#124: Andrew Spott (HR Signal & VividFront)

Andrew Spott (HR Signal) [00:00:00]:

My vision, and our vision as co founders of HR Signal is to help more companies be better at retaining developing talent, growing people from within, so that we can build a healthier, corporate America where people have to leave less jobs to get what they deserve. And companies can spend more resources on developing their people and less resources on hiring and turnover and recruiters and try to make the whole ecosystem healthier.

Jeffrey Stern [00:00:32]:

Let's discover what people are building in the greater Cleveland community. We are telling the stories of Northeast Ohio's entrepreneurs, builders and those supporting them. Welcome to the Lay of the Land podcast, where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host, Jeffrey Stern, and today I had the real pleasure of speaking with Andrew Spott, the founder and president of HR Signal and the founder and chairman of VividFront. Andrew originally founded VividFront back in 2009, growing it to become the acclaimed strategic Cleveland marketing agency that it is today, with recognition spanning the inc 5000 fastest growing companies, Land North Coast 99 Top Employer awards multiple times over, all while driving success and impact for dozens of Ohio based organizations and beyond who have worked with VividFront. After transitioning from CEO to Chairman of VividFront, Andrew has shifted his attention towards his latest project, HR Signal, which is a venture backed HR technology company based here in Cleveland, which he cofounded back in 2020 and has since raised 1.6 million in precede funding for. The mission at HR Signal is to address the critical issue of employee retention, workforce planning, and of culture. High employee turnover often indicates issues within a company's human resources strategy, and discerning which employees are considering departure is often a complicated and challenging task for managers. HR Signal aims to mitigate this exact problem through predictive analytics by deploying a set of algorithms which analyzes billions of data points from public sources, market data, peer career path data, including hundreds of millions of anonymized resumes. Importantly, the process uses minimal internal data from clients to uphold the privacy of employees and to facilitate onboarding. I really enjoyed this conversation with Andrew, spanning his work across VividFront to the work he's doing today with HR Signal and beyond, and I learned quite a lot from his reflections on it. I hope you all enjoy it as well. After a brief message from our sponsor. Lay of the Land is brought to you by Impact Architects Land by 90 as we share the stories of entrepreneurs building incredible organizations in Cleveland and throughout Northeast Ohio. Impact Architects has helped hundreds of those leaders, many of whom we have heard from as guests on this very podcast, realize their own visions and build these great organizations. I believe in Impact Architects and the people behind it so much that I have actually joined them personally in their mission to help leaders gain focus, align together, land thrive by doing what they love. If you two are trying to build great. Impact Architects is offering to sit down with you for a free consultation or provide a free trial through 90, the software platform that helps teams build great companies. If you are interested in learning more about partnering with Impact Architects or by leveraging 90 to power your own business, please go to IA layoftheland FM. The link will also be in our show notes. So I wanted to start with a general expression of gratitude for you and for Vivid Front, who have shown lay of the Land great hospitality, allowing us from time to time to record in person. So. Thank you, Andrew.

Andrew Spott (HR Signal) [00:04:03]:

Jeffrey you're welcome. Land. As I've said, our casa is your casa as well.

Jeffrey Stern [00:04:08]:

So beyond Vivid Front, which I have now already mentioned, and HR Signal, which we'll soon talk about, I know you have had quite an interest in Land exploration of entrepreneurship well, even before these two endeavors. So tell us a little bit about where that inclination for building comes from, Land. Maybe take us through some of your earlier initiatives.

Andrew Spott (HR Signal) [00:04:33]:

Growing up, I had a father who was a business owner, had a couple side hustles even on top of that. So in a household where he was an entrepreneur, my mother was a nurse, I really had both models of sort of being part of a big system in the sense of health care on one hand, and on the other hand, seeing my father take risks. My whole life I've been an entrepreneur. Even when I was in middle school, I was starting businesses and buying things and selling things and was really early to ebay land internet retail in general, really my biggest early venture was in the space of services. So I had a business selling computer consulting network setups and computer repair and selling custom systems. And at the time, when I was like 1314 years old, making $30 an hour, it was like crazy money sort of compared to other people having $5 an hour jobs. And so I felt really the economic upside of entrepreneurship at a young age and then moved into more Internet oriented businesses as time went on. When I came to Ohio State for college, I already had a nest egg from a few different businesses that were in the realm of, as I mentioned, computer service. I had a business selling automotive parts and computer parts on the Internet. And then I also really had a lot of side hustles like buying land, selling cars and importing race components and reselling those and things like that. And so when I came to Ohio State, I had a nest egg, I had some money. Land was intending on starting a business. Land so my freshman year at Ohio State, there was a lack of online ordering. This was 2004. And we had the idea, well, initially not online ordering, but in fact just getting the menus online so that you could look at stuff on your phone, really at the time it was just your laptop. And we built a eventually in the ensuing year that followed, we launched it fall of the start of the sophomore year, we built an online ordering system for restaurants. And so we actually delivered the online orders by fax to the restaurant because they didn't have web connected point of sale systems and toast and tablets and all of this wasn't around yet. And so we would take an ecommerce site and generate, take the email receipt and it would be faxed to the restaurant and then they would deliver the order to the customer and we would wire the money and keep our commission. We grew that business while at Ohio State and myself and a couple of partners, and we sold it our senior year when we were graduating. So I had that experience at a young age, really formative on entrepreneurship and starting things. Land selling things and yeah, it's really a lot of what made me feel comfortable leaving college and taking a career.

Jeffrey Stern [00:07:31]:

Of self employment and prescient as to where the world might go.

Andrew Spott (HR Signal) [00:07:36]:

Well, yeah, and the company that we sold, it was called Sloopy Menus for Hang on Sloopy. The company we sold it to was later bought by Groupon for tens of millions of dollars and part of the whole internet ordering revolution. So maybe I should have stuck with it, but it was also fun to kind of start something. Land get rid of it. Land have a good outcome and things like that.

Jeffrey Stern [00:08:00]:

So at this point you've built up, let's call it a confidence in yourself to flex and exercise the entrepreneurial muscle, which is an important one. The first time Founder Journey is very different than the second Time Founder Journey.

Andrew Spott (HR Signal) [00:08:17]:

Humbly. I might revise that and say I have the confidence to start things and try things, but I do expect failure. And I started my marketing agency, Vivid Front, like 14 years ago in the spring of 2009. I guess maybe now we've entered 15 years at this point. I've had people ask me earlier in the journey, what do you have to do to succeed? And marketing is a tough business and client services tough business. And I always say you just have to get more things right than you get wrong. Land accept your failures and learn from them. So for me, entrepreneurship is about being willing to fail, learning from those failures, and moving fast enough to solve the problems that you need to solve to succeed. And it's less about faith in myself. Land more about faith that these problems can be solved. I'll find the right people, the right team, the right vendors to overcome.

Jeffrey Stern [00:09:13]:

Yeah, I appreciate the clarification there because that all resonates. But to give you credit, there comes a resiliency from knowing that you can handle the constant slew of failures that comes with the entrepreneurial process.

Andrew Spott (HR Signal) [00:09:30]:

Fair enough.

Jeffrey Stern [00:09:31]:

Well, tell us a little bit about the VividFront journey that you've been on.

Andrew Spott (HR Signal) [00:09:36]:

In the year between when I sold the online ordering business and started Vivint Front, I had started an ecommerce venture in lighting and home furnishings. At the time, if you wanted to order a fancy chandelier or a ceiling fan, and it wasn't something that you could get at Home Depot, you went to a lighting showroom. Land you could look at a catalog, there might be some display units. You'd place an order, it'd be delivered to that same showroom, you'd pick it up from there, or they'd deliver it to you and install it. It was a cottage industry. And so I saw an opportunity to bring sort of the ecommerce strategy to an industry that had high priced items, steady multiples, 1.8 or two x multiple on cost for retail price, so like 50% margin. And we digitized more than 100,000, I think, 140,000 items into one catalog and built six different websites in ecommerce sites for different verticals or niches in lighting, like commercial lighting, multifamily lighting, residential lighting, decorative lighting, crystal lighting, whatever. We spun up. The business built this platform in its early days. Magento we were one of the first people to get it above 100,000. SKUs and the the housing market and banking crisis of 2009 happened. 2008, 2009, and we saw all of our revenue, all six websites, go to zero one day. And with no orders coming in, it was pretty chaotic. We had to lay off people and cancel orders of merchandise. All of this land I ultimately decided to offer my partner in it. My partner was a gentleman who had a lighting showroom and had licenses for all of these different brands that we were selling. Decided to give him back my half of the company in exchange for the ability to walk away and start something else. My calculus was that it might take a while for the economy to recover, and that as an entrepreneur, that wasn't a problem that I could solve. It was a macroeconomic force bigger than me. So I was like, I'm going to give you back this thing. And he ended up focusing on the led portion of the business, which has out of those ashes grew a very successful business for him and his partner. And for me. I was able to reset and start again. What I did was email hundreds of contacts I had from my online ordering business at Ohio State. I had built relationships not just with restaurants, but with bars, businesses in the area, and national businesses that were advertisers. And so I had a huge Rolodex, but I had a non Solicitation, and it happened to have expired at the point that I was leaving the lighting business. And so I sent out this email like BCC to a couple of hundred people that, hey, I was doing this lighting business, housing market, lighting it's sideways. And so I'm available to help build ecommerce sites, websites, do brands, marketing strategy, media buying design, whatever you need, I'm here to help. I need some work, unbeknownst to me in the way macroeconomics work, housing, land. This sort of whole industry had a crash moment, but the rest of the economy was healthy. And so I got way more replies to that email than I could handle and immediately had to hire people to take on work. And I incorporated VividFront basically by accident to build an agency, build an entity around this huge stream of work that I'd created out of desperation by accident. So it's not maybe the best reason to start a company but that is the genesis of Vivid Front.

Jeffrey Stern [00:13:25]:

Wow. That's one of my favorite founding stories, I'll say, because so often it comes from a place of there's a recognized need, a problem you're working to address. And a lot of the early risk is just about trying to ensure that that problem is a real problem. And here I feel like you've just circumvented the entire kind of discovery process and in one swoop validated that there was a need for Vivid Front.

Andrew Spott (HR Signal) [00:13:56]:

Well, and I think it was something I did knowing, I think maybe more subconsciously that there is a shortage of marketing, design, technology, consulting people. So I think I know a lot more about the agency business than when I started it, of course. But there's persistent demand for fractional consulting and design, land marketing, land technology and consulting of just business strategy. And so one of the things that's been interesting for Vivagefront is we're going through another economic macroeconomic moment of a downturn. Here we are 15 years later. Usually these cycles take maybe less time historically, but it's arrived on schedule, so to speak. And Vivagefront sort of true to form as an agency that serves both business to business and business to consumer companies, it's doing really well right now. It's growing. While other businesses are shrinking or laying off people or having macroeconomic issue struggles, vivitfront keeps on chugging along, keeps on growing. Big testimony to that is the team. But it really is also the type of business that can do well when the economy zigs, it zags.

Jeffrey Stern [00:15:09]:

So you've spent the last 15 or so years building up Vivid Front with the team as an agency not to lead the witness, but at this point know that you're focused on a new chapter as well as we make our way towards HR Signal. What was the process for you as you've grown this business over time and felt the inclination to start to work on something new?

Andrew Spott (HR Signal) [00:15:39]:

About five years ago, I began the process of trying to work more on the business than the business. That meant empowering a larger leadership team to take responsibilities that I once held as CEO and founder and instead trust people to do a better job than me. And so I've been lucky to have attracted and retained amazingly talented colleagues and coworkers at Pivot Front that have been capable of themselves growing and rising to challenges and being able to adopt new responsibilities. And so beginning five years ago I began delegating and moving out of day to day operations. Roughly two years ago was when the training wheels came off and I was able to really leave day to day operations of the business. And so today I'm more of a founder and chairman stepping into meetings or problems when needed, but really spending just a handful of hours a week on the business and the team leads it. When you work on the business, not in the business, you create a lot of value in a company. It becomes not a lifestyle business, but rather an entity. And really during 2021, the first big year of the Pandemic in terms of economic growth and everything that sort of happened post lockdown, there was a lot of M and A activity in the marketing agency Markom Space. And people have always asked are you going to sell Vivid Front? And my decision has always been no. And the reason why is because I wanted to give it to the leadership team that had grown to be the people that run it. And so the leadership team for free is receiving over a vesting schedule, significant equity in the business instead of selling it to somebody else, which would not be what I'd want to do for our team and our employees and our clients. They run it and they get to have the profit share and the equity if it ever is sold in the future to enjoy and to be fruits of their labor. And we also do profit sharing and bonuses to the whole team that's not on the leadership team at VividFront Land. So that model, I think, is sustainable. I think it'll allow the business to keep growing and be healthy and have the best interests of clients and employees at heart. And that's enabled me to focus on my new venture, which is HR Signal.

Jeffrey Stern [00:18:09]:

Which I definitely want to touch on. But I do want to ask one more question on Vivid Front, which is in my own personal experience, I feel like one of the hardest things to do is to relinquish those kinds of responsibilities. And maybe the mark of really good managerial competency and leadership overall is the effectiveness of your team in your absence and how well they're able to kind of run the ship. How did you find the process just personally of letting go? Land empowering the team to run with everything?

Andrew Spott (HR Signal) [00:18:47]:

It took a village, I think, to help me turn that corner as an entrepreneur. It was the first time I had really gone through this process of, in the words of our we run on a we run VividFront on a platform called EOS Entrepreneurial Operating System. Land it's from a book called Traction written by an author named Gino wickman and we had self implemented it, I think 2017 or so. And it had helped us grow and helped us scale and double in size. But we had done a poor implementation, we'll say a half implementation. And so a couple of years ago when I was moving out of a Vivid front to focus on my new venture, we hired the absolute best consultant we could find to reimplement EOS Land. I think it was helpful from the structure standpoint, but also there was another voice of authority in the room which I was paying to listen to what he said, saying, Andrew, get the F out of the way and let the people you trust be trusted and do these things. And so the shook me. And then our leadership team at VividFront, they manage up land they're not afraid of telling me that, get out of the way, Land, let the work or ask me for strategic guidelines and then let them focus on the tactics within those guidelines. And so I've become a better, more trusting leader through my own learning process of letting go.

Jeffrey Stern [00:20:25]:

I love that. So, turning our lens towards HR Signal, what is the founding story of this company?

Andrew Spott (HR Signal) [00:20:33]:

So I guess maybe the trend is another nontraditional founding story. I have a very dear friend in Cleveland who I've had as a client as well at VividFront in different capacities for 15 years. He grew up in a suburb of Tel Aviv, Israel. His family, mother, land, father and siblings were his children and his wife were very similar age to another family that lived on the same floor of an apartment building. This other family is my co founder at HR Signal. And so he his name is Sege. Had this idea to take big data, use the modern tools of AI and machine learning to apply it to the data around human resources in the sense of career paths and people to try to predict when people are ready for a new job. Initially, the idea was to try to help recruiters, to call only the people that were ready for a new position or sort of prime for that next move and try to focus their energy on the best candidates. And so he had this idea, and it was sort of just an idea at that point. And he told his old neighbors, his friends from across the hall, about the idea and they were like, hey, you've got to talk to Andrew. So we met on the Internet, had a call online, I think it was maybe January of 2020, before COVID started. Loved the idea, loved him, and we began working on it. When COVID started, my schedule got wiped for travel, business and personal. All of a sudden I had a lot more time and was at home land like everyone else, spraying groceries with alcohol and learning about UV sanitizers and all the, yesteryear, chaos of COVID And that also brought me a lot of time to spend with him. And so we worked on a proof of concept. He got a partner, and I brought a partner as well. Four of us are co founders, and we incorporated the business in November of 2020. And the first product we built was an algorithm meant to predict who was most likely to look for their next job. Originally, we meant to sell this to recruiters. We were running a case study on the algorithm, trying to train it. And this was, I think, in November to December time frame of 2020. Land what we detected was a huge amount of pent up turnover. We have a scoring system that predicts how likely someone is to look for a new job. Land we saw really high scores across the board like we hadn't seen early in 2020. And what we realized was either our algorithm was very broken, or we had some sort of prediction that wasn't clear to us what it was. So we spent a couple of weeks arguing with each other and who broke the algorithm and what was the last code thing you pushed to GitHub and who did what. But what we realized was we had detected what became the great resignation early. And so we pivoted in the winter of 2020 to employee retention. And we decided to make a commitment as a company at HR signal to use big data ethically for good, which is both to help employers retain employees, not help recruiters poach, and sort of pull people out of organizations and use our data to help people grow in their careers faster. Land better at their current place of work. And so what we have built is an algorithm and a workforce insights engine where we look at we now have billions of data points spanning many, many years of data. And we're able to understand more than 50,000 different job titles, the trends of talent development internally at a company, versus change employers each time you change job titles. And we have sort of cracked the nut on people analytics. Land predictive analytics for career outcomes, so we raise capital to sort of scale up our team. And we actually just launched out of stealth mode about six weeks ago.

Jeffrey Stern [00:24:55]:

Wow. A lot of things I want to ask you about here. Maybe we'll take the ending and work our way back through some of those. You mentioned stealth mode now in a public place about it. It's a conversation I find really interesting and one I've actually been having with a few folks. But perhaps the reigning business wisdom is that ideas are a dime a dozen and it's all about execution at the end of the day. And I think that's the wisdom you'll find if you go and Google it. I find myself somewhere else on the spectrum in in that I think some ideas are better than other ideas. And this is working towards the idea of stealth mode. Because in some competitive environments, maybe ideas are worth protecting, where you have maybe large enterprises who, for the sake of this conversation, maybe have unlimited resources to throw at. Ideas relative to a resource constraint startup who's who's still figuring it out overall, but kind of fascinated by this whole approach of stealth mode and would love to understand why you opted for it. What did you see as the advantages or disadvantages to reflecting on it now that you're in a public place to explore those ideas? Sure.

Andrew Spott (HR Signal) [00:26:13]:

So initially we were kind of at the frontier of predictive analytics ourselves. There wasn't a competitor doing what we were doing even close initially when we had the idea. So we felt sort of a corporate social responsibility of like, we need to make sure it works and make sure it's accurate, because it has really big implications to tell an employer, hey, I think this person could leave if they don't grow in their career at your company. We take that seriously. We don't we don't do that lightly. So we launched a private beta in May of 2021 to get customer Feedback, test our algorithm, test our product, or at least our first version of the product. And we felt like doing that in a closed loop system of a private stealth mode beta was best because if we had a problem with it, we could fix it without public inspection. And if it worked, it would allow us to move faster and iterate and not be sort of beholden to changing our website messaging or redoing our social media every time we want to Pivot or adopt a new feature or remove a feature. So it helped us stay lean and focus just on the product and just on product market fit. Further, we added a consideration to make around intellectual property. We could try to go after process type patents, or we could have trade secrets and try to use market share and commercial advantage to defend ourselves, instead of spend lots of money seeking patents to protect our ideas. And so ultimately, we talked to a lot of Lawyers, did a lot of research, and it felt like the upside of the pathway to IP would either be too expensive or too time consuming to get to market with what we wanted to do, or we'd have to raise more capital. Land it felt more lean and more sort of innovative to just build the product and go to market with it. And if someone wants to reverse engineer it, they will, but we'll have a start on it. Land so not to make this about Elon Musk, but you can listen to interviews with him about the same topic of what they're doing at Tesla and SpaceX, and they don't patent for the same reason. It's just to focus on the work of the work. Land try and win in the commercial sort of Marketplace, not win in a courtroom. So we made that decision. But there's a big con. And the con is you have huge public companies that are in the space of HR software workday and SAP, Success Factors and many others. And ultimately we expect them to either try to knock off some of what we're doing or try and buy us at some point. Because we believe that people analytics and predictive analytics on workforce will be ubiquitous a couple of years from now. So it's sort of like stealth mode has helped us to move quickly and understand things about the market and the product and customers. And now that we've launched, sort of the clock starts on our competition, knowing what we're doing and how we're doing it somewhat. And so we wanted to be well prepared for that. And that's why we spent a couple of years in stealth mode.

Jeffrey Stern [00:29:43]:

Got it. Well, I want to ask about the heart of it because I think the crux of the problem you're trying to solve is so fascinating. How do you actually not to ask you for the trade secret, but that you just described as the competitive advantage, but how do you predict which employees are most likely to be at risk of leaving? And the higher level question there being around predictive analytics more generally, with billions of data points, where's the signal from the noise? What are the variables that matter that help you make these kinds of predictions?

Andrew Spott (HR Signal) [00:30:17]:

So we look at more than 200 different types of data. The data falls into three categories. We look at peer career pathing data. So we have anonymously land analyzed more than 400 million unique career paths. This is data like position and company and length of time, and what was before that and what was before that. What type of education did this person have? And this peer data is one of three data types that helps us to understand benchmarks and patterns. The second data type is public data. This is information published by governments like BLS Data, mandatory IRS filings, public company earnings reports, and news land reports that get released. We look at all sorts of public information and alternative data. And finally we look at market data. So we're buying data on verified pay, on surveyed pay. We're buying data from job posts. So how much is advertised in a position? How many job posts are there for a certain job in a certain region, and how long do those positions take to fill? So fundamentally, we are taking all of this data together and we're analyzing it and looking for correlation and causation. We take more than 200 factors and they all vary per position and per person, per company, per region. And it generates a score. The score is between one and 99%, and we call it our retention risk score. And this retention risk score is a likelihood for the person to no longer be retained to seek a new position, whether it's internally or. Externally is up to the employer. And so if it's 99%, our algorithm is saying with all but 100% certainty that this person is going to seek a new position soon. We say within 90 days. Typically that means when we say seek, it doesn't mean leave. So call it three to six months. When the score is 1%, it's a one in 100 chance that someone would be a retention risk. And so we generate these scores for our customers, but we also generate these scores just to test the algorithm and train it. And so the way that it works is sort of proprietary. I can't divulge that, but that's sort of how it works. Does that make sense?

Jeffrey Stern [00:32:48]:

It does my mind, for better or for worse. And you can help me understand which one goes to the precogs of Minority Report, except in the context of employment, where those in charge can have a sense of what might come. And you've already touched a bit on this, but it is a sensitive application, I think, of this data maybe concerns both from employees and what is the right way for employers to actually use this data, and in what ways? How has the reception been to rolling this out at scale? What have been some of those concerns? How do you think about those? Sure.

Andrew Spott (HR Signal) [00:33:32]:

So ultimately, our predictive analytics roll up to a single function when it comes to employee retention. When you get hired at a job, when you're interviewing for a job, people who are interviewing you ask you questions like, what do you like working on? Do you like what you're doing right now? Where do you want to be in one year, two years, five years? Questions like that? Not often do those questions get asked again innocently. They might be asked when paired with a performance review once a year. And so we find that in general, corporate America loses track of the individual nature of career paths. And so there's a tool called a stay interview. And a stay interview is when you're asking questions like you would when you were interviewed, but it's not to leave the employer, but it's to stay. The problem is with these stay interviews is, ideally, you would ask every single employee at your organization once a month, maybe once a quarter, how are they doing? They like the projects they're working on. Do they feel like it's helping them develop to their next position? When do they think they're going to be looking for their next position? And what would they want it to be? More individual work? Would you like to move into leadership? Do you no longer like leadership and you want to be an individual contributor again? But organizations don't have capacity to have this conversation with every employee every month or even every quarter. So what HR signals predictive analytics are doing, ultimately, this retention risk score is about saying, hey, go talk to this person now and ask them these questions. And the purpose of these questions is to figure out if you, the employer, are not providing what they the employee needs to be happy where they are currently and to be developing towards their next promotion. So for us, you asked a question of how is it received and Minority Report? Whatever. The purpose of the analytics and the usage of the analytics is not to pick who to arrest before the crime happens, but rather to use the prediction to offer someone a path that they may not know was there to speak to leadership in HR or to speak to leadership of their leadership meaning like boss's boss, and understand what growth path and how much of an intent for growth their employer has for them. And so many people land there's a societal opinion that younger generations call it people who are in their maybe early 40s are job hoppers and go from job to job to job without loyalty. And you can even hear recruiters and HR people who've been in the game for a long time say this, oh, I look at someone with ten years of work experience and I know they've had eight jobs or something. We have looked at the data. We looked at the data back to the there has been a decrease in the way that people grow and are promoted internally at employers. We see in the data that leadership positions, when managers and supervisors and chiefs and directors are hired more today than in the past, they're hired externally, meaning from a recruiter from another company. And leadership positions are filled with, of course, the best of intentions that companies have, which is to find the best person for the job. But it's a two way street. And so when you work at a company land they're hiring a director that you might want that position, and you would report to that position if you don't get that position and you see that they don't hire you or any of your coworkers, but instead they hire somebody from your competitor. The logical conclusion as an employee that I would have is, well, maybe I need to do the same thing. If I want to be a director, I should apply to that competitor that we just hired from to go get the director job over there. And so we believe that we have the data to back it as well, that there is a fix that can be made to talent development and career paths. And in fact, when people leave an employer and start in the new employer, whether they got a promotion or not, it's hard. You have to learn new things, new systems, new people, new friendships, new relationships, new commute, new cafeteria, whatever it is. And it can be tough. In fact, it'd be easier to grow at your current job, but you're not in charge of your own promotion. And so at HR Signal, we're trying to use this data to help employers to be more proactive with talent development, promotions, and an employee centric focus on their own people today to help them grow and be the leadership and the promotions and the people that they need in the future. And so we're trying to use this algorithm, this data, for good. And in the employee retention space, there's competitors, there's competitors of ours that are doing key logging and network monitoring and application use monitoring, trying to predict whether people are even working land, whether people are likely to quit. That's not us. We're not spyware or tattleware. Rather, we're trying to use this data to help employers treat employees better.

Jeffrey Stern [00:39:01]:

Wow, that also introduces a lot of questions there. But I love just to layer on one other piece to the puzzle to consider is that as hard and expensive as hiring is, it is significantly more deleterious to the business to lose someone who you've spent time to onboard and to invest in, for those folks to leave. And so to play the angels advocate to the minority report side as a person, the severity of this problem, it's a really big deal.

Andrew Spott (HR Signal) [00:39:42]:

It is. And that motivated us to focus on employee retention over recruiting two years ago, more than two years ago now. And we didn't even really understand this until we got into the HR industry. Like myself, our co founders, there's a lot of research around the cost of turnover land. It's estimated to be between 50% to double the salary of the person who quits, that the employer wasn't expecting to quit, like voluntary turnover. That cost variable is based on three factors. One, you have the replacement effort, which is hiring and recruiting, and that whole process of finding a new person. But in the meantime, when that person leaves two weeks, four weeks, or maybe the day that they quit, their job has to be filled by other people, their coworkers, their supervisor, the people around them. And that productivity loss and adoption of other knowledge and tacit knowledge that people don't have, that costs money. The hiring process costs money. And then when you hire someone new, they don't have training, they don't have context, they don't have tacit knowledge. And so that training can be two weeks, it can be six months, it can be two years, depending on the position. And so there's a cost savings with HR signal, which is really significant, and especially because of the great resignation and everything that happened with turnover in 2021 and 2022, it has brought to the forefront of every CFO and CEO and CHRO and anybody in HR and finance and leadership. The true cost of turnover has been felt because so many companies had so much of it that everyone understood what the pain is from that.

Jeffrey Stern [00:41:24]:

So I want to ask about, actually some of those macro kind of trends like the great resignation. There's been a handful of these buzzwords that have emerged over the last few months from quiet quitting and those kinds of things, but even more practically, trends like pay transparency that perhaps didn't exist when you began looking at this data that now exists today. And so I imagine you can begin to understand what the implications of some of these developments actually are. How are you thinking about even take something like paid transparency as a potential factor in the analysis here? How do you think about those kinds of things?

Andrew Spott (HR Signal) [00:42:10]:

So we get paid transparency, disclosed data from job posts that we buy. We see the data. It's not for every state, yet it's a handful of states. Most of the employers, their compliance of it is kind of annoyingly opaque in the sense that you post a job. Land you might have a salary range of $60 to $120,000 a year posted as a big range. One of the might feed a family of four. The other one is not the job for me kind of thing. So there's a challenge with compliance there because it doesn't have to be one number. Land in general, lay transparency is a great thing. We think that there's a huge stride to be made in diversity and equity. And so we designed our algorithm and all of our career pathing data. We ignore all demographics, age, gender, ethnicity. Location is included as a factor, but all of the typical sort of demographic elements of a dei we have stripped out so that when we look at the career pathing data for a role for a person, we're looking at outcomes at large, not outcomes for their demographic. Land so interestingly, pay transparency is one factor, but you look at turnover rates or past turnover rates and data reports in most HR information systems, all from the biggest companies in the world that sell them. The default way you look at turnover data is going to look at it by gender and by age, by ethnicity sometimes. And so we are trying to remove the biases. If you filter data by a certain demographic or taxonomy, you will produce an insight or an output which is colored by that filter. So we try to remove filters as a way of removing biases from the system. And so pay transparency helps to reveal pay. Land but it's not perfect because of the aforementioned large ranges.

Jeffrey Stern [00:44:25]:

So you had mentioned some of the prevailing narratives, I think, that we're told about the HR landscape, like the job hopping one. Are there other kind of large misconceptions that we have at this societal narrative level where what you guys have been able to find in the data doesn't quite match what our perception is of the reality of the situation in the workplace?

Andrew Spott (HR Signal) [00:44:55]:

So analyzing all of the different career paths that we have has allowed us to separate trend data from position to position in a career growth trajectory of staying at the same company and going from promotion to promotion versus changing companies each time you get a promotion. What we've figured out for some positions, not all positions, that counterintuitively. In fact, you're more likely to be promoted, growing at the current company you're at and in fact, in the majority of job titles. The majority I shouldn't say that, I guess the majority that I've looked at because I haven't looked at data for all 50,000 positions, but the ones that I have personally, I can get the real answer for you. Maybe you can put it in the show notes later. But the majority of positions, if you change employer, you're going to be hired in the same job title, not promoted when you change jobs, meaning if you're a sales manager, you're going to be a sales manager, you get a new job, you're going to be a sales manager at a different company. If you're a software engineer, you're likely to stay in the same position, software engineer, when you get hired by a new company. And in fact, counterintuitively, while growth seems to be what happens when you leave jobs, the data speaks otherwise. And so that sort of common reprise that you got to upper out is more like sort of a phrase than reality.

Jeffrey Stern [00:46:30]:

Emerging from stealth mode, you've raised some capital, you've set out in this direction. What is the path forward looks like, what has you most excited about what's coming next as you think about this retention problem?

Andrew Spott (HR Signal) [00:46:46]:

So we've been lucky. We launched and got our story released by TechCrunch and Fast Company and Cranes and Business First and other publications. We got a lot of coverage. And that's, I think, the goal of any launch. And with that launch has brought us many new opportunities with customers, with partnerships, with investors. And we're in a place where we're trying to move very fast on sort of everything all at once. And what I mean is that we're building more product features every sprint, every week. We are onboarding customers. We've forged partnerships. We're trying to forge more partnerships that are oriented around mass distribution of HR, signal mass reach as fast as possible. For example, we're partnering with other HR consulting firms, sort of like agencies, but they sell HR consulting services to bring our platform to their clients and also get access to our insights for their clients, which gives them more information to help consult to be better at really executing their consulting. And so we're in a sort of a commercialization focus right now where we're trying to reach as many companies in the market as fast land, as wide as possible land. We're doing it both in the US. And Canada. So two countries at once.

Jeffrey Stern [00:48:19]:

The focus on retention, do you envision other areas under the people operations responsibilities that you can begin to work on?

Andrew Spott (HR Signal) [00:48:30]:

So our new platform that we launched out of stealth mode is not just our retention risk, predictive analytics piece of it. We also have benchmarking and a lot of talent development reports and insights on career path and market data. So we're not just focused on sort of the core issue of employee retention, but also talent development and workforce planning. Those features are built into our platform. We tried to deliver sort of all of the data you would need to have a really well prepared employee performance review or employee talent development meeting. And so, fundamentally, we are really trying to not just focus on retention, but in general, if you develop employees well, if you have the best data, come prepared for every performance review as a supervisor or an HR person. And you're doing a really good job helping to develop your team and give them the attention they deserve. Likely they won't ever need to be retained in the sense that we are detecting it with our algorithm. So our hope is that customers that adopt HR signal end up using more of our talent development and bespoke analytics for each employee data to empower better employment outcomes. Natively culturally, instead of acutely sort of addressing a risk that we send them an alert and say, hey, go talk to this person now, because we think there's a risk here that should be an acute problem that reduces over time through proper usage of our platform.

Jeffrey Stern [00:50:14]:

So with that broader vision in mind, what does success ultimately look like from your perspective? What is the kind of impact that you would like to have at large across companies at scale?

Andrew Spott (HR Signal) [00:50:28]:

So going back to VividFront, we've had years where there was zero or nearly only one person who voluntarily was quitting, right? That retention rate and talent development at VividFront is a testament to the culture. And in fact, you can look at the retention, the turnover rate versus the internal mobility rate. Internal mobility is the percentage of people who are changing positions, promoted, and the turnover rate is the number of people who left right of any reason, voluntary turnover being of just the people that quit. You can look at these ratios at an organization and understand how healthy the culture is, how much it's growing people within versus a revolving door. And so my vision and our vision as co founders of HR Signal is to help more companies be better at retaining developing talent, growing people from within, so that we can build a healthier, corporate America where people have to leave less jobs to get what they deserve. And companies can spend more resources on developing their people land, less resources on hiring and turnover, and recruiters and try to make the whole ecosystem healthier. We hope that for companies that use our platform, that they outperform their competitors because they're using our insights, our data, our predictions to improve their culture, improve their career paths, and improve their employee experience. And that's our grand vision. That's why we started this. And that's what will motivate us for years to come.

Jeffrey Stern [00:52:13]:

That's awesome. I think so often we talk about the importance of culture and I think it's rare that there's a semblance of how to begin to think about not that you're quantifying it, but that you can leverage it as an actual asset in the company for sure in that way.

Andrew Spott (HR Signal) [00:52:35]:

And I think, again, we've had a gift of the great resignation because it's exposed this weakness that companies, if the people leave, that's the company, right? Most companies aren't running some machine in the back room that's stamping out widgets, but rather it's a bunch of people doing stuff and if those people leave, the company is crippled. So people matter. And treating employees well is really important.

Jeffrey Stern [00:53:00]:

Yeah, it always comes back to people. It's the theme of this podcast. Amen well, I want to ask a little bit about the journey itself for you having kind of been through this process a few times now. Are there things that you have done differently with HR Signal that the you had done before? And what are some of those lessons that you've taken with you from VividFront and Prior and then also some of the things that you've still learned in this new journey?

Andrew Spott (HR Signal) [00:53:32]:

It's been a huge contrast to go from a company for 1415 years trying to delegate and build roles, land people that do things and narrow what I spend my time on to then being in a startup where I wear ten hats a day, I'm janitor, garbage man. All of the sort of things that you would outsource if you weren't trying to conserve resources and spend investor dollars wisely. Right, so founders do everything, everything they possibly can to push the venture forward and reduce expenses. And so for me, it's been a huge culture shift and one that I've incredibly enjoyed because, listen, I like technology and entrepreneurship and all this kind of stuff. If I could make a living that I felt was my goal for earning potential, working with my hands, doing automotive work or woodworking passions that I enjoy outside of work, I would prefer to do that. I don't really like sitting at a computer working on a screen, hunched over soft problems. I would rather work with my hands. But you can't make money while you sleep working with your hands. And so for me, I have enjoyed getting back into the trench land grinding at the sort of founder trench level. And it's been very refreshing because in Vivid Front, my job, especially for the last five years, was to get out of the way and to be extremely focused on having other people do responsibilities and do them well, trusting them to do them well. But now it's complete opposite. So that's been a huge shift. I've really enjoyed it.

Jeffrey Stern [00:55:21]:

I think that's a really interesting reflection on it because the path will ultimately lead you back towards some of the experiences at Vivid Front. Eventually, of course, just a different life.

Andrew Spott (HR Signal) [00:55:34]:

Cycle of exactly but, you know, to your to your earlier question of what will I do differently this time? You know, I've made a lot of mistakes. Land I've learned from them. So we know where to invest time solving a problem and when to hire the expert. We know that while we probably could save money running our own hardware and private cloud and infrastructure, it's better to just use Google or Amazon web services and outsource those things. Land so if I'd started HR Signal 15 years ago, I'd have a loud humming server rack of equipment that I'd be running to save money on all of the computing resources land machine learning and AI crunching that we're doing. But I know now that that's not how you spend your time. It's not going to result in revenue or an exit. You have to outsource that to cloud providers. And so it's like decisions like that where we really have the benefit of not just my past experience, but one of my co founders grew a family business to the point of it becoming rather large and selling it to private equity. And then private equity chose him to keep running it after they bought it. His name is Aaron Goodman. He's our COO and he by my side. Both of us, as executives and leaders land other businesses for 15 plus years before this, we take those experiences into HR Signal, that maturity of leadership. And so that's helped us to make less mistakes, I think, as a company. And we benefit from that tacit knowledge, that past experience. And hopefully it takes me less than, say, 13 years to get out of the day to day operations of HR Signal. We'll see, right?

Jeffrey Stern [00:57:28]:

Maybe less than the days of Sloopy menus.

Andrew Spott (HR Signal) [00:57:33]:

Exactly.

Jeffrey Stern [00:57:35]:

Cool. Well, I want to round it out here, Land. Land before we get to our our closing question, just leave space for anything you think that is important that we we haven't touched on yet.

Andrew Spott (HR Signal) [00:57:47]:

I don't think we've touched on starting multiple businesses in Cleveland. Yes, this is a question. So we raised venture capital and met with investors all over the world with HR Signal. The question came up, why is the company headquartered in Cleveland and why are you even living in Cleveland? Questions like that. Personally, I lived in New York City and I know you're from New York as well. And I came back to Cleveland to start a family. My wife and I, she's also from the Midwest. And we were kind of seeing our friends start families in New York and it looked hard and expensive. And we wanted to have a little bit easier of a ride on the family front so we could focus our energy on career as well. In Cleveland, you have this spirit of overcoming and can do and grittiness and you have the support structures and the resources that big cities have, but you can get to them easier. Here we have incredible support from state leadership and county and city leadership for entrepreneurship. We have one of the most successful state, partially state funded VCs and jumpstart right in our backyard. And so we see a healthy ecosystem. Ultimately, the roles that I've hired at VividFront over the years of software engineering and design and marketing and sales and all of this similar positions will be hired at HR Signal and will keep being hired at HR Signal as we grow. And so I know that you can do it in Cleveland. And so having grown vivint run in Cleveland, I know that it's an economy that has the talent, that has the support to do it, and you get more bang for your buck. And so, for those reasons, we really think that it's been a great decision to put our US headquarters in Cleveland. We do have another office overseas in Tel Aviv. It's our R and D subsidiary. And so my two co founders that are in Israel are running another office there with separate employees, land everything there as well. But as we grow, a lot more of the hiring will be in Cleveland as well, because this is where our customer success team and customer service, land sales and all of the sort of administrative stuff will be land. We'll continue to do R and D, mostly from Israel.

Jeffrey Stern [01:00:19]:

Wow. Yeah, no, that's awesome. I appreciate you bringing that up because we can also keep it there in Cleveland and round it out here by asking you for your favorite hidden gem in the area.

Andrew Spott (HR Signal) [01:00:32]:

I think Cleveland is full of many hidden gems. And I'll say this, living in New York City and having access to the culinary landscape was amazing. I'm a foodie, my wife's a foodie. We love finding, whether it's fine dining or the next hole in the wall, weird place that is amazing at something. Cleveland punches above its weight in many areas, but superior fu, which is near and dear to my heart, continues to be one of my favorite gems in the city because I think they have the best bowl of soup and perhaps the best sandwich, though I do like a slime Land corned beef as well. But the bonme at Spirit Fuzz is amazing, and I think that would be my gem recommendation.

Jeffrey Stern [01:01:21]:

Awesome. Well, Andrew, I just want to thank you again for taking the time and for coming on to share your story.

Andrew Spott (HR Signal) [01:01:27]:

Jeffrey, thanks for the opportunity. Love lay the land and keep up the great work. I appreciate the reach and visibility that you provide entrepreneurs in Cleveland.

Jeffrey Stern [01:01:38]:

Thank you. I appreciate that as well. If people had anything they wanted to follow up with you about, what would be the best way for them to do so.

Andrew Spott (HR Signal) [01:01:46]:

Sure. You can reach me on LinkedIn, andrew Spot spott. You can email me Andrew@hrsignal.com or Google my name. You'll find me there's. Another Andrew Spot. But I'm the only one in Cleveland.

Jeffrey Stern [01:02:03]:

You got him on the SEO there. Awesome. Well, thank you Andrew.

Andrew Spott (HR Signal) [01:02:08]:

Thank you Jeffrey.

Jeffrey Stern [01:02:10]:

That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show, so if you have any feedback, please send over an email to Jeffrey at layoftheland FM or find us on Twitter @podlayoftheland or @sternJEFE. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on itunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be back here next week at the same time to map more of the land.