SaaS Interviews with CEOs, Startups, Founders
Workable Hits $30m Run Rate, Burning $10m, Series C Valuation "Less Than $250m"
14 Jul 2020
Chapter 1: What is Workable and how has it grown since its inception?
When you look at the average, I mean, if you opened up top of funnel, that would pull your average down because you're getting more customers in that are paying way less. You said two-thirds of your customers have less than 100 employees.
It's happening both ways, actually. And it's normal in SaaS companies. The fact is, as you get bigger companies in the mix, typically the ACV goes up, even if you have an S&P product.
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We got to grow faster. Minimum is 100% over the past several years.
Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Bean before Google acquired his company for $2.6 billion.
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My guest today is Nikos Moratakis. He's the CEO of Workable, makers of the popular recruiting software used by 20,000 companies in 100 countries. He led the company from its inception in 2012 to a fast-growing organization with 300 employees in the US and Europe, raising $95 million of venture financing from top European and American investors. All right, Nikos, you ready to take us to the top?
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Chapter 2: How does Workable's pricing model cater to different business sizes?
I see what you're saying. When you raised that $50 million, you raised for like 24 months of burn versus like 12 months of burn.
Nearly three years of burn, actually.
I mean, okay, that's a lot. Why'd you go? I mean, obviously, you take dilution. The more money you take today, the more dilution you take. Why raise for three months of runway or three years?
We got the right investors. We have a long term plan. I think also right now the markets are pretty good for raising money. So if you get a good deal, you just pick up the extra money. So, so far in all the rounds, we ended up picking up a little bit more than we needed and we needed it.
Yeah. Okay.
No, I think I'm not the only one who will say this.
No, no. There's a lot of people that would say that they're raising more than what they need right now because they think the macroeconomic conditions are really good for raising. Um, so I mean, I'm, I'm not hitting you. I'm just trying to understand where your brain was at. Um, 50 million raised on, on for a three year kind of runway, right?
That'd be, that'd mean burn is something like 1.4 million a month, or at least that's what you're comfortable with. Is that about where you're at right now? 1.4 a month?
Quite a bit less right now. Actually, at the end of the day, we're earning less than a million a year.
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Chapter 3: What is the current annual revenue run rate for Workable?
I mean, I would say if you double from 30 to 60 at the end of next year, you could potentially start pushing that billion dollar kind of valuation mark. Is that reasonable or is that too aggressive?
I guess so, but to be honest with you, the theoretical valuation of preference stock is not my main concern.
It unlocks, as we saw with Mr. Newman at WeWork, it does unlock additional capital for you that's non-dilutive.
Of course. Having a good valuation generally is a good thing, but for me, the primary thing is to have a company that grows sustainably. There are plenty of companies in the HR space which... because of a mix of a good growth with low burn and a steady big market, have achieved remarkable outcomes. I don't know, compared to bamboo, for example.
They've had remarkable outcomes because their whole P&L was not just focused on growth at all costs.
Yeah, I mean, the tricky thing is even with you, right? So if you burned, right, 10 million, right, on 30 top line, that's negative 30% EBITDA margin on growth of 50 to 60%, right? So your rule of 40 multiple is actually below the target E40.
Exactly. You don't want to be much below that. Depends then what margin, because we have margin of 87%. Yeah. Which is pretty soft.
Yeah, yeah. Okay, let's wrap up with the famous five. Number one, what's your favorite business book?
My favorite business book? I think it's Fooled by Randomness by Taleb. You said Alchemist? Fooled by Randomness by Nicolas Taleb.
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