What's New at Greenhouse! $200m ARR, AI in the Real World, Getting Bought by PE, More

All right, everybody, it's Saster. Um, super excited to have a good friend of mine, a good friend of Saster, Daniel Chait, co-founder and CEO of Greenhouse. Daniel, thank you for being with us once again. I really appreciate it.

Absolutely. Look, I'm looking forward to the conversation. It's always great to be talking to you, Jason.

And, and, uh, I have known Daniel since pre-revenue at Greenhouse. I was an advisor and small shareholder became very passionate about the company in the beginning, knew one of his co-founders from my first internet job. So a lot of history here. Daniel was at the first SaaStr Annual. We had at least at the first, I think he was on our 20% panel. I picked, I think I picked 4, 3.5 CEOs around $1 million of revenue and said they were all going to make it. It was Daniel, it was Nick Meta from Gainsight, it was Tiago from Talkdesk and Nicholas from Algolia. And I think, I don't know whether you've disclosed your revenue or not, but everyone is sort of in the $200 million-ish ARR. Interesting. That panel, it's very interesting for SaaS. Give me a little credit for predicting that 100% of the 20%ers got to $200 million in revenue. It's pretty interesting, isn't it, in terms of recurring revenue?

That's a pretty good hit rate. I mean, it begs the question of, was that just good prediction or were you able to make that happen through your excellent advice and programming?

I think you can help a little bit. I think there's probably a lot of learnings. I mean, honestly, I don't know what your thoughts are looking back. I think cloud is so much bigger today, right? Yeah. And in a way, if you look back to 2015, if you are able to achieve any decent level of growth, triple, triple, double, double, right? And Greenhouse grew faster than that for a while. You had to have insane product market fit because the markets were— we didn't realize it, but the markets were like a 50th of the size that they are today, right?

Yeah, and it's funny, I mean, you talked about meeting us before we were, you know, in the pre-revenue. I literally remember, and I wasn't just joking about your advice, like I remember we would have these moments where we would be grappling with some question about our early go-to-market and trying to figure out how to get our first few customers or grow in this way. And you would write a blog post like that Friday, like coincidentally addressing that same question and with the answer, and we would basically just like take whatever you wrote and like do it. And it worked. And like, I don't know, I think that's a— I think obviously like you had a lot of great advice for sure. But I also think it speaks to the point that you were just saying, which is like we were there, we were in this moment that, that these markets were just growing up and all these things that are now playbooks and there's a lot of repeatable stuff out there and people have done it before. We're all just getting figured out for the first time. Yeah. And so it was kind of this moment where you could you could just do the vanilla SaaS 101 playbook. And since your buyers hadn't heard it all 1,000 times, it worked.

Do you think, just looking back in terms of the level of sophistication in SaaS today, could something like the Greenhouse of that time, 2015, could that even make it to market today? How has the market changed for like overall HR software, applicant tracking, recruiting? Like, does that Greenhouse 1.0, would it even get off the ground today?

Yeah. You know, it's funny. Yeah, getting off the ground is one thing. In fact, I was just having this conversation earlier today with a startup founder. Yeah, trying to do an HR tech startup. And my thing is like, it's such an easy and obvious pitch as a new startup in HR tech. It's like, she's like, hey, you know, here's our idea. There's a real shortage of talent. Every company is desperate and yet they all say it's important. And so like, we've got this thing that helps you like get better at hiring. I'm like, yeah, everybody knows that there's a real, like, it's not interesting to say that anymore. And by the way, I just walked around the HR Tech Conference, which is like the biggest industry expo in our field. And I saw like 47 booths that all said like, finally, we're here to solve all your hiring problems in one box. And it's like, so that pitch has been done to death. And I think buyers are a little bit jaded about it because they've heard it so many times. At the same time, if it's easy for them to try, like they'll try it. And so one sort of failure mode I see over and over again is, hey, we've got a cool new source of candidates and everybody says, signs up, this is great, I'll give you $5 grand and your ARR goes way up. It's like really easy to get to like $10 or $15 million of ARR. And even today.

Yeah.

The problem is you can't, you know, what happens next? And if you're on the VC journey, you know, then you just top out and you melt. And I've seen that happen time and time again. In the ATS industry, it's a different story, but we're seeing this happen over and over again is people come out and they say, your ATS is clumsy and big and complicated and expensive and ours is cool and new and shiny and nice to use. And by the way, it's cheaper. That's a great pitch. And that happens every year. And every year there's a new flavor, you know, that comes out and then, you know, some of the buyers go like, ah, it's a little bit cheaper. I'd rather spend 3 grand than 7 grand. And yeah, it is kind of nice to use. The problem is if you're in business for any amount of time, you end up getting your, your product ends up getting a little bit older. You have to, hiring is really complicated. So if you're gonna keep solving different use cases, if you don't just have 200 customers, you wanna get to $200 million of ARR, you gotta build a lot of software. And so what you can't do is be nice, easy, simple to use, cheaper than everyone else and big.

It's just not tough, right? It is tough.

I've never seen anyone do it. So how are—

I still, um, when I, when I get, uh, copied on emails from founders I know or portfolio companies, it's— I still feel like the vast majority I'm seeing Greenhouse, they're even relatively early stage. So how are you thinking about that long tail? Like when you do have to be very rich and enterprise and complicated in workflow, I, and I see so many folks implicitly or explicitly abandon the long tail. Sometimes it's like they cut it off relentlessly, sometimes they ignore it, right? Right. How have you thought about that as you've gotten to put up these big numbers?

Yeah, I mean, I think we've always tried to be really intentional in our, in our strategy and in this way in particular, we've always thought of it as we want to be multi-segment. I know it's a trade-off. I know it's a choice. We're doing it knowingly. But we always thought, um, number one, you get a great portfolio effect. So in a year like this, the SMB is just doing worse. There's a lot more churn, companies are going out of business, um, new startup formation and growth is down. But the enterprise segment that we have, which by the way is bigger now than our SMB segment, is doing great. And so the net retention characteristics and the long-term nature of it, like, is really nice. At the same time, there's other years where, you know, SMBs are just jumping in the boat and it's all you can do to take the orders as fast as possible. And so you get this amazing growth. So like the portfolio effect of that at our scale is really helpful because you're gonna have a bunch of different years with a bunch of different things happening. Secondly is I do think there's something really neat about having a couple thousand startups using your product every day. You get so much more innovation. Like the enterprises don't really want all that innovation. But they're not gonna drive it, but they want it. And so it's not gonna come from them, but having startups lets us try things even if they're not necessarily built out to scale yet with our SMB customers. And as they succeed and we invest in them and we get the regulatory needs and things met, then we can roll it out to like an enterprise customer. I think our enterprise customers like the fact that they benefit from that, like SMB.

They're the lab, the start, the tech companies are the lab, the startups are the lab, right?

Got it. You got it. But look, it's, but look, it, it, it comes at the expense of other things. So like we're multi-strat, we're multi-segment. That means that like we're serving a few different markets. And so it's like, it's a lot of stuff to build.

And how do you, something folks seem to yo-yo on as they scale is this idea, hey, look, maybe, maybe as you know, you just said the majority of your revenue is enterprise. So it'd be natural for marketing and others to put all the money there, right? All the energy. It's just natural, right? But then folks realize that if they don't put enough into the startups, someone else takes that And they don't always find you later, right? And I've heard this everywhere from Mikkel at Zendesk and others saying you've got to, you know, they do this upmarket and then they rotate back. Do— how important is that? Do you need to— do you want to capture them at Greenhouse, sub $1 million in revenue so they stay with you for life? How have you thought about that over a decade?

Yeah, definitely. I mean, you look at our enterprise business and part of the reason why it's so great is because a lot of those companies started when they were tiny. Yeah, we have a huge amount of our mid-market that were SMB and our enterprise customers that were mid-market just a few years ago. And so when you look at the true lifetime value of one of those companies, you have to think about the fact that like there's a, even after segment shift. So we look at a segment business, but we don't realize is like, well, some of the churn in our enterprise, in our SMB business is actually companies moving into mid-market. And so it's like more segment transfer. And so, so that, that's been a dynamic for a long time. And so I look, I think you're right about the swing, you know, nature of it. I think we try to be thoughtful about the fact that we are running a portfolio of bets and you got to place a few chips in each square and be consistent over time. It doesn't mean that in a certain year you may focus more in one place than another tactically. But we're never going to abandon one, abandon the other. It's just more about managing a portfolio.

Are there— and maybe I should know this and I don't— are there like a couple massive features that your enterprise customers need that the mid-market and SMB literally don't care about when you're managing 10,000 employees? I don't know where the— what's the line for you for enterprise, right? Maybe 5,000, 10,000 employees.

Yeah. Yeah. We say actually it's 1,000 employees and up.

1,000 employees and up.

Okay. But a Workday integration is a classic example of that.

Got it.

Got it. An SMB business, it's not, it's not that like they just want it a little bit less, like they don't want it at all. It's not relevant to them, right? I mean, you know, they don't want like a little version of it, you know, versus an enterprise, it's a requirement. And so that, so that's a great, like there's a bunch of features in the different approaches that we've segmented out for that reason.

And to relate a point that the biggest, theme at SAS Annual this year. Bummed we didn't have you this year, but we'll get you back. We'll talk about your travel before we break because it was an interesting conversation we had. But boy, the theme was multi-product. Everyone talked about— I remember at SAS Annual 2017, they brought in Jeff Lawson and Peter Gassner to do these back-to-back. And it was early, actually. 2017 was early. But today it's everything. And particularly in HR, there were a lot of themes of Swedification in HR, right? And all over the place, you could see it at one end from the Riplings and the others. To Lattice. It was like overwhelming. So what have you— what's your— and tell me where Greenhouse is on this. I should know. No, I feel like you're somewhat multi-product, but you're focused.

Yeah, we're mostly like our flagship Greenhouse hiring software, like the applicant tracking system and all the hiring stuff around it. Like, that's the bulk of our business.

We do manage to make that— that's going to get you to a billion in revenue though, isn't it?

That's the business. Um, we'll see. I feel like, I feel like for us, you know, like you said, like we're at about $200 million right now. You don't need any imagination to see $400 million in that business because it's just like more customers, you know, more of the same, you know, to get, and other vendors have already done it. So you can kind of look around and see like, oh, this has been done before. To get to a billion of ARR just on the ATS business, it needs a little bit of imagination. I'm not saying it can't be done, But you got to think some things are true that may not be now or that have to stay true. And so I'm kind of thinking about it as like, okay, so that growth can get us another turn from 200 to 400. Then what? So that gives us a little bit of time. We don't have to do that today or this year. But I'm thinking about like if the first 10 years of Greenhouse was, which believe it, it's like crazy to think how long it's been. If the first decade was Let's, let's win the ATS market. Okay, check. We're still on the same mission, which is let's help every company become great at hiring. So it's like, okay, are there other things our customers do in hiring that they don't do super well that now that we're at this scale, we think we can help them get better at? Like, yeah, that is a long list. So I think we're starting now thinking about, okay, for the next decade of Greenhouse, how do we really take the next step in that mission and what are the opportunities there given what we've built?

Yeah, I guess that point that if you have comps that are bigger than your target, that are, that have done, then you know you can do it, especially if you believe you have a better product, right? Going back in time though, for like founders, I remember in the early days when we met, I would introduce you guys to different folks and the refrain was, oh, another ATS. Okay. Like, and people were probably comparing it to, to like Windows-based products that were very limited. Right. But did you know that the TAM would be as big as it is today? Did you have the confidence to say single product? Did you know you could get to 200+ with your growth back then, or was it a constant thing you and you guys were thinking about every year?

I'll tell you what we— I'll tell you what we knew and what we didn't. What we knew was hiring was a big problem.

Yeah.

And worth a lot of money.

A top, a top 10 problem, right? That's the thing, you know, right? It's a top 10.

You look at it like this is something that every business cares about. And that there's real money at stake in solving. And the second thing we thought was that the ATS business was failing to solve that problem. Yeah, we just, it just wasn't gonna do it. And so we knew we had to do something different. And actually for the first 6 months, we didn't think we were gonna build an ATS at all because it didn't seem in any way relevant to the solution we were trying to, to the problem we were trying to solve. And it was, it took some soul searching for us to figure out like, okay, But the buyers buy an ATS. And so as much as I want that not to be true, yes, the fact of the matter is we have a category where every company buys exactly one. There's no such thing as a company that doesn't have one, and nobody buys two.

Yeah.

Secondly, all the buyers are on LinkedIn. There's a head of talent acquisition, there's no such thing as one of them who isn't on LinkedIn, go find them. And thirdly, I can go to your website and look at your careers page and know everything about the incumbent. I know which product you're using. I know how much hiring you're doing and what jobs you're hiring for. Like, it's all right there. So it's a very addressable market. And so we thought, ah, the bar is really low. Like, applicant tracking systems don't do a whole lot. Like, they're not very good. And so we think we can clear that bar. We think we can address this market, but it's only worth doing if we see it as a vehicle for the larger problem that we wanted to solve. And frankly, I didn't know if there was going to be a big successful ATS business or not. At the time, there really wasn't. What I'm surprised at now is that there are at least 3 that I know of, ATS primarily businesses, with plus $1 billion valuations. And like, that definitely wasn't obvious in 2012.

Wasn't obvious, right? Yeah. I certainly didn't know that was going to happen. Yeah. And so did you think that you wanted to for sure build an ATS, or was ATS a way you wanted to categorize, to help people understand the vision, what you want to do for hiring and recruiting?

Jason, you have to understand, even saying the word ATS has like been a big growth journey for me because for years I wouldn't even say the word. Oh, I was just like, I don't want to be one of those. It's not what we're doing. It's not, you know, and I remember having like in the early days, like I'd be on our sales calls and I'd be talking to this buyer. And I remember one in particular and I got off, you know, the call's ending. He says, I believe everything you're saying. This product looks amazing. I love it. The problem is I need to go buy an ATS. Like I have this ATS I hate, I gotta get rid of it. Let me go do that and then I'll come back and buy Greenhouse afterwards. I was like, wait, whoa, no, stop. Hold on.

Yeah, it's a big insight, right?

But I wouldn't, but so like I learned like one of the, and this may be like is relevant to a lot of startup founders is like you have to learn the language of your buyers as different from the language of your investors and your vision, which goes to like your employees and even yourself.

Yeah.

And like we learned that lesson the hard way through conversations like I just related. And so made that, made the decision, okay, like, hey, we're in the ATS game, we got a great one, we got the best one. Here's what it does. And there's more to it and we'll tell that story to the buyer. But you got to be in the buyer's budget or else you're not going to get bought. And then if you look at my investor decks all throughout the years, like it never says the word ATS.

Yeah, it is interesting. We relearn— I keep relearning this lesson. There are In software, there are buckets.

Yep.

There is a CRM bucket, uh, an SFA, HRM, and there is this ATS bucket. And as founders, we wanna remake categories and, and innovate. Um, but it's much easier if you innovate in a bucket.

That's right.

Right. Even if you're actually changing the bucket. And, and, and, and also buyers have been buying these categories of software for 20 years and they're rebuying them. Right. And so, You— it's so much energy to train them to buy a new type of software, right?

It's—

that's the— it's not worth it if you can avoid it, is it?

Frankly, it's a lot of energy just to train them to buy your category for a little bit.

Yeah, that's all the energy you might have, right?

Or, you know, in a little bit of a different way or with a little bit of different value prop. That's that— like, we have to do a ton of buyer education. Yeah, just on that. And so, you know, to have the conversation of like, hey, like, your ATS seems great. But how do I tell my CFO that I want to buy like a more expensive ATS? I'm like, don't tell them that at all. Like there's a whole bunch of education we have to do just to get that done to then say like, actually we're in a whole different category. Like, I don't know. So you see that a little bit now. Like there's some opportunities to do that where a whole new paradigm comes up. AI is a big one. So now everyone's saying like, oh, you've got your ATS, but now you've got an AI thing you've got to buy and we've got one. I don't know how long that's gonna last. Like I think there's like these moments where you can like, say we're the internet version, like you've got the old version, or we're the local mobile social version. Yeah. Or now you can say we're the AI version and get like a new bucket made. But I think ultimately those all get folded down into the main, into the main stack.

What are you, so what, what are you thinking about AI for recruiting and in sort of human capital overall? What, what you've, I'm sure you guys have been thinking about it a lot and separating the, the, the, the hype from the reality. I have my own opinions, but what have you learned so far?

Yeah. And dammit, we made it 18 minutes in without saying Nord AI, but I guess You brought it up.

I should have put it on the list. I'm still, I feel like I'm so early on my discovery journey. Like I'm, I'll, I'll, I'll, I'll tell you what I think if you're curious, but I, but what you, you think is much more important than what I think.

Yeah, look, I think, you know, obviously these technologies have burst on the scene and everybody knows about ChatGPT. So I think everyone's rushing to put a ChatGPT-like thing in their product and we'll do some of that as well. So for us, like, One of the, one of the neat ideas that we are working on is reporting. Everybody wants lots of sophisticated reporting, but they don't know how to express it. And so clicking around in your report builder is hard for them, but they can just talk to the report builder and say, hey, I kind of want to see how many candidates I have by stage, and then iterate and say, no, no, no, no, no, I want to see it in a bar chart. Actually, I wanted to group to this way and iterate. It's a great— but there's so much more to it. I think A couple of things I'll say. One is, um, we see, we think a lot about fairness at Greenhouse and, and, and how can you use technology to improve, uh, fairness, both because it feels like the right thing to do and that's important to us, but also it's a huge business opportunity. After all, if you're, if you're not fairly assessing candidates, it just means you're missing out on great talent that your competitors aren't.

Well, AI can cut both ways there though, can't it?

That's right.

If you talk to anyone who's been in AI a long time, there's so much bias in a lot of AI models, right?

That's exactly my point is I think, you know, if you just say, take things like we see a lot of folks that are saying, oh, we're gonna take AI and filter your top of funnel and ask it to just rank all the candidates and that way you can save time and look at the top 10. Like, that's disastrous. And you will definitely magnify any biases that are present in that database to begin with. Not to mention the fact that there's a whole new host of local and state laws governing that, that you're now subject to, you and your customers are subject to. So we're very much studiously avoiding that. But the— I think there's a real opportunity on the opposite side to use these technologies to improve fairness. So one example is, we have a patent on a new machine learning-based resume parser, which may sound a little wonky. But the dirty little secret is that all the vendors in the whole industry use about 2 or 3 different of the same resume parsers, and they're not very good. They parse at about an 80% accuracy.

They're just trying to extract structured data from them, or are they trying to evaluate them? Yeah.

So you submit a resume and it's in a PDF or a Word document. And every, if there's 100 resumes, there's 200 different formats. They're just, it's not, it's crazy for sure. Yeah. And so getting the information out of that resume is really, really difficult computer problem. But we've, we've, we've improved the state of the art by significant amount to the fact that ours can now parse in the mid to upper 90s percentage of resumes accurately. And so what that allows us to do is things like when you submit your resume to a job, we can anonymize it. I can blank out your name and identifying information automatically at scale. And then submit that into the hiring manager and they can just assess your skills and skills-based— I see. Everyone wants to do. So that's a way where you can kind of use machine learning to improve fairness and to level the playing field. There's lots of studies that show, for example, that resumes submitted by women or by people with traditionally African American sounding names just don't get assessed as fairly.

For sure.

As others. And so if you can remove that bias, you give yourself a leg up. So that's a great example. Um, we're also using it as a to power much more powerful search, right? And so doing the little Boolean and/or stuff in everybody's like search box is fine, but using natural language search and then expanding that across the huge amount of data that we have in Greenhouse is like a real opportunity. So there's tons and tons of stuff that it's gonna do for every SaaS business, I think.

Yeah, that was what got her to G2. Their big push is trying to take all that massive G2 data kind of like you have for people and make search work, right?

Right.

What about last one? The one I'm obsessed with is everyone wants to AI-ify things, right? I'm much more obsessed in my aha moments early on were in legal, which are get automating processes that are frankly impossible today. Okay. Like reviewing 10,000 commercial NDAs or like you can't do it, right? There's so many gotchas that are going to get in there. And when I think about Hiring, there's so many rando resumes that come in, right? And one thing is parsing them and putting it, but there's so many applicants. Is there some way to use AI to find gems that we would otherwise not find? Isn't that also a magic, a magic AI? Because humans can only, for your bigger enterprise customers, like just how many inbounds are they? How many applicants are they processing? It's like overwhelming, isn't it?

It is. It, it can be.

And, and so you, how do you handle 200,000 applicants a year? Like how, how do human beings do it?

We definitely see that in our customer base where some jobs get overwhelmed with applicants the soon as they open them, especially if the company has like a great consumer brand and people know them. And others are starving for, for candidates. And so that is definitely a problem in, in, in many categories of, of, of job opening. I think there's real opportunity there, as you say, to, to focus them on, on the right candidates. I think AI can be a really dangerous way to do that for some of the reasons we just said. So there's some good opportunities and some tricky opportunities. I think the tricky opportunities, the ones I said before, is like have the AI just scan all the resumes and find the ones that are most likely to get hired and send those forward. Because like, guess who's most likely to get hired? Well, it turns out—

Same 6 people everywhere. Same 6 people, right?

You know, frat guys named Chad are gonna be like, make it through your like sales process.

Worked at Stripe.

Is that a good thing? Like, I don't know, right? So we want to avoid magnifying existing biases. At the same time, What there is, is automatic taxonomy, for example. What do I mean by that? You might call yourself a software engineer, the other guy calls himself a developer. It's the same job, but yes, making sure you don't miss that applicant, right? So can AI actually like converge your skills? And, you know, are you a C++? You know, like all the different things like salesperson versus, like, you can really like simplify and find people that may have the skills but didn't type it correctly on their resume. And that whole era of people trying to like jam as many keywords on their resume as possible so that the ATS wouldn't lose it. Like we can end that. So I think there is opportunity to do those things. The other stuff though, like we go back to the root cause of like, why are there so many applicants for certain jobs in the first place? And how can we, how can we fix that problem before it even, like rather than just get a bunch of chaff and try to, try to filter it out afterwards. Like, why don't we make our customer much better at finding exactly the people they need to find in the first place?

Yeah, that is, that's one of the existential goals of Greenhouse since the beginning, right?

I think that's a real opportunity for us and something that we're making a ton of progress on.

All right, one last AI question. I know you get tired of AI, but just for what you see in the field, are you seeing from buyers that there is any HR, any AI budget? Is there any, because CIOs are doing some of this, but I don't know if it boils down to you where people want to experiment. They've got another $20,000 or $30,000 for AI and it's almost risky if you don't tap into it, right? Because it may go to another vendor, right? Are you seeing this budgeted or is it not really budgeted in your in your space?

I don't know that I've seen like a specific AI budget exactly. I think there is a very, there's a strong mix of excitement.

Yeah.

And fear in our, in our world that may be different in other markets.

I think it's common. Yeah. Excitement and fear, right?

And kind of like the HR, like there's like a lot of rules about this stuff and people are scared about getting it wrong, but to your point, they don't want to miss the boat and they see the opportunity. So there's like a lot of cautious optimism. I think everybody wants to try things. But I heard actually, I was again in these conferences I've been at, I heard someone telling the story, they're like, oh yeah, I'm using that stuff, but I use it on my personal account. So people are literally like logging on home laptop and doing things for work that they, that they're kind of not allowed to do at work. And then, you know, doing the experiments that way because people are People are nervous, but they're like, but they can't not do it.

Yeah, they can't not do it. Okay. Just a couple of things before we run out of time. I wanted to chat about higher-level stuff. One, before we got on, we were, we were talking about how much you travel even now as a CEO and at around $200 million in revenue and leverage that you get on your team. Right. And maybe just a few learnings for folks. I think you're in year 10-ish of Greenhouse, right? Maybe 11, depending on how you count. I don't know. 10, right? I don't think you can survive without this leverage, right? Even though you're still traveling, I think you say you traveled like 80, you know, half the last 3 months. So talk about this, what you've learned from getting leverage out of the rest of your team.

Yes, I'm a grudging platinum flyer on Delta. Look, I think one thing I'll say is like, yeah, like to your point, you never get away from— in some ways you end up doing more, you know, travel and being in person with customers. And, and that's just To me, you know, no one, I say no one can do what I do in the sense that like there's only gonna be ever like one founding CEO of Greenhouse. So that gives you a certain kind of power in any room. That's a real, that you really wanna take advantage of. And so I don't make our products. I don't even write the product roadmap. I don't sell a single copy of Greenhouse or manage any customer accounts or solve any of their technical problems. So there's almost everything our company does. I can't do. One thing I can do— no, it's true. No, I know it's funny, but one thing I can do is you can put me in a room and I can do my thing. And so that's great for customers, it's great on stage, uh, it's great in, in internal communications. And so like I try to think about like what are the rooms that I need to be in because I have the skill or because of my position. I try to be in a lot of those because it's one of the ways I can, I can add value. Um, but, uh, but the other piece of it, to your point, is like, if you can find, uh, people on your team that can add, that can be additive to your, to your life, and that can help you get out of the weeds and do the thing that you do uniquely, like that to me is the big unlock in hiring. And what I mean by that is I've described it as I feel like with my team, I have an anti-gravity, uh, device, meaning I don't get weighed down into their world. I don't have to go fix their stuff. I'm happy to help them. We collaborate a lot. They're, they come to me to like break logjams or like make decisions. But if I'm trying to do their job, I can't do my own. And a lot of times I've given that advice to folks in my organization as well, which is I see someone doing the job of one of their team members and they're thinking like, well, if I don't do this job, it won't get done. And I'm like, that's a bad smell because it's not your job. And so the person whose job it is needs to be able to do it. And if they can't, You gotta upskill them, train them, support them, or find someone who can do it so that you can do your job, so that I can do my job. And the feeling I always have is like, I remember I had someone ask me on my team once, like, well, if you're not there to oversee it, you know, aren't you, aren't you worried that it's not gonna get done well? And I was, I was like, no, because when I'm not there to oversee it, you're there to oversee it and you're awesome. And she was like, oh, right. I said, so when you're not in the room, when your team is doing the work, you should have the feeling that like you're happy because they're awesome and they're doing it well. If you don't have that feeling, like you can fix that.

It's good. All right. Two last kind of tactical questions I want to get peering and peering into your data in your CEO's head before I lose you. Layoffs and rehiring. Salesforce just announced they wanted to like rehire 2,000 of the people they laid off. I just wrote up Samsara, which is an awesome rocket ship. They just said they way underhired for sales reps. But also we know a lot of unicorns and others that are deeply struggling, right? So what does your data say? How are we doing in your two segments, right? Sort of enterprise, mid-market or smaller? And what is, what are you seeing in the trends for the coming 12 months?

Yeah, I mean, to our business first, like we're obviously seeing, I shouldn't say obviously you wouldn't have asked, we're seeing a lot of stress on small business and, you know, kind of VC-backed small companies. Yeah, there was an era there of, you know, kind of free money that propelled a huge amount of startup growth. And that's not happening anymore. And so us and every other vendor are seeing churn in that segment up just because customers are going out of business.

Downgrade or churn overall? Like what's more impactful for your business?

I mean, the customers are going out of business.

Oh yeah, that's true.

They're not renewing, right? And there's no playbook for that. You know, there's no SaaS blog you can read to tell you how to do that.

No, but the ones we see on TechCrunch do not represent the entire world, right? The United States has 3% unemployment. So we're— tech is never completely the real world, as critical as it is, right?

That's right. That's right. And we do over-index on not even just tech companies, but like knowledge workers more generally. So we like to say, you know, we sell to companies that think of themselves as people first, meaning every hire, you know, makes a big impact on your organization and you're usually competing for talent. And so these are jobs that are like, management consultants, finance companies, advertising, marketing, media companies, like those are similar. They have similar talent characteristics to a tech company. And so in all of those, you know, types of industries and jobs, the buyers are hiring less. And in some cases, these layoffs are hitting and some of them are going out of business.

So you're not seeing yet a reduction in stress in that segment. You're not seeing a little bit of a rebound.

Elevated. I'd say it stopped getting worse. But it hasn't got better yet.

Got it.

Versus in the enterprises, in the larger organizations, even in those same similar types of businesses, you're just seeing a lot more, you know, because they can plan over the long term. And so I know you just named a couple large organizations, but I'd say just in general, the trend is much more positive and much more healthy because they just roll along and they stay, you know, not going to go out of business because there's, you know, interest rates went up a few points.

Yeah. Some even got too lean. right? Some of the folks got— talking with Aron from Monday at SaaS Annual this year, I mean, Monday grew 60% and did a hiring freeze for a year. It just can't— you can't do that forever. No, because your needs went up.

Everyone got—

everyone do it one year, you can do it one year, right?

Everyone got the memo that capital markets are just like valuing EBITDA, you know, or Rule of 40 or whatever. So they started— so they cut, you know, they, they made those ratios better for a bit. But yeah, if you're still growing, if you're, if you're blessed enough to have a business that's growing like that, You got it. You got to keep up with it.

Well, maybe you're not seeing it yet. That's why I don't. But here's what I'm seeing is like, I think the memo, like people read about the layoffs, right, for big companies, not for startups or— but the truth is the layoffs are really just about quickly getting lean, quickly getting fit. Like if you're Salesforce or even a smaller one like Monday or whatever, or Samsara, these are great companies. They're growing. It's just Wall Street said you got to be profitable, right? So not only do people do layoffs, But, but quietly they did, they did mostly hiring freezes in many cases for you, which probably wasn't great for Greenhouse for those customers, right? Not terrible because they're not going to churn, but you're not going to sell much more if there's a hiring freeze. But I don't think those— I think there's got to be this quiet reflation in 2024 because these higher— no one can freeze for 2 years and grow, right? No one can freeze.

You're right, it's a God's ears, man.

But, but, but I'm seeing it anecdotally. But you, but you have, you have more data. You're not seeing it across the board this quickly.

No, we know what's going to happen. It's obviously just question of when, it's all cyclical. I think the one, maybe one indicative data point that we have is we look at the use of recruitment agencies across our customer base as kind of a bellwether of how tight the talent market is because—

I see, you stop using them when times are tight, you do it all in-house.

You know, when you've got enough applicants, you then, you know, you're not gonna go spend $40 grand to hire, you know, to hire an agency to bring in an engineer or something. And when times are tough, Everyone does that. And so that's much more swingy of spend than on like a SaaS tool like ours. But we see all that spend and I can tell you it's way down right now. Okay.

I may be slightly too bullish by looking. Yeah.

And so it's, you know, we look at that as a real bellwether of how competitive and spendy companies are being on hiring because their greenhouse bill is kind of constant. You know, they know, we know what that is a year in advance. Yeah, but when they hire agencies a lot, they know— we know.

I see.

All right.

Last different question before I lose you. Very different just because it's niche, but people don't talk about enough private— being private equity acquired or owned, right? So 2021, when times were good, Greenhouse had crazy times after lockdown, right? It was really bad and then really good and then really like you had more yo-yos. Everyone had yo-yos.

It was really bad. It was really bad for about 3 weeks.

Yeah.

And then it went very good for about 2 years. Yeah.

So then Texas Pacific Group bought your investors out for close to $1 billion all in. Right. And you're still here. What, more than 2 years later?

Yeah, absolutely.

Okay. So you get a little bit of liquidity. That's part of the deal. In a way, I've always thought for a certain founder, it's not perfect, but the best of both worlds because you can get a little more liquidity than you might otherwise get, but you get to play another card. Right? You give up a little bit, right? But you also get to play another card. What would it— but also you have this big shareholder, right, with different goals and a slow clock ticking that maybe is different than an angel investor who's like, Daniel, I love you, whatever happens.

Yeah.

It's a— so what have you learned in this PE world?

It's a great question. I would say a couple of things. One, maybe more advice as a founder, which is, you know, you kind of mentioned like Yeah, when we took on this investment, a bunch of early shareholders sold, including people like me and others who had been in early, not all of everything we had, but just a little bit. And my advice to founders has always been, this is not necessarily about me or anything new, but it's always been like, as a startup founder, your opportunities for liquidity are very few and far between.

Fewer than we think in the good times. We get this wrong in the good times, right?

Yeah. When things are going well, you're just like, oh yeah, this thing is going to go up forever. But, but, but it might. But even so, like, aren't a lot of buyers all the time and it's hard. It's hard to make those things happen. So when they come along, like, take advantage of it because it's very, very lumpy and you never know when, when or if your next one will come. So I know people sometimes wrestle with that and they worry that I'm leaving money on the table. What if it triples in the next few years? Like my dreams are going to say they're going to— like, don't regret selling a little bit along the way because you may not get another bite at the apple, even if it feels like you have all the choice in the world. So that's like one learning that I've had over my 27-year career doing this 3 times in a row and talking to lots of other founders who both made that mistake and not. Secondly is, yeah, having private equity ownership is different than venture capital. They have different goals and that's fine, but you've got to understand it. And I think it's easy to not think about or just sort of put it aside. But, you know, I'm accountable to 3 very different stakeholders. I'm accountable to my customers and my employees and my investors. And so when that investor base changes, that's going to have a lot of impacts on what your strategy is. And, you know, for an average private equity investor, you know, they want to get a triple, not a grand slam. And so knowing like, how do I deliver that in the timeframe that matters to them? Is, is, is it's just a different feel than, than having a VC who, you know, if their other investment is WeWork, you know, hey, like, you're fine. There is that.

You're fine.

Nothing you're going to do is going to matter. You know, for, for a PE, like, they want to manufacture consistent wins like time and time again.

Did you— did they— because usually folks like these big guys have a bench of CEOs they can bring in. Did you have the option to stay or transition out if you wanted to? Did the conversation ever even come up? Because, you know, with like with other folks from the old days, Kyle from Salesloft.

Yeah.

Transitioned out a while. Andy from Logical just got acquired for almost $300 million, raising very little. They brought in someone the day the deal closed. Right. So any learnings from that process?

If it ever came up, it never came up with me in the room. I can tell you.

I see. They wanted— they wanted you first because Greenhouse was big enough. You could— it wouldn't do as well, but you could bring in a guy.

Yeah, I don't know.

It's enough recurring revenue, right?

Or a woman.

Yeah, I didn't— I did— I tried to use that as a non-gender-specific term.

But I know what you meant.

I know what you meant.

Look, I don't imagine I'm the only person out of 7 billion earthlings that could run this company for sure.

At this scale. At this scale, right?

There's lots of people that are qualified to run a company like this. At the same time, like I said, number one, I think there is something unique about a founder that is running a business. And so I think that does have power. And number two, like, for sure, I wanted to do it. I was excited about it. I wasn't going anywhere. And so we didn't do this deal because we thought we needed a change in management or because I was ready to retire. We did this deal because it was a great way to finance the business. TBG is a great partner. The Growth Fund, which is investing in growth businesses, they're not a buyout fund, and the Rise Fund, which invests in positive social impact, was the perfect partnership for us. So like that all made a ton of sense. But no, John and I certainly didn't have any intention to go anywhere.

And luckily they agreed with that. It's just every, and that's the, that's a good, that's an, maybe we'll break there. It's just when PE firms approach and everyone's different and the funds are different that you described, right? But sometimes the pitch to, to founders that achieve 9 figures or maybe even $50 million up in revenue is, look, Daniel, you're great, but you've been doing this 8 years, you've been doing this 9 years. And if you want Linda, Linda at our, at our fund who was at whatever before, she was at Workday. And you're gonna love her. And if you want, you just let us. And the beauty is there aren't that many exits as a founder that are like that clear. Like, it's tough to leave the day after an IPO, or the week before, or the week before you raise a round. But PE is one of the only times. And if you get acquired by a big tech company, like, they're gonna force you to stay a couple years. Maybe you screw around, but PE can actually come in and say, here's a few nickels on the driveway, just like you literally can go chill, not be on a beach. But I've always thought that would be an interesting moment to observe this discussion. Right. But it didn't happen that way in this case, right?

Yeah, that wasn't, that wasn't what we were trying to put together. And like I think you said, the key, the key phrase, which is not all PE is the same. And so there's buyout funds and there's growth funds and there's different things doing different, different, you know, people doing roll-ups. And so there's all kinds of strategies there for us. Was a growth partner and there was a social impact component to it. And so that, that was like what we needed and wanted.

Pretty cool. All right, Daniel, this was great. Did we miss anything we want to touch on on Greenhouse or any, any thoughts you've had in general? Did we miss anything good?

I could talk about Greenhouse for months, but no, I think this was a great, a great tour through kind of like what's happening these days around the company and hopefully helpful to people.

Cool. And last one, what's the next— very last question— what's the next cool release feature thing coming out for Greenhouse? What's the coolest thing we can we can expect in the next 3, 6, 9, 12 months? Is there something great coming down the pike?

Yeah. If you're not in our industry, this may not mean a lot to you, but for people that are, people that are talent acquisition nerds, goals. So the idea that you can set company goals or individual goals around hiring in Greenhouse.

Well, hold on. That's interesting, right? I mean, OKRs, goals, KPIs is one of the oldest categories there is, isn't it?

Are you hitting your goals? Like, so like that's a really neat new thing in Greenhouse that people are, are doing. In a lot of new ways. And it helps with accountability. It helps with showing value to your stakeholders. And so little subtle—

and goals based just around hiring and people management or even broader than that? Are you getting into the overall category?

We're a hiring platform. So there, but there's a lot of stuff we do. So is it, are you, what kind of goal, you know, we can talk about setting goals for things like getting scorecards completed on time, which is a huge differentiator in the market. We can talk goals for like how many candidates do you want in your pipeline by what day? So there's all kinds of different goal setting you can do in Greenhouse. And the nice part is the more people set goals in Greenhouse, the more we can automate the process of saying like, you're not on track to hit your goal. Here's something you can do about it.

And like, and is it a different module or is it part of the core product or how are you thinking about it? Just add it here.

It's baked right in.

Baked right in.

The more we see people needing to hit those goals, the more things we can help them do to try to do that.

Cool. All right. Greenhouse Goals. I'm very excited. Is that what it's called or does it have a pithier name than that?

Product marketing manager Jason M. Lemkin.

You know, I'm very into the descriptive names. Uh, all right, Daniel, this was so great. Thanks for making all of the time while you're in a mega, mega month or two of travel. It's great. And congratulations on the first decade, the first couple hundred million in ARR. Always