[02:01] So let’s dive right into it. And the first question I want to ask you is, what does your company do? Just, in your own words?
- Yeah, sure. So that was a mouthful. I appreciate, I appreciate the introduction. So Crosschq’s sort of fundamental goal in the world is to help companies and talent better match with each other. We sort of acknowledged that, in the modern workforce, it’s really hard to build great teams. And so, all the tools that both companies can have to ensure that they’re hiring the best talent, and frankly, that talent can have to ensure that the job is the best for them. That there’s an opportunity to help both sides of that equation. So what Crosschq has done is we basically have reinvented the traditional reference check. You know, the process that has been used for decades to call your, your references, to sort of screen you in the last stages of a hiring process. To really create what we call human intelligence hiring, which is this idea of how do you get information and insights from people and put them to use for people to ensure that the company is right for the candidate and the candidates right for the company. So think about it as a reinvented reimagined version of the traditional reference check, but done in the cloud with modern technology, data, AI, all that stuff that you’d expect out of a modern company.
[03:20] Okay. And to be clear, this is not a personality assessment, something like, for example, we use a tool called Caliper.
- It is not. And and we think there’s a lot of interesting stuff happening in the, in the assessment space. There’s a lot of stuff happening in the screening space, frankly, in innovations around things like criminal screening and whatnot, we are definitively not in those two areas. We are really in this, in this human intelligence area, which is based on this fundamental notion that getting insights from people that know you that have worked with you, right, and converting those into data can be really helpful to help make sure that the job in the company are well managed.
[03:54] Okay. So who would you describe as your customer? Is it the company doing the hiring or is it the employee getting hired?
- So it certainly is the company doing the hiring and that’s who’s paying us today, right. So we are going to go to market plan has been focusing on high growth, innovative technology companies, that’s sort of phase one. And focusing on the heads of talent and talent groups within those organizations. So these are folks that are aggressively, you know, hiring, they’re building teams that are using tools and data to do that in better ways. So that’s absolutely the tip of the spear for us. That being said, the whole technology was built to try and be as candidate friendly as possible. So hopefully candidates view us as a way to help them through the hiring process, and it’s a net positive for the candidate, but the company is the customer.
[04:40] Okay. Target market would it be, would it be a lot of venture back SaaS companies or do you have a specific target?
- Yeah, it really is in phase one. It’s sort of high growth tech in almost by default that, that’s venture backed a lot of Silicon Valley. It’s companies like the Upwork, to Eventbrite, Glassdoor, Nerd Wallets, Dialpad, those, those types of companies, companies in that kind of cloud SaaS, you know, 100 of those types. That’s where we sort of started.
[05:06] Okay, what is the pricing model look like?
- So we price based upon an annual forecasted hiring volume with some tiers based upon the size of the company. And it’s a subscription, so a monthly subscription, annual license, traditional kind of SaaS, kind of SaaS model.
[05:24] Yep. And so, across your customer base that turns into an average customer paying how much per month?
- It really does vary because of the range of the size of companies. So some of our smaller startups, it could be as little as they’re paying, you know, 500, 600 bucks a month for a 100 person company that’s hiring 50 people. And then you obviously get to multiples of that if you’re a company like Glassdoor, who’s got 1000 employees, they’re hiring 600 as an example. I’ll tell you one of the metrics not to get too far in the weeds quickly that we kind of use as a benchmark and Eventbrite which is a killer company that uses our stuff. They ran their own kind of cost benefit analysis. And they just looked at the traditional cost to do a traditional reference check. And kind of concluded that on average, it costs them about $185, to do it the old fashioned way, right, picking up the phone, scheduling these calls and getting bad data. And it’s all kinds of issues related to it. But, on a kind of per candidate per year basis, we’re south of that number, you know, and kind of in about half of that number, frankly, is the starting point, just so you can kind of get your head wrapped around, you know, how the pricing works.
[06:29] And you’re helping them to achieve that savings largely because you’re cutting a whole bunch of labor out of the equation, right?
- Yeah, there’s like, there’s an easy workflow pitch here, which is just make this easier and faster, get better data. There’s a whole bunch of other cool stuff I’m sure we’ll get into in terms of what the product does. But that’s the, that’s the simple, the simple argument as to why you should migrate to Crosschq from your traditional way of doing things.
[06:49] Okay, when did you launch?
- So we, we raised our first round of kind of pre-seed financing in late 2017. We spent most of ‘18 building the technology. We started got into beta, late ‘18, and commercialization for all intents and purposes started in the first quarter of this year. So launch, in whatever terms we all use in this modern world, I sort of, you know, I don’t know, I don’t know that we have launched. But, we, you know, have active customers as of kind of jam, one fair start date.
[07:19] Okay, so when you raise the pre-seed rounds, did you rate basically, raised off a deck with no prototype at all?
[07:27] Interesting. And were there pre existing relationships that assisted in that race?
- Yeah, sure. And has my co-founder and I between us have invested in or started probably a dozen companies. So, and this one was born out of a personal experience, frankly, that he and I both had. And some of the investors that invested in this company shared that we had the same, we had the same kind of scraped knees, if you will. So there was, it wasn’t a hard pitch. It was a “Hey, Mike and Pete, let’s go solve this”. Right. And let’s just fix this. And so that was, it was pretty, it was pretty straightforward at that stage. But we didn’t really, as you know, with these things, you’ve done it a bunch of times. Obviously, in your career, you don’t know what you don’t know until you get into it. Yeah, right. And we didn’t know at that stage what was on the other side.
[08:12] So pre money valuation when you’re just got a deck and no prototype, what were you able to do?
- Better than I would have expected. It made me laugh because my serious aid in two companies ago, which was last one, really raised an early stage round. Our valuation was higher in this with nothing and that company had a million in revenue. So I’m scratching my head on, this is a different, a different time. I prefer not to disclose what the valuation was, but it was, you know, probably more than I would have paid as a private investor, to be honest.
[08:44] Okay. And was it traditional VC backing? Was it family offices? Was it angel money? Where the money come from?
- It was angel money. But one of the VCs that I’d worked with in the past, Bessemer Ventures, they actually have a seed fund that is a number of the partners put money into deals the best version kind of formally do. And so they were, they were kind of the lead if you will. It was angel, technically, but it had a little bit of an institutional vibe to it. They also came in, in our actual seed round that we did over the summer, Bessemer as a firm did, but…
[09:18] Okay, so were they the first in the door on the pre seed round?
[09:23] Did being able to drop their name help you to get others?
- Yeah, you know. I don’t mean, it’s so hard, as we all know, to raise capital in any environment but this was pretty straightforward. We were oversubscribed, guys that knew us and had an appreciation for the problem so I’m sure it helped. Right. But we wouldn’t have gotten there to be, to be honest without them. I was pretty confident in that. It certainly helped, as importantly though, not flashing forward, but they were part of the formal seed round that we did with GGV capital. And, you know, you know how this goes, Bessemer continuing to support the company after being in a pre seed that, that signal absolutely helps. No denying that. I certainly, the counter signal to that can be troubling for early stage companies if they didn’t come in as a follow on, right. We were fortunate to not have that issue.
[010:15] How many customers now?
[10:20] Okay. And ARRs, off those 50 customers is roughly where?
- You know, we’re not, yeah, you know, the game, we’re not publicly disclosing that, right. But it is, you know, we’re in the, we’re getting into that seven figure run rate, which is what we expect to do here. And so that’s, that’s kind of the goal, right, in terms of the next, the next sort of six quarters. If you will, is to get a healthier, a healthier version of that. But it’s kind of directional.
[10:48] If you and, sorry, remind me how many quarters you’ve been acquiring customers for?
- You know, as I mentioned, all this, it all gets a little fuzzy. I’ll give you a little bit of our go to market where we were kind of introducing this new category, this human intelligence hiring thing. And we’re walking in the door to companies who have legacy biases about the old reference check and their own processes and workflows. So our go to market was around, “Hey, we’ll give you 90 days free to use the software, see what you think about it.” Right, and then start to convert those companies into paying customers. We didn’t really start that conversion process, frankly, until I would say kind of Q3-ish of this year. So those first half as I was mentioning the commercialization efforts, I’m using that term a little loosely, that was, frankly, when we really started selling the product. And that, that was our go to market. So, you choose your date, I would say sort of beginning of Q3 is when we really started to see folks start to cut us checks, you know, design contracts, and exit that sort of that, sort of a proof of concept phase where that beta phase.
[11:47] So you’ve got roughly a quarter, maybe just slightly over a quarter of customer acquisition under your belt now then?
[11:52] So if you were to extrapolate that over a year, what do you think that would translate into a year over year growth?
- You know, I, what we’re learning too is as I mentioned to you at the beginning, our focus initially on high growth sort of Silicon Valley Tech also lead you to some smaller companies. Even though they’re growing rapidly, and you’re going to place bets, and it’s awesome to see them in the pipe. The thing that has profoundly changed already, so we’re just getting, you know, we’re getting at that at, you know, more real mid market and even real enterprise and kind of strategic accounts, which is exciting. So, if you think about this from the perspective of number of candidates that pass through the system, if you kind of use that as a proxy, to sort of measure growth, it’ll be you know, it’ll be 10x, right? It’ll be that sort of number. How that correlates into $1 per candidate, it gets a little bit more nuance to that front. But you know, we love all of our partners. Don’t get me wrong, but you have companies that are hiring 20,000 people, so that quickly changes that dynamic between a company hiring 10, right, it’s just the game.
[12:53] Okay. And, folks, we’re gonna dive a lot more into growth strategies in segment two of the interview tomorrow, so make sure you tune in for that. What’s the headcount now?
[13:05] Okay. And are you able to disclose the amount raised so far?
- Yeah, sure. So we raised about 4.3 million over the summer, which was the GGV investment round. We also had a Klay Thompson from the Warriors that was fun. He invested in the company, which was cool. And a couple of other angels, Kevin Julia Hearts, who are the cofounders of Eventbrite. Kevin is now the chairman and he is the CEO. So we brought in some other good strategic investors along the way. So that was one that we did in kind of June-July timeframe.
[13:36] Okay. So before we get to the fat of the fast five questions I asked at the beginning of, or rather at the end of segment number one, now that we’ve been talking about funding for a bit. For anyone who’s listening who is a founder, and they’re looking at you know, maybe I can bootstrap for a while but I probably am gonna have to raise at some point in time. You’ve been doing this a while. What pieces, what pearls of wisdom would you share with those folks with respect to the challenge of raising capital?
- Yeah, I mean, we all know it’s a grind. It was, it was so interesting. When I was looking at my target list and reflecting on, once we closed the seed round my target list of the nose, which we all have. So this is sort of post up pre seed round that I mentioned to you earlier that was relatively easy, on the, in the grand scheme of things. Prior to our seed round, I probably met with two dozen investors, right. Up and down, just to get a sense of their read on the opportunity. And, and then, and what struck me from that is how much work I had to do on positioning the story, right. The game just changes as we know from the preseason, trying to talk to the institutions, make sure you get the story right. And then frankly, dialing in on the KPIs and the milestones that mirror that story. So the package was tight, right, when you’re going in to talk to, for that for the seed round and it was an amazing thing that happened. For me and for us. We had five term sheets on our seed round, we oversubscribed. We got competitive and I done this enough times that that doesn’t always happen. Right? And it doesn’t always happen that way right, it’s an awesome thing when it does. So I tribute that certainly to just crafting that work and that story and then making sure that data that you’re gathering and your proof points that you’re gathering mirror the story and connecting all those dots. So I’d say that, and just we all know the grind aspect of it, right? There are the number of times I got the, I’m certainly, I’m certainly thinking I’m going to end up regretting this, but we’re going to, we’re going to pass for XYZ reason, right? That’s because, you know, again, it’s all the same stuff we all deal with.
[15:42] So the deck that you used, is that something that could be a PDF download in the show notes for other folks who might…?
- Yeah, I would share it and I got it down. This is the other piece of that when I got that thing down to 12 slides. I just, I just took out all the noise too, right, and it just simple, simple themes and got the big messages across. One of the new ones for us too, and this is a little weedy, but it just speaks to how you have to really be hyper focused on the storytelling and those early phases.
You know, when we initially got into this business, you know, part of our bias was towards sort of the screen out opportunity. We came from a place where we were frustrated on the bad hire problem and, you know, looked back and reflected on “Gosh, we made those two bad hires, how do we miss that?” Right? How did we not get more data on these individuals to make better hires? And so the theme of our presentation reflected that, right, it was, it was a little bit more, frankly, almost cyber leaning. It was insider threat prevention. It was keep the bad guys out. And it was a really subtle twist that we made.
And in fact, we brought on an advisor, a guy named Rusty Ruff. Rusty is a killer in the HR space. He was the first independent board member of Glassdoor, Chief People Officer in EA, senior guy at Pepsi, he’s that guy. And he just, he kind of almost just slapped us and said, “You’re thinking about this the wrong way guys, the concept is great, but this is a two sided problem. It’s a two sided equation. There’s a company, and there’s an individual. And for this to work, you got to solve the problem of, you know, for both sides of that equation”.
It seems so subtle, technology concept was the exact same, right, of getting data from people about people and converting that into something actionable. But the simple positioning there of making this a company first, keep the bad guys out message, to a, “Hey, let’s help companies just build better companies, both for the company, and for talent”. As soon as we made that shift, right? The conversations changed. They really, really did. And that was just, it was a great lesson for me about how just subtle and how important those types of things and paying attention to that type of stuff is.
[17:39] We’re going to start off with customer acquisition systems. I know you haven’t been at this for very long only acquiring customers for less than two quarters. But let’s talk about what you’re doing.
- Yeah, sure. So, from a systems are first sort of a channel strategy perspective, where do you want to start?
[17:53] Hmmm…I love me some good systems. So let’s start with systems.
- I love me some too. We’re still working through what those exactly are. So we’re, you know, we’re Salesforce, HubSpot, kind of a thing today. And we have a handful of different email systems that we use for sort of drip campaigns and things of that nature. We’re piecing all that together, HubSpot will be our, you know, will be our kind of savior, we believe, we hope. And we’re kind of in that process now of kind of maturing the integration of all those systems.
[18:21] And the HubSpot that you’re using, is it their marketing suite or their CRM suite?
- We’re actually gonna use both. We’re gonna use both. We’re drinking the Kool Aid and the ability to connect it all we think is we’re going to dive in and give it a shot.
[18:35] Yep, okay. And you mentioned Salesforce, I would imagine you’re not going to need Salesforce if you’re using both HubSpot systems.
- Right. That’s the plan but we are currently using Salesforce at 100%.
[18:50] Got it, okay. So in terms of customer acquisition activities. If you’re using HubSpot, marketing, and totally content production, and SEO are probably a pretty big part of it, but I’d like to hear that from you.
- Yeah, it’s a part of it and it’s definitely a meaningful part of it. And we’re, you know, how this is you’re breaking into a new category, trying to establish a new software category, it’s hand to hand combat, right? So there’s not late demand yet that we’re trying to capture. So from a digital marketing perspective, I’ll sort of take this in two buckets, starting with non digital, for lack of a better term, right. So for us non digital marketing, certainly the network number one, right, which is just having been around Silicon Valley for a couple of decades, having a network, having a board, investors, a board of advisors, all those tactics, right, surrounding yourself with people who have good relationships with decision makers. In our case in the HR tech space, you know, channel number one, that’s it, full stop, no debate, that’s it, right. It’s getting introductions, either from our folks or from people that our folks know, right? And so we sort of call that an our attribution. We have two sub categories. We have both for internal relationships and then we have what we call FOC, friend of company. We kind of loosely connects investors, advisors, and just friends, we’re making introductions and referrals. I would say no doubt about it. And that initial things, that’s the number one most important and high value channel for us that we’ve taken advantage of.
The second channel for us has really been developing a channel and partnership strategy. So in the HR spaces, these applicant tracking systems and various HR systems and all these different companies operate on, we’ve started to integrate Crosschq into those systems and establish commercial relationships with many of those partners as mutual kind of refers. So they identify people that are using their platforms that could benefit from Crosschq, make that introduction, and we have a financial incentive in place to help reward them for that, and that sort of thing. So that that channel partnership strategy has been extremely effective for us.
And then the other piece related to that is just on the customer advocacy. One of the things that we’ve found really early on are the NPS on this company is like a 78 this quarter. And we have these really psyched customers that are just digging in, right, once we get them over the hump. So activating our customers, we put together a customer advisory board, we gave them a little bit of equity, right, just to be clear on that, did that all post contracts, there was no conflict of interest. I gave them a little bit of equity, put together a form for them to be influencers, to recommend this to friends, that sort of thing, or to other colleagues and other companies. So, that put those on the non-digital side of the equation that we track those as unique and distinct channels, but are certainly the most powerful. They end, which we don’t know, right. And that’s not programmatic, that’s not repeatable, and it has a shelf life. And that’s why you have to start building up on the whole digital side of the equation. So, and that’s where you get into the stuff, the more traditional stuff that we’ll talk about. We’ll talk about from a content marketing perspective.
We’ve started some really cool things, like a LinkedIn. We started tile strategy, where once a week or announced a new customer, when we literally were putting a tile up on LinkedIn. This is another great customer chooses Crosschq logo of the customer. So it’s not as heavy as a traditional press release. And it seems so simple, but it’s repeatable. We’re getting these one a week. And, and frankly, it’s just, the response has been awesome. Right? And just my continuity perspective. And it’s a great way of it’s like a LinkedIn drip, if you will.
[22:15] I’d love to have, if there’s a screenshot or a PDF of one of those, I’d love to have that for the show notes as well.
- Absolutely, we can share that with you. So that’s been awesome. As just sort of some of the unique stuff we’re doing. These are tough buyers to find, you know, we’re playing with some things around how do we identify HR tech buyers on LinkedIn, but get them to engage and retarget them and other social media environments like Instagram, Facebook, believe it or not that’s tough. We all know the response rates within LinkedIn from a retargeting factor are really not great, but as a lead source, it’s fantastic. So we’re doing some cool things around that front. The traditional stuff on our drips, you know, from a prospecting perspective and all the normal stuff from an email marketing perspective, you know, sort of six touch strips that we’re doing. You know, from which earlier, I don’t know what the world thinks of those as a content marketing or what you call that. But that’s moderately effective. The area that was new to me, having not been in a software showdown, was really the Capterra of the world and the GPS of the world, and all these sort of comparison sites are expensive, but extraordinarily effective. You know, I won’t name the lead because it was an enterprise lead. It was a great lead for us. And I asked them how they found us, and she said, “I saw you were the number one rated reference checking software like in the world” And I was like, what? Who said that? Well, Capterra said that. I was like, all right, good. Sounds good to me. Right. So, that has been a surprisingly effective channel than the normal from SEM and SEO and retargeting perspective. This is all the normal stuff that we’re, I would say we’re checking the boxes on, I’m not sure we’re doing anything uber, uber innovative right now. But yes, small team we’re trying to figure it out.
[23:58] So you’re planning to produce a lot of content, high quality content, on the blog or on the website, and use SEO tactics to find your way into search?
- Absolutely. And how you activate that even through the initial channels that I mentioned, this is where those folks can be effective and the shelf life doesn’t necessarily wear off. So I’m a chief people officer at Glassdoor, one of our customers and she becomes an advocate for us. She’s a customer testimonial that we’ve posted, reposted it right to her 1500 followers that is just, that’s worth its weight in gold. Right? You can, you can, thanks. So yeah, we are producing better content. We just produced our first customer testimonials in the last month and published those with NerdWallet and Dialpad to our customers. We’ll keep doing that. We have an influencer series that on our website we publish. We’re trying to get better at that, we have one come out this week, which is just finding experts from in and around the field to do Q and A. Generally speaking around topics that surround us, that kind of thing. And then we’re doing some news jacking with our PR folks. You know, they’re working on identifying what’s happening around us, that big thing that came out in the last couple of days about the, I forgot her name, but the one that had falsified her resume, right? Like those are topical for us that we can jump on, right, and kind of play that game.
[25:14] So there’s two interviews that whoever on your team might enjoy that I conducted. One of them was with the CMO of AHrefs, which is a very popular SEO tool and their blog traffic has grown exponentially against some very, very stiff competition. I’ll make sure that you get a link to that. And I’ll put it in the show notes for anyone that’s listening. And then just yesterday, yeah yesterday, I recorded an interview with the founder of a company called ContentKing, fellow’s name is Vincent van Scherpenseel. He’s from over in Europe, Western Europe, and they have had a fair amount of success with what I consider to be a pretty clever, like I’ve interviewed a lot of folks across my two podcasts about content marketing, I ran a content marketing agency for four years. And what he’s doing with their online Academy I thought was particularly clever, especially with respect to how they do their content, production and promotions sprints. So I’ll again put those links in the show notes and of course you’ll get them before this ever goes live in case you want to have anyone from your team listen to that.
- I love it. That’s awesome.
[26:16] Be forewarned, there is some soft promotion of my software company, which is SLP software company. And those, because one of them in particular Vincent is starting to have a pretty good look at it from a partner program perspective, because he really likes what we’re up to. Oh, okay. So do you have a sense of what your blended CAC is yet?
- No, I actually don’t, I know, on the paid side. I know, something we work through, right. And just in our funnel just for whatever it’s worth, what you know are, the primary, the core KPIs, we think about in terms of SQL, to meeting, to proof of concept, right? So those are kind of the four big and I think one of the things we’re probably more focused on right now versus our CAC is really just what our cost per meeting is. Because we’ll figure out how to close better and the proof of concept phase, we’ll get that, but getting qualified leads that convert into qualified meetings is really the name of the game for us right now. And based on these different marketing channels, look, I mean, those, the margin is, you know, in these businesses is so significant that you can be prepared to pay 500 bucks for a meeting and not that high. Right. And so, that’s, that’s generally kind of where I spend more time thinking that are true CAC. It’s a little hard in our states too…
[27:43] So do you have a sense of what your cost per meeting has been so far? Although, yeah…
- I think it’s probably the notion of like 750, something like that…
[27:51] Is that largely coming from your new network and your FOC and that kind of thing? So it’s maybe not the best parameter of what number it’s really…?
- Not a perfect number, it’s really not. And you know the game at STL load, how much, how much personality load on that. From a paid perspective, that number I’m giving you is from a true paid, it’s SEM retargeting the software technology comparison sites, that’s true pay. That’s kind of where we see that we see the thing landing.
[28:15] Okay. And I’m guessing you probably don’t have really enough data yet to know what your LTV is. It’s too early.
[28:21] Okay. How about as an, probably churn? Right? It’s probably too early, to even go churn.
- Yeah, it is. It’s a part of what we’re exposed on, just being totally Canada learning for all of us, because we’re focused on high growth tech companies. What’s great is their high tech growth got their growth companies when they stopped being growth companies, you know, you potentially bear the brunt of that, right. And so we benefited from it absolutely more than it costs us today. But for example, one of our awesome companies, they just went through their first layoff, right? This is a company that had 200 people last year, they just laid off 70. That’s also their hiring plans for 20. So we got to deal with a little bit of that which I wouldn’t attribute to being traditional churn and that they were moving from another software, it lightens up, which is a volume game where they’re not necessarily growing as rapidly. I know we don’t have yet enough data to say, you know, what that what that looks like, and we won’t for another couple quarters.
[29:16] So that said, I guess one of your major risks as we go through it another tech bubble, and funding dries up and there are any high growth companies?
- Yeah. And you know, our pitch hopefully doesn’t change in terms of our value. We actually think the talent you bring in gets even more important. The volume might go down, and there might be some pricing pressure. And that might work out differently. I don’t think the value proposition changes at all. And I don’t think the importance of us in the process changes, but absolutely it’s like we’re all you know, all of us that are sort of disrupting and leaning on other tech companies in this ecosystem to disrupt together have some exposure as things get challenged.
[29:57] Yeah, absolutely. You mentioned the importance of customer success early on. What type of systems or processes have you created thus far to ensure the highest levels of customer success from onboarding and so forth?
- Yeah, we’re probably annoying people to be honest in terms of how aggressive we are right now. And look, a big part of that is you can afford to do it now, once you have 1000 customers, it looks different. And you start thinking about it differently. But we’re hyper obsessed with it now. So the normal thing, I’ve been normal things, but the NPS, we started early, right, just measuring our NPS, just even when we had 10 customers, like let’s just, you know, the statistical significance is questionable. But let’s at least get into the habit of, of getting a good feedback loop with our customers. Right. So that’s one thing that just kind of keeps us, keeps us honest. You know…
[30:46] Let me interrupt you there. Let me interrupt you, if I may. How are you gathering NPS? Are you just sending them an email saying, “Hey, give us a score”, or is it embedded in the app somewhere?
- We’re doing it via Survey Monkey or something like that. We’re just doing it to the standard MPS package that they have. So the other thing that we’re doing, though pretty, sort of systematically is when we bring them in when we onboard them for the proof of concept phase, we set up an immediate meeting after their first Crosschq candidate gets completed to help them read the report. We’ve set up 15 days post their onboarding. And then we establish that when we launch them for their touch base to review all of their progress, right. So we’ve gotten really clinical in terms of how we push them through our funnel, which is really a customer success function. What’s been interesting about it is we’re having our customer success team drop in in that sales process, to give them a flavor for what they’re going to get on the other side. That’s been working extraordinarily well. It also gives good continuity once they start working with us. We then do a monthly touch base in terms of reviewing all their candidates that come through and all that good stuff. The other thing, though, that I mentioned to you earlier, is this customer advisory board that we put together that meets quarterly that also has this is a real opportunity for our customers to collaborate on. You know, things that can help us with product suggestions and that sort of thing. But we’re pounding it now. It’s just getting them to communicate with us.
[32:11] How much if any, if your customer success is dependent upon video based training?
[32:18] So Mike, how have standard operating procedures or documented business processes played a role so far in keeping the ship afloat and going in the right direction at the fastest speed possible?
- You know, certainly. It’s pretty cool to start a company in this day and age because you can serialize more stuff easier. You know, so when you use words like that, historically, I would have thought about a big stack of documents and something overwhelming that would never have gotten looked at, right. But it is amazing how well we’ve been able to just calendarize things, serialized tasks, repeatable tasks, use tools that we all have to communicate more easily and stick to schedules. All that good stuff. I mean, there’s frankly no excuse for someone to not be participating in a recurring thing with all the tools that we have available and accessible to us. So I think more important, you know, as important to that is just us putting in processes in place early, sticking to them. Right, and ensuring having an expectation that every participating and following in some of those, those, you know, in those consistent behaviors has been really important. I hate to say this, because it’s not really, I don’t think where you maybe had the question going, but even for us things like values and mission statements, we have a slack channel where we all call out when people have acted, the reflecting our values. You know, casual thing that just creates habits and it’s not, you know, it’s not a standard operating procedure, per se, and it’s not a documented thing, but it does keep you tied back to a system. You know, in a system that we’re trying to create, that’s repeatable.
[33:54] Well, plus, it’s a part of your culture.
- And it’s part of our culture.
[33:59] Are you familiar with EOS or The Great Game of Business, or anything like that?
[34:05] Okay. EOS is entrepreneurs’ operating system, Great Game of Business was written by Jack Stack. Oh man, probably in the 90s. He pioneered the concept of open book management. And there’s a really great story behind how all that came to be. Verne Harnish has got, you know, the gazelles, there’s a variety of them out there. And you may or may not find that one or more than resonates with you. All right. So when you talk about the, you said variety of tools that we use, what are just a couple of the tools that immediately come into your mind when you think about, well, let’s create repeatable processes and document them so that we make sure that they become a part of our day to day rhythm?
- You know, so we had just a simple thing for us because we are remote, but we, one of our values is we’re remote but connected. So I’ll tell you Hangouts for us is mandatory. We do, I mean, we’ll have video, we’ll share video if we’re sitting next to each other in the same office even right so it’s just that ingrained in our life as a repeatable process. So we use Google Hangouts for that. I mentioned to you earlier, Slack is dominating our environment. We’re making phone calls on Slack, we’re doing video shares on Slack, or document sharing on Slack. So that is also become an integral part. But really just anchoring around the philosophy that this remote, it’s still connected philosophy for us is really important. Looking at each other in the eye, even though we’re you know, 2000 miles apart, or whatever it is. That is just really important to us. And that’s the tool that we’ve, that we’ve, that we found ourselves using.
[35:33] Yeah, I’ve been all of my companies are remote, and I’ve been, you know, doing this, the online conferences now as a regular part of my communication for years. And every once in a while I’m forced into what I call an old school phone call because the person on the other end, you know, for whatever reason, doesn’t want to be on camera. And I literally feel like I’m going, you know, with one arm tied behind my back. Because I can’t, I can’t see what their face is doing, which is a huge part of communication. You know, and I just can’t imagine not having the convenience of being able to do what you and I are doing right now to communicate with my team and customers.
- I agree with you completely.
[36:16] Alright, so in your, remind me of the number of employees you have?
[36:21] How do they divide between engineering and sales, marketing and whatever else might be a significant pinnacle of…?
- 10 engineering, 5 sales and marketing with customer success in the sales and marketing bucket, and one kind of in the catch all fancy HR stuff.
[36:36] And your hiring pace right now is how quick?
- You know, I think our plan for end of Q1 is probably 25. One thing that I am personally doing a little differently is we’re not capitally constrained, but I am probably more disciplined in this and getting this right in terms of integrating hires being a little more patient with that. I think I have learned this over time. That is just feeling seats doesn’t necessarily drive the value that we need to create. And I would, I’m finding myself spending more time mentoring and getting people fully immersed. And I’m willing to do that and giving more hours of my week to ensure that my next, my last hire is going to ramp up their productivity versus trying to fill another couple of seats. Right. And so that’s a little bit of the cows with wisdom, I think, for good or ill. But that’s our, that’s our approach. So we’re being, we’re being pretty paced on that.
[37:30] And how are you generating leads? Let’s talk about engineering, because obviously, in the valley, that’s the biggest challenge is attracting engineers. There’s a lot of competition to say the least. What do you do to generate your candidate leads?
- Yeah, so we have a really easy solution for valley engineers, and that’s to put your engineering in Buenos Aires. So which is just been awesome for us. So my co-founder had a prior company and he had a team that he had used there for four years when we started this company. He called them all and said, “Hey, quit all your jobs. I’m hiring you. We’re going to go change the world.” And so we have a team on there. We got two offices in Buenos Aires, we are riding that wave. Happily, these are awesome guys. They’re full time employees of ours. And that’s how we’re, that’s how we’re growing. And that’s full, full stack development, UI, some of that type of stuff. We’re not, we can’t get there with sort of data, you know, machine learning data, it’s going to have to be more localized. But that’s how we’re dealing with the engineering side. Just for whatever it’s worth, we’re probably paying 40 cents on the dollar.
[38:29] That was gonna be my next question, fully loaded, what’s it cost? 40 cents, that’s a pretty whopping savings.
- It’s awesome. And they’re great. And the communication is good. The hours are good. It’s not, I tried this in other parts of the world in my career. This is far and away a whole different deal. And one thing I will say to these guys are equitize, they’re, you know, the part of the company. So it’s not your, you know, I off, you know, I offshored this thing to some office in the middle of nowhere that they don’t have skin in the game. So we’re riding that, we’re riding that wave on the engineering side.
[38:57] We’ve taken the same approach. I looked recently, competitors are already burned through 2 million of funds, of raise rather, we’ve bootstrapped and our IRRs higher than theirs. And largely we were able to do that because it’s been all over overseas and shares.
- Isn’t that awesome? And the key is you got to have someone at the point who can manage them. Right? I mean, it’s that simple.
[39:21] Ask my co-founder.
- That’s the same with me, that’s the benefit of luxury I have. Yeah. That’s the other great word of wisdom is get a co-founder who can do all that for you.
[39:31] Oh, yeah. There’s, I wouldn’t be a software co-founder without my other co-founder. He’s the CTO. He’s the guy that deals with all the ones and zeros and the engineers and the keyboards that make all of that happen. And there’s no way. There’s just no way we’d be where we’re at without him.
[39:49] What about your interview process? Do you have anything that you think that is noteworthy in your interview process? Either be it, either for an engineer or for someone on the sales and marketing side?
- Absolutely. I mean, this is our product. So, and now we haven’t spent a ton of time on the…
[40:06] But yeah, I mean, the checking references part, I’m sure is pretty noteworthy.
- Right? But what’s cool about it, so we entered this phase, what we found is companies perfunctory, we’re doing kind of the reference check, last stage of the hiring process post offer. Kind of pre-start, kind of like when they would do a criminal check. And we’ve always been begging the table saying that you got to do this further up, because this can impact your entire hiring process. And then some of our more innovative companies are now, even like Upwork is doing this post phone screen pre first interview. Very cool. So that’s what we do. So before you’re even gonna get an interview with us, we’re going to run your Crosschq. And it is an awesome interviewing tool, because you cut through all the noise, I don’t have to spend time talking about things that I don’t need to spend time talking about. But I had these great insights into you, maybe what your blind spots are, your strengths, your weaknesses, it just sets up for a much more powerful interview. And frankly, it also gets you comfortable if you’re going to come work here with our tool. That says like, if you’re afraid of this, you shouldn’t be working here. Right. So it’s a great screen out process, but it really is awesome in terms of making the interview itself more and more productive.
I’ll give you one little thing on a sales guy we were looking at hiring. Great guy, everybody loved him. But on the Crosschq, he was low rated as a closer and low rated as a, as sort of a pipeline management individual. Really successful guy, great career, people loved him. He was one of the, he’s better suited in a kind of leadership-ish role at a more established company. And for us getting that insight and it would have been hard to get to that insight any other way. But that was something we were able to flesh out early in the process. So we love our tool from that perspective. Super, super effective. We use Lever as our ATS who’s also a partner of ours. You know, I think, I think that, that’s great. Just an efficiency perspective. But really, you know, we use our own stuff on that question. So it feels like a paid promotion, unpaid promotion. Excuse me.
[41:56] Alright. So here’s my dumb question Lever as your ATS. I don’t know what that is.
- Lever, ah, Applicant Tracking System. So they’re really good for our real stage companies. It’s just the system you use internally to manage your talent from the time they enter your world through to when they’re hired. There’s a whole bunch of, there’s a big war in that space as you can imagine. Yeah, the guys like Workday and Oracle have been the big players. And these are the sort of the disruptors in that space for guys like Lever and Greenhouse in those types of companies.
[42:24] Do you happen to sort of, self-interested question here, is your service available on an ala carte basis for, you know, because we’re a bootstrap company? I don’t, I don’t know how many people I’m gonna hire this year. And I watch my nickels like their dollar bills. So I don’t want to sign into a subscription for with an unknown frequency of hiring. Can I simply buy them as I need them?
- Yeah, it’s not today. And I mean, we do friendlies all the time, right, where we have, you know, the accounts were local, let you give it a run and see what you think. It is interesting for us. We did test a premium version of our model to try and deal with some of those opportunities. We turn that off. So a limited feature free version. And so that was an interesting experience. And I laugh about it because Glen Solomon from GGV, he’s like, it’s not gonna work, don’t waste our time. You know, 9 out of 10 of our companies that try premium, just, it’s just not a good place to get for some things, but it’s just not what we’re doing here. So we weren’t really able to make that work. But we would be absolutely will selectively choose early stage companies and let them give it a whirl and kind of grow with them when they’re ready to grow into exactly. So, we’d love to, we’d love to help you guys out.
[43:34] We have, I have only eight minutes left. So we’re gonna have to draw to a close here pretty quickly. Let’s talk about employee retention. Do you have anything there that you can share? You haven’t been around that long, so maybe it’s not been an issue yet.
- Now, it’s interesting. I was talking with one of our clients yesterday about their retention. We’re working on something really cool. We just brought on a PhD from Georgetown, a guy named Brooks Holtam to build out a productive team for predictive retention index. What we’re trying to get to with Crosschq is take our pre-hire data and map it with post hire data tenure and what type of performer they were. So once we have a company tuned in the Crosschq system, we can actually predict for you how long this person is likely going to stay or get within the bounds of reasonableness. And Nicole on my team said, we were talking through this, because why don’t we just use ourselves as an example. We’ve had 100% retention, we’ve never lost anybody. I don’t know that you get back there. And so, anyway, today, we’re there, but talk to me at three months. I’m sure stuff happens. Lives change.
[44:29] Yep, indeed. My guest has been Mike Fitzsimmons and the company is Crosschq. And they are an innovative provider for fixing, or not fixing, solving a very critical problem in the hiring process. Go check them out.