20VC FF 028: Where To Start Your Startup and Single Founder vs Co-Founder Model with Richard Hanson, Co-Founder & CEO @ HiringScreen

Richard Hanson is CEO and co-founder of HiringScreen, where rocket science meets recruitment. Founded in Jan 2015 in Hong Kong, HiringScreen has raised over $800,000 from a number of investors with plans to expand into the Philippines and Indonesia. Before founding HiringScreen, Richard was an award winning headhunter and recruitment consultancy owner. A special thank you to Mattermark for providing all the data displayed in today's show and you can find out more about Mattermark here! In Today's Episode You Will Learn: 1.) What were the origins of Hiring Screen? What was the a-ha moment for Richard? 2.) What advice would Richard give to founders contemplating entering accelerators? What should they look for and why should they be wary of? 3.) Why does Richard believe that a startup with multiple founders is more beneficial than single founder startups? What would he suggest someone looking to find a co-founder is to do? 4.) Why did Richard start Hiring Screen in Hong Kong? What are Richard's views on Asia's emerging tech scene? What advice would Richard give to a founder deciding where to start a startup? 5.) What has been the most challenging element of growing Hiring Screen? How did Richard overcome it and alter the company from there? 6.) If Richard were to found Hiring Screen again, what would he do differently? Is there anything he wishes he had known before the process? Items Mentioned In Today's Episode: Richard's Fave Book: The Alliance by Reid Hoffman and Chris Yeh Richard's Fave Blog or Newsletter: Calacanis, Feld Thoughts As always you can follow The Twenty Minute VC, Harry and Richard on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here! Free Ebook: How to boost your Conversion Rate Optimization (CRO) by over 100% I would like to say a huge thank you to our sponsor for today's show: LoyaltyBay. Have you ever wished more of your website visitors would convert into a sale, signup or referral? If so, you need Loyalty Bay. With their saas conversion optimizer tool they increase any conversion metric by offering potential customers a choice of personalised rewards to get them to convert. They work with large enterprises like Virgin Media through to startups and have increased conversions on average by over 100%. Free 30 day trial at www.loyaltybay.co.uk

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You're listening to the 20 Minute VC and the first episode of 2016. A very happy new year to all of you. And joining me today to mark the new year and this very special occasion is an extremely important person to me. He was the first person to really show backing for me and for the show and since has gone on to be a phenomenal mentor and advisor to the 20 Minute VC throughout our growth. It is the first ever sponsor of the show, HiringScreen, and their founder, Richard Hanson. Now, I'm not going to give the usual intro about the company, as Richard does a much better job in the show, but I will say, since being on the show, HiringScreen have gone from strength to strength, growing rapidly, leading to their seed round of $800,000, with

• 0:43Harry Stebbings?

  plans to expand into Philippines and Indonesia. An absolutely fantastic company with a huge future and what I believe to be the future of recruitment. And I'd like to say a special thank you to Matamart for providing all the data and analysis for the show with Richard today. And if you're looking for a new year's resolution, join me with mine. Mine is to read every article on Matamart Daily every day. But before we jump into today's episode, to celebrate the new year and the festive period, the kind folks at Loyalty Bay have produced an incredible ebook, "How to Boost Your Conversion Rate by Over 100%". And this free ebook details how Loyalty Bay increased conversion rates for their clients,

• 1:24Harry Stebbings?

  such as Virgin Media, by over 100%, providing tips, tactics, and strategies, so you too can do the same. And you can find the download link in the show notes, on the website at the20minutavec.com, and on the newsletter, which you can sign up for on the website, so you never have to miss an update. But it's now time for me to shut up, so without further ado, I'm delighted to welcome my good friend and mentor, Richard Hanson, co-founder and CEO at HiringScreen.

• 1:59Speaker 01

  You have now arrived at your destination.

• 2:02Harry Stebbings?

  Richard, welcome to Founders Friday. I'm so delighted to have you on the show.

• 2:05Speaker 02

  Thanks, Harry. Very happy to be on the show.

• 2:08Harry Stebbings?

  Now, can you kick us off today with a little background on yourself and how you came to co-founding HiringScreen?

• 2:14Speaker 02

  Sure. So I studied law at Cambridge and then spent the next 11 years doing recruitment consultancy. Started off in London for four years and then moved out to Hong Kong. I founded my own recruitment firm four years ago. And actually, the idea for HiringScreen came from doing recruitment consultancy. And one particular job that I was working on for a client, I was asked to find him an executive assistant. And on that particular job, I ended up staring at an inbox with 196 CVs. And I had no idea where to start in sorting through them. And I thought it would be a great idea if there was a way to automatically know which of those CVs I should be looking at first.

• 2:56Speaker 02

  So I got together with my co-founder Luke Byrne and we developed an algorithm that basically helps score, sort and select the most relevant candidates from that pool.

• 3:06Harry Stebbings?

  And so you obviously saw the fragmentation of the recruitment market. So walk us through this. What do you feel is fragmented about the employment and recruitment industry? And how did you identify this problem?

• 3:18Speaker 02

  In the recruitment industry, especially over the last three to five years, there's been a lot of technological advancement. So today's job boards and social networks have probably developed to a point where in terms of sourcing applicants, the access to these candidate pools is an all-time high. But on the flip side to that, because you've got quick apply buttons everywhere, the barrier to application is, I would say, it's an all-time low. So whereas you've got the increase in potential applicants, you've got so many to look through that you can't do that in an accurate and consistent manner if you're doing it manually, which was the problem that I had when I was recruiting. That's deeply inefficient.

• 4:01Speaker 02

  And then if you work your way down the recruitment process and you look at applicant tracking... Systems, they're also highly inefficient because their value proposition is feeding as many candidates you want, hundreds or thousands into this applicant tracking system and we'll manage them for you. Whereas my view would be, don't do that. It, there's a lot of psychometric testing, video interviewing, phone interviewing facilities out there and they cost a lot of money. So my view would be, find the relevant candidates, tell the ones that aren't relevant for the job early on that this might not be for you. So they can get on and find the right job for them. And then take the relevant candidates into the rest of your process and

• 4:42Speaker 02

  use the, uh, the money that you have to invest in that recruitment process in a much more efficient and targeted manner with those relevant candidates.

• 4:51Harry Stebbings?

  And for entrepreneurs looking for verticals to go into, are there any signs that represent a broken or fragmented market with market opportunity? I mean, what should they be looking for?

• 5:01Speaker 02

  Well, I, I would say in terms of, you know, where, where the technology is and whose side it's on. At the moment, it seems to be very weighted towards the employer. Uh, and I think there's probably a gap there for companies to come in and really help the candidates. Uh, and this would go into the theme of, you know, presenting data back to them as to where they can target their job search, what skills they need and really help, uh, help them be aspirational. Because nowadays, most recruitment technologies or recruitment agencies are simply trying to move people laterally. So they'll say, you have this skill set and profile, this matches this job. Whereas it doesn't always work like that. And sometimes people actually want to do something different in their career.

• 5:43Harry Stebbings?

  So having had this idea and starting Hiring Screen, which is now based in Hong Kong, why did you decide to move to Hong Kong? And what advice would you give to founders who are debating where to start their startup?

• 5:54Speaker 02

  Um, I, I think for me, um, I'd always had, um, sort of that itch to scratch in terms of working, uh, in a, in a different country. Uh, and Asia, I visited there when I was younger and it seemed pretty exciting. Um, you always hear about, you know, London, Hong Kong, New York is big financial centers. And so I wanted to experience that. And that's what prompted the initial move. And, you know, I'm very. Happy that I did, and I'm very bullish on Asia in general. There's a, there's a real buzz of activity. Um. That goes through from, uh, you know, right through the startup scene, I would say out here is, is very exciting. Um. I would say in terms of location, if you're talking about Asia, you probably want to go somewhere where there's a good

• 6:33Speaker 02

  um startup community and support environment. So Hong Kong, Singapore's very good, Japan's also well developed.

• 6:40Harry Stebbings?

  And we have seen a rise in VC funding going into Asia in the last few years. Has that really been shown in the startup ecosystem? Have you seen it develop in the past two years or so?

• 6:50Speaker 02

  Yeah, sure. I, I, I think in terms of um either startup communities, whether that be, I mean, online or the growth of accelerators across Hong Kong, Singapore, Japan and other places around Asia. Um. Or Asian companies and participating in well-known accelerator programs like Y Combinator. Um. There's definitely uh growth and advancement for Asia startups.

• 7:14Harry Stebbings?

  And in talking of starting up, what were the biggest challenges for you in starting up HiringScreen? And how did you overcome them?

• 7:21Speaker 02

  Well, I think in terms of, um, if I can sort of flip that around, in terms of overcoming them, I'm lucky in the sense that I've got a great co-founder, Luke Byrne. Um. Who I'd known for, I've known him for six years, so five years before HiringScreen came about. And, um, you know, not only is he, you know, a very good product guy, and he's also exceptional project management. And I think having, having somebody to bounce ideas off and sense check you and make sure that you're not making, uh, you know, bad decisions is, is really useful. Um, you know, I, I think the same, so it goes, is two heads are better than one. And I think in terms of overcoming everyday challenges for us at HiringScreen, being able to have an open dialogue with Luke and to bounce ideas around and come to a consensus is very important.

• 8:04Harry Stebbings?

  And would you say then that having a, a co-founder is very beneficial for, for a startup?

• 8:10Speaker 02

  I personally think it's very beneficial because nobody's right all the time. I know plenty of people who think they're right all the time, but I don't think that's necessarily the case. So I would say that just being able to, you know, reach a consensus and have different points of view, everybody thinks in different ways about different problems. And I think just being able to have that open dialogue with somebody that is aligned in the right way and is bought into the business as much as you are, you know, that's very important. People, friends, family, they're always there to give advice, but ultimately they're not seeing the same challenges and pressures day to day that your co-founder

• 8:53Speaker 02

  is. So you're not going to get, you know, the same level of advice with the same level of buying as you are from your co-founder, in my view.

• 9:01Harry Stebbings?

  And now as the CEO and co-founder at HiringScreen, you've come a long way, but a lot of people seem to struggle from idea to creation phase. So what advice would you give to entrepreneurs who are yet to make that leap and start their own startup?

• 9:15Speaker 02

  I would say if you've got the idea, try and figure out earlier on how you would go about implementing that. So you start to give yourself some level of hope and comfort that that idea can come to fruition. You know, a lot of people might say, well, you need to figure out, you know, the one month or six month or 12 year view. And I agree that that's important at some point, but I think you need to start fleshing out pretty early on, whether it's something that you're going to be able to execute. And in my case, I had that idea and I went straight to Luke because he was very good at the execution and project management side. And together we figured that out. And I would say that,

• 9:57Speaker 02

  you know, if you're not somebody who can come up with both the ideas and feel comfortable with execution, you know, maybe go and talk to somebody or find a co-founder who can give you that, you know, to give you that step.

• 10:09Harry Stebbings?

  So it's the idea and then very quickly move on to prototyping and building mockups? Is that the best way?

• 10:17Speaker 02

  I would say so. I mean, I think in the interests of when people talk about failing fast, if you try and get through those sort of first steps in a relatively efficient manner, you would often come up against something and you might hit a dead end and figure out, well, actually, you know, you didn't think about that on the first day, but one week or two weeks later, you figured out that it was a bad idea. You know, I would really try and validate the idea as soon as you can, even if it means going and talking to the ultimate customer. So if you have an idea, people will say about problems that need solving, talk to somebody that you think has that problem, don't just think it's your problem. So in our case, we went out and spoke to heads of HR and recruitment at a

• 11:01Speaker 02

  number of different companies in different industries, just to make sure that they had that same initial problem that I had in terms of trying to screen high volumes of CVs. Now, of course, when doing that, you can also talk and get other pain points from those target customers, and then you can also put those into your product development. So I would say validate early on, take additional feedback, and then use that to then define the rest of your product roadmap.

• 11:32Harry Stebbings?

  And a lot of people, though, struggle with the really very initial stages of actually just building those workflows and mockups. So for you as a non-technical co-founder, what advice would you give to someone in terms of finding a technical co-founder? How did you overcome this obstacle?

• 11:48Speaker 02

  I would say that, you know, obviously, try and use the technologies which make that process in terms of the mockups easy. So, you know, whether it's InVision app or something else where you can make these mockups quite simply nowadays, that's great. I would also say in terms of trying to keep the process as simple as possible and keep the communication with your product team as open and simple as possible is a good thing. For myself, not having a technical background, I mean, I went on to Code Academy and, you know, I took the HTML and CSS course, just so that I actually knew what, you know, title tags were.

• 12:27Speaker 02

  And how to do basic CSS. So, you know, even though I couldn't implement, certainly not to any great extent. You know, I'd hate to try and do a mock-up myself. I can at least know what the, you know, the UX guys are doing and the front-end developers are doing when they're designing a mock-up.

• 12:44Harry Stebbings?

  And do you think it is important for a founder then to be able to look at their code that their developers are giving them and approve it and say that's okay?

• 12:52Speaker 02

  I'm not sure my developers would believe that I had any valued input if I looked at their code and said, look, look at that. But, but I, I think it's like, um. You know, when you go to a foreign country and you made an effort to learn the basics of a language and people know that you're trying to be polite and make an effort. I think my development team, I'd like to think that they know I'm somebody that's made the effort to do background research, has done those courses. And so. I'm trying to inform myself about what they're doing and I'm taking an interest in the different types of technologies. And that's also important because, for example, when, you know, when our chief architect, CTO, interviews people. Or is introducing me to people that he would like to bring on to the team.

• 13:34Speaker 02

  He needs to feel confident that he can put them in front of me and I'm going to be able to talk with a basic knowledge. About what that developer's been doing in his past history. Ultimately, as CEO. I need to be able to attract talent right the way across the team, whether it's UX or developers or sales, marketing, whatever it might be. So I feel it's my responsibility to show that level of effort and commitment around what people are doing in their job.

• 14:00Harry Stebbings?

  And a dominant part of any startup's journey is raising VC money. As CEO, what are your plans for, for this round of the business?

• 14:09Speaker 02

  Yeah, so everyone says for a CEO, you should be recruiting or fundraising. So we just talked about the recruiting side. Um, fundraising, yes, and we're doing that right now. So we're currently raising a round.

• 14:21Harry Stebbings?

  Quick disclaimer, this show was recorded before the funding round, but HiringScreen have gone on to raise the funding in eight weeks. Absolutely fantastic job, Richard. And back to the show.

• 14:31Speaker 02

  Um, that's been, um, an interesting process, you know, again, tried to inform myself. By, you know, listening to the twenty minute VC and also reading appropriate books about how to go about that. Um, you know, and I think we've done fairly well. I mean, we're half the way through raising the amount of money we wanted to. Um, we've had a very supportive and good response from the angels that we've initially approached, uh, and that's an ongoing process.

• 14:56Harry Stebbings?

  And what would you say are the must haves then for entering a round of funding in terms of documentation? Is it business plans? Is it exec summaries, cap tables?

• 15:06Speaker 02

  Um, I, I would say all of the above. Um, I mean, it sounds obvious, but making sure you've done your homework on your own company is pretty critical. Uh, and I think you never know what an investor is going to, um, is going to pinpoint. Um, you should know what they're going to ask for because, you know, anybody will tell you that they want to look at financials or market size or competitive environment. Um, but also maybe trying to really distill down to any particular unique advantage that you have or, you know, specific gap in the market that you spotted, um, is, I, I think pretty crucial. Because I think a lot of investors, and certainly this is something that I've realised during the process. They're seeing a lot of opportunities at this early stage.

• 15:48Speaker 02

  And so I think in terms of trying to put together something that ticks all the basic elements of a pitch. Um, but also gives just something that's exciting and new, um, is, is pretty important.

• 15:59Harry Stebbings?

  And you said do your homework on your own company. Do you like to do your homework on the VCs themselves then too?

• 16:05Speaker 02

  Definitely. Uh, I think you've got to know who you're talking to, and I think there should be a reason why you've approached a particular VC. Um, and I, I, I myself look at, you know, the level of investments that they've done. So I make sure that they usually invest in the type of round that we're doing. Ideally, they've made investments or shown interest in a, uh, in the specific sector that we're in, which would be, you know, HR technology or, you know, the wider human resources space. And also, you know, just having industry background that's complementary. Um, not necessarily just in terms of companies they've invested in, but their own personal background. Um, you know, that's very helpful. Um, you know, certainly Luke and I definitely do not know at all about running a business.

• 16:48Speaker 02

  And we're just trying to go, you know, day to day, doing our best to come up with sensible decisions. And having, uh, investors on board who've got that experience would be very beneficial.

• 16:58Harry Stebbings?

  And what's been the most challenging thing about the fundraising experiences? And have there been any surprises?

• 17:04Speaker 02

  Um. I think, you know, really trying to convey some of the more complex points about HiringScreen and why we're doing what we're doing in the timeframe of a pitch is quite difficult because you do want to tick all the boxes in terms of, you know, why you're raising that amount and going through the financials, justifying your valuation, competitor slides, as I said. But also really trying to tell them the vision for the future and trying to convey that mission statement. Because especially when you're talking about the workforce and skill gaps and productivity gaps. Some of those conversations, you could take each one of those components and I could talk half an hour or forty five minutes

• 17:46Speaker 02

  about why HiringScreen is addressing those concerns and issues. But you just can't do that. You need to really try and distill it down. And so I, I think one of the challenges that, that I personally had was trying to make sure that I had everything really crisp and succinct so that we had a clear pitch for the investors.

• 18:06Harry Stebbings?

  And you're currently in the Swire Accelerator. What are your thoughts on accelerators on the whole then, you know, and what they provide startups? And do you have any suggestions for people contemplating moving into an accelerator and maybe choosing the right ones in the now sea of options?

• 18:21Speaker 02

  Yep. So we're, we're based at the, uh, the Blueprint Accelerator, which is run by Swire Properties, based in Hong Kong. Um, that's a fantastic accelerator. It's business to business, um, focused. Um, they don't take any equity in the startups, which is fantastic compared to a lot of other accelerator programs. And the most important thing about Blueprint is they actually give you a, a good level of access to the Swire network at companies. For anyone who doesn't know, Swire is a big, um, uh, conglomerate, so they have multiple companies in different industry verticals. So the opportunity obviously for a product like HiringScreen, which is focused around recruitment is huge. And they sponsored us into, um, various parts of the company and giving us the opportunity to speak to

• 19:04Speaker 02

  HR and recruitment teams and really advance our product there. Um, in terms of Asia accelerators, uh, I mentioned that Swire is business to business. There are accelerators like Brink, which is hardware focused. And I think we're just at the beginning of the development of the startup accelerator ecosystem in Asia. It's very exciting, Harry.

• 19:25Harry Stebbings?

  And how can founders determine whether it's right or wrong for them? Should they have a checklist saying, you know, we want to keep equity? We want this level of benefits coming. What are the signs in accelerators right or wrong for you?

• 19:40Speaker 02

  In my opinion, I would have thought that the idea about how much equity you're willing to give up should come a little bit later on. And obviously, if they're asking a huge amount and they're not giving you a lot back on face value, you know, that may be a clean cut decision. But what I would say first of all is to try and make an assessment of what does your startup most need right now? You know, is it that you're needing to be super lean on costs, in which case an accelerator which provides office space might be great? Is it that you have a product, but you just need to get a proven use case or extra metrics? In which case, something like Blueprint, where you can get the opportunity to trial your product and test it, might be more beneficial.

• 20:22Speaker 02

  And then, once you've established what you want out of it, and whether that particular accelerator can give it to you or not, that's when I would try and balance that against how much equity they need, if any.

• 20:33Harry Stebbings?

  Now, we're going to move into a quickfire round now, where I say a word or short statement, and you give me your immediate thoughts.

• 20:40Speaker 02

  Fantastic. It's slightly surreal doing a quickfire round with you, having you.

• 20:45Speaker 02

  I am not going to say Elon Musk.

• 20:47Harry Stebbings?

  Okay, good. Well, I think you'll be the first not to.

• 20:51Harry Stebbings?

  So your favourite book and why?

• 20:54Speaker 02

  Well, anybody who's been listening to the show should know that we did the book giveaway. And I'm going to say The Alliance, which was co-authored by Reid Hoffman, Ben Casnot and Chris Yeh, I believe.

• 21:07Speaker 02

  And why? It's because I like books that's, you know, try to take a different look at something or look at a particular situation or issue from a different angle. And in terms of the way that they look at the workforce and the employer-employee relationship, I think it's a very refreshing take on things. And some of the principles that they talk about in that book, like the tour of duty, concept of employment, those are some of the principles that we actually have underpinning Hiring Screens development as a product.

• 21:38Harry Stebbings?

  What purchase under a hundred dollars has made the biggest impact on your life?

• 21:43Speaker 02

  Oh, probably a heart rate monitor, I'd have to say. I'd have to admit to having piled on a few pounds since I've started Hiring Screens. So hopefully, once I've done my fundraising round, I can, I can get back in the gym. Maybe my, maybe potential investors don't want me to, me to say that. Maybe they want me at the desk, but I'm gonna have to.

• 22:03Harry Stebbings?

  The opportunity cost of starting a startup.

• 22:05Speaker 02

  I'm sure, I'm sure they want me alive. I'm sure they want me alive.

• 22:09Harry Stebbings?

  Um, okay. And then your favourite newsletter or blog?

• 22:12Speaker 02

  I do read calicanis.com. I do have a soft spot for Jason. And I would say Brad Feld and Feld Thoughts is also very good.

• 22:21Harry Stebbings?

  And when I say successful founder, who's the first person that comes to mind?

• 22:25Speaker 02

  Um, Elon Musk. No, no, no, not really. Harry, Harry Stebbings.

• 22:30Harry Stebbings?

  Oh, stop it, stop it.

• 22:32Speaker 02

  Well, I, I, I do promise that I divert everybody to Founders Friday episode two for more on that. But my serious answer is going to be Reid Hoffman. Um, I know I mentioned him before with the alliance, but I think in terms of a founder who, one of the things I really admire about him is the fact that he didn't want to be CEO of LinkedIn and he thought that there would be better people to do that. And he thought that there would be people, better place to take the company on than himself. And I think that was really a very smart and selfless thing to do. Uh, I mean, he might turn around and say it's a no-brainer, um, but I think that that was very, very smart and very pragmatic.

• 23:15Harry Stebbings?

  And then finally, the next five. For you and Hiring Screen, what's the plan?

• 23:20Speaker 02

  I would like to think that we can just carry on doing our best to execute the product vision, keep building a team that enjoys what we're doing. I talked earlier on about trying to explain about the mission statements. Obviously, when you're building a team, you have more opportunity to try and convey to them why you're doing what you're doing. And I would like to think that everybody who's part of Hiring Screen today and in the future comes to work really understanding what we're trying to achieve. And if I can convey that and they can enjoy their work, then I think I'm going a long way to building a successful company alongside Luke.

• 23:57Harry Stebbings?

  Well, Richard, it's been absolutely fantastic to have you on this very, very special episode of Founder's Friday.

• 24:02Speaker 02

  Thank you, Harry.

• 24:03Harry Stebbings?

  Joining us.

• 24:04Speaker 02

  Fantastic.

• 24:05Harry Stebbings?

  Very special to have Richard on the show today. And if you would like to listen to Founder's Friday, episode two, you will join James Wise of Balderton Capital interviewing me on the founding days of the 20 Minute VC. And if you're loving the show, do not forget to sign up for the newsletter on the20minutavec.com so you never have to miss an update. Also, do not forget to download the fantastic ebook from Loyalty Bay. If you would like to increase sales, sign-ups or referrals on your site, then this book is for you as it clearly presents Loyalty Bay's strategy of increasing conversion rates for their clients by over 100%, providing tips, tactics and strategies so you too can do the same.

• 24:48Harry Stebbings?

  And you can find the link in the show notes on the20minutavec.com or on loyaltybay.co.uk. Thanks so much for tuning in today and we look so forward to bringing you next week's episodes.