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Sep 30, 2018 · 20m · top-founders

1163 How Jazz HR Used $6m in New Funds to Add $1m ARR in 3 Months

Pete Lamson · 9m spoken Nathan Latka · 8m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top Entrepreneurs, host Nathan Latka interviews Jazz HR CEO Pete Lamson to explore how the recruiting software company leveraged a $6.6 million funding round to accelerate ARR to nearly $9 million. Lamson details their sub-1% churn rate, multi-tiered pricing, annual contract structuring, and indirect partner channel driving 30% of new revenue.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 47.1% of the talking time here. How this is scored →

Nathan as informed peer 4.8 Guest teaching 3.2 Guest disagreement 2.0 Nathan pushing back 2.6
05100:0010:0020:001:30–5:29 · Nathan as informed peer 6/10 Introducing Pete Lamson and Jazz HR Value Proposition Nathan recalls historical metrics from Pete's previous appearance and calculates that an under one percent churn on a 200 dollar ARPU implies an LTV far higher than Pete's conservative 10,000 dollar estimate.5:29–10:15 · Nathan as informed peer 5/10 Pricing Strategy, Upselling Philosophy, and Annual Expansion Rates Pete explicitly refutes Nathan's aggressive upselling premise and pushes back on Nathan calling a 200 dollar ARPU expensive for SMBs, citing clear ROI metrics.10:20–13:20 · Nathan as informed peer 3/10 Sponsor Spotlight: SEMrush Competitive Intelligence Tool After an ad monologue, Nathan asks Pete about revenue share splits with channel partners, which Pete collaboratively breaks down.13:20–16:42 · Nathan as informed peer 6/10 Tracking Rapid ARR Acceleration Towards the Ten Million Mark Nathan drills into the exact definitions of total annual revenue versus December exit run rates, validating Pete's pace toward ten million ARR.16:42–19:54 · Nathan as informed peer 4/10 Mitigating Seasonality and Securing Long-Term Contracts in Recruiting Pete counters the idea that recruiting software suffers from seasonality by walking through baseline corporate employee attrition math.1:30–5:29 · Guest teaching 2/10 Introducing Pete Lamson and Jazz HR Value Proposition Nathan recalls historical metrics from Pete's previous appearance and calculates that an under one percent churn on a 200 dollar ARPU implies an LTV far higher than Pete's conservative 10,000 dollar estimate.5:29–10:15 · Guest teaching 5/10 Pricing Strategy, Upselling Philosophy, and Annual Expansion Rates Pete explicitly refutes Nathan's aggressive upselling premise and pushes back on Nathan calling a 200 dollar ARPU expensive for SMBs, citing clear ROI metrics.10:20–13:20 · Guest teaching 2/10 Sponsor Spotlight: SEMrush Competitive Intelligence Tool After an ad monologue, Nathan asks Pete about revenue share splits with channel partners, which Pete collaboratively breaks down.13:20–16:42 · Guest teaching 3/10 Tracking Rapid ARR Acceleration Towards the Ten Million Mark Nathan drills into the exact definitions of total annual revenue versus December exit run rates, validating Pete's pace toward ten million ARR.16:42–19:54 · Guest teaching 4/10 Mitigating Seasonality and Securing Long-Term Contracts in Recruiting Pete counters the idea that recruiting software suffers from seasonality by walking through baseline corporate employee attrition math.1:30–5:29 · Guest disagreement 1/10 Introducing Pete Lamson and Jazz HR Value Proposition Nathan recalls historical metrics from Pete's previous appearance and calculates that an under one percent churn on a 200 dollar ARPU implies an LTV far higher than Pete's conservative 10,000 dollar estimate.5:29–10:15 · Guest disagreement 5/10 Pricing Strategy, Upselling Philosophy, and Annual Expansion Rates Pete explicitly refutes Nathan's aggressive upselling premise and pushes back on Nathan calling a 200 dollar ARPU expensive for SMBs, citing clear ROI metrics.10:20–13:20 · Guest disagreement 1/10 Sponsor Spotlight: SEMrush Competitive Intelligence Tool After an ad monologue, Nathan asks Pete about revenue share splits with channel partners, which Pete collaboratively breaks down.13:20–16:42 · Guest disagreement 1/10 Tracking Rapid ARR Acceleration Towards the Ten Million Mark Nathan drills into the exact definitions of total annual revenue versus December exit run rates, validating Pete's pace toward ten million ARR.16:42–19:54 · Guest disagreement 2/10 Mitigating Seasonality and Securing Long-Term Contracts in Recruiting Pete counters the idea that recruiting software suffers from seasonality by walking through baseline corporate employee attrition math.1:30–5:29 · Nathan pushing back 2/10 Introducing Pete Lamson and Jazz HR Value Proposition Nathan recalls historical metrics from Pete's previous appearance and calculates that an under one percent churn on a 200 dollar ARPU implies an LTV far higher than Pete's conservative 10,000 dollar estimate.5:29–10:15 · Nathan pushing back 4/10 Pricing Strategy, Upselling Philosophy, and Annual Expansion Rates Pete explicitly refutes Nathan's aggressive upselling premise and pushes back on Nathan calling a 200 dollar ARPU expensive for SMBs, citing clear ROI metrics.10:20–13:20 · Nathan pushing back 2/10 Sponsor Spotlight: SEMrush Competitive Intelligence Tool After an ad monologue, Nathan asks Pete about revenue share splits with channel partners, which Pete collaboratively breaks down.13:20–16:42 · Nathan pushing back 3/10 Tracking Rapid ARR Acceleration Towards the Ten Million Mark Nathan drills into the exact definitions of total annual revenue versus December exit run rates, validating Pete's pace toward ten million ARR.16:42–19:54 · Nathan pushing back 2/10 Mitigating Seasonality and Securing Long-Term Contracts in Recruiting Pete counters the idea that recruiting software suffers from seasonality by walking through baseline corporate employee attrition math.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 83.4% · guest 16.6%0:00 · Nathan 83.4% · guest 16.6%3:00 · Nathan 26.6% · guest 73.4%3:00 · Nathan 26.6% · guest 73.4%6:00 · Nathan 28.5% · guest 71.5%6:00 · Nathan 28.5% · guest 71.5%9:00 · Nathan 67.3% · guest 32.7%9:00 · Nathan 67.3% · guest 32.7%12:00 · Nathan 44.8% · guest 55.2%12:00 · Nathan 44.8% · guest 55.2%15:00 · Nathan 15.7% · guest 84.3%15:00 · Nathan 15.7% · guest 84.3%18:00 · Nathan 69.1% · guest 30.9%18:00 · Nathan 69.1% · guest 30.9%
Sharpest disagreement ▶ 7:46 Pete directly challenges Nathan's statement on pricing

Pete directly rejects Nathan's assertion that 200 dollars per month is high for SMB recruiting software, citing solid ROI metrics.

 Hardest push from Nathan ▶ 7:30 Nathan calls out high CAC as a red flag

Nathan presses Pete on how a 2400 dollar CAC can be justified against a 200 dollar per month price point in the SMB market.

 Biggest teaching moment ▶ 16:59 Pete explains why recruiting is not seasonal

Pete educates Nathan on why baseline corporate turnover creates non-stop recruitment demand for small businesses throughout the year.

 Nathan holds their own ▶ 4:42 Nathan proves LTV estimate is conservative with math

Nathan does instant cohort math showing that a sub-one-percent monthly churn implies a 100-month lifespan, making a 10k LTV estimate very conservative.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Pete Lamson and Jazz HR Value Proposition 6212 Nathan recalls historical metrics from Pete's previous appearance and calculates that an under one percent churn on a 200 dollar ARPU implies an LTV far higher than Pete's conservative 10,000 dollar estimate.
Pricing Strategy, Upselling Philosophy, and Annual Expansion Rates 5554 Pete explicitly refutes Nathan's aggressive upselling premise and pushes back on Nathan calling a 200 dollar ARPU expensive for SMBs, citing clear ROI metrics.
Sponsor Spotlight: SEMrush Competitive Intelligence Tool 3212 After an ad monologue, Nathan asks Pete about revenue share splits with channel partners, which Pete collaboratively breaks down.
Tracking Rapid ARR Acceleration Towards the Ten Million Mark 6313 Nathan drills into the exact definitions of total annual revenue versus December exit run rates, validating Pete's pace toward ten million ARR.
Mitigating Seasonality and Securing Long-Term Contracts in Recruiting 4422 Pete counters the idea that recruiting software suffers from seasonality by walking through baseline corporate employee attrition math.

Statements from this episode (15)

Disclosure
Lamson: JazzHR targets small businesses with 5 to 500 employees
“We provide a very simple to use powerful and affordable recruiting tool for small businesses, which we define as SMBs with between 5500 employees that replaces the typical recruiting solutions of spreadsheets, Word documents, and inbound email management.”
Pete Lamson Sep 30, 2018 ▶ 2:09
Assertion Not checkable as stated
Lamson: JazzHR has over 3,500 paying customers
“We are, we have about north of 3500 paying customers, 4000 customers total now using the platform.”
Pete Lamson Sep 30, 2018 ▶ 3:15
Assertion Supported
Lamson: JazzHR raised $6.6 million in funding in October 2017
“We were able to successfully complete an additional funding round in October of 2017. So we raised 6.6 million at that point.”
Pete Lamson Sep 30, 2018 ▶ 3:32
Insight
Lamson: SaaS companies do not have a real business until customers renew
“You don't make money by selling somebody for one year, you can sell anybody, anything once, but you don't have a business until they renew. And so deriving that lifetime value is critical for SAS businesses.”
Pete Lamson Sep 30, 2018 ▶ 4:14
Assertion Not checkable as stated
Lamson: JazzHR customer lifetime value is just under $10,000
“So so our lifetime value right now is just under 10,000 dollars.”
Pete Lamson Sep 30, 2018 ▶ 4:37
Insight
Lamson: Pushing unwanted features fails; accepting downgrades retains customers long-term
“We have to start with what's best for our customers and to jam them into things that they don't need. That is a losing strategy. And so number one is we want our customers to be on the right solution for their business. So what of our products do they need to …”
Pete Lamson Sep 30, 2018 ▶ 5:50
Disclosure
Lamson: JazzHR accounts expand by about 10% annually on average
“On average, about 10% per year.”
Pete Lamson Sep 30, 2018 ▶ 7:10
Assertion Not checkable as stated
Lamson: JazzHR operates with 5 marketing reps and 15 sales reps
“Our marketing team is about six people, I think. Maybe five. Our sales team is about 15.”
Pete Lamson Sep 30, 2018 ▶ 8:30
Assertion Not checkable as stated
Lamson: JazzHR spends approximately $100,000 monthly on paid media
“So off the top of my head, I can't tell you exactly, but I would say it would be about a 100,000 dollars a month.”
Pete Lamson Sep 30, 2018 ▶ 9:18
Insight
Lamson: Capturing existing demand outperforms creating demand in SMB marketing
“Any time, especially with a small business, you are tapping into existing demand versus creating demand. It's going to be more effective because it's, you're tapping into that mid funnel versus top of funnel.”
Pete Lamson Sep 30, 2018 ▶ 9:32
Disclosure
Lamson: JazzHR offers a 20% to 30% revenue share to partners
“It's a sliding scale depending on their own volumes, and it ranges between 20 and 30% depending on how much business they are driving.”
Pete Lamson Sep 30, 2018 ▶ 12:40
Assertion Not checkable as stated
Lamson: JazzHR has just under $9 million in ARR
“We're just south of nine million. We're just south of nine million right now.”
Pete Lamson Sep 30, 2018 ▶ 14:22
Assertion Not checkable as stated
Lamson: Channel partners generate 30% of JazzHR's new business
“That's now we're driving 30% of new business up from zero just over a year ago.”
Pete Lamson Sep 30, 2018 ▶ 15:05
Insight
Lamson: JazzHR's biggest challenge is educating SMBs out of spreadsheets
“Our biggest challenge is that is education is categorical education is helping SMBs understand that there is a better and highly affordable solution out there. Then the word document and spreadsheet hell they're stuck in now.”
Pete Lamson Sep 30, 2018 ▶ 15:25
Assertion Not checkable as stated
Lamson: 80% of JazzHR new sales are annual or multi-year contracts
“Well, no, I'm sorry, 80% are total, like one, two, or three years. of those that are on a contract, annual or more, about, 92% are one year.”
Pete Lamson Sep 30, 2018 ▶ 18:15
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