Actors are always on the hunt for their next big break, but until then, many find themselves on the hunt for gigs in the hospitality industry.
Whether its tending bar or serving meals, caterers and event planning companies are in need of high-quality, vetted staff. In an industry where 40 to 50 percent of workers leave in the first year, it’s clear that good help can be hard to find.
With a background producing film and theatre, Bobby Sain, founder and CEO of Waitron, has plenty of actor friends who he saw struggling to find part-time work that paid well and worked with their schedules.
“You could take a job at a catering company, which isn’t consistent demand, or take a job at a restaurant, which isn’t consistent schedule flexibility,” Sain explained. “But none of that really existed in a form that accompanied their skill sets to allow them to use the things that give them their side job, in a way in which Uber did it.”
The concept for Waitron came about after Sain realized there was a huge need on the buyer side as well and a wide open market that he felt was filled with highly overpriced staffing companies.
“If a market entrant came into that industry and said there’s a better way to do this using a marketplace mechanism to cut down the costs and speed up the transactions, then it would make a lot of sense,” he explained.
In this week’s episode of The Matchmaker Is In series, Sain joined hosts Karen Webster and David Evans, economist and author of Matchmakers: The New Economics of Multisided Platforms, to discuss bringing a unique staffing platform to the hospitality space to displace the traditional staffing companies and job boards, enabling businesses find high-quality help when they need it.
Here is an excerpt of their conversation.
KW: What does Waitron do, and what are the big frictions the platform is removing from the staffing model in hospitality?
BS: The hospitality industry is unique in that it has a very high degree of turn, around 40 to 50 percent of workers leave in the first year. It’s also difficult to find good workers, and the only way typically to do that is to go through a staffing company; but of course staffing companies are expensive. In some cases, they cost around 20 percent more than the cost of the worker’s salary for the year, so economically it doesn’t make a lot of sense for the hospitality industry, which is a traditionally low-margin space. Then you have job boards, which is the other solution. You can use job boards, but then you’re left with the “trying to find a needle in a haystack” effect.
What Waitron wanted to do from the beginning, and something that I’ve always been fascinated with, is provide the quality and assurance of a staffing company at the cost and speed of something like a job board. Forty percent of the U.S. workforce are contingent workers today and that number is only going to increase, so as these contingent workers work, they are increasing turn as more firms continue to move to on-demand type businesses. With a rise in turn, hospitality being a low-margin industry and the need for accuracy, quality and vetted capable staff, it just builds to a big, unsolved problem now. The hospitality industry employs around 11 million workers, and 6 million of those are contingent or part-time — one of the industries that needed a solution like this the most just didn’t have one. That is what we are looking to solve.
KW: Hospitality is a pretty big industry; is there a particular segment that you’re focused on?
BS: We started as a traditional staffing company focused on catering and event planners. We went out and recruited a bunch of people, then we partnered with a few catering and event planning companies to let them know that whenever they needed staff, we could handle it. We did that in order to better understand the nuances of staffing in this industry, and it’s a bit more complex than other industries in that you don’t typically have just one or two people you need at a given time — it’s dozens potentially. Matching dozens of people to one entity was a big problem in catering, so that’s where we started. Now we are expanding out to the brand ambassador world, which is an industry that’s also in big need of this type of solution. These are people that go to grocery stores and liquor stores to demonstrate products, and with that, you need someone who is knowledgeable, can be deployed at a given time somewhere and [who’s] hospitable. Right now, we service catering companies, restaurants for off-premise catering, event planners and brands.
KW: How do you find people to opt-in to your marketplace? Is it hard to corral those people?
BS: It’s hard to corral qualified people. We go through a process with all of our workers where we vet them and background check, but finding quality amongst them is a real challenge, because there are so many workers [who] want to be on our platform. There’s the fortunate stance of knowing that there’s big a problem on the seller side or else there wouldn’t be so many people trying to get on the platform.
DE: Has recruiting a high quality workforce been your biggest challenge so far? Or do you have the usual challenges that a matchmaker has of getting both the buy side and the sell side onboard at the same time?
BS: More the latter. We’ve been fortunate that the workforce, or seller side for us, has not been so difficult to recruit. But doing both the staffing up of the workers and finding the buyers has been a bit difficult. Buyers are not comfortable using something like this when they’ve traditionally only used staffing companies. These are mom-and-pop type establishments that have been around for a really long time, and their vendors have been their vendors for years. Saying to them, “Hey, let our marketplace replace the need of a staffing company, and we’ll do it quicker, more efficiently and more inexpensively,” is just a hard thing for a lot of our buyers to accept. It’s not that they can’t grasp it; it’s just that they aren’t used to it.
KW: How are you convincing the buyers that what you have is better and more reliable?
BS: That’s the hard part. For us, what we do is sell it as a traditional staffing solution, and then over time they start to realize that it’s more of a marketplace. Getting them past the mindset of this is how they solved a problem traditionally, and showing them that Waitron is how they can solve this problem today is a gap that we have to take some time bridging. We haven’t figured out the golden bullet yet, but I think we’re getting closer and closer to it.
KW: Since you’re dealing with a local market where sellers may be known to the buyers, how do you convince sellers that Waitron is something they should do versus just making sure they are part of the rolodex of a caterer that’s working an event?
BS: A lot of this has to do with the cacophony that’s around the seller side. If you’re a worker in New York City on Waitron, it’s likely that you work for a restaurant, work for two to three different staffing companies or even that you’re an actor [who] has to go on acting jobs every now and then. There is all this noise around the worker side of getting multiple jobs from multiple areas, so what we found is that the … major problem is on the worker side. When they start to realize that Waitron is a single, one-channel solution to get their work to line up with their schedule … when they want to, it’s not a very hard sell for us. In fact, they are the ones coming to us saying that they want to work for us. Hopefully we can continue to have that good fortune as we scale, but for the time being, we haven’t seen a big problem with recruiting good, high-quality sellers.
DE: How far along are you on your thinking and implementation of policies to make sure that the workers don’t get stiffed by the event companies, on the one hand, and how the event company can be assured that if a worker is a dud they won’t be exposed to that individual in the future? How do you manage bad behaviors on both sides of the market?
BS: We’re still a little early on as a company, so there’s a lot of this that we haven’t quite uncovered yet. We do experience that in some ways; for example, a catering company may try to recruit a worker to work for them directly and obviously go around the platform. How we incentivize that is that we try not to limit that behavior by the catering company. We just want to be a better solution for them than employing those people themselves. For the worker, the way that it’s best solved is creating relationships through the platform of which it would be hard for them to keep outside of the platform. If they’re being favorited by a specific client and they leave the platform only to work for one other client, then they are dealing with the opportunity costs they are giving up by losing the other clientele they’ve built on the platform. As we scale, we think it will be more difficult to control the problem, but we also think the network effect will hopefully help to curtail some of the platform leakage that other firms have had.
KW: Do you take responsibility for paying the workers? How do you make money?
BS: Our third-party payment provider is Braintree, so we use Braintree for all of our payment processing. For the time being, we are still operating a bit like a staffing company to better understand the problem, so we do payments ourselves. We will then move over to Braintree automating that payment system as we start to transition to more of a traditional marketplace platform. Braintree is our payment acceptor, but in terms of payout, we’re not using that functionality yet.
Just like a traditional marketplace, we’re primarily making our money from the transaction fee. We have a percentage above the cost of the worker, but as we scale, the way that it will be hard for staffing companies to compete with us is that we can charge exceptionally lower amounts for the same level of quality through our platform. As we build more tools into the platform for brands, catering companies and other hospitality businesses to manage their workforces, we’ll be able to add subscription fees into our platform.
KW: Do those on the platform get a notice when there’s a job, or is it up to them to check in daily?
BS: That is the one thing we wanted to make sure we solved off the bat. As I mentioned earlier, these workers are working for several different companies, so they’re having to check calendars for all of these different companies across multiple jobs. It just didn’t make sense for the workers that they had to do this when there should be a push notification system that was much smarter. We’ve built that stack so it’s an SMS-based system, and once they get matched to a job they get a text message about the job and they can replay to confirm the match. Afterwards, they receive a more detailed run-down of the job in another message via a link to a PDF, and they get an email message. They get all of the information pushed to them as opposed to having to go check.
DE: It would seem to me that one of your big challenges going forward, in order to scale the business, would be scaling up the quality checking of the workers. Staffing agencies are small in part because they can’t really operate on the large scale. You’re trying to develop something that is national, so I’m curious how far your thinking is in terms of how you take the vetting process and scaling that up nationally that allows you to compete with the smaller staffing agencies that have a close connection to the workers?
BS: We have put quite a bit of thought into this problem. It was one of the first things that we wanted to think through, knowing that there’s a big market opportunity here in a several billion-dollar industry, but how to actually have the quality of an in-person recruiter at the scale of an Uber. What we’ve come up with is a tool for somebody to opt-in to being the recruiter as long as they have the background to do so. This is someone [who] can work as an independent contractor when they want to onboard workers in remote locations. It would be an in-person recruitment process between them and the seller, where they would actually work with the seller, screen the seller in person, understand if that seller can do that job and then use a series of tools we give them to do that recruitment. It would be a little different than traditional staffing recruitment, but not so far that it isn’t something that somebody could do on a part-time basis. If you’re a general manager of a restaurant and you want to make extra money, you could go and recruit for Waitron for a week.
Recruiters are paid a percentage of the worker’s payment. They would essentially get a percentage much like a normal recruiter would get, and that percentage would depend entirely on how much that person worked. The idea is that they’re incentivized to find somebody who wants to work often, work well and be favorited by several clienteles so that they are making a higher percentage.
KW: Are there other successful platforms that, as you have observed them operating, you’ve borrowed techniques or inspiration from as you’ve been sketching out Waitron and thinking about how to scale it?
BS: Absolutely, I love Airbnb. I think they did something that was beyond brilliant for something that was so simple — basically taking unoccupied space and turning it into value. We are taking unoccupied time and turning it into value, so in a way that someone has built up the value of their home, this person has built up the value of their skill set, and we are opening up the marketplace to connect directly to that skill set.
The idea of a staffing company is that there is a gatekeeper — they are the gatekeeper because they know how to vet and screen people better than a job board can, and having the human touch is really important to the client. But if you remove the gatekeeper and connect the client directly to the buyer, then if a system is built in such a way that screens for skill, then you know what you want ahead of time and you just connect that need to that supply. I think Airbnb did that beautifully. The person brokering real estate in a really big way is deserving of a $20 billion valuation. A lot of people would probably disagree with me, but I think that they are a brilliant company.
I think OpenTable is also a great one. They seem to have a big problem with scaling the supply-and-demand sides in tandem, and I can understand why it would be difficult to get people from the world [who are] as legacy-thinking as restaurants into a world in which reservations happen through the ether. I think that working through some of OpenTable’s problems makes a lot of sense for us, because we are dealing a lot with the same buyers that work in the hospitality industry. We are looking at some of those similarities to determine how we can mimic or at least stand on the shoulders of that giant to learn a little bit more about what we could do ourselves.