If you’re interested in how to start a successful marketplace, Matt Mickiewicz is a man to study.
Matt has previously started two successful marketplaces: Flippa and 99designs.
His latest business, Hired.com, is a job marketplace which — after just three years — is doing tens of millions of dollars in annual sales and has raised over $70 million in funding.
Matt was recently interviewed by Andrew Warner of Mixergy (transcript here) about how Hired.com was started. As usual, Andrew dug down to some great details.
If you’re building a marketplace, there’s plenty to learn from.
Here’s a summary of the main points:
Phase 1: Idea and Minimum Viable Product (MVP)
1.1 Identified a Big Pain Point
Over dinner after a conference on April 27th 2012, Matt got talking with a couple of other successful entrepreneurs about a problem that they and many of their friends were frustrated by: not being able to find good people to hire.
Existing ways of addressing this problem were:
- very expensive, and
- not working well.
They knocked around some ideas for a marketplace to help match the best candidates with the best companies.
One of the guys (a CTO) offered to build it, saying it would be worth it if it helped him find even one software engineer for the company he had at the time.
1.2 Built the Initial Tech Platform
Matt created some wireframes, landing pages, ad copy, emails, etc. and the CTO guy built it. The first version was at DeveloperAuction.com.
Phase 2: First Users
2.1 Focussed Tightly Early On
To get liquidity in their early stages, Hired focussed their efforts in three ways:
- Geography: They concentrated on a specific geographic area (the San Francisco Bay Area).
- Supply-side: They only accepted candidates from five or six Silicon Valley companies (Google, Facebook, Twitter, and others) with a reputation for hiring good engineers.
- Demand-side: They only allowed VC-backed Silicon Valley companies to make job offers.
This focus increased the chances of any pair of candidate and potential employer on the platform being interested in one another. So with relatively few candidates and employers, they could still start getting ‘matches’.
2.2 Used Email to Get Initial Candidates (With Lure of ‘Finding Out How Much They Were Worth’)
To get candidates onto the platform, Matt and his co-founders emailed engineers at their target candidate pool companies inviting them to
“find out how much you are worth”
“have companies trying to hire you with transparency up-front.”
This was a novel pitch to the engineers (who were used to being bombarded with requests from recruiters) and Matt feels it was an important reason why it caught their attention and encouraged the engineers to sign up.
Through these emails, the Hired founders got 88 engineers to create profiles on the platform.
2.3 Used Email to Get Initial Hiring Companies (But Had to go Via Investors)
Approach 1: Emailed Potential Hiring Companies Directly
With profiles of 88 potentially highly sought-after candidates in hand, Matt and his partners then emailed target hiring companies with the following pitch:
“We have 88 engineers who are interested in new job opportunities. Would you be interested in using our platform to interview the people that you’re interested in? There’s no cost up front. We’re not asking you for a credit card, no contract to sign. You don’t have to talk to us if you don’t want to. We’ll only charge you a success fee when somebody gets hired.”
They expected a good response. After all, these companies were keen to hire software engineers.
But the approach didn’t work.
Matt thinks the problem was that they didn’t have any credibility at that stage, and so came off as being like the many other recruitment services that were pitching these companies at the time.
Approach 2: Contacted Hiring Companies via Investors
The Hired team then tried a new approach: they reached out to the investors they knew and asked them to tell their portfolio companies about the new service.
This did work.
Some of the investors contacted their portfolio companies about the new platform and some of those portfolio companies started using the platform.
Phase 3: Growth
3.1 Developed an Innovative, Differentiated Solution
Hired.com differentiated themselves from existing alternatives in a key way which helped to improve the experience for candidates:
- They provided upfront transparency to candidates about the compensation they could receive if hired.
This differentiation helped them get attention when contacting people directly and also helped them get a TechCrunch article which generated a lot of interest in the service early on (resulting in around 5,000 developers and hundreds of employers signing up to the service).
3.2 Boosted Liquidity by Introducing Urgency
From early on, Hired started presenting batches of candidates to hiring companies for limited two week periods. This had two benefits:
- it gave prospective employers a reason to take action and
- it meant that strong candidates could end up with multiple offers on the table at the same time, allowing them to compare those offers better.
3.3 Invested in their Brand
At a stage when they had $2.7 million in seed funding, the team spent $10k to $20k on a branding/naming consultancy and around $125,000 on the domain name Hired.com.
3.4 Focussed on Candidates
Despite their initial challenge with getting employers on board, the team viewed candidates as being the hardest side of the marketplace to get in place.
With this in mind, for the first 3 years, Hired focused almost all their resources on attracting and improving the experience for candidates (knowing that with the right candidates, prospective employers would follow).
This included building a team of ‘talent advocates’ to help candidates through the recruitment process. These are people with high EQ who are incentivised around Net Promoter Score, not recruitment commission.
Hired.com are only now looking at ways to directly boost the employer side of their marketplace as well.
3.5 Used Feedback, Experimentation and Data to Improve Process
From the very beginning, Hired have continually been working to improve the recruitment process:
- They talk to lots of customers and run user research feedback sessions.
- They continue to test new approaches, some which work, some which don’t.
- They are very data-driven with a data team and business intelligence infrastructure, with data available to the entire company.
This has led to them dramatically reducing the end-to-end time it takes for someone to be recruited.
Hired is a marketplace that has been hugely successful in a short space of time. Key factors in their success so far have been:
- Identified a very severe and common pain point.
- Focussed tightly to get initial liquidity.
- Raised lots of capital to double down on the opportunity (but only after proving the concept, and the founders’ track records presumably helped).
- Focussed resources on building the most in-demand side of the marketplace (great candidates), which attracted the other side (hiring companies) for free.
If you’re interested in this kind of thing, do have a read of the transcript of the interview here.
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Okoh Segun Ifeanyi · July 6, 2017 at 11:18 am
Very nice thought behind Hired.com. Your phase 3 about it’s growth is very impressive it is very important to tell people about your uniqueness and invest in branding. Thanks to share with us.