Talkin’ ‘Bad Touch’ w/ Andy Katz, COO Nexxt

What do you get when you bring 65 years of industry experience under one podcast? Press play and find out, as the boys chat with Nexxt’s 25-year veteran Andy Katz. There will be beer on this Nexxt exclusive.

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Announcer: Hide your kids. Lock the doors. You're listening to HR's most dangerous podcast. Chad Sowash and Joel Cheesman are here to punch the recruiting industry right where it hurts. Complete with breaking news, brash opinion, and loads of snark, buckle up, boys and girls. It's time for the Chad and Cheese Podcast.

Chad: Today on the Chad and Cheese Podcast, we have Andy Katz.

Joel: Lovely day.

Chad: Andrew Katz now, we're sitting on the porch here at ...

Joel: Indianapolis icon-

Chad: The Veranda-

Joel: ... Harry & Izzy's.

Chad: Harry & Izzy's.

Joel: On the north side.

Chad: I have a bourbon on the rocks. What do you have, Andy?

Andy: I have some Ketel One and seven.

Chad: Ketel One and seven, is it ...

Andy: It's noon somewhere. It's 5:00 in London.

Chad: It's just about noon. It's almost noon here.

Joel: A pint of zombie dust over here.

Chad: Yeah, zombie ... I had my fill of zombie dust last night, man. That shit is awesome.

Joel: You look a little zombie-esque.

Chad: I love it.

Joel: After a night of zombie dust.

Andy: You cleaned out the bar of the zombie dust.

Chad: Yeah, I love it, dude. So we have Andy Katz here-

Joel: It's a good thing this isn't on video.

Chad: And I've known Andy for a few years. How long have we known each other?

Andy: Probably about 20.

Chad: Yeah, probably about 20 years.

Andy: Just a few.

Joel: Did he have hair back then?

Chad: No.

Andy: No, Chad did not have hair, but he definitely looked younger.

Joel: Oh, ouch.

Chad: That hurt, wow.

Joel: That does hurt.

Andy: Sorry about that.

Chad: So for all these new to the industry people, Andy, tell us a little bit about you.

Andy: Sure. I've been in the human capital space for about 25 years. I started my career at Bernard Hodes group, also known as Symphony Talent-

Joel: Were you selling newspaper ads?

Andy: I was selling newspaper ads.

Joel: Nice.

Andy: I was that dinosaur that woke up on a Sunday when I lived in the city and went to a ... There was a newspaper store that got papers from all over the country. I'd go there every Sunday, buy about 40 newspapers, and make sure they didn't fuck up my ad lines and made sure my display ads weren't upside down.

Joel: So for the kids out there, what would have been the most you would have

made on a display ad in a newspaper back then?

Andy: Oof, you talk about full-time-

Joel: That was big money, right?

Andy: ... full-page ads in the New York Times, they were 100 grand a pop.

Chad: Holy shit.

Andy: And they were ordering them for three weeks in a row because they got a 50% discount on the third week. So I mean, those were the days where-

Joel: Cash money, boy.

Andy: ... the agencies were printing money.

Chad: Dude.

Andy: At newspaper, printing money.

Chad: They were printing fucking money.

Andy: Yeah. Boston Globe, I remember the days they had 150 full-page ads to start out their classified.

Chad: So talk about how that whole trend, and you seeing it, how that came to be with the Internet, all these crazy job boards? Because I mean, that just turned everything on its fucking ear, right?

Andy: It did, it did. And it didn't happen overnight. I could, not to keep promoting Hodes or Symphony, but we were one of the first with the job board too, Career Mosaic. That and Monster Board were the first two job boards out there, OCC.

Chad: Yes, OCC.

Joel: eSPAN, don't forget eSPAN.

Chad: Nobody remembers eSPAN, Joel.

Andy: No, Joel, sorry. Yeah, that's in the morgue.

Joel: NAS remembers eSPAN. They're still around, dammit.

Andy: So yeah, it wasn't a change overnight. Some newspapers made the change sooner than later, others-

Joel: And most did both, right? I mean, very few would just say, "Let's just go online."

Andy: Right.

Joel: It was doing both. So probably for a while-

Andy: Absolutely.

Joel: You were making a lot more money, 'cause they were doing split ads-

Andy: We were, there were ad-ons. It was go take out a full page ad and we'll put this job up on this website called Monster Board or Career Mosaic that no one ever heard of back in 1994, '95-

Chad: Oh, fuck yeah.

Andy: For an ad-on for 300 bucks onto your $100,000 ad, it made sense.

Joel: Nice.

Andy: It made sense.

Chad: That was too easy.

Andy: Yeah, it was an easy sell. And you know, between Monster and Career Builder at the beginning of time, they just took off and everything started moving over there. They both made good relationships with the newspapers and had more of an ecosystem behind them. So it was buy a newspaper ad, get an online posting for free or vice versa, and-

Joel: When did you see the writing on the wall? When did you say like, "Okay, this newspaper thing probably won't last."

Andy: Yeah.

Chad: When were newspaper reps saying, "Oh, fuck"?

Joel: When did you start seeing the gravy train drive away?

Andy: I would say, I'm going to go with early, early 2000. I think we made it through Y2K-

Joel: So the first recession, maybe?

Andy: Yeah, 2002, 2003, probably right around there.

Joel: Okay.

Andy: I think after the world actually continued to move forward when it should have blown up 'cause of Y2K, I think everybody was pretty much status quo the '98 to 2001 and make sure it all lived, and then starting in 2002, that's when job boards really propelled us into the future.

Joel: Yeah.

Chad: So that being said, that was an exciting moment. And Joel always, we always talk about how that was exciting as hell.

Andy: It was.

Chad: We were there, we were watching-

Joel: Superbowl ads.

Chad: And it's like, "Holy shit, dude," blimps, Superbowl ads-

Andy: I want to be a yes man.

Chad: Yeah, I want to be a yes man, that's right. Chimps, all that other shit.

Joel: I want to brown nose.

Chad: But is it not more exciting now? I mean, there's so much shit that's going on-

Andy: It is, it is.

Chad: So much money pouring into this goddamn industry.

Andy: Well, I think that's what people got scared of. They saw how do you take, and I'm being a little facetious with the 100,000 ads, they were there, but they weren't the norm.

Chad: Right.

Andy: But a $5,000 ad was extremely common, even if you were running a secretary ad. So ... And that's in major markets obviously where prices were high, so you know, we saw that, it was exciting, we were printing money, people didn't want to say, "How do I go from a $5,000 print ad to a $1,500 posting package?" And at the end of the day, if you look at it and you own the job board, you got 85% of the 1,500. If you were using a newspaper, you got 15% of that.

Chad: Right.

Andy: So if people really would have thought forward, they would have seen it all equals out, and the Internet is here to stay and it's going nowhere. So embrace it versus try to go around it. I mean, I think the same thing now is with programmatic. People think that's the next end all, be all, and it's extremely big piece of any puzzle, but, and we have to embrace it, it's not exactly the way job boards or agencies want to work, but it is one piece of the overall strategy.

Andy: So I think everything keeps morphing.

Chad: Why wouldn't agencies want that, though? Because I mean, from a complexity standpoint ...

Andy: Right.

Chad: The hiring companies are going to come to agencies when they don't understand shit.

Joel: It seems like agencies are more valuable now than ever.

Andy: the agencies, they're a wealth of information and extremely valuable, and I don't think it's agencies that are saying programmatic is the end all, be all also. It's the easy button right now. You could put all your jobs in one feed, distribute them to 10, 15, 20 places and let it be. But there's a lot more, and I'm not just speaking about at next, it's throughout the industry, you have text messaging, you have re-targeting, you have branding, you have all these other pieces of the puzzle that make up the whole hiring ecosystem, and to say that just one thing, I don't care if you say change my word from programmatic to a job posting or job posting to sending out text messages. One size doesn't fit all. You're not going to reach every audience with one medium.

Joel: And I think from where we're coming from, companies know they have to do these things. They know they have to be in programmatic. They know they need a chat bot.

Andy: Absolutely.

Joel: They know they need AI. But they don't really know what that means.

Chad: Yeah, or how.

Joel: And agencies seem to fill the void of like, let us help you understand-

Chad: They do.

Joel: And guide you through that. Are you seeing that as well?

Andy: Yeah, and they are valuable partners of ours. Without them, we wouldn't exist. So the agencies are ... They're our middleman between us and the customers or the client for lack of better words, and we're finding that even on the agency side, they're learning more and more every day 'cause again, it might be five, 10 years old, but in relation to the overall hiring ecosystem, it's relatively new. So we keep learning. I manage a huge part of Nexxt, I keep learning every day, I keep making us better, more efficient, offering better services to our job seekers and to our clients, and I think all the job boards out there are doing the same and all the agencies are embracing it and it's really about just having a whole arsenal of tools instead of just saying, "Here's one thing that works for everybody."

Chad: Are you seeing a big movement from duration-based ads to performance ads, or is that just kind of like trickling right now?

Andy: It's trickling. You still have some of the major players out there doing duration postings, and they're businesses. Sure, it's not where it was in 2007 or '8, but who's is, right? So they're still surviving, they're doing well off of them. I think it's slowly morphing from duration to performance. I mean, at the end of the day, if you're a client and you have $500, would you rather put it towards something that you don't know what the return you're going to get or would you rather say, "Okay, for $5,000, I'm pretty much guaranteed 100 apps"?

Chad: So why isn't it moving faster that way though? I would think-

Joel: Fear.

Chad: ... from the standpoint from an agency-

Joel: Don't like change.

Chad: From an agency though, from an agency-

Joel: True.

Chad: An agency can say, "Look," and that's why you have the agency there, is to be able to usher you into these new lands, even though we're still 10 years behind the marketing industry. Why aren't we seeing more of that? Because you would think that that push would happen on the agency side.

Andy: Well, I don't think you're seeing any new players come into this space making a duration posting, right?

Chad: Right, okay.

Andy: So everybody new is performance. You have a few legacies that are doing duration, and it works for them, and-

Chad: So it's withering is what you're saying.

Andy: It might be, and they're also morphing their businesses and other services to either compensate or move-

Joel: Acquisitions.

Andy: ... to performance, but it's one of those things I said earlier where not one size fits all, and duration postings still have a place. Sure, they're not where they were, again, 10 years ago, but they're still there now.

Chad: Well, and there's still newspaper ads, right?

Andy: And there's still newspaper ads.

Chad: So, you know, to say that duration posting-

Joel: What's a newspaper again?

Andy: That's that black-and-white thing you open up on Sundays.

Chad: Yeah, exactly, that-

Joel: What's your read on the consolidation that we're seeing in the agency business? So you have Shaker buying up Arland Group, you have Monster buying KRT, right?

Andy: CKR.

Joel: Or CKR, sorry.

Andy: Close.

Joel: Is that a healthy thing? What's your take on what's going on there?

Andy: Yeah, everybody loves competition. Competition validates you and you need different players for different ... Not everybody can handle a behemoth of a fortune 10 company, right? The smaller agencies might not be equipped, so they're going to handle maybe an SMB market. I'll say the same thing about job boards, I'll say the same thing about any of the CRM providers out there, talent community providers. There's a market for everybody. Now when you over saturate that market with too many players, that's when you spread yourselves too thin and nobody makes money except for the top three.

Andy: Where if you consolidate on making a number up from 20 down to 12, that's healthy. And consolidation is the crux of this entire country and economy forever, people always acquire and build and grow from there, same thing will happen with the smaller players.

Chad: So what about the UX side of the house? So candidate experience has always been a bitch. It's always sucked. But there's a lot of money that could prospectively be there to ensure that you're obviously getting the right talent, they're not ejecting before getting into that 20 minute application process into your ATS. So do you see a movement door down that path, or where does it go from a money standpoint? Where is the money moving?

Andy: I think you're right, the UX still sucks, but I'm going to keep going back to not the number of years, but in relative, it's still a newish technology and way of recruiting. When someone figures out truly how to make a mobile apply mobile, that's going to be one of the winners of this whole endgame, and they don't have to do it themselves. They can license out that technology to 20 other players. The biggest-

Chad: Didn't Indeed buy a mobile apply company?

Andy: I think they might have.

Chad: And they still haven't figured this shit out?

Andy: Because the difference is, you might be able to get it in on the front end, but getting it in through the back end of the ATS when you have 50 different ATSs that gather information differently and APIs are different, it's impossible to bring it all down to one common denominator to make you be able to apply to all of them. So you might be able to solve for the top three or four at one time, but the long tail's huge still now too.

Chad: Well, that's customized work though and that's money to be able to implement for like, somebody who has a Taleo and to be able to get it right. And I understand there's a shit ton of maintenance that has to happen on those APIs and so on and so forth-

Andy: Oh, yeah.

Chad: But still.

Andy: Every client's ATS is sort of configured differently, right?

Chad: Yeah.

Andy: If every Taleo client had the exact same Taleo set-up, you can build an API, you can build a functionality, you can get everything through a mobile. That's not the case.

Chad: No.

Andy: Once you have one client do any customization to it, you're kind of fucked. So I think that's what people need to solve for and I mean, there's a lot of smart ... Much smarter people out there than me, and they haven't figured it out yet, so.

Joel: So Nexxt offers a lot of services and solutions being in the industry for a long time, so you've seen things come and go. Five years from now of the new stuff, what are we still talking about? What are the big success stories in the future?

Andy: Sure, I think it is going to come down to performance marketing. Everything is going to be performance. People want to pay for what the value they're getting. You know, text messaging, again, that's going to keep growing.

Chad: I want to talk more about that.

Andy: Okay.

Chad: So let's put a pin in that, but keep going.

Andy: Yeah, so I will say the text messaging's huge. I think retargeting's huge. The bounce rates on client's websites from job seekers is huge.

Chad: Oh yeah.

Andy: And we don't know every single step of the way why. There are actually companies out there right now that are working on that to show you where the gaps are and why people are bouncing where they are and how to recapture them, but retargeting's huge. If you can drop a cookie on your user and you can know where in the process they dropped off, you can then retarget them at the right time with the right messaging.

Chad: But a lot of those cookies and the targeting and all that other fun stuff with GDPR and all these new regulations, new regulation was just put out yesterday-

Joel: Chrome.

Chad: About ...

Andy: What?

Joel: Chrome security on Google, they'll tell you how you're being followed, 'cause it's following you.

Chad: Yeah, all the stuff, new legislation just pushed in Illinois yesterday. Do we feel like we're going to be able to collect enough data to continue to do those things? 'Cause right now, it's still the Wild West.

Andy: Well, I think you have two ... Well, that was going to be my support to you, where GDPR is ... It's standardized across the European nations, right? Where in the U.S. we're not standardized, I mean, California has one set of rules, Indiana has one set of rules-

Chad: But don't you have to like, develop a program for like the hardest set of rules?

Andy: That's the way it should be, right. And then you have to have people opt in, double opt in, and then if you do that and you're in compliance, then you can drop your cookies. Every time you go onto a website, it's going to say, "We collect cookies. Are you okay with this?" If you accept it, then you know, and we can re-target it. So you know, you've got to go back-

Joel: Will employers be comfortable with that message when people go to their site? That'll be an interesting dilemma, right?

Andy: Well, let me ask you, have you ever left a site because it said it was collecting your cookies, or do you just go and clear your cookies out afterwards if you didn't like it?

Joel: No, but I'm not an HR person who doesn't want phone calls or messages from job seekers saying, "Why are you following me?" Or "How are you following me?"

Andy: Right, well-

Joel: That may not be the most comfortable conversation.

Andy: There's a stalking way of following somebody and then there's the way of re-targeting subtly.

Joel: But if I'm an HR person, do I want to explain that? I don't know.

Andy: I don't know. You know, you're talking about five years from now, right? Today, I'm agreeing with you. Five years from now-

Joel: Okay, keep going.

Andy: Again, the landscape changes. Right? So how do you reach the passive job seeker or the active one that maybe have interest but just didn't want to go through your 20 page application? But you have enough data on them from whatever pages you did collect, and say, "Damn, this person's a great candidate. How do I go back after them?"

Chad: So okay, I'm going to pivot back to texting, because you guys have how many-

Joel: You forgot virtual reality, by the way.

Chad: Oh, Jesus.

Andy: Augmented reality, [crosstalk 00:15:47]

Joel: Virtual reality.

Chad: He's still hanging on to Second Life like you wouldn't believe.

Joel: I'll-

Chad: So he's ...

Joel: I will be redeemed one day, trust me.

Andy: I heard MySpace is coming back, too.

Chad: And friends, sir, if you ever go to Second Life and you see a fairy unicorn, it's

Joel.

Joel: Shh, don't give away my identity.

Chad: So back to texting.

Joel: I'm the only one there.

Chad: Back to the texting side of the house. You guys have how many to date? You have like a database of like-

Andy: Almost 8 million.

Chad: 8 million? Okay.

Andy: 8 million opted in text messaging job seekers.

Chad: So text messaging is to me-

Joel: They were brilliant early on.

Chad: Fucking crazy.

Joel: By the way. Very early on, they had an opt in for resume postings to get text messages.

Chad: Yeah.

Joel: And that's been a very profitable business for you 10 years later.

Chad: Well, when you see the returns on text-

Andy: Right.

Chad: ... responses, and that hasn't changed-

Andy: No, it's actually getting better.

Chad: Yeah, why-

Joel: Damn.

Chad: Why isn't every company doing texting? We nail this all the time.

Andy: Right.

Chad: It's like, if you're not texting when you're recruiting, you're fucking dumb. I just don't get it.

Andy: So I got to go back to slow to adopt, right? Five years from now, everybody's going to have some type of text messaging.

Chad: But everybody needs top talent now.

Andy: Everybody needs it now and you know, not everybody's going to survive. For whatever reason, and that might be one of the reasons-

Chad: Well, that even means you, HR director or TA director. You might not survive because you can't get the talent fast enough because you're not using texting or some of these other programmatic tools or what have you.

Andy: They are, and I think anybody would be remiss to say, "Let's not try everything and see what we get from it," because there's enough providers out there to say what works and what doesn't work. My best analogy when I'm talking to clients is, "If you had a million dollars to invest in a stock portfolio, are you going to put it all in one company?"

Chad: No.

Andy: And granted, yeah, in foresight I could have put it all on Amazon, Apple, Google, any of the fang stocks, right?

Chad: Yeah.

Andy: But my crystal ball's broken today. So my answer is, you're going to take your million dollar recruiting budget and spread it across 10 partners and move money around based on who performs best. And quite frankly, if Nexxt wasn't one of the ones that were performing for some crazy reason, 'cause we always perform ... That was a little plug.

Joel: Obvi.

Andy: You know, then they should move money out of our stock.

Chad: Well, and that's where we were talking earlier about the agencies. They're like the consultants to be able to-

Andy: They're your financial advisor.

Chad: To help you make the right decision for those 10. Not for one-

Andy: Right.

Chad: But for the 10.

Andy: And not for 40.

Chad: Yes, exactly.

Andy: Because you also don't want to be spread too thin. You have to have the right number of sources for your budget and for your recruiting needs and to make, again, I mean, I truly say this when ultimately we all really are looking out for the job seeker and we want them to have the best user experience, but we want to make money doing it.

Joel: Aw.

Andy: We do, we do. I know.

Chad: He's so sweet.

Andy: That was sweet.

Chad: I'm going to give him a hug, give me a second.

Joel: He's a tough guy, but he's really sensitive.

Andy: Aw.

Joel: Yeah, isn't he?

Andy: Okay, I'd better order another drink.

Joel: Are you sensing that companies are moving more toward a marketing competency? Are they moving too slowly? What's your sense on that?

Andy: I think, especially the major companies and the top fortune 500, are moving ... I mean, most HR departments have an HR marketing department associated with it, right?

Joel: Really?