Scale Venture Partners

The Startup Tapes #038

Design as a Business Imperative

with Sarah Nahm (Lever)

Lever has taken the recruiting software category by storm, with fast growth, high-profile customers, and $32.8M raised to date. We talk to the Founder & CEO of Lever, Sarah Nahm (previously a guest in The Startup Tapes #002), about why design can be a critical advantage, even if you work within the confines of a relatively staid market.

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Tim Anglade, Executive in Residence at Scale Venture Partners: You’re a designer by trade, right? Is that fair to say?

Sarah Nahm, Founder & CEO fo Lever: Yeah, studied design at Stanford.

Tim: Perfect, and I didn’t know you, didn’t know any of that. I was a happy Lever user, customer, and I fell in love with Lever because I felt as a person who recruits people, like this people, the people who made this product understand the flow, understand what I need to have any point in time, understand what happens, and I fell in love with it as opposed to other products that I have used in the past and pushed for us to buy it because it was just well mapped. And so, now, of course, I meet you. I understand more about your background, and it feels like oh, of course, design at the center, but maybe that wasn’t the Lever story. So I wanted to talk to you about that, like how the product happened and what kind of impact design had not on just the product, but on your business, right? Is it really a competitive advantage to have a quote unquote a well designed product even in this B2B enterprise software world that we live in?

Sarah: Yeah, no, that’s a great question. So I mean, you know, when we approached rethinking a stale category, and for the most part, systems that have powered hiring, recruiting, those are old. That’s an old category. I really think design is the only lens that helped us create a new point of view in this space. We spent a lot of time in our early days, like six months actually, in the trenches, working really closely with not just recruiters, but people like you, hiring managers, executives, people who had the consequences of hiring not going well. And it was actually through that that we, I think, latched onto something big that was happening in B2B software in SaaS software, which was that a lot of these systems of record that have existed are actually morphing towards, you know, systems of engagement, that it’s not enough to build a digital filing cabinet anymore. People expect more from software. They expect the software that they use from nine to five at work to be as fluid, as intuitive, as engaging as software that they’re using on their phones at home. And so, for us, when we thought about it, there was actually something really powerful in that shift from system of record to system of engagement. Recruiting software, it’s unique in the sense that actually, it’s one of the few pieces of software that every single person in a company does touch or use in some way. You’re submitting your interview feedback. You’re referring a friend. And so, really from that standpoint, there’s only a few group of users that are kind of paid to use the system. Everybody else has to voluntarily want to. And the more that you could actually help a company unlock that potential in their employee base, the more you can get them excited, the more you can get them helping. Obviously, that drives business value. So I think for us, in taking kind of this universe where we actually had this huge opportunity of engaging an entire company in hiring. Obviously, the product had to be intuitive. It had to be simple. It also had to actually be delightful. And I think really when you think about it, if we can get hiring managers to log into the software and to do the tasks that they’re depended on to do to actually like it when they’re doing it, to be passionate users of our product, we’ve actually opened the door to an incredible new business opportunity because applicant tracking may be our category, but it’s also this interesting backdoor to reaching the extended kind of like tree of management inside of a company.

Tim: That makes sense, and I can definitely see how that adds tremendous value for you too because if you drive this engagement, I’m sure like churn goes down, I’m sure like referrals go up, lock-in is improved, but focusing on the value to the customer, it’s interesting because why isn’t that really at the center of everybody’s attention in this day and age? And it feels so obvious when we talk about it, but how do you think we got to this idea of, again, of those system of record, of just kind of digital storage of information as opposed to something that makes you feel happier to do your job better? I’m detecting a little bit maybe in your answer too it helps improve not just your process, but even like the quality of the people you hire and the satisfaction they have with the entire process.

Sarah: Right. Well, I think the interesting thing about design is it gives you these short term benefits like you’re saying. I mean, you see your sales cycles move quickly. You see trials where the product sells itself and improves your win rate. You see churn go down because people are actually adopting and using the product and they’re getting value out of it, but I think there really is this longterm advantage to it too, and this gets overlooked in a lot of B2B software categories, which is that if you can actually maintain that closeness to your users, to your buyers and really understand their needs through a design lens, you’re actually gonna probably sniff out new opportunities that take you into blue ocean directions, that help you solve problems that nobody’s solved before or in a way that nobody’s solved before. So a lot of people, when they think design, they’re thinking pixels and colors and buttons. I think it’s super powerful for a B2B company to spin up a strong user research practice to spin up a very strong interaction design practice, to actually take features that they’re testing and not just test them on buyers, but test them on end users and to hear what those people who are actually using the software say, react to. I think when you actually go down into the weeds with the actual people on the ground trying to do work, you actually find the true business ROI. And I think too many companies stay focused on the buyer persona. They don’t actually get to the business user. And so, I think that from that standpoint, design means a lot of things at different stages as a company. In the beginning, it’s how you get your great ideas. It’s also how you actually probably get your strongest strongest advocates, the customer log you’re looking for in early traction. Then it’s gonna pivot you to having a reputation, a brand, a brand as being an innovator, a brand as being a great product. It’s gonna get you those referrals from your customers, but then, I think in the really longterm stage, it, I think, gives you the ability to think differently about a category, and when you look at any kind of massive B2B company nowadays, they had to have a really big view on what was changing about the world and about the way people are doing business. So I think design is a great lens to approach that. And as a startup founder, you’re pulled in a million directions. If you can enable a design team to go out and stay close to your customers, you’re going to have insights that can be really powerful in the long run.

Tim: And it feels like now startup, they’re always looking for an edge to this route, just to be very, very cliche about it, and people are like this old school industry, and I’m bringing this twist to it, and there’s some almost universal ones, like, oh, I’m gonna do this, but mobile or I’m gonna do this, but I’m gonna do the SaaS version. Do you feel like it’s almost like there’s a universal thing if you can look at an industry and a tool and be like, I’m gonna do the well designed version, that this is something an entrepreneur should think about in term of how they can have a difference or they can build a different take and mount like an assault on a very entrenched industry?

Sarah: In terms of launching to market with like the best in class design, you know, I don’t think that’s enough, but I think launching to the market with the best in class design team is an incredibly powerful competitive advantage, and if you can sort of stay focused on building up a strong design competency on your founding team, when you’re 10 employees and continuing to grow that as you scale your business, I think that that means that you’re going to waste fewer engineering hours, fewer product cycles, you’re gonna actually launch confidently, like new functionality or new products to market because, again, you’ve taken the time to have a task force inside of your business that’s validating is this actually going to do what my sales people says it does once you’re actually kind of in the hands of the customer.

Tim: Right. So where are some of the limits? You know, you and I have talked before about sales and the importance of different other components of company other than design, so where do you think is that impact if you had to kind of qualify it? What does investing in design afford you, and what will it like not protect you from in your experience?

Sarah: Wow, that’s a good question. You know, how can you actually get to the humans and to the needs that are underlying anything that might be a technology solution? So when I think about like what are the, what’s the potential of design and whats the limits of design, it really kind of goes back to how well can you actually listen and learn, and can you actually suspend your assumptions about something, challenge your assumptions about something and see opportunities that you might have missed otherwise? And doing that, sometimes you’ve gotta get out there in the field. You’ve gotta actually spend more time with customers. As a CEO, that’s something I really try to prioritize is sitting at the desk of a recruiter using our product to hire and actually trying to understand what their life is like. And so, you know, ultimately, I think, especially if you’re in a growth stage or a later stage, having the capability of challenging your own assumptions about the world is the only way you stay relevant. So I think that the greatest opportunity of design is to keep your innovative edge, but the greatest challenge, certainly, is to just keep doing that even as you grow and scale.

Tim: So is there anything else you’d like to share? Do you feel like at any point, you kind of bet too much on design or kind of over thought something that wasn’t really a design issue, or what were some of the failures of maybe approaching some of your product and your market capture that way?

Sarah: Yeah, I think there have definitely been times when sort of an intention to be really authentic to our end users and really sure that we actually brainstormed enough and ideated enough. I mean, that’s always a tension with your ability to execute quickly and your ability, I think, to just like get to market faster than the competition. So I think something that I’ve done really early on is make sure that my designers were also given a perspective of the business goals and making sure that my product team overall was really like tightly integrated with sales. There’s a natural tendency for those teams to drift apart or even become adversarial, and I think there’s like been a lot of common wisdom about the power of, of course, enabling each side with those mutual perspectives. And maybe this is because I’m a designer, but in my role as CEO, I really view actually my job to be very design-like. I mean, I don’t probably design my own product anymore, but I feel like my company and my team is my product and sort of Lever, the company, is my product, and my users now are just my employees, so I have to spend a lot of time need finding. I have to spend a lot of time identifying what their needs are, and really, that’s kind of the only way that I’ve been able to solve pretty much any problem is by staying close to the users, which in this case, are sort of my employees, and designing solutions that actually meet their needs.

Tim: That makes a lot of sense, yeah. Thank you so much.

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The Startup Tapes chronicle the highs & lows of building a startup, through candid, immersive interviews with founders, operators & advisors. Tim Anglade, an Executive-in-Residence at Scale Venture Partners and formerly with Realm, Apigee, and Cloudant leads the project with the goal to de-mystify the process through which startups emerge, grow & succeed. His unfiltered interviews transcribe the conversations we often hear in the boardroom, amongst our portfolio community and with entrepreneurs and partners we engage with every day.

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