Over the past seven years, I estimate that I’ve listened to roughly 1,000 different HR and TA Technology pitches. As you can imagine, some of these have been super successful and many have failed and were never heard from again. I remember meeting Eightfold’s President, Kamal Ahluwalia, in a bar in Vegas when they probably had eight employees and angel funding and he was telling what this new company was all about and I’m like, yeah, that’s going to do well! Unfortunately, he didn’t offer me founder’s stock!
I’ve got a bunch of those stories, it’s amazing to see technology being born, and down the road thousands of companies using it!
Here’s how about 90%+ of new HR and TA technology startups pitch:
- Act like they are the next unicorn and have something no one else does.
- Listen to way too many people
- Build something they believe their potential buyer wants because they had a potential buyer tell them this is what I want.
- Keep building.
- Keep building.
- Try to sell a little.
- Blow it up and build something else, but mostly the same with a new user interface.
- Add on, build some more.
- Run out of money.
Here’s the winning formula:
- Don’t act like a unicorn, but get very curious about real problems organizations are having.
- Don’t listen to what HR or Talent pros want.
- Listen to what HR and Talent pros can’t get done and if they could get it done what impact would that have to the organization.
- Build a working product.
- Sell the sh*t out of that product. Get users using it. Sell more of it! No, more!
- Go back and make the product better and add on stuff users aren’t asking for because they don’t even know what is possible, but you do.
The single biggest fail of technology startups in the HR ecosystem is they don’t sell and market their product. They just keep hiring engineers and they keep building, mostly without a proof of concept. Or, even worse, they have one proof of concept with one company, and everything they are building is based on what one company wants.
The second biggest mistake startups make is believing they don’t need to be profitable. That’s what VC money is for. We just keep building and gaining users and one day this thing will magically be profitable. You can’t give your tech away for free because “real” users won’t value it. You see, we are willing to pay for stuff we’ll actually use. If I’m not willing to pay you, I probably don’t find very much value in what you built.
The final mistake is HR technology startups underfund sales and marketing by a factor of a hundred! Almost any technology you can build, someone probably has something similar in this space that is around 80-90% of what you do. In fact, there are probably at least ten companies selling something similar to what you’re building. So, you aren’t as unique as you feel you are, but those who market and sell their stuff the best, almost always win.
I see great technology every year that doesn’t make it to the next year, not because the technology doesn’t work, because the founder and the team they’ve assembled, well-meaning, smart, caring folks who want to be successful, don’t know how to sell or market their product. Yes, it’s that simple, and that hard!
How can an HR Tech startup win?
If you get $10 Million in funding, spend $1 million on engineering and $9 million on selling your product. You can shop your engineering out to the Ukraine or India or where ever in the world development is cheaper. You can not shop out sales when selling to the US market.
“Well, if we make great tech, people will find it!” Nope! No, they won’t! Because someone making a good product will be sitting in the office of your buyer and your buyer won’t know who the hell you are.
Tech folks hate this concept. They just want to build great tech. These are the same folks who hate iPhones but love the Google phone. “The iPhone sucks, the Google phones have better technology by a factor of a thousand!” Yeah, but Apple is a genius at marketing and sales. So, we all have iPhones and you have the best phone, congratulations, I hate that I have to text you with a green bubble.
Careerbuilder survived way longer than Monster in the job board wars not because they were better. They were virtually the same! Monster had a bigger brand! CB sold the crap out of their clients! Take a look on LinkedIn and see where most of Indeed’s sales force came from!
The average HR buyer couldn’t name more than a handful of HR Technology companies. There are over 10,000 worldwide. No. One. Knows. Who. You. Are! So, it doesn’t matter what your tech does or doesn’t do if no one knows you!
This isn’t just an HR functional issue. Finance, operations, sales, marketing, IT, etc., we all buy what is sold to us. There might be twenty potential technologies to solve the thing I need solving, but if I only know of three, guess what? I’m buying one of those three! And, all three of those I know, might suck! Why do you think we constantly complain about our technology!?
I sat with an ATS out of Australia that no one has ever heard of. They are awful. Literally, ATS technology from the early 2000s. They found out how to sell to the US government and now have over $500M in US gov’t contracts to provide ATS technology to a number of US agencies. They are still awful, but they figured out how to sell and they are making stupid money delivering an inferior product.
I’m not telling you to make bad technology. Make good technology and be proud of it, and then sell it like it’s the antidote for Covid!
Don’t know how to do that? Let’s talk.