O n the 2nd April 2019 we officially announced that our startup nFold.io was shutting down, drawing to a close, an epic, and transformative three year journey.
When you give everything of yourself, into something like a startup venture, it begins to form part of your very identity, and although my decision to close down is still reasonably fresh, it is no longer raw;
A failure is not a failure unless you didn’t learn from it — To learn from an experience, you’ll have to be able to tell the truth about it and part of doing this means you need to figure out how to tell it yourself first, without dilution, falsification or rationalization.
This article is a post-mortem at understanding what worked and what didn’t, and almost more importantly, a recognition of the amazing people who walked this road with me.
Let us probe the silent places, let us seek what luck betide us;
Let us journey to a lonely land I know.
There’s a whisper on the night-wind, there’s a star agleam to guide us,
And the Wild is calling, calling…let us go
— Robert W. Service, The Spell of the Yukon
Learning about Marketplace Dynamics the hard way
nFold was a Recruitment marketplace connecting Employers who wanted to hire tech talent with 3rd party Recruiters who wanted to find great places for their candidates to work. We monetized when a hire occurred and received anything from 10-20% of the placement fee.
Our value to the market was simple, Companies needed candidates and didn’t want to spend the time figuring out which recruiters to work with and on-boarding with them without any guarantee of success. Recruiters were always looking for great places to introduce candidates to, and hey, who likes cold calling?
Marketplaces are amazing businesses to try and run. Connecting people who want to work with each other, while making ourselves responsible for the success of the outcome, is both breathlessly exciting and traumatizing, as I watched the wheels come off when people start interacting with each other on our product.
Initially we worked hard to build as few constraints for each side, to maximize the possibility of the “buyer” (hiring company) / “seller” (recruiter with a candidate) finding and servicing each other, with the goal of being a platform where hires happen without much intermediation on our part. I think that this is where the hard part in most marketplaces lies, designing and engaging demand side to synchronize with supply and vice-versa.
Guess what suffers in this process though? Quality and the user experience! We managed to get many aspects of the job done but, man, it did suck while we were doing it.
Enter the managed marketplace
Solving this seemed to require a “managed” marketplace approach which, for us, meant undertaking measures designed to improve quality of experience along specific vectors. Two vectors we tried to optimize were Job Intake where we built a tool so that the hiring manager could rate anonymized LinkedIn profiles on which we would then use Machine Learning to generate a “Target Search Profile”. The second, was vetting our recruiter signups to ensure we had those who shared our worldview and who we thought would commit to putting in the effort to serve the demand side.
Too early we abandoned this approach and tried to “manage less” by our ruthless desire to have a “product business” and not a “services business”, and therefore tried to make the tech carry the burden of a successful transaction.
Looking back, we should have continued our focus on the user experience and on how we could push our tech to accommodate particular parameters that would drive quality. This would, of course, not only start to get expensive (and possibly unscalable), but would start to create additional constraints on what supply will/can actually serve and which subset of demand it could serve.
The above statement may appear contradictory but this is the trade-off I think marketplaces need to figure out — How to prioritize user experience across specific vectors for a specific subset of users while maintaining a healthy CAC/CLV.
In these early stages, marketplace liquidity (pool of possible supply and demand) and quality (% of happy interactions) are tradeoffs, but if your goal is to create a seamless user experiences (which is should be for any marketplace), this is the price you need to pay!
Don’t forget about the psychology
Building a Marketplace is really hard, but fighting for the right user experience makes it so much harder. It bears mention at this stage that depending on the service a marketplace may have unique psychological challenges — For nFold, being a Recruitment Marketplace, there were unique psychological challenges we experienced namely:
(1) Employers have multiple hiring channels at their disposal. This means that for one of these to stand out (for example nFold) it needs to be many times better than the others — Guess what suffers then? Engagement. What amplified this problem was the nature of contingency recruitment (no-cure-no-pay). A user who pays for a service upfront is much more likely to engage with the system to ensure they receive what they paid for and, more importantly, /complain/. You really want people to complain; complaining users == a product team that is learning and improving.
(2) We bravely and actively fought underlying market trends, in that Recruitment is trending towards in-house sourcing and candidate selection and away from 3rd party search. Recruiters were mostly seen in a bad light and often referred to as “used car sales people” (this is one of the nicer terms) — Building a marketplace and trying to change negative hard-wired perceptions and chronic distrust among the users is an uphill battle.
(3) Hiring is a leaky funnel. There are no physical goods in this marketplace – It’s people end-to-end, Candidates, Hiring Managers, Recruiters, HR Managers. This makes for a very unpredictable process and outcome as things can stall for a multitude of reasons. In our last months I made a desperate (and deeply misguided) attempt to fork the tech infrastructure we used in the marketplace, into a subscription SaaS solution to try and get out of this death spiral. By this point, we were out of time, out of money and … well, out of reasons to keep trying.
The Success Function
I believe Marketplaces have a success function of sorts — Variables that are inherent in the nature of the supply and demand sides you are bringing together, and that successfully enabling supply and demand, depends on deeply understanding each variable in order to simplify or adopt the risk of managing them to achieve a seamless user experience. The fewer variables you ultimately need, or choose, to account for, the easier it is to get quality and liquidity for a broader subset of users.
Our success function was way too complicated
For us a Hire = Supply Side (f (candidate supply, timing, effort)) x Demand side (f (engagement, current demand due to state of other channels, culture/quality alignment))
Finding the right candidate at the right time (timing and luck) in a scarce market, who is actively searching and interested in the right position at the right company, who don’t have other great candidates already in process and are sufficiently engaged to drive the process.
Although I failed to figure out the approaches required to determine success in this particular marketplace, it has left me excited about what I can help build in the future. A baptism of fire like no other.
If there is one thing I am left with, is that people don’t need choices, they need solutions and it’s my calling to figure out how to do that.
There was a time when the customer’s point of view might not have mattered quite so much; it used to be the case that success depended on controlling the supply of a good or service, or owning the distribution channels through which goods or services flow. The difference with the Internet — and it is a difference that, thanks to smartphones, very much affects real world goods like cars and scooters — is that goods and services can, at least in theory, reach anyone. Distribution is free, and in markets where supply is plentiful, value accrues to the companies that own demand — that is, those that have the most end users thanks to their superior user experience;
We went together.
If you want to go quickly, go alone. If you want to go far, go together.
When I look back today, the one feeling I find myself left with, is a deep sense of gratitude to the amazing people who have walked this journey with me and who deserve mention.
Carien, my amazing wife, who is my unsung hero in this journey, always at my side, always encouraging me to do what is meaningful and not expedient. My voice of reason and my tireless supporter in this entrepreneurial journey I have undertaken and continue to undertake — Inherently a very selfish and destructive act.
On the battleground, covered in scars and now picking up the pieces of the current situation as much as I am, if not more; My Co-Founder and now-brother-for-life — Philip Marais. Contrary to what he once told me, I am proud to report that he remained in the fox-hole with me right to the bloody end. For this I am grateful, nFold was as much a manifestation of will and struggle for both of us as, it was an attempt to create value and impact in this world.
Philip is a builder, a seeker and a man of deep principles, obsessive tendencies and a fiery temper which is set to transform whatever he sets his mind to. He has made me a better person, more comfortable with fighting for my beliefs and our obsessions combined were a force to behold! Although I am greatly saddened by our parting I have no doubt that he will do mind blowing things in the future. I am excited to see what he does next.
My Co-Founder, Nick Martin. He joined the startup later in the journey and subsequently left in early 2018. In the early days of the Rockstart Accelerator we shared an apartment and Nick slept on a mattress on the floor for 5 months eating 89c brie cheese and coding 16 hour days with us. His obsession, self discipline and desire to find answers paralleled (and in some ways exceeded) our own and completed what was a very strong team. Mature far beyond his years and with an inner fire that shows only a glimpse of his true potential, his future is blindingly bright.
One of the best decisions I made was to ask people that I highly respected and admired to join our “Advisory Board” — Each of the advisors I officially invited to join the board played a unique and important role in our startup and in my own development as a person and Entrepreneur.
@Ben Hutt — He built a Recruitment Marketplace in Australia between 2014-2016 which listed on the stock exchange before it eventually collapsed. Ben is a man of high intellect and an executioner of strategy beyond compare. He just gets things done. He taught me the true meaning of “Focus” and practical frameworks how to achieve this. Every startup should be so lucky to have someone like him on their board.
@Gianluca Valentini — He is the real deal, an ex-founder who has traversed the full gamut from business idea to exit to now Venture Advisor and Gringotts Ventures . Combining this experience with high expertise in metrics (CAC/CLV) and financials his insightful questions left me with a few sleepless nights and changed our strategy for the better.
@Fred Smulders — The owner of Typ Recruitment, Fred joined as our “Domain Expert” but he proved to be so much more. He is a man who marches to the beat of his own drum in his business (with a unique recruitment model named – “Fred Works”) and personal life. Fred patiently listened to my many ramblings and product ideas for our users while balancing his feedback between practical advice and future strategy. I wish I met him 6 months earlier.
There were others who I only met with occasionally but who deserve a special mention — Not only because of their impact on nFold but on me personally.
To Bart, Imme and Diaz – Three super ambitious, hard working and amazing young men who took part in our journey in early to mid 2018. Our work was impactful, and although we parted ways too soon I am grateful for our time and I will follow their progress with interest — They are a strong team who will go on to do great things in whatever they set their minds to.
@Keith Jones — An experienced company founder who is now and Author and Founder at SW7 which is a framework for strategy execution. Keith was there at the beginning of my product journey back in South Africa, and it is only now with hindsight that I see the impact and value he has contributed to my journey. His sharp intelligence and brutal honesty helped me at an early stage of my entrepreneurial mindset. Keith is like a wise sage who every time you meet with him, shares some words of wisdom that you can spend months truly comprehending, or years learning the hard way. I regret not speaking more with Keith.
@Don Ritzen, who was CEO of Rockstart Accelerator, was the most impactful person from Rockstart I met. He is one of the few people who have a sharp intelligence which he balances with pragmatism, restraint and most importantly without personal ego. Speaking with Don is guaranteed to change or exponentially improve your ability to think and I would highly recommend any startup founder to sit with him at least once.
Last but certainly not least, I received an outpouring of emails from our Users when I announced the shutdown of which I have decided to only pick one (from Elja Abdullaeva)
Dear Marko and the rest of the team
I am really sad to hear that this is happening.
I was really rooting for nFold to be successful. I want to thank you for trying.
Don’t see this as a failure, you guys took a risk and learned a lot on the way. Nobody has become great without making mistakes.
I wish you all the best.
This message was a punch straight to the gut — It took me a few minutes to recover reading this. Being thanked for trying was humbling — it reminded me of my original focus on finding people who I could delight with a user experience and how important that action was. Elja was one of the people who were willing to give us some of their attention, their time and their voice. This message made the battle worthwhile.
A startup only exists in the minds and hearts of customers — It is a group of founders trying to find another group of people who share the same worldview of making something better, of changing the world itself.
”People aren’t eager to pay you with their attention. The fact that you bought an ad doesn’t earn you something that priceless.
Instead, we can hope that people might voluntarily trade their attention. Trade it for something they need or want. Trade it because they’re genuinely interested. Trade it because they trust you to keep your promise.
— Seth Godin