How Sapia CEO Barb Hyman grew to $35M revenue and 50 customers in 2024.

hey folks my guest today is barb hyman she's been working her career in career executive hr roles she realized that companies weren't able to unlock the true potential of their people simply because they didn't have bias-free insight on everyone's strengths she's now trying to solve this via human learning and machine learning at s a p i a sapien dot a i barb you ready to take us to the top i am so excited to be here thank you so much nathan all right well anytime anyone mentions ai or machine learning i always just cut right to it and go what's your total team size and how many engineers i think the big question is how many data scientists we have or data scientists about what is ai and one quick check that i suggest to businesses is go out on linkedin and see whether there are any data scientists if they're not then there's not really ai going on that's right to where where are you guys so we are headquartered in australia we have an amazing uh team which we call phi labs who are really our innovation machine they're a group of phds in machine learning and ai and they're full-time or consultants no no no it's all full-time we only have uh full-time we're about 54 people we've been product led from the beginning because you need to be when you're building technology that's used to support human decision making so we have engineers machine learning engineers everything we do is proprietary so we don't use any open source algorithms or products we effectively are a fully vertically integrated machine learning system that has built a capability to understand you nathan from a short conversation so it's really new science it's something that ibm tried to do with watson for a couple of decades but couldn't because they didn't have the data and even though google has 10 000 phds working in nlp they can't do it either because they don't have the data so there are some elements that we've got that are pretty unique and that's what's really fueled our you know capability and our continued innovation i want to give you some time to defend that because most people listening are going to wait how does this lady i'm just hearing on nathan's show have more data than google so defend that a little bit how have you gotten unique data that google doesn't have yeah so there's a lot of discussion around you know do you actually need to have large data sets in order to create impre you know impressive and accurate predictive models you don't because you need to look at the context in which you're using it so what we are is we've scaled the science of a structured interview so if you think google and amazon for instance they take you through these laborious interview processes that are very rigorous where you're being asked the same questions and you're all measured against the same rubric in their case it's the leadership principles now you can use humans to do that which they can afford to do because they're you know a well-resourced organization but most can't how do you actually maintain that level of rigor but remove all the human bias by using technology that's what we're doing by chat the data that we have that's first party and proprietary data is the responses to those structured interviews that's now at about 800 million words it'll be at a billion words fairly soon and that is our across how many interviews 800 million words how many candidates 1.8 million each of these okay got it over what period of time across 47 countries and around about three years so it took us 18 months to build a product you can't just hire engineers and suddenly have a machine learning product you actually need to capture the data do the research most importantly do the bias testing and you know we started with what we call machine learning models where you take a hired signal like if you think about what amazon did wrong all those years ago in 2018 that they took cv data and they tried to build a predictive model of that the issues are firstly when you're hiring of your incumbents you risk amplifying existing biases and secondly when you're using cb data you're very likely to amplify existing devices we don't do that the data set we're using is clean it is just words it doesn't have any demographics it doesn't even have the question in it and that's what makes this a pure way to understand people and use ai in a safe way for people decision making oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview okay barb i understand the product this is great what are companies paying on average per month or per year to use your technology yes so we have um typically multi-year annual contracts we're not a monthly subscription because we're enterprise focused you know we work with uh businesses that have big pain which are normally meaning that they're big so we're not at the point where a mid market or a small business can use us right it's just like fifty thousand hundred thousand dollar acvs or what would you say the averages yeah yeah it's around about 100 to 150 we might have significantly higher than that but um you know somewhere around about 100 would be typical okay do you have any customers that are by themselves paying you more than a million per year no can you get there quick in next year or two um look there are different ways to drive revenue depth you know you can build more product um to get there but you know right now for us we're about we have a number of really large customers that are pretty close to that and part of why we're coming into the us we've got you know a handful of customers here erickson air canada's north america obviously we've just won a couple of others um and our ambition is to obviously take the incredible product market fit in australia we work with most of the trusted consumer brands their aquinas group will west group bunnings you know anyone who's on the asx is uh aware of us if not using us we want to bring that to the u.s market so our focus is to be really really focused and we see growth coming from expansion you know continuing to deliver this value in our technology to customers like the ones that we've been serving well in the uk and australia rather than start to build our new product um we have around 50 enterprise customers at the moment across australia the us and the eu got it interesting and so how many i guess do you upsell against number of interviews is that the right metric yeah typically the pricing is based on hiring so you're really aligned in terms of you know performance if you like you're not charging based on applicants you're charging based on the number of highs and when you think about the difference right so if you're using an agency i don't know what it's like in the us but in australia you know you might be paying 1500 2000 per hire for an rpo you know you're paying 20 bucks for higher without technology so the cost savings are more expensive than that i mean recruiters in the states you're paying 20 30 a first year salary yeah disrupting to that to that sector and the rpo sector mm-hmm so you're charging based off number of of completed hires okay so how many completed higher successful placements did you have last year uh about 80 000 oh wow okay and how do you how do you make sure to track attribution on those can can people go outside of sort of your system or do you know every time your system lands to a hired candidate so when we integrate we're because we're enterprise we normally are delivered through the system so a workday or a success factors or you know an hris and when you do the integration you're obviously feeding in data which is not just us pushing data to you in terms of here's the score here's the profile but actually we're getting data back so we have a closed data loop which gives us further you know opportunity to retrain our models which we do for our large customers so you get to higher and higher accuracy over time and so last year 80 000 what about monthly last month how many total hires um i didn't track it on a monthly basis because we've got quite a lot of cyclical you know if you think about retail you might have 20 000 in one month like our largest what do you think you'll do this year in terms of hires yeah this year um i'd say it would be close to 200 000 wow across how many total interviews done since we need a placement rate yeah it's normally about two percent three percent yield so wow we expect yeah we we're we're likely to get to three four million um interviews this year well that would be i mean two hundred thousand against three four million would be higher than three percent placement right i mean that's like six seven eight percent yeah it's you know for some for the really high volume players it's a very small number in terms of placement um for when we work with tech companies obviously it's higher but typically if you're if you know if you're seeing that you're hiring less than 10 of your applicant pool it makes perfect sense for you to be using technology to give you leverage in that automation process of course of course this is okay what a great story so um we we understand that project understand some of your customers put this on a timeline though for us when do you launch the company so we launched the company uh in 2018 is when i started but as i said we had to build the product and get to product market fit that took us a good 18 months um and we have basically had 200 plus growth year on year since then um we're you know currently in the us i'm here in seattle right now um and have been in san fran just meeting with vcs and getting to know that market because our business has really been funded i've put in my own money you know i've put in half a million dollars because i'm a huge part of that a lot are you super rich from a past tense there's not a lot of money for you i'm just a regular person i'm a regular person that was all your savings your hard earned savings it's a lot of money if you have to make this work yeah yeah that was a that was the second mortgage right that's not money that's sitting in the bank and then we've had um some amazing really high net worth people um in australia that have you know funded my vision and really backed me and believed in me you know when was that seed pre-seed round um so end of last year uh we had um some investors coming in and so what we want is to now figure out who do we want to partner with you know i really want a partner and a set of partners that can help us grow in the u.s so we're we're you know doing the rounds of vcs over here how much did you raise in the precede last year i'm not a privy to disclose that oh okay you don't want to share that no no but what i would say is that we're unbelievably capital efficient so our return i know that's why i'm saying why wouldn't you want to brag about that it was a six-month payback which for an enterprise business is pretty impressive we won't have that for this year it might be more like a 12 month um but you know that's just information i'd prefer to keep private okay fair enough um let's jump into some of the the team today so you said 54 full time how many engineers we have 16 engineers um based in australia and then we have another three phds and we have two ml engineers okay and you mentioned here in the states right now trying to meet vcs find the right partner and raise do you have a target in mind in terms of what you're trying to raise um look i'd say between 10 to 15 u.s you know we want to um uh really you know we've got a team of seven sales people we were pre-marketing until december so you know as i said we've been incredibly focused on the product and the product is not just what the engineers do it's what sits underneath in terms of the nlp and the bias testing and device governance and model cards and all that kind of good stuff you know that's been a key part of building out the product as well as the i o component that goes into our assessment so what we want is to you know build a sales team here that's bigger than three which is what it is right now and start to invest a bit in the brand marketing side we've just rebranded uh which is exciting and we need to put a bit of money behind that so you know between 10 to 15. [Music] we're not in any urgency because we've got runway until the middle of next year so for me it's about you know really taking the time to find the right partner and um and um you know obviously for me i'm very focused on building the story about you know our impact here to to share what we've achieved for our customers elsewhere and 50 customers at the average acv you showed earlier about 110 000 per year would put you today at about a 600 6 million run rate is that generally accurate i'd say that's about right yeah okay and 200 year-over-year growth would mean you're doing you know you're doing about 170 grand a month last year about a 2 million two and a half million run rate last year yeah that's about well a bit more than that yeah a bit more than 200 but yeah fair very cool well this is great i mean this is this is very i mean look i don't know what you're raising your precede round but i'm i'm guessing it was less than your current arr and anytime i see that ratio it's a fantastic ratio and very capital efficient so congratulations thank you yeah it's been a hard work why go give up that and you go do 10 million dollar raise you have a three person five person board now you've got board meetings you give up control there's you know you sure that's the step you definitely want to take look i mean i i think i'll probably end up moving to the u.s but there's a lot that we don't know about this market there's not a lot of localization we need to do in the product which is great in because fundamentally people are people and our ability to understand different languages is really strong now with the data set that we have but for me it's getting advices getting experts to help us who've been there before so that's why having a vc partner who's been a founder who's figured out go to market who's found ways to cut through the noise it's a very noisy mark at hr tech like that that's kind of gold i'd feel really privileged if i could find people like that to help us out so it's you know it's an exchange of uh that that that obviously needs to deliver in terms of accelerated growth but that would be my motivation jazz hr you know pe-backed k1 isam's pe backed vista there's a lot of m a happening in this space and you are the perfect target because there's not vcs that they have to negotiate with and give the vcs 100x control someone might think they could buy you for 20x and get a good deal are you in the u.s talking to any acquirers i get asked about that a lot but i i just feel we're on the very early stage of our journey in terms of what we can do with this capability it is world changing like we are basically raising the collective self-awareness of humanity with our tech because it helps you learn about yourself and your strengths and where you can go with your career and like i just think wow imagine what you could do with that so i'm not ready to kind of sell out you know i feel that there's still a lot of my vision to bring to life through through the product development i mean speaking though of wow imagine what you could do with that 60 million all cash up front would be a nice offer yeah i'm not in the market for sales for selling really honestly yeah i just don't that's the right answer you're giving all the right answers i just don't believe you yeah no i'm serious like i i'm i mean like everyone has a number right everyone has a number yeah but you know for me this is like the best job i've ever had i've had amazing jobs but it's so creative you get to work with incredible people and every day i'm learning you know and i'm surrounded by people who are smarter than me and like why would i want to bring that to an end you know guys there you heard it you're seeing it here on youtube on itunes if you read in the press in like a week say barb sells to iso for 100 million all cash up front you know where to find her leave comment below no barb this is a great story i guess last question before we wrap up you know net dollar attention is really key when it comes to sas valuations which is key for your next raise and you know minimizing dilution it sounds like you have pretty healthy net dollar retention right above 110 120 we've had no churn no direction we have deals with rpos who are like agency partners and they've been kicked out and we've you know had to go along with them but our renewal rate is uh from our direct customers is 100 we've had customers who have been with us for three years um it's incredibly sticky you know what about expansion so are they growing yes so the product expansion we are the full stack of assessment if you like if you're thinking about recruitment so in terms of expansion we need to build more product in order to get more expansion because when you can upsell the number of hires right same product but more hires yeah but different kind of hiring requirements so if you think about when you're hiring for white collar there are other things that matter other than just your capabilities so your technical skills matter and so then you're one part of a piece right so right now we just want to stay focused where we are a hundred percent of the stack when it comes to hiring for a particular customer and just more and more of those you know so we have the ability to go and expand and you know that's certainly happened in some but we're focused more on revenue growth through taking the existing formula which is where we own the entire assessment stack for a large volume player and and rinse and repeat again and again so you know home depot walmart heb you know um albertson's uh net you know all those kind of players here esops just about to go live in the u.s we're just short on time just to be clear heb if they hire a thousand people through your platform last year and this year they hired 1200 they should be paying you more there's 200 extra highers but you're saying they don't you don't drive expansion that way oh no that that definitely plays into it absolutely that's what i'm asking that's what i'm asking so what's the expansion revenue from more usage over the past 12 months is 120 130 percent on average yeah it's in about 20 percent about 20 yeah net dollar retention if you have no churn that would be about 120 which is really healthy yeah very cool all right this is great anything i missed you want to touch on before we wrap up no just come great to connect and um look forward to you know anyone who wants to contact me you can find me on twitter bob hyman one uh or um you know find me on linkedin we'd love to hear what you think all right barb famous don't come with any offers i'm not saying famous five here let's wrap up number one last book you read uh so i'm reading the book now founder brand which i'm absolutely loving and so uh that's partly why i'm driven towards going back onto twitter which i got off i was just on linkedin so i'm loving that book number two is there a ceo you're following or studying um such a nidella for me is inspiring because one person with a different set of attributes can fundamentally transform a culture and that's what he's done microsoft linkedin linkedin recruiter m a deal who knows number three what's your favorite natural owner of our technology absolutely all right number three what's your favorite online tool for building uh the company besides your own look i'm a bit obsessed with loom yup yeah i i you know in a global team and the ability to connect at a human level i have become a bit obsessed with loom yeah all right number four as you chug your starbucks like me how many hours of sleep are you getting every night five to six is a good night all right i'm not great i'm always on and barb what's your situation married single kiddos i have three kids older kids and i have a beautiful partner who has no kids and a dog so it works really well and we live so amazing i love that that's incredible okay and do you want me asking how old you are i'm 52. oh my god you look amazing for 52. last question something you wish you knew when you were 20. um i wish i knew that i was so freaking good at sales because i would have gone into sales and made a lot more money than where i am right now guys there you have it uh sapia.ai redefining what it means to do an interview to hire recruits to diversify and do it at scale they processed caught last year uh over one sorry total over the last three years 1.8 million interviews last year 300 200 000 sorry this year 200 000 total hires projected from three million interviews these are the hbs of the world using the platform they've just passed caught six million dollar run right going over 200 year over year looking at raising right now to really put fuel on the fire maybe a 10 15 million round we'll see what barb ends up deciding but barb thanks for taking us to the top thanks so much nathan thanks for having me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get 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