SaaS Interviews with CEOs, Startups, Founders
957 Why He's Moving from Self Serve to $3k/yr Plans in Recruiting Space
08 Mar 2018
Chapter 1: What is the background of Raj Sheth and Recruiterbox?
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 of 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. 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.
Chapter 2: How did Raj manage to bootstrap Recruiterbox?
Hello, everyone. My guest today is Raj Sheth. He's the co-founder and CEO of RecruiterBox, a SaaS recruiting software with over 2,100 customers. He works with a team of over 35 people across two countries and has bootstrapped the company over the past six years. He's also the author of Prepare a Hiring Guide for Founders and First-Time Managers. Raj, are you ready to take us to the top?
Yes, I am. Thanks for having me. You're welcome. So you're based in San Francisco and you're bootstrapped.
Chapter 3: What revenue milestones has Recruiterbox achieved?
How do you resist the urge, the funding urge?
So when we first started, you know, my co-founders and I were asking how we would raise funds, right? Because it just seems like to do anything, to hire people and to do paid marketing, of course, it's going to take money. And we always believe that sequentially, we need to spend money first before we can make any revenue and grow further, etc.
But we could very early on, we started making a little bit of revenue. So we figured out the revenue first. And we started learning from that revenue. And then we were asking ourselves, Well, we should only raise money if money becomes a bottleneck to what we have clearly figured out.
Chapter 4: Why is Raj shifting from self-serve to higher annual plans?
And every six months and every year, it felt like, well, we haven't really clearly figured out what we're trying to innovate here, etc. And we need to learn a little more. And before you know it, we... two, three years down the line, we hit that first million and then 2 million. And then pretty much we were like, you know, we, we should only raise money.
And we continue saying that right now, we're not like flag bearers for bootstrapping or anything. We continue saying that we should only raise money. If money becomes a bottleneck to what we truly need to do. And right now it seems like we are fine. And it's just taught us to be more efficient.
And you mentioned you kind of blew past a million and 2 million in ARR. What are you at today? What do you pass?
We are in the mid, we are in the mid, mid point on the journey towards 10. So we are mid, mid single digit.
That's got, so can we, can we put a range and say between four and six? Is that fair? Sure. Okay, good. And, and give me more of the history here.
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Chapter 5: What customer segment is Recruiterbox targeting now?
Put some timestamps on this stuff. So when was year one?
Year one was 2012. So 2011 is when we put this out. And we had probably 20 customers in 2011.
And how much revenue in year one? Do you remember?
Yeah, 2011 was just 30,000 total.
Hey, you got to start somewhere, right? And how many of you guys were you supporting on 30 grand? How many founders?
We are three. We were three, and we were only three. We didn't have any other employees, and it worked out well because one of my co-founders is a backend engineer. The other one is a frontend engineer and designer, and I was doing all the marketing, sales, and support. So we kind of just carried it on our back, you know, three of us.
That's great. And what year did you pass the million in ARR rate? 2014. 2014.
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Chapter 6: How does Recruiterbox handle customer acquisition costs?
Okay, so from nothing to a million in ARR in, you know, about two and a half, three years, it's pretty healthy, right?
Yeah, well. Well, hopefully we would do it faster if we had to do it again.
Yeah, of course. And can you give us a sense of current growth? So we just mentioned you're now between four and six, but where were you a year ago?
So a year ago, we were roughly at about 2.7, 2.8.
So healthy growth. I mean, you're almost doubling or maybe are doubling year over year.
Yeah, and of course, of a higher base, it gets a little difficult. And like, once you get into the specifics of it, we had a lot of these little customers paying, you know, little, I mean, in ticket size, paying us, you know, a monthly subscription.
How much? Like, what's a little?
80 to 100 bucks a month.
Okay.
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Chapter 7: What is the current churn rate for Recruiterbox?
In itself, that's not the goal. But Let's assume that all of us are doing this because, you know, we are trying to solve a problem uniquely that, you know, at least we have a unique vantage point and hopefully it's helping a bunch of people. And the thing is that we realized that an applicant tracking software is not like an accounting or payroll software.
See, every five person company, even if like, let's say you have four or five or 10 people working with you, you definitely need a payroll software. You definitely need an accounting software. But for the next six months, if you're not hiring a single person, you really need an applicant tracking software.
So what we started realizing is that all our customers that were doubling down and growing with us and where 90% of the product feedback was coming, they were not these small companies. They were like mid-sized companies, like 30 to 500 plus employees. And all of them had a budget to do this well, you know, 5,000 a year, 10,000 a year.
So long story short, what we realized is it's not just about charging more money and moving up market, but what we realized is who is our customer? Who do we really exist for? And who are we solving the problem for? And those guys are people if we keep charging them $100 a month, we will go out of business. And that aren't 100,000 of those guys.
Yeah. So Raj, what are you kind of close this story out so we can get as much as possible. So what are the folks currently paying on average per month, would you say?
Per month, they're currently paying about 250.
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Chapter 8: What lessons has Raj learned about growing a SaaS business?
That's what it's moved up to. And it's all annual plans, mostly.
Got it. So 250 annual plans. So they're paying, you know, on average, was that three grand a year?
three yeah three to five grand as well most of the payments will be that makes a lot of sense and uh again totally bootstrapped currently what you mentioned that you wouldn't raise unless there was like a clear thing you've already figured out and you know where you would spend it are you doing any paid marketing right now what and if so kind of what is your fully weighted cap yeah uh
We spend about 50% of this $3,000 a year on our CAC. That's our customer acquisition cost. It's $1,500 per customer. Okay. And again, most of these guys are paying us $3,000 upfront. They're not paying us month on month.
So you have an instant payback period.
Yeah, we do. And our sales cycles are also quite short. They are between three and six weeks is the range, right? So you can say that it's about like a month, the sales cycle. And to answer your question, we're spending about $30,000 a month on paid marketing.
Got it. And where are you spending that?
It's split pretty evenly between Google AdWords and Capterra.
Interesting.
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