In this episode of The Staffing Show, Aaron Elder, CEO and co-founder of Crelate, shares his experiences with entrepreneurship and upskilling his teams. He also discusses what today’s economic landscape could mean for the staffing industry and how to use “transferable velocity” to predict a candidate’s rate of professional growth and the likelihood of their success within your organization.
David Folwell: Hello everyone. Thank you for joining us for another episode of The Staffing Show. I am super excited to be joined today by Aaron Elder, who is the CEO and co-founder of Crelate. Aaron, to kick things off why don’t you tell us a little background on yourself and how you ended up in the staffing industry?
Aaron Elder: Cool. Thanks, David. Pleasure to be here, and thanks for having me. My background in the staffing industry, probably like many, is I didn’t intend to fall into this industry. I am a visual arts major who dropped out of college and taught myself how to code back when the web was taking off. And co-founded a startup that got sold to Microsoft and became the lead application architect for Microsoft CRM and then left Microsoft and started a consulting company implementing Microsoft CRM. And most consulting companies are kind of like staffing companies and we grew very quickly and were constantly hiring. And ultimately, when I sold that business, I wanted to get back into this industry that I kind of love. I love helping people, and this industry’s all about people, and that’s sort of how I got here. I don’t know if makes any sense, but that’s me.
Folwell: Yeah, no, that’s great. And I mean, one, that’s a cool story that you dropped out of college, learned how to code, and then sold the company to Microsoft. And I think you mentioned in one of our other conversations, you also had an exit to Accenture, is that accurate?
Elder: Yeah, so our consulting company got sold to a joint venture between Accenture and Microsoft called Avanade, and then a portion of it got sold to Accenture Federal.
Folwell: One other note that I just remember from a conversation we had is that you’re a big proponent of good user experience. And I remember you mentioning some stat about the user experience that you created and it compared to Salesforce at a trade show.
Elder: Yeah. I can’t remember what it was, but we had won “Best in Show” or “Best New Product” at Internet World 2000 or ’99. And Salesforce was there. One of those teams got turned into an Apple hire. The other one went off to be worth billions. I’ll let you guess which one was which.
Funny story though. Because my background in visual arts and then coding and the web itself was a very visual world. And I remember when I got to Microsoft, they said, “Well, what do you want to do here?” I’m like, “Oh, I want to design the UI and be the lead architect.” And literally one of the product managers in a room had like laughed out loud. Because it was absurd that a dev would work on the user experience. But fast forward, the first UI of Microsoft CRM, the first couple versions were my design and I befriended a UX team and that’s where I was, and I coded it.
Folwell: That’s a pretty incredible background and really cool that you have that experience. And also just to think that you built the Microsoft CRM, or a big part of it, that’s quite a background.
So, why don’t you tell me a little bit more about kind of what is Crelate and how you guys are kind of approaching the staffing market?
Elder: I think the way we’re approaching the staffing market, I would probably say is intentional. So after selling to Avanade, I really wanted to go do another product company. And I literally sort of, it could have been anything. It could have been another social network or, just, I mean, I had this idea for a wine app where you could like take a picture of a bottle of wine and it would OCR it. So it would tell you what the bottle of wine was. And you could share your experience of that wine with others. It’d be like a social sharing network around data of your… Anyway. So like it could have been anything. But after looking at the landscape, I sort of identified a need that I had experienced myself in prior businesses is that if your primary business is talent, you need to bring several business processes together over and over again forever.
You’ve got to go find opportunities, get those opportunities — stuff for people to do. You got to go find people, whether they already work for you or they’re out in the world, and then you got to get them productive. And you got to get those stars to align over and over again forever. And there really aren’t a lot of good solutions for it. When we started our consulting company, when we had an ATS and we had a CRM and a whole bunch of spreadsheets and people in the middle. When we merged with a larger one. same thing, they had like written their own for part of it. But the rest was other processes, when we got to Accenture and Accenture Federal, and Avanade, same thing — it was just more people and more spreadsheets. And I’m like, there’s got to be a better way to do this. And so the sort of the grand idea was a recruiting CRM, which 10 years ago was a term people didn’t really use. And that’s what it was. So it was really an intentional platform for this industry, for businesses whose primary business is talent.
Folwell: I love that. And also I think part of the background that I remember you talking about as well was you’d kind of built this dev community at one point and had a bootcamp. Are you using any of the learnings, or maybe you could just share a little bit about what that was and why you built a dev community and bootcamp. Because I think that’s pretty interesting for the audience too.
Elder: When I left to start the consulting company, or to join a consulting company, my co-founders and I had this problem that like, there weren’t enough Microsoft CRM consultants in the world. There just weren’t enough of them because there was a new product and we were pushing it upmarket. And we do the usual thing where we’re like looking around like, “Well what’s a related skill set? Okay, let’s go find an SAP developer or Pivotal developer or an Onyx developer, some old platform and teach them a new skill.” At some point in time, that sort of gets saturated. And then you start saying, “Well, where else are we going to get people?” And we decided to invest heavily in our own internal bootcamp. And it was a two-week bootcamp that included a bunch of instructor-led presentations and then turned into, it also had like live coding portions and live exercises, et cetera.
And this bootcamp became quite popular for us to be able to take people from all walks of life. I mean I’m talking bricklayers and baristas and moms returning to workforce, whatever it is, and teach them a new skill. And on the other side, fast forward a couple years, we’ve got more certified CRM developers than anybody to keep up with demand. It was kind of the lost art of the internal training programs. Sort of hearkening back to the fifties and sixties and seventies when people actually did that. You invest in people and everyone can benefit.
Folwell: So you basically had an internal coding bootcamp, or coding school, similar to what people are going and paying for, but you actually built one of those internally to fill your own…
Elder: We built it internally. And we were paying…to do it. And then to follow on with that, I would like to think — maybe it wasn’t perfect for everybody — but we did our best to create a culture on the other side of it that embraced people that were learning. It was okay to ask questions. And I used to tell devs or consultants like, “Listen, we’re going to find out if you know one way or the other, and it’ll be way better…”
Folwell: Tell us upfront.
Elder: Yeah. Tell us upfront. Tell us now when we still have budget left on this project to teach you and to do it. And so we really try to create a culture of learning and fast fail and fail forward. And as we’re sort of focused on the results and we’ll get there. And because of that, they were able to take the bootcamp, but then also learn on the job, truly learn on the job. If that makes sense.
Folwell: Yeah. No, that does make sense. And I think that’s a pretty incredible story to tell in terms of how you got and built up the team. Did you ever look at what the cost to get people into…upskilled to where you needed them compared to what it was to go to the market? Because I feel like we still have this huge lack of supply of quality talent. And I know a lot of staffing agencies are looking at, “How do I fill this void?” Is there a path forward where you think staffing agencies could be doing bootcamps like this and have a financial model that works?
Elder: I think so. And I’ve heard of some industries that do this, like in like the welding industries and a few other places. It’s not something you want to half-ass and it’s not something that you should expect quick returns on, I think is a problem. And there’s that meme on LinkedIn where it’s like the CFO is like, “Well, what if we invest in these people and they leave?” And the CEO’s like, “Well, what if we don’t, right?” And I think it’s exactly right.
Folwell: What if we don’t and they stay.
Elder: Exactly. What if we don’t and they stay, or we can’t hire them to begin with. And so I wanted these guys, who’s like, the pie can always be bigger kind of person. And so if you can just put positive energy out there, it’ll all work out in the end. So believe in it, believe in the program. Because the other aspect of it is I would like to think that you’re earning loyalty, if you will. Loyalty’s not just given. And if it is, it’s fake. I mean like, you took time and invest in these people. And some of them had…
And so you got to pair it with a path to promotion. In fact, one of the things that I’m always like — what I worry about is like — “Am I growing fast enough to keep good people that are going through this program?” Because I got to keep the business bigger to give these great people opportunities to move up. And so get them in, invest in the program, give them paths to grow and you’ll probably be rewarded and it’ll be a win-win for everybody.
Folwell: I absolutely love that model. I mean, I think that’s really cool that you built that out. So jumping a little bit back, but why don’t you tell me just a little bit about kind of the size of Crelate, what your growth trajectory looks like, where you guys currently stand.
Alder: Right. And actually, maybe I should throw a quick little plug in, I don’t know if people know what Crelate does, real fast. So we’re an applicant tracking system and a CRM system and a delivery system all built in one. I want to be a talent platform for talent businesses. So if your primary business is talent, you’re a staffing company, recruiting company, et cetera, we’d be your primary system of record for those core things. And that was a grand idea 10 years ago. Fast forward to today, we got about 1,800 customers, mostly US-based, we’re at about 65 employees. We’re growing north of 50% a year. And that’s the path we’re on. We just did a Series B, to continue our growth from our existing investors. And yeah, that’s what we’re doing.
Folwell: That’s great. And sounds like you’ve got a good… I mean 1,800 customers is pretty significant and also you’ve got a good growth trajectory with the 50% year over year. That’s got to be on the upwards end for ATSs, I imagine, right now. So from your perspective, you talked a little bit about Crelate, what you guys do, but how are you different than other ATSs, or what makes Crelate unique?
Elder: Probably a few things. I would like to think that my grand vision is maybe a little bit bigger than the recruiting firm that hired a dev and built four recruiters by recruiters, sort of thing. And those are fine tools, but building an ATS is not easy. It’s a lot. There’s so much functionality that is minimum expectations, just table stakes, right, in the industry that you got to go build. And so I think this idea that we’re not just an ATS, we’re actually a platform, is very different than other things. We tend to build things the hard way. If you want to build an onboarding process, we wouldn’t just create a new table and add a bunch of checkboxes and call it onboarding. We’re like, “Oh, onboarding sounds like a generic business process. And that generic business process probably has owners and assignments of synchronous and asynchronous tasks that needs to happen. And those tasks will then produce artifacts that are evidence of the thing that happens. And those artifacts could be verified by someone through a whole business rule process.”
And so we build a generic process engine to go build our onboarding feature on top of. Now, that took a long time. But now once you do that, we now have a process engine that could be used for offboarding or for multiple onboardings or different kinds of processes you want to run inside your company. And we take that same lens and apply it to all these different things.
And so I kind of want to be like the Salesforce of talent. Like, actual talent platform for talent businesses. One that’s going to grow with you over time as your business changes. Because our customers are…they’re super flexible because they, I think they’re so close to the economy in how they react to whatever talent is doing. You need to be on a platform that’s also flexible and going to react with you as well. So that’s why one big way that I think we’re different.
Folwell: Yeah. And with that, it sounds like you’re kind of building out like a component-based, where people can build their own workflows or configure it to match their exact business process, versus the “here’s how you do it” and “here’s the process.” It’s more of a “We’re going to allow you to build it, to match your unique needs.” Is that…
Elder: Absolutely. I mean, we have a platform-first mindset. I need to provide a box of Legos. Now I got to also provide instructions to make it easy enough to use for the average user at a time, as your unique business, your unique niche, your unique set of customers, pushes the boundaries of that. I want to be able to say “yes.” “Yes” with an “if,” “no” with a “but” during the sales conversation. So I think that’s one big difference. I think the second big difference is I want to get big. I want to be big enough to matter and have an impact. And that sounds obvious, but it’s a very big differentiator maybe between other companies. There’s a lot of other products in general, most startups fail. You’ve probably heard a statistic, like 95% of startups fail.
But what you don’t hear is that 95% never get big after. And so they get up to $5 million, $2 million, et cetera. And it just sort of like converts into like a lifestyle company. Iinvestment slows, churn picks up, innovation drags, they can’t raise money. I want to be big enough to actually matter, to actually impact people’s lives with a platform that does this. And so we’re on this long-term journey to do that. And that’s been very intentional from day one. We’re not perfect right out of the gate, but we’re always listening and we’re always getting better. Year after year after year after year we’re always getting better.
Folwell: With that, what is big for you? What is the like, three- to five-year outlook? What does Crelate look like?
Elder: Three to five years from now? Well, I mean, I think it’s a continuation on that journey. I mean, right now, we’re working on the next iteration of our open API, of our marketplace. It’s funny, I think we have like, 30 official integration partners, but we probably are over 50 or 60 unofficial integration partners. People are just building on the open API that I don’t even know about. It’s almost every week that I hear about someone else who built on us, I’m like, “I haven’t even heard of that company.” And customers are using us with them together. So I would like to see us, I mean, be that platform for more businesses. And one thing that we measure success in at the company is not just revenue. It’s the number of placements that our customers do on the platform.
Folwell: I love when people are actually, when you’re looking at what is the goal of our customers and tying that back to the goal of your software. I think it’s unique and that’s great.
Elder: And so to answer your question in five years, I mean, maybe we’re doing a million a year on the platform. That’d be nice.
Folwell: A million placements a year.
Folwell: And so you’re helping a million people get a job a year through your platform.
Elder: Exactly. Exactly.
Folwell: Yeah. I love that. That’s great. So jumping a little bit more specifics. Do you have any kind of unique use cases, case studies, or any kind of customer examples in terms of how people are using your platform in different ways? Or any stories along those lines that you’d want to share?
Elder: Probably a bunch.
Folwell: Yeah. I guess it’s a question of, what can you share.
Elder: Yeah. I mean, there’s different ways that the platform can be used. I mean, they’re all in and around talent because when you ask that question, my mind instantly went to my past where we were selling Microsoft CRM. We coined the term XRM. And we were selling Microsoft CRM to do all kinds of things. We were doing land management and patient management. Just anything, everything. Crelate is pretty talent-centric in its mission.
I think one story that I really like, as a customer, her name is Dee Williams. She started teaching people to be recruiters at her church. And so we work with her to get a special offering for new recruiting firms that get started up. And so she’s got a bunch of people on the platform that came from all kinds of backgrounds with all kinds of adversity in those backgrounds and have given them a path to prosperity. And I’m really glad to be a part of that. I’ve heard some amazing success stories from that. So, I mean, that’s one of my favorite stories.
Folwell: That’s great. I love that.
Elder: And my other stories, I won’t drop names, but we’ve got a number of customers that started with us a couple years ago as couple-seat deals. And now they’re some of our biggest customers. Because when you understand the business and you got the grit and you got a process, you can grow. And I’m so glad that we were able to be accessible and approachable on the small to get them in the door and then to scale with them as they grew. And so those stories…I love.
Folwell: Yeah. And then it sounds like you’re building to meet their needs as well. So yeah, listening to the customer on an ongoing basis saying, “Hey, here’s what do you need next? And how do we build this out?” So you have the configurable process to do this.
Elder: Right. And then our job is to take all that — I’ll actually throw out one little anecdote — if you just listen to every single customer and what they ask for, you’re going to build a big pile of, like, crapware.
Elder: If you have two customers, one customer wants a button blue, one wants it red. And if you make it purple, everyone’s angry. And so you have to sort of listen to what they’re saying and then turn that into this engine and these set of Legos that can satisfy those needs.
Folwell: Yeah. I don’t know if this makes sense, but when I think about that, building a big pile of things that are hard to use, Zoom settings feels like every big customer that’s asked them for a setting in Zoom they’ve just said “yes” to. Because I go in there and I’m like, “Wait a second. What are you guys… What’s going on here?”
Elder: Yeah, it’s a journey. I’ll say that because you’re reacting and then you got to go back and rethink it, and it’s a journey.
Folwell: Another concept that I’ve heard you talk about — this idea of transferable velocity. I know we’ve talked about it a little bit. It sounds like with your bootcamp, et cetera, that kind of fits into that. But could you speak a little bit more to that concept and what that means to you?
Elder: I think this is probably me on my soapbox trying to bring back corporate training and corporate investment in people and to maybe give business leaders a way to believe in it, if you will, a little bit. And so where am I going with that?
Let’s assume you want to create this program and you’re going to invest in it, but like, who are going to — and more importantly, create this environment of learning on the other side for people to land — who are going to be the best candidates to enter into that? And so if you’re trying to evaluate, “Can someone switch careers?” You have to sort of look at their life agnostic of the career itself. And so then if you sort of draw dot points of their career. So like let’s say random job, random job, better random job, better random job, out of the workforce as a mom for a while trying to get back in.
And if you plot that career trajectory that they were on and you saw this upward slope, and then as you talk about their experience being a mom, let’s say, and they just freaking crushed it. They’re just like on top of it, they’re doing this, doing this…you just sense, that’s a clear, natural path. Because it’s not easy being a mom, that if you draw a line from those data points, you can clearly say that the forecast shows that the next data point will be here. So provide that landing spot for them to get there. Don’t just make them reset entirely. You can transfer that velocity of that person’s life. Does that make sense?
Folwell: That absolutely makes sense. And I mean, I think one of the things that I’m hearing is the theme from you is like the idea of giving people a second chance, and also the fact that we have this massive talent shortage. But there’s people, and it’s like, all right, well, how do we get the people to know the skills? And how do you look at like, who should you hire based off of the trajectory of their life and what they could do.
Elder: Correct. And I think you can look at it, I mean, another example might be, let’s say they dropped out of the workforce for a while and they got on boards, they volunteered, and they crushed all those things. Well, then why wouldn’t they crush it for you when they decide to apply their talents back to your thing? Now, it has to be a two-way sword though. Or a two-way street. Because if you’re going to the first mover, if corporate will be the first mover, take the risk, make the investment, the person’s got to step up, too. They got to work hard and probably work extra than the average person. Because they’re switching careers. They got new stuff to learn. They got new ropes to figure out. And it’s not for everybody. But for, let’s say the 80/20 rule, for the 80% that do, you’re going to meet that spot and it’s going to be great.
Folwell: And are you implementing this within Crelate with your hiring processes?
Elder: I certainly try. And I think if you look at the way that we promote from within, it’s the first place I look whenever we have a new role. It’s always from within. And I’m always looking to squint my eyes when I’m looking at an applicant, especially on our junior roles. It’s like, “Oh, well maybe,” or even on the more mid-level roles, “Well, they were doing this and that’s not really what we do, but there’s a lot of similarities.” And “This looks like a real high-performing person and they want to switch careers into something else. Can we give them that chance? Do we have that runway to give them that chance?” And usually, the answer is “yes.” It’s a balance. But yes, I absolutely try to do it.
Folwell: I mean, just to second that thought is I’ve had a couple of the best people I’ve ever hired have been people that did not have direct industry experience, but the attitude and the work ethic and the velocity of where they were going. It was like, “Oh, well, if you can just take that, apply it here. You’re going to be fine.”
Elder: Totally. One of my favorite devs was a recruiter who went to a bootcamp. I hired them and I was able to keep them here for a good three or four years. And then he just got a great new job somewhere else. Unfortunately, we weren’t growing fast enough to align with his ambition, but clearly, he was a diamond in the rough. We found him, he was a recruiter turned dev.
Folwell: That’s amazing.
Elder: And I’ve got a number of other stories like that too.
Folwell: That’s great. So shifting gears a little bit, but what are some of the changes that you see happening in the staffing recruiting industry? Maybe changes you’ve seen over the last few years or where you think things are going forward in terms of major trends?
Elder: Whoa. Well, there’s so many changes that I think I’ve seen. It’s funny. I mean, I think the big change that everyone’s talking about right now is recession on the horizon, and what does that mean?
Folwell: Let’s dig in there.
Elder: I think when we were talking earlier, just on the pre-show, we were talking about how…two things. One, this industry is hyper-reactive to the economy. They are in constant reaction to what customers are needing. If customers are needing this, they’re getting that. If this is a new hot thing, they’re figuring that out. If you need a developer with 10 years experience in a two-year-old technology, staffing’s all over it. They’re going to go find that person who doesn’t exist. The purple squirrel. And I think that the trend that you’re seeing now is with the rise of RPO. Which, I would argue, is really a sign of the end of a cycle. The labor is so tight and so in short supply companies can’t even hire recruiters to go help them fill the roles.
And so if your firm has recruiters, they’ll just hire you. I mean, that’s basically a talent shortage in the recruiting space itself is RPO. But I also think it’s end of cycle, if that makes sense. It feels kind of bubbly. And I think right now people are watching #hiringfreeze and #layoffs that were sort of coming on the end of that cycle. And then, it’s fascinating you talk about that chart earlier. But one of my favorite exercises that I did, and I actually did this when I was raising money because I was doing a pitch to angels and they were like, “Well isn’t the ATS really sensitive to the economy? What happens if we have a recession? And blah, blah, blah, blah.” And so I did this chart that overlayed the American Staffing Association’s Staffing Index with the Bureau of Labor and Statistics Employment Index.
And if you align the recessions all up, they trend super close, but staffing always has this overhang of like, let’s say a quarter. Where it’s totally fine. So it’s like a Wile E. Coyote moment. And then it crashes it. But what’s fascinating is what crashes. Direct might fall off a cliff as people aren’t doing hiring freeze, et cetera, but contract doesn’t dip as far. Because people are still on contract companies are shifting their focus — “Well, maybe we’re not going to go pay that big fee right now. Maybe we’re not going to hire someone, but we might do some contractors.” And so contract falls down too, but never gets as low as employment does. And then they all rebound actually in line with the economy. And so, I mean, I think it’s a trend that we’re going to be seeing coming up in the near future.
Folwell: Yeah. And when it comes to the recession, I mean, this is a hot topic for lots of staffing agencies. I feel like every conversation I have, people are talking about what’s going on with the economy right now, where things heading. With the State of Staffing, we did a poll survey last week and asked staffing firms what they’ve done with their 2022 projections, and if they’ve adjusted them upwards, downwards, or remained the same. And a week ago, as of a week ago, the staffing industry’s still really optimistic. Mostly, the majority had not adjusted or adjusted upwards for the year, despite the changes that we’re seeing. And I’m just curious what your kind of take is on where we’re at in terms of having a recession and also what you see the rest of the year looking like.
Elder: Like, okay. So a few thoughts. One, I forget who did it, but like while the music’s playing, you got to keep dancing. So definitely. And the music’s still playing in many industries. Tech might be doing some layoffs here and there, but like, I mean, you got to be dancing while the music’s playing. Two, I think our industry, it’s made of optimists. If you weren’t optimist in general what the heck are you doing trying to be starting your own staffing company. So absolutely. The second one, the funny thing about recessions is that, the metrics that are used to look at a recession, can’t really tell you if you’re in a recession until it’s already happened. And personally, I think we’re already in a recession. I think we probably entered one in Q2 of this year.
What’s going to happen next? I don’t know how deep it’s going to be. I don’t know how long it’s going to be. I don’t know. I do know there’s been a whole lot of capital brought into the market. That capital flowed through investment firms, et cetera, and the businesses that were chasing growth at sort of all costs. That growth required talent and people were hiring left, right, and center. And so it definitely felt a little frothy to me, especially when I hear about some of the comp packages and just sort of the crazy stories that I’m sure your listeners are familiar with. If it seemed too good to be true, or if it seemed unsustainable, that’s because it was and because it is. So there’ll be some sort of a reversion to the mean at some point in time.
Folwell: I saw a chart the other day. I don’t remember the exact stats on it, but it was on Reddit, I think. But it was showing, like dev salaries at some of the top software companies, and like, how much they’ve increased and seeing like, averages of like in the four hundreds for some roles and it was like just absolutely wild.
Elder: Well, I mean, if there’s too much money chasing too few people to go get too little growth. At some point in time, that’ll happen. I think, and this, we talked a little earlier. One of the dirty little secrets it’ll be interesting to see… So a little side hobby at mine is macroeconomics. And sort of trying to understand large systems, et cetera. And it’s interesting, so I forget who did the quote, but it was a quote, it was like, “A recession is when your neighbor loses their job. A depression is when you lose yours.” And I thought that was very, a similar way of thinking about inflation. Inflation’s high when a billionaire becomes a multi-billionaire, right? But inflation’s too high when random people start getting ridiculous salaries.
Now, I’m not saying I disagree with that. But like, that is, I think a sort of a dirty secret at the Fed where they’re like, “If Bezos becomes a trillionaire one time over, that’s not really going to push money into the overall economy and goose demand above supply.” Too many dollars chase too few goods. But when full employment leaks over and wages start going up materially, that is when the Fed internally starts to get worried. And that’s why we’re probably in the middle of a rate cycle hike right now. They are worried about that, which, it’s unfortunate. But we’re on the verge of another boom-bust cycle is how it feels.
Folwell: I’ve watched the investment that’s coming into the market from software providers to staffing firms over the last few years. I think “frothy” is the right term for it. One thing you mentioned there is you talked about the — I don’t know if you want to dive into this or not, this might be a touchy one — but if you believe in trickle-down economics. Because you just mentioned that making Bezos a trillionaire, isn’t going to help the economy. Do you have any thoughts around that, or if that’s an area you want to dig into.
Elder: I think my general thought on that is, I don’t know where to term trickle-down economics came from. And I don’t know if I’m even a big fan of it. What I am a fan of is a level playing field for people to experience entrepreneurship and to create their better life for themselves, a fair field for that. And that’s actually one of the reasons why I like this industry so much. Actually another reason why I don’t want to go straight upmarket and abandon the small market. When I say I want to be like the Salesforce of talent I want to be able to handle one-seat deals forever. And I also want to be able to handle 1,000-seat deals. And everybody in between.
So when COVID hit, business went off a cliff. It was amazing. And like zero. But then instant rebound, right, in July. And I think we probably onboarded maybe 200 customers that were brand new businesses that just got laid off. And how great is it that I can be a platform, I can provide enterprise-class software to anybody. I was a platform for people to go start their new business on. Entrepreneurs. And so I actually believe that entrepreneurship is really the more viable way of growing the pie than “trickle-down economics.” I don’t know if that makes sense.
Folwell: Absolutely. That does make sense. And one of the things that you and I also briefly talked about was some of the kind of recommendations that you have. And if we are entering the recession, just kind of different ways that staffing agencies could be thinking about how to approach it, what they should be doing to prepare, knowing that there might be a downturn. Or an inevitable one, if you think we’re already kind of already there and behind the eight ball a little bit.
Elder: I got a few thoughts. One, I think that you should be looking to take advantage of opportunities that this might bring to you. And let me just give you an example. When everyone and their brother is doing layoff consulting and offering layoff services and whatever, that’s when it’s already too late and we’re probably on a rebound. So start that now.
Start helping people who are getting laid off now. Be early on that. If direct is probably going to slow, except for niches and certain industries, et cetera, maybe boost up your contract game. Or find a way to be more flexible and more responsive to customers. You’re calling around, “Oh, we’re not hiring right now.” “Oh, that’s great. We don’t do direct placement anyway, we only do contract, whatever. Do you have any temporary things you need?” Or get ahead of it.
Because once everyone’s doing it, well, then you’re probably on the end of that cycle. So that’s in terms of sort of growing and surviving. Two, I think the next one would be if a slowdown comes and it is material to your business, use that as an opportunity to look at what you did, what worked, what systems worked, what people worked, what processes worked, what didn’t work, and reinvest for the next upswing. If your ATS wasn’t working for you, maybe look at another ATS, obviously. But just look at all your systems and tools. And I think depending on how bad things get or lean things get, people always sort of reevaluate their expenditures and where they’re at on that. So those were my two advices: get ahead of it and invest for the future.
Folwell: Yeah. And I think that makes complete sense, especially being, I think, adaptability in any recession. And we saw that with the… I mean, COVID was just hit a wall for a couple months with no action at all. And then one thing you’ve also mentioned just kind of repurposing the talent pipeline, which we’ve talked about a little bit here with that transferable velocity. But any other insights or thoughts around how to repurpose a talent pipeline or ways that staffing firms could be thinking about it, approaching that?
Elder: I think, maybe the first one, and I’ve talked to a few customers where they were having a hard time filling contract roles because no one wanted contract work. But as soon as there was even a little bit of softening, suddenly people were much more interested in contract work. Does that make sense? And so, not only do you… I mean, our customers got to be open to it, but that the talent has to be open to it. So I think there might be an opportunity there to have some conversations.
The second one would also be coaching both sides on what’s reasonable and where market is. I’ve heard from customers that people have come in with ridiculous expectations. They heard some story about that one person who got that one thing that one time, and they think that’s for them. And the recruiter has to sort of like coach them down a little bit and say that was them and et cetera.
So I think there’s an opportunity there. And then on the reskilling side, I think it depends on who we’re talking about. If we’re talking about staffing companies or we’re talking about direct placement firms. I don’t know if I have a great answer. I think there’s always an opportunity to look at individuals and try to see what you can do to help bridge the gap between them and the opportunity.
If you can make the story. I know a recruiter right now, who…there was a role, it’s kind of a hard role to fill, they got a bunch of candidates that — it’s one of these things where it’s like the role’s too hard to fill. And so they’re basically trying to show that these people can actually solve the majority of that pain point anyway. And can we like change the role a little bit to meet where this market’s at and then have them grow into it. Getting creative, I guess, was my answer.
Folwell: Yeah. No, that makes sense as well. And one thing, just a thought that came up while you were talking was that, and you mentioned this a little bit, but like focusing on the laid-off talent that’s happening right now from these major companies has to be a big opportunity as well for staffing firms. If they’re trying to fill other roles, it’s like, all right, as layoffs are happening, might be able to find people that actually fill some roles.
Elder: You might. Just quick thoughts. A lot of them probably got some pretty decent severance packages, so it’s probably not going to be a panacea. And also you and everybody else is thinking the same thing. There’s a website, I think it’s Layoffs.fyi. And they even have like email addresses.
Folwell: Oh really?
Elder: Yeah. It has the email addresses and names of these people. So definitely, I mean, reach out to them because they’re probably looking.
Folwell: I’ve seen a couple LinkedIn posts from staffing agency owners who have just like tagged the company that did the layoffs and said, “Hey, I know you might be going through a hard time, but don’t worry. We’ve got plenty of opportunity if you’re interested.” And just really going after directly. So not a super unique idea, but kind of fun to see people trying to help those people out and help them find a job.
Elder: It’s interesting too. For the candidates though, I think their expectations might change a little bit too, in that like, well, okay, you’re funded, but where are you burning? I’m talking the tech space now, particularly. But like, what’s your burn at? Because like the companies that are burning north of 50% ARR are getting pummeled. And if the growth is not there, the raises won’t be there. And these VCs that are sitting on big losses for those firms may not be anxious to put more money in. And so I think employees need to do a little more due diligence about where they want to land. Sure, you might go get that great opportunity and make a quick buck, but are you also going to be the first one on a chopping block when the time comes?
Folwell: Absolutely. I think that makes sense too. I mean, I’ve even heard that just in conversation I’ve had where it’s like, people are more wary of the burn rate and making sure that you have a sustainable business model in place already.
One area that I kind of wanted to dig in with you as well, is like, you’ve got a pretty amazing background with building Crelate, the Microsoft CRM. What are some of the challenges that you’ve experienced over the years or lessons learned that you’ve had while building your organization? A lot of entrepreneurs listen to this podcast and are trying to figure out how they can grow and scale their business. And it feels like you’ve figured some key things out, but if you could share a little insight on any of the challenges that you’ve had over the years or any of the key lessons learned.
Elder: I think my key lessons… Is this a part of your rapid-fire questions? I think one of my key lessons is that I wish I raised capital sooner. All my other businesses were bootstrapped. This one was the first where we raised capital. Raising capital is a forcing function. It forces you to come up with a business plan that’s viable enough for you to sell someone else on it. Ideally someone you don’t know, not a friend or your parents or whatever. It’s a super important forcing function. Is it actually a good idea? And if it is, you should be able to sell someone on it and they should be able to write you a check. Even if you don’t need the money or don’t want the money, you should try.
Folwell: I’ve never really thought about it that way as it kind of proves viability of your business. It’s people that know what works are willing to bet on you. You’ve probably got something worth moving forward on.
Elder: And it’s a way lower risk than I’m going to quit my job and go do it for three years. And spend all my savings and then figure out where I’m at.
Folwell: Yeah. I feel like so many people think entrepreneurship, it’s like, “Well, I’m going to pick this date, quit, and then start.” My approach to it has been start it now, on the side, get it to be viable, and quit once you’ve already rebuilt the revenue, or raise money.
Elder: Or raise money.
Folwell: And actually now, so you brought this up, but we are actually going to jump into the rapid-fire questions. So what advice do you wish you were given before entering the staffing industry, or in your case, maybe technology space?
Elder: Well, I think this was that one. It was like raise money sooner. We did a friends, family, founder, and fool round. And then we did an angel round and then we did a Series A. Try to raise money sooner. It’s a valuable forcing function. I also can tell you, if you want to go build an ATS, there’s a lot more work there than you might think.
Folwell: I can’t imagine the idea of building an ATS. I’m just like, there’s so many components and so many things to solve for. And then the number of use cases as well.
Next question is in the last five years, what new belief, behavior, or habit has most improved your life?
Elder: This probably relates to managing anxiety. I can be an anxious, high-stress person. I’m worried about macro issues all the time, et cetera. I like to focus on… I like to not sweat the small stuff and focus on the result that I’m trying to achieve down the road. And aligning people and everything else to go achieve that and not sweat the small stuff, if that makes sense.
Folwell: No, that’s great. And what is one of the best or most worthwhile investments you’ve ever made? Could be an investment of money, time, energy, et cetera.
Elder: It has to actually be Crelate. This was my biggest and… I mean, I’ve done some angel investing here and there. Crelate is by far my biggest investment. And I think so far it’s taken off.
Folwell: That’s awesome. I love that. What are the bad recommendations you hear in your profession or area of expertise?
Elder: I think anybody trying to sell you one thing that, “Oh, just do this one thing. Just find your…”
Folwell: “The silver bullet, the silver bullet.”
Elder: Yes, exactly. And I think the listeners are susceptible to this, or certainly hit with this the most, is that because starting a business is hard. Running your business is hard. And many times this is their first business doing it, their first time doing it. And when it’s getting hard and you’re in the dark corner and someone’s got like a flashlight, they’re like, “Hey, here’s the thing. Just find your niche. Just do this, just go to bed at 6:00 AM,” or whatever-
Folwell: “Get a morning routine, you’ll solve everything.”
Elder: Well, whatever it is, I don’t think there is one thing. So I think you need to look holistically at it because otherwise you’ll just be chasing the one thing over and over again.
Folwell: Completely agree on that. And I think, coming from a marketing background, that’s like one of the areas. Everybody’s like, “Oh, what’s the one marketing thing or one marketing tactic?” And it’s like there isn’t one. Ever.
Elder: There isn’t one.
Folwell: Yeah. And these 100 things, though, will be impactful.
Elder: Well, actually to that, I mean maybe if there is one thing in marketing, it’s the ability to fail quickly. Give yourself a platform to try a lot of things.
Folwell: Absolutely agree with that.
What is the book or books you’ve given most as a gift and why?
Elder: It’s two books. The one that I’ve given the most of is Factfulness. I’m not sure if you’re familiar with that book. It was like Bill Gates’ number one read. I gave it actually to all my employees in January of , right before COVID hit, because I was — again, because I had spent so much time thinking about macro stuff — I sort of sensed that there was this growing animosity towards the world in general. And this book is all about sort of a mindful approach to consuming news and data in a way that most people don’t do. So that’s the book I would recommend. And in the opening section there’s a quiz that you can take. If anyone wants to challenge themselves I got nine out of the 13 right. And if you’re a reader… So we’ll go from there.
Folwell: I’m marking that one down. And I feel like that’s maybe based off what you said that should just be like required reading for like every person in this country.
Elder: Yeah. I think Bill had said it was his number-one book he’s read, like ever. And I’m like Melinda said something very, very similar. The second book that I’ve given out a lot is it’s called Cynical Theories. It’s a pretty academic book. So it talks a lot about academia and sort of history of… It gave me a perspective on a number of macro things that are going on right now that I didn’t really have that perspective of. And so I think it’s a good way to understand things.
Folwell: Great recommendations. And how has a failure or apparent failure set you up for later success?
Elder: I don’t know. I think I’m absolutely okay with failure. Because I always ask this question of everyone I interview. What was your most embarrassing or biggest mistake? And the reason why I ask it is because all humans fail. All humans make mistakes. And if you don’t have a good answer, or a big one, a big whopper, it usually means that you never took a big enough risk or no one trusted you enough to take on a risk. And that’s very telling in and of itself. So I don’t know if this answers your question, but we fail all the time, we build features that weren’t quite right. We build things that just didn’t hit the mark, but we fail quickly. We…
Folwell: Learn from it.
Elder: We learn from it, and we move forward.
Folwell: Yeah. Oh that’s great. And last question I’ve got for you is what is an unusual habit or absurd thing that you love?
Elder: Probably roulette.
Folwell: Oh, I didn’t expect that. That was good.
Elder: I mean, I’m a data guy, I’m generally sort of… And roulette it’s got the worst odds in the casino, but it’s very exciting, et cetera.
Folwell: Yeah. No. So I mean the last question, if you had any comments for the audience, any closing comments to share?
Elder: Closing comment would be, and this is maybe some advice people can use, be aware of when you’re working in your business or you’re working on your business. The founders and staffing owners are constantly…you got 100 things coming into it all the time. And you can be just consumed by working in the business, the day job, and you’re never working on the business. You’re never, et cetera. And so in all my past companies, things didn’t get better until I said every hour over 40, I’m working on the business. My day job’s my day job. I got to do it. This is what I got to do to keep things moving forward. But every hour over 40, I’m working on the business. And then as you scale, you can work on the business more. But be conscious of when you’re working in versus on and if the ratio’s right for you.
Folwell: That’s such great advice. And I’ve actually just been introduced this year to Steven Covey’s Time Management Matrix, with like working on quadrant two. Have you heard of any of the…
Elder: I have not.
Folwell: It’s exactly what you’re talking about. And it’s basically like, identify what type of work you’re working on and then make sure that like quadrant two is where…it’s the important, but not urgent work that doesn’t get done. So it’s basically the… It is exactly what you’re talking about. It’s like, work on the business, things that are going to build it to scale. And it is so easy to get wrapped up in the day-to-day and not spend the time on doing the things that you’re going to have to do eventually to move to the next level.
Elder: You won’t even realize when you’re doing it until it’s been a few months, you got to bring yourself back. Was the name of the book again?
Folwell: Steven Covey’s Time Management Matrix. I don’t know what book it comes from. I’ve just got the Google chart.
Elder: Oh, got it.
Folwell: But it’s exactly what you’re talking about. It’s great advice. Aaron, it was really nice having you on today. Very much enjoyed the conversation and thank you so much. Hope you have a good one.
Elder: Thanks for having me.