By: Alejandro Cremades
Arabic version here.
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Ian Siegel has worked with a string of startups that have gone public, sold for hundreds of millions and raised millions in capital. As they say, a smart person learns from their own mistakes, a wise person learns from others, so they don’t have to make them.
Siegel recently appeared on the DealMakers Podcast, where he streamed us his scoop on how to position yourself to raise a record-breaking amount of capital, the most valuable qualities of successful entrepreneurs as well as startup team members, and many more topics.
The Accidental Tech Entrepreneur
This founder certainly took a non-traditional path into technology. Growing up in LA, literally on the mountain where that big Hollywood sign resides, Ian originally thought he wanted to write movies.
After college, he went to work for a production studio on Warner Bros’ lot. In less than a year he learned to hate Hollywood so much that he took the first job he could get, which happened to be at Warner Bros online.
Ian says “Storytelling is a key capability for startups who want to succeed. It's how to allow others to see something the way you see it and become excited about it or get infected with your enthusiasm for it.”
From there he kept bouncing forward from one tech gig to the next. He was also approached by a recruiter to interview for a VP position at Facebook but he declined. During his time at Ticketmaster, Siegel went from the most junior person in the office to doing the same work as the most senior. Only he was still on a junior salary. He packed up and went to look for another job.
He then went on to work for CitySearch where he was one of the early employees. The company just couldn’t keep a CTO. At 22 he was thrust into the leadership position and was suddenly managing a team of 40 much more experienced engineers.
Not knowing what to do, he just started asking the team that worked for him every day. Pretty soon they told him he was the best technology leader they ever had. Because he listened.
Most people listen to talk. Ian says “What I really practiced from a very early point was fully digesting what the person across from me was saying before I fully formulated a response to what they were saying.”
In this regard, he recommends practicing the two-second rule. Which is to wait two seconds when someone finishes speaking before you respond. Not only will it make you seem more thoughtful, but it will force you to be more thoughtful.
As a result, you will have the chance to fully process whatever it is that they say to you.
Appreciation And Picking One Thing to be the Best at
At Stamps.com, his next job, for a solid four months nobody left the office, seven days a week. No holidays, no breaks. They had to provide some perks. They gave money, laundry service, meals, and more. Then they gave everyone a TiVo. It was a huge hit and taken as a very thoughtful gift.
By this point, Ian had worked at several companies, two which went IPO, and the third which sold for $435 million to eBay.
There was a fundamental truth at these startups, which is every one of these businesses only sold one thing. No matter how many things they said they sold, they were really only capable of getting famous for one thing.
Even Google is only really famous for search. Despite the fact they actually dominate so many other industries. From his perspective, entrepreneurs should find one sentence differentiation.
ZipRecruiter and The Importance Behind Testing
If you’re not really sure if your business idea is going to work, test it. Now a leading online employment marketplace, ZipRecruiter started as a side project.
With Joe Edmonds, Ward Poulos, and Willis Redd as cofounders, the first day they launched they put $50 into Google Adwords, and got 12 customers for that $50. Ian quit his job and went all in.
They started the business without any outside financing, working out of his house at his kitchen table. They bootstrapped the business for the first four and a half years.
Eventually, ZipRecruiter’s business model matured into an online employment marketplace, which uses AI-driven matching technology to connect millions of job seekers with businesses of all sizes - through mobile, web, and email services.
They were literally doing north of $50 million in revenue before raising the first round, a $63 million Series A led by IVP, which was the record for LA at the time.
In 2018, ZipRecruiter closed its Series B round, bringing their total raised to over $200 million. While many find fundraising hard, Siegel says the position they were in, having not taken in any money and having great revenues gave them a great edge when they did accept investors.
Storytelling is everything in fundraising and ZipRecruiter was able to master this. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Downside of Fundraising
It’s hard to keep a big raise quiet. The week after ZipRecruiter was in the LA Times, TechCrunch and bunch of other newspapers. Ian says he faced the worst time of his career.
They went from having a network of long-standing deals lined up with vendors thanks to their volume, to everyone wanting to increase costs on them overnight, and even blocking them as the competition.
It forced the company to make a massive investment in its matching technology and get a whole lot better at doing everything on their own.
Today, they have over 200 engineers that work at the company. Over 50 in an R&D Center in Israel where they are doing some of the most advanced algorithmic work in the world.
Listen in to the full podcast episode to find out more, including:
Having leverage towards investors
Building a business without outside financing
Ways to recruit top tier employees
The benefits of going after 80% of the market that your competition is ignoring
How AI and machine learning are improving recruiting for employers by 300%
The questions Ian asks when recruiting
The future of robots in recruiting
How sunk costs make or break entrepreneurs