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

All right everybody, it's Aster. 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 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 sester annual. We had at least at the first. I think he was on our 20 percenter panel. I picked, I think I picked 4C, 3 1/2 CEOs around a million of revenue and said they were all going to make it. It was Daniel, it was Nick Mehta from A Gainsite, it was Thiago from Talk Desk and Nicholas from Algoli. And I think. I don't know whether you disclosed your revenue or not, but everyone is sort of in the 200 million ish. ARR, interesting that panel. It's very interesting for SAS. Give me a little credit for predicting that 100% of the 20 percenters got to 200 million in revenue. It's pretty interesting isn't. 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. 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, 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. And so it was kind of this moment where you could, you could just do the vanilla SAS one on one playbook. And since your buyers hadn't heard it all thousand 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 is 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?

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, 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. Like, it's not interesting to say that anymore. And, and by the way, I just walked around the HR tech conference, which is like the biggest industry expo in our. 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 and says, great, I'll give you five 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, 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, oh, it's a little bit cheaper. I'd rather spend three grand than seven 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 going to keep solving different use cases, if you don't just have 200 customers, you want to get to 200 million of ARR, you got to 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. When I, when I get copied on emails from founders I know or portfolio companies, it's. I still feel like the vast majority. I'm seeing greenhouse there 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 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. 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, 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 to business, 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 is really nice. At the same time there's other years where 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 the portfolio effect of that at our scale is really helpful because you're going to 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 going to drive it, but they want it and so it's not going to 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 that the start. The tech companies are the lab, the startups of 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, 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 any everywhere from Mickel at Zendesk and others saying you gotta, you know they do this up market and then, then they rotate back do. How important is that? If do you need to, do you want to capture them at Greenhouse Sub a million in revenue so they stay with you for life. How have you thought about that over, 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, I mean 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, 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, 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, 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 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 a couple massive features that your enterprise customers need that the mid market has to be literally don't care about when you're managing 10,000 employees, 20. I don't know where the lot. What's the line for you for Enterprise? Right? 5,000. 10,000 employees?

Yeah. Yeah. We say actually it's a thousand employees and up.

A thousand employees and up.

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

Got it, got it.

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 and 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, the biggest theme at Sasser 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 interesting conversation we had but boy, the theme was multi product. Everyone talked about. I remember at SAS Triangle 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 sweet ification in hr. Right. And all over the place. You could see it at one end, from the ripplings and the others to lattice. It was like overwhelming. So what have you, what have you. What's your tell me where Greenhouse is on this. I should know. 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 have managed to make that. That's going to get you to a billion in revenue though, isn't it?

That's the business we'll see. I feel like for us, you know, like you said, like we're at about 200 right now. You don't need any imagination to see 400 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, you know, 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. You 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 crazy to think how long it's been. If the first decade was 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 built?

Yeah, I guess that point that if you have comps that are bigger than your target that are, that have 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 another ats. Okay. Like people are probably comparing it to like Windows based products that were very limited. Right. But did you know that the TIM 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 plus 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, 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.

Anyway, you look at it like this is something that business, every business cares about and that there's real money in stake in solving. And the second thing, we thought that the ATS business was failing to solve that problem.

Yeah.

We just, it just wasn't going to do it. And so we knew we had to do something different. And actually for the first six months, we didn't think we were going to build an ATS at all because it didn't seem 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. Secondly, all the buyers are on LinkedIn. This is the head of talent acquisition. There's no such thing as one of them who isn't on LinkedIn. You can 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 I see. 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, is that there are at least three that I know of. Ats, primarily businesses with plus a billion dollar valuations. And like, that definitely Wasn't obvious in 2012.

Wasn't obvious. Right.

I certainly didn't know that was going to happen.

Yeah. And was and thing. What? And so did you think that you wanted to for sure build an ats, or was ATS a way you wanted to categorize to. 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. Oh. I was just like, I don't want to be one of those. 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 getting one in particular, and I got off, you know, the calls ending, and 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 got to 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. To. To a lot of startup founders is like, you have to learn the language of your buyers as different from the language of your. 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 ETFs 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 in my investor decks all throughout the years, like, it never says the word ETFs.

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

Yep.

There is a CRM, but bucket, sfa, hrm, and there is this ATS bucket. And as founders, we want to remake categories and innovate, but it's much easier if you innovate in a bucket.

That's right.

Right. Even if you're actually changing the bucket. And also, buyers have been buying these categories of software for 20 years and they're rebuying them. Right. And so 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.

Yeah. That's all the energy you might have. Right.

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. To. 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 whole new paradigm comes. 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 going to 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. And, damn it, 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 chat GPT 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 say 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, but there's so much more to it. I think a couple of things I'll say. One is we see, we think a lot about fairness eckerry now and how can you use technology to improve 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, I can cut both ways there though, can't it?

That's right.

If you talk to anyone who's been 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 going to 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 a disastrous. And you will definitely magnify any biases that are present in that database to be 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 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 two or three different of the same resume parsers and they're not very good. They parse at about 80% accuracy.

They're just trying to extract structured data from them. Or are they trying to 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 problem. Um, 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 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 resume submitted by women or by people with traditionally African American sounding names just don't get assessed as fairly sure as others. And so if you can remove that bias, you give yourself a lineup. So that's a great example we're also using 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 going to 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? Yeah, 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 are 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?

Can be.

How do you handle 200,000 applicants a year? How do human beings do it?

We definitely see that in our customer base where some jobs get overwhelmed with applicants the sooner they open them, especially if the company has a great consumer brand and people know them and others are starving for candidates. And so that is definitely a problem in many categories of job opening. I think there's real opportunity there, as you say, to focus them on the right candidates. I think AI can be a really dangerous way to do that for some of the reason we just said. So there's some good opportunities and some tricky opportunities. I think the tricky opportunities, the ones I said before, is 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 six people everywhere.

Same six people, frat guys named Chad are going to 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.

Yeah.

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?

Yep. 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 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 budget 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 that, oh yeah, I'm using that stuff, but I use it on my personal account. So people are literally like logging on their 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, 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 said you traveled like 80, you know, half the last three months. So talk about this, what you've learned for getting leverage out of the rest of your team.

Yes, I'm, I'm a grudging platinum flyer on Delta. Look, I think one thing I'll say is like, yeah, like 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 going to be ever like one founding CEO of Greenhouse. So that gives you a certain kind of power in any room that's a real. You really want to 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, 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, it's great 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 add value. But the other piece of it, to your point is like, if you can find 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 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 come to me to, like, break logs or 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 got to upskill them, train them, support them, or find someone who can do it.

So.

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 going to 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, peering into your data in your CEO's head before I lose you. Layoffs and rehiring. Salesforce just announced they wanted to like rehire 2000 the people they laid off. I just wrote up Samsara, which is an essence rocket ship. They just said they way under hired 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 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, 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 business?

I mean, the customers are going out of business, they're not renewing. Right. And there's no playbook for that. You know, there's no Saster blog you can read to tell you 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 the completely the real world as critical as it is. Right?

That's right. That's right. And we, and we do over index on not, 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 some cases these layoffs are hitting and some of them are going on 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 complain 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, 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 Iran from Monday at Sarano 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 you, your needs went up.

Everyone, one year.

You can do it one year. Right.

Everyone got the memo that capital markets are just like valuing EBITDA, you know, a rule of 40 or whatever. So they, so they cut, you know, they, they've 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. 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 Samsar. 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. 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 two years and grow. Right. No one can freeze.

You're right to 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 month.

We know what's going to happen. It's obviously just a question of when. It's all cyclical. I think the one, maybe, maybe one indicative data point that we, 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 when you stop using them, when, when times are tight, do.

It all in an applicant. You know, when you've got applicants, you then, you know how you know you're not going to go spend 40 grand to hire, you know, to hire an agency to bring in an engineer or something. Yeah. And when times are tough, everyone does that. And so that's much more swingy of spending 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, 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, it's niche, but.

Okay.

People don't talk about enough 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 three weeks.

Yeah.

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

So then Texas Pacific Group bought your investors out for close to a billion dollars all in. Right. And you're still here, what, more than two years later?

Yeah, absolutely.

Okay, so you, 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. 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, happens. 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 kind of mentioned. 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 has 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 to, it's hard to make those things happen. So when they come along, like, take advantage of it because it's very lumpy and you know, 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, my dreams are going to say they're going to. I'm 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're, you know, 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 three 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 and they have different goals and that's fine. But you 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 three 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 a 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 we work, 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, or transition out if you wanted to do the conversation ever even come up because you know, with like with other folks from the old days. Kyle from Sales Loft transition out a while. Andy from Logical just got acquired for almost 300 million raising very little. He, they, 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 look, I think Greenhouse was big enough. You could, it wouldn't do as well, but you could bring in a guy. Yeah, I don't know enough recurring revenue. Right.

Or, or a woman.

Yeah, I didn't, I did. I, I try to use that as a non gender specific term, but I.

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, that is running a business. And, and, 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 yeah, 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 a business. TV 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. 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 is 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 nine figures or maybe even 50 million up in revenue is, look, Daniel, you're great, but you've been doing this eight years, you've been doing this nine years. And if you want Linda, Linda at our, at our fund, who was at whatever before she was at workday and you're going to 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 around. But PE is one of the only times and if you get acquired by a big tech company, like they're going to force you to stay a couple of years, maybe you screw around, but PE can actually come in and say here's a few nickels on the driveway, just and 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 P 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 it 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, we want to touch on, on Greenhouse or any, any thoughts you've had in general? Do we miss anything good?

I 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. KPI's is, 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 hiring platform?

So there, but, but, 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 know, 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?

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? Greenhouse Goals. I love it.

Product marketing manager Jason Lemkin.

You know, I'm very into the descriptive names. 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.