Across all industries exists a universal truth: a great idea is just a starting point — having the right team to bring it to fruition separates the disruptors from the also-rans.

Enter: Greenhouse

The brainchild of Daniel Chait and Jon Stross, Greenhouse was founded in 2012 with the mission to take the guesswork out of hiring. Annual subscriptions for the recruitment software have been used by the likes of Airbnb and General Assembly to put together their fast-growing teams. The software addresses all stages of recruitment, from applications to interviews to evaluation.

The company raised $2.7 million in seed money in 2013, followed by $7.5 million in its A round the next year. Funding rose exponentially in subsequent rounds and Greenhouse was one of 50 companies predicted to reach unicorn status. Nathan Latka sat down with CEO Daniel Chait to find out how Greenhouse continues to grow in valuation in an incredibly competitive industry.

Key Data

Revenue: Approximately $6 million a month
Customers: 3500
Employees: 380
Annual Contract Value: Approximately $20,000
Gross Revenue Churn: 10%
Net revenue retention: Approximately 120%
Payback Period: 18 months

Want a list of the top 100 fastest growing software companies ranked by revenue? Click here.

Greenhouse’s Growth

What kind of growth do they anticipate?
Despite operating in a market full of competitors like Jobvite and Oracle, Greenhouse grew rapidly since launching their first product in 2013. At the time of Chait’s appearance on the podcast in 2017, Greenhouse had 2,000 customers. Now they’re serving over 3500 and Chait predicts that they’ll add nearly 1000 new customers this year.

Their average ACV has risen as they’ve signed increasingly larger customers. Some customers have an employee base of over 20,000, though Chait doesn’t want to disclose an exact number.

The company currently sees a 10-20% expansion on historical accounts. This is partly due to the rollout of new products like Greenhouse Inclusion so that they can promote inclusivity in hiring by evaluating for implicit bias.

“Customers are now buying CRM from us, they’re buying employee onboarding, they’re buying Inclusion and doing other things with us beyond what they traditionally have,” Chait explains. “All that stuff in conjunction is really leading to larger deal sizes.”

New partnerships will likely boost Greenhouse’s customer base as well. For example, the company recently announced its partnership and integration with Asurint, a background screening provider.

How big is their team?
Greenhouse has nearly doubled its team from 200 in 2017 to 380. 90 are engineers and 30 are quota-carrying sales reps.

Sales and Revenue

Do Customer Success Reps have quota targets?
Most of the company’s enterprise segment is sales-driven while the small business segment is driven primarily by marketing. Of the 90-100 sales reps, about 30 carry quota targets.

Greenhouse’s account executives focus on signing new logos so that the account management team can focus on renewals and introducing new products. Their customer success team is driven by mission-aligned metrics rather than financial ones.

What is their gross revenue churn?
Chait says that annual gross revenue churn is holding steady at 10%.

Looking for strategies to reduce churn? Check out our guide to churn management.

Where is their D Series funding going?

Greenhouse raised $50 million in pure equity during their D round in the summer of 2018, bringing their funding total to $110 million. The $50 million spend is being invested in international expansion, additional R&D on features for enterprise customers, and improving existing products.

Customer Acquisition Costs

What is their customer acquisition cost and where is it spent?
Chait says the company spends approximately $25k to get each new $20k per year customer, for an 18 month payback period. While the enterprise segment is more sales-driven, the company does run ads for its marketing-driven small business segment.

We took a look at the ads Greenhouse is currently running on Google and Facebook.

The ads running on Google are clearly speaking to a specific target market who value hiring the best. These companies already know what the recruiting process can be like and value how Greenhouse’s software will help the company by optimizing the process. The focus on creating a winning hiring culture speaks to a specific target market that is beyond the start-up stage. Larger, more established companies tend to value and prioritize culture.

The ads that Greenhouse runs on Facebook are short-form, conveying Greenhouse’s value in fewer words.

The carousel ads provide a quick overview and are easy to skim. This format is great for an audience that is quickly scrolling through their newsfeed. The Facebook image ads focus on particular selling points of the software. We like how they have established it’s not an untested product when they emphasize Greenhouse is trusted by large companies such as Pinterest, Box, and Buzzfeed. Like the Google ads, there is a focus on building culture, which appeals to more established companies with bigger budgets. One of the ads includes a direct call to action, which makes it easy for potential customers to dive right into requesting a demo.

What does their burn rate look like?

Chait resists pinpointing Greenhouse’s burn and runway, though he says that Greenhouse is in a good position overall.

“There are periods where we’ll invest pretty significantly. For example, this year, we had a half-dozen new initiatives that we launched,” he explains. “Rather than looking at a big lump of burn, we actually have the ordinary ‘run-the business’ which is some amount of burn and growth, and then we have targeted investments: we’re opening an office in Dublin, Ireland, we’re building a professional services team, we’re launching a distributed engineering team.”

The Competition…

How do they stack up against similar companies?
While other companies with similar ACVs and scale have higher numbers, Greenhouse has yet to catch up in terms of annual revenue. Chait believes that the company’s innovative model may be responsible. “It takes time to change how a whole industry works,” he explains. Chait also notes that the company’s growth has been steady. “Gross margins and deal sizes have gotten better and retention has stayed strong.”

Looking to make a deal?

While Chait is reluctant to disclose Greenhouse’s specific plans, he says that the company may be interested in acquiring a tech stack or product if the right opportunity came up.