A startup in the making (post #2)
A glimpse into what it's like building Strong Yes, our process, and the lessons we are learning along the way.
Personal note
I (Robin) became dad for the second time. Since Stephen and I are both dads, we wanted to reserve some words to what it means starting a company as parents in a future post. So stay with us.
But first…
A quick recap
How we got started: we experienced first hand how hard it is to hire. We saw plenty of tools and services that help companies manage leads in applicant tracking systems (ATS’s), but little to no innovation to help companies interview better and faster. This is what we originally aimed to fix.
Back to the present day…
We began the second month (May) with a change of direction, aka. a pivot.
Here’s the short version of what happened:
We started with the idea of employee-referrals as the easiest way for teams to attract good talent. You can read more about the concept here.
We prepared a bunch of assets such as an updated website, pitch deck and no-code MVP (image below) to get a sense for inbound demand and direct feedback
We interviewed 8 recruiters
We changed our idea completely
Now for the longer version:
Validating the problem and solution
Our approach
We aim to reduce the time it takes to gather insights from months to weeks.
My (Robin) default was always to jump directly to code. In fact, I made that mistake even this time around. When thinking about our first idea in March I build this TestFlight app 1 (you can download it if you want). But the time it took coding was at least 20x greater than the time it took to create design mocks in Figma. We ended up only using the app for one day, dog-fooding our solution, and making any adjustments took days and not minutes. In hindsight time not well spent.
Working on something longer and investing a lot of time also creates an attachment to what you’re doing. This is bad, and makes it harder to leave solutions that don’t work.
Our hypothesis: Do people want what we’re making?
We had gathered information on how employee referrals programs were used within the industry to drive top of the funnel leads. We knew which larger companies were using referrals to their advantage, and how smaller and mid-sized companies lacked the resources to do the same.
However to build conviction we wanted to know whether or not companies really felt they had a problem with their internal referral programs to begin with.
What we wanted test:
The actual size of the problem (impact, frequency)
Where in the referral funnel did employers experience the biggest pain points
Our preparation:
UI Mocks
We created a couple high-fidelity UI mocks using Figma that we placed on our website, and pitch deck. Two main reasons:
some people asked for a deck before speaking with us, and
if our conversations were successful, then surely they would want to see something.
MVP
We also brainstormed how we could hack together a bunch of 3rd party tools as a solution. Here’s why:
To offer more than just words
In the case that a prospective user was interested, we wanted to be confident that we can even pull it off, and have something to show them.
To build faster
To immerse ourselves in the experience
Even if our solution would not provide immediate value to employers, we thought we could use it to build our own understanding of the holistic experience, what parts of the referral program were most broken, and where improving the user experience had the most potential. This solution (below) could still provide us insights into the problems and complexities of different funnel touch-points, e.g. reminding the senders to refer, or how the referral lands in the recipients inbox.
Above image reflects the tools and functionality within the flow.
How we tested
We gave ourselves the following constraints:
We wanted to build some kind of conviction within 1-2 weeks.
We figured a light mix of quantitative and qualitative feedback would be enough to test the market, and decide to continue or change course.
What we actually did:
We posted our new website on the following platforms:
We monitored upvotes to the forums, traffic to our website, and conversions to our mailing list
We reached out to 30+ recruiters within our network — all working at different startups in Europe.
We got on the phone with 8
The results:
Referrals wasn’t the problem
What we learned from our qualitative feedback:
Short answer: 💤
Long answer: when we kept the conversations open and asked our users what their biggest problems were, they never mentioned referrals being one. When we narrowed in on referrals as the problem they were surprised and confused by our questioning.
Tracking a referral status and linking it to payroll didn’t seem like a big enough pain-point then either. Even if we could increase the amount of hires made exclusively with referrals, the frequency still would not warrant the need for entire tracking solution. Bigger companies had this already, and smaller companies with fewer open roles didn’t have the need.
What we learned from our quantitive feedback:
Short answer: more 💤.
Longer answer: We saw less traffic and interest than when testing the idea of asynchronous video interviews. We’re slightly embarrassed showing these, but it’s also the reality we have to face.
(Image 1: Inbound traffic to website compared to the previous month)
(Image 2: Upvotes to HackerNews. FYI - you get one point simply for posting.)
(Image 3: Waitlist conversions. BTW - we already had three 🤦.)
Conclusion:
Less conviction in the idea of improving employee referrals.
Mahima Chawla, co-founder and CEO of Cocoon recently made a good comment here which summarizes how we felt:
If it feels like you’re pulling teeth to find the pain point, you haven’t found a problem worth solving.
After all, we wanted to avoid building a business that required any kind of behavioral change, or a lot of education and convincing upfront. Instead we want to build something that helps make something people are already doing easier, and abides by the 10x rule (10x faster, 10x cheaper, or 10x greater).
Back to the drawing board
Knowing now that the way we framed referrals wasn’t the right it we took a look at all our interview notes with recruiters. Thankfully we had them and didn’t need to rely on our memory. We noticed there was one thing that was mentioned in half of the interviews, and without any preamble.
The problem of compensation + benefits and the downstream effects it has when not set and managed properly.
More concretely, here's a list of the problems we heard:
Managing the different definitions and expectations of acquiring world-class candidates
Being able to properly benchmark compensation based on cost of living and/or skill output
Being able to send competitive offers to candidates when they receive international offers with higher pay
Losing candidates in the time it takes to update offers based on that candidate’s expectations
Our own experience with compensation:
Having been a manager of several direct reports, the last thing you want is having disgruntled and demotivated team members due to inconsistent and intransparent compensation policies and processes.
We lost 2 employees to misalignment around salary and raises, and spent months cleaning up the mess.
What’s next
Before jumping into any solution we’ll explore the problem of compensation by speaking with as many people in HR and finance as we can. We’ll start locally (Germany + EU), tap our existing network, and send out dozens of LinkedIn requests via LinkedIn.
We’re using the following message:
Hey, after experiencing the challenges around setting the right compensation ourselves we’re starting a company to help solve it. Would you be open to a 30 min talk with me and share your current pain points?
The founder and CEO of Pave Matt Schulman famously reported using LinkedIn Sales Navigator to contact 200 users and being able to speak with 59 of them. By getting such a high response rate he was to assess the level of frustration employers face with compensation in the US from the start.
That’s where we are today. Stay tuned for our next post to read how things worked out.
🙏 Thanks for reading! Until next time.
In order to view our previous iOS beta app you must first download the TestFlight app: https://apps.apple.com/us/app/testflight/id899247664