How Yobs Reached $20K Monthly Revenue and 20 Enterprise Customers with a Freemium Strategy (Interview with CEO Raphael Danilo)

Introduction: Raphael Danilo and Yobs

Nathan Latka

00:00Hey, folks. My guest today is Raphael Danilo. He's a French entrepreneur and investor based in Brooklyn, New York. By day, he's the co founder and CEO of Yobs, an interview intelligence platform on top of Zoom. Yobs is backed by industry leaders like Adam Grant and trusted by dozens of high growth companies like Nestle, HomeTap, and Nissan. On nights and weekends, he runs Evening Fund, a 3,000,000 operator fund out of which he writes fifty to one hundred

00:18k checks in the early stage companies. Raphael, you ready to take us to the top?

Raphael Danilo

00:23>> Let's do it.

Evening Fund: Raphael's Operator Investment Vehicle

Nathan Latka

00:24What came first, by the way? The the the Evening Fund or Yobs?

Raphael Danilo

00:28>> So Yobs came first. Evening fund is something that I started just earlier this year, and we've done about 25 investments so far in 2021.

00:43>> And, yeah, as you said, something that I do just on nights and weekends to, you know, kinda give back and support other founders.

Nathan Latka

00:49Very cool. Well, give back and support, but you need to make a return if you plan on I mean, who did you raise capital from?

Raphael Danilo

00:56>> So well, so some of the capital so I I drew it with a partner. Her name is Kat. She's also a a full time founder of a of a VC backed company called Baretto. So some of the capital is ours. Some of the capital is from friends of mine, you know, industry connections, and then we have a couple of larger funds. I can't name all of them, but Bain Capital is one that I can name. And

01:22>> then, yeah, there's a couple of other kind of, like, multistage funds that are LPs in the fund. And yeah. Absolutely. And and, honestly, like, you know, we very often fit into kind of angel allocations because we only write fifty, hundred k checks. So they're pretty small checks. We're not trying to lead rounds or anything. And and it's super fun. And we actually got our first unicorn a month ago after less than a year of investing. So

01:47>> so far, it seems like it's going pretty well and, you know, most importantly, we're having a ton of fun.

What Yobs Does and the Problem It Solves

Nathan Latka

01:51Alright. Tell me more about Yobs. Who's buying this technology, and when what are they and how are they using you?

Raphael Danilo

01:56>> Yeah. So, you know, with Yobs, the the kind of the premise behind it is that, you know, interviews have the highest impact on the quality of of hires. But interestingly, they're also, you know, the process with the highest error rate. You know? And so even within the hiring process. So about, like, 50% of interviews basically have a conclusion that doesn't end up being true post hire. Like, we thought that this person was, you know, you know,

02:26>> very extroverted. Turns out they weren't, etcetera, etcetera. And they also have the biggest impact on the time to hire, like, how long it takes to hire someone. 60 to 80% of it comes back to the interviews. And in the past, like, this wasn't too big of a deal because you could do multiple interviews on sites over, like, weeks, and you could still get good candidates. But now you have so much competition for talent, especially because of

02:49>> remote work and the talent shortages and just everything that's happening at the macro level, that if you're not going fast, and I'm talking, like, three interviews max for a whole process for, you know, per per per candidate, And you still have to be precise and you still have to be engaging. If you're not like, if this is not your bar, you're you're not gonna get great talent. And so this is particularly painful. Well, so this is

03:11>> a problem that everybody's facing, you know, from the smallest start up to the biggest companies. As you mentioned, like, we work with Nissan all the way down to, like, small startups. But the the companies that kind of have you know, feel the pain the most are what we call high growth companies. And so high growth companies are typically venture backed. They don't have to be, but, you know, oftentimes they can be.

Pricing Model: Free Plan vs. Enterprise Seats

Nathan Latka

03:32So Raphael, just just just jumping in for a second. So so Yeah. Understand the platform. I think my audience will clearly understand what you're doing based on that description you just gave. Help me understand how you're pricing. Is it per interview, per month?

Raphael Danilo

03:44>> So we actually have a free forever plan, and we just came out of beta. So so right now, we're not even charging for our entry level plan. We're only charging You're

Nathan Latka

03:53pre you're pre revenue today.

Raphael Danilo

03:55>> We so we'd only charge enterprises. So we have some larger customers that we charge. But these high growth companies, we don't charge them today. We'll start charging in q one or q two.

Nathan Latka

04:06Okay. Tell me, I guess, can you tell me more about the enterprise folks today? How do you model their plans?

Raphael Danilo

04:11>> Yeah. So it's it's it's basically based on the number of recruiter seats that you need to have on the platform. So, you know, we will serve recruiting teams largely, but then you also have interviewers that are, you know, functional heads, you know, head of sales, head of engineering, so on and so forth. So depending on the number of people that you need, you know, collaborating on the platform, that's what we charge you based on. But, you

04:32>> know, unlimited number of interviews, ATS integration, all of that stuff. And then in the free plan, you can you can basically integrate Greenhouse, Zoom, Google Calendar. And if that's your stack, then we give the tool away for free today.

Nathan Latka

04:48I see. So these enterprises, why not give it to them for free as well? Are we just talking like these are, like, two or three of your buddies that run enterprise things, so you you know, it made sense to charge them?

Raphael Danilo

04:57>> Yeah. No. Because the the enterprise guys typically have, you know, different requirements when it comes to, you know, security, data privacy. There's things around, like, custom integrations or, like, small customizations. And then also just, the whole service component of, like, they may want support around just making sure their process is being run properly. So, you know, they they have the budgets, but they need a little bit more handholding. Just the nature of enterprise sales.

Nathan Latka

05:23I I wanna go back to your free choices, the freemium plan choices you made in a second and your back story. But before that, so give me sort of an average. Right? What is what's an enterprise account gonna pay you per month to use the technology?

Enterprise Contract Value and ARPU

Raphael Danilo

05:33>> Yeah. So our our enterprise accounts are in the 5 figure annual contract value. So I mean, it it it depends, but it's kind of like 10 k per year onwards. So roughly $1,000 a month up to, like, $5,000 a month.

Nathan Latka

05:49What would how many how many recruiters does someone paying you a thousand bucks a month likely have?

Raphael Danilo

05:56>> Probably about a dozen, I would say. Like, you know Okay. Like, 10 plus. When we work with high growth companies, they typically have, like, up to 10. So enterprise typically kicks in when you start to have, like, you know, ten, fifteen plus people on your recruiting team.

Company Founding Story and Remote Hiring Origins

Nathan Latka

06:10Yep. That makes sense. Give me the backstory here. When did guys launch the business?

Raphael Danilo

06:14>> Yeah. So so, you know, we launched three years ago, and it's funny because I'm so I'm from France originally, as you mentioned, and

Nathan Latka

06:23your backstory is 2019, right?

Raphael Danilo

06:26>> Yeah. Exactly. Yeah. Yeah. Yeah. 2018 actually is when we when we incorporated the business. Okay. And, so before COVID, like, I was always working remotely for startups. Like, I worked for an Israeli startup remotely while I was in LA. Like, we worked with some European companies with my cofounder. We're both European transplants in The US. So we've always done the remote hiring thing. And so we've always kinda felt the pain of interviewing over Zoom and not

06:51>> being able to collaborate efficiently and effectively when you're interviewing people remotely. Like, you have to consolidate your notes. You have to make sure you're capturing the key moments, and it's it's pretty hard. And so we we came up with this idea of, like, well, what if you could, like, actually, like, record conversations, transcribe them, make it really easy to, like, you know, grab the key moments, share them. And then, you know, as your recruiting team starts

07:13>> to do this more and more and more, you know, kind of like what gong.io does for for sales calls, you can actually start coaching recruiters. The same way that with Gong, you can start coaching your sales reps based on, like, what closes more deals. Well, here's the same thing. Like, what closes more candidates? What engages them the most?

Nathan Latka

07:29Are you licensing someone else's, like, call flagging or call tagging technology, or have you guys built that in house?

Raphael Danilo

07:36>> So the the transcription technology, we work with a couple of different vendors, because that's pretty sort of table stakes. And then the the the whole technology to sort of, like, look into what's happening in the transcript and the call that's that's ours. That's proprietary.

Nathan Latka

07:54I see. I see. How many folks are on the team today?

Raphael Danilo

07:57>> We have 12 people on the team.

Nathan Latka

07:58Okay. So how many of those are engineers?

Raphael Danilo

08:04>> About half of them.

Nathan Latka

08:05Okay. Six.

Raphael Danilo

08:06>> And we have a couple of PhDs in organizational psychology who are kind of like domain experts in interviewing and assessments. So they're they're deeply technical, you know, in their own way, just not, you know, software engineers per se.

Nathan Latka

08:18You get going in 2018. You're experimenting. What was it like? Do you remember closing your first customer, and who was it? How'd you get them?

First Customers: Landing Nissan as an Early Enterprise Account

Raphael Danilo

08:25>> Yeah. It was crazy because, actually, Nissan and another huge, huge, huge Fortune 500 company were our first customers. So Nissan, I think, was, like, number two or number three.

Nathan Latka

08:34How'd you get Nissan?

Raphael Danilo

08:35>> It was so I actually knew someone who worked at Nissan at the time who's not who's not there anymore. And we went to a conference, and one of their colleagues heard about us, and they just, like, very organically like, that person reached out, and

08:49>> we ended up making a pilot happen. But what was interesting is, like, we totally kind of skipped the whole, you know, work with startups and then work your way up to enterprise. We did it, you know, exactly the other way where started with Fortune 500 accounts, which had its pros, namely that you can get really big contracts really quickly. I think, like, as an advice, I guess, to other founders on this front, like, you know, just

09:11>> get ready to get bogged down and also it's, like, a lot of customization and some stuff that, like, when you're on your road to product market fit, you probably don't wanna waste your time doing. So I think that's one, like, flag I would raise when you're going after, like, big, big enterprises as as first customers.

Nathan Latka

09:25So Nissan was number one or number two. And then you obviously, you're now two years later scaling up. How many enterprise customers are you serving

Current Scale: 20 Enterprise Customers and Revenue

Raphael Danilo

09:33>> 20 plus. And then on the free plan, have dozens of companies using us.

Nathan Latka

09:37Yeah. Yeah. Yeah. But but all those 20 ones, again, are the enterprise folks you alluded to earlier where you are charging them per recruiter per seat.

Raphael Danilo

09:44>> Yep.

Nathan Latka

09:45Okay. Can I take that ARPU you told me earlier of a thousand bucks a month multiplied by 20? You guys are doing about $20,000 a month right now in revenue?

Raphael Danilo

09:53>> Yeah. That's that's about right. Yeah.

Nathan Latka

09:55Okay. And just to calculate growth rate, where were you exactly a year ago? Do you remember?

Growth Rate and Freemium Land-Grab Strategy

Raphael Danilo

09:59>> Yeah. So we we roughly three x ed since last year. And then the free plan is something that we launched two months ago, exactly two, three months ago. So the the strategy for us has been really about, like, really playing the long game. So I think, like, we probably could have five x this year or more if we fully focus just on revenue. But, you know, I think, like, we're in a space where it's basically a

10:24>> land grab. Like, there's a couple of other companies that raised a bunch of funding to do, you something similar as what we're doing. But there there

Nathan Latka

10:30Who are those companies? Just name one or two of them.

Raphael Danilo

10:34>> You know, there's a company called Clovers out of LA that just raised a good amount of funding from, like, you know, pretty solid investors and a couple of others. And, you know, they're they're they've raised, like, you know, 10 to 30,000,000, you know, roughly is the range. So still pretty early, but, you know, kind of, like, the stage after. And and I think, like, the strategy that a lot of the folks in this space are taking

10:54>> is focus entirely on the enterprise accounts. And I think, like, you know, it makes sense. I understand why they do it. But I think there's such a huge long tail of businesses that don't wanna shell out 10 to 20 k today, but may want to in a year or two. And capturing them today because they already feel the pain in something like a free plan and, you know, tapping into more of, a product led growth go

11:16>> to market, I think in the long run, it could be the winning strategy. And so while everybody's focused on, like, enterprise sales and, you know, paying tens of thousands of dollars to advertise at conferences, we're taking more of a, you know, hey. Let's be the easiest company to do business with. So you go on our website today, like, you can sign up for free, book an onboarding call, or explore yourself. Like, we're trying to be super,

11:37>> super easy to work with, and that's that's basically the strategy.

Nathan Latka

11:40And we're wrapping up — we have about two or three minutes left here. So we'll do this and then jump into the famous five. But in terms of funding, have you stayed bootstrapped, or did you decide to sell some equity and raise as well?

Seed Round: $2.5M Raised on SAFE Notes

Raphael Danilo

11:49>> Yeah. So we we we bootstrapped for a while, and then we we just raised our seed round earlier this year. So we ended up raising 2,500,000, mostly from, you know, angel investor operators who, obviously, as I mentioned, like, I'm a big believer in the whole operator investor model. I think it's, you know, oftentimes, like, the the most value added investors.

Nathan Latka

12:10So was there a lead in that 2.5, or was it, like, twenty $100,000 checks?

Investor Mix and Adam Grant's Involvement

Raphael Danilo

12:16>> It wasn't twenty $100,000 checks, but we didn't we didn't have, like, a strong lead. We raised on safe notes, so it was it was basically just like, you know, we set the terms, and then we brought in who we wanted to bring in. And then had a couple of, you know, cool kind of, like, superstar angels like Adam Grant come in who've been awesome to to work with.

Nathan Latka

12:36And then when you're obviously thinking about funding, minimizing dilution is obviously important. So you're doing a note, so cap's important. Most people on a seed round are doing, you know, effectively 10 to 20% if they convert it out to cap where you serve in that same standard range.

Raphael Danilo

12:48>> Exactly. Yeah.

Nathan Latka

12:49Okay. Pretty big safe. I mean, that means you was, a $20,000,000 cap or 18 to $20,000,000 cap, something like that. That's pretty large.

SAFE Cap and Valuation Discussion

Raphael Danilo

12:56>> Yeah. I mean, I I think, like, especially in 2021, like, you know, especially if you have traction and you're you're you've proven that you're you're hitting on some of the themes that will be, you know, no brainers over the next few years. You have a good team, and you've shown traction. I think, like, understand that some of these markets are gonna be land grabs, and so you gotta move quick. And so in the long run, you

13:20>> know, there every invest and we think about it the same as as investors. Like, we're looking for these, like, 1,000,000,000 or $10,000,000,000 companies when we're doing venture investments because 80% of companies are gonna die at that startup stage. So whether you pay 10 or 18,000,000 on a cap is not really like that's not what's gonna make or break it.

Nathan Latka

13:38Mhmm. Well, I mean, more about optionality, though. Right? I mean, you basically put yourself on a track where you have to do something faster. Either hit growth faster or you end up dying faster. Right? So Yeah. Why is it important to have that, like, short term focus versus, you know, buy yourself time, be default alive, be cash flow positive, and play the long game?

Why Venture Funding Enables the Free Plan Strategy

Raphael Danilo

13:57>> I think, like, as I mentioned, like, playing the long game in the sense of, for example, raising venture funding is what allowed us to play that long game in terms of, like, having a free plan, which I think in the long run is what's gonna allow us to win. Because while everybody's gonna be focused on charging $10,000 for a product that probably isn't worth it, we're able to play that longer game, acquire users, give them a

14:19>> free version of the product to, like, get them hooked, and then over time start layering on more and more of those features, more and more integrations that actually make the tool really worth it. So I think, like, the the like, raising venture dollars allows you to tap into strategies that, like, long run can actually work out better. So just as you said, it it's more about optionality. And I think you can also do it the bootstrapped

14:43>> kind of, like, look for, you know, profitability way, and, you know, we see a lot of great businesses do that too.

Famous Five Rapid-Fire Questions

Nathan Latka

14:49Alright. Raphael, let's wrap up here with the famous five. One word answers if you can. Number one, favorite book.

Raphael Danilo

14:56>> Zero to One, I would say, is the one.

Nathan Latka

14:58Number two, is there a CEO you're following or studying?

Raphael Danilo

15:03>> I think Jason Lemkin, not a CEO anymore, but a great guy to follow.

Nathan Latka

15:06Number three, what's your favorite online tool for building Yobs?

Raphael Danilo

15:13>> FullStory is awesome.

Nathan Latka

15:14Number four, how many hours of sleep do get every night?

Raphael Danilo

15:18>> I'm anal about that. I would say seven or eight hours.

Nathan Latka

15:21Nice.

Raphael Danilo

15:22>> In situation, married, single kids?

15:24>> My current situation?

Nathan Latka

15:25Yep.

Raphael Danilo

15:27>> Girlfriend, not married yet.

Nathan Latka

15:29No kids running around?

Raphael Danilo

15:31>> Just a dog.

Nathan Latka

15:32Alright. And how old are you?

Raphael Danilo

15:34>> I'm 23.

15:35>> 23.

Nathan Latka

15:36Last question. Something you wish you knew when you were 20.

Raphael Danilo

15:42>> Sleep more.

Nathan Latka

15:45Guys, there you have it. Yobstech.com, helping you do interviews more effectively faster and make sure when you end them, there's good follow-up, strong follow-up with a tech stack that they integrate directly with doing about $7,000 a month about a year ago, now $20,000 a month. So three x year over year growth scaling. They just closed a $2,500,000 seed round earlier this year at a called 18 to $20,000,000 valuation as they look to continue

16:04to scale. Raphael, thank you for taking us to the top.

Raphael Danilo

16:07>> Appreciate it, man.

Nathan Latka

16:10One 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 live. It is fun to watch every Thursday one

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