graphic for The 2019 Index of Intelligent Technology in HR Tech

 

HRExaminer Radio

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HRExaminer Radio

Guest: Martin Snyder, Principal/CEO, Main Sequence Technology
Episode: 174
Air Date: May 4, 2016

 

Martin Snyder is a principal/founder of Main Sequence Technology Inc. He has served as President of Main Sequence since 1998. Main Sequence’s flagship solution, PCRecruiter, is one of the most successful American recruitment technology brands, with over 3,000 active global customer entities across all major verticals and recruiting models. Prior to founding Main Sequence with William & Gretchen Kubicek and his brother Michael Snyder, Martin developed and marketed logistics software and general business computing services. Martin is a Registered Investment Adviser and serves as compliance officer for Darcy Brix Inc. Martin’s other professional interests include patent reform and industrial psychology. Martin was educated at the University of Akron, and currently resides in the Cleveland, Ohio metro area.

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Transcript

 

Begin transcript

John Sumser: Good morning and welcome to the HR Examiner radio show. I’m your host John Sumser. We’re coming to you today live from beautiful Redwood City, California in the shadow of the oracle towers. Today we’re going to be talking with Martin Snyder who is the principal and CEO at Main Sequence Technology. You probably have never heard of Martin, but he’s one of the most long lived executives in the HR technology space. Main sequence technology is the parent of a product called PC Recruiter which is a mainstay for power recruiters.

 

Good morning Martin. How are you?

 

Martin Snyder: Good morning John. It’s great to be on the show. Thanks for having me here today.

 

John Sumser: I appreciate it. Why don’t you take a moment to introduce yourself.

 

Martin Snyder: You just did a great job. I’m coming to you from sunny Cleveland. I’m looking out of the beautiful Midwest vista of just forest and trees filling in. Main sequence of the company that provides pre-hired technology to three main markets, which are permanent search, so [inaudible 00:01:29], staffing, which is going to be contracting and temporary work, and direct hire, which is going to be organizations that are hiring for themselves. That’s part of it.

 

The pre-hired technology encompasses both what we’ve now come to call CRM and ATS or applicant tracking. For a long time a lot of people bought applicant tracking software and they really needed CRM. They ended up buying CRM when they really needed applicant tracking software. The reason that they’re different is that an applicant is pretty much the end stage or near the end stage of recruiting. By the time somebody’s ready for applicant tracking or processing they typically have been recruited. People end up with the wrong software are asking the wrong questions.

 

Over the years the market has replied and so there’s companies that do CRM. There’s companies that do ATS. There’s companies that do both. We’ve always done both. The product PC recruiter’s been around since 1998. I founded the company with 3 of my close friends and companions. We’ve grown to about 50 employees and about 3,100 active customers right now. We have to do business all around the world. We try to look for the sweet spot with whatever technology [inaudible 00:02:48]. Before the show, John, you and I were talking a little bit about disruption versus sustaining. We see ourselves as a sustaining company.

 

John Sumser: You’re a software company in Cleveland, Ohio. I think there are plenty of people who will listen to this show and go, “That’s not possible.” What’s it like to be a software company in Cleveland?

 

Martin Snyder: First of all it’s an incredibly low cost environment to do business. We have terrific real estate. We have a lot of good talent. All of our costs are data centers, so all of our costs of doing business are substantially lower then let’s say on the coast or a major metro area.

 

Cleveland at one time in 1927 was the 4th largest city in the United States. We have lots of infrastructure here. We have an incredible fiber optic systems running between Europe and Chicago right down Euclid Avenue which is where our data center’s been. We have a lot of talent in manufacturing, healthcare, various technical leftover manufacturing industries, modeling industries, drawing, all that stuff from the 50s. There’s a lot of technical talent. We have a lot of educational resources nearby. We’re actually well-equipped.

 

In the Cleveland metro area there’s also 2 million people. We’re a reasonably large market. It’s nice being a medium fish in a medium pond. No question about it. Acquiring talent is better. There’s some good software companies here. There’s Highland software which does document management which is a fairly large company. There’s some growers here too.

 

There is a lot of debate in town about … There’s a little bit of angst because when companies do get successful they do tend to leave or establish their major operations elsewhere or they typically will exit by getting thought. You don’t see a lot of sustaining IPOing, large growing software companies in Cleveland but there’s opportunity there to do it. I think it’s the same all over the country. There’s a little bit of tech everywhere outside of Silicon Valley. It’s kind of a different world of tech. Ours is of course a Midwest labor to that.

 

John Sumser: How did you end up doing this? I can’t imagine that you were in the sandbox of a little boy and you went, “What I want to do is build recruiting technology when I grow up.” How did you end up here?

 

Martin Snyder: That’s funny. Everybody falls into what they’re doing it seems. My key partners, Bill and Gretchen, were running an ISP. They had been selling telecom and doing ISP in the mid 90s. They were very busy. My brother and I had been doing logistics software. We were doing trucking, data bases, and how we got there is a whole other story.

 

There was a recruiting customer who couldn’t make use of my partner, Bill’s, T1 line. We went over there and we looked at the software they were using. We found out what they paid for it and we said, “Geez, we could do better then that in a weekend.” We did actually prototype PC Recruiter, what became PC Recruiter in one long weekend. It was just a great business to work in. The intersection of employment in the internet was explosive. Logistics was becoming a much more digitized satellite-based larger scale business anyway, whereas recruiting at the time, and still is fragmented and is always going to be fragmented because it’s a basic economic process.

 

We like working with recruiters better. If you lost somebody’s trailer and you cascaded their whole transportation system it was going to be a long night for you. If you lost a resume the recruiter’s like, “I’ll just redownload it.” The stakes seemed a lot lower and the people seemed a lot nicer. [crosstalk 00:06:20].

 

I’ll tell you what’s been great for us is that because we didn’t know anything about HR and we weren’t planning on even being an HR recruiting, we saw it as a supply chain problem more then anything else. Even today in the inherent design of PC Recruiter and the philosophy around the whole thing being more of a supply transaction and so the people transaction has served us well. It’s a lot of [inaudible 00:06:45] and it’s made PC Recruiter more of a versatile horizontal product. We’re lucky in that respect.

 

John Sumser: You’ve been a CEO for 18 years. What’s that like? In the beginning it’s got to be a lot of [inaudible 00:07:02] operations but [crosstalk 00:07:04] you must just sit with your feet up on your desk and smoke cigars and bark orders out at this point.

 

Martin Snyder: A couple things, one is we’re self-funded. We’ve never taken any outside investment. What that means is that we’ve all had a lot of discipline in terms of working hard, staying focused. I still have a startup mentality every day I come in. We’re still fighting for our lives even though we’re not actually, but it just feels like we are.

 

There’s so many rewarding parts of doing it. When I look around I see the sheer number of babies that have been born to people who I’ve either met or met and grown with the company or been here for so long. It’s unbelievable to see the generation. When people come together or somebody refers a friend or they become a great part of the team or look back it’s a great thing. To build a small successful team that’s been together for a long time and does one thing is probably one of life’s most rewarding pursuits. I’m really happy with the way that’s worked out.

 

We’ve been a startup for 18 years. The reason that we we’re probably going to stay that way for another 4 or 5 or maybe 10, however long it takes is that we really feel like we only have a chance to come out once. When you come out you want to come out strong. We’ve been learning and building and watching for a long time. We know we’re closer and closer everyday. We watch for, we were talking about earlier, disrupters versus sustainers. I said at the top that we’re a sustaining company.

 

A disrupter comes in at lower costs and lower quality. They take parts of markets that established vendors don’t care about because they’re low margin or they don’t perceive the disrupter as any kind of a threat. As the disrupter gains rapid share then it becomes more and more difficult for, it becomes easier for the disrupter to add features then it becomes for the incumbent to match the cost and quality disadvantages of the disrupter.

 

If you don’t have that, if you talk about somebody who’s shaking up a market but they’re not really low cost or lower quality then they’re not really a disrupter. They’re an [inaudible 00:09:17]. They maybe successful but they’re really what’s called a sustainer. That’s somebody who takes cost out and adds quality in within a market. Both disrupting and sustaining are critical basic functions of capitalism and they’re expected.

 

What happens is that a disruption can be a threat. Anytime any company get successful they become subject to being disrupted. There’s just no way around it. On the other hand they’re better able to sustain, that is take cost out of and add quality in, then people who are just starting or who aren’t in the business yet. It’s kind of a really [inaudible 00:09:51].

 

When disrupters come along and take value out or disrupt the value chain then the incumbent, which is us, we have to respond by moving somewhere else in the value chain. We have to recognize when we’re being disrupted and immediately step away from it, not try to compete, and find other areas of the value chain because every time there’s a disruption there’s also value creation somewhere else. We’ve done that in a lot of different ways over the years. We’ve found tons of value in different spots that’s kind of buried. It’s below the radar or that means something to people but it’s not yet been disrupted or it’s something that the larger companies have trouble with.

 

I’ll give you some examples. One is email handling. Something like probably 90% plus of corporate email users still use Outlook as their primary client. We knew that. With PC Recruiter people just didn’t like switching between their ATS and their email program. We devised a way to operate PC Recruiter without ever leaving Outlook. We call it the portal for PC Recruiter. You stay in your Outlook. You use PC Recruiter. You really never have to switch out of Outlook. It just becomes a part of Outlook, the menus and the emails and stuff. It’s really cool. It’s not really disruptive, it’s just more sustaining, but it’s not an area where anybody else is focusing on.

 

Some other ones like [inaudible 00:11:10]. In recruiting and staffing companies, the phone is a big part of what happens to begin to record like sending texts into the database or recording events of phone calls when they happen or where they were made or what happened on the call. If you have an integrated phone system, which is not usually within the [inaudible 00:11:27] of recruiting technology, it adds a lot of value. It hasn’t yet really been disrupted. It’s not really that an attractive place for the other vendors. It’s a place where we do very well. If you want to have an integrated phone system with your recruiting CRM then PC Recruiter’s a great choice for that because we put focus in that area.

 

That’s how we sustained for the 18 years. We maybe become a disrupter ourselves. The opportunity may come up at any time where something really big and useful could be disrupted and hopefully we’ll meet a company if there’s an opportunity to do that. When we come out, one way or another, we want to give you a strong sustainer, we’ll have a serious disruption, and that’ll take us to [inaudible 00:12:05].

 

John Sumser: I assume you’re following the changes in what used to be resume [inaudible 00:12:12] as it becomes a text analysis and text calculation. Would you call that a disruptive force?

 

Martin Snyder: Yes, absolutely. We have the whole question of artificial intelligence and all the different ways that that can apply to recruiting. The questions that we ask about artificial intelligence and recruiting we can just as well apply to realty or medicine or other areas of professional services in individual situations. Where’s it going to apply and where’s the value going to be?

 

Large text searching period was a disruptive technology when it first came along, then the ability to do it, even today. If you want to have really huge volumes of [inaudible 00:13:01] hundreds of millions of resume that you can read quickly and thoroughly for key words and [inaudible 00:13:08] operators in some sort of reasonable time span and then keep that index updated, it’s a significant technical challenge. If you could do that at a low cost or drive the cost down there’s value to be had there. Whether or not that’s a standing disruptive it’s hard to say.

 

In terms of the artificial intelligence of reading resumes, John, when I think and what I’ve found so far is that recruiters, or human minds, are very, very adaptive to matching. We do a pretty good job with the matching actually. A recruiter who’s given the right broad information, let’s say a stack of reasonably accurate resumes, can make the final selections or make a matching decision relatively quickly, a lot better then any [inaudible 00:13:50] that we’ve seen so far. Because the matches aren’t strictly a matter of key word matching, there’s a whole bunch of sub rows of stuff. There’s culture, there’s where they’ve worked, the experience, salary, all kinds of different stuff. The kinds of team that’s involved, which recruiters are aware of when they’re reading or looking at the technology where’s [inaudible 00:14:08] difficult time with it.

 

Where artificial intelligence may have a lot stronger impacts. Let me give you an example. If you download a name or you have a name that’s in LinkedIn or 6 other databases, it’d be nice to have a software facility where you type or just say some of these names the software goes out into the world, LinkedIn, Facebook, internet, we’re everywhere, combines the profile and then intelligently says this information matches, this doesn’t, and then intelligently calculates what we call propacuity, which are relations between data elements. In recruiting a small amount of propacuity can go an incredibly long way.

 

For instance, if I happen to have a job for you, a role that I’m filling, in your spouse’s home town I may have a terrific leg up on getting you to consider that role. If I don’t know that that’s your spouse’s home town then I miss that small piece of propacuity. It could make a big difference. Real artificial intelligence brings that to the attention of recruiters so they can make decisions about it. The augerism is not going to say the spouse’s home town ranks for this many points so therefore I’ll put it up in the search results. It’s got to be a little more integrated with people. The most interesting part of the AI is really how the people in the AI are going to merge their skills together.

 

John Sumser: I’ve been seeing models that completely refute the idea that meaning and artificial intelligence is an important part of statistical analysis and say instead that you can using virtually nonsense factors accumulate a predictive way that allows you to bet on a particular candidate without regard to the voracity of the resume or the literal specifics that recruiting is so good at looking at. For instance, the question of whether or not there is a dot between the first and last name in an email address is predictive of performance in some cultures. The question of what the format of the resume document is is predictive of performance. You take these little silly things and you add them up and you get a better likelihood of a prediction of success then a human being can generate generally speaking.

 

That stuff is coming. I wonder how you make sense of that because it’s not really artificial intelligence. It is more like figuring out the odds and counting the cards in Las Vegas.

 

Martin Snyder: I think you’re exactly right. I think there is definitely validity to it. If you look at Wall Street, an index fund outperforms hedge funds. Unmanaged, completely random process outperforms the most information intensive, high contentionality process. Warren Buffet’s got a bet with a guy for a million dollars that the S&P will outperform his hedge fund for 3 years. [inaudible 00:17:20]. I think so far I think he might be ahead. I think Warren Buffet might be ahead.

 

When you combine that I suppose when you say combine that method, that scale, if you’re hiring a lot of people I think that that could work well. It’s counterintuitive. The investors of ours just hate the idea of it, a market itself could just do a better job then they can.

 

John Sumser: Right.

 

Martin Snyder: Recruiters may hate the idea of [inaudible 00:17:46] analysis of a whole bunch of people who do a better job then they can, but they very well may. When it comes down to picking your quarterback or picking your power forward or your whatever it’s going to be, a high position variable role that’s got leadership and all kinds of politics and emotion involved with it then you’re not going to have such success. If you take those methods and you use them with team and skill then you’re probably going to get ahead of it.

 

If you look like, I always use the example of [inaudible 00:18:13]. He’ll beat you with his players and then he’ll beat you with your players. It doesn’t matter how well you assess him. You can assess a guy like Randy Moss up and down when he’s in Minnesota. You’re going to get a bunch of results and say it’s a bad seed, and then he’s going to go over to New England and he’s going to be a model citizen. It’s still the exact same person who you would assess out the exact same way.

 

John Sumser: I agree. What I tend to see happening is that lower value decisions are better made by machine. There’s some threshold that you find where you hand it off to people to do the higher valued decisions.

 

Martin Snyder: Let’s talk about airline pilots for example. It used to be before the age of the simulator that pilots had to do a lot of reviewing and airlines had to develop a lot of systems where they could closely watch a person for a good extended period of time with a reliable watcher before they would let them become a pilot with significant responsibility. Not you can have a virtually entirely automated hiring process for pilots. You can compare their flight records which are all computerized. You can have them fly simulators which both the courses and the responses are entirely digitized and quantifiable. Simulations are a very, very effective on the job predictor.

 

At some point you still have to meet the person, talk to the person. Can this person function with other people? Is this person we want representing our company? How’s he or she going to be with customers? There’s parts of every job that are not necessarily mechanistic no matter what you do, especially of any high value job. Recruiting’s always going to exist. We’re never going to be able to call our direct competitors and approach their talent because otherwise it would be just straight up war and people don’t want that. There’s always going to be trusted intermediaries. People have loyalty. They have ties to their organizations, not necessarily that they wouldn’t leave and consider other offers, but how much information they’re willing to share with any other company in their space or their room.

 

My people are not going to just go out, most of them anyways or all of them, 99% of them are not going to go to some competitor and give them every bit of competitive intelligence against future recruiters. They just wouldn’t do it. They wouldn’t want to do it. If you’re going to hire somebody and you need that information there’s always got to be an intermediary to do it. Even then that whole process of one person leaving a tribe and joining another tribe, that’s some very middle brained ancient stuff. I don’t know that computers are going to disrupt that anytime soon.

 

John Sumser: I think that’s right. At the same time between the accelerated levels of investment and the recent continuation of the explosion of processing power the recruiting industry is flooded with gizmos and gimmicks and new ways of doing things. How do you make sense out of the flow of stuff?

 

Martin Snyder: I use that model of disruption and sustaining because I think that has been proven out enough times. High tech is such of a speeding up environment for business. Businesses are born. They live their whole life cycle and they die. I’ve seen several cycles of that already. It’s so much faster then it used to be. You can see from experience that the disruption/sustaining model, it’s real. That’s really describing something important that’s happening.

 

The second is is that we have that reliance and that faith that it is still a human business. It’s going to be for a long time. We look at other businesses that were amenable to disruption where their stakes are reasonably high like recruiting, like real estate. What you have is that the people who were good at it are massively empowered to do more business and so the business is shaken out. There’s fewer of them, but the ones that are practicing are much sharper. You find that the auspices and the predicates of buying a house, how many you look at and how you look at them and what you do digitally and all the homework that you do as a buyer before you even start is changing. The behavior’s changing.

 

It’s the same with recruiting. More and more people, they realize they’re in charge of their own career. They know what these features are. A lot of this stuff is consumer directed in terms of what’s your salary range, what are the job descriptions, what’s going on in other companies, the glass door. There’s all this visibility that was never there before. It doesn’t remove the need and it actually increases the need for high touch, high quality human contact. A job is not a pile of sticks. It’s not a hunk of metal. It’s identity. It’s security. It’s prestige. It’s all kinds of things. It’s intangible and it’s unique. There’s so much psychological stuff with it.

 

It’s about as high stakes a sale as you’re going to make. People don’t tend to just make high stakes decisions without talking other people at some point down the chain. I just don’t see that changing no matter how much technology comes along. If I were a recruiter I would be concentrating on becoming a better recruiter and making sure that all my systems were in line so that I can do what I do but at a higher volume because that’s what’s happening with real estate. That’s what’s happening with law. That’s what’s happening with medicine. It’s the same everywhere. There’s a determination to squeeze out the quality time from high performers and get rid of everything else or we’re move it along to the lower part of the value chain or do whatever it necessary to squeeze more production out of new productive assets. [crosstalk 00:23:54].

 

John Sumser: In the software business in general, the theme seems to be create more value, give it to your customers. What’s next in your pipe of more value for your customers?

 

Martin Snyder: That’s a good question. There’s some good answers. We were using an outside analytics firm, a third party partner. Analytics has now become so core to what we do that we have to do our own which was build our own analytics staff from scratch. That’s occupied us for the last 3 or 4 months pretty fully, and will continue to occupy us for the next couple months. John, one of the things that we see is that there’s no, and Bull Horn, one of our biggest competitors has solved this already and stepped in front of us there, but that’s okay because there’s plenty of time. One of the most interesting things we see is that for CRM, just general sales and the economy is really becoming more like recruiting then vice versa.

 

These days when you’re selling an abstract solution that’s a completely digital or it’s just abstract, it’s an off shore/digital/automated production, whatever it might be, these are very abstract solutions that we’re selling, very unique. Selling a product today has turned into almost like recruiting a customer. If that’s the case and the old methods of thinking of recruiters as now going to be turned towards general sales, which could be interesting, you would find that the CRM companies that come out of the recruiting space and they have a leg up.

 

Bull Run’s trying to compete straight up with sales force. More power to them. They’re coming at it from a recruiting mentality which maybe more effective and may have better traction with people going forward. If that’s the case then we’re just steps behind them in behind able to sell CRM to the wider market. PC Recruiter’s already used a lot of times for CRM now in a casual way so [inaudible 00:25:54].

 

The other thing, John, is, and I think you may agree with this, the delivering of value to customers is really, really important. All of these companies have never made enough investment and where we need to invest in our investing is customer success. Basically automated learning, embedding education within the product is absolutely essential. Basically we’re going to have to teach people how to recruit and how to use PC Recruiter because it’s like selling a guitar. You have to teach people to play guitar and be a musician if you really want to sell more guitars. That’s what we need to do.

 

There’s a lot of technology there. There’s a lot of interesting thinking there. I think our focus for the next couple years is really going to be about education and building education into the product. I think there’s a lot of value there.

 

John Sumser: That’s really interesting. I’d like to follow up on that. We have blasted through our half an hour so we won’t get to that today. What should I have asked you that I didn’t?

 

Martin Snyder: John, we could talk for days. You’re a philosopher. I’ve been reading your stuff since 1997. I thought it was a great conversation. If your audience wants to take away one thing that I could help with is whatever you’re in the market for don’t accidentally buy an ATS when you want a CRM. Don’t buy a CRM when you want an ATS. If you don’t know what the differences are stop what you’re doing and find out if you’re in the market for talent acquisition software.

 

John Sumser: That’s fantastic piece of advice. Would you take a moment and reintroduce yourself and tell people how they might get a hold of you?

 

Martin Snyder: One more time, I’m Martin Snyder. I’m principal and president of Main Sequence Technology. My email address is martin@mainsequence.net. My product is PC Recruiter. We can help you, especially if you’re doing any kind of passive recruiting or recruiting a passive candidate, if you’re doing head hunting, if you’re doing staffing, or if you’re a corporation with direct recruiting needs we have some great technology that’s low cost, very effective and work plays well with other technology.

 

John Sumser: Thanks very much Martin for taking the time to do this. It’s been a great conversation. Not enough time.

 

Martin Snyder: Not enough time. I’ll do it again for you sometime. I really enjoyed it. Thank you for the opportunity.

 

John Sumser: Thanks so much. You’ve been listening to HR Examiner radio. We’ve been talking with Martin Snyder who is one of the founders and the CEO of Main Sequence Technology. I think you might underline Martin’s notes in the sales. CRM is becoming more like recruiting then vice versa. Sales is becoming more like recruiting then vice versa. It’s a counterintuitive notion that’s liable to be exactly right. Thanks for tuning in today. It’s HR Examiner radio. I’m your host John Sumser. Have a wonderful afternoon and thanks again Martin.

End transcript

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