The secret to successfully disrupting legacy industries is to leverage existing behaviour, says David Smyth, co-founder of recruitment startup Scouta.
In the past, Smyth tells StartupSmart he’s “tried changing industries before and it’s hard to change people’s behaviour”.
“If you have a product that doesn’t require a big change in behaviour, you can get some early traction,” he says.
Together with co-founder Stuart Hunter, Smyth’s latest startup Scouta has done just that, having successfully gained “pretty good interest” from investors and customers after pitching at Antler Australia’s demo night.
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Scouta allows recruiters to refer talented but unsuccessful applicants to other startups.
“Basically, we’re taking advantage of the wastage that currently exists in recruiting and making the process more collaborative,” Smyth says.
It’s widely acknowledged within the industry the current recruitment process is “inefficient, so these kinds of unofficial groups have emerged, formed by in-house recruiters on Slack channels and in Facebook Groups to share the people they can’t hire with other companies to help them get jobs,” he adds.
By incentivising the existing practice and making it into a product, the team has been able to spend more resources on development, and less time convincing their market to change legacy conventions.
“Incentivise unmonetised behaviour”
Because the behaviour already exists within the target market on free platforms “out of goodwill”, Scouta needed to add value to the user experience to become a viable product, Smyth says.
The first solution was to “build a business model that coaches the right incentives,” Smyth says.
In Smyth’s experience, recruiters share individual candidates to select people in their network on a case-by-case basis.
Smyth and Hunter hope to make the practice more universal. By doing so, Scouta would achieve viability and scalability.
By inviting unsuccessful candidates onto Scouta’s platform, where they share what stage of recruitment they made it to, individual referrers are offered a reward in the form of a gift voucher when the candidate is successfully hired by another company.
The reward comes out of the fee the hiring company would pay Scouta, which Smyth assures is smaller than an agency fee, saying “it’s aligning with what companies are paying for their internal employee referral programs right now”.
The referrer’s company would also be rewarded with credit on Scouta, which would then cycle back into the system when they hire a referred candidate from another company.
“For each of those parties, we’re only really offering upsides,” Smyth says.
“So because it’s a win-win-win … it’s not really been difficult” when it comes to marketing, or pitching to investors, he adds.
Base the product on customer experience
The co-founders also wanted to make the referral process more effective, so they focused on usability.
Smyth’s professional history is in digital product development, so user experience is at the forefront of his designs.
Before building out a product, Smyth suggests developers “identify the why behind current behaviour, what motivates people to do the things they do, and what will help facilitate people to do it”.
“Our research has kind of dictated the order of development and the business model,” he says.
“Everything is based on that.”
Wanting to reduce any unnecessary changes to the existing recruitment process, he and Hunter decided to integrate the platform into widely used programs.
The co-founders then automate the program to match a company’s needs with candidate skills and notes from the referrers.
The program integration and automation system reduce the level of input needed by all three parties using Scouta — candidates, referrers and hiring companies — and allows Scouta to collect the necessary data to function.
“Due for disruption”
Early interest in the startup has come from a wide acknowledgement the “recruitment industry hasn’t really changed and it’s due for some disruption”, Smyth says.
“People, in general, agree that the UX of recruitment could be improved,” he adds.
According to Smyth, current digital tools can be helpful, but recruiters still rely on traditional methods of sourcing job seekers before resorting to them.
“If you think about the channels you have to source candidates, you start with: ‘Who do I know in my network or who does my network know?’”
“The problem with that is the network is small.”
Smyth considers even the current use of Facebook and Slack groups to be outdated band-aid solutions, calling them “telegram groups”.
“We want to really scale up that channel [of networks] and to make that a legitimate source for searching for candidates, before you have to go through to secondary channels and recruitment agencies.”
By building a solution by “driving and accelerating” recruiter’s preferred systems and practices, the co-founders have won over the likes of Canva and Deputy as their first customers.