20 VC FF 024 Raising $33m in VC Funding with Nikos Moraitakis, Founder & CEO @ Workable

Summary Notes


In the final episode of Balderton Capital feature week on "20 Minutes VC," host Harry Stebbings interviews Nikos Moraitakis, CEO of Workable, a hiring software startup. Moraitakis shares his journey from VP of Business Development at Upstream to co-founding Workable, which aims to modernize recruiting by focusing on a user-friendly workflow for managers. Despite starting in Greece, Workable gained traction with 50% of its customers in the U.S., prompting a move to better serve its market and access sales expertise. Moraitakis emphasizes the importance of building relationships with investors over time, being transparent, and the predictability of the SaaS business model. He also discusses the significance of metrics like month-on-month growth and the ratio of new to lost revenue in evaluating a SaaS company's success.

Summary Notes

Introduction to the 20 Minutes VC Podcast Episode

  • Harry Stebings hosts the 20 minutes VC podcast, focusing on Europe's most prestigious and successful venture capitalists.
  • The final episode of the feature on Baldston Capital.
  • Previous episodes featured general partners Saranga and Daniel.
  • Founders Friday episode introduces Nikos Moraitakis, CEO and founder of Workable.
  • Workable is an affordable, usable hiring software, which replaces email and spreadsheets with an applicant tracking system.
  • Nikos Moraitakis has a background in business development at Upstream and was involved in enterprise sales across 40 countries in four continents.
  • Loyalty Bay is promoted as a SaaS conversion optimizer tool offering a free 30-day trial.

This is the 20 minutes VC with your host, Harry Stebings. And welcome to the third and final episode of our feature of Europe's most prestigious and successful vcs.

This quote introduces the podcast and the theme of the episode, which is a focus on successful European venture capitalists.

And joining us from Workable is their founder and CEO, Nikos Moritekis.

This quote introduces the guest of the episode, Nikos Moraitakis, and his company Workable.

However, before we jump into today's show, do you wish that more of the visitors to your site would convert, whether that be through sales signups or referrals?

This quote introduces Loyalty Bay, a conversion optimizer tool, which is mentioned as a part of the podcast's promotional content.

Nikos Moraitakis' Background and Workable's Foundation

  • Nikos worked at Upstream, a marketing automation technology company for telcos, before founding Workable.
  • He was an early employee and stayed through the company's exit.
  • Nikos and his co-founder decided to start their own company after their experience at Upstream.

Well, I used to work at a startup before I worked at a company called Upstream, which was doing marketing automation technology for telcos.

Nikos describes his previous experience at Upstream, highlighting his involvement in a growing startup that provided marketing automation technology.

And then my co-founder and I, who were both working over there, decided to start our own company.

This quote explains how Nikos and his co-founder's shared experience at Upstream led them to start their own company, Workable.

Idea Generation for Workable

  • The founding of Workable was not driven by an "aha" moment or a specific problem to solve.
  • Nikos and his co-founder wanted to create a software company with an engineering culture, centered around the product.
  • They chose to start in Greece and focus on enterprise needs and tech, specifically targeting the SMB space.
  • They identified recruiting as an area left behind by the enterprise software revolution.
  • Workable was born out of the recognition that there was room for improvement in hiring software.

To be honest with you, there wasn't an aha moment or a big burning problem we wanted to solve.

Nikos explains that the idea for Workable did not stem from a sudden realization or an urgent problem, but rather from a more strategic approach.

Recruiting seemed to be like the step sign that was left behind from the revolution in enterprise software.

This quote highlights the founders' observation that recruiting software had not evolved like other enterprise software tools, which presented an opportunity for Workable.

Distinctiveness of Workable

  • Workable is designed to fit the workflow of line managers, not just HR departments.
  • Traditional recruiting software is referred to as "applicant tracking systems," which indicates a focus on process rather than collaboration.
  • Workable aims to be more collaborative and user-friendly for all involved in the hiring process.

How is it better? I think the main element of workable that makes it different is that it focuses on a workflow that fits with the way line managers work inside the company.

Nikos describes Workable's key differentiator: its design is tailored to the workflow of line managers, making it stand out from traditional recruiting software.

It's not a collaborative software that people want to touch, then sometimes they're not even allowed to touch it.

This quote criticizes traditional recruiting software, suggesting that it is not designed for collaboration and often restricts access, unlike Workable.

Workable's Approach to Recruitment

  • Workable advocates for a simplified recruitment process.
  • They believe traditional recruitment processes are outdated.
  • Workable's tool is designed for actual work execution rather than mere tracking.
  • The platform is tailored to small businesses and has found success with this demographic.

"Workable takes a completely different approach and says you don't need to track anything, just go there and do it in a simple interface that you would like."

This quote emphasizes Workable's philosophy of simplifying the recruitment process by focusing on a user-friendly interface that facilitates work rather than tracking it.

"It makes some discounts on functionality. So it says that some of the stuff that's typically done around this process, it's just there because that's the way we did recruiting 50 years ago."

Here, Nikos Moraitakis explains that Workable intentionally reduces certain traditional functionalities, suggesting that they are outdated and no longer necessary for modern recruitment.

"And I think that appeals in the end into the small company."

Moraitakis highlights the appeal of Workable's streamlined approach to small businesses, which is a key market for their product.

Starting a Company in Greece

  • The challenges of starting a startup are conceptual rather than location-based.
  • Product-market fit and good product design are universal startup challenges.
  • Greece had challenges for startups, but they were not insurmountable.

"I think that the hard problems that you need to deal with when you create a startup are not so much location based, they are conceptual."

Nikos Moraitakis indicates that the core difficulties in creating a startup are related to product and market rather than the geographical location.

"But right now you can get started with 50 or with two hundred k."

Moraitakis notes the reduced initial capital requirement for startups today, making it more feasible to start a business even in a country like Greece.

Access to Funding and Talent in Greece

  • Early-stage funding is accessible in Greece through local funds.
  • Greece offers a hiring advantage due to a strong network and less competition.
  • Greek engineers are as skilled as those in global tech hubs.

"In Greece there are funds that do it. Open fund is one of them and better no one that gave us the first money and you can definitely get started."

Moraitakis shares that there are Greek funds available for startups, highlighting that funding is accessible even outside major tech hubs.

"There's plenty of them. They're really good. They're equally good to the kind of engineers that you will find anywhere else in the world."

This quote points out the abundance and quality of Greek engineers, which is comparable to engineers worldwide.

Workable's Expansion to the United States

  • The move to the U.S. was customer-driven, not for proximity to VCs.
  • Workable had a significant customer base in the U.S. before establishing a presence there.
  • The U.S. offers unparalleled talent in online marketing and sales.

"I mean no disrespect, but if you do a good business, VCs will pay attention to, you don't need to move next door."

Moraitakis explains that the decision to move Workable to the U.S. was not to attract venture capital but was a strategic move driven by customer geography and business needs.

"So when we were having a few hundred customers and starting to grow really fast, and we wanted to set up a marketing and inside sales and account customer support infrastructure, it made sense to build this close to a bigger customer base."

The quote clarifies that Workable's expansion to the U.S. was a logical step to support their growing American customer base and establish a local operational infrastructure.

Popularity of Enterprise SaaS

  • Enterprise SaaS has become a popular business model due to its measurability and predictability.
  • The SaaS model is now mature with standardized metrics.

"One thing is that it's a fantastic, measurable, graspable, predictable business model."

Nikos Moraitakis describes the enterprise SaaS model as highly attractive due to its clear and quantifiable nature, which allows for better business predictions and assessments.

"I could look at five or ten metrics in another business and tell you if it's doing well or what kind of potential it has."

This quote highlights the standardization in the SaaS industry, where a few key metrics can provide significant insights into a company's performance.

Understanding SaaS Business Dynamics

  • SaaS businesses offer clear frameworks for investor analysis.
  • Traction and metric performance are indicators of potential success.
  • The market for cloud solutions is expanding, particularly in the high enterprise sector.
  • Traditional on-premise software is being replaced by cloud solutions.
  • Medium-sized businesses are adopting affordable cloud solutions for various functions.
  • Pioneers in accounting and email marketing software have educated small businesses on the value of such tools.

One, on the high enterprise market, there's a replacement of traditional on premise software, which is happening on mass, and there's still a lot of it to be replaced.

This quote highlights the ongoing shift from traditional on-premise software to cloud solutions in the high enterprise market, indicating a significant opportunity for growth in SaaS.

And as more and more small and medium sized businesses realize that, realize that it's making their performance better, they're starting to try to adopt one for every job.

The quote emphasizes the growing realization among small and medium-sized businesses that cloud solutions enhance their performance, leading to increased adoption for various business functions.

Key Metrics for SaaS Success

  • Month-on-month growth is a crucial metric for assessing a SaaS business.
  • A high growth rate, especially beyond $2 million in annual revenue, suggests a well-functioning business.
  • The ratio between new monthly revenue and lost revenue indicates the business's momentum or 'drag factor.'
  • These metrics reveal product-market fit and marketing success.

Well, if I were to invest on a company purely on one metric, that would be month on month growth.

Nikos Moraitakis emphasizes the importance of consistent month-on-month growth as a primary indicator of a SaaS company's health and potential for success.

I would also want to see the ratio between new business, a new business now creating a new revenue coming in every month, and lost revenue every month to see, really let you know, how much drag do they have behind them?

This quote identifies the second key metric, the ratio of new to lost revenue, which helps investors understand the company's customer retention and acquisition efficiency.

The Fundraising Experience

  • Fundraising is a means to an end, not an achievement in itself.
  • The process of meeting investors is systematic but also relies on personal connections.
  • Investors often back entrepreneurs they have a special rapport with and have observed over time.
  • Balderton's investment in Nikos Moraitakis' company was influenced by an existing relationship.

Although we do not celebrate fundraising, we do not celebrate in the sense that when you raise money, the point is to do something with it.

Nikos Moraitakis articulates the perspective that fundraising is not the goal but a step towards achieving the company's objectives, likening it to preparing for a marathon.

The investors who do get to back you are usually investors with whom you clicked in a special manner.

This quote reflects on the personal element in fundraising, suggesting that successful investment often comes from investors who have developed a personal belief in the entrepreneur.

Balderton had a fairly good picture of how well the company was doing and how much the company was delivering on its promise.

Nikos Moraitakis notes the importance of delivering on promises and performance as a factor in securing investment from Balderton, indicating the value of track record and trust.

Fundraising Advice for Founders

  • Fundraising is about building relationships, not just delivering a pitch or presentation.
  • Investors need to know the founders over time, observe execution, and see consistent results.
  • Integrity and decision-making at critical points are crucial for gaining investor trust.
  • Previous investors in Workable had known the company for over a year.
  • Metrics should support that the startup is a good investment.
  • Building a relationship over time is key; immediate investment from new acquaintances is unlikely.
  • Transparency and honesty in presenting the company's status and vision are important.
  • Being true to oneself can act as a filter to attract like-minded investors.

"The whole thing, it's about a relationship. Nobody's going to write you a 20 million Doyle check if they haven't known you for a while, observe the way you execute, seeing consistent results."

This quote emphasizes the importance of building a long-term relationship with investors and demonstrating consistent performance and execution.

"Anyone who has ever invested a workup with new us for more than a year, or anyone who has made an offer who has actually taken serious, we definitely did have the metrics to support a very good investment."

The speaker highlights that serious investors had a relationship with the company for over a year and that the company had solid metrics to back up its investment worthiness.

"The people you pitch today, they're not going to invest on you today. But if they watch you for two years and they figure out that you did more or less what you were suggesting, and you're staying true to your vision and you're delivering the results, that is going to make them very interested."

This quote underscores the necessity of patience in the fundraising process and the value of proving oneself over time.

"We have been transparent, honest ourselves. We didn't try to make this look as something bigger than it really is or to sell a grand vision or whatever."

The importance of honesty and transparency in dealings with potential investors is highlighted here, reflecting the speaker's personal approach to fundraising.

Personal Preferences and Future Goals

  • Nikos Moraitakis enjoys the book "Fooled by Randomness" by Nicholas Taleb, aligning with another entrepreneur's preference.
  • Bill Gurley's blog is cited as a favorite.
  • When discussing future objectives, Nikos mentions a target of 100,000 small businesses in the U.S. using Workable's recruiting software.
  • Setting clear objectives is not deemed essential by Nikos, indicating a flexible approach to goal-setting.

"Favorite book... Fooled by Randomness by Nicholas Taleb."

The speaker shares his favorite book, which aligns with another entrepreneur's preference, suggesting a common appreciation for Taleb's work among entrepreneurs.

"I have no clue what's in store. I'm hoping we get 100,000 small businesses in the United States, use our recruiting software, but I don't know how we're going to get to that."

Nikos expresses a hope for Workable's future growth while admitting uncertainty about the path to achieving it.

"Actually, it's a million, but I want to be modest."

This quote reveals a more ambitious underlying goal while displaying a sense of modesty.

Acknowledgments and Resources

  • Thanks to Nikos Moraitakis for his time and insights on the fundraising process and company growth.
  • Mattermark is recognized for providing data and analysis for the episode.
  • Mattermark Daily is recommended as a valuable resource for startup and VC information.
  • Loyalty Bay's conversion optimizer is mentioned as a tool for increasing sales conversions.

"I would also like to give a huge hand to Mattermark where all of our data and analysis was provided for this episode and you must sign up to Mattermark Daily."

The host recommends Mattermark Daily as a key resource for listeners interested in startup and venture capital information.

"And don't forget to check out Loyalty Bay. Sales is the lifeblood on any business and their conversion optimizer helps you convert more prospects into customers."

The host mentions Loyalty Bay as a useful tool for businesses looking to improve their sales conversion rates, highlighting the importance of sales in business success.

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