Vested Capital
Vested Capital

Episode 5 · 4 months ago

(EP5): Chris Bakke Founder Of Interviewed Acquired By Indeed For $40-$50Mil, Early Zillow, RentJuice, Currently Laskie.com

ABOUT THIS EPISODE

Chris Bakke is currently founder of Laskie.com, a startup focused on becoming the Upwork for enterprise hiring.

Previously he was co-founder of Interviewed, which was acquired by Indeed for 'mid 8 figures' after just two and a half years.

Prior to this he worked as COO for 42Floors (acquired by Knotel) and RentJuice, which was acquired by Zillow, where Chris also worked for several years.

Chris in this interview explains his part in all these companies, first starting as an early employee in the real estate tech space, which led to his first exit, gaining shares in Zillow (he explains what he did with the shares during the episode).

After a couple of years at Zillow, Chris left to work for another real estate tech firm 42Floors, rising to become COO, and again enjoying an exit when Knotel bought the company.

Chris was then 'pushed' to become a founder himself, after his co-founders won a hackathon and several angel investors where throwing startup capital at them to back their recruitment testing tech idea.

This led to an amazing two and a half years where thanks to a lot of a hustle and a 'beachhead' client acquisition strategy, Chris and his co-founders grew Interviewed to $2.5Mil in annual run rate, and then the incredible sale to Indeed for almost $50 Million.

One of the mains reasons I wanted to speak to Chris was to hear how several of the companies he worked for or co-founded were able to sell for such high multiples. He calls these 'strategic buys' and explains why this was possible in the interview.

Enjoy the discussion.

Yaro

Podcast: https://www.yaro.blog/pod/
Blog: https://www.yaro.blog/

Hello, this is Yaro host of the bestedcapital podcast to show about how people make money, build capital andthen put their capital to work. I interview startup founders, who haveenjoyed big exits, much like my guest on today's episode Angel Investors,Venture Capitalists, Crypto and Stock Traders, realestate investors andleaders in tech. These are all my favorite topics and in fact, I'm prettymuch doing almost all those things myself so obviously coming from a placeof real passion about this topic and my guest today for episode. Number five ofVESTA capital Chris backy, is a fantastic example of a start up founderwho had multiple exits and built up. Some incredible capital made a lot ofmoney by his being a great founder. He got his start in company called rentjuice. He was one of the early employees in that company, which was inthe real estate tech space that was acquired by Zilo, which you probablyknow that was sort of early days for Zilo. So Chris was a part of thatcompany as it grew and then listed on the stocking chains. Where's actuallymade some some early six figures with that acquisition and his shares in Zelohe'll talk a little bit about that. So you can what he did with that money.Then we move on to the next company that Chris started to work for fortytwo floors, which was acquired by note, and then we dived into the real storyhere, which is the company called interview which Chris was a CO founderof and that company was acquired by indeed in two thousand and seventeenafter only being operating for two years and amazingly enough- and this isreally why I want to get Chris on to the podcast indeed, and also rent uce-that the first company was a part of both these companies sold for verylarge multiples of what they were actually doing in terms of revenue atthe time so with, for example, interviewed that company is doing abouttwo and a half million in annual run rate. Yet it was acquired by indeed,for he said roughly mid. Ah Figures, which means somewhere around the fortyto fifty million dollar mark and rent juice, was acquired. Also for aboutforty five million dollars- and it was only doing a coining to Chris abouthalf a million a year in run ray, so these are very large multiples of whata company is doing in in annual revenue and probably even less in profit. Toget these mid, eight figure deals. That's very unusual and I was just verycurious. How is that possible? And Chris does a great job to explain whatleads to US strategic buyer like that, paying these higher multiples? Itreally involves the right state holders being involved and when I say stateholders I mean both the investors and the clients. Sometimes an investor is aclient. Sometimes investor is a client and investor and then becomes theacquirer of the companies are going to hear. All of that, and all that kind ofcame together from Chris in this really exciting interview, and we also talk alittle bit about what Chris did with all the money he made from the sales.So if you go all the way to the end, we talk what he did with his capital greatinterview for anyone who's interested in how to grow a tech start up Chrisoperate in two spaces in the real estate are a real estate tech and thenin the HR recruitment text, space, which is where his current start uplascio operates in as well, so he's still in that recruit in space. I lovethis. I know you will too before I hit play on this interview. I just want toonce again mention my company in Box Dono, which actually tied in reallywell to the day's interview, because we talked a lot about hiring, which iswhat Chris did with his company interviewed and what continues tohappen with. Indeed, and funny enough, my own company in Buxton, we had someof the same practices in place when we hired or when we hire people to manageyour email for you, which is actually what the company does we're an emailmanagement company we provide a human being, who will take over managingorganizing and replying to your emails for you. So if you're a busy founder,professional entrepreneur management, executive, someone who has too muchemail- and you want to break free from that- let someone else handle ninetynine percent of your email, including applying to your messages and buildinga real system to handle that for you. So you can focus on what's important inyour life in Your Business and get to work on what really matters to you. Weare the solution. It's in box done com. Okay, let's begin today's interviewhere we go okay, so I'm here with Chris Barky today, for what I hope will be areally interesting interview, because Chris has got such a good background interms of starting companies and selling or getting acquired very quickly. Oneof the things I noticed about your companies, Chris, you seem to scalefast exit start another one, so love to hear all those stories, I'm just goingto read off the ones in your linked in profile, so I can get them all right.You're, currently, the founder in co of Las Kio, which we'd love to talk about,you were the coloner interviewed, which was acquired by indeed in two thousandand seventeen. That's the one. I read a little bit of an Ama on Indi hackersabout how you sold that and you getting like a mid eight figure. Dealsi AmazingCo. Forty two floors: You worked for...

Zilo for a while and rent juice, whichis required by Zelos. I'm assuming that's how you started to work for themand I believe referent juice was your first company that was also sold for amidday figure deal if they veen correct. Yeah Yep was a employee at that one andthen found her interviewed and now askin, okay, so there's so much there.I'd actually love to go through this in chronological order, because I thinkit'll build on each other. So you might. If we go back in time and talk aboutChris even before school, were you entrepreneurial in any kind of way?Yeah, a little bit grew up in Colorado, so I was always shoveling, snow andstuff for neighbors and mowing lawns and that kind of stuff. Definitely Iwas starting little side businesses, I put a plastic tarp down the side of myParents Hill and would charge neighborhood kids like twenty fivecents to slide down. I like put the garden hose up there in retrospectives,probably using like forty dollars of water, to make like three dollars perday during the summer. But you know my parents didn't seem to mind so littlestuff like that here and there growing up and then I think, as I got older.Actually I approaching kind of high school college had less of a desire,maybe to actually start something kind of always assumed that I would be anemployee at a big company, and that was- and that was fine with me. Then itwasn't really tell like right when I was graduating college that I sort ofgot the bug to dive into a start up, and I figured sort of the best way todive in would be to you know, apply and kind of work. For Somebody who is agreat entrepreneur and join as an early employe, learn first and theneventually, five or ten or fifteen years down the road kind of start. Myown thing that's sort of what happened. Okay, so at university you studysomething related to business or something else. No political sciencewas was very eager to get out of college, didn't really particularlyenjoy it kind of coming in thought. Maybe I wanted to be a lawyer sostudied you know, pre law, political science and then kind of rush throughthat degree didn't change it because I had already done some pre law classesso powered through in like two and a half years, which wasn't you know thatI was particularly intelligent. I don't think it was just. I took a ton ofclasses like over the summer and what not so I did like you, know just fineand did kind of the bare minimum to get through and get the degree and thenyeah, I think very quickly into that experience. I saw all of the other kidsaround me who were actually wanting to be lawyers. I think you know. Irealized exactly how much boring reading being a lawyer actually is- andyou know, became very uninteresting to me quite quickly, but I really at thatpoint didn't quite know what I wanted to do. I think I was I was leading moretowards something real estate. I was interning with a couple kind of realestate, private equity companies throughout throughout college over thesummer when I was taking summer classes and so that life seemed a lot moreappealing than being on sort of the law side of a real estate. Can we time snapthis like? Were we looking like one of the COM bubbles was around? I hat wasaround you in terms of the the economy at the time yeah. So this was, I guess,started college in two thousand seven. This is kind of like during was like myfirst year of college. Everything was great and then the last kind of yearand a half two years of my final two years of college, you know two thousandand eight thousand and nine, and so was- was working for a private EquityCompany in college that was buying mostly commercial, real estate andcommercial mortgages, in Los Angeles, for like somewhere, between, like sevenand thirty cents, on the dollar, from where they were priced in two thousandand seven, and so that whole world was quite fascinating and it was clearlyyou know there were. There were crazy deals to be had if you, if you had thethe relationships to get, you know mortgages and get loans, and have youknow capital kind of in the wings, and so I worked for a company and it hadabout two billion dollars under management as an intern and thenactually joined them very briefly out of college before that. First start upand just kind of almost like family office money, and so that was veryinteresting and I was interested in like being the person who is running afamily office as like the the kind of soul LP. But I think I was alsointerested a little bit in like the operations of real estate, and that'sspecifically, why then, in twenty ten kind of coming out of college afterthree years I joined rendue and rent juice was a residential real estate.You know software company, and so that was sort of how that all I guess,aligned and at the time to thousand ten, was particularly interesting and happyto get into it. But what you generally see, at least in the US, with realestate professionals. is you see this massive number of people gettinglicensed in two thousand five thousand six, two thousand and seven all ofthose people who got brokers, licenses or agent licenses in the US stoppedpracticing in two thousand a D, eight thousand and nine, and then this wholenew flood of people's coming out in two thousand and ten, who necessity, whodidn't necessarily get burned by late, two thousand and seven thousand andeight thousand and nine and all of a sudden in two thousand and ten twentyeleven things are amazing. Again everybody wants to be buying realestate. People want to be selling real estate, certainly not true. Throughoutthe country I mean there's still markets ten years ago in two thousandand eleven that were that were very hard hit. Parts of you know Arizona,Nevada, Florida and what not, but in a lot of the markets that first start afront juice was operating in. You saw just this flood of peoplea kind ofcoming into property management and...

...into mortgage careers, and certainlyinto kind of the sale side of real estate as well. Tell me more aboutrente. So what exactly did they do and then why did you choose to join them?As with many early jobs really careers? It was just all quite lock afterworking for just a few months. I don't even remember how long it was, but Ithink full time I worked for like six to twelve months after college at thiskind of family office, in in Los Angeles, doing real estate, privateequity and working there as an intern was quite different from working fulltime, actually quite hated. The experience of being you know like thelow man on the totem pole and just having to do all the all the sort ofshit work for very, very little pay and watching sort of the BPS and thepresident and all the family that the sort of this lp get extremely wealthyin that period, and I just saw like ahead of me. It was like. I alwaysimagine that this was the dream I loved real estate. I came to love, I thinkthe private equity and investing side of real estate and all of a sudden, Iwas like twenty one. I guess at the time had graduated from college and waslike you know. Do I really want to stay in this role like looking at the sixtyyear old guy, who was like in a VP title at this? You Know Company goingokay, I have to work here for forty years to like work. My way up to be,you know, making real money and at that's, obviously not true everywhere,but I think with this like isolated vision of what this company was had a alike friend of a friend who is also in real estate, in Los Angeles. Heintroduced me to a good college friend of his who was in Boston at the timeand had just kind of moved out to San Francisco had started a company whilehe was at Harvard Business School, take around two thousand and nine kind ofturned it into a company. I think Lake Thousand Nine Thousand and ten and thenmoved out to the bay area and was hiring had raised kind of a seed roundand was like a son pace to raise a series, a and so joined as a sort of abusiness tire there. So it was sort of through a connection in real estate. Ididn't have any experience. I never had a desire to be a software developer ora product person. I didn't really know what technology was, but I figured theylike. You know part of being a analyst at a small real estate. Private EquityCompany is that you do have to go gather information. You have to talk toa lot of people you're constantly on the phone you're, sending lots ofemails you're out in person, sort of you know shaking hands, and so, if Icould do that, then presumably I coul do it everywhere. So just decided tolike jump into this kind of really sales role and really sharpened thatskill of software sales essentially see I rentes was a. It was ultimately acram for the residential real estate industry. So all these people that areflooding into the real estate industry and getting licensed it was very hard.I think, in two thousand and eleven to actually track all of your differentdeals. So if you were an agent to a broker in Miami in New York, ChicagoMiami, any one of these kind of major markets where things were reboundingquit quickly, what we saw was a ton of real estate brokers and agents thatwere primarily doing four sales stock in two thousand five thousand. SixtyThousand and seven were now shifting over to rentals, and so this cram inthis company got really good at the rental side of real estate selling,mostly the property managers and agents who are managing rentals on the side.There's a very kind of cheap, affordable solution, mostly selling toindividuals versus to kind of large companies, and then that company grew.I was there for, I guess about a year and a half two years we were acquiredin two thousand and twelve for forty five million dollars by Zilo, and thenI joined Zilo as kind of leading business development there right aroundthe time of their IPO, our whole team sort of joined and many of that teamactually still almost ten years later. Still there ironically, but yeah it was.It was a great place to work. Zilo taught me a lot about sort of how a extremely fast growing company did.Things was a very different company, then than it is today much smaller.Obviously I think when we joined there were three to four hundred people. Iwould guess, there's something like six to ten thousand people. There kind oftotal between all of the main employees and the contractors and stuff at Solonow so very different time, but learned a lot and incredible leadership therefrom a team perspective so from the the rent, juice experience and and the Ziloexperience, which included the acquisition. Were you early enough,rent juice that you were given some kind of like shares? And I know youwere coming from this experience with the like the family office, where yousaw other people getting rich. But after a very long career was the rent,uce experience kind of meeting the need to increase, how much money and howmuch capital you were making, or was that really just a stepping stone to tothe next thing that came along yeah yeah? It was interesting. It was likeit was. It was a ton of money for me at the time, but I don't even rememberexactly exactly what it was because we had shares yeah, because because I hadbecause I had chairs, I think everybody had some sort of very meaningful allthe way down to very minor stake in the company. I think, by the time we wereacquired, it was something like thirty one people was that the company size orhead count sides of a Renche, so everybody had chairs- and I was sort ofin this interesting middle pack, where...

...you know the founders got extremelyrich. I wasn't a founder and I was also on the sale side. So I think theengineer is also made like significant money, but I was really enough on thesale side and then the stock price did did well enough that it continued to goup. I think the effective price there were actually two stock pots at Zilo,so the effective stock price was like. You have seven dollars per share, it'ssomething like a hundred and ten dollars per share today of zoo, and so,if you had actually held onto that, you've done, you know very well. Didyou half of it so Kay Funny Story? I don't even remember what the amount wasbut made something like you know, a couple hundred thousand dollars inequity wall between the acquisition and from working at Zelo. I sold like ahundred thousand of it very quickly, took that into five small down paymentsfor, like a hundred to hundred and fifty thousand dollar homes in NorthTexas, sort of decided that okay, we had sold software, two propertymanagers and landlords. I wanted to now start sort of building my real estateportfolio to be catchfly, those properties buying properties in twothousand and eleven two thandy twelve in North Texas. The cash opportunitywas phenomenal. The appreciation was terrible. You know, especially relativeto zoos stock. You know going up something like fifteen x or whateverover over that same time period, but you know I was glad I did it. I sort ofdipped my tone to into real estate investing and then ultimately joinedforty two floors as an early employee. Again then, she became coo of thatcompany and that company was acquired by Otel in, I think, two thousand twothousand and eighteen, but I joined in o thousand and thirteen, and that wasthe commercial real estate version of Zilo sort of helping people find andnavigate finding office space. Finding retail space things like that. Okay andI'm guessing as the Col, you are also a fairly large shareholder by the timethat was acquired to yeah exactly so started off in a very vague as an earlybusiness higher. I think my title is just like business operations for along time, ultimately sort of took over a lot of the financial aspect, salesaspects and operational aspects of forty two floors and that company hadsort of a crazy venture story where the the founders had raised something liketwenty. So I think it was like twenty to twenty two million dollars, prerevenue, which this was happening in like two thousand and twelve, twothousand and thirteen. So it was you no company like are doing that all thetime, but at the at that time it was relatively unheard of for a company tohave raised so much, and then I think when I was hired and several otherpeople were hired onto the growth side and the product side, and you knowmarketing side and things like that. It was really hey. We have this incredibleleadership at this company that was able to successfully like create thisvision. For what the commercial real estate version of Zilo actually is nowwe need to execute. So how do we find customers? Who are our customers? Arewe selling to agents? Are we selling to tenants? Are we selling to landlords?How do we monetize, and so all of that was sort of figured out over? You knowroughly two years, and you know very fun experience and then, after aftersort of working there receiving to decant equity, but ultimately not beinglike the person in charge. As you know, a non founder decided, I really had theedge after. I think something like six years. Five or six years combinedworking in these early real estate, tech companies and in two thousand andfifteen then started interviewed for the first time as a founder yeah. Soyou ready came in to interviewed with a lot of experience. I mean two exitsworking at Zilo, a massive company. You would have seen everything from startup phase to IPO phase and beyond and besides seeing those companies grow,you would have seen yourself evolved to I'm sure in your skill set what youwere getting good at. You rose to cool within a company, so you're, obviouslynot just a sales guy. You must be an operations guy as well. When you wereabout to then start for the first time, your own company, with interviewed. Howdid you make that decision of what market to go after, given everythingyou had done up to that point? And what was your strength at that time? Yeah sothat the sort of you know easy, revisionist history, so to speak. Rightis always that, oh you know I was working in this Real Estate TechCompany, and we came up with this idea that was in ultimately sort of thetalent, an HR and recruiting tech space, which was an assessment company andsort of the history was about a year before we started the company. Our Cohad tasked myself and one other person who became my co founder. He was thesort of head of growth with the company to figure out why we were having somany problems as we were sort of Blitsens this company, we went from youthink, like eight or ten people to sixty or seventy people. I like a year,and so as we were scaling rapidly, we were very effective, highly effective.I think at hiring and retaining really high quality engineers along the sametime frame we had churned through and like made so many mistie along, likecustomer support sales marketing, basically a non technical roles andsort of what it came. Downto was a. We...

...had engineers and engineering managerswho were trained in technical, interviewing and technical hiring, butwe were also starting to use things like you know. I think hacker rank andwhat not that were coming out of that that period, which are these short tomid lent, you know technical screen so that we could actually do a skills testbefore somebody was hired and that really didn't exist for the most partfor non technical, like everything still today for most jobs, butcertainly then in two thousand and fourteen we were hiring customerservice people based on Hey. Do we get along with you? Do you sort of pass theairport test? You know if we were stranded in an airport together? Wouldwe get along for six hours with a layover or something like that, but itwas. It was a very flimsy way of hiring. How do you test? For that? I mean it's.A soft test right is like it's basically do we get along with eachother and that's like a terrible way to hire, but I think that the reality isespecially for a lot of young companies with young managers. Young founders,that is just the sort of de facto way of hiring, which is you know, higheryour friends and a lot of times that works really. Well, you get outside ofthat core circle of friends where you actually know their strengths andweaknesses, and in two hours, you're sort of like hey what I get along withthis person. The answer may be yes, and you build this like very deep, robust,awesome culture, but then nobody actually knows how to do their job,because you've just hired like fun people to work with versus like hardworkers or workers that are actually skilled at porth marketing or acustomer support or whatever it may be, and obviously some of those skills arelearned and can be developed and sharpened, but that's an expensivetraining if you're hiring fifty or sixty people in a year. That reallydon't necessarily have the skills, and so we were turning through a lot ofpeople. We decided to figure out how we could hire better people and we starteddeveloping these basically like work samples in house where win a salesperson would come in part of their top of final interview process was to go, Iwould send them a google sheet and they would have to respond to three actual,like customers who are interested in purchasing. You know the forty twofourth platform, and so we would see their rating communication skills wewould see. Can they actually write a cold email? Can they respond to acustomer for customer support? We would give them actual and desk tickets ofangry customers or happy customers and see how they would respond, and so hecreated all of these, like situational interviews for every role and all of asudden hiring started getting a lot better, but internally, these wereexpensive to maintain, because I was having to come up with every single onefor every role I would have to like manually, send a link and have to likethen share that shared Google document with a bunch of other people on theteam, and so we kind of thought hey like we should productize this, and sothe two people that became my co founders were both technical andexcellent engineers, Daniel and Darren, and the two of them entered a Hakata inearly o thousand and fifteen. We were all still working at forty two floors.They ended up winning this Sacaton, where we sort of built the MV of likewhat a work sample or case study based, hiring solution orproduct would look like, and so the reality is we got forced into it like.I don't think we any of US would have actually created this company. Theproblem was, we want this Sacaton and it was from Sion banister who later wasat counterpane Jason Calcano, this pretty like stellar line up ofinvestors and they all pulled their money and gave us a hundred and twentyfive thousand dollars for winning as like an investment, and they said great,like this company is awesome, you guys are going to make it. We also want toinvest additional money. Where should we wire the funds and it was like wedon't even have a company, we don't have a bank account, so we had like anextremely hard decision to make that weekend, which was we had one to hacketon. It was in this sort of like talent, hr tech, hiring space. We had four orfive legits kind of Silicon Valley vs, who wanted to invest additional money,totaling about three hundred thousand dollars work and we wire. We don't havea company, we don't have a bank account should we create a company, and so Iwas a spur of the minute decision. I was actually probably quite burnt outof real estate tack at that point as well, and in the back of my mind formany months I was saying I do want to become a founder. I have no idea whatthe idea is. So some founders, I think, go through these multi month, multiyear, customer development journeys to figure out what they actually want towork on. This happened very quickly very accidentally, and I remember thatMonday or whatever the three of us quit our jobs. We left. We luckily had theblessing of Jason, who was the co of that company to like, come on as anadvisor and help us, and he invested money and invest a lot of time in us,so it all worked out, but I do remember the feeling of like Oh shit. I justleft this like very hot, extremely well. Funded Start Up is like a twenty fiveyear old being there Clo to go basically make like no money with threehundred thousand dollars in the bank. Now we have to go higher engineers. Nowwe have to go like figure out. How do we actually like develop this into aproduct and that was sort of the beginning of interview yea, so I'mactually a part of Jason Syndicate. So I see a lot of Jason and he's a verypersuasive guy. I can imagine you know it would have been exciting to want towork with him as an advisor investor yeah he was, it was very excited. Imean it was at launch, so his like festival was the hackets on and yeah.He and a bunch of his friends were the first D. You know three or five checksinto interviewed okay. So I love to...

...talk more about interview. Then, is ittwo side to this because you grew this fast? I remember Reading Your Ama, soit's like you went from. It sounds like this Hakata to exiting in two yearstime with the sale of the company to indeed for and if I'm pret wrong. Yousaid mid a figures. You were sort of saying around the fifty million dollarmark in the MA. That's fast! THAT'S A big number! Now what I loved about thatnumber, though, and I'm very curious about this, as you said, you know, youwas doing like two and a half million Arr two million a year so to sell atthat. Multiple is incredible before you answer that, because I'd love to talkabout that, I do want to know how do you grow a company in two years andespecially because you said it was founder, lead sails. It seems to besomething that you've become a bit of a specialist at. Can you men must takethis forward, so you've accepted the investment from Jason and his friendsand got three hundred thousand in the bank. You've got two technical cofounders by the sounds of things, so you've got a bat, a version of thisplatform for kind of doing a testing process before you hire people you're.Obviously the sales, maybe founder, so CEO, you kind of doing a lot ofdifferent things, but you're, not the tech guy. Basically, what do you donext, like? How do you day? One start growing this business, because Inecligent I assume right. So what do you do? Yeah? We can dive into each ofthose things I'll start with the clients. I mean the clients was another.I mean it's just pure hustle in the beginning, so we have this idea. Like Iremember all. I think we did this a athon call like March eleventh andtwelfth we sort of left our start up on like March thirteenth and then, likeyou, know, Monday march, fourteenth. Let's call like seventy two hours laterafter we said, like you know we're just doing. This is a fun Hakata, we're likesitting in my co, founder Daniel's house in the Hespen San Francisco,going like you know, kind of like literally. What do we do, and luckily Iended up having two co founders, who were not only technical, but they hadalso built and sold startups themselves before, and so it wasn't brand new, andI would say it: That's like a subtle thing that I would highly recommend ifit's your first time as a founder, it doesn't always work out and I think itactually probably it just a lot of luck, but the fact that they were with alittle bit older, had had a lot more experience, sort of in and aroundstartups and had actually been founders prior to being early employees of aforty two floors was very helpful, and so it wasn't quite as sort of what do wedo next, maybe at the at the time for them. But for me I think it was likehey guys. What are we? What are we doing here and ultimately we thought.Okay, you know we're taking a bet that we're not the only company that hasthis problem. We can't be the only company that really sucks it ontechnical hiring and so actually, we sort of developed at forty two fours.We had this relationship with a company called task us that was based in LosAngeles. They are going public soon. Actually, but at the time it was thissort of small customer service as a service like they were taking, callcenters and scaling them in mostly Manila in the Philippines, at thatpoint, but eventually expanded to India and San Antonio and Mexico sort of allover the world, and so big companies were starting to adopt this to do. Dataentry, outsource customer support, content, moderation, and so we built avery quick relationship with the founders we had used them at forty, twofors and so we're sort of like hey. We were previously a customer o you guys.We took a bet on you guys when you were early. How about you take a bet on us:you're hiring all of these remote customer service people all over theworld. What is your screening process look like and why don't you pay US justa couple hundred dollars a month? I don't know what you actually get forthat, but, like sign a contract, I think it was for five hundred lars amonth, and we will just like help. You figure this out. We you know made uppricing as we go. That was ended up being obviously orders of magnitude toolow for an operation at tiring and screening thousands of people, but itdidn't matter. It was our first logo and we sort of developed this frameworkactually very quickly, which was logo, learning and lettuce. Like lettuce issort of cash money. Logo is, do we get the Loga from the customer and can weuse that logo to then sell to other customers by saying hey? We have thiscompany task us, that's using us, will other outsource customer supportcompanies and by the solution, and they did. We really went vertical byvertical, starting with call centers and started going down this rabbit holeof. If we get one big outsource Call Center Customer Sport Company, There'sthousands of these companies out there we can get five more and once we getfive of those, let's find like another into a company. So it was just a ton ofcold emailing. It was a ton of hustling. It was a ton of tapping our existingconnections and yeah. It was. It was all sort of founder, led sales up to, Ithink, a little over two million in Arr. So for eighteen months it was myselfout there selling send sending again a lot of cold emails. I think we had it.We had a a sight advantage being based in the bay rea. We had a bigconcentration of bay area based company, so the time were quite small. Iremember pitching door dash when they were like seven or eight people. Theyrelanded them. As a customer R, we were...

...at Ober's offices when they were fairlymassive, but not quite what they are today in early o thousand and fifteen.We were at lifts offices when they were about three years old. We sold theKanva like thinking about these companies. We were just like it, welocked out, because we picked a product that the money scales as that, as thatcompany naturally grows like if you're paying per candidate, that you'resending through an assessment. It's very easy to land can va or lift orwhatever, when they're fifty or a hundred people, it's very unlikely it.They just like strip out that solution at the point there three or tenthousand people, and so we accidentally again got lucky for you know, seventime, as I've said, I don't think it was scale it was just like we werearound all of these other companies and we were using their products. They wereusing our products, and so it was very like on the ground sort of in personDamos of this product and getting it in the hands of early customers. That's anamazing list of companies that were early like that are now every one ofthem, I think, is a billion dollar plus company check me through a process ofso you're in the door dash office or over or Cambo whatever? Do you just doalmost like a madman style presentation of your your software and and what itdoes and also how did you charge for what you did yeah? So I think theanswer is yes, I mean we had a we built had a sales deck. We had a product wefocused on getting to demob wire frames very quickly, so the product didn'tnecessarily work that first five customers were definitely taking a beton the on the fact that we could make it work and ultimately, what the visionwas was taking every candidate that you're sourcing from all of thesedifferent job boards and running them through interviewed to do you know anassessment, and then we would take those results and instead of justseeing a person in their resume, we would enrich that with, like all thisadditional data, how are their written English skills or verbal English skills,or you know, written proficiency or conscientiousness and all these sort oflike soft skill things as well, and so we had this like range of assessmentsand work samples. That was, you know mostly very realistic, and we were wedid like an integration with grammal. I think to do like spell checking andword count speed, which is super important, Frenchy level, customersport, and so he would enrich the resume at all of this extra data thatyou could get on a candidate when they applied, and so that was like thevision that we were selling who would go into their conference room. Iremember pitching in Stacatto Door Dash, but she knew, but it was all sort ofthe same. It was showing this demo of like picking a roll off of their siteand saying you and uber are hiring for lots. Customer support, maybe at doorash you're, hiring lots of drivers or lots of delivery. People pick thenumber one role that we think their talent team is going to have a hugeproblem with today and really the pitch was you know into recruiters? How doyou make a recruiters job easier like no recruiter actually wants to besitting down and going through. You know a thousand resumes per day, and so,if you can give them data, if you can give them signals on who's going tomake a better, not even a better hirer but a better interview, so that you canbe hand picking the top ten or twenty percent of candidates versus just likereading their resume and then trying to infer without ever hearing them on thephone without ever seeing something that they've written, whether theywould be good on the phone with customers or good at resolving customersupport tickets, and so that was the type of data like you could go through,and we were doing these like very short sort of thirty. Second, like videointerviews, so it could have been an introduction. It could have been like asample called to a customer, but giving you additional data points on what thisperson would be like to work with was sort of what the dem it was, and thatwas you know ultimately sort of what we were pitching and how much he chargedfor the first five or ten, maybe even fifteen customers. I think it was aflat monthly rate that probably got us to a hundred thousand dollars inrevenue. I would say, with the first ten to fifteen customers, all chargingthem between one hundred dollars and two thousand dollars per month. Twothousand was sort of an outlier, probably mostly in the like threehundred to seven hundred and fifty dollar a month range and- and there wasno like rhyme or reason it was sort of like we think we can get companies topay this out of their talent budget. As we grew, we started growing intocompanies that were doing extremely high volume hiring. So I think wesecured lift as a customer first, but then we were going to Uber, but at thetime was significantly larger than left is, is like two thousand and sixteenmaybe and pitching huber. We pitched bell so Balan Canada was one of our bigcustomers. Tellus international is one of our big customers. Ib M was a bigcustomer. Fidelity investments is a big customer so, as we started pitchingpublicly traded companies or companies that had over, you know tenor and somecases over a hundred thousand employees. We just said: okay, our cost isbasically the same, whether you're running a hundred candidates, who are ahundred thousand candidates through, but the value to a company increasessignificantly based on the amount of candidates that you're actually runningthrough. This sort of you know simulation of this assessment, and sowe started charging per candidate and then we eventually landed on a base fee.So there was a minimum threshold that you had to spend, which I think for alarge company was probably something like two to ten sendollars per month.It's sort of a base software fee and...

...then for every candidate that you hadrun through, which for some companies was you to tens of thousands ofcandidates per month. We would charge you a small amount and that smallamount, I think, ranged from maybe a couple cents per candidate at the lowend up to like a dollar or two dollars at the high end kind of depending onthe volume, and so we got to two million dollars with a fairly smallcustomer count. I think we were at about sixty customers when we hit twomillionaire R and then from there we were focusing on just bigger and barerdeals. So just to clarify is you know a hundred percent Sass like it's all thedelators. There are a human component, because I'm thinking you can askquestions to a typing test, but you said: there's some video recordings. Isthat just a case of them logging into the software and recording the video,so there's no human side of what you did right? It was just video capture.It's a good question, though, because, interestingly right before we wereacquired, we actually started building out a small team who would actually besort of human Qa people or human interviewers. Who would then watch theshort video clip again? I think averaging about thirty seconds and giveit a score so, depending on what the client actually wanted to infer fromthat video, so that their recruiting team didn't have to watch. You knowtens of thousands of these. I think, for an additional like two to fivedollar per candidate. This team would like watch the video. The short videointerview would read the that work. Samples would actually read the resultsand give like. I don't remember if it was a thumbs up times down orpercentage score, but they would give some sort of like score or feedback. Sothen the company wouldn't have to have their. You know talent, a position,people watching all these videos, and so that was an ad on service. We onlyever hired a couple people for that team and I think we had this idea tostart augmenting that service by you know several dollars per candidate,maybe three to six months before the acquisition. So it was. It was a sortof a promising part of the business that just never really took off becauseof timing. It's funny hearing, you say all this right now because well, a I'vejust posted a job to indeed the company that acquired you guys, and I take thebox to have some of these pre tests done before the caddis get to me. Sothat is clearly your responsible for that and that happening to. I run acompany called inbox ton, I'm a CO founder of it. We provide basicallyemail customer service agencies we do over. We do your email for you, replyto your messages and that company was born from me being a customer andmeeting my email out source, but part of the hiring process for what we do isvery similar to what you're talking about like we ask people to you.Imagine these are some of the emails you had to reply to them. We test yeah,your writing speeds all these kind of pre qualifications, because if we get ahundred applicants, maybe one of them makes it through to the end to gethired, and we start doing that for another company. I had a coachingbusiness, maybe six seven, eight years ago, we brought it in with in box tonand it is so important when you're getting waves and waves of applicantswhich ultimately are kind of low quality. So it provides like a barrierthat people have to jump over before they even get to the next kind of phase.But you turn that into software, which I think is that's the real genius partof this plus. I think it's fair to say the fact that you are- and maybe thisis my next question for you. If you can tell me a bit about the founder, ledsales aspect of this before we talk about the acquisition, it sounds likeyou kind of had a beachhead strategy with marketing where you said you wouldget like one client in this industry we're doing this. For them they love us.We could do it for you. It helps with your hiring process, there's socialproof, because this company, probably your competitor, trust us, and thenthat gets you at least into the door where you can do that presentation. Youtalked about, and then you do, that for each company within an industry andthen you can maybe get another beach head like once you got lift you can getover and once you get you know door dash. You know you can get anotherdelivery, food company and so on. So maybe I've answered the question foryou is that basically, what grew you to a sort of two million year run ratejust kind of beach head more face to face meetings and presentations and,like you said before, really hammering the outreach with emails to get thatstarted? Is there anything else that kind of? Is there a secret sauce behindthe scenes that really really helped you to scale to that size? No, I thinkthat's exactly right. I mean I, I think the thing the thing that I would add isother call center companies. Other housers companies would care a lot thatwe had one and then three and then five and then ten other bpe other outsourceor other sort of like call center customers, maybe even at two years inhaving Ibn as a customer, was impressive to them, but it was likethey were much more interested in. You know task us, the small company thatnobody outside of that industry has heard of because it's like okay,everybody knows that task. US IS SUPER fast growing. You know, assuming nowthey ended up going from. I think, a thousand agents to like fifty hosenagents in seven years time or something like that. Soo, crazy growth, buteverybody in the industry knew them and...

...then similarly, a lot of old schoolsort of blue chip. Tech companies were super interested in the fact that wehad im- and I think maybe the way we got im was getting drop box orsomething. So it was this like leap frog to get bigger and bigger clients,almost all within four vertical. So we focused very heavily on out sourcingand DPOT kind of early stage technology, which then grew into blue chip,technology, financial services and telecom. So if you look back at almostall of our customers, they were almost almost for verticals and then it wassort of accidental again. But when I hired my first two sales raps eighteenmonths to twenty four months into the company about six months before ouracquisition, we just said like how do we want to chop up the world? I thinkfrom a sales perspective, you can die divide it by my country or by region orif you're, only focusing in you know, Canada and er the US in North America.You can focus by you, know, geography or by East West Coast, whatever it maybe, but we just focus by you know: Company Vertical, and so I was goingafter early stage tech. One of our early sales reps was going after youknow financial services, one of them was going after telecom, and so youalso get really good at speaking that language and selling into those rolesand sort of saying you know, I know all of your competitors were working withthem and you can sort of increase the price. You know as you go, okay and itmakes a lot of sense, so kind of rounding out towards the end of theinterview. Chris I've got a now, so you managed to sell interview to indeed forlike a minate figures, roughly fifty million dollar price tag with only atwo point: five million annual run right. So that's a much bigger multiplemost companies, which are assass aim to like a three to five to six times.Usually, profit margin actually for a multiple. So a two and a half MINOLAcompany, maybe to ten million as the stretch goal, would be possible becauseso obviously there's that's, not a hundred percent margin, so more luckyto sell for like seven eight million dollars but you're talking forty fiftymillion dollars. So there's something special going on there. Could you maybetell us why you were able to sell for that much, but also just take usthrough, even why you decide to sell and how the acquisition happened yeah.So the piece that I had sort of skipped over was the the funding piece. So atthe point that we sold, we were we were lightly profitable. We were a prettysmall team, but we had we had taken on about two million dollars total thatfirst, three hundred thousand is an investment from from Jason Palicanusand Sin Banister, and a couple of the other kind of early angel judges, twomonths into the company and we applied to Y combinator. We got in we wentthrough after why commodate we raised about one point, six, one point: Sevenand of that capital. Again we were quite strategic in deciding to raisefrom strategic investors, and so the majority of the capital came from threecompanies who were deeply invested in. You know future of work, HR, tech,talent, tech, whatever you want to call it. Businesses indeed invested as anentity through their HR tech fund, which was sort of a early stageinvestment vehicle if they had only done two other checks out of sort of inthe history of. Indeed, as we were the third company that they had backed, wealso raised from work day ventures which was kind of a similar early stage,like probably fifty million dollar fund. I think workday had been public for awhile by this point and so big public. You Know Ats Twenty Billion DollarMarket Cap Company, putting fifty million dollars to work an early stage.Very you know not meaningful of the time for them, but having indeed as alogo on our cat table, not only, I think, helped us hire really highquality people, but it also you know, selling into talent teams when, inthose early days, when you know we only had two or four customers but sayingwe're back to by indeed and we're back to by work day and we're back to myApollo, which was the other big one. That was investing a lot of reallystage education, tech, HR tech. Things like that, and so they, those threecombined were about fifty percent of the capital that we did raise, and thenwe also went after a bunch of sort of future work, founders and angels andadvisors and got them to put really small. You know five or ten or twentythousand checks in the company, and so we had actually built the relationshipwith indeed, first as an investor. After two years they became a customerwhere, similar to your experience, posting jobs on indeed, you know,there's there's ultimately a spam problem, call it right when you'reposting a job, and so you post a job. You get hundreds of applicants. How doyou now sort these applicants? What do you do next? The de facto thing is ahas been go to the resume, and so we sort of built their relationship as acustomer, and then indeed is one of these companies that you know.Ultimately, you know their thesis at least at that point it may have changed,but they really like to build or they like to buy. They do not likenecessarily the long term partner option. There are some exceptions tothat, but if you look at recruit as a parent company of indeed this, you knowsixty billion dollar market Cap Japanese conglomerate that ones indeednow they also own glass store they own RESECA, they're, sort of rolling up toHR tech, industry, yeah, and so that was that was s just a big evolutionfrom your investor to partner customer...

...to like hey this kind of makes sensefor all of us. Incidentally, that also, I think, helps with your your exit orwith your you know, valuation, because at the time we didn't know it at thetime and at the time we were in this perfect storm of, I think, where youwant to be as a company we were profitable. So we didn't need to raiseany more money, and I think you know indeed knew that Ventricosus knew thatwe also had the option ality of growing very fast, where we could raise ventureif we wanted to, and so at the point that we required. We were sort of inthe middle of raising a series a and then the third option is we can sell,and I think the decision for us to sell was ultimately non. Technical Assessments is actuallya quite small market, and so it's there's, maybe a hundred milliondollars to spend in the US. We had very quickly gotten it to like two or threemillion dollars, an Arr which meant that, like you know, a captured, calllike three percent of the market relatively quickly and there wascertainly room to grow there, but I think the fastest way to grow as with apartner that already had. I think, at the time of our acquisition for context.We were running about a million candidates. A year through interviewed,indeed, was seeing two hundred million candidates a month, apply to you knowtheir job board. So the orders of magnitude that you get you knowannually on those differences and sort of like candidate run rates, was thatindeed, was like the perfect partner to like take this business to the nextlevel, integrated into their systems and sort of scale it and we lovedworking with the team. On the investment side, we loved to work,commit the product team sort of as a partner, and then you know thecorporate development team. I think it made a lot of sense for us to link upso they just approach you and a deal got done basically Yep, so we hadoptions on the tables kind of remain profitable, raises series a or sell to.Indeed- or there was a there's actually another partner who I think kind oflegally, we can't discuss, but they were another big player in the HR textpace and I think that combination of everybody wants to have the best dealon the table. I think that's how you go from a three or five or six ex returnon you know revenue, let's say for a SASS business to a you know, ten ortwenty five x. The craziest example of this actually is, you know, rent juice,the first company that I worked at. I think our air are at the point we wererequired for forty. Five million was like five hundred thousand dollars ayear, so that is like a strategic that at you know, eighty or ninety exrevenue, whatever it is on that company and on integrating that software withina now like massive company- and I think it happens, you know it doesn't happenall the time, but certainly you see companies get bought, pre revenue for alot of money. You see you do see these, like you know, ten or twenty or thirtyx, multiples. Every now and again yeah. I mean it's rare by the sounds ofthings like I see so many companies yeah that just you know, exit for acouple of million when they erready doing half a million, but yeah it'sgreat to hear behind the scenes now. I know you've only got another three orfour minutes I'd love to know about. Last year, your current company, whichyou are are focused on, he may be connect the dot. So you have this exityou're. Obviously leaving interviewed your must be leaving a fairly wealthyman. You are ready a wealthy man from a couple of other exits property,investing and so on. What makes you want to start another start up withLaskian. What is it yeah, so post acquisition? I worked out indeed forthree years. You know incredible experience, working first onassessments and then on enterprise product, and my two co founders werealso there and one of them really had the desire to go start like a mortgagesort of property, tach business, and so he left after three years and is nowrunning a company called steadily and then my other co ounder Daniel and Iloved working together. We wanted to do another company together and we decidedthat you know. We know talent really well it's very hard for companies towork with freelancers today and work with contractors, and so we wanted tobuild a platform for companies to do this scale. So you have companies likefiver and up work and things that have grown. I think on sort of like the themicrosec layer like helping you do these like very short term tasks. Wewant to help enterprises do the same things to help enterprises find theright. You know, freelancers, find the right contractors find the rightagencies department with okay. So it's more like, like the Peter Peer kind of matchingyou're the connecting the dots but you're big you're, going for enterprise,looking for an enterprise level, employee or even a tea, exactly right,mastic, okay! Well, I mean Lasky for la S, K I e COM is that company I actuallyhad to dig around because I've been doing some hiring and that's why I wentwith indeed and so on. So it's amazing how much HR tech is out there. So it'sfantastic here in that! Maybe last two minutes here: Chris before you go, as Isaid, you've exited. You made a lot of money. I think it's safe to say yourbiggest gains and all of this has been exiting companies each time you'vewalked out some big capital. What do you do with all this money now like nowthat we're well and truly past those early stages? Are you an investor? Doyou buy toys? Is it sitting in crypto currency? What's your what's yourstrategy, all of the above yeah, all the above. I just put it all in dosecoin, an let ride now I as we do b. But...

...of that. No, I try to be very ambitiousin work and I think it is a massive lip, a faith to create company. No matteryou know. Certainly you know your first company or two and you have very littleor nothing is a much bigger leap of faith, but you know professionally, I'minvesting a hundred percent of my time effectively in Lasky and so withinvestment stuff I like to keep it boring real estate funds. You knowmulti family small amount of Crypto, a lot of indexing into the stock marketand then just a lot of individual tech companies that I, like you know puttingmoney into from an angel perspective. Okay, nice, all right. So as an angelto you must have some website out there regarding what you do there do you wantto share everything or maybe one place if people want to learn about youbesides, obviously Laski I'll put that in the show notes. Yeah just follow meon twitter. It's probably the best way Chris J Baki, the Akka is my name andthat's also my twitter handle. I think, that's how I connected with you forthis interview to so yeah appreciate the time Chris keep up the great work.I love following these. These amazing exits and sharing with Amas and twitterand everything, and hopefully I can connect so thanks for your time, allright thanks so much an raven me thanks for listening to that episode withChris Bucky from Alaskian and all the other companies that he was involvedwith what an amazing startup story. I really learned a lot from that and Ihope you did too just a reminder if you have not done so already. Please sharethis episode of vested capital. Its episode number five with anyone. Youthink who would benefit from hearing Chris's story and, of course, becominga subscriber to get all the latest episodes from me and the back catalog.So if you know an entrepreneurs, any investors, anyone who's reallyinterested in growing their own net worth and their capital, they will lovethis episode and all episodes of thes the capital so share the link. The bestway to do that, you can send them straight to my podcast. Just look forYaro dot blog. You can Google that Y, a R O thou, get you to my blog andthere's a podcast page there with all the subscription options available or,if you're ready. Listening to this inside, whatever podcast at player, youuse whether it's apple Amazon, Google potifer any of the other ones, makesure you hit the subscribe button and hit the share button too. That's agreat way to share with some other people posted on your social media. Ireally appreciate that you help me reach more people who will benefit fromthis show, and thus I am able to continue and do more, great interviewslike that. It's a really symbiotic relationship. You listen, you getbenefit, I record more episodes and the virtuous cycle continues. Okay, I'mgoing to stop talking now. My name is Yaro. I look forward to speaking to youon the next episode of a vested capital.

In-Stream Audio Search

NEW

Search across all episodes within this podcast

Episodes (78)