Matt Mickiewicz – Co-founder, 99designs, SitePoint, Flippa and Hired – Transcript
We’re here with Matt Mickiewicz of Hired.com, SitePoint, Flippa, and 99Designs fame! Hit him with all of your questions and don’t be shy!
The Q&A Session with Matt was held on May 18th, 2016. This transcript has been edited for punctuation, grammar, etc.
When you were just getting started in your Webmaster-Resources.com days, what did you envision yourself doing 20 years later?
I was 13 or 14 years old when I started that website back in 1998… I knew my long-term plan likely involved being in business for myself – I had started subscribing to FORTUNE Magazine when I was about 12, but I honestly didn’t have a 20-year plan.
With so many smash hits, what were some of your failures? And what did you learn from them?
Never underestimate how fast things change… in 1999 all of our revenue was tied to advertising, by the end of 2000 after the NASDAQ bubble burst, nearly all of our clients were RIP. We got into book publishing, initially selling directly to our website visitors ($3 to print, $35 price on the website), so we had crazy margins. Eventually we got into traditional retail – like Borders and Barnes&Noble as well – but that entire business started going downhill after a few years as well, with the move towards eBooks and Amazon’s growing dominance. The biggest lesson is just around being adaptable, and not taking current market conditions for granted. Smartphones, SaaS as a business model, cloud computing, etc. have all emerged over the last decade. Some companies have done a better job embracing them than others.
Do you think design and development are moving more towards decentralization (with many remote jobs), or do you think more startups are placing a value on people being co-located?
Based on the 4500 clients that use Hired.com to find engineering, sales and marketing talent, there is a HUGE premium placed on having people being co-located. While we heavily skew towards VC backed growth companies in our client base, there is a huge preference towards people working in the same office.
What is the best product manager hack you have as far as finding product market-fit or knowing what feature to build next on the roadmap?
Customer interviews are powerful, but so is doing projected ROI analysis. At Zynga for example, every PM had to do a full funnel impact analysis for every feature they built, and then after it launched, they’d have to send an email critiquing their initial assumptions and the final outcomes. It helped everybody become really rigorous in their thinking and better at estimating the impact of their work. Assigning a dollar value to everything you build can be a great way to prioritize. On top of that, doing quick & dirty tests using “Dummy Buttons” can also be effective. I’m also a huge fan of A/B testing major changes… sometimes new features just add more complexity and maintenance overhead vs. making something actually better. Think Google Docs vs. Microsoft Word.
What’s next on your list of areas to innovate in?
HIRED is keeping me pretty busy… we’re well over 200 employees now, with over a dozen offices spread across five countries and three continents. Getting everybody a job they love is our mission, and we’ve barely scratched the surface of what’s possible there. HR Technology is an area that’s seen shockingly little innovation over the last decade… Even LinkedIn is now over a decade old, and trying to hire using their platform is equivalent to trying to buy a house using the white pages. You know everybody’s name, address and contact details, but you have no idea who is interested in selling, so your only option is to drop a postcard in everybody’s mailbox, hope that 5% respond, and that some fraction of those have the right layout/kitchen/square footage where you actually want to buy.
I am interested to know, after you come up with an idea, how long does it take for that idea to become profitable? On the same question, when do you start giving up on that idea. One of the apps I have is ramen profitable, but I have been going at it for 3+ years now…
I really like Paul Graham’s Startups = Growth article – if you haven’t read it yet, then definitely do… In general, I always start off by asking “How quickly can I find out I’m wrong?” I start with the assumption that my idea is bad, and then run tests to find out if the opposite is true. With Hired, we could have stopped at several different points. 1.) If candidates don’t show up, then kill the idea. 2.) If companies don’t sign-up, kill the idea. 3.) If companies/candidates don’t connect, then kill the idea 4.) If those matches don’t turn into revenue, kill the idea. It’s only after we proved out all of those using our own money that we actually went out to the market and raised our $2.7m seed round (we’ve raised $70m+ in total to date).
Did you set your very specific marketing goals – like website visitors and such – before even launching a product? How do you plan for conversion, churn rates and such? Taking random average numbers doesn’t seem to be the way to go. Or is it? Thanks!
Not before launching the product, no… The initial focus is all around delighting customers, even in unscalable ways.
Do you think we’ve entered a marketplace bubble? If so, what are your expectations moving forward in the space? If not, do you believe that we might in the future?
There’s a lot of faux marketplaces out there… lead-gen businesses masquerading as marketplaces. I love Bill Gurley’s article on this topic:
http://abovethecrowd.com/2012/11/13/all-markets-are-not-created-equal-10-factors-to-consider-when-evaluating-digital-marketplaces/
In regards to a bubble, there’s definitely been a lot of capital that has allowed bad ideas and bad companies to survive far longer than they would otherwise. The zero interest rate environment and the fed policy hasn’t helped things.
If you had to start over from scratch: What is the first growth-hacking strategy you will implement and why?
Don’t scale prematurely… This is one of the biggest mistakes ever. First you need product/market fit, and only once that’s nailed, do you even begin to think about growth. 99designs didn’t spend a penny on marketing in its early days. The product was 10x better than anything else out there at the time, and 90% cheaper. That’s a deadly combination. Never understimate the cost of switching. Habits are hard to change. If you’re trying to steal market share from existing solutions, being 20% better or 30% cheaper won’t do the trick. It has to be exponential. I did a great interview with Peter on this:
http://www.xprize.org/news/blog/10x-cheaper-10x-faster-1000x-better-99designs
Do your companies come from problems you’ve experienced directly or are they something that you sought out some other way?
99designs was pretty organic – it was born out of the “Design Contests” Forum on SitePoint, so we didn’t really invent the idea, we just saw a behaviour that was occurring, and we capitalized on it by building a product and a brand to drive more of that activity… With Hired, it was entirely around solving my own problem. Previously, we had used upwards of 30 different recruiters to hire software engineers, and it was a terrible, miserable experience. Once in a while, one of them would get lucky and send us a $30,000 invoice and a 6 pack of donuts as a way of saying, “Thank you.” I thought this was pretty ridiculous. These recruiters were often not the smartest bulbs in the room, but they were making a killing. I disliked them, the engineers disliked them, and anytime you have a middle-man who both sides don’t like dealing with, in a huge trillion dollar market, that just screams opportunity.
Any plans to help out us rural workers (I’m in upstate NY too far from NYC to commute – think medium and small cities surrounded by farms – yes there are farms in NY state)?
Eventually we will do a hub-and-spoke model… But jobs do tend to congregate in major urban areas. I think it’s only in the last decade that we have more of the population living in cities vs. rural areas. That trend will continue. Population density leads to innovation because of spontaneous collisions of ideas, capital, and people to make ideas happen.
Follow up to what you answered about Zynga and doing an impact analysis. Did you train devs who had no idea what that meant, or did you only hire devs who did?
Devs shouldn’t be doing product management… It’s a very different skill set. In fact, devs making a career transition to product management often have to undo and unlearn a lot of habits. So my suggestion here is to hire great product managers who know what they are doing.
How do you find your first 100-500 clients and customers, especially before proving your model?
Beg, borrow, steal. Hustle. Figure it out… There is no one answer. As an entrepreneur, when you run into a wall, you have to find a way to punch through it; if you don’t have hammer – use your fists. With Hired, we initially went to companies themselves to get them onto the platform. That didn’t work. So we went to their investors, who in turn referred us to their portfolio companies, which gave us credibility and lead to employer sign-ups. PR can also be incredibly valuable – and I don’t just mean NY Times or WSJ. Go after small blogs who then feed into Lifehacker, etc. which then feeds into the big media outlets. Craft a good story. My fav book on the topic is “Trust Me, I’m Lying.”
“If you had to start over from scratch” response, in that time you were creating a new market, a new way of doing things, and that’s hard to do. How did you get customer and designers’ attention without investing in marketing?
With Webmaster-Resources, it was organic word of mouth, SEO and PR. We had 10 search engines back then, and SEO Optimization was super easy… Within weeks of launching I got featured in WINDOWS Magazine (which at the time had a million subscribers), LA Times and USA Today. It was something, new, novel and interesting – and hence newsworthy. Lots of people were interested in learning to build websites, and I was one of the few good places online that focused on that topic. There’s lots of design blogs, newsletters, etc. now that cover new & interesting products. You can write guest columns or articles. You can speak at conferences and panels. You can try to do partnerships with companies who do have an audience.
How did you tackle the marketplace/two-sided market problem for 99designs? i.e. Did you focus on acquiring designers first or clients? How did you go about it?
We had SitePoint.com which 99esigns was spun-out off… that seeded our database of designers. The clients all came organically because the solution that we provided was 10x better and 90% cheaper than the alternatives. I paid $10,000 to an agency for one of the SitePoint Logos back in the day and they gave us 3 different concepts… With 99designs, anybody could now get 50 concepts for $200 (at the time) with a 100% money back guarantee. We took risk elimination to its extreme. Nobody had ever done a money back guarantee in the graphic design industry. It was always like “Well, you don’t like it, I can change it for $150 per hour more…”
Hi Matt, how do you stay focused with so many ideas? I tend to develop a software to 50-90% competition, then an idea hits me. I’m 20, so my focus isn’t all that strong.
One at a time… April 30th 2012 was my last day at 99designs. We came up with the DeveloperAuction idea (which has now become Hired.com) only three days earlier, though I had been researching the industry and thinking about this problem for months before. At one point, I went through all 450 recruiting/HR startups on angel.co just to understand the space better and see what others were doing.
Random question: I read somewhere about you rebranding from developerauction.com to Hired. Couple questions. Can you talk about why you made that move. how much did you pay for that great domain, and has it proven to be worth the investment and why?
Great question… DeveloperAuction was really limiting and didn’t encompass the scope of our vision. It didn’t allow us to do designers, product managers, data scientists… much less marketers, sales people, and eventually healthcare professionals, lawyers, accountants, etc. The “auction” name, while it communicated what we did, was also very controversial and rubbed some employers the wrong way. When I was doing demo calls with the first couple hundred companies, I always felt like I was starting off on the defensive, having to explain that “auction” didn’t mean that the highest payer won, etc., and that salary was just one more point of alignment in the process. Nobody wins after a 3-week interview process when an offer falls apart at the last minute over mismatched compensation expectations. The Hired.com name cost low 6-figures, and was absolutely worth it. We also own Hired.co.uk, Hired.ca of Canada, Hired.com.au, and a bunch of others. It was pretty amazing that nobody had built a company using it. But I gotta say, pulling the trigger on such a big purchase when we had only raised our seed round was a bit hair raising. Inc Magazine actually did a story about how we acquired the domain name as well, it’s out there somewhere.
How do you know when you have product market fit?
When a significant portion of your users would be very disappointed if you cease to exist. Sean Ellis advocates using a survey to get the data… Lots of other good thoughts on the topic here:
http://andrewchen.co/when-has-a-consumer-startup-hit-productmarket-fit/
On websummit you’ve talked how you’ve put the developer on a pedestal at hired.com. A good developer is already unreachable. What is your experience with that at hired.com?
On the contrary, we’ve made developers more reachable to smaller startups and companies by putting them on equal footing against clients of ours like Uber, Twitter, Facebook and Amazon… They no longer need a team of sourcers who are running boolean searches on LinkedIn and blindly sending inMails in the hope of getting the timing right and receiving a reply. We’ve hired over 60 people using Hired.com at this point… We didn’t hire our first internal recruiter until we were 120 people. For a San Francisco company, this is completely unheard of. I can definitely state that we solved our own problem.
One more, what are your top influencers/blogs/newsletters you follow/subscribe to?
I recently spent a bunch of time on WaitButWhy.com… their posts on A.I. and Elon Musk & Mars were fascinating. Takes a couple hours of good reading to get through them though.
Why did you kill “tasks” at 99designs?
That happened after my time at 99designs. I don’t know the full context and wasn’t involved in the decision, so can’t really comment.
What would be the number ONE most important task where you’d put most of your energy & focus on to make your business as successful as the one you have now?
Relentless customer focus. And build a product that’s NOT incremental. Like I said, being 20% cheaper or 30% better doesn’t cut it. The switching costs are too high. If you build something fantastic, all your marketing/sales costs will be dramatically lower.
Thanks all! Great questions, really enjoyed it.
