I thought I was building a startup to make hiring better. Now I’m building an agency to make hiring obsolete.
In 2014, I started working on a product that represented a novel approach to solving one of the most challenging problems I’d encountered in life: hiring and getting hired. I had had several subpar experiences on both sides of this equation, both as someone doing the hiring, and as someone looking for a job.
Now, 2 years later, the product I built has been relegated to the dust bin, and I may have stumbled upon the future of building a startup.
How I got to here
My solution was simple: instead of having employers spend untold hours pouring over resumes, sorting them into the “no” pile and the “interview” pile, what if they could simply create a project for a prospective employee to complete? Then, they could use the person’s performance on that project as the first step in considering them for the job.
- The employer would get an honest look at the candidate’s true capabilities and suitability for the job
- The candidate, regardless of credentials or background, would get an equal opportunity to compete for the job
- It would get done quickly
I detailed the wisdom behind this approach in an article titled We keep talking about diversity. We should be talking about bias. It got a fair bit of attention, not least of which because it offered a real solution to the lack of diversity in hiring in the tech industry. While it wasn’t my original intent to solve that problem, it turns out to be a natural byproduct of the approach I advocate because it rids the hiring process of ALL forms of bias. Instead, it focuses a hiring manager’s attention exactly where it should be: on evaluating if the person applying for a job has the capabilities to do it well. Period.
This isn’t a new idea, or even a novel one. Nearly all forms of athletic competition use the exact same methodology to evaluate talent and have done so for a long time. In sports, they call it a tryout (and so did we). Our innovation was simply to build software around the tryout methodology and offer it to employers as a better way to evaluate talent. Game on!
Things were going well… until they weren’t
While the idea was interesting and people were enthusiastic about it, our execution of that idea didn’t measure up. I poured my heart and soul into building this concept into a great product, but it turned out that product wasn’t able to generate the necessary traction with users.
Heartbreaking as this was, I’m far from the first entrepreneur to experience this sort of letdown. In fact, this scenario is the rule not the exception. As Steve Blank described in his seminal work The Four Steps to the Epiphany
“Startups don’t fail because they lack a product; they fail because they lack customers and a profitable business model.”
That lack of customers, otherwise known as “traction”, is what derailed my efforts, and the sad truth is that the vast majority of entrepreneurs have experienced this same outcome. I’d been following, participating in, and building startups for years, and yet, despite knowing about customer development, an MVP, traction, short sprints, SCRUM, and the like, I still wasn’t able to achieve enough traction in a short enough time frame to advance the company.
The team is everything…
Every successful entrepreneur and investor will tell you that the team building a startup is the single most important element of it. This has been true for a long time, and it’s the basis for the oft-heard anecdote “investors bet on the jockey, not the horse.” In startup-speak, this is a reference to the importance of the team, not so much the product that team is building. A talented team, so goes the thinking, can iterate their way to a successful product, whereas a good product — without a talented team behind it — won’t be able to keep pace and will eventually lose. Yup :(
…but how do you actually build one?
Intellectually, everyone gets the concept of building a great team. I mean, it’s sort of obvious, right? But actually doing it is the hard part. What does a great team look like? Who should be a part of it, and who shouldn’t? What is the criteria for “great?” These are questions without easy or consistent answers. Furthermore, the types of people and skill-sets a startup needs often change over time.
Even Mark Zuckerberg has acknowledged the challenge of building a great team, commenting that he spends 50% of his time on recruiting. That’s nice for Zuck, but he has more than 10k employees working at Facebook, meaning there is a lot of headcount to help him get stuff done. But what about when you’re the CEO of a 10 person startup? How can you allocate such a huge block of your time to finding new people, at the expense doing of all the other stuff you have to get done? You know building a great team will benefit you for the future, but there may not be a future if you can’t make it to your next fundraise or start generating some revenue.
The problem isn’t lack of time, it’s lack of urgency
When we were building the first version of Varsidee, the value proposition of “time-effectiveness” was something we talked about often with every prospective customer. They all loved it. It turns out when you ask a candidate to complete a project (again, we called it a Tryout) as the first step in the hiring process, not that many actually will. And, because a huge proportion of possible candidates opt not to complete the Tryout, the hiring team saves a ton of time that otherwise would’ve been spent screening and interviewing all those people. Said differently, it’s much faster to find the needles in a haystack if you start by removing the hay.
While our early customer development efforts produced amazing levels of enthusiasm and interest in this concept for this reason, when we delivered the product for our first customers a funny (sad) thing happened: they didn’t use it. Pressed for reasons why they weren’t using the product, the nearly uniform answer was:
“We TOTALLY get it, and we’re gonna do it, but we haven’t gotten to it just yet”
This went on for days, and then weeks. We were perplexed. These same customers had sent us numerous emails asking when they could use the product. They clearly had the very pain point our product solved, and had told us repeatedly that “yes, this product would indeed solve our pain point.” And then… nothing.
I’ll spare you the intermediate steps and cut to the chase. What we eventually learned was that while nearly all of our customers loved the concept in theory, they didn’t want to do the work that went into putting that theory into practice. I eventually took to calling this the “Gym Membership Problem.” Our customers said they wanted to get ripped, but they didn’t want to lift the weights.
My takeaway from this experience is that people often want the outcome of something, but aren’t interested in the input that produces that outcome.
This only makes sense. We live in a world of instant gratification. If I need a ride, I tap a button on Uber. If I want to meet someone new, I swipe right on Tinder. If I need any product ever, I can have it delivered to my door the following day by Amazon.
What my team and I got wrong with our “solution” is that even though the Tryout method saves time in the long run, it costs time in the short run because a hiring manager has to create the project she wants candidates to complete before they can, well, complete it. Here I thought we were selling “aspirin” to kill pain, but the market thought of it as “vitamins” where we were preventing pain from happening. To a customer not in pain, buying vitamins is interesting. To a customer in pain, buying aspirin is essential!
Why do companies hire?
These learnings have prompted a fundamental reconsideration of my founding premise. I started my company trying to build a better, faster, cheaper way for companies to hire. Now I’m wondering if hiring is even the right outcome? Maybe I was providing the right answer to the wrong question. Perhaps the better question is “why do companies hire in the first place?”
The most immediate answer is that companies add headcount so that new employees can help the company accomplish the projects and tasks that, taken together, move the company forward. Seems simple enough.
Now I’m wondering, is hiring the best way for a startup to get all that stuff done? Maybe there’s a better way to move a company forward without having to hire anyone. Interesting…
Hiring will be disrupted by Agencies & Operators
If we’re all seeking instant gratification, hiring isn’t the right solution to getting work done. As we know, it takes time to define what kind of person you’d like to hire, then you have to market the opportunity, recruit candidates, interview them, make an offer, onboard them, and then get them up to speed on their new job. Best case scenario, this activity takes several weeks. More commonly, it takes several months. All the while, the work you’re hoping this new hire will do isn’t getting done.
Did I mention hiring is extremely expensive? In SF, the average tech worker makes $176k/yr, and often arrives with transaction costs of 20% of first year salary (recruiters). Ouch…
So if we acknowledge that hiring’s purpose is for the person hired to complete various projects and tasks that move the company forward, and if we observe that hiring is both extremely time-consuming and costly, might there be an alternative way to get those projects and tasks done?
There is, sort of… we call them contractors. But the problem with contractors is that a company still has to go through most of the same steps to find and identify them as with prospective employees.
What we need instead is a new form of contractor. Right now, we think of a contractor as a person. But what if a contractor was an Agency, and that agency sub-contracted a multitude of subject matter experts who could form ad hoc teams to work on a project for a client? I’ll call these people “Operators.”
What is an Operator?
Think of an Operator (capital “O”) as a person similar to a freelancer, but whereas the freelancer works on her own both finding clients and doing the work for those clients, an Operator is only responsible for the “doing” part. The Agency is responsible for getting the contracts and managing clients.
This isn’t a new concept. In fact, it’s a long established model. The purest example is the construction industry, where a “general contractor” deals with clients on the one side and “sub-contractors” on the other. General contractors are responsible for getting the deal and managing a project to completion, while sub-contractors are only responsible for completing their specific work within their unique trade (plumbing, electrical, carpentry, et al.).
If it’s a good way to build office buildings, maybe it’s good way to build the startups that sit in those office buildings
What I’m wondering is why we can’t apply the Agency-Operator model to startups in a more meaningful way?
We know that startups need to get lots of things done to keep moving the company forward, and we know that hiring is time-consuming and expensive. Wouldn’t it make more sense for startups to partner with an Agency that could complete a lot of the same work, instead of trying to recruit, interview, hire and onboard an employee to do it?
I think it makes all the sense in the world, and that’s the new focus of Varsidee: to build such an Agency.
And, it turns out we already had the perfect name. The varsity team in any sport is a group of the best and most talented athletes. That’s exactly what we’re building: a team of “the best” that are available to jump in on a client’s project whenever they are needed.
Bringing it full circle
In 2014, I started working on a product that represented a novel approach to solving one of the most challenging problems I’d encountered in life: hiring and getting hired.
In 2016, I’m beginning work on a service that presents a better approach to solving one of the most challenging problems I’ve encountered in trying to build a startup: We used to think that hiring was the best way to get projects and tasks done. But maybe there’s a better, faster, cheaper way that leverages the subject matter expertise of Operators. Maybe we need to evolve our definition of how to build and grow a startup. Maybe…
Varsidee, and our growing cadre of Operators, is not in the advice business, we’re in the “get stuff done” business, and our BIG IDEA is to help you build yours.
We’re open for business.
Trevor Goss is an Operator at Varsidee.
