How GetRocket CEO Anant Chaudhary grew to $600K revenue and 100 customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is abhinav agarwal he is the ceo and co-founder of rocket previously he was the ceo and co-founder of renzo which was required by surveymonkey vp at zynga a product manager or pm at amazon a consultant at mckinsey attended hbs and princeton before jumping into startup world abhinav you're ready to take us to the top yeah absolutely all right so talk to us about rocket hr tech is you know very crammed how are you standing out you know it's interesting we started um this company just because we were trying to solve a problem that we had with our own hiring and our own startups you know i've recruited at companies as large as mckinsey and amazon and then as small as my own startup which raised a three million seed round but nobody knew about us right so the problem we're solving is for us which was how do you hire great talent quickly and the way we want to stand out is by making a full stack solution you know i think there's a lot of people who just want to use a tech approach to this problem we don't think that's going to work what we think is going to work is sort of a humans combined with good technology kind of like what compass is doing what atrium is doing that's our solution yep and so walk me through how folks are paying is it a peer play sas model it's not it's sort of a combination i think um you know it's fun fans the gamut there are some people who want that pure play sas model i would say they're actually in the minority in this business because they're very very afraid of all the bad players that are out there you know you think about your recruiting typical recruiting agency it's only right below comcast in terms of negative or low nps scores right you know i think it's not quite as bad as your cable provider but but not not that far off right and so historically there's been a great sort of desire to align how much you pay with kind of performance and so that's kind of you know in the pure place sas model you just get some sourcing you get some candidates that's great you pay a monthly fee but most of what our clients are interested in are actually kind of performance oriented models are now even retained models the difference is just you know if you hire a typical recruiting agency they're not going to have any engineers on staff they're not going to have any people who've actually done the role themselves right so i've done product management for 10 15 years my co-founder has done marketing and growth for an equivalent amount of time our cto has done sort of technology for the last 20 years and so we're able to train our recruiters given that experience which most agencies just don't have so when you look at i'm sure you have customers of all different sizes but the average customer per year is paying you about what would you say what's your sweet spot they're paying us about 80 to 100 000 a year and what are they getting for that how many hires um you know our typical uh percentage fee is anywhere from 20 to 30 of uh first year base salaries so they're getting anywhere from three to four hires a little bit lower if they're in the bay area or new york city and the comp is higher uh a little bit more if you know we have some clients all the way in missouri city and in missouri city the average pay is 80k right and so the placement can be only 16 to 20k whereas in san francisco or average placement becomes anywhere you know around 35 to 40. so do you i mean is any of this truly sas or you've basically just made the traditional recruiting process and business model you know tech enabled essentially you know so what i would say is that it can be sas for the people who want to have it right and so the difference is that many people so for the people who want to pay that way they can get all of our services on a monthly fixed price saying they don't need to pay us any time extra if they hire or don't hire the person right and we have some clients who are doing that too right we have some small startups who like that predictability if you're thinking back to sas what does that really mean i'm getting this it's predictable i know how much i'm paying i can start at any time i can stop at any time right and i'm paying a monthly fee and we have some clients to do that i think the challenge for many people has been that they don't know if it's going to work out or not and so they prefer to pay them performance so we think of it more as innovating on the go to market model uh than anything else right it's the same thing if you think about atrium's evolution for the longest time they've had to go out and do the same thing as billing you on a per engagement basis because until they've proven themselves that's what people want to buy and then over time you know i just saw that email from hdmi was last week or the week before introducing their monthly subscription plans right because now that they've proven themselves clients people are more willing to take the bet so i think we're making that same transition over time and we've had clients like thrive global you know they spent 150k with us last year and then they came back and their ceo said hey let's turn this into predictable stream uh payments so now so so when did you launch the company what year uh we started in late 2016 2016 and how much time did you spend you know between the first line of code and your first dollar of revenue uh about four months okay and and how much cash should you guys think into that mvp um so we were a little bit lucky um you know we've got a successful startup before that been acquired by surveymonkey so we ended up raising uh 2.9 million right out gate you know we spent a few months iterating on the idea and once we were locked and ready to go we raised that that seed round so it's not really fair to say we built it on very little amount of money but i think our mvp was out within uh you know two or three months so if you and we have two or three engineers so all under like 50 to 60k we have okay and how much total have you raised in the company to date two point nine it is the 2.9 okay yeah um so i mean what's the right amount for your next raise you said you wanted to raise now um we're probably going to target towards the end of the year i think the race uh it's all about what we use the money for which is open new offices so we've got the last two and a half years you know we've had our offices so we just opened up our las vegas location so we're going to work with companies like caesars and gm all the gaming companies and real gaming casino companies as well and so the next step in the company is just opening up more offices i think we're going to target somewhere from 7 to 10 million in the next round but uh it all depends on the market conditions yeah and how many customers today we have about 100 customers today okay and are those all i mean when you look at something like churn in your space how do you measure that did you say yeah i think there's a very easy way to say uh think about churn which is the client has an active role but they're not using you uh and there's no excuses on that but that's just what it is sorry i don't understand if a client has an active role but they're not using you what does that do you consider that role because you know companies will go through these days off hey they just don't they're not hiring right now so if you imagine a small startup they might do a burst firing of four to six hires then they might just stop because they don't want to hire anyone and so they're not using you actively that's not really churn they just don't need to hire right now if they have an open role they're hiring actively they're just not using you that's the real definition of churn in this in this space i'm guessing your next question is going to be what does turn look like for us you know typically over the last couple of years our churn has been anywhere from two to three percent monthly or annually annually on a logo or revenue basis uh revenue basis okay so does that mean three percent of your customers that did at least one hire through you last year will not return this year uh yes if we're projecting forward yeah something like that yeah okay interesting um i mean can i even take i think this is too high can i take 100 customers times again a hundred thousand dollar acv average you just told me i mean that puts you like 800 grand a month right now on revenue i don't think you're that big now i think what ends up happening is the difference between median and average in this industry is very large right and so what ends up happening is the numbers i'm giving you are some of the medium whereas some of the customers that are small so if you imagine so and this is the challenge of running a business like ours where we have a company you know i just kicked off a role with a self-state startup they raised three million from foundation um and you know we're just off the blocks with them versus also having a customer like carta which is hiring something like 75 to 100 engineers right so it tends to be kind of all over the map the way we think about this and this is where churn also again it matters back to are they hiring or not or is the reason that they're out of business because they're just defunct so one of our you know customers outpost games uh was doing really well but then they really just went out of business enough sorry i don't mean to cut you off but we're running i mean i wanna get as much as possible so last last year how many total hires went through your platform uh we don't release those numbers today publicly just yet okay well range is fine are we talking like tens or like hundreds or thousands okay so between 100 and a thousand is fair yeah okay um and then how do you make sure that you get credit for all those hires how do you track attribution so we track attribution because the way we think about it as a recruiter from our companies chatting to every single of those candidates so we're in the loop we know that the candidate is being hired by a company um and that's just i mean it's a very simple tracking mechanism okay and in 2019 how many hires do you think you'll break i think we're so uh on a quarterly basis we're growing at about 240 percent yeah but again that's easy going from one to three is 300 year over year growth that's that's a you know that's an unfair metric to use right now right that's the sexy one that everyone wants to hear but it's that's a pointless metric to use right so in 2019 how many total unique hires do you think you'll pass through your platform no no and that's the metric i'm telling you it's 2019 versus quarter of like 2019 quarter that just closed versus the 2018 quarter that was the growth rate let's do 40 percent yeah but i'm telling you that doesn't matter it's small numbers it doesn't matter right that's the question you're asking is what does 2020 growth rate look like right no no it's a sim this is a simple question in 2019 there's two months left in the year and how many total employees will you place into your customers i think again i wouldn't give you an exact range but the growth compared to over last year would be roughly 2.5x yeah i mean i would say that's potent i mean you could argue that that's extremely extremely low considering you're dealing with very small numbers it should be way higher for a vc funded company sure absolutely i think that the fair you know we beat ourselves up every day that our growth should be sort of a thousand percent now that being said our numbers are you know uh something like three to four million a year so yeah it's not it's not that low or could we be doing better absolutely uh you mean last year you did about three million in revenue yeah and this year you think you'll break you think you'll break 2.5 x that that's the hope yeah yeah i mean are you on track to break six million this year yeah we are i think the tough part on this is the business is seasonal so uh you know we it and it isn't sas revenue where you can just predict it so every month you sort of start the treadmill again which is a hard thing to do in business i mean there's only three months left in the year i mean are you over five million so far this year we are on track like i said okay good and then take me back one year since you have the history if there was three million 2018 what was the year before that do you remember so 2018 uh 2017 i think we did about four to six hundred something like that okay good yes so good that's good growth yeah um okay cool and now where is most this growth coming from are you are you hiring more people for the same customer base or adding new customers all together i think most of the growth is from new customers most of the growth okay okay great and is more growth coming from the sas model or the 15 20 to 30 first year salary model um more from the full stack model where he charges a percentage of salary yeah break down your team for me for on this model so how many people total in the company you have about 30 people about two-thirds of the team are recruiters a third of the team is product and engineering okay so about 10 engineers and products so okay any rep quota carrying reps we don't have any sales people today no no sales folks okay uh and what about what about so you mentioned three percent revenue churn kind of annually what about expansion on that same cohort is it more than three percent sorry i don't know if i fully understood your question so um if you look at all the customers you have signed up exactly a year ago they're paying you x amount when you fast forward now what they're paying you a year later you said three percent of them you'll lose three percent of the revenue i'm just curious do you upsell them by more than three percent as well so expansion makes up more than makes up for churn no i don't think so i think to some extent that statics that stays flat which is where most of the growth ends up being from the new customers your question correct yeah yeah that's right okay good and then look you're looking potentially at a q4 maybe q1 2020 kind of raise you've done this before you've been through the kicker you raised 2.9 million bucks what are you comfortable i mean what can you sleep at night in terms of what you're you're comfortable burning per month to grow this thing so we're basically cash flow positive already so um you know i think we think about it as what ends up being difficult in this business is actually receivable so you know i have something like uh you know net contracts are net 30 but payments end up being sort of net 60 net 90. so the biggest thing i'm financing is actually my receivables um the second piece that i'm sort of financing is new office expansions and typically it takes a recruiter anywhere from three to six months before they start paying off i think the way i think about netburn is that i'm happy at any point looking at hey can i get back to cash flow positive in six to nine months so today when you say you're basically cash flow positive that means you're burning less than five grand a month in that burn oh uh yeah yeah that's okay got it i mean i'd consider again at your scale anywhere between kind of five and five you know negative five thousand up to five thousand plus you're basically break even with a little fluctuation oh yeah absolutely and we have a 2.9 we've raised we have about 1.6 on the bank oh that's good so why go why go do another run and take all the dilution so the biggest reason i think is around scale of ambition right i think we have a model that we believe is proven out could we sort of build this business slowly uh yeah absolutely we could without raising another dime in external capital i think the reason we want to raise more capital is we believe we have a proven model and next year if all things go well i'd love to open sort of five to ten offices in the us because it is a local market right you do need to be in market to talk to customers affect your candidates i'd rather open five to ten offices as opposed to one or two and grow the pie yeah now what do you think obviously if you break six and maybe get a little bit more juice on that six and a half seven ish if you go raise 7-10 million i mean do you think you can only sell maybe 10 to 15 of the company or do you think it's gonna look more like you know it's you know 80 90 million dollar premium evaluation you can get better you know i i think it may not be the right way to think about we we don't think about it as much as a matter of dilution as we think about the right term and there is a reason why in a normal sas business the metrics and kind of the you know if you look at social capitals eight ball or whatever their different methodologies you get a very good sense of sort of valuation based on uh current revenue and growth metrics our model is different and so the thing we care most about is having the right partner who understands that model we've seen too many companies in this space fall flat you know whether you look at hired or others where things stall because they don't have the right partner and the right partner pushes that into an operating model that doesn't work for this industry so the wrong partner pushes them into a wrong business model yes yes sorry i mean yeah but i'll be enough to your point these are these are hr tech companies that try and be a sas company when they're not so they get really high valuations with liquidation preferences and ratchet clauses that end up destroying them because they're not a sas company so to your point if you find a partner that's a better fit you're not going to get a sas like valuation you're going to get more of like an agency like valuation at like 3 or 4x arr not like 10x arr totally i think that's fair number one number two that one delta i would say is that if you think about you know i'm i'm a financial guy in addition to a product guy if you think about what makes a company's valuation three to four versus the nine or ten by sas it really just comes down to profit margin right the typical agency makes five to ten percent net margin um you know our hope uh again net margin is not a great metric for us today because we have a big fixed cost but today we are targeting anywhere from 60 to 70 gross margin so our goal we can ideally be a 30 40 net margin business is that the same as a software business absolutely freaking not um but is it much better than the traditional agency model we hope so and that's why we're in this business yeah no i think i think that i agree with all those points i think that's fair um on the on that note let's wrap up here with the famous five number one what's your favorite business book uh i love um sort of thinking big and small number two is there a ceo you're following or studying you know i'm a really really huge fan of dave goldberg um you know when he bought our last company um we lost him too soon um and i i spent a lot of time talking to people who worked with him uh it was really really inspiring in the little time yep number three what's your favorite online tool for building your company we've loved mixpanel i don't know if you've uh considered it still a tool i mean it's such a mature company now but coming from sort of an analytics tracking background i love tracking everything we do you know everything in our company is measured and sort of analyzed and that's super great number four how many hours of sleep i get every night eight to nine and what's your situation married single kids married and expecting a baby in about a month very exciting all right one kid on the way and how old are you i'm 36 36 last question what do you wish your 20 year old self knew um i would have done startups way faster you know i think i just didn't i didn't know any better if i knew better i would have uh stopped whatever i was doing and uh and gone and joined the startup guys abhinav with get rocket launch back in call 2016 2017 helping folks hire more effectively with their tech platform six hundred thousand dollars in revenue in their first year hoping to break six million on track to break 6 million here in 2019 up from 3 million in 2018 so healthy growth again as they look to scale not only their team but their recruiters their locations 100 customers right now uh placing anywhere between 100 and a thousand jobs or employees per year right now again as they look to scale cash flow breakeven 2.9 million raised 1.6 in the bank looking to potentially do a 7 to 10 million dollar round in q4 or q1 call it 20 20. i've been off thank you for taking us to the top absolutely take care these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now