The Exchanges

Q Okay. So put, you know, help us flesh out your timeline. So when did you leave VC and did you go directly into select software from Bessemer?

A No, so I worked at Bessemer until 2012, went to HBS, taught myself how to program, graduated in 2014, started a business called Next Wave Hire, which is a small HR tech SaaS business, um, you know, really bootstrapped, high retention, profitable, but super small company. Hired a GM to run that business about a year ago. Uh, and so I had a lot of extra time, had the startup itch, I love to learn, I love to teach, and A gap in the market that I saw is that most HR teams are not super well equipped to buy software. And if you look at the current online resources, like the sort of Yelp for software businesses, there's not a lot of signal there. Um, and I kind of first learned that actually investing and trying to use those online reviews to due diligence and just realize there's, there's nothing there that's of value.

AI assessment note: “No, so I worked at Bessemer until 2012, went to HBS”

Q And they, I mean, is this modeled out like a SAS platform? Is it pretty consistent what they pay you every month?

A It is fairly consistent. Uh, it's not straight SAS cause it's per click. And so my business is a little bit dependent upon the three to four Google updates that happen every single day. Um, just one of the bad things, like Halloween night, like my traffic sort of like dropped off a cliff. Right. And there, there's nothing really you can do about that. Um, and if I have less traffic, that means less clicks and therefore less revenue. However, if you look at it over longer stretches of time, it is very consistent and What's really nice is that the churn is very, very negative. Um, and that's mostly a function of it being sort of a new marketplace where your CPC, your CPA is much lower relative to AdWords, LinkedIn, Capterra, G two, sort of all the best alternatives.

AI assessment note: “It is fairly consistent. Uh, it's not straight SAS cause it's per click.”

Q employee recognition companies, right? Talent acquisition software, all of which drive you between, you know, 20 and a hundred kind of Clicks per day or per month, right? So is that, is that, is that how you've chosen to go about this? Is you're essentially going to take critical keywords that you're best known for, dominate that, that search on Google, and then that'll be your beachhead into the space?

A Yeah, exactly. That's sort of the best way to do it. Uh, because you need to get somebody right at the moment where they have super high intent and that there's only like a two week window for a given piece of software. So let's say like I'm the head of HR and I buy a new ATS every five years. There's two weeks in that five year period where somebody is going to actually convert. And so it's kind of akin to like the Geico marketing. So like if you're Geico, like you can do all these wacky ads and like try to build a brand in people's heads, but that takes Hundreds of millions of dollars. And so like, what do you do if you're just starting out? You got to dominate your niche. Um, which of course I think is like H refs, uh, tagline is like dominate your niche for, for search or something like that.

AI assessment note: “Yeah, exactly. That's sort of the best way to do it.”

Q Alright, now this is telling. An ex-Bessemer guy has now bootstrapped to tech companies. So, so the secret's out. The, the, the way to build a company is to bootstrap, not RaiseVC, huh?

A Um, so I think there's like two sort of conflicting things here. One is expected value. The other is what you are. Are you more of a king? Are you more, somebody wants to get rich? I think the expected value, probably the highest expected value is working in venture. Then it's probably working at Google. And then it's probably starting a venture back to business that has the potential for a unicorn outcome. Um, but for me, the thing that sort of resonates, the thing that gets me up in the morning is being, A little bit of a king, you know, having the ability to do the stuff that I want, and so I think that It's sort of the right path for me. And I think it's the right path also for 99.99% of businesses. There is like the basis point of businesses where it makes so much sense. You've got a huge market. You can have a high return on capital into sales and marketing, et cetera. But for most businesses, it makes absolutely no sense to raise venture.

AI assessment note: “for most businesses, it makes absolutely no sense to raise venture.”

Q So how do you scale that across multiple keywords to go build a, you know, a 50, a 100,000 dollar a month company quicker?

A That's one of the things that I'm grappling with right now. Um, so think about the timeline of the business. I, I basically started about a year ago, started working on it full time last summer. And right now it's, it's essentially myself and then some contractors doing stuff that is very easy to automate. I've tried to get domain experts to like write stuff. Um, I've spent actually a decent amount of money getting various people to write up these landscapes. And what I found is the quality is really low. Like there's very few people that have domain expertise that can write, that can explain things. And so that is, that is like the key question, right? Like how do I scale this beyond sort of my best efforts? And to be quite frank, like I haven't figured out that formula. Over time, you know, that becomes like a barrier to entry. Um, assuming this is a, an interesting enough niche for other people to try to compete with me against. Um, but it is really, really hard to develop that content, especially in an unbiased way.

AI assessment note: “to be quite frank, like I haven't figured out that formula.”

Q Yep. So, so let's compare what your thesis is. The thesis is for select software reviews to something that more people might know, which is, you know, you know, G two, right? So what are you doing differently than what someone could usually use a G two crowd for?

A Yeah. So if you, if you look at G two crowd, the vast majority of reviews on there are extremely positive. So another similar example is a Capterra. It's just like G two, right? Um, last week I was on Capterra and I looked at the applicant tracking system page. The first 200 vendors have a four star and above rating. So if I'm a head of HR and I go on that page, it's like, okay, am I going to look at 200 vendors to choose the right applicant tracking system? What does it even mean to have high ratings? Like how does that happen? And the reality of how that happens is that the head of marketing and all these different vendors pays their customers to leave reviews when they have a positive interaction with their software, which they should do, right? It's like totally aligned with their incentives, but for the practitioner, for the person actually buying software, it doesn't help you in your process.

AI assessment note: “for the person actually buying software, it doesn't help you in your process.”