Entrepreneurs

Getting To $110M ARR: Lessons From Greenhouse Cofounder Daniel Chait

10 years, $110M ARR, and $500M in funding from TPG Growth & The Rise Fund later, cofounder Daniel Chait of Greenhouse and I sit down for a reflective conversation on what worked and what didn’t on the journey to this momentous milestone. 

I’m particularly excited to share Greenhouse’s story because of their impact-driven mission: to reduce bias in hiring. Greenhouse is now helping more than 5,400 customers globally, including HubSpot, Stripe, Airbnb, Peloton, to hire over 2M new employees globally. Since the start of 2021 the Greenhouse platform has managed over 55 million job applications, processed over 1 million referral applications and scheduled over 8 million interviews. 

This January 2021, Greenhhouse’s critical work in creating economic opportunity led to a $500M investment from TPG Growth & The Rise Fund in 2021. In the world of venture capital, the Rise Fund is unique in that it seeks out investments in startups that are not just potential Unicorns, but are what I’ve coined Good Unicorns: companies that serve our people & planet in meaningful ways. The Rise Fund invests in fast-growing startups that serve one of the 17 UN Sustainable Development Goals. Its investment in Greenhouse was because of the company’s underlying service to Goal #9 of the UN Sustainable Development Goals: Industry, Innovation and Infrastructure.

With that, let’s dive into the deep end!

Diana Tsai: Let’s start with the good stuff. What didn’t work?

Daniel Chait: Oh jeez, how long is this interview…it’s only an hour?! There are so many things that didn’t work. You go down a lot of blind alleys. In 2016, I wasted $10m. How? In 2015, we added $10m of sales and marketing thinking: we’re a venture backed company, let’s go-go-go! And then 12 months later there was no revenue growth. That was bad. What we realized at that moment is we were at a different place on the company journey than we thought we were. We thought we had already figured out a scalable sales and marketing approach. We hadn’t. We had amazing product-market fit. Early adopters were buying in droves. That was a hard lesson to learn, and be a little more patient.

Tsai: Love the vulnerability. Now let’s talk about what you did right. What’s been critical to you growing this company to this milestone of $110M ARR?

Chait: My co-founder Jon Stross and I created Greenhouse in 2012 to help companies become great at hiring. We knew that more inclusive hiring was integral to better hiring. We believe if we are successful in our mission, we will unlock the power of human potential at work. Jon & I always thought of this company as a big, ambitious project. We never were interested in shortcuts. We wanted to build. Not houses of cardboard – the opposite. We intended to build on granite. We’ve watched a lot of companies in our space announce shiny new ideas and initiatives, and then we look back a year later and those initiatives have disappeared. We’re thoughtful about how we take things on, every time we do make a decision to pursue something, it’s solid, it’s good, it can be counted on. That shows up in how we hire, the markets we choose to pursue and not. 

Tsai: Speaking of building a durable company – they say success is a mix of preparation & luck. What unexpected lucky breaks happened along the journey without which you wouldn’t be here today?

Chait: There’s certainly a lot of luck involved. When we started the company in 2012, we had record low unemployment, there were talent shortages, the conditions were just right on a macro-level for us.

Tsai: Amazing. Let’s go back to your mission, reducing bias in hiring. You help thousands of companies hire better, I think 5,400 to be exact. How do you go about actually reducing bias in hiring for companies you serve?

Chait: Everyone asks about our secret sauce thinking reducing bias in hiring is really complicated, but it’s really simple. We help companies become structured in their hiring, which means, we help them implement deliberate, defined processes when hiring. Structured hiring means we can measure Pipeline Parity, which means we can measure things like: do the offers we make match the talent pool that applied? If roughly the same mix of people who applied are roughly the same percentage that get hired –  that’s a healthy indicator of a fair process. If that’s not the case, you may have a problem with your process that you need to solve. It’s an important health metric for any company. 

Are we helping more and more people across different companies? Are we able to get more and more people into the right role? What is the dollar impact of getting more and more people into the right job? More women into the right roles, than they otherwise would, at equal pay? How does that play out for the individual who’s short-circuited, and how does that play out for society? That’s what makes us excited.

Tsai: I’m fascinated and inspired by your partnership with the Rise Fund (their $500M investment in Greenhouse) and how together you’re basically taking on one of the UN Sustainable Development Goals. This blend of growth startup and massive, scalable impact is one of my obsessions. Can you tell me more about that partnership?

Chait: We just talked about Pipeline Parity and how to measure reducing bias in hiring. We actually work with the Rise Fund on this: they have an in-house team of scientists and mathematicians that work with us to build these models. They actually help us measure impact, and hold us accountable to that. When we show up at board meetings we’re not just showing profitability numbers – we’re being asked to show: how are you improving economic opportunity? How can you do more? It’s amazing.

Tsai: That’s incredible. An example of Silicon Valley gone so right. I need to talk to The Rise Fund about my Good Unicorns research! Now let’s explore the opposite – what have you done in direct contradiction of conventional Silicon Valley wisdom that was critical to your success? 

Chait: When we hired our director of D&I, I had a very prominent investor tell me not to hire her. His view was that it would lead to a destructive culture in the company and empower people to loudly complain and make trouble. It led to a whole board-room battle, in the end, we stuck to our values and hired our D&I director and she’s been phenomenal.

The lesson there for entrepreneurs, is your investors don’t always know what’s right and a lot of them will reflect pattern-matching, their own biases. 

Tsai: Thanks for sharing that. I want to take us back to the beginning of your story. I can tell from this conversation that you’re a really calm, stick-to-it, resilient kind of leader. You’ve said several times you’re in this for the long haul. When did you know this mission was worth dedicating several decades of your life to?

Chait: My cofounder and I were brainstorming ideas in 2011. We worked through this criteria of which ones we wanted to focus on. We had all these ideas and none of them were going to work. We were starting to get really discouraged at the amount of ideas we had tossed out. We were looking at healthcare issues in the developing world and Subsaharan Africa, exploring all these ways to make an impact.

The critical moment was when we stopped and looked at each other and asked, “What is it that we ACTUALLY know how to do?” And we realized, we’ve both spent a lot of time hiring, and systemizing hiring at scale. Everyone complains about hiring and we were constantly surprised they hadn’t done the systemizing work we had with our hiring processes. So we decided to set out to make companies better at hiring.

Tsai: I absolutely love that question: “What is it that we ACTUALLY know how to do?” I love how that was the breakthrough moment for y’all that led to this moment, a decade later. One final personal question, as you look back on the journey to where you are today, what core habits and best practices would you tell your earlier self to triple down on?

Chait: First, vulnerability-based trust starts from the top. I came from finance, which had a different set of rules, more machismo, all that stuff. With Greenhouse, it’s about setting a healthy culture and leading with vulnerability. The second, read “Getting Things Done” by David Allen – that book helped me organize my life!

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