SaaS Interviews with CEOs, Startups, Founders
1610 How This Founding Team of 2 Peacefully Removed 3rd CoFounder
21 Dec 2019
Chapter 1: What challenges did the founders face when launching DeepHire?
Launched DeepHire back in 2017. Had some co-founder issues that they've worked out now. Now they're focused on getting a 10 grand a month in revenue. Currently doing a grand per month. That's eight customers paying about 150 bucks per month.
Chapter 2: How did the team resolve their co-founder issues?
They've raised about 85 grand combination of angel money and grants to scale it. Tima2 in Ohio, again, building DeepHire. Much easier to use software for recruiters when they're looking to capture video content from people applying and so they can get through it quickly and only invest in those videos where there's true promise in the first minute or two. Hello, everybody.
My guest today is Stephen Gates. During college, he went through 24 hackathons, 200 job applications, zero callbacks, and made a recruiting hack. He was basically a VC firm awarded a grant. Plus, they raised some pre-seed to launch their current company, DeepHire. They're 1.5 years in. They had no traction, pivoted to video interviewing platform from pilot feedback.
Chapter 3: What strategies did DeepHire use to pivot and gain traction?
And now they're closing paying clients, won another grant with Angel Match within two months, and now focused on getting to the beautiful $10,000 per month mark as soon as they can. Stephen, are you ready to take us to the top?
I am. Let's do it.
All right. So where are you at today on that trek to 10 grand a month? So right now we're doing about 1,000 in monthly recurring revenue. That's great. So let's break down kind of the backstory here. The first 1,000 can be the hardest sometimes. So when did you actually launch the company? What year?
So we launched in 2017. I think officially we incorporated in April 2017. So that's right after that whole hackathon stuff.
Chapter 4: How did the founders secure initial funding for DeepHire?
Um, and then since then we actually had three co-founders. Uh, we did the whole summer thing, right? Like get a, get a house together. The three startup bros do the whole, the whole shtick. Uh, by the end of the summer, it turns out we only, uh, we had to get rid of one co-founder.
So I was going to say, it's like the hunger games. How many, how many founders survived, right?
Yeah, exactly. Two founders survived. Um, and that was, that was one good learning, by the way, it took longer than you would expect to like actually make that clean break.
it took way longer than you would expect why steven why did it take longer after that uh during that time um the fond relationship wasn't like a super clean break right on the relationship side it got a little bit um you know a bit ugly and then just because back then we're really bootstrapping i mean even though it's like 35 000 like nothing though is that is that what you guys had raised from grants and stuff 35 grand
Oh, yeah. Thirty five grand total. So that's what that's what carried us to to last week. And last week was when we closed the fifty thousand kind of like bridge round.
Oh, congrats. Now, was that it was that equity or debt or venture debt or what?
Which one? The thirty five? Fifty. The fifty. It was twenty five thousand convertible from an angel and twenty five thousand from a grant award thing that I had to go through.
Oh, that's great. OK, so about 85 grand into the company to date, which is which is nice. So congratulations. You're feeling good. You have some extra runway now. Now, how much runway, though? What's the team size? Is it just you two?
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Chapter 5: What unique features does DeepHire offer for recruiters?
Yeah, just us two. And we're hiring. So there's a few specific programs around here that we can hire some interns for, especially cheap on our end. So we're experienced with that, but two co-founders and then any interns that we can get.
Yeah. So I want to walk through kind of how you're doing this because a lot of students or people stuck in corporate are listening going, okay, like how do I jump out and do what Steven's doing and get my first grind of revenue? We'll come back to that in a second, but first give us some product context here. What's the product do?
Yeah. So are you curious about the whole pivoting structure and how we pivoted or as of right now, start with where you're at today and we'll go backwards. Cool. So today, um, So just like how we're Skyping right now, and you do a lot of these podcasts every single time, right? So imagine if you could automate yourself out of it.
So you just have a list of questions and you send that out to people. They kind of log on, click your invitation link, they log on, they answer the questions on video, much like I'm answering your questions right now. Now I know you're being a bit creative and you're asking your own questions, so you can add those as well. So that's basically what we're doing for recruiters.
Recruiters, they're little professional networkers, right? They do 30 minute phone calls all day, every single day. And a lot of those phone calls, if the candidates just, they're like prospecting. So if the candidate just is plainly not a good fit, first two minutes, you can kind of tell, you can't just hang up the call and go on, right? You got to stay out through the call the entire time.
So that's the huge time savings. That's why that's really one of the biggest value prospects for a recruiter is, hey, use DeepHire, fill out your screening questions on this interview link, send out the invitation, people log on, answer your questions on video. And then you get back the results in video profile. And then we do some extra stuff to
So I'm actually recruiting specific things to kind of help the recruiters drive client decisions faster.
Yeah, so like the candidate can basically say, okay, first question, tell me about yourself. The candidate can look at their webcam, wherever they are in the world, answer it, that video gets uploaded, and then your recruiters can kind of talk amongst the team, like on the sidebar on their backend about what they thought about that candidate. Is that right?
Yeah, a hundred percent. And then the other key part of the killer whole thing, cause there are other apps that do that other web apps, other companies that do that. Uh, the reason why I think we're getting traction, why people are responding really well now is because we're focused on the, uh, the, the, the client and the recruiter relationships.
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Chapter 6: How did the founders acquire their first paying customers?
But for the recruiter, Closing that placement, that's a $5,000 check for the recruiter. So he cares a lot, right? I mean, that's his revenue. That's how he makes money. That's his business. Yeah, that's interesting. So we do stuff there to automate and kind of do a drip campaign to the clients and get them to respond and kind of teach them along, get feedback from them.
And that's like those two combos. What are people paying on average per month for this?
They're paying $150 per seat per month. Okay, $150 per seat per month. And how many customers have you scaled to today?
Um, so that'd be, we're around like eight or eight, eight or 10, eight or 10 seats.
About eight seats. Great. Yeah. So I can have, that's where you get the thousand bucks a month, eight times about 150. Right. And, and how, so walk me through how you got those first date. I mean, are you just hustling? I mean, literally, how'd you find the first recruiter that started paying you?
So literally find, so we found a lot of recruiters that are willing to mentor us and kind of give feedback.
Um,
In our local network, I mean, you know, a lot of people say that your first sales come from a local network. We found a lot of people that were willing to mentor us, which is great, but we found no one that was willing to actually pay for it, which was a little bit less great. So to literally find our first customer, she's awesome. We love her. Her name is Suzanne. She's in London, actually.
And we found her by going to Facebook groups. And there are specific recruiting groups. Each of them have like 20,000, 30,000 people in the group. So, uh, some of the groups, they do stuff like feature member of the day, right? Kind of like you do, where they talk about, you know, they're here, there are metrics and here's what they do. And here's what they focus on.
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Chapter 7: What are the founders' plans to reach $10,000 in monthly revenue?
So it's a lot of cold Facebook message them, set up a call, set up a demo right after that. And then usually because the people in the groups, they're much smaller deal sizes. You know, at max, it's like a boutique firm with like 10 recruiters. So in terms of, you know, selling... It's a pretty small deal size, pretty small customer. So their decisions are way faster.
The first customer we closed in like a week, I think.
That's great. All right, let's go back to the kind of the founding story here, right? So like getting out of the gate. So first off, when you raise the first 25 grand and now obviously you've just raised additional capital. Let's go back to when the other co-founder was still there. Did you guys just split it right down the middle in the bro house? It was 33, 33, 33.
Yeah, we started out, I think, with, like, Russell and I, equal partners. And then the third guy, he had, like, 25 because we had done some Lego before then. But then he said, well... So, like, yeah, okay, sure. 33, 33, 33, right down the middle.
Okay. And then, so, okay, so when did you realize it wasn't going to be a fit? Like, did the third one just, like, stop, like, responding on Slack or he stopped being engaged? What happened?
Um... So there was always like red flags, right? But back then, Russell and I had the mentality of, well, we can work through it, right? Founding is like a marriage. By the way, back then, we didn't even know what an LLC was. Yeah. You know what I mean? Like that was the first learning. We learned what an LLC was. And the day after that, we learned what equity was.
Day after that, we learned what was the vehicle to take a $35,000 check.
Yeah.
You know what I mean? Like that's the mind frame that we were in. So now though, being more experienced and looking back, we can kind of tell like, oh shit, that was like no fucking way it would have worked. Did you have vesting schedules? What was that? Did you know about vesting? Thankfully, yes. Okay. Which by the way, back then, didn't know what a vesting schedule was, right?
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Chapter 8: What lessons did the founders learn from their early experiences?
There was no cliff, but we're on investing schedule. So they invested quarterly. So I think he had two quarters that he invested.
I see. So he, he's still kind of on the cap table, kind of silent partner. Yeah. Yeah. Great. Makes a lot of sense. And then the other big question here, um, and this is kind of sensitive, so you don't have to answer, but it would be valuable. People never know what to pay themselves in the early days, especially when they've raised like 20, 30, 50 grand.
I mean, so how do you and your co-founder pay yourself?
So we do moonlighting. So we just do software consulting on the side. Or sorry, we used to do software consulting on the side. Now that we're kind of making money off of this, we want to kind of go full on and bootstrap a bit further or whatever. But as for paying, if you've got $35,000 in the bank, I mean, as your pre-seed investment, I don't think that's worth paying you for.
Because if you pay yourself even $10,000 for the year, then that's actually with taxes, it's like $7,000. Yeah. You know what I mean?
So it's like- So you didn't pay yourself. You just did consulting partners on the side.
Yeah, exactly. So we just did software consulting on the side, which is, I also think early on, that's really good to do because it just exposes you to more people. You get more changes to pitch your product and you kind of develop relationships with people.
Yeah, that makes a lot of sense, man. So what's the next plan? How do you get to 10 grand a month in revenue?
So 10 grand a month in revenue. One, we're really... So we're trying to fill in the market gaps left by competitors and really hitting hard on differentiation and the gap that they're leaving. So one gap is on inbound marketing. All of them, all the competitors... Right now they're like slightly older companies. They don't really quite get inbound yet.
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