Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses.
It’s really cool for me to now get to interview someone who was listening to Mixergy interviews as his company was being built. And the other thing that’s cool about this interview is it’s so different from the approach that many of the entrepreneurs that I’ve interviewed have taken. You’ve heard me say this before, that one of the commonalities that I’ve noticed in my interviews is that entrepreneurs will notice a big problem in the world, will realize it’s a big pain point for people and they’ll create a business to address the pain point and solve it and make it better and capitalize on it.
Today’s guest says he explicitly did not do that. He’s a listener of mine long enough to know that that’s what I look for in many interviews. I appreciate that he’s saying, “I have a counter example. That’s not how we did this.” We put down a list of criteria—and Perry, you can tell me if I’m getting this wrong—but Perry put down a list of criteria for what he wanted in a business and started thinking of businesses that fit those criteria and then found one that became a hit and that’s what today’s interview is about—how did he get that list of criteria to turn into a company that today is doing really well and helping companies hire.
His name is Perry Oostdam. He is the founder of Recruitee. Recruitee is cloud-based software that helps you hire better. They help you place your ads and more importantly, they help you manage the people who apply to work for your company in an intelligent way, one that just looks right and you get it as soon as you see the visual of it. I hope I can do it justice here in this interview. And one that allows you as a company to represent yourselves right and hire people who are a good fit for your business.
So, we’ll find out how he came up with this idea and how he grew it and it’s all thanks to two sponsors, the first will help you host your website right. It’s called HostGator. The second will help you hire developers, but I checked it out with Perry. He’s not thinking of them as a competitor at all. It’s called Toptal. I’ll tell you more about both of those later. First, Perry, good to have you on here.
Perry: Thanks. Thanks for having me.
Andrew: Thanks for staying late. You said it’s 7:00 p.m. your time. We’re recording at 10:00 a.m. my time. Where in the world are you?
Perry: I’m in Amsterdam. Although it’s eating time, it’s lovely and sunny, as you can see.
Andrew: I can see that. Yeah. You’ve got a whole lot of sun on your face.
Perry: It looks like I’m Spain on the beachside, but I’m actually in the office in Amsterdam and maybe the logo behind me proves that.
Andrew: Yes, that will prove it. I will say this. I bet you by the time this interview is over that you’re going to get darker and darker, so dark that we might need to turn the lights on. Hey, you know the first question I’m going to ask, which is revenue. What are your revenues at Recruitee?
Perry: Well, I can’t share the exact details, but I’m very proud that with the minimum amount of funding that we had because we only had a seed round in 2015 when we founded the company, we scaled up above $1 million a year in revenue and far above it by now. So, we didn’t take any funding and we bootstrapped the business to that point, to give you a bit of an indication.
Andrew: More than double the $1 million? Is it more than $2 million?
Perry: I can’t say that.
Andrew: Okay, but the fact that you’re pausing and I’m looking at your eye gives me a sense of it. The reason I’m asking is we did a pre-interview with you about half a year ago. At that point, you told our producer, “We are hitting $1 million in revenue.”
Andrew: So, it gives me a sense of growth that in the last half year or so, you’ve more than doubled the business. Fair to say?
Perry: Yeah. I can share some stats on that. We grow about 10% a month. That’s the growth we aim for as well. It represents in customers, in revenue, but also in terms of staff, etc. That’s the type of organizational growth that we aim for.
Andrew: You have a cofounder in the business. How’d you find your cofounder?
Perry: Founder2Be.com, actually.
Andrew: Founder2Be.com. So, it’s like—
Andrew: I never thought those things would actually work. What did you do on Founder2Be.com that got you a cofounder?
Perry: Don’t say it’s Grindr for business.
Andrew: I didn’t think of that, but yeah, is it like Grindr for business?
Perry: Yeah, Founder2Be is a platform where people meet up and get to know each other. I was actually looking for a counterpart, like an engineer, somebody to bounce ideas back and forth because I know everyone that starts a company will be an IT company. So, actually, I’d been looking for people at get-togethers like hack-a-thons and startup weekends, etc. I came across this website, made a profile.
Pawel started chatting with me, actually, on the platform and we ended up meeting each other in the Netherlands. So, he drove from Poland all the way to the Netherlands, spend a weekend, bounce ideas and we figured out there was a great fit on the ideas that we both hand in mind, but also personally about what does a business mean to you, what’s your ambition, what do you want to sacrifice maybe for a business?
Andrew: What a great question, what are you willing to sacrifice? What are you willing to sacrifice for this business to be successful?
Perry: Maybe you need to sacrifice your social life a little bit. I don’t think you need to pay—if you pay too much value to your social life, I’m not sure a high-tech scale up is the best place to be.
Andrew: Yeah, I can imagine. You’re there at 7:00 on an evening. You’re definitely not going out for drinks. So, you found him and the first ideas that you guys pursued, was it GeoRun.com?
Perry: Yeah, exactly. 2012, we met up. We pursued GeoRun because it originated from the idea of we should do with mobile games, mobile GPS games. So, GeoRun is a concept that helps companies like brands build awareness around stores or locations for events and then set up GPS games to attract people to this location. So, think about it kind of Pokémon Go without the virtual reality. That’s pretty much what it is.
So, we set up campaigns for IMG Bank, for [inaudible 00:05:50], which is a warehouse in the Netherlands, but also for Samsung we set up a game. So, we did that for a couple of years and then I think it was in 2014 we realized the games are fun. It was definitely a cool business, but not scalable in the way we wanted it to be. So, we had five, six people on the team then, still working remotely.
So, from day one we worked with half the team in Poland, half the team in the Netherlands. We figured there’s much more we could do with the team. We were not happy with the business that centers around services and going from campaign to campaign and this is when the idea of a more scalable B2B solution started popping up.
Andrew: And you started writing a list of things that you wanted. You said, “Now we’re going to be much more intentional about it.” What was on your list?
Perry: Exactly. I remember doing a deal in GeoRun that took 13 months to close and we figured this is not the type of business we want to have. This is when the idea started off, “You make a list, I make a list. Write down the 15 commandments of an ideal scalable business,” I think I still have the list somewhere, actually.
So, we wrote down things separately and then combined the list into things like we should be able to sell to customers worldwide from day one. It should be pretty clear what the pain point. So, it shouldn’t have a whole lot of story around it. We should be able to put our finger at the pain, actually, for the purpose of selling it. Let’s focus on an inbound sales process rather than having a need for outbound and calling, etc.
We also wanted to particularly stay below a certain monthly revenue pricing point just to make sure all the people in the company could have the credit card access to charge for it. If you go above 300 or 400 a month, it’s harder and you need to go through a certain chain of command, of course. These types of things, we listed them down and then started to look at what type of ideas do we like and could we work on as a team that we have not.
Andrew: Okay. I like the thought behind this. It seems though that you still were thinking of a pain point, even though you didn’t start by discovering someone’s pain, you did say, “I want software that addresses a pain,” right?
Perry: Right. Yeah. It’s much easier to sell aspirins if you know people have a headache, actually.
Andrew: Got it. I’m looking at my notes here from the conversation with the producer. You specifically said, “I did not start by trying to solve the pain that we encountered.” Why was that important to point out? I know for me it’s important because I don’t want to send out the message that there’s only one way to start a business by starting with the pain. I’m wondering why you wanted to be so clear and say, “I didn’t start by understanding pain.”
Perry: Yeah. The pain is not in particular something. Typically or often businesses are started because this is a frustration. People want to change something in the market. I think we had another route. We did it the other way around. We said what would our ideal company look like? We are serving people international. It’s a relatively small team, so we had about 30 people, we should be able to come up to a decent size revenue, not having to scale the team according to the client size like agencies have to do often.
Perry: So, we wanted to have a scalable model and then start working backwards to in the end, what’s a pain that we could help solve? I think that’s the essence of what people are willing to pay for. But it wasn’t that we started from the pain. It was we started from the other way around.
Andrew: I see. You made a list of things and said maybe CRM, contact software, maybe it’s going to be brand monitoring software. What else did you consider that fit within the criteria?
Perry: Quite a crowded market as well, CRM software for sales. We looked at what processes do we use, what software we use, what’s something we could do better, what should be done differently. Also, we really liked the market of brand marketing software, did you have Google Alerts, I would say, in the extreme. We also looked at affiliate software, still an interesting market. Not a lot of good affiliate software out there.
So, I guess the common area was B2B software. So, we figured that’s the area we want to be at, not B2C like we did before, but really B2B. But those are typical examples we looked at.
Andrew: What’s the problem with B2C?
Perry: Well, GeoRun was very B2C-focused. But after you end up with a two-sided marketplace. You have to have enough consumers on it in order to be attractive for businesses and the other way around as well. We didn’t want to start a two-sided marketplace where you could potentially end up with the need of a lot of funding to get one of the two sides going.
So, we wanted to really start leaning and say, “Let’s build an MVP, finance it ourselves, get 20-30 customers on it and then start scaling up and don’t even think about funding before you know that funding is going to be used for scaling and not for building the product.” So, a lot of B2C doesn’t work out like that.
Andrew: Because B2C is also harder to monetize, right? It’s much harder to sell to consumers. A business won’t think too much about spending $20 a month. It’s nothing. But an individual will think for a long time about spending $2 in the App Store, right?
Andrew: If you’re going to build a sustainable business, you want real revenue to come in from customers.
Perry: Yeah. That’s healthy. I know a lot of startups from the Amsterdam network like Rockstart Accelerator, Startup Boot Camp. There’s a lot of stuff going on here in terms of startups. But it’s a big misconception that if you build something awesome that people actually are willing to pay for it and that’s what we actually saw in GeoRun, like games were cool, people liked it, everybody said, “Wow, it’s so much fun the type of games you’re building but who’s even paying for it.” Then people drop off.
Andrew: That is painful. Okay. I’m wondering why you gave up on the other ideas. Why not brand monitoring, for example? Why not a CRM?
Perry: I guess we were more comfortable with this particular software because we felt we have the ideas, the team that could build it and also build something new in terms of what’s already out there. Also, my cofounder, Pawel, he had been working on a similar software doing his studies, when he was doing some freelance work of coding. It wasn’t exactly the software we have now, but it was also in the recruitment sector, so he knew the industry bit. He knew the customers that in the end the company was selling to. So, there was some familiarity with the business, yeah.
Andrew: I see. What’s the pain here? I’ll be honest with you. When I hear about another app for hiring, another way to hire people, I think, “Man, Perry’s got all these freaking competitors.” I’ve interviewed tons of your competitors, guys that made boat loads of money and have boat loads of funding. What’s the pain that all these other guys didn’t solve that you said, “I’m going to come in and I’m going to address?
Perry: Yeah. It’s a good one because when we researched the market two years ago, three years ago, we saw all these competitors. We saw typically business builds to blue oceans. You want to be something new. This is pretty as [inaudible 00:13:10] as it could get from a market perspective. But the question is first of all, could you do it better, could you do it differently and of course how big is the market?
There’s a reason why this market is big. There’s also a reason why there are, I think, 12 [inaudible 00:13:23] in Amsterdam and a lot of them are actually still doing fine. So, I’d like to turn the question around by saying first of all, how big is the market, what business, what size could we get in the first place. The thing that frustrated us in particular in this market is there are so many old school players that actually give the particular software that we deliver applicant tracking software, even a bad name because these are companies 12, 15 years old.
If you look at the software, Google the term applicant tracking software. Go to the pictures and look at the average software that people are using. It just hurts your eyes. We couldn’t believe that. We said this needs to be this new Trello for hiring or whatever you want to call it like in intro, somebody gets it and it should be used as a modern way of like you use slack and you use your modern tools. We couldn’t find that. We simply couldn’t find that tool.
Andrew: I see. So I’m looking now on Capterra. They have a list of competitors of yours. IBM Kenexa, that’s thing?
Perry: I think if you start Googling around for it, you find. . .
Andrew: The list is huge.
Perry: Probably hundreds of it.
Andrew: You’re saying all these guys are good or were good at one point, but their software is just out of date. It doesn’t feel modern.
Perry: Are we in the top ten in your list on Capterra?
Andrew: That’s a good question. Let me see. One, two, three, four, five, six, seven, eight—you’re number eight on their list. I looked at number one. You know what? I can’t tell. To me, I think your software is more approachable because it looks like the apps that I use today. Frankly, you guys did copy a little bit from Trello, fair to say? To me you guys look a little bit more approachable because it looks like frankly you copied a little bit from Trello. I’m familiar with Trello. You look a lot like Pipedrive, our CRM and I’m familiar with that, so I get it.
So, did you guys go in and look at all your competitors? Did you start doing demos? Did you say this is actually not approachable to us?
Perry: That’s the first thing you do if you start. You start looking around what’s out there, what do people do. We did that a lot. We looked at tons of software. You know what the conclusion was? We need to stop looking at competitors. This is what I would advise a lot of startups—do the research, get your position, get how you want to be different, etc. At some point, stop looking at them and worry about when people start switching to competitors.
This, look at all the categories of Capterra. It couldn’t get more competitive than this industry. It’s one of the worst places to start a business. I can assure you that. If we’re able to, within two years, get into the top ten of Capterra being this competitive, it’s a good feeling.
Andrew: You know what, actually? Capterra is kind of tricky. I realize you’re in the top ten if I sort by sponsored. Then if I sort by highest rated, which is what I thought I would need. It’s kind of weird because number seven on the list has only one positive rating or number ten on the list has only one positive rating. Because it has a positive rating, it has a 100% love rate or something, so it scores above others who are clearly more used. I like Capterra, but I also find it’s a little bit tough to see what’s what on there.
Andrew: But still, let me say this. The fact that you think it’s out of date, the fact that I think it’s out of date doesn’t mean there’s a market for it. Did you do anything to see if users were finding it out of date? Did you do anything to talk to customers and say, “Hey, look at all these competitors. Are they working for you?”
Perry: Hardcore, actually. We looked at job boards. We gathered, I think, 40,000 emails, phone numbers, people that were having jobs live at the moment and we did it hardcore, where we called, literally I called my cell for hundreds to ask it. One of the criteria I didn’t mention is I want to know how to sell it and even have sold it before we start building it.
So, we looked at recruiters that were actually having jobs live at the moment, called them and said, “Hey, we want to launch something new. This is the idea. Would this be something you’re willing to help test?” This is also something we would advise to other companies because it gives you momentum. You hear no. You hear no way more often than you hear yes, of course. But you learn how to redefine the pitch and you get to know the questions why yes or no.
Andrew: They actually took your phone calls?
Perry: Well, of the thousands of calls, 80% no. Nobody wants to get a cold call.
Andrew: Eighty percent said, “Dude, Perry, I don’t know who you are. Leave me alone. I’m not looking for another sales call.”
Perry: That’s a nice way of putting it.
Andrew: What was the harshest thing? What was the one that actually hurt your feelings, if you’re open with me?
Perry: Well, when you do cold calling, you hear all kinds of things. “We don’t want your call, shut up,” or, “This won’t work,” or whatever. You get demotivated a lot, so you have to be a bit persistent when you start calling people.
Andrew: Okay. Let me take a moment to take a break and when we come back, I want to hear what’s one or two things you learned from these calls that you didn’t know. It’s so easy to make these phone calls and have them just reinforce what you already believe. So, let’s hear what you didn’t expect, what changed the product in a way that you wouldn’t have been able to think of if you hadn’t made those calls.
But first, I’ve got to tell everyone about a company called HostGator. We needed somebody to host our website and frankly, we said hosting is kind of a solved problem. Let’s just look for someone who can do it right and do it at a good price. So, we went to HostGator. HostGator has these phenomenally low prices. If you go to HostGator.com/Mixergy, they’ll actually lower their prices by 50% or more. So we thought, “Great, low prices, but I’m expecting that I’m going to have a thousand people come to my website at the same time. I’m expecting that I’m going to need to really grow this new business big.”
So we signed up for HostGator’s baby plan, but we immediately called them up and said, “What’s the best you got?” The best they had was—what is it even called? You get private server. Do you know what it’s called, Perry, where you’re getting your own computer?
Perry: Dedicated cloud?
Andrew: Dedicated server. We had that. I paid for that. It wasn’t very expensive, cheaper than their competitors. We have not had a single freaking glitch. We’ve had a glitch internally at the company, but not a single glitch with the hosting package. It just freaking works. I have my WordPress. It’s installed. You can get WordPress installed with one click and you can count on this business working and growing because it’s built on HostGator.
If you’re starting out, go for the baby plans. They actually have something called a hatchling plan or a baby plan, really inexpensive that will get you going. When you’re ready to scale them up, call them up and tell them. Tell them what you’re going to try to do and tell them what you’re looking for and I bet you they’ll have it. How many times did we look at managed WordPress hosting? We paid companies hundreds and hundreds of dollars for managed WordPress hosting. Then we realized HostGator has got that. They’ll manage our WordPress.
We looked at competitors who had dedicated servers. We said HostGator has got that too. So, you can start with HostGator, get a really low price and as you scale up your business, you can scale up with them. They’ve got everything, reasonable prices and great service. It just works. I have not had a single issue with this. I’m really proud to say that we hosted our new business, it’s called Bot Academy, on HostGator.
If you want to sign up, go to this special URL that I’m about to give you, not only will you get a big discount, but they’ll also know that you came through me and that I am here to take care of you guys as best that I can. Go to this URL. It’s HostGator.com/Mixergy. Think of that gator, HostGator.com/Mixergy.
All right. So, what did you learn that you didn’t expect?
Perry: Well, we wanted to start off with a plain applicant tracking view of just move your candidates through the funnel of hiring. You make your own stages. You drag and drop people into the right slots. But people quite early on said, “My problem is not really organizing candidates.” They said, “I need exposure of my job.” So, they said, “I would need integration with job boards. I would need some exposure to jobs to get people in in the first place.”
What we didn’t know when we started researching that market is that the Netherlands, where we started the business, is a very fragmented market when it comes to job boards. So, there are about 1,400 job boards in the Netherlands from niches like aviation jobs, stewardesses to all kinds of sales job boards, etc.
It turns out to be that the Netherlands somehow is a very particular country compared to the US where if you’ve got 20 job boards, you’ve got the majority of all the exposure. So, we had to find the partners that could publish on these job boards. So, quite early on down the road, we actually reached out to partners to job advertising and it’s their main job to buy slots at all these job boards and then resell it for a discount. If we didn’t find those partners, I guess it would have been way different. So, I’m glad that users pointed it out. The first version of the product, we actually included those job boards.
Andrew: I see. I didn’t even realize—you’re saying there are basically ad buying agencies that do nothing but buy ads for their clients to help them recruit?
Perry: Right. They get discounts up to 70% and they give the client a discount. If we work with them, everybody gets a little cut and even the client that we have gets like a 30% price off the listing price. So it’s still fairly happy and then they also have a big chunk of it.
Andrew: I see. If I hire one of these agencies, I don’t pay any more for the ads because I go through them. I actually pay less and they get a cut from what I’m paying because their discount is so steep that it gives them space to do that. I see. So that’s what you discovered, that these are the big guys that you might want to work with. The other thing you discovered was software is not that—it’s important to organize the recruits that you get, but placing ads on job boards might be even more important.
Perry: Yeah. I guess that we discovered a couple of types customers because one customer says, “I have so many candidates, I need a software to organize the process.” This is a luxury position, I guess, that particular brands have that are more well-known. But the majority of the customers actually struggle to first of all, “How do I position the brand? How do we make sure people want to work for me? How do I get people in via job ads? Can I sort them on network?”
So, we saw two types of companies and needed to solve just a little bit to serve both. Some might have to deal with thousands of candidates and some actually are very happy if they have 10 or 20.
Andrew: I see. What are some of the questions that led you to the best insight?
Perry: Well, recently as well, if we go to the more advanced tech companies and we look at how they handle their recruitment—so, for instance, we just organized an event in Amsterdam together with Booking.com, which is located here in Amsterdam, and then we learned a lot from Booking. If you talk to their recruiters, they have about 45 people who are dedicated on sourcing people. That’s their main target. They hire about 500-600 engineers a year, new engineers in Amsterdam.
So, you can imagine the machine that they’ve created to be effective in reaching out to people, making sure they like to move over. The market is too small to hire 500 people in Amsterdam. It all comes down to relocating those people, making sure they come live here, etc. Basically, whole families relocate because of their hiring needs. So, we learn a lot from the effectiveness of the bigger brands and how they set up their sourcing and how they set up their analytics and how they improve the business.
Andrew: Okay. So, then your cofounder went and built a minimum viable product based on what he heard. What were the key features based on all these issues that you heard that you felt like you had to include?
Perry: Well, the most important thing for us, to have a view where you see one overview your whole status of your recruitments, who is where in which part of the process. Who is new? Who is in my first interview, second interview? We wanted to spend the most time on that design, making sure that if we promise to deliver something new, we shouldn’t come up with lists or it should be very intuitive for either the first time recruiter or the very advanced Booking.com-style recruiter. So, we spent most time on the visual appeal of the software that was most important to us.
Andrew: I see. That’s where it kind of looked like Pipedrive.
Perry: Yeah, actually that’s right. I guess that’s because we’ve been using Pipedrive, Trello, HubSpot. We use all the tools ourselves. As I mentioned, we’re a remote company, so we see rely on these tools. If we don’t set up the right tools online, then basically there’s no way for us to communicate effectively. So, we’re familiar with all these modern tools. I guess that represents also in the design that we have. It’s not that you copy them, it’s just that there’s a lot of research in what good looking design is and it tends to funnel through the same type of stuff.
Andrew: And the design for anyone who doesn’t know is a series of columns. Each column represents a different step in the process of turning a stranger into a hire. The whole team gets to look at this board and see where everyone is. In one glance, you get to see exactly where everyone is on the board by knowing how many people are in each column and where everyone is, what column they’re in.
Andrew: But it seemed like the bigger issue that people came to you with was not managing their candidates, it was actually placing ads. So, why didn’t you start with that? Why didn’t you start with one tool that places ads in multiple locations and then make this next step this board?
Perry: Not necessarily. I think it was a bit of both. We wanted to focus on the process first because we thought there are multi-posters. It’s called multi-posting if you want to distribute your job [inaudible 00:27:33] at once. So, we figured we had seen those already. Also, people could post manually to the site. Charging people $49.99 or a couple hundred dollars a month for just posting it doesn’t feel like a true service for us that we could relate to.
For us, its’ more about the process of your recruitment and also the emailing part, the scheduling part, etc. that we figured people would spend some money on it if you can help them to get organized and save some time. I guess this is more about the posting part than the job posting part for us.
Andrew: And you were seeing both of them as issues?
Perry: Yeah, definitely.
Andrew: Equally painful for people.
Perry: No, not equally painful.
Andrew: What was more painful?
Perry: The organizing process.
Andrew: The organizing, I see. So, earlier when I was asking you what didn’t you expect it was that there were a lot of job boards and job boards were important. It’s not that that was more painful. It’s just that that was an additional issue that you hadn’t thought of. I see. So, you started out with the board.
Andrew: Your cofounder then created this board. You told our producer, “Frankly, it was kind of terrible. I didn’t know how to tell him it was terrible.” What was so bad about what he did?
Perry: I don’t know if you have seen design of a typical engineer—and Pawel might be listening to this later, so I have to be careful with my words—but a typical engineer that designs it is very practical. You could see this is one of the most practical designs you could get, but if it’s appealing to the eye, it’s the second thing. I remember it was black and red. It just had straight division of these are the functions, that’s it. So, I had to tell him politely, “Okay, this would be great to have a second opinion on some of the functions.”
Andrew: So, you went to him and said, “Do you mind if I get a designer to come in here and give us some feedback?” And that’s when you hired a designer to really reshape what he did.
Perry: Right. We worked with a couple designers in our company, GeoRun, before. So, we had one of the guys that we’re actually still in the same office with, not nowadays, but back then, we shared the office with a couple companies. So, we said, “Hey, could you take the initial idea and design and tear it apart and give your own idea to it.” He was the one that came up w the whole cards and drag and dropping and all that stuff, actually.
Andrew: I see. I think the first time you guys launched it was 2014, right?
Perry: We started building design in ’14, but we were still doing GeoRun back then, so it was a bit of a side project. We didn’t pick it up until the summer in 2015, actually.
Andrew: I’m looking at your website from December 2014. The card view with all the columns where I could slide the card from one column to another just looks beautiful and it’s easy to move, but it looks like even at that point you already had a bunch of job boards built into the site, right?
Perry: Yeah. I think I’m not sure if we automated them because it might have been that normally what we do with all the stuff is start as lean as possible, so put it out there, “Hey, it’s available. Don’t build it before people buy it.” So, typically we in the beginning also mentioned, “Hey, we have partnership with these job boards. We can post everywhere.” In the beginning, it was a manual process of someone actually going to the job board and posting it just to confirm people want it and then when it happens ten times, it’s a sign of, “Okay, let’s automate it.”
Andrew: I see. So, even though I’m looking at a demo that shows that I can select what job boards my ads would go to—Indeed, JobBird.com, etc., that’s not really working via the software. That would actually fire off a request to someone on your team and you’d manually put their ads on those sites.
Perry: Not for all of them. Some of them have easy APIs or XML features set up. You put the jobs into the XML feed. They read it twice a day and that’s actually perfectly fine. That’s also how companies like Indeed and LinkedIn work. So Indeed is set up in a couple hours for the team, but the niche job boards, especially in Netherlands, the ones that I mentioned that have been around for a long time, it’s very tough to go back and forth with the team about XML feeds. In the beginning, it was even quicker to have someone on the support team go to the site placing the job and figuring out if people would want it in the first place than to automate all hundreds of job boards.
Andrew: That makes sense. How did you get your first customers?
Andrew: You personally would cold call people?
Perry: I remember being at Rockstart Answers and there’s actually a point that we wanted to launch the MVP and I said, “How do I get 100 customers on this platform because we don’t have money to spend on marketing yet?” The whole thing about Rockstart Answers is the whole audience gives an audience on the paper and you have like 80 or 90 answers from people on the number one branding question. One of the answers said, “Keep on calling until you have 100 customers.” I thought, “Jeez, it’s so simple, let’s do it.” So, we kept on calling until we had about 100 people that said, “Okay, I’ll help you test this. I’ll give you feedback.”
Andrew: That’s a lot of calls, Perry. 100 people were committed to testing it. Were they willing to pay?
Perry: That’s a different thing.
Andrew: I see. You just got 100 people to say, “I’m willing to use it,” not pay for it. Once you got 100, what were you going to do with that?
Perry: That’s good feedback because you have 100 people also feeling like it’s something that’s new, so they provide a lot of feedback. I remember we launched it somewhere in 2015 and then we didn’t have a paid plan, nothing, it was really an MVP. So, by the end of 2015, we introduced monthly plans and said we’re going to charge money for it.
We even asked all the people personally what do you think is a fair pricing point, tell us fairly. So, some said, “Hey, this is very valuable. I’ll pay $200 a month.” Some said this is $10 a month. We had to make a decision to start somewhere. Then you instantly lose about 70% of those free users because they’re not going to pay for it. That’s a hard reality check at that point.
Andrew: Were you starting to narrow down your audience or target at that point? Did you say we’re only going to focus on businesses or only on ad buyers? Was there anything of that?
Perry: We have a very wide range, still today, actually. The pricing started at $19 months all the way up to depending on how many jobs you had live, so not depending on your amount of seats or something. But the only variable we look at when considering a pricing point which is fair is the amount of open jobs someone has. That resulted in all the industries you could get, also all types of companies, from SMEs at one job to corporate users that we have on the platform with hundreds of jobs.
Andrew: So, when you were making all those phone calls and you had 100 people that said, “Yes, I will be your beta tester,” they were all over the place. There was not one single focus for them?
Perry: No, they were all over the place.
Andrew: In retrospect, was that a mistake? Should you have focused on one type of person and create a product that satisfies them first before expanding to other areas?
Perry: Difficult question. I’ve been asking myself that as well, but if you are starting from a real bootstrap mindset, you’re really glad to have customers on the platform, people to start paying for it. Every one or two customers feels like a little victory in the beginning. I don’t think we would have done it differently.
I’m still glad that we have this very wide scope. We have a [inaudible 00:35:01] of customers nowadays, actually. This actually forces you to think how do I create something that is beneficial for all types of companies. Some might fall off because it’s not a niche product. It’s very general. But I think we’re comfortable there.
Andrew: Okay. All right. So, then when you were trying to sell these 100 people, what percentage did you say actually paid you?
Perry: Well, I remember it was something around 20 or 30 people said, “Hey, I love it. I’ve been part of this. I’m willing to pay,” which means 70% of that initial base just dropped off gradually over time.
Andrew: That’s painful.
Perry: Yeah, but it’s also a tough market. I once read that Ikea, for all the worldwide products they’re going to sell is testing in the Netherlands with new products because they know in any market out there, Dutch are one of the pickiest ones when it comes to pricing. So, if we’re able to sell our furniture in the Netherlands, everything will work.
Andrew: All right. Let me take a moment here and tell people about someone that I met at dinner, a guy named Drew Gorham. I hope I’m pronouncing his last name right. When you meet people at dinner, you often don’t ask for their last names.
Anyway, he runs a company called the App Factory. When he heard that Toptal was a sponsor of mine, he said that he used them, I said, “How?” He said, “You know what? As a software consultant, I need to be able to say yes to projects, to great projects that come my way,” but he says, “Look, if I close all these sales, I don’t often have the specialized product teams that I need to satisfy what my clients are asking for.”
So, he said that’s why he works with Toptal. Toptal gives him the speed to scale up his product teams and meet his project load whenever he needs it. So, he gets a new client. The client asks for the type of project that he’s done before. He says, “No problem. I’ll go to Toptal.” Behind the scenes, he goes to Toptal and he says, “Toptal, I need you guys to bring me these people into my team,” and he knows that Toptal’s extreme process will ensure that he gets just the best people on his team. He believes that a good developer, a great developer is worth ten times more than somebody who’s just an okay developer.
So, he likes that Toptal has their extreme vetting process. So, these developers that he brings in from Toptal or designers or other people that he brings in from Toptal act as if they work for Drew. Their email addresses could say Drew’s email address from the App Factory. They represent themselves as employees as Drew’s company and they work for Drew’s clients.
Project is done, they go back to do other things and Drew does not have to keep paying them. It allows them to build a very flexible workforce for a company that has to deal with lots of different projects. He works with them. I think he’s got a book about this called—I thought it was called “The App Factory.” No, “The App Factory Playbook.” That’s his book.
But the process that he’s talking about has been used by many other people. I had no idea about this until I used Toptal. I thought that when I worked with a development shop that all their people were full-on employees. It turns out that in many cases, they’re actually Toptal people who are working behind the scenes as if they were employees of the company.
So, if you’re running an agency and you can’t bring in every single person that you need to handle every single project that you take on, you should know Toptal is a resource and frankly, if you are out there and you need to beef up your development staff and—are you sure, by the way, Perry, that these guys are not competitors with you? You’re okay with me talking about them in this interview?
Perry: Yeah, no worries.
Andrew: All right. If you guys are out there and you need to bring in developers or designers, you should know that many of the design companies and development shops you’re working with already work with Toptal, so you should consider working with them too.
Good news for you, just like Perry, Toptal is created by two Mixergy fans who are just like Perry in the fact they’ve been listening to Mixergy. So, they’re offering Mixergy listeners something they’re not offering anyone else and that is 80 hours of Toptal developer credit when you pay for your first 80 hours and that’s in addition to a no risk trial period of up to two weeks. Go check them out at Toptal.com/Mixergy.
So, you get, Perry, some real customers. It’s actually bringing in some revenue. What is the next big thing that you did? Was it going up to bigger customers or was it what happened on Product Hunt?
Perry: Yeah, Product Hunt was an example of getting some exposure online, which was for us the biggest challenge to get out there. So, the first hire we did was a content marketer making blog articles because from day one, we wanted to focus on let’s do something back to the community on everything we learned. So, we built job description templates. I think by now we have over 400 landing pages of dedicated content. So, the first step for us was get the name out there, start thinking about what platform should we be on, what marketing channel should we work on, etc. So, get exposure, I guess.
Andrew: I see. So, how did you know what to write, what kind of templates to create? How did you even know that templates would work well? What was your process for coming up with good content marketing. I know that was a huge reason why you guys did well in the early days.
Perry: Sure. Everything also nowadays that we do comes often from clients. We have little groups. We made better groups of clients saying hey, we launch into a new feature. We’re launching a new mailbox, for instance, in a couple of weeks. Then actually we call the clients that we know we have a very close relationship with and we tell them, “Do you want to give feedback on the designs?”
We give them an invite to InVision, where we have all the designs uploaded. They literally comment on everything, like, “Hey, I would change the button, I would do differently, what about this feature? Is it in here, etc.?” which we did for the content as well. We asked people what would you like to read about, etc.
Andrew: You’d go into your group and you’d say, “What do you want to know?” and they would give you feedback on what they’d want to know?
Perry: Yeah. We even sent out a survey of, “Hey, these are the top ten IDs we have. How would you rank it? What would you like us to write about you?”
Andrew: All right. I’m looking at your early blog posts, “Five Proven Methods to Improve Talent Sourcing,” that was a typical type of post. That would have come from feedback from your customers.
Perry: Yeah, funny. It still is today, actually, one of the biggest—
Andrew: That’s one of your big blog posts even today.
Perry: Yeah, still a topic which we feel people want to be educated on, like how do I source people, where do I find especially developers like with Toptal as well. This is a real need, like real need of way do I find developers, how do I track them, etc.
Andrew: Here’s one of my favorite ones, June 27th, 2015, “Over 500 Users of Our Recruitment Software: Yippee.” I love that as I go back in time, I see these little milestones. Content was the first big winner for you, right?
Perry: Yeah, right.
Andrew: What did you do to promote content? I feel like sometimes that becomes a whole job unto itself. You’re supposed to promote your business so you create content to promote your business, but then you have to promote the content that’s supposed to promote your business and now you’re in like two different businesses. You’re a content creator and a content promoter while you’re in the software business. What did you do to get that right without having to overwhelm your other business?
Perry: Sure. Well, nowadays it’s two separate jobs, actually. We have people creating content and we have the other people distributing the content, thinking about where are people actually having discussions, where could people benefit from the content they create? So, it turned out to be separate jobs as we figured out.
Initially, the first hires on were doing both. He would spend half the time on creating the content, talking to customers, creating blog articles, also creating guest postings and then create the other half over time, spend the other half of our time on distributing the content, looking for channels, LinkedIn groups, Facebook groups, Quora groups, but also look at news channels that would benefit from a guest post, etc. So, we would also think of where could this actually end up and where would people read this, actually.
Andrew: There was one person that got to do both. I think that we should get someone to do that. I see the value of it. Was there one channel, was it LinkedIn that worked for you guys?
Perry: Quora for us was a channel that works well because this is a channel where people ask questions and you can help out and answer them.
Andrew: Okay. All right. Then you told our producer one of the big growth points was when you started going after big clients. How did you go after big clients?
Perry: This actually went kind of natural because I remember even Hudson Bay was considering the Netherlands and actually are entering the Netherlands now. So, they’re hiring 1,800 people in one year and they said, “Hey, we need a new software. Now that we’re set up in the Netherlands, it’s a good time to start from scratch and look at the tools out there and implement something new.”
So, they actually wanted to have a new tool implemented that looked at two or three options. We were one of the options. They came by in the office and said, “We love your idea of the product and how it should integrate with all the tools we use, like Slack, etc. So, there was a good match. This was one of the bigger customers that we got initially. But actually, it started to get out there naturally, because if you look at startups initially and smaller companies, these companies looked at startups.
Andrew: So, you guys did not have a sales team call on all these big customers? It was all inbound because of the content that you put out?
Perry: Yeah. We still have no soliciting outbound at all.
Andrew: I see. I had no idea. Product Hunt was actually a big source for you apparently of attention and customers. I’m looking at your Product Hunt page. You actually did really well for recruiting software, not the kind of thing that every guy who’s just sitting at home looking for something new to play with could use. 323 upvotes on Product Hunt, lots of customer or user engagement in here. I get Product Hunt as a place to go and discover new software. Did you actually get people who are doing more than just discovering and voting on your software? Did they actually sign up? Did they become customers? Was it useful that way?
Perry: Yeah. I remember I got a call I believe at night from an Indian recruitment agency that said, “I want to buy a year plan of your software.” They signed up on the spot for a year deal. I think it was about $2k at that point for a year plan, which now that I look back doesn’t sound that much, but back then it was tremendous. That was the first real commercial effect of Product Hunt. I think it wasn’t like hundreds of customers, but definitely 10, 20 customers following that single post.
Andrew: You guys did something on Product Hunt that I wish other companies knew to do. You responded to every single comment on Product Hunt, even the ones that weren’t so significant. This guy Rutger put up a post that said, “This has a simplified dashboard with a great design. It’s great. Cheers to the team of Recruitee.” I get the sense that maybe you guys are friends with him, but regardless, you responded. You said, “Thanks. We updated the dashboard just yesterday. Glad you like it.” I think it just shows that there’s a real company that pays attention to users when you respond that way.
All right. I get why you’d get customers. People see the value of your software and they’re actually seeing you’re engaged and so they want to try it out. The thing I’m surprised you got is funding. The thing I’m surprised that you got was funding. You told our producer, “Hey, you know this little round of funding that we did? It actually came because of Product Hunt,” tell me about how Product Hunt led to funding.
Perry: Yeah. It was funny, actually, because Product Hunt was August or something like that. And then we got in touch with Robert Pijselman and Luc Brandts, who were two seed investors, actually. We know them or actually we didn’t know them, but we got to know them via the Rockstart network. So, they were giving a workshop at Rockstart about their business BWise. They have created this software company together, which was sold in 2012 to NASDAQ, actually, and they were looking to reinvest in startups. They heard about us and we got to know each other.
I think Robert even approached me at the event they were hosting. He said, “Yeah, I heard of you guys,” we get in touch. It was a nice buzz going around because of the Product Hunt post. We just hit it off because it was a good match of their experience of building a business, also taking it international, particularly the B2B side of the business, of course. They sold to Fortune 500 companies as well. So, it just clicked and it didn’t take very long. I think it was a matter of weeks before we said, “Let’s do it together.”
Andrew: How much money did you guys raise? I see the post that you put up on your site on August 27th, 2015, but you didn’t say the amount.
Perry: No. We agreed not to publish the amount because they felt it was no value to publish that.
Andrew: We’re talking about hundreds of thousands, not millions of dollars at this point, right?
Perry: We’re talking about enough to really kickstart the business, yeah.
Andrew: Maybe not even hundreds of thousands.
Perry: If you’re lean it could be $5k. It was enough to bring us to a point where we are today, actually.
Andrew: You said to our producer it’s not about the money. It just changed our way of thinking and professionalized our sales and marketing. What happened when you guys got more professional with your sales and marketing?
Perry: It’s true because the input of Robert and Luc, who had built teams of tens of people or hundreds of people that are doing sales, you start thinking about what type of people do I need to attract and how are they going to sell my business and particularly need to learn going from a startup to a scale up phase to let go and find people for the right spot to take on the responsibilities you in the beginning all have on your plate. So, I think this process of professionalizing going hand to hand with actual hiring, so I would say practicing what you preach, we got a lot from the investors as well.
Andrew: Be more specific. Who did you hire that you wouldn’t have hired? What role did you fill that you wouldn’t have filled before?
Perry: Recently, like six, seven months ago, we sat down with the team and said, “Hey, it makes a lot of sense for us to hire a chief commercial officer,” I said initially, “Why? We’re doing fine with the business,” right? They said, “No, but you get focused on commerce, thinking about affiliate partners, resell shares, maybe much more than just sales,” because initially we wanted to call it head of sales and then we sit down and they told me like, “Hey, Perry, maybe it’s not just head of sales, maybe you should look for a chief commercial officer.”
So, initially, I thought do we need to? And now that we hired Nils, who joined seven months ago, I realized wow, it’s so valuable to have someone in the team dedicated on the commerce part that maybe I wouldn’t have realized myself.
Andrew: Okay. I see that this is all helping you, I see the change that’s happening in your business. You also said, “Look, I had to go through a mindset. I was in a country that was dependent on other countries for trade. That affected the way that I was thinking.” This is what you told our producer. What do you mean you guys are affected by other countries for trade and so you’re thinking different from a US entrepreneur because of that?
Perry: Well, not just me. I think it’s the nature of the landscape here in the Netherlands. It’s because we’ve been part of the back country, a lot of our trades from the past decades have been going through Germany, so our economy very much relies around other countries around us. You can also call it trademanship that’s kind of like in the root of the entrepreneurship, I guess in the Netherlands and my grandfather is an entrepreneur, my dad is an entrepreneur, so they also have been involved in business, as you know, in the European Union to do business with other countries and kind of rely on them.
So, I guess the mindset of an entrepreneur in the Netherlands is to think about how do I make partners and how do I set up an international connection to benefit—we’re not a small country. It’s like 16 million or 18 million people. From day one, you have to think how do I sell outside the country? They probably wouldn’t survive on just the Netherlands alone.
Andrew: So, Perry, what I was saying was that doesn’t seem like an issue. That actually seems like a good thing, right? You come from a mindset of creating partnerships. Your business needs partnerships to grow. I thought that you were telling our producer that’s a challenge, but it sounds like it’s not. That’s actually a strong thing for you, isn’t it?
Perry: I guess it is. But at the other hand, if you’re talking to, for instance, investors in the Netherlands, which we happen to know via the Rockstart network, they typically tend to think small inside the Netherlands or European Union, as in look for companies located here because you want to be next to a company you’ve invested in, which makes it hard to think about.
We’re actually active in 55 countries nowadays, so, I wouldn’t say we’re a Dutch company even. I would prefer to call us a global company because this was one of the criteria. Let’s focus on international business. If we find partners, like if we find job boards, it tends to localize in countries. So, it could work against you if you want to have an international business to have a local mindset, but we always wanted a business from day one with countries abroad.
Andrew: What did you do to create partnerships with companies abroad?
Perry: Well, a lot of that follows the demand of customers, like for instance, you have customers in the US that say, “Do you also publish on the US job boards.” So, the team had to go on and make the partnership basically. I guess it’s natural for the product and that’s kind of how it develops, like people ask for it and if you hear the question 10 times, we reach out and said it up.
Andrew: What do you do to keep track of all the things that people ask you? I’ve been kind of looking at Basecamp’s site. They have this process, it seems like, for being aware of the issues people bring up on a regular basis. I know what it is. Basecamp’s developers use Basecamp project management software to manage their company. They have Basecamp send out a question to all their tech support people every week that says, “What issues came up this week often that you want to share with us?”
So, everyone gets that question. They all write the answer to it and then in Basecamp, they get the answers to all these questions and so they’re aware of the big requests, the big needs that come up and they can start to sport trends. Do you have a process like that that works for you for understanding what issues people have?
Perry: It makes sense. We even have a Trello board for it. We set up a Trello board all the users have access for and they can request features. They can see our roadmap even. They can comment on the roadmap. We invite them to be part of that discussion. We send out a newsletter twice a month like hey, we’ve updated the roadmap, this is coming. So, we literally try to make the user part of the process by inviting them to join the discussion.
Andrew: I thought I saw that, actually. I thought I saw a public—
Perry: It could be, actually, yeah.
Andrew: A public Trello board. Yeah, there it is, Recruitee Roadmap on Trello. So, anyone can go in and see what your roadmap is. So, for example, you guys finished candidates list export, external recruiters access, give candidates view only, Slack integration. That one got 30 votes. I see. Anyone can see what’s going on, anyone can see what you guys are thinking of and they can all go in and vote on it.
Perry: Yeah. You don’t publish your whole roadmap. There are certain projects that you have in stealth mode that you’re testing, experimenting, but the stuff that’s ready for the public, saying this is something we need input on, you publish them by itself.
Andrew: I see one. Quarter 1, 2018, there’s something called Stealth Development: [inaudible 00:54:54], right? So, you don’t say what it is, but you’re aware it’s coming up on the roadmap.
Perry: Yeah. But you do have a closed group of users that are a part of that because you do need the input. You’ve got maybe 20-30 of hardcore users that are part of those types of projects, but it’s just an experiment you run and if it’s successful, you put it on the public roadmap. You make everyone part of it. You definitely need some kind of experiment area.
Andrew: What’s this thing about scorecards? That has to do with the book “Who” right?
Perry: Yeah. Scorecards are very interesting because the biggest struggle is how do you rate people? If you have a team of people rating the same candidates, you even need the structured process of how to rate.
Andrew: So, you’re creating that and that’s coming out Q4, 2017.
Perry: Big one, yeah.
Andrew: You mentioned that you come from an entrepreneurial background. Your dad was in the import/export business. What specifically did he import and export?
Perry: My grandpa was in the import/export business of the flower bulbs. This was where I come from in the Netherlands pretty big. They used to create flowers and export them to Germany or Russia or England, even. My dad took over the business, not the flower business. Back then, he turned it into a bowling alley. So, he took the whole fabric and he made it a bowling alley.
Andrew: So, when you were growing up, your dad ran a bowling alley. You told our producer that he would drag you along to every business meeting so you could learn from it—bank loans, meetings internally, the works. Is there one thing that you learned from all that that you can still use today?
Perry: Yeah. Definitely. I grew up in this bowling alley. When I was a little kid, just part of the business. He took me to the meetings, also to networking events, for instance. I remember I was 15, little kid, going to network events with entrepreneurs who were 40-50-year olds. I guess you learn people actually accept you and entrepreneurs tend to be open-minded to getting to know new people. I feel very comfortable walking into a room where I don’t know anybody and it takes a matter of five minutes and you just start chatting to people. That’s a comfortable idea if you are in unknown territory.
Andrew: Especially if you’re going to call hundreds and hundreds of people asking them for feedback and asking them to be beta testers. I can see how that would be helpful. I had no idea that bowling alley owners would need to network. Why would he need to network?
Perry: It started with a bowling alley. Then he added a restaurant, another restaurant, the he started to buy property, he went into the property businesses, then he started investing in companies. So, it’s kind of a growing entrepreneurship that evolved all the time. The bowling alley was just the beginning.
Andrew: I see. You got to watch all of that as it developed, be a part of it and see how companies are built.
Perry: Yeah, and even do some stuff together. We often, when he’s investing in companies, I help him. I assess the business plans, assess the entrepreneurs.
Andrew: Did your dad invest in your business?
Andrew: Why not? He didn’t invest in Recruitee? He didn’t believe enough in it?
Perry: He did believe in it, but I think it was a bit of an ego question, like I can do it alone, not take family money and prove I could do it myself, I guess.
Andrew: Are you guys close or are you competitive?
Perry: No, very close. We even do some business together. When he looks at companies to invest in, I help out, I assess the business plan, the entrepreneurs, we go to events together, very close and very open. So, he’s also challenging me on a lot of fronts often, pretty cool.
Andrew: Got it. All right.
Perry: Congratulations on the success of Recruitee. It’s basically spelled Recruit with two E’s at the end, right?
Andrew: Right. That’s it.
Perry: Go check them out at Recruitee.com, of course. And the two sponsors that I mentioned are the site that will help you host your website. Go check out HostGator.com/Mixergy and if you like Drew, who I mentioned earlier, who I met at dinner, want to keep beefing up your agency, go check out Toptal. They have an extreme vetting process and you can get a great deal working with them if you go to Toptal.com/Mixergy, top as in top of your head, tal as in talent, Toptal.com/Mixergy.
All right, Perry. Thanks so much for doing this interview.
Perry: Cool. Thanks a lot.
Andrew: You bet. Bye, everyone.