It's NOT a Labor Shortage
There is no labor shortage. At least that's the position taken by Sean Behr, CEO at Fountain, a solution for industries with high turnover. Nope. There's a SPEED shortage, instead. What the hell does that mean? The boys dig into his theses and tackle a wide variety of high frequency hiring issues plaguing so many companies these days in the process. A must-listen for employers having issues hiring truckers, nurses, restaurant staff, warehouse workers ... yeah, OK, pretty much all essential workers.
TRANSCRIPTION SPONSORED BY: Disability Solutions partners with our clients to build best-in-class inclusion programs and reach qualified, talented individuals with disabilities of every skill, education, and experience level.
wHide your kids! Lock the doors! You're listening to HR’s most dangerous podcast. Chad Sowash and Joel Cheeseman 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.
Oh yeah, what's up boys and girls. You know who it is. It's your favorite guilty pleasure AKA the Chad and Cheese podcast. I'm your co-host Joel Cheeseman joined as always.
The Spanky to my alfalfa Chad Sowash. And today we welcome oo, this is a big deal! We got the CEO of Fountain kids. Sean "don't poke the bear" Behr. Sean, how are you, man?
Great to be here guys. I'm doing really, really well.
Dude. What took you so long? It's been a while. I mean, he's never been on the show. You've you've had a name change. You've had a rebrand, hundreds of millions of dollars in funding. Oh my God. It's been hard for me not to sleep some nights because you haven't been on!
Joel (1m 5s):
Hey SoftBank takes up a lot of time.
Sean (1m 7s):
Yeah. Investors take up a lot of time, but let me tell you, it's not for lack of trying. I mean, you guys, I've only been the CEO here for two years and finally I got on! I feel like I don't do you guys, is there a certificate that comes at the end of this? It's like in a frame I can put on my wall or ?
Joel (1m 28s):
Say more Sean, say more. We love you long time.
Chad (1m 31s):
We need to get him a Chad and Cheese stepbrothers poster is what we need to get.
Joel (1m 36s):
We could work that out, work that out. Only if he has a bunk bed in the house.
Sean (1m 41s):
More room for activities.
Chad (1m 44s):
Amen brother. Amen. Amen. Excellent.
Joel (1m 46s):
So what's the Twitter bio on you, Sean, before we get to the company and our topic of the day?
Sean (1m 51s):
Yeah, I mean, I'm a, I'm a tech guy through and through. This is my fourth company, the first one in the HR world, but I did did a company in e-commerce space and did a company in the advertising technology space and one in the automotive technology space and now in the hiring space. So
Joel (2m 8s):
Did you hit your head and then decide on HR company was a good idea?
Sean (2m 12s):
Yeah, I didn't didn't think that one fully throw it. No, it's been really great. Look here. Here's what I would say. You know, this will be the only moment that maybe is, is righteous at all on this entire podcast. At least for me, the world's gonna be fine with, or without better targeted ads selling you soda and food. You know, there's something about HR where I do my job at the end of the day, thousands and thousands of people get a job and you know, better than showing 15 second commercials that you're annoyed by and can't skip.
Chad (2m 46s):
So you're trying to say car parts really wasn't your passion?
Sean (2m 52s):
Chad (2m 52s):
sfx (2m 53s):
What did you say?
Chad (2m 54s):
Tell us about that journey though. The name of the company, was it STRATIM
Sean (2m 58s):
Part on STRATIM? Yeah. STRATIM. It was a great company. It's focused on sort of the world of car sharing and ride sharing. So, you know, sort of this future of autonomous driving, which it, which may or may not actually ever arrive, but a great company, a lot of disruption happening in that space. But again, you know, relatively small impact, right? The number of people who are actually giving up their car, is relatively, relatively small.
sfx (3m 26s):
Sean (3m 27s):
Whereas in HR tech it's, you know, people are getting jobs, at least for the companies that can hire them right now. I know it's very, very challenging market.
Joel (3m 34s):
Yeah. This is way too much for a Friday. Let's get to like the good news.
Chad (3m 38s):
Oh, okay. So here's a quick question. Before we jump into the topic, because with $219 million, I think it is what is the current valuation of Fountain? Is question one.
Sean (3m 50s):
Great. What is the current valuation? It's it's almost a billion dollars. It's it's not quite there. Almost
Joel (3m 56s):
Sean (3m 57s):
Yeah, almost. It's not quite there though, but look, I think it's a fair valuation. Obviously, you know, the markets have corrected and I think you're gonna see a lot of changes in valuations over the next 12 to 24 months.
Chad (4m 9s):
Yeah. They've been bloated as hell.
Joel (4m 12s):
That's Latin for layoffs.
Sean (4m 13s):
There are definitely gonna be a lot of layoffs in the world of tech. You know, we've already seen some. I think you'll see some more, but the truth is this whole industry, the venture backed industries is based on public market companies. Now, as all of us know in our 401ks public company prices have come down dramatically. It's inconceivable that that won't have an effect on private companies. You can't say that you're worth $5 billion. If there's a company that's bigger than you, that's already public, that's only worth $2 billion. So I think there'll be a reckoning here. And I think you're starting to see companies sort of focusing.
Joel (4m 52s):
Sean, quit drop in common sense on the Chad and Cheese podcast. Okay.
Chad (4m 56s):
I love it.
Joel (4m 57s):
It's a no common sense podcast.
Chad (4m 59s):
By the way Silicon Valley has never been one for common sense. So No.
Joel (5m 4s):
That's true. That's true.
Chad (5m 5s):
With that being said, you guys have been around for, you've been around for a few years. You have a big name in the industry. No acquisition yet. Who's your first acquisition?
Sean (5m 14s):
Yeah. We actually have done an acquisition already. A very, very small one, but we acquired a company called Koan, which was a great team in the OKR space.
Chad (5m 23s):
So an acquihire for most part?
Sean (5m 26s):
For most part.
Chad (5m 27s):
Sean (5m 27s):
Okay. Okay. But just incredible team and incredible vision and product and has made a big impact for us. Where I think the next one will come, and we're definitely in acquisition mode. I would say, you know, we're looking at a number of companies as we speak one, they have to be the right size. You know, we're roughly 250 employees. So, you know, we would only acquire something that is, you know, digestible for a company our size, but it also has to increase, you know, what we're up to, right? Oure mission is to open opportunities for hourly workers and blue collar workers around the world. So technologies and products that will help me do that more effectively are really interesting.
Sean (6m 9s):
But I think as you can probably guess, and you, you guys have talked to everybody. Most of the time companies are focused on the knowledge worker, you know, people that are on zooms and, you know, sit behind a desk and think about marketing and sales and accounting. A lot of those companies just aren't attractive to us. They don't add a lot of value to what we're up to. We're interested in companies that are in technology and product that's focused on sort of the workers are in the field. People who are delivering you food and your packages and driving trucks and working in stores and restaurants and grocery stores.
Joel (6m 40s):
So this is a long elevator ride, Sean. Yeah, this is getting long.
Sean (6m 45s):
Joel (6m 46s):
So let me summarize. You are a platform to hire high frequency positions?
Sean (6m 51s):
Correct. Hourly workers
Joel (6m 52s):
From finding to onboarding like the whole process.
Sean (6m 54s):
Joel (6m 54s):
But that's not why you're here today, Sean.
Sean (6m 55s):
I didn't think so. I thought I was just here to have fun.
Joel (6m 59s):
I know. Well, hopefully you're gonna have fun and are still having fun, but what we're here to talk about is that you do not believe there is a worker shortage. You believe there's a speed shortage. Explain.
Sean (7m 13s):
Yeah. I mean, I think what's really happening in the, and again, I'm gonna be speaking mostly about sort of the world of the hourly worker, you know, the person who's in the field, but I think this is probably also applicable to the knowledge worker who's, you know, sitting behind a computer all day. The easy way out is to say that there is, you know, no one's applying for the job. You know, there's just not enough people that, and you know, there, there may be some elements of truth to that, but I think the core thing that is overlooked is how important speed is in the hiring process. Explicitly in the world of hourly work. Just to kind of give you guys a sense, an average hourly worker is a probab- when they go into job search mode, which they go in fairly often, you know, usually once a year, at least they're not applying to two jobs that they really like, they're applying to like 10 jobs simultaneously.
Joel (8m 7s):
Are they typically in the same sort of universe? Like, Hey, I want to be a server. So I'm gonna apply to 10 restaurants. Is that typically how it works?
Sean (8m 16s):
Yeah. Typically like, you know, I've already applied to one, you know, apply to 10 restaurants, right. Or, or five stores or seven stores. And what happens then is now you're on the radar of seven stores. They also don't wait around for three months for the best offer. Right. Usually they're like, I need to get a job in the next two weeks. So if you're a company that can't move fast, you lose.
Joel (8m 43s):
When you say speed, do you mean the actual apply process? Do you mean the time that it takes for a restaurant or a business to connect with you or interview you? Like define speed for everybody.
Sean (8m 52s):
And a big picture, it's the whole process, but, I'll even give you an example of something really, you know, really small if you're trying to hire servers and you're running a restaurant and I tell you that everyone who applies for your job is also applying to seven other restaurants. You have a much higher chance of getting that applicant, especially the good ones if you get to them first. If you wait five days, you should assume that the other six restaurants have already contacted them. They're already in the process. They may have already even interviewed. The chances of you coming from behind and grabbing that great applicant? Very, very low.
Joel (9m 32s):
Chad (9m 32s):
So you said that, you know, there could be a problem that nobody is applying and we're actually seeing data. That that is a huge problem right now. So how can a company actually get past that? They have all these old processes that are driven by their current quote, unquote, "new tech", but all they've done is they've jammed those 1990s paper processes into the computer, right? The computer screen. So how do we get past that? Because that is one of the biggest obstacles in being able to actually get candidates in the first place and because if you don't get that, you can't even worry about speed.
Joel (10m 14s):
Especially for government.
Sean (10m 14s):
Yeah. Government for sure. It's a great point. And I think one of the things that this has this sort of the last two or three years, which been obviously very tough for everybody, but last two or three years have been things that would've never been thought of in an HR department are now like, thought of. I'll give you an example. I spoke to a prospective customer, probably six months ago, who told me absolutely clearly that they would never have anyone working under the age of 18 in any of their stores anywhere in North America, full stop.
Chad (10m 48s):
Why? Did they give you a why?
Joel (10m 49s):
Good luck with that. Yeah.
Sean (10m 51s):
They just it's been their policy. That's just been, you know, their ethos forever. Go on their website now you can be 16 and work in their stores. You know, and good for them. Right. I mean like, but unfortunately it took a, you know, it took a pandemic and you know, a national labor problem to get them to rethink a longstanding tradition. I have another customer who said, no matter what, no matter how low this job pays, no one can work at this company unless they give me a resume. And I said, I get it. I mean, I understand that you think it's a measure of quality.
Sean (11m 30s):
We can debate that, but I'm telling you in this economy in this time, it might be a good time to get rid of that requirement and just try it.
Joel (11m 37s):
And how many 16 year olds have a resume?
Sean (11m 39s):
Correct. And what do even if they did, what does it say?
Chad (11m 48s):
Nothing. It says nothing.
Joel (11m 50s):
Chad (11m 50s):
Yes. How do you spend your day? I mean, nothing. It's got
Sean (11m 56s):
It's got like two bullet points, you know, made coffee, ran register.
Chad (11m 59s):
Joel (11m 59s):
So, Sean, we talk a lot about the show and there are examples where obviously pay is a huge issue with this. Obviously speed is an issue, but I mean, if you're paying a living wage, won't people deal with the speed challenges or not.
Sean (12m 17s):
Joel (12m 17s):
Sean (12m 18s):
The good news here. Look, I do think the pay has gotten better in a lot of places. And I think there are certain companies where, you know, if you can't pay to that $15, $20 range, it's gonna be complicated. It's gonna be challenging for sure. But again, if I'm applying to 10 jobs, there's at least a few of them that are in, you know, in a pretty good pay range, you know, there's, it's not like everyone's down at the bottom. There's probably two or three that are closer to the $20 range. There are some that are in the $15, $16 range. If you're in that you gotta be in the range. You gotta be somewhat competitive. Cuz because being really low will definitely get you eliminated. But as long as you're competitive, then the question is just, can you execute?
Sean (13m 2s):
Right? And if it's one company is at $15, one's at $16. But the guy who's at $15, I've already gotten a couple of text messages from him and I've scheduled an interview and I'm going in tomorrow morning and I have that interview and he says, I can start Monday. Even if someone's willing to pay me $16, if they ping me on Monday, I'm gonna be like, Hey, you should have called me last Tuesday. I'm already starting a new job.
Chad (13m 27s):
Sean (13m 27s):
Here's a great example. I have a customer of ours. They were doing well hiring, this is in the warehouse work or space so just kind of dimensionalize that around the country. It was taking them, I think something like three weeks from the moment the person applied to the moment the person showed up for the first day of work and what was happening was the people would apply. They would get the job, they would fill out all the paperwork and then day one would show up and they wouldn't come. They would ghost.
Chad (13m 56s):
Sean (13m 56s):
And, this was a mystery and I was like, no, it's not a mystery. That person started working for a different company 10 days ago.
Chad (14m 6s):
Sean (14m 6s):
That that's it. They're now hiring people at roughly seven and a half days from application to first shift and ghosting has generally removed itself as a challenge.
Joel (14m 17s):
Chad (14m 18s):
So yeah. Being able to have somebody sit out there, not getting paid versus getting paid. Yeah. That, that seems like a benefit. It seems like a benefit to get paid. So let's jump back real quick. As Joel was talking about wages, you know, there's a bigger macro kind of narrative that's happening, where we started calling these individuals, which I think is amazing. And they started to see that they are essential to work. Essential to an organization actually doing anything. Right? And they felt like they deserved better. So they just ejected out of the actual workforce for a time or they quit. And we saw all the quitting that was actually happening.
Chad (15m 0s):
Do you think that we're going to be able to get those 3.2 million people who have left the workforce to actually come back into the workforce because they were treated so badly and paid so badly over the years?
Sean (15m 11s):
I do think you'll see some of them return. I don't think you'll see everyone return. I mean, there are some people that have moved on to, you know, different opportunities and we can talk about that, but I do think you'll see some return. Look, the last two and a half, three years have have been, you know, challenging around the world for lots and lots of reasons. If you wanna be an optimist for just a second, I think it's been a catalyst for this notion of the importance of these kind of workers, dismayed that it took a three year health thing where we basically had to shut down our economy to realize the importance of people.
Sean (15m 53s):
Look, you know, sitting here in the bay area, in Silicon Valley, people will tell you that, you know, software engineers are the most important people. We gotta get more software engineers, all that stuff. You know, you wanna talk about a role that's really important? Commercial truck drivers.
Chad (16m 9s):
Oh yeah or the people actually pulling the shit off of the ports.
Sean (16m 14s):
Exactly. Like those are really important jobs, Frankly, by the way, really hard to hire for right now.
Chad (16m 19s):
Sean (16m 19s):
It's harder to hire a commercial truck driver than it is to get a software engineer at this moment in this country. But I do think long term, this has been a catalyst for the empowerment and the value of hourly workers. I think if we're honest, if we're really honest about sort of the way we thought about talent over the last 20 years is, when we were talking about talent, we really were excluding the people that were hourly workers from that conversation, by large part. And I think the reality is most teams thought two things about this, this worker population. And again, maybe they wouldn't admit this, you know, all the time, but I think it's a fair estimate, which is over the last 20 years, we said two things about hourly workers.
Sean (17m 4s):
Number one, they always quit. And number two, we can just replace them. The problem now is the first statement still true. And the second one isn't, you can't just replace them.
Chad (17m 14s):
Well, we just saw Amazon. They did a study in some of their areas where they operate they've already burnt through the workforce.
Sean (17m 23s):
Joel (17m 24s):
So Sean, I'm guessing that there are people listening that are saying, you know what? We had 18 months of unemployment benefits, STEMI checks go out. We had, you know, trillions of dollars, you know, created, yeah. All these people have, you know, started their own business. But 85, 90% of businesses fail. The gig economy is gonna lose its luster. Aren't there people out there saying, you know what, it's gonna go back to the way it was in 12 to 18 months. I don't really need to make changes. Do you agree? I assume you don't agree with that, but I assume that there are people that believe that. What would you tell those people?
Sean (17m 57s):
Yeah. I don't agree with it. I do think there are people who think that and I think by the way, those people have been waiting for it to go back to normal for the last 12 months.
Chad (18m 8s):
Joel (18m 8s):
Sean (18m 8s):
And I think this is the new normal, I think. And again, I think in a labor market like we're in, you don't need 20% of the people to leave the market. Even small numbers of people deciding to opt out, have really big impacts on the big picture of things. I do think it's gonna be a hyper-competitive labor market going forward for this world. And what I can tell you is doing the work that we would recommend by the way, with or without Fountain. I mean, you can, you can, there's other companies that you could work with and other technologies, and you could even do this manually, but implementing the ethos that Fountain brings.
Sean (18m 52s):
I can, number one, be assured you're gonna be successful regardless of the labor market. And you'll just be, if it turns out that I'm wrong and that, you know, millions and millions of people are gonna come back and let's go back to business as usual, you'll be twice as efficient and you know, good for you. And, but if I'm right, you're gonna be able to thrive in a market regardless of how challenging it's.
Chad (19m 16s):
Well, we have those industries or those areas like we were just talking about, Amazon and how they're burning through talent, where people aren't leaving, they're just shifting, right. They're not leaving the workforce. They're just shifting what they're doing, because it's like, Hey, look, I don't wanna do that shitty job. This I'm gonna try this one over here. So they change industries entirely. So, you know, again, how do you actually convey to an organization that it is about getting them in fast. Speed is key. There's no question, but it's also about how you treat them when they get in.
Sean (19m 53s):
Yeah. I would say it's even important how you treat them when they're applying for the job, you know, like from the moment they apply, you've gotta put your best foot forward there. And then obviously all the way through the onboarding process. And then, you know, when they show up for the first day of work, you know, you've gotta do, it's a full life cycle process. But think about the number of people who apply for an hourly job who never hear back from the company.
Chad (20m 20s):
Yeah. And we wonder why they ghost us?!
Sean (20m 22s):
Exactly. You know, like you've gotta do a great job from the moment that person applies. The interesting thing here is, if you went back a couple of years here, I think if you asked Taco Bell who their competition was for both customers, and by the way, I don't wanna pick on Taco Bell. Great, great company.
Joel (20m 39s):
Oh, we talk about Taco Bell all the time. Sean, don't worry.
Sean (20m 44s):
But if you ask Taco Bell or Dominoes Pizza, whoever. Who's your competition? They would've said Pizza Hut McDonald's and whoever else. And I said, no, no, no, who's your competition for labor? And they would've said same answer. It's Domino's, you know, Wendy's and McDonald's. And I said, okay, guess what your competition for labor is definitely those guys, but it's also Amazon and Walmart, it's DoorDash and Uber, Lyft, and you know, 10 other companies that are out there. And they're all going after that same population. That has changed. The other thing that's changed for them is, they were primarily, you know, they just assumed they just could, Hey, we'll burn through these people and then, you know what, it's just cheaper to just get new ones.
Sean (21m 34s):
Joel (21m 35s):
A few weeks ago, we talked about Amazon, an internal memo that basically said we're outta people to hire in five, in a few years. Right? Yeah. Like we really are churning through the labor force in these local markets, which is a little bit scary.
Sean (21m 48s):
It's scary. Yeah. I look, I think it's a, you know, I know that there was that memo that went around or that strategy doc, that they were, you know, interested in sort of going through people. And that was fine. I do think that they're gonna need to rethink that.
Joel (22m 3s):
Sean, where are you on, I gotta bring up robots? I got to.
Chad (22m 6s):
Oh God, I was gonna hit that. Damn it.
Joel (22m 9s):
So, and two perspectives. One is sort of the, what we think of as robots that are flipping burgers, robots that are delivering things and the kind of direct robots taking jobs. Cause I think the devil's advocate would say, some people are just saying, we're gonna have robots do these jobs at some point. And the other is the perception of robots. So you mentioned trucking and we've talked to people in the industry that say, look, why would people get into a career if they think that automated cars are gonna be the future and driverless trucking. So there's the perception of robots and the actual robots that are coming. Where are you on that?
Sean (22m 44s):
Yeah. And I'll state this from the fact that, you know, I spent the last seven years prior to this dealing with autonomous driving. So I know a little bit about sort of this.