[Raised $30 million] Ep.114 - The First 100 with Dylan Serota, the CEO and Co-founder of Terminal

Dylan Serota is the CEO and Co-founder of Terminal, a full-stack remote workforce solution for software-driven companies, providing both recruiting and remote long-term employee support, making it easier for remote software developers to build remote careers and for high-growth companies to find in-demand workers. You have raised to date $30 million.

Where to find Dylan Serota:

• Website: Engineer your perfect team with Terminal - Terminal.io
• LinkedIn (3) Dylan Serota | LinkedIn

Where to find Hadi Radwan:

• Newsletter: Principles Friday | Hadi Radwan | Substack
• LinkedIn: Hadi Radwan | LinkedIn

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Transcript

Let's do it. Broadcasting from around the world. You're listening to the first 100. A podcast on how founders acquired their first 100 paying customers. Here's your host, Hadi Rodwan. Good to have you on the show, Dylan. How are you doing today? I'm doing well. Pleasure to be here. Thank you for stopping by. A quick introduction for our listeners. Dylan Serota is the CEO and co-founder of Terminal, which is a full-stack remote workforce solution for software-driven companies. You provide both the recruiting and remote long-term employee support so that it's easier for remote developers to build careers without having to travel. and you've raised today 30 million. Take us back to the founding of HowMoment. How was Terminal born? Going back, it was really an inspiration from an experience I had at my prior company. I was with a startup in San Francisco called Eventbrite. I was there for seven years. I had a number of different positions, but at the end I was running the platform team. So overseeing all of our API development, our app marketplace, but at the time we were very focused on building out the entire team. in Silicon Valley, in San Francisco. And we got to a point where it was just unsustainable to think that we could continue to build engineering in the most competitive market, in the most competitive environment. And so the strategy that we ended up employing was, let's look at new markets where we would have better access to talent, where we would have a competitive advantage relative to where we were in San Francisco. And we ended up building a large engineering team in Argentina. We expanded with another engineering team in Nashville and then in Canada and then in Spain. And that was really what inspired me to pick my head up and realize that one of the biggest challenges that my friends at other startups who were starting companies, everyone said the same thing, which was finding high quality engineering talent was the number one bottleneck to their growth and their innovation. And yet... every company was competing in the US and in some of the most competitive markets to source and find that talent. And we were seeing engineers in terms of cost going way up, in terms of retention going way down, most people leaving after 12 to 18 months. And that just felt like it was unsustainable for many companies to build long-term teams to tackle the big challenges that they had when you have a supply of talent that is very limited. that experience opened my eyes to is that there are amazingly talented developers all over the world and the opportunity really isn't to try to bring them to your company. It really was how can you bring opportunity or how can you bring the companies to the talent in all of these different markets and there were two things that really stuck out in my mind at that time. The first was if you look at the macro data of talent density in the United States, there are four open jobs for every one And so that from a macro perspective is what drives a lot of the challenge for companies that are trying to hire, trying to compete, trying to retain. And yet if you look in other markets like Latin America, there are 25 engineers for every one open job. So it's completely inverted. And so my belief was that we're not going to solve the supply and demand imbalance on the supply side in the US. We're not going to snap our fingers and magically create a million more developers. And yet from a demand perspective, more money is pouring into the innovation economy, not just in startups, but you have companies like JP Morgan that are hiring a thousand developers today alone. So you have demand dramatically increasing and yet you have limited supply. So my belief was the demand side of the equation, companies are going to progressively move to find new talent pools. But that comes with a lot of challenge. Where do you go? How do you hire? How do you employ? How do you pay people? How do you set up the right environment for them to be successful? That was all happening in my mind. And then the other thing that I noticed from my experience working with globally distributed teams at my prior company was that the remote infrastructure to allow teams, and especially on the product development side, the infrastructure was getting to the point where it was very seamless. You could communicate. You had the ability to push code to the cloud where you didn't have to be around local servers. You had all of that kind of developing to the point where it really made it possible to have. global remote teams that can support high velocity product development. The confluence of kind of those two factors, the macro imbalance plus the infrastructure getting to that level, was really what opened my eyes to the opportunity that the future is going to be global, the future is going to be remote. And so I ended up leaving Eventbrite and I joined up with the team at Atomic, which is the startup studio based in San Francisco. And together we formed the plan and the idea for Terminal. And I've been building it ever since, going on six years now. Amazing. So if I were to distill it, are you a marketplace matching supply and demand, or do you have your own homegrown developers all over the world, and then you would match them or outsource them to your clients? You can think about it as a vertical solution. So on the top, we are a marketplace, but a highly managed marketplace. So we are sourcing customers. So companies are coming to us that are looking for high quality engineers outside the US and leverage our platform and our tools and our system to be able to match them with developers. On the developer side, we are a destination for them to come build a profile, go through our assessment process. And if they pass, then they get matched with many different opportunities with high growth, predominantly US. or European companies that are looking for that level of quality developer talent. So on that level, there is a managed marketplace model. But we're vertical in the sense that not only do we do the matching, we also then employ the engineers ourselves. We manage the contract, we manage the local HR compliance, and we manage all of the payments. So from a company perspective, not only do you find the developers that you want to work with, you also have a partner who is seamlessly managing all of the employment. So that no matter where the engineers are located, you have one partner to pay and to ensure that the developers are getting the support and the legal compliance to do their work in their country. Amazing. It's a classic marketplace question, which is where do you start first with supply or demand? Do you go to companies and say, here's what we can offer you. And then you would find developers for them, find a pool of developers, put them on standby, and then go and hunt for companies. Which one did you tackle first? At the beginning, it was definitely focusing on demand. So we had to prove out that companies, that CTOs, really our end buyer, would trust us as a third party to source their most valuable assets, their developers, to employ them, to pay them. And so that was really kind of the first thing that we had to prove out. that we could do and do at scale. So we really focused on trying to partner with the best companies and convince them that we were the right partner that could go out and build them these global teams of extremely high quality elite talent. And so once we got a lot of the demand, we were able then to use that and use these logos, use these companies, the type of work, the interesting challenges that they're tackling to go then build a developer brand and say, great US startups. If you want an opportunity not to be an outsourced developer but to work directly with these companies and be a part of their journey, you come to Terminal. And so it was leveraging kind of demand in the beginning and then going out to the supply. Where we are today is it's actually flipped now. We actually have more engineers coming to us and go through a high vetting process to really pull out and extract the best ones that are going to be the best fits. that has flipped from kind of being almost demand constrained focusing on the demand side to now actually having a lot of this surplus supply of engineers on the platform. How did you early on manage the positioning or your brand vis-a-vis the competitor, which as you know, the incumbent is the headhunter. Because I'm a CTO, I can go to headhunters and say, get me the best talent. Or there is other companies that... have existed like TopTal, Fiverr, et cetera, which probably are good in quality, some are not good in quality. So how did you navigate that space early on? It's a really good question. The market that we compete with is very broad. On one hand, you have headhunters and recruiting agencies. What we saw time and time again was that they were extremely limited to a specific geography and they only did one thing, which was find you talent. But then the companies are left with, okay, now that I haven't... engineer I want to hire, how do I pay them? How do I make sure they have the right benefits? How do I make sure that they have the right support on the ground? And so by being a vertical platform, we were able to really solve that. Not only could we find the talent, but we could support the entire life cycle of that employee and the scaling of that team in a market. So less about even just finding one person, but how do you get a company to have a team of 10 in a three-month period and have all of those engineers be compliant? be paid well, have the right benefits to stay retained. So that was kind of the competitive positioning against recruiters that are only doing kind of that one job, whereas we were actually doing a lot more for the companies. On the other side, you have these other talent marketplaces that Upwork or Fiverr or TopTel that we felt like are doing some of the matching, but doing it not at an enterprise scale. So we really focused on how do we be a source of quality and build a brand that is on the premium end. So we knew that we weren't gonna be the lowest cost. We didn't want to try to undercut on price. What we wanted to really do is establish our brand based on quality. And that stemmed from, we have to work with the best companies because they are a representation of the brand that we work with. And we need to make sure that we deliver for them and then build case studies, build kind of the demand gen around those companies that have been successful to maintain. that premium positioning and premium branding where a CTO would trust us, whereas they would never turn to a company like Fiverr or Top Talent and say, hey, my talent strategy is I'm going to go to, you know, Upwork. No CTO is going to say that, but we were able to get them to be very confident saying our talent strategy is to partner with Terminal. And so that was a lot of the thinking around the initial branding and the positioning, the pricing and the go-to-market. Take us to the early days. How did you convince the first 10 customers and where did you find them? How can you reach those CTOs, cold outreach, conferences, any challenging first channel, but then this is your go-to? Especially the first early customers were all from my network. So I really looked at the Rolodex that I had and worked with people who trusted me. I was very lucky to be at a company like Eventbrite. joined when there was 30 people, I left when there was nearly 800, but by working so closely with the engineering side, I knew so many of the directors of engineering where once I had started Terminal, they were off being VPs of engineering at their own companies, and I was able to turn to them and show them what I had built, and they had also seen that strategy in place at Eventbrite, and they had worked with teams that were global and distributed. exists out there. So that was really kind of the easy sell. And that was really where I focus a lot of my effort on for those first 10 customers to trust us and really give us a chance. And after that, when your network dries out, what was the next tactic that you followed to get the following 10? Similar in a way, but when we raised our series A at the time, everyone was calling it a party round. For us, that was actually a very concerted strategy. So we raise money from Kleiner Perkins, from Kraft Ventures, from Lightspeed Ventures. And by doing that, these were portfolios that now we had commonality with. And they had talent partners who now knew our solution and could recommend it to other companies in their portfolio. So kind of the second phase was we were able to raise money from a lot of different venture firms. We then used the leverage of those portfolios to turn those customers into kind of our second wave. of business. So the party round strategy was actually very, very concerted for us from a go to market standpoint. What have been things that you had to unlearn when you moved from Eventbrite and to start your own company? Things to unlearn, I would probably say that there are a lot of really good aspects that I was able to take. I think that it was seeing the company go from 30 people to 800. You see A lot of the positives, you also see challenges that come with that. So overall, I would take a lot of really positive lessons. The one thing I would say is by the end of my tenure at Eventbrite, we were prepping to go public. The company is large, the product development life cycle is immense, the roadmap, the planning. What really had to change was just velocity and speed and understanding that we don't have the right. data at any point in time. Eventbrite had millions of transactions happening. There's a lot of data you can extract from that. We really had to think about our gut, what we felt like was the right decisions in the market at the time, and then move very quickly. And if it was wrong, we could adapt very quickly as well, because we were a very small team at that time. So I think speed was probably the one thing that had to really get cranked up as I transitioned from a company that size to my own startup. Amazing. If you go back to the early days of Terminal, is there a time or a story or an anecdote about a challenging situation that you had to face and how did you overcome it? Oh man, many challenging situations. I mean, I think the one thing that I'm still grappling with six years later is just the roller coaster of a startup and the highs of winning a new customer, the lows of... having a customer where we felt like we weren't delivering on. And a lot of those times I had to be the face of the company. So in the good times and the challenging times, put myself out there and try to solve customer problems kind of head on. We still aren't even at a point where anyone on the executive team can kind of sit back and just empower the team. We're all really leaning in to solve different challenges. But we had to look at. a number of different things when we've been expanding into new markets, evaluating new talent pools, hiring people into these new markets. So it's hard to pinpoint any one thing, but it has been kind of that ongoing roller coaster of ups and downs and continual challenges. If I'm today a software developer listening to this, how many hoops do I need to go through before I get accepted at Terminal as someone who could be part of the ecosystem? For a large majority, we can actually make it very binary. We know that if you have experience with very modern software development stack from language tools, we know that if you've worked at certain companies that have certain high thresholds of talent alone, we can make very quick decisions and know basically who is going to be a standout candidate versus ones that aren't at the level yet. Then for maybe the 20% that are in the middle, we go through automated and then human-led assessments. So we go through a 45-minute call. We have a team of people who are trained to basically interview the developers and get into the meat and bones of what they have worked on and get to a point from a communication standpoint, from a technical standpoint, from a motivation standpoint, and from an autonomy standpoint if they are going to be a strong remote developer. So that is really focused on that subset of folks who get through. We have never kind of strained from wanting to get that human connection, to be able to actually screen the developers, get to know them and make sure that, you know, they are highly motivated individuals to give them access to these great opportunities. Amazing. Thank you for sharing this. Dylan, what is the principle that you live by that has helped you in your journey? You know, one thing that I think I've changed from a principal standpoint, from the beginning to where I am now is I think that there was a time where leadership principles were very focused on managing through outputs and so very focused on KPIs looking at number of whether it's on sales development, number of calls being made, number of emails being sent, looking at a lot of kind of output activity metrics. switch on that is really more focusing around the inputs and less so on the outputs, kind of thinking that what we really need to focus on is our approach in every single customer interaction, the training that we do to show up every day and be the best performing team that we can, and much less emphasis on the outcomes. And what we've seen by kind of focusing much more on the inputs is that the outputs end up solving themselves. But that's something that has definitely flipped in my mind from the beginning and it's something that I'm very conscious around most recently. Amazing. Thank you for sharing this, Dylan. One last question. What's next for Terminal? What's next for us is continued global expansion. There are still many, many countries that we are not open for business in yet, but our ambition is to be a global platform to be the source of access to the best global development talent out there. Today we're in Canada, Latin America, we're in Europe, but there are still many other countries that we're looking to expand into. What we've also recently expanded to is from only focusing on full-time hiring to also allowing contract hiring, which is something that we've seen be a big driver, especially today with a lot of the macro economic uncertainty in the market. We're finding companies are much more willing to hire someone for six months. And if they work out, convert them into being full-time. And so having one platform that supports contractors as well as full-time talent, we've seen a really valuable solution and something that's very unique in the market. And so we wanna bring that to many more geographies, many more markets, and really become that destination for developers as well as companies to solve their scaling challenges. Before we let you leave, two more questions. Where can people find you and are there any positions you're hiring for? You can find me on Twitter at Dsirota. You can find me on LinkedIn as well. Our website is terminal.io. Today, we are continuing to be a destination for software development talent. So if there are engineers that want a new opportunity, who want to level up their career and work with some of the best companies out there, companies like GoPro, companies like Chime, companies like Nextdoor, Premis Data. many different companies that can open up new career paths, we are that destination. From a hiring standpoint, we are in a position where we are looking to be extremely lean. So we have not focused on growth. We feel like we have the team, the infrastructure, the efficiency built into our model to be able to continue to expand without adding headcount as we march toward profitability, which we will look to get to early next year. Amazing Dylan, thank you very much for stopping by. This was very insightful and we wish you the best of luck on your journey. Thank you so much. Appreciate you having me. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play or Spotify and share it with a friend starting their entrepreneurship journey. Leave us a five star review. Your support will help spread our podcast to more viewers.