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The average truck driver at this point is something like mid-50s. So you have certainly people leaving the industry for both of those reasons. But what you also see is a lot of people just trading back and forth between companies. The average worker tenure in the industry is, like, 90 days.
Jay Clouse 0:18
The tartup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them, and discuss the upside of investing in them. Welcome to Upside.
Eric Hornung 0:46
Hello, hello, hello, and welcome to the Upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Eric Horner, and I’m accompanied by my co-host, Mr. Listener-Survey himself, Jay Clouse
Jay Clouse 1:01
Boo boo boo boo. That is us bringing the big guns and asking a favor.
Eric Hornung 1:06
Yeah, we’ll talk more about the favorite later, Jay. But it’s pretty exciting. We’re finally doing a listener survey. I think that means we are officially an official podcast.
Jay Clouse 1:13
I think we’ve been talking about doing a listener survey for longer than we’ve actually had published episodes.
Eric Hornung 1:20
I think that was the first thing we said we probably should do.
Jay Clouse 1:22
Yeah, before we even had listeners, we were like, we should do a listener survey.
Eric Hornung 1:25
I think if you’re a podcast host, you’re supposed to do a listener survey, you’re supposed to have ZipRecruiter as an advertiser, and you’re supposed to go on a road show, do some live audience kind of stuff, you know?
Jay Clouse 1:37
Yeah. Well, I mean, listener surveys make a lot of sense because, one, obviously we’re creating this podcast as a product for you, dear listener, and we want to make sure that that’s good, and that we are serving you in the way that is best served for you. And honestly, the analytics in podcasting are just trash. So we’ll talk more about that here before the interview, but the long and short of it is we want you to go to upside.fm/survey and let us know how you feel about the show. We have just a bunch of really easy questions to run through. it should just take you a couple of minutes and mean a lot to us.
Eric Hornung 2:11
So much so that will probably be playing that plug in the next few weeks of episodes. So if you forget after this episode, we’ll remind you next week.
Jay Clouse 2:20
Yeah, we’ll do it for the next month or so. We obviously care about feedback. We did a whole episode on feedback, and maybe after the survey, we’ll do a second episode on feedback from what we learned here, Eric. But speaking of feedback, today, we are talking with Max Farrell and Andrew Kirpalani, the co-founders of Workhound. Workhound is a workforce retention platform built specifically for frontline workers. They give employees a voice with a real-time, anonymous feedback platform. So really tight in there, Eric, good segue. Did you plan that?
Eric Hornung 2:50
No, I didn’t. I thought I was going to take us down the road show, we would talk about trucking. You know, but you took us down feedback. That was nice. That worked out well.
Jay Clouse 2:59
Yeah, good tie- in. Workhound was founded in 2015. They are based in both Chattanooga, Tennessee, and Des Moines, Iowa. Eric, I actually met Max Farrell many, many years ago.
Eric Hornung 3:10
Many moons ago, if you will.
Jay Clouse 3:11
Many moons ago at a global summit for Startup Weekend. Organizers of Startup Weekend, Max and I’d both facilitated Startup Weekend for a long time. In fact, I think we both facilitated to the same audience in Iowa. He did Cedar Rapids, I did Iowa City, but they shared a lot of attendees and organizers. And I’ll be honest, I think they liked Max more than they liked me.
Eric Hornung 3:33
Well, that’s, I mean, come on. Like we all knew that, we all knew that going in. Is this the conference that was in Las Vegas?
Jay Clouse 3:40
This was the conference I was in Las Vegas.
Eric Hornung 3:42
Your experience at that conference is where I learned about the idea of collision theory.
Jay Clouse 3:47
Ooh, I like that. Yeah, well, actually, that’s kind of the first time that I had put it into words. It’s a Tony Hsieh theory. That’s why he built the Downtown Las Vegas project, which he’s since pulled out of and it’s kind of declared mostly a failure. But his idea was we want to get some form of density in downtown Las Vegas between these creators and founders and make them collide and make them run into each other and see what magic comes out of it.
Eric Hornung 4:10
Well, speaking of colliding, hopefully we don’t collide on this podcast, because there’s going to be four voices. Jay, I like when we have two founders on because it gives us a little bit more depth into the backstory of how they met and why they work well together.
Jay Clouse 4:23
That’s true. It’s, It’s fun. And it’s fun to see them play off each other. Always introduces some challenges in making the most out of our limited time together. So Eric, let’s see how we do as hosts here. A couple more pieces of information. Workhound was founded in 2015. They’ve raised just over $2 million to date. And you, dear listener, as I said, you’re about to hear a plug for you to give us some feedback in our listener survey at upside.fm/survey. And also let us know how we do in this interview where we have four voices, you can tweet us @upsidefm or email us email@example.com.
Eric Hornung 5:01
How much are the wasabi peas you buy a Kroger?
Jay Clouse 5:03
I think they are about $5, maybe $3.99.
Eric Hornung 5:07
That’s pretty expensive for for a little snack,
Jay Clouse 5:09
Just a little snack, but you know the value is there, and I think it’s worth it.
Eric Hornung 5:13
How do you afford that on a podcasters budget?
Jay Clouse 5:16
It’s tough. It’s tough. I gotta dig deep. And I gotta lean on my other business sometimes.
Eric Hornung 5:20
Well, you know what, I think the listeners could help us out here because there’s one thing that they could do that directly correlates with our ability to raise some advertising revenue on this platform.
Jay Clouse 5:30
I think I know where you’re going with this.
Eric Hornung 5:31
Oh, yeah, I’m going to upside.fm/survey. It is our 2019 Listener Survey. And it is a key part of our growth strategy here at Upside so we can keep on telling stories about founders, community builders, and venture capitalists outside of Silicon Valley. And we can get Jay some more wasabi peas.
Jay Clouse 5:51
That’s right. So, dear listener, if you would do us a solid, if you would do us a kindness, please head over to upside.fm/survey. Answer our 2019 Listener Survey should only take a couple of minutes. Myself and my wasabi peas thank you.
Jay Clouse 6:14
Max, welcome to the show.
Max Farrell 6:15
Thank you. It’s great to be here.
Jay Clouse 6:17
Andrew, welcome to the show also.
Andrew Kirpalani 6:18
Thanks. Thanks for having us.
Eric Hornung 6:20
So we like to start with a background of the founder. But since we have two on the podcast today, Max, we’ll start with you. Max, can you tell us about the history of Max?
Max Farrell 6:30
Oh boy. I’m just a boy from Arkansas. I am from Little Rock, Arkansas originally, very proud to be from the Natural State. Had the opportunity to go to a liberal arts college in Iowa called Grinnell College. My focus there was sociology. And when I graduated, I immediately started working for a fast growing software company in Des Moines, Iowa, called Dwolla, which is focused on payments that had raised money from, raised venture capital from both coasts. And any chance you get to ride a rocket ship, you just hop on board and ride for a while, especially if it’s in Des Moines, Iowa. Cut my teeth there for a few years and community building and biz-dev. Along the way, I also participated in a lot of startup weekends, both organizing and facilitating around the country. And those sorts of experiences then led to some of the ideas that have led to Workhound.
Eric Hornung 7:23
And Andrew, can we get the history of Andrew?
Andrew Kirpalani 7:25
Yes, it’s a fine book bound in leather. Looks really nice on a shelf.
Jay Clouse 7:30
Smells of rich mahogany.
Andrew Kirpalani 7:31
Exactly. So no, I grew up in northwest Iowa, for the most part, small town, ended up going to Iowa State with the notion at that time that I was going to go make special effects robots for the movies. And nobody in northwest Iowa is, like, equipped to know what that takes and has no notion to say, oh, if you want to do that, you should probably go to school at, like, Cal Poly. So I got into Iowa State and ended up, you know, getting into computer engineering and found out just that I really enjoyed creating things technically. But I always kind of had the mix of technical ability — though there are plenty of people that are much better engineers than I am — and then the ability to kind of look at things from the business or the pragmatic side and kind of blend those two worlds of sort of the human and the machine. Sounds like it’d be the subtitle of a really great sci-fi movie. But, so kind of going through Iowa State and getting out, I’d really held, like, every job you could think of on the technical side of companies from everything from implementation, so where I’m not actually writing the software but going out and helping companies bring it into their their workflows, to customer facing engineering to backend engineering. And then ultimately, in my last gig, I got pulled over into product management. So really, instead of now writing the code, I’m deciding what we should write code to do. And that’s really what ultimately my role has kind of evolved into here at Workhound. Max and I, you know, shared that passion for Startup Weekends. And I’d also organized the facilitated the ones primarily here in Des Moines but some other places around the country. And so we kind of met, and Max knew I was interested in, in doing something on my own, and we kind of share the problem or the passion for unsexy problems. And so the trucking industry has been our beachhead, sort of by starting with those unsexy problems.
Jay Clouse 9:20
Awesome. There’s a lot of paths we can go down here. I also share an affinity for unsexy problems, which is why I co-host this podcast with Eric.
Eric Hornung 9:27
That was terrible. Zing.
Jay Clouse 9:30
Didn’t land. It’s fine.
Andrew Kirpalani 9:32
No it worked. I got it.
Jay Clouse 9:33
Max, we talked about working at Dwolla and that being a rocket ship in Des Moines. We are not in Des Moines, we don’t know a lot about Des Moines. And to us, that is one of few companies, probably one of one companies besides Workhound, that I know of in Des Moines. So can you talk about what Dwolla meant for that ecosystem and if it is as rare as I think it is?
Max Farrell 9:53
So for any community, you have to start somewhere with, with a company that goes outside the norms. And Dwolla was one of the first companies to get venture capital from a group like Andreessen Horowitz or Union Square Ventures. And sometimes all you need to know is that, hey, this is possible here versus it’s the mindset of that you have to leave in order to achieve these things. I think Ben, the CEO of Dwolla has done a really great job of just putting the the state down saying we can do this here. And we have the talent here to make it happen. And just having that growth that they’ve seen, and also just getting to learn what works and what doesn’t, was was tremendously valuable for me.
Eric Hornung 10:34
Andrew, you mentioned that the two of you met through Startup Weekend. I’m curious what the first real sit down was to say, like, what, how did this become a partnership from meeting at Startup Weekend and being into non sexy problems?
Andrew Kirpalani 10:52
Yeah, well, so it’s definitely it’s one of those kind of cliched stories. But so Max and I had known each other for a while through Startup Weekends, we’d help each other out with a few little things. And Max had left to Dwolla to kind of go apply those principles to larger companies in kind of a consulting role and ultimately had been sort of nudged into the area of trucking by some mentors to say, like, hey, there’s really big problems here. So Max is kind of off gallivanting about the country doing his consulting gig. And he comes back to Des Moins, and I’m working in my prior gig at that time, he’s like, let me buy you a beer. So we go get a beer, we’re just catching up. And he pulls out this bar napkin with like, horrible chicken scratch scrollings on it. And I don’t know if you guys have seen Max’s penmanship, but I, you know, if you don’t know him, you would be concerned he has a medical issue of some kind. So he pulls out this bar napkin and shows me this, this prototype of this idea. And really, he starts talking to me about the trucking industry and telling me like, the trucking industry has an average 95% annual turnover rate. And it’s companies like, and I like, when we tell people that, they have to, like, confirm that that’s not a mistake. Like, no, we really mean that if a company has 100 trucks, they hire 95 drivers a year to keep them rolling. You know, there’s something like, like a 50,000 driver shortage in the industry. That’s sort of the low end estimates. This industry touches every single thing in our economy. If you look around any given room, everything in the room was probably on a truck at some point, and that it costs them $5-8,000 per driver every time they have to recruit, hire and train. And so you’ve got this industry that sort of underpins everything in our economy that just has raging inefficiencies in it. And on top of it being an unsexy problem, to me that says it’s a stupid problem, like it’s a problem that’s like, just logically unsound, like it doesn’t make sense. And so that really got me fascinated. So Max buys me a beer, shows me this napkin prototype with, you know, chicken scratchings and whatnot, and says, I want to fill out an application for this accelerator, and I just need someone’s name to put down for, for the tech. And so I’m like, yeah, okay, fine, you bought me a beer, you can use my name great. And I sort of, I had done this a couple of different times where I’d applied to an accelerator with just an idea, and like, really, were at the stage where you don’t get into accelerators with ideas anymore, you’ve got to have something. And so I sort of thought it would be one of those things where they review the application. They’re like, oh, you seem like interesting dudes. And like, this is kind of a cool problem. One of our board members wants to have a meeting and, like, talk about something, and then maybe you’ll figure out if you want to work on this in your free time and come back. But instead, like 24 hours later, with nothing in it like 5am on a Saturday, they let us know that we were in the accelerator. So they were going to give us 20 grand for 6% of this bar napkin. And we just kind of decided to take a flier and go for it.
Jay Clouse 14:01
Which accelerator was that?
Andrew Kirpalani 14:03
That was the Straight Shot accelerator over in Omaha. So it’s kind of a local, regional accelerator. They have kind of morphed away from the accelerator model at this point. I think they ran three classes through it. I think we were in the second one. But yeah, that was that was out of Omaha called Straight Shot.
Jay Clouse 14:19
Max, why did you choose or how did you find that accelerator versus going to a TechStars or YC?
Max Farrell 14:26
The Midwest network. So I knew David Arnold, who was the Managing Director at the time, he had come to Des Moines, man, just trying to rally up interest from companies. And so I’d just always stayed in touch with them. And as, as my curiosity evolved from corporate innovation to the challenges around frontline workforces, that’s when I approached Dave saying, hey, I know this application’s past due, but can we at least put our name in for this? And so I figured it was worth a shot, like I had no intention of…Had you asked me that month, did I have any intention of starting a business around this, the answer would have been no, for both Andrew and I, we were just saying, yeah, let’s see what happens. Wrost that happens is they say no. I’ve gotten told no a lot, this won’t hurt if they say no again. And when they said yes, interestingly enough, I was actually at a truck stop when they called me and said, yes. I was like, this is fitting for the next few years of my life. But yeah, Andrew and I were like, yeah, what do we have to lose? Let’s spend three months in Omaha. And we just kept going.
Jay Clouse 15:28
When you asked Andrew if you could use his name on the application, was that a really thoughtful like, this is the first step, but I know he’s actually going to want to do this afterwards? Or were you literally just like, I need a name on this application?
Max Farrell 15:41
It was a mix, like there was…Both of us had enough shared values that it was like, okay, if this weird pie in the sky approach became a real thing, could I ride with this guy? And the answer was yes because we both had a shared passion for community, which, which told me that both of us would would be aligned on the kind of company culture that we would want to build. And then also, there was just a natural hustler hacker combination, because Andrew has the unique skill set in that he can not only build a product, but he can figure out what product to build. And what that’s allowed us to do is avoid any major pivots as a company, which being a lean, scrappy company has been essential for our success. So some of those characteristics were key. And it also helped the both of us at the time didn’t have any debts, didn’t have any kids or any other obligations, and were willing to just say, yeah, let’s, let’s just start a company for a while.
Eric Hornung 16:38
So let’s talk about that company. What is Workhound today in your own words?
Max Farrell 16:42
Workhound is a real-time, feedback platform for frontline workers. Our goal is to give workers and industries where people don’t sit at desks a voice and then give companies the insights to understand their people’s issues and do something about it. So the end result is increased worker retention and a better company, because they’re making better business decisions.
Eric Hornung 17:04
So you started with trucking, and now you have this term frontline workers. How did it evolve? And how does your, how did your business evolved to expand out of trucking?
Max Farrell 17:15
So one of the things that, that I’ve learned from from my experiences working in startups and just seeing other startups is the, the lack of focus can kill a company, or just make them a mediocre company. And so one of the things that Andrew and I agreed to early on is that let’s prove this out with so much extreme focus that then we have a beachhead to build off of, let’s go start where there’s this really big problem, where with a 100%, 95% annual turnover rate, and in an industry that is 10 years behind the times technologically where we can put a minimum viable product out in the market and be really embarrassed, and people said that it was innovative. And so that, fortunately, that’s what we were able to do. But as we started Andrew and I always knew that there was an opportunity beyond trucking if we could prove out the the initial value.
Jay Clouse 18:08
My assumption is, if there’s a 95% turnover rate in the industry, on one hand, you have to think that that industry is like, there’s got to be something to help us with this turnover rate. On the other hand, there must be some systemic issues that might make them hesitant to adopt a platform like Workhound. So what was the response when you got that MVP in the hands of these trucking companies?
Max Farrell 18:32
There’s been a few different responses. So one has always been the status quo of that, hey, we’ve always done it this way, why would we do something different? But as we’ve entered the market, we’ve entered, entered it at a time where there is this significant driver shortage, and especially around qualified drivers. And so companies are really hurting to keep their best people because there’s not a great pool to then draw from to keep their trucks running. And we know that statistically, in any company, a retained workforce is safer, more productive, understands your company culture, there’s all these intangibles around people staying in an organization. And so we came into the market at a time where people are saying, yeah, we should probably do better than 100% annual turnover. They just didn’t know where to start. And we said, Why don’t you start with listening to your people? Because we know people are leaving companies because they don’t feel respected, and they don’t feel like they have a voice.
Eric Hornung 19:29
When truckers leave, how often are they leaving for other trucking companies? And how often are they leaving for other careers? And then, when they leave for other companies, why are they leaving? Like what are, what are the, what are you guys seeing?
Andrew Kirpalani 19:42
There’s a couple of different things. Like, you absolutely have people leaving the industry, people retiring, like the average truck driver at this point is something like mid-50s. So you’ve certainly people leaving the industry for both of those reasons. But what you also see is a lot of people just trading back forth between companies. The average worker tenure in the industry is like 90 days. So you have this, this additional, you know, another piece of that turnover statistic is the fact that the average worker tenure is super short. And there’s a couple of different reasons for that. And I’m sure there’s, you know, knock on effects and things like that. But first, these companies have just always done it this way. When, you know, people bring up what’s your competition, of course, we’d be idiots to say we don’t have competition, every company has competition. But our biggest competition is not a large incumbent or somebody taking business from us. It’s the status quo, we’ve always done it this way, our company is built to dump a whole bunch of recruits into a really leaky bucket, and hope, you know, we’ve got enough still when we get to the bottom. And so you’ve got these companies that are just dumping money into recruiting, and all of their metrics, all of their measurement is around how many new drivers did we seat. So you’ve got these pretty, like, aggressive recruiting departments that are, you know, they have targets they have to hit. And so they’re telling workers, the absolute, like, rosiest picture of what possibly working for this company is going to look like. And part of that, just sort of put a little sidebar tangent there is that, I don’t know how many people know this, but like, truck drivers are not paid salary, and they’re very, very rarely paid hourly. Most of the time, they’re paid by the mile, which means if their trucks not moving, they’re not getting paid. Oh, but also, they’re not really in control of the things that keep their truck moving. So they’re not in control of the weather; they’re not in control of traffic, they’re not in control of the dispatcher, which is the person at the company who tells them where to go, what to pick up; they’re not in control of the shipper that they’re picking up from; they’re not in control the receiver that they’re dropping off at. And so there’s all these factors that create an extremely volatile pay structure. But every company is going to try and sell recruits on this idea that you’re going to make, you know, the top dollar every single week, where it’s much more likely that they’re going to have peaks and valleys, and they’re going to, you know, have lean weeks and things like that. But if your only job is to recruit workers, like, giving them the raw truth doesn’t feel like a really great sales pitch. And so what happens is they get the best sales pitch there is to come join a company, then reality kicks in, then you have, you know — I’m a big fan of saying that happiness is the shortest possible distance between expectations and reality — and you’ve got this natural divide that’s already happening there, so they are happy to pick up the phone and take the next set of expectations and go down the road and see if they hash out. There’s just kind of these systemic setup that doesn’t really foster this retention mindset. You know, we went around four years ago starting to ask, well, whose job is retention? It’s everybody’s job. Well, nobody’s name is everybody. And so you don’t get, you don’t get actual focus on keeping the workers there, even though everybody knows it’s this big, bleeding, money pit of a problem.
Jay Clouse 23:11
So how did you guys land on feedback being your solution to all of these, this like, mixing pot of problems that have led to the outcome?
Andrew Kirpalani 23:21
Yeah, so if you if you look at the real, if you look at the the the disconnect in the industry, it’s that the driver — and and this is actually the case for truck drivers, diesel mechanics, home health care nurses, whatever — the person actually delivering the surface of the company, the person that is actually out on the front line, you know, caring for a patient or delivering freight, like, they’re, they’re the face and the frontline and the eyes and ears of the company. But in most of these companies, you really don’t actually have a strong connection between that worker back to the company. They’re going to funnel in through one person, usually the person that assigns their work. And that means that if they tick that person off, they might go sit in a parking lot for three days and make zero dollars; they might, you know, get a bad patient load; or they might get, you know, less advantageous service tasks to make their quotas. And that’s not the only reason. But what it does is it creates this atmosphere of distrust and fear, anxiety. And so what we looked at and said, there has to be another communication channel, there has to be a way for these workers to actually participate fully in their companies because they can’t gather around the water cooler, they can’t meet up with everyone in the break room. We have to open up that communication channel for them. And if you look at the Workhound product, ultimately, what we’ve really created is a new communication channel and then services and analytics on that channel. And it really was about opening the door for that communication to happen. We like to say that we’re building the megaphone for the 23 million undesked workers in the US.
Eric Hornung 25:08
If I’m one of those workers, who am I communicating with? Who’s that channel going to?
Andrew Kirpalani 25:14
What you’re opening is a direct line between those workers and usually operational people that actually care sort of one level up from, from the dispatcher. They’re looking at how do we as a whole, like, meet all of our goals for a company? How do we execute the work? And then often what you will you also have is another layer on top of that even, like at the executive level. So the way that we set up our engagements is that we make sure that everybody has an executive sponsor. So that’s somebody that really cares about the macro level of the business, and they’re looking at it from a perspective of, you know, how do I make sure that my business is properly capitalized? How do I make sure that I have the resources, I need to actually serve my customers, and then what we call day to day quarterback, and that’s usually those operational people who really care about, you know, getting that work done on a day to day basis and managing the various, you know, workers, as well as the people that are sort of dispatching them or making sure that they do what they need to do. And so it’s actually one level up from this, like, very personal, in some ways, contentious relationship between the distributed worker and the person who’s, like, sort of assigning or telling them what to do.
Eric Hornung 26:24
You mentioned the word engagements. Max, is the business model here b2b SAS? Is it project base? Is it one time fee? Like how does, how do you guys make money?
Max Farrell 26:35
One day at a time. We…So the company’s revenue model is b2b SAS. So we have a recurring subscription for the companies that we work with. The company is the customer, and they pay a subscription fee to have that regular feedback loop with their workforce.
Eric Hornung 26:55
For an area that companies had previously just said, this is everybody’s job, it’s something that we just do, and we don’t really pay for, how do you price this?
Max Farrell 27:04
Beyond how much you got? We price based on a couple different factors. So how many workers are in their organization, what kind of data are we providing for them — is it just a really basic offering or are we really digging more deeper into feedback at the location level? Also understanding, ya, what what other analytics that they’re wanting to track? So our pricing is, is pretty straightforward. But those are the factors that we consider.
Eric Hornung 27:29
How broad and deep are those analytics capabilities? Like what can you give to a customer?
Andrew Kirpalani 27:36
There are sort of your top line types of things. So how many individuals have commented in a given week? How many individual comments do we have? So those are sort of your like table stakes, what’s happening here, just kind of the tip of the iceberg. And then what we kind of do is dig in a little bit deeper and try to track metrics that are going to help our customers work well with us. So we do things like track how frequently they’re uploading their worker list information. So how frequently are they telling us that new people are coming in and old people are dropping off. We do things like checking in on how often they’re actually initiating contact requests. So helping them kind of measure the behaviors that they need to do in order to most effectively use the platform. And then wrapping that all around, what we really needed to get to was a pretty strong ROI metric. And sort of the obvious one is total worker turnover. But the problem there is that it’s really, like, the ultimate lagging indicator, right? Like there’re so many things that go into whether a person stays or leaves a job, right? Like there’s, you know, if you did something like, you know, used Workhound to the fullest but then you cut your driver pay in half, you’re going to lose workers, right? So that’s actually a pretty hard thing to, to measure and to do our return on investment calculation. So what we actually did was take that and make it a more granular calculation, say, what did you do with Workhound that really became dollars and cents for you? And so we look at what we call a reveal. So basically, we have a process in which the workers are all anonymous to begin with, but the company can see something that’s important and request to break that anonymity The worker always is in control of that: if and only if the worker consents to revealing their identity, then we’ll actually connect the worker to someone at the company to resolve their issue. And what we found is that when that connection happens, that worker will stay at the company an additional 30 days 95% of the time. At first that sounds trivial, but then remember back to the statistics I told you about the average worker tenure being 90 days. So I’ve just increased worker tenure by a third simply by having these interactions. And then if you look at the real costs associated with this, so again, the average recruiting cost is $5-8,000. And then if you talk to companies — they’re going to have various answers on this — but say the gross margin of a worker of a truck sitting idle for a month, for instance, is somewhere in the neighborhood of 10K often, so you’ve got a $15-18,000 swing, just buy one worker leaving the company or by staying for that additional 30 days. And we can tie that pretty tightly to an action taken through Workhound. And so, we actually are able to look at, you know, deeper ROI metrics now. And as we continue to grow, we’re able to go even further and deeper under that, that iceberg and do things like unlock trends and population analysis and all kinds of different things that you can do when you’re building up this, you know, data and then meta data all on these workforce populations.
Jay Clouse 30:50
So is the magic moment or the magic experience for a company and their workers, this moment where worker submits their feedback. The company sees it, the company says we care about hearing more about this, please tell us more. And they have that reveal. Is that, like, the ultimate happy path that you can show like this is working?
Max Farrell 31:09
So there’s there’s a couple of magic moments. The first one is, we know that in a lot of these workplaces, like you take a trucking company and driver can be happy on Tuesday, fed up on Wednesday, and quit by the end of the week, and they will have a job that next Monday. It is it is that volatile. And so if a company can identify the straw that is going to break the camel’s back and address it in that small gap, that’s a win. That is a win that will save them $5-8,000 in the cost to hire the next person. And these companies realize that. So that’s the first magic moment is being able to show them, hey, you have 1,000 people at your company, out of the 100 people that had issues in the past month, 90 of them are still with your company. That’s huge. And then, so they can see the savings there. That’s the first one. Then the second magic moment is when companies start to change the culture based on the feedback that’s shared. What we have seen is that the most toxic thing in business is to ask for feedback and do nothing with it. And we tell that to companies, we screen them in our own sales process to make sure we find these companies that are committed to change. And to see companies see the feedback and realize, actually we can make a change, we can be different, and they change how they operate the company or they increase pay. You know, one example is that in trucking, we’ve seen companies that have drivers that want to ride with pets in the truck, since they’re on the road for a month at a time. And they added a pet policy so drivers could ride with their furry friends. And those are the sorts of things that really impact the existing workforce to become a recruiting tool for the future workforce, and shows that the company is working to get better. And those things are really rewarding for for the work that we’re doing.
Andrew Kirpalani 32:57
Yeah, it’s pretty interesting that you know, the sort of get in the door value proposition is retention. It’s purely a cost play. But our most successful customers are realizing that what they’ve done is actually created a channel to gain operational intelligence. This is the eyes and ears of their company, and they haven’t been listening. And then they realized that this operational intelligence is now something that they can grasp. And so yes, the retention helps. And they, they have that initial, like, aha moment when they have their first reveal and retention event. But then they start to realize, oh, man, all of these micro-interactions are enabling us to make macro-changes to our business. And that’s, when that light bulb comes on, that’s the next level for us. And that’s that’s a real big win.
Eric Hornung 33:50
How easy is it for someone to, you said, comment? Is that the only way that they can interact with this system? And I’m imagining this average age, 55 year old truck driver who probably has some high school or a high school education, just on average, how easy is this platform to use?
Andrew Kirpalani 34:08
That’s actually something that we’re pretty happy, like pretty proud of. So we’ve done some things that are maybe a little bit counterintuitive. But they’ve all been geared at this idea that we should have the lowest friction possible for our users. So Workhound does not have an app. And one of the reasons we don’t do that is because we don’t want the barrier of entry of having to download one, we don’t want the barrier of entry to having to create a user account individually. And we don’t want people to have to, like, think about that thing on their phones. There’s,and we know that us being technology…technologists, there is a tendency to add features, do more, that can end up, you know, not really serving demographics like that very well. So we stepped back and said, what do we know? We know that 95% of frontline workers, even with these age, demographics, etc, have a smartphone. And every single one of those smartphones can get a text message. And every single one of those smartphones has a web browser. And so what we did was, say let’s meet them where they are, let’s use these tools that they have, let’s use these tools that they’re familiar with, and get their, their feedback that way. So every week, we send out a text message with a link in it. And that link just opens right in their web browser and has a very simple feedback form. Essentially, it’s like a Net Promoter Score, one to 10, how are you feeling right now and why? And like, leave that open ended feedback. And we get everything from Bill is a jerk to three weeks of work history with dates and timestamps. It’s amazing the diversity of feedback we get. But what that also means is that any given worker can be in and out of our feedback experience in 90 seconds. We don’t take up a lot of their time. We don’t, you know, really divert them from their workflow, they don’t have apps floating around taking up their data, that sort of thing. And so really, what we’ve been able to get is, is an amazing amount of feedback. We, you know, one of the very first things, thinking all the way back to the accelerator that they run you through is what are the critical assumptions of your business? And one of our critical assumptions was that people would be willing to leave feedback. We were a little bit worried about that. And then we went out, went out and started testing it and found out that that’s not an issue, you know, we it’s, it’s, the bigger problem is how do you deal with the volume of feedback? Right? So we’ve really focused a lot on supporting our user base, you know, these considerations of lack of friction, lower barrier to entry, that sort of thing.
Eric Hornung 36:42
Out of curiosity, what, what does conversion look like? You send out 100 text messages, how many open up the browser? And how many actually put something in there?
Andrew Kirpalani 36:51
It’s actually a more complicated question that you’re asking is. What you really want to know is, what does that communication channel look like? And so we don’t, we’re not the same as like a consumer user startup where you have to say, like, I have a million daily active users or whatever. That’s not really what we’ve created. We created this, this feedback channel. And so what’s interesting is that if we have a population of workers, we will get comments from about 10% of that population per month. And then what’s really interesting is that population tends to accumulate over time. So let’s say, like, just using your hundred worker example, we might get 10 individuals in the first month that comment. But then in month two, you’re going to get 10 individuals, but they’re not going to be the same 10 individuals. So by the end of month two, you’re going to have roughly 20 individuals. By the end of monthmthree and four, you’re going to have 30 and 40. And by six months, we find that typically, half of the individuals that would make up a population size have left at least one comment. We also find that, on average, our number is greater than one comment per individual. So we know that people are coming back and leaving multiple comments, because if you think about it, somebody’s not necessarily going to have something to say about their job every single day. They might have a significant event, you know, January 2, and then they might have another significant event, March 14, you know, and so we know that they come back to us when they have those significant events. And that allows us to accumulate this workforce over time. So once we’ve been with the company for a year, we’ve had as many individuals commenting as their workforce population size.
Jay Clouse 38:34
In this market of frontline workers, if Workhound just goes gangbusters and is the number one place for retaining and getting real time feedback from your frontline workers, how big is that opportunity?
Max Farrell 38:48
Huge. Workhounds opportunity is pretty significant, because, as we’ve shared, not only is trucking our beachhead, but there are 23 million frontline workers in the country in industries like trucking, manufacturing, warehousing, retail, restaurants, hospitality, construction, technicians, and all across healthcare. So there are plenty of different industries where these workers are decentralized from their, their workforce or from their home office, and don’t have a voice. So that in itself is something that keeps us really excited about the road ahead. But the other piece that’s really exciting is that we have, we’ve been very focused on the steady state of employment. And if you think about an employment lifecycle, where you spend — there’s companies spend all this money on attracting talent, recruiting them, onboarding them. And then once they come in the door, they just kind of leave them hanging in there in these industries. And so there’s tremendous opportunity for us to continue to build and expand the offerings that we provide, to create value for these companies, where they’re not only figuring out how do we do the things to connect with our people, but how to we make it where, in their first 90 days, we really understand their biggest challenges or make sure there’s a greater connection there.
Eric Hornung 40:07
When you say huge, can you give us a number there? Like, what do you think about for your TAM?
Andrew Kirpalani 40:12
Everybody’s looking for a billion dollar number, right? So…
Eric Hornung 40:16
You can give me any number you want. It can be 10 bucks. That’s fine. That’s huge.
Andrew Kirpalani 40:20
No but, but I mean, that’s sort of a bit of a cynical inside joke between Max and I, because we’ve been through a couple of different programs, and there’s always different ways of, of calculating your TAM and your solemn and you know, addressable markets, this, that, the other thing. What we know is, if you have, if you have 23 million workers in the US, and we’re going to — let’s say we got every single one of them and we were able to charge even a trivial amount of dollars per month, which is just certainly lower than we were able to charge now, you know, you’d get to your hundreds of millions a month pretty easily. So the total addressable market is in that billions. You know, let’s say we were at 100 million a month based on a trivial dollar amount for some of those 23 million workers. You know, you got a $1.2 billion per year run rate on something like that. Now, are we going to ever get to 100% of market? No, but we know that there’s plenty of runway for us to go and get.
Jay Clouse 41:16
I love the simple implementation you guys found of, how do we meet these workers where they are and use tools that actually work for them? The other side of that sword is that implementation side of things seems like it could be easy to replicate. So how do you guys think about building mode or competitive advantage, so other people entering the space can say, well, let’s just also take that implementation and try to compete on the analytic side or something like that?
Andrew Kirpalani 41:43
Sure. So this goes all the way back to Startup Weekend to sort of frame how Max and I think about this. So both of us facilitated Startup Weekends, and you get people coming from all walks of life. And one of the very first questions almost always is, well, what if someone steals my idea? So yeah, you can sit on your idea and never pitch it, never work on it. But the way that I always turn around and answer that question for whomever is at the Startup Weekend is, if somebody hears your idea, thinks your idea is better than every other idea that they’ve ever had, throws out all of their previous ideas, and then executes on your idea better than you, you deserve to lose. So that’s where we start is that execution wins the day. The second piece of it is that, yeah, it’s a simple implementation, but the power is really in what we do with that data after the fact. So we’ve got a four year head start on getting this kind of raw feedback, unstructured data from frontline workers that, you know, is going to give us some runway to go ahead and go ahead and outcompete whoever might want to come into the space. We also find that a lot of players in the space are just not thinking about it in the same way that we are. And, you know, time will tell whether their approach is better than ours. You know, we believe that the anonymity is really key in the approach to get that unfiltered feedback. A lot of people disagree. Time will tell if we’re right or not. But we really think about it in the combination of a data moat, execution, and you know, just hustle.
Eric Hornung 43:17
How do you guys go to market?
Max Farrell 43:20
As far as how do we get customers in the door? So there’s a few ways that we’ve been able to secure customers. One is just outbound sales, smiling and dialing, turning strangers into friends into customers. We are pleasantly persistent. And in these industries, it’s a great way to to grow the business. We attend trade shows that especially industry specific trade shows where it’s same sort of approach, use guerrilla tactics to turn strangers into friends. And on the inbound side, we focus on things like press and content partnerships. And then referrals are also huge, that happy customers are always your best reference for new customers.
Jay Clouse 43:59
We talked about this super briefly at the beginning of the show. But I want to dive in a little bit deeper. You guys are in Des Moines and Chattanooga. Talk to us about why you have two locations. And I’m also curious how big your team is and how it’s split between those two locations.
Max Farrell 44:15
Yeah, so in 2016, a year after we started the company, we had some progress, but we had no customers in Iowa, and a good portion of our revenue was coming from the southeast United States. And around that time, given that neither Andrew and I had a background in the supply chain, we got connected with some investors in Chattanooga that said, hey, come to Chattanooga for a few months, we’ll put some money into your business, we’ll connect you with other people, and we’ll do what we can to help you out. So we spent three months in Chattanooga, and in that time, we doubled our revenue, we got our first enterprise customer, and built a network of good people that could help us continue to connect to this industry in ways that we didn’t necessarily have in Iowa. And so what we’ve learned is that in the smartest midsize city are building around a thesis. So Des Moines is built around ag tech and insurance. Chattanooga is built around the supply chain transportation and logistics. And so we said, let’s keep a presence in Chattanooga, where this, this thesis exists. And so we have our sales and customer success teams in Chattanooga. And that’s where I am. And then we have our software team in Des Moines where Andrew is.
Andrew Kirpalani 45:22
And that made sense for a couple of different reasons. One, you know, we founded the business here, and thus, we have really good networks here as well. And my personal software developer and technical network is just better in this area of the country. The other piece that I think is really important is, if you look at Chattanooga, Chattanooga is about half the size of Des Moines. And neither one of the cities is, you know, over a million people or anything like that. So if you’re going to compete with, you know, cities and companies that are based in areas with, with millions and millions of people, you’ve got to expand your resource pools. And so, instead of just drawing from the resource pool of Chattanooga, or just drawing from the resource pool of Des Moines, we’re drawing from both of those resource pools, and then also building the organizational skill set around remote communication to the time, you know, to be prepared for the time when we actually have to go to an even more distributed model because, you know, if you’re not building, you know, in a tech hub or a metro major metropolitan area, you’ve got to run your company company a bit differently. You know, one of the analogies I like to use is, you know, when you first start sort of looking into startups and getting educated, you sort of think of, like, Silicon Valley as Major League Baseball, like that’s the show, right? And then you think, okay, well, in my city, we’re doing some things, maybe we’re playing, you know, Little League or Triple A ball. And I thought about that for a long time. Like, that’s what I thought the analogy was. But as we built the businesses, or the business, what I’ve realized is that San Francisco is still the show, like that’s Major League Baseall. Outside of major metropolitan areas, we play cricket. Like, all the pieces are there, right? You got bats, you got gloves, you got balls, you got bases, but the field’s different, and the game works a little different. And so, for us, it’s really been about designing the company that works for the game that we’re playing. And that’s why we’re set up the way we are.
Jay Clouse 47:23
One quick question to follow that up, we didn’t get an answer this, how big is your team right now?
Max Farrell 47:27
So Workound has 15 people right now.
Eric Hornung 47:29
So when you hear, like, most VCs talk about opportunities, they say something along the lines of, we’re looking for an industry that’s big and it’s growing. When I think about trucking, I think about being the poster child for the industry that’s going to disappear when AI and autonomous driving become a real thing. So how do you guys think about, either anecdotally, or strategically, what Workhound looks like when there are no more truckers? If there are no more truckers?
Max Farrell 47:56
I never thought you’d ask, Eric. So we obviously think about this, this a lot. And what we know is that autopilot didn’t replace pilots and autonomous trucks and autonomous technology will not replace drivers or warehouse workers. Now the work will evolve, but the work won’t go away. And so, as this technology advances, and the role of a truck driver or, or any other worker evolves from doing the work to making the work better, feedback becomes incredibly valuable, and the input of the worker becomes really important. And so for us at Workhound, we will continue to evolve with the work and play a role in the human side of automation. So we are really excited about the way things are evolving in these, in these markets. And the other thing is that automation is not coming for the next few decades.
Jay Clouse 48:49
Really. Tell me more about that.
Andrew Kirpalani 48:51
Yeah. So even if you talk to the people that are out there, building autonomous trucks, right? Like, I’m trying to remember the article, but there’s certainly an article out there relatively recently in which really was actually interviewing folks at Waymo and a number of other different autonomous truck providers. They will they will tell you that last mile delivery is not going to be automated for decades. If you look at, I believe it’s Freightliner, they actually are releasing this feature on their their trucks, and it’s called highway pilot. It’s not called autopilot. It’s not called, you know, no driver, it’s not called seatless trucking, it’s highway pilot meaning, oh, yeah, I can take over and drive the really straight bit from on ramp to off ramp. But when it gets complicated, I need a person. And that’s where the technology is, and that’s how the technology is going to evolve. And if you think about it, you rather than having, you know, this, like cliff, when suddenly we have nothing but drone trucks, and there’s no workers, you’re going to have the truck, right now, the truck is helping the driver a little bit, right? Like you got a highway pilot, you’re going to help a little. And then, you know, as you the technology continues to evolve, it’s going to help the driver a little bit more. So you still got sort of top line driver work help from the technology is sort of increasing. And then eventually, at some point, you’ll flip to where the driver is, is doing less driving, but still assisting the technology until finally even when you get to the task of, hey, all of the driving is done by the truck. Well, what about all the other stuff that a truck driver does when he isn’t driving the truck? Who puts the gas in an autonomous truck? Do autonomous trucks load and unload themselves? Or do we still continue to have high touch freight like we have in a lot of these industries? You know, and then even if the technology gets to the point where it can do every single piece of the work, and somehow it’s like self repairing, and nobody ever gets a flat tire, what if, what happens when your states don’t have consistent regulatory frameworks? Thinking about this stuff wrapped around autonomous trucking is really going to be some of the biggest challenges. I think, honestly, I think one of the next big opportunities in transportation and logistics is not autonomous trucks, but autonomous infrastructure. How do we change our infrastructure to support a fully autonomous trucking fleet, because if you think about the millions and millions of miles of highways and the thousands of gas stations, and the, you know, thousands of convenience stores and truck stops, and roadside restaurants that all exist to support the industry as it is today, like that’s a huge rock to move to get ready for a fully autonomous truck. So, so there’s a lot of work to be done yet before, you know, we have sort of delivery by Blade Runner.
Jay Clouse 51:42
Awesome. Well, this has been fascinating, guys, thanks so much for sharing. If people want to learn more about you or Workhound after the show, where should they go?
Max Farrell 51:50
Yeah, so just search Workhound, we’re at Workhound.com We’re on all the social medias. But we would be thrilled to chat with you, and we are hiring. So if you’re interested in working in one of the rising cities of Des Moines or Chattanooga, we’re excited to talk with people that are hungry to help create the future work.
Jay Clouse 52:11
All right, Eric, we just spoke with Max and Andrew of Workhound, two guys building a company in the middle of the country. Where do you wanna start?
Eric Hornung 52:19
Is there anything more podcasts than four white guys and a squad-cast? I…
Jay Clouse 52:25
I had that thought and I almost said something on air. But I had that exact thought.
Eric Hornung 52:29
Yeah, it’s a, it’s not everyday we have four in their 20s and 30s white guys who are on a squad-cast, but this one was so here we go.
Jay Clouse 52:39
Here we go. This is our third company in the trucking space.
Eric Hornung 52:43
Yeah, I think we’re developing, you know how we have an ecommerce Blitz?
Jay Clouse 52:46
Yeah, the Blitz.
Eric Hornung 52:48
You almost forgot.
Jay Clouse 52:49
That’s a callback?
Eric Hornung 52:50
Yeah, and now we have a trucking Blitz. But we can’t call it a blitz. We need a new name for it. And he needs a little, needs a little jingle. What do you got?
Jay Clouse 52:59
The Haul? The Haul?
Eric Hornung 53:00
Ooh, the Haul? That was good. That was quick.
Jay Clouse 53:03
I almost thought I wouldn’t get, I almost thought it wouldn’t have something. But I did.
Eric Hornung 53:06
Jay Clouse 53:08
Eric Hornung 53:08
That’s what we’re gonna do. Alright, listeners, let’s get to the deal memo. Now that we have called our new shot on the Haul.
Jay Clouse 53:22
Oh, wow. Where do want to start, Eric? Do you want to talk about Max and Andrew as founders? Do you want to talk about the opportunity for the company? What sticks out to you?
Eric Hornung 53:29
Yeah, let’s talk about the opportunity. Let’s talk about the size, we didn’t get a lot of numbers. So this deal memo will probably be a little light on quantitative analyses. That being said, they said even if you charge a small amount for each employee each month, and you got the entire universe of the 23 million employees that they’re targeting, you’d be looking at hundred million dollars a month, or $1.2 billion a year. So when we think about this opportunity — and I don’t know how much they actually charge, right? — but that breaks down to about $5 per person to get to that figure. Five dollars per employee per month. They made it seem like their number was significantly higher than that. But even if it’s five times that number or 10 times that number, you’re looking at something in the $1 to $10 billion market size. That kind of falls in my second bucket as we talk about.
Jay Clouse 54:22
And we talked a little bit about this market in the Tiller episode and talking to Summer, because it’s a similar workforce. But when he was talking about the number of frontline workers as a proxy or leading indicator for their market size, I was trying to understand, sure, there’s 23 million workers, but that’s representative of how many companies? Because the company’s the customer. So how many companies do you actually have to get on board to reach that 23 million worker number? Because to me, that’s more realistic to think about your addressable market.
Eric Hornung 54:51
Yeah, that’s definitely a question we should have asked, Jay. My guess would be that it is a lot of different companies.
Jay Clouse 54:59
So let’s put it in your bucket of your second sized market bucket, still very large. Something I saw in the research that — this is the challenge of having for voices on the podcast, just get limited number of questions — but something I saw in my research, Workhound has recently raised $1.5 million. That was in June. And a quote from Max on that was that, to this point, they had been really working off of the revenues of their customers. So it’s clear to me they have some number of real customers, and that those customers are paying. We didn’t get any pure traction numbers. But you asked a very pressing question at the end, Eric, which was like, how, what is your go to market? What is your customer acquisition look like? Because to me, that is the big question. And if I’m getting ahead of myself here and talking about next 6-18 months, that’s my biggest question for this company moving forward, like what does scale look like and customer acquisition look like? Because they’re moving out of just the tracking space into other frontline industries. They said trucking was our beachhead. But we didn’t get a sense of how saturated they’ve gotten in that beachhead market. How many of those trucking companies that represent these 23 million frontline workers are they actually in front of right now?
Eric Hornung 56:10
It sounds like, anecdotally, and I agree with you, we don’t have all of those kind of metrics that we would normally point to, to say, okay, this is a good number, that’s a good number. But it sounds like they anecdotally are solving a very real problem. And I think that one of the numbers we did get, which is that over a six month period, 50% of a given given population will actually use this tool. That’s got to be, like, a workplace record for some sort of feedback tool. I mean, the surveys that get sent around at my full time job and that I’ve seen, no way close to 50% of people actually do those or use them.
Jay Clouse 56:48
What did you think about feedback? Feedback is naturally inclined towards people who are having really great experiences or really bad experiences. And so to me, this, this idea that over the course of six months, 50% of people leave feedback, that to me is saying most likely that, over the course of six months, 50% of people are having a really bad experience, which makes sense when they say that there’s a 95% turnover on an annual basis in this industry. So in an industry where you have so much dissatisfaction, I’m not surprised at how high the rate of leaving feedback is. And the value proposition here seems very clear to me also. If, if their data really plays out and says if replacing a trucker or replacing a worker is $5-8,000, and that’s not accounting for any idle time outside of that, that’s like the most efficient switch of it sounds, like it could be 15 to $18,000 they said, to me, that’s a super clear ROI if the trucking company or the company in general using the product can recognize that and show that their retention has improved. They talked around a little bit this idea that retention is a difficult metric to point to on its own because some of that can be attributed to Workhound, and then if you slashed wages — was Andrews example — and retention dropped has nothing to do with Workhound, that’s a different factor. But to me, it seems like this industry is, like, rooted in status quo. So how often are they changing things outside of Workhound? It just seemed to me that it should be very clear to show the retention improvement and market the value of that. And maybe it was, maybe it is. I just didn’t get a sense that every conversation they’re having is turning into a sale. And my shadow is, I don’t know, why not, if all these things are true.
Eric Hornung 58:33
I can I can definitely see your point there. I think that my first take on that would be, it’s hard to sell businesses something that doesn’t impact the things that they currently measure. And if they’re currently measuring their ability to get recruits — and long term, this helps that number, but in the immediate term, it doesn’t — then if all the incentives for the employees at the firm or at the company are to get recruits, then it’s a pitch to the executives, which is why they have this executive sponsor, which I think is really smart, to let’s try something different. This obviously isn’t working. But “obviously isn’t working” when everyone else is doing the same thing sometimes isn’t so obvious.
Jay Clouse 59:16
Yeah. Moving over to the founders here in our deal memo, I love the founding story. Max finding this information, he’s pushed there from a mentor, he has all these statistics of how broken and, to us, seemingly backwards all these indications are to pitching Andrew and joining him and being a part of this accelerator application to do an accelerator now running this company and having this two HQ approach, where in one place they have a good town connection in the other place they have good industry connections. I really loved all of that story. And in the background on these two guys. What was your take?
Eric Hornung 59:53
I thought they were very thoughtful. I thought they had well crafted and thought-out answers to every question we asked to the point that, I mean, I know maybe the question I asked last was a bit of a softball, because they’ve probably heard it so much. But they knew exactly how to address kind of the elephant in the room of the potential non-growth. They knew how to address all the questions, which makes me feel like they’ve been having a lot of conversations, which is good for solidifying the strategy of what they’re doing. And they’re definitely on the same page, because a lot of times — this is a little inside scoop here because, listeners, you might not hear in some interviews — when we have two founders, there’s a little stepping over each other or one wants to answer and the other one doesn’t. But here it was, there’s a clear delineation of you’re the better person for this answer. You’re the better person for this answer. And it was almost like, I mean, maybe they were slacking on the side or something. But we didn’t, we didn’t see any indication of “you go, no, you go, no, you go.” And I think one thing that really stood out to me was Andrew’s, Andrew’s a tech guy, right. He’s a CTO. Like, to him, I’m sure that coding a very simplistic software, or minimalistic software, I shouldn’t, I shouldn’t say simplistic. Minimalistic software is probably not the sexiest thing he could be doing. But it’s the right thing for this consumer. And he called that out. And I really thought that was, like, that’s the kind of founder you want is when your putting the customer and consumer first.
Jay Clouse 1:01:13
Also impressed about Andrew, this was kind of off hand, technical guy, technical background, before Workhound, found himself in a product management role. And in some ways, that’s a natural transition. In a lot of ways it’s not. There aren’t a ton of people who have both product management and a pure coding skill set. And that’s super, super valuable for a small, growing company to have so much of those ancillary skill sets in one person.
Eric Hornung 1:01:42
Alright, Jay, let’s transition to the end of our deal memo. What do you want to see in the next 6-18 months? You already kind of teetered around it. Let’s hear it.
Jay Clouse 1:01:52
Yeah, I just want more insight into the plan for go to market, but also how that’s going. And we didn’t, and this is just we didn’t have a chance to ask this. But understanding what markets are they entering into? What is their saturation of those markets? And what is their success rate with those companies? Because like I said, you get the sense that this industry and maybe all the industries are going into are these really hesitant, slow to innovate industry, we want to stick with what we’ve always known and what we’ve always done. And that may be the major reason why, when they lose deals, that they’re losing deals. But if the statistics are what they say, and I believe them, and this changes, retention, it seems to me like that’s got to be a very winning proposition, and there’s got to be a way to overcome that. And I would expect the hit rate to be high. And if they can make this change happen, other companies are going to see that, and there will be people imitating and moving in. So how well can they saturate these markets? And how well can they maintain that position.
Eric Hornung 1:02:50
Yeah, I think mine is related. They raised this round. We didn’t really ask what the money’s going towards. I’d guests growth if they were working on, working off of mostly revenue. But the number I would look at in 6-18 months is how big is their sales team? Because if their sales team is growing and growing quickly, it’s because the sales people that they’re bringing on are hitting quotas and surpassing quotas to the point that they don’t have capacity. I want to see is that sales team growing? And is it growing quickly and quicker?
Jay Clouse 1:03:21
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Debrief begins: 52:10
Max Farrell and Andrew Kirpalani are the co-founders of Workhound.
Workhound is a platform that allows frontline workers to provide feedback to the companies for whom they work. Max and Andrew began Workhound in the hopes of eliminating a barrier that exists between the workers and the companies, with the ultimate goal of increasing worker retention rates and thus the success of the companies. Originally designed for truck drivers, Workhound has since expanded to other professions such as technicians, mechanics, construction workers, and visiting healthcare providers.
- Founders’ story and Workhound’s inception (10:50)
- Workhound today and it’s evolution (16:38)
- Use of Workhound by companies (18:08)
- Company model (26:25)
- Workhound’s successful for a business (30:50)
- Usability of the Workhound platform (33:50)
- Potential opportunity (38:34)
- Dual-location in Des Moines and Chattanooga (44:00)
- Autonomous trucks and the future of Workhound (47:30)
Workhound was founded in 2015 and based in both Chattanooga, Tennessee, and Des Moines, Iowa.