A Q&A with Zao founder and CEO Ziv Eliraz. The Los Angeles–based company was founded in the Fall of 2011 and raised $1.3 million in venture funding in late June. The round was led by Oren Zeev, founding Partner at Orens Capital and former General Partner at Apax Partners.
SUB: Please describe Zao and the value proposition you bring to recruiting/HR.
Eliraz: Zao is a SaaS (software-as-a-service) recruiting platform designed to increase and make the most out of the number one source of hire: referrals. It’s pretty amazing that in most companies, referral hires are still done as if the Internet and social media weren’t invented. HR sends an email to all employees, and then employees are left with the task of somehow coming up with a resume. Without proper guidance, most employees just end up ignoring the referral program altogether.
Zao’s goal is to leverage all the advancements, connectivity and data in social media—namely, LinkedIn and Facebook—and help companies increase their referral hires, from employees as well as former employees, vendors, business partners and other trusted referrers. We bring structure and technology to the process and make it quick and efficient.
The first thing we do is change the question HR asks employees: it’s not just ‘who do you know for the job,’ it’s also, ‘think of who your friends might know.’ We do that by enabling HR to split the reward between the employee and their referring friend. So, for example, let’s say that the referral reward is $1,000. If the employee refers someone that gets hired, they get the full bonus. If the employee doesn’t know someone relevant, but their friend does, they both split the bonus 50-50. This way, Zao motivates second-degree trusted connections to refer relevant candidates to the company.
The second important thing we do is give employees and referrers technology and tools to help find the right person for the job. We all know a lot of people, and most have hundreds of contacts on LinkedIn and Facebook. That doesn’t mean we know exactly what their skills are. That’s were Zao comes in to help. When referrers connect with LinkedIn and Facebook, we help them search their networks and bring up the people most relevant to the job description. From that point, sharing the opportunity with them is just one click away.
Finally, the third thing we do is add a gamification layer to the whole process, to bring in healthy competition and analytics to the entire process.
SUB: Who are your target users?
Eliraz: Our target users are companies that need to hire—whether it’s HR, the hiring team or the CEO. Another important group of users are the referrers themselves, whether employed by the company or not—we want to make the referral process as easy and engaging as possible.
SUB: Who do you consider to be your competition?
Eliraz: I’d say the main competition is noise—there are so many ‘social recruiting’ products and services out there that do completely different things. That said, once companies listen to our story, they get it pretty quickly.
SUB: What differentiates Zao from the competition?
Eliraz: We put referrals in the spotlight—front and center, and look at the process holistically. Many ATS platforms claim to add ‘social recruiting’ features but all they’re really doing is letting employees post a job on their wall. With Zao, social is not an afterthought, it’s the core. Our ability to help employees and other referrers be extremely personal and specific about who they forward the job to, our ability to reward every referrer in the process, as well as our gamification layer, are just the start of what differentiates us.
SUB: When was the company founded and what were the first steps you took in establishing it?
Eliraz: The company was founded in September, 2011. Putting together the team and financing, as well as defining the first version were the first steps.
SUB: What was the inspiration behind the idea for Zao? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Eliraz: The inspiration behind the idea was the process I went through in building the U.S. team for the company I worked at prior to Zao. I tried job boards and agencies, and was very frustrated with the results. Job boards brought in a lot of irrelevant resumes, and I felt that the agencies I worked with never really ‘got’ what I needed. That’s when I started calling on our business partners and asked if they knew someone for the job. The people I spoke with immediately understood what I was looking for and gave me fantastic leads. That’s where the idea of expanding referrals beyond employees came from.
Needless to say—that’s the same process I used to build the team at Zao. Check out the ‘About Us’ page on our site—you’ll see how I got to each and every one of Zao’s employees. This stuff works.
SUB: What have the most significant obstacles been so far to building the company?
Eliraz: The biggest challenge is priorities—figuring out what’s important and focusing on that.
SUB: You recently raised $1.3 million in venture funding. How do you plan to use the funds?
Eliraz: Our goal is to expand our U.S. presence while remaining as frugal as possible. Cash is the ammunition with which we go to battle, and we want to be as careful as possible about how we use it.
SUB: Do you plan to raise more outside funding in the near future?
Eliraz: Our goal is to become profitable as quickly as possible, but we have a lot of ideas about where we can take this platform—so it may be necessary to raise additional capital to realize the full potential of what we have in mind.
SUB: What are your goals for Zao over the next year or so?
Eliraz: The number one goal for Zao is happy customers that hire well and fast using our platform.
Zao – www.zao.com