SaaS Interviews with CEOs, Startups, Founders
1271 This HR Tech Company Incentivizes Your Current Team to Recruit
16 Jan 2019
Chapter 1: What is the main focus of 50skills.com?
Launched this thing in Iceland, now has a team of five people, really focused on helping your current team members, right? Recruit and bring on new folks, right? Really make the onboarding process frictionless, also set up incentive and reward structures for referrals and things of that nature.
Bootstrapped, which I love, again, has new customers coming on, paying anywhere between $100 a month, all the way up to $3,000 a month, usually on annual fees. contracts 1% customer logo churn that's a net monthly number willing to spend up to 12 months of CAC in order to get the customer so 12 month payback period assuming a minimum lifetime value of about 36 months founded in 2016.
This is the top entrepreneurs podcast where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs.
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Chapter 2: How does 50skills.com differentiate itself in the recruiting market?
We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Christian Christensen.
He's the CEO and co-founder of a company called 50skills.com, which is transforming the way businesses find and hire people. Christian, are you ready to take us to the top?
Sure am.
Chapter 3: What pricing model does 50skills.com use?
All right. Tell us more about the company. What do you guys do and how do you make money?
Yeah. So in a nutshell, 50 Skills is our recruiting software. What we do, which is a little bit different from other recruiting softwares out there, is that we connect directly with messaging platforms.
So companies using Facebook Workplace, using Slack, it integrates directly with those and kind of changes the way people think about recruiting in a way that we call conversational recruiting, which is a new trend that's happening in the market.
And is it the SaaS model or is it, you know, 10% of first year salary kind of set up?
It's a SaaS model. So companies are paying typically 12 months in advance for subscription of the service.
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Chapter 4: How does 50skills.com incentivize employee referrals?
And then there's an optional integration fee. So a lot of the companies use the software also to onboard new candidates. So it can be for different types of software they have. It can be checklists of things that they want to occur. So there can be custom integrations on top of the SaaS subscription part.
But that's completely optional for the companies and something that more of the larger enterprises are going for.
And why would somebody pay a little versus a lot more? In other words, are they buying like a bulk number of placements per year or what drives the pricing economics?
No, so we have a tier-based pricing model and it's based on the number of employees that the company has. So it's not based on the number of users they have. And in fact, we actually want to encourage the company to add as many users as they can and not be diminished or having to pay a higher price if they add more users to the platform.
Got it, okay, good. So it's, okay, how does that work though? I mean, I imagine you have more costs if you obviously place more jobs. How do you keep pricing? I mean, what allows you to drive pricing up higher?
Yeah, so you dropped a little bit out there during that question.
Yeah, I'm just saying if you don't drive expansion revenue based off number of new placements, what does drive expansion revenue? That seems to be like the core utility value of your product.
So the number of employees that the company has
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Chapter 5: What strategies does 50skills.com use to acquire customers?
employee is what drives up the price of the software and the reason why it's also you think about why is the price higher etc there's a number of things like one of them is that the software helps the companies hire through referrals so basically whenever you build a job you can add awards to it You can incentivize all of the employees within the company to reach out into their social networks.
So basically, the more people you have working for you, the more people you have optional to source candidates. So that's one of the arguments. The other is that we have really a great support team. We have put a lot of effort into the support, making sure that the customer is really happy. And so the effort is a little bit higher on our end if the company is larger.
Got it. Okay. Makes sense. But someone could have a thousand person team. They use your tool and it doesn't lead to any new recruits for whatever reason. You're still going to price based off team size, not number of new recruits.
Yeah. Yeah, we do. Based on the size of the company. And we do have clients that have thousands of employees that are using the system. They have different departments and they do use it in a different way. But overall, it's a great offering in comparison to whatever else is out there.
And are you selling one time to like the, you know, HR lead or are you selling to these individual departments kind of an Atlanta expand approach?
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Chapter 6: What challenges does 50skills.com face in customer retention?
It really depends on the size of the company, how we do it. We have clients ranging from smaller startups to larger enterprises and the sales process and how you do that really depends on how they're structured, who's making that buying decision and what happens there. You also have companies that have a really different types of turnovers.
So like in the hospitality tourism types of companies, they typically have a higher turnover or seasonal turnover and, Um, and, and the hiring process is different there from companies that maybe have, you know, people stay there for 10 years and don't, don't move the job afterwards.
And, and I don't want to go down every customer cohort. I'm sure you have many and you break them up, but on average, what would you say one of these customers is paying you per month?
Yeah. So typically our price, again, the pricing is based on number of employees. So it's clients are typically paying somewhere between a hundred to $3,000 a month services.
Got it. Okay, good. I mean, that's, that's a pretty big range. Are you more enterprise at 3000 a month or more, more SMB at a hundred a month?
Yeah, the 100 is more like the smaller startups that are using it for their hires. But most of our clients are closer to the maybe 500 to 5,000 employee range. So that's our target market. But we've gotten a lot of interest from smaller startups that just raised funding, growing fast. They love to use Slack, love to use Workplace. And they really want to integrate perfectly with that.
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Chapter 7: How has 50skills.com scaled since its launch?
So we've gotten a lot of inbound leads for that kind of stuff. Although our focus has been more on the 500, 5K market.
I'm just trying to get at it. So a more accurate average might be closer to 3,000 than 100 bucks a month. that's your focus going forward is more enterprise. The SMB stuff is just coming on no touch and you're, you're handling that as it comes on.
Yeah.
Yeah. Okay. Very good. Give me more of the backstory here. When did you launch the company?
So company is about two years old with our kind of reaching out of beta in October last year. And since then we've been growing pretty fast.
Okay. And what's pretty fast. I was going to say, just to be clear, going from $1 to $2 is 100% growth. Many would call that very fast who are doing currently $100 million in revenue. So it doesn't mean much when you say growing fast.
Yeah, I mean, instead of disclosing the customer amounts that we have, we're at about 30% growth rate per month right now.
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Chapter 8: What lessons does the guest share about entrepreneurship?
Okay. Again, it doesn't, it doesn't, uh, I always wonder why founders, especially ones that are young say that, cause it doesn't mean much. Again, if you're going from a dollar to $2, it means much more when, you know, these CEOs come on doing a hundred million in revenue and say, Hey, we've figured out a way to stabilize around 30 to 40% year over year growth. So, um, we'll move on past that.
Uh, I just, I want to call that out because I have to obviously be fair that way. Walk me through your first few customers that you got. How did you get them? Did you come from an agency and you brought them on? Where'd you get them?
Yeah. Um, The first customer that we got on board was just through our networks. We just used referrals. We looked at companies that we knew that were growing. In some cases, just begging them to try the software just to help us build it out. And once that started out, we got some great feedback. We were able to iterate.
Once that happens, we had some word of mouth happening and then we tried a few different strategies. So currently there's like three things that we do to find clients in the B2B space. One of them is just with outbound leads that we look at sources of what's a good trigger mechanism for us to reach out to companies.
And there are a few in the hiring space that we've tried out that's worked in a decent manner. The other two is we used resellers a lot, so we've actually gone out, found resellers that have a great network, and we've used them to find candidates that are a good source. They've defined leads that kind of fit the criteria, and they have their own kind of networks and areas that they operate in.
Why do they take time to help you, though? You must incentivize them somehow.
Yeah, they're incentivized to help us. So it's a little bit different. It's an incentive model as a percentage of the revenues that we make.
Got it. Like a traditional kind of value-added reseller model? Yeah. Okay, very good. And by the way, do you limit that or is it in perpetuity? In other words, if they bring you someone that pays you every month, do you pay them in perpetuity or just for the first year or just for the first month or what?
We have a structure on all the revenues that they bring in from the clients. It typically works on a 12-month basis, like all the revenue they bring in on that period. But there's different types of structures that we have depending on what kind of reseller partner we're working with.
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