Hireology Revenue, Valuation & Funding (2024)

hello everybody my guest today is Adam Robinson he's the co-founder and CEO of hire ology a venture-backed hiring and talent management platform named a top 50 best force workplace by Inc a top company culture by entrepreneur and number 94 in 2016 and number three 32 and 27 on the Inc 500 list of America's fastest growing private companies Adam are you ready to take us to the top let's do it all right very good so up to this real quick cuz I know when you obviously apply for Inc you have to report things like revenue figure where were you in 2016 and 2017 we were just a shade under seventeen million of gap revenue and in seventeen and just under nine and 2016 that's great okay so now tell us what the platform that's a big ol hook right there so now tell us what the platform does for people that aren't familiar yeah we're everything that an owner operated business needs to be good at the people side of their business so we focus our talent technology platform on branded business networks like dealer networks and franchise systems so over the last four years you know we've grown in specialty markets like automotive retail you know one in nine new car dealerships in the United States run higher ology to build and keep their teams we're in over a hundred and thirty franchise brands and five thousand owned and operated locations individually that are part of some branded network and that nuance really matters in our value proposition yeah so 130 we can think of 140 almost like logos and that's across 5,000 locations of those logos is that accurate that's correct okay and how do you price do you price based off logo or poor location we price per location per month based on employee count at that location interesting and what is that's obviously you know knowing how to price and what to tie your to your utility value to is a tricky thing to figure out sometimes how did you come to that kind of being your equation yeah that's the question you know we started our business in 2010 and we were a job slotting model so you could buy a one job opening subscription to higher ology and it'd be the platform for what you need on demand so we were selling to the market we had access to which is small businesses that didn't have a lot of resources or any on selling to them right and so we've grown from there now what we find is as we've expanded the platform in the breath our value prop is really based on servicing the number of employees that you have so if you're trying to maintain headcount of 50 employees that means you're running a certain size career site you're running a certain number of job ads and marketing spend you're running a certain number of interviews test assessments drug on background screens and we price based on your revenue or sorry your employee footprint and that drives our revenue and pricing interesting so if we look at it on the 5,000 number the location number not the logo number on average with the location paying you per month would you say really really depends on on the industry blended you're looking at about 250 to 300 dollars a month okay so that's so that's a tricky price well maybe not but a lot of people that are in that like 102 to $300 ARPU range it's tricky because it's usually not enough to put touch on the sale right but it's also not cheap enough where the sales will be no touch on the website right you have to put something on it how do you manage that balance well what what you would find digging in is that you know the average owner in some of our largest markets owned four to six locations so that that location ARPU 300 bucks really is more like 1,500 to 2,000 dollars I see yeah so you're still you're essentially you're still selling bulk deals right but per location that's the 300 in what's different in our markets in the region why it's you know tough tough to get into this space is because those four locations are typically operators for independent LLC's with four different ownership structures Wow may be owned by a common holding company but the ownership structure is different so if you're a traditional HR tech companies selling to a centralized HR team at corporate that doesn't exist in our customer base they're decentralized networks different ownership structures and requires a completely different text act to pull it off that's interesting it seems like obviously you're pulling it off 5,000 locations three hundred bucks a location puts you at about 1.5 million a month today is that generally accurate we're actually a little bit north are there good so we're you know we run running close to 170 that's great when do you think you'll pass to third quarter Oh great that's great and now would then put you out what is that a 20 million run right come on under this year something like that uh 20 now 27 at the end oh good that's good girl how do you how do you kind of forecast what growth targets you want to hit like how do you know that you want to go for 27 after doing a 17 year oh we look at our addressable market and you know we really we look at what's possible and then we look at what's the what's our maximum efficiency to get at our maximum growth rate so we don't want to blow it out have our acquisition cost go off the charts have our LTV to CAC ratio crater it's just it's just not worth it so we're trying to build the best business we could build which is the right amount of hyper growth right there is there's a point of you know beyond which it's just not worth getting that incremental customer because you have to pay too much it's just inefficient so you know I think you know we're proud of our capital efficiency and the way we approach this it tell me more about that and maybe let's approach it from a payback period number how quickly you like to get paid back on your CAC generally we loved 10 to 11 month paybacks you know and if you're if we're fully loading in customer success and support sometimes we do it sometimes we don't depend on the analysis we're running you know that'll stretch it a little longer and on course sales cost you know we're inside of 11 months that's good so kind of backing the math out of that you're spending somewhere between 3 and 5 grand to get a new location that's correct yeah that makes a lot of sense where where is the spend most effective for you to the extent you can share when we can get in front of prospects that's most effective so we're you know we do a lot of old-school it is thought leadership publishing I've published a book we crank the club it's called the best team wins build your business through predictive hiring which has really had a huge impact on our business and yeah I mean it you know we're showing up instead of being you know paying to speak we're being paid to speak it really makes a difference we're seen as a thought leader in our markets we really get to know our industries and our verticals and so it's really it's it's made a difference so when we can show up and there's 400 people in a room that could all buy from us you know we move out with 40 or 50 customers that's a good use of time it's a great use of time me through funding right so I don't think your boots dropped how much have you raised and why'd you make the decision to raise at all yeah we've raised it somewhere in the neighborhood of about 31 million dollars today that's come in three different rounds a B and C most recently at the beginning of this year and we did it because I you know we saw a market opportunity and there's a window on that market opportunity that closes and and we frankly thought we could we could execute this strategy when these markets and return capital to shareholders in a way that you know make a pretty happy and so we saw the opening and went for it yeah it's fascinating to me I'm Adam how many sound companies there are in this exact space like we had we had the I sim spoke you know Colin was on recently you know he's cranking you know well North a hundred million obviously bootstrap just killing it moved into a new office you got gusto you got zenefits was just on how is there so much space for all of you well a problem by the way coming in I Sims is just a world-class organization and Colin it's killing it I mean it's just you know you know you're gonna look aspire to be as well run a hundred million dollar businesses that one but the it's a universal problem and it's a persistent problem companies are really bad at the people side of their business and as the economy expand expands the workforce expands the problem expands the number of companies created will always have this this this issue big companies have this problem small companies have this problem problems never going away and so it's all businesses with employees have this issue that's a big market I mean it is it is a in tens of billions of dollars of opportunity just in the United States yep are you playing I I think I don't know who is jr. Colin J ed zenefits or calling it I Sims that said that they were just now expanding product line into the kind of job recruiting ad spend market which I guess people spend 15 billion on recruitment related ads annually do you have any products to hit that that space or no yeah she's so interesting I mean some of you know that would out go ahead consider the thought leaders in this space all are coming to market at the same time realizing the same thing they our company is not only bad at hiring about it advertising their opportunities images light the world on fire with with their money and we we have a product we call applicant engine we launched in January we've been in the market for six months with that product we think it's bigger than our core market I mean it you know I think a lot of the smart players see it and are going at it yeah and and that is you know traditionally you'd spray your money around a bunch of job boards and hope you get some applicants now it's really more you know companies like TMP have operated in this space that you know that don't monster with a traditional agency model I'll help you spend your ad money programmatic is gonna own that market in five years and it's companies like ours and I Sims and others that are gonna help customers do that that's right and that can happen at all segments of of the market Enterprise in large midsize where I Sims plays and down to you know small midsize and small business where we play yep turn what do you 90 plus percent net revenue retention annually you know in our markets that's that's that's pretty good at your price point you know you're not selling huge quarter million dollar annual continuity some are but it's not your kind of your key sale can you get to net negative kind of or or should I say over a hundred percent Retta net revenue retention annually at this price point yes and in fact we expect to do that by the end of next year and what will be the main growth driver of that how you get there it's gonna be new products so we you know we are to be think hard about how we configure our product bundle we want to go in within us what you know we'll call an essentials package and upsell over time so we you know what we've learned over the years is even if we have the opportunity to sell a customer everything we probably shouldn't because they're they're gonna churn if they're paying for stuff they don't use or see the value and and so there's a lot of excitement at the front end were generally the first HR tech in the door so we can sell them more than they need or we can sell them everything they think they want to buy we've been very good at pulling the deal sizes down and up selling over time which is a trade off but it pays for itself in churn in revenue expansion you know you've got a much more sustainable business and what are you some lifetime value is on these folks you know we we measure that you know both its three four and five years generally to run our scenario planning interesting yeah LTV number is always a tricky one to actually use when you're making strategic decisions because it can change and fluctuate but if you assume three-year minimum at 300 bucks a month you know that's 12 grand in their lifetime value minimum yeah I mean and the thing we think about in you know in our senior leadership discussions is let's not worry so much about these theoretical SAS metrics you know lifetime value could theoretically be infinity if we do our job and so let's focus on building great product delivering great value servicing customers and keeping them on the platform and lifetime value is gonna be what it is longer is better than shorter so let's not you know navel gaze and be theoretical I like that I love I love navel games has not heard that term before but I serve them and assume that means you're looking straight down looking at the short term the whole time right well looking at your you know just kind of pick in the linear your belly button try it you know thinking about problems and you know meanwhile you know that the the things on fire right in front of you and you're not even seeing it yeah what's your team size today we are 170 today where we are you know we see an opportunity in a window in in what you know everybody thinks is pretty late stage of the economic expansion of everybody's been saying that for the last three years and so we have the opportunity in the capital to really push it and lock up some market and so you know we're in the middle of a pretty big hiring push that's great and where's the team based we are in Chicago Illinois I've got a bunch of reps in the field that are home-based around the country and then our engineering team is a hundred percent home-based in remote throughout the United States that's great so Chicago and remote locations very good Adam let's let's wrap up here with the famous five number one besides your own what your favorite business book my business favorite business book changed last year at shoe dog by Phil Knight and what was it before that business favorite before that I was a big fan of seven Habits that that is a book that's had a big impact on me two good ones number two is their CEO you're currently following or studying CEO I'm currently following or studying you know short answer is not not not one that pops the top of top of mind here I spend a lot of time reading latest and greatest mark market Intel business every day I mean I'm you know I'll read four or five newspapers a day electronics some actual paper versions of newspapers that I like the traditional side that's good number three Adam what's your favorite online tool for building a business a favorite online tool for building our business well tell you the tool that's most important to our success in Salesforce yeah number uh number four how many hours of sleep to go every night five and a half to six okay that's pretty yes you're you're skipping there a little bit what's your situation married single kids married four children that's why nine and under our you know our one-year-old got up last night decided she wanted a party about three o'clock so rocky right now yeah that explains the five six hours and uh how are you Adam turn forty two on Saturday exciting very good last question what do you wish your 20 year old self new take more risk sooner because it's a lot easier to bounce back back then so I wish I would have pushed at all things that were a big deal just weren't ya they just weren't I just pushed it harder and I'd be a lot farther guys there you have it take earlier risks take bigger risks earlier in your life if you're listening right now you're under 30 go for it stop sitting around Adam launched higher ology back in 2010 he's now helping over five thousand locations across 130 different brands really again higher more effectively on bore more effectively and just bring a lot of waste and pull a lot of waste out of the hiring and recruiting process they're growing rapidly 2016 9 million 2017 scale 217 today they're at about 1.7 million bucks a month in revenue hoping to go up to 27 million in terms of run right by the end of 2018 currently ninety percent net revenue retention annually they're spending you know three to five grand to acquire these customers targeting 11 to 12 month payback period 107 people between Chicago and other remote locations around the US Adam thank you for taking us at the top thanks for having us back