Listen to my interview with Jerome Ternynck, CEO of MrTed, an on-demand provider of recruitment applications.
In this podcast, hear about the vendor's free-of-charge on-demand recruitment application for SMBs and find out why its business model for making money from selling online business services means you may never again have to pay for recruitment software.
Listen to or download the 8:13 minute podcast below:
PW: Jerome, last year your company launched a new on-demand recruitment application in the US market called SmartRecruiters, which is for small businesses. And what does that do, that application?
JT: Well, SmartRecruiters is an end-to-end recruitment solution for companies with up to 2500 employees. And it allows organizations to manage their recruitment processes create requisitions, post them, source candidates, assess candidates, screen them and hire them automating the whole process, as well as giving organizations a career website so they can post their own jobs on their site. So it is a fairly complete recruitment solution, specifically designed for SMBs.
Okay. So it really allows a company to put their jobs on their company website and use that as a tool to automate the application screening process.
That's correct, yes.
Right. Now, it sounds like it's got all the functionality there but it's completely free of charge. So how do you how does that work?
Well, you see that's the model that we have put forward. It's called an 'open SAAS' model. So it is an application that is hosted, and maintained, and supported like any software-as-a-service application. But it's also as open as an open-source application meaning that it is entirely free-of-charge, as you said, and it's community-based and thrives on viral adoption. And so users SMBs are absolutely free to register on the website and start using the application to cover their recruitment needs.
Okay. And when you say community-based, in what sense is it community-based?
Well, actually, we allow recruiters and hiring managers to connect to each other and to leverage best practices around the recruitment process. So we've embedded the technology into a community and made that free and easy to access for everyone.
Right. Okay. So you're taking some of the ideas of the open-source community and providing this ability for users to connect with each other and share ideas and things like that. So and as you say, it's a free of charge application. But how do you actually make money? because presumably, this is a commercial exercise at the end of the day.
Yeah, it is of course a commercial exercise. We intend to make money by allowing users to purchase recruitment services from within their recruitment application. And, therefore, business users a hiring manager or recruiter will be able to procure job posting, assessments, background checks, drug screening, sourcing services services that they purchase today offline, and that they are able to purchase from within SmartRecruiters at the same price, so market prices. So users get the technology integrated with suppliers and the ability to procure services in an integrated way, which really makes the whole process so much more efficient. And we make money by taking a cut of that transaction from the supplier, so the suppliers end up paying for it.
So, it's not exactly advertising in the application.
No, it's not. It's not advertising; it's not a 'free meal' [either]. So we're not there is no limit to the software usage you can have. There is no user limit, there is no time limit, there is no upgrade that you could buy or anything. The whole software is for free, without any limit, and it's also advertising-free. The only thing that you can do, if you desire, is to purchase your job posting on Monster from within your system, rather than to do it offline with your credit card directly on the Monster site. And if you do this, then we'll make some money from Monster.
Right. So any service that a business buys that they buy through the SmartRecruiters application, they actually buy it from your company and then you pass the transaction on to the provider of the back-end service.
Exactly. So that allows an organization to have one point of contact to purchase all the recruitment services that they use in their day-to-day recruiting life.
Right, right, okay. And of course, the free software effectively gets the businesses there in the first place. That makes this an attractive platform for those service providers, because you're bringing customers to them, effectively, aren't you?
Yes, we are, we are. And you could in a sort of Main Street approach you could compare the software to a store that has nice features and has a nice technology offering to attract people to come inside the store, and then hope for them to buy products that are in there. That's pretty much the approach. So the store is the technology and people come in there for that.
Well, we see this a lot in the consumer marketplace, but do you think that businesses are okay with free software with applications that are important elements of their business process, but which they're not paying for? Are they going to be comfortable with that?
You know, I think people are increasingly comfortable with the idea of free. And the open source world has paved the way for it. And I think similar to what open source has brought to software I think open SaaS definitely can be the next generation of SaaS application.
People are increasingly comfortable with the idea of free. The service is maintained, it's hosted, by a company, MrTed, that has a long track record of producing some of the best recruitment applications for the world's largest global enterprises. So it's not like it's a garage initiative that's going to stop next month.
If I look at the uptake that we've had in the first six months since we launched, we just passed 1500 customers that signed up to use SmartRecruiters. And that is just phenomenal in the world of recruitment, where the market leaders have [around] 1500 customers. So we have seen a very, very strong adoption from customers. And our customers are supporting each other and encouraging each other. They're even translating the software for us to get into other countries, or expounding ideas for new versions, suggesting services that we should bring in.
So the whole community is taking place, where the technology component is not a question any more. So I strongly believe that business users are happy to rely on free, provided that they understand that there is no trick, there's nothing hidden. It's clear, it's transparent how we make money, why we are a sustainable business and technology.
I guess some of your competitors might not be too happy about it though.
Yeah, I think it, you know, it poses a question. I remember some of the reviews that went out when we first launched. Someone in the industry called it a wake-up call to the HCM industry. I think overall, in a couple of months or in a couple of years, it's going to be pretty difficult to justify back to your CFO that you want to be paying for a recruitment application, if this one is here and it's for free and it's as good as any one that's out there.
Just like in the first in the early days people used to pay for their email account and now, who would pay for a Gmail account? These things are free now, and I think we're going to follow that same path. So yes, it's a transformation for the industry, and I think its good; it's just the next generation of business application.
Right. Well, okay. Software vendors, watch out!