Peter Maglathlin is the Co-Founder & CFO at Trade Hounds. He joined me on the phone from Boston for this interview.

TRANSCRIPT

Chris Russell:
Give us a quick history of the company. When did it start and why did it start?

Peter Maglathlin:
Sure. Yeah, so we’re a Boston-based technology company that was founded in 2016. The underlying thesis for the business is that there’s a huge demographic of workers in this country and globally, we’ll call them construction workers, professional tradespeople, that lack a digital professional identity in the way that so many other of the world’s workers already have. LinkedIn is a great tool for the office worker. There are other vertical communities for nurses or oil and gas workers, but no one had built a platform that the construction worker inherently wanted to use. Our perspective is that’s largely because the construction worker is unique. They have a unique set of communication habits, they have a unique lifestyle, unique language. There needed to be a platform built with this end user, the worker, in mind.

Peter Maglathlin:
The fact that no professional platform exists in construction in our opinion is a big driver in the inefficiency in the labor market in this industry. Sure are there too few workers entering the trades every year? Yes, and we hope to play a role in fixing that over time, but the fact that none of these workers are digitized makes the industry incredibly inefficient. Employers struggle to find them, they struggle to evaluate them. Why doesn’t this exist in construction when it does already in other industries? With that problem identified, we then needed to determine what is the right approach to solving this problem? We felt strongly that taking a worker first or a community oriented approach as opposed to a pure-play job approach would be the way to win because the worker is the scarce asset, they’re the valuable individual in the market that is sought after, and so if we can build a piece of technology that’s designed for them, for their professional needs, the employers will then be attracted to the platform.

Peter Maglathlin:
We launched our TradeHounds mobile application in early 2019 and what workers are able to do on that application is a number of things. First and foremost, showcase their work. There are carpenters, electricians, plumbers, welders, individuals across the skilled trades that are incredibly proud and are incredible craftsmen, and they like to showcase their stuff but they don’t really have a forum through which they can do that where they’re able to collaborate and commiserate with other tradespeople. That’s number one, build a platform where they can showcase their work. In order to do that it needs to be imagery and video focused. The written resume for the office worker landscape is effective, it’s really not for construction. If you think about an electrician, plumber, welder, the best way for them to showcase their stuff is through a photo, it’s more of a show versus a tell-me industry.

Peter Maglathlin:
Through participation in the platform these workers then start to build out a professional profile and an identity that they can leverage for employment opportunities. We’re north of 200,000 workers today. The vision was always to once we reached critical mass on the worker side to deliver a jobs capability that will enable employers to harness the power of the community. We launched that a couple of months ago and we’re now working with well over a hundred subcontractors across the country to source qualified, skilled tradespeople in a way that is far more effective than the other alternatives.

Chris Russell:
Okay. This had to be a mobile app experience versus launching a website initially, I imagine, because those construction people are on their phones all day, I’m assuming. Talk about that approach, if you could.

Peter Maglathlin:
Yeah, it’s a really important point. I think that there are other companies that have tried and failed to solve this problem and I think that insight is one they missed. Because when you think about a construction worker, he or she is on a job site all day, they’re not sitting in front of a computer, they’re not heavy email users, they are heavy users of their phones and of text messaging and phone calls. The app needed to be predicated on that communication habit. We are not in the business of forcing behavior change amongst construction workers, we’re trying to meet them where they are.

Peter Maglathlin:
By building a mobile application we meet them through their preferred mode of technology, and by making it phone number based it enables a far superior mode of communication between us and the worker and employer and the worker. What I mean by that is, email tends not to be the preferred mode of communication for workers, regardless of who they’re hearing from. The fact we have phone numbers and they’re on their phone really makes them accessible in a way that they prefer, if that makes sense.

Chris Russell:
Texting is a big part of the communication strategy there?

Peter Maglathlin:
Yeah. When it comes to the job platform itself, let’s say XYZ Electrical subcontractor posts a job, our technology then matches that job with a certain number of qualified candidates in the right region with the right trade at the right level. Our best-performing mode of generating interest in a job is actually through text message. We also do send push notifications to the application, which get plenty of responses, but it’s become clear to us that we don’t need to change behavior here, we should just leverage existing behavior.

Chris Russell:
Right. You mentioned the primary audience in terms of jobs is coming from contractors. Does that mean it’s mostly just small businesses subcontracting out? Is it bigger construction firms as well? Talk more about the audience there.

Peter Maglathlin:
Yeah, it’s a really good question. The construction ecosystem is a vast and complicated one. For any given project you have the developer, the firm that buys the land and develops a plan for it. They’ve been engage a general contractor or a construction management firm to manage the project and then that construction management firm most of the time subcontracts out, by trade, the work. When we were thinking about our end customer, in order to establish a beachhead it became pretty clear to us that we should be selling into and serving the subcontractors of this country. Those come in a variety of shapes and sizes. You’ve got the five to 10 person shop that is obviously far smaller and has fewer recurring hiring needs but still have hiring needs. And then you have the Rogers Electric or the Gaylor Electric who have thousands of tradespeople on staff but are purely electrical subcontractors, and we serve both.

Peter Maglathlin:
Some of our workers prefer to work for small shops, some of them prefer to work for larger shops. We think that the hiring problem is pervasive regardless of how large you are, and the last thing we want to do is cut out a customer segment that we think could be well-served by our product. But to close the loop there, we don’t serve staffing agencies in any sort of prolific way today. I imagine we will over time, but most of our work is done with subcontractors that are seeking to hire workers full-time as opposed to staffing agencies that bring them onto their staff and then deploy them out to subcontractors on a project-by-project basis.

Chris Russell:
Yeah. You launched the jobs platform I think a couple of months ago, according to the release. Was that your first piece of the monetization puzzle there, or were you making money before that?

Peter Maglathlin:
No, that’s right. The platform is free to the worker, which we intend to be the case forever, which we think is really important. The foundation of this business is a vibrant worker community, which I think really differentiates us from most other job boards. We have tens of thousands of workers using the application today, some to find jobs, some to pose a question, some to showcase work, some to develop their profile. But the fact that there’s a deep, vibrant community underlying the jobs platform is hugely important, and the best way to go about building that is creating something not only that the workers love but that has a low barrier to entry for them joining, which is it being free. We spent the better part of two years building out the community because we knew that was fundamental to our success.

Peter Maglathlin:
Once we reached what we thought was critical mass, we’re now north of 200,000 users, we felt that the employers would find a lot of value in it, and so we’re monetizing the platform through a pretty simple job posting model where it’s $200 to post a job, it’s live for 30 days, and we promote it over the entirety of that period. We’re able to deliver a minimum of five qualified candidates to basically every employer that comes to the platform, and many folks have been hired from it.

Peter Maglathlin:
The monetization opportunity for TradeHounds over time is vast, but it all comes back down to, “Do we win over the hearts and minds of the worker?” Because sure, employers want access to these workers, but so many brands want access to these workers too, whether it’s Milwaukee tools, Ford trucks, Carhartt, Dunkin Donuts, and we’ve got relationships with all those companies, and so there will be a way to monetize the platform at a certain point through those brands, but we wanted to keep the user experience incredibly authentic, all user-generated without contaminating it, for lack of a better term, with advertisements or brand messages, until we felt that point was right.

Chris Russell:
You mentioned critical mass a few minutes ago. When did you come to that point, do you think, and give me a couple of tactics around how you got there, do you think?

Peter Maglathlin:
Yeah, of course. Hey, there’s no magic number. Could we have launched the platform earlier? Yes. Is there reasonably we could have waited also? Yes. But I think there were a number of things happening in the community, a number of things that were occurring in the market, that gave us confidence that now was the right time. I’d say number one, we have many workers every single day posting to the platform that they’re looking for work. They’re using TradeHounds as a way to source work even though it wasn’t yet built for that, so we felt like from a supply perspective there was a willingness to engage amongst a lot of workers on job opportunities.

Peter Maglathlin:
On the demand side, on the customer side, the hiring issue and the labor shortage has been a problem for years and I don’t think it’s going away. I think we knew once we had a certain number of workers willing to engage that the interest on the customer side would be there, but we just wanted to make sure that we focused on a specific customer segment, the subcontractor, that we felt like we could really deliver for. Again, I wish I had a better, perfectly formulaic way of talking about critical mass. It was more of an art than a science, if that makes sense, but it’s proven thus far that our worker base is deep and willing to engage on job opportunities, which is leading to great customer outcome.

Peter Maglathlin:
When it comes to how we scale the worker side, it’s been a combination of things. Number one, we launched the mobile app really on a few hypotheses, that there’s latent demand amongst construction workers in this country for a product like this. We thought that we would need to feed the platform with content for weeks, if not months, in order to generate interest but that only lasted for a few days because once the platform went live we were acquiring hundreds, if not thousands, of users every day.

Peter Maglathlin:
But then how we operationalized that is really a couple of different ways. We’ve got one way of acquiring users, which is we’ll call it paid marketing or paid advertising. We leveraged the Facebooks, the Instagrams of the world through very construction-specific messaging and imagery to draw users in, and that’s incredibly effective and incredibly cost efficient, but I think what’s really exciting is the organic growth that we’ve been experiencing over the last nine to 12 months, the unpaid growth, the word of mouth.

Peter Maglathlin:
One way we’ve structured this into the product, which I think is really unique to this industry and really cool, is through the concept of hardhat stickers. Hey, I’m not a construction guy by background, my co-founder is. I’ve learned a lot about the industry. I didn’t think something like hardhat stickers were really going to make a difference for us, but they have, and this is how it works.

Chris Russell:
Yeah, I’m curious.

Peter Maglathlin:
Yeah. If you join the TradeHounds platform we compel you to fill out your profile, which is a lot of very valuable data that we can use to customize your experience and deliver your job. In exchange for that, we mail you 10 free hardhat stickers which I think are pretty cool-looking with our logo, we actually did a COVID-specific one. The response we’ve gotten from the user base has been mind-blowing. What workers tend to do is they put one on their hardhat, one on their truck, and give the other eight out to guys on the job site, which is a phenomenal way of generating word of mouth on projects because a lot of our workers are commercial workers, there are potentially hundreds of workers on those job sites, and so the brand is able to proliferate really quickly in that way.

Peter Maglathlin:
It’s also interesting to see that a lot of times when users receive them they actually post photos of them to the platform because they’re pumped up. I think it’s idiosyncratic things like that that make construction unique that are required to get right in order to when the worker because the same messaging or strategy that works with an engineer or a banker isn’t going to work with a construction worker, and I think that’s where we’ve gotten things right.

Chris Russell:
Yeah. I love that story Peter, that’s a great offline tactic for growing your brand, and well done there, well done. You picked up about 3.2 million in funding back in June. What was that moment like for you and the team?

Peter Maglathlin:
Yeah. We raised a little bit of money a few years ago when we were just a few people and an idea. That enabled us to bring the product to market in early 2019 and then on the heels of about 15 months of really rapid user growth, we were able to raise 3.2 million from a few great VCs and a couple of really great industry players too. Alpaca VC led the round. Brick and Mortar ventures, which is run by Darren Bechtel and the Bechtel family, was one of our biggest investors. I think what we’re really proud of from an investor standpoint is mixing your traditional VCs or financial investors with strategic investors.

Peter Maglathlin:
Suffolk Construction, which is the biggest general contractor in the Northeast, was a big investor in the last round. PCS Construction Staffing is one of our bigger investors. Lincoln Property Company now is one of our bigger investors. I think it’s been really helpful to us to not only bring on technology investors but bring on folks that really understand the unique facets of this industry because it is unique and there are a number of advantages, I think, to having both of those bases covered in our boardroom.

Chris Russell:
Yeah. Very cool. Has the pandemic helped or hurt the business this year?

Peter Maglathlin:
It’s interesting. I’d say it net hasn’t had much of an impact, and let me unpack that. I’d say from a user growth perspective it really hasn’t impacted us at all. If anything it’s accelerated things a bit because more folks are on the sideline, more folks have free time, and they’re willing to try something new like TradeHounds. I’d say from a hiring perspective it’s been fascinating over the last couple of months and it’s really region-dependent. Hey, I’d be lying if I said the industry itself hasn’t been impacted, because it has. Certain projects were stalled, plenty of people were laid off.

Peter Maglathlin:
But what we’ve seen recently is a pretty noticeable uptick in hiring and projects getting back restarted. Hey, have we reached the normal level of activity in hiring? No. Do we suspect that’s going to be back to normal pretty soon, call it the back half of Q1? We do. All the conversations we’re having and the data we’re collecting and the anecdotes we’re deriving from the platform suggests that. I’d say from a user perspective it’s going to be maybe a net positive, on the hiring side maybe a slight net negative, but there are still so many companies out there seeking good people and I think that’s something that just doesn’t go away, even amidst a pandemic, and that’s how we’ve worked through it.

Chris Russell:
Yeah. Is it just for US right now? Is it US and Canada?

Peter Maglathlin:
Yeah, so we’re just US today. We feel that market is obviously plenty large to serve as a beachhead, but this is a global problem. I’d say the pretty obvious geographical extensions are Canada and Mexico, but I think if we build this company right it will be global over time. Obviously the product will need to act a little bit differently depending on the country, the language, et cetera, but it’s a very, I think, persistent and consistent problem across the world.

Chris Russell:
Yeah. Appreciate your time today Peter. Last question, what’s next for the company? 2021 is just around the corner, you got any big plans for new features, products?

Peter Maglathlin:
Yeah. 2021 is really all about I’d say … Our mandate right now is really twofold. Number one, become the definitive professional platform for workers, regardless of whether or not they’re looking for a job. There’s a use case for tradespeople on TradeHounds whether they’re an apprentice plumber, a master electrician or something in between, and it will help you develop a professional identity, so really scaling out that user base to two, three, four, five X what we are today.

Peter Maglathlin:
And then number two, which is related, is to really grow our customer base. We’ve got the deepest and most vibrant pool of workers. We can serve 10 to 50 X the customers we’re serving today and we think we’re solving a real problem. We’re 13 people today, we’ve hired eight people just in the last couple of months. We’re growing quickly, so really focused on execution over the next nine months and then probably go back to market for a Series A, call it the end of next year, to pour more fuel on the fire.

Chris Russell:
Yeah. Well audience, tradehounds.com is where you’ll find them. Peter Maglathlin, thank you very much for your time today. I think it’s a great product. I love the approach, app first. I love the sticker idea. We wish you the best and definitely stay in touch with us here at RecTech.

Peter Maglathlin:
Thanks a lot, I really appreciate you having me on.

Chris Russell:
That will do it for this episode of the RecTech podcast. Be sure to follow us on the socials, Facebook, Twitter, LinkedIn via the @RecTech media handle to see all of our podcasts, videos, and blog posts that we publish. Thanks again to my sponsors, Emissary and Adzuna. Be sure to check them out for text recruiting and job advertising. Thanks for listening everyone and remember, always be recruiting.

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