Workable's Biggest Customer Pays Six Figures. On Purpose.

Workable’s largest customer pays it low six figures a year. That is not a ceiling the company has failed to break through. It is a ceiling the CEO installed on purpose.

We’re not so keenly interested in million dollar contracts, because that would necessarily mean that the product would become less appealing to the smaller customers. Right now, the way the market is, we are the leading player with companies with fewer than 500 employees, and we don’t want to lose that.

Nikos Moraitakis, CEO, Workable

$30 million, and what it cost

At the time of the interview Workable was closing on a $30 million run rate, up from “slightly below 20” a year earlier — 50 to 60 percent growth. It had 20,000 customers in 100 countries, up from 6,000 at Moraitakis’s previous appearance a little over a year before.

Latka went straight at the growth rate with the question the funding implies. “Once you’ve raised 95 million dollars, at this scale you want to see 100 percent year over year growth, right? So going from 20 to 30, I imagine, was not exciting for your VCs. How do you manage their expectations?”

Moraitakis did not accept the framing. “The growth obviously is one parameter, but it’s also how you’re growing, how much money you’re spending, how efficient your sales are. So actually we’re happy to be at 50, 60 growth. It’s the whole picture of the P&L.”

He then said out loud the thing most venture-backed founders will not, and named the company he was measuring himself against.

There are plenty of companies in the HR space which, because of a mix of a good growth with low burn and a steady big market, have achieved remarkable outcomes. BambooHR for example — they’ve had remarkable outcomes because their whole P&L was not just focused on growth at all costs.

Nikos Moraitakis, CEO, Workable

Latka ran the rule of 40 on him anyway: burning $10 million on $30 million of top line is a −30 percent EBITDA margin, which against 50 to 60 percent growth puts Workable just under the bar. Moraitakis agreed without flinching — “you don’t want to be much below that” — and pointed at the margin holding it up.

Raising more than you need

The Series C had closed a year and change earlier: $50 million, taking the total to around $95 million. What is unusual is how much runway that bought.

“We raised quite a bit compared to how much we’re burning,” Moraitakis said. Latka: “When you raise that 50 million, you raised for like 24 months of burn versus 12?”

“Nearly three years.”

Asked why take the dilution, the answer was about market conditions rather than need. “We got the right investors, we have a long-term plan, and right now the markets are pretty good for raising money. So if you get a good deal you just pick up the extra money. So far in all the rounds we ended up picking up a little bit more than we needed — and we needed it.”

Most of the $50 million was still in the bank. The stated use was acquisitions, and Moraitakis was specific about the target profile: recruitment marketing, and “job sites that deviate from traditional job sites and create communities, and have richer audiences in terms of the data, their intent, where you can help people actually source better candidates. There are a lot of local ones, there are a lot of vertical ones — and these are closer to ATSs than they are to job sites.”

On the round’s valuation he let Latka reason it out: below 20 percent sold, typically 10 to 15 at a C, which puts the number around $250 million. He accepted the arithmetic and then dismissed the whole exercise. “The theoretical valuation of preferred stock is not my main concern.” His reference point, in September 2019, was current: “as we saw with Mr Neumann at WeWork.”

The arithmetic that fell apart on air

The best moment in the interview is a calculation that does not work, and neither man pretends otherwise.

Moraitakis had given an average contract value “slightly above 10k annually” — more than triple the roughly $3,000 he reported at his last appearance, driven by traction with companies of a few hundred to a few thousand employees. Latka multiplied: “If I take 20,000 customers times that ACV, that would put you at like 16 million a month in revenue.”

“No, no, no. For a year.”

“It’s a twelfth of that.” And then Moraitakis, closing it down: “We must have done something wrong in the calculation. The current revenue is in the tens of millions, not in the hundreds of millions.”

The gap never gets resolved on tape, and it is worth stating plainly: 20,000 customers at a $10,000 annual contract value is $200 million, and Workable was at $30 million. The ACV figure has to describe the annual, inside-sales half of the base rather than the pay-as-you-go small businesses, who “can just go and pay for the hires they’re making.” With three quarters of customers under 100 employees, the blended average is nowhere near $10,000. Two true statements that do not multiply together.

Two businesses in one P&L

The retention numbers show the same split, and they are far apart.

The small end is cheap to serve because Workable does not really sell to it. “We’ve been very successful in the past with the content marketing operation. Right now I think we have the most popular HR website in the world, with about 25 million uniques a year for HR professionals. So a lot of our leads are coming inbound through organic and SEO. For the smaller customers we don’t tend to spend a lot of money — so it’s a net profit from the very beginning.”

The sales motion at the other end is fast by enterprise standards: transactional inside sales with cycles under twenty days, “very often just a few days”, turning more consultative for bigger accounts. About a third of the roughly 300-person team was sales-related, but only 20 to 25 carried a quota. Ninety to a hundred were engineers. And there is no field motion at all: “We don’t have steak dinner sales.”

Not taking a cut of the hire

Recruiting software sits next to an industry that charges 20 to 30 percent of first-year salary, and Workable has looked at the arbitrage and refused it.

“In some of our products it would perhaps make sense to mimic the recruiter and agency business model, but we try to stay away from it,” Moraitakis said. The reason is positional rather than financial: “What we’re trying to do is essentially to replace and automate some of what agencies do in the future — and we felt that following their business model would not send the right message.”

The scale that flat fee has bought: about 70 million candidates, a bit under half a million hires placed in the year, and something like a million and a half over the company’s life.

A note on the date

This conversation was filed in the GetLatka database as May 2018, and it is not. Moraitakis refers to a previous appearance “in May 2018” as past; Latka signs off asking for 10,000 YouTube subscribers “by the end of September here, 2019”; and the WeWork reference dates it to the month Adam Neumann left. The profile’s September 2019 rows — $30 million in revenue, 300 employees, 90 engineers — match the tape line for line. The May 2018 rows, $20 million and 170 people, belong to the earlier interview. The record has been corrected.

Moraitakis’s answer to the last question is one of the few in the archive with no strategy in it at all. Asked what he wished his twenty-year-old self had known: “I wish I knew how easy it is to create a company, and build whatever product you like, and make a career out of it.”

Sources — Nikos Moraitakis interviewed by Nathan Latka, recorded September 2019. Revenue, headcount, customer and funding figures from the Workable profile on GetLatka, with dates as recorded.