The Unicorn Parade with Jason Corsello

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[00:01:49] Chad Sowash and Joel Cheeseman are here to punch the recruiting industry right where it hurts. Complete with breaking news, brash opinion and loads of snark. Buckle up boys and girls, it's time for the Chad and Cheese Podcast.

[00:02:05] Oh yeah, it's Warren Buffett's favorite podcast, aka the Chad and Cheese Podcast. I'm your co-host Joel Cheeseman. Joined as always, the Wayne to my Garth, Chad Sowash is in the house as we welcome Jason Corsello, founder and general partner at Acadian Ventures.

[00:02:28] Jason, welcome to HR's most dangerous podcast. Gentlemen, it's great to be with you. Longtime listener, first time caller. We might have a pair of counting crows tickets for your efforts today. So Jason, a lot of our listeners probably do know who you are, some of them do not.

[00:02:50] Tell us a little bit about you and then the company and we'll get into the Q&A. Yeah, of course Joel. So thanks for having me guys. My name is Jason Corsello. I'm the founder and general partner of a venture capital firm called Acadian Ventures.

[00:03:03] We are an early stage venture capital firm focused exclusively on work technologies. Prior to launching the fund, I was at Cornerstone for a bunch of years and have been hanging around the hoop of this industry for over 25 years or I guess almost 25 years. Yeah, here I am.

[00:03:20] Jason, you've been in this industry for a minute, okay? You know it takes HR forever to adopt anything. So how did you get into the startup game, right? Because I mean, it's like you got the new stuff coming and there's the whole risk

[00:03:35] that's there for HR and how did you get into that and what made you jump into startups? He loves getting kicked in the balls apparently. Geez, man. Yeah, Chad, you know I've been in this industry for long enough and I've seen companies succeed.

[00:03:51] I've seen companies fail and to me what's so interesting about this industry is to your point, it's really screwed up, right? There's the thing that we tell our investors is there's 3.3 billion workers in the world. Most of them don't like their job.

[00:04:06] Most of them are underpaid and most of them don't like their employer and they stick around for less than two years now, right? So the world of work as we know it is completely broken and we think technology can fix a lot of that.

[00:04:17] So that's why I wake up every day thinking about like where's the most interesting or newest technology that can solve some of these problems that after all these years still haven't been solved. So what level of startups are you funding? Is it seed, A, B and beyond?

[00:04:31] Where's your sweet spot? Yeah, we specialize predominantly in the seed stage, right? So that's typically we're writing checks of a half a million to a million bucks. In some cases, we'll write a check where we've known the entrepreneurs and it's just an idea.

[00:04:45] Sometimes we'll invest a little bit later than that. But core seed is really where we invest our time and our money. Jason, we love to talk about history on this show mainly because we're two middle-aged white guys, but I'd love your perspective. Because we lived it.

[00:04:57] It was so much fun around the 2021-22 period, the unicorn parade. Every week someone was getting $100 million and a billion dollar valuation. Just what was your take in that golden era of venture capital and maybe where you guys fit in as mainly seed investors?

[00:05:16] For other folks that have been on your show, there was irrational exuberance in terms of other smarter investors. It was crazy town. I mean, you know, checks were being written for companies that made no sense. And it was a product of the environment of just free-flowing cash.

[00:05:34] We invested during that period of time. We probably did deals where we probably paid too much. And that was just the nature of the environment. I don't blame companies. A lot of people blame, oh, this company raised $200 million at a $3 billion valuation. And I don't blame those companies.

[00:05:51] Where I think the biggest flaw over the last three years is many of those companies didn't hit the reset button. And what I mean by that is they didn't cut their staff. They didn't adjust their operating plans. They didn't reduce their burn.

[00:06:03] And those are the companies and there's a lot of them still that are going to be in a very hairy situation over the next one or two years.

[00:06:08] The ones that didn't make those hard decisions two years ago or one years ago are the ones that are going to be in a really, really precarious position going forward. Well, they did the opposite. They took the money. They exploded on staff. They exploded their TAM.

[00:06:21] Their discipline and their focus went to shit in many cases, right? So, I mean, as we sit back, hindsight is always 20-20. As we sit back and watch, there are some unicorns that are out there that are doing well.

[00:06:36] And for one just right out of the gate deal, right? They just said, oh, hey, we just made $400 million in ARR. Then a week later, they're like, oh, sorry, hold my beer. That was $500 million in ARR, right? Made a couple of acquisitions.

[00:06:50] And then you've got a competitor, which is you guys actually work with Oyster, and they're in the same line, right? So they're competitors. So what does that do to a company like Oyster? And I believe they were unicorn status. Now, they see this happening with Deal, right?

[00:07:07] Does that crush dreams or does that just provide validation and say, OK, we need to refocus on this? Yeah, Chad, that's a really, really good question.

[00:07:17] I think the short answer is I'm going to answer your question, not answer your question, but try to answer your question, which is just like venture capital. There's no right or wrong way of building a startup, right?

[00:07:27] I mean, Deal is taking the ultra aggressive growth at all costs, right? And that worked for a period of time for a lot of companies until it didn't. We like Oyster's strategy because they are being very pragmatic about the market.

[00:07:39] They also are sitting on a lot of capital that they raised two years ago that they haven't spent. So a lot of these companies, to your point, over the last few years, they raised a lot of capital, but they spent a lot of capital. Burn, burn, burn.

[00:07:50] Versus Oyster is being very pragmatic and they still are sitting on a lot of that capital they raised even two years ago. So what happens in environments like this is the companies that weren't pragmatic, weren't building their business foundationally or fundamentally looking at product and profitability and loss

[00:08:05] and key fundamentals of operating a business are going to be in a really tough position to operate on a go forward basis. Right. And they're going to be limited in options.

[00:08:13] Either they sell, they do a down round or they go out of business versus companies that are still hoarding some of their cash.

[00:08:19] We'll get through this kind of period of uncertainty over the next one or two years and come out the other side in a much better position with less competition, with more opportunities for growth. Phase four question. Yeah, in a roundabout way. OK. In a roundabout way.

[00:08:33] And just real quick, when you're talking about something like that, there's a cycle that actually happens. And within that cycle, there's going to be a layoffs because you need in some cases, obviously, you've got the engineering side of the house.

[00:08:45] You need to build product, build product, build product, get to MVP. And then you might have to dial down the engineering side of the house because you're not focusing on product. You're focusing on revenue.

[00:08:55] And then that's where the sales engine, sales and marketing engine should should actually go into play. That seems almost like a fine orchestrated type of movement. Right. And it doesn't seem like a lot of startups get it right.

[00:09:10] How are you guys involved in at least advising how to get that very hard ballet move executed? Yeah, it's a really good question. I mean, where we invest, it's at the seat.

[00:09:23] So our goal is to help our companies get to that product market fit as soon as possible. Right. So, you know, that delicate balance matters, but it doesn't matter at the seed stage.

[00:09:33] Right. Most of these companies have only raised three, five million bucks and they're trying to figure out, can they find customers willing to pay for their product? And can they find more of them? Right. What you're talking about is the later stage companies.

[00:09:45] And those are the ones it is a delicate balance. Right. And this is where what we've seen, you know, the transactions that we've seen over the last two years is management teams that weren't making, weren't willing to make those hard decisions to cut engineering, go to market,

[00:09:59] figuring out what wasn't working and didn't have boards that were providing the oversight. Maybe they had board, but they didn't have active boards that were providing the oversight to say, hey, your top line number went from 100 percent growth to 50 percent to 25 percent

[00:10:10] growth. But yet you're still growing your headcount at 20 percent, 30 percent. Like, they're terrible and unfortunate decisions that you have to make. But guess what? Like that allows you to fight another day to keep growing the business. And there's more companies than not that didn't make those hard decisions.

[00:10:28] Maybe they cut 10 percent, but the fact of the matter is they probably should have cut 40 percent. And this is the environment that we're going to, that's going to play out over the next 12 months as those companies that did make those hard decisions are going to be

[00:10:39] the ones that live to fight another day and the ones that didn't are going to be in a really, really tough position. So you talked about a period of uncertainty. We've talked about the unicorn parade followed by what you call VC winter.

[00:10:53] Talk about the thaw. You more than any as a seed investor see those seeds being planted now for the next 12, 48 months, 12, 36 months, whatever it is.

[00:11:04] You just recently announced a new fund, the Acadian Ventures Fund 2, which I assume is in preparation for the oncoming onslaught of seed funded companies that we're going to be talking about on the show. So talk about the thaw and what we can expect in the next 12, 24 months.

[00:11:23] Yeah. So, Joel, we've been seeing about four, I should say actually probably closer to six quarters of that thaw, right? So in our data, when you look at the cycles of the market, we really peaked venture capital in terms of the dollars invested in Q4 of 2021.

[00:11:41] And since Q4 of 2021, we've kind of seen this slow decline. And then over the last four to five quarters, it's kind of flattened out. Right. And we kind of I don't want to say I have a crystal ball and we predict this.

[00:11:54] Right. But I think the way we articulated with RLPs is we're going to bounce on the bottom for a while. Right. We're probably halfway there. Maybe we're kind of beyond that halfway point, which is all good news.

[00:12:04] When we look at our data, a couple of things is seed is still very resilient. Right. On any given quarter, there's about 100 million bucks in our world that goes towards seed investing. And that's been relatively consistent over the last couple of quarters.

[00:12:17] So the seed market is still very, very healthy. Early stage has dropped dramatically. It's slowly starting to recover, but it's really with the series A types of rounds and, you know, no steps around you. Right. A smaller check, a smaller valuation.

[00:12:30] So a little bit easier right from the series B. The series B rounds have been really, really challenging over the last couple of quarters. The late stage, as we've talked about, has been really, really crushed.

[00:12:39] We're starting to see some signs of it's coming back, but it's off of a low volume. There was like four in the last quarter, I think four late stage kind of series C, series D, series E types of investments.

[00:12:51] I think that's where it's going to be really, really choppy over the next couple of quarters. But to your point, Chad, I think we're starting to see that market slowly recover. It's going to be a long recovery in terms of the venture dollars being deployed.

[00:13:05] But the good news is it's happening. There's a lot of activity in venture land. We expect this year we're going to increase our pace of investment. Typically, our goal is to do 10 deals plus or minus a year.

[00:13:18] Last year we did five. This year, I think we'll do north of 12. So we ourselves are a bit more bullish on where the markets are. And we're just in a more healthy environment. Valuations across all stages are better than they have been. They're realistic in some cases.

[00:13:33] Realistic and it helps you build fundamentally stronger businesses, right? When a venture capital, two years ago, venture capitalists gave you 100 million bucks. He wanted you to go and spend that. He or she wanted you to go and spend that $100 million.

[00:13:46] They didn't want you to put it in the bank and draw 5% interest on it. So we're getting in much better company building environment, which to me is good. And by the way, Jason, Jason recommends that when you raise that money,

[00:13:58] you sponsor podcasts with all that money that you get from. As much as possible. That's right. Come on. That makes sense. But so you talk about the focus when you get some of these companies get all this money, it's like their kid in the candy store.

[00:14:14] A couple of things that are happening, obviously, VCPE, they're going to say, look, we need more headcount, expand the TAM. How do you how are you actually going to give us our money back? Right. You can't do that with this this incredibly focused point solution.

[00:14:28] Right. So we need you to expand. That's that's a big problem. Not to mention when you get that kind of money. And I'm going to go ahead and throw it out there. When you're an eightfold and you're getting hundreds of millions of dollars

[00:14:40] and then you're spending money on buying half of HR tech space. Right. It just doesn't make any sense. It's just it's just so weird that we see that happening. But then obviously, you know, the cycle is going to switch

[00:14:55] and we're going to go into the winter session. Right. But for you and a flip in the question, this is like the perfect opportunity for Acadian to be able to take a look at some some great startups and not have to actually pay, you know,

[00:15:11] maybe that half million, maybe it's a quarter of a million, but still get the shares of what you might have paid for before. The way we think about it is the market has just been over fueled. Right. It's been overfunded.

[00:15:23] There's been, you know, way too many companies that have been created. Right. It's been easy to start a company and get venture venture capital back. I shouldn't say he's but like, you know, there's way too many companies in the market today. Right.

[00:15:35] And so we're in the middle of this shakeout, which is a lot of these companies probably that exist today probably shouldn't have existed. Right. Either they were going after too small of a TAM or there's just way too much competition.

[00:15:46] And then there is like employee engagement or, you know, performance management. Or it's a product seeking a problem that doesn't exist that we see a lot of times. OK, listener, how can you help your employees become more productive? I have answers. How about automating manual and repetitive tasks,

[00:16:06] giving meaning to data, then allowing that data to actually drive decisions? And how about matching people to your jobs quicker? Well, wait, the Chad and Cheese has a new LLM. No, Cheeseman, I'm talking about Tex Kernel. Ah, OK, that makes more sense.

[00:16:26] What I'm hearing is the groundbreaking concept of, wait for it. Yeah. Simplicity. Seriously, though, seriously, Tex Kernel cuts through the complexities like a tortilla chip through some hot nacho cheese. Really? Nacho references already. Anyways, Tex Kernel brings efficiency and productivity to your operations.

[00:16:48] Tex Kernel seamlessly unifies your tools and data to drive efficiencies and success. Tex Kernel is creating new opportunities for your recruitment journey, kind of like adding guac to my barbacoa burrito. Oh, my God. How about extracting meaningful insights from data?

[00:17:08] I mean, that's something swiftly matching people with jobs, automating repetitive tasks. Who knew such advanced concepts were even possible in the land of human resources? We did, Chad. We did. Dude, wrap it up. I'm a little hungry. Imagine that. OK, listener, get ready to use today's tech

[00:17:31] to drive efficiencies and productivity. Visit Tex Kernel dot com. That's T-E-X-T-K-E-R-N-E-L dot com. Mmm, nachos. It's that or it's just, you know, in our world, it's is it a feature as a product or is it a company? And those are three very different things, right?

[00:17:54] Where most of the things that have been invested may have been a feature or to some extent a product, but they weren't a company, right? They weren't a hundred million dollar ARR type of business. And so that's going to play out.

[00:18:04] So for us to see the investors right now, we think this is great news because we're going to see a clearing out of the market. And so companies that are getting invested today, I mean, in venture capital, they talk about vintages, right?

[00:18:15] Right now we're in the twenty twenty four vintage. If you raise the fund, we just raised our fund in twenty twenty three. So we've got a twenty twenty three vintage. And I predict, you know, and many experts predict this will be a great vintage of venture capital funds

[00:18:28] because the market's clearing out lower valuations. They're going to be much higher returners of funds over the next couple of years. And we we subscribe to that. So, you know, as a seeded stage investor, I'm I'm excited about what we're seeing.

[00:18:41] We know how long are we into this podcast and we haven't used the word AI. But it's coming. We've got this whole technology. Oh, you broke it. I know I broke it. I screwed it up. You're going to go there, Jason. We might as well.

[00:18:53] So the new fund, you've gone from 10 million to 30 million. What kind of companies, what kind of trends are you looking at? I know, you know, Fora is one that you're in, that we've talked about on the show. Compa, Combo K or some of the others.

[00:19:08] Is there a theme that you guys are looking to target? Something that's hot and trending, maybe something we haven't even seen yet that you're looking at. What's the future look like in terms of technologies and focus? Yeah, there's two big themes for us today.

[00:19:21] One is just AI, right? I mean, I went through the cloud cycle over the last 20 years. I was at Cornerstone on demand and we were big beneficiaries of this move from on premise to cloud. And we're going to see that same thing in AI.

[00:19:35] It's most likely going to be much bigger. So we're looking at companies right now that are doing something AI. You know, we don't get excited about the gen AI stuff that we're seeing out there today because I think it's very easy to replicate.

[00:19:46] What we're looking at stuff is, is there really deep foundational AI and language models that are being built that they can create a mode around? So AI is certainly a big theme because we think that a lot of incumbents

[00:19:58] today can or will be disrupted by building foundationally AI companies. So that's a big focus for us right now. You know, we're looking at a lot of geeky stuff in compliance, in regulatory and compliance areas.

[00:20:11] You've had Guru from Fair Now on the show and love what he's doing. I just talked to him this morning. I think that's a huge market because it's a little bit of the wild, wild west in AI right now. No one knows how their models are governed.

[00:20:24] No one knows if and how they're being audited. And every company, whether you're, you know, big global enterprise or technology vendor has to be able to validate what they're doing in AI. And they need a rubber stamp of approval, if you will.

[00:20:37] So that's another area that we've been looking pretty closely at. So those are two, I guess the third one, Joel, is this area of just global workforce, right? Out of the gate, our goal was to invest in companies anywhere in the world.

[00:20:49] And even specifically half of our investments we wanted outside of the US. And we just think today you can build a company anywhere in the world. And oh, by the way, you can hire and employ and pay someone anywhere in the world.

[00:21:00] So that's also a pretty big theme for us. And we've got a couple of companies today in that segment. Follow ups to those real quick. So AI, I see AI is pretty much being ubiquitous.

[00:21:11] Everybody's going to have it, but it's going to be one of the big companies that's actually supplying the large language models. Right. The data piece is what really matters most. And that's going to be the hard part for a lot of these newer companies

[00:21:24] who just don't have the years of data or the data lakes that an ADP has. Right. I mean, that's just ridiculous amount. So how can a startup today who wants to be an AI startup, knowing that data is literally the secret sauce?

[00:21:42] How do you advise them to be able to have a product that's not going to be dead in six months because somebody else creates something with Gemini that just blows it out of the water? Man, Chad, that's a way smarter question I could probably answer.

[00:22:01] But I think the way I think about it from a very simplistic perspective is data is all over the place. Right. Yes, the incumbents do have an advantage because they're sitting on on a tremendous amount of data.

[00:22:12] One of the things I learned as being an incumbent at Cornerstone is in a lot of incumbents just don't know how to how to leverage their data. Right. I mean, they have so much data, they don't know what to do with

[00:22:21] in some cases, and they don't have make sense of it where, you know, startups can get access to data a lot easier than they historically could have. Right. So a couple of examples. So TechWolf is doing skills at first. Right. They're taking data from your existing systems.

[00:22:35] And that can be anything from Workday to Slack. And they're also pulling in public domain data from Census Bureau data anywhere in the world. And they put on their pixie dust and secret sauce, and they make sense of that data.

[00:22:49] So do they have a data advantage or disadvantage? I don't know. I think you could argue probably both cases. But I think there's lots of ways to get access to data more so than you ever have.

[00:23:01] And then our second company is this company Combo that you mentioned, Joel, that is basically building that kind of integration layer to everything HR tech. Right. So this was the biggest problem we had at Cornerstone. We'd have a customer that said, hey, we want to integrate with

[00:23:15] our 80 other HR tech vendors that we have in our stack. And we'd be like, yeah, we can do that. And we got six years later, we'd have to, you know, ball bearings and duct tape, you know, these things together.

[00:23:26] And our developers internally hated it because we'd have to take time away from stuff that they like working on. And it was a pain in the butt. So now there's actually systems like Combo and there's others out there

[00:23:36] that provide that kind of infrastructure later to be able to get data anywhere that's residing within the enterprise. So, you know, we're in a much different position even from three or five years ago. It's probably not the best answer to your question, Chad,

[00:23:50] but the data is out there. Data is accessible. Certainly, I do agree that the incumbents do have a built-in advantage. But I also think that they're also incumbents that have a bunch of other things, you know, that they're worried about.

[00:24:03] And so it's harder to solve some of these problems because they're focused on other things. Well, I mean, those incumbents like Cornerstone, they're also slow. They've got a shit ton of tech debt. And if you can create a startup that will help them actually take that data

[00:24:23] and do something with it that they care about, then you've got a great opportunity for acquisition, right? Yeah, there's also, you know, in the case of Cornerstone, I don't mean to bash private equity companies, but they also have very different incentives than startups, right?

[00:24:37] You know, their private equity owners really care about cash flow and they care about how much money can they produce. It's a very different incentive than a startup that really is trying to innovate and build, you know, a business for the next 10 years.

[00:24:51] Yeah, and a lot of that we have a lot of startups that listen to the show, a lot of people that are thinking about starting companies. You've probably heard our show Firing Squad, where we take a startup to task. Give us a sense from where you sit.

[00:25:03] How many pitches do you get on a yearly or monthly basis? What are some good, you know, the best pitch decks that you've seen? And what kind of advice if I'm a startup or looking to start a company out there? How do I help you help me?

[00:25:18] So first of all, Joel, I think most of our companies have survived your firing squad. So thank you for that. And by the way, we don't know who your companies or who aren't. Like, we're not giving preferential treatment to a Gideon.

[00:25:30] To answer your question, on any given year, we'll look at 1200 companies. And that could come through a pitch deck that comes to her inbox. And we do look at everything that crosses our desk. Now, sometimes we'll look at the pitch deck and it'll take one or two minutes

[00:25:44] and we'll brush it aside. It's just not a good fit for us. But on any given year, our pipeline looks like we'll look at call it 1200 companies will deep dive into two to 300. We'll diligence, you know, another 100 and we'll invest into 10. That's a typical year for us.

[00:26:02] So we do look at a lot of companies. We find our best sources of deals don't come from inbound. They come from referrals. I just was writing an FAQ for our website. And as much as I hate the way the venture capital world works,

[00:26:15] warm referrals are good sources for us because someone is validating, in some cases, the founder or the idea that helps. And, you know, warm referrals, whether through founders or other VCs or even some of our limited partners, our investors tend to be our best sources of potential investment.

[00:26:33] So you're Gordon Gekko, basically. I look at 100 deals a day, Bud Fox. I pick one. I love it. 1200. That surprises me. I'm not sure most people would guess 1200 a year and you pick 10. That's a lot. That's a lot. It's a lot. It's a lot.

[00:26:48] But again, we don't we don't meet with 1200 companies. We look at 1200 pitch decks and, you know, and it quickly funnels out from there. Yeah, it is a lot. Amazing. So within within that pitch deck, those pitch decks, you're looking at global as you're just talking about.

[00:27:04] You are also looking at global organizations, global startups. Currently, it was at Olivia and TechWolf, at least are a couple of the European startups that you guys have in your portfolio. How do you and the team evaluate a European startup differently than a US startup?

[00:27:20] I don't know, Chad, if we evaluate them differently. But I mean, there's two fundamental things that are the foundation for our investment. One is, is this a super unique team? Right. Are these kind of one percent founders? And now one percent is obviously subjective.

[00:27:35] But do we think these are really, really special founders based off of either their experience or their idea or certain some combination thereof? And the second is, is it a big market? Right. Are they going after a big market? I mean, we've seen plenty of interesting businesses

[00:27:49] where we like the founder, but just we don't think the market is big enough. So those are the two foundations. And what we found is, is founders that we've invested across the world are very comparable to the skills and competencies and expertise of the US based founders.

[00:28:05] I mean, we invest in a company in Kenya. And I put these two founders against any other founders in our portfolio in terms of their skills. They're happening. They probably have more hustle. And today we've invested in founders across 13 countries. So it's hot right now, right?

[00:28:20] You know, what we've learned in emerging markets is they run hot and cold, which is in down markets, funding gets really, really tight. And then, you know, in up markets, funding gets pretty robust. So they're very cyclical in terms of the funding environments

[00:28:33] and those so that they access the capital. But it's certainly I think it's probably one of the most interesting, exciting markets out there just based on pure size. You know, it's eight times the size of the US market.

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[00:29:37] your talent acquisition today. How deep do you guys dip into the economic landscape itself to be able to take a look at the prospect, not just today, but growth? Going deep. Just the tip. You had to go there. I love it. So it really varies, Chad.

[00:29:55] I think it depends on, you know, when I think about big market, we look at like macros of the market, right? So I mentioned Africa, the simple we invested in a company called WorkPay that's doing HR payroll in sub-Saharan Africa. And the math was pretty simple, right?

[00:30:10] We think that market's eight times the size of the US market. Well, the US market now has 12 billion dollar plus HR payroll companies. Yet Africa doesn't have one and it's eight times the size.

[00:30:20] So those are kind of the simple ways that we think about some of these markets, whether it's Latin America or Africa or Southeast Asia. That's the robustness of just we do some simple back of the envelope math.

[00:30:32] We try to understand the dynamics of the market, which is a lot of those markets, you know, it's services and oriented businesses that haven't fully embraced technology. And so we think obviously technology can can accelerate those markets

[00:30:44] or at least replace a lot of the services based models out there. But, you know, like I said, what we've learned is some of these markets just take longer to develop. So what we need to do is have pretty patient capital and LPs that say

[00:30:55] we don't want our money back next year or two years. We know that these are 10 year funds and that's how we that's how we think about the investments. Looking at some of the more established companies, smart recruiters is one that's in your portfolio.

[00:31:09] And Chad and I regularly I won't say bash, but are fairly critical of the future of the ATS business. Give us a reason to be bullish on the ATS business. On the ATS. Wow. Good question. One is it's a established category that as much as, you know,

[00:31:30] we all think it's broken, it's still a very, very large market today. The other thing which I've been frustrated about the ATS market over the last five years is there's no real dominant vendor. Right. No, I mean, probably the most interesting vendor in the ATS market

[00:31:44] over the last five years has been who? Workday. Everyone loves them. And we all know that trials and tribulations of customers that have implemented workday recruiting. Now, I'm not saying it's a terrible product. I don't think I've ever actually used it.

[00:31:59] But it's a it's a big market that needs innovation. Now, the question, I think more of what you're getting at is where's the disruption happening? And I wish I knew that answer because I think we've kind of just

[00:32:09] we've been disrupting around the edges, but we haven't kind of disrupted the core. And I wish I knew that that answer of why it hasn't been disrupted. I think part of it is if you really want to disrupt the not just the ATS market, but the recruiting market,

[00:32:24] it actually probably takes a bit of capital out of the gate to start. Right. Instead of raising a three million dollar seed round, you need to go raise 20 million bucks out of the gate. Yeah. What kind of what Workday did 15 years ago.

[00:32:35] So you raise a lot more money so you can build everything faster and try to disrupt it in that way. But smart recruiters, I mean, they're actually in, you could say the catbird seat with regard to data because they're an applicant tracking system. They have huge data lakes.

[00:32:50] If they pivoted and they started to use these large language models to actually focus on efficiency. And I mean, all the way down the funnel. I mean, they could literally change the old style ATS that they modeled themselves off of and become something new.

[00:33:07] So, I mean, it looks like there are some opportunities there. The hardest part for them, though, is that they were going through acquisition and that didn't happen. Supposedly. Yeah, supposedly. Sure. And then the CEO just left after over a little over a year. Rebecca's been at the company.

[00:33:24] She went away and she came back. But I mean, it's just like it seems like a perfect opportunity for a new CEO, whether she gets it or not, to be able to pivot into something new and cool. I think you're you're spot on, Chad.

[00:33:37] And I don't think the full story on smart recruiters has been written yet. And I do think they do have still one advantage that's been kind of lurking behind the scenes. And that's Jerome. Right. Jerome knows this market better than any executive CEO chairman in this market.

[00:33:52] Right. So I think that's the one to watch. Do we get Jerome back? Do we get Jerome back? Should we start that chant? Let's do it. Do we get Jerome back? Does Jerome get back into the CEO position? Should we start it here? Jerome, Jerome, Jerome.

[00:34:06] But yeah, I mean, you guys have known him for the evolutions of this industry, and he's probably the biggest thought leader. And for us as investors, I would love to have that guy take a much more active role in repositioning smart recruiters for the next five years,

[00:34:20] because I think that opportunity absolutely exists. So who doesn't love a good game of marry, fuck or kill, Jason? I'm going to spin it a little bit differently for you though. OK. Your best bet, your worst mistake and the one that got away.

[00:34:34] OK. So our best bet on paper. So our best bet is this company called Nomi Health that many people don't know about, but it was founded by Mark Newman. Many of your listeners know and love Mark Newman. He was a founder and CEO of HireVue in most cases.

[00:34:52] Newman. They love Mark. You know, if you take out the AI kind of facial recognition stuff to the side. So Mark started this company called Nomi Health. It's disrupting health care and aspirationally, it's my favorite business because I want someone to disrupt health care.

[00:35:09] And Mark's the right guy to do it. So on paper, that's been our best investment to date. It was our it was our third investment. So Mark's made us look really, really like our own LP investors. Our worst investment? I don't know if we know that answer yet.

[00:35:20] And the reason being is that our fund is still five years old. You know, I wasn't going to answer this directly. But, you know, the thing, Joel, with seed investing is, is you're going to be wrong probably 70 percent of the time. Right.

[00:35:33] So there's probably not one that takes the winner. I probably put three or four in that category. And I think more so the lessons that we learn is that startups are freaking hard. Right. And you get you get punched all in the face all the time

[00:35:47] and you got to get back up. And it's the ones that just didn't have that resilience that we can sniff out at that time of investment that have proven to be the worst. So I purposely dodged your question and I appreciate that.

[00:35:58] So give me one, give me one that got away. At least give me the one that got away that you said no to that hit it big. The one that got away. There's actually two that got away. But this is this is before we started the fund.

[00:36:10] So before I started the fund, I was doing corporate venture at Cornerstone on demand and we launched a you know, we launched a CDC and there was two investments that we we missed. There's actually three investments that we missed.

[00:36:22] One was DeGreed, the second was CultureApp and the third was Vizier. And I think in every three of those cases, I got outvoted because of the belief that we could build the products instead of investing into them. So, you know, another lesson that I've learned, right?

[00:36:36] Most incumbents do a pretty shitty job of trying to replicate or steal someone else's idea. Yes. So those are the three that they kind of got away. Not bad. A little bit of dancing, but not bad, Jason. Very nice. That was pretty good. That was pretty good.

[00:36:51] All right. Jason Corsello, everybody. So, Jason, if somebody wants to connect with you or, I don't know, have a conversation about how where they can send their deck. Where can they do that? Yeah. So on our website, there's a buried link,

[00:37:06] but you can email it to hello at Acadianventures.com. We tried to make it completely explicit or I wouldn't be able to go home at night because I'd be looking at so many pitch decks. LinkedIn is always a good spot, too.

[00:37:20] So we know anything that comes in through LinkedIn. We look at it may take us some time to get back. But those are probably the two easiest spots or, you know, have these founders go to you and you send on the warm leads to us.

[00:37:31] And then, you know, we'll look at it much closer. Nobody loves a juicy deck like Chad and cheese. That is another one in the can. Chad, we out. We out. Thank you for listening to what's it called? A podcast. The Chad, the cheese. Brilliant. They talk about recruiting.

[00:37:52] They talk about technology. But most of all, they talk about nothing. Just a lot of shout outs of people you don't even know. And yet you're listening. It's incredible. And not one word about cheese. Not one. Cheddar, blue, nacho, pepper Jack, Swiss.

[00:38:11] So many cheeses and not one word. So weird. Anywho, be sure to subscribe today on iTunes, Spotify, Google Play or wherever you listen to your podcasts. That way, you won't miss an episode. And while you're at it, visit www.chadcheese.com

[00:38:33] Just don't expect to find any recipes for grilled cheese. So weird. We out. You've got questions. We've got answers. Business leadership, ownership and sales can be challenging. Tune into the Accelerate Your Business Growth podcast to learn from the world's experts. Join me, your host, Diane Helbig,

[00:38:57] as I chat with people who have expertise in various areas of business. You'll enjoy the lively conversations that are focused on providing you with the ideas, tips and suggestions you need to realize greater success. Get what you need for your business when you need it

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