How Recruiter.com Hit $11M Trailing Twelve Months Revenue With a $40M Nasdaq Market Cap (Interview with Chairman and CEO Evan Sohn)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Evan Sohn. He's the chairman and chief executive officer of recruiter.com, an on demand recruiting platform that combines AI and video job matching technology with the world's largest network of small and independent recruiters. Evan, you ready to take us to the top?

Evan Sohn

00:13>> Oh, that was great. That was a great description. I don't know where you got that from, but that

00:16>> was Who gave me that?

Nathan Latka

00:17My gosh, sleek and smooth, great delivery.

Evan Sohn

00:21>> Wow, I must have an awesome corporate communication person. That's fantastic.

Nathan Latka

00:25Evan, how long have you been doing this? When did you guys launch?

Evan Sohn's Background and When He Joined

Evan Sohn

00:28>> So I became CEO in June 2020. I became chairman of the board in May '19, in March 2019. The company URL has been around for a while, but this all really came together in March 2019.

Nathan Latka

00:45Okay. What was it before that?

Recruiter.com Origins as a Media Business

Evan Sohn

00:47>> So it was always recruiter.com, right? So it's a great name, but it was really more of a marketing organization, like a media company, really focused at news for recruiters. It had various training tools and resume distribution, really just fantastic SEO, but it was really more of a destination site for recruiters and still is. It still is a destination site for all things recruiting. What we started to do in March 2019 was really start to monetize this

01:18>> huge community of recruiters and HR professionals and talent acquisition professionals that really came into the platform.

Nathan Latka

01:25Well, tell me tell me more about that. So some of the most successful, you know, freight waves is a good example. Media business plus major SaaS play, and they work really nicely together. You start off as a media business. Right? So let's quantify that and then go into 2019. How many uniques was the site getting in 2019?

Evan Sohn

01:40>> We were probably getting $4,000,000 of organic SEO on a monthly basis.

Nathan Latka

01:46Well, quantify that in terms of unique views.

Evan Sohn

01:48>> Difficult to quantify. It's a lot. It's a lot. You know, I usually like in the dollars. I'm a dollars guy, man.

Nathan Latka

01:54Yeah, that's fine with me. So 4,000,000 in free SEO per month.

Evan Sohn

01:57>> Yeah. You know, so something like 3 to $4,000,000 of organic traffic on a regular basis. So again, very good traffic.

Nathan Latka

02:04That's monthly though, right? Not annually.

Reinventing the Recruiting Industry

Evan Sohn

02:05>> That's monthly traffic. So tremendous traffic. We rank number one or number two in tons of things. We have all this traffic and the goal, what I really saw the opportunity to do was to really reinvent the recruiting industry. So the recruiting industry is 120,000,000,000 industry, huge giant industry fragmented across so many different ways and sectors. But the reality is, Nathan, there's two ways to hire. You either do it yourself, You use ZipRecruiter, Indeed, LinkedIn, etcetera, or

02:38>> you do it yourself and you sorry, you do it yourself or you hire someone to do it for you. And if you're going to hire someone to do it for you, you would use the classic headhunter and they would charge you 20 or 30% of the salary to get to place the person, etcetera. That model really has not changed in decades, and it's now time for a variety of macro reasons to actually change it. And what

03:00>> we really do is we help companies of all sizes, startup companies to Fortune 50 companies, hire talent by either giving them fractional on demand gig recruiters on demand. So think of us as Fiverr for recruiting or talent acquisition. You need a recruiter to help you recruit financial people for the next three months, pay that person on an hourly basis, not no success fee when they place a candidate, do it, get the right person at the right

Three Business Lines Explained

Evan Sohn

03:29>> place at the right time with the right skill set and pay them for their services. That's what the gig economy is all about, and that's what we do. Plus, we also have, as you mentioned, an incredible tech stack to ensure that the recruiters are doing a great job. These tools actually stand on their own. We have like 50 plus clients today that are just subscribing to our software to build pipelines of candidates. It really

SaaS Software Clients and Pricing

Nathan Latka

03:49How many brands are paying for just the SaaS tool? 50?

Evan Sohn

03:54>> Over 50.

Nathan Latka

03:55Yeah. Okay. 50. And is this like a premium enterprise pricing? What do they pay on average per month?

Evan Sohn

03:59>> No. They're paying anywhere from a thousand dollars a month to... We have some people paying like $10,000 a month depending on the scope of what they're looking for. We really combine AI search and email marketing into one platform. So we have, you sound like a great numbers guy, Nathan. We have 160,000,000 profiles indexed in our database. Full diversity, all searching, everything. And so we use our tools to find the right person, to find the right group

04:26>> of people. And then we run campaigns literally like marketing campaigns to get them to raise their hand to say I'm interested.

Revenue Breakdown Across Business Lines

Nathan Latka

04:31So how are you making money today? So 50 customers at a grand a month is only $50,000 a month in MRR. I know you're doing that.

Evan Sohn

04:37>> Yeah, We're actually... So many of them are paying a lot more than that. So our software is probably doing about $200,000 a month in software. A little over. A little over $200,000 a month in recurring monthly revenue on the software side. We run marketplaces. So we have job boards and marketplaces like ZipRecruiter and Indeed. We're generating money there.

Nathan Latka

04:57How much there?

Evan Sohn

04:59>> Another $150,000, $200,000 there. Our on demand business is growing incredibly well. We're doing really nicely there.

Nathan Latka

05:07How much?

Evan Sohn

05:08>> Yeah. Over $1,000,000 a month.

Nathan Latka

05:10Okay. And what's that model? I just don't know the model.

Evan Sohn

05:13>> That model is like Upwork or, you know, you pay us, we take a fee and pass the rest on to the recruiter.

Nathan Latka

05:181,000,000 is your fee. That's a total GMV for the

Evan Sohn

05:20>> Total money now and it's been growing. It's over 1,000,000, Right? Okay. So, you know, it's

Nathan Latka

05:24But Evan, so so... But but but to be fair here, mean, million in GMV on on demand was actually fairly low for a marketplace. Why is that not higher?

Evan Sohn

05:31>> Yeah. We're growing 25% quarter over quarter.

Nathan Latka

05:34So Why not faster? I mean, this is a very hot space right now. Everyone's hiring. Why isn't there a 100,000,000 going through your on demand platform?

Evan Sohn

05:41>> I would agree.

05:44>> We have a tremendous demand and we're balancing out. The answer that you ask is as a small public company, and we're a Nasdaq company, we uplisted to Nasdaq about four months ago, we are really focused, unfortunately, on profitability also. So it's not just about growth, it's really about growth and profit. And so we invested about $1,000,000 into our business last quarter. We could have invested 20,000,000 and grown our sales and marketing and delivery. Our biggest investment was

06:13>> really in talent delivery, ensuring that we can deliver talent faster. And that's our throttle point now. And so we're trying to do this in a balanced fashion, hit profitability, and we'll we'll get there early in '22.

Nathan Latka

06:24What the percent... What percent are you taking on on on demand model?

Evan Sohn

06:27>> About 20 to 25% in that range.

Nathan Latka

06:29So you basically have three business lines each doing about 200 to $250,000 a month in revenue. So you're doing $700,000 a month in revenue total, something like that.

Evan Sohn

06:36>> Oh, so you're looking at a gross profit number. The other business that we have is many of our... We have a direct hire business. So often when you are using an on demand recruiter as a company, you'll say, gee, I really love that recruiter. Can I hire that recruiter? Yes. Companies are using us as a try buy and that generates another couple $100,000 in business.

Nathan Latka

06:56Yep. So trailing twelve months, again, public company or $12,000,000 in revenue, something like that.

Evan Sohn

07:01>> 11 Yeah.

07:02>> That was actually trailing 12 from our Q1 numbers. Our Q1 numbers were 4,300,000. So even that on a run rate was about 16,000,000, you know, times it by four. We're... We we gave guidance that we're growing 20%, 25% quarter over quarter. So if we did over 5,000,000 last quarter, that brings it to about a $20,000,000 run rate. And, you know, we're... Again, we're we're very pleased with our overall growth because we're really balancing our growth with

07:26>> the the need to be profitable.

Nathan Latka

07:28Yeah. What percent... I can look this up to, but you'll be able ask you. What percent of the company do you own, fully diluted basis?

Evan Sohn

07:33>> Evan Sohn personally? Yeah. About 4%.

Nathan Latka

07:36How'd you get involved? Did they recruit you as a CEO, like, just to introduce the IPO?

Evan Sohn

07:42>> Yeah. No. I was brought in by one of the original investors in the company about three years ago to sort of help out. My background really is in technology, operations, platforms, reinventing different industries. And, they brought me in and I'm like, you have a company that owns recruiter.com. If it's not a billion dollar company, someone's making a mistake. Totally. Let's go fix it.

Nathan Latka

08:06Yeah. So you're on 4% personally.

Evan Sohn

08:08>> I personally own 4% right

Nathan Latka

08:10Yeah, yeah, yeah. How much did the company raise before you came in?

Evan Sohn

08:15>> Very, very little.

Nathan Latka

08:16Like under 5,000,000?

Evan Sohn

08:18>> Probably less than that, yeah.

Nathan Latka

08:20Okay. So here's a very interesting question. I mean, 40,000,000 market cap, I imagine

Market Cap and Valuation Discussion

Evan Sohn

08:25>> We're the most undervalued company on Nasdaq.

Nathan Latka

08:29What do you think you should be valued at?

Evan Sohn

08:31>> Today, I would say no less than 80 to 100,000,000.

Nathan Latka

08:36And why is that?

Evan Sohn

08:38>> So you look at the comps, right? You could say that we run a marketplace like ZipRecruiter and indeed, and they're trading at... Or sorry, ZipRecruiter is probably trading at five, six times revenues, run rate revenue. You look at our ROD business, our on demand business, and Fiverr is trading at 22 times that revenue. So even if it's at $200,000 $250,000 a month in gross profit, that should be trading at 22 times. Our SaaS software, which is

09:06>> more like a DocuSign business operation software, trades at 22 times revenue. Even our direct hire business, which again, typically is valued low, is still very, very low relatively speaking. So if we're doing a $20,000,000 run rate now on revenue, we're only trading two times revenue. That is incredibly low. My guess is even on the low side, we should be trading at five times revenue, probably even at this stage. Again, I think the headwind for us is

09:33>> that we're a startup company on Nasdaq. And most companies are not startups on Nasdaq. It used to be that people were startups on Nasdaq. Adobe, Microsoft, all started startups on Nasdaq. Most companies now are like, oh, Airbnb, who cares if you're losing money? It doesn't matter, grow, grow. I think that we have to demonstrate a maturity as a startup company to actually deserve the market.

Why Private Equity Has Not Acquired the Company

Nathan Latka

09:59Here's what I don't understand though. Here's what I don't understand. I mean, look, we just Pete Lampson on, we've had Colin Day on, we've had, you know, all these people on Art Papas, Bullhorn. Right? This is a very, very hot space. And so when you look at what K1 did in April with Jobvite, JazzHR, NXTThing. Right? And what they even bought that and did that deal at, why is nobody just taking you private and

10:18rolling you into, you know, Vista? Right? Or sorry, Vista with iCIMS or Bullhorn, you know?

Evan Sohn

10:23>> Yeah. No. I agree. Look, the challenge of being... We were an over the counter company first. And

Nathan Latka

10:30I don't I don't know what that means.

Evan Sohn

10:31>> So a pink sheet company, right? So we were an OTC company when I got involved. I think it's been a lot of fun, sort of the journey from an OTC company to a Nasdaq company. It's got some headwinds associated to it, but we're all here for the long haul.

Nathan Latka

10:46Wait, I feel like you're trying to tell me something without telling me something. Translate that. Why does Vista and K1? Why do private equity firms don't like a historically OTC company?

Evan Sohn

10:54>> No reason. I think that just the headwinds on an OTC company is that no one knows who you are yet. When you uplist, when you do a traditional IPO, right, you're bringing on large investment banking firms. They're giving the coverage that you need. They're giving you the support that you need, etcetera. I think when you do a SPAC, we all read about SPACs. A SPAC is an artificial way to go public because a SPAC already has

11:20>> sort of the following, the volume, the ownership, etcetera, and the coverage, etcetera. When you're a small company, it's difficult to make a lot of noise in the micro... In the microspace.

Nathan Latka

11:30Mhmm.

Evan Sohn

11:30>> That's really it. And many funds have limitations on... They can't buy a company that's under $200,000,000 in market cap.

Nathan Latka

11:37Mhmm. Why don't you go raise $50,000,000 and and... It's a little premium to your current price and you take this public and now you own 60%.

Evan Sohn

11:45>> Yeah. So the the answer is that we do not wanna do anything dilutive right now. So I could raise money tomorrow if we wanted to as a company or as an individual, as a company?

Nathan Latka

11:54No. I think you should raise it individually. Team up with a private equity buddy and take it private.

Evan Sohn

11:58>> Dig the whole thing out. Yeah. I've thought about it months ago. This is a lot of fun. We wanna deliver lots of value to our shareholders.

Nathan Latka

12:07But I don't believe you. I mean, you own 4% of a 40,000,000 market cap company. It's 1,600,000, which is like nothing for you considering your background. You've got to be... I mean, there is no logical person that wouldn't wanna take this private and own way more of it and run with it.

Evan Sohn

12:18>> The the answer is like, I I know you want me to focus on the stock price, I don't. I focus on running a great company and delivering great value. We're at the epicenter of the job industry. I'm on CNBC once a month talking about the job market. All the stuff will come. I am incredibly optimistic that all of our value will be realized and we're going to have a great story as a public company. We're having

12:42>> a great story as a company delivering great value for great clients. And I'm very, very confident in our ability to do that. I like the liquidity aspects. I really do like the liquidity aspects of a public company. There's something very, very nice about that that you don't get when you're a private company. I've been both. And I think that we're all up for the challenge. I have a great team of people around me.

Nathan Latka

13:03How many people on the team right now?

Team Size and Engineering

Evan Sohn

13:05>> The company is about 75 people.

Nathan Latka

13:07Okay. How many engineers?

Evan Sohn

13:10>> We have a great CTO and he's got a good team of people, both a combination of insourced and outsourced. And we have good product people. Really just our big investment now is not... There's no more R in terms of R and D. There's D as in making it easier, development making it easier, scaling better, etcetera. We're doing a lot more volume on our searches now. There you go. We're gonna be a great story. We we are

13:33>> a great story and we're just an undervalued company on Nasdaq.

Nathan Latka

13:36Yeah. Yeah. No. Just... You know, when everything's undervalued, especially when 4% have great information rights like you do, I'm going, you know what? Before the market does see what I see and values it full, I'd love owning 70% instead of 4%.

Evan Sohn

13:48>> That's right. You know, I'll tell you what's interesting. We have very good... Our investors have been around for a while. They're not selling. They're looking to make sure that this is very... This is not a two times... A two X. My long term incentive plan is tied to multiples of the stock price, not 10%, 20%, like real multiple.

Nathan Latka

14:08Fair, fair, fair. All right. Anything else we should know about?

Evan Sohn

14:11>> Look, I think that companies of all sizes now are waking up and realizing that they have this insatiable appetite or they should have an insatiable appetite for candidates, for talent. And thinking, sitting back going, I'm running a great company. I'm not going to lose people. That's not a post pandemic thing. We saw four point three million people quit in August. That is not going away. We are in a new economy. I call it the job hopper

14:36>> economy. That's where we are. And talent acquisition is really at the forefront of all these things as companies of all sizes need to hire talent and they need to change the way they do it to really prepare for the next millennia.

Nathan Latka

14:48Love it. All right. Hey, real quick last question here. Do you feel like you have CAC arbitrage because of the media brand? I just looked at your Alexa rank, it's actually not that great. I mean, it's 75,000. That's actually not like a top 1% site anymore Yeah. Like it used to

CAC Arbitrage and Inbound Leads

Evan Sohn

15:01>> what was the question? Say it again. Do we...

Nathan Latka

15:03Well, do do you feel like you can get customers cheaper than competitors because of your media brand? But then I I step back to say, wait a second. The media brand isn't quite there anymore. You're not... You don't actually rank that traffic.

Evan Sohn

15:12>> We lots actually of inbound leads. We're working on qualifying them better. But our biggest customers are all people that hit our website, really. Like it's pretty incredible.

Famous Five Rapid Fire Questions

Nathan Latka

15:21Yeah. Very cool. Alright. Let's wrap up with the famous five. Number one, favorite business book.

Evan Sohn

15:28>> I'm reading Extreme Ownership.

Nathan Latka

15:30Number two, is there a CEO you're following or studying?

Evan Sohn

15:35>> CEO I follow or study, Steve Jobs. And I would say, LinkedIn's Founder. Blitzscaling is like one of my favorite books.

Nathan Latka

15:44Yeah, Reid Hoffman's a good one. Number three, favorite online tool you use to scale the business?

Evan Sohn

15:49>> HubSpot.

Nathan Latka

15:50Number four, did you always use HubSpot or you switched to them recently?

Evan Sohn

15:54>> The company always did, always used HubSpot.

Nathan Latka

15:57Very cool. And you're happy with it?

Evan Sohn

15:58>> Big fan, big giant fan of HubSpot.

Nathan Latka

16:01All right, number four. How many hours of sleep do you get every night?

Evan Sohn

16:04>> Five, five to six.

Nathan Latka

16:06And situation, married, single kids?

Evan Sohn

16:08>> Married, happily married, almost twenty seven years.

Nathan Latka

16:12Wow.

Evan Sohn

16:13>> Three kids, 22, 20, 16.

Nathan Latka

16:16Holy mackerel, how old are you Evan?

Evan Sohn

16:18>> I will be 54 in three days.

Nathan Latka

16:21Oh, happy early birthday. That's great.

Evan Sohn

16:23>> Very much. Thank you.

Nathan Latka

16:24Yeah, press team goes, hey, happy birthday Evan. Go talk to Nathan for twenty minutes.

Evan Sohn

16:29>> That's my birthday present.

Lessons Learned and Closing Thoughts

Nathan Latka

16:30Yeah, last question. Something you wish you knew when you were 20.

Evan Sohn

16:34>> I didn't hear you, say it again.

Nathan Latka

16:36Something you wish you knew when you were 20.

Evan Sohn

16:38>> I think the value of having really good people around you. I think when you're 20, you get a little cocky thinking you could do it all. And the reality is really always need a good team of people and you need people that are smarter than you, that are more capable than you, but also push you to be better than yourself. And I think that I didn't know that. I started my first company when I was 21.

17:01>> So I didn't know that at 21. And it's nice to really be surrounded by a fantastic team today.

Nathan Latka

17:07Guys, recruiter.com founded in 2015 was a major, major media business up through 2019, getting over $4,000,000 of free traffic effectively just because of the strength of domain name. They've been pivoted to more SaaS products. Now three different revenue line items, job boards, SaaS and on demand products doing call it $20,000,000 in ARR run rate according to the last earnings call team of 75 as Evan looks to scale the business. I would argue undervalued 40,000,000 market cap.

17:30You look at others in the market in this space, I'd say a 100,000,000 minimum. We'll see what happens though, Evan. Thanks for taking us to the top.

Evan Sohn

17:36>> Thanks, Nathan.

Nathan Latka

17:39One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal alive. It is fun to watch every Thursday one

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