Bootstrapped Beginnings to $63 Million Series A

ian-blogIan Siegel, CEO and Co-Founder of ZipRecruiter, speaks with GrowthCap about the genesis of his business and its vision of making recruiting more efficient for the SMB market.

RJ: Ian, thanks so much for joining us. We’re really excited to chat with you today. I’d like to kick off with a brief overview on ZipRecruiter and how it came to be.

Ian: Sure. ZipRecruiter is a five-year-old business. And for the first four and a half years we were bootstrapped. It was originally started by four founders, all of whom had serially worked for internet startups. And most of those companies had been too small to have an HR department. It was really inefficient for us when we had to do recruiting — we were required to do our own job postings and candidate adding. It just felt like there had to be a better way. We built the product that we thought would have been most useful to us when we were doing our own recruiting and that was a job distribution and applicant tracking system on the back end. And the market responded tremendously and immediately to the product when we brought it out. We were profitable from the first months that we launched and we grew like a weed. In August of 2014 we raised our first round of capital: our Series A was a $63 million round led by Institutional Venture Partners.

RJ: Congratulations. It’s always an amazing story when you see the product market fit immediately. Can you tell us a little bit about your target market and the customers that get the most value out of using ZipRecruiter?

Ian: From the very beginning we were building a product that was targeted at small businesses. It was a product that we ourselves would have been happy to use at the companies we’d been at. When we look at the landscape of businesses in the U.S. there are six million total businesses with more than two employees. One million of them have 100+ employees. When you look at candidate sourcing for the five million businesses that have less than 100 employees, the bulk of them fill their open positions through Craigslist. Every major job board, every recruiting firm, or every VC dollar of investment that has gone into any HR or recruiting company has always been targeted at the top one million businesses with over 100 employees. So we intentionally went after the SMB market, and that’s where we definitively got our strongest response. Our average customer has between 10 and 500 employees, skewing heavily towards between 10 and 100.

RJ: I imagine the lower end of the market experiences a higher level of churn, so SMBs are probably using ZipRecruiter more frequently than a larger scale enterprise that doesn’t have that higher turnover. Is that right?

Ian: I think that the nature of how customers use the product, at least if you’re a candidate sourcing or a recruiting tool, is how much hiring do they have to do? There’s a very good reason why historically every other similar business has focused on companies that have 100+ employees because those companies tend to be large volume hires and are persistently hiring. A company that has less than 10 employees, for example, averages two or fewer hires per year. The characteristics of these SMBs are highly differentiated depending on the size and their level of maturity. We are trying to build a solution that’s simple and can be used anywhere. If you want to come in and post a single job like you would a traditional job would, no problem. If you want to come in and post 10 jobs and then use us to manage the vetting of those candidates, no problem. We’re a solution that fits companies of every size up to the point where you reach the high end of the enterprise.

RJ: Got it. So if I’m one of these CEOs and I’m keen on finding the best fit, is there a proprietary way of matching up candidates to each business?

Ian: The science of what we do is distribute jobs to more than a 100 job sources. And that’s everything from job boards, to aggregators, to social networks and to talent communities. Not only have we laid all these pipes, but we have also built a system for what we call smart distribution, where we will take your job and put it in the places where it has the highest probability of being seen by the right types of candidates. There is a lot of technology and data science that goes behind that, and to date that has been our key competitive advantage: you can post a job on ZipRecruiter and expect to see results that are unparalleled with any individual job board you might post to.

RJ: That’s fantastic. Could you talk briefly about your path and the things you did leading up to ZipRecruiter?

Ian: I was lucky in that I found my way to an internet company as my first job out of college, which was called Citysearch. From there I just continued to work at early stage internet startups in the LA tech ecosystem. I was able to develop a really broad network so that when I ultimately decided to start my own startup I was able to cherry pick what I considered to the best talent in LA and put them all at one company.

RJ: Can you give us a sense for the scale you’re at now and your vision for the near term? How quickly are you going to be expanding, and are there certain areas in particular you’re focused on for your expansion plan?

Ian: We already measure our subscribers in the high tens of thousands. And we began experimenting, at the request of our customers, with an onboarding solution. That is very simply described as when you find the candidate you want, you want them to accept the offer letter, fill out a W-4 or an I-9 and then potentially enroll in benefits. We have built that entire onboarding system, and it has gained stunning rapid adoption by thousands of customers with very little promotion. So it seems clear to us what our future is, and it’s already happening. We’re going to become a more robust HR software for the SMB community that puts things that they currently do in multiple separate tools into one tool.

RJ: So if someone comes to ZipRecruiter only to find candidates, you can then help them with everything else that they need to do along the way?

Ian: They come to ZipRecruiter to find candidates for a job. When they find the one they want, we then allow them to send a digital offer letter and whatever the tax forms are to the candidate, who then signs it on their cell phone and sends it back. At that point we can even help the candidate get enrolled in benefits, and if the company doesn’t have benefits we can get them benefits. If they already have benefits we can digitally enroll their employees into it.

RJ: Great, this has been very informative, and we appreciate you taking the time.

Ian: You’re welcome, thanks for having me.



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