Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I do interviews with real entrepreneurs for an audience of, get this, real entrepreneurs, not wannabes who just want to hear the beginning and ending of the story, but the ones who want the details of how a business was built.
And one of the things that I found having done over 1,500 interviews here on Mixergy is that the entrepreneurs who have the surest path of success, not the only path, but the surest path of success are the ones who find a problem, a real pain point, and then they start to address it. And I’ve talked about that in past interviews, so that’s not anything that’s brand new to you guys. But the other thing that I hadn’t really explored is that it’s not just finding a pain but often finding new technology to address the pain because if the pain existed, someone would’ve found it before. There’s a reason why it hadn’t been addressed in the past, and often it’s the technology wasn’t there to help make it better, or . . .
But anyway, that’s the thing that I’ve noticed in these interviews. And today’s guest is an example of that. He is a guy who saw the way that hiring was done, the way that matching was done and he said, “This is antiquated. It goes back to thousands of years, with just a history of what people have done, and a feel for what they could do, and a little bit more than that, but not much more.” And he said, “There’s got to be a better way,” and he built it. He built software that enables a sure match to be made between a candidate and the company that the candidate wants to work for. All right. So, enough about the backstory. Here he is. His name is Barend Raaff. And I think I . . . How would you pronounce it? Please do a justice.
Barend: Okay. In Holland, we say Barend Raaff, but I will listen to anything you call me. It’s okay.
Andrew: Barend Raaff?
Barend: Close enough, definitely.
Andrew: One of the things that I love about the Dutch culture is I was backpacking through Europe going from city to city. In every country, I would apologize for my language not being good, and occasionally say, “Do you speak English?” When I got to Holland, I said to this one woman at the drugstore, “Do you speak English?” And instead of looking at me funny and needing an apology or any of that, she just said, “Of course.” She was there. She’s ready to speak however we go with no judgment.
All right. His company is Harver. Harver offers matching technology that allows companies of all sizes to hire better. We’re going to hear how he built this company up, thanks to two great sponsors. The first will help you hire your next phenomenal developer. It’s called Toptal. And the second will help you do email marketing, and frankly, all marketing automation right. It’s called ActiveCampaign. But I’ll tell you more about those two guys later. First, it’s good to have you on here.
Barend: Thank you for inviting me.
Andrew: How much revenue are you guys doing?
Barend: It’s a good question but we don’t like to talk about.
Andrew: I have it here in my notes. Am I allowed to say anything about what I have in my notes? I’ll tell you what. Can you say if it’s over 3 million or under 3 million a year?
Barend: Yes, over 3 million, but we agreed not to speak about this too much.
Andrew: Okay, I’m going to actually get it deleted to you so that I don’t accidentally reveal.
Barend: But I would like to talk about the content of what we do.
Andrew: If my producer got it from you with confidence, then I want to make sure that we maintain the confidence that we promised. But let’s get into this story now that we have a sense of how big the business is. This occurred to you when friend of yours became CEO of a company and she gave you a number that blew her and you away. What was the number that she told you?
Barend: The magic number was 30%. And yeah, it was the number of people that she hired to work in a call center and that left the company within 12 weeks.
Andrew: And what’s the problem with 30% leaving within 12 weeks?
Barend: There’s so many problems with that. So, one, it’s on a personal level. So, you can imagine working in a call center, it often involves people that are young, first-time jobs, just out of high school, proud to be hired at this nice company telling at home, telling at the previous school friends that they found a nice job, and within 12 weeks they have to tell that they got fired or that they actually hate the job and left. So, that’s a personal disaster. And from a company perspective, I think you have a lot of entrepreneurs that are watching the show, if you hire somebody, you invest in onboarding them and training them, and then if they leave, it’s a waste of money and energy that you put in somebody.
Andrew: In the intro, I said that this was an old process that you noticed that they did. Describe the process from beginning to end. And when we feel overwhelmed, I’ll let you know. But I want to give people a sense of what you saw as problematic.
Barend: Yeah. I think almost everybody applied for a job at least once in their lives. If you’re an applicant, it start with something called the job description. So, you read online about a company and if you look at those job descriptions, it’s always the same, it’s always an international growing company, ambitious looking for young people that want to join the winning team. Blah, blah, blah, blah, blah. We have read it all.
Andrew: Right. A rock star that wants to join the winning team.
Andrew: Yeah. Rockstar or ninja is the word. Okay. All right. So, that’s how it starts. What’s next?
Barend: So then you think, “Yes, I want this.” And what do you have to do? You have to send in a resume. And you said it was an old process and it is indeed. We looked into what is the oldest resume that’s still out there, it’s Leonardo da Vinci from Italy offering his services through the government of Italy. And it looks the same as it looks today. Yeah, and there are some historic effects in your resume. And for some jobs, it means a lot, but for a lot of new jobs, especially jobs that are created today that you didn’t have 10 years ago, it doesn’t mean anything, or when you just came out of school or university, it doesn’t mean anything as well.
So, then you have recruiters looking at piles of resumes. On average, they spent six seconds or less to look at a resume. So, you can imagine they only look at one thing, and based on that thing, they reject a lot of people. Then you go into an interview, and yeah, especially for low-entry jobs, it’s not a meeting of two, three hours, it’s a maybe 20, 30 minutes interview, and then they decide to hire you. So, if you then look on the facts, what are the facts that a hiring decision is based on, it’s not so much. And that’s also I think if you read now on the internet, many blogs they all say resumes, they’re not predictive for success anymore. So, yeah, there must be an alternative.
Andrew: But don’t some companies say, “We’re going to give people a test, and the test will help us understand their personality, help us understand their strengths, and then based on the test results we’ll know whether they’re a good fit or not”?
Barend: Yes, absolutely. So, when you look at the process, companies do that, but that’s often after the first steps. So, first you have a pile a resume, you reject a lot of people, then you have a phone interview, you reject some people, and then mostly to the last people that are left over, you send out a test. So, yes, we support it, but you send it only to a small group. And tests are often treated as individual data points. So, you have a personality test, then you know the personality, but maybe intelligence can compensate for personality or motivation can compensate for personality. So, that’s, I think, not so good about working with standalone tests.
And I think what’s really lacking in recruitment is learning. So, you send out this test, you decide to hire the person. After six months, do you look back at the person, look at was he’s successful or not, and then look again at the test results to see if the interpretation of the data was correct? Well, I can tell you it’s not happening. Not happening enough in a structured way.
Andrew: Okay. And when you noticed this, you were working at . . . actually, you were running an online digital marketing company for seven years. What kind of work did you guys do?
Barend: Yeah, we were, as we said, on the crossroad of digital innovation and business innovation. So, we supported mostly Dutch companies to come up with new concepts to digitalize their business and by digitalizing, making processes more optimal.
Andrew: And you saw this and you said, “You know what? I think we’ve got the resources to do this well.” One of the clients that you’re working with was a company called Randstad.
Andrew: They are the largest temp agency in the world.
Barend: Yes, that’s correct.
Andrew: And they were your client. What kind of work did you do for them before you decided, “I think I could help them with their recruiting”?
Barend: Also innovation. So, we run . . .
Andrew: What does innovation mean?
Barend: So, we set up systems for them on, for example, referral recruitment when it was still new. We did the nice campaigns a long time ago in the thing called Second Life. Maybe you remember it . . .
Barend: From the old days. So, whenever there was something new, we try to see how can this work for a more traditional business and how can we make impact there.
Andrew: Okay. So, you’re helping them with all that. And then, did you go to them and say, “I think I can solve this?” or did they come to you and say, “Here’s our problem. Fix it.”
Barend: So, the problem, in this case, came from a friend when I . . .
Andrew: Was your friend working at that company?
Barend: So, there was a friend working at the call center that had the attrition problem. And then I already worked for Randstad, so we looped them in because, of course, there is a huge amount of knowledge on recruitment there. And yeah, basically, together we decided to [inaudible 00:08:40]
Andrew: So, you recruited . . . You brought Randstad in. You said, “Look, I’ve got a friend who’s running this call center. This is the issue that she’s having, 30%, basically, one out of three people are walking out the door 12 weeks into hiring. Can you help us fix this problem?” At the time were you thinking, “This could be a business. This could be a software company”?
Barend: We already had ideas that when you look at HR in general, so not only recruitment but HR in general, that it could be far more data-driven. So, of course, HR is always human-driven and there was not . . . Sometimes people think that human and technology doesn’t match up. So, we had multiple ideas on how to improve your HR processes by using data. And yeah, with that storyline we also went to a Randstad and thought, “Yeah, let’s figure this out.”
Andrew: Okay. And so you got together and you started figuring out and you said, “I think we’ve got a solution.” What did that first version . . . Actually, how did you get to the . . . How did your understanding change once you looped in their expertise?
Barend: Yeah. So, it was the team. We dive into the recruitment process and interviewed a lot of people that were working on the floor, so the managers, but also people that were hired and were successful and also people that were hired and not successful to better understand, “Why is this happening? What is what is the core reason why this recruitment is broken?” And we found two main reasons. So, one, I just described, that is that the data they were looking at was not predictive for success, so that was a big problem, so we should be looking at other data. Two, that there was no feedback loop. So, there was no learning, so it didn’t improve over time. It didn’t get smarter. And the last thing is that people had no clue what the job was really like. So, they apply at a big name, at a big company to work in there, for example, in this case, call center. And what were really intended, they didn’t know. And what happens then, is that you get hired, you get your onboarding training, and after four weeks, you think, “Yeah, this is not my cup of tea,” and you quit.
Andrew: So, it’s not just about the company understanding, “Will this person do well at the job?” not just about the company saying, “Are we improving our process by seeing who succeeds at this work and then what are they like?” and then looking for more people like them It’s also letting the person, the candidate know, this is what the job is on a day-to-day basis. “Can you really sit and make phone calls all day? Can you really sit and deal with humans who have complaints on the phone?”
Barend: Exactly, but not . . . Yeah. So, in call centers and retail and hospitality for every low entry jobs. And what we also think is . . . So, we offer matching technology, which provides decision-support, and decision-support is for both sides that have to make a decision, so it’s not only the company, also the applicants should be really aware.
Andrew: Okay. And so you had this idea, you said, “How?” You know what? A lot of times people tell me, “Andrew, talk to your potential customers, interview your customers, understand their problem.” The questions that I should come up with are not necessarily obvious. How did you get to that? What did you ask that allowed you to understand the problem from all these different directions?
Barend: You mean the questions we ask to the people to that we . . .
Andrew: Yeah. Well, how did you draw this out of them?
Barend: Yeah. We created what we call the applicant journey. So, we let them sketch their own life, and that’s not only the application process, that’s also before. So, how do you look for a job? What makes you think that this was the right job for you? What is . . .
Andrew: You went to the applicant?
Andrew: The successful one, the one who fit in the work?
Andrew: And you said, “Forget the day that you applied.” Or not forget. “Go back before. What were you doing before?”
Barend: Yeah. What were you doing?
Andrew: And you wrote it down.
Barend: Exactly. And . . .
Andrew: “How did you find this job?” And you wrote it down. “Why did you apply?” And you wrote it down. “How did you go about applying?” And then what were you looking for in all those steps in the journey?
Barend: Of course, insights. So, insights that explain, especially for the people that were leaving why they were leaving. So, for example, if somebody quit a job after four weeks, there is a very clear question. What did you expect when you applied for this job and what did you find after four weeks onboarding? And then you see the huge differences and you know there is a problem there. On the other side, if people don’t make it in a job because they don’t perform well, you can look at the performance indicators, so that was the next step, and start to think what could be measured in advance to detect whether this performance is likely to have happened or not.
Andrew: So, let’s suppose that they’re not making enough phone calls, what would you say I can measure to tell me why they’re not making enough phone calls?
Barend: We can give you an example that I think everybody understands. If you’re on a phone, you have to listen to a story, of course, you have to listen to the customer. That’s what you want as a customer. You want somebody who understands you. At the same time, you have to work always multiple computer systems because, yeah, you have to do data entry, you have to look for the right answer, you have to modify something. So, you have to work on a computer, listen to a story, and act on it at the same time. This is something one of the things that we measure now later on with our online platform on forehand. So, how do you behave when we ask you questions, let you multitask and let you type at the same time, and then measure how many errors do you make and if you can still follow the story. And if you’re good at that, then you are less likely to get frustrated when you have to do it on a job.
Andrew: That makes sense. You’re looking for the things that could lead the . . . You’re letting them tell their story, and then you’re looking for the reasons why they would succeed or fail.
Andrew: And you’re just coming up with hypotheses. It’s just, I think it’s because someone who can’t multitask is not going to be able to handle a lot of phone calls and respond to people fast enough. And then you make a list of these hypotheses and you say, “We think we understand how to improve this process.” And you walk over to your client and you say, “I think I know it and I’m going to build something that solves it.” What was the thing that you would build with all that in mind?
Barend: So, what we build in initial version is an application experience where we could measure in a validated way because that’s for us really crucial because if you measure something, you have to be sure you measure it in the right way, because else the system gets broken again. So, an integrated application experience where we could, and one hand by video in gaming, showcase the job so people could decide for themselves, “Do I like this or not?” And in a nice storyline, because it also has to be fun and attractive, yeah, basically measure the KPIs that we assumed were predictable for success. So, that’s one part that we built.
And I think equally important, we build a part for what we call performance feedback. So, if we assume that some things are predicted for success, then you are obliged to also measure after three months, six months, nine months if it indeed predicted the success. And I think that’s also unique at Harver that by that we created a learning system, so, every time you use it, every time and an applicant is successful or not successful, yeah, the system becomes smarter, because as you say, indeed, you start with assumptions.
Andrew: You know what? We try to do that with our processes all the time, that if we have a process for pre-interviewing someone, we need to have a feedback loop that goes back to the next pre-interview and says, “Here are all the things that worked and here are the things that didn’t and we keep trying to improve that loop.” And that’s something that I used to leave out of processes as I would just say, “I think I’ve got the process. It’s done. Let’s move on.” But what we have to now remember is always have that feedback loop in there.
All right. So, you have the KPI, you came up with the way to showcase. I get what you’re saying. I want to see it a little more concretely. Was it a website that you built that said, “Here’s a day with a video that said, here’s a day in the life of our job before you apply. Notice this”? And then, what was it?
Barend: So, if you go to . . . I don’t know. Clientofbooking.com and you go for a job in their call center or some other jobs, and you hit the Apply button and then you don’t get this boring form to upload a resume, you go to our platform, there is a host, there is a video welcoming you explaining you about the company, also the good things and it’s a realistic job preview but it’s also, of course, a little promotional thing. And we guide you through the process, and in this process, you have to help actual customers in a game. You go through testing, also, for example, personality testing, as you just mentioned. And at the end of the process we show you your results, so you can also choose for yourself, “Do I think it’s a fit or not?” And based on all these data points, the matching algorithm calculates the likelihood that you will be successful, and that decides whether you move forward in the process or not.
Andrew: This is today version. I think I’m on your . . . You guys created email@example.com for the company called booking.com, right?
Barend: So, that’s the recruitment website. That’s done by another amazing company, by the way. So, that’s not us. We are behind the Apply button.
Andrew: Once I hit Apply that’s when you guys kick in.
Andrew: Okay. So, that’s today what I would see if I went through that process. What did the first version look like?
Barend: I think if you look at the evolution of our platform, we started with a platform that was only for call centers, so that was basically the beginning, with a limited amount of measurement instruments. And now if you move fast forward, and in that time it was also a platform that we designed for our customers, so we actually build it for our customers. And now we transform that into a SaaS solution. So, in our new platform, our customers can design these application flows as if you would build a PowerPoint. So, you can just . . .
Andrew: You know what? I’m sorry. Maybe I’m a little slow with this, but can you . . . The first version, can you spend a little more time on that? What did that look like?
Barend: Yeah. It’s like an MVP. So, we built this application experience and it was set in stone. It was one version that was available . . .
Andrew: So, you were the whole thing, the thing that said, “Here’s the video,” that whole thing you guys created.
Andrew: Right from the start, the gamification. What did . . . So, I understand that the video was just a basic video that the client shot with your help?
Andrew: And then the gamification, you built into it. What did that first version look like?
Barend: It’s a situational judgment and in essence, that didn’t change. It got more flexible, but in essence, is that you present the situation to somebody and you ask how you would respond, and there was a very good way and a very bad way to respond, and by doing that multiple times, you can see if somebody’s behavior is close to the expected behavior on the working floor.
Andrew: Okay. All right. Let me take a moment to talk about my first sponsor, but I want to sum up. Here’s what I’m understanding from you. First, you found a problem. Next, you went in, and you found somebody who could help you understand this problem better. Then you went and you started talking to the people who dealt with this problem from both sides and you asked them for their story, and throughout their story, you were looking for places where the process would break down or lead to bad results. And once you identified those, and it was three different points that you found, once you identify those, you checked in, I’m assuming, with a recruiting agency, with Randstad, and then you started to build the first version.
Andrew: And your first version was not a minimum viable product. It was a pretty robust system. It just was inflexible.
Barend: That’s it, yeah, because it had to do the job from day one.
Andrew: Yeah. Why didn’t you just say, “You know what? We’ll do this manually, we create forms using something like Typeform or SurveyMonkey or whatever and we’ll manually do a lot of this stuff”? Why did you decide that you had to code up the whole thing?
Barend: I think that scenario could’ve been possible as well. I think we were quite confident that if it was not perfect, we would be close to very well solution. And also it was high volume involved. So, 10,000 applicants applying for a job. So, it’s also something that we wanted to deploy and, yeah, that it was manageable for the company and that it will not happen with forms or . . .
Andrew: And your friend, she was paying you guys to deliver this result.
Andrew: So, you had a client who is doing it and by building it for one client, you were getting paid to build it, but also learning enough that you could create software that then becomes your software, the standalone.
Barend: With more scalable versions, yes.
Andrew: Well, one last thing before I go into my sponsor. I know I’m running late with the sponsor. But what was it about the research that you did that made you feel so confident that you felt like, “Yes, we are on the right track”?
Barend: There was quite a lot of research was done on what predicts what kind of success on the job, but it was never brought together into one data-driven solution. So, we had quite some research that was already proven. We didn’t have to prove it anymore. That was many universities did a lot of studies for that. So, we were quite confident. And then the other thing is our competition was the resume and that the resume didn’t work. Well, that was also very obvious. So, even if it wouldn’t have been as successful as it is today, we would have had improvement anyhow.
Andrew: Yeah. Yeah, I hate those resumes. I like LinkedIn. Why is LinkedIn so much better than resume? I don’t know why. I guess part of it is that LinkedIn is less wordy, more factual, and it’s kind of you imagine viewed by a lot of people, so it’s more accurate.
Barend: Yeah. Yeah. It’s also, I think less tailor-made to a certain goal because it has a general purpose.
Andrew: Right. Okay. So, the company I want to talk about is a company called Toptal. And one of my past guests, a guy named Justin Hartzman, excuse me. Get this. He ran Needls, a Robo agency and I interviewed him about it, and he got really obsessed with cryptocurrency. He wants to make it easy for people to buy and sell cryptocurrency in Canada, not in the U.S. Apparently, the rules are different. So, he created a company called CoinSmart. At first, it was like the side thing, then he started getting investors for it, then he started saying, “You know what? Maybe I should spend all my time on it,” and started hiring these phenomenal developers for it.
And then on a call with me, he said, “You know what, Andrew? I called up Toptal.” I said, “Why? You already told me that you had these great developers that you were basically pulling away from other projects.” He said, “Yeah.” He said, “I got super-smart people. I’m investing a lot of time. I’m investing a lot of money in them. I’m sending them in a really good direction here, but I want someone who’s like CTO level, someone with a lot of experience to look at the work that they’re doing and tell me and tell them whether we’re on the right track or not. Tell me and tell them whether there’s another way of doing things that we hadn’t thought about. Be that outside voice that frankly a lot of writers know.”
How many writers have editors who have a lot more experience, a lot more guidance who can come in and improve their writing work? He said, “That’s what I’m looking for.” And so I said, “What did you do?” He said, “I went to your URL, toptal.com/mixergy,” because he also likes a good deal and he also wants to be connected with me. And he said, “I talked to them.” And that’s the first thing that anyone who’s listening to the sound of my voice is going to do. You’re going to get to talk to someone at Toptal.
This isn’t one of those things where you go to their website and pull out a credit card and pay for tens of thousands of dollars in development work. You go in, you fill out a form and you show that you’re committed. But once you fill out that form, you get on a call with them. And if you’re happy with what they could offer you and you want to get started, still no obligation, they’ll connect you often with one or two people who they think are the ideal hires, not candidates, hires, they really want to do a great job for you and often the first or second person they introduce you to is going to be a great fit. This is what they do. They do it great.
If you want to go to that URL just like Justin did and get a great deal, here’s what you’re going to get. Mixergy listeners get 80 hours of Toptal developer credit when they pay for their first 80 hours in addition to a no-risk trial period of up to two weeks. They want to make sure you’re 100% satisfied. So, go to toptal.com/mixergy. That’s top as in top of your head, tal as in talent, T-O-P-T-A-L.com/mixergy. Are you’re getting excited about cryptocurrency too? You’re not shifting your business to cryptocurrency?
Barend: Oh, no. But I follow it for sure. Yes, it’s interesting.
Andrew: All right. You had your first version, you put it out in the world. What was the reaction?
Barend: Yeah, measuring results. So, the first month it was more collecting this feedback data to see if it was working. Yeah. And then the results came in and we saw that attrition was dropping, engagement was increasing, performance was increasing. And that’s also the moment in time when we really decided, this is not something that we built for one company, it’s something that a lot of people can benefit from now.
Andrew: You know what? We have these email sales sequences that can last two to three weeks. And the problem we have with that is, if we’re buying an ad today, we won’t know whether that ad worked for two to three weeks. It’s really hard to measure success. And so we keep struggling with figuring out, “Should we spend more on an ad or more or less?” You have something similar. You don’t know the next day whether a candidate is going to work out or not. It takes, you said, 12 weeks for 30% drop out. But you don’t want to wait 12 weeks to know whether your software is right and improve on a 12-week cycle. So, what do you do to solve that?
Barend: There are multiple data points, but you have to be very cautious on what data points you use. So, of course, an applicant comes into a company and has his first interview, and then already you get some feedback because the recruiter has an opinion. Then you get a hiring decision. So, within reasonable time, you know is the person hired or not, that also gives a little bit feedback. Then you have the onboarding. So, did he go well through training? And then one month and 12 weeks attrition. Is somebody still there? And then we look at three months cycles of performance feedback, and how is this person performing and engaging.
Andrew: So, you’re looking for earlier indications, knowing that the later indications are the most solid, the most telling, but you’re looking for that early . . . What was the first indicator that told you whether you guys are successful? What’s the first metric you look for?
Barend: When we started, we looked at the attrition. So, we waited a while before we had the metrics. And now we look at more metrics and are also, yeah, agnostic in the kind of metrics that we can support. But we liked the longer-term success because there can be also negative bias in the initial data that you get. So, if somebody is hired because the recruiter likes him, that still doesn’t mean that it is a very successful person. So, that’s why we . . . It’s hard, just as you describe in your example. It’s hard to have a longer period of feedback, but we believe it’s . . . Yeah, you need . . . The quality of the data is equally important as the speed of the data. So, yeah, we decided to wait at time.
Andrew: So, you’re trying to build a solution for one client. A lot of people in my audience are running agencies where they think that they want to create a standalone product, but they don’t have the time for it. So, this is a good path to doing it. You build for one client, you get paid to build the software, you get feedback from that client because they’re paying, you know that the quality is right. The challenge that they bring to me is, can they take the work that they did for one client and productize it without having the client feel ownership over that product? How did you solve that?
Barend: Straightforward agreements before we started. So, yes, they do pay for the product, but you can also co-invest, because often in these kind of, yeah, where you really have to look for innovation, you have to spend a lot of hours and you’re not sure if you even can come up with a solution that works. So, we had clear agreements on that. And yeah, I think it’s a good way to start with one client and to prove that it works in the real world before expanding it to a bigger product and to multiple clients.
Andrew: When you say agreement with them, what was your agreement with them that allowed you to take this beyond your work for them?
Barend: Our IP. So, the IP of concept, the IP of code. Everything that you create and you keep and you license it out. So, although it’s the first client, it’s still a license deal.
Andrew: Okay. And was this standard in all your agreements with your clients that anything that you build for them is your intellectual property?
Barend: Not always, but it was . . .
Andrew: It was in this case. And so, that’s good advice for someone listening to say, “Whatever we create, is it the creator’s intellectual property?” Or do you think you can work out an agreement where you both get ownership of the software?
Barend: I think if you have an idea that you’re onto something that you want to drive into a company and the first . . . or that you want to create a company out of and your first client is a larger company, then I would advise to keep it all with you because having a startup with a big company as a partner, that’s not an easy road.
Andrew: Were they partners? Did they own any of the business?
Andrew: No, nothing. Okay. So, you then were looking at the results, you told our producer you wanted to see how attrition would be impacted by your first version? What were the numbers? Do you remember?
Barend: It was about 60% decrease of attrition and it was immediately. So, it was after, I think, three months we published those numbers.
Andrew: Yeah, that’s what I have here in my notes. That’s shocking. And that then is clearly a measurable financial number for your client, they know how much that’s worth, right?
Barend: So, in, let’s say, low-entry jobs, the numbers are between €2,000 and €20,000 per mis-hire on onboarding, training, recruitment or everything, but also the salary you paid for somebody that was not yet productive, so that this makes an ROI that’s never a problem for us.
Andrew: The super clear return on investment, you have a good case study, and you’re ready at that point to start building this into its own product. How long did it take you to turn what you created for one client into software that would work for other clients?
Barend: Yeah, it was a staged process. Another thing maybe it’s also good to address. Another point of the ROI, which I think for a lot of companies is also important is that many of their applicants are also their customers, so you want to treat your applicants well. So, it’s not only the money that you lose, it’s also about your reputation as an employer.
Barend: Equally important. So, how to evolve from there is that . . . Yeah, so the second client, basically, got the same product, so technology-wise we didn’t change anything. So, I think the first, yeah, it will be around 25, 30 clients, they were still served in the same way, so with the same kind of platform, and then we decided to read the scale and also transform everything into a SaaS solution instead of a one-off solutions.
Andrew: Okay. Actually, how long again? I think I might have missed the number. How long did it take to turn it into . . .
Barend: I think after 25, 30 clients, we really thought this is not . . .
Andrew: So, it wasn’t a number of weeks of turning it around. You started working with more clients one-on-one creating almost custom solutions for 25 to 30 of them.
Andrew: Okay. Got it. So, it was . . .
Barend: And of course, it not [customized 00:31:06] and you get smarter in it, but at that point, we really said, “Okay, now we know . . . ” Because if you want to transform a custom-built solution into a SaaS solution, you have to limit it because, yeah, you cannot customize limitless in SaaS. So, yeah, it took some time to figure it out and . . .
Andrew: You know what? Yeah, tell me more, because I think in my mind the reason I didn’t hear your answer was I expected a completely different answer. I expected you’d say, “This worked for one client. We immediately put it out on its own website, harver.com. Anyone can go there and create their own process.” And you didn’t. You worked with over two dozen clients before you did that. I wonder what insights you got by working with two dozen clients almost as a consultant almost customizing, in fact, customizing the software for each one. What did you learn that you wouldn’t have known if you did it the other way, the way that I expected?
Barend: So, I think one thing is different industries. So, we started in call center, but now, yeah, we do hospitality retail traineeships. So, I think in the first clients, we also learn about different industries, we learn more about the KPIs that are predictive for success. So, yeah, if you transform something in a big platform, then you have to know what’s in there. And I think what we also learned is, how can we limit customization for each client, but still give the individual clients the idea that they got a custom solution. So, if you and your competition have exactly the same platform, you don’t like that, you want to differentiate, so you can change the background image, you can change the logo, you can change some colors. And you have to define that really as narrow as possible before you translate something into a big platform. So, these are the things we learn before going into a bigger investment.
Andrew: You know what? The examples that you just gave, I imagine my listeners saying, “Of course, you want to change the logo. Of course, you want to change the color of background.” What’s not obvious that you learned about how to do mass customization for your space? What’s one thing that you only learn because you worked with over two dozen clients before you standardized it and turned it into a software as a service?
Barend: I think, for example, if you talk about gaming, there is a lot of things going on around gaming and recruitment. And if you say gaming, it’s open. There are limitless ways of developing games and interact in games. And I think we brought that back to, we show you situation and you can respond to multiple ways because our goal is not to have the best game in the world but to collect the best data in the world. We expecting in the beginning that clients would really demand a lot of customization on that, that they really say, “No, I like a 3D game. No, I want a game where you can walk around. I want a game with joysticks.” I don’t know. And that’s one of the things that we found out now and we can really structure it in a very solid data-driven structured way and we can explain why it’s not necessary to customize as much as you could maybe do in other environments. I lose the audio.
Andrew: How did you get over two dozen comp . . .
Barend: Yeah, I can hear you.
Andrew: Sorry. How did you get over two dozen companies to trust you with something that’s a key part of their businesses?
Barend: I think what help for us was we got quite some publicity. We were very . . . Yeah, and that time there was more data-driven recruitment going on today than back then. So, we won some awards in Holland and won some awards in Las Vegas which got us quite some publicity, and I think it’s a burning problem. So, a lot of companies have problems with efficiency and quality of hire.
Andrew: You know what? So, I noticed that in your conversation with our producer, you said that, “Randstad nominated us for awards.” And I said, “What awards are there that have to do with recruiting?” What’s the award ceremony that you won?
Barend: There’s award for . . .
Andrew: I had no idea.
Barend: There’s an award for everything. Our award is for HR for innovation in HR. And in U.S. we won an award for innovation in call centers. If you look at the call center industry, for example, it’s all about people. It’s a human being on the phone, so people are the most important thing in a call center. It’s not the phone or the technology. So, if you have something that will improve people, it has big impact on business. So, yeah, I think that was a reason we were awarded.
Andrew: And so you got the awards. You also did a case study I think that helped?
Barend: Yeah, yeah. Multiple case studies.
Andrew: Like constantly whenever you improve numbers come. Why would a client allow you to use them as a case study?
Barend: I think they’re also proud on it. I think people are not proud on attrition numbers, they are not proud of people leave disengaged, but if they can improve it, why not share that news. It also shows that you care about your people even if you don’t hire them.
Andrew: Look at this. Actually, not only are there that many awards for you to win, there are so many conferences in the HR space that you guys on your blog, as I was researching what you said, I found you have 25 of the top HR conferences for 2018. There’s that many different events in the human resources space, HR.
Barend: Interesting. It’s in every industry that when you dive into it, there’s a whole world that you don’t expect to be there.
Andrew: All right. And so you got really good at that space, you then took on more and more clients, you built out your own software. Did you start to create a marketing process that was more geared towards getting customers on an ongoing basis?
Barend: I think that’s something we started last year. So, in the beginning, it was really driven by our clients approaching us and this word of mouth. Last year when we also decided to scale in the U.S. to make U.S. our main market for expansion, yeah, there you have also different rules, and then we really started with professionalizing marketing, building a real sales team and . . .
Andrew: You know what? I’m going to ask you about professionalizing marketing because I know that was a key area of growth for you guys. But let me ask you about first. Starting out in Amsterdam, starting out in Europe, how did it impact your growth and understanding of your customers? Did it help? How?
Barend: I think if I would generalize it, I think that when you are in Amsterdam, in Holland, the first steps are easier because it’s a small country and I think people are really open to innovate and work together. I think when you look at scaling a company, and then, of course, there is a big disadvantage because the European market doesn’t exist. There are all different countries, actually experience different languages, different cultures. And I think then there is a big advantage of being in U.S. because there is limitless scale possibility.
Andrew: So, it helps you get customers, it helps you understand them at first, but you have to remember, we got to break out of this one country because if you want to go bigger, you need to get out of the small country. I’ve noticed that a lot, actually, that entrepreneurs who I interview that are outside the U.S. especially in smaller countries, if they try to come into the U.S. first, they struggle, but if they work on being as big as possible within their country, understanding it, getting strength and customer base there and then expanding, they have an easier time. Is that fair?
Barend: Yeah. I think if you still have to invent your product market fit, then you’re not ready for expansion, but if you have the basic . . .
Andrew: So, first get product-market fit in the different market.
Andrew: In your own space.
Barend: Yes. And also make sure that if you go to the U.S. from abroad that you are aware of the investments you have to do to start in the U.S. It’s a big, big country, but it also requires series of investments to start it off.
Andrew: How much did you guys raise?
Barend: I think in total around 12 million.
Andrew: Twelve million. And so, were you profitable as a standalone business before you started raising money?
Barend: Close to. I think we could have been profitable, but I believe if you’re in technology, and especially in data technology where data is key to success, you have to scale because if you don’t scale, there will be another company probably from the U.S. that will take over the full markets. And so we were not fully profitable but then we decided it’s also not our goal to be profitable. We want to grow.
Andrew: Okay. So, let me talk about my second sponsor, and then I’ll come back in and find out how you grew beyond this small innovation. So, I got to say that years ago . . . Let me see how long ago it was. I interviewed this guy 2012. He wasn’t a techy, but all he was into is music. He knew how to let people . . . He knew how to teach people to listen to music and learn how to play it, play by ear. He was just an amazing. His name is Jermaine Griggs. He had a church rag with him, to give you a sense of who he was. That’s like when you get sweaty at church, you use this rag to dry yourself off. He was just like a nice smart guy.
But what separated him was he started teaching people online how to play music by ear, and then he got into marketing automation and he got really smart about it. If you like a certain kind of music, he would put you in a sequence of messages so that you’d get not just promoted his course, but that you get promoted his course with that type of music in mind. So, people who are into rock would get to hear him say, “Here’s how you can play the piano, rock music by listening to it.” If you’re into gospel, you can get emails that were geared towards gospel, and that’s how he sold. And if you watch one of his videos, you immediately got another email about the next video because he knew that you are hot for the next one, and the next one and the next one until he sold you. And this guy built a multimillion-dollar business even though he wasn’t a techy, just by getting into it, because he taught himself just one thing, marketing automation.
Now, a lot of people in my audience said, “All right, I’m going to try it.” And they tried to copy him, they tried to follow in his footsteps, and they failed. And the reason they failed is, “Marketing automation sounds so simple, so clever, so easy. And if this guy could do it, then they could do it too,” They thought. But it turns out, no. It takes a lot of effort, a lot of time. It’s just . . . That’s why many people just gave up. It was just too much.
And then a company called ActiveCampaign said, “You know what? Why does it have to be so tough? Why can’t everyone have that power?” Why can’t anyone who’s listening to the sound of my voice say, “You know what? We have different kinds of audiences, let’s just figure out who’s who and send them a different set of messages based on who they are and let’s make it super simple.” And the company, ActiveCampaign, decided to focus on that. Marketing automation made simple.
So, if anyone is listening to the sound of my voice and says, “You know what? I think I could sell better by addressing people based on who they are instead of giving them all generic messages. But I don’t have all week to become a growth hacker 40 hours a week. I want to just build it in and move on.” Well, if that’s you, you should go check out activecampaign.com/mixergy because, first of all, you’re going to get at the top of the screen a list of all the features and all the things that you could really do. But second, they’re going to give everyone who’s listening to me two free one-on-one sessions to make sure that you understand how to use this and implement in your business, you have a plan of action, and then . . . That’s in the first session, and in the second session, they follow up and make sure you actually use what you learned and give you the next steps whether if you miss something, how to apply it, or if you got something right and you want to take it to the next level, how to take it to the next level that really work with you.
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All right. Professionalizing the marketing. How did you do that?
Barend: Getting good people on board.
Andrew: You mean, you said, “I can’t do this. I need to find people who are good.” What does it mean to get good people on board for this role?
Barend: People . . .
Andrew: People who did it?
Barend: Yeah, people [inaudible 00:43:29]. And I am very lucky to have a very, very good commercial director who is also taking care of the full marketing part of the business. So, he had met many, many interviews with people and created a path forward to get us basically from where we were in Holland and not none at all of this matters due to where we are today where we have . . . Yeah, I think we have some basics . . .
Andrew: I understand how you hire for this role because it is so critical. Was it that you said, one of the things I see in enterprise is a business says we’re going to go and hire a salesperson who worked with the clients that we want because he’ll just go back to his old clients and say, “I’ve got this new thing that you should be aware of.” The other thing they do is they say, “I want to find someone who did all this, who built a sales department from scratch,” and they do that. What was your process? What was your vision?
Barend: So, I believe in a second one. So, building a sales process, building a sales team. And it depends, of course, on the kind of business of what you do. But I think if you are selling SaaS solutions in a certain market segment, the sales process should be really, not completely but a standardized process with clear defined steps where you can onboard new people and make them successful, regardless if they have a network or if they have been in the industry before. So, I think it’s a lot about having the right process, having the right material, the right content to run the process and not so much about hiring somebody that’s in the industry for 30 years and that has a big network. That may work in other industries, but I don’t think in SaaS will work.
Andrew: For you, what you said was, “I want someone who already built a sales team, a SaaS process, and was already had experience doing it.” The person you hired, where did he have experienced building a team and building a process?
Barend: So, he worked for a few marketing companies. He joined Harver really early on. I also perceive him more as a business partner than as an employee. And he runs sales team of 100 plus people in the field marketing. And I think . . . Yeah. It’s not that he built a SaaS sales team before, but I think he learned to study a lot and on the way created the process that works for us.
Andrew: What is the process? What are the set steps that he defined for you guys that you’re using?
Barend: So, of course, we have a lead generation. I think we rely a lot on content marketing. It’s also something I personally believe in that if you share with the community, the community will know you and will know how to find you when they need your service. So . . .
Andrew: It’s content marketing for you guys the blog only or is it more than that?
Barend: Yeah. We also write for different, not only our own blog but also different content. White papers, but we also organize, for example, conferences, so that’s not online but more offline exposure.
Andrew: Okay. All right. So then you start off with there, and then that feeds into a funnel. What’s the sales funnel look like?
Barend: So, we have a business development representatives that follow up and also do, based on outreach, search for potential clients that are in our sweet spot. And we have if they made first contact and there is a serious interest, yeah, then they are handed over and we have account executives that follow the lead and close the deal.
Andrew: You know what? So, I’m on your site right now looking at one of your blog posts. It seems like the only way that I can go from being a reader to being a potential customer is to go to the top navigation and maybe hit one of the buttons like Request a Demo and then I get on with one of your people, but you’re not trying to actively get me to switch from a reader to an email subscriber, and then from an email subscriber to a demo. You’re not doing it. It’s subtle, isn’t it?
Barend: It’s there, but it’s subtle. It’s not a highly aggressive, but they also know they’re playing around with it. So, they are trying multiple things to approaches. So, there’s definitely always room for improvement. That’s something I absolutely believe. So, it’s subtle but it’s there, but it’s not in your face. It’s not that there is a Subscribe Now button on every corner of the website. That’s true.
Andrew: Here’s the other thing that I noticed, that the phone number on the site is a European phone number, it’s +31 then 20, etc. You don’t localize it for me to have a local phone number.
Barend: That’s a good point. I will look into that tomorrow because we have a U.S. and it should be on there definitely.
Andrew: I interviewed a founder of a company called RightMessage. He will automatically change that based on people’s IP for you guys if that’s what you want. All right. I thought maybe there was a reason for that. I thought maybe that you guys are still considering yourselves a European company, but that’s not it. It just happened to be that it’s not.
Barend: Actually, it’s the opposite. We really believe we are multi-location company and we are as U.S. based as Dutch base. So, no, that was not . . . There is not a strategic reason behind that.
Andrew: So, then, once somebody gets on a call, what’s the process? You show them the software and then you close a sale on the call?
Barend: Most of the times there are multiple calls before you close . . . Yeah, before you close a contract. But yeah, basically, that’s the process. Yes.
Andrew: And then you also said that you guys do outreach? Who do you reach out to? What’s your process for that?
Barend: So, we have a sweet spot for clients. So, of course, if you only hire 10 people a year, then maybe Harver is not yet the right solution for you. So, there is some volume involved in there and also we look at companies that also have a high volume of applicants, so there’s also some selection required.
Andrew: And then you start looking for their HR people and start telling them . . . What do you do? You email them or you call them?
Barend: We have some smart software that we use, I don’t even know by heart what software it is, that collects this data and we call them, we email them. So, there are multiple sequences to approach them, and I think in general, we are not the most aggressive in that approach. We really believe that . . . Yeah. We have a very good offering. So, we reach out to people and if it’s a no, it’s a no.
Andrew: I was trying to figure out how you guys work. Where are people coming in from? LinkedIn seems like a big source of traffic for you guys. Search, I think I saw was significant. But still, according to a similar web, the Netherlands accounts for the . . . It means you’re getting more people from the Netherlands than any other country including the United States. So, it’s still in its infancy your sales process.
Barend: Yeah. And we also . . . So, we started in the U.S. last year, so we’re also building up. And I think in Holland we’re quite a renowned company where people follow us and look at what’s happening with us. So, yeah, it makes total sense that it hasn’t flipped yet to the U.S.
Andrew: You told our producer you have two challenges. Actually, you have more, but here are the two big ones.
Barend: I wish were two.
Andrew: You said, “You know what? For me a low point,” you said was, “I have lots of ideas, I just could not move fast enough until I finally said, ‘I have to commit to a single idea.'” And you told her this was a low point for me picking the one. Why was picking one a low point?
Barend: No, the fact that you had to pick. We had a nice chat about the entrepreneurs, they often have multiple ideas and you’re always new opportunities and you would like to change them all, but I think the reality is if you chase them all, then nothing will be really successful and you have to focus. So, I think it was in 2014, end of 2014, where I really said, “Okay, it’s going to be Harver. And if I have a great idea on something else, I will tell somebody else but I will not do it myself.” So, it was not a hard thing to choose Harver. It was a hard thing to choose.
Andrew: To just pick. Why did you pick this over any other idea?
Barend: I think it will make huge impact. I think I like that because it makes impact not only for companies, so it’s not only about making or saving money for companies but that you really help people to make the right decision in their careers. So, I like that thing. But I also think from a business perspective it was a huge opportunity.
Andrew: What was the second best idea?
Barend: Wow, that’s also a good question.
Andrew: Or one of the leading candidates for second best.
Barend: So, back then, I had some other platforms that I managed and companies that I built. One was, we supported tourists that wanted to visit locations that were affected by recent wars. So, let’s say an Airbnb for war-affected areas. So, from a business perspective, less attractive, but it was also great to setup and to see how you can basically impact people’s life by sending them tourists that spend money in the community that never gets tourists. So, I think that’s a nice one. And I also previously built an online butcher and where you together with your friends could buy a cow so you would really know where the meat came from and would be sure that the cow had a good life until, of course, it ends.
Andrew: You know what? Yeah, I can see how those are good ideas, but this is a bigger idea. It impacts more people.
Andrew: The other challenge you said was, “Adding features when we need to focus on scaling.” Can you talk more about that? Like here’s one you said, “Look, I’m 100% sure that we can use the same technology that we built for Harver to help individuals. If we can help a consumer and create a consumer product.” Right? So, that was one feature that you considered creating, but it would keep you away from scaling on this one, on your business which is serving businesses.
Barend: Exactly. I think there’s always this balance in your company. When you see new opportunities and want to chase them and at the same time you have to make sure that you serve your current and existing customers and keep delivering the value that you offer today. So, I think one of the things I strongly believe in is that if we improve this matching and get the matching to the highest possible level, then we can not only use it for big companies to select the best applicants, but we can reverse the process and tell the applicant, “Based on your data profile, this could be jobs where you could be happy and successful.” And the fundament is the same matching technology, but it requires obviously an approach for a different target audience. So, this is something that’s definitely for us on the roadmap.
Andrew: Because you have to have the discipline to say, “We’re not going after that even though it makes sense because we have to scale this one business first.”
Barend: Not today. Exactly.
Andrew: Yeah. How do you make a decision about what to get into, whether to focus on scale or focus on improving your matching, for example?
Barend: Yeah, this is always joined decisions where there’s always multiple interests. So, you have clients requesting certain features where you have to decide is this feature while you are at the now and is it something that we as Harver want to offer or is that a feature that maybe not a company should provide to a client? And you have your own assumptions of new parts of your product where you think if we add this, yeah, we can reach new industries, we can reach new areas and this is always a balance where there is always less resources than there is a mission
Andrew: All right. The website is Harver, H-A-R-V-E-R.com for anyone who wants to go check it out. And I want to thank my two sponsors for making this happen. The first will help anyone who’s listening to the sound of my voice do email marketing right. It’s called activecampaign.com/mixergy. And the second will help you hire your next great developer. It’s called toptal.com/mixergy. And I’m grateful to you for coming here and doing this interview. Congratulations.
Barend: Thank you.
Andrew: You bet. Thank you, everyone. Bye.