Ian Siegel is the co-founder and CEO of ZipRecruiter which is an online employment marketplace that connects millions of employers and job seekers through mobile and email services. The company has raised over $200 million from investors such as IVP, Industry Ventures, or Basepoint Ventures.
In this episode you will learn:
- The benefits of going after 80% of the market that your competition is ignoring
- How AI and machine learning are improving recruiting for employers by 300%
- The questions Ian asks when recruiting
- The future of robots in recruiting
- How sunk costs make or break entrepreneurs
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Ian Siegel:
Ian Siegel is CEO and co-founder of ZipRecruiter, a leading online employment marketplace that uses AI-driven matching technology to actively connect millions of businesses of all sizes and job seekers across all industries to their next great opportunity.
Since the companys inception in 2010, more than 1.8M employers have used ZipRecruiter to find their next great hire and over 500 million job applications have been submitted through the site.
Prior to co-founding ZipRecruiter, Ian held executive product and technology leadership roles at companies including CitySearch, Stamps.com, and Rent.com. He received his B.A. in sociology from Oberlin College and is based in Santa Monica, California.
Connect with Ian Siegel:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. I think that today we’re going to be learning quite a bit about recruiting, quite a bit about AI, and machine learning, and all of that good stuff. So, without further ado, I want to welcome our guest today, Ian Siegel. Welcome to the show.
Ian Siegel: Thanks for having me.
Alejandro: How was life being born and raised in Los Angeles?
Ian Siegel: Life is great, and building a business in LA has also proven to be great.
Alejandro: That’s amazing. So, tell me about growing up. You did study sociology at Oberlin College, but how did you develop the love for technology?
Ian Siegel: Well, I had a non-traditional path to technology. I grew up in LA, and I actually grew up in Hollywood literally on the mountain where that big Hollywood sign resides. Maybe because of where I grew up, my original idea of what I wanted to do with my life was to write movies. So, I went to college, and I came back to LA and went to work for a production studio on Warner Bros lot, a very famous production studio. Within a year learned to hate Hollywood so much that I took the first job I could get, which happened to be at Warner Bros online, which was the technical division that they had spun up. That’s how I found myself in tech.
Alejandro: Wow. I think that entrepreneurship storytelling is critical, and that’s for either raising money and for getting top to your talent. This experience, for example, that you had in movies and the love that you had for movies, do you think that kicked into high gear, the storytelling side of things?
Ian Siegel: It was definitely when I look back over my career, one of my secret superpowers, which is I understood from an early phase in my career how to build a narrative. Really, telling stories is frequently used to sell something, so it’s how to allow others to see something the way you see it and become excited about it or get infected with your enthusiasm for it. So, certainly, I think storytelling is a key capability for startups who want to succeed.
Alejandro: Got it. Before you went at it on your own as the founder of ZipRecruiter, I’d like to touch very briefly on what you’ve learned and also what you did because you bounced quite a bit in multiple companies: TicketMasters, Stamps.com, Rent.com, Pictage.com. It seems that product was a big thing; one of the things that you were really very much involved. So, what did you learn in each one of these places? If we had to go one by one, and you just name one lesson that you learned, let’s do that. TicketMasters, what was the lesson that you learned?
Ian Siegel: At TicketMaster, I learned to appreciate my value on the market, is how I would say it, in that I came in as the most junior person in the office. Then very quickly, I was doing the same work as the most senior people in the office, but still getting paid as the most junior person. So, it was the first time I would say that I had the courage to pick my head up and look around and say, “Hey. I’m not getting paid fairly. Let’s go find another job.” I think the lesson I learned there was to value myself. Then I went to CitySearch. I was one of the earliest employees there. I had them launch the first market that they ever launched. It was a fantastic experience, but I had sold myself in as an engineer, and obviously, I didn’t have a computer science degree. I was just quick at picking things up. So, I was sort of faking it until I made it. Then ironically, maybe because of the storytelling background. But people really liked me, and CitySearch was a challenged place from finding a CTO. They went through four CTOs while I was there. The last one lasted less than three days before he walked out and said, “Life’s too short.” Then like a battlefield promotion, on an interim basis asked me to step in and take over the team. I think I was 22, and I was suddenly managing a team of 40 engineers, all of whom were probably in their 30s. I was so out of my depth. I didn’t know how to do the job. I had never managed anybody before. I felt completely unqualified. I felt like a total imposter. Literally, what I would do every day is I would just go to the team and say, “What do you want me to do today?” Whatever they told me to do, that’s exactly what I did. After two months of doing this, I went to the leadership of the tech team, and I said, “Listen. I just want to apologize that I’m so terrible at this job.” They were like, “What are you talking about? You’re the best technology leader we ever had here. You listen.” That really stuck with me. So, listening has become one of my other key areas of focus regardless of what level I was at. Every job I’ve done, and every room I’m in, I’m always practicing listening. That was the CitySearch lesson.
Alejandro: Let me cut you right there. How do you define being effective at listening?
Ian Siegel: I think most people listen to talk. What they really do is, they listen until something triggers in their brain. They figure out what they want to tennis-racket-back to their person they’re participating in a conversation with. What I really practiced from a very early point was fully digesting what the person across from me was saying before I fully formulated a response to what they were saying. I give this advice all the time to people in my organization, which is, practice the two-second rule, which is wait two seconds when someone finishes speaking before you respond. Not only will it make you seem more thoughtful, but it will force you to be more thoughtful because it will force you to fully process whatever it is that they said to you.
Alejandro: Wow. That’s a big one. That’s a big one. So, let’s continue. Then what happened after you learned the art of listening?
Ian Siegel: The art of listening. Now, I’m trapped as a technology leader, and I’m getting recruited by companies far and wide. Famous companies are recruiting me to be a technology leader, and I wind up at Stamps.com. Again, a very early-stage employee. I built an entire, basically frontend web organization for them, mostly technology. So, again, I’m building and running technology teams even though I don’t have a computer science degree or experience in managing them. That went extremely well. What I really learned there; I think the most interestingly lesson I learned there I learned many lessons, but the most interesting one was, we were working with the Post Office. Stamps.com lets you print postage from your printer. That was their whole business model. It was a multi-month certification process from the U.S. Postal Office to make it legal. We were basically in a death march. I’ve never been at a job like this. It went on for a solid four months where nobody left the office, seven days a week, no holidays, no breaks. We had to provide perks to our employees. We offered everything. We were offering money. We were offering laundry services. We were offering meals. What I learned in that period was what really motivates and incentivizes people. 1) Having a common mission. 2) If you really want people to appreciate something, make it tangible. Back then, one of the things we did is we gave everyone a $300 device called TiVo, which was the first set-top box that let you record TV shows. I’ve never seen such gratitude from an employee base from anything. This was the cheapest possible perk we could give them, and yet they were so grateful. They thought it was such a thoughtful gift. So, that’s really stuck with me. One of the things I do now is when I talk to employees that work for me, I always say, “List the things you like the best about working here. What perks do you value the most?” Over and over again, it’s things like the TiVo. “I love that you guys serve breakfast and encourage us to sit down together and talk to each other.” Stuff like that means so much more than a little bit more money.
Alejandro: Yeah. All these big companies, they’re losing the human component, and culture is people.
Ian Siegel: That’s right.
Alejandro: I love it. So, what was the next lesson and the next gig?
Ian Siegel: Then I’m leaving Stamps.com, and I go to a company called Rent.com where again, I’m hired as the head of technology. At this point, I’ve got like a blue-chip, gold-plated resume, and people think it’s incredibly impressive that I’ve now worked at three companies, two of which I IPOed, one of which sold for hundreds of millions of dollars as the head of technology. There, I actually started to feel confident as a head of technology although still terribly miscast. It was not my core skill set. But what I learned there is that regardless of the role you play, at Rent more than any company previously, I started to get heavily involved in the product. That was where my real passion lay, and I knew there that once you find the thing you love to do, you have the power to craft your reality. I knew I was never going to take another technology job again. It’s really funny because when I was leaving Rent.com, and we sold it to eBay for 435 million dollars. When I was leaving, I was getting recruited, and I’m not kidding. Facebook was calling me and saying, “Will you come be a VP of Engineering.” I was like, “I would never run an engineering team again.” Facebook wasn’t Facebook back then. I probably should have taken that job. That’s the level of calls I was getting because I was this famous head of technology now for three companies in a row. But I took a job at a company called Pictage, where I would get the opportunity to run multiple teams and do the thing I loved, which was product.
Alejandro: Now, it was from engineering and tech; now it’s product. Product and product/market fit. What did you understand about product/market fit, like really focusing and nailing it on product so much now?
Ian Siegel: From the first job I did, and again, maybe it goes back to the writing movies and having to create a logline for a movie, but I really felt like there was a fundamental truth at these startups, which is every one of these businesses only sold one thing. No matter how many things they said they sold, they were really only capable of getting famous for one thing. The example I will give people today is, what does Google do? Everybody says, “Oh, Google’s a search company.” It’s like, “Yeah, it’s a search company. It’s also the biggest mapping company and the biggest email company in the world.” But nobody really thinks of them that way. They think of them as a search company. So, with product, it was really trying to find one sentence differentiation that you could own the mindshare of within society or within your customer base. I felt like that was the key to my success over and over again with products, which is just having that understanding that you’ve got to pick something to be the absolute best at, and then you really just want to say it over and over and over again in as many places as you can so that you really own the mindshare around it.
Alejandro: Got it. I love the fact that you say that every company is viewed for one thing. Sometimes, we forget, especially when you’re an operator and building stuff. You did product for MyLife as well. I want to go right into it. At what point do you realize maybe it was during MyLife, which was your most immediate gig before you launched your own business. What happened that all the sudden you came up with the idea of ZipRecruiter? What was that process like?
Ian Siegel: I had the idea for ZipRecruiter all the way back when I was working at Stamps.com. The nature of these startups is that the HR departments are tiny, and frequently aren’t able to do the recruiting for you. So, I was literally posting my own jobs when I was recruiting. When I got to Pictage, I was managing product marketing operations, so I was constantly recruiting. To post a single job, it was like, “Where are you going to post it? I’m going to put it on Monster. I’m going to put it on HotJobs. I’m going to put it on Dice. I’m going to put it on Craigslist.” There were so many places to post the same job and so many different mechanisms by which the candidates were coming in that I personally felt this acute pain point over and over again at job after job. So, I had the idea for a while, and I was actually going to go build ZipRecruiter when I went to MyLife, but MyLife was the one time in my life that I would say I took the paycheck. They offered me so much money, I couldn’t walk away. So, I deferred building my startup for a little while to go work at MyLife. But then I realized it just wasn’t where my passion lay. So, I finally worked up the courage, built my startup, and left.
Alejandro: You had the idea back then, and it was definitely QNE in the background. What was that day when you made the decision that it was time to go at it and start doing your own thing?
Ian Siegel: So, I was working at MyLife, and ZipRecruiter was something that I had recruited three co-founders to build with me on the side of our full-time jobs. It was kind of a hobby project. We were like, “This would be like a great magic button if it existed where you could push a button and then a job you wanted to post would go to all job sites.” Then all the candidates from all those sites would just come into one easy-to-review list. We were cavalier in the way that we approached it. We’ll build it, and then we’ll see if anybody wants it. The first day we launched ZipRecruiter, I put $50 into Google Adwords, and we got 12 customers for $50. That was one of those rare cases where you have immediate product/market fit. It’s almost like the customers were at the gates banging on them, waiting for us to open the doors, and I quit the same day. I just said, “Okay. Done. I’m doing it and doing my startup.”
Alejandro: Wow. Then how did you meet your co-founders Joe, Ward, and Will?
Ian Siegel: We had all worked together at past companies. Some of us at multiple companies together, so we were really familiar with each other. Funny enough, it was actually just Will, Ward, and I to start. Then Joe has been living with his girlfriend in a foreign country, and he came back to the U.S. and was homeless. He asked me if I had a spare room. I said, “You can live in my converted backhouse/garage. You’ll have to work on my startup for free. And he said, “I’ll take that deal.” That is how Joe became the fourth co-founder.
Alejandro: I love it. Then what did each one of you guys bring to the table to make it so magical?
Ian Siegel: In a way, we were the ideal startup team in that Ward is an elite frontend developer and designer. He’s probably the best designer I’ve ever worked with. Then Will and Joe are both elite engineers, and I was a generalist who had done product, marketing, operations. Obviously, I had run tech teams. So, we all had natural roles. There wasn’t any argument about who was going to be the CEO. Being back then, I just remember it being like a joke. They’re like, “Hey, you’re the CEO. Go get us an insurance plan.” I got all the work nobody else wanted to do. But we were like a Navy Seal ideally constructed startup team, though none of us appreciated it at the time. I sort of opportunistically picked up Joe when he was homeless. We weren’t thinking like, “Ah! We’ve really cracked the code here. We’ve built an awesome startup team.” We were like, “Yeah, we’re a group of guys that like each other. Let’s try to build something.”
Alejandro: Right. Then you guys finally get together. Did all of you give the notice at the same time, or was it more like a gradual process?
Ian Siegel: I was the first one to quit. Joe was obviously unemployed and living in my garage. The two of us were working. I tell the story: I was making a lot of money when I quit my job. It’s just me and Joe in my house, and many days I’m in my pajamas all day just working at my kitchen table where we were building this. We bootstrapped for the first four-and-a-half years that we were in business. I remember I looked at my wife. It probably was about a year in, and I’m still at the kitchen table. I was there, and I said, “Hey, listen. I just want you to know I know we may not be able to keep this house. I know our kids may not be able to go to the private schools they’re in, but this is my bliss, and I just want to tell you how grateful I am and how much I love you for supporting me as I pursue this.”
Alejandro: She looked me in the eye, and she went, “How long?”
Ian Siegel: I said, “What?”
Alejandro: She said, “How long before we call this a failure?”
Ian Siegel: I said, “Give me two years. Two years. If we’re not making enough money to keep the house and the kids go to private schools, then I’ll consider going back and getting a job.”
Alejandro: How many kids did you have?
Ian Siegel: I had two kids. One was in school, and one was still in preschool. But they were very young.
Alejandro: What were some of the troubles or hurdles that you were encountering during that one year-and-a-half where you were in your kitchen. I’m sure it felt a little bit lonely too because you were used to working with other people. What was that experience like? What a change for you.
Ian Siegel: Yeah. I went from managing a team of I think I had over 100 people at the last job I’d have at MyLife, and at Pictage, I was managing more than 100. Suddenly, it was just me and Joe all day, every day. Every customer was precious, and we were adding customers fast, but that meant also that the support demands on our team were high. These customers needed a lot of hand-holding, a lot of explanation. None of them were experts at writing job descriptions. Many of them had questions. I would take basically all the customer support, phone calls, and emails that came in. We were on the West Coast, which meant that I would be getting up at 5:00 a.m. to start answering calls and emails that were coming in from the East Coast. Then I would be staying up until 11:00 p.m. at night to deal with night owls on the West Coast, and it was just rinse and repeat. This went on for a year. I don’t know that I’ve ever worked that hard over that length of time before. Because we were bootstrapping, it never even really occurred to me like, “Hey, we should be hiring a bunch of people. We should be getting offices.” It was just happening really fast. It was, to some degree, overwhelming, and I got lost in it. I’ll never forget; the first hire we ever made was a wonderful woman named Ingrid. This was a year-and-a-half in. We hired her to be our first customer support rep. The day she started was the day my life got perfect, where suddenly, I had copious free time. I wasn’t working weekends or late to the evening anymore. I was spending time with my family. It was the greatest period of my life that I remember, and two weeks after we hired her, Ingrid came in my office and said, “I’m quitting.” I was like, “What! You can’t quit. Why are you quitting?” She’s like, “This is batch hitting, and I can’t work seven days a week from 5:00 to 11:00.” I was like, “Okay. Well, how do we solve that problem?” She said, “How about we put office hours up.” I was like, “Done.” We had office hours on the site within five minutes of that conversation. To set an example, I tell that story to all new employees. “You can affect change here. You have agency. You see something wrong, tell us about it. We’ll fix it.” Ingrid, I’m delighted to say, is still here. She’s still here. She’s still working with us.
Alejandro: Wow. What a great testament as well for your culture. I want to ask you here. You were talking about doing the Google ads to capture 12 people at $50. What ended up being the business model because you were at it for a year and a half, and then when you started building up the company, what was that business model?
Ian Siegel: Fundamentally, we started as a SaaS business, and instead of charging employers on a per-post basis, which is how all job boards had worked before, we said, “We’ll charge you a subscription.” The reason we can do that is because we gave them job slots where could rotate jobs through. So, if you put a job up and it didn’t work, you could change the job and try again. Also, we’re the system. We’re the applicant tracking system that they use when the candidates come in to vet the candidates and collaborate with teammates to decide who to hire and who to reject. That meant that we had recurring revenue, which allowed us to grow pretty fast. We bootstrapped for four and a half years and were doing north of 50 million in revenue before we raised our first round, our first Series A, which was 63 million bucks. So, we obviously did pretty well.
Alejandro: How were you growing the revenue. Obviously, we’re not going to go into details because of potential confidentiality here, but at least before you guys started the hypergrowth path with VCs, and you were bootstrapped, how was that revenue growing?
Ian Siegel: I think it’s no secret that ZipRecruiter does a fair amount of advertising, and we were doing that advertising before we raised the VC money. So, we were in TV, radio, and a bunch of other channels. It’s really interesting because conventional wisdom was that the market we were going after, which was SNBs couldn’t be reached through conventional means. Effectively, all of the major players in the job market you heard of before us, whether it was Monster, CareerBuilder, staffing firms, or VC-back startups. They all focused on effectively, of the six million businesses in the U.S., the top one million that represent about half the jobs in the U.S., and we were going after the other five million. When we started doing all this advertising, everyone was just like, “They’re dead. They’re going to be out of business in a year. They’re spending all their money.” They basically gave us all of these channels, almost an exclusive in these channels, and it worked like gangbusters. We were just tearing up market share. Then you never get to rap it for very long is what I learned, which is like the big guys very quickly woke up. We’re like, “They’re not dying. Why aren’t they dying?” Then, suddenly, if you turn on the radio, or you open your mailbox, you will see that every job company in the world is now advertising on all the same channels we are.
Alejandro: Wow. Market places are typically tough because, in something like this, you have the companies offering jobs, the people seeking jobs. So, how did you go about the chicken and the egg problem, especially being the supply and demand problem, but especially being bootstrapped?
Ian Siegel: We had an insight early on, which is every company that had built a job company before us. They focused on getting job seekers first. Then they sold them to employers. I looked around, and I said, “Hey, why don’t we take the opposite strategy. We’ll go aggregate the employers, and then we’ll treat all these different sites that have job seekers like a commodity, and we’ll just buy from them. That’s how we started. It’s a very interesting tactic I pursued because we were growing so fast that literally every job board we distributed jobs to every month for the first two years, they would call me and raise our price every month. They would be like, “You can’t keep the old deal. You’re growing too fast. We need more money from you.” I got to the point where I dreaded the calls from our partners because just imagine you’re working with 100 sites, most of them want a raise every month what that feels like. Then this funny thing happened a couple of years in, which is I still got the calls, but almost overnight, all the calls became, “What can I do to make sure you’re happy and keep your business?” because they had ladder stepped us up into becoming one of their biggest buyers if not their biggest buyer. I was like, “What you can do is you can give me a discount.” So, suddenly, we started to build a moat around our business by using our size and leverage to get preferential deals. But it was a painful two-year process to get there, let me assure you.
Alejandro: I hear you. At what point would you say that your wife felt it was okay for you to keep going?
Ian Siegel: I mean, we did really well.
Alejandro: Was she like, “Okay, I think this is going somewhere.”
Ian Siegel: I would say the first two years were thin, but we were just building an ever-larger customer base. The beautiful thing about a recurring revenue model is the revenue predictably grows. It probably was around the third year that she woke up to the fact that there was the same amount of money going into our bank account as there used to be.
Alejandro: Very nice. We know, Ian, that being an entrepreneur, there’s no such thing as a straight line. You have the highs. You have the lows. I want to ask you here, what was a moment for you that perhaps was one of your darkest moments during the journey of this business that led to a really incredible, magical breakthrough?
Ian Siegel: Ironically, we bootstrapped for four and a half years, and then we raised 63 million dollars in a Series A round, which was the largest in LA history. We had to make a decision, which was, “Do we tell people we’ve raised this money or not?” Up to this point, we had practiced what I call Security Through Obscurity where we never told anyone how well we were doing intentionally because I was really concerned having worked for multiple VC-backed businesses and knowing a lot of VCs that there would very quickly be copycats of our business model when people realized how lucrative it was. But at that moment, there were a lot of internal advocates for sharing publicly that we had raised this money and sort of beating our chests because they said it would help with recruiting. I was swayed by that argument, but the week after we were in the LA Times and bunch of other newspapers, Announce and TechCrunch announcing the fundraised, was probably the worst week of my career at ZipRecruiter because not only did a legion of partners call me up and say, “You **** liar. You’ve been saying you’re four guys in a garage. You’re bigger than we are.” Then they tried to renegotiate their deals with me on the spot. But our largest partner, who was our biggest source of traffic fired us immediately. Circled us. Put crosshairs on us, and said, “You’re our #1 competitor.” So, overnight, the fundamental economics of our business changed, and our access to Job Seeker traffic changed. In the spirit of what doesn’t kill you makes you stronger, it compelled us to start focusing on the other half of our marketplace, and with the mantra of never again. We’re never again going to be in a situation where other companies have the power to limit the amount of traffic we get. That’s when we started to really focus on building an excellent job seeker product to go with our excellent employer product. That’s when we made a major investment in mobile which turned out to be a prescient decision because back then, about 25% of job-seeking happened on a mobile device or tablet. Today, just a few short years later, it’s 75%. Being the best at mobile turned out to be one of our better long-term decisions. I’ll never regret because of the many positive things that came out of it, the decision to announce publicly, but it strategically, definitely was a dumb decision.
Alejandro: Why 63 million? It’s not just like one of the largest in LA, probably one of the largest in U.S. history when it comes to Series As. Why 63 million in a Series A? Why not raising just a tiny bit, and then maybe a little bit more, and continuing the pace of the different financing cycles?
Ian Siegel: We had a tiger by its tail. There were so many things that we wanted to do simultaneously. Whether it was to beat a rap advertising in channels where we still had basically free reign and were operating like we had exclusives because we were the only ones in it. A particular desire to invest heavily and rapidly in technology. There was a lot going on technologically in our business. It was right around this point that a funny challenge happened to our business because after we survived the companies and partnerships dissolving and losing some traffic right after we fundraised. By focusing on it, we immediately built a great job seeker product, and job seeker traffic skyrocketed. Then we started delivering not 30 candidates per job, but 40, 50, 100. It turned out that when you get to that level of candidate delivery, it actually upsets employers. So, our strategy of more as being our true north turned out to start hurting us, and we had to make a major pivot from more candidates to a laser focus on quality candidates. The technology that was emerging in machine learning and deep learning, what every calls AI, it was really hard to find engineers who were good at it. It took a lot of investment to get it up and running. We were right at the early stages of it. So, I knew I needed a large war chest if we were really going to go after what the next iteration of our business was going to be. It probably was the biggest single pivot we had to make as a business, which was shifting from volume to quality.
Alejandro: Got it. Definitely, AI and machine learning, there’s just so much noise. Everyone says, “I’m doing AI for this, or machine learning for this.” You were talking about building a big war chest. I guess one of the biggest expenses there or the biggest cost was the scientist, the data scientists.
Ian Siegel: Yeah. We have over 250 engineers that work at Zip now. We have 60 in an R&D Center in Israel that are doing some of the most advanced algorithmic work in the world. We have a whole other search team in LA. We are pursuing this and investing tens of millions of dollars into it. What you said is exactly right. If you really want to do this work, it’s not easy to find the people. But more importantly, it takes an extraordinary quantity of data to actually train these algorithms. There are very few companies in the world that have enough data to do it. It’s an interesting time because there’s an inflection in startups’ ability to disrupt incumbents. The incumbents actually have the advantage because they have the data from which to train these algorithms. It’s not just in the recruiting category. It’s in many categories.
Alejandro: Got it. Just to close the gap on the fundraising, how much capital have you guys raised to date that is publicly announced?
Ian Siegel: It’s over 200 million dollars at this point. We did a Series B last year.
Alejandro: So, 156 million. Right?
Ian Siegel: Correct.
Alejandro: Really nice. Would you say that in your case, typically the people that I have on the show, these people had to go there and fight to get their round because every company, like the bootstrapping road, is not the norm when you’re thinking about hypergrowth companies? It’s like you’ve got to get out there. You’ve got to fight. You’ve got to build a funnel and start pounding doors to get some financing. But, in your case, we’re talking about doing tens of millions already in revenue. Were you literally having people waiting for you at your office when you were arriving on Mondays at 9:00 a.m., or what’s the deal?
Ian Siegel: If you want to feel really good about yourself, successfully bootstrap a company because it is like having the most leverage you can possibly have in a negotiation because you are buried in suiters. So, our Series A was relatively easy to find quality investors who wanted to participate because we were the untouched company. We’d never had a dollar put in, and we were doing so well. I still was an idiot. It’s very hard to be good at something in life until you’ve done it a few times. So, that was the first round of funding I’d ever raised for any business I was at. Obviously, I made a bunch of mistakes. Even then, I still have great partners and investors. They’ve been tremendous all the way through, but if I had a piece of advice for anyone out there thinking about raising money, which is find a quality advisor. That will change your life to just have one smart person who has the wisdom and experience to sit on your shoulder and tell you how to avoid the pitfalls in that process.
Alejandro: Got it. That’s a really good one. That’s why I actually built my next business, which is Panthera Advisors. But that’s a different conversation. Why did you decide to get institutional partners as the lead investor for this first round? What did they have that nobody else had?
Ian Siegel: I had a really interesting experience. I got to talk to some of the best investors in the world. I was surprised by the level of input many of them wanted to give me on the business that was doing so well. The changes they were outlining as thinking were good ideas. I would say the demeanor of some of the investors I was talking to was one of they were adopting more of a mentor/coach role with me, as opposed to a partner role with me. I had been building startups for 17 years before I built ZipRecruiter. IVP came to me, and from the very beginning, they’re like, “How can I be helpful? What would be helpful?” They listened. That’s what I would say. They listened really well, and everything I said, they wrote down and followed up on. I was so impressed because I think the #1 thing I look for from a VC is make my job easier. The only way you’re going to make my job easier is by listening to me. It’s not by talking at me. By the way, a lot of the advice that many of those VCs gave me, I wound up taking, and it was greatly beneficial to the business. So, in no way am I denigrating their advice or their wisdom. I’m just saying it was the wrong way to start a conversation.
Alejandro: I think the listening; it just keeps popping up. I really love that part, Ian. I think that listening is everything. That’s why we have two ears and one mouth. So, that’s for sure.
Ian Siegel: I’m stealing that line. I love that line. I’m stealing that.
Alejandro: Yeah. Let me ask you this. We’re talking about now like putting in machine learning, AI. This is really incredible that now, with just like pushing a couple of buttons, you’ve got what you need. In a world where the vision of ZipRecruiter is fully realized, what does that world look like?
Ian Siegel: The first thing you’ve got to realize is whether it’s a Boolean algorithm or a heuristic-based algorithm, which is what engineers have used in the recruiting space, and I’ll speak to the recruiting space specifically for all time. The first version of a machine learning algorithm that we used produced satisfaction as measured by a thumbs-up by the employer when a candidate applied at 100% improvement over what the previous satisfaction level was. The most recent version of our algorithms is 300% better. What I say is the dawn of robot recruiting is here. No human will ever be as good again as these algorithms, and it’s because the algorithms are capable of developing insights over large data sets that no human would. I’ll give you a really concrete example, which is something like if you post a product manager job in New York, the algorithm at ZipRecruiter is smart enough to know that that job should be shown to product manager candidates in LA because those candidates in LA will frequently move to New York for that job. Similarly, the algorithm is smart enough when you post a customer service job in New York not to show that job to customer service reps in LA because they won’t move to New York to take that job. That’s the kind of rule you would never have put into your heuristic algorithmic approach. So, when we say the AI learns, and it gets smarter over time, there are numerous examples I could point to of little insights like that that the algorithm develops that you don’t know that it’s doing unless you really search for it, and you don’t tell it to do. This is software that studies a crowd, looks for patterns, and exploits them. That’s going to be true and across a wide variety of industries. However, the #1 question I get asked is, “Does that mean the robots are going to replace humans, and we’re not going to need humans to do recruiting anymore?” Let me make this really simple. That will never be true, and there’s a really easy answer why which is whoever has received a call from the recruiter in the past has usually taken that call. Why do they take that call and hear out a recruiter when they’re not looking for a job, and they’re happy at their current job? It’s because it’s intoxicating. It’s like getting picked up at a bar. We’re human beings, and we are susceptible to praise, and we are susceptible to being wanted. So, it’s always going to be more effective for a human to call human than for an algorithm to send you an email or text for the job.
Alejandro: 100%. You’ve seen a lot when it comes to recruiting, so for the folks that are listening because I think that building a business is all about surrounding yourself by the right people. Especially during the early stages. But for those who are thinking about building up the team and being able to ask the right questions, let’s say in an interview, what would be the three most important questions that they should ask and why?
Ian Siegel: I will tell you the questions that I ask in an interview, and I think we have an elite team here, so hopefully these will be as useful for you as they were for me. The first question that I ask everyone is, “Tell me about the last company you worked for. What made them special and how they were different from all the competition in your space?” It’s surprising how few people can answer that question. The number of people who are just heads down in a job just doing a specific role, but not looking around at what the company overall is trying to achieve or how their competition is competing against them is surprisingly high. So, I look for people who are strategic, number one. Good answers to that question are a way to elicit it. Number two: I like to ask people like, “Tell me about a time when you failed.” A lot of people try to turn like a positive situation into negative, but the most important thing I’m listening to in that answer is, what did they learn? How reflective were they about the failure? That turns out to be one of the most telling questions that you can ask. Then the third thing is, I try to engage them at some point, either at the beginning or the end, I’m like, “Tell me what you like to do.” And find something they’re passionate about, and then ask them to tell me about the thing in detail that they are passionate about to see how infectious they can be. What is their enthusiasm level? How vulnerable are they willing to be? Are they willing to geek out with me on something? Because, for me, it’s the people who are passionate and strategic and thoughtful that turn out to be the best employees.
Alejandro: Got it. Really cool. Is there like one thing or a constant pattern that you see that is always the same red flag that so quickly appears during interviews that you’re like, “Okay. Next.”
Ian Siegel: For me, over and over again, I feel people overweigh extroversion in interviews. It’s the hardest thing to overlook. There are just some people who are naturally comfortable in a higher-pressure situation. It doesn’t mean they’re great at what they do, or they’ll be great at working with you. So, I always say the three things that matter in an interview are the references, the references, and the references. So, do yourself a favor. Always check the references.
Alejandro: There’s this interesting trend now that I just was reminded of. It is how companies now are all about what you’re capable of rather than where you studied. Have you seen that too?
Ian Siegel: Yeah. You have 101 months in a row of the economy creating jobs. You’ve got 3.7% unemployment. You’re basically at what we call peak employment in the country. It’s incredibly difficult to find experienced talent right now. It’s a job seekers’ market, not an employers’ market. As a result, employers have had to get very, very honest with themselves about what does this job really take? It’s less about where you went to school. It’s less about the companies you worked for before, and it’s more about expertise in a single skill. Whether that be a specific software, whether that be in sales, there are a lot of different examples now where companies are eliminating all but the most important requirement and everything else becomes a nice-to-have.
Alejandro: Interesting. We’re talking about recruiting and making decisions on who you bring aboard and stuff like that; I guess more on the decision side of things because the other day, for example, I heard someone saying that life and business is like a game. Every choice that you make has an impact. But, obviously, there are very important choices that can determine whether you’re going to survive or you’re going to die. So, during those times where you’re making those really critical decisions, what does the process look like for you?
Ian Siegel: I spend a lot of time talking to people internally about the difference between reversible and irreversible decisions. I stole this from Jeff Bezos. Clearly, I was not the original author of this, but I think it really rings true for me. There are very few decisions you make that are irreversible. So, the most important things I look for are frameworks around decisions such that we know whether or not something is working or not working, and whether that’s a higher or a new product that we’re launching. There’s an important skill that if you want to be an entrepreneur, you have to develop, and it is incredibly difficult to develop, but it’s really what separates the winners from the losers in my opinion. It’s very simple. Can you ignore sunk costs? Whether it’s a higher or an investment in a new product strategy. I’ll tell you. The hardest day I had a ZipRecruiter, the hardest single day, we’d spent a year working on a product, and thirty people for one year had fully committed to it. At the end of the year, we killed it. Toughest decision I had a ZipRecruiter. But it wasn’t working. The thing is, you can always find bright spots or soft signal that there’s a possibility that it will start working, but after a year if something’s not working in a year, kill it.
Alejandro: One question that I always ask folks that I have on the show, Ian, is you’ve been at it for over eight years, hypergrowth to the next level with ZipRecruiter. If you had the opportunity to go back in time and have a chat with your younger self before you were about to give your notice and go to your kitchen table with your co-founder, what would be that one piece of business advice that you would give to yourself before launching the business and why would that be?
Ian Siegel: When we launched the business, I was really focused on it being a lifestyle business. My fantasy back then was we’d have a 12-person office on the beach with a dog, and everyone would hang out together, and it would be a very family feel to it. It took me a really long time to let go of that. I think the advice I would give myself is it’s very rare that you find something with the potential to be big. When you do, have the courage to go after it, and don’t settle for anything less than big success. I think arguably we should have raised money faster. We could have pressed our advantage harder, and it was my reluctance to let go of my original vision that slowed down our appetite for some period of time when we could have grown a lot faster than we did. There’s a great talk I heard. I can’t remember who gave the talk, but he said, “A lot of startups quit one problem from success.” That sticks with me because the nature of building these companies is that any modest success that you achieve is so rare that everybody celebrates you for it. I think the thing that take real courage is not building a business to sell it, but building a business that gets so big that you know it will live beyond you. So, for me, ZipRecruiter is going to be one of those businesses. It’s going to be around for a long, long time. I wish I’d had the vision to see it sooner.
Alejandro: I love it. Just out of curiosity. Did you finally get the dog?
Ian Siegel: I never got the dog.
Alejandro: Right. I have two, and they’re very loud, and they bark a lot. They told me to get them, so now I’m the one that picks up the poop in Manhattan when it’s snowing like crazy at 5:00 a.m. So, you lucky you; lucky you, Ian.
Ian Siegel: Maybe I’m lucky I don’t have the dog.
Alejandro: For sure. Ian, for the folks that are listening, what is the best way for them to reach out and say hi?
Ian Siegel: Just write me. I’m email@example.com. Easy to reach.
Alejandro: Amazing. Any social media handles that they could follow you on?
Ian Siegel: Yes. I am on Twitter. You can also follow me on LinkedIn. I’m everywhere.
Alejandro: Amazing. Well, Ian, thank you so much for being on the DealMakers show today.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic, and if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help whether it is with your fundraising efforts or with selling your business, you can reach me at firstname.lastname@example.org.
* * *
You’ve reached the end of another episode of the DealMakers Podcast. For free resources and materials, head over to alejandrocremades.com. Thank you for listening and see you at the next episode.