Founder

 Ins+tute  Sea/le  
Startup  Research-­‐  Suppor+ng  Your  Idea  with  Facts  
Jeffrey  Seely      4.25.11  

1  
Startup  Research-­‐  thoughts  on  suppor+ng  your  idea  with  facts  

Assignment:  
“take  a  fresh  look  at  how  research  helped  
shape  your  product,  direct  strategy  and  
drive  growth  in  your  companies”      

•  You  have  an  idea  or  have  already  built  a  

product  

•  What  role  does  research  play  at  this  point  

in  guiding  your  next  steps?  

•  What  about  ongoing  research?  

•  Address  this  from  my  experience  with  
several  different  companies  and  brands  

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Basics:  the  pillars  of  market  and  product  research  

•  The  market  you  intend  to  serve  

–  Define  it  
–  Size  it  
–  Who  will  be  the  compeMtors?  
–  What  are  the  trends  and  forecasts  
–  Where  does  your  idea  fit  in?  
•  The  customer  you  want  to  capture  
–  Demographics  
–  ANtudes  and  desires  
–  Where  to  find  her/him  
–  How  to  engage  her/him  

Most  importantly-­‐  
 What  problem  are  we  trying  to  solve?  
     What  needs  of  theirs  are  not  being  met?  
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ShareBuilder:  how  we  decided  to  posi+on  the  product  

Evaluation Criteria

TARGET
COMPETITION CUSTOMERS
  Savings-­‐like  investment  product  
  Web-­‐based,  all  online  
  Recurring  revenue  model  
SWEET
SPOT   SMcky  /  accumulated  value  
  AUracMve  customer  acquisiMon  costs  
  Addressable  market  

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And,  how  we  improved  odds  of  success  

Target a Specific Customer Segment

TARGET
COMPETITION CUSTOMERS
  Early  stage  investors,  lower  net  worth  
  Ignored  by  Schwab,  Merrill,  etc.  
SWEET   Simple,  easy  to  use  product  
SPOT!   Lower  value  per  customer,  but  more  
of  them!  

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Defining  the  target  customer-­‐  another  perspec+ve  
U.S. Distribution of Wealth: Household Net Worth

Middle  
Income,  Early  
Stage  or  
Beginner  
Investors  

Lowest 25% Highest 10%

Market  Posi+oning-­‐  “go  where  they  ain’t”  
Industry Standard- Focus on the Wealthy

Lowest 25% Highest 10%

How  we  validated  our  customer  targe+ng  

•  Research:  
–  Carefully  analyzed  compeMMve  offerings,    
–  Studied  Federal  staMsMcs  on  personal  savings,  
–  AUended  investment  conferences,  
–  Spoke  with  Wall  Street  research  analysts,  
–  Assembled  focus  groups  and  did  mulMple  surveys,  
–  And,  got  to  know  the  sector  media  personaliMes-­‐  

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We  determined  who  our  customer  was  

•  Profile  of  ShareBuilder’s  target  customer  

–  Age  group  25-­‐40  
–  Equal  distribuMon  of  women  (vs.  industry  predominantly  male  %)  
–  Mostly  college-­‐educated  
–  Own  their  first  home,  or  soon  planning  to  
–  LiUle  invesMng  experience  (usually  company  401k)  
–  Online,  of  course  

•  Investment  characterisMcs  
–  Account  sizes  were  <$5,000  
–  Monthly  investment  amounts  about  $200  
–  For  over  50%  this  was  their  first  investment  account  

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Research:  We  made  it  an  ongoing  priority  

•  Hired  a  full  Mme  customer  research  professional  

–  “The  Professor”  ran  a  constant  process  of  studying  investor  behavior  
•  Usability  tesMng  was  a  regular  discipline  
–  We  built  an  in-­‐house  facility  to  constantly  test  new  designs  
•  Formed  a  customer  advisory  council  
–  InteresMng,  but  didn’t  really  work.    We  abandoned  it.  
•  Regular  schedule  of  focus  group  meeMngs  
–  Otherwise  very  difficult  to  “stay  in  touch”  with  the  consumer  
•  Listen  to  customers  
–  ExecuMves  were  required  to  spend  Mme  each  month  in  customer  care  
department,  parMcipaMng  in  calls  
•  Net  Promoter  Score  
–  NPS  became  one  of  our  key  metrics,  another  way  to  measure  customer  
happiness  

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Complexi+es  of  customer  behavior  and  economics  

•  The  best  intenMons  someMmes  don’t  follow  through  

–  American  investors  lack  discipline,  tend  not  to  sMck  with  a  plan  to  save  
–  About  55%  of  new  accounts  actually  put  money  in  to  invest  
–  Less  than  half  of  the  monthly  invesMng  plans  kept  going  aler  1  year  

•  Metrics  Driven:  Unit  level  economics  sMll  were  successful  

–  CAC  (customer  acquisiMon  cost)  was  closely  managed  against  actual  revenues  
–  Payback  on  CAC  was  <  1  year  
–  LifeMme  value  per  customer  (LTV)  was  measured  by  channel  and  by  
demographic  cohort  
–  LTV  substanMally  exceeded  CAC  

Research and measurement drove ShareBuilder to be profitable,

sustainable and a unique player in the online investing space.

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ShiOing  gears-­‐  Jobster  and  Recrui+ng.com  

Assignment:  
“restart  a  startup  that  had  been  dealing  with  complex  customer  and  product  
issues,  solve  operaMonal  problems  and  reposiMon  the  company”      

The  process  we  took  to  re-­‐invent  the  company:  

Basically,  had  to  take  the  same  approach  when  starMng  ShareBuilder  to  assess  the  
changed  market,  do  basic  research,  and  figure  out  which  way  to  take  the  
product  and  the  business.  

     

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We  did  an  assessment  of  the  sector  

•  Short-­‐term:  we  are  selling  hiring  tools  in  the  middle  of  a  hiring  freeze  

•  Long-­‐Term:  The  global  war  for  talent  is  an  inevitable  reality  and  there  may  
be  opportunity    

•  The  US  HCM  solware  market  grew  13%  in  2007  to  $7.2  B,  then  hit  a  wall  
•  Forecast  was  CAGR  of  10-­‐12%,  growing  to  $10.6B  to  $12.8B  by  2012      
•  Job  board  spending  increased  to  $11B  in  2008,  but  cratered  in  2009  

•  Crowded:  compeMMon  is  concentrated  in  Medium/Large–business  segment  

•  Confusing:  consolidaMon  inevitable;  product  definiMons  fluid  and  blurring    
•  Changing:  landscape  will  remain  dynamic  -­‐  alliances  shiling  constantly  
•  End-­‐to-­‐end  soluMons  and  integrated  HRM  suites  are  growing  in  popularity  
•  SaaS  delivery  model  is  gaining  tracMon  and  momentum  

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 Timeline:  research  process  for  new  product  strategy  

Job  Tech  Trade  

Show   Work  session  
Begin  Current   report  out  
V2  Demo  
Customer  Research   Board  Presenta+on  
November  18  
Prospect  
Research  /
User  Training  &  
Chicago  
Support  Demo  
Preliminary  
RetenMon  &  
Sales  Demo   RecommendaMons  
Renewal    Demo  

August   September     October     November  

Prospect   Research  
Kick  off   Research/   Findings  
mee+ng     Begin  ExecuMve   NYC   Lead  Team   Refined  
PresentaMon  
August  6   Interviews   Work  Session   RecommendaMons  

Prospect  
Begin  Secondary   Research/  LA  
Category  Research  

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 Customer  research  
•  In-­‐depth  “Buddy  Pair”  interviews  in  Chicago,  New  York  and  LA  
•  29  total  interviews  
•  Recrui'ng  Directors:      13  
•  HR  Directors:        11  
Chicago  9/17  
•  Vice  President,  HR:        5  

•  Diversity  by  geography,  industry,  company  size  

•  20K+  (e.g.,  Disney,  IBM,  Mitsubishi)  
•  10K  –  20K  (e.g.,  AIG,  Mitsui,  Reuters)  
•  1K  –  10K  (e.g.,  American  Golf,  US  Cellular,  OSI)  
•  500  –  1K  (e.g.,  Landmark  Theaters)   New  York  9/18  

•  All  respondents  in  charge  of  recruiMng  or  managing  recruiters,  

all  were  aware  of  and  interested  in  “passive  talent”  

•  Conducted  20-­‐25  onsite  focus  sessions  with  local  recruiters  

and  talent  managers.  Interviewed  every  client  company.  
Los  Angeles  9/22  
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We  defined  our  target  customer  

VP/HR  
CFO  

•   500+  FTEs  
Line     •   50+  reqs  per  quarter  
Recruitment    
Recruiters   •   Five  years  in  present  posiMon  
Director  
•   Primary  decision  maker  
•   Budget  authority  
•   Front  line  +  management  perspecMve  
Hiring  
Mgrs.  

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Did  the  usual  SWOT  analysis:  “Integrated  Recrui+ng  Solu+on”  

Strengths   Weaknesses  
•  Resolves  tension   •  More  Mme,  money  
•  DifferenMaMon  in  a  white  noise  market   •  New  idea  =  no  analogue  
•  Thought  leadership    
•  Don’t  see  compeMtor  who  can  follow  

OpportuniMes   Threats  
•  Territory  to  claim,  defend,  own   •  Cash/Mme  pressures  
•  Can  sell  as  service  vs.  product   •  Development  talent  
•  Increasing  sMckiness   •  Opportunity  cost

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What  steps  we  took  based  on  our  findings  

•  Learned  Jobster  was  perceived  as  a  consumer  name.      

–  Sold  the  job  posMng  business,  Jobster  name  and  related  assets      

•  Renamed  and  rebranded  the  company  RecruiMng.com  

–  focus  to  be  on  providing  a  CRM-­‐like  solware  product  for  finding,  managing  
and  communicaMng  with  future  hire  prospects  

•  Rebuilt  the  product  with  enMrely  new  architecture  

–  Saas  service  designed  to  incorporate  the  needs  of  our  target  customer,  easy  to  
use,  with  a  great  search  engine  

•  Launched  the  new  RecruiMng.com  on  schedule  in  Sept.  2009  

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How  it  worked  out  

Not  so  good.  

•  Sales  were  weak  on  the  new  product,  and  capital  was  running  out.  
•  Market  condiMons  for  recruiMng  solware  were  bad  everywhere;  our  target  
customers  were  not  hiring,  in  fact  they  were  laying  off  their  recruiMng  
teams.    Buying  recruiMng  solware  wasn’t  even  on  the  list.  
•  We  saw  no  path  to  profitability  without  addiMonal  financing,  and  our  VCs  
were  clear  about  not  invesMng  more.  

We  sold  RecruiMng.com  to  another  industry  player  in  the  2nd  half  of  2010.  

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Conclusions  

•  Research  is  criMcal  in  defining  your  market  space,  shaping  your  product,  
and  driving  your  markeMng  and  product  development  once  you  launch.  

•  You  can’t  analyze  things  to  death.  There  comes  a  Mme  when  you  have  to  
pull  the  trigger  and  just  do  it.  

•  All  the  research  in  the  world  won’t  fix  a  bad  idea  or  stabilize  a  difficult    
market.  

•  SomeMmes  ideas  turn  into  great  successes,  someMmes  things  don’t  work  
out.    That’s  why  its  “risk”  capital.  

20  
 Thank You.

Founder  Ins+tute  Sea/le  

Startup  Research-­‐  Suppor+ng  Your  Idea  with  Facts  
Jeffrey  Seely      4.25.11  
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