How Icims CEO Brian Provost grew to $250M revenue and 3.5K customers in 2020.

hello everyone my guest today is Colin day he's the chairman and CEO of a company called I Sims which he founded in 2000 with a vision to deliver applicant tracking software emphasizing ease of use and an unparalleled customer service I Sims is the largest standalone provider of talent acquisition software in the industry and stands among Forbes top 100 fastest growing private cloud companies in the country Colin are you ready to take us to the top I'm ready I already would I'm excited you're here so the largest standalone provider is a big word you're a measurement guy how do you measure that how do you know you're winning we do it by customer base I mean you can take a look at revenue you can take a look at growth rates for us its customer base so we get pretty good real-time data about who uses what in our industry and so yes we're we're the largest standalone provider we're actually number two to Oracle who bought a company called phileo but we're feeling really good about our odds of hopefully surpassing them as well and where are you today in terms of customers on the platform we're using the platform so we're a little north of about 3,500 companies okay and tell us what that means for folks not familiar with the product what are they using you for your bed so the we we sell something called a talent acquisition suite at EA is honestly just a really fancy word for recruiting so we our enterprise software that you put in place to manage your recruiting operations it usually starts with we sort of have a bedrock product that you put in first and that's our applicant tracking system called recruit and then if you're looking to get a little bit more progressive and not just do what a lot of recruiters can do which is it's sort of post and prey methodology you can put in marketing automations and build up sort of passive candidate talent pools you can put in onboarding components to complete the transaction and should we think of your business model means is this a SAS model or is this you're taking a percentage of first year salary of placed folks how do you make money it is purely a SAS model oh wow so we actually we started in 99 we didn't even know what SAS was it wasn't even called you invented come on Colin just take credit for it I will not take credit for that no I think probably Benioff gets way more credit yeah that but no we we started pure sass kind of one platform one code one version and we've stuck to that you know all the way through and and so what our again give us a sense you said you've had many many products the product that most of them start with is it the tracking so applicant tracking software it really is that's that's the bedrock of recruiting that helps you manage all your position openings that sends it for approvals gets it posted brings in the point of application schedules the interviews and also handles a lot of the compliance around recruiting tracking EEO data etc so what I mean its Equal Employment Opportunity data so race gender veteran status etc and what is the I imagine you have a variable multiple oude of different price points for that but on average what does somebody pay to start using you through that software it really varies so we actually support customers of just about every size we tend to see recruiting to come really really important probably after you hit a hundred employees we have seen some below 100 employees but I think after 100 employees you start getting to scale depending on your growth rates you're you're really thinking about the next level so we have price buckets that makes sense for the the smaller end of the market versus the mid market versus a very high end of the market so it can start as low as you know call it 500 a month and it can go up to six figures a month got it and then talk to me about I want to learn more about the founding story now that we have a little bit of the context of what the business does so you said he founded this in Aysen 99 yeah the hell that's a hell of a year to found a software company yeah tell me about it what was going through your head say I fell into it ass-backwards there was a lot of luck involved but um I graduated from Cornell with a degree in psychology I just wanted to do something entrepreneurial and I got pulled into a recruiting staffing firm as my first job I knew nothing about technology but they said all right you're gonna be hiring you know developers testers DBAs for Bell Labs uh-huh so my first clients were here in New Jersey which is where we are headquartered and yeah worked as a recruiter I was always antsy to try to figure out you know gosh how do i how do i parlay this into starting a business and the reality is and I think this is the case for many entrepreneurs it was just staring me in the face I was logging into this proprietary system that the company I was with at bil they were called comm rise and our system was called comm Rises information management system so they called it Simms and yeah one day just woke up and I said you know what have I been doing it's staring me in the face every single day so I think I was 23 at the time and I went to their CEO and I said you know this is gonna sound crazy but what did we buy the rights to your software we spin it out we'd start our own company and he was totally on board and that's that's what we did we threw a little red eye and a.com and then as I'm sure you can imagine about three years later we couldn't drop the dot-com portion of it that's enough it's not what it was ninety nine the year you start up the company or the year when you were 23 when you negotiated it by the company out yeah so I started as a recruiter 97's as 21 when I graduated so I worked for as a recruiter for a couple of years before I started Ison's at 23 so I didn't have a lot of you know knowledge to go on I think that was probably a good thing I think if I'd uh probably had more experience I would have talked myself out of trying to do it because it's just such a competitive market it's always how did you also call first off amazing story I imagine there's a lot of other 23 year olds listening right now there are frustrated with the company they work in but they see something inside the company they would love to spin out but they're going I've only had a salary of 80k for two years I'm still paying off college debt I have no savings how on earth my not gonna negotiate it's piece of technology to spin out how would you do it oh you know I look back and I wonder I I had someone who trusted in me I would have said believed in me but I didn't I didn't have a lot of history with him to believe in but the individual that ran comrads technology I casino the CEO of comrades the the technical staffing firm I was with I can only imagine what must have been going through his mind when this sort of brash 23 year old walked in the room and said hey I've got an idea for a business is that what you did you just walked in the office and said either fire me or let me buy this part of the company I don't think it was probably saying either fire me I don't think I was ready for that moment but definitely said hey listen I think we've got something here and my god she he was so supportive Wow how do you value it though like like talk to me about the economics of that deal like did you pay him an amount of money for did he just give it to you and keep a chunk for himself I mean oh there's a crazy story behind that portion of it but uh you know all I knew I didn't even know how to hey make me a CEO give me a CEO salary I didn't negotiate for equity early on it really was very much just I see an opportunity I want to run for it I will need to buy the software so we did that at a very you know we created a very low value of the software to do that transaction you use your own money or did you figure out a raise money from other investors we literally did it all through a loan so I not only said hey I need to get the technology out but I need you to give me all the money to buy the technology from you oh he was the way he loaned you the capital you didn't have to sign a personal guarantee with the bank he loaned the capital oh wow great oh when you talk about really having a patron behind you I mean he really was so and then yeah I'm sure you can imagine come 2001 and 2002 well he's turned up in heroing did you have leverage at this point like was the business already feeling the 99 kind of bust and you said before this thing goes bankrupt maybe I can try and pull an asset out of it or were you not was that not the state of mind you were in no it was the opposite that we were in high time so when so when I was working as a recruiter we could not find enough technology people fast enough they even sent me over to India well it's a just recruit out of India and try to bring people back so it was a heyday when we and when we sort of spun out and it was only after that that everything started to sort of gloriously fail and quick before we move and we fast forward to today just so those young folks listening right now in case they're trying to maybe mimic your success inside their own companies I mean are we talking a loan amount that was like above 100 grand like in the millions or below 100 grand I mean what size risk were you taking here um so I mean it really was alone over time so so you know sort of think that the first two years of our existence I called him payroll loans which was basically every two weeks I would call him up and I'd say hey here's the staff we have and how much I need to pay and I would joke that I'd sort of sweat bullets well while I waited for the wire transfer and then walk out and tell everyone that they were getting paid that week so you would tell him that you didn't actually get the cash he would wire you money as you needed it it was sort of bridged as as needed I would call up and get the cash and it was to the tune over all over about two years about two and a half million dollars okay got it and why and besides just you being a nice guy right and him loved it you know there was some camaraderie there what I mean what was he getting for this did he keep a portion of the company they still own a part of the company today or was there interest or what um so yeah looking back I did not negotiate equity up front we had to do that later on oh and it started seeing some success so there's probably a lesson to be learned there but so you know he I I was just thrilled honestly to be a 23 year old CEO starting my own company with with capital and 99 yeah in 99 what was your do you remember what your first year by the way was it a monthly recurring business model back then or has that evolved it was a monthly recurring business model back then and it was really hard to get going cuz you know we don't we didn't have Amazon Web Services we didn't have old right yeah gosh I'm amazing resources that make it a lot more capital efficient to start so yeah a lot of it was building out a data center sort of all the things we knew we needed to do before we even got a customer what was your what was that first year revenue do you remember it was pathetic how pathetic was it this will help other people get excited about doing their own thing I think we were thrilled to have probably about 80,000 or something that's a great yeah all right so fast forward today what's the team size they're in New Jersey sure so we are about 650 people and 90% of them are in our headquarters in New Jersey with the irony being that we are actually moving in November to the old Bell Labs headquarter oh wow where I originally started recruiting for so there's a sort of come full circle story there that is pretty funny so okay so about 650 folks based there in New Jersey and besides that first about two million dollar loan have you raised capital robbie bootstrap since then so something we're really proud of and and you know it took me a while to learn about raising capital and you know what kind of capital and primary versus secondary etc we honestly like to say that we have gotten to where we have with no one's money really going into the business so that original loan was paid back in full with interest and then we have since brought in a private equity part of growth equity partner called Susquehanna but all of that was was secondary it was liquidity we actually were were growing really well and we were able to say them to them you know guys we don't need the cash we're pretty profitable but if you were to help with a liquidity event we'll we'll you know ratchet up the risk and put more of the bottom line into the weight I'm not following that what do you meet you they actually put capital in for a percentage of equity help me understand that again you bet so so yes they took a percentage of equity but all the capital went out it went to liquidity and went to the original owner so it didn't actually go into the business was an operational cash it wasn't operational yeah so so we still like to make the claim that yes despite the fact that we do have a growth equity partner we feel like we've we've done everything using our own our own operator so that all the money they put in it was purely liquidity none of it went in operations god guys I just have to highlight this real quick guys because I don't get opportunity to do this a lot there are so many ways to create wealth for yourself as an entrepreneur when you're building a business and taking risk besides selling to some big company this is one way to do it right where you get it outside investor and you know I'm making this up I don't know what Collins numbers are calling I'd love for you to share them but I'm gonna guess you're not but let's say the private equity folks put in 20 million bucks and he's gonna say okay we'll give you ten person equity for that but you're actually buying ten percent of my sixty percent that I own right so Cano can pocket that is that how the dynamics works Colin you got the dynamics right actually did we did two bites of the Apple so susquehanna our partners come in six years ago with one investment they followed it up left with a bubble and how do you so like one of my things in life is like you can't expect someone to work hard for you after you make them rich it's kind of like earn outs rarely work and like so many things rarely work it seems to be working for you you seem excited about being there you've already made capital from this like how do you in your brain keep keep excited about going forward after you already have had a payday yeah sure I don't know what it is I've got this like 1/8 desire to win and so I always try to create a I never want to see a scenario where we say we've won I always want to create a scenario where we're winning is you know three to five years further out so I think we look squarely at the marketplace and we said you know what's going on in our market is is that recruiting unfortunately in many cases is getting sort of thrown into an ERP suite as a sort of afterthought of hey we'll give you everything and by the way if you want recruiting our premise is that is too important to screw up to put through an ERP I mean that is your front of the funnel you you you can't hire people you hire bad people you're you're you're screwing with your business so yeah I think our our mandate is to convince the world to be contrarian not not go get an add-on from your hrs payroll or ERP but go get best and breed so while we're in the sort of number one best in breed vendor we still have some enormous competitors in the ERP that we would love to be thrown if Larry comes to you and writes you a two hundred million dollar check today to sell the business do you sell only if I get his yacht as well you are competitive I like it all right I'm kidding I honestly that would be a long hard thing we want to leave the company in a position where we say whatever it is it will be the definition of kind of winning the industry yeah I mean the question I have for a guy like you how what are you I'm 41 yeah so like you look at a guy like Elon Musk's like right he was really good at like early early creating momentum he's so he create an agency sold it but no never talks about this but that's what allows him to go put that capital at risk going to space it's like the risk for a guy like you is only time right the more time you spend trying to solve like the recruiting problem the less time you solve to less than we have to solve to take bigger risks with all the capital that you've made and those could be really life-changing I mean Europe I mean hiring obviously is really important but you could go even bigger things how do you manage that balance in your brain ah just try to stay focused it's it's probably been my greatest strength I'm sure some people would say my greatest weakness too but I've been told for 17 years hey you got to get on you got to expand you got to move to the next you got a you know follow the industry trends and I don't know we've always just sort of said no I I feel like it's the opposite be the contrarian keep focusing do what we're doing better than anyone else and I think we've proven that focus works you gotta be we call it you know the 10x factor is what people have written about if you're gonna you know bite off a piece and say that's what I'm focusing on you better do it ten times better than anyone else you can't be two or three times but yep few economics questions here before we wrap up with the famous five con what are you paying to acquire new customers what's your CAC oh gosh it really will depends on the segments that we go after so we're taking different approaches on average what would you say we have a taking the return the cat close to CLTV we typically break even on a deal in the year - okay near - so you have it to about a 12 month payback period and what's the average annual contract size um when you average it all out I would say that right now it's probably about 30,000 a year okay so you you're spending call it 60 right on the folks 60 grand to get them you get paid back in those first two years that creates a a significant cash gap because the acquisition cost goes out I mean I imagine all upfront how do you manage that gap uh I think you know we've just had to do it the old-fashioned way because we're not raising gobs of money that we can sort of stem through we literally just have to model it out to say a a certain amount of cash is gonna have to go out each year by a marketing so that is just modeled into the business so you always have a buffer that you know is a large larger basically than a two-year buffer that would be what we're going for yeah yeah awesome and then can I do you see the average contra dries about about 30 grand so again if I do divide that to 12 get monthly it's about 2,500 bucks can I take 2500 times your number of customers to kind of back into mor or is there any reason that math would be wrong if you are good enough to do that multiplication real time maybe about maybe about eight point seven million bucks monthly 3500 times 2500 bucks per month north vet all right good stuff let's wrap up here calling with the famous five number one with your favorite business book III feel like it's a little boring but it's a great by Jim Collins literally laid the foundation of our business number two is their CEO you're following or studying right now I've got to say between two I'm enthralled by Satya at Microsoft and the turnaround that he sees putting together but I gotta say if you're in SAS you got a look at Denny off as the example of how do you keep that growth going do they have a recruiting platform built into their system yet they don't they've really stayed focused on on kind of the front operations of marketing and selling servicing so I don't know if they've done a deal with workday to say you stay out of my world we'll stay out of your world but we haven't seen them in recruiting number three is their favorite online tool you have like a QT scheduling I'm gonna give you the most boring answer in the world but I just live in I lived in 365 for Microsoft honestly from task management calendaring email rules you're really pretty you're really positioning yourself from Microsoft exit here you got your favorite CEO your favorite tool all right last figure Colin how many hours of sleep to get every night how many hours of sleep oh it is getting a lot better I have a five-year-old daughter a seven-year-old son and so I'm finding that you know getting up to about 8 hours which I'm pretty proud of it did not used to be that way that's pretty good so just to confirm your situation married two kids 41 years old that right that's right all right so last question take us back 21 years what do you wish your 20 year old self knew I just think it's trust your gut and trust your instinct I feel like I've had 17 years of having people tell me what they think is happening in the industry what they think the competition is doing don't listen too hard to the outside forces Trust trust the gut there you guys have it from Colin who he had the foresight back in 99 when he was 23 to go to his CEO and say hey man I would have spin this this little hiring system we have out into its own company called I Sims that was in 99 fast 4 and he did that on a 2 million dollar loan that was funded by that CEO fast forward to today their team is 650 people based up in New Jersey working with over 3,500 paying customers paying on average a $30,000 per year a sippy obviously their cohorts and their segments of customers differ greatly they're doing more than about 8.7 million bucks a monthly recurring revenue with about a two-year payback period again focused really on helping folks find talent manage talent and onboard talent in a cost-efficient and effective way Colin thank you for taking us to the top it's been a pleasure thank you