SaaS Interviews with CEOs, Startups, Founders
1734 How He Hit $3.5m in ARR Selling HR Interview Tool
23 Apr 2020
Chapter 1: What changes have been made to the podcast release schedule?
Hey guys, I'm recording this here on April 5th. It's Sunday. Everyone's trying to survive the crisis. Quick note to you guys, we are moving, you know, we used to delay these episodes by, you know, four to eight months after we recorded them in terms of releasing them on the podcast. We've changed that.
A lot of these interviews you're gonna hear over the next many months are gonna be ones we recorded only
days prior we think that's a smarter way to run the show i've made the change so expect more urgent information coming out secondly i am getting destroyed on itunes reviews by these people that say nathan's rude he's hard-hitting blah blah blah which by the way i am it's part of my style it's what works the problem is people that love that style never take the time to go leave a five-star review
So I only get one or five star reviews on iTunes. And right now there's a streak of one star reviews that is driving me crazy. It would mean the world to me, guys. If you're loving the show, you love how direct I am. You like the style. If you go leave a review on iTunes now, if you do that and tweet it to me, text it to me, email it to me, whatever you want.
I'm going to reply with a very special surprise. I think a lot of you guys will really like it is heavy, heavy data oriented. All right. So I appreciate that. Thanks, guys. Enjoy the show. Launched his company Shining and helping people do more efficient interviews, specifically HR teams. Has about 55 companies right now paying 10 grand per year.
So 45 grand a month in revenue up from 30 grand a month just a year ago. They just raised 350 million bucks in terms of funding, basically operating a break even up to that point. 10 people in the UK. Economics wise, about 5% local turn annually, 10% expansion. So negative 5% net negative revenue turn annually, spending about 3,500 bucks to get a new customer.
So four month payback period as David looks to scale. Hello, everyone. My guest today is David Koppel. He was originally a software engineer, now a serial entrepreneur, loves applying technology to solve real-world problems. And like the best of ideas, Shine is an idea born of frustration and real-world experience of the recruitment process.
The company helps video interviewing and value-based recruitment at shineinterview.com. David, you ready to take us to the top? Yeah, looking forward to it. All right. So what do we need to know about what the company does? And then what's your business model? Is it pure play SaaS? It is SaaS, yes. So Shine is a pre-hire recruitment and screening platform.
So we use video interviewing and values-based recruitment to allow our clients to reduce the time and cost to hire by up to about 70% and also getting a better quality of candidate coming through to the next stage. So as you mentioned, it's born of frustration, really. And I guess my background is
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Chapter 2: How did David Koppel come up with the idea for Shine?
Yeah, $45,000, $50,000 a month at the moment, yeah. Okay, and what does growth look like? What were you doing exactly a year ago? Yeah, so we're growing year on year about 60% at the moment. So we're doing about 350 last year. This year, looking to be about 600. Yeah, so just to be clear, when you say 350 last year, you mean your run rate in December was about 350K? Yeah, yeah.
Okay, so that would have been about 30 grand a month. You're now at about 45, 50 grand a month. Yeah, that's right. Okay. And where's most of that growth coming from? Is it these customers paying you more because they're using it more or you're adding brand new customers altogether? It's a combination.
So, yeah, we're in a good position where we can actually grow existing client base, which is really good, especially when you're able to maybe start in a single entity. And then some of the organizations we work with, obviously, multinational corporations and spread out from there.
That's a good way to get a footprint into an organization, but there's a lot of new business coming online at the same time as well. What's the growth channel you're using? How did you get these 50 customers? A lot of it is outbound. We'll go to exhibitions, trade shows, and the like. We've got an in-house sales and marketing team. How many inside sales?
inside sales so we've got three in that team and uh somebody in marketing as well so total team size is about how many uh the company is uh 10 okay so about three or four marketing and sales yeah yeah and everyone's in the uk or is folks remote uh we are predominantly based in the uk so we're based uh in the northeast that's right um but we are looking to develop partnerships as well um so that's something really which is a a
bit of a focus for us over the next few months as well. And David, have you bootstrapped this or have you decided to raise capital? Yeah, it's pretty much bootstrapped to date and actually just took on a small seed round just in December. Okay, so you're not bootstrapped. I mean, you're either bootstrapped or you've raised capital. So you've raised capital. How much have you raised?
Literally just two weeks ago, we closed that round. That's great. Up until that point, yeah, bootstrapped until then. So it's a fairly small round. So just did 350. Okay. And really the idea there is to just give a bit more to play with in terms of the sales and marketing. Was it a priced round or was it a convertible note? Yeah, it was an equity play. Okay, it was a priced round.
And you raised from what? Wealthy individuals in the UK or US investors or who? Yeah, it was a VC mercier in the UK who backed us there. Okay, very good. And then other economics critical to a SaaS company, things like churn can kill a company. What's your churn today and how do you make sure to keep that low? Yeah, pretty good actually. So we've only ever lost a handful of clients.
Probably less than... 5% in terms of logo churn, which I think is quite good.
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Chapter 3: What is Shine's business model and pricing structure?
We've never had anyone move to a competitor, for example, which is really good. So we need to just make sure we're keeping that up. When people leave, it's because perhaps their recruitment needs have perhaps changed or their way of using the platform is slightly different. In terms of revenue churn, that's actually negative. So as I mentioned, we're able to grow existing accounts as well.
That's something we're really trying to focus on as well. How negative? Sort of probably running between 5% and 10%. So negative 5% kind of net negative revenue churn annually? Yeah, yeah. And where is most of the expansion revenue happening? What pricing XCs are you upselling against? Generally, it's within the client success team working quite closely with our...
clients to make sure they're using the software in the best possible way. But once they see the benefit, how can they use that in different ways? How can we use that in different departments, for example, as well? So it's obviously picking out the opportunities and who's best to focus on. So David, sorry, just to be clear, is it upselling number of seats? Is it upselling number of recordings?
Is it upselling feature upsells? What's the value metric you're upselling against? Yes. So it's not not seats, but it'll be it'll be functionality. It'll be it'll be volume that they're putting through. So that might be recorded interviews as an example. Interesting. OK, that's healthy. And that's kind of so good.
I mean, so if you have five percent logo turn annually and 10 percent expansion, that puts you at about negative five percent net negative revenue turn annually. Those sound about right. It's about there, yeah. Yeah. Interesting. In terms of growing the company, I mean, you're a developer on the back end. I mean, are you doing any direct paid spend to drive new customers?
Yeah, so we will spend a little bit on sort of external exhibitions and trade shows, that kind of thing. Obviously, the content marketing side is quite big for us as well. So there's various different things that we'll be looking at there. And are you, I mean, so when you look at your fully weighted CAC to get a new customer paying you 10 grand a year, what are you willing to spend on that?
Yeah, so it's around about three and a half K at the moment. And where is most of that going? Sales, like headcount and salaries commissions? I would say the majority of that is headcount commission. And then there's maybe a small amount of external spend as well. Yeah, that's great. And then are you, I mean, how aggressive are you being now that you raised capital?
Are you burning a bunch of money each month or you're still operating at profitability? Yeah, well, um, I mean, it was literally two weeks ago that we, uh, we closed around. So we're, we're going through a recruitment phase at the moment. So we're looking to head, uh, headcount there. That better go well, right? You have to use your own tool and do that very efficiently. That's right. Yeah.
So, uh, yeah, absolutely. Um, so yeah, I mean, we've got, we've got plans to be a bit more aggressive now, which I think is the really exciting thing. Um, when you're bootstrapped, it's a little bit more difficult. Uh, I think you're just taking those risks and, uh, knowing that at the end of the day, you've still got to meet payroll and everything else.
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