- Duration: 33 min
- Platform: meet
- Source: Read.ai 01JCNX4XTY5J1MWH9WRP3HQVFR (https://app.read.ai/analytics/meetings/01JCNX4XTY5J1MWH9WRP3HQVFR)
Transcript
[Michael Houck]: and so I’m excited to sort of see what you guys have come up with. Obviously, I’ve checked things out, I talked to Andrew a bit too, but yeah, excited to learn more. [Brandon Amoroso]: Yeah, awesome. Should I just start with like sort of quick background and intro and then we can dive into it? Yeah. He gave me some context, but not a ton. [Michael Houck]: Yeah, let me just start with that and then we can dive into the business stuff after that. But yeah, we’d love to learn more about your journey and your story and how you got here. [Brandon Amoroso]: Cool. Yeah. So I started a Shopify plus agency, uh, back in early 2019 when I was going to, uh, us, uh, on LA, uh, we started, uh, about one team or team member and just myself and then scaled to about 55 team members and sold that business in, uh, mid 2022 to a company called drinks.com. They’re a beverage technology platform. That was entering the Shopify space, so they really needed a team and then also somebody to run that for them. So I still sit on their exec team as an advisor, but not involved in the day-to-day anymore. Right around the time I was exiting that business is when the idea was starting to bubble for this current one, and that came out of a lot of the pain points that I had hiring and scaling the team. It’s not like we were huge, but I was very involved in the in the recruiting and hiring process. And given that it was an agency, it was a pretty people-intensive business. And then my co-founder in this current one is also my younger brother. So he was looking for jobs while I was scaling the business and getting recommendations from job boards to go be like a forklift operator, air traffic controller, just like crazy things. He got a woman, part-time woman’s shoes associate at a Macy’s in New Jersey a few weeks ago. You know, no one would ever recommend these things. And it’s crazy because the job boards have all this information too. And so that’s what we set out to solve is like, what’s wrong here? And I was getting in on the, it made more sense my issues hiring where I’d get a thousand applicants for a Shopify developer role and maybe 25 of them had ever even logged into Shopify before. And I just paid LinkedIn a bunch of money to promote that post. Um, and so we, I’ll get more into the team in a second after you do your intro, but we brought in, uh, the director of people, operations from Recharge. If you’re familiar with Recharge, they’re the largest subscription commerce platform for Shopify. So they got about 600 plus employees. She was basically dealing with my problems but at a much greater scale. So leveraging some of the enterprise technology in the space and then having to deal with managing a bunch of different departments, hiring managers, etc. So the three of us sort of set out to figure out what the issue was here. That’s essentially how we got here. [Michael Houck]: Very, very cool. Yeah, very, very cool. I also love that you’re working with your brother. You know, that bond is real. You guys are family. There’s no, there’s no, well, maybe there is. I don’t know. [Brandon Amoroso]: Maybe there’s no co-founder drama, but you know, it’s good stuff. There’s always some family drama, but the nice thing is that we’re extraordinarily different. And so we have our two like swim lanes and very complimentary. So we don’t really step on each other’s toes too much, though we are both very stubborn, so. [Michael Houck]: Yeah, I would imagine. It’s probably very interesting, but cool. Yeah, on my side, so I started my career, big tech, did the Airbnb and Uber thing, was part of the early team at Uber Eats. Got laid off from Airbnb during COVID, and I built an agency before that, like after college, basically. Decided that this time take a venture shot, and so raised We raised a Series A from Andreessen Horowitz for a company called Launch House. Basically, we built a membership program for startup founders. We also had a venture fund. So it was sort of a mix between Soho House and Y Combinator, as weird as that sounds. And so we ran that for about two and a half years. We did these co-living residencies from Beverly Hills to New York to Tulum, Lisbon, Aspen. Miami, all these other places, met a lot of amazing founders that way. And, um, I left that business about almost two years ago. Um, since then I built up a personal holding company. We have some media assets. We have, uh, a couple of agencies, we have a SAS product. Um, and more recently started to think about doing my toe back in on the investing side. So I’ve been partnering up with, uh, Ryan Hoover, uh, founder product hunt to do some deals and that sort of my impetus for reaching out to Andrew and being like, Hey, like, who do you know who should be talking to right now? And so if we were to write a check here, it would be through Ryan’s fund, which is weekend fund. And it’d be 200 to 400k most likely. And pretty high conviction, you know, we’re not waiting to see who else is in the round or anything like that. We’re founders. So we can move fast. [Brandon Amoroso]: That’s pretty much how it works. Awesome. I love I think having a founder on the other side of the table is definitely very helpful when it’s not the case. [Michael Houck]: We’re very far from finance guys, let’s put it like that. [Brandon Amoroso]: My brother has a lot of opinions on that. [Michael Houck]: I feel like founders more and more are asking for that too. I see more and more the bigger funds, the more established funds, longer funds hiring folks like that who just, you know, they’re trying to get some of that DNA, but you either have it or you don’t, in my opinion. [Brandon Amoroso]: Yeah. We’ve avoided funds up until this point. Um, it’s been all angels and then my own personal investment. Obviously that’s not how we’re going to proceed forever, but right at this early stage, it’s definitely helped us to be able to, uh, think a little bit more strategically longterm and how we’re investing into the company. Uh, for a variety of different reasons. [Michael Houck]: And you guys are raising one million right now, is that right? Yeah, definitely. [Brandon Amoroso]: So the fundraising situation is a little bit weird because we’ve invested just under 1.7 so far. Half of that is my personal investment and then the other half is from angels. And so the safe has essentially been open for 11 months. Either the angel money comes in or it doesn’t it’s not like i’ve been out there like actually fundraising Because I just fund it if it’s not there. Um, that’s not obviously the long-term Unfortunately not I didn’t you know, the agency didn’t sell for a billion dollars but um, that’s that’s how we’ve been doing it thus far and we are um Yeah, so like and I can share the uh financial projections with you, but we have about another six hundred to seven hundred thousand. It’s called at the high end of investment from now until August of next year. That includes like additional headcount and stuff like that before we’ll be break even. So in an ideal world, we would avoid not good, but I wouldn’t bucket you into this, but we would like avoid traditional VC money until time and raise a price round. And we’re still structured as an LLC because we want to take advantage of the QSPS upside. We’ll be converting into, and I only know about this because the company that bought mine, they did this conversion at a $46 million valuation. And so the first $460 million out for them will be tax free, which is crazy. I still can’t believe that’s a thing. So we would ideally raise that like a $30 to $45 million valuation. We’re not going to be greedy here, but also want to maximize the upside and then raise that price around at the, at the end of next year for the investors that come in now or who have come in the fact that they get that preferential tax treatment as well. Yeah. I mean, that’s fantastic. [Michael Houck]: Um, what are the, like you say in that, that range, when you do raise the price round, what are sort of the milestones you’re looking to hit? Like what’s the sales pitch you’re going to be going out to investors with at that time, if everything goes right. [Brandon Amoroso]: over the last year, I mean, I’ve probably spoken to 150 plus Series A, Series B funds, just to get them aware of what we’re doing here. There’s only two key, it will be interesting valuation because we have our SaaS subscription revenue, but then we also have our marketplace revenue. So there’s obviously a different multiple associated with each of those. The key milestone and the only thing that we have to do do to achieve any of this is just onboard companies onto the ATS. And I’ll show you it here in a second. But we have our sort of roadmap in terms of sales projections. And they’re based, they’re bucketed into eight different average contract value sizes. And it starts, let’s just remove my screen here. And that’s starting with like, Very very nominal growth. We already have a waitlist of over 150 companies. So this is these are like hyper conservative projections, but These are the key milestones in terms of ATS adoption. [Michael Houck]: So yeah Out of curiosity where those waitlist companies coming from like, how are you how are you sourcing them and finding them? How are they finding you I guess? [Brandon Amoroso]: Yeah, so all those waitlist companies are from direct outreach. So Just reaching out via Apollo. And I’ve been testing a bunch of different strategies, but the most effective has been me going to different cities for a week at a time. So I’ve been to San Francisco, New York, LA, San Diego, two or three others over the past three months. I’ll reach out like three weeks before I go. Coffee, lunch, drinks, dinner, whatever it may be. Not only has it been a better response rate, but the meetings themselves have been significantly greater quality. And, you know, a 30 minute cocktail turns into two hours and then they’re introducing all their friends. And, you know, then, you know, it’s just it’s been a much better experience that way. So that’s that’s one aspect. We also Lizzie has been in this space for like the last 10 plus years and she’s sort of a thought leader in it. So she got invited to speak at a recruiting operations conference in Chicago at the end of last month. And and so we we picked up another like 30 businesses just from that alone, from getting to connect with them and whatnot. That wait list, though, is much more on the average contract size, 20,000 and above. There’s also a laundry list of businesses that are sub-50 employees or even sub-100 employees from my personal network, from the newsletter and the podcast and just from the previous business. Those are much easier to self-serve on board. The way that we’re thinking about the pricing strategy is similar to Brex, in that under a certain employee headcount, the solution is free for the business because we make money off of them anyways. Right, through the marketplace. Right, through the marketplace, and then they can grow and scale with us. And also similar to how Shopify, you could be one person in your garage and set up a store for them, but it also supports companies doing billions of dollars of GMV. That’s the same way that we’ve thought about sort of structuring the platform, is that anybody could use it. My grandma could use it, but it also can support the needs of some of these larger businesses. So we have quite a few enterprise design partners, like Netflix and ClickUp, who we meet with on a monthly basis, because they understand what really matters at this stage is the core foundation and platform that we’re building. Are just becoming commoditized. You know, we know exactly what Greenhouse has that they need. They’re not, it’s not rocket science. We just have to do, we can’t do them immediately because you know, we’re not spending a million dollars on development every month, but tracking towards, you know, like Q3, uh, you know, launch, uh, with, with the folks, folks like them. [UNKNOWN_SPEAKER]: Cool. [Michael Houck]: Okay. That’s, that’s really helpful context. Um, as far as like where you guys are sitting in the space, and the product and all that. I totally see existing NTSs not being able to compete, getting disrupted, getting blown out of the water by what you guys are doing. There are other people tackling this space too. So I’m just curious, what are your thoughts on positioning long-term between you and say Mercure or someone like that? [Brandon Amoroso]: Yeah, so pretty much everybody who is tackling it in one way or another is just approaching it from one side of the market. That doesn’t work for a variety of reasons. I like to use the AI recruiting agents as one of those reasons. They’re all reliant upon the same data that all the other competitors that they have are reliant upon. And they’re also not the system of record for hiring for that business. And so the really unique thing about what we have here is that we’re not asking employers or candidates to do anything that they’re not already doing. But because of the fact that we have them combined together and we’re accessing all that proprietary data around how they go through the application process, what are they scoring on their skills assessment tests, what are the recruiters ranking them on their scorecards. That is what is really powering our recommendations engine and is not something that anybody else is privy to. Whereas anyone can go out there and spin up some sort of AI wrapper that is going to scrape LinkedIn profiles and try to come up with some sort of a match score. That’s not defensible. And then the fact that we have pretty significant network effects on our platform. But with the current ATS providers, it doesn’t matter if 10,000 businesses are using a greenhouse or if 100 businesses are, it’s still the same end product for the company that’s using it. Whereas because of our model with the talent marketplace and the fact that every candidate that comes through then gets pushed into our recommendations network, if there’s 1,000 companies on our platform, it’s significantly more valuable than if there’s a hundred. [UNKNOWN_SPEAKER]: Sure. [Brandon Amoroso]: From an acquisition, talent acquisition standpoint, the ETS itself, you know, there’s a laundry list of things that we do better than the existing players, but that’s just, you know, addressing key needs at this exact moment for those businesses that are leveraging one to hire. [Michael Houck]: I think it’s a really smart approach. I like what you said about system of record. People I’ve met with in a few different spaces recently have framed what they’re doing that way. And I think that’s a really, really smart positioning right now because of the importance of data. Data is the only defensible thing. Data and distribution, really, are the only defensible things you’re going to be able to have in the long run. So yeah, I think it’s really smart that you guys are making that. It’s not just that you’re matching people. It’s not just that you’re sending them candidates. It’s that you’re building that data set and leveraging that in ways that others couldn’t. [Brandon Amoroso]: I think that’s smart. Yeah, the switching costs are are pretty significant too once you’re up and running and you’re leveraging that. Plus things like dynamic resumes because of the way that. Let me just share my screen actually. We’re hopping up a little bit here but this will elucidate it a little bit more. So because of the fact that in that step three process, like step one through three is quite literally exactly how it happens today. They post a job in the that pushes to the various job boards, then they submit their application and it goes over to the recruiting team. So that’s how the current process works. No feedback loop, no unique identifier or profile being created for the applicants. With us, when they press apply, we have a parsing tool that extracts all their resume info out into structured data. So that gives our employers over 50 filtering options that they can use for auto rejections, for segmentation. So it does significantly help reduce their their time spent on this, as well as the time to hire. But because of that profile creation, let’s say you then go apply to a business that’s using Scaleless nine months from now, you’re updating that profile when you submit your application. So it will get updated in all of the instances of the ATS that you are already a part of Whereas right now, every ATS is just using static data. So after six it’s pretty much useless. So a lot of the migrations we’re doing, they don’t actually even want to bring over their talent because it is irrelevant. Yeah, I’ve been there. [Michael Houck]: It’s a mess. It’s a mess. So OK, let’s talk about the bear case, right? So in your mind, what are the biggest risks? What are the things that are going to make this not work? [Brandon Amoroso]: What are the things you’re worried about that you’re like focused on Yeah, I think the the biggest the biggest risk for us is that we Really just do not find the right capital partners along along the way here like I don’t and maybe this is I’m a very pessimistic person to begin with but through the past like four months of being out there in person, meeting with folks. Like when we were at that recruiting operations conference two and a half weeks ago, these people do not hold back when it comes to feedback and it comes to assessing the platforms that they’re using. And it’s because they’re relatively jaded. They’re used to having to work with leather and greenhouse. And it’s just a terrible experience for them. And it’s an industry that has been underserved for a long time. And so they really picked apart what we’re doing. And I had two people will send me the resume a day later asking if, you know, once we start hiring for the customer success, they can join us because they’re so excited about what we’ve done here. And it’s something that these people that you’ve been asking for a while. There’s actually a LinkedIn post about six months ago where somebody tagged the Ashby lover and greenhouse CEO, asking them essentially, why have you not done what I’m showing you here today? And they actually replied with a list of reasons why they haven’t or can’t do it. And then we added some like additional context and color around it, but I think it’s just distribution, like distribution and then, and then fundraising, because it’s very clear what we have to execute on here. And we can scale like crazy, the more aggressive that we can get with the ATS pricing. You know, one business hiring for 20 roles a month on our platform is the equivalent of a quarter million net new applicants to our, to our, to our platform. And there’s a, there’s a trickle off a little bit of like this flywheel here only about 90% of the candidates who get rejected then start engaging with the job board and then the month over month retention is about 90% as well. Fortunately everybody is always looking for jobs even if they are employed because the best time to find your next job is while you’re still employed. So that was originally our biggest risk is that this part right here was not going to work and that we weren’t going to see the engagement on the job board and with the because if we don’t have that revenue, then we’re just a really like, you know, great ATS that, I mean, that’s not a, that’s like a, not a long-term position that we thought was super defensible. But when we launched our private MVP with those 12 companies, we got a lot of those metrics out of it that I’ve now updated the model with. And so I’m not, I’m not concerned about that anymore. It really is just the distribution. [Michael Houck]: One, could you send me that LinkedIn post? I’d love to take a look at that and see what they said. [Brandon Amoroso]: Yeah, I’ll forward you the email we sent that has the LinkedIn post, but also our commentary around them that gives some additional context to it. [Michael Houck]: Well, yeah, that’d be great. And then, OK, so if distribution is the risk, you mentioned your co-founder is sort of a thought leader in the space, is sort of the creator, influencer, marketing route, what you think it’s going to be? I mean, obviously, you can’t scale yourself going to cities and doing this forever, right? So what’s the what’s the long term distribution channel you guys are most excited about? [Brandon Amoroso]: Yeah, so the cold outreach, honestly, has been wildly effective, even the ones that are not around that in person, we’re talking 5% plus response rates. And, you know, coming from the agency world where nobody ever wanted to talk to me, that’s awesome. Because they’re already in market looking for new solutions, like really are only competition is Ashby. Businesses are leaving Greenhouse for Ashby and then there’s businesses who are on Lever who are evaluating you know is it Ashby or Greenhouse but there really isn’t another player in the space that is even worthy of talking about. There’s a laundry list of like very crappy ATS solutions whether it’s Breezy HR, Jazz HR, etc. But there’s a void in the market right now for that like zero to two hundred person company. They can’t spend a hundred thousand Plus a year on a greenhouse or an Ashby, but they also are significantly underserved by the solutions that are within their their particular space I remember when lover was was trying to be that company like ten years ago, whatever it was They got brought by employee and everything has gone to shit since then so Market looking so when I do these cold outreaches and I have like the founder background story myself, and then I have Lizzie as well. I mean, Lizzie is just such a superstar sales channel for us because she is literally them. She was in their shoes not so long ago and left to build something because she hated the solutions that she was using. That resonates really well with this audience because they’re used to non-HR people building tech for them. So Cold Outreach is one. The events like the conferences that got us into the room with businesses like Netflix, companies that are not going to be responding to direct cold outreach from us. Third is partnerships. So the reason I grew my whole agency that quickly was through tech partnerships from Klaviyo, from Shopify, from Recharge. They sent us like 70 to 80% of our business. So we have our partner program built out, at least the framework, and we’re starting to onboard recruiting operations agencies, recruiting agencies, And they’re actually more valuable for us than businesses. Because if you’re a recruiting agency, you might be working with 30 different companies. And the way that we’ve set up our system is that these recruiting agencies get a workspace for each one of their clients. But then they have a master account that all of the talent for all the roles that they’re hiring for across those 30 companies funnels into. And so it makes them wildly more effective when it comes to placing. Because when you’re hiring for a company, they don’t even have to necessarily source, they can tap into their talent pool from the 30 other businesses that they’re already hiring for and be much more effective at matching. So, the cold outreach, the events, the partnerships, and word of mouth, we have quite a few advisors who are well connected within, you know, like the New York people operations and HR space, and the LA people operations and network space. This industry is extremely like tighten it. We’re actually benefiting from that fact right now because negative word of mouth is like impacting a lever and then therefore benefiting us. But positive word of mouth is going to be a huge, huge thing, a huge thing for us. Yeah, because they all they all know each other. It’s even more like incestuous, for lack of a better term than the Shopify ecosystem was where where everybody knows everybody. [Michael Houck]: Yeah, I mean, that’s that’s the biggest benefit you can get if you’re the the cool kid on the block in this group chat. And things like that. That’s what you want to be. It sounds like you guys are well positioned for that. But also just the cold outreach, if you’re getting 5% plus reply rates, if you’re getting those converting to actual customers at a good rate, that’s something you can scale for quite a long time while you’re focusing your actual day-to-day on the other stuff, the bigger ticket folks, like you mentioned with Netflix and all. So it’s a smart strategy. [Brandon Amoroso]: Yeah, exactly. But yeah, that’s definitely the four main ones. There’s some others that are in the back burner, like everyone wants to talk about building a community. [Michael Houck]: I’ve done it. It’s a lot of work. [Brandon Amoroso]: It’s long term, and we don’t have the resources right now to do something like that. Oh, the one thing I actually forgot to mention is Apex. Is our quarter million subscriber media arm that is targeting early career professionals and late college students. We have a podcast, we have a newsletter with that, and that has proven to be a pretty effective not only sales channel but distribution channel. Chief people officer of Lyft, of LiveIntent, of some of these really big companies has come on the podcast. And naturally the conversation leads to, Oh, you know, well, what is scaleless? And then, you know, they’re not, they’re not going to be as responsive to a cold outreach email. But when I tell them, Oh, you can reach, you know, a quarter million, uh, soon to graduate or just graduated. And then not only do you get the visibility to them, but you can then get the post about it on LinkedIn, you know, that you’re supporting this type of audience. Uh, and it serves as a nice on ramp for us to, uh, for the job seeker side of, of the marketplace is, uh, So that’s sort of like our subsidiary that we’re going to do a lot of content marketing with. Cool. [UNKNOWN_SPEAKER]: Yeah. [Michael Houck]: I mean, that makes a lot of sense. The newsletter space, something I’m, I’m super familiar with my newsletter is 60,000 founders podcast. They send it out to the same list. Uh, so yeah, big, big advocate of, of new media, um, unrelated to sort of what we’re talking about. Maybe we set up some other time to chat about this if you’re interested, but we’ve built, um, basically an interest-based social graph on top of emails. So basically the type of targeting you could do through Facebook and Instagram and TikTok and all that, you can now do emails with what we’ve set up. So, you know, rather than just scraping a list off of Apollo or downloading lists off Apollo or scraping a list off of people’s social media followers or something like that, we have something that’s a lot more comprehensive than that. And we’ve used it pretty successfully to drive subscribers to my newsletter and to at this point, a bunch of client newsletters, too. So if that’s of interest for growth there, just get more people in that funnel. [Brandon Amoroso]: We can talk about that kind of separately. Yeah, I’d definitely be interested in exploring that. We’re always trying to find new ways to grow that channel. [Michael Houck]: Cool. I’ll send over some info on that separately. But did you have any other questions for me about next steps or anything like that? [Brandon Amoroso]: Yeah, I mean, in terms of, I guess, your timing and process, what does it typically look like from here? Is there any other materials or resources that I can share with you, whether it’s the revenue model or our wait list? [Michael Houck]: No, I think Andrew sent over the deck, so that’ll be enough. And then I’ll take my notes from this chat. Next step is I’m going to chat with Ryan. First of all, I love it. I think it’s great. I think it’s clear you know what you’re doing and that you know the market. So I’ll chat with Ryan tonight or tomorrow, and then we’ll probably be able to get back to you at the latest Tuesday, let’s say. And then we can go from there. Either he or Vedika from the team might want to meet as well, but that would be the only other call that would need to happen. [Brandon Amoroso]: We’re pretty lightweight, we can move pretty quickly. Okay, sweet. And then in terms of funding, you guys are ongoing funding right now? Yeah, yeah, we have dry powder. I think that is… I think that’s it then. All right. [Michael Houck]: Well, I’ll I’ll shoot a note to Ryan as I said, and we’ll get back to you ASAP But I think it’s great and I’ll shoot over some info on the newsletter stuff separately because yeah, I think it could probably help out there, too Okay, sweet. [UNKNOWN_SPEAKER]: Awesome. [Brandon Amoroso]: I appreciate it. It was great meeting you. [Michael Houck]: Good to meet you, Brandon. Talk more soon, man.