SM: That does not sound like a long-term sustainable operation.
MC: It was exhausting, but it worked enough to prove the concept. After we had been doing that for about nine weeks, I missed the 9 a.m. Monday deadline. I had already pulled several all-nighters that week, including that Sunday night, and I could not think well enough to write the newsletter. At around 9:10 I started getting e-mails from people asking where the newsletters were. Those e-mails kept coming. That’s when I really knew I was onto something. That was the moment of validation.
SM: What were you charging for this service?
MC: Our first two subscribers found us through a Craigslist post, and we offered the service free. Once we had our process in place, we started charging $25 for access to our job listings and our newsletter.
SM: So you charged from the beginning in 2003?
MC: No, we had no revenue in 2003. We started charging in January 2004.
SM: I imagine that you were still working out of your apartment then?
MC: We did through most of 2003, but working out of my apartment was not that great. I had to find some cheap office space, which is not easy in New York. I did find some executive office suites that catered to entrepreneurs for only $1,000 in November of 2003. By that time we had three employees.
SM: So in early 2003 you were not charging subscription fees, and you had some basic overhead expenses and three employees. Were you bootstrapping this or did you have outside financing?
MC: It was bootstrapped in the beginning. Initially I was pretty creative in what I would consider financing and equivalent partnering opportunities. I had some connections at The New York Times and actually went to them in August 2003 when I launched the site. I offered to give them a third of the company in exchange for $1 million in advertising money. They did not come through on that deal, although they probably regret it today.
SM: Did you raise institutional money?
MC: We did raise money in February 2004, but that was angel money.
SM: How did you manage that process?
MC: At the time most Internet startups were setting valuations of $3 to $5, so I set a valuation of $4. I figured that was fair, but there was really no true reasoning for it other than what others had asked for.
SM: How much did you raise, and what was your plan for the money?
MC: We raised $750,000. I wanted to invest it into R&D and figured that TheLadders would need to operate cash flow negative for one year. We started hiring people and building up the site with that money and then two months later, in April, we were cash flow positive.
That led to an even greater investment into R&D, again with the plan to be cash flow negative for a year. By June we were cash flow positive again. At that point I figured that if every time I put money into the business that the result was to get more money out of the business then I should raise money with some VCs. I spoke with over 30 VCs and decided to raise a round in the fall. That is when we raised $7.25 million from Matrix Partners at a $29 million pre-valuation. That’s the last time we’ve raised money. We’re now live in the United States and the United Kingdom, and we will be going into Germany later this year. We now have 305 employees and over $100 million in revenue.
SM: How would you describe your value proposition today? Did your strategy change as a result of raising money?
MC: Today I would say it is very similar, although a bit more refined. We still focus on the high-end jobs that pay $100,000 or more a year. We now offer subscribers access to those jobs for $30 a month or $180 a year. We also give them access to our database of 35,000 recruiters. By charging job seekers, we reduce the pool of candidates to serious seekers. That is still what makes us very valuable.