I recently had the opportunity of speaking with Richard Alberg, founder of MyWorkSearch – A company he set up in 2009 after selling his former company, PSL to Kenexa in 2006.
MyWorkSearch is described as a practical new way to help jobseekers find the right job - fast.
In the full interview below, Richard talks about his early experience running PSL, selling to Kenexa and how the idea for MyWorkSearch came about.
Can you give you some background information about yourself, were you the entrepreneurial type growing up?
I was not entrepreneurial as a child. However I always had a strong desire to do things my way and an aversion to being told what to do. Once I started work it did not take me too long to want to run my own business. I worked for others for about two years and then set up my own company.
Tell me about some of your experiences running PSL and some of the key things that you learnt from that experience? You also sold that company right?
Many of my early business endeavours were opportunistic. A chance conversation or observation would lead to a venture and this is how PSL started. I got interested in psychometric testing and formed a company to distribute a product. The company developed from there through a series of steps that were a consequence of minor successes and failures. For example quite early on I recognised that although we had a very high gross margin we really struggled to sell enough to exceed our fixed overhead. I therefore found a slightly larger competitor whose product range only marginally overlapped with ours. We agreed to merge operations and through doubling turnover whilst halving the combined fixed costs transformed what were two barely profitable companies into one very lucrative enterprise.
Another realisation was the importance of having our own very distinct products. Having a ‘me too’ product simply meant we had to sell on price whereas a differentiated offering set us apart. The risk, of course, is that we get it wrong and the market rejects our solution. From time to time this happened. However when we got it right we could make profitable sales whilst also developing our reputation for innovation. We also found it easier to attract media interest and win blue chip clients.
For many years I ran PSL simply trying to do better each month than we had the previous one. I had no real strategy or defined end goal. Survival followed by profit were our principle objectives. I joined a group of SME CEOs called TEC (now known as Vistage) and for the first time was exposed to strategy. I started to think through what we were creating and how we might achieve an exit. I also recognised our many failings as a business.
I decided my existing approach was flawed and that PSL had to either break out of mediocrity or fail. We bet the company on technology and we focused all our investment and efforts on building a world-class online assessment capability with similarly sophisticated psychometric test content. We had one major competitor that was far larger than us and had far more resources. We on the other hand were nimble and innovative and we played to these strengths. We were creative in how we promoted our achievements and we worked very hard to secure some lucrative and high profile wins. Our successes and reputation for innovation helped us attract some very talented people and this in turn led to more success.
There came a point when we had a solid UK business however both growth and our clients were requiring us to go international. I decided that this was a good time to consider a sale as our strong client base and excellent IP would be of interest to an overseas company looking to enter the UK, an organisation that could cross-sell into our clients or a business that could introduce our products to their clients. We would be especially attractive to a buyer with all three characteristics. We appointed advisors and after a marketing process had four offers and in November 2006 sold to Kenexa.
Tell me how the idea for MyWorkSearch came about?
I completed my earn-out at Kenexa and left in November 2008. Towards the end I was actively considering what I wanted to do next and started getting in touch and meeting with many of the people I had got to know over the years. At the same time the post Lehman global recession was making itself felt and unemployment was increasing. It struck me how much organisational effort was required for my networking activities and how what I was doing was just a fraction of what an effective jobseeker would need to do. It also struck me that most people are hopelessly unprepared for the jobs market and the help available to them was expensive and of inconsistent quality.
In conversation with a friend who runs a recruitment agency the idea of MyWorkSearch developed. Would it be possible to develop an online service that provides jobseekers with all the assistance they require to secure a new role? If so the entire economics of the career transition market would be changed as a 24/7 ‘all you can eat’ service could be made available at very low cost. I put together a small team and we set about building a basic workflow automation product combined with eLearning, tools and resources.
What is MyWorkSearch?
We started development on MyWorkSearch in February 2009 and it has come a long way since then. It is a software platform that takes a person on a journey into employment, providing the individual with all the resources that are helpful in obtaining work. These range from tools such as CV building to data such as the million plus UK vacancies sourced from thousands of job boards and career sites to high quality eLearning to assessment to activity management etc.
At the same time there is complete tracking and reporting, both for the individual jobseeker and the organisation that has enrolled this person in MyWorkSearch. A short video on MyWorkSearch can be seen at: http://www.youtube.com/watch?v=XRofEePW5co
Talk me through the first few months of running the business? What would you say was the hardest part of starting the business?
Starting the business was easy. We did not have to raise funds and we could dive straight into product development. Getting the software built was relatively simple as I had good connections as well as experience. Developing the eLearning was more of a learning curve as I had not done this before. However asking around combined with Internet research allowed us to get going. The challenging economy made it easier to find people with the skills we needed and many suppliers were willing to offer their products and services at very competitive rates.
The difficulties started about six months later as we got closer to having a product that could be used and we started to sell and market. We had no reputation or track record and we were suggesting a very different solution from the prevailing human delivered career transition assistance model. The good news for us is that we had a relatively small cost-base and could just get out there and sell. And this is what we did. For employer sales we knocked on doors and used our contacts and we also established some reseller partnerships. For consumer sales we agreed affiliate relationships with a number of job boards.
Our initial approach was for all the team members to work from home. This forced us to adopt cloud computing for every aspect of our business, from Salesforce.com CRM to hosted Exchange, Sharepoint and accounting as well as VOIP telephony. Not only did this save costs in the early days it also allowed us to scale up quickly once we needed to expand.
The challenge with a home based team is communication. We really had to make the effort to talk and all those easy and accidental conversations that take place in an office were absent. Items were easily missed and coordination was that much harder.
How were you able to fund the business?
I was lucky in that my exit from PSL meant that I had the personal resources to fund MyWorkSearch. Self-funding removed the headache and delays of fund-raising however it also removed the third party business oversight that comes with a VC, a dynamic that can work very well.
Would you say the initial idea for the company, or that your business model has changed since 2009?
MyWorkSearch has changed hugely since we started. Our initial focus was selling to employers making staff redundant and also directly to jobseekers who wished to pay themselves for the service. We quickly discovered that selling to jobseekers was not for us. We did not have the b2c marketing skills or budgets necessary and in any even felt that there were reputational risks in selling to unemployed people. Notwithstanding our money-back offers and our belief that we are offering a crucial and valuable service, we did not want to be accused of taking advantage of people who might be financially stretched and desperate.
We therefore decided to focus on the employer market and we achieved some swift and significant wins. We then heard about Department for Work & Pensions (DWP) funding for services that support unemployed jobseekers. It was immediately obvious that MyWorkSearch was perfectly suited to this market. The amount paid per person was relatively low and this limited the human delivered services other suppliers could offer.
Not only could we provide our service for the sums paid, we could quickly scale to meet as much demand as existed and do so nationally. We quickly expanded, hiring a team of account managers to support Jobcentre Plus advisors and within a very short period of time became the largest supplier in the country for this DWP contract.
For 15 months our focus was on delivering this contract and further developing MyWorkSearch. We were convinced that there was an ongoing need for technology delivered jobseeker assistance and it became clear how much government funding existed to get people into work. It also became obvious that technology’s ability to track and report on activities (and inactivity) would be especially interesting to the government funded jobseeker market.
All of this encouraged us to reinvest in improving MyWorkSearch. We focused on the needs of the government-funded market and refined our product and proposition for this sector. From time to time we have put ourselves forward for business awards and we have been fortunate in winnings several. The Cabinet Office launched the Innovation Launch Pad to showcase the very best of what was available from SMEs for the public sector.
We entered this competition and were delighted to be one of the final nine chosen as “exemplars of the innovation and value that government can get from SMEs”. This led to additional public sector opportunities and our focus nowadays is very much in this area.
Our initial government contract ended in March 2011 as the previous administration’s programmes came to an end. The Coalition Government’s programmes and focus are in different areas and we have had a slow 2011 as we have adjusted our offering and then bid for work. The new few years should be busy as we deliver on the programmes that are now in place.
What would you say MyWorkSearch does differently from other online employment platforms out there?
The depth, breadth and usability of MyWorkSearch set it apart from the handful of other online services. Having helped many tens of thousands of jobseekers we also have the data to demonstrate that MyWorkSearch is effective at getting people into work. Indeed compared to others, MyWorkSearch users are 50% more likely to secure employment and at the 90-day mark are three times more likely to have found work. All of this puts us in a very strong market position. However we don’t take our leadership for granted and know that others will be coming after us.
How big is your team now?
There are 20 of us.
What would you say has been some of the most crucial that you've done to build the company to this level now?
We have been willing to take a medium term view and invest significantly in our offering. There were other online solutions in the market that had quite simple capabilities and fed off the considerable demand created by the recession. However customers are now more informed and discerning and our substantial product development investments over the past three years means we are far better positioned to secure business.
Our initial premise that there would be substantial and growing demand for online jobseeker support has proven correct. Where we were wrong was in our route to market. Our willingness to explore commercial options and pivot as required have been essential.
What is your business model?
We sell subscriptions to use MyWorkSearch. Those who enrol people in our service pay either a per-person charge or a monthly charge for access to MyWorkSearch. We invest in product development but other than this have relatively low overheads and a very low marginal cost of delivery. Once we get beyond a minimum level of subscription revenue our business becomes increasingly profitable.
Is the business profitable?
We made significant profits in our first two years of operation. However we will make losses for our latest financial year as a result of maintaining product development for the many months between our major contract ending and new ones starting. We are now profitable again.
What’s been your most memorable moment so far on your entrepreneurial journey?
Selling PSL and achieving personal financial security . Being able to run a new business knowing my house is not on the line is a very liberating situation.
What pieces of advices could you give to aspiring entrepreneurs out there?
There is a short term need to get the business trading profitably and with cash as otherwise it will not survive. But once this is achieved have a strategic journey in mind. This need not be cast in stone and change is both possible and sometimes essential. However you will achieve success far faster if you know where you want to head.
Hire talent. You can achieve far more with good people around you and will be in a far better position to exit if a purchaser can see there is a strong team that will remain in the company.
Be merciless on costs. Making sales is hard and spending cash is easy. Make your money last.
What can we be expecting from you and MyWorkSearch in 2012?
I see technology driven jobseeker assistance as becoming the norm in the sectors we operate in. By the end of 2012 I want MyWorkSearch to be the default supplier. I think 2012 will be a very good year for us.