Building the Team Builder | Josh Millet from Criteria

Josh Millet 0:00
In the first five years built our business on the back of Google, which has the advantage of being really efficient, but when you’re just reacting to customers finding you, you’re not really choosing your target market as much.

Alexander Ferguson 0:17
Welcome to UpTech Report. This is our Founders journey series. UpTech Report is sponsored by TeraLeap. Learn how to leverage the power of video at Teraleap.io. I’m joined by my guests, Josh, and this is part two of our discussion. Josh Millet, who’s based in LA, co founder, founder and CEO of Criteria Corp, definitely go back and listen to part one, where we understood a bit more about their people analytic software. But just I want to hear a bit more of your journey, your story, like how did you get to where you are today? And you shared a little bit because you have one company sold it, and then the idea came, but let’s, let’s continue that journey, how did you actually build the Criteria Corp? And to have it where it is today? Fifth, almost 1415 years later?

Josh Millet 0:58
Yeah. Thanks. Thanks for having me here. Now. You know, the the story of how we got started, as I mentioned, in the in the last episode was an experience a negative experience being involved on the hiring side, you know, as an employer, and but we got started, you know, honestly, started launching the product in 2007. And that was, if you’re selling hiring software, that turned out to be a uniquely terrible timing, in a lot of respects, because within about six months of, you know, launching the product into the world, the financial crisis, 2008 hit, and so it was effectively kind of a hiring freeze across the US. So it was pretty tough time to be,

Alexander Ferguson 1:46
I didn’t feel that mobi, like, great, I build a product, this is gonna be fantastic. And suddenly everyone’s like, No, we don’t want to hire anybody right now.

Josh Millet 1:52
Yeah, it’s interesting, because I think at that point, we were still, in a sense, it was fortunate that we were so small, and had so little, so we didn’t have any revenue to lose. And so in that sense, you know, glass half full, but it was really, it really made us just focus on like finding product market fit and working with the customers we were able to get. And so, you know, we really the early years of the company, though, as a result, were not very sexy, we bootstrapped the business for many years. And, you know, we launched with sort of four or four people in a room, you know, working on the product. And a couple years later, we were six employees, you know, so it didn’t what was what was that journey?

Alexander Ferguson 2:37
What was that step? So you decide, because you had a successful sale earlier, decide to I’m going to start another company use my own funds? How many years to you say two years it took before you say, All right, let’s get outside investment to be able to go for it.

Josh Millet 2:51
We did raise? Yeah, we my co founders, and I put in our own money. And we did kind of like a friends and family round. And so we had a little capital. But then when the financial crisis hit, we realized, okay, we’re probably going to be bootstrapped for a while. So we better we better, you know, when you’re when you’re in that situation, you kind of have to manage for, you know, manage for cash flow, as much as growth, as if we didn’t know if there’ll be another round, we actually did do another angel round a couple years later, once we had a few, you know, like, 100 customers or something, we were able to do do that. So that helps. But we didn’t take real outside capital for for almost nine years. So we Yeah, it was a long time. And we were even at that point, when we took our first outside venture capital, we were, you know, I think 18 employees at that point, and now have grown to about 150 employees at this point, so,

Alexander Ferguson 3:50
but when it comes to funding, what would you say is one of the biggest mistakes one could make when seeking funding and and bringing in that capital?

Josh Millet 4:00
I mean, I think for me, I don’t think we’ve made this mistake, but we came close to it, which would be just going for the highest valuation rather than the best partner at that stage of the business. You know, I think, for us, we’ve been fortunate to have two really good growth Equity Partners. And they both were really constructive. And one of them who’s who’s our current backer still is a great influence on the business. So I think for me when you’re growing a business, I mean, it’s kind of obviously advice but you know, you want unless you’re really exiting the business altogether, and maybe even then, you shouldn’t be alerted by the by the highest valuation, only because if you if you bring in a partner into the business, it’s got to be one who’s aligned, you know, across a lot of different areas.

Alexander Ferguson 4:55
Having that right person the right relationship to that has the right connections and insight where you’re where you’re headed is is is powerful. For for you both both before you got that major round, and after Were there any key points as far as customer acquisition, sales and marketing, where you saw you came across an aha moment? You’re like, wow, this really helped us get to the next level.

Josh Millet 5:22
Yeah, I mean, for us, it was, it was more Looking back, I think it was more of a slow grind that eventually hit a sort of inflection point, we were, we were initially focused on SMBs. That was our target market. So smaller businesses, initially, small and medium sized, maybe like sub 500 employees was the core of our market in the first, I would say, seven or eight years. And then initially, and then over time, as a product got a little bit more mature. We got our first enterprise customers and and at first it was more or less by accident, we it’s not like we made some conscious decision to say, let’s go get bigger companies, what happened

Alexander Ferguson 6:02
is like stumble across them and like you just

Josh Millet 6:04
somebody knew somebody. So what we got really good at, and I think this is, you know, a lot of businesses have this have this trajectory, but we got really good at getting customers over the internet. You know, using Google, we spend a lot of money on Google. And we get a lot of free traffic from Google and, and so really, in the first five years, built our business on the back of Google, which has the advantage of being really efficient. But when you’re just reacting to customers finding you, you’re not really choosing your target market as much, because you’re just you’re just sort of reacting to the inbound traffic you get. And for us, that was really great for getting smaller businesses. But eventually, some some bigger companies started finding us, right, they know how to use Google too. And so, you know, so I remember when we got our first really big customer who’s still with us today, there was a there was a moment or a period of time where even though the product wasn’t quite ready for enterprise in certain respects, we thought, Hey, you know, there’s, there’s enough here we’ve, we’ve built something that big companies see value in as well. And so, over time, we’ve decided to lean into that. And now the enterprise, part of our customer base base is like the fastest growing revenue stream by far for us. So if you had to do something over again, would you have done something different? I mean, I would say that, you know, I think about this all the time, as you kind of reflect on the journey, but I think that we were pretty stubbornly committed to, after a while to bootstrapping, because, you know, if Initially, it was like, okay, investors aren’t returning our calls, we’re gonna, we’re gonna bootstrap. But then, you know, you sort of become committed to that approach. And I think it’s a great approach if you can do that. And we managed to make it work. And it was awesome. But as soon as we did get outside funding, there was this realization that Oh, wow, yeah, we’re so under resourced in all these areas. And once you have some, some capital to invest there, it really does allow you to accelerate things. And so I guess what I would maybe do do differently is, is look around kind of, you know, poke your head up earlier, from the grind of running the business and look around for funding a little bit earlier stage.

Alexander Ferguson 8:21
That is, I’ve heard in many conversations I’ve had is the balance of when do you seek money when you bring it in? When or when can you start scaling? Because obviously, the more team members you have the the bigger the staff that the more resources availability to grow? Is it is a simply a moment of product market fit? Is it a moment of Have you start to see some scale? Like, what do you think is the right inflection point that makes sense to to make the switch from bootstrapping to VC?

Josh Millet 8:50
Yeah, I think I think it’s, you know, different for every company. But for us, there were a couple of considerations. One of them was the idea that we thought we could use some help beyond financial, you know, beyond an investment is, and, and, and, you know, a lot of what venture capitalists and private equity firms do is, is basically pattern recognition, right? They, they know how to scale a sales team, because they’ve done it. So many other companies, they’ve advised companies on that they know how to, you know, build an engineering team, because they’ve done it and so you, you really benefit from sharing these best practices that they have. And we’ve always been fortunate to have partners that that are pretty nuanced and that where they’ll, they’ll, you know, give you a lot of guidance, but not be overly prescriptive, which for me, is the right balance, you know. And so I think for me, it’s it’s like the, one of the overarching concerns is, when does the non financial side of the investment really add? A lot and, and that that point, it’s probably a good thing to take capital.

Alexander Ferguson 10:04
Once you’ve got the funding and you start to grow, you obviously need to grow the team. So when it comes to hiring, which is extremely relevant to your industry, what do you do? What have you seen as some of the big takeaways or lessons learned on on growing your team from that from the early stage of Alright, we’ve got some capital, who do we first start hiring and growing?

Josh Millet 10:24
Yeah, I mean, so obviously, we put a lot of emphasis on that, on that part of growing the business, I think it’s, you know, I’m biased, obviously, but I think it’s the most important part of building a team is, or building a company is is the team you hire. And then, you know, after you’ve hired them, it’s the job of the leadership team to make sure you create a culture that that they want to stay in, right, because it doesn’t do any good. If you’re really good at hiring, but not good at retaining, right? that just creates a lot of work for yourself. So for us, we’ve had amazing hiring results for a long time, we obviously use our own tools, our own assessments. And I think one of the great benefits of doing that, for us is, you know, in the early days, especially we didn’t, we didn’t have any brand, right, we didn’t we didn’t have an employer brand, or even a brand brand, really, you know, people just found us on the internet. And so, you know, you typically at that point, don’t have 1000s of people flocking to work for you just because they’ve heard of, they’ve heard of you and that and that’s Incidentally, another benefit of funding is it does raise your visibility a little bit as an employer. So for us, like the assessments that we use are crucial, because they allow you to find talent and untraditional places, or non traditional ways, you know, and the particular emphasis we have, and that I think a lot of the division that a lot of our customers buy into is, is really, if you’re hiring for call it three quarters, four fifths of position, it really pays to focus on potential long term potential of those hires and not experience which is what traditional hiring is so often geared around that has great business impact. If you can do that. Well, it also has great impact on diversity, because most diversity initiatives, if you’re hiring is focused around experience, you’re only going to reinforce the inequities in the world not not help solve. And so, so for us, that’s been really key, we found some great people in weird industries that have nothing to do with HR software that, that, you know, I always tell the story, a couple of our best salespeople even today, one of them was was like selling art out of a truck, selling African art out of a truck when when he found us and one of the another one was a physiotherapist. And now they’re two of our best salespeople, you know, and if we had just been focused on looking at their resumes, and what they’ve done in the past, we never would have even interviewed them. And so assessments can really help you discover talent in that way.

Alexander Ferguson 13:04
And that is a great example and story of a use case of the personality itself and the how assessments can can come into play for you as a as a leader, wherever you gotten your insight from any books, podcasts, audiobooks, sites that you have read, or would recommend to other later other leaders.

Josh Millet 13:27
I tend to not be a huge consumer of business books. I mean, I definitely read read a few. I love since my businesses is connected to psychology, I love reading psychology books, I’m not a psychologist, but a couple of my founders, co founders are and but I’ve really loved learning in that field. And one of them next sort of crosses over the bounds from business to psychology to economics is is a book called Thinking Fast and Slow. I always recommend that I’ve read it twice now it’s kind of it’s by this, this guy really sort of founded the field of behavioral economics and I love it. It’s it’s a great book. And it’s not the easiest read. But it’s it’s really great for people who were in business and thinking about the ways that human beings are not always totally rational. And and in economics, they sometimes make really irrational decisions. And they do that in predictable ways. So it’s fascinating book for me. And so I’d recommend that one.

Alexander Ferguson 14:28
I love that. I love that for you going forward into the rest of this year and beyond. What do you see is the kind of upcoming challenges that that are going to overcome for continuing to grow?

Josh Millet 14:42
Yeah, so it’s, it’s interesting. I think, for me, one of the big things that I’m thinking about is, you know, we were mostly mostly in office on site company, and then we went totally remote like so many businesses, unfortunately, you know, we’re in an area that that worked really well, I was shocked at how well remote work worked for us as a company. And I think one of the big challenges is now, as I referenced earlier, kind of, Okay, how do you go back now? And, you know, clearly, we’ve discovered that from a productivity standpoint, remote work is really working pretty well. And a lot of our team members love it. So we want to accommodate that. Like, I think I’ll be working from home at least a few days a week, you know, once our office totally reopens. But from a cultural standpoint, that’s something I think about a lot, as CEO is just like, Okay, how do we scale culture, right? We had a really great culture, when we’re 30 people, it’s harder to maintain that sort of energy and culture as you get bigger and have multiple offices and when you’re remote as well, it’s it’s tough. So So for me, it’s sort of the big challenges, I think, with our team figuring out okay, how do we make that hybrid people call it the hybrid model? We don’t know what that’s gonna look like, how do we make that work? There’s, it might be more tricky to manage that and either completely on site or completely remote. You know,

Alexander Ferguson 16:07
you’re also distributed said, in LA and Australia.

Josh Millet 16:11
Is that correct? Yeah, we have offices in Sydney, and Melbourne and Brisbane. Brisbane is our big Australian office and then in LA, and we’ve got some people in New York. So that might be the next office.

Alexander Ferguson 16:23
How any tactics on on managing a team across time zones, and that you found effective and keeping the culture and productivity together.

Josh Millet 16:35
Yeah, I mean, I think it’s, it’s a challenge, honestly, with Australia, because they’re, like, 17 hours apart from us, you know, it’s not just if it’s not just East Coast, West Coast. And so for us, you know, that that has scheduling applications, I think, you know, using great communications platforms, for your team is helpful, because that really builds culture quickly, we, we probably delayed to two after we acquired the Australian company, we took a while before we all got on one instance of Microsoft Teams, in our case, and, and zoom. And so as soon as we did that, it really accelerated the integration of of the company. So, so hindsight, I would have done that, you know, almost day one.

Alexander Ferguson 17:21
Gotcha. Now, I’m just curious on your perspective, when it comes to technology, last question for you, for you, Josh, is what future tech predictions do you do you see, well, we’ll see when it comes to innovation in the near term, next year or two, and long term, 510 years when it comes, particularly in the space of HR and, and people and the opportunity for tech innovations.

Josh Millet 17:45
Yeah, I think a trend that we saw in the past that kind of got interrupted a little bit by COVID, that is going to re accelerate is the emphasis on candidate experience. So a lot of big companies are now thinking of their job candidates as their customers, right. And in a lot of case cases, they are right if like, if you’re a big consumer brand, like Coke or Pepsi, right, the people that you’re hiring or not hiring are your future customers. So you want to make sure that for your current customers, so you want to make sure that they that the 98% of people who apply to your company, or whatever it is 95 who don’t get hired, still have, you know, warm, fuzzy thoughts about Coke or Pepsi and still want to keep using you’re using your product. So, um, candidate experience is really important. And so that’s one of the reasons we’re really interested in game based assessment, because it’s a little more fun than, than traditional assessments, in some cases, a lot more fun. So, so we’re really leaning into that trend. And I think that’s, that’s a big one. And then, you know, the another one I’d highlight would be locked longer term is, you know, what role? What constructive role can AI and machine learning play in human capital management, right, or talent management? I think so far we’ve seen some some interesting advances, but there’s also some really problematic elements to it. But I don’t think that I think that train has left the station it’s going to keep growing so so how do we use that technology to to make a more not not only more effective, but But uh, ensure ensure that it’s an ethical system that we’re that we’re using in terms of, you

Alexander Ferguson 19:27
know, hiring people, the balance of AI machine learning in the future will be will be very interesting. Thank you so much for your insights and lessons learned over these these years. I really do appreciate it.

Josh Millet 19:40
Thanks, Alexander.

Alexander Ferguson 19:42
Now, for those who want to learn more, you could definitely go to criteriacorp.com or go back to listen to part one of our interview at UpTech Report. Thanks again everyone, and we’ll see you on the next episode.

That concludes the audio version of this episode. To see the original and more visit our UpTech Report YouTube channel. If you know a tech company we should interview you can nominate them at UpTech report.com. Or if you just prefer to listen, make sure you’re subscribed to this series on Apple podcasts, Spotify or your favorite podcasting app.