thousands of people pay for her job site? Look at the biggest point that she made. She said that she has a phone number on every page of her site because–and here’s a stat–95% of the people who call end up buying. Most people, though, don’t call her, but seeing a real number increases their confidence in her and they buy. So try this. Go to grasshopper.com and get a phone number that will make your company sound professional. Add it to your site and see what happens. Grasshopper.com.
Remember Patrick Buckley whom I interviewed? He came up with an idea for an iPad case. He built a store to sell it, and in a few months he generated about a million dollars in sales. Well, the platform he used is Shopify. If you have an idea to sell anything, set up your store on shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up a beautiful store and manage it. Shopify.com.
Here’s the program.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart and the place where over 800 entrepreneurs, proven entrepreneurs, have come here to share their stories. In this interview I want to find out, how does a founder fix a business that just will not take off? Art Papas is the founder of Bullhorn, Inc., which makes software for the staffing and recruiting industry. Because of his software, a recruiter can, for example, know how many job candidates have blogging experience, know when to follow up with each candidate because they’re going to get alerts, and know who was rude on a phone call that took place months before. That’s just one small example of what his software can do. I invited him here to tell the story of how he built up his business. Art, welcome.
Art: How are you?
Art: It’s good to be here.
Andrew: So you’re doing well now, right? I mean, what were revenues for 2012?
Art: In 2012 we did around the mid 40s.
Andrew: Mid $40 million.
Andrew: Wow. But things, as I said at the top of the interview, weren’t always so good. In fact, can you tell people the story of when you realized that the first version of your product was just not hitting, maybe the Hasbro story that you told me before?
Art: Bullhorn started as a dotcom. We were trying to build a sort of mix between monster.com and eBay. We were trying to build a system for freelancers to connect with, with freelance gigs and companies online. It became clear to us early on that it was going to be an uphill battle. We weren’t quite sure why we were meeting so much resistance with companies. Freelancers were all about, “Okay, I’ll use the Internet to find gigs,” but the companies were really tentative and didn’t really want to use our system, and so we actually went and visited a lot of companies. We had this moment when we were sitting with the team at Hasbro, and they were getting all excited about our idea. We were explaining, “Look, you can access all this great creative talent, freelance, on our system, all you have to do is go online and put in your gig, and freelancers will apply from all over the world. They said, “That sounds awesome. We just have to wait for that guy over there to finish using the computer that has the Internet attached to it.” I realized, okay, corporate America has not yet got the Internet, and we’re just way too early. This is not going to work anytime soon. That was the moment in which we knew we had to do something else.
Andrew: Corporate America had not yet been fully on board with the Internet, but there was a buzz at the time. There was a lot of enthusiasm for the potential of Internet companies. Can you tell me how that influenced your decision to launch this business? What were you seeing?
Art: It was kind of an amazing time; 1999 was a huge boom in all these Internet properties. Amazon had taken off. People were predicting the end of brick-and-mortar stores, which was largely true but probably a decade too early to be predicted. It was just a crazy time. Internet start-ups were raising money. Valuations were through the roof. Companies were burning millions of dollars on TV ads. It was really a crazy time. My favorite start-up from the whole period is pets.com. They had the sock puppet, and they spent all this money on TV ads to sell pet food, and they went out of business. I think they auctioned off the pets.com sock puppet from the TV ads, and I think they made more money on that than anything else they sold. It was an emblem back at that time. The sock puppet is in Internet Heaven now.
Andrew: You know what? That sock puppet, I think, made its last TV appearance on the Good Morning America that I happened to be on. It must have failed after they recorded that piece, but it was too late for them to pull the clip out, so what they did was they just called it a sock puppet without mentioning pets.com, and they ran their bit and then they came to me and they said, “All right, so you’re running this new site. Tell us about it.” Then I talked about grab.com.
So it was incredibly heady days. Where do you get your idea from with all that that’s going around? The reason I want to get to this is because we’re going to see an incredibly powerful method for coming up with a business idea, the one that worked for you now. But I also want to see what’s the opposite, which didn’t work out. Tell me about that method? Where did you come up with that original idea?
Art: My co-founder and I were talking about ideas. I wanted to start a company, he wanted to start a company, and that was really the impetus. We just wanted to start a company. We wanted to pursue our own ideas and be our own bosses, be entrepreneurs. His idea was, why don’t we build a platform for people to display their creative ideas? Then my idea was, oh, and then, okay, we could have those people then get jobs. It was sort of just like this artificial, wouldn’t this be a great idea kind of thing. Neither of us had any experience with the domain. Neither of us had any real pain that we had experienced on our own. We just thought it was a good idea. Nobody told us that it was a problem and we were out to solve it.
Andrew: Nobody told you it was a problem. You hadn’t talked to freelancers, you hadn’t talked to companies, no?
Art: No. We had lots of resistance when we presented them with our idea. It was like, isn’t this great? And they’re like, “Maybe it’s great. I’m not sure it’s great. It could be. I’ll take a look at it, but how did you come up with this?” That was the number-one question, how did you come up with this, which is a polite way to say this sucks.
Andrew: What did investors say when you took the idea to them?
Art: They loved it. They loved it in ’99; they hated it in 2000. It went from “What a great idea, let’s give you $5 million in capital” to “How are you ever going to make money doing this? You guys need to perform. You’re cut off. You’re not getting any more funds.”
Andrew: So you get $5 million, you’re in there, and it doesn’t take long for you to realize, “Hey, this is not going to work and we’re not going to get any more money.” Why didn’t you just call it quits? What was it that made you say, “We’re going to continue with this business and figure it out.”
Art: It just never seemed like an option. It was like, we have to. This is our life. We’re building a business. What do you mean by call it quits? I’ll do without salary but I won’t quit. That was never on the table.
Andrew: You told April, who pre-interviewed you, that you were nearly out of money around that time. Do you have an example of what you, on a personal level, had to deal with because you were running out of money?
Art: There were a couple of times where we ran out of money. The first time we ran out of money was before our second round of funding. I was putting my rent on a credit card. It was a very stressful time because I had no savings and I was just watching this massive credit card bill accumulate. No salary, and everything was going on a credit card. Also, I was buying servers for the business on my credit card. Very intense acid reflux. Pretty scary time.
Andrew: Acid reflux. How much money do you have on your credit cards?
Art: I [ran] it to about $35,000, which was about the max. So I maxed out the first one, and I opened the second one. It was scary. My parents were very disappointed.
Art: Why didn’t you go to business school? Why didn’t you go to medical school? What are you doing?
Andrew: All right, and then you get money, and I guess you get to pay off the credit cards. Is that right?
Art: Yes. We got some money, and I got a salary again and paid down the credit cards. Then, actually, as we started to really take off back in 2002, we were running out of money again and we needed bridge. We only needed about a million dollars to continue to get to profitability. It was a very protracted negotiation with our investors. I was about to get married, and the day before we went down to Connecticut to kick off the whole rehearsal dinner and all that, I turned to my fiancee at the time, my wife now, and I said, “So, there’s a slight chance that we may not get this financing done, and if we do that, we’ll have to go without a paycheck for at least a couple of months.” My wife looked at me and she said, “You’re telling me this now. We’re getting married, and you’re telling me this now. You need to hold this till we get through the next couple of days. You can’t tell me this.” We were on pins and needles. The financing came through the night of the rehearsal dinner. My co-founder burst into the church during the rehearsal and we’re like, “We got it!” It was this crazy moment. It was pretty awesome.
Andrew: Did you ever think of not getting married until you had your financial shit together?
Art: I thought I had my financial shit together, I guess.
Andrew: Oh, but you did think at the time.
Art: I kind of thought I did. I knew we would get the funding. My wife had been with me long enough that it was like, okay, she understands that there are going to be ups and downs and there are plenty of ups and downs. Even once you have your financial shit together, owning a business is a roller coaster. My wife understands that.
Andrew: You know what, that’s a good point. I know that for me I wanted to wait till I was financially sound and had other things going on before I got married, but once you get everything together, it doesn’t mean that it’s not going to fall apart all over again unless you stop being an entrepreneur and live a really boring life within whatever savings you have, you’re never going to get rid of the ups and downs, right?
Art: There’s always high drama.
Andrew: Actually, is it still for you? You’ve come a long way.
Art: You know what, it always is. Every six months the business is changing. We just did two acquisitions. We had never done acquisitions before. We just did two acquisitions, and we closed at the same time and required [??] employees. It was great. It was a totally different high-drama situation from the high-drama situations that I used to have 10 years ago but still high drama, and good. Challenging, mind-expanding stuff.
Andrew: It is challenging, it is mind expanding, and I feel like it’s both of those helpful things because there isn’t the disaster of having to be out on the streets if you’re wrong. Am I right about that, that it is more comforting and more cerebral when there isn’t that devastating disaster hanging over your head?
Art: What is the cost of being wrong when you’re early stage? I think it’s more of a . social stigma of having to call it a failure. And, you know, I mean, I was a software engineer; I could always get gainful employment writing code, just I didn’t want to go back and admit that I had been an unsuccessful entrepreneur. I think that’s the most scary thing. And so that really never goes away, right? If you tank a business, you get a stigma, and it’s hard to recover from that, or it feels like it would be hard to recover, but plenty of people do it. So…
Andrew: Yeah, absolutely. All right. So you’re starting to get this feedback that is “We like the idea, or maybe we don’t even understand the idea, but either way we can’t make it work for our company because that computer over there has the Internet and not the one over here and we have to wait for the guy who’s using it to stop.” You were ahead of your time.
Do you — what does it take for you to accept that feedback from the world, the feedback that goes against your worldview?
Art: Yeah. That’s interesting. There were three co-founders, and each of us came to the realization at a different point. My CFO came to the realization the fastest, and he would joke with me and said, “You know, we thought we were going to create a creative marketplace for talent. We were wrong.” And I would get mad at him and say, “Don’t give up yet. It’s not time.” And then I was next, and I gave up, and it was over. I said, “Forget it. This is never going to work.”
And our third co-founder, who was the most sort of entrepreneurial and creative of the three, it took him forever. It was so clearly over, and the business was actually starting to take off again, that it took like that in his face for him to admit, yeah, the other thing’s never going to work.
Andrew: Oh. It took the new idea…
Andrew: …taking off for him to finally give up on the old one?
Art: Yeah. Yeah. So he was the last to give it up, and it’s just funny. We have different dynamics, different personalities and different attach rates to ideas, or detach rates.
Andrew: Can you tell the story of the guy who you saw in action that made you realize what the new version of your software should be, what the future of your company was?
Art: So one of our investors said, “Hey, you guys are doing all this stuff with contractors and [??] and trying to find contract gigs for people; why don’t you talk to this guy who runs a staffing agency and just learn his business and hear what he has to say.”
And so I took the meeting with this guy in New Jersey, and we go down there and start just asking him like, “What’s your business all about?” And he starts ranting about — he’s funny; he sounded just like Tony Soprano. And he’s like ranting about what a pain in the ass it is to run these businesses because you’ve got these — the only way to grow a staffing business is to expand regionally, but as soon as you do, it’s like having each office as its own standalone company because nobody communicates cross-office and you get no synergy.
And he was like swearing and dropping f-bombs, and he’s like, “If you could solve this fuckin’ problem for me, I’ll pay you $10,000 a month.” And we both, me and my co-founders like stood there, frozen. Here we had been trying to sell something nobody wanted for a year, and never had even been offered any money at all, and then this guy just throws out — he’s willing to pay six figures a year for us to solve a problem that to me technically sounded really easy. So we did.
It was like, OK, that’s our business, forget the business plan, forget the market size. If we could do this for this guy — and this guy was a very good salesman. He said, “Oh, everybody’s business is just like mine, and if you solve my problem, every staffing company in the world is going to want my software.” I said OK. I believed that, being sort of capable of suspending disbelief. And sure enough, he was wrong about that, but it was the process of solving his problem I learned, “OK, well, I can solve this other company’s problem too.”
And that kicked off this whole process of sitting with customers, iterating over what they had in their mind as like the ideal software to run their business and then making it a reality. It’s like being a painter on commission. Somebody has an ideal . . . they want a painting, and they want it to look a certain way. I was just programming in code that would spit out screens that looked like what they wanted.
Andrew: I want to dissect what you just said because I think that this is maybe the most important part of the interview. He wanted something very specific, and he gave you clear direction. What I understood his problem to be–and you said it was simple–I understood his problem was he wanted to communicate with his other offices so that they weren’t stand-alone branches. Now, that could mean everything from he needs a simple email system to he wants his contact management system to be united to something completely crazy. How do you understand his problem and create a solution that solves that problem?
Art: I guess my background had prepared me a little bit for this. I worked at a company, Thompson Financial Services, where we had folks all over the world submitting research documents to our systems. You had people in one area editing those documents, in another area uploading, in an other area proofing, and in another area publishing. I got to see how this online workflow system worked. We said, “Okay, so you just put the data in the database centrally, let people access it, and then the rest is just fields in a database.” So to me it made perfect sense that you would create a centralized database, give people access over the Internet. He was willing to spend money on getting bandwidth because it was a real problem for him to solve versus the people we were trying to sell to earlier who saw no reason to invest in bandwidth if my solution wasn’t compelling.
That actually was the catalyst for a lot of these businesses. They looked at what we were doing. “Okay, I can connect all my offices with one database over the Internet.” That’s a little scary, but what a compelling value proposition. We just steamrolled right over that.
Andrew: Okay, so central database. Let people take data out of it. Let them add data to it. Everyone, no matter which office they happen to be in, has access to it because he’s willing to pay money for the Internet. You said that he was willing to pay money to install that infrastructure because he had such a big problem. Who else is a client with a really big problem different from someone who is just taking a meeting with you the way maybe Hasbro might have back then? What else are they willing to do that other clients aren’t willing to do?
Art: These clients were very passionate about rolling up their sleeves and saying, “Okay, here’s how I think the system should work, and here’s what I think this screen should look like, and that screen.” They’re totally invested in what the end product looked like and how it was used by their end users. That was a huge investment of their time. Nobody else had ever engaged on that level. Nobody had even thought, oh, it should look like this it should look that. [??] what it should look like because it wasn’t solving a problem that mattered to them.
Andrew: And then you said–I took notes as you were talking earlier–you said he thought that every other company like his would need this exact same problem, and you said he was wrong about that.
Art: Yeah, it’s funny because I heard the same thing from every customer, our first customer to our hundredth. I personally was involved in every implementation up to the hundredth customer. What I kept hearing was, “I can’t believe you don’t have this.” The first customer was, “Once you build this, everybody else will want it.” The second customer was, “I can’t believe you don’t have this. How can anyone else use this system without this?” It was interesting. These people were passionate that you needed to have this field, or that field shouldn’t be labeled “cell phone.” It should be “mobile” because I have people in Europe. Okay. That’s a passionate–your people won’t know what cell phone means? “No, they won’t know what cell phone means.” But that passion was so awesome. You can react to that. Apathy is very hard to react to.
Andrew: I see. So how do you deal with that when a client gives you something and says everyone wants it, then you put it in front of someone else and they say, “No, that’s not it at all” and right down to the labels are bothering them. How do you unite all these different opinions?
Art: My solution was, come up with a way to have a basic system that people could relabel, change drop-downs, add fields, remove fields. That was the solution. Basically make like a custom kit on top of the software but not do it with custom software, make it like something they could change themselves. That’s eventually what we migrated to was this system that let them drag and drop fields and add fields, etc.
Andrew: So if they didn’t like the word cell, they could change it to mobile. If they didn’t like the word cell or mobile, they could change it to carry phone, whatever.
Art: Exactly. I kind of automated my job, was to take down their requirement and put it into the system. I got sick of doing that and eventually automated my job.
Andrew: The other thing you said it was almost like being a painter on commission. What do you mean by that? I want to understand that process.
Art: People would have this vision of what they wanted, and then when you would deliver it they were so happy and so impressed with what they felt they had created. I created the software, but they felt they had created it. They actually started referring to the product as “my Bullhorn.” That became a very common thing that you would hear, like, “Oh, this is my Bullhorn.” When we had user groups, I would watch two users get together and they’d say, “Oh, show me your Bullhorn. What did you do with it?” It was very much a part of their . . . they felt like they had commissioned it.
Andrew: Because they could customize it, or because they asked you to build it for them?
Art: Because they felt like it was their . . . they felt like they had had a vision and imparted that to us and then we made it happen, and it was totally their custom system. I could show you two of their systems. Client A says, “Oh, this my Bullhorn. It’s really unique,” and then Client B, and two things are different, but to them it was their system. Practically custom.
Andrew: Is the way that you did it, did you take in their feedback, add it to the software, and then push it to everyone? Or did you allow it to work for everyone but only pushed it to them?
Art: That took a while to get right. Initially we started adding fields for everyone, and that got ugly fast because people freaked. “Hey, what did you do to my Bullhorn?” We couldn’t do that, so we had to come up with way to say, “Okay, well, each person will have their own environment.” Some things will be the same across all the environments, and then people are going to want to have it tailored to their needs. That took a while to get right. That’s a balance.
Andrew: It sounds like you were almost going backwards and becoming a consultant first and building software almost for each individual customer but you had the ability using one piece of software to customize it for them. Does that sound right?
Art: Absolutely. That’s what it was. I think that it even would have been successful selling a [shrink-wrapped] product and saying, “Here’s what it does and sorry, you can’t do that.” But I look at the other companies that tried that, and we ended up beating them in the market, so I think it really paid off. Somebody said something to me once, which is there’s never a wrong way for a customer to want to use your software and so if you’re in the way of them being able to do what they want to do, then you’ve got to get out of the way. I felt like that was good advice.
Andrew: I understand how you found the first angry customer, the Tony Soprano, who said, “I’m so fed up, I’m going to show you what you guys should build, and then I’ll be your first customer for this product.” How do you get the subsequent early customers?
Art: That was hard. Basically it was like–to be honest, it was so painful that I kind of blocked it out. It involved a lot of humiliating phone calls, cold calling, emailing, attending trade shows, trying to flag people down in elevators, just being shameless about promoting. You know, “Oh, hey, are you in this industry? Well, oh, hey, you know what I do?” It was awful, especially for somebody who is relatively introverted. Really, really hard, but you had to do it. You had to get the word out about what you’re doing and try and get clients, and then eventually we get big enough we can afford to market and hire a sales force. The first hundred clients was just hand to hand combat.
Andrew: Hand to hand combat building software helped you understand your customer’s problems and helped you build the product that they that would really want to buy. When it comes to hand to hand combat when that comes to sales were you learning anything about your messaging? Were you learning anything about what you said that suddenly got people to pay attention when they didn’t really want to listen you?
Art: Yes. That was an important exercise to know how to market and to know what resonated with customers. If you led with, I have this software and it’s got these features, they would tune out and say I’m good. I have something. But if you led with questions about how many offices do you have? I have five. How do they collaborate when they get job orders that can’t be filled within that region? It’s really painful. Get them talking about the problem. You say, that’s interesting. I have this other client he was wrestling with the same thing and it’s this common problem. We actually solved that. Okay. That’s when they know they’ve been hooked but now they’re interested. They have a reason to be talking to you.
Andrew: I’m looking here at April’s notes and there’s one thing I didn’t understand. You said, you bootstrapped and beat the bushes to launch the company. You were a funded entrepreneur with five million in the bank. Why would someone with five million in the bank describe his process as bootstrapping?
Art: We were a venture backed company that became bootstrapped. The way that, that happened was we raised money in ’99 and again in 2000. The bottom dropped out of the market. Being Internet was really uncool and we had taken money from investors who not only were they anti-Internet, they woke up anti-Internet one morning. They also realized that, hey we’re late stage investors. What were we doing investing in pre-revenue companies? When we said, hey look we’ve got some traction. We’ve got 20 clients. We need about a million bucks to bridge to profitability. They said, not only do we not have the cash, you have to do this. You will never get more money from us unless you get to late stage. Okay, so can we raise money from somebody else? Well, good luck, because you raised money at a really high valuation and if you do we’ll cram you down. We don’t want to participate and we also don’t want to be diluted because that’s our right.
So we ended up really operating a bootstrap business even though we were successful. We had to raise about a million dollars , incredibly painful, very dilutive, almost wiped out the common stock. Really, really, painful financing that we got them to agree to. Then I said, no more capital ever from outsiders. I was spurned, which later I relented on that position because that was kind of a dumb position to have. We went from about a million and half in revenue profitable to 15 million in revenue, staying profitable the whole time, staying break even before we raised capital again from the outside. So really operating like a bootstrap business.
Andrew: Your piece of the business went from where to where? Your share of the business must’ve…
Art: Being a co-founder and after our first two rounds I still had about 20% of the business. Then after that painful round I ended up with less than 5%. Over time I was able to get stock options and build my share back up. That was very painful. Through the awful experience, I don’t recommend it.
Andrew: It seems like at that point a lot of entrepreneurs just leave and say, hey my shares are not that… I got whatever I can out of this. there’s not that much more here and I keep losing. Why don’t I go start another company?
Art: We definitely talked about, should we go do that? We’ve got nothing left but then you’ve got this business that’s taking off and it’s exciting. There’s the opportunity that it could someday it be worth 9 figures and you could get a great financial outcome. That did end up happening, and so we were right to stick with it.
Andrew: Did you end up taking some money off the table?
Art: Yeah, a couple of times along the way. When we raised our [Series D] financing I said, “Okay, this would be a good time to do a little profit taking. We’ve been running the company for eight years,” trusting venture capitalists again after being burned. That was a great opportunity to put a little money in your pocket and then go for it again. We did that, and then most recently we sold the company to private equity. We sold the majority of the company to [this] Equity Partners, and that’s been great. We’d take some money off the table and do it again. Interestingly, now I’ve become an investor in the company, so that’s kind of a different perspective. That’s evolution, right?
Andrew: Yeah, and the world has changed so much now on the funding side since the time when you took it. That founder whom you invested in or the team that you invested in must have much better terms than you had.
Art: Yeah, I’d say. Yeah, I don’t have the double dip, and I don’t have a flow ratchet and all that double liquidation preference. It’s pretty straight, practically common stock.
Andrew: And they have an investor who really cares, who’s gone through this process, who understands.
Art: Yeah, it’s very different. Very different. Private equity is very, very different from the venture role as well.
Art: I think private equity is, they’re much more comfortable using debt and leverage. For instance, doing two acquisitions, previously we would have been very tentative. It would have been about, “Can we really afford dilution if we go acquire these companies?” A private equity investor says, “Well, we could use equity or we could use debt, and the debt markets are so favorable right now that it’s kind of a no-brainer.” I just don’t think that would have ever necessarily come up with our venture investors.
Andrew: They wouldn’t have even thought of it because it’s not the way they do business.
Art: That’s right, yeah.
Andrew: And if you would have thought of it, would you have had that kind of access?
Art: I don’t know, I don’t think so, just because if I go to Wells Fargo and say I need $40 million, they say, “Okay, what’s your history of paying down your debt?” If a private equity firm does that, they have a track record. That’s what they do. With interest rates that are near 4%, why wouldn’t you do that?
Andrew: Unreal. It’s like free money, almost.
Art: It is free money. It’s awesome.
Andrew: Frankly, that’s why the interest rates are so low, aren’t they? The Government wants the economy to get going. You lower interest rates. More companies borrow to build up their businesses. As they build up their businesses, they end up growing the economy.
Andrew: Still, one of the issues you have, even though you are in the recruiting business, is hiring good people. Is that right?
Art: It’s a challenge, yeah. We’ve really shifted over the years from trying to be in the rat race to hire people as fast as possible and hire the most expensive developers. We still do our fair share of that, but we’ve turned a big focus to hiring entry-level folks coming in right out of school and training. We’ve got a big investment in training now just because in Boston there’s so much competition for technical talent that you almost have to have your own sort of farmed team for talent. The other thing was these acquisitions. We acquired two teams of developers and nearly doubled our development staff. That was awesome.
Andrew: What do you mean by farmed talent? How do you develop that?
Art: You take somebody right out of school. Rather than saying, “Okay, I need a Java programmer who knows jQuery and Mongo,” you say, “All right, I need a smart kid graduating college that wants to learn how to do all those things.” You have to make a big investment in their training and giving them a longer ramp time in allowing them to learn the job. Once you do, you’ve got somebody who you gave them a shot, they feel like they’re being rewarded for the fact that you took a chance on them and so the company gave them something nobody else was willing to give them, and now they’ll be a little more loyal to you than somebody who it’s their fifth job out of college and they’re just job hopping, trying to get a better salary. You get somebody who actually believes in the company and it’s a good thing.
Andrew: You talked about how you came up with the original epiphany for what the product should be. It’s not so much an epiphany if someone else yells it at you but you got that. What about as you develop? Now, after the first couple of customers, you’re no longer able to go into their office, watch how they use it, build it yourself, show it to them, have them be angry, adjust it, see them be happy, grow it, and do it again over and over. At some point you have to evolve. How did you do that? What was the next stage?
Art: The next stage was about trying to create a culture that would be as responsive to customers as I was. That was really hard. Understanding how to build a culture is something that you can read books on it, but ultimately you have to first define your culture and then hope you’ve defined it properly, and then hope you’ve reinforced it properly, and hope that people have interpreted what you’ve said your culture is properly. It’s a hard thing to do. Then you have to hold people accountable to that culture and hold yourself, and lead by example. It takes a lot. I would say that’s been like a five-year, six-year endeavor, forming the culture in the way that I want it to look and the way that it should be so that when a customer talks to a Bullhorn employee, they get that same level of care that I would have given them if I were sitting there. Not every employee knows how to program. Not every employee is going to go and throw open the hood of the product and say, “All right, now it does what you want.” But there’s a process by which those employees can take that information and bring it back to the product team, be passionate internally, thump the table, and get what the product needs.
Andrew: How do you figure out what your culture should be?
Art: I think ultimately the culture is just a reflection of the way the CEO would behave. You look at a lot of these culture core values. Really, they’re distillations of, “How would you describe the CEO’s best qualities?” and you leave out the bad stuff. Like moody is not a core value, or like you’re mercurial. Impatience is not a core value. I’m very impatient. It’s not a core value at Bullhorn. But the way it actually manifests itself is in agility. Speed and responsiveness and getting back to people right away and responding to good ideas and being demanding that we stay on the cutting edge, that is a good thing. So that agility is a core value. Humor actually is a core value at Bullhorn. I argue that you can’t really connect with people at Bullhorn, employees and customers without at least having a sense of humor, and so it’s actually part of our culture. It’s not true of every company, but at Bullhorn we like to goof around and like to joke. It’s not schmaltzy like Southwest Airlines, like, “Let’s make a joke.” It’s more like humor, I think, is a sign of intelligence. When you can use it appropriately with customers or fellow employees, it lets people know, “I’m smart, you’re smart, you get my jokes.” It’s sort of a good way to build a bond.
Andrew: I’ve found that entrepreneurs, having done hundreds of interviews now, are not very self-aware. In the early days, it would drive me crazy because I thought they were hiding from me where they got their first customer or how they failed. I didn’t realize it, they just weren’t aware of even their failures because they try not to pay attention to them, because it would spook them if they spent too much time thinking about them, for example. So, with that in mind, how did you do it? How did you become so aware of your positive qualities and the ones that you wanted to perpetuate through the company?
Art: I actually spent a lot of time thinking about what I’m not good at, and I’ve perseverated on it sometimes. I’m not the most charismatic, outgoing public speaker, so I’ve had to work really hard at that, for instance. I’m very aware of those shortcomings. I find it very easy to focus on what I’m not good at, or my weaknesses, or my failures.
Andrew: And what you said earlier is, that’s not what you want to perpetuate, of course, the company culture. I did notice that you listed more of your challenges than you did your assets. Then you said, “Well, here are the assets that I have that I wanted to grow.” So how do you become aware of them? We’re trained not to be aware of our strengths that way.
Art: I think, though, that certain things do come through. I think eventually over time a CEO gets a lot of ass kissing. There’s a lot of brown nosing, kissing up to the CEO that goes on. You’ll hear, “Oh, you’re really good at this” or “You’re really good at that.” Generally, 50% of it is true and then the other 50% is just people trying to butter you up. Over time you start to recognize, okay–outsiders will recognize, “Oh, you’re really good at this,” or “You guys are really good at that” and you build up this sense of, “Okay, what are my strengths? What are my weaknesses?” Truly, this is a strength: a sense of urgency. I do have a sense of urgency, and it’s really, really high. That’s a strength. Now how do I turn that into prose that becomes a core value that actually is something people can find meaningful?
Art: In other words, people, say, have a high emotional quotient. They’re able to connect with people. How do you translate that? Well, okay, that’s kind of like in the humor core value. Being able to make a personal connection with people is important. Yeah, so I’m aware of them; I just don’t like to talk about them. I get uncomfortable.
Andrew: Yeah, that’s the problem. We don’t talk about them.
Art: Next question.
Andrew: On to the next question. He is impatient. I don’t want to take too long.
The next question has to do with one of the ways that this whole experience has changed you is that it’s helped you make tough decisions faster. Do you have an example of a tough decision that would have taken you forever a few years ago but today you can just zip right through?
Art: I think people decisions are the hardest, and especially people that report to you. Even the best managers make hiring mistakes 30 or 40 percent of the time. It doesn’t benefit you to keep somebody in a job that they’re not equipped to do or they’re not fit for two years, say. I used to do that. I’d have somebody in a job, they weren’t right for it, it just wasn’t a good fit culturally or whatever the reason. I would sort of labor over okay, I never want to let somebody go. That’s so hard. Over the years it’s gotten faster and faster. You start to get to a place where I think if you do it enough, you start to say okay, if somebody’s not performing a job, they’re not happy, and if somebody’s not happy, you actually need to set them free in a humane way. You don’t just say, “You’re fired and no severance.” You’ve got to be fair to people. But if you can do that in a humane way that preserves their dignity, they’ll actually be really, really happy when they go find a job that is right for them.
I used to feel like keeping them employed was doing them a favor. It’s actually not. Nobody would ever say being let go or being terminated is, “Oh, you’re doing me a favor,” but at the same time you kind of are. You’re helping them find the next thing that is right for them. Once you feel okay with that and you say, “All right, the evidence is clear, I need to go do this,” then you rip it off like a Band-Aid and it’s incredibly painful at the time, but . . .
Andrew: [??] because there were periods there that you didn’t do it, that it took you too long, was there one specific that you think of and you go, “I don’t want that to happen anymore?”
Art: There are a few.
Andrew: I thought I saw something as I asked that.
Art: It took more than one to get faster at it. You still want to make sure you’re giving people adequate time, but there are a few instances where it cost the business big time because you don’t have somebody in the right role. You get a key executive position and you’ve got, say, customer service problems, you need to get the right person in that role. You’re actually doing your customers a disservice. You think you’re doing the person a favor. You’re not. You’re doing your customers a disservice. Your employees, other people on the team are being let down. It’s a lose-lose-lose for everybody. It took me a long time to learn that.
Andrew: One of the reasons why companies take a long time letting somebody go is that it’s really hard to replace someone in a small company and whatever position someone’s doing, even if they’re doing half assed, if they leave, it falls apart. Jack Welch, in one of his books, said that if someone quit, he liked to show strength and replace that person within hours–not weeks, not after a long job search, hours–and always having somebody who can fill that person’s role. We can’t always do that, or how do we do that? How do we get ourselves prepared to let someone go and not be so dependent on people that our company falls apart?
Art: There’s definitely wisdom in that. I think the addendum for start-ups would be if you don’t have somebody that you can slide into the role, ask somebody to wear two hats. If you don’t have somebody you can ask to wear two hats, do it yourself. I’ve done that a number of times, and the business immediately seems okay. The beat goes on. Nobody’s going to die. We’re going to be able to, you know, trains will run on time. You will work extra hours. You will be stressed out. You will probably better understand the job when you go to hire the next person and what really is entailed. Now, you can’t do that with every job in the company, but certainly you can do that with one job at a time. Yeah, things will suffer a little bit, but what happens is you get a culture of, okay, we don’t tolerate poor performance. We’re a team, and everybody’s accountable.
Andrew: What’s one job that you had to take on that took extra work that you said, well, this is maybe a mistake.
Art: I actually, a few years ago, played VP of sales for six months.
Art: It was really hard being CEO and VP of sales, but I learned a ton about our customers, how the market had changed since that first 100 customers. It was five years later, and now I’m back talking to the same customers with different challenges. The market evolved. It also gave me a ton of credibility with our sales force where previously I would say things and they would say, “Well, how does he know?” Now they know that I’ve been on the front lines with them, and I know exactly what they’re going through. They still roll their eyes occasionally when I say things, but at least they know I’m coming from a place of understanding.
Andrew: Let me talk about this. I’ve been holding up a mug. The reason I’m holding up a mug, I want to talk about this and then I want to come back and ask you a non-work question that I think is important that I don’t talk enough about here in these interviews. The mug, actually look this, the guy put way too much, I think–well, maybe it’s not too much. It looks fine, but you might not have seen [??]. This is from an audience member named Lewis Schiff who works with Inc. Magazine. I asked some of my fans to send over mugs that they use with their company logos. What he did was he sent a mug with his upcoming book’s name on it. It’s called Business Brilliant. Lewis Schiff, who works with Inc., is putting together a book of what he learned from talking to successful entrepreneurs, kind of like he did Mixergy interviews but he pulled out some analysis based on it. The book, as I said, is called Business Brilliant. I asked him what he likes about Mixergy, what he’s gotten out of it and he says, entrepreneurs who bounce back from failure. That’s the secret sauce that he likes to hear in these interviews. We’ve obviously done that for him here. So, Lewis, thanks for being out there and listening.
I love to see what people are building. I love to know that the audience isn’t people who are just sitting back but they actually have books, in more cases actually businesses. I’m curious about what they’re building with what they’re learning. Keep letting me know, guys.
Finally, apart from work, you also do some nonprofit volunteering, right? You [did] work with the Career Collaborative. What’s that?
Art: That’s a local nonprofit here in Boston that helps people that are at or below the poverty line get critical interview skills and interview training so that they can get a good-paying job and pull themselves out of poverty. It takes people who previously were holding down like maybe one part-time minimum wage job, or maybe no job, and helps them develop the skills necessary to land either a full-time job above minimum wage or a full-time salary job inside the bank, or something like that. It’s a great position.
Andrew: Why? Why do you work with Career Collaborative. Why don’t you just say, ‘Hey, you know what? My time’s better spent working on my own company, or investing in other companies. I will give them money, let the experts who are working at Career Collaborative do their thing. I’m going to be more efficient doing my thing at my company.’
Art: Well . . .
Andrew: Is that a jerky thing for me to say?
Art: No. No. It’s a good point. Why not just give them money and continue to make more money so I can give them more money.
Art: You know, I think, I feel like the non-profit world can benefit from people in the for-profit world being involved. So I have these skills that I’ve learned over the years and developed and so I feel like I can give them back to the Career Collaborative.
Andrew: Give an example of how you’ve helped them that way, with the experience you’ve had in for-profit.
Art: For instance, the way they go about raising capital. We were talking about how the founder has some big donors, and I said, ‘So how much have they increased their donations over the last few years?’ And she said, ‘Oh, they’ve been about the same.’ And I said, ‘OK. Well have you tried asking for a three year commitment? And once you’re in year two, ask for a little more, right in the middle of a three year term.’ And she said, ‘No. That’s a great idea. I should do that.’ And so it’s simple things that you would apply from business, but the folks in the non-profit world don’t necessarily think about things like price increases on customers.
Andrew: And you guys are also a subscription based business, right? So at Bullhorn, if somebody pays, they might be paying $100 a month for a recruiter. That gives you some consistent revenue and it allows you to build a business based on the.
Art: Right. Yeah. And there’s all sorts of challenges they might have, like hiring is a huge challenge for these non-profits. Understanding how to manage people, how to grow. It’s all the same things that entrepreneurs wrestle with go on in the non-profit world, they just actually have a lot less resources to drawn on to help themselves solve problems.
Andrew: Finally, I didn’t ask about the social recruiting product. I should have asked about it earlier, but I want to make sure to absolutely include that here.
Art: Yes. Bullhorn Reach is our social recruiting product. It’s a free product, so it could be interesting to the listeners and the viewers. It’s a product that helps you leverage Facebook, LinkedIn, Twitter, to find job seekers and fill jobs in your company. And it’s free and very easy to use, and it works.
Andrew: So if I need to recruit a, I’m trying to think of a role over here. If I need to recruit a writer, for example, I can use it to tap my Twitter, Facebook, LinkedIn community and find that person?
Art: Yeah. Exactly.
Art: You sign up for an account which takes all of two seconds. You describe your need, ‘I need a writer.’ You say where and you say what the salary is that you’re willing to pay, and then you connect to your Facebook, LinkedIn and your Twitter and it will periodically send out status updates to your network. It gives you a great landing page. It manages collecting resumes. Things like that.
Andrew: So it promotes on my social networks, in an effective way, and brings people to a page that clearly explains what’s going on and helps anyone who’s a good candidate apply.
Andrew: OK. And what does that cost?
Art: That’s free.
Andrew: That’s what I thought you said. Wow.
Andrew: All right. So the company, of course, is Bullhorn. Sorry?
Art: It’s a pretty good deal.
Andrew: Yeah. I was going to say. What’s going on over there? Are you guys giving into the, um . . .
Art: I’ve been hanging out with the Career Collaborative too much.
Andrew: All right. The company, of course, is Bullhorn. And you guys have a great domain, it’s Bullhorn.com. Right?
Art: That’s right.
Andrew: Way to go on getting your domain. And thank you all for being a part of this interview. Bye, guys.
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