How Monetizing Referrals Is “Uberizing” Recruiting
Apr 12, 2017
There’s a reason why companies establish and promote internal referral programs in order to find top talent — it’s a direct pipeline to their employees’ professional and personal networks — and to candidates that may fit the bill. While referred candidates are typically highly qualified and greatly valued by businesses, these programs can quickly exhaust the networks of internal employees. As David Samuels, CEO of ReferralMob , pointed out, internal referral programs can be a productive channel for identifying talent but are very limited in terms of usage. ReferralMob serves as a matchmaking platform that aims to address this challenge and many others that are inherent to the hiring process by magnifying the number of referrals a company can receive. To do this, ReferralMob takes the referral process outside of the four walls of the business. Improving the Short Stack
Think of it as “uberizing the recruiting industry,” which is exactly how Samuels describes the process. The platform enables members of the public to monetize their valuable professional networks through making referrals to great job opportunities that are available from employers on ReferralMob’s network. They are paid when those referrals result in successfully hiring a candidate, resulting in a win-win-win situation for all involved. The employer finds a highly qualified candidate, the candidate finds a new job and the referrer makes $1,000 for making the connection. ReferralMob CTO Joe Schwendt has also built in value-add features that ensure the platform goes beyond just acting as the middle man. The platform’s machine learning technology enables ReferralMob to identify who is actually qualified and has the experience and skills identified by the employer for that role before the candidate ever reaches the employer. ReferralMob also has every referred resume reviewed by an experienced HR recruiter and only then provides employers with the candidates who actually meet their qualifications, thereby reducing the time it takes and enabling the employer to move right to the interview stage of the hiring process. “We’re really all about providing that short stack of candidates versus wading through hundreds of candidates to find that small subset that’s really going to be the ideal people to talk to,” Schwendt explained. Schwendt also noted that the platform focused on taking out every minor point of friction in the hiring process, from how you make a referral to how you apply to a job. Potential candidates can apply to a job using their mobile device in just about two minutes and, with two additional taps, apply to another relevant job posting. In this week’s episode of The Matchmaker Is In series, Samuels and Schwendt joined host Karen Webster to discuss how speeding up and simplifying the hiring process through matchmaking is addressing frictions on both sides of the platform. Here is an excerpt of their conversation. KW: The friction you’re removing on the employer side is better access to a higher-quality candidate pool, because someone is only going to refer someone they are confident will be a qualified candidate, right? JS: It’s actually really difficult to get people to apply to jobs if there are a lot of hurdles in their way. If you’re a full-time job seeker because you’re out of work, you have all day to sit there and apply to a job. However, I think it’s pretty well understood that the best candidates are usually already employed, and they don’t necessarily have the time nor the desire to sit through an hour- or two-hour-long application process. Even if the opportunity sounds great, it’s got to be simple and easy. DS: One of the frictions we remove is that a lot of the most qualified and talented people out there already have jobs. In fact, many are happily employed. What the data shows is that 80 percent of millennials who characterize themselves as happily employed are open to learning about new opportunities, as long as they’re provided by a trusted relationship. That’s what the referral does — it’s someone whom they’ve worked with in the past, whom they respect, or it can even be more of the social relationship. That’s what really makes us effective: the ability to take and present great, new opportunities to those who aren’t already in the job market and to present these candidates to employers who wouldn’t ordinarily be able to interview these candidates because they aren’t looking for work. KW: Does a member of your platform refer a candidate to a particular employer and job opening, or do they just refer them to the platform itself for future possibilities? DS: We have two sides to our platform — the employer, on the one hand, and consumers, on the other (whom we call Mobbers), who comprise both referrers as well as candidates. In general, most of our referrals are for specific positions. I might happen to know of a great CTO position at a company that’s approaching unicorn status, and I could send Joe a text message to make him aware of that particular opportunity. He would click on the message, click on the link and be able to take a look at a short summary of that opportunity. There are times, however, where I might simply refer Joe to ReferralMob and explain that there are a lot of opportunities on the app he might not have heard about before. KW: What kind job openings are most of your Mobbers trying to refer or apply to? Do you have particular specialties or levels? Help us understand your market. JS: We don’t think about it in terms of industries as much as job categories. Typically, when you are an accountant, you can be an accountant at a BioTech firm as easily as you could be an accountant for a restaurant or startup. We focus everything around the individual and what category of job they would be able to fill. We play in categories like accounts and finance, IT software development, creative design, sales, marketing, etc. Those are some of the areas we specialize in, and it cuts across industries. KW: Every single matchmaker has the proverbial chicken-and-egg dilemma to crack — you need both sides at scale or at least with enough critical mass to make the other attractive. Where did you start? Did you start by rustling up a pool of employers willing to take a shot at something new and then assemble the network of candidates? Or did you start the other way? DS: We decided that the most attractive approach would be to speak with employers and share our ideas of what we were looking to accomplish on their behalf. For those who were excited by the prospect of being on the receiving end of more qualified candidate referrals, we then took the next step and asked if they would be an early adopter and be willing to post a few openings on the platform. We let them know in advance that it might take us a few weeks to go out and recruit our mob, or the crowdsourced referred applicants. It didn’t take us very long; probably within the first six months, we had roughly 200 Boston-based companies sign up to our Terms and Conditions and start posting jobs. That is when we started reaching out to the crowdsourced network to start building that out. It didn’t take long for referrers and candidates to begin applying. In our very first year, we had over 10,000 referrals in the Boston market alone. KW: Wow! So how did you recruit your Mob? Where did you go find those individuals? DS: It was a combination of basic marketing — everything including content marketing, event marketing and email marketing. It’s also a topic that is near and dear to so many people. Outside of family, one’s employment is a critically important topic, and there are a lot of professionals in the Boston area who felt like they were in a position to help out a friend or former colleague. KW: The features that are built into the platform add a layer of intelligence and creates a short stack of qualified candidates. So you’re not just bringing a candidate together with an employer — you’re adding more value than that by vetting those candidates. JS: Yes, absolutely! The adding of the machine learning aspect was a big key for us to be able to scale the model. We take every candidate’s credentials and every job description and match those against each other to determine a simple score. The score is really an aid to our decision-making process. For example, if the match score turns out to be a 2 out of 10, the likelihood of us declining on behalf of the employer is pretty high. Whereas if they come through and score an 8, then the likelihood of us passing them through is pretty good. However, it’s the 5s, 6s and 7s of the world that require much more scrutiny, and algorithms can’t do this alone today. There are just too many variables to consider — we have to take into account the company the candidate was last at, what their job experience was, what they accomplished while there, how their career progression has been, what they are looking for in their next role, etc. We also have to then channel the inner employer and understand through the nuance of the job description, realistically, what it is that they’re looking for. I do wish it was more simple — online dating is almost much easier of a problem to solve. But it’s something we care deeply about, and we really do want to make meaningful, good and solid matches happen. KW: How do you guys make money? Presumably the employer pays you, because someone has to pay the Mob … so how does that all work? DS: ReferralMob takes its obligation to pay the Mobbers itself. Right now we are paying the Mob $1,000 on successful referrals and hires, and our employers pay us more than that. There’s some gross margin there for us — right now we charge employers $2,750 for matches. As you can probably determine, that’s roughly 10 percent of the cost of a recruiting agency itself. Our fees are only success-based, so our employers don’t take on a lot of risk in terms of posting with us. In the event that one of our referred candidates leaves within three months of being hired, which has only happened twice, we do provide a guarantee and return of the fees that we charged the employers. KW: Since we do cover payments, I’m curious to know how you pay your referrers. Do you put it into their PayPal account, or does it go right into their checking account? How do you pay people? DS: It’s almost exclusively checks, but having said that, we will make bank-to-bank transfers when that’s requested of us. But certainly from a payment perspective, maybe that’s a conversation Joe and I can have with you, Karen, down the road to get a little bit of advice in terms of what you’re seeing in the marketplace and how you see people liking to get paid. KW: Don’t be surprised if your phone lines start lighting up with people who have an idea for you! We have a hashtag here going called #KillTheCheck, so I have to say let’s kill the check! One last question before we wrap — we always love to ask innovators who are taking on the hard work of getting a platform like this off the ground who you’ve taken inspiration from. I can probably guess Uber, since you’re uberizing the recruiting industry. But thinking broadly about successful matchmakers across lots of industries and best practices, are there any others that come to mind? DS: Uber, Airbnb and others are really the inspiration for us. It’s always been about monetizing certain assets that people own but have never been able to turn into something valuable. We feel that professional networks fall within that category. JS: I also think a lot of this has just been based upon our own experiences — that we know who the dominant players are in our space, and we know where they are falling short. Part of it is just building a bigger, better mousetrap that solves for some of those inefficiencies. That’s part of the reason we are building what we are, because we feel like we have the correct answer for a lot of those inefficiencies.