How Hackerearth CEO Sachin Gupta grew to $36M revenue and 500 customers in 2024.

hello everyone my guest today is sachin gupta he's the founder and ceo of hacker earth and has grown the company to a global sas platform with hundreds of customers and millions of users he leads the marketing team today along with sales and operations he's also responsible for product management and strategies sachin your idea takes the top all right are you ready to take us to the top absolutely all right so tell us about the company what are you guys doing what's the revenue model so hacker earth is a developer skill assessment software uh we have this technology that allows anybody to come and write code in the browser and that's used by our customers to automatically screen and interview candidates in their technical recruiting process we also have a community version of the product where we allow any developer out there in the world to come in and self-assess themselves to either improve their coding skills or prepare for technical interviews so we've got both an enterprise solution as well as a community so would you sort of say this sort of a combination of like code academy plus lambda school uh well both of those are kind of focused on skilling uh through structured course courses we are more focused on assessing uh and you know kind of giving you real-time feedback on how your coding skills are and and it's more of self-paced learning i would say but the intent is the is this success metric on your platform does paypal hire the engineer they gave the assessment to in other words it's driven by the company giving assessments uh so the uh it's driven by the company who's giving the assessment so they would give an assessment through hacker then depending upon how candidates perform they would then decide whether to take them further in the recruiting process or not i see okay and then so how do you make money obviously traditional recruiting firms take 20 30 a first year salary i assume you have some form of arbitrage against that oh well we don't uh charge on say the first year salary or we don't have that kind of model uh primarily because uh you know we're not sourcing candidates we are more of an assessment tool and we fall after the sourcing stage uh we have a vr sas solution so we have a per recruiter seed kind of model so we charge for recruiter speed everyday credence it comes with a certain number of assessments on a monthly and annual basis and then depending upon the size of the organization their needs we kind of customize the plan so we start as small as one or two receipts and which which upsell kind of lever is more powerful for you guys charging based off number of assessments or number of recruiters on the business team number of recruiters because number of assessments could vary year from year year on year you know you sometimes have a slow time uh in terms of hiring sometimes you have a sudden surge so we don't really want so to introduce you know more predictability in the business it's better to prefer it's been better to price a number of liquid receipts and paint this sort of i'm sure you have a lot of different price points people are paying but give me like the sweet spot what's the average customer paying per month or per year and how many recruiters does their team have yeah so the average i would say the the right land opportunity for us is a two to three receipt that comes out to about seven to twelve thousand dollars to land uh and then we typically expand from there of course you know we've got the long tail which may just start we just wanted to receive and then we also land enterprise accounts starting at 100k where they're looking at probably 20 30 recruit receipts but the sweet spot is to anything between uh two to three recruited streets to begin with i see okay got it and then would you say that i mean if you look at all of your customers are there like three that make up you know 30 percent of your revenue or do you have a fairly even distribution we have a fairly even distribution uh i would say our top customers some of our biggest accounts would contribute only to about 10 of our revenue i think that's that's good because it gives us a little bit more between the business you know we're not at the mercy of just top free cons that's right yeah now when you add up well actually sorry before i ask more questions about today let's get some backstory here we sort of jumped right in there what year did you launch the company uh so uh you know we we started the organization way back in 20 towards the end of 2012 2013 and the core motivation for us to do hacker earth was very simple you know i i i'm a computer engineer software engineer by by education and um you know we saw uh we felt that the way recruiting is being done today it's highly arbitrarily uh not not based on skills and often recruiters as well as developers themselves are taking wrong decisions in terms of which opportunity to go after uh and you know being engineers at heart we wanted to solve that problem so that's how we kind of got into it there's a small anecdotal story a good friend of mine who was top of our batch uh you know top of the class didn't get through uh some of the top companies and we were shocked uh that you know we all think this is the guy who's gonna get into google facebook and he just didn't get through because uh you know the recruiting process of the interviewing process is in some sense broken and that was the you know the motivation for us to kind of start hacker and do you remember back in 2012 how many assessments you gave personally how many were done through your platform in year one i think we have done about 5 000 odd ass estimates in the whole year to start okay okay interesting and now today how many have you done uh so i think today on a daily basis we're more doing more than uh so that's amazing can you sum up so last year do you know the number was for last year i mean are you talking i mean what that's got to be three to a million two million assessments all last year yes so uh we on an app on a on an annual basis we are doing close to a million assessments yeah that's amazing and across about how many customers are you working with now so we're working with about 500 customers split you know distributed globally and can you sort of describe them are they all sort of what you would expect they're sort of the pay pals the googles the facebooks of the world or is there any sort of surprising cohort that's using you so uh well i wouldn't say it's surprising now it was surprising probably three four years back when we uh when we would get customers who were typically into uh say engineering when it's engineering i'm not talking about software engineering in hardware engineering or uh banking segment picked up tech pretty soon so uh actually before i answer that you know a mega trend that has taken place is obviously uh uh software software is eating the world and most of the businesses today are primarily software businesses and we saw why the you know the tech companies were obviously suspect for us uh but then we started seeing you know an airline company like a boeing uh hiring or using hacker earth or rge in the healthcare space using hacker so we saw a lot of different segments who were trying to build out their tech competencies in-house started building uh dev teams internally and then obviously you know they had to build that recruiting muscle and that's where hacker comes into the picture and of those 500 companies using you if you add up all the recruiter seats how many recruiters are using you uh so you know i i'll probably kind of be giving you a number top of my head because some of the accounts have say about 300 400 recruiters uh the larger ones uh and then you know on the on the long tail we go as small as one or two receipts i would say if we take on an average about four to five receipts uh i would say five so then we're looking at about 2 500 odd recruiters who may be currently uh active at any given point of time but if i look at the lifetime of of hackers more than 10 000 recruiters have gone through the system wow interesting and what what is sort of like now putting back on your founder hat and like hey i want to grow revenue in hacker earth mode what is the key metric for you guys is it number of assessments number of customers number of companies what is it so for us it's the number of uh admins that we onboard to the on on the platform uh and and that obviously gets tight so there are two ways you could do one is you look at growing your accounts once you land them and that can typically happen in mid market and enterprise or the other is you go after a larger customer base and say you know i'm gonna acquire ten thousand smes and each one of them is going to give me two admins each because the product is so maturely built out that i could cater to a small smp you know i just got up a call one person shop who could potentially use hacker earth and then last week we're talking to a giant who's probably going to be used across 400 500 so we're not segmenting per se but yeah our sweet spot is typically higher smb mid market tending towards enterprise so the strategy is land more accounts and then through them do you feel like you have good control over predictable expansion on historical cohorts or is that more dependent on the macro economy and if people are hiring or not uh that's a great question uh i would say there is a little bit of element of the macro economy for example there were you know given the current situation a lot of our customers have reduced the volume of their hiring and hence that limits the expansion capabilities for us in the short term of course uh but that also lends to in certain cases rapid expansion so we've seen accounts grow threefold within the same year so there is an element of macroeconomy that plays into our business and sachin if you look at your cohort that was active and paying for the platform exactly a year ago so ignore all new customers out in the past 12 months but if you just look at the year ago cohort what percent of those or how much sort of churn was their revenue churn and then how and then add back expansion how much expansion was there right so uh again a great question so i would actually segment that into two uh uh you know segment that response so we've got enterprise where our revenue churn is in early single digits uh and then we've got smbs uh which when we actually go up to 20 22 yeah and uh not something that i'm too proud of but it's just the nature of our business smbs you know keep on some of them to our business some of them stop hiding all together year on year uh however blended we kind of look at a churn revenue churn which is in the range of about i would say about 15 to 16 uh having said that uh our expansions and typically in our accounts actually surpassed that so our net nr net revenue retention from existing cohort uh is on the positive side so so let's use let's talk about this in terms of retention versus churn so if your annual retention is about it was at 84 16 churn you're saying you're expanding by more than that whole so you're back up to a hundred percent how much more than a hundred percent do you continue expanding historical accounts like what is net revenue retention are you like 110 120 130 so we haven't hit the 120 mark yet so we are in in in the 110 range so very important order so for example last quarter was 106 for us uh this quarter we are projecting about 110 uh objective is to take it to 120 yeah i would i would i would say anything above sort of 120 is really good and anything above like 130 140 is just world class in the b2b sas space at least yeah very cool and what is walk me through the system that allows you to drive the expansion and let's talk about the eyes of your current talent your team how many people total on the team today so uh we've got a fairly large team we bought 140 people uh split across about 30 people in sales i've got a csm of about uh six uh csmt most six seven folks then engineering and product development is fairly big about 50 our people price their marketing is another 10 15. uh to answer a question from an uh account sorry how suction how many engineers did you say uh so product a total of 40 45 people in the product team which includes engineering design product management okay and you were going to continue yeah on the csm front so that's where the account retention strategy kind of comes into picture so uh the csm function is fairly well laid out we've segmented that into smb and enterprises because enterprises are typically they require a lot of hand holding so typically accounts owned by an enterprise csm is in the range of 50 to 60 while an smb account uh a manager could actually own up to 100 accounts uh we you know have a strategy for kind of we segment our within these accounts we segment into a high potential where we could grow to you know can't really grow facing problems so the various models that we've kind of built into uh built into the whole csm strategy basis which the csm team is then incentivized to air retain the customers and then drive up cells and referrals and so there's a big debate right now happening in a csm community on if you give cf csm's quota based off the expansion they drive or if that's just expected and there should be no quota component to their their salary how have you structured it do your csms get quota so we don't give them expansion quota so we're in the latter category i personally believe that csm should be responsible for driving product adoption building a customer champion and making your customers representable expansion will happen naturally uh if all those three things are happening now what happens is if you give your csm a revenue quota then they are only worried about revenue in the sense even if you know 20 of my accounts are churning but two big accounts can compensate for the revenue loss they'll go for it and you as a company i don't want that i want every customer is important to me so we incentivize them on retention and then give them additional incentives on top of your quota if you drive referrals so referrals is independent that's like your you know additional cherry on the cake but your core incentive structure is dedicated to comprehension and what does that look like if i'm hiring and starting tomorrow as a new csm at your company what does my sort of description look like what does the retention metric look like with the target so typically retention metric would be in the so we are like i told you right we are operating i'm enterprise i'm enterprise okay yeah so enterprise csm rep so we are already operating at say about 95 retention uh and this is not including the expansions so the goal that the person then kind of gets is in the range of 97.98 so that they should be able to make an incremental improvement in terms of our historical retention rates uh and that's where their uh incentive structure would be built in and then whatever they do additionally in terms of upsell is a separate like i said incentive from the gate smart interesting okay uh you clearly know your numbers i'm gonna guess you're you have raised capital yeah how much have you guys raised so we raised a total of uh two rounds three towns including our seats so seed was half a million then we just did a series of four and a half and then we did a series b of six and a half we didn't announce the last one so this was sometime late 2018 is when we did that okay so about 11 and a half raised together altogether interesting and how do these how do these vc's value you guys when you and your founders are on these pitch you know these meetings are they valuing a base like a sas company or like a recruiting agency oh so we uh it's based on the sas business uh because that's how uh that's how our business model is built so we're not necessarily a recruiting agency uh and uh but we also have a community element so we typically get valued on uh sas plus community yeah how many entre how many uh developers have gone through your system uh so we today have a user base of four and a half million dollars that's amazing i mean so you can sort of email them if if twilio is putting on a development conference twilio can pay you to sponsor an email sent to 4.5 million developers do you do that model uh so we do what we call as hackathons and coding challenges so in our community if you go to hacker.com you'll be able to see that there's a developer facing part of the product where developers would come in and like i said just solve problems uh and we regularly host hackathons coding challenges and those are the ones that could be sponsored by our customers interesting i just realized we're over time so last two questions here before we wrap up burn obviously burns critical on any sas company especially during coba you want a longer runway how are you and your founders thinking about burn and how much are you burning today would you say net so uh you know burn is obviously like you said a very critical element particularly given the current scenario um obviously when covert hit our expansion business expansion kind of took a hit you know we were we've been we've been fairly successful in retaining our accounts and kind of maintaining the run rate that we were at compared to the last year but future business expansion took a little bit of hit so we uh immediately kind of you know prepared ourselves for a lower burn and that is in terms of uh cutting down on on marketing expenses and so on and so forth but in general uh my perspective on burn is your burn should never be out of control uh obviously to gross as business you need to spend right so the way i look at our journey has been more of a step function so you invest and you know you reach that level so you kind of break even and then you say again i'm gonna invest and that's what we've always done so again we're in that stage right now we introduce even by the end of this year and then we start reinvesting back into the business i see today are you burning more or less net than 500 000 a month we are burning life okay great that's good and then you think break even by the end of the year which is great and then in terms of top line revenue again before we wrap up i mean 500 customers at around a thousand dollar rpu obviously you do have big accounts and maybe you have smaller accounts as well but it sounds like you're somewhere around 500 000 bucks a month or about a six million dollar run rate today is that right that's great that's great all right let's wrap it here sasha with the famous five number one favorite business book uh how things uh buy hot things from uh ben horowitz number two is there a ceo you're following or studying really i'm obviously you know fascinated by elon musk but not studying yeah number three what's your favorite online tool for building your company sorry what's your favorite online tool for building your company uh i do a lot of things on google docs that's a good one number four how many hours i sleep per again every night um i try to get at least seven hours seven okay and what's your situation married single kids married a kid five months old oh well congratulations what a fun time okay one kid and uh how old are you i'm 30 30 30. great all right take us home here sajon last question what's something you wish you knew when you were 20 uh well uh i you know i i kind of wish i knew uh in so we kind of started our business in india and then we expanded globally i think uh if we had known how big the market could be in the us would have probably made that move this really from business perspective nothing to do with life and personal life but from business perspective yep guys there you have it hackerearth.com this is the tool where 500 companies and 2500 recruiters are using to give assessments to their development talent and this is after the sourcing step they monetize pay they have customers paying about a thousand dollars per month on average but obviously varies wildly via an smb cohort and an enterprise cohort the company is just past call it five six million in terms of run rate rates 11.5 million bucks to drive this growth team of about 100 and uh how many about 140 odd people 45 engineers 30 quota carrying reps csms highly incentivized to drive that retention rate up to about 110 percent sachin we're running for you thanks for taking us to the top thank you