We Study Billionaires - The Investor’s Podcast Network - TIP189: Ian Siegel - Founding a Billion Dollar Company (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. On today's show, we talked to Ian Siegel. Ian is the founder and current CEO of the billion-dollar tech company ZipRecruiter. Ian built the company from nothing in 2010 and has now served over 120 million customers. On today's interview, we talked to Ian about how in the world he did this. We ask him what advice he can give to other people that are also trying to grow their own business from the ground up and how they'll know if they have a winner on their hands. Before founding his current company, Ian was also an executive at Stamps.com and eBay during the key development growth periods of both of those businesses.

Starting point is 00:00:37 So with all his experience and knowledge of taking startups all the way to the top, we bring you a wealth of experience from Ian Siegel. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right. So, Ian, thank you so much for coming on the show here. We know your schedule is packed. You're a very busy person. So we just want to thank you for taking time out of your busy day to be with us. Oh, thanks for having me, guys. So, Ian, let me start by saying that we're really excited to have you here. But the thing that I am excited to talk to you about is you're a guy that's really been playing at the top of the game and not just for, you know, the last couple years, but for a couple decades here. You started out as one of the first. You started out as one of the time. of the very first employees. I think you were one of the first 40 employees at Stamps.com as a vice president. Then you went to eBay at the very early stages and you saw all that as a vice president. And then out of nowhere, you start this company and you go out on your own

Starting point is 00:01:53 and you become a founder of your own business. And this is before ZipRecruiter was recognized name across the whole United States. But I guess my question is this. How did you go from having the security of a wonderful job and starting your own thing, because I know that's just not easy. And tell us what you saw back in 2011 that made you take this bold step in your life. Well, the experience I had with my career prior to ZipRecruiter was I serially worked at small internet startup. So I was at city search. And then as you mentioned, I was at stamps.com. Then I went to a company called Rent.com that actually got acquired by eBay. So then I was at eBay and then I worked at two more startups.

Starting point is 00:02:36 And what was true at all these startups is we were often too small to have what you'd consider to be a full-fledged HR department. So I was doing my own recruiting. And if you've ever done recruiting, you would understand the pain point that I was repeatedly experiencing, which is every job board has a different method by which you had to post your job and then a different method by which they would deliver candidates. So Craigslist would send me candidates one at the time by email. Monster would send me candidates either by email or I would go into their interface and have to log in. Other job boards require you to log in in in order to see the candidates. So to collect all the candidates who applied to a single job was a big task.

Starting point is 00:03:19 And I just for years, literally for probably 10 years, I was saying to myself every time I did this, this is crazy. there has to be a button I can push that would put my job on all job sites and then bring all the candidates from all those sites into one list. And that's what I built. I love this. Supercruiter was built on frustration in a way. Yeah. I mean, they say, you know, like, it's best to launch a business in a category you know. And I knew the pain of recruiting, not as a recruiter, but effectively as a small business operator slash owner who would,

Starting point is 00:03:56 was doing his own recruiting, and I just knew how onerous the process was. And then when I started ZipRecruiter, we bootstrapped for the first four and a half years. And you said, like, you know, when you went to the company and what was it like making the transition? It was shocking. Yeah. Suddenly I was burning, you know, $8,000 a month. I had a kid in private school. I had a mortgage. And it was really hard. So it takes courage and conviction in order to take that leap and do a startup. And so it wasn't like something that you were kind of doing on the side and then slowly worked into it. It was like you ripped the Band-Aid off and was like, this is what I'm going to do now. I mean, I built ZipRecruiter. I was working at one of those companies where I was the hired

Starting point is 00:04:37 gun. And I was building Ziproker on the side with my three co-founders. And it was like a hobby project. So it took a six months to build it. And it's just not that complicated a concept. And then when we launched it, I'll never forget the day we turned it on because I put $50 into Google AdWords and I said, okay, I'm going to run some ads and see if anyone else is feeling this pain point. And we set up a little email alert that would go off each time a customer bought our product. And I just remember walking through the office that day at the company I was working for. And my phone just kept buzzing, buzzing, buzzing. And it was like a jolt of adrenaline. Every time it happened, I was like, oh my God, this is really going to work. And a month later,

Starting point is 00:05:19 I quit. I think that's us a great strategy. and really a takeaway for all of us. You know, 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, which, you know, in many ways makes a lot of sense. But why would you do that if you don't have any kind of validation from the marketplace? And as you said, that you can do this as a side project, perhaps throw a few advertising dollars behind if you're in a position where you can do that and really see what does the market tell you? I think that's just a great approach and take away here.

Starting point is 00:05:57 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, and now I'm putting my product together. Will you be either an advisor, a board member, or an investor? And 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 and then you want to raise money. But if you do it in the reverse order, you have literally set the highest possible challenge for

Starting point is 00:06:38 yourself you can and 99% of people who take that approach fail. 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 like, wow, I was right. Like, 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. Like, it's very hard to do. So you knew it was right when that phone was going off. That's like, yeah. And I, look, I had been doing this for a long time. So I sort of had a list of things I believed to be true already. And on that list, really, really close to the top was things that work work right away.

Starting point is 00:07:19 They can be imperfect, they can be ugly, but if they are going to work, you know right away. It's not like you're guessing, you're not coming up with the next three optimizations you need in order to make it work. So when we launched ZipRecruiter, it was literally like the prospects or the potential customers had been waiting at the gates,

Starting point is 00:07:39 beating on the gates, saying, please let me in. I want this product. So yeah, I knew that it would work from literally the first hour that we launched it. And that same philosophy is how I approach our business to this day, which is find a bright spot, then invest. Right. So don't invest a lot until you know you have product market fit. I love that story. Ian, you've been on both sides of the tables here. I mean, you've been a founder. You've also been an employee. Talk to us about the specific roles and the

Starting point is 00:08:09 key factor of success depending on your role. First of all, let's talk about what it means to be a founder. So I had a background where I had gone through a series of successful startups that either IPO or sold. And 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.

Starting point is 00:08:42 Like until you can point to revenue, until you're you. say like I'm selling art, everyone considers you a hobbyist. So it is a lonely, stressful, doubt-filled, uncomfortable existence because so many people will question you when you start this process, when you start this journey. So the number one thing that I say, when people say to me, well, what does it take to be a founder? You know, do you have to have a lot of experience? 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 over-year's 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

Starting point is 00:09:24 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. And so 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?

Starting point is 00:09:56 Your tendency will be to stay in the pocket of the thing you are the best at. And the truth is that the best businesses require a diverse set of problem solving. abilities in order to keep growing. So for me, I had to get out of the product and technology side and into the marketing and in the sales side. And that's another thing that I think has, you know, really led to our success, which is once you have product market fit, the trick is to tell as many people as possible, right? So 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. And as a founder, you have to be a strategist.

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Starting point is 00:15:13 Because it's really two different approaches. Buffett's looking for this stabilization and then buying things because the market doesn't understand what the real value is. and like you're just creating something straight out of the gate brand new. So 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 start in their own business. Well, I did have the advantage of having worked on and built internet startups for almost

Starting point is 00:15:41 two decades before I started my own company. And 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. So 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.

Starting point is 00:16:17 you are knife fighting in the jungle, you are trailblazing, you are literally trying to retrain the world to do something extra. And 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 a hundred million dollar business every time I look at it. So 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.

Starting point is 00:17:06 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 and 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. I love that. Very interesting.

Starting point is 00:17:34 So, Ian, you're in the people matching business. And everyone who held a job or anyone who's tried to hire another person would say that they had experience both with good matches and bad matches. So in 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 do whenever we match an employee? I mean, there's sort of a classic set of mistakes that we all make. And I'll take you through the process. The first is we are all bad at writing job descriptions. And we're bad for one fundamental reason, which is when we look, online and we see the templates for what you're supposed to put in a job description,

Starting point is 00:18:19 it's a description of the company usually dry, followed by a list of requirements for the role, and followed by like a very short list of benefits at the bottom. And the truth is when you're recruiting, you're not just trying to describe to people the type of person you're looking for. You are also selling to that individual that they would want to come work for you. And 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 work for them. And what does that mean? Just think of it like this. Answer one question when you write 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

Starting point is 00:19:09 environment? Do you have flexible schedules? There's got to be something about your office. that people like, 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. And 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. And there's two ways that you can avoid this problem. Number one, almost every job in America has one fundamental skill that is

Starting point is 00:19:56 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, and 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. And then there's a golden rule that we use at zipper 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. And then the third most common mistake we

Starting point is 00:20:42 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 happened in seven days or less. You know, it's funny, your second point there 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 so 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 so you can go one level deeper. And that's when you really find out a lot about

Starting point is 00:21:24 a candidate. But very interesting points there. Fascinating points. Well, let me just flip that. So you just talked about the vantage point from the employer, the person who's going to be making the hire. I know that we got a lot of college students that listen to the show and they're looking for jobs. advice do you have for them? Well, I can start with the quantitative data, which is 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 apply to less than 10. And 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.

Starting point is 00:22:11 And then in many cases, we even see them tailoring their resume to reflect the skills that were described in the job description. You know, 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, Excel, PowerPoint, etc. But 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 have with each of those skills. So don't shortchange yourself in the resume process. And if you find a company you like, if you really like the job, take the time to put the information your resume they need in order to match with you. Ian, another thing that we took away

Starting point is 00:23:26 from Tony Shane, 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 and how to implement the cultural fit kind of thinking? 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. And what that meant was that myself and my three partners would just literally be sitting in a room together. And every customer service call that came in, they would have to do an active listening to me talking to the customer about what problem they were having.

Starting point is 00:24:19 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 listened to me talk all day long to either partners or customers or they themselves were talking to partners or customers. And what happened as a result of that is we had really open communication. Everybody knew everything that was going on.

Starting point is 00:25:00 and everybody felt comfortable talking to everyone. Now, the challenge that you run into as a growing business is we have almost a thousand employees now. I can't even tell you that I know every employee's name anymore, even though I do do a training with every new employee who starts, to tell them the story of how we came up, to ground them and how I think about our customers and how I approach the business. So when I think about culture, the thing that matters the most to me and the thing that I try to to convey in that training that I do with every new hire is, yeah, 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. And honestly, none of that,

Starting point is 00:25:49 in my opinion, creates culture. You know what really creates culture? Everyone feeling safe, speaking their mind, regardless of what level they're at and the level of person they're talking to, And 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. And so what I tell them is we're a fast-growing company and we built a lot of stuff too quickly. And when you get into your job, you are definitely going to find problems in our business.

Starting point is 00:26:27 and I want you when you find that problem to write 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. And that's the way our business works. And because they write those ideas directly to me, I make sure we celebrate the people who have the courage to actually speak up. And to me, that is the most important thing in our culture.

Starting point is 00:26:55 That's what creates our culture. Wow, that's awesome. That's a great story. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer.

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Starting point is 00:30:21 Back to the show. Okay, so this one I'm curious to hear your thoughts on. So what has been the most painful experience and the most rewarding experience you've had building a business in the past eight years? I'm going to do the most painful. There's so many painful, there's so many painful, Mo's. I was like, it's really hard, really hard to choose. I told you I was at my kitchen table and I will tell you, like my first truly painful experience is I'd gone from going to an office. every day, to being at home where, you know, I would start taking calls at 5 a.m. for our East Coast

Starting point is 00:30:56 customers. And I would literally work till 11 p.m. or midnight for our West Coast customers. And my wife is a stay-at-home mom who takes care of our two kids. And so I was around a lot, all of a sudden. I was around a lot. And I remember looking at her while I was sitting at the table and saying, you know, honey, I know we're burning through our savings. And I know that this may never be a big business and our kids may not be able to keep going to private school. And 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 had 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. And she came to the

Starting point is 00:31:39 table and she looked me dead in the eye and she said, how long? And she said, how long before we call this a failure. And this is like, this is like three to four months in, 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 like, that was the first really painful moment. But I mean, this is the truth about being an entrepreneur. Yeah. It is hills and valleys. There are so many moments. I mean, this will sound silly, but just to give you a contrasting story, a year ago, I had to go do in all hands meeting where I stand up in front of the company and I just tell everyone what's going on. And right before I got on stage, one of our employees grabbed me and told me a story about

Starting point is 00:32:29 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. And she was so grateful to me and that I changed her life. And then I got on stage and I looked out and there were, I mean, there's probably seven or 800 people in this room. And I suddenly felt the pressure of being responsible for so many people's livelihoods, so many people's children's health care and quality of life. And it really like, it hit me really hard because it had kind of been a game for me until that point. Like I'd really thought of what we were doing is like everybody was, you know, in the engine working together and we

Starting point is 00:33:13 were just a bunch of young turks who were taking care of things. And no, 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. And that was really, that was like 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. And then 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, like this, moment of like, you just feel like you just broke out of prison. I don't know how to explain it to you. I don't think, I don't think entrepreneurship is right for everyone. It definitely takes an internal

Starting point is 00:33:53 fortitude. But if you do it and it works, it's the greatest life you can live. Awesome stories. 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, you know, CEO, owner of the company? 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. And let me be clear on what I mean by that. There is a, you know,

Starting point is 00:34:40 tendency, particularly with people who get MBAs, to be fulsome in their research, to show you how smart they are by describing every possible scenarios that any question you might ask is already on the screen in front of you in the deck that they're showing you. And 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.

Starting point is 00:35:21 And then find the one main reason that you don't like it and communicate that. And let's just debate the primary point. There is a notion in design about white space and how you find the thing that's most important in design. and then you try to remove everything else. Finding white space and conversation, I don't know if it's a skill that takes courage or experience, but so few people communicate directly and effectively. And one of the things that I have noticed in particular

Starting point is 00:35:51 is that the higher the level of education, one of the people I hire has, the more they feel like they need to demonstrate their expertise. And so there's nothing, by the way, we have some great MBA students. We have some great master's students. I think we even have a couple doctors in the engineering department. And it's great.

Starting point is 00:36:09 I'm not in any way knocking education. I'm just saying that there's a difference between being an effective operator and proving how smart you are. Yeah. I know that you are a huge reader. And I know that you have so many great resources that's inspired you and really into business, entrepreneurship. So do you have any specific resources where you're like, do you need to read?

Starting point is 00:36:34 this, this is going to fundamental change your life. I mean, there's so many. Whenever people ask me for business books, I actually always start them with Jesse Itzler's living with a seal. And 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,

Starting point is 00:36:56 you have to get so far outside your comfort zone. And you have to push yourself to limits you didn't know you were capable of. and Jesse Hetzler, if you don't know who he is, he's a guy who he now owns the Atlanta Hawks, I think. Prior to that, he ran like a private jet flights business. He married the founder Spank. So he's married to a billionaire, and he's a multi, multi-millionaire from his own endeavors.

Starting point is 00:37:18 He doesn't have to do any work. And he gets effectively, like, dissatisfied with his life. And in living with a seal, he hires a Navy SEAL who is an ultramarathoner to live with him and effectively torture him for 30 days. just so that he breaks out of his comfort zone. And that book resonates with me so much when I think about entrepreneurship, because that is what being an entrepreneur,

Starting point is 00:37:41 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 have pretty good lives prior to taking that leap. I certainly did. So I love that book. There's another book called Made to Stick by Chip and Dan Heath, which if you haven't read,

Starting point is 00:37:59 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. And it uses the example of an American who I think he has to go to Laos and he gets six months to cure child hunger and malnutrition an entire country. And nobody wants him there. So the whole country's dead set, I guess. It literally, it walks you through the story. how this guy actually cures malnutrition in an entire country in six months. And 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.

Starting point is 00:38:41 So I like Chip and Dan Heath's made to stick. Do you think that sometimes when a person has a short timeline like that, like he had six months that it's actually more advantageous to creatively find a solution to the problem by giving yourself that tight timeline? So I think good ideas work right away, A, 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?

Starting point is 00:39:24 that would actually improve the experience for that. You have no idea at this point. So 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. And don't raise any money until you have followed those steps. That's my advice. I love it.

Starting point is 00:39:54 Well, I can tell you, Ian, just such insightful answers here. And it's such a pleasure to have you on the show. Thank you so much. I know your time's very valuable. So thanks for taking time out of your day to come on the show and chat with us. Thanks for having me, guys. I appreciate it. All right, guys.

Starting point is 00:40:09 That was all that Preston and I had for this week's episode of The Investors Podcast. We see each other again next week. Thanks for listening to TIP. To access the show notes, courses, or forums, go to the Investorspodcast.com. To get your questions played on the show, go to Asktheinvestors.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP Network.

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