Founder Interview
How Recruiterflow Reached $400,000 ARR and 120 Customers Bootstrapped (Interview with Co-Founder Manan Shah)
- Interview Date
- July 11, 2019
- Interviewee
- Manan ShahCo-Founder and CEO
Company Metrics at Interview Time
ARR (2019)
$400,000
Customers (2019)
120
CAC Payback (2019)
4 months
Team Size (2019)
3
Year Founded
2017
Historical Snapshot
These numbers were reported by Manan Shah during the interview recorded in July 2019 and are a historical snapshot, not current figures. See Recruiterflow’s current numbers.
Key Takeaways
- 01Recruiterflow launched in November 2017 and reached $400,000 in ARR by mid-2019
- 02Recruiterflow had about 120 customers at the time of the interview, nearly all of them recurring: single-seat users who recruit for three months and then leave were 1 to 2% of the total
- 03Average contract value on deals closed in the last three months was $7,000 to $10,000 per year
- 04Customer acquisition cost runs $2,500 to $3,000 per new customer with a 4-month payback period
- 05Recruiterflow's first customer found it through a Quora post Manan Shah had written, and three more came by referral from another customer who had also found it on Quora
- 06At the time of the interview Recruiterflow was completely bootstrapped and cash flow positive, with no external capital
- 07Logo churn is approximately 3 to 4% annually, driven mainly by seasonal recruiting customers
- 08Net revenue churn was negative, Manan said, because customers keep adding seats and upgrading to the bigger package
- 09The MVP cost about 50,000 rupees to build, which Manan put at about $1,000, because the team were all engineers themselves
- 10The team was three people at interview time, with plans to grow to six within a couple of months
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| ARR (2019) | $400,000 | Founder interview, July 2019 |
| Customers (2019) | 120 | Founder interview, July 2019 |
| Average Contract Value, Deals of the Last Three Months (2019) | $7,000 to $10,000 per year (earlier customers were much smaller) | Founder interview, July 2019 |
| CAC (2019) | $2,500 to $3,000 | Founder interview, July 2019 |
| CAC Payback (2019) | 4 months | Founder interview, July 2019 |
| Logo Churn (2019) | 3 to 4% annually | Founder interview, July 2019 |
| Team Size (2019) | 3 | Founder interview, July 2019 |
| MVP Build Cost | About 50,000 rupees (he put it at about $1,000) | Founder interview, July 2019 |
| Year Founded | 2017 | Founder interview, July 2019 |
Growth Breakdown
Revenue
Recruiterflow reported $400,000 in ARR at the time of the interview in mid-2019. About a year earlier the company was generating roughly $8,000 a month, reflecting strong growth from a small base. Average contract value on recent deals had risen to $7,000 to $10,000 per year as the team moved upmarket toward larger clients.
Customers
The company was serving about 120 customers at interview time, nearly all of them recurring, up from a first five that came through a Quora post Manan had written, referrals and a personal friend. Logo churn was probably about 3 to 4% a year, Manan said, coming mostly from very seasonal customers, and net revenue churn was negative because existing customers kept adding seats and upgrading to the bigger package.
Team
Recruiterflow operated with a team of three at the time of the interview, with Manan noting plans to grow to six within a couple of months. Because the team were all engineers themselves, the MVP was cheap to build: about 50,000 rupees, which Manan put at about $1,000.
Funding and Profitability
At the time of the interview the company was completely bootstrapped and had no external capital. Manan said Recruiterflow was cash flow positive and agreed that it was reinvesting pretty much everything back into the business.
Growth Strategy
Quora Content by the Founder
Recruiterflow's first customer, a three-person recruiting agency based in New York that was still a customer at the time of the interview, found the company through one of the Quora posts Manan had written. Asked whether Quora had been a good channel early on, he said: "Yes. Very good channel."
Referrals from Early Customers
Three of the first five customers came by referral from another customer who had also found Recruiterflow on Quora and immediately referred more customers to it. The fifth came through a personal friend.
Moving Upmarket
At interview time Manan was deliberately targeting larger clients, reflected in average contract values rising to $7,000 to $10,000 per year on recent deals. The team was not yet investing heavily in feature-based upselling, focusing instead on landing bigger accounts.
Seat-Based Pricing with Feature Tiers
Recruiterflow prices on a per-seat basis with two feature tiers, allowing natural expansion revenue as customers add recruiters or upgrade to the fuller feature set. Manan said that expansion made net revenue churn "obviously negative".
Efficient Customer Acquisition
With a CAC of $2,500 to $3,000 and a 4-month payback period, Recruiterflow maintained a disciplined acquisition model that kept the business cash flow positive without external capital.
Best Quotes
“Our first customer was this three people recruiting agency based out of New York. They're still with us. And they found out about us in one of the Quora posts that I had written.”
“We are doing about 120 customers now.”
“But earlier we used to sell a lot to much, much smaller customers. So right now we do about $400,000”
“We are currently at four months.”
“We are getting each customer at about $2,500 to $3,000”
“Customers keep adding seats so that are upgrading to the bigger package. So net revenue churn is obviously negative.”
“That you need to take quantum risks to have quantum gains. And my 20 year old self was surprisingly more conservative than my 30 year old self.”
What Happened Next
At the time of this interview in July 2019, Recruiterflow was a bootstrapped three-person team generating $400,000 in ARR from 120 customers, with no plans to raise outside capital or sell the company. Manan had set an internal target of $750,000 in ARR by year end and was actively exploring new growth channels to get there. This page captures the company as it stood at that moment. Visit the Recruiterflow company profile for current figures.
View Recruiterflow’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction and Guest Background
- 0:17Selling Retention.ai and the Acquihire
- 2:36The Idea for Recruiterflow and Seat-Based Pricing
- 5:42First Five Customers and the Quora Channel
- 6:21Current Customer Count and Revenue
- 7:10Annual Revenue Goal and Growth Rate
- 7:51Bootstrapped from the Start
- 8:00MVP Cost and Team Size
- 8:19Cash Flow Positive and Reinvesting
- 8:41Churn and Net Revenue Retention
- 9:53CAC and Payback Period
- 10:23Plans to Raise Capital or Sell
- 10:34Famous Five Rapid Fire
Introduction and Guest Background
Nathan Latka
00:00Hello, everyone. My guest today is Manan Shah. He's a co founder and CEO of a company called Recruiterflow, which is the second startup, the second SaaS startup. His first SaaS company Retention.ai had raised a million dollars and was acquired by Inshorts. He's a huge believer in bootstrap SaaS companies. Manan, you're ready to take us to the top?
Manan Shah
00:16I am.
Selling Retention.ai and the Acquihire
Manan Shah
00:17All right. Let's go, Nathan.
Nathan Latka
00:17When did you sell retention.ai?
Manan Shah
00:21It was earlier called Betaglide and it was started in mid twenty thirteen.
Nathan Latka
00:26Okay. But when did you sell it?
Manan Shah
00:28And I sold it in 2016, mid twenty sixteen.
Nathan Latka
00:32Okay. And when random probably. What what happened? Because when I go there now, it's dead. There's nothing there.
Manan Shah
00:37Oh, yeah. So we we we originally started as a mobile app testing platform. This is back in 2013. So, in India, Android was the talk of the time, it was just about picking up, and developers were struggling to test their apps. While we were doing that, we realized that, hey, you know, it's hard to make money in developer products. So, we pivoted and with pretty much the same tech stack, we became the first company to give
01:07developers an ability to track uninstalls, right? So, in a country like India, in fact, of the Southeast Asia, uninstalls was a huge problem because the phones did not have enough memory, hardware problems, and network problems. So, users would uninstall app.
01:28And marketers needed to know that. And that's where we tapped into the marketing budget. And to be able to do this, we built a massive infrastructure of about just about real time data analytics on user front. And we grew that company to about 18 and about a $100,000 in ARR. But we couldn't see going beyond that. Like we couldn't see going beyond a few million dollars.
Nathan Latka
01:56So was it a fire sale to Inshorts? Basically they paid you like a $100 for it?
Manan Shah
02:00Yeah. I mean, it was more of an acquihire plus IP acquisition from Inshorts. It wasn't much for business, but
Nathan Latka
02:00Okay.
02:10So no cash, but you guys got good jobs and they got the IP?
Manan Shah
02:14There was a little bit of cash involved for us as well as, you know, our investors.
Nathan Latka
02:19Okay. Very good. And that retention.ai, sounds like you've gotten some distribution there. You were active, at least you claimed you were active on at least 12,500,000 devices. Inshorts, powered by a big private equity firm. M and A is part of their MO. Did you jump directly into Recruiterflow right after you sold that company?
The Idea for Recruiterflow and Seat-Based Pricing
Manan Shah
02:36No, I worked at Inshorts for about fourteen months. And at Inshorts, that's where the idea of Recruiterflow came in. So at Inshorts, I was looking after the growth and one of the problems that we had was each functional had to do recruiting for their own team. So, I ended up recruiting a lot of product managers and marketing guys and design guys, and it was just hard. And I came from a sales background. I was an engineer
03:08who did sales for the very first time at the time of retention.ai. So, I was used to great tools like SendBloom or Pipedrive. This was our main sales stack. And I pretty much did the same thing that I did with sales prospecting, outreach, calling, and getting the candidates in. And I realized that there is nothing like this for recruiters. That's where we built Pipedrive plus SendBloom for recruiters. So more like outreach.io plus Salesforce for recruiters.
Nathan Latka
03:39Very, very cool. Okay. And are you pure SaaS?
Manan Shah
03:43Pure SaaS. Yes.
Nathan Latka
03:44Okay. So give me a general sense. I know you have a lot of different customer cohorts, but on average, what's the company gonna pay you per year for your technology?
Manan Shah
03:50About $7,000 to $10,000 That's our average ticket size.
Nathan Latka
03:54Okay. So call it like $800 a month, something like that.
Manan Shah
03:57Yeah, close to.
Nathan Latka
03:58And what do they get for that?
Manan Shah
04:01So what they get for that is first a prospecting tool, right? So, a recruiter is out on LinkedIn all day. So, we help them prospect those people, engage them in sequences, being able to track all of those conversations, track all of those relationships, collaborate with each other, and finally make placements with the clients.
Nathan Latka
04:24Very cool. And do you upsell against anything else or is it all feature based upselling?
Manan Shah
04:31Right now we don't. I just don't think that this is the right time to do a lot of feature based upselling. We are trying to tap into the larger clients right now.
04:42You know,
Nathan Latka
04:42So what do you price against though? Is it seat based pricing or usage based pricing if it's not feature based?
Manan Shah
04:48It's seat based, completely seat based.
Nathan Latka
04:51So no even usage value. No, if you get at least 20 prospects at this much, if you get 2,000 prospects at this much?
Manan Shah
04:59Not based on that. So there is a seat based and then there are two tiers that, you know, that if you want this set of features, you pay this much. And there is a smaller set of features you pay the other amount.
Nathan Latka
05:10Well, then that's feature based upselling then.
Manan Shah
05:13Yeah, kind of, you wanna say that way.
Nathan Latka
05:15I Well, mean, that's what you just said. There's one feature set that's bigger. There's one that's smaller. They pay more for the bigger feature set that's feature based upselling.
Manan Shah
05:21Oh, okay. I thought that, you know, we would provide some special kind of features.
Nathan Latka
05:26No, no, no. I'm not talking professional services. No. So you upsell against and a larger feature set.
Manan Shah
05:32That's right.
Nathan Latka
05:32When did you launch the company? What year?
Manan Shah
05:35We launched in November 2017.
Nathan Latka
05:38Okay, 2017. And then do you remember how you got your first five customers?
First Five Customers and the Quora Channel
Manan Shah
05:42Yes, very much. So our first customer was this three people recruiting agency based out of New York. They're still with us. And they found out about us in one of the Quora posts that I had written. And our other three customers came from referral from another customer who also found us on Quora that he referred, you know, immediately referred to more customers to us. And our final customer came from, you know, one of our personal friends.
Nathan Latka
06:17Okay. So Quora was a good channel for you early on.
Manan Shah
06:20Yes. Very good channel.
Current Customer Count and Revenue
Nathan Latka
06:21That's great. So first five customers came there. How many customers are you serving now today?
Manan Shah
06:26We are doing about 120 customers now.
Nathan Latka
06:30Okay. And those are all kind of active recurring customers, not one off kind of projects?
Manan Shah
06:35Yes, most of them. So we have some single seaters who do recruiting for three months and then go away. Yeah, but that's like one, 2% of total customers.
Nathan Latka
06:46That's good. So 120 customers paying call it $800 a month that puts you, just north of about 1,000,000 in ARR. Is that accurate?
Manan Shah
06:54No. So 8,000 is the data for last three months. That's what we have done. But earlier we used to sell a lot to much, much smaller customers. So right now we do about $400,000
Nathan Latka
06:54Okay.
Annual Revenue Goal and Growth Rate
Nathan Latka
07:10So $400,000 annually. What's your goal to hit by the end of the year?
Manan Shah
07:14I'm sorry. I lost you there.
Nathan Latka
07:16Yeah. Yeah. What's your goal to hit? What do wanna hit by the end of the year if you're at 400K ARR today?
Manan Shah
07:22We are targeting 750K, but I'm not sure if, you know, how we're going to grow there. We are trying to figure out a few growth channels over there.
Nathan Latka
07:32And where were, if you're at 400, you know, call it $35,000 a month today, where were you exactly a year ago? Do you remember?
Manan Shah
07:38About a year ago, we were at about 8... 8 thousand dollars a month.
Nathan Latka
07:44So good. Nice nice growth. Obviously, small numbers, but still good growth. And have you done this bootstrapped or did you decide to raise capital?
Bootstrapped from the Start
Manan Shah
07:51No, completely bootstrapped.
Nathan Latka
07:53I love that. Well, obviously you had put some of your own capital sweat equity in at the beginning. What'd you spend all in on your MVP before your first dollar of revenue?
MVP Cost and Team Size
Manan Shah
08:00I don't know, maybe about 50,000 rupees, which is about, don't know, thousand dollars.
Nathan Latka
08:05Okay. Okay. So pretty cheap.
Manan Shah
08:07Yeah. Yeah. I mean, we we are all engineers ourselves. So it's just... We are still a team of three going to six in a couple of months, but still a team of three.
Nathan Latka
08:15And cash flow positive today? Are you burning capital to drive growth?
Cash Flow Positive and Reinvesting
Manan Shah
08:19No. We are... You know, we don't have external capital. So our cash flow positive.
Nathan Latka
08:23Well, you could be, you know, making up a loss by putting in more of your own money.
Manan Shah
08:27No. No.
Nathan Latka
08:27Okay. So cash flow positive, but basically breakeven, you're reinvesting everything?
Manan Shah
08:32Pretty much. Yeah.
Nathan Latka
08:33And what about churn? You know, because you're in SaaS, churn's critical. Your action... Your whole last product was around churn. What's what's your churn on this new product?
Churn and Net Revenue Retention
Manan Shah
08:41We we experience a very low amount of churn. Majority of the churn comes from very seasonal customers. Right? So they're recruiting for a quarter and they are not and stuff like that, or they just go out of the business completely, which is, you know, because we are one of the more expensive products in the market right now, that doesn't really happen because these customers tend to choose the cheaper options in the market. Market.
Nathan Latka
09:04Okay. So when you look at annual revenue churn over the past year gross, what would you put it at?
Manan Shah
09:10I don't have the exact number to say, but in terms of logo churn, I can say it's probably about three or 4% annually.
Nathan Latka
09:20Okay.
Manan Shah
09:21Again, very small number, very young.
Nathan Latka
09:24Do you have expansion revenue? So do you have expansion of the historical cohort that more than makes up for the 4%
Manan Shah
09:30Oh, yes. Yes. I mean, customers keep adding seats so that are upgrading to the bigger package. So net revenue churn is obviously negative.
Nathan Latka
09:41Okay. So said differently, net revenue retention is north of 100%?
Manan Shah
09:45Yeah, pretty much.
Nathan Latka
09:46Okay. Very good. And what are you spending to acquire a new call it, you know, 800 a month customer? How aggressive are you being with payback period?
CAC and Payback Period
Manan Shah
09:53We are currently at four months.
Nathan Latka
09:55Okay, four months. Okay, good. So again, if your historical folks are paying you to call it $275 a month, that puts you at $400,000 in ARR today. That would mean you're totally happy to spend about a thousand bucks to get a customer.
Manan Shah
10:06Yeah, we can go much above that as well. But right now we are getting each customer at about $2,500 to $3,000
Nathan Latka
10:16Okay, very good. They're paying again about $8,000 per year.
Manan Shah
10:16Yeah.
Nathan Latka
10:16All right. Any plans to raise capital?
Plans to Raise Capital or Sell
Manan Shah
10:23Nope, not right now.
Nathan Latka
10:25That's great. Now, are you in any acquisition talks with anybody?
Manan Shah
10:28No.
Nathan Latka
10:29You don't wanna sell the company?
Manan Shah
10:31No. I went through that path once. Not doing it again.
Famous Five Rapid Fire
Nathan Latka
10:34All right. Let's wrap up with the famous five. Number one, what's your favorite business book?
Manan Shah
10:39It's Zero to One Peter Thiel.
Nathan Latka
10:42Number two, is there a CEO you're following or studying?
Manan Shah
10:42I'm sorry?
Nathan Latka
10:42CEO you're studying or following?
Manan Shah
10:49I like David Cancel.
10:51Drift.
Nathan Latka
10:52Number three, what's your favorite online tool for building your company?
Manan Shah
10:55I'm sorry, Nathan, your voice is breaking up over here.
Nathan Latka
10:57What's your favorite online tool for building a company?
Manan Shah
11:00Strive.
Nathan Latka
11:01Number four, how many hours of sleep do get every night?
Manan Shah
11:05About five to six.
Nathan Latka
11:07Okay. And what's your situation? Married, single, kiddos?
Manan Shah
11:10Married, no kids.
Nathan Latka
11:11Okay. Very good. And how old are you?
Manan Shah
11:14I'm 30.
Nathan Latka
11:15Last question. What do wish your 20 year old self knew?
Manan Shah
11:20That you need to take quantum risks to have quantum gains. And my 20 year old self was surprisingly more conservative than my 30 year old self.
Nathan Latka
11:31Guys, Recruiterflow, CRM for recruiters, currently doing about $33,000 a month in revenue, up from $8,000 a month just a year ago, hoping to get $700,000 in ARR by the end of this year. Spent about 1 k to build the MVP back in 2017, now serving 120 recruiters as customers. Still just a team of three and bootstrap cash flow positive, which I love. Spending about 1,000 to get a new customer. So call it a four month payback
11:52period as Manan looks to scale. Manan, thanks for taking us to the top.
Manan Shah
11:56Thank you so much, Nathan.