I love the name. In a sea of look alike offerings with names like JobZombie, CareerPotty, EmploymentAsphalt, TalentMagnate and 10,000 other indistinguishable variants on the words Talent, Career, Employment or Job, Zao comes out of the chute with differentiation. You pronounce it “Zow”.
With 11 employees (mostly in Israel), Zao isn’t the smallest startup looking to make a name in social recruiting. It’s certainly one of the most focused players in the current generation. (A generation in social technology related firms is something under a year). Zao is 90 days old and making great strides.
You have to parse through the me-too crap to get at the company’s real value. Zao is another in the herd of players who propose to deliver incentive based referral programs harnessing social media. That means that they are following the path blazed by H3 and Jobster in years gone by. All of the processes have been patented and (we think) purchased in the recent flood of investment money flowing around the industry.
In a world where reinventing the wheel works as a fund raising juggernaut, it’s nice to notice that there are some lessons learned from the past. Hans Gieskes, the founder of H3 tried to encapsulate what he and his team learned when they shuttered their operation.
His key points:
- You can take a horse to the water, but you cannot make him/her drink. Only 4% of people are actual “connectors” (see Malcolm Gladwell, The Tipping Point), perhaps proven by fact that fewer than 4% of LinkedIn’s members are in “500+” category. No wonder that in traditional ERP programs only a fraction of employees actually take part and score (multiple) rewards. It’s great that hundreds of millions of people have a LinkedIn or Facebook account, but 96% of them will never become successful networkers regardless. So all these referral recruiting solutions are wasted on the majority of employees/people.
- Real “connectors” make incredibly prudent and balanced decisions when it comes to referring a job or a candidate: they will only make a referral if they truly believe they’re doing the right thing for both people on each side of the referral. Whereas a financial reward can certainly add urgency to a referral request, money will not corrupt their decision, as we saw at h3.com where $10,000 rewards never resulted in resume spam and never yielded bad candidates. It’s not about financial rewards; it’s about prudent people carefully managing their social credit balance sheet to first of all help people whose relationship they value.
- If we accept that only a small fraction of a company’s employees are true connectors, and in the same light that only a fraction of our personal networks are true connectors, then it’s obvious why referral recruiting solutions advocate that non-employees should be able to make referrals and earn or share rewards. Resulting back-office issues should not be underestimated, and indeed are a genuine concern for HR managers: W-9, 1099 IRS reporting, etc.
In other words, referral programs harness the energies of a few very specific types of people. While automation can reduce the complexity of referral programs, it is unlikely to significantly increase the yield of those programs.
There was something about the conversation I had with Ziz Eliraz, Zao’s founder and CEO. There are few things more refreshing than talking with a man who is driven by his vision of a better world. Elriaz is very happy to build Zao by being frugal and working through word of mouth. This is different from most of the startups I talk to who are interested in rapid growth and changing the world tomorrow.
In the conversation, we stumbled across one of the areas that no one has seemed to touch yet. Using referrals to staff the entire business ecosystem. The approach would have some chance of succeeding in the supply chains of companies like Cisco, Apple, Google, Microsoft, Boeing, Bechtel and the usual stacks in most major MSAs. While Zao has no interest in solving the problem, Ziv is the kind of guy who generates that sort of insight in a conversation.
So, if we were betting on the entrepreneur, we’d bet on Ziv. If we were betting on the concept, we’d bet against him.
Here are a few of the other competitors.