20VC FF 028 Where To Start Your Startup and Single Founder vs CoFounder Model with Richard Hanson, CoFounder & CEO @ HiringScreen



In this episode of the "20 minutes VC," host Harry Stebbings interviews Richard Hansen, the co-founder and CEO of Hiring Screen, a rapidly growing HR technology company that raised an $800,000 seed round and plans to expand in Asia. Richard shares his journey from a recruitment consultant to tech entrepreneur, explaining how an overwhelming experience with CVs led to the creation of an algorithm that scores and sorts candidates effectively. He discusses the challenges and inefficiencies in the recruitment industry, emphasizing the importance of technology in streamlining hiring processes and advising entrepreneurs on idea validation and co-founder relationships. Richard also touches on fundraising strategies, the value of accelerators like Swire's blueprint in Hong Kong, and the future vision for Hiring Screen.

Summary Notes

Introduction to the 20 minutes VC and Richard Hansen

  • Harry introduces the first episode of 2016 and his guest, Richard Hansen, founder of Hiring Screen.
  • Richard Hansen is a mentor and advisor to the 20 minutes VC.
  • Hiring Screen is the first sponsor of the show and has grown rapidly, leading to a seed round of $800,000.
  • Expansion plans for Hiring Screen include the Philippines and Indonesia.
  • Matamot is thanked for providing data and analysis for the show.
  • Loyalty Bay's ebook on boosting conversion rates is promoted.

"And joining me today to mark the new year and this very special occasion is an extremely important person to me. He was the first person to really show backing for me and for the show and since has gone on to be a phenomenal mentor and advisor to the 20 minutes VC throughout our growth."

This quote highlights the significance of Richard Hansen to Harry and the 20 minutes VC, emphasizing Richard's role as a mentor, advisor, and the first sponsor of the show.

"Now, I'm not going to give the usual intro about the company as Richard does a much better job in the show, but I will say since being on the show hiring screen have gone from strength to strength, growing rapidly, leading to their seed round of $800,000 with plans to expand into Philippines and Indonesia."

Harry comments on the success and growth of Hiring Screen, including their funding and expansion plans, indicating the company's promising future in the recruitment industry.

Richard Hansen's Background and Founding of Hiring Screen

  • Richard studied law at Cambridge and spent eleven years in recruitment consultancy.
  • He founded his own recruitment firm in Hong Kong four years ago.
  • The idea for Hiring Screen came from a challenging experience sorting through a large number of CVs.
  • Richard and his co-founder, Luke Byrne, developed an algorithm to score and sort candidates effectively.

"So I studied law at Cambridge and then spent the next eleven years doing recruitment consultancy. Started off in London for four years and then moved out to Hong Kong."

Richard provides a brief overview of his educational background and his extensive experience in the recruitment industry.

"I ended up staring at an inbox with 196 CVs and I had no idea where to start in sorting through them."

Richard shares a pivotal moment that led to the creation of Hiring Screen, highlighting the inefficiencies in traditional recruitment methods.

Fragmentation of the Recruitment Market

  • The recruitment industry has seen technological advancements, especially in the last three to five years.
  • Job boards and social networks have increased access to candidate pools, but the ease of application has also led to a high volume of applicants.
  • Manual sorting of candidates is inefficient and inconsistent.
  • Applicant tracking systems are also inefficient due to their focus on managing large numbers of candidates.
  • Richard advocates for a more efficient use of recruitment resources by focusing on relevant candidates early in the process.

"In the recruitment industry, especially over the last three to five years, there's been a lot of technological advancement."

Richard discusses the technological progress in the recruitment industry and its impact on sourcing applicants.

"So whereas you've got the increase in potential applicants, you've got so many to look through that you can't do that in an accurate and consistent manner if you're doing it manually."

This quote emphasizes the challenge of managing a high volume of applicants and the need for more efficient methods in the recruitment process.

Identifying Market Opportunities in Broken or Fragmented Industries

  • Entrepreneurs should look for signs of a market that is weighted towards one side, such as the employer in the recruitment industry.
  • There is an opportunity for companies to help candidates with targeted job searches and skill development.
  • Current recruitment technologies and agencies tend to move people laterally rather than helping them change career paths.

"I would say in terms of where the technology is and whose side it's on at the moment, it seems to be very weighted towards the employer, and I think there's probably a gap there for companies to come in and really help the candidates."

Richard identifies a market gap where technology favors employers over candidates, suggesting an opportunity for new companies to address this imbalance.

Choosing a Location for Startups

  • Richard moved to Hong Kong due to his interest in working in a different country and financial centers like London and New York.
  • Advice for founders includes considering personal aspirations and the excitement of experiencing a new environment.

"I think for me I'd always had sort of that itch to scratch in terms of working in a different country and Asia."

Richard shares his personal motivation for moving to Hong Kong, which was driven by a desire to experience working abroad in a dynamic financial center.

Key Theme: Bullish View on Asia's Startup Ecosystem

  • Asia has a vibrant and growing startup scene with a "real buzz of activity."
  • Key locations for startups in Asia include Hong Kong, Singapore, and Japan, which offer good startup communities and support environments.
  • There has been a significant increase in venture capital funding in Asia in recent years.
  • The startup ecosystem in Asia has shown development, with a rise in online startup communities, growth of accelerators, and participation in programs like Y Combinator.

"initial move. And I'm very happy that I did, and I'm very bullish on Asia in general. There's a real buzz of activity that goes through, from right through the startup scene."

This quote emphasizes the speaker's positive decision to move and invest in the Asian startup scene, highlighting the dynamic and active environment for startups in the region.

"Seen a rise in vc funding going into Asia in the last few years. Has that really been shown in the startup ecosystem?"

This question points to the observed increase in venture capital investment in Asia and inquires whether this influx of funding has had a noticeable impact on the startup ecosystem.

"Yeah, sure. I think in terms of either startup communities, whether that be online, or the growth of accelerators across Hong Kong, Singapore, Japan and other places around Asia, or asian companies participating in well known accelerator programs like Y Combinator, there's definitely growth and advancement for Asia startups."

Richard Hansen confirms the positive impact of increased venture capital funding, noting the expansion of startup communities, accelerators, and Asian companies' participation in prestigious programs.

Key Theme: The Importance of a Co-founder in Startups

  • Having a co-founder can be advantageous for startups due to the ability to bounce ideas off each other and prevent bad decisions.
  • A co-founder provides a sense of check and balance, contributing to better decision-making with their different perspectives and expertise.
  • The relationship with a co-founder is unique because they share the same day-to-day challenges and pressures, unlike advice from friends or family.

"And not only is he a very good product guy, he's also exceptional project management. And I think having somebody to bounce ideas off and sense check you and make sure that you're not making bad decisions is really useful."

Richard Hansen emphasizes the value of having a co-founder like Luke Byrne, who has strengths in product development and project management, which contributes to the success of their startup, Hiring Screen.

"I personally think it's very beneficial because nobody's right all the time."

Richard Hansen advocates for the benefits of having a co-founder, suggesting that the collaborative process helps in making more informed decisions and mitigating the risks of individual error.

Key Theme: From Idea to Creation for Entrepreneurs

  • Entrepreneurs should start by fleshing out the feasibility of their ideas early in the process to gain hope and comfort that it can be executed.
  • It is important to consider the idea's viability and to have a co-founder or someone who can help with execution and project management.
  • The advice is to move quickly from idea to prototyping and validating the concept with potential customers.
  • Entrepreneurs should seek feedback from target customers to ensure the problem they aim to solve is genuine and to gather additional insights for product development.

"I would say if you've got the idea, try and figure out earlier on how you would go about implementing that so you start to give yourself some level of hope and comfort that that idea can come to fruition."

Richard Hansen advises entrepreneurs to evaluate their ideas for practical implementation early on, which can provide reassurance and a clearer path to bringing the idea to life.

"I would really try and validate the idea as soon as you can, even if it means going and talking to the ultimate customer."

The importance of early validation of a startup idea is stressed, with a focus on engaging with potential customers to confirm the problem the startup intends to solve is recognized by others.

Key Theme: Overcoming Non-Technical Challenges in Startups

  • Non-technical co-founders should utilize available technologies to create mockups and prototypes easily.
  • Keeping communication with the product team simple and open is crucial for success.
  • Non-technical co-founders are encouraged to learn the basics of coding to better understand the work of UX designers and developers.

"I would say that obviously you try and use technologies which make that process in terms of the mockups, easy."

Richard Hansen suggests leveraging user-friendly technologies that simplify the process of creating mockups, which is especially helpful for non-technical co-founders.

"I went on to code academy and I took the HTML and CSS course just so that I actually knew what title tags were and how to do basic CSS."

By sharing his personal experience, Richard Hansen illustrates how gaining a basic understanding of coding can improve communication and collaboration with the technical team, even for a non-technical co-founder.

Founder's Involvement in Development

  • Understanding the basics of code and technology is likened to learning a foreign language to show politeness and effort.
  • A founder should have a fundamental grasp of what the development team is doing.
  • Knowledge in technology helps the CEO to attract talent across various departments.

"I think my development team, I'd like to think that they know I'm somebody that's made the effort to do background research, has done those courses and so I'm trying to inform myself about what they're doing and I'm taking an interest in the different types of technologies."

This quote highlights the importance of a founder making an effort to understand the technical aspects of their company, which can help in building rapport with the development team and showing commitment to the company's core functions.

Fundraising Strategy

  • The CEO's role includes recruiting and fundraising.
  • Informing oneself through resources such as the 20 Minute VC podcast and relevant books is crucial.
  • Having a good response from initial angel investors is a positive sign during fundraising.

"So we're currently raising a round... we're half the way through raising the amount of money we wanted to."

Richard Hansen indicates the current status of their fundraising efforts, emphasizing the progress they have made in reaching their monetary goals.

Documentation for Funding Rounds

  • Essential documents include business plans, executive summaries, and capitalization tables.
  • Founders must understand their company thoroughly and anticipate investor inquiries.
  • Distilling a company's unique advantage or market gap is critical to attract investors.

"You should know what they're going to ask for because anybody will tell you that they want to look at financials or market size or competitive environment..."

Richard Hansen emphasizes the importance of being prepared for investor questions, which typically focus on a company's financials, market size, and competitive environment.

Research on Potential Investors

  • Founders should research VCs to ensure alignment in investment type, sector interest, and industry background.
  • Having investors with experience can be beneficial for business guidance.

"I myself look at the level of investments that they've done. So I make sure that they usually invest in the type of round that we're doing."

The quote demonstrates the strategic approach Richard Hansen takes when selecting potential investors, ensuring they are a good fit for the company's current stage and sector.

Fundraising Challenges

  • Conveying complex ideas succinctly in a pitch is challenging.
  • The pitch must address financials, valuation, and vision while being concise.

"I think really trying to convey some of the more complex points about hiring screen and why we're doing what we're doing in the time frame of a pitch is quite difficult."

Richard Hansen discusses the difficulties in effectively communicating the complexities of their business within the limited time frame of an investor pitch.

Accelerator Programs

  • The blueprint accelerator in Hong Kong is business-to-business focused and does not take equity.
  • Access to the Swire network of companies is a significant advantage of the blueprint accelerator.
  • Choosing the right accelerator is crucial, considering factors such as equity and network access.

"That's a fantastic accelerator. It's business to business focused. They don't take any equity in the startups, which is fantastic compared to a lot of other accelerator programs."

Richard Hansen praises the blueprint accelerator for its focus and benefits, particularly its policy of not taking equity and providing access to a valuable corporate network.

Startup Accelerators in Asia

  • Asia's startup accelerator ecosystem is in early development stages, offering exciting opportunities.
  • Accelerators like Brink focus on hardware startups, illustrating the diversity of specialization within the ecosystem.
  • The conglomerate sponsoring Richard Hansen's company into various parts of their business exemplifies the potential for growth and product advancement through accelerator programs.

"In terms of Asia accelerators, I mentioned that suare is business to business. There are accelerators like Brink, which is hardware focused, and I think we're just at the beginning of the development of the startup accelerator ecosystem in Asia."

This quote emphasizes the nascent stage of Asia's startup accelerator ecosystem and highlights the variety of accelerators, such as Brink, which cater to specific startup types like hardware-focused businesses.

Evaluating Accelerators for Founders

  • Founders should assess their startup's immediate needs before considering equity trade-offs with accelerators.
  • Office space, product testing opportunities, and other benefits should be weighed against the amount of equity an accelerator requests.
  • The decision-making process involves understanding the startup's requirements and matching them with what the accelerator can provide before negotiating equity.

"But what I would say, first of all, is to try and make an assessment of what does your startup most need right now."

Richard Hansen advises that founders should first identify their startup's current needs, which is crucial to deciding whether an accelerator is suitable for them.

The Alliance Book

  • "The Alliance" is favored by Richard Hansen for its fresh perspective on employer-employee relationships.
  • The book's concept of 'tour of duty' employment is implemented in the development of Richard Hansen's product, Hiring Screen.

"And why? It's because I like books that try to take a different look at something or look at a particular situation or issue from a different angle."

Richard Hansen appreciates "The Alliance" for its innovative approach to traditional concepts, which aligns with his own company's philosophy.

Impactful Purchases

  • A heart rate monitor is cited as a significant purchase by Richard Hansen, hinting at the health and lifestyle adjustments faced by entrepreneurs.
  • The mention of getting back to the gym post-fundraising round reflects the balance entrepreneurs must strike between work and personal well-being.

"Probably a heart rate monitor, I'd have to say."

This quote reveals that a simple health-related purchase had a notable impact on Richard Hansen's life, likely due to the demands of starting and running a company.

  • Richard Hansen reads and recommends calicanis.com and Brad Feld's Feld Thoughts for insights and industry perspectives.
  • These resources are likely part of his regular reading to stay informed and inspired in the startup ecosystem.

"I do read calicanis.com. I do have a soft spot for jason. And I would say Brad Feld. And Feld thoughts is also very good."

By sharing his reading preferences, Richard Hansen provides insight into the types of industry content that he values for professional growth and information.

Successful Founders

  • When prompted with 'successful founder,' Richard Hansen first jokes about Harry Stebbings, then seriously cites Reed Hoffman for his pragmatic and selfless approach to leadership.
  • Hoffman's decision not to be CEO of LinkedIn is admired by Hansen as a smart move for the company's growth.

"But my serious answer is going to be Reed Hoffman."

Richard Hansen respects Reed Hoffman not only for founding LinkedIn but also for recognizing when to step back for the betterment of the company, showcasing an important trait of successful entrepreneurs.

Future of Hiring Screen

  • Richard Hansen aims to continue executing the product vision for Hiring Screen and building a team aligned with the company's mission.
  • He stresses the importance of team members understanding and enjoying their work as part of building a successful company.
  • Conveying the company's mission to the team is a key part of his strategy for the future.

"And I would like to think that everybody who's part of hiring screen today and in the future comes to work really understanding what we're trying to achieve."

This quote highlights Richard Hansen's focus on ensuring that his team is fully engaged with the company's mission, which he believes is fundamental to Hiring Screen's success.

Founders Friday and Additional Resources

  • Harry Stebbings hosts a special Founders Friday episode featuring Richard Hansen.
  • Listeners are directed to episode two for more insights and to subscribe to the newsletter for updates.
  • A recommendation is made to download Loyalty Bay's ebook for strategies on increasing conversion rates, demonstrating the value of practical resources for startups.

"And if you're loving the show, do not forget to sign up for the newsletter on the Twentyminutevc.com so you never have to miss an update."

Harry Stebbings encourages engagement with the show's content through newsletter subscription, ensuring listeners stay informed about future episodes and resources.

"Also, do not forget to download the fantastic ebook from Loyalty Bay."

The promotion of Loyalty Bay's ebook serves as an example of the type of actionable advice and resources made available to the show's entrepreneurial audience.

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