Value of focus: How we built Zenjob from a niche player to a leading staffing platform
The modern work landscape is evolving rapidly. As the global economy shifts towards more dynamic employment models, the gig economy will only become a larger portion of the overall economy. On-demand staffing, once a novelty, has now become a cornerstone for many businesses that need flexibility in hiring. Gig work platforms, in particular, are at the forefront of this revolution, acting as the bridge between eager job seekers and businesses in need of short-term skilled labor.
At Gig Work Summit, Fritz Trott, Founder & CEO, Zenjob had a recent session, “How we built Zenjob from a niche player to a leading staffing platform” Where Fritz explained how they focused on a single use case within a specific industry to a grow beyond €100m run rate and raise more than €100m in funding.
What follows is a comprehensive transcript of his session, edited for clarity, which sheds light on the intricacies of building a successful marketplace in today's gig economy.
Go the highlights as indicated below or watch the full video above.
- New Workstyles and the Rise of On-demand Jobs watch here
- Understanding Zenjob: An Overview of the Staffing Platform watch here
- Automation as a Core KPI watch here
- Challenges of Building a Marketplace in the Gig Economy watch here
- Zenjob’s strategic Approach to Gig Work Platforms watch here
New Workstyles and the Rise of On-demand Jobs
Hi, everyone. Nice, nice to meet you. I'll be super happy to share some context on Zenjob, as well as maybe a few words on myself and share a few insights on what I've seen, what I've experienced what we've seen and experienced, in in the company in building the company, and
I'm happy to afterwards, obviously, to answer questions. And I think we will also have some time for Q&A.
So I was asked to talk about the value of focus and how that actually helped in building, Zenjob as a marketplace. And I'd start by first maybe giving a short update or introduction of Zenjob.
So who are we and what are we actually doing, Zenjob is a staffing platform, we're based in Berlin, we started actually end of 2015. We set together we founded the company then went into business in 2016. By now we're 280 employees like roughly 300 employees. 1/3 is tech and product. We're active in Germany, only Germany, and within Germany, only 25 areas around bigger cities.
Last year, we had roughly 50,000 talents, that's how we call our workers earning money via Zenjob, and more than 3000 companies who relied on Zenjob, sending them staff. And that resulted in quite a strong revenue growth in the course of the last couple of years. And as a business, and you also see that from the pictures, we serve clients in the industries around logistics, hospitality, but also offices – such as call center, customer care, and retail, both in food and non food.
Understanding Zenjob: An Overview of the On-Demand Staffing Platform
“we saw that people would want to be more in control, that flexibility would be valued more and more, it would be more important to offer variety and choice to workers, as well as a high level of efficiency to companies”
Right. And so what I was asked to talk about this, what was it like building the business is anything I can share with other companies to other founders, anything, any learnings, lots of failures that I can talk about.
And I'd like to speak about focus and explicitly look at several areas of focus that we came across in the last seven years when building Zenjob as a marketplace, once around the product market fit, then it's around tech and automation.
It's about the flywheel. I'll spend some time talking about that one. I guess everyone has heard or read about flywheel when, like everyone who is in tech or thinking or working out or in marketplaces, and then also speaking about failures and focus, and finally about culture. I'll keep it short.
And, and look forward to answer questions at the end. And to start with, I think it's important to underline and to explain the vision we have and on what we actually saw when starting the company. So why did we actually start so we looked at the market and what we saw is that overall, the world of work is changing.
I think the audience today is very familiar with those facts. And by now, seven years ago, we were wondering how things would develop, we saw that people would want to be more in control, that flexibility would be valued more and more, it would be more important to offer variety and choice to workers, as well as a high level of efficiency to companies. And we saw this trend and we were wondering, and thinking, how cool would it be if we'd be able to build a technology to address this need and to accelerate that change.
And we came up with a vision and with a mission, and that's the first thing I would say that helped in terms of focus, we came up with those two. And they helped us being a good guideline, and compass, to go back to whenever we had to take strategic choices.
Zenjob’s Focus on Flexibility as Key Driver Gig Workers
“As a platform, we believe that focus and flexibility is a core part. And not only of our mission, but also on the company we're building.”
And while the vision is formulated very general, basically, that we want to offer, you know, a solution that helps people to have more control in the work life. The mission is a little more precise already. And what you read in there is that we deliver unparalleled flexibility. And for us, this is core. And you will also see later on that when talking and thinking about USP for our users, companies as well as workers, the flexibility is the one thing that stands out.
And as a platform, we believe that the focus and flexibility is a core part. And not only of our mission, but also of the company we're building.
And when sort of having defined that vision for us, we actually looked at the staffing market, and we want to focus. And you might also ask, okay, how can you talk about focus when talking about staffing market?
It's a massive market, you have huge players, I've listed three here,you've got stuffing all around the world, you find players and stuffing all around the world. It is actually opposite of focus, how can you actually talk about focus with such a market?
We look closer, and what we saw is that it's a big market, but it's highly fragmented. And if you double click, you'll find out that there's a lot of players and industries that are actually very niche. And you might have specific regions or specifications by industry. And we believe that that is a choice. And we actually decided to narrow down our market again, and again, and again. And again, to find the niche in the niche of a niche.
And to explain what I mean I, I put up an example, what you see here is the first important point on focus, which is the finding or using focus to find the first PMF to product market fit. And we started in billing, as I mentioned. And we were wondering how to get a foot in the door, how to start our business on such a huge market. And we particularly looked at hotels, and thought, hey, we're just going to go into hotels. And then we thought, well, hotels, that's actually quite a big market. And you see the two axes here.
Growth in the Crowded Staffing Market
“we will do what no one else can do, we will do something that no one else is willing to invest in. We offer 24 hour last minute staff for just one industry in a very specific area.”
One is the market size. And the other one is the pain, the willingness to pay for customers, we thought okay, hotel staff, that is a huge market. And customers are also willing to pay for a solution. But it's very crowded, all the big players, you know, about like, Manpower, Adecco runs that they're all there.
It's highly competitive, the product or the solution is highly commoditized. It's very, very hard to make a living there. And now the natural next step is to sort of look a bit lower or to break down a sub market and what you could do is you could think about the same size of the market, but maybe with a lower pain.
So think about your offer staff that speaks at least four languages. This is really cool, because it's a very special thing. But you know, the problem is, it's very likely that you will not find a lot of hotels who pay you an extra markup for staff like waiters, right? Kitchen helpers that speak five languages or more. Plus, well actually it's also not only that you find only a few hotels they also would be fairly okay if your staff speaks say two languages three languages. So yes, that would work but a low pain and below market. If you go for a bigger market with a low pain would also be cool.
Say you tell hotels, you know what we'll send you branded stuff. And they'll all wear, you know, shirts with your logo on every hotel manager will say to thumbs up, this is amazing. But when you send them the bill, not very likely they will pay extra for it. Most importantly, they need waiters, and you know, they need to watch the cost.
So, yes, big market, but low willingness to pay the pain is not as high. This is what we looked at. And we were wondering, how can we get into the market, what is something that has a very high pain, and yes, it's a small market. But in the market, there's a higher willingness to pay. And we saw that it is a big problem in hotels that on the same day, or within 24 hours, staff would cancel, not turn up, there would be unforeseen peaks.
And so we thought, this is the entry for us, you know, we will do what no one else can do, we will do something that no one else is willing to invest in. We offer 24 hour last minute staff for just one industry in a very specific area. And this is how we will get the foot into the door.
Defining a Niche in the Gig Work Marketplace
There's this reading which I can recommend, which is the Innovator's Dilemma by Clayton Christensen speaks a lot about big incumbent players, looking at the big share of the market and ignoring or not having the capacity or the relevant attention to look at smaller markets or at small players coming from sort of a space that you oversee, you've seen that you might see that with booking.com, where Airbnb just started, you know, with a, b to x rentals, and then you know, more and more made a market out of it. And or HotelTonight, you know, so those are some examples.
And the idea is that you start with a very, very narrow, but precise product market fit and from there, you can gradually then develop and grow into the market. And this is for us the first area where I'd say we used focus as a way to grow the business by a high level of discipline and focus on this, on this flexibility.
And as a next step, it's important to understand that we are building software, and we need to build software on which we can build heavy operations with a lot of edge cases. And this can create an advantage, but only if you have a high level of focus. Otherwise, your software is not resulting in a better or faster, or a 10x better product to your customers.
Zenjob - Deconstructing the Staffing Industry to Deliver Value
So we looked at the basic staffing process. And basically you have clients who order stuff on the one side, and then you have talents or workers who do a job on the other side. And when we started working on a technology, we're wondering, how cool would it be if we use the technology to make the whole process a little lighter and more customizable?
How cool would it be, if talents could actually choose a job, they're not told where to work and what to do, but they can pick the job. That's a big change. It sounds small, but it's a big change. And so we came up with a nice app and a way of visualizing jobs, but also giving choice to our users to our talents on where to work, and what work and, and from there.
The next step was that actually, by bringing together supply and demand, we gain data. And by automating it, we can have more data. So why not start using that data to improve the experience on both sides and deficiencies. So we started using data, we started building a matching engine and a booking engine, and over time, use more and more data, whether it's for recommendation and prediction or many other topics. And this of course helped to then overall create a level of automation that did not only make us a fast and efficient provider for workers and for jobs, but at the same time also allowed us to work on invoicing on payrolling and offer an end to end automation in the staffing industry.
Automation as a Core KPI
“Automation is a big topic for us. And it's not only about say the engineering part If this is relevant for our marketing team, our sales team to our account management team as well”
And this focus on technology helped us to actually gain a big advantage. And what you see here is only sort of the last year of progress when it comes to automation. It's a very important KPI within our company. We work with OKRs one KR is all about automation. It's a big topic for us. And it's not only about the engineering part. This is relevant for our marketing team, our sales team to our account management team as well, who are the clients we work with, which are the edge cases we allow? What are the kinds of processes we allow ourselves to go into? And where do we sort of reject. And we reject many clients, we reject many talents, we do everything we can to stick to our focus.
The Importance of Automation in Staffing Platforms
And, for us, this is sort of a second pillar that I recommend, particularly when speaking to younger companies, or to companies that did launch or to build a marketplace to be very, very strict on understanding where and how to use the advantage of technology.
And to avoid sort of the distraction of, you know, becoming too operations heavy and not having the software to carry the heavy operations. Right, so that’s focus number two. And then there's a focus killer. And that's particularly at the marketplace, the chicken and egg.
Why, because usually, you always have one side that is suffering and like a headless chicken, you go from left to right, and back and forth. And in the gig economy, and in the staffing economy, technically Zenjob, it's not in the gig space, but in the staffing space, you have supply and demand. And they heavily rely on each other.
Challenges of Building a Marketplace in the Gig Economy
Think about a marketplace for pizza delivery. Usually, the pizza restaurants have different kinds of customers, not only the customers you provide as an online marketplace, in our case, we have the talents who rely on the income. And then the companies who rely on the workers. And if there's a very limited level of pain and tolerance, it just needs to work and you need to cope with it. And on top.
Temporary staffing is by definition, very volatile. So you do have a lot of peaks. And potentially those peaks are even sort of instead of leveling out each other, are actually the opposite. So it is a lot of pain to cover both sides.
And of course, this is a big distraction for focus, because you would constantly fall short on one side. So that's sort of one of the key questions when building a marketplace, how to overcome the chicken and egg problem. And for us, the solution is the flywheel.
The Talent Marketplace Flywheel
"it's not only about just putting that flywheel together, it's actually about putting a KPI next to every section to the flywheel and putting a team In the name next to every section of that flywheel."
I've mentioned it at the beginning. Everyone is familiar with the flywheel. It's fairly straightforward, you know, you add more and more of one, say, of demand, and that will help you generate more supply. And when you have more supply, you can serve the demand even better. sounds super obvious. Reality is though it's way more complex. And it's also nothing that you can just copy and paste from one model to the next.
In the past, I've been working with other marketplaces, in food delivery, in beauty bookings, just to name two. And I've seen again and again that every industry and every business model has a very distinct and different way of growing supply and demand. And the clue is that you need to find a way on how growth leads inevitably to more growth.
Usually, the core offering of your marketplace, attracts demand and supply and leads to an even better value proposition. In our case, sort of the core USP and your USP unique selling proposition and unique stands isn't unique. Remember what I said at the beginning, we deliver stuff as fast as no one else. And we offer a level of flexibility no one else on the market can offer. And that attracts customers.
Those customers offer jobs. And by offering a choice to our talents, we offer flexibility to our talents and that attracts the talent side. And the more talents we have, well the more flexibility we can offer to our customers. And it's not only about just putting that flywheel together, it's actually about putting a KPI next to every section to the flywheel and putting a team In the name next to every section of that flywheel. And if you now think back to this, what you can see is that, oh, what you need to think about is that you have peaks, low season high season short demand, short supply. Whenever you have such a situation, you can calmly look at the flywheel and understand which section of my flywheel is currently stopping me from growing?
Where am I lacking sort of, or where do I have a constraint? And that turns the whole sort of pain into a very balanced and ideally, also database discussion. And from there, you can derive actions. So that's the third point, the focus on the flywheel, that helps big times and something I can highly recommend.
Zenjob's Strategic Approach to Gig Work Platforms
At this point, I wanted to quickly speak about focus failures, we've had a lot at Zenjob, all kinds. And I've put a map here, which is just sort of as a very, very general way of showing how tempting it is, as a marketplace, particularly in the gig space. And I do think HyperTrack is a good example of highly specialized on a small piece, sort of, you know, of the whole gig economy, and how important the focus is in terms of the business model.
In our case, we decided to work only for like, we only offer side jobs, only within Germany, only in actually 25 areas of Germany. And they're only for people who have an employment or study and you set up for side jobs, nothing else. And we do that only for a few industries.
Finding Focus within On-Demand Staffing
And only for a certain duration of time. And in between we test a lot. We test international markets, we test other user groups, think about refugees think about pension years, we test other industries, think about health, sort of how we test and whenever we test it, we saw that it immediately creates distraction, you have a way lower ROI and lower confidence in other industries, and it takes time and money, you know, to validate and to increase your confidence. And as a marketplace, particularly in the staffing industry, you can highly benefit from network effects. And it's super important to keep the focus and sort of to stay strong when those temptations come up.
It might sort of lure you away, but I'd be like, very, very encouraging on sticking to your focus and sticking sort of to, to rather nail your core market and elevate that instead of going too broad, too early.
And with that one, I'd come to define a focus that I can share, and the learning and that is actually connected to this to this slide, which is you need a strong culture. And very often this gets completely underestimated, or overseen by a focus on understanding and being clear on the people you want to work with and the people who fit to your company, to your style, but most importantly to your vision is key. And same thing, it is very easy to make an exception.
It can be that you want to hire specific talent. And while seeing that there's, you know, some hurdles in the interview process, maybe something not being 100%. Right, you'll still go for it. And usually, that doesn't pay out and that hurts. And it's a distraction, it costs money.
The Importance of Culture
"Having values is great [...] it's also important to mention what you actually actually mean with each value."
And for us very early after year one we came up with four values. And we use those four values day and night at Zenjob. What I see is that they're not just hanging on the wall.
Actually the very opposite. They're lived wherever we can. So we use those values in our performance evaluation. We use them in the hiring process. We have slack icons, using them day by day. We use them for feedback conversations, it is part of our culture, but it's also part of the interaction we have with each other.
And for each one, though, it's also important to mention what you actually actually mean with a with a value. So whenever you run a company, or you start a company, having values is great, it's the first step putting into the wall. Also cool. But what you need to do is actually explain what you mean with the value and maybe giving some indications as an example. We have those four values, and for the value hungry, we've got three sort of exact descriptions of what we actually mean with it, right. And, and that helps so people can understand. And it's very important to break it down.
Building a Successful Staffing Platform
And having a focus in the company starts with having a focus on the people you work with, hiring top talent, having talent on board that is fully dedicated to the vision and mission you have. And then also talent that is also keen on you know, cracking a very hard problem with a high level of focus. And if you have those ingredients, I believe, then you can sort of actually get very far, can be very successful and can build a strong company.
I've also put together a few readings that I can recommend that help you both build a marketplace having a high level of focus and having a good culture to sort of nurture that focus.
The True Essence of Focus in the Gig Economy
The final sort of final recommendation I can give in the context of focus is that it gets very often misunderstood, that focus is about, you know, picking a topic and highly offering all showing a high level of dedication to a certain topic. And then and then you know, people think or you think, or I always thought this is actually focused. And that's actually not the case, I do believe focus is much more about saying no to all the other things, you know that that line up.
And it's actually not very easy, because usually, you have decided something or you've agreed something and you've agreed to focus on something, and then something new comes up. And you say yes, this, I know, we set our focus. But this is an exception, or this is very important, or we didn't know three months ago, and that's why we should be doing it now. And it's very hard to say no, right? It's very hard to say no to other people or to investors, or to customers or to revenues.
It comes at a big cost to focus. And I believe that this is the most important.
Or this is the best summary I can give on how also we built Zenjob up from a niche player, sort of to a leading staffing platform by learning day by day again and again on focusing sort of by saying no, and yeah, with that, I'd sort of conclude and I'm happy to take any questions and look forward to tonight's exchange.
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Please visit https://hypertrack.com/gigworksummit for information on Gig Work Summit 2023, a virtual summit hosted by HyperTrack for the community building next generation tech for gig work and on-demand delivery.
