With Marius Luther, Founder and CEO, HeyJobs
Marius discusses his vision for transforming the hiring and recruitment industry.
The Coronavirus crisis has exposed the fragilities inherent in many businesses. But for some startups this crisis is also an opportunity for rapidly accelerated change and change is something the best tech founders thrive on. In this one-off series, Reimagining, Notion Capital explores the personal founder stories behind some of Europe’s leading SaaS companies as they move from rescuing their businesses to rebounding and ultimately reimagining their journey.
In the sixth episode of our “Reimagining” podcast series Marius Luther shares his philosophy for navigating the COVID crisis ...
Marius Luther is a serial entreprepreneur and the Founder and CEO of HeyJobs, the predictable hiring platform, matching people and employers with their best job at scale. Marius founded the business together with his co-founder, also called Marius, in 2016 and Notion Capital led the Series A in 2018. HeyJobs is at the intersection of employers and employees, so it was fascinating to learn from his experience.
Let’s jump straight in. When and how did you realise the significance of this pandemic?
I read about it pretty early, particularly on Twitter. But I really noticed it on 5th March, when I was scheduled to do a business trip to Cologne to speak at an event and visit a couple of enterprise customers. I already felt unsure about whether to go but in the end I went and I remember disinfecting my hands all the time and trying not to shake hands. So that was my last memory before everything collapsed and we went into lockdown. The day after, I spoke to one of our employees, and he said, "we've always been pretty good at doing things ahead of the curve. Do you feel we should start working from home because this thing is going to grow very quickly?" For startup folks, looking at data and metrics is quite normal, we are pretty good at looking at growth rates and understanding the difference between exponential growth and just linear growth. When we saw the case growth rates for the virus, I remember thinking, "I wish we had those growth rates in our business because they’re pretty extraordinary." So that really brought home how big this was going to be and how fast.
The very next day we told everyone in the company that we would all be working from home with immediate effect. We organised transport and made sure everyone got home to safety. So that's how it started for me.
Tell us a little bit about how it felt as the significance really sunk in.
The first thing we needed to consider was health. We needed to protect our employees, help make sure they wouldn’t be infected and also help our country to flatten the curve, so the medical system could cope. That was the first priority.
Next up we needed to think about how to organise remote working, with everyone now being at home.
Then we quickly realised that it wasn’t just the transition to remote working that would have a big impact, but also the whole business, our customers and our numbers. We had customers calling in and saying, "Please stop our job ads, because there's no way we can conduct interviews next week."
As an entrepreneur, you're quite used to crisis, or at least critical situations. Over the last 10 years of being entrepreneurs, we’ve been on this eternal roller coaster where really bad things and really good things could happen in a matter of hours. So I think, for entrepreneurs at least, it was more normal for us to know how to react to a crisis, than maybe it would be for a lot of other people. The first thing you do is just solve a problem, rather than being philosophical about what the impact may or may not be. So we were very hands on in trying to solve the problems at hand. The first problem to solve was how can everyone work from home and you solve that and then you move on to the next problem.
Only a little later did we start to think about the implications for 2020 and 2021 and implications for fundraising and of course the implications for the business as a whole.
How did you come to terms with the changes you needed to make to the organisation?
Germany went into lockdown in mid March, the shops closed and business activity came to a halt. We all hoped this was only going to be temporary, for maybe four weeks, six weeks, eight weeks, and then there would be another phase, which I think we are in now, which is the lockdown is over. But that doesn't mean the economy is back to normal.
So I think we always tried to think about these two phases. There's a term in German - auf Sicht fahren - which means ‘when driving in fog only go as fast as you can see ahead.” And I think that's the mode we went into, literally looking week by week and month by month, how are things developing, how much do we have to slow down or how fast can we go? We asked ourselves simple questions:
Thankfully, in Germany, there's a fantastic government scheme, the Kurzarbeit scheme, which allows you to put your employees into furlough at different percentages, so you can tell someone you only work 50% and then as a company only have to pay 50% of the salaryand the state adds another 30%, so the employee ends up at 80% of the pay. It’s a wonderful tool, which is a win win win. And it's rare that a policy tool is a win win win. But it essentially helps companies quickly reduce their cost base, but also to quickly ramp it up again, which is what we now did. In August, we’re back at 100% for the whole company.
The beauty of the scheme is that you are able to keep all the talent that has all that experience and knows your code base and your customers. Compared to the US, where you fire your whole employee base and then you have to rehire everyone, this is a much smoother way of running things for both us and for the state.
The best thing though was that we could adjust this month to month and set the configuration, which could be something like: customer success on 25%, new customer sales on 50%, r&d on 70%. But four weeks later, we might change the percentages depending on how business picks up.
It really gives the company a lot of flexibility. Now the critical point you need to manage is fairness and transparency within your company and to communicate to your employees that they feel treated fairly. That was a big priority from the beginning to be very transparent about what we are doing and how we are steering through the crisis.
I love that analogy of only driving as fast as you can see, and you are an extraordinarily ambitious team. And in this time period, you've moved from “playing to win” to “playing to survive.” Is this the way you thought about it?
After the first couple of weeks, the realisation sets in that you're in a much more depressed economic environment and then you think about what that means for the market. The recruitment market is cyclical in nature. So you won't have as many hires being made in a crisis as in a boom phase, that's pretty clear. But then we went a few levels deeper, and we identified a lot of industries that were still hiring, such as healthcare or logistics powering ecommerce and they were hiring as much or even more than before. So we had some easy decisions to make about where to focus to make sure we can still grow.
As a startup you have the advantage that you don't have 100% of the market yet. We're probably at about 1.5% market share. So even if the total market goes down by 30%, that still means there’s a lot of companies that don't work with us yet and that we can still win. And I think that perspective is also very important for motivating your employees to say, "we are still so tiny, and there's still so many companies out there that are still hiring, that we can still win customers and grow." We put our focus on things that could work, rather than whining about how bad the economy is.
Tell us more about what you are now doing differently.
Okay, I'm going to have a really surprising answer for you. We're not doing that many things differently. But we looked very hard at it. In May we did a re-strategy exercise and we said, “what needs to change in the light of Corona?” I wish I could tell you that we did some big pivot, or something crazy. But in the end, we said, "there's still going to be a lot of companies that are not finding the right employees, and they desperately need nurses or mechanics or many other roles." So, except for focusing on the right industries that have a big hiring boom and taking a bit more of a nuanced view there, we believed our strategy was still very much intact.
However, there are a lot of tactical changes that you have to do. For example, you can't do face to face visits anymore and you can't go to trade shows, so you try to shift budget into more virtual formats such as webinars. We started something we call the customer forums, where we invited our customers to essentially talk to each other on a zoom call and exchange learnings and best practices to foster our “Hey Community.” Our digital activities increased at the expense of offline activities. But we believe that our overall strategy, to build the next generation talent platform, that matches people and jobs in a much better way than ever before, is very much intact.
You said something very interesting, that you are only 1.5% of your total market, so there is much more for you to do. So as you 10x, 20x, 30x the number of organisations you work with, how do you reimagine the future of your business and your industry as a whole?
The analogy that I like to use is that, in many areas of life over the last 10 years, acquiring certain things has become a really seamless process. So, during COVID-19, if you needed something in your home, you would go on Amazon, you'd order it and it would be there the next day.
If you tell me now, for example, that you're looking for a new hire at Notion, I think you would want to click a button and then have the ideal candidate the next day. But that experience is not the current state of things in hiring and recruitment. I do think we can get very close to that over the next decade or so, through advancements in technology, such as machine learning to identify the right candidates that will really fit your job description and vice versa, using software to assess people. All of these technological advancements can bring the cost of the recruiting process down a lot. The traditional way has been to create a job ad, you spend 1000 euros, you get 50 candidates, 40 of them you screen out. Then you talk to 10 in the first interview phase, then you do a second interview and so on. This whole process is very long, very expensive and in 50% of the cases, it will fail. That's when you will turn to a search firm. And they will go through the same process and come back with a lot of candidates.
We believe we can automate this experience and thereby bring down the cost per hire to very low figures, and the time to hire down to a few days, by essentially matching to the right people, assessing them online and then delivering a short list of candidates within the next day or so. Not through manual work, but through technology.
What trends do you expect to see play out?
I think there's going to be an acceleration towards efficiency. Organisations will be looking very hard at what they’ve been doing in the past and will ask themselves, “are we going to restart these activities?” What you saw in 2008-2009 was the nail in the coffin for the print advertising industry. Google was already coming along, then there was this big crisis and marketing budgets were frozen. When people restarted advertising, there was a lot of push to say, “let's not restart the old way, but rather think about what's the best way to go about this problem in the future.” I think something very similar is happening right now. We've seen when we track our rebound versus that of job boards incumbents, we've rebounded a lot quicker, which speaks to the fact that we are increasingly the number one source employers turn to the moment they want to ramp up again, because with us there is reliability and predictability. So that's an acceleration that we are seeing.
You often talk about matching ideal people to the ideal job and the ideal job to the ideal person. That's a really powerful, evocative concept. And I imagine, with the transitions that we're seeing the world, but that'll be something people will be thinking about.
If you look at the largest job sites in the world, the experience you get is that still you put in a job title and a city and then you click search! In return you’ll get tens of thousands of jobs that roughly match that title and are in that city. But when you think about how you get products, or you get recommended products on Amazon that others may have bought, it’s a much more sophisticated experience. We think that having lots of data on job seekers - info such as "how long a commute is okay for this person? What types of working hours are good for this person?" Maybe even things like, “What kind of purpose really drives this person? "Is this a person that really cares about the environment? Or is this person who really cares about making money?” and then having the same sort of deep data on the jobs available. Traditionally the focus is on the requirements to do the job and the tasks of the job. That's what's in a traditional job ad. But what we've seen is that applicants are far more interested in what's the salary, what are the working hours, what is the manager like to work with, what's the purpose of this company. That's very different to a traditional job ad, and so what we're trying to do is, on both sides of the market, gather a lot of these previously hidden data points. Our matching technology relies on a lot of these data points and looking at what people like and what they have looked at and what other people have looked at, and trying to build statistical correlations from that.
This sounds like the Japanese philosophy of Ikigai which describes the fundamental sense of satisfaction and contentment that a human has, when they are spending their time working on something with purpose, that they're good at, that they're paid to do, and that they love to do. Very few people actually can tick those four boxes, achieving a mix of passion, mission, profession and vocation. It's a wonderful concept and sounds to me like what you are trying to do?
Yes, I think so. Our vision is to enable everyone to find the right job, to live a fulfilling life and maybe those four dimensions you just mentioned are the key to living a fulfilling life through your job.
So Marius, you've been riding the roller coaster for quite a long time. Founders thrive on that. But still, it's been an up and down. So how do you now feel about the business and the future of HeyJobs?
Being in Germany, we were fortunate with the way the pandemic and healthcare crisis has been handled so far. We’ve also been lucky from an economic perspective to have methods, such Kurzarbeit, that have really helped to give us flexibility as a business. We also have investors that support us and that actually invested during COVID-19 to give us further funding.
I feel very bullish because we have the strongest team ever. Relative to the market, we are positioned very well, with a quick rebound and the quick pickup. So all we need is for the overall market demand to come back to pre COVID levels, but I think we're in good shape for the long term game. So right now I think my mindset has shifted from worrying about what might happen in August or September, to being the leading talent platform in 2025.
I'm putting a lot of thought into that which gives me a lot of motivation and purpose. I think if I focused on the short term, I’d be disappointed, because I might have a client that I have had a really good relationship with, for whom we did a tremendous job, but they don’t currently have the budget to commit to huge deals. Obviously not a great feeling. But if you take a macro picture, then all of the investments we are making will pay off in the long run and these customers will come back to platforms they feel offer the best value.
It’s been fascinating watching and learning from you over the last couple of years, and I'll watch with fascination the journey you go on for the next five to then. It's been a pleasure to speak to you Marius, as ever. Thank you so much.
Thanks so much and thanks for all of the support we have had through Notion. You have been second to none in terms of the VC support and especially so during COVID-19. The fact that you all come from the same entrepreneurial background as your founders prepared you well for the crisis too!