EP 90: Daniel Chait, the Co-founder & CEO of Greenhouse, shares lessons learned from helping 1000s of companies hire top talent.
James Mackey 0:00
Hello, welcome to the show. I'm your host, James Mackey. We have a really exciting episode for you today. We're joined by Daniel Chait, co-founder of Greenhouse. Daniel, thank you for joining us today. I really appreciate that you're willing to contribute to the community and help guide talent strategy for a lot of executives out there that want to improve their hiring.
Daniel Chait 0:24
Yeah, absolutely. James, thanks for having me. I'm excited to be here. I think we're gonna have a really interesting conversation. And hopefully, you know, people get a lot out of it.
James Mackey 0:31
Yeah, for sure. I know. I mean, of course, they will. It's gonna be a lot of fun. And I'm just excited to riff with you and go back and forth on our experiences, whatnot. So I guess we, uh, you know, before we jump into the topics that we outlined, I would love for you to provide a bit of a background on yourself, on Greenhouse, just so people really understand, you know, what has gone into getting you where you are today and getting the company where it is today.
Daniel Chait 0:56
Yeah, absolutely. So I started my career as a programmer, I graduated with a degree in computer engineering, but I've always been an entrepreneur, even as a kid. And growing up, I always, you know, had that desire. And I always was starting side gigs and hustles. And after I graduated and worked for a very short time, I left my first job in New York City to start a company, and that was in 1997. And so I've been an entrepreneur ever since. And it was really through that lens of being a leader and of growing the business that I came to see the centrality of hiring and, and the power of hiring, but also the importance of getting it right. And so, you know, in the early 2000s, I had started a company that was focused on technology in Wall Street.
So we were building teams that would come into a big Wall Street institution and create technology for them. In order to do that we needed people that were super technical, we needed people that were self-driven, that could manage client relationships that could learn business jargon, and in the finance world, not surprisingly, those are hard to find. And so it will very quickly become apparent to us that, you know, we were in a competitive talent market, we had a win for talent, we couldn't just assume that we could hire the people we needed to. And you know, the people we wanted, lots of other people wanted, they had lots of opportunities, they could go work anywhere. And so we had to attract them to us as much as anything else.
And so I started really, from the standpoint of an entrepreneur, again, who I'd never really had many jobs, I didn't really know what it was like, quote, supposed to work at a big company. So we just talked about figuring out how to compete and win for talent. Well, we landed on this idea of structured hiring, that if we got really good at assessment, and we ran a really disciplined process, we can collect data, we could find people that other companies weren't looking for, we could make really smarter decisions, we could deliver great experiences to those candidates, that that will give us an edge. And so that was kind of my background really through an entrepreneurial lens. And when I ultimately sold that company, and John and I were considering this opportunity, you know, we saw that so many leaders and executives would say, I think correctly, that hiring was really important. It was a top-of-mind issue for you know, boards and leadership at almost every company, and yet, also one of the biggest areas of failure and struggle at most companies. And so, as entrepreneurs are looking for opportunity, hey, this is something that's a big problem in most companies and something that they stink at. And something also that creates a lot of value if we can solve it so that, hey, if we can help every company become great at hiring, we create a lot of value. That was the founding idea of Greenhouse.
James Mackey 3:39
Yeah, I love it. And I actually just have a quick question on that. So these days, right, there are so many different applicant tracking systems out there, greenhouse, in my opinion, and I think the data would likely back this as the category leader, particularly for the tech industry pretty much at every stage of growth. So that said, like, when you started the company, was the market, pretty much just as saturated with applicant tracking systems for the tech industry, or what was kind of the I'm just curious, like going through the thought process of when you evaluated the competitive landscape and gaps within the technology, like what was the thought process? Or what were you seeing at that time?
Daniel Chait 4:12
Yeah, you know, it's funny, James, like, when we started, we started with the idea that I just said that, you know, hiring isn't a strategic imperative. At companies, you can't win as a business if you can't win at hiring. And yet, most companies would say it's a real problem. It's something that they struggle with, and they don't have a path to getting better at. And so that was the idea that we had. And we had a path for them to get there that we wanted to build. And it was only after a few months of doing that, that we started to like to get to know our market a little bit and what the customers are talking about. And we started to hear this word over and over again, applicant tracking system. We're like what is that thing? And it turns out that there has been this long history of software built back when recruiting was kind of an administrator to have a job for the recruiting team to track their information and they needed a system, you know. And so they would track applicants and an applicant tracking system. That's what it's for.
That wasn't the problem that we thought we were addressing, we didn't think the problem was applicants aren't being tracked in the system, we thought the problem was, recruiting requires participation and buy-in from across the company. It requires showing up at interviews and being really smart. It requires delivering winning experiences to candidates at scale, it requires operational excellence, all these capabilities that companies needed, that weren't really the focus of what an applicant tracking system thought they were trying to do. So we found ourselves in this world where like, the buyers were buying these products, they were usually pretty inexpensive, they didn't do a whole lot. They didn't really have any visibility beyond the recruiting department like they weren't something that if you go out and talk to the average person in the business, they knew what those products were. And so we kind of thought of ourselves always doing something very different.
James Mackey 6:07
So what was like so in terms of the highest leverage, biggest lift when you're initially doing the products like a roadmap and you're looking at, okay, we know that we want to go from just a reference your book like chaotic, hiring to strategic hiring, like, there must have been some initial like, Okay, this is the initial functionality, or like, here's the biggest lift, we can help our customers make to get those like, maybe not easy wins, but those first ones to show value, because that also helped me understand like your psychology around hiring, I think that'll be interesting for folks to know.
Daniel Chait 6:37
Yeah, it's a great question. Because, you know, just to say, what's implied in the question, we thought that this was a massive change, that companies really needed to completely overturn how they were hiring. You can't get there all at once. And so we very much thought, okay, like, if we're going to get there, eventually, over a period of decades, what is the path? How do you create that behavior change? And? And our answer was the idea of the interview kit, which is a term that we use to describe the screen that an interviewer gets when they show up to an interview. And before Greenhouse, I think it's fair to say that most interviewers at most companies didn't show up to an interview with anything, maybe they had the candidate's resume, but except for a few companies, in most places, you were kind of showed, hey, there's a candidate over there in a conference room, go meet with them and tell us if they're good. And what good meant was kind of up to you. And, and I knew this from my own again, I mean, in my background, like I had struggled up the same hill, you know, decades earlier, I had recorded interviews of my own team, because I didn't know what was happening in those rooms.
So I literally went sent and sent them in with tape recorders that I bought at RadioShack. Not to date me, and listen to them on the ride home. And I started out wow, if we are not preparing our interviewers to do a good job, they're asking questions that are oftentimes irrelevant to the job. They're asking questions that the candidates have already been asked sometimes two, three, or four times on the same day, they're asking questions that may be illegal. You know, they're just, they're just winging it. And why shouldn't they I mean, they, they're trying to do a good job. But there's, they're given no guidance. And so that moment of the actual job interview, to me, was the pivot point of really the difference between a thoughtful hiring process and a chaotic hiring process. If you get that right, it starts to build all the rest of it. Because once you have that, right, then you can talk, you can zoom out of it, you kind of got the structure of like, okay, what interviews are we going to do? And in what order? And who's going to give them? And what are we going to do with the data, you know, afterward? And how are we going to plan out ahead of time, what's on your scorecard, and all so much of it comes out of that basic idea, but until you know, that you're trying to succeed at interviewing, like, you really can't get getting anywhere else,
James Mackey 9:02
And it's like providing that structure and thoughtfulness to the processes, ultimately, what provides a great candidate experience and like looking at the employee journey holistically, and understanding it starts from the very first interaction, whether it's like from an awareness channel or kind of, like more so a capture channel, if you will, when they're actually, you know, interviewing with their team. Like, it all starts there, right? And that impression is what's going to lead and even like, you know, sometimes with when even when you're looking at conversion rates or whatnot, that's not going to tell the whole story of like, necessarily the types of candidates that are going to move down the funnel and of course, the folks that might be the best fit are going to have potentially the most options on the market.
And having structured hiring not only like allows you to ensure you're hiring the right folks, but it also ensures the quality of the I suppose I should say relevancy of the pipeline that's moving toward a higher is more relevant and more aligned with like what I like to call value creators like people that are really going to help you build your company. versus just a kind of plug-in. And of course, you need both kinds of roles within your company. But particularly in tech, as we know, right? You need people that are truly going to create value greater, you know, create work that is truly moving the company forward and helping them grow. Right?
Daniel Chait 10:14
Yeah. And look, you know, if you are listening to this podcast, and you're thinking this sounds kind of simple, you know, what I would say is, it really is a pretty simple idea. But if you think about other parts of your business, it would be unconscionable for your sales team, to sell the way that most companies hire to go out and tell a sales rep, hey, we've got a prospect somewhere in the pipeline, we don't know what stage they're at. And you don't know who else they've already met with on our sales team. And I'm not giving you any script for this particular stage of the sales process, but go in there and sell them and try to move them forward. Like, you would never do that. I'm sure that's not happening right now. And it would obviously fail.
You send a salesperson in there, okay, this customer is here, they've taken a product demo, they want to talk about pricing, or whatever the stage that they're at, you know how to do it, you get good at that stage, you measure the inputs and outputs, you optimize over time like it's obvious stuff. And yet, when you turn around, you look, your hiring funnel, you have the same level of confidence that when a candidate is in a given stage, they're going to have that consistent of an experience. And if you don't, that's a good indication that you probably need to put something in place. It doesn't have to be our software, but something in place to give those to give that level of consistency, and then structure to your process. Because if you can start there, that's the basis or the foundation that you can build on.
James Mackey 11:37
Yeah, for sure. So like one thing that I always say is that the best talent acquisition organisations are run like the best revenue organizations and like there's so much access to education at this point. Like there's there's a group called Pavilion. I don't know if you heard of Pavilion by any chance. So Sam Jacobs, like he's building out this whole, like, education channel aspect to the company, which is really cool. And you can take like, CRO courses, Chief Revenue Officer courses, and whatnot. And I always like I've been saying lately, it's like, I think talent acquisition executives would benefit a lot from taking more of those revenue-focused courses to understand like, customer lifecycle customer experience, how to remove friction, how to do the discovery process properly, and, and even more so like customizing it towards it's not the interview process, but like, how you kind of position the company and the opportunity based on the candidate's values and what they care about, like understanding, are you speaking to a parent with four kids that's really focused on benefits?
Are you speaking to, you know, somebody younger in their career that's looking at career progression, and how do you discuss the opportunity? And you know, what you're thinking about, and communicating probably should have nuance to it to communicate the right message to the right person. That's just one example of a million, but there are just so many things, and so many good correlations of parallels to what needs what is done in a revenue organization that needs to be done in a recruiting organization. And I've often actually, like wondered why we don't see more of that. I think it's like, the sophistication is getting a little bit better than maybe 10 years ago, but there's still definitely a gap that I'm seeing between how revenue orgs are run and how we do the hiring.
Daniel Chait 13:16
Yeah, that's right. And I think, you know, the good news is that it's ultimately a very, should be a very empowering and optimistic idea. Because after all, you can look at how it works in revenue organization. And, you know, to your point, like, you know, it's kind of functional. And most organizations look at their recruiting, and they say, it's kind of dysfunctional. And that shows up even in how you hear executives talk about it. Nobody thinks hype. Nobody thinks sales are easy. Does everybody understand that? It's, it's competitive. But well, you don't hear salespeople say, like, man, it's really hard out there. You know, I don't know, like the, you know, customers have other choices. What are you going to do? Like, there's no, there's no good customers out there? Like, oh, man, no, they compete.
Okay, so you have a product and the guy down the street has a product, like, get out there. And when talk about the benefits of your product, find the right customers for yourselves, like use data, like they compete, they see it as Yes, it's a challenging part of the business. But it's really valuable, and we're going to compete and win. And when you talk about hiring, it's not the same like you hear this thing of like, Boy is really hard out there. There are not enough good people. And that's kind of the thinking the feeling sort of ends there. And I would always challenge people to say like, that's true, it is competitive. But just think like one-click further in other competitive areas of your business, how do you then react to that reality? And what you see is, yeah, you're empowered. There are things you can do to compete and win in that field. And so once you make that mindset shift from like, boy, what are you gonna do? There are no good candidates. So like, yeah, it's competitive. You got to win. That's the mindset shift that you need. And that can only really come honestly in this we'll get to a little bit of the, I think the conversation I'm trying to have is that competitive mindset shift really needs to be led by the business, it can't be led by your recruiting team, your recruiting team is there to support and help and drive the process. But the business leaders have to decide this is a competitive priority,
James Mackey 15:14
for sure. And I think this is probably a good transition into talent makers and discussing some of the topics in there. I just like when one other kind of, I suppose point or something I'd like to bring up in relation to what we're talking about is the culture surrounding hiring and having a talent first organization is required, it's necessary to get good outcomes. And I think I've worked with over like 150 tech companies in the past eight years, and helped them hire. And so one thing that sometimes I'll see is when we get like feedback or data on what's required to hire top talent, and there isn't necessarily like they understand supported, there's a level of frustration, but they're not is always like, there's not always the buy-in. And I guess, alignment across leadership to make the changes sometimes to make changes necessary to make the investment I should say, necessary. And to me, it's like, it's kind of wild, right?
Because think about it this way, if you have a product out there that isn't competitive in the marketplace, what are you going to tell customers? Like, oh, no, we're not going to, we're not going to change this in order to give you what you need. It's, I think, if you can look through candidates and employees through the lens of being a customer, and, you know, people that you need to serve, and you need to delight and create great experiences for you, that's, that's required. I mean, you just like, and you know, what, like, honestly, Daniel like that, to get some structured hiring into it, make it a competitive advantage, the bar is not necessarily incredibly high, like, so many companies get this wrong if you really just do it with intention, not perfectly. But if you're intentional about it, and you're working at it, and you're just moving even an inch at a time in the right direction, you can win. It's not rocket science, it's very,
Daniel Chait 16:58
it's very doable. And you know, any organ, you know, the nice part is you don't have to have a lot of money. You know, you don't have to have a lot of, you know, you don't have to be famous or a company that is reserved or something Oh, like, well, of course, Google can do it or whatever. Because they're Google, like, I'm not used to that a lot. And I would say, you know, anyone can take 10 minutes before you kick off a hire to write down the interview questions you're going to ask and to think about the criteria for a hire and how you're going to have the meeting at the end to decide between candidates like it's free. It takes, you know, a pen and paper and a little bit of a meeting. So yeah, there's definitely a path for anyone to improve there. It just comes down to making that decision.
James Mackey 17:40
Sure. Yeah. For sure. So talent makers. So you and John co-authored the book.
Daniel Chait 17:50
James Mackey 17:52
I recently read your book and thoroughly enjoyed it. There are some interesting points that I would like to discuss with you. Before we dive in, I would like to know more about why you decided to write this book. Your intention and outcome seem to be very focused, so I would appreciate your perspective on what you wanted to accomplish by writing this book.
Daniel Chait 18:17
I mean, the reason we wrote a book, you know, we, obviously our company is, has a mission, as I say, to help every company become great at hiring, which naturally, the question becomes, what do you mean by that? Like, what is great hiring actually look like? And so we've done a lot of work on that question. We were meeting with hundreds and hundreds of companies, we actually kicked off some, research, and interviewed 1000s of people all over the world. And the thing that we discovered was the key difference between companies that succeeded hiring and everyone else, it was actually a leadership role. And it was down to the leaders prioritizing and taking an active role in hiring, and everything else that came after that was important. But it started with leadership. And we realized that there was a kind of this missing role, or there's a missing name for what it is that leaders do in hiring, that the ones who did it, well, they kind of did it instinctively, or they had learned how to do it. But nobody had a name for it. Nobody had a formula.
And we realized if we're going to get companies to act that way, it would help to put a little bit of a framework out that people could understand is like, let's name it. And let's describe it. And when we did that, you know, the idea was, well, these leaders who are acting in this different way around hiring, the name for them that we came up with is talent makers. And so then we talk in the book about what it is that those talent makers do, and how it is that you can become one and what the effect is if you do that well within your organisation so that was really the impetus for the book was you know whether you're a customer Have rehouse or not. And let's face it, we've done well. And we've got a good customer base, but we have 7000 and change customers. There are millions of businesses out there in the world. Most of them aren't our customers. How do we help Raleigh achieve this mission? We wanted to get this word out there that leaders have to take this particular kind of role in hiring, called Talent making, and how does it work? And what does it look like? And how do I get there if I want to? For sure,
James Mackey 20:24
and I think a lot of it too, it's at least for me, the main high-level takeaway is really coming down to culture and prioritization. Right? You know, one of my mentors, I've been fortunate enough to learn a lot from Steve Cadigan, he was the first Chief HR Officer of LinkedIn. And he oversaw their growth from like, 300, folks to 3000. By the way, for those tuning in, he's one of the first episodes on the show. So you should definitely go back and listen to Steve. But one of the things that he talked about was, talent was the first topic and every leadership meeting, consistently, quarter after quarter. And on the board meetings he was presenting, it was one of the first it was I think the first topic discussed was, how are we doing with hiring what you know, what are the results? Are we getting the right people in the seat? There was it was always the top concern and focus of the company. And I think that that's really what it takes by being, you know, talent makers is also like being talent first and making that a priority. And showing everyone as that cascades down even to an individual contributor level, that, you know, the kind of the fabric or the core of the company is the people and that there's a deep understanding that people drive, operational excellence, customer experience, everything that we want to create and build starts with having the right folks and that again, it starts as leadership with you. So as you said, right?
Daniel Chait 21:49
100%. And so one of the, you know, the, we talk about talent making as having really three components to it. And the first component, and maybe the most important is this idea, of the leadership of being a talented leader in that way. And you know, it's not just a slogan, like it actually has a lot of really practical things that you can do that make a difference. And you talked about one of them, which is, as a leader, what are you talking about? Where are you focusing the organization's attention, as a leader, that's one of the biggest ways that you tell people where to spend their time, what's important, what are you measuring, is that and so if you're standing up every all hand, or if you're issuing your company's like reports, and you're talking about revenue, or you're talking about cost, you're telling people that those things matter. If you're talking to your OKRs, you're talking about those things that matter. And the great talent makers, center talent in their leadership, it's present at, as you say, at all-hands meetings, it's present in company goals. It surfaces even in public communications like they're always talking about their hiring and their talent, and their organization really does notice those things.
There are other really practical leadership things that you can do. If you're listening to this podcast, you're thinking, Oh, I'm a leader, I want to be a talent maker. That sounds nice. I can talk about talent. But what else like there's a bunch of stuff we talked about in the book, one obvious area is in how do you make space for hiring in your organization. In other words, you're assigning everyone their priorities, if your team is being asked to do their normal job, whatever it is, let's say they're in marketing or product. And then interviews really aren't prioritized. Or, hey, we're going to do a kickoff meeting to spec out a role or we're going to do a round-up meeting at the end, to talk about the candidates and make some decisions. And as a leader, you're not showing up at those meetings, or you don't prioritize time for them. Or you're not promoting internally based on successful hiring, like, if that's not one of the criteria that you've established, then you're really communicating through your actions, to the organization that hiring doesn't matter. And conversely, if you do those things, if you show up at the meeting, everyone else is gonna show up at the meeting, if you promote people or don't promote people based on their success, or lack of success at hiring, that communicates in a really practical way, where people should spend their time what actually matters and your lived values. And so there's a real leadership role there, that if you play it, and orient the whole organization's energy around hiring, in a way that's really important to winning.
James Mackey 24:24
Sure, I think l when you're attracting and evaluating leaders into your organization or upskilling in promoting leaders within the company in either way, it's really evaluating like they're their ability to build teams. And is that one of the core kind of, I suppose skill sets that they believe that they have that's that's a strength and really diving into how they've done that in their structure for hiring I think, you know, I think I well run organizations I see this but I think it's it can be a miss in some cases where people are looking at this specific decision. When right where they're they're looking into the skill set of like, let's say it's a sales leader or engineering leader, they're looking at more so like the technical specialist specialization versus necessarily like, do they have they come from environments? Or do they understand the value of a, essentially talent-first approach? And when they're thinking through capacity planning for their organization? Do they think about talent and evaluating and interviewing? Is that part of the way that they're structuring kind of like the the blueprint or the growth plan for their team to make sure that there's enough space for that to be a priority? Those types of things? Right? Yeah. When
Daniel Chait 25:35
I interviewed leaders that I categorized as talent leaders. In the Talent Makers book, they talked about spending half their time on hiring. And they talked about setting the expectation for their direct reports that those people also spend, sometimes up to half their time on hiring. And so we talked about it as this idea of building and leading a culture of hiring, that this is something that has to permeate your way of working, it can't be separate, you can't be thinking we do our work. And then oh, yeah, hiring is a thing, you know, that happens to us or by the HR team or something else? Like no, no, you take personal responsibility. And you think about building and leading the culture of hiring, that gets you set for flooring,
James Mackey 26:18
right? I mean, there's like a real ROI component to this. And I think, you know, that's one of the, for me, for us, I found that that part of the book, like really, really interesting, just getting into like the ROI of hiring, and the concepts of like employee lifetime value and whatnot. But I was actually would you mind diving into that a little bit deeper? Because I think for some folks like executives, like they get, okay, culture, this set of the other great, right, but we have a few Northstar metrics that we're accountable to the board to hit and this is, right, like, how is this really? How do we sell this? Like, how do we get the buy-in required for other leaders like, it requires an ROI, like we have to show the truth.
Daniel Chait 26:59
Right. And it's a pretty basic idea at the heart of it, but it's one that I think most organizations haven't really fully embraced or fully come to realize in the simplest possible way. And it's this, it's that and in most companies, not every company, but in most companies, the main source of value is from the people is human capital. Some businesses dig stuff up out of the ground and put it in jars, but like most businesses today, they're not doing that. And even in a physical company, like our company, or consumer goods company, you know, so much of the value comes from things like design, innovation, branding, salesmanship, merchandising, finance, those are human capital functions, those are not physical capital that you have in a warehouse. And so this question of what's the ROI of great hiring starts from the fact that in most businesses today, most of the value is created by employees.
And so then the question becomes if your employees are doing their best, how much more value could you create? And that's really the return on the investment that you make, after all, an employee who is more productive? Or who stays longer, who develops more and more talent over time through learning, or who ramps up more quickly when they join is worth more. And so you can think about this question of like, How much is it worth to us to get employees that are better in those ways that stay longer, or that add more value while they're here, and so on. And the sort of aha moment that I had as a software executive, is I sit in meetings all the time talking about what we call, you know, the CAC to LTV ratio, customer acquisition cost, and lifetime value. That's the basic equation of a healthy, you know, the encryption software business is, what does it take us to get a customer? And how long and how much value can we create and capture out of that customer over time? And as an organization, I'm extremely focused on the that, if I do a better job with my customers if I add more value to them, I can charge more money. If I serve them better, they'll stay longer and leave for competitors less frequently. And that's worth real money to me.
And so if I get better and better at that, then I can pay more and more to acquire a customer. I can hold bigger and fancier events. I can spend more money on web advertising and brand I can do all these things to pay to get good customers because I know I can get a lot of value out of it on the other side. And when I looked at the way companies were thinking about hiring, that thinking had been missing. But if you really focus on it, it's kind of the same idea. It costs money to get candidates, no question. You have to advertise the jobs. You have to hire some recruiters maybe then you have to spend time and energy interviewing them and choosing the right person and onboarding them and training them when they join like it's expensive, absolutely. 1000s of dollars per person. What's the value that that person creates? Right because if you're going to spend 30 or 40, or 50 hours hiring someone, keep in mind, they're going to join your company and work like 2000 hours a year. And maybe they'll stay for like three or four or five years.
So the leverage that you can get on that eight or 10,000 hour of that person is really high. And so from that perspective, it's probably worth it for most companies to invest a little bit more in hiring, they're probably usually under-investing in hiring because they don't see the value in those same terms. But we took that same notion of customer lifetime value, which we use all the time in SaaS companies, every SaaS company looks at that number. And we just translated it to this world and said employee lifetime value. It's the same idea. Right? And from that, you can say, Okay, well, what are the things we can do to increase employee lifetime value? And that's where the conversation gets really interesting.
James Mackey 30:46
Right. It makes a tonne of sense. But again, it's like, for whatever reason, it seems to be a massive blind spot. And it's, you know, what's interesting about it, too, it's, it's, I think it's often a blind spot for executive leaders. It's also a blind spot for a lot of talent acquisition leaders, I honestly think I think that there's a lack of like, analytical skill set within talented people organizations, quite honestly. And I think often talented people, leaders have a hard time tying hiring objectives, or hiring outcomes back to like Northstar metrics and getting into spreadsheets and really presenting a data different case for optimising hiring and really selling that to executive leaders. Because I think, right, if you go to an Executive leader, and you have a clear message, you're able to articulate ROI, and employee lifetime value and the importance if you're able to show some data and reporting and visibility as well, you're gonna have a much better chance of getting the resources you need versus going and just saying, like, we're having a hard time hitting our hiring plan, or we're getting folks that are not producing very well, it's just it's these kinds of like antidotal, or not, really, it just doesn't come across as quite as professional or data-driven. And it's really hard to get the buy-in you need from executive leaders without having a clear ROI, or data-driven response or approach. Right.
Daniel Chait 32:12
Yeah, I think that's right. And look, I have a lot of empathy for, you know, recruiters and recruiting leaders, as well as for executives, they each think about, you know, their own job or this work through a slightly different perspective. And so from a, from a business perspective, yeah, they're thinking about things like ROI and cost of investment and opportunities to grow. But recruiters, they're there, they have a very specific job, they're often tasked with, like, filling jobs that they're given. And so they're naturally very focused on that. And What's interesting is the recruiting teams that we speak with, often know the problems much more directly and much more clearly,, than those not in their recruiting team, to the point where they almost assume everybody must know that these problems exist, because I see this stuff every day. And the recruiting and the business leaders often are not focused on those areas. And so they don't, they don't pay attention, or they don't have that perspective, in the same way. And so yeah, the solution, as you point out, is to bridge the gap between recruiting and business in this way.
And you know, I've seen this I've had these conversations, I remember, you know, early on in greenhouses, history, having this experience of talking to a recruiting team, where we pitched our product, and our and the structure hiring idea. And they thought it they thought it was fantastic. It would make total sense to them, they knew was the right approach. And they said, Great, send us over, send us over a proposal, which we did. And the proposal was like, I think it was like $15,000 a year for the software. And they like lost their minds, and was like what's going on here? And they said, Well, we're using this, you know, like ATS that cost like $1,500 a year. And you're telling me that I'm supposed to go to my CFO, and say we need to spend 10 times as much money like this is that's that's crazy. And I said, Well, you know, let's make maybe it's a good idea. Maybe it isn't, I don't know. But let's talk about what we're trying to accomplish here and see if it makes any sense.
And so I asked them, you know, hey, if you'll give me a little bit of data about what's going on inside your company, can we work together on a business case for this? And let's see. And if there's a good business case, we'll bring it to your CFO together. And if there's not a good business case, I'll go on my way and talk to the next company. And they said, Sure. And so I started asking them questions like how many people you try to hire, and what's your average revenue per employee? And how many of your employees are A players or five stars versus how many are C players? And what's your employee turnover for every employee you hire? You know, how long did they stay? And we started looking at those numbers. And what we saw was, this was a company of about 300 people.
They were growing very fast, so they were trying to grow the staff like me More than 30% a year. So they were gonna hire 100 people the following year, and call it 150 or 200 people a couple of years later, at the same time, they had very high employee turnover, because they were in a very competitive field. So they were losing 15% of their staff every year. And so if you just plug in these numbers, and you look at their revenue per employee, you look at what it costs to hire someone, you look at the 15% annual turnover, and the fact that they're going to be hiring hundreds of people within a couple of years. What we saw shocked us, what we saw was that they had a $100 million problem that they were trying to solve. And the recruiting team never thought of the value they were creating in that same way. But once we did the math, it was really obvious, we said, Okay, if we're going to succeed as a business, we need the right people, we're not on a path where we're going to have that this was a way for us to get on that path. And in that light, making an incremental investment of 13,000 boxes was a no-brainer. And so that mindset shift of how much value is at stake, if we get this right, was, I think really empowering to the team and to the company, to know that they should make the proper set of investments and getting a right.
James Mackey 36:18
That's brilliant. I really liked that. And you're right like you don't really hear that type of value proposition or that psychology or philosophy toward hiring with an org. So just,
Daniel Chait 36:29
you know, look, you know, again, like this stuff is hard. I don't want to you know, I don't want to make it sound always so simple. But at the same time, you know, I've got this, you know, I've said it a number of times, like, you know, great hiring, I say is the second hardest thing in business. I say it that way, because everybody always says, Hey, what's the first hardest thing? So the first hardest thing is building a great company, if you're not great at hiring, right? So yeah, I get it. This is, this is a big hill to climb. It's a big investment. But the alternative is a lot worse, the alternative is to continue to struggle along and not really have the ability to win for talent. And that's just not a viable path. And so you need to get up the hill and, and recognise that incredible ROI. Like, what if you knew that every time you open up a job, you're very likely to get someone who's great at the job, and will stay a long time, what would that be worth to you as a business, I think most leaders would say that's worth a huge amount. That's not their expectation today, most leaders when they have to face the prospect of an open job on their team, have a kind of sick feeling in their stomach, they sort of feel this isn't going to go well. And it's gonna be unpredictable, and it's gonna be bad. And maybe we'll luck out and get some good, but oftentimes, it's not who you want. And if you have that ability to really be confident that you can hire the right person when you need to. It is one of it is the most powerful feeling in business because it gives you the courage to do all the other things you want to do really well. For example, I'll give you two examples.
Number one is expansion. And a lot of companies when they consider a new product line, or they want to open an office in a new geography or going to expand around the world. One of the number one risks that they identify correctly, is, what if we don't have the right talent? What if we can't hire the right leader for that new office? What if I can't bring in the skills to build this new product? And oftentimes, that's a real impediment to launching those new initiatives. But if you could take that off the table and just assume that whatever it is you want to do you always have the ability to go hire the right person to do it. Boy, does it unlock those possibilities, it really gives you the confidence to expand and grow in ways that many businesses are fearful of. To me, that's really empowering and confidence-building. Feeling.
The second is, as I've quipped before that you know the only two things that hiring managers really struggle with are hiring and managing. Why I say that is a big part of managing. Most managers are afraid that if they're too if they give too much feedback, the people are going to quit. So what if I lose this person, and so they sort of don't give the right feedback, they struggled to manage people well? And as a result, as a result, they keep mediocre people for too long, and they fail to give the right amount of feedback or good accurate feedback to their team which then doesn't perform up to snuff. It's a huge management challenge. And I would argue that if you knew that you could always hire someone at least as good as the people you have. It would empower you to be a much better manager. Right? You'd give clear feedback, you'd set the expectation.
And so I give this challenge to managers I say imagine, do it, do it, close your eyes. And imagine standing behind every one of your employees who is seated at their desk is someone else waiting in the wings, who's just as good or better. And you have the option every single day to ask that person to get up from the cheering, go home and have the person behind them sit down and take their spot. Like, it's, I mean, obviously things don't really work that way. But if you just think about, like, I use a pro sports team analogy, if you think about, say, a basketball team, they've got 1215 people on a basketball team, but every year, there's a draft and the best players in the world comment or the NBA draft, and you draft three or four new people. And then you've got to choose the top 12 or 15 out of this larger roster, it makes sure that you always got the best talent, as you can think about hiring in that way. And it really helps you to be a much better manager of people and be much more well-placed in the right role for the right person. And boy is that a huge opportunity. So I always think hiring is great management, and empowering skill as well.
James Mackey 40:50
Agreed. And I so I wanted to ask you a question too. So like, let's say that somebody's moved to more of a strategic hiring approach. They're proactive in how they evaluate their process, technology, their culture, and whatnot, they've done the work, right, they put in the work. You know, I, what's next I got there's, I think the other piece of it, too, it's like the and this goes into the ROI and employee lifetime value. Onboarding is critically important. Like you can have, you can do the right things from a hiring perspective. But if onboarding is not what it should be that is another area where it's, there's incredible value and getting it right, and there's an incredible cost to dropping the ball. And I'm curious to kind of get your thoughts on that. And I'm also curious to see like, if you have any thoughts on greenhouses, like involvement and progression, too? I mean, are you guys are you going to start to focus more potentially on like, as you expand and grow? Like, do you see that as part of the progression? So I guess that's a two-part question. Sorry. But like, I'm just kind of curious to talk to you about onboarding, let's just start there.
Daniel Chait 41:55
Yeah. So um, you know, we talked about this idea of employee lifetime value, and it sounds a little abstract and brainy. And frankly, mathy, which nobody likes. Right? I promise you, it's simple. We talked about this in the book. So if you get the book, homemakers, there's a very simple, almost like back in the Napkin sketch that breaks it down for you. And what you what we identify is, there are kind of four moments in the employee lifetime, where you can really have an impact are four ways that you can really have an impact there is, you know, hiring the right person, there is how quickly you can get them up to speed there is, are they improving or not over the lifetime that they're at your company, in the amount of value that they can add? And there's how long can they stay.
And some of those things then translate directly into things you can do like having a better culture tends to keep people staying longer, it's a good reason why you should invest in culture. But to your question about onboarding, there's a very specific thing, which is called if you can get people to ramp up more quickly. It's their morality. So when you hire an employee, how quickly do they do that sales rep hit their quota? How quickly can your new software engineer start producing code? How quickly can that new manager you know, fully ramp and take on a team and the difference in weeks or months, and the success rate or failure rate of that onboarding has a huge downstream impact on their value? And you can quantify this, you can say, Well, okay, so if we keep, you know if we make this 20% Faster, or if we make it 20% more consistent, less failure rate of new onboarding things, then then, you know, we'll create XYZ amount of value. And onboarding is one of those points in most organizations where it does fall through some cracks sometimes because the recruiting team often thinks of themselves as filling the job.
So once I've made the offer, and it's been accepted, you know, hey, like, recruiting is done. And now it's hrs issue. HR, not. Again, these are all very understandable HR thinks about employees. So once you start, you know, from that day forward, you know, you're, you're gonna get paid and you're gonna have your laptop and you know, your keycard and all these things. Well, there's a gap in there, often a gap of, weeks, between when you accept the offer, and when you start, and that moment is a real moment of opportunity for most companies that they dropped, right? Because we've got this new employee, which, if you think about it, from that new hire's perspective, it's an incredibly fraught time emotionally, it's exciting, you've got this new job you're starting, you may be making more money or getting a new title, but it may be a little bit scary. You don't know if you're gonna like your new team or your new boss, you're not sure how it's all gonna go. And so, you know, they're sort of they're worried but they're optimistic and you've got you've gone radio silent, you know, you've got the offer letter in and you know, you're kind of not touching them. Instead, there's, there's a different way to work, which is you start to use that period, to really start onboarding them, to give them a great experience to get them educated about your culture, show them who they're going to work with. And so we've broken down like what are the elements of great onboarding and to your point green out So as a product is called Chronos onboarding, lots of our customers use it, I recommend it highly, but there's not a greenhouse commercial here. So I will just say that, if that problem that I highlighted resonates with you, again, you don't need our software, you just need to think about from a design perspective, how are you taking the best advantage of that interim period between when the employee takes the job offer? And when they started? And probably ignoring them isn't the best answer. Probably you'll think things like, hey, what if we sent them the LinkedIn profiles of the people who interviewed them? What if we sent them a three-minute video about our company culture?
And some of the key things we do as an organisation? What if you ask them some questions about their hobbies? One of my favorite examples of this was from a friend of mine, Andre stress Lavina. He's at Whole Foods. And he talked about bringing a hospitality mindset to the hiring experience, and what they want, they wanted to deliver the same experience as a five-star hotel would when you show up there, you feel very welcomed. And so they would ask candidates during the interview process, hey, like, among other things to get to know you, they would just kind of icebreaker stuff. And they would ask them, like what kind of music do you like. And then when those employees came into the office, they would have that music playing. Like little stuff like that, you know, they would ask them about foods that they liked, and they would make a welcome basket. And so again, these are things you can do. And you said, you know, earlier James, like, if you do these things, I guarantee you'll stand out you will have, you will be in the top 5%, you will be memorable to every candidate, and you'll have people clamoring to come work at your company. And all it takes is buying a fruit basket and asking the right question.
James Mackey 46:38
It's funny, I think like some leaders of companies are like, well, how are we going to compete for folks like, you know, they look at like Elon Musk putting as like a mission statement of putting people on Mars. And I try to remind us like, you don't, you don't need to put people in Mars to track top talent. Like if you're just people first, if you create great experiences, if you listen to feedback and implement the change. It's not. You don't need all that. I mean, like, you know, for, for instance, like for my company, like we do recruiting services for the tech industry, I have 10,000 competitors. I'm not putting people on Mars. Right, right. I mean, that's not my, but the way that we win, and we get the best folks on our team, is by having a people-first culture by listening to candidate feedback and implementing by having a structured interview process by providing good onboarding and making sure like, they just took a big risk on us, and what are we doing about that, to provide them with a good experience, like part of the value too, when it comes to onboarding is like making them feel good about their decision not going into their first day or a month into the job feeling anxious? Right? Like, it's, it's about, like, of course, accelerating ramp, but it's also about, you know, you want people to get easy wins quickly, right, because that's going to build their confidence to roll that's gonna help them feel more creative. Like they're making an impact, they have a clearer understanding of how they're going to impact the organization. And they feel very confident that they made the right decision. And that energy that that creates, is also very significant. And I just think, like, just focusing on experience, like experience, experience experience, is, right.
Daniel Chait 48:11
There's not, you know, you talk about different companies and having a mission, but what the truth is, for each person, and even depending on where they are in their life, and what's also going on, like, different things are going to appeal to them. And so understanding what it is about your company, what it is about this particular job that's going to matter to the right person for the job is, is the formula and you know, it's I don't, I don't believe that there is a stack rank of the best jobs in the world to the worst jobs in the world any more than I believe there's a stack rank of the best people to the worst people, right, I believe that there's the right job for the right person. And believe me, for every person who's dreaming of going working at a rocket ship company, there are plenty of people who don't want to work at a rocket ship company, he thinks that's not what they're interested in. It's not what they want. And who working at a recruiting tech company, I believe me as somebody who runs a company that's dedicated to recruiting technology, like we have hundreds of people who've joined our company, who think it's really interesting and really important and really matters. And they like the fact that that's what we do and don't want to be doing anything else. And it's not a job for everybody. There are a lot of people who would think it's boring or irrelevant, or it's not something they're good at or a million other reasons why they shouldn't work at our company. And that's fine. Because there are 7 billion people on this earth. I don't need to hire that many. I just need to find the ones that this is gonna be the right job for them.
James Mackey 49:32
Right, right. I love it. I love it. But Daniel, I feel like I could keep riffing with you for hours. This was so much fun, and incredibly valuable. I think the most impactful part of doing this show is when I get LinkedIn DMS from executives saying that they're dropping these conversations and Slack channels, and sharing them with their team. And I know that that's gonna happen a lot with this episode. I wanted to just say thank you so much for your contribution.
Daniel Chait 50:03
Great, I really appreciate it. It's a great conversation.
James Mackey 50:06
And for everybody tuning in, we'll see you next time!