The Exchanges

Q Okay. So the reason you stay, the IPO reasoning there is you just, it's not something you need right now. You feel like there's enough private capital. Why put up with the regulation if you can leverage private capital and not have to worry about it? Is that accurate?

A So I've been told, again, I mean, the best I can come, and I've chatted with pretty much every bank out there, every investor, and the best I can come up with is that there's three reasons to IPO, which is, uh, you know, need for capital, and you think it's better in the public market than the private market. We don't have that dynamic right now. Um, and then, uh, I've been told that the second one is CEO vanity, uh, which, uh, it's, I, I don't wake up every day saying I gotta be ringing that bell and getting a picture of myself, uh, And, and then the third one, which I think has some legitimate is, is just brand exposure. And, and that's the one we always want to take very seriously, particularly as we've gone up market. And, you know, we are fighting the oracles, the SAPs, the work days, uh, CIOs and CFOs, you know, when, when the project comes to their desperate blessing, uh, they know those companies, but every once in a while they'll say, what is an ICMS or an ICIMS? And, uh, We'll, we'll have to explain what a great company we are. So, so that is the one that I think we're constantly looking at, uh, with, would that help us as we continue to move on market?

AI assessment note: “need for capital, and you think it's better in the public market... We don't”

Q That is pretty funny. So, okay, so about 650 folks based there in New Jersey, and besides that First, about two million dollar loan. Have you raised capital or have you bootstrapped since then?

A So something we're really proud of and, and, uh, you know, it took me a while to learn about raising capital and, you know, what kind of capital and, uh, primary versus secondary, et cetera. Um, We honestly like to say that we have gotten to where we have with no one's money really going into the business. So that original loan was paid back in full with interest. Um, and then we have since brought in a private equity, a growth equity partner called Susquehanna. Um, but all of that was, was secondary. It was liquidity. Um, we actually were, we're growing really well, and we were able to say to them, you know, guys, we don't need the cash. We're pretty profitable, but Uh, if you were to help with a liquidity event, uh, we'll, we'll, we'll, you know, ratchet up the risk and put more of the, uh, the bottom line into the, uh, the growth of the firm.

AI assessment note: “we have gotten to where we have with no one's money really going into”

Q of private equity firms that I work with that are doing these secondary offerings, one of their biggest concerns is, you know, once you make a man or a woman rich, it's very hard to keep them motivated. Uh, and that's their biggest concern with doing secondary offerings. You've done that. Um, I assume you took some money off and maybe other important executives. How do you keep everybody motivated?

A I think it's just a burning drive inside. Um, we hire the right kind of people, the people who, uh, you know, just really want to see the company win, and we, we try to keep that sort of infused in the culture, um, It is true. Yeah. Yeah. Some people, including myself, we've, we've, we've gotten some money out of the business, but, uh, I would not say that drive to win has, has waned at all. The good, the good news is even though we think we're the largest sort of best in breed provider, uh, we were number two in the industry or Oracle bought this company to Leo. Uh, they've still got the largest customer base. So I think we all come in every day saying, Hey, we haven't made it. There's still something to be going for.

AI assessment note: “I think it's just a burning drive inside. Um, we hire the right kind”

Q Can you quantify that con? I'm curious how drastic that was like two years ago. What was your ARPU compared to what it is today?

A Um, I would say, you know, our average deal size is probably, uh, Close to double in the, in the last few years. So, so it's, it's been a pretty significant move up. We've been signing some very large companies, you know, the Microsofts, the Amazons, the Intuits, et cetera. Um, but, uh, yeah, our, our customers very simply, they pay us a one-time implementation fee, um, and, uh, and then they pay us a monthly service fee. The service fee is, is pretty much predicated upon, um, we, we take a hybrid of The size of the organization. So I know a lot of people will look at a PEPA model, a per employee per month model. Um, we take a look a little bit of that. You can have a very large company who's not recruiting heavily or a very small company who's trickling in size. And I think we're able to sort of capture the dynamics with a hybrid approach.

AI assessment note: “our average deal size is probably, uh, Close to double in the, in the last”

Q right? The more time you spend trying to solve, like, the recruiting problem, the less time you solve to, the less time you have to solve to take bigger risks with all the capital that you've made, and those could be really life-changing. I mean, ER, I mean, hiring, obviously, is really important, but you could go after even bigger things. How do you manage that balance in your brain?

A Ah, just try to stay focused. It's, it's probably been my greatest strength. I'm sure some people would say my greatest weakness too, but I've been told for 17 years, hey, you gotta get on, you gotta expand, you gotta move to the next, you gotta, you know, follow the industry trends, and I don't know, we've always just sort of said no. I, I feel like it's the opposite. Be the contrarian, keep focusing, do what we're doing better than anyone else, and I think we've proven that focus Um, you, you gotta be, we call it, you know, the 10 X factor is what people have written about. If you're gonna, you know, bite off a piece and say that's what I'm focusing on, you better do it 10 times better than anyone else. You can't be two or three times better.

AI assessment note: “Ah, just try to stay focused. It's, it's probably been my greatest strength.”

Q So that's, that takes the IPO thing off the table. I imagine, look, I imagine a company like Vista, they're raising fourteen billion right now. It's very hard to deploy that amount of capital. You're the perfect kind of target for them. Why not? I mean, I bet you they offer 1.8 easily for something like this seven to seven to 10 X revenue. Why not sell to a Vista?

A We look at the options. We really do. Um, we, we want to make sure first and foremost that yes, we've got our strategy set. We Ask ourselves who would be the right partners? Uh, do we have the right partners in tow? Do we need to look at some outside partners? So, um, yeah, there's some very interesting, uh, private equity companies out there, interesting strategics. I mean, there's all sorts of options right now, which is a good thing, uh, for a company, but, um, we're, we're dead set on trying to figure out, you know, how to move from a kind of two hundred million dollar business to a five hundred million dollar business. And I think, Uh, making sure we've got the right plan and strategy before we then say, right, how do we go partner up and, uh, you know, get the right partnerships, deploy the right capital.

AI assessment note: “we're dead set on trying to figure out how to move from 200M to 500M”

Q you did a year and a half ago, I mean, I imagine whenever you do any one of these kinds of liquidation events, you look at all options. Do you sell the business? Do you look at an IPO? Do you do a secondary or do you do nothing at all? What did that, what did the ecosystem look like for all four of those things about a year ago?

A Yeah, we, um, honestly, every single year we strap plan and we take a look at this and sort of where are we going and what are the needs? How's the market? Should we be looking at options? Um, and, and honestly, should we be buying companies? We, we, we did a pretty big acquisition, uh, at the beginning of this year, but, um, Which company did you acquire? Uh, we bought a company called Text Recruit out of San Jose, uh, that had really caught on to the momentum that, hey, listen, you know, candidates are changing. They're not, they're not responding as well as they used to to phone calls and emails, um, but it responded incredibly well on, you know, texting, messaging, even bought interactions off of career sites. Uh, so, uh, we were really happy to kind of bring them into the fold, but, um, you are right. We, we look at all the options. Uh, we constantly look at IPO. I think we have all of the, the metrics, the scale, the growth, the profitability to take a look at that. Uh, but the reality is, uh, believe it or not, to sort of hit our goals, we're not sure we, we need to, to go down that route right now. We want to keep it open as an option, sort of make sure that it's there in case, you know, market dynamics or our needs change. Uh, but, uh, yeah, we, we, we look, you know, private markets, public markets, M&A, um, We're, we're, we're constantly evaluating the options, just …

AI assessment note: “We, we look at all the options. Uh, we constantly look at IPO.”

Q Ah, I have fun doing it, you know. Um, and then last question. Uh, people might be listening going, I'm, I'm playing in the HR space. I'd love to learn how Colin is thinking about making potentially future acquisitions. What, what's your decision tree look like on those?

A So we are really interested right now, what's going on, believe it or not, in, in the recruitment advertising side of the equation. So our market, if you kind of add up all the software, it's about a 7.5 billion dollar market, but, but tangential to, uh, is a fifteen billion dollar recruitment advertising market. Um, so this is where people spend, you know, for LinkedIn licenses and indeed and, and all of that. Uh, Google has gotten in this game in a big way, announcing Google for jobs, essentially saying like, okay, after 10 years of ignoring and sending 80% of the traffic to boards and making boards, uh, we're getting in, and we're gonna try to sort of eradicate the middlemen and make the, uh, job searching experience much, much better. We are fantastically excited about that because I think applying for a job and going through all these middlemen and boards to ultimately get to the job as has not been, uh, the best experience. So We're working with them heavily. We're building products sort of around them. And I think it's, it's a chance for us to go sort of further up the funnel. So rather than thinking about broadening out downstream into HR, et cetera, we're much more excited about actually going upstream and sort of riding with Google on this new wave.

AI assessment note: “rather than thinking about broadening out downstream into HR, et cetera, we're much more excited”