SaaS Interviews with CEOs, Startups, Founders
JazzHR Has Record 40k Applicant Month During Pandemic, $15m Revenue
04 Sep 2020
Chapter 1: What is the main topic discussed in this episode?
Now, we run the business at cashflow breakeven. We could be cashflow positive if we chose to, but we plow everything we can back into the business to drive additional growth.
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My guest today is Pete Lampson. He is focused on building a company called Jazz HR. He's also a results-oriented executive with a 25-year history of strategic metrics-driven approaches to accelerating revenue. He's focused on the global small business market with deep experience and B2B high-velocity new customer acquisition.
As CEO of Jazz HR, Lampson is responsible for Jazz HR's strategic direction, company performance, day-to-day operations, and serves as a support center for his revenue teams. Pete, you ready to take us to the top?
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Chapter 2: What is JazzHR and what services do they provide?
How's that work?
I'm sorry, the company again is? Hacker Earth. Yeah. So, Hack, I can't comment on the, you know, I'll tell you everything that you might want to know about our business. I'm not going to talk about anyone else's business. That's kind of... That starts to get into territory that I wouldn't share. But certainly, we have some partners that perform more than others.
Partnerships typically do take a little bit of time to get up to speed, but we're dedicated to helping all of our partners perform as best as they can.
Got it. Yes. All right. And maybe this is because Chuck Brownfield is the one quoted in this press release saying we're thrilled to integrate with Hacker Earth to empower teams to hire talented engineers faster. What I'm trying to get at here is with this surreal, a real idea of a channel partner or Hacker Earth, what does that actually look like?
So are they putting a button for Jazz HR inside of Hacker Earth or vice versa? What is it? How does it actually work?
So it varies partner by partner. And first, we allow them to offer Jazz HR to their customers either on a resale or a referral basis, whichever they're more comfortable with. So in all cases, there'll be generally some form of recruiting promotion on their website and that their sales teams will be offering to their customers.
their customers either then are referred to us, in which case then we would work with their customer. If their customer chooses to purchase, then pay them a revenue share in perpetuity. Wow, it's in perpetuity. As long as their customers are paying us, we are paying them. We don't limit it after a 12-month period. Do you have any clause in that agreement?
No.
Sorry, I don't mean to cut you off there, but do you have any, I mean, one of the things I talk to VCs all the time about is just margin improvement in businesses.
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Chapter 3: How has JazzHR adapted its hiring strategy during the pandemic?
And if our partners who are reselling, which would include ADP and others, what they effectively do is they're purchasing a Jazz HR subscription at a discount from our retail price, and then they then mark it up or not at however much they choose to do so and resell to their customers. So in that case, there is the button or a pure e-commerce solution that resides on our partner pages.
Now, Pete, 7,000 customers at about $190, $200 a month. I mean, it sounds like you guys have broken about $1.3, $1.4 million per month now in terms of MRR.
Yeah, we're just under 7,000, but your numbers are correct.
Okay, which is great growth. When you came back on in early 2018, you were at about an $8.5, $9 million run rate. So nice growth. What is that, about 80%, 90% growth? Have you done this with the capital you'd already raised at that point?
Chapter 4: What record hiring trends has JazzHR experienced recently?
You had raised $26.6 million back then. Did you raise more capital?
We have not raised any additional capital.
Oh, wow. That's great. I was expecting you to say you'd raise a bunch more.
No, we run the business at cashflow breakeven. We could be cashflow positive if we chose to, but we plow everything we can back into the business to drive additional growth.
That's great.
What's the team look like today? Should I say that again?
I said that. I just was saying that's great being at breakeven. What's the team look like today? How many people? 80 employees. 80. How many engineers?
That's a good question. I'll say a low twenties, but I'm kind of guessing.
Low twenties, fair enough. And obviously this price point does not lend itself usually to an inside sales team because the ACVs aren't high enough to give commission. Do you have quota carrying sales reps on the team? We do. You do. Okay. So I'd love to learn about that. How many do you have and how does that work?
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Chapter 5: What is the average monthly cost for small businesses using JazzHR?
And, I mean, we're in the 1.2s generally. And then our net is when we, because of expansion revenue, which we define as both add-on sales and upgrades, is where it drops down below 1%.
I see. I see. Got it. So you've got, if I just multiply times 12 to do annual, you've got about 12% gross revenue churn annually, maybe a little above 12%. You've got about 5% or 6% expansion. So your net revenue retention is right around 97%, 98%.
Yeah.
Not bad for this price point. Do you see a path to getting that above 100 percent net revenue retention with some maybe higher priced products?
You know, net negative churn is, of course, the holy grail for SaaS companies. Hard, easy to say, hard to do in the SMB market, as you suggested. So, you know, I hope so. Certainly that's what we keep marching towards as best we can. We continue to make progress towards it.
I don't know if we'll get there or not, but every tenth of a point of progress we make adds value to the company and to our customers. So I hope we can get there, but even if we don't, it is an effort worth pursuing because even if we get halfway there from where we are now, we're better off.
Still better off, yeah. All right, Pete, let's wrap up with the famous five. Number one, favorite business book.
Well, my favorite hasn't changed. I think it's still The Hard Thing About Hard Things.
Number two, is there a founder that you really respect or admire?
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Chapter 6: How has JazzHR's customer base grown over the years?
Three. Three. Oh, a busy guy. All right. How old are you?
57. 57.
Last question. What do you wish you knew when you were 20?
That's a great question. I'll say push yourself harder.
Guys, there you have it. Jazz HR, again, helping SMBs get their hiring needs taken care of. They servo almost 7,000 customers up from call of 3,500 just about 20-ish months ago. So nice growth without raising additional cash.
They're breakeven today with $26.6 million raised, approaching a $15, $16 million run rate as they continue to drive growth, even during COVID, with one of their record months happening just last month. 40,000 new applications coming through their system in just one month. Pete, congrats on the growth, and thanks for taking us to the top. Thank you.
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