SaaS Interviews with CEOs, Startups, Founders
HireClub: How 32k Member FB Group Fueled $25k MRR SaaS Business
11 Aug 2020
Chapter 1: How did a Facebook group evolve into a startup?
We've added a new plan, especially because of COVID. We want to recognize what people are going through and we added what we call a standby plan. So there's about 50 people right now, what I would say is on the $20 a month plan. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed.
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He is the founder and CEO of a company called HireClub.com. He loves helping people succeed in their careers and turned a Facebook group into a startup that's increased salaries for over $2 million for his customers. All right, Ketan, you ready to take us to the top? Let's do it. All right. So this started off as a Facebook group, it sounds like. Is that right?
Yeah, actually in 2011, I was running a design agency and I had clients like Microsoft, Adobe, and Twitter. And I always realized it was really hard to hire people. and finding good people to hire or even getting a job yourself. And I felt like normal ways of doing it weren't working. So we started this Facebook group and we had a couple of simple rules. I invited 25 of my friends.
The first rule of HireClub was don't talk about HireClub, right? And from that very first day, we had a first interview set up. And that first week, we had our first hire. And I was like, wow, this is kind of cool. And then eventually, I kind of just let it grow on its own. This is when people weren't really doing Facebook communities or groups. I was just doing it organically.
Really, I just needed people to hire for these projects I was working on. And then around 2017, we hit 10,000 people in the group. And I was like, oh, that's cool. We can do something with this.
um and we had helped like at that point hundreds of people find jobs where it was contractor full-time and um the community was so amazing we ended up um raising a crowd equity round and our community invested our first fifty thousand dollars into building the company as it is today so it literally is extremely community driven it's very diverse it's very open and it's a place where people are going to really talk about the real struggles they have at work
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Chapter 2: What challenges did the founder face in hiring?
As they were getting referrals, we would look at their resume. We would talk about, hey, this is the thing you should bring up during this interview. If you're their designer, I could help them and point out on their profile stuff. And what we realized is people needed coaching support. And that's really what made the difference, right? If I just give you a referral.
That is now, when I go to pricing, say that is your model today. $299 a month at a high, all the way down to $119 a month at a low. And they're paying for minutes of coaching calls per month. Is that right? Yeah, yeah. It works a lot like a cell phone plan. You're getting X amount of money. What would you say, just so we can get a sweet spot, and we can go deeper on the sweet spot.
What would you say sort of the average person looking for a job that usually you guys is paying you per month across these plans? Just like an average. So our average is around the middle plan, the 179 a month. Okay. Fair enough.
Now, the obvious question here is if you're trying to build a recurring model and your coaching is successful, they pay you to coach them and they get a job and they cancel you because they don't need coaching anymore. So do you have serious retention issues? So a couple of things. One, if I find someone in a job at a company called hire club, I have done my work. That's incredible.
You don't get paid for the placement though, right? We don't, we, we weren't, we're not doing that now because again, incentive alignment, right? Who am I? Who is my customer? If the company is paying me, the company is my customer and my goal is to get them what they want. If the customer is paying me, then they are my goal to get them what they want.
If I want to build something that's really going to make an impact on people's lives and be able to help them succeed, they have to be my customer. The problem is they're not your customer if you're successful. If your tool works, they're then not your customer. So how do you solve that? Here's the interesting thing. There are cases, yes, where people do leave after they find success.
I'm completely happy with that, right? Like Tinder's a perfect example. Tinder, people break up or get into relationships all the time after meeting on dating apps. Doesn't mean the dating app is not valuable, right? Or can create revenue, right? It's the same similar type of model. What we've actually seen though, as we grew,
is we went from coaching just to help you find a job to more career growth coaching, right? So now what's really interesting, our top customers, a lot of them are founders.
A lot of them have been with us for two plus years because now they have an executive coach, a business coach, someone who can help them work through all the issues that you have as a founder and running a business and all that stress that entails. And what's really interesting, our highest LTV is over five grand.
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Chapter 3: How did the community contribute to the startup's funding?
So from 2011 to 2018, you were making money in the community selling headshots. No, let me back up the story a little bit. So from 2011 is when we started the group. We didn't even cooperate until 2017. I didn't even try to monetize until 2017. I actually had different startups I was working on. Got it. Nightlife startup I was working on.
I was working on a business app startup that... Okay, I understand. I understand. Now, this is a side... I was just like... a thing I was doing to help people, and I love doing it, right? I see. It was really a community, right? Yeah, I see. So you signed people up starting in 2017. You got your first sign-up on this about two and a half years ago.
How many customers do you now have using the tool today? In terms of total customers or active? Active customers, I think we have over 200. Yeah, active, meaning they're currently paying you today, like this month. Yeah, yeah, it's over 200. Okay, okay. How many have you had come through and pay you at least once over the past two, three years?
I would say it's something like $1,100, $1,200 right now. Interesting, interesting. Okay, now the nice thing here, correct me if I'm wrong, I'm looking at your crunch rates, but you haven't raised any capital for this, correct? We did.
We actually ended up, so a really interesting thing happened to us is the reason we incorporated was in 2017, a friend of mine said, hey, there's this new reality TV show called Meet the Drapers. Do you want to be on it? And I was like, what the heck are you talking about?
one week later i'm being filmed in front of you know these cameras with the draper family tim draper jesse draper and bill draper who are very you know well-known vcs and i pitched higher cover the first time and it was run on republic which is a crowd equity campaign uh platform that is by the founders of angel list and we ended up raising our first capo through that which our community invested we had 309 investors from that uh and they're raising our first 50k and then um
After that, about a year later, we started raising from angels and we raised about 500K so far. Got it. So to date, you've raised 550K? No, 500K total. Okay. So there was 50K from the first tranche people and then there was another 500K from angels? Yeah. So that would be 550,000 total? Yeah. Not 500,000 total? No. Yep. Okay. Got it. So 550,000 total raised today. That's great.
Now you've got it. I mean, you've got a fairly large team, right?
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Chapter 4: What monetization strategies were explored by the company?
There is 31 people. Is that right? Or how many are on the team today? Oh no, no, no. The team is only four of us. I was going to say how, how on I'm backing into your revenue here because you're saying 200 customers at 179 bucks a month, you're doing about 35 grand a month in revenue, right? Uh, yeah. But which, um, where are you getting the 31 number from? LinkedIn.
Oh, so here's how our platform works. We have career coaches who are essentially what we call providers, right? We have over 60 of them. And some of them link on LinkedIn that they are part of HireClub. I see. And it says that number. But employees, we only have four. I see. Okay. And is that right, though, in terms of scale today? You're doing about $30,000, $35,000 a month in revenue?
No, because we've added a new plan, especially because of COVID. We want to recognize what people are going through, and we added what we call a standby plan. So there's about 50 people right now, what I would say is on the $20 a month plan.
And the standby plan, what that is, is they can keep their minutes, they can continue doing their coaching, but they're not being charged further in terms of getting new minutes. So they're spending $20 a month to continue their relationship with the coach. Okay. So revenue is a little lower than that. Then it's like 150 customers at 180 a month. So you're doing like, what is that?
25,000 bucks a month, something like that. Exactly. Exactly. I see. I see. Well then this must be profitable. I mean, for people, I mean, this, I mean, this is a profitable company. Um, we are like right at the edge there. We're skirting there. Right. Because there are costs, right? Like we have, we had an office that we got a lease for. Um, and how much was that? About five, five grand a month.
Yeah. You can cancel that though now, right? No, long story. Sure. I can't. But there's a, there's a different, longer story. You're locked, you're locked in for a decade, like most triple net leases, right? Yeah. Yeah. I'm only locked in for a year, which is fine. But we, we also, one thing we do that's really important is we, every customer connects through us through text messaging.
And what we found is, we're using Twilio, and Twilio's not cheap. Twilio's are probably our biggest expense. We love them, it's fantastic software, but it's expensive.
and um what we do is we create a transparent channel where you can text your coach and your coach can text you but you don't know each other's numbers right that creates a lot of safety it also creates a lot of trust and what can happen is that when you sign up and you start working with a coach it's immediate conversation you don't have to go through some app you have to download anything and customers love it because what it is is very transparent and i think a lot of people talk about how do the coaches get paid
They get paid based on how many minutes customers signed up for. For you? Yeah. Yeah, from us. So what happens is we charge X amount for the plans, and then they get paid $70 an hour or 70% of whatever we're charging, whatever is lower. So each month, what is your expense that you have to pay out to coaches? This must be like 10, 15 grand, something big, right?
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Chapter 5: How does the coaching model work for clients?
Six, okay, that's not horrible. And what's your situation though? Married, single kiddos? I'm divorced. My daughter is 21 and doing her gap year now. Oh, very cool. Okay, so one kiddo. And how old are you? I'm 43. 43. All right. Take us home here. What's something you wish your 20 year old self knew? Your past is not your present and you should always just go for it. Guys, there you have it.
Katan Building Hire Club started in 2011 as a side project, built this space up today to over 30,000 people strong, just adding value. And as a side effect in 2017, launched a tool that helps people looking for jobs, get sort of job coaching and consulting, but they even stay with the firm even after they found a job. Founders do this to have someone to talk to.
He has an army of coaches that help them out. They're doing, they have about 150 folks actively paying $180 a month for the platform. So call it $25,000, $26,000 a month in revenue. All organic onboarding via the Facebook group and their email list as he looks to scale. $550,000 raised to date and about to get into many more verticals of coaching and consulting.
Gitan, thanks for taking us to the top. Thank you.