Deephire Revenue & Valuation (2024)

hello everybody my guest today is stephen gates during college he went through 24 hackathons 200 job applications zero callbacks and made a recruiting hack basically a vc from awarded a grant plus they raised some pre-seed to launch their current company deep hire they're 1.5 years in and they had no traction pivoted to video interviewing platform from pilot feedback and now they're closing paying clients won another grant with an angel match within two months and now focus on getting to the beautiful 10 000 per month mark as soon as they can stephen are you ready to take us to the top i am let's do it all right so where are you at today on that trek to 10 grand a month so right now we're doing about 1 000 in monthly recurring revenue that's great so let's break down kind of the back story here the first thousand can be the hardest sometimes so when did you actually launch the company what year uh so we launched in 2017 i think officially we incorporated in april 2017 so that's right after that whole hackathon stuff um and then since then we actually had three co-founders uh we did the whole summer thing right like get a good house together the three startup bros do the whole the whole shtick uh by the end of the summer it turns out we only have uh we have to get rid of one co-founder so i was gonna say how it's like the hunger games how many how many founders survived right yeah exactly two thunder survive um and that was that was one good learning by the way it took longer than you would expect to like actually make that clean break it took way longer than you would expect why stephen why'd it take longer then after that uh during that time um the fun relationship the it wasn't like a super clean break right on the relationship side it got a little bit um you know a bit ugly and then just because back then we're really bootstrapping i mean even though it's like 35 000 like nothing though is that is that what you guys had raised from grants and stuff 35 grand oh yeah 35 grand total so that's what that's what carried us to to last week and last week was when we closed the 50 000 kind of like bridge round oh congrats now was that it was that equity or debt or venture debt or what uh which one the 35 50. the 50 it was 25 000 convertible from an angel and 25 000 from a grant award thing that i had to go through well that's great okay so about 85 grand into the company to date which is which is nice so congratulations you're feeling good you have some extra runway now what now how much runway though what's the team size say is it just you two yep just us two and we're hiring so there's a few specific programs around here that um we can hire some interns for especially cheap on our end so we're experienced with that but two co-founders and then any interns they can get yeah so i want to walk through kind of how you're doing this because a lot of students or people stuck in corporate are listening going okay like how do i jump out and do what steven's doing and get my first grind of revenue we'll come back to that in a second but first give us some product context here what's the product do yeah so are you curious about the whole pivoting structure and how we pivoted or as of right now start with where you're at today and we'll go backwards cool so today um so just like how we're skyping right now and you do a lot of these podcasts every single time right so imagine if you could automate yourself out of it so you just have a list of questions and you send that out to people to kind of log on click your invitation link to log on they answer the questions on video much like i'm answering your questions right now now i know you're being a bit creative and you're asking your own questions so you can add those as well so that's basically what we're doing for recruiters recruiters they're little professional networkers right they do 30 minute phone calls all day every single day and a lot of those phone calls if the candidates just are they're like prospecting so the candidate just is plainly not a good fit first two minutes you can kind of tell you can't just hang up the call and go on right you got to stay out through the call the entire time so that's the huge time savings that's why that's really the one of the biggest value process for recruiter is hey use deeper fill out your screening questions on this interview link send out the invitation people log on answer your questions on video and then we and then you get back the results and video profile and then we do some extra stuff to some extra recruiting specific things to kind of help the recruiters drive client decisions faster yeah so like the candidate can basically say okay first question tell me about yourself the candidate can look at their webcam wherever they are in the world answer it that video gets uploaded and then your recruiters can kind of talk amongst the team like on the sidebar on their back end about what they thought about that canada is that right yeah 100 and then the other key part the killer whole thing because there are other apps that do that other web apps other companies that do that uh the reason why i think we're getting traction why people are responding really well now is because we're focused on the uh the the the client and the recruiter relationships so they're the for the client you know some guy to hire the recruiter to fill a position uh this client's like a vp of sales let's say and he's hi he needs like an entry entry level sales rep he's got 10 priorities hiring for that sales rep is like his 15th priority right he doesn't take the time to do it so and then but for the recruiter closing that placement that's a 5 000 check for the recruiter so he cares a lot right i mean that's his revenue that's how he makes money that's his business yeah that's interesting so we need stuff there to automate and kind of do a drip campaign to the clients and get them to respond and kind of tease them along get feedback from them and that's like those two combos what are people paying on average per month for this uh they're paying 150 per seat per month okay 150 per seat per month and how many customers have you scaled to today um so that would be we're around like eight or eight eight or ten eight or ten seats about eight seats great yeah so i can have that's where you get the thousand bucks a month eight times about 150 right right and and how so walk me through how you got those first date i mean are you just hustling and literally how did you find the first recruiter that started paying you so literally find so we found a lot of recruiters that are willing to mentor us and kind of give feedback in our local network i mean you know a lot of people say that your first sales come from a local network we found a lot of people are willing to mentor us was great but we found no one that was willing to actually pay for it which was a little bit less great um so to literally find our first customer uh she's awesome we love her hanging with suzanne she's in she's in london actually and we found her by going to facebook groups and there are specific recruiting groups each of them have like 20 000 30 000 people in the group so uh some of the groups they do stuff like feature member of the day right kind of like you do where they talk about you know they're here their metrics and here's what they do and here's what they focus on if you have any questions reach out to them so that's what we did we reached out to every single person that they that they had featured um we got a lot of calls out of it like a really really high response out of it because obviously they want to talk how did you get their emails uh it's part of it's part of the feature man that says here's suzanne letting from okay she does xyz this is her phone number she's interested in you know abc interesting okay very good so it's a lot of uh cold facebook message then set up a call set up a demo right after that and then usually because of people in the groups they're they're much smaller deal sizes you know at max it's like a it's like a boutique firm with like 10 recruiters so in terms of you know selling it's a pretty small deal size pretty small customer so their decisions are way faster the first customer we closed in like a week i think that's great all right let's go back to the kind of the founding story here right so like getting out of the gate so first off when you raise the first 25 grand and obviously you've just raised additional capital um let's go back to when the other co-founder was still there did you guys just split it right down the middle in the bro house it was 33-33-33 yeah we we started out i think with like um russell and i equal partners and then the third guy he had like 25 because we had some legwork before then but then he said so like ah okay sure three three three three right down the middle okay and then so okay so when did you realize it wasn't gonna be a fit like did the third one just like stop like responding on slack or he stopped being engaged what happened um so there's there's always like red flags right like but back then russell and i have mentality of well we can work through it right founding is like a marriage by the way back then we didn't even know what an llc was yeah like that was the first learning we learned what an llc was then the day after that we learned what uh equity was day after that we learned how or the vehicle to take a thirty five thousand dollar check yeah to me like that that's that's the mind frame that we were in so now though being more experienced and looking back we can kind of tell like oh that was like no way would have worked did you have testing schedules what was that did you know about investing thankfully yes okay which by the way back then didn't know what investing schedule was right so that was totally because of the incubator we worked with their template had a vesting schedule built into it so that obviously gave you a forcing function to be able to kind of essentially push this third guy out who wasn't contributing exactly exactly yeah and he was there for less than a year so the one-year cliff you got all the equity back um yeah we so we did it that was the one sucky part there was no cliff but we're on investing schedule so they invested quarterly so i think he had two quarters that he invested i see so he's still kind of on the cap table kind of silent partner yeah yeah great makes a lot of sense and then the other big question here and this is kind of sensitive so you don't have to answer but it would be valuable people never know what to pay themselves in the early days especially when they've raised like 20 30 50 grand i mean so how do you and your co-founder pay yourself uh so we do moonlighting so we just do software consulting on the side or sorry we've used to do software consulting on the side now that we're kind of making money off of this we want to kind of go full on and bootstrap a bit further or whatever um i started paying like i don't really if you've got 35 000 in the bank i mean as your pre-seed investment i don't think that's worth paying you for because that's that's if you pay yourself even 10 000 bucks for the year then that's actually with taxes it's like seven thousand bucks so it's like you didn't pay yourself you just did consulting partners on the side yeah exactly so we just did software controlling outside which is i also think early on that's really good to do because it just exposes you to more people you get more chances to pitch your product and you kind of develop relationships with people yeah that makes a lot of sense man so what's the next plan how do you get to 10 grand a month in revenue so 10 grand a month in revenue uh one we're really so we're trying to fill in the market uh gaps left by competitors and really hitting hard our differentiation and the gap of the leaving so one gap is on inbound marketing all of them all the competitors right now they're like slightly older companies uh they don't really quite get inbound yet so we're gonna be hitting inbound like 10x you know i think i think we started the whole thing the whole inbound stuff this month and we're already putting out 10 content pieces next month i think we're on track to putting out 30 months after that with start king podcast and video you know what i mean yep so the whole inbound machine i think is really going to be really really really big for us um the other one is through just some lead generation software it's like nothing special it's just some legion software and one you're going to start with what was that name the one you're going to start with the legion software yeah so we're using something called robots have you heard of them yep yep yep what do you think of them good company yeah it's great look there's a ton this space is very commoditized there's a ton of companies like that so hopefully that one works well for you uh yeah listen that makes good sense man let's uh let's wrap up here with the famous five so actually you just gave me kind of your tool that you're using that that's good there talk to me about your books so any books you're reading um any books i'm reading right now yeah like your favorite business book our favorite business book um so number one for your business book i would say however what was it called how i raised myself from failure to success in sale and selling i think okay i think that was by far the best book i've read great number two is there under the radar ceo you're following are studying um so i follow a lot of ceos right like a lot of them name one in ohio that we wouldn't know uh one in ohio uh the robots guys are kind of good but they've been an extension in ohio i mean root insurance they're great but their ceos aren't really doing a lot of outs like pr stuff so it's kind of hard to follow them uh overall though so david goggins on a few counts have you heard of him no what's he what's he the ceo of uh goggins llc i don't know so he's not quite like a traditional ceo he's he started out like navy seal some like the classic super super incredible story you know he's like 300 pounds when he's 22 by 24 he was in the navy seals you're gonna be like super inspirational type of guy and he's like the most dedicated focused person you'll you'll ever see like honestly and he just now had his sights on like as of six months ago on creating a personal brand and doing that whole thing so i'm just curious to see like how a person like that attacks the business world and all the branding stuff and like you know what i mean because he's like he's seriously he's very he's very tactical yeah yeah all right david goggins that's good number three your favorite tool you're working on robots let's go to number four how many hours of sleep you get every night uh if i'm really focused i'm doing everything good eight hours if i'm being less focused than like four to six okay good we'll maybe call it six seven or something in the middle and then situation married single kids uh uh girlfriend no kids no okay so not married no kids in hell are you 23 23 as of this month yeah congrats very good all right stephen take us home here what do you wish you knew three years ago when you were 20. uh when i was 20. uh use a cliff and um don't don't forget about what you're good at you know keep doubling down what you're good at but also keep working on finding your weaknesses guys use cliffs remember what you're good at launch deep higher back in 2017 had some co-founder issues that they've worked out now now they're focused on getting a 10 grand a month in revenue currently doing a grand per month that's 100 that's eight customers paying about 150 bucks per month they've raised about 85 grand combination of angel money and grants to scale it team of two in ohio again building deep higher much easier to use uh software for recruiters when they're looking to capture video content from people applying and so they can get through it quickly and only invest in those videos where there's true promise in the first minute or two all right stephen thanks for taking us to the top love it thanks nathan