Revisiting the Standout Jobs postmortem; Part I
Failure sucks. But you can learn a lot from it. In 2010 I failed in a big way, and then wrote a post about it. Let's see if I learned anything since then. (#6)
From late 2007 to 2010 I was CEO and co-founder of Standout Jobs (a recruitment & employer branding startup.) It was not a success. We managed to sell the assets of the company to Talent Technology, which then became Talemetry. Talemetry was then acquired in 2019 by Jobvite. Jobvite acquired two other recruitment startups at the same time in a rollup strategy, fuelled by $200M in funding by K1.
Check out our sweet logo (from the original to the rebrand):
(Btw, whenever I used to say “Standout Jobs” on the phone, people heard “Standup Jobs” and some actually asked, “Are you a job board for comedians?” In hindsight, that might have been a better business… 😝 😢)
In October 2010 I wrote a postmortem on my experience (on my old blog.) For about 7 years after that, I would receive almost weekly messages from founders that were struggling in the recruitment space. They were experiencing a lot of what I had gone through, especially with respect to the complexities of the HR/recruitment market. I’ll be completely honest: I still struggle with the idea of ever doing anything in the HR/recruitment space again. I won’t go so far as to say I have PTSD (because that’s a legitimate condition), but I’m 100% scarred. There have been plenty of successful startups in the space since 2010, so I know it’s doable, but I get a little twinge of panic just thinking about it.
Someone recently brought up Standout Jobs to me (not in a vindictive way!) and I went back to look at the postmortem. It’s been ~13 years — so I was curious how much of what I had learned then still makes sense, how much of what I said still holds true to me today. The exercise has been incredibly interesting and has encouraged me to reflect on what I believe to be true based on “2023 Ben” compared to “2010 Ben”.
Note: I’ve broken this up into two posts, because of length. So today is Part I and next week I’ll share Part II.
You won’t want to miss Part II. Please subscribe below if you haven’t already!
My 2010 Postmortem — What still holds true today?
“Overnight successes” are generally bullshit. No road to startup success is without big, massive road bumps. It’s called a rollercoaster for a reason. On the flip side, failure is rarely so crippling a blow that entrepreneurs can’t pick up and keep going. Everyone fails. “Out of the ashes…” and all that.
I’d edit the first sentence as follows: “Overnight successes are always bullshit.” No one wins overnight. Sure, we’ve seen some rocket ships take off pretty quickly, and quick startup exits, but even those are a result of past experiences, years of work, etc.
The startup hype machine is real. Right now the hype is toned down because the economy is wobbly, startup funding is teetering, crypto is exploding (not in a good way) and it’s fair to say the startup graveyard is going to fill up. But when that startup hype machine ratchets up it can be deafening. Huge VC rounds at wild valuations, companies going public, SPACs, etc.
As for the point about “startup failure” — we should not dismiss how tough this is for people. I do believe entrepreneurs can pick themselves up and go for it again, but failure hurts. More on that in Part II.
Our timing was terrible. We launched the paying version of our application in the fall of 2008 about 5 minutes before the economy collapsed. Very few companies were hiring. I got feedback on sales calls like this: “That’s a great product, really love it, but we won’t be hiring for another 18 months or so. You have anything to help us fire people?”
We knew the economy was heading south, but we had no idea how bad it would be and how long it would last. And we failed to react quickly and aggressively enough. In fact, I think most failures of CEOs and startup founders fall under the category of, “didn’t react quickly and aggressively enough.” I’d say it’s fairly rare that a startup overreacts to something and changes too radically. In 99.9% of cases it’s the opposite: startups don’t change fast enough. But making aggressive, fast changes takes bold, bold leaders.
I’m almost laughing out loud reading this. We are literally reliving these moments. Late 2021, many VCs were still in the camp of “keep spending, grow at all costs.” By end of Q1 2022 there was an immediate change in tone, “Hunker down, fire as many people as you can, the sky is falling.”
Timing things is tricky, but what definitely remains true is how quickly the mood changes amongst investors. Following the advice of investors is complicated. On the one hand, they see a lot, and have a vested interest in your company. On the other hand, they’re still wrong most of the time, tend to follow patterns, and aren’t as deep into your business as you.
What I’ve learned is this: It’s the CEO’s job to make quick, decisive decisions. Some will be wrong. Hopefully more of them are right. But hesitating too long—especially on the tough decisions—is usually a direct path to failure. Ultimately everything going on within your company (if you’re the CEO) is your responsibility. You should delegate, but you are ultimately responsible for it all.
I didn’t have a strong enough understanding of the HR / Recruitment market going in. I see countless entrepreneurs make the same mistake. They look at a market objectively and think, “I can fix that!” only to realize when they get neck-deep into it that there are a whole bunch of issues they didn’t understand.
I just didn’t do enough homework. And doing homework while you’re writing the test as fast as you can is pretty damn hard.
Having said that, I do think that I did a good job pushing my way into the industry leadership, networking, communicating Standout’s vision and catching a good sense of where the market was heading. And in some markets, brand awareness and brand building amongst the evangelists and leaders is critical to gaining exposure and generating buzz. It can provide a false sense of success, which is something to be wary about, but it can also add significant value.
The lack of market understanding ultimately meant that we couldn’t match the right product to the right market at the right price.
There’s a lot to unpack here.
Founders that see a big, often inefficient market, and froth at the opportunity to disrupt it with technology are legitimately asking for trouble. Sure, there are markets out there that could benefit from technology, but there are also underlying reasons for those inefficiencies. Sometimes, they’re literally baked into how the machine works, and while you can attempt to disrupt the machine, you better first understand the inner workings of it. A great example of this is recruiters. Recruiters typically get paid a % of first year’s salary (~15-25%) for people they place in new roles. That can add up quickly, if you’re spending $20,000-$30,000 in fees per new hire. Most people who use recruiters loudly bemoan the fees, and yet they keep going back. Why? Because recruiters get the job done. They take the responsibility off your shoulders and find candidates for you. A myriad of technology companies have attempted to eliminate recruiters as useless middle-people. They see recruiters as an inefficiency in the market. Some have built marketplaces or other services that work, but recruiters keep trucking along. People still trust and rely on people (I know that’s a broad statement with lots of holes in it.) And people also like having a “throat to choke” if things go wrong. It’s hard to choke the throat of a recruitment marketplace. So what you may see as an inefficiency is actually part of the plan.
I firmly maintain my belief in doing proper problem validation through rigorous customer discovery. What I describe as “homework” above is critical. And a good portion of this newsletter in the future will be dedicated to how you should do the homework in the best way possible.
Building your individual brand as a founder in a market can be extremely valuable. It’s a lot easier if you’re already a participant in the space (again, don’t go in cold as per point #1 above.) If you can’t establish credibility in a space you may find it hard to build sufficient trust with buyers, but personal brand isn’t a requirement. That false sense of success is definitely real—in a world where everyone can shout from the rooftops and someone listens, you can quickly get a sense of value without much substance.
Simplifying the Value Proposition
I was able to simplify Standout’s value proposition to the point where it was clear, but that’s not always enough. Part of the problem was that our value proposition lacked immediacy: “Invest in your employer brand and over time you’ll hire better fits into your company at a faster rate.” The problem is with “invest in your employer brand” – too few people truly have time for that (although they should!)
I didn’t make a strong enough case for tying the value proposition to something immediate that HR could sell internally to their bosses. It’s important to note that “selling a value proposition” and “delivering actual value” are two different things. I remember a sales call once with two people in an HR department. This was the second call. We were doing a web demo. As I was presenting, the new person on the call said, “We already have something like this. It’s [name not included here]. It does what you’re talking about.” I was surprised that the first person I had met didn’t bring this up since the other product was somewhat competitive. It turns out that neither of the two people even knew the URL of the site that the competitor had launched for them. The competitor had managed to sell their solution to this company, and the company didn’t even know where that solution was online. That was surprising and demoralizing. The competitor had managed to “sell their value proposition” extremely well, but whether they were delivering on value was a different story. Please note: I’m not arguing that you should sell a good value proposition and not deliver actual value, but you can’t get to delivering actual value if you can’t sell a good value proposition.
I still believe all of this. If anything I’ve probably become more hardened against loose value propositions that promise some mythical win in the future with no immediate return. I can appreciate the need to make bigger, longer term bets, but only if your customer is also willing to do so. HR people are not focusing long-term. They’re focused on short-term initiatives and keeping the lights on.
Value propositions need to be super clear, straightforward and deliver (or at least claim to deliver!) immediate results.
Tying value propositions to making more money is best. Saving money is second best. Everything else is tertiary. This is bit simplistic. It’s also primarily focused on B2B. The priority of value propositions does shift depending on how things are going in the market. In a downturn, people focus on saving money and time. When things are on the upswing, people focus on making more money. Other broad value propositions are gaining strength as well—visibility & traceability (into a supply chain, operations, etc.), efficiency (beyond just saving time), improving sustainability—all a reflection of how things are going globally. But rest assured you still need to tie those value propositions to a solid business case (i.e. make me or save me money.)
Tying Value Propositions and Market Understanding Together
It’s critical that you understand the market (including users & buyers in a B2B context, if they’re different) and the value propositions for all stakeholders. A superficial understanding of the market will lead to weak value propositions that don’t translate to sales or traction. Here’s my Standout Jobs example:
Ask any CEO, of any sized company, (particularly in a public setting), “What’s the most important asset for your company to succeed? ” What do you think they’ll say?
Please answer the poll below (if it’s still available), then read on…
9 out of 10 times it’s going to be: the people. (Only Elon Musk seems comfortable publicly saying otherwise.)
The people. The people. The people. Everyone (at least publicly) almost always says things like:
“This is the greatest group of people I’ve ever worked with.”
“We wouldn’t be where we are without our people.”
“Our employees are the best, and their well-being is our #1 priority.”
“Our #1 asset is our people.”
So we know that the #1 thing that matters to CEOs of all companies is the people.
Now ask a simple question: “Have you ever had a hard time recruiting top talent?” The only answer is YES. It’s true right now (despite so many people being let go) and it’s true when the market is hot.
So to summarize:
People are the #1 asset
Recruiting is insanely hard for everyone
You’d think building something in this space is a slam dunk. But then you go speak to HR people and you hear a different story.
“Our job is to put asses in seats.”
“As long as new employees stay 3 months, it’s not our problem any more, we’ve done our job.”
“I get a job requisition from a department, and they tell me, ‘I need someone yesterday, and your budget is $1,000 on job postings’ so I post on job boards. Done.”
In my case, HR was telling a much different story than senior leaders and CEOs. And HR was saying things like this because that’s what they hear from senior leadership and CEOs. I don’t want to sound overly jaded—there are many companies that truly value their employees—but there are plenty that don’t.
This can’t be emphasized enough: You have to understand the market, its nuances, its skeletons, etc. and then you need specific value propositions that resonate and drive engagement from prospects & customers (not superficial value propositions that sound good but don’t really make a difference.)
I had an exceptionally strong team. But in reality we didn’t code and launch fast enough. We didn’t get product into customers’ hands fast enough. We were fast, but next time I’ll move faster, and iterate much more frequently. Of course that’s easy to say, but I think a lot of developers aren’t as comfortable as they need to be with this strategy. The fact is that having a specification and building to that specification is a lot easier for a developer; constantly changing requirements, moving things around, cutting features, adding stuff, circling back with feedback, etc. makes a developer’s job harder. More rewarding. But harder.
In the future I’ll focus a lot more on a Minimum Viable Product (MVP) and getting it into the hands of customers as early as possible. And even more importantly, I’ll solicit real, hard feedback from them. With Standout Jobs, we did things in a slightly incorrect order, which distorted our view of reality.
Launch quickly and early. Please. There’s a great deal of debate about what an MVP should really be, and if we’ve lost the plot on what’s meant by MVP, etc. This is usually because people ignore the V and just build a Minimum Product. The V is the tough part because it can feel subjective. When is a product actually viable from a value perspective? That’s not an easy question (and again, something we can tackle in the future.)
Sorry, developers. My intent wasn’t to throw developers under the bus, and a lot has changed in 10+ years. Without question, Standout Jobs was less “focused” chaos and more “headless chicken chaos” and that was squarely on me. The Lean Startup movement did make a difference; it got more people, developers included, building and launching faster. Customer discovery as a concept got developers out of the dark back rooms into the spotlight, directly interfaced with users/customers. Today, if I see a startup where its founders or employees (regardless of their roles) aren’t all interacting with customers, I get worried. Developers can do customer interviews. Get on with it already.
Real talk. It’s so easy to engage people in a way that solicits almost only positive feedback. You can bias everything. Potential or real customers say nice things, nod their heads, but don’t use or buy your product. This happens all the time. And it’s because you’re not asking questions in the right way. You’re not being honest about what you’re doing. You don’t want them telling you your baby is ugly. I totally get it, but you’re shooting yourself in the foot. There are a ton of resources on how to engage people in customer discovery. I still go back to Talking to Humans. The team at Highline Beta wrote a very short and tactical guide to conducting effective user interviews.
Here’s a snippet from a postmortem by Brett Martin, from his days as founder of Sonar:
Listening to your users: False positives
We launched Sonar with Facebook, Twitter, and Foursquare support. Shortly thereafter, users buffeted us with requests for Linkedin integration. Ostensibly, they wanted to use the app to meet fellow professionals.
Eager to please, we rushed to add Linkedin. The net effect? Nada. My guess is that the people asking were not actual users, but rather people that “wanted to be” users. We had mistaken noise for signal.
“I would use your product if only you had X feature” is a dangerous signal to follow. Users do their best to anticipate what they want before they’ve seen it but, like entrepreneurs, they are often wrong.
Enterprise companies should validate demand by asking customers to put their money where their mouths are. Media and social networking companies should double down on analytics to find, observe, and build for actual user behavior.
When we were getting ready to launch the paying version of Standout Jobs, we decided to pursue a channel partner strategy. This meant providing partners with a white label version of the Standout Jobs platform so they could resell it. In principle it made a lot of sense: they had existing customers, market share, mindshare and experience selling into the HR market. And we had a lot of interest. But looking back it was too early for us to be seeking partners. We didn’t know ourselves yet how to sell the product, to who and for how much. Without that information we didn’t provide channel partners with enough of a “sale-in-a-box” that they could execute on.
In some ways we tried to offload responsibility of selling our product to our channel partners. It worked, to a degree, but not well enough. And when the recession hit, everyone in the HR / Recruitment space got clobbered. Our partners recoiled and focused on their core, and we were left holding the bag. I still believe there’s immense value in leveraging channels for sales, but only after you know how to sell your product effectively; the channels then provide scale.
I still believe everything here.
Don’t outsource sales.
Don’t hire salespeople prematurely.
Make sure as a founder that you figure out how to do sales, get the playbook in order, and then bring on support, in the form of other salespeople, or partners, etc.
And recently, Lenny did a podcast with Pete Kazanjy (Founder of Atrium) on the topic as well:
OK, that’s the end of part I. Thank you for getting this far. To give you a little break, and perhaps a laugh, here’s possibly the best analogy to building and funding a startup: combat juggling. I encourage you to watch this short video, and then share this post!