Hirewire Revenue, Valuation & Funding (2017)

started working on the prototype for higher wire launched their first beta in Atlanta in early 2016 grew that very rapidly I think he said about 2,000 employers that got on the platform over 100,000 people looking for jobs of which they placed 20,000 into a new job they're now scaling they've turned on Revenue he's thinking here shortly they'll be doing about 200,000 bucks in monthly recurring Revenue because restaurants or other employers pay them 50 bucks per month up to 100 bucks per month depending on how many folks they want to hire and how quickly they want to do it 4.1 million bucks raised again team of 18 based out there in Atlanta this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per to 5 and6 million he is held bent on global domination we just broke our 100,000 unit soul Mark and I'm your host Nathan lka this is episode 740 be sure to tune in tomorrow morning well you'll hear from Todd Johnson who tells us how we sold his company for $15 million and now he's tackling healthc care patient doctor relationships hello everybody my guest today is Cho W he's the founder and CEO of a company called hwire an OnDemand hiring app for hourly workers in his previous Venture he hired over 20,000 people and quickly realized the hiring process was broken and ripe for disruption he launched lached tire wire in 2015 and has raised 4.1 million bucks in funding to solve this problem Joo are you ready to take us to the top I'm ready where were you working where you hired 20,000 people McDonald's or yeah not quite uh but uh close I was uh I was in my previous Venture it was called Campus Special and we were an online food ordering deals platform for college kids and so we were in 165 cities we had 500 colleges and we had uh 4,000 sales reps that would go meet with the merchants and we had about 15,000 street teamers that would go promote our products on campus so we had to hire every single one of those people and so I had that company for about eight and a half years and um sold it to a public company a couple years ago and so in that process I just learned what it was like to Source candidates interview screen hire and uh it was quite a process a very broken process so when did you launch that company how old were you I was 25 the time on my dining room table that was 2005 that's amazing okay so what are you today I am 36 36 that's great so you built that company for 8 years um we won't go too deep into it but generally speaking I mean what' you grow it to we have an employee account what were you doing in terms of I guess Revenue the year you sold it yeah yeah we're doing about 15 million in Revenue okay and employee head count in the 40s and I imagine your biggest cost there obviously there's a lot of headcount there I mean was it a profitable business or is that why you sold it it actually was so that was a bootstrap company we didn't raise any capital and uh we were one of the fast growing companies um for four consecutive years U through ink magazine and it was actually a very profitable business so uh which is really interesting because we built that uh we never had any investors never had to worry about cash and uh sold it um what what did you sell it for it was uh about 25 million okay and how did you negotiate the price based on 15 million Top Line yeah so really it was kind of an interesting time where um I think growth was a bigger deal than Revenue so we had strong Revenue growth we had strong iida uh and great margins but no one cared about that at the time so um that was 2013 when we're in the process uh so yeah it was really just a u you know what the what the buyer was willing to pay and what the seller was willing to to sell at did you feel depressed after you sold your baby you know it was bittersweet I mean you wake up every day obsessing and and just worrying and and working hard at something for almost a decade and then one day it's just not yours anymore so it was bittersweet but uh I was really proud to have built it uh up and and served a lot of customers and uh so it was a you know it was a proud moment you're making my audience hate you they're going he can't be depressed he just basically put 25 million bucks in his bank account he's not allowed to be upset right yeah did you you obviously didn't have investors did you have uh kind of an equity pool that you gave your kind of leadership team or did you own 100% of the company when you sold it yeah you know I owned 100% of the company and um that business was you know it was a lifestyle business turned into a technology you know uh fast growing startup um it was just a you know one of those things where I didn't have a plan and one day I woke up and I had a great business and we doubled down worked really hard and grew and and we attracted acquires that's great yeah yeah so it's uh it was a good first kind of warmup and uh now I'm in my second Venture that's very cool okay so let's talk about higher wire which is the new Venture so did you launch this immediately or did you wait a year or two yeah IIT well I stayed on board um for about a year with my acquir I bet that was painful yeah you know it it is painful in that uh it's hard to go from being you know your uh your CEO you're calling all the shots you're Nimble you're fast and then you become part of a bigger organization I definitely learned a lot of things while I was there but I always had the itch obviously to go out and do my you know next next thing so I took almost a year off and spent a lot of time in that time thinking about what am I good at that is a problem that needs to be Sol where I could leverage my past experience and not start from scratch and so because I done so much hiring and I was very comfortable Building Technology products and and acquiring and building local marketplaces it really made sense to go after the hiring problem specifically though at the hourly level where it's high turnover uh kind of entry level um you know uh wage uh earners that make up like 77 million people in the US and so when this uh concept popped up I just fell in love with it more and more and then I just couldn't resist and so pulled the trigger about a year and a half ago you raised Capital why why are you going a different route this time yeah you know it's funny because uh when you build a bootstrap company and then you go out and you raise Capital you see the Stark differences right so uh with this business we felt that we out the gate really needed to invest heavily in the product and technology and so we needed a great engineering team um and uh we raised it before we even had a prototype so 2 million to start and then additional 2 million last year uh so about 4 million so far on the initial like what did you do a note or priced Equity round convertible note on both okay got it so you have not had a priced Equity round just caps on the notes that's right got it and what is the so how do you make money on this thing how do we you make money yeah yeah yeah so essentially Highwire is a marketplace where job Seekers and employers uh can connect and it's really mobile first so they're using their mobile mobile device to speed up that process and uh you can kind of think of it like a Tinder Uber for jobs in that you know there's pictures there's video there's chatting and you know our next uh release is really focused on on demand hiring and so think about it this way as an employer if I have a need for say I'm a restaurant which is one of our Big Industry focuses um if I'm a restaurant manager and I need to hire somebody I can basically select who I need to hire when I can interview and we push candidates to them immediately and we get paid based on a membership so they pay a monthly subscription plus who the people looking to hire or the restaurant owner the the employer and then the job Seekers is free uh for them to uh to find a job okay so defining this Marketplace in terms of buyers and sellers your sellers are the job Seeker selling their their services the restaurant owner is the buyer looking to hire the job Seeker you got it okay and so you do you take a cut like a first like a salary or anything like that or it's a flat fee to the restaurant owner yeah it's we don't take a cut um so we're not really like the staffing agency model um we are really a Marketplace model where they're paying to get access to these candidates and paying a membership fee okay now so so I mean do they pay as they what if someone says I want one candidate versus someone that says I want a thousand candidates they pay the same flat fee no they can pay as they go too so um so let's say you're a small operation and you don't really need to hire a lot of people and you only use it a few times a year you can do a pay of you go model and then there's different tiers so you know your McDonald's for example who has 200% turnover is hiring almost every day those guys would have a different tier where you know they could have you know 50 hires a month 100 what's your core business I mean like a key feature of a SAS business is predictable Revenue do you have predictable revenue or is this truly pay as you go the restaurant owner opens a thing they hire five people then they stop using you yeah I would say that our core customer base uh are recurring um users who have a constant need and we're focused on the restaurant industry because it has the highest turnover that's good for you yeah so that revolving door means that they have this need that comes up almost you know every other day or weekly and so I would say that it is is very predictable and for the most part our core customers are using it on a weekly monthly basis what do they pay you on average per month the average restaurant owner yeah we charge per location per month so that ranges from $50 to $100 per location per month depending on usage okay got it and usage is B is specifically how many hires at the location got it okay so 50 to 100 again per location and when you're selling into something like a big chain um are they I mean I mean do you do that or do you go kind of restaurant by restaurant yeah we do both uh say we're really um focused on building it at a local level but we definitely sign national accounts and usually those guys do a license kind of deal where you know when they have 500,000 locations and C C of a break and kind of switching back to the marketplace for a second so on each end of this right Supply demand like how many job Seekers do you have and how many hire you know people hiring do you have on the platform yeah I'll give you this data so we we first launched in Atlanta which was our test market and we did that we were in beta for a year and so in that time we went from launching with nothing chicken and egg problem right uh it was actually January 2016 okay and um we had no job Seekers no employers so we had to go out and build this two-sided Marketplace which is very hard to do not only is it a two-sided Marketplace also a very local marketplace right so the job Seekers need to be near the employers for it to work out so we uh in one year in Atlanta got over 4,000 employers to sign up and accumulated over 100,000 jobs Seekers and got 20,000 people hired so that was uh pretty good you know just in Atlanta yeah just in Atlanta's okay so that's like not like you stumbling into something lucky I mean those are incredible numbers I mean did you just you use the same game plan you used at your first company or what yeah so that was one of the helpful things so having built two-sided local marketplaces well we understood the whole liquidity uh balance and lowcost acquisition I think though there are really two drivers that really allowed us to grow that quickly one is is that we were hitting a paino that was number one on their list so if you're a restaurant manager operator or you're hiring hourly people it's a very very painful thing to go through this hiring process so they're generally using Craigslist or you know job boards and so when you show them a more modern faster easier way they're very very interested in trying in so that allowed us to grow pretty quickly is that still where you're at in terms of numbers wise about 2,000 buyers 100,000 sellers uh well since then we've launched to multiple cities and so that's a new thing we just did that last month and so ask me again in a few months but it's fair to say I mean are your numbers basically the same since you just launched these new spots yep yeah roughly I say um and then the key is that over half of our user base is organic right so think about how uh the normal job hunting process goes uh creating a resume walking around passing it out filling uh out online applications and now you just download an app create a profile and get like five job offers within 24 hours like that's really Fu the fire for organic growth and so both sides of our Market is growing very rapidly just from from Word of Mouth yeah I mean can I do the math you said you had 2,000 buyers is that are those actual is that are those companies or are those the actual locations of the companies yeah locations wise we have uh it's like five sorry I should say hiring managers we have about 5,000 is and locations we have about 4,000 okay so some hiring managers were working on on average 1.2 locations yep or you may have uh two hiring managers like front of the house back of the house kitchen manager GM per per location got it and so you mentioned earlier you're kind of you said your RP per location is between 50 and 100 can I just do 4,000 times 50 and assume you're doing more than 200 Grand in mrr yeah I would say well we actually just launched our monetization so it's below that but uh I think that by end of the year will be will'll be yeah you do have paying customers though right today absolutely and you're just so is the reason that arpu number is wrong is because 50 to 100 is what you're you're signing new people up at now but historically you have people paying maybe lower than that because you're you were testing pricing yeah we've been testing pricing and we're still testing pricing um and a lot of the monetization just started happening a couple months ago yeah so so what do you see and then so back to kind of like the churn thing which I'm very curious about right so let's assume like that just think only about the SAS side of the business for a second I mean do you see high gross customer turn per month like once people are done hiring if the if the hires are good hires they stay a while right yeah you would think that but because uh our focus is a restaurant business um it is just super high turn on their end right so to give you an idea um a restaurant um turn could be 100 to 200% so imagine losing your entire team not once or twice so what if they blame you for that though right what if they go oh it's because I'm using these people from Highwire like if I go hire a real recruiting person my I won't have to replace people every two months right you know when we before we launched we were really afraid that would happen uh but we found that you know we don't think we're causing more churn to happen uh we just think that we're an easier faster way for both sides to uh find a job or fill a position when they do need to hire um we haven't heard a lot of push back and we've been out in the market now for over a years so I don't think that that U I think ultimately people will stay where they're happy where they're making good money and it's a good environment to work in but uh yeah I I'd like to think that we're not causing that that so what is your grow your gross C return per month yeah I would say we're retaining like 95 plus perent of our monly monthly okay so about 5% monthly turn which that's not bad that's about 4% and just having launch monetization I think it's pretty solid but our goal is to get it down to you know like 2% or 1% of course yeah yeah and then where are you at today in terms of Team size yeah team size we're at about 15 people plus or minus um we try to run in pretty lean and uh based where Atlanta yeah we are in Atlanta y very cool and then have you obviously youve raised some Capital you're just starting monetization so you might not have some of these this data or this cohort yet but are you doing any paid acquisition yeah we do uh we do paid acquisition yeah okay and how and so like what do you spend an average month on paid acquisition you know it depends uh on the job secer side it could be you know so 50% of our job Seekers are organic so we don't have to pay anything for those guys but um you know we've used uh with great success you know social U methods um to to drive users and uh you know we we spend anywhere depending on the month depending on the seasonality from like 10 to 25,000 per per month across different channels y yep great um okay cool and then look last question here do you have any weird you know I've had a lot of people on that are kind of marrying this Marketplace model plus SAS I just had a company on actually that does this in the freight World um it's called freedos I don't know if you've heard of them but like they have a SAS product that can helps people find Caro containers to ship the items they just sold but then they also put a put a put a Marketplace on that and the SAS problem solv the chicken and egg egg problem of the marketplace do you see these Dynamics playing out in your business yeah I do actually um you know in the employer lives they're basically paying um a fee to to have the software right that's going to help them solve their hiring problem they're paying you to join your Marketplace that's just a good good right and then on the other side though we have to build up this liquidity of of job Seekers right so it really is like SAS meets a Marketplace play um but yeah I think uh in our business our our goal is we want super sticky high retentions on high retention on the employer side the job sticker they come and go right if we do our job properly the job seeker comes in uses our app gets hired and they come back you know three months six months nine months later but uh yeah I would say it's a nice blend so we're having to use uh Playbook of you know ass SAS Playbook but also consumer Marketplace Marketplace Playbook yeah two two-sided free consumer Marketplace thing you're not making money on on a cut or anything right right today we are what do you tell what's your cut uh on the on the jobseeker side we're not making uh money I thought that that was your question on the B on what cut are you making on the other side there is there is an the cut oh yeah yeah so you're not making money on the on the marketplace aspect yes yeah just the SAS aspect many of you listening right now don't have time to listen to every B2B SAS CEO that I've interviewed if you want to get access to the database I've ated with year-over-year growth rates customer accounts margins and many many other data metrics and data points you can go to G l.com here's the thing though this that database I keep it to myself it's so freaking valuable and to preserve the quality of the data and make sure that the people that have access to it have a true Advantage I'm only letting 10 companies on each month so we're full this month we can go to get lat.com to get on the waiting list for next month and look there's big people on the waiting list I mean the biggest VCS you've ever heard of of you've probably heard of them they're big private Equity billions and billions under management so it's an impressive waiting list go get on now at g.com many of you know I am buying companies that I really really like and there's no quicker way for me to get to the bottom of what is happening on that website then using this tool called Nathan la.com hotjar h o t j a r it basically will give me a recording okay when anybody lands on the website it'll give me a recording of where the viewer is scrolling and obviously does the basic stuff like heat Maps too but I learn so much about where the users are scrolling and clicking on my site using that tool it helps me increase conversion rates make more money and grow those businesses faster and we'll have to see what happens with those businesses but I'm buying them I'm buying them very quick and I'm using Nathan locker.com hotjar for all of my website analytics you can too I work with them it's totally free you can go to Nathan l.com hotjar no credit card required again use it as much as you want Nathan la.com hotjar I'll see you there all right good let's wrap up here with the famous five number one what's your favorite Business book favorite Business book um this one is used a lot but I really like uh Jim Collins good great it's just solid and and there's not a day I wake up or go in the office and I don't think about those Concepts so that's a good one number two is there a CEO you're following or studying currently yeah you know I I really I'm going to give you two um I'm very big on on U Elon Musk everything he does um and then I'm he's not a COO right now but a reed Hoffman just incredible stuff that he puts out there very relevant to what we're building number three is there a favorite online tool you have like cue scheduling online tool um yeah this might be a cop out but slack I mean I'm obsessed with it and we communicate with it and do everything on it so yeah number four how many hours of sleep do you get every night yeah not enough um I'm probably on average about five yeah so something like that and what's your situation married single do you have kids yeah married with two kids eight and 10 so you're getting wow okay maybe that's why you're getting five hours right that's why I'm not proing much yeah yeah and then what how old are you I'm 36 okay so last question CH take us take us home sick us back 16 years what do you wish your 20-year-old self knew oh man um at the age of 20 I was still kind of in that phase where I wasn't that serious about anything you know I was still a kid and at the age of 21 I got my first sales job and that changed my life because what I realized was I the harder I work the more money I made because I got paid commission and that really kicked off my entire career because I became this like kind of a do the bare minimum kind of guy college student to really working hard working late you know first one in last one out working weekend what show what would the lesson be though right so what was one lesson you give your 20-year-old self is that there is no replacement for hard work and if you put your nose at grindstone and you just absolutely attack it and kill it and and push it every day good amazing things happen there you guys have it there's no sub suit for hard work about uh what is this about 11 or 12 years ago he launched his first company hustled when he was 25 hustled in that for about 8 years grew to 15 million bucks Top Line sold it for 25 million ownn 100% of it that was back in 201 uh 2014 then 2015 uh started working on the prototype for higher wire launched their first beta in Atlanta in early 2016 grew that very rapidly I think he said about 2,000 employers that got on the platform over 100,000 people looking for jobs of which they placed 20,000 into a new job they're now scaling they've turned on Revenue he's thinking here shortly they'll be doing about 200,000 bucks in monthly recurring Revenue because restaurants or other employers pay them 50 bucks per month up to 100 bucks per month depending on how many folks they want to hire and how quickly they want to do it 4.1 million bucks raised again team of 18 based out there in Atlanta Joo thank you for taking us to the top thanks for having me if you enjoyed today's episode with chow go back and listen to mati yesterday where she'll break down how she has 3x her monthly recurring Revenue to 700 Grand in under 11 months she's a winner she's growing very fast learn how she did it