Stig Brodersen  5:21  

I think that’s a great strategy. Really a takeaway for all of us is you hear so many people who are just going all in because they feel like they want to be fully focused on the new company that they’re setting up. In many ways, it makes a lot of sense, but why would you do that, if you don’t have any kind of validation from the marketplace? 

As you said, you can do this as a side project, perhaps through a few advertising dollars behind if you’re in a position where you can do that and really see what the market tells you. I think that’s such a great approach and takeaway here.

Ian Siegel  5:57  

I have probably been approached more than 50 times in the last two years,. The aspiring entrepreneur always says the same thing to me, which is, “I’ve raised some money. I’ve built a team. Now I’m putting my product together. Will you be either an advisor, a board member or an investor?”

I always say no, because you did it exactly backwards. The first thing you want to do is find product market fit. That’s the most important thing, then you want to hire people to work with you. Then you want to raise money, but if you do it in the reverse order, you have literally set the highest possible challenge for yourself you can and 99% of people who take that approach fail.

Preston Pysh  6:43  

Yeah and it sounds to me like when you were telling the story there where you were walking through the office, and your phone’s just going off. It’s kind of, “I was right.” It was almost like a surprise that you were right because so many times when you have an idea, and then you actually try it out in the marketplace, it just doesn’t work. It’s very hard to do, so you knew it was right when that phone was going off. That’s it.

Ian Siegel  7:04  

Yes. Look, I’ve been doing this for a long time. I sort of had a list of things I believed to be true already. On that list, really, really close to the top was things that work, work right away. They can be imperfect. They can be ugly, but if they aren’t going to work, you know right away. It’s like you’re guessing. You’re not coming up with the next three optimizations you need in order to make it work. 

When we launched Zip Recruiter, it was literally the prospects or the potential customers had been waiting at the gates beating on the gate saying, “Please let me in. I want this product.”

So yes, I knew that it would work from literally the first hour that we launched it. That same philosophy is how I approach our business to this day, which is find a bright spot, then invest. So don’t invest a lot until you know you have product market fit.

Preston Pysh  8:00  

I love that story.

Stig Brodersen  8:01  

You’ve been on both sides of the tables here. You’ve been a founder and you’ve also been an employee. Talk to us about the specific roles and the key factor of success depending on your role.

Ian Siegel  8:13  

First of all, let’s talk about what it means to be a founder.  I had a background where I had gone through a series of successful startups that either IPO-ed or were sold. With all that credibility, with all that history, when I started my own startup, everyone asked me the same question My family, my wife, everyone, “What makes you think this is going to work? Why do you think you’re qualified to do this?” 

I described becoming an entrepreneur a little bit like telling people you’re an artist. Until you can point to revenue, until you say I’m selling art, everyone considers you a hobbyist. It is a lonely, stressful, doubt filled, uncomfortable existence, because so many people will question you when you start this process and when you start this journey. 

The number one thing that I say when people say to me, “What does it take to be a founder? Do you have to have a lot of experience? Do you have to go to business school?”

I say it takes one thing: it takes courage. That’s what it really takes: courage and I think it’s an overused word, but truly grit, because you have to be willing to listen to so many people doubt you and question you, and still willing to keep solving the next problem and the next problem. 

The next biggest thing about being a founder, and this is something that I think a lot of people aren’t ready for when they take the leap, the biggest shock to me at least is we all have an area of core competency. We all have a thing we are the best at so I was particularly good at product and technology. 

What happens when you build your business is you probably leaned hard on the thing you were the best at and then once it’s working, you have to answer the question like “What am I going to do next? How am I going to grow my business bigger?”

Your tendency will be to stay in the pocket of the thing you are the best at. The truth is that the best businesses require a diverse set of problem solving abilities in order to keep growing. 

For me, I had to get out of the product and technology side and into the marketing and in the sales side. That’s another thing that I think has really led to our success, which is, once you have product market fit, the trick is to tell as many people as possible, right?

I think for me, a big part of the difference between being a founder and being an individual contributor is as an individual contributor, you’re a specialist. As a founder, you have to be a strategist.

Preston Pysh  10:39  

On our show, we often study the principles of Warren Buffett and investing in companies that have reliable cash flows that sell at a discount to their intrinsic value, but you’ve created this incredible asset in a much different way. Can you talk to us about your approach to creating an asset and creating value? How could somebody that’s motivated by your story try to create their own business and their own asset in a similar way, because it’s really two different approaches?

Buffett’s looking for the stabilization and then buying things because the market doesn’t understand what the real value is. Then you’re just creating something straight out of the gate and brand new. 

Talk to us, so often, we focus on the first one and not the latter. I want to hear what you would tell that person that wants to do kind of like what you did with entrepreneurship and starting your own business?

Ian Siegel  11:23  

Well, I did have the advantage of having worked on and built internet startups for almost two decades before I started my own company. There is a fundamental insight that I tell everyone, but it seems like no one listens. Everybody wants to put their hand in this fire and not take this piece of advice. 

Hopefully, your listeners will be the first group to take this advice, which is if you’re building a business, and you are taking an established process that people are used to doing, and you add one step to it, just one extra step to it, but the outcome is an order of magnitude better, because they took that extra step. Good luck. You are knife fighting in the jungle. You are trailblazing. You are literally trying to retrain the world to do something extra. 

That is not something that is in the comfort zone of the majority of the people in the world, but if you take that same established process that they’re used to doing, and you remove a step, you just make it one less step, that’s $100 million business every time I look at it. 

The reality is, people will put a premium on ease of use on time saving over every other enhancement or improvement you can possibly put into your product. This is why I constantly challenge our team to say only launch features that half or more of our customers will use, because I don’t want anybody getting confused. I don’t want anybody going down a rabbit hole and trying to figure out how to use a new feature. 

There is a fundamental value proposition that every business offers. Either you are offering something like time savings, or you are offering something like an improvement in outcome.

You have to understand what your core truth is. The best businesses are ones that take something that everybody has to do, and lets them do it in a shorter amount of time. 

Preston Pysh  13:21  

I love that. Very interesting.

Stig Brodersen  13:24  

Ian, you’re in the people matching business. Everyone who had a job or anyone who’s tried to hire another person would say that they had experienced both good matches and bad matches. 

With your experience and with all that data that you have, say that you are a small business owner, what are some of the most common mistakes we make whenever we match an employer and an employee?

Ian Siegel  13:51  

There’s sort of a classic set of mistakes that we all make. I’ll take you through the process. 

The first is, we are all bad at writing job descriptions. We’re bad for one fundamental reason, which is when we look online, and we see the templates, or what you’re supposed to put in a job description. It’s a description of the company that is usually dry, followed by a list of requirements or the role, and followed by a very short list of benefits at the bottom. 

The truth is when you’re recruiting, you’re not just trying to describe to people or the type of person you’re looking for, you are also selling to that individual that they would want to come work for you. 

The number one mistake, particularly small business owners make, is that they fail to sell the business to the prospects they want to have come to work for them. 

What does that mean? Just think of it like this: answer one question you write in a job description, which is, “Tell me why I would want to work there. Do you have a dog friendly office? Do you bring in lunches three days a week? Is it a family environment? Do you have flexible schedules?”

There’s got to be something about your office that people. Put that into the job description, you need to help the candidate envision themselves actually working there, so that they want to work there. That’s number one. 

Number two, and the most common mistakes that people make, during the interview process, we all have a bias to hire the person we liked the most in the room. It is what we call the interview bias. People who usually do well in interviews are calm, confident, extroverted people. We overweight the social skills, what’s called the EQ over the IQ. 

There are two ways you can avoid this problem. Number one, almost every job in America has one fundamental skill that is required to be good at that job. In some cases, it will be people skills. In some cases, it’s just do you have a driver’s license, if you want to go, for example, drive for Uber.

You need to become really good at identifying what the one primary skill is, and testing for it in the interview process. 

Then there’s a golden rule that we use at zip recruiter, which is that the three things that matter most when you’re hiring someone are the references, the references, and the references. Trust the reporting of other employers who have hired this person before over whatever your 25 minute read in the room was when you had your first encounter with them.

Over and over again, the references proved to be the truest north in any hiring process. 

Then the third most common mistake we see is a failure to go fast. Usually, if you are talking to a candidate, they are not just talking to you. They are out there interviewing. They need a job, or they want a job. There’s a reason that they are talking to you. Employers tend to dawdle. They tend to go too slow. The best hiring stories are the ones that have happened in seven days or less. 

Preston Pysh  16:52  

It’s funny, your second point here about the references, I think it was a book we did on Jack Welch, where he said the references that a candidate will give you for a job is the starting point. 

You can make the second call from that reference to maybe where they worked before or somebody else. The primary list they give you, that’s your starting point. You can go one level deeper. That’s when you really find out a lot about a candidate, but very interesting points. They’re fascinating points.

Well, let me just flip that. So you just talked about the vantage point from the employer or the person who’s going to be making the hire. I know that we got a lot of college students that listened to the show, and they’re looking for jobs. What advice do you have for them?

Ian Siegel  17:32  

Well, I can start with the quantitative data, which is that people who apply to 40 plus jobs, when they go to a job site, are no more likely to get called back than the people who applied to less than 10. 

The reason why when we look into the data is that the people who apply to less than 10, tend to be selective and pick the jobs for which they are actually qualified. Further, those individuals tend to do more research on those companies. 

Then, in many cases, we even see them tailoring the resume to reflect the skills that were described in the job description. It doesn’t take that much extra effort to stand out when you apply for a job. 

If you have a skill that is described in a job description, but you haven’t actually listed it in your resume, take 10 more seconds, and add that skill to your skill section. So much of the matching that is getting done in the modern age, whether it be through what’s called an applicant tracking system, or whether it be a job board trying to pick jobs for you, is done by computers. It’s done by algorithms, and the algorithms can only operate off of the information that they find in your resume. 

You want to be thorough and complete. It may seem silly to list out each of the Microsoft softwares like Excel, PowerPoint, etc. Honestly, that’s the way these algorithms work. They’re looking for what skills you have and trying to deduce the number of years of experience you’d have with each of those skills. 

Don’t shortchange yourself in the resume process. If you find a company you like, if you really like the job, take the time to put the information on your resume they need in order to match with you.

Stig Brodersen  19:14  

Another thing that we took away from Tony Hsieh in his book “Delivering Happiness” was really the importance of cultural fit and how you would hire first and foremost for that to really make your business sustainable. Now, how do you think through that? How do we implement the cultural fit kind of thinking?

Ian Siegel  19:35  

Well, if you want to understand ZipRecruiter culture, you have to understand how we came up. We bootstrapped for the first four and a half years so we literally started the business at my kitchen table, and we stayed at that kitchen table for six months before we ever got our first office. 

What that meant was that myself and my three partners would just literally be sitting in a room together. Every customer service call they came in, they would have to do an act of listening to me talking to the customer about what problem they were having. So they got really good at listening to the customers with me and rapidly responding. That’s what set whatever project or product roadmap that we had at that point.

We got that first office, because we were bootstrapping. It was a small office. And so, the first I’d say 25 people that we hired also sat in a big room where they listen to me talk all day long to either partners or customers, or they themselves were talking to partners or customers. 

What happened as a result of that is we had really open communication, everybody knew everything that was going on, and everybody felt comfortable talking to everyone.

Now, the challenge that you run into as a growing business is we have almost 1000 employees. I can’t even tell you that I know every employee’s name anymore, even though I do training with every new employee who starts, to tell them the story of how we came up to ground them,  how I think about our customers and how I approached the business. 

When I think about culture, the thing that matters the most to me, and the thing that I tried to convey in that training that I do with every new hire is we have all the perks of a northern California high flying internet startup. We bring in free food. We have incredible health insurance. We offer flexible schedules. We are a dog friendly office. 

Honestly, none of that, in my opinion, creates culture. What really creates culture is everyone feeling safe, speaking their mind, regardless of what level they’re at, and the level of person they’re talking to.

The way we achieve that is I encourage everyone during those trainings to think of our business as an infant. We are eight years old. How many eight year olds have you met that could operate at the same level as a mature adult? None, zero. 

What I tell them is we’re a fast growing company, and we built a lot of stuff too quickly. When you get into your job, you are definitely going to find problems in our business. When you find that problem, write to me personally. You have my email address. You tell me you found the problem. 

If you identify the problem, I’m going to give you a bonus. If you give me the problem and a solution, it’s quite possible you’re going to get promoted. That’s the way our business works.

Because they write those ideas directly to me, I make sure we celebrate the people who have the courage to actually speak up. To me, that is the most important thing in our culture. That’s what creates our culture. 

Preston Pysh  22:46  

Wow, that’s awesome. That’s a great story.

Okay, so this one, I’m curious to hear your thoughts on. What has been the most painful experience, the most rewarding experience you’ve had building a business in the past eight years?

Ian Siegel  23:05  

There are so many painful experiences. It’s really hard to choose. I told you I was at my kitchen table. I will tell you like my first truly painful experiences, I’ve gone from going to an office every day, to being at home, where I would start taking calls at 5am for East Coast customers. I would literally work till 11pm, or midnight for West Coast customers. 

My wife is a stay at home mom who takes care of our two kids. I was around a lot. All of a sudden, I was around a lot. I remember looking at her while sitting at the table and saying, “Honey, I know we’re burning through our savings. I know that this may never be a big business. Our kids may not be able to keep going to private school. We may have to sell this house, but I love you so much for supporting me because this is my bliss. This is the first time I felt truly happy in my entire career. I love what I’m doing. I feel like I have a purpose and I’m really helping people. So thank you.”

She came to the table and she looked me dead in the eye. She said, “How long before we call this a failure?”

This is like three to four months. I said, “Give me two years. In two years, if I haven’t got this to a point where it can support our lifestyle, I will go get another job.” So that was the first really painful moment.  

I mean, this is the truth about being an entrepreneur. It is hills and valleys. There are so many moments. This will sound silly, but just to give you a contrasting story. 

A year ago, I had to go do an all hands meeting where I stood up in front of the company and I just told everyone what’s going on. Right before I got on stage, one of our employees wrapped me and told me a story about how she had left her husband with her child. He was giving her no child support and that our job was giving her free health insurance, which allowed her kid to go to a good school, because she had the money to pay for it. She was so grateful to me and that I changed her life. 

Then I got on stage, and I looked out, and there are probably seven or 800 people in this room. I suddenly felt the pressure of being responsible for so many people’s livelihoods. Many people’s children’s health care and quality of life. It hit me really hard because it had kind of been a game for me until that point. I really thought of what we were doing as everybody was in the engine working together. We were just a bunch of young turks who were taking care of things. 

However, when you get to hundreds of employees, there are a lot of people counting on you. There are a lot of families in your business. That was really a wake up call for me, it really changed my approach to many of the things that I do here. That was another hard one. 

As far as the best, nothing will ever beat day one. Nothing will ever beat dollar one. When the buzzing of my phone happened all day long and the adrenaline was surging, this moment of you just felt like you just broke out of prison. I don’t know how to explain it to you. I don’t think entrepreneurship is right for everyone. It definitely takes an internal fortitude, but if you do it and it works, it’s the greatest life you can live.

Preston Pysh  26:27  

I got a question here that we weren’t planning on asking you a bit. I’m just kind of curious. When you think of a business school student, either they just came out of their undergrad or their masters, what is the thing that they kind of come to the table or they come into the business that the school had taught them, that’s just dead wrong, that  just is frustrating to you, as a founder or CEO, owner of the company?

Ian Siegel  26:50  

I think what separates the best operators and the best communicators that I have worked with, from the pretty good to average, is the directness of their communication.

Let me be clear on what I mean by that. There is a tendency, particularly with people who get MBAs to be fulsome in their research to show you how smart they are by describing every possible scenario, so that any question you might ask is already on the screen in front of you in the depth that they’re showing you. That’s not really necessary.

I often encourage all of my executives to talk like a caveman. It’s one of my sayings, it’s like, be as direct as possible with me. When I give you an idea, don’t tell me the three ways that we could improve it, two ways it might not work, and one way we could go in a completely other direction. Just say, “I don’t like it.” 

It saves us all so much time, and then find the one main reason that you don’t like it and communicate that. Let’s just debate the primary point. There is a notion in design about whitespace and how you find the thing that’s most important in design, and then you try to remove everything else. 

Finding whitespace in conversation, I don’t know if it’s a skill that takes courage or experience, but so few people communicate directly and effectively. 

One of the things that I have noticed in particular is that the higher the level of education of one of the people I hire has, the more they feel like they need to demonstrate their expertise. 

There’s nothing by the way, we have some great MBA students, we have some great masterals. I think we even have a couple doctors in the engineering department. It’s great. I’m not in any way knocking education. I am just saying that there’s a difference between being an effective operator and proving how smart you are. 

Stig Brodersen  28:44  

I know that you are a huge reader and I know that you have so many great resources that inspire you. You are really into business and entrepreneurship. Do you have any specific resources, where you are like you need to read this, this is going to fundamentally change your life?

Ian Siegel  29:04  

There are so many. Whenever people ask me for business books, I actually always start them with Jesse Itzler’s book “Living with a SEAL.” It’s one of my favorite books. It’s funny, it’s a fast read, but it’s actually a great story about entrepreneurship because to become an entrepreneur, you have to get so far outside your comfort zone and you have to push yourself to the limits you didn’t know you were capable of. 

Jesse Itzler now owns the Atlanta Hawks. I think prior to that, he ran like a private jet flights business. He married the founder of Spanx, so he’s married to a billionaire and he’s a multi-millionaire from his own endeavors. He doesn’t have to do any work. He gets effectively dissatisfied with his life.

In “Living with a SEAL,” he hires a navy seal, who is an ultra marathoner to live with him and effectively torture him for 30 days, just so that he breaks out of his comfort zone.

That book resonates with me so much when I think about entrepreneurship, because that is what being an entrepreneur is, you have to do stuff that people think you’re crazy, they all doubt you, nobody understands why you’re doing it. In most cases, a lot of people become entrepreneurs and have pretty good lives prior to taking that leap. I certainly did. I love that book. 

There’s another book called “Made to Stick: by Chip and Dan Heath, which if you haven’t read is the best description of my whole philosophy about how you do business, in that it basically strongly recommends finding bright spots and investing in them. That is the whole philosophy of the book. 

It uses the example of an American who I think has to go to Laos, and he gets six months to cure child hunger and malnutrition in an entire country. Nobody wants him there, so the whole country is dead set against him. He walks you through the story of how this guy actually cures malnutrition in an entire country in six months. It’s so intuitive when you hear the process he goes through, but it’s a great example of how you should approach product market fit.

Preston Pysh  31:10  

Do you think that sometimes when a person has a short timeline, like he had six months, it’s actually more advantageous to creatively find a solution to the problem by giving yourself that tight timeline?

Ian Siegel  31:22  

I think good ideas work right away and giving yourself a tight timeline to start testing ideas is not just a good idea, it’s a necessity. 

So many people who are building startups tell you like I’ve been working on it for two years, three years. My question is why? Why have you not launched your business? What possible polish could you be putting on something that has never met a customer that would actually improve the experience for that? You have no idea at this point. 

Definitively if I were advising someone on becoming an entrepreneur, I would say, “Prioritize product market fit over everything else. Figure out what the least amount of work you can do is to test whether your thesis is good or not. Don’t raise any money until you have followed those steps.”

That’s my advice. 

Preston Pysh  32:19  

I love it. Well, I can tell you, Ian, just such insightful answers here. It’s such a pleasure to have you on the show. Thank you so much. I know your time is very valuable. Thanks for taking time out of your day to come on the show and chat with us.

Ian Siegel  32:33  

Thanks for having me, guys. I appreciate it.

Stig Brodersen  32:35  

Alright, guys, that was all that Preston and I had for this week’s episode of The Investor’s Podcast. We will see each other again next week.

Outro  32:43  

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