At the iCIMS analyst day last month, the boys sat down with Erik Kostelnik, founder and CEO at TextRecruit, a recent acquisition by iCIMS. If you've never heard Erik, you're in for a treat. We talk CareerBuilder, Dice, chatbots, competing with Slack and much more. Michael Wilczak, SVP, Strategy & Corporate Development at iCIMS also joined in.
Enjoy this NEXXT exclusive.
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Announcer: This, The Chad and Cheese Podcast, brought to you in partnership with TA Tech. TA Tech, the association for talent acquisition solutions. Visit tatech.org.
Chad: Okay Joel quick question.
Chad: What happens when your phone vibrates, or your texting alert goes off?
Joel: Dude, I pretty much check it immediately. I bet everyone listening is reaching to check their phones right now.
Chad: Yeah I know. I call it our Pavlovian dog reflex to text messaging.
Joel: Yeah that's probably why text messaging has a freaking 97% open rate.
Joel: Crazy high candidate response rate within the first hour alone.
Chad: Which are all great reasons why the Chad and Cheese Podcast love Text2Hire from Nexxt.
Joel: Yeah. Love it.
Chad: Yep, that's right. Nexxt with the double X, not the triple X.
Joel: Booomchakabowow.. So if you're in talent acquisition, you want true engagement, and great ROI. That stands for Return on Investment folks, and because this is the Chad and Cheese podcast, you can try your first text to hire campaign for just 25% off, boom.
Chad: How do you get this discount? You're asking yourself right now.
Joel: Tell them Chad.
Chad: It's very simple, you go to chadcheese.com, and you click on the Nexxt logo in the sponsor area, using the long URL to remember. Just go where you know, chadcheese.com, and Nexxt, with two x's.
Announcer: Hide your kids, lock the doors, you're listening to HR's most dangers podcast. Chad Sowash, and Joel Cheesman are here to punch the recruiting agency right where it hurts. Complete with breaking news, brash opinions, and loads of snark. Buckle up boys and girls, it's time for the Chase and Cheese podcast.
Joel: All right, we're recording correct?
Chad: Yeah it's what that red light is for. Go ahead.
Joel: What's up everybody it's Joel Cheesman here with Chad. We are at the iCIMS Influence Conference in beautiful, historic New Jersey.
Joel: Joining here is Erik Kostelnik- I said that wrong. Kostelnik?
Erik: Kostelnik. It's alright, I've only known you for 3 years.
Joel: Co-founder and CEO of Text Recruit, recent acquisition of I-Sims. Also, Mike Wilczak -
Mike: You got it. Nailed it.
Joel: He's SVP of Erik as well as strategy. We're late in the day, we're a couple beers in, we wanted to get these guys together and talk about some things.
Joel: Erik, for those who don't know Text Recruit, not many of our listeners don't know you-
Joel: But give them the quick elevator pitch on what you guys do.
Erik: Yeah, it's a candidate and employee engagement platform that leverages chat, text message, and AI to help you hire better people faster.
Joel: It's that easy. And the name pretty much says it all. Text Recruit.
Chad: Yeah, Message Recruit would be good as well.
Erik: That was a little long. That was a little long yeah, it's alright.
Erik: You gotta write the ad before you sell the product or or build the product.
Mike: You gotta buy the URL, right? I mean that sort of determines the naming.
Erik: Unbelievable that was open. I still can't-
Chad: No shit?
Erik: Yeah dude.
Chad: Did you go to GoDaddy?
Erik: Of course I did. No joke-
Chad: No shit.
Erik: I hosted Text Recruit on GoDaddy for the first 3 years. It was only until we got like some money and were like, "Well maybe this is not the right way to do it". I built this site on WordPress. Personally. So everything that you see on our site is all the stuff that I built.
Erik: Original branding, original content, all that stuff.
Joel: It's not as janky anymore.
Erik: It's not as janky, I actually hired a professional to do it now. So yeah. Anyway.
Joel: Erik one of the things I thought was interesting was you have a whole suite of products and I think people think of the Text Recruit messaging component. But talk about the two or three other products that you guys offer.
Erik: What we did when we started was, we figured out, "Hey, how can we take all these text messages that are happening out there and make them centralized and more professional and compliment?". And we just naturally rolled into leveraging text message for attraction of candidates. Cheesecake Factory was using us in storefronts and on their Craigslist ads, and so we created a product called Text Apply, which helps on the front of the funnel there.
Erik: We also found that companies were looking at, this is funny, but they were on our website and they would say, "Hey, what's that chat function that is on your website?" And it was just a lark. It was just intercom or, and they were like, "Well I want that on my career site". I'm like, "Well, why can't just make that for you?" And that became job chat, it's now Live Chat.
Erik: And the Text HR side of things, it just was natural to progress into the onboarding experience and helping these candidates get onboarded as they become employees, since that became Text HR.
Erik: As we moved down the funnel, UPS came to us and said, "Hey, can you help us managing all communications for our entire temporary workforce for the seasonal hiring, not just to get them onboard, but actually to build software to help engage them through this whole entire season, so we don't have to issue everybody phones", and it ended up being Text Reach. So we still to this day leverage that platform for those guys.
Erik: Obviously, this sweeter products we didn't think it was gonna be this, we thought it was gonna be Text Recruit, but part of our core values has always been, much like iCIMS, it's always listen to customer, and we're customer founded and customer driven. And ultimately that lead us to these additional revenue channels and value for customers.
Joel: If the customer will pay for it, we'll build.
Erik: I'm a salesman, so I'll build you what you need, I'll sell it to you.
Chad: So Mike, how do you figure into this whole thing? You always keeping the reins on Erik? You let him- what's going on here?
Mike: I don't know if there's keeping any reins on Erik!
Chad: He doesn't have flip flops on right now.
Erik: No, they made me wear shoes.
Mike: You look very professional today, even with the boutonniere.
Mike: He looks like he's going to the prom after this.
Mike: I lead the strategy and acquisition Text Recruit from the iCIMS side, so part of my role is to incubate that and make sure that it's successful coming out of the gate with us. Then once we've got a great comfort level, just make it a part of our normal business. So we're in that phase right now, and it's been fantastic over the last 9 months to see this company continue to grow.
Chad: It's your job to sit and watch. Is that what it is? To watch kind of the incubation period? Really you were helping along the road of, "Hey, this is what you need to do to be able to get seen by us", I mean, what's all-
Mike: Yeah, it's a bit of a story there. I think I met Erik probably four and half, five years ago now. I had just joined iCIMS, I didn't come from this space. I really didn't know much about HR Tech. Pat Crest has a great SaaS conference every year in Vail, Colorado-
Erik: It's Key Bank now, but yeah.
Mike: Key Bank yeah. So I went out there and they put together a number of meetings for me. Kind of '30 minute Speed Dating pitch an idea to another company' kind of thing. And Erik and Jedd came in with a PowerPoint deck talking about how they were gonna kill this category and I thought, "Wow, that's an amazing feature!".
Mike: We've got to be doing this, right? Every ATS-
Joel: What year was this?
Mike: 2014. Every recruiting software company has to be doing this, right? I found out we weren't. My guy says to Erik, he says, "Look, it's a really interesting capability but you've got to broaden it. You've got to get more of a platform, more of portfolio of products, not just this one component", and man, over the last four years we've just seen him broaden the product portfolio, we've seen him add a lot of our customers to his customer base.
Mike: So when we were looking at this deal, we took it to the board and the board literally said, "This is the most logical acquisition we've ever seen".
Chad: Now you simplified, but you cheated a little bit, right? Text Recruit was
integrated into iCIMS, you sort of saw the growth in the numbers.
Joel: That's the incubation period.
Chad: You need a little bit about what you were getting into correct?
Mike: Yeah, totally right? So, at the same time that Erik was building his business, we were building our platform strategy, which was enabling other companies building products to plug into us and to integrate with us, right? He had the foresight to say, "Look, if we're going to go build this product that works with ATS providers and CRM tools, that we should build it to their specifications and via their platform".
Mike: I think that greased a lot of the sellability of the product of our customer base. So we started holding them up, "Hey, this is what a great product integration looks like". So we were able to see the two big hurdles to M&A in software is, 'How does that product work with yours' and 'Will your customers buy it?'. We were able to see both of those things. It's been fantastic.
Chad: So tell us the Dice story.
Erik: I had just gotten off of the identified acquisition, right? That was another big tile. SVP of monetization and sales strategy for Identified, which funny enough, became Work Days acquisition and became their shitty ATS now. That's kind of what it's became.
Erik: So, fast forward, I was able to get out of that situation and say, "Okay, what do I want to do? I have this idea" and I pitched my buddy on it, Ryan Chad, he's my co-founder and he said, "I think we can do this, I think I can sell this".
Erik: So he built the product and we got customers going. Then it was like, "Hey, let's be agnostic, let's actually go to all our contacts all over this ecosphere", and part of that was going to Job Boards. I'm an ex Career Builder guy and learned a lot there and learned that, "Look, these are the types of job boards that we should look at working with", so Dice happened to be right down the street in San Jose and walked down to- got the train. I was living in San Francisco, got off the train, went to 225 Santa Clara, walked upstairs, beautiful 11th floor in downtown Santa Clara, or downtown San Jose on Santa Clara street.
Erik: Go into this big board room and all the executive staff are from Dice is there and I start pitching. I start pitching Text Recruit and capabilities and how we can change the way that they're engaging with all their candidates and their massive databases and create drip marketing.
Chad: So it's a room full of people just-
Erik: Yeah, all the executives, all of them. 'Cause they were like, "What is going on with this?", 'cause we were gaining traction already. It was really interesting because I left the meeting feeling like, "Oh man, I feel like I killed that, right. This is great and it's another engagement platform, we're gonna manage all text communication for Dice, it's gonna be massive". And I got an email like a week later, "Hey we just don't think it's going to be right for us. We don't think it's going to be very professional to text and communicate for jobs".
Erik: I was like, "Wow. Okay". Total miss, whatever, I move on. Fast forward four years, we just took over the Dice space in downtown San Jose, so-
Chad: Life's like that man.
Erik: It's amazing how things kind of come back around and you know, things change and new companies have to evolve. I think that's a big learning- and one of the key reasons why we chose iCIMS candidly, was that you gotta hook your horse to something and someone. We knew that there's going to be a lot of challenges along the way in building up a really big company. We built a pretty big company, but not like a multi-billion dollar company. Which is what all VC's want, right?
Erik: To build a multi-billion dollar company, you have to have a little bit more than what just Text Recruit was. So I was real about that. But we knew iCIMS was changing the way that they had been doing business. And it wasn't just a 15 year old company, it actually was something that was becoming a new way of doing business in the HR space and Unify was part of that. But also the way these guys were looking at strategy and how to build this company out. Obviously it's worked for them and it worked for us, so I think it's good stuff.
Chad: So I have your one sheet here of your material and what you guys do. And I'm reading Text HR, communicate with employees over text message and live chat at scale and Text Reach, manage projects and coordinate with your employees over text message.
Chad: That sounds a lot to me like Slack. Am I off base there or not?
Erik: You're not. That was the vision for Text Reach. I'd say like, if we didn't go through this acquisition, we'd be probably doubling down on Text Reach right now. We believe that Text Reach, candidly, is a competitor of Slack on the white collar or hourly work forces that don't have smart phones or don't have access to corporate email address].
Erik: So generally, when you have Slack, you have corporate email addresses that you send out invites to, and then you have your Slack that happens.
Erik: But in the blue collar workforces, all of our customer based, those out of the hourly workforces, you don't have the ability to send out corporate emails. You can't invite them to corporate chat functions because it just doesn't work for those. Companies like Crew and some of these other systems that are trying to be Slack for the hourly, I just didn't believe it was gonna work because everybody communicates via text.
Erik: So if I can do the same thing that we did for recruiting, and put it into a managers hands to communicate with it's existing employees and group texts without sharing personal data of the employees as well as the manager, that could become a very big company.
Erik: That's what our VC's originally saw within that application and that's why they were gonna be willing to give us $15 millions if we didn't get acquired because we were gonna build that out. That's kind of the thing, you take this strategy, you take what you think is right for the time, and ultimately iCIMS did a good job by positioning itself in what we could do together.
Chad: I'm gonna do a quick re-direct. So you guys, talking about this product, you can actually get sentiment. Employee sentiment, so at that point, you know if they're happy, sad, all that other- and we were talking last night, kind of laughing about Glint saying how much money and just the other disbelief in Mike's eyes last night at dinner.
Mike: I still believe.
Chad: So what do you think about that? $400-500 million on Glint.
Mike: I hadn't heard that number before so that seems like a massive amount of value.
Mike: Especially for a CEO who said he built it for the good of humanity. I almost felt like he needed to give it away after all of that.
Chad: He probably felt like he was giving it away.
Erik: How much money did he take on?
Mike: I think it's a recognition of the fact that Length is trying to broaden it's tam. It's trying to get into something beyond talent acquisition and start looking at more of the talent engagement side. I'm sure it makes sense for them, I'm sure they've got a whole thesis around how they're going to take that product and get $400-500 million worth of value out of it.
Chad: So I won't ask you to tell me the next companies that you're gonna acquire, but what are- Mike, what are some of the segments or overall, themes that iCIMS going to be looking at getting into in the next two, three, five years?
Mike: That's a great question, right? We just did this round with Vista and I think the output of that is to step on the gas. We've built what we think is the category killer in talent acquisition software. How do then take this platform that we've built, that has scale in a market that has an incredible amount of data and now turn that loose to create something that's incredibly more valuable?
Mike: For us, it's not getting out of talent acquisition. It's doubling down on talent acquisition. What we're looking at is things that we must more up-funnel and enable our customers to really leverage our product, not just to manage workflow, but to actually do sourcing.
Mike: That ability to connect candidates and to connect candidates to hiring companies and to make those matches is really interesting to us. We think we have unique data that enables us to do that in a way that's completely different than the way companies are doing it today.
Chad: So iCIMS has changed, I mean really, the outlook. Wasn't an acquisition kind of a focus before? You have put your foot on the pedal, especially with Vista money. So why? Why the change? What did you see- what was happening in the market that made pretty much the executive team, everybody say, "We've got to do shit differently?".