Solutions, services or tech — who cares?

Since I’ve moved to Silicon Valley, I’ve had seemingly endless discussions about the difference between a ‘solution’, ‘service’ and ‘tech.’ Prospective investors, in particular, seem to believe that what we do at Shortlist is more of a ‘service’ than ‘tech’. I believe that in the end these categories are arbitrary and don’t matter at all. In the end, all that counts is that there is a customer who pays the bill.

The most important questions to ask at the beginning of a new venture are “what are your customer’s needs?” and “What goal(s) are they trying to achieve?” For our clients, it is to hire and retain qualified and differentiated individuals for their senior-level positions. The most important word is hire, because that indicates for them the desired outcome. Therefore, when they look for ways to achieve the desired outcome, they will engage with vendors that offer a solution to their need.

In the traditional non-tech world, a solution is the service of a recruiter who sources, presents, and engages with potential candidates until one is hired. In the tech world, you have products (and underlying tech) which give its users capabilities to source potential candidates via outreach or database search (e.g. LinkedIn). The reason I called the latter products (and not services, or solutions) is that they provide some means to get to the desired outcome (hire). However, they do not solve the need fully. Moreover, they are typically targeted at internal/external recruiters (the day-to-day users) and solving their needs (e.g. where do I find candidates matching certain criteria), or job seekers to find a position out there, rather than solving the goal for the client.

To fulfill the customers’ goal to hire, our aim at Shortlist is to create a solution that delivers results. Initially, we looked at the whole process: beginning with how we engage with clients to understand detailed needs for their open role, through analyzing where the best candidates usually come from, ending with how to present, engage and rank prospects, to maximize the only KPI that truly matters — the number of hires.

Obviously, our aim is to create a highly-scalable solution addressing the need. Therefore, we are continuously assessing what we can build or include into our platform to automate the whole process, and thus establish technological leverage that outcompetes existing solutions (e.g. a recruiter) or products that do not solve the need holistically. What we’re creating is a novel combination of technologies to differentiate our business as John Chisholm writes in his new book “Unleash Your Inner Company” (Chisholm, 2015, pp. 132). He elaborates further that this is, “on a very small scale, the same process by which all innovation takes place.

We have started with need/problem and are building to solve it; we don’t build technology and then try to fit it to the need. This isn’t just the right approach, it’s common sense. If someone asks whether we’re a ‘services platform’ or a ‘tech platform’, I simply say we are a novel solution to what customers need, and we’re building a technology platform to cater to that need. Frankly, I’m skeptical of the hype of building technologies for the sake of technologies, especially in the software world. Winners are those who understood well the need, and can execute on it flawlessly by combining existing technologies and adding new, relevant ones, to the mix. Investors seek ‘tech’ in order to achieve high-scalability, repeatability, and zero marginal costs to maximize their return. However, early-stage companies first must figure out product-market fit and only then validate that a mix of technologies (e.g. deliver digital headhunter to the client) can help to scale the business later.

Ultimately, everything needs to be aligned with the most critical client need, including our business model. That will drive our success as a business. At scale, proper technology will ensure Shortlist is a high-margin business. The revenues however won’t come from the tech: they’ll come from the fact that everybody is satisfied by the results of our solution. From the beginning, this will be because we share the same goal: to hire.

I’d be intrigued to hear your thoughts and perspectives.

Andrej Danko

Founder & CTO @Shortlist

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