How The Muse Reached 600 Employer Customers on an Annual SaaS Model (Interview with CEO Kathryn Minshew)

Introduction and Overview of The Muse

Nathan Latka

00:01Good morning everybody. My guest this morning is Kathryn Minshew. She is the CEO and Founder of themuse.com, a career platform used by over 50,000,000 folks to find a job, learn professional skills, or advance in their careers, and by hundreds of companies looking to grow their employer brand and to hire. Now Kathryn is a Wall Street Journal and Harvard Business Review contributor, and she's spoken at MIT and Harvard along with the Today Show and CNN. She's been

00:29named a Smart CEO's Future 50 and Inc.'s 35 Under 35, a Duke alum. Kathryn worked in Rwanda with the Clinton Health Access Initiative before founding The Muse and was previously at McKinsey and Company. Kathryn, are you ready to take us to the top?

Kathryn Minshew

00:43I am really excited to be here.

Revenue Model and Business Description

Nathan Latka

00:45Thank you for making the time. So tell us first for those folks that are not familiar, what is The Muse and specifically what's your revenue model? How do you generate money?

Kathryn Minshew

00:54Yeah. So The Muse was founded to be the most trusted and beloved place for people to navigate their career. What does that mean? It means we function essentially like a marketplace. We have over 50,000,000 people who use the site every year to find a job, get to that next step, talk to a career coach, get advice, learn a skill, anything that's related to taking charge of your career and sort of living the life that you want.

01:18And then on the other side, we have over 600 companies from Facebook, Dropbox, Slack to HBO, Goldman Sachs, Marriott, businesses large and small, and we help them with hiring and employer branding. So the way I like to think about it is, you know, the old way of doing things, because a company could just put up a job description and expect that some of the most talented people in the world were going to line right up to

01:43come in. That's no longer the case. If you want really great people, you've got to compete for them because everybody else wants them too. And so, we help companies figure out, first of all, what is the story? What is it that they have to offer great candidates? How do they survey their top people and understand what are the core elements of their employer brand, their value prop to employees? Then how do you tell that story? Through

02:04photo and video, through a Muse profile? We have a lot of different ways companies can do that, especially kind of once you've gotten these great stories from employees, sharing those to a broader audience. And then finally, how do you distribute that? So how do you make sure that anywhere a company is trying to hire, they have the ability to reach those candidates and to get more context and assets in front of those people to help them

02:26decide whether working at Goldman Sachs or New York Life or Facebook is the right place for them.

Nathan Latka

02:32So should we think of you more like a LinkedIn recruiter or like a media brand that makes revenue from impressions?

SaaS-Enabled Marketplace Explained

Kathryn Minshew

02:39We are more of a SaaS company. So it's a... I don't know if you've heard the the sort of word going around New York tech these days, but it's a SaaS enabled marketplace. Yep. That's, I think, probably the closest way. We do compete fairly directly at times with LinkedIn, with Indeed, with Glassdoor. But interestingly, we do also, in some ways, work well with them. Like, we found a lot of companies that will use their Muse assets

03:03and their Muse platform and embed it or link it to some of these other platforms and it makes the entire kind of sum work better than the individual parts.

Nathan Latka

03:12And so for those that are not familiar with a SaaS enabled marketplace, right, help us understand and give examples in specific in your business, right? What part is the marketplace and what part is the SaaS component?

Contract Sizes and Average Deal Value

Kathryn Minshew

03:23Yeah. So most companies sign up for an annual subscription to The Muse. That can be anything from 4 to 5 figures for an SMB or a small mid market company all the way up to 6 figures for a major Fortune 1,000. What's the

Nathan Latka

03:39average, Kathryn?

Kathryn Minshew

03:44That's a good question. So, right now the average is between 20 and 30 ks.

Nathan Latka

03:48Okay.

Kathryn Minshew

03:49But

03:52number of enterprise deals is rising quite a bit more quickly than our mid market business. I think you'll continue to see that go up. We're also... We look at sort of average by category. In that case, you obviously see very different things based on the employee count.

Nathan Latka

04:08Do you mean like a financial sector category versus a...

Kathryn Minshew

04:12No. Because we work with businesses of all sizes within a specific industry, more like the the employee count of a company. They mid market or enterprise?

Nathan Latka

04:21So when you're categorizing, it's not by industry, it's by team size.

Kathryn Minshew

04:25Exactly. Industry has other effects on the site, but the biggest one in terms of contract size is simply how large is your company, how big are your recruiting needs. Somebody that has 50,000 employees is going to be radically different than somebody with 500 employees. That's And obviously, you see that everywhere in between. So, back to your question about a SaaS enabled marketplace, essentially, we have these businesses of various sizes that subscribe to The Muse. It's an

04:51annual subscription. And through that, they get a range of different tools. They have the ability to literally have a profile on The Muse site and hire from our community, but also we give them a number of tools, embeddable sort of, I don't know, widgets for lack of better word, I need a better word for that, and measurement and analytics

05:14dashboards that allow them to understand how they're doing across different pieces of their recruiting funnel and optimize not just the recruiting they're doing on The Muse, which is the marketplace component, but on their own career site, through their own social channels, etcetera. So the marketplace is literally on themuse.com where companies can post job listings and profiles, and we have, again, a sort of audience of millions that might apply directly. But for us, we realized that we

05:40were essentially wanting to build some of these products that we started out focusing on their existence within the marketplace and take those to much

05:50broader audience. Actually, I'll give you one example quickly. We have a business we're working with that has

05:59between 50,000 and 150,000 employees. I should know exactly.

Nathan Latka

06:04Who are we talking about? Can you share?

Kathryn Minshew

06:05No, I'd rather not.

Nathan Latka

06:07That's okay.

Kathryn Minshew

06:07Some of our larger clients are sensitive if we don't get their explicit approval to talk about them in the press. I can also be more candid if I haven't identified the client. But they are recruiting for really sought after talent. They need to build up data science, engineering, of course, a wide variety of technical and product related positions. They're having trouble competing with some of these newer and more digitally savvy companies. And so not only are

06:33they recruiting via The Muse and hiring people through our channels, but they have a pre existing social media presence of tens of thousands. They have a talent community that they're not doing a lot with Mhmm. That has, I think, something north of a 100,000 members. So how do we not only help them recruit through The Muse, because we've got a great population, a lot of women, a lot of millennials, a lot of digital natives, but how

06:56do we also then help them take those lessons and apply it to these existing channels that they may have built up previously as a Fortune 1,000 company, but they're not optimizing and and fishing from really effectively.

Chicken-and-Egg: Traffic Before Employers

Nathan Latka

07:09And so are these... If any marketplace, right? Everyone talks about chicken and egg, right? And all the analogies. For you specifically, did you get the traffic, you know, the 50,000,000 people coming first with content or did you launch as kind of a platform that's really sexy company profiles and then say, oh my gosh, we have to figure out how get traffic here?

Kathryn Minshew

07:29We started with the individual users, the people, although in the sort of span of the company's history they were both started fairly early. So when Muse initially launched 2011, sort of late twenty eleven, September, we just had career related content, tools and resources for individuals. And we didn't roll out our first company profile until we had a 100,000 people a month using the site.

Nathan Latka

07:56And were you not making any money at that point? Or or is it ad driven?

Kathryn Minshew

08:00No. No. No. We've never had advertising on the site. Okay. I think banner advertising has no place on The Muse.

Nathan Latka

08:06Your guys' site is too beautiful to be destroyed by this vomit. And so let me ask the question though, right? So you you went several years then before you introduced this revenue model. How did you support yourself? Where did you get the cash from?

Early Funding and Personal Savings Story

Kathryn Minshew

08:18Yeah. So we actually hit a 100,000 users a month in about six months. Okay. So it was not all that much time. The early cash came from my savings account.

Nathan Latka

08:27Yep.

Kathryn Minshew

08:27So when I started the business, my co founder and I kind of looked at our bank accounts and we said, Alright, based on expenses and things we need to might, you know, set aside for the business, this is how long we can last. And we got really close to the end.

Nathan Latka

08:42Was that... Wait, Kathryn. Was that scary? I mean, were you... Was that a scary... An actually scary position for you or had you derisked No.

Kathryn Minshew

08:50I mean, was terrifying.

Nathan Latka

08:52You quantify Like how much did you have in savings and how much did you put in? Like, I mean, you literally at the brink?

Kathryn Minshew

08:57Well, so when I left McKinsey, I had $25,000 in And

09:04I was thinking about possibly starting a business, but I didn't have an idea I was in love with yet. And so I got this offer to move to Rwanda and work for the Clinton Health Access Initiative on vaccine introduction, and that was essentially a net neutral offer. So what they said was, we'll give you the flexibility of only working for us for six months, and we will give you... It was an incredible, incredible experience, but they

09:27said as a result, we'll pay all of your expenses, fly you there, housing, food, etcetera, but we're not gonna pay you a proper salary above and beyond that. It'll just be sort of net neutral, and they were a non profit, and I said, that sounds great. I would much prefer to have the flexibility and not have the cash.

Nathan Latka

09:43And how old were you at this point, Kathryn?

Kathryn Minshew

09:4625. Okay. I think. Yeah. 24.5 or 25.

Nathan Latka

09:49A few years out of college at McKinsey, you get this offer, 25 in your bank account, a great experience, you take it.

Kathryn Minshew

09:55Exactly. And I will say when I started at McKinsey, I had almost nothing in my bank account. Yeah. But I lived as if I was making half of my salary because I knew something that might not pay a lot of money. I wasn't sure whether it was moving to Africa, whether it was starting a business, whether it was something else entirely, but I've always thought that savings are freedom. And so I said, look, you know, I'm

10:20making 65 ks a year and I'm gonna live as if I'm making, you know, how cheaply can I live in Manhattan? Which by the way is not easy to do.

Nathan Latka

10:29Have It's not go

Kathryn Minshew

10:30to bars and be like, I'll have the tea please. And I was furious for just being honestly

10:35super I'm soda water.

Nathan Latka

10:36I'm still soda water.

Kathryn Minshew

10:37Exactly. But you know what? Like, every every time you do that, you're putting away money for your future, and that's how I looked at it. So I had 25 k. When I came back from Rwanda, I still had about 25 ks. Think I had 24 ks because I had done a little bit of traveling, and I started working on actually a business that was pre Muse, but it was a very similar idea. We created a content

11:00platform for professional women. And that was where we laid a lot of the groundwork and said, wait a second, there's this huge need for individual candidates who are thinking about... Sorry, not even candidates, humans. People that are thinking, what do I want out of my career? How do I be a better manager? Can I put an emoji in a workplace email? And does that make me seem young or junior? Or is it casual and fun? And

11:22how do I think about navigating sort of workplace rules? And so we were building up this content site and we realized that firstly people were incredibly hungry for what we were offering and secondly that there was an opportunity to do something with employers that would feel so much more human than what was frankly the case on most classic job search sites.

Nathan Latka

11:43Like in Indeed or these other things with no story or emotion.

Kathryn Minshew

11:46Absolutely. I mean even today in most cases, you are confronted when you go to those sites by a giant blank search box. You have to type something in, and you'll get 3,724 results, and they all look the same. I'll get off my soapbox, but I am offended that for so long that was considered adequate for one of the most personal and important decisions in someone's life, which is, what are you doing with your life? What are

12:09you doing with your career? And anyway, won't go all the way down the rabbit hole, but I really felt like there was an opportunity to change that.

Nathan Latka

12:16So how much of that 25 did you put in the business?

Kathryn Minshew

12:20So I spent about 20 ks on living expenses with the first company, which was effectively research in some And I didn't spend it on research. I spent it on rent and food and paying for a metro car so I could get around New York. But I had about 5 ks left, and to make a long story short, we had... There were four of us that started that first project, business. It started as a project, became a business.

12:48We had two very different visions, and so Alex and I, my current co founder to this day, sort of split off. The other two took that and made it kind of something different, took it in a different direction, and we started The Muse. And I had about 5 ks left, which frankly was terrifying because firstly, was spending... My living expenses were as cheap as I could possible get them. I had moved out to Brooklyn. How much

13:10was sales? Probably $1,800 all in.

Nathan Latka

13:15You're three months Exactly.

Kathryn Minshew

13:18And rent was half of that. Everything else was like blood, sweat and ramen. And so, yeah, but we felt like we had to start with the users. So we put up the user side of the platform of the marketplace first and we attracted

Nathan Latka

13:34Which is what? Kathryn, is this just you writing?

Kathryn Minshew

13:37No. It's funny. I didn't start The Muse because I knew all the answers. I started it because I knew all the questions, and I needed the answers. So I wrote very infrequently in the beginning, but I sourced a lot of the best advice, I knew So where to find we went out and tapped a broad community. We didn't have any money. We weren't paying ourselves, much less writers at that point. But we said, look, we can

14:03build an audience, and we are building an audience of mostly women who are thinking about what is that next step in my career, and if you have expertise or you want to help other people follow the path that you followed, then we'd love to invite you to contribute to the site. And so the first version of the site was we probably had about 50 articles or so. Career advice, skill building, links out to other resources, and

14:29we launched our first job listing about a month later. It was a test. We did it with a little known Silicon Valley startup called Uber that had about 50 employees at the time. And we decided to see if we could get them some hires from our platform.

Nathan Latka

14:44Do you make money off the hire like a typical recruiting firm does?

Kathryn Minshew

14:48So in that first arrangement we were supposed to. We don't anymore. It's just the SaaS platform. Okay. But in that first one, I think we made $600 off of the sort of, you know, email and sort of work that we did, and then there was a... I forget it was 2,000 or $2,500 success fee. Unfortunately, Uber made two offers from The Muse, and both people turned down those jobs. So we didn't get the success money, but

15:12the caliber of people who came through was so high that we felt like we had proved we were onto something.

Equity Split Among Co-Founders

Nathan Latka

15:18Fast forward to today. This was 2011 you started it. You have two two of you cofounded. By by the way, did you split fifty fifty?

Kathryn Minshew

15:26No.

Nathan Latka

15:27How'd that how'd conversation go?

Kathryn Minshew

15:29It was honestly not that bad. I mean here's the thing. So there were three of us in the early days. Alex and I were kind of all in full time and then Melissa a, she had been at McKinsey with us. She was accepted to a PhD in cancer biology, and we were trying to convince her to put that PhD on hold to come and do the business, and what we ended up deciding was she had a

15:51smaller percentage, and she actually worked on The Muse and did her PhD first year full time. Then put the PhD on pause, was full time on The Muse for a year and now is back doing her PhD, not active in the business. But I'm actually in her wedding as a bridesmaid in a couple months. It's a great plus. Yeah. She's she's incredible.

Nathan Latka

16:09So she's still on the cap table then?

Kathryn Minshew

16:11Yes.

Nathan Latka

16:12Yeah. Got it.

Kathryn Minshew

16:13And then Alex and I, we had gone full time and taken on risk in slightly different ways. Mhmm. So I mean it's a tough conversation. Anytime you're talking about equity, it's not something I would do for fun ever.

Nathan Latka

16:25Oh gosh no.

Kathryn Minshew

16:26At the same time, you know, we both came to it with we want to work together. We want to make this happen. We want to get somewhere that feels fair to both of us, and that's never going feel perfect to both of us, But it needs to feel tolerable to both And of so it's close to be even, but there were small differences based on again how much risk, how long each of us had been sort

16:52of without another full time job because we left our roles at different times. And I think we got to a place that we felt pretty good about.

Nathan Latka

16:58That's great. We have... Kathryn, we have a few minutes left. So again, equity, there's someone that was early with you, have a very small portion, and then you guys basically split the rest basically equal with some tweaks to make it fair. Talk to me about funding. You raised capital. How much?

Fundraising History and Total Capital Raised

Kathryn Minshew

17:12Yeah. So we raised... Gosh. We raised about a 100 k in January 2012 plus we got into Y Combinator. So that came with about a $170,000. That was our first seed funding. It was very hard won. We ended up over the last couple of years raising over $28,000,000. So we've had a little better luck with fundraising, but the sort of first three and a half years of The Muse's life were were pretty lean. It was seed funding,

17:43bootstrapping, making revenue here and there. Our our product we've charged for for employers from the very beginning because we didn't feel like we had a choice to go with a freemium model. That said, we always wanted it to be free to individual users, so that was really important to us. And then we raised a $10,000,000 series a in, spring of two thousand fifteen, and then a $16,000,000 series B last spring, summer.

Nathan Latka

18:08So it's almost a year from that last raise. So you're either in fundraising mode right now or Indeed has a 50,000,000 offer on the table to acquire you. Which one is it?

Burn Rate and Path to Profitability

Kathryn Minshew

18:19Well luckily when you're in a business that makes a lot of money, you don't quite have to earn so fast as companies that rely on investors to keep them afloat. So we're in great shape.

Nathan Latka

18:29Are you flat? Are you break even or close to it?

Kathryn Minshew

18:32No. But we've been at sort of closer or farther at various points and we have a fair amount of control based on how fast we want to grow, what we want to invest in, whether we want to let that gap get further or narrower. And I think that again

Nathan Latka

18:45Your burn rate, is at the gap you're talking about?

Kathryn Minshew

18:47Exactly. And there's lots of different ways to build a business, so I'm I'm kind of skeptical of people who claim to have found the one true path. But I think for us it's been really helpful to have structured the business in such a way that you know, our customers pay for a fair point of our growth and we can use venture capital really to accelerate, not to sort of Support. Yeah, exactly, to support.

Nathan Latka

19:09How many employers are you working with today as paying customers?

600 Active Employer Customers and Churn Patterns

Kathryn Minshew

19:12I think it's about 600 active on annual subscription.

Nathan Latka

19:16When you say active, I'm I'm going to read into that and say either some people have started and then stopped or they're just it's a seasonal business. If they've stopped, why have they stopped? The ones that weren't happy.

Kathryn Minshew

19:27Yeah. So companies that have stopped, sometimes they go out of business. Yep. We actually...

19:32We joke that we should...

19:33We would never do this by the way, but we joke that we we basically know sometimes when somebody's getting acquired. We didn't realize this pattern at the beginning, but we will regularly have companies, especially, again, tech companies, up and coming companies, that will suddenly email out of the blue. We think that they're very happy, they'll email out of the blue and say, I need my profile to come down. And we used to just freak out because

19:55we thought, What's wrong? Churn. Love service, the churn. And inevitably, you know, four to twelve weeks later, they get acquired. Yeah. So that's the reason. We also, in fairness, because the...

Nathan Latka

20:08By the way, that's valuable information if you're an investor.

Kathryn Minshew

20:12I know. Yeah. That's why I was joking. We would never actually publicize that. But it is funny internally, sometimes we just we have our suspicions. Yep. And then of course because our product is you know, it's marketplace, it depends to some extent. Like some employers are better or worse figuring out how do they actually successfully market themselves to candidates. So occasionally we have companies that are like you know, we only wanna hire iOS developers. And some

20:37companies do that very successfully on The Muse, and others really struggle. It honestly depends, like, can you make a case for why an iOS developer with a lot of good options would want to come work at your business? If you can, great, they're out there. If you can't, you're going have a harder time.

Nathan Latka

20:51600 customers times an average selling price of about $30,000 per year puts you at somewhere above 18,000,000. Is that am I doing the math correctly?

Kathryn Minshew

20:59I don't comment on our active revenue, but we have a wide range of kind of customer sizes and types. So yeah, you'll have to wait till the next reporter scoop to figure out whether you're right or not.

Famous Five: Books, Tools, and Habits

Nathan Latka

21:09You guys will have to come on and watch the YouTube video and judge Kathryn's smile when I ask that question to figure out what the real number is. Kathryn, let's wrap up here with the famous five. Number one, what's your favorite business book?

Kathryn Minshew

21:21I I love The Hard Thing About Hard Things. That's probably one you get all the time. I also read a book called Traction recently by a guy named Gino Wickhamen, is such an odd name that stuck with me that I really enjoyed about some of the basics of running a business. It's for small businesses, but I think it's interesting for people that are scaling as well.

Nathan Latka

21:41And you've just launched your new book. Tell us about it real quick.

Kathryn Minshew

21:44Yeah. It's called The New Rules of Work. It came out the week before last with Crown Business, Penguin Random House. Super excited. Reviews have been great. It's essentially an A to Z guide to the modern workplace. So how do you figure out what you want to do, go out and get that job, and then succeed, manage up, delegate, be more productive, all of the things you need to do to sort of effectively navigate the twenty first

22:10century workplace.

Nathan Latka

22:11The new rules of work link that in the show notes. Number two, Kathryn, is there a CEO you're following or studying right now?

Kathryn Minshew

22:17Oh my goodness. You know, I follow and study a huge number of CEOs. No one that's sort of above all. I would say everything from I think... Let's see. Jennifer at Rent the Runway is doing some super interesting stuff right now. Elon Musk is probably on everyone's list. There's a company called Andela. Jeremy Johnson Johnson's the CEO. He's fantastic. I'm very biased. And I don't know that's probably three. I'll leave it at three.

Nathan Latka

22:49Okay. And then number three of five here, your favorite online tool like Acuity Scheduling.

Kathryn Minshew

22:54Oh, So I love Boomerang by Baydin, which lets you pop emails out of your inbox and bring them back, and then I'm gonna cheat and give you a second, is Pocket, because I love... I'm a voracious reader. I absolutely... And I'm just very curious. Like, I I just love stuff. I love knowing things. I love reading, thinking, discussing. And yet, it can be really distracting in the middle of the workday when a great article gets emailed

23:14to you or something. So I save it, to Pocket and it just automatically uploads to my phone. I And can read it on the subway or an airplane or something like that.

Nathan Latka

23:21Number four, Kathryn, how many hours of sleep do get every night?

Kathryn Minshew

23:26Seven.

23:26Okay. It varies. I actually, I need more sleep. I'm not one of those people that's like I can get by on four. I'm really really unhappy if I get less than about six and a half. So I try an average between six and a half and seven and a half. Some weeks I do better, some weeks I do worse.

Advice to 20-Year-Old Self

Nathan Latka

23:43And then take us home here with the last one. Take us back to your 20 year old self. What do you wish that Kathryn knew?

Kathryn Minshew

23:50I wish she knew it was okay to be different. I stressed out a lot about being, you know, a bit of an odd duck growing up. I wish she knew that everything worth doing is hard, and so persistence and grit are probably two of the most useful things. And I think I'm really grateful to the way I grew up. We didn't have a ton of money, but really figured out how to kind of just handle you

24:22know situations as they're dealt and keep on going. And that's been so helpful. And so I think 20 year old Kathryn would have enjoyed knowing that it's gonna work out okay.

Nathan Latka

24:29There you guys have it from Kathryn, Founder of The Muse. It is okay to be different. Everything will work out okay again. Came out, was working McKinsey, $65,000 salary, saved up about $25,000 because she was really smart at managing expenses, then went on an amazing journey with the the Clinton Foundation out in Rwanda doing great work, came back, launched the company, put about $5,000 in, which is basically all she had because she spent the other $20,000

24:52on living expenses in New York. The Muse is now again growing super fast, over 50,000,000 active folks there annually. Again, connecting with brands and brands creating great company profiles. Over 600 employers are using the Muse. Again, average selling price for those contracts to work with the Muse between $20,000 and $30,000 for a specific cohort per year and again launched in 2011. Kathryn, thank you so much for taking us to the top.

Kathryn Minshew

25:19Alright. Thanks so much.