Founder Coffee episode 039
I’m Jeroen from Salesflare and this is Founder Coffee.
Every few weeks I have coffee with a different founder. We discuss life, passions, learnings, … in an intimate talk, getting to know the person behind the company.
For this thirty-ninth episode, I talked to Max Armbruster, Founder and CEO of Talkpush, a recruitment automation platform that leverages chat interfaces for recruitment.
After stints at companies like CNET, Altran, ATKearney and SAP, Max started Talkpush based on in-house software he built in a previous business to streamline their recruitment process.
Despite being a US national with German origins, he leads his company from Hong Kong with half of his company being based in Latin America. And he sells his software worldwide.
We talk about whether it makes sense to combine software with services, how the big internet giants get rich, and how to build great processes and have effective meetings.
Welcome to Founder Coffee.
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Jeroen:
Hi Max, it's great to have you on Founder Coffee.
Max:
Thank you, good morning from Hong Kong.
Jeroen:
Good morning from Belgium. You're the Founder of Talkpush. For those who don't know what you guys do, yet, what do you do?
Max:
Talkpush is a recruitment software and we are working on automation and we use chat bots to automate the engagement with candidates at scale. What does that mean? It means we're handling millions of conversations with job seekers all over the world for some of the largest employers in the world. Companies like Walmart and McDonald's or Accenture. We're connecting with those millions of candidates using messaging interfaces, conversational AI over platforms like WhatsApp and Messenger in order to make recruiting go faster.
Jeroen:
Okay, so you're working for enterprises to streamline their recruitment flow by using chat, by conversations, right?
Max:
That's right, and the vast majority of those conversations are fully automated, fully AI. But still some human touch points as parts of the journey is assisted and parts of the journey is unassisted.
Jeroen:
Yeah, so I'm imagining that the companies you're working for have huge flows going on of people recruiting and they want to partly take away things that are too manual. Then the thing you offer is something that merges the automated part, which I'm assuming replaces forms with the more human part, which is the usual but then more through chats. Is that sort of what it is?
Max:
Yeah, I could say that I'm not opposed to forms as a user experience. I think that there's some benefits to forms over chat, over conversations, including the fact that when you fill out a form it feels a little bit more official. But generally, yeah we're moving more towards these dynamic experiences, Typeform-like interfaces, where it feels more like a conversation and yeah, we're part of that. The thing that's driving us is really a change in behavior, consumer behavior. When companies realize that they're going to attract better talent if they have an interface that talks to them the same way they talk with consumers, it gives them an edge on the recruiting front and so then it carries the business, helps everybody. The foundation is really a change in behavior and habits from the consumers, which has not really been taken into consideration by the leading software vendors.
Jeroen:
Is that the sales story you go with to an enterprise or is there not a specific platform that you're focusing on?
Max:
The angle that I was describing just now talking about the changing consumer behavior, that works well with enterprise if they have a very recognizable name and their brand is their most precious asset. For companies where the search for talent is a little bit more proactive where they have to go and search for the talent rather than the talent coming to them, where it's more outbound than inbound in the sales lingo, then the focus shifts from brand a little bit more towards productivity and building the value from a recruiter productivity standpoint. What is the number of hires you do per recruiter, your time to hire, and so on. Those are the two big angles to work with.
Jeroen:
Got it. So it's the productivity angle and making sure that you can screen more candidates with lesser resources, better, right?
Max:
Yeah. Candidate side. Recruiter side. Absolutely.
Jeroen:
Okay.
Max:
Then of course if you want to get ambitious on the sales side you could talk about the loss in revenue when you have a slow time to fill a position and about the lack of reactivity to the business needs and what it means for the rest of the business. For example, in a retail environment, I know that's not a hot segment right now, but retail will come back and every week that goes by when you don't fill a position you're going to lose revenue. You still have to pay rent, you still have to pay storage, but you're not selling as fast and as efficiently as you could. A really good salesperson will figure out a way to tie the business outcomes to recruitment, but it's not an easy thing to do because often talent acquisition is seen as a support function and they don't have their finger on the pulse of the business.
Jeroen:
Yeah, but it seems what we've been discussing, based on your website, is just a part of the story because you're also making sure that with the integration with ads you can pull candidates towards the interfaces you're building and then behind that you have another system in which you can then also organize the leads you get in, so to speak, right?
Max:
Yeah, you have different levels of leads. Somebody who goes to your website, somebody who applies for a job, somebody who goes to an assessment, somebody who does an interview. At each stage of the funnel you need to track the cost per lead, and we try through automation to minimize the cost per lead at each stage.
Jeroen:
Yeah, what strikes me often when I think about recruitment agencies being the ones you have on every street corner or the more headhunter types, is that these companies are so little digitized and organized. If you would go to the typical recruitment agency on the corner that recruits operators and people for administrative jobs and all those kinds of things, then they're often operating at local state of cares as far as I'm concerned, where there's no proper system in place to remember who they have to call about what and which candidates they saw and all that.
Max:
You imagine the data that you have to work with. I mean it's people and people can not be really relied on to give very good data often. It's so hard when you're interviewing people for your own business to figure out what is true from what isn't and to give an assessment. It's an extremely broken and diversified space. The systems of record, which are called the applicant tracking software, as well as the assessment platforms that score the candidates, as well as the sourcing and marketing platforms, the job boards and marketplaces. It is as fragmented as it comes because it's so complicated and so diversified. There's a little bit of consolidation that's happening in the world of marketplaces and the big databases are becoming bigger where you have four big players that monopolize the space. One of them is Microsoft and LinkedIn. Another one is Facebook and Facebook Jobs, which is a marketplace for entry level blue collar at the moment and SMB, but expanding into new areas.
Max:
The big job board called Indeed, and I'm forgetting one. I guess Google. Google has moved into the job space by building a Google cloud talent solution, which lists jobs from all the different recruitment software vendors and lists them for free on Google.
Jeroen:
Crazy.
Max:
So if you search for 'engineering position in Brussels', the first thing you'll see is a Google result and coming from Google delivered to you for free. No ad revenue linked to that, no ad revenue linked to Facebook jobs either at the moment. Those mega players are moving in and maybe that will drive more automation, more technology because there's less diversity I guess.
Jeroen:
Yeah, fully understood. Actually it's very funny, it's like you and I are operating in parallel spaces where we're doing for sales what you're doing for recruitment trying to automate a lot of the data, validate it, make sure that it's all organized, provide interfaces to connect with people. The things that you're saying about these big players moving in and being the platforms from which you source data is I think true across industries. It's funny how they position themselves in just about every market in an efficient way.
Max:
I was reflecting on the fact that my biggest supplier and where I spent the most dollars four years ago was Facebook. It was mostly ad revenue and I managed to slowly wean myself off that. Now I look at my biggest expenses, I just paid the bill for LinkedIn sales navigator. Then my other big expenses are Amazon and Google actually. I got Google Cloud API, and I'm like, "Okay great," so I managed to get off phase one and now I've got three big ones. I got three big vendors, so I got three out of the big four that I'm still spending a lot of money on. Yeah, it is a very concentrated world.
Jeroen:
True.
Max:
It's the reality. There's nothing we can do about, we have to live with it. Maybe against our entrepreneurial ideals but that's the world we live in.
Jeroen:
Yeah, all these companies have moved into a platform mode in which they provide us all the tools to work with, to build our businesses, but in the end they are the ones who make all the big money.
Max:
Yeah, should we cry now?
Jeroen:
No.
Max:
Shed a tear?
Jeroen:
Let's go back to your story and how you guys started. Because it seems like an awesome thing to work on, but I'm wondering where the spark came from for this whole thing. You mentioned to me before the call that you started on this about five and a half years ago, sort of similar to us actually. When did you think we should have a better system for this and what were you working on and how did all this happen?
Max:
Well I started as a practitioner so I was hiring for my team internally in a previous company that I founded, co-founded and was frustrated with the repetitive nature of recruitment and purchased a third party software. Then realized that we could build something as good ourselves and we built our own version of that software. Then we started selling it, and so I became a software entrepreneur a little bit by accident where initially I built something for our own internal use, then I started selling it, and then I started realizing it's so much better to work in software than to work in services because you have the recurring nature of the revenue.
Max:
That was my education, but Talkpush is a company that I founded alone, built on top of my experience of course from the past, and realizing that, as I said, that available technology did not adapt to the consumer needs. You are making a parallel between our businesses, usually recruitment and talent acquisition is a few years behind sales and marketing. Sales and marketing have big money and they get a lot of the innovation dollar. If you look at the history of recruitment software it's usually three, four years behind the sales and marketing innovation. Doesn't take a genius, you have to follow what the guys in sales and marketing do and apply it in a recruitment context. It's a smaller industry with less innovation dollars, but on the positive side you're helping people get work and that gives us a little bit more purpose than simply empowering a sales team. We like the fact that we do recruitments and we help put food on the table.
Jeroen:
Yeah, cool. Let me get back for a moment to where you said that you figured that software is nicer than services and you said it brings recurring revenue. There's an interesting podcast with Neil Patel, Mixergy, where he actually says the opposite thing. He says, "Software's glory moments have passed because everybody can build software now using all the services," like you said before, the big ones. There are companies everywhere that try to out price the other ones and he says where you can make the big money is actually not in software itself, but it's in delivering services and automating your own services with software. How do you think about that? Is that something you're thinking of or is it a pure software business you're looking at?
Max:
Yeah, we are thinking about that. It's a matter of whether you're willing to make that jump because if you make that jump then some of your customers become your competitors.
Jeroen:
True.
Max:
It's a big bold move, and the other problem when you move to service is if you build a really good service organization they're going to cover for your failures as a software company. If they really know how to work around problems that means that the problems will never get to the R&D stage and engineering will miss them. I think it's a very difficult move to make, very tempting because there's definitely more money to be made and so you can get a revenue lift from moving into service and in our space we could say, "Don't pay us for the software, pay us for the number of hires." Many platforms have made that gamble. I haven't seen one that's managed that gamble with great outcomes. I mean some companies do okay.
Jeroen:
If you take the model where you know how there's accounting software - like new accounting software that promises that it does everything automatically. They often have a team that if you don't want to do something with the software, you can get a dedicated accountant that they have in their center that will take everything out of your hands.
Max:
Are you planning to do something like that for your customers or it's not applicable?
Jeroen:
Not right now but it's something I sometimes think about. Could be cool.
Max:
I think maybe the best way to start this, and I'm meandering now, just wandering, but is to create a certification program where you enable somebody to become a super user and give them a diploma, a degree of some sort and then you say, "Okay, we're going to bring you business," and hopefully that catches on fire. Something like that.
Jeroen:
Yeah, that makes sense. You offer a partner program with solution partners or something.
Max:
I'm trying to emulate UIpath, the RPA leader in that sense. They've done a very good job of training their users and then building the ecosystem that way. I used to work at SAP. SAP also has invested a lot in creating SAP consultants and creating a whole ecosystem that works on SAP. I don't know when you flip that switch. Right now we're so focused on making the software work better that it's hard to imagine building that whole organization on top of things.
Jeroen:
On that point you mentioned as your second reason not to do it that if you use the software internally you are more likely to cover up for bugs. My experience is actually that if you use the software internally that you see the bugs before the customers see them. But that's not really a question, rather a statement I guess.
Max:
No, no you're right. It's just that I've seen a number of companies. In recruitment you almost have to be with your team physically on site to make sure that the hires are recorded properly. It's very difficult. You need an exclusive partnership where you become the recruitment process outsourcing partner and you handle all their hiring so there's complete exclusivity. Otherwise it's hard to track the outcomes and it becomes an expensive endeavor if you don't track them properly. Anyway, I don't know how to make the switch but I'm interested.
Jeroen:
Yeah. For sure. Do you have any plans to also integrate things like video interviews within the software or is that already in there?
Max:
It's already in there. The great thing about working with Messenger and WhatsApp is that you can capture voice, video, animated gifs, whatever. We have these things that make the two way communication richer and more fun. If you give a hiring manager the choice between 'you can spend 30 seconds reading this resume' or 'you can spend 30 seconds listening to this candidate answer a question about who they are', obviously they're going to pick the video because you can tell so much more from someone, especially for jobs that are not extremely technical, but jobs that are more about empathy and communication skills. The video is going to be the go to method, and so actually most of the hiring that happens on our platform happens without a resume.
Jeroen:
Yep, and is that synchronous video communication like recorders or are there also live calls going on?
Max:
We support both actually, but mostly asynchronous.
Jeroen:
Yeah, so you mentioned, if I understood it well, you worked at SAP, you had a recruitment business, and then you went into this software business. Is that a good summary?
Max:
Yeah, that's all part of my background. I've been self-employed most of my adult life by now.
Jeroen:
Including the part at SAP or after that?
Max:
Part at SAP I was definitely getting paid.
Jeroen:
Yeah.
Max:
There's no other way for me to have served my time there.
Jeroen:
Have you always felt like you wanted to have your own business or was there some switch moment or it just grew on you?
Max:
I always wanted to live the entrepreneurial life dream. I even majored in entrepreneurship when I went to business school. I started quite early and I had a bit of a FOMO for the big tech company, and the opportunity to work at SAP, when I came in seemed overwhelming. A great opportunity to work with great talents that have great resumes working in beautiful offices and signing very large contracts. I maybe overestimated the level of the quality of the work that you do in a large company. I guess everybody's very smart and well dressed. You feel like you're working with very competent people and these companies do take care of their employees. Obviously you also feel very disconnected from reality because sometimes there's 20, 30, 40 people who are working on one deal, to close one deal, and everybody's going to take credit for it but in the end a lot of the purchases is based on brands. In fact maybe none of those 30 people had anything to do with it.
Max:
It's hard to feel connected to the results and the outcome when you're a part of an organization with so many employees. I found it hard to stay motivated in this environment. Now I don't have the choice, it's great. I don't have to ask myself if I'm motivated. I get up and go.
Jeroen:
Yeah, I see you've done this for two years and four months. That's already quite an accomplishment I would say.
Max:
Thank you. I made a lot of good friends there and I learned a lot. I learned a lot of the psychology of sales and how to work with group decision buyers.
Jeroen:
Yeah. Talking about getting up in the morning and having to be motivated. What keeps you up at night lately?
Max:
Well lately I would say it's been quite a lot of change for our sales cycle with the current pandemic. I guess when you're an entrepreneur you like to be in control, you want to be in control of your destiny and of your finance, of your payroll. In a rapidly changing world you lose a little bit of your control. As your company grows hopefully you also lose a little bit of your control, you rescind it and give it to others, others that are better qualified than you.
Jeroen:
Yeah.
Max:
I guess that's keeping me up a little bit at night. All the changes that are happening. But nothing out of the ordinary.
Jeroen:
Where do you see the most impact on your SaaS business? I'm assuming it's on new revenue and not so much on churn like customers going away?
Max:
Yeah, you're assuming correctly. Everyone's trying to get an edge and whether they're big or small, companies will ask for exceptionally favorable credit terms and so it's hard to count on anything in these conditions because payments get delayed, even when they were already committed. Things like that. It makes it harder to manage, harder to plan, but I know we're going to get through it and I think the adversity will bring us closer together as a team and so I look at it as a glass half full.
Jeroen:
Yeah. What is it that you spend most of your time on now? Work wise.
Max:
I'm a big fan of Andy Grove's High Output Management, a book where he helps CEOs and entrepreneurs with things like running good one on one meetings and setting targets and talks about the importance of doing meetings. I'm also a big fan of Jason Fried and the Rework book where they talk about how meetings are completely useless and you should get rid of them. I'm always going between these two books to try to figure out what's right for me. I think I spend a fair amount of time doing meetings and it takes a lot of energy out of me, but I think it's a worthwhile investment. I wouldn't do it otherwise. Especially having the team, 90% of the team is not in the same country as me, so I figured I need to invest as much time or more time than the average business owner because I'm far from them. A lot of meetings, a lot of one on ones, setting new targets on a regular basis, communicating a lot. That takes time and energy no doubt.
Jeroen:
As you've been thinking so much about no meetings, doing meetings, how do you make sure that these meetings are worth it, your time is well spent and that they're effective?
Max:
Well best practice is to ask people to come ready with an agenda and then to summarize what the next steps are in writing. Sometimes I am the meeting police where if I see a meeting has been booked with 20 people when we only need five, I'll go talk to the meeting organizer and I'll say, "15 people, one hour salary. Do you really want to spend $1,000 getting this message out or can this be done by email?" Something like that. I do a little bit of that. I don't have any other nuggets of wisdom.
Jeroen:
So it's meeting agendas, next steps, and limiting the amount of people in a meeting.
Max:
Yeah, reduce as much as we can the number of participants.
Jeroen:
What is the typical amount of participants you would get into a meeting? It's something we are experimenting ourselves with now at Salesflare for some of the meetings because sometimes we feel like we're five in a meeting, but actually I mean it's nice to have all five involved, but we feel that we could also do it with three and then the two others give comments to the document, to all the things we discussed.
Max:
Yeah, I haven't gone to that level quite. I'm always worried about having 10 people on a call or more because I feel like they're going to switch off mentally. If you don't participate in a conversation then it's only natural to drift away. We're not paying people to drift away.
Jeroen:
Exactly.
Max:
Yeah, I guess smaller than 10 is best, but we also do the company town hall. Company town hall is almost not a meeting, it's basically me presenting most of the time. It could be completely asynchronous and recorded, but we make it a point to do it at least once a month to make it feel like we're all in there together. Feel like one hour in the month is for everybody to be stuck together in one virtual room. It is reasonable.
Jeroen:
Yep. To your point on people who are not involved or drifting off, what we found is that this starts happening if you go more than three people. Because it's usually three people carrying the discussion, and if you get in with five then mostly two of them are almost doing nothing.
Max:
Yeah.
Jeroen:
That's why we try to limit it now. Town hall totally makes sense.
Max:
What do you think about the ideal span of control, the number of direct reports per manager?
Jeroen:
We are a very small company. We're just seven people so it's not really an issue for us.
Max:
Not a problem.
Jeroen:
I haven't done a lot of thinking about that.
Max:
Yeah. Well the literature says the ideal number is eight, seven or eight because then you have the most leverage, but also you can still give people time and attention. To your point, maybe it would be better if it was a little bit smaller because if you do a meeting with eight or nine people it's true, you might lose them. I don't know.
Jeroen:
Yeah, you probably lose most of them. So how does your day look like? What do you spend a lot of time on? Do you structure it in a certain way?
Max:
Yeah, my Mondays and Tuesdays is when I do all my one on one meetings so I get it out of the way and then I can have the second half of the week to be a little bit more free with initiatives that I want to work on. That could be product or sales oriented or fundraising, whatever the day calls for. I am based in Hong Kong but with half of the team in Latin America, we're 12 to 14 hours apart, so I have to factor that in. I wake up very early, around 5:00 in the morning, and by 5:30 or 6:00 I usually have conversations with Latin America. That takes me until 8:00-8:30. Then I have breakfast and then I can start my day after that. I have two days. One day where I'm talking to Latin America before breakfast, then I have breakfast, and then I have my Asian day. Then after that I'll do some sports in the evening. I start early but I usually fizzle out by 6:00 pm. I'm useless and then I have to have dinner or go do some sports or something like that.
Jeroen:
Yeah, cool. You talked about Latin America. You're not active in North America?
Max:
Not so much. We focus more on emerging markets.
Jeroen:
Okay. What do you do outside doing sports in the evening? Is that where most of your time goes?
Max:
Yeah, I do sports. My wife keeps a social agenda and I look for good science fiction shows on Netflix.
Jeroen:
What's the latest science fiction show you watched?
Max:
Well the best thing in the world is Rick and Morty and the new episode just came out two days ago.
Jeroen:
Have you seen Dark?
Max:
Nope.
Jeroen:
No? Okay, your name is German but I don't think you have any German roots, right?
Max:
Well my name is German so yeah, the roots are German. I'm not but I'll go check out Dark.
Jeroen:
Dark is a German series and it's really good. It's about time traveling and a little time in Germany. But let’s not expand on it in the podcast.
Max:
My great-grandfather was German. He traveled across the Atlantic Ocean at the age of 13 in 1863. He became a pastor, a Baptist pastor and he worked across the US and then he had four kids and raised an American family.
Max:
It's so crazy to think that just four generations ago people would live lives completely different from ours. They didn't have electricity. I mean it's crazy. It's fun to read about your ancestry.
Jeroen:
Yeah, have you been doing that?
Max:
Well yeah, I have been recently. Since you're mentioning my name and it connects me to that history. It's fun times.
Max:
I guess under Donald Trump it's nice to feel a little bit less American.
Jeroen:
I know what you mean. I'm actually born in the US as well so I identify with the whole thing. I could see myself if I were in the US getting slightly depressed.
Max:
Yeah, we're stuck at home now so it's been more depressing.
Jeroen:
I think it's less depressing.
Max:
Yeah.
Jeroen:
We'll talk about reading. What's the latest good book you've read and why did you choose to read it?
Max:
Well let me see if I have some good ones, some nuggets. I mean right now I'm reading the old classic 1984 by George Orwell. My recommended readings for my newcomers, people who come to work for Talkpush are Behind the Cloud, the Story of Salesforce, the book I just mentioned by Andy Grove, High Output Management, Rework, those are the go to's.
Jeroen:
What was the last one?
Max:
Rework.
Jeroen:
Rework from Jason Fried.
Max:
Jason Fried, yeah.
Jeroen:
Yeah, cool. What are the things you've learned from High Output Management and Rework combined?
Max:
They're opposite sides of the spectrum. High Output Management makes you realize that anything you hated about management and structure and organization, you hated for the wrong reason and that you have to embrace it because it's the only way to get people to work well together. If you're a little bit of an anarchist this is a good read because it will connect you with why you have to be a good manager and why you have to overcome your weaknesses in this domain. Rework - it's a great book by very independent thinkers full of good tips on how to be productive but stay in control of your life. Not accept the tyranny of useless meetings and of pointless conversation and to be more output driven so you can be in control of your life.
Jeroen:
Got it. Final question, what's the best piece of advice you ever got? I know it's a difficult one.
Max:
Yeah, I'm not prepared for this one. I don't have a very good memory.
Jeroen:
What's the first thing that comes up in your mind?
Max:
Best piece of advice. You should raise more money.
Jeroen:
Raise more money?
Max:
Yeah.
Jeroen:
Before you go into COVID crisis?
Max:
Yeah, it's like every investor, every shareholder I ever met they've always told me the same thing. You should raise more money. Yeah, okay I should also sell more products, right? Yeah, but I mean generally speaking it is the rule of capitalism that a good CEO, a good business owner is going to be good at convincing others to give you capital because you need capital to get things done. The underlying message behind you should raise more money is you should be good at your job. You should be good enough at your job to convince people that this is a huge opportunity. If you're not good enough at doing that you're not going to get that far. Yeah, beyond the obvious statement of 'more money the better', I think there's an underlying message here that especially as Europeans we have to learn how to do a show and tell as good as the Americans and go for the big bucks.
Jeroen:
Understood. Thank you again Max for being on Founder Coffee. It was really great to have you.
Max:
Thanks Jeroen. All the best at Founder Coffee and looking forward to listening to the upcoming episodes.
Jeroen:
Thank you.
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