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Follow the HR Tech Money w/ George Laroque

CA$H is GUSHING into the Recruitment Industry, which is why George Laroque from joins Chad and Cheese to break down the first two quarters of VC spending in 2018 (spoiler - '18 is already bigger than '17)

Are AI, Block Chain, and Machine Learning taking all the VC cash? It's a breakdown of who, what, why and how of all the investment money flowing into recruitment technology startups. George shares insights and data specific to Recruitment Industry VC CA$H!

Many props to Uncommon for this EXCLUSIVE look into the ca$h that's being pushed into the Recruitment Industry.


Chad: This, The Chad & Cheese Podcast, brought to you in partnership with TAtech. TAtech, the association for Talent Acquisition Solutions. Visit

Joel: Chad, why do recruiters spend money on unqualified, or uninterested candidates?

Chad: Dude, I don't know, because they're recruiters. What in the hell are you talking about, in the first place?

Joel: All right, stay with me here. PPC campaigns mean you're paying for click, and the person who clicks could be qualified, or unqualified. You don't know, and you're still going to pay for that click.

Chad: Hell, man a subscription model is even worse, because you're paying for all of the candidates, not necessarily qualified ones.

Joel: Bingo. So the answer is current pricing models suck, duh. So, what if you handed over cash for only interested, and qualified candidates. I'm talking about candidates that are actually qualified. The ones that meet all of your job requirements from years in industry to specific skills.

Chad: I gotcha, now you're talking about Uncommon.

Joel: Bingo, Uncommon is where the model does not suck. Right now, Uncommon only charges $14.95, that's 14 dollars and 95 cents per interested, and qualified candidate. If you do volume hiring you'll get bigger discounts.

Chad: Man, that's cheap. So, yeah Uncommon is simple, you set your monthly budget, and Uncommon only charges you when you get an interested applicant that meets, or exceeds your job requirements.

Joel: And to sweeten the deal just create your free account, and get your first five qualified, and interested candidates for free. Just go to to create your free account. That's U-N-C-O-M-M-O-N dot C-O and get those fresh five free peeps with mega skills.

Chad: Hey, this is Chad from the Chad, and Cheese Podcast, today on the Uncommon exclusive we have George Larocque.

Joel: George Larocque, the rock.

Chad: La rock, not the porn star by the way. This is George Larocque, George you've been in the recruiting industry for a good amount of time. Give us a little bit of your background, and tell the listeners why they need to know a little bit about George.

George: It has been a good amount of time. It's been like almost thirty years now. So, I spent ten years, I came out of the staffing world, moved on to the employers side, came out of recruiting into HR, and really ran it all. Spent 10 years on the vendor side, launched a couple of bigger brands in talent acquisition, and worked in talent management, there as well. Now it's been about nine years as this analyst, and advisor.

George: So, what I do is publish reports on Outside of the reports, what I do is, I help employers, and vendors understand each other. One of the things that I do as a part of that is track innovation, and all of the start ups, what's coming up, and share a quarterly report on the VC that's been invested in those start ups globally for HR tech in all of the segments.

Joel: So, George what piqued my interest there was saying 30 years in the industry. So, let's start with an historical perspective from you in regards to, I guess the VC space. What are your take-aways from the last, 10, 20 years of money flowing in, and out of the industry?

George: The last 10 it's been just, you know, We've had maybe a couple of lulls here, you know 2008, 2009, everybody tapped their brakes, right, with the financial collapse, but generally speaking it is just been a, it's been salad days as far as the money flowing into the business, right, into the industry. Deals that in 2000, 18 years ago, you know somebody got $5 million. We were like, "Wow, that's a lot of money."

George: Last week, Greenhouse got $50 million and I saw Daniel, the CEO there, and I said, "That's a lot of money." And he said, "It is." It's, we had earlier in the quarter, we had a $100 million round to Checker, right. So, it's just vastly different, and that's not just an HR tech things. It's everywhere, the money is, it's incredible how much money is out there for start-ups.

Chad: So why do you think this much money is actually going out to, I mean, $50 million is a good clip of cash. So, what does a Greenhouse, or what does a Checker, what do they actually need with this kind of cash?

George: Well, $50 million at Greenhouse, and I knew them a little better that I do Checker, but it's a later stage round. They've raised over $100 million. So, when you look at what a company's doing with a big later stage round like this, these aren't, this isn't like back when Zenefits came out of nowhere, and raised 500 right? That was just inexplicable, and where are they now, right?

Chad: Yeah.

George: So, this is more of a growth funding, they've received validation. Now, I'm not saying it's a foregone conclusion that they will be the leader they are trying to become, or seem to be emerging as, in either one of their cases. But they've had to demonstrate a certain amount of revenue traction, a certain amount of you know product market fit, that they've got to have the right team. So, at the same time investors like to double down, it's a safer bet when others have done before and these, these firms have demonstrated more results. So, they're rather put more money into a more established vendor. That's why it's so hard to raise the early money, because it's you know you don't have the product you don't have the market acceptance yet.

Joel: George, you see a lot of companies now sort of forego the public space. You know, going IPO, in the early days, you know Monster Dice, going public was sort the way that people would cash out. Today, you're seeing someone like Glassdoor that gets two hundred some million in investment money go for the sale to recruiting, you know recruiting in the space, recruiting in this instance as opposed to going IPO. Is it your sense that these companies are getting a lot of money? Is the goal essentially to sell or to go IPO in your opinion?

George: You know back in the day, when I was on a vendor site. I was employee number 10 at BrassRing, we raised a crap ton of money, you know largely from the newspaper industry. You know, and it came from their corporate funds. If you asked me when I was running sales for BrassRing, I would have said, "Well, what we have to do in order to exit, whether we're acquired, or whether we go public is exactly the same. We've got to build value, yes." It's the sound bite that you're told to give when your asked that question. Now, I think there's more of an assumption that, obviously the VCs looking to get their money back times five.

George: I don't know that there's a preference. I think they want, I think there's less of a glow around going public to your point. I think there's, if they get acquired, and they get a sick multiple, that's a hell of a lot easier, you know, staying private not going through that process. But you know I think that really has to do with the culture of the organization, and sort of the founders, right. How, you know, what's their vision for what they want to build, and what success means to them, and then depending on how much they're leveraged, what that means to the VC they took their money from. You know, it means more what the VC thinks if you're highly leveraged to them.

Joel: Yeah, so it sounds like strategy is changing when it comes to start ups. That being said, obviously funding has changed as well from comparing last year to this year. Can you give us can of like an idea of how much money's been spent in 2018 versus 17, and what that looks like possibly moving out through the end of Q4.

George: We're basically at the mid point of 2018, and we've already surpassed 2017. So, with 1.33 billion in 2018, that's a couple hundred K, I'm sorry a couple hundred million more than we did, we did about 1.09 billion in 2017. So, that's a break neck pace. It's hard to predict where we'll be end of the year, because you know I look at, you know Q1 this year was huge. It was almost 800 million, just in Q1. So we have about 533 million in Q2, so you know that's dip from Q1, yet Q2 was bigger than any quarter in 2017. So, does that mean, will we spike up again? It's really hard to predict, because you know I don't know that, you know, the same indicators you'd look at for just general corporate growth, or how the job markets doing, or how the stock markets doing, necessarily relate to the investments that are in the works today. It's hard to predict for me, anyhow.

Chad: So most, I mean, most VC and correct me if I'm wrong, they don't even understand our industry in the first place. So are they just anxious to just throw cash at anything that sounds good? I mean even just a concept versus what's actually there. It was funny the other day we were talking about vaporware, and how that was big term back in the late 90s. It almost seems like what's going on today as well.

George: You have a couple of questions there. You know, to Joel's point earlier, I think the VC sees these exits, they see the Glassdoor acquisition, they see Indeed being acquired, they see Linkedin being acquired, they see all of these things. And you know there's some big, these are some mammoth acquisitions, big exits for these guys. So, it draws a lot of attention to the space. You know, on the other side of things they saw success factors years ago, and you know which was another giant acquisition by SAP. You could argue whether that was way over valued or not. So, that gets a lot of attention. Then you start to look at the issues, like a macro level that everybody is aware of, right. In the news you hear about the pay gap, you hear about the skills gaps, you hear about, you know, the job market having issues, you know talent hard to find. So the VC is aware of this and I think it attracts them to the space.

George: I don't know if it's vaporware that they're investing in, because it's really hard to raise, you know, I talk to so many start ups that have, they have a product they have a good idea, but they don't have the traction they need to track that early round of venture capital. It used to be a million dollar run rate, you know, less than ten years ago, a million dollar run rate in recurring revenue would drive some investment, but that's clearly not cutting it any longer. They're looking for more traction, more success, but there's still like that old. There's still that old boys network. You look at the big rounds that go really early, and you can see the ties, whether it's through their educational background, maybe they worked at an investment bank, worked in the same corporate corporation at some point. I still see a lot of that for the really big ones that happen early on.

Chad: You're saying D, actually your C rounds, at least within your report, is where a lot of the money's going. So what you're saying is, there has to be that proven model that's in place. Even though 120 million went to A, most of the money over all went to more later round funds.

George: Yeah, that's yeah. That's a good point. Now, it's impossible to track all of the seed rounds, and this is something that I think vendors really need to get their head around when they want to raise some money, and get to that A round. The reasons it's so hard to track, I get a lot of calls form vendors and they're looking for introductions to venture capitalist that make super early, you know, investments. That money tends to come more from angels and independent investors, and there's a full time job there, which is networking and pitching your company to these networks of independent investors.

George: If you don't them already you've got to get to know them and you got to get them really believing in what you're doing. If you were to get a few hundred thousand dollars to leave their hands for you to go build your business and get to that A round. It's a whole different game than the folks that are pitching for an A round on the backs of you know five, ten, million dollars of run rate.

Joel: George, I want to ask you about red flags. Historically, anyone who watched the Jobster train wreck [crosstalk 00:14:22] taking as much money as they did, this was bound to end badly. Erik, the CEO, and founder of TextRecruit spoke at TAtech last year, and said something along the lines of, you know, how much does a chat bot like Maya, really need? I think Maya's raised somewhere in the neighborhood of 30 or 40 million. I'm sure that you probably know better than I. Whereas, TextRecruit took a fairly modest three million, as they had already found some success. So, I'm curious, anyone out there that you can look at both historically, and just sort of the checks, that have been written that you can say fairly well that this is probably not going to end well?

George: Well, I think, we just watched, I mentioned Zenefits on the HDM, and benefits side. That was a public implosion for a lot of reasons. They raised a ton of money, over 500 million in one round, and you could just see that that was, that the original founders were arrogant, they were coming into the market smarter, perceiving themselves to be smarter, than every multi-billion dollar pay roll company that came before them. So, it was, you could see that one. That's a historical record.

George: Right now, I don't know that I would out any specific vendors, but I would say that I do see a lot of features that are billed as products right now. Chat bots are a really good example. And you know that funding question, how much is too much? You see a lot of entrepreneurs struggle with that, because you don't want to over leverage yourself. But at the same time, you know, it's- One of the things you can do with money is create a lot of noise, and get a lot of attention, right. You can invest in marketing, you can invest in branding, you can invest in sale people. That's where it isn't necessarily the best product that starts winning in the market with more feet on the street, and more attention.

George: So, you know the draw to that is, it's pretty intense. You could almost look at another vendor that's raised a ton of money in, I wouldn't call them a feature, but if you look at SmashFly in the recruitment marketing space. They've raised a lot of money, and you know there's been, we haven't really heard anything officially, but we know that there's been some shake ups from a management perspective.

George: You know I look at them and I know they've got a lot of Fortune 500 customers. They're the perceived market leader in recruitment marketing, but at some point, depending on how much money you've raised, it can never be enough, because you can't be on as healthy a clip from a revenue perspective to satisfy those investors. So, it's, again I'm not predicting their demise, but I think that's one that I'm watching to see. I wonder how they're going to fare in the next few years.

Chad: Yeah it's almost like you're drowning, right? I mean there's just so much that you can take, and then you've just taken too much. Then to be able to get that five x, or who knows what they're asking for, to be able to actually pay that back against that quote, unquote unicorn type of status isn't easy. Obviously, if it was then everybody would be doing it.

George: No, you're right. I think the whole unicorn thing is, it's just a silly conversation you know, unicorn by definition is supposed to be rare, right.

Chad: Right.

George: It's mythical, so the idea now that the conversation, and the broad B2B tech market is one where, you know sort of getting to unicorn status is the goal. It's just not feasible. It just isn't realistic that they're going to get to- especially in our space. I just don't see that happening.

Chad: Yeah, let's switch gears real quick, and let's talk geography. So, where's the money being spent? The start ups where are they at, and I guess you could probably see on both sides, where's the money coming from, and then where's it being spent. What companies, where are they actually located, geography wise?

George: Well, not surprising to anybody would be that the US leads, from a VC perspective, both in where the moneys coming from, as well as where the start ups are located. Silicone Valley, is still the, they like to call themselves the cradle of innovation. But you're seeing some other areas like New York, Boston's emerging a little bit, again. Then there's start ups that are located across the country. The world is getting flatter. So, you can attract talent that isn't quite as expensive. They get better quality of life, and your cost of living, and cost of doing business is a little more feasible in the middle of the country. Atlanta's got some interesting things happening there as well but it's still a US and Silicone Valley.

George: Internationally speaking, you know. So, in Q2 the US had 21 deals. Number 2 was France with seven. So there's a big gap between number one and number two, and the UK was number three with six. Then everybody else was like one or two deals here or there. France is something interesting, they may never catch up to the US, just given the way we roll here, but and then the UK may never cath up for all I know. But when I look at France, they sort of game out in the last couple quarters. I've said it, I've written about it. I don't know whether, it's something political, or you know what's happening ultraly there. They seem to be developing start ups. They seem to be investing in their people, and even from a governmental perspective, creating ways for folks to start companies and get some early traction.

George: I've been contacted by a branch of the French government about a start up coming to the US, and they were helping them find analyst, and advisors. So that's kind of interesting. I'm not aware that we do that for any start ups.

Chad: Seeing that in Ireland too.

George: Oh really? Okay that's cool. You guys were over there. I listened to your, at least one of your shows from like the Guinness Brewery maybe.

Chad: Throughout Dublin, wherever there's beer.

Joel: George, I'm curious, you see, obviously we talk a lot about Google, Linkedin, Microsoft, et cetera. Do you see that having a significant impact on the types of companies being funded, and how much they're being funded?

George: I think those are good examples again, of activity in the market that draws a lot of attention. But in the talent acquisition space, consistently quarter to quarter, job boards lead as the subcategory, right under, I sort of group it by talent acquisition, and then within that I look at job board slash market places, because I've only seen a couple market places that just look like every job board I've seen. So, by far the job boards lead. I think, you know, while Google has released with in the G Suite, you know, a process management, you know air quotes, ATS like capabilities.

George: You know a lot of what they've done, and you know deeper, you have deeper insights into their product stuff, but a lot of what they've done is around the job advertising. Where we're anticipating that build go, is further in that, and getting companies exposure, and dry talent. So, that's a job board like marketplace, and I think that probably has something to do with a sustained investment in job boards, and market places.

Chad: Yeah, I mean the job boards already have revenue streams coming in. They're looking to pivot to, I would assume, to evolve past just being a job board. So I guess, and just from my opinion, it makes sense for a company to be able to provide funding to a company who already has solid revenue streams first, and foremost, and they're looking to evolve into different technology. Doesn't that, I mean from my stand point, when I'm seeing this from the outside, that's kind of the feeling I get. Is that what you're feeling as well?

George: Yeah, that's one big part of it. The other, I think, is more so than any other solution in our space. It is a two sided, job board by definition is a marketplace. I've got a consumer, and I have the corporation. Right, I've got the consumer, and the business side of it, and I'm bringing them together.

George: So, if I'm investing in an applicant tracking solution, it's a one sided sale. I'm selling into the business. So, you've got a really, that sort of high volume transactional environment that a job board can be, is really attractive to an investor, because I can sell, I can sell via eCommerce, I can sell single ads, and I can sell big subscriptions, and other services that I can tack on to your point, and grow this business, because I've got a captive B2B market as well.

Joel: George, I'm curious about, I asked about red flags earlier, I'm interested in green flags. Of the start ups that are getting money maybe in multiple rounds. What are some of the ones that you look at and go, "Oh yeah these guys are a home run"?

George: I'm not giving anyone, any investment advice, let me say that up front. That's the million dollar question, no pun intended, right. It's I think, you know, let's look at the big sexy trends. So, all of the bots, and the AI, and the machine learning. There are a couple, one that jumps out, I think you might have spoken to them, is AllyO, who goes really deep into the process. Now, how much of that, you know, I haven't gone deep with them. So, I don't know how much of that is like pseudo AI, I don't know how much, I'm not questioning their credibility at all, but that model of doing something innovative, you know, and really changing the game for the recruiters, and talent leaders is something that I would pay close attention to.

George: I also see their customer list, and that looks pretty impressive as well. I think, we are going to see some, you know, I don't know whether it's going to be a like a Beamery, or I picked on SmashFly a little bit, it cold be a SmashFly, it could be a Telemetry. I think the folks who can bring the employers something that helps them with that, sort of getting the brand to, out to the audience is going to be interesting as well. I think your, there seems to be room to me for, either a big brand job board to reinvent themselves, or somebody else to come in form the outside, and maybe that's Google. Maybe that's what Google is, the void Google will ultimately fit is the finder of talent, because the Monsters and the Career Builders just didn't get where we thought they were going.

Joel: George, man thanks for all your time. We really, really appreciate it. We know you're a busy guy. Thanks and any last words parting wisdom.

George: No, I'm just really excited to do this with you guys on a monthly basis. Thanks for having me this is- I am looking forward to it.

Chad: That was a good hard sale I love that, that was good stuff.

Joel: We are a huge deal apparently, if George wants to be on our monthly show.

Chad: No shit.

Joel: Thanks George.

Chad: Thanks George.

George: Thanks guys.

Joel: Remember to visit

Chad: Where the candidate model doesn't suck. Right now Uncommon on charges $14.95 per interested, and qualified candidate. Plus if you're into volume, and I know you're into volume, there are bigger discounts.

Joel: To sweeten the deal Uncommon allows you to create a few account, and get your first five qualified, and interested candidates absolutely free.

Chad: Do it.

Chad: Thanks to our partners at TAtech the association for talent acquisition solutions, remember to visit

Tristen: Hi, I'm Tristen, thanks for listening to my stepdad, Chad, and his goofy friend Cheese. You've been listening to The Chad and Cheese Podcast. Make sure you subscribe on iTunes, Google Play, or wherever you get your podcast so you don't miss out on all the knowledge dropping' that's happening' up in here.

Tristen: They made me say that. The most important part is to check out our sponsors because I need new track spikes, you know, the expensive shiny gold pair, that are extra, because well I'm extra. For more visit

#VC #Money #HRwins #Smashfly #Beamery #Jobster #Uncommon #Greenhouse #Checker #Zenefits #TATech

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