Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Joining me today is a founder who had a problem hiring people. That led him to create a company that helped him and other employers recruit and hire the right team members.
Ian Siegel is the cofounder of ZipRecruiter, which enables companies to post to multiple job boards with a single submission and easily review all the candidates that respond so they can evaluate and find the right people. ZipRecruiter is used by Netflix, PayPal, Wells Fargo and over 400,000 other employers have used them. I’m looking forward to finding out how he built this company up and how the product evolved.
This whole interview is sponsored by HostGator. Now, I’ve got my notes here from HostGator, the sponsor, about what they want me to tell you. They want me to tell you that they have one-click WordPress installs, but you kind of assume that everyone is going to have it today, right? They want me to tell you that it’s easy to build a website using their quick website builder. But if you’re listening to Mixergy, you probably believe that you can setup a website on anything, probably an old PC, old Mac, whatever. So, that’s not bringing you in.
There are two things, I think, that are going to really be interesting for you. First of all, you care that they are reliable. Second, if you’re like me and you’ve used other hosts and you can’t get anybody on the phone, you probably are going to love that they have 24-hour phone, email, chat support.
They told me that it was easy to get through to them. So, I’m going to try it right now, right here, on the call with Ian. Their number is 866-964-2867. Ian, is it going to be embarrassing if I call and I get put on hold for long? Let’s see… Let’s press one and see how fast I get technical support. Ian, this is probably the longest sponsorship message I’ve ever done. Thanks for standing by. Alright. Record the call. That’s fine. If you want to check them out, go to HostGator.com/Mixergy, sign up and let them know you heard about them from Mixergy.
Good. Hi. My name is Andrew. If I have a tech support issue like my website is down, are you the right people for me to talk to? Ah, 49 seconds it took me to get you on the phone. Thank you so much. I better run. I was just doing a commercial and I wanted to see if you’d come through. Thank you. No. That’s everything. Thanks a lot. Alright. Thank you. HostGator.com. Go sign up. Tell them Mixergy sent you.
Ian, how was that for a commercial? You’re a guy who’s really good at communicating his ideas?
Ian: I think we can probably tighten that pitch up some.
Andrew: It did take a long time, right? But 49 seconds is not a long time. It’s just a long time for a commercial.
Ian: Yeah.
Andrew: Alright. Let’s get back into ZipRecruiter. Thank you for doing this interview and letting me experiment with that commercial. You guys raised a boatload of money. How much money did you raise?
Ian: We raised our series A and it was $63 million in August of last year.
Andrew: $63 million. Now, Jeffrey Zwelling, who introduced us, said that that was a record. What kind of record was that?
Ian: I think it might be the largest series A ever done in Los Angeles history, though obviously I didn’t spend a lot of time checking that stat. But it came after we [inaudible 00:03:38] and we were fortunate that we were in a position of doing tens of millions of dollars.
Andrew: Sorry, after about how many years?
Ian: Four and a half years.
Andrew: And you were doing how much in revenue? Sorry, we lost the connection for a moment.
Ian: We were doing tens of millions of dollars in revenue. We were profitable. So, it was an exciting time for us to make a decision to actually take on the investment dollars because it really represented a transition in just how we thought about how we were running our business.
Andrew: Ian, I’m looking at your resume here. You were a web producer for Warner Brothers, product manager at Ticketmaster, VP for Stamps, etc. This is your first company. Everywhere else you were the CO-something, chief of something or VP of something. Is this your first company?
Ian: Yeah. This was my first official startup. I’ve been building companies for other people for over 16 years. Then I finally said, “Hey, why don’t I try to build one of these for myself?” and it went even better than I expected.
Andrew: I’ll say. Tell me about the problem you saw and how you experienced it when you decided, “I’m going to jump in and start my very first company here?” I think we just lost the connection again. There we go. What was that problem as you experienced it?
Ian: So, I worked for multiple internet companies that were either poorly funded or lightly funded and we were too small to have an HR department. So, often I found myself in the position of posting my own jobs, usually to multiple job boards and then processing the candidates that came in and most often I was doing that via my email inbox.
Andrew: So, what’s the problem with that? People do it all the time. You get to post on Craigslist. It doesn’t even cost that much. You get a lot of people that are applying. Why is that an issue? Give me an example of a time where it was an issue for you.
Ian: I think the reason that it was an issue is because it was so inefficient. By that I mean yeah, we would post on Monster or we would post on CareerBuilder and we would post on Dice. In some cases, if we were feeling particularly ambitious, we would post on all three.
But each of them had their own separate posting flow. I had to take the same job ad and re-present it multiple times based on how the job board wanted me to put it into their system. And then I had candidates coming from all these different sources and in the majority of cases, the candidates were coming directly into my email inbox.
So, it was difficult to track where the candidates were coming from and I had to create folders so that I can manage the vetting process. Back in those days, I was also printing out all the resumes. I remember I was staring at a stack of resumes on my desk and I was thinking, “There’s got to be a better way to do this.” That was the genesis of ZipRecruiter. We really built a product that we thought would help us at the companies that were smaller that we were working on.
Andrew: Ian, how did you know that this was a problem that other people would be willing to pay for? As an outsider, I would imagine that bigger companies have HR departments that are entrenched and have a job of doing what you’re describing here. Smaller companies don’t do this often enough to ever need to pay for it. Maybe this isn’t a real business. How did you know that there was a market for it?
Ian: Well, there are six million business in the United States.
Andrew: Sorry. The connection–we’ve been having connection issues for some reason today. But it keeps coming back, so I’m going to wait. So, you’re saying there are six million businesses in the United States and…?
Ian: There are six million businesses in the United States that have more than two employees. One million of them have more than 500 employees. Five million businesses have somewhere between 200 and 500 employees. So, when you think, “Oh, this is not a product that small businesses need,” it really comes down to what do you define as a small business?
So, your principal users on an ongoing basis of our solution have anywhere from, call it, 10-200 employees. Those are really the companies that are rapidly growing and have persistent hiring needs. They love our product. We also do really well with companies that have two to ten employees who have intermittent hiring needs. Because if you want to post a job, the number one question you’re trying to answer in today’s world, where there’s not just four job boards, there are 40,000 job boards, is, “Where should I post my job?” We make that really easy.
Andrew: And so where others might have gone out to do some customer development calls or try to sell the product before they built it, it sounds like what you were saying is, “I’m going to do some research. Let’s see if there’s a big enough number of companies that are like the ones that I was with where they’re big enough to matter but small enough to not have the solution in-house and they will be our target.” Is that right or did you do both?
Ian: You’re giving me a–
Andrew: Sorry, the connection again. I’ll tell you what. If you can hear me, Ian, I really like this conversation. For some reason, we’re having a lot of pauses. Let’s just go to audio only. People are not going to get to see this jacket that I put on and they’re not going to get a chance to see you. But if we just go with me dialing your phone, we’ll get a good connection.
So, where we were was the question I was asking is–and for anyone who is listening, we just switched over to audio because it’s just going to work better today–were you doing both customer development where you were talking to customers individually and research or was it just research that showed you that there were enough customers out there?
Ian: So, when we first built the product, we did the opposite of everything I recommend to every aspiring entrepreneur who comes and talks to me today. What we enacted was like, “Hey, I have an idea for a tool that would be really useful for me at the businesses I had worked at, so I’m just going to build that. And then I’m going to see if there’s a market appetite for that tool.” Ironically, by approaching it that way, we probably added four extra months of development to our initial release. We built a lot of features that turned out to be uninteresting for the marketplace. So, we probably would have been smarter to have either smoke tested it or done some research on product market. So, like many entrepreneurs that came before me, we got a little bit lucky is what I would say.
Andrew: What are some of the features that you built in that weren’t necessary?
Ian: You know, one of our original premises when I was staring at this stack of resumes on my desk and just dreading the idea of reading through them to try and figure out who I would then call and phone screen was that when you do a phone screen, you know within five minutes whether you want to bring somebody in for an interview. It’s such a better vetting mechanism than reading a resume.
So, the initial thought was what if we allowed employers to put an online interview in as part of the application process to effectively replicate the phone screen that we would normally do and make every candidate take the phone screen questions. So, we thought this interview feature was going to a real key differentiator.
When we first launched the product, we had job distribution and the interview feature. We had probably spent two months building job distribution and four months building the interview function. The first five customers that we signed up who were our beta customers raved about what we had built. They told us that it was a game-changing product that was going to fundamentally improve the way they worked. They all had the same first feature request, which was could they use the job distribution without being required to add the interview.
Andrew: I see. And you know what? I’m actually looking at an early version of the site and there is no interview in there. By the time you launched the site, it seems you just did away with it?
Ian: Yeah. You could effectively say that our beta customers defined the product we would ultimately go to market with. That was the real research period that we did where we had real feedback from real customers.
Andrew: And you’re saying if you could do it over again, the way you’d save money, the way you’d save a lot of anguish is to have told customers, “This is what we’re thinking of building,” and then have them say, “You know what? This phone thing we don’t need, but the other thing is revolutionary, give us that.”
Ian: Yeah. And I would also say that there’s a lesson that, for whatever reason, I’ve had to learn multiple times in my career, which is if you take an established process that people are already comfortable with and you add a step to it, even if the outcome of that additional step is an order of magnitude improvement in the end result, you are knife fighting in the jungle. You are convincing everyone in the world to change the way they’re used to doing something. If you take the same process that they’re already comfortable with and you remove a step, you just let them get to the end result faster, $100 million business every time.
Andrew: Interesting. And there’s something I want to bring up later on that seems like a feature that matches on of those two descriptions. I’ll get to it in chronological order. I also want to hit on the things that you did right because you had this problem, because you personally experienced the pain of it. Do you remember one personal pain that you experienced when hiring that you built in that you said, “No one else would have known this. Andrew Warner sitting on the outside just listening to an interview would never know this problem because he never experienced it the way I, Ian, experienced it?”
Ian: Well, I think that one of the key features of ZipRecruiter, and it sounds kind of silly in today’s world, is a lot of employers hire by posting jobs and then not just managing the candidates that come in via their email inbox, but they actually go through the process of printing out the resumes so that they can share the resume with others in the office so everyone can see what the candidate’s credentials are.
It sounds silly, but one of our key features is when a candidate applies to your job, no matter what format they submit their resume in, we parse it and put it into a common digital format so that you can see all candidates against a common interface view. It’s all digital. And you can invite as many coworkers as you want into the account to vet the candidates with you and again, all online. That is a surprising efficiency boost for an office that has multiple people participating in a hiring process.
Andrew: Kind of like with Google Docs. If I want to share a doc with you, we can both look at it at the same time and highlight it and read it together and talk about it. That’s what you’re saying?
Ian: Exactly. In fact, when you’re looking at a candidate and you’re in our interface, you can leave notes for your colleagues about what you think about the candidate. You can put star ratings on the candidate and you can also put tags on the candidate so that you can help find that candidate more easily later on.
Andrew: You know, one thing that stands out about the first version of your site that I was able to find online is in the first one, you really emphasized the hundred job sites. In the later ones, you’re just saying find the right one, the right key employee. It seems like there was a lot of pride about how you could blanket the job sites and people just weren’t that excited about it. They didn’t need 100 places. Am I right?
Ian: You know, it’s funny. You’ve actually run into an A/B test we’re running.
Andrew: Ah, alright.
Ian: There’s a headline we’re testing and it actually doesn’t perform as well as a 100-plus job boards.
Andrew: So they do still want 100-plus. So, you guys hit on the–actually, when I moused away, I did get a popover-type message that says “over 100-plus job boards.” I see.
Ian: Yeah. What I’d like to say about ZipRecruiter and our marketing–and the headlines you were just looking at are a good indicator of what we have repeatedly proven to ourselves as true–is that it’s important to be credible. There are a lot of hiring sites that say, “I will help you hire faster. I will help you find the right candidate.” But they don’t tell you how they’re going to do that.
The good thing about ZipRecruiter is we’re really simple. Post the job and we’ll put it on more than 100 job boards with one submission. Does putting the job on more than 50 job boards versus, let’s say, 100 job boards make a material difference? Probably not. What you’re looking at is what is the actual density of candidates for that type of job in a geographic region–that’s the real limiter.
But the one good thing about using a service like ours is you know absolutely whether or not job boards are going to work as a candidate sourcing tool for you for the job you are trying to post.
Andrew: It’s always interesting that these A/B tests get me. I assume I understand. I’ve got the one page. But of course, you can’t. They change all the time.
Ian: That’s right. We’re aggressive testers.
Andrew: But the two big problems you were in there to solve were posting on multiple job boards, big pain, second one, vetting the volume of candidates that come in from all those different places, again, second big pain and that was the initial product that you launched.
Ian: That’s right. Really, that’s been our mission all the way through. You asked me–and I get asked this all the time–“What’s your product blowback?” It’s to get employers even more candidates because once you have a system that makes organizing and vetting easy, what you really want is a haystack. You really want an opportunity to try to find the right candidate.
So, we use it consistently, as more job boards, more social networks, more niche sites and more talent communities, to try to find new job boards, to try to find new candidates in every nook and cranny of the internet.
Andrew: What was your process for vetting, for allowing an employer to vet? I mean in the beginning, when you guys just got started.
Ian: Are you asking how we decided who was allowed to use our service?
Andrew: No. How would you vet candidates for employers? What was your original vision, your original process?
Ian: Yeah. So, to be clear, we’re basically a web app. So, we’re not a recruiting firm ourselves. We don’t help employers vet the candidates. They use their own internal process. We just get them a big pile of candidates to do that.
Andrew: Sorry. I meant to say how do enable them to vet so many candidates because by allowing them to post to more sites, you’re enabling them to get even more submissions. Is it the team collaboration that was going to be your vision for enabling faster vetting? What was it that you imagined?
Ian: So, the ultimate product that everybody fantasizes about in the job space is posting a job and getting five ideal candidates to pick from. That seems like science fiction. We are a long way away from that reality. So, the next best step in between would be to post a job, get a lot of candidates, ideally all the candidates available on the market and then have some kind of algorithmic scoring system that would let me know which of these the systems thought were the best match.
We have played with some solutions that try to do this. It’s a really fascinatingly difficult thing to try to get right. We have not yet found a solution that works better than just humans reviewing the candidates. I’m basing that on the feedback we got from employers of the programmatic or algorithmic mechanisms that have existed and we’ve actually incorporated into our site that unfortunately have had to be removed because of dissatisfaction.
Andrew: It was bootstrapped at the beginning, right?
Ian: 100 percent bootstrapped the first four and a half years.
Andrew: And you knew you had to bring in money quickly. How would you bring in users in a profitable way? What was the initial marketing technique?
Ian: This is what I do say to aspiring entrepreneurs, which is I often get approached by individuals who say, “I have a great product idea. I can build X for Y community.” I always say, “That sounds interesting. But if you want to get me excited when you talk to me about it, smoke test it.”
So, the way we smoke tested our own product and found out how quickly we could make money is SEM. We just wrote Google Ads. We literally went on Google and said, “Can we write a job ad that brings in enough employers who would be interested in this product to make the profit in 30 days or less?” It turns out that that was achievable with our product.
Once you have that marketing tunnel in place, it allows you to start exploring other marketing options that are potentially slightly [inaudible 00:20:42] and slightly more expensive.
Andrew: Job advertisers like you are so competitive. How did you go in there and so quickly figure out how to buy an ad profitably?
Ian: So, the truth is I think I wrote 25 different versions of our initial job ad. It was definitely over 20. I tried “Hiring company 2.0,” or, “Hire faster,” “Hire smarter,” all kinds of variations of what I call rhetoric-based marketing. Nothing works better than direct response. So, what is direct response? Direct response is the plainest description you can possibly make of your product. So, in our case, it was, at the time when we first launched, “Post to 15 job boards with one submission.” We were much smaller back then in terms of the number of places we distributed.
Andrew: I see.
Ian: That turned out to be gold, solid gold. It was immediately credible. It explained exactly what we were going to do. It was logical that that approach should work better than posting to an individual job board.
So, you could make the argument that our marketing was simple, comprehendible and also, in some ways, disruptive because when you’re competing in SEM, yes, there were a lot of established players who were buying a lot of ads, but all their ads made what I was describing before, rhetoric-based claims–“We have the best candidates.” “We have the most candidates,” etc. We never made any claims. All we said was, “This is what we are going to do.”
Andrew: And you were only doing about $50 a day in ad spend from what I understand.
Ian: When we launched, we did $50 a day. I remember the trepidation I felt taking that up to $100 a day. It was a different time.
Andrew: You remember your first $1,000 day. How do you remember it?
Ian: So, we had been in business for a few months. Our business is a subscription business as opposed to a pay-per-posting business. We knew logically that if you had enough subscribers over time, their value would compound and you would cross $1,000. So, we were unsophisticated in the way of SaaS back then, which is software as a service.
So, when the $1,000 day happened, I remember looking across my kitchen table at one of my cofounders and saying, “Wow. We just did $1,000 in a day. That’s a $30,000 a month run rate. What would it take to get to $100,000?” We quickly penciled out the math and we said, “That’s more than $3,000 a day.”
I remember just shaking our heads and thinking, “Wow. That’s going to be impossible,” because of the nature of a compounding subscription business. We, of course, cleared $100,000 probably just four short months later. So, it’s a great business model if you’re contemplating building a business.
Andrew: Why did you go for the subscription option instead of a one-time fee the way Craigslist does?
Ian: You know, while what we sell looks like job posting, and it is because we distribute a job to more than 100 job boards, the real value that we provide is the management of the candidates that come in. We are what is more traditionally referred to as an applicant tracking system. That has ongoing value for a business. We knew that we didn’t want to just sell on putting your job in all these different places. We actually wanted to become a part of how businesses perform their HR activities. That turned out to be correct and proven almost immediately.
Andrew: Do you remember your $100,000 goal? Did you hit it? Do you remember when you hit it? Obviously you hit it.
Ian: Yeah. I think it was 13 months in that we had our first $100,000 month, I believe. It felt really slow. I’ll tell you, it was much more exciting when we got to $1 million.
Andrew: Why did it feel slow at that point? It seems really fast to me as we’re talking about it. What was it about the environment that we’re in or your frame of mind that made it feel slow?
Ian: You know, we are truly sophisticated operators. But we were bootstrapping. We were so cautious. So, we would incrementally increase marketing spend every month because we were always trying to stay within like a 30-day return on investment. If you look at most businesses like ours, they target like a 12-month return on investment. So, you can see how conservative we were being in how we spent.
It felt like any time we wanted to take a big risk with marketing, we were potentially vetting the viability of the entire business. I think that’s why it felt slow. Instinctively, we knew we should be investing a lot more in marketing than we were, but we were only reinvesting the profit as it came in. So, it was just like one foot in front of the other. We were never leaping forward until we actually decided to start leaping forward. It turned out to be a great choice.
Andrew: I put the name ZipRecruiter into Google and limited my search to your earlier years and one of the things I found was there were a lot of affiliates, people who were only getting paid when they sent traffic to you. How effective were affiliate programs?
Ian: You know, affiliates never really took off as a program for ZipRecruiter. I don’t know why. Maybe we just didn’t put enough time or energy into it. But that really wasn’t what propelled our growth. From our background, serially building internet startups for others, myself and my three partners, we had a lot of expertise in how to growth hack businesses, once we found a model that worked and once we really started to understand the customer economics, things like what the projected lifetime value would be, what the value to the customer would be within 12 months, etc.
That’s when we really put the petal to the metal from a marketing standpoint and we jumped out of the traditional sandbox that most internet startups use, which is we didn’t just go digital, we also went offline. So, we’d do everything from television to radio to satellite radio to direct mail. If there is a form of advertising in the world, we do it. Go ahead.
Andrew: Oh, I was just smiling as you were saying that.
Ian: Well, I was going to say that goes to sort of the core premise I have, which is my fundamental belief and approach to startup business is all startups sell one thing. They may do 100 things. But what people come in the door for is the one thing. Once you figure out your one thing, once you know why people want to use you, you can really push it at that point from a marketing standpoint.
And then what happens is you can have your other 99 features and they become part of what I call delightful discovery. As long as they get the one thing they came in for, you can just make them happier and happier by layering on all these other benefits that they never expected to get.
Andrew: So, it seems like for you actually the one thing is easy–they want to hire someone. Why was it so hard? What did you think it was or how am I wrong with my assessment of the one thing that you guys are offering now?
Ian: You know, and this is getting a little into how soup is made, what was hard for us in the beginning is that when we post a job to all the different job boards we work with, we actually paid for the traffic that we got from all those job boards. We always had to be very mathematically measuring how much we were receiving from our employers versus how much we were paying to bring traffic to our jobs. It was a fairly complex process.
I’ll tell you a startup story. Everybody likes startup stories. We were working with probably somewhere between 20 and 25 job boards for the first two years. They were always excited to start the relationship with us. We always started with a relatively small buy. I’d say like, “I’ll give you $10,000 a month and I’ll buy traffic from you on a per-click basis for X.”
And then every month after the first month, with sales reps from all 20 of those partners–so, that’s 20 calls a month I would get–would call me up and say, “You’re not spending enough. If you don’t spend more, we’re going to turn you off.” It was like 20 shakedown calls a month, if you can imagine the stress that created for my poor, bootstrapping entrepreneur heart.
What happened is this went on for literally two years. For basically two years, every month, 20 shakedown calls. And then right around the two year mark, this fascinating thing happened. The calls all came, but instead of asking us for more money, almost every company said, “What can I do to keep you happy and keep your business?” because they had ladder-stepped ZipRecruiter in our spend to a point where we had become either their biggest buyer or one of their five biggest buyers. And suddenly I had leverage. My answer to all of them was, “You can lower your rate.”
So, we very quickly found ourselves in a position where we could use our size to leverage ourselves into preferential rates for traffic. People always ask me why someone else doesn’t build another ZipRecruiter. Well, that’s a big reason right there. It takes a lot of scale to make the model work as efficiently as we do.
Andrew: I do notice that a lot of traffic comes to you from different job sites. What I was wondering is if those are candidates, how does that help you get more employers or does it help you get more employers? SimplyHired.com is sending you traffic and Monster.com and Craigslist–does it help you get more?
Ian: Yeah. The product we sell is job seekers. That’s what we sell to employers. We say, “Come get more job seekers.” So, the more of them we have when you post a job, the happier you are going to be. We are truly what I call candidate scientists. We measure down to job category and job title by market what the number of candidates you will receive on average from most other job boards and then we try to exceed that.
So, we really take a disciplined approach to trying to provide you the absolute best value and best service we can. The bulk of how we bring in employers is from our employer-targeted marketing. That’s all the advertising we do on all those different mediums I mentioned earlier. The reason why they’re happy and they stay a subscriber is because of all the candidates we get from all those different job sources.
Andrew: You mentioned that you guys were growth hackers and you tried a bunch of different things. What kinds of things did you try that didn’t work and what did you try that did work?
Ian: We tried so many things. In fact, we have a philosophy here that when we launch a feature, if the feature fails we’ll remove it from the website because we never want to maintain something or let our interface become cluttered if it’s not adding real value to our customer base. So, some of these failures that I can rattle off for you, you can’t find them on our website anymore.
But I’ll give you one great example which is we launched a featured called nationwide posting. We all these really large companies coming in, like major retail chains or conglomerations of restaurants. And they just wanted to hire everyone in the country because they would be churn and burn hiring situations. So, we thought, “Okay, nationwide postings.”
We put up the ability to post in the 50 major metropolitan markets all at once. I have never seen a better honeypot for scammers and spammers than the nationwide posting feature. It was literally like it had a magnetic effect on the darkest corners of the web that came out to try to utilize that feature.
Andrew: You mean like the work from home people wanted to use it.
Ian: Yeah, like that.
Andrew: I see.
Ian: All the people who are really trying to sell some sort of get rich quick scheme, all the work from home people, the mystery shoppers. We could have left it up there purely as a security screen, like automatically if you used that feature we could just kill your account.
It’s a funny problem that we have, actually, which is over 30,000 businesses a month create an account on ZipRecruiter and try to post a job. What we’ve discovered is that we’ve had to invest a tremendous amount into both the technology and then also into just straight up head count in what we call trust and safety. We block somewhere between 15-20 percent of the would be users of our service every month.
Andrew: I get that. I’ve heard even small job boards have a hard time keeping the wrong people off.
Ian: Yeah.
Andrew: Even individual bloggers.
Ian: Yeah.
Andrew: Here’s a feature that I saw that you guys added. I read an article with a quote from you that seemed like you were really into it, ZipSites, which was a site for recruiters. If they don’t want to create their own pages, you will do it for them. And now it’s off.
Ian: Yeah. ZipSites is another one that went the way of the dodo bird, just like nationwide postings. So, we put multiple months into building a drag and drop, build your own recruiting site that was largely targeted at recruiters. There are over 50,000 individual recruiters in the United States. Many of them need a website. Many of them use ZipRecruiter. So, we thought, “Okay, we’ll give them a website, which will give them a reason to stay.”
What we learned from that experience is that we are not Wix. We are also not an ISP. The flood of feature requests that we received was really taking us outside of our wheelhouse of the MVP approach that we like to take that everything we do. MVP is minimum viable product. So, yes. It was a large distraction. We ultimately made the touch decision to just shut it down.
Andrew: I see. I guess at that point people are really starting to look for full-blown websites if they’re going to build a website at all.
Ian: By the way, I am unbelievably impressed that you found ZipSites. I forgot about it. While you’re on there, you can also look at–we tried something else that was a split network for recruiters because we had so many recruiters on our platform, which is essentially a marketplace of job postings just by recruiters for other recruiters to say, “Hey, I’m trying to fill a req and if you have a candidate for this req, I’ll split the commission with you.” That’s a split network.
We put it up. We had thousands of recruiters use it. We were supposed to get a cut of those commissions. It turns out they all loved the product and none of them were going to give us our cut. That entire website no longer exists. SplitRecruiter is dead.
Andrew: How hard is it to kill a feature, especially when you’ve got customers who are businesses who start to count on it?
Ian: You know, the discipline of killing features is something that, at least in my personal career, I developed early on. It’s because what most companies don’t appreciate is the organizational cost of a feature.
There is the code that went into providing the feature that must be maintained and considered every time you want to launch a new feature that’s adjacent to that feature. There is the customer support team that must be trained on how that feature works so that they can answer questions from customers. There is the onramping time of a new customer who has to learn how the feature works so they can take full advantage of the service.
Features are actually undesirable in most startups in my opinion. The real discipline is what I call the white space inside of building one of these startups, which is how minimal can you make your product and have it still solve core problems that you sell your product on. So, the answer is I love killing features. I personally find it really easy. They’re always happy that we are simplifying the code.
Andrew: What was one feature that you almost had to argue or you did have to argue internally to get rid of?
Ian: What did we argue about getting rid of? Let’s see… Oh, I know what it was–background checks. So, as a service, we have literally millions of candidates applying to open ZipRecruiter jobs almost every month. It’s intuitive and logical that those employers, as a next step, would want to run a background check on the candidate that they would like to hire.
It turns out that background checks were what I call a half a percenter, meaning only a half a percent of our employers were using the background check feature. But it was such a small feature. It seemed like a braggable feature, like, “Hey, we also supply background checks.” But there was, I think, a healthy internal debate before we removed it from the website.
Andrew: So, let me see if I understand that. I see. You’re saying half a percent not enough and they’re arguing that half a percent is enough?
Ian: I think the internal debate was saying that we provide background checks is a marketable feature. The counterargument is having support for background checks on the website took up interface space, required code maintenance. There was an API with a third-party. There were a number of factors that created ongoing overhead in order to keep that feature alive.
My core thesis is most companies, ours included, market one way and one thing. So, we are never going to incorporate, though it sounds like a marketable feature, I don’t believe it is a core decision making feature over whether or not you would use our product.
Andrew: I see.
Ian: You use our product because we post to 100 job boards with one submission.
Andrew: So, if it’s just that over and over again, then why try all these different ideas, all these different marketable features, as you say?
Ian: You know, I will tell you about the most recent feature we launched and why you keep trying. So, we surveyed our customers because we were running up against this problem of repeatedly launching features that had low utilization. So, we surveyed our customers and we said, “What would you like us to build next?” The list of options were things like calendaring software so that you can schedule interviews, more social network integrations so that you can get even more candidates, etc., a bunch of stuff like that.
What happened and what surprised us is by an overwhelming margin, the feature our customers asked for the most was onboarding. What is onboarding? Onboarding is the simple process of being able to send an offer letter to the candidate that you want to hire and having that candidate sign the letter digitally and send it back. That’s all it is. And you would say, “Wow, a lot of employers want that.” Well, it turns out that’s logical, right? We are the best site on the web for getting you a large pool of candidates. From that pool of candidates, you find the one you want to hire. What’s the next problem you need to solve? Literally the next problem is getting them an offer letter.
Andrew: Yeah.
Ian: So, that has really opened our eyes to what our go-forward product needs to be. It’s not about making the ZipRecruiter product that we’ve been working on the last five years better. It’s about extending its reach into the range of things you do from an HR perspective with a new candidate.
So, the first thing you’re going to do is send them an offer letter. What’s the next thing you’re going to do? Add them into payroll. So, what have we got to build a way for you to add them to your payroll system? What’s the thing you’re going to do after that? Get them setup on insurance. So, what have we got to do next? We’ve got to figure out a way to hook them into your insurance. If you don’t have insurance, we have to figure out a way to offer them insurance.
So, those are the ways that we plan to extend our product going forward. We have a product that I say falls into the very much good enough category. So, now what we have to do is give you even more reasons to stay with us.
Andrew: I see. So, you’re saying, “Andrew, you’re paying attention to all the things that didn’t work, but they’re worth having tried and failed just so we can find the one thing that is now going to extend our product and then open up a whole new line of extensions for us. It’s important to have killed off all those things that didn’t work so we can focus on these ideas that will allow us to continue to grow.”
Ian: Yeah. I’m basically saying that.
Andrew: Am I a little bit off? I want to make sure that I understand you right.
Ian: I think we’ve never built a feature that we didn’t think would get widespread adoption. So, we don’t just scattershot a bunch of features onto the service. I think we are repeatedly surprised by what gets high utilization and what doesn’t. I think where we finally got smart is we just started asking our customers. We have tens of thousands of active customers. So, we have a large pool of employers from whom to ask like, “What should we be building next?” and listening to them. I know this sounds like ABC simple, but listening to them turned out to be the best way to find the next feature that would get widespread adoption.
Andrew: How do you ask them?
Ian: What’s that?
Andrew: How do you ask them? If you were to say, “What should we build next?” They start to create a Frankenstein of feature requests.
Ian: Well, it’s a little more structured than that. We just used SurveyMonkey and we sent them a list of product feature options and we provided a one-paragraph description of how each of those product feature options would work. We let them rank how valuable they’d be. There’s actually internal debate about what should even be included in that survey. I for one didn’t believe in onboarding. That’s a good example of why you really need to trust the data and not your gut. I never would have guessed onboarding would be the next most requested feature.
Andrew: How did you come up with the features to put on that list? Is that from a survey or is it customer conversations?
Ian: Well, we log here feature requests that come from customers. So, some of it was driven from that log. We were like what was the most commonly requested features of our service that we haven’t built? And then some of it was market research about what else we could do that was a little bit more blue sky.
Andrew: What kind of market research is that?
Ian: We looked at what alternative solutions in the market were doing beyond just candidate sourcing. What do other applicant tracking systems do? We looked at other startups that are gaining traction, some of which weren’t even in the job category specifically but were servicing a similar demographic customer to what we serviced.
Andrew: You know, I’m trying to understand. I guess I’m getting it. What you’re doing is you’re trying to find as many different ways to figure out your customer problems. In past interviews, I’ve been hearing people saying, “We call up our customers and we listen.” You’re waiting for them to contact you or, in addition to–actually, do you do any calls to them?
Ian: We have literally tens of thousands of calls per month with customers. But we’re not soliciting. That’s knife fighting to me. When you go in there and you say, “Tell me what you would do to the service?” I think you were alluding to it earlier. You’re going to get a lot of different answers to that question.
Andrew: Yeah.
Ian: We tend to think about what we do in broader terms, which is can we come up with another marketable solution? So, onboarding is great because it’s not a feature so much of our system as it is another solution. The first solution is candidate sourcing. The next solution is onboarding. What’s the solution after that? Payroll and insurance.
Andrew: It occurs to me that maybe the reason you hired Jeffrey Zwelling, the founder of EchoSign to come on is because you were going to do that next step. Is that why he’s on board?
Ian: Jeff is probably the greatest engineer in Los Angeles. So, we are incredibly lucky to have him on board. At his last company, which was Convertro, which he built after EchoSign and then recently sold to AOL for north of $100 million. He was actually a ZipRecruiter customer. So, at Convertra, they used ZipRecruiter to do their recruiting. So, he was intimately familiar with how our product works.
As we have, as described it as picked our head up and tried to look outward at all the things we could do and be, it became clear that we have such broad reach and we have such a strong product market fit that the customer base we have, which trusts us to do more things for them than we were doing.
Andrew: But you didn’t hire him because he’s the best developer. He’s so much more than that. Why did you hire him?
Ian: Well, we hired him to be our chief strategy officer to do a lot of what we have been talking about, which is help us figure out what is the right solution to build or how to extend our product from where we have started.
Andrew: I see.
Ian: If you’d asked me a year ago who we were competing with, I would have said, “We’re competing with applicant tracking systems.” If you ask me who we’re competing with now, I would probably pick bigger game. I would say we’re competing with Intuit. We’re competing with ADP. We are aggregating a huge volume of businesses and providing HR-related services to them.
Andrew: Now that you’ve raised so much money and you have five million job seekers in your resume database, aren’t you competing with the job boards that you post on? Don’t they see you now as a threat?
Ian: Without a doubt. I’ll tell you another startup story. We were flying high. We had been bootstrapping for four and a half years. We had all these fantastic relationships with really all of the job boards that mattered in the United States. We raised $63 million. We had just finished patting ourselves on the back when the single largest partner we work with and the single largest source of candidate traffic we had immediately circled us, named us their biggest competitor and stopped doing business with us overnight. It was like seven days after we raised the money.
So, yeah, I would say that there is what I would call a healthy co-op-itition between us and the job boards. We are not a job board. We are a distribution service. But our marketing is, “We’ll put you on 100 job boards,” so, to some degree, we subsume their value proposition in our marketing. That makes us competitive with them.
The reason that large partner stopped working with us–I was told this candidly by someone internal to the organization–we were impossible to sell against. Anyone who would say on the sales team of that company, “You should by from us directly,” would hear from our customers, “Why should I? When I go through ZipRecruiter I get you and all these other job boards. It’s better.” That’s really tough to refute.
Andrew: So, what does a company say? What does Job.com say? What does Monster say?
Ian: Well, I think there are things that we can do to aid the brand of some of these job boards and we do. We talk to literally thousands of new companies every month. We say, “Monster is a great place to put a job. Job.com is a great place to put a job. We help you get your job on these great job sites.” So, we are brand-building and creating awareness for these companies. We also pay them a lot of money.
Andrew: I see. I feel like maybe that’s it. You’re now just too big for them to turn away.
Ian: You know, I have great respect and I would even use the word affection for many of the job board partners we work with. This is not a winner takes all industry. We effectively resell their products right now. So, it isn’t as much that we compete with the intent of destroying job boards. It’s more like we augment who they are selling to. And this is probably the greatest truth about ZipRecruiter’s success.
We have found a way to penetrate the SMB market, the small and midsize business market and that historically has been a no man’s land for job boards. The predominate customer of a job board has been a midsize to an enterprise-size company. We are going out and in droves onboarding smaller to medium sized companies that never would have posted on one of these job boards in the first place.
Andrew: What are you doing to make all those ads work, to make radio work for you, to make offline work?
Ian: You know, it’s really consistent incremental optimization and a consistent focus on the metrics. We work hard to be scientists, not artists.
Andrew: Alright. Final question–I can see that we’ve gone over our time and I’m glad we’re able to make this phone call-based interview work for us. The final one is this–in the pre-interview we asked you, “What would you teach other entrepreneurs if you could?” You said that you get a lot of entrepreneurs who want feedback on their idea, but many of them are starting in the middle. What do you mean by that?
Ian: Yeah. I think the most consistent pitch I get from young entrepreneurs is, “Let me tell you about my product.” What I always say back to them, if you want the full speech, is, “Your product sounds great. But here’s how you would really suck me in, which is first, tell me how big the market is.” So, if you’re telling me you had built a skateboarding app, tell me, “How many skaters are there in the United States?” And then the next thing I want to know is, “Where do skaters congregate? Are there ten websites that are the biggest ten skater websites in the country?” And then, “How does your product solve a problem that skaters have?”
Then I know how big the market is and where you’re likely to market this product that you have built. Without those facts, I struggle to understand how good or bad your product is. Even if I think you’ve built a great product, I don’t know if you’re solving a problem for 100 people or you’re solving a problem for 100,000 people. That’s where I feel like a lot of entrepreneurs fail in the diligence portion.
It’s ironic given ZipRecruiters own background of how we just built a product that would have been useful for us. But I will say that I knew when we built it that the jobs category was really big. You didn’t have to do a giant SWOT analysis to know that there were millions of businesses in the country that were posting jobs.
Andrew: I see. So, it’s how big is the market that you’re talking about? Where do people in the market congregate? What’s the problem that you’re solving for them?
Ian: Absolutely. I also say as a general rule–and this is a good rule in life. You can use this not just for your startup ideas. You can use this when you’re talking to anybody. It’s the eyebrows up, eyebrows down rule. If you want to find out if your audience likes what you’re saying, watch their eyebrows. If their eyebrows go up, you’ve got a great idea. If their eyebrows are scrunched down, you’ve got a problem.
Andrew: That’s really a good point. I’m going to try to say something to someone to see are they interested based on their eyebrows and test it today.
The website, the business is ZipRecruiter. I had no idea how big you were until–actually, frankly, I have to say, until Jeffrey Zwelling told me about you. Then I did my research and I realized, “Of course, these guys were out there. They talked about how much money they’d raised. I’d seen them.” But for some reason, I think because you are just outside of my worldview. Now the more I see, the more amazed I am but what you guys were able to build.
Ian: I appreciate it. It’s not your fault, really. We ran a security through obscurity strategy. Because we were bootstrapped, we never went to the tech blogs. We never talked about ourselves to the VC community. We didn’t want anyone to know how well we were doing because we didn’t want someone to fund a knockoff competitor.
Andrew: Yeah. The only place where I saw articles about you, really–I shouldn’t say the only–were on little sites like The Fordyce Letter, I don’t even know how to pronounce it, “Straight talk for the recruiting professional.” It’s that kind of post, that kind of site.
Ian: Yeah.
Andrew: It makes sense.
Ian: We were really low-key in our PR strategy for a long time.
Andrew: Alright. Thank you for doing this. For anyone else who wants to follow up, first of all, check out ZipRecruiter.com. And if you want to get every single interview that I create right here automatically downloaded to your phone as soon as I publish them for free, just go to Mixergy.com/Podcast. Ian, thank you so much for doing this interview.
Ian: Thank you so much for talking to me. I appreciate the time.
Andrew: Love it. Thank you all for being a part of it. Bye everyone.
