00:11:13 · Daniel Chait, Guillaume Moubeche
[00:11:13] S0: I respect I respect the hustle. You know, I mean, again, I've been an entrepreneur my whole career. There's things that you can't do, but, you know, when I see a startup person, you know, trying to think creatively about how many they wanna try to go, like, I respect that. And so, you you gotta do a little bit of that. [00:11:26] S1: When exactly did you know that it was working, that you had like this kind of magic moment where you have product market fit and everything comes together?
00:11:36 · Daniel Chait
[00:11:36] S0: Well, it all comes back it all comes back to Lemkin again. So he was starting that blog as we were starting Greenhouse. Basically, Friday, a would new blog post, and it was weirdly the problem we were figuring out that week. And he would just write the blog post and the answer. And so basically, our business plan for the first nine months was every Friday, read disaster and do what he says. And he had written a blog post about it. He said, well, when you get 25 arm's length customers, true, this is not my brother's cousin. This is a true company that just decided to buy your product out of anyone else, then you've got product market fit. And so when he wrote that blog post, we took 25 pieces of paper and scotch taped them up on our whiteboard and numbered them one to 25. And every time we'd get a customer, we would print out the logo in office printer and cut it out with scissors and tape it up on the thing. They're like, okay. One. And that was our goal. We said, okay. By the time we get to 25, we'll know that we'll know that we've done it. And so the first one took us months, two months to get, and the next one took us weeks, and then the next one took us days, and then they just blah blah blah blah. And so to get to zero to one was impossible, and to get from, like they say, impossible to inevitable, that's how it felt. And so to get the first one felt impossible. And then by the time you had 15, it was like, yeah, the next one's just a matter of time. And so by the time we exited with 25, we were like, okay. We've got it. Like, we've 25 companies that genuinely chose and bought our product, you know, out of all the choices. There were still a million questions that we had, but but we'd answered the fundamental one, which is have we figured out something that people want and that they'll choose over the other options?
00:13:13 · Guillaume Moubeche, Daniel Chait
[00:13:13] S1: Yeah. And I mean, you scaled like past 100,000,000 in annual recurring revenue. At some point, I think you decided to sell like majority to a fund. How exactly did that happen and what was reasoning behind it and the vision after? [00:13:29] S0: Yeah. So fast forwarding, you know, quite a few years now, picture this is... I'll start in 2020. We did that deal at the beginning of twenty twenty one. [00:13:36] S1: Okay.
00:13:37 · Daniel Chait
[00:13:37] S0: Okay. So that... The story takes place over about a year from March 2020 to March 2021. March 2020, COVID. Right? And we went from the world changed all of a sudden. And for us, we went out of this zero interest rate environment where everybody was growth at all costs, hire as many people as you can, to this crazy time where in April 2021, the unemployment numbers came out. And for context, typical employment report comes out and the number swings by a 100,000, maybe a few 100,000 if it's a big swing. You might see 300,000 jobs created or a 100,000 jobs lost. 13,000,000 unemployed in one month, in one job report in April. I mean, you look at economic charts from early twenty twenty, they all just have this spike. And so a lot of people panicked, including us, and it was like this existential moment. And so we actually did a layoff. We were... Realized we were geared for for hypergrowth. We couldn't count on that anymore. We cut about 30% of our team, mostly in sales and marketing, on the theory that, hey. We've got some customers. We've got a business. Let's keep that at that level. And then whenever all this pans, you know, subsides, it could be years from now, then we'll be we'll be able to withstand it. And within a month, growth had resumed. And by end of May, it was a frenzy again. And so we had a six week period of uncertainty followed by return to hypergrowth. And we immediately tried to hire back everyone we could. They had all gotten jobs already. You know? I mean, that was, again, it was a a frenzied moment of growth or in tech as much as it was a a difficult time and lots of other... So that was our experience. So as that year played out, we were getting tons of business. We were growing like a weed, but we couldn't hire. We literally didn't have the... We couldn't get talent. And so we were incredibly constrained, and it was really painful. And we knew we needed more resources. We knew we needed to fund a lot more growth. And so I started thinking about how that was gonna go in the fall. And as we realized the scale of the business and what we needed and where we were at, we started talking to some of the larger investors and private equity funds, and we came across this really interesting offer product that TPG had on offer, which was they called a growth buyout.
00:15:46 · Daniel Chait, Guillaume Moubeche
What this was was they were finding late stage opportunities at growth tech companies that they believed in the management, they believed in the strategy. These companies needed resources, and they wanted to bring the resources, not just financial, of a large firm like that to bear in these type of situations. And so it was a really good fit for what we needed. We were nine years into the business. We knew we wanted to provide some liquidity for early investors, for early employees, but we knew we needed lots of money for what we were gonna do next and for the growth that we were experiencing. And so that growth fund offering of TPG has just had a really nice fit to it. And know, it took a few months to get that deal done. We closed it, as I said, in q one of twenty twenty one, and it was both an opportunity to buy out the early shares of those people that had, you know, put 25 or $50,000 into the company in 2012, as well as to provide, you know, tens of millions of dollars onto the balance sheet for the future growth that we're experiencing. [00:16:44] S1: And I think like during your growth journey, you've also decided to acquire other companies to kind of do like external growth, drive also like more innovation from like young startups. Can you like walk us through your decision making when it comes to buy versus deals?
00:17:02 · Daniel Chait
[00:17:02] S0: Yeah. You know, each situation's a little bit different, but there's some of common principles that I think that are obstructive. It's like the old saying in software, like, anyone can build anything. Right? So on one level, it's like, it's always a question of, could we just build it ourselves when you're considering acquisition? But the truth is that a lot of technology does require very specialized know how and skills. So often, there is a component of how much specialized know how is there in what this solution involves. And then there's always the time to market, which is as much as anything about trade offs. We like to say here at Greenhouse, I think the one thing that we think about is if we're gonna have a given solution, whether we buy, build, or partner, if I'm gonna bring something to market, it's gotta be relevant to most of my customers. I don't wanna have a bunch of products that 5% of my customers are gonna need. That's a great example of where, let a partner bring that to market. We'll help them get to our customers that want it and need it. But for most of our customers, that's not gonna be something I'm gonna invest in. So I'm thinking about, is this something that has the potential to be used by, you know, most of our of our customers? And is this something we... Is this a business we need to be in? And if those two things are true, you know, then often often is not, then it comes down to, like, how are you gonna get there?