The Twenty Minute VCAdarsh Hiremath @ Mercor: The Fastest Growing Startup in Silicon Valley | E1261
EVERY SPOKEN WORD
85 min read · 17,140 words- 0:00 – 1:01
Intro
- AHAdarsh Hiremath
The round was 100 million.
- HSHarry Stebbings
And the price was?
- AHAdarsh Hiremath
It was at 2 billion, yeah. (instrumental music plays) I think we'll live in a world with many, many models with different use cases. We're already seeing this with a lot of application layer companies, where they all have these specialized use cases for how they wanna leverage the models. (instrumental music plays) I think being a recruiter is the highest prestige position in any company. The recruiter is the one who controls the talent inflows and outflows of every company. And pretty much, you can gather all you need to know about a company from seeing the talent inflows and outflows. (instrumental music plays) The businesses that succeed in a world where software costs approach zero will be built on network effects.
- HSHarry Stebbings
Ready to go? (instrumental music plays) Adosh, I am so excited for this, dude. Listen, I've heard so many good things from Pat Grady, from Nico, from Anil, from Scott Sandell even, so thank you so much for joining me.
- AHAdarsh Hiremath
Thank you for, uh, having me. Really, really a big fan of the pod.
- HSHarry Stebbings
That is very, very
- 1:01 – 2:30
How Debating Makes The Best Founders
- HSHarry Stebbings
kind of you, dude. But I did my stalking beforehand, and everyone told me about your mastery of debating, you and your co-founder Surya. You were debate champions. How did debate prepare you for founding a company? Let's start there.
- AHAdarsh Hiremath
Yeah. Well, I mean, one thing about Brendan, Surya, and I is that we actually go quite a ways back. So, I actually first met Surya when I was 10 years old. Um, and the reason we got along so well is because we were pretty much the only elementary schoolers who wanted to compete in high school debate. So, at the time, we did Lincoln-Douglas debate, which is sort of, like, a one-on-one debate format. Surya and I actually even debated each other, uh, a couple times. And then we ended up at the same high school, Bellarmine, which is also where I met Brendan. Um, and then all three of us were on the debate team together. Surya and I decided to do policy, so we ended up being debate partners together and then going on and competing in all of these nat- national tournaments. Um, but, but debate is a lot like founding, uh, in a lot of ways, right? Like, I like to think of my debate partnership with Surya as sort of my first startup, just because we had 50/50 equity in each other's success. If one of us were to mess up, it would tank the odds for both of us. Uh, there's, like, this constant feedback loop after every debate round about whether you won or lost. Picking the right debate partner is, like, the most important decision you can make in policy debate. And similarly, picking the right founding team is the most important decision you can make while starting a company. So, there's that parallel, and then there's just the immense amount of ownership, right? You know, we both have a stake in each other's success.
- 2:30 – 7:39
Do People Treat You Differently When a Unicorn Founder
- AHAdarsh Hiremath
- HSHarry Stebbings
At the time, you were, like, 18, 19-
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
... and you can correct me if I'm wrong there. But you, Brendan, Surya get interested in labor markets. How does that happen?
- AHAdarsh Hiremath
Actually, so Brendan, Surya, and I started working together, um, without any business ambition necessarily. We, we just started a, a dev shop together. So, we were like, "Cool. You know, let's learn how to build software really, really quickly. Let's go to these startups. Let's figure out things they want built. Let's build it together." And what we ended up doing is recruiting these really, really exceptional folks from India to help us out with our dev shop. And then very, very quickly, we realized, you know, the software was one thing, but we had (laughs) found some really, really exceptional people, a- and it was more about the people than the software. So then, we were like, "Okay, we found these people in a completely manual way. Ca- can we automate this?" Uh, and that's how the automated candidate side of the platform was born. And then very quickly, we realized, Brendan, Surya, and I couldn't scale well by doing sales manually, so then we had to automate the other side of the platform, too, the, the company-facing platform. And that's how the marketplace was born.
- HSHarry Stebbings
Okay, so the marketplace is born. We've automated both sides of the platform. How exciting! Except you were at Harvard at the time, I think, um, and now you have this very vibrant and working platform.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Take me to that moment and the decision between whether you drop out or whether you stick to the traditional course.
- AHAdarsh Hiremath
Well, well, (laughs) it's funny that you say I was at Harvard. I was definitely there physically, not sure about mentally. I was pretty much (laughs) doing everything I could to avoid going to classes. And I actually have a pretty, uh, funny (laughs) story about this. So, you know, Brendan would visit me pretty frequently at Harvard. And my roommate at the time, Artemis, had this, like, really, really weird sleep schedule. He would just, like, go to the engineering building and pretty much be nocturnal. So, the routine that we would typically follow is Brendan would visit me, he would just crash in Artemis's bed because he'd be in the engineering building just working on problem sets. And then he'd come back, wake Brendan up, and then we'd get to work together, and then he would go to sleep during the day. Uh, and then, you know, fast-forward today, Artemis has joined the, the McRoy team. So, yeah, i- it really was the typical dorm room story.
- HSHarry Stebbings
So, when you were then deciding, "Shit, am I actually gonna leave Harvard?" It's one thing to say, it's another thing to do. Can you just take me to that moment?
- AHAdarsh Hiremath
At the time, it wasn't obvious at all that we should drop out. And I really, really sympathized with my parents at the time for, you know, not approving because here I was, we hadn't raised our seed round, we hadn't raised the series A, there was no Thiel Fellowship, there was one side of the marketplace that had a little bit of revenue, and I was telling them that I wanted to abandon my degree program. Um, so it wasn't an obvious decision at all, but I think, you know, like most of these decisions, you just make them completely emotionally. And I just knew I wanted to work with my best friends.
- HSHarry Stebbings
For a lot of students who are wanting to start a business, who have a business already, how do you advise them on whether to drop out or whether to stick to the traditional path?
- AHAdarsh Hiremath
Oftentimes, it's, it's an emotional decision. Like, you can try to rationalize dropping out or, uh, starting a company, or try to figure out the exact, you know, set of prerequisites that you have to do. But, like, for me, for example, the moment I knew that I wanted to drop out was, was actually back when we had an office in Palo Alto. And the office had exactly three desks, one for Brendan, one for Surya, one for me. And I was like, "Surya, man, should we, should we drop out?" Uh, and then he just looked at me, and he was just like, "Dude, how hard could this be?" Wasn't a logical argument at all, but in that moment, I was just like-... "Let's do this. Let's, let's drop out of school."
- HSHarry Stebbings
Where was the business at, at this point? Just to frame it.
- AHAdarsh Hiremath
No seed round, a little bit of revenue, no Series A, no Thiel Fellowship, nothing. We were just three friends, uh, working in a small office in Palo Alto, with, with our amazing team in India.
- HSHarry Stebbings
Take me to the seed round date. Like, how did it go? Do you remember getting the term sheet? Just take me through that. 'Cause you were 18, 19 at the time?
- AHAdarsh Hiremath
Yeah, I think we were, we were 19 at the time. So that was-
- HSHarry Stebbings
Okay.
- AHAdarsh Hiremath
... that was just surreal. So, what ended up happening is, initially, we thought we wanted to base the company in New York, so I'll take credit for making the, the wrong, uh, call there. I very, very quickly realized that it was the wrong decision. But what ended up happening is we had moved to New York before raising the seed round. And for me, actually, the more surreal moment wasn't actually when the money hit for, for the seed round. It was actually when we changed our, uh, like salaries in Gusto to $500 a month. I felt like we made it at that time. I was like, amazing. You know, we just moved to New York, we changed our salaries to $500 a month, and then afterwards, we closed our seed round, um, and then when the money was wired, we were just looking at the account, like, in awe.
- HSHarry Stebbings
Dude, I'm just fascinated. How was that process? Like, did you pitch many venture investors? Did the round come quickly? How much did you raise? Just take me through it. It's a special moment.
- AHAdarsh Hiremath
So, so we raised over three million, and it came very, very quickly. So, uh, we... General Catalyst, uh, led the round, and really, really enjoy working with, uh, Max and Nico, so...
- 7:39 – 11:08
Scaling to $70M ARR in 24 Months
- AHAdarsh Hiremath
- HSHarry Stebbings
Dude, you are one of the fastest-scaling companies in Silicon Valley, in the US, in startups in general.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Um, unbelievable. It was 50 million, I think, of ARR in November. I quoted it wrongly. It's... You may be able to correct me, but it's much more now. Um, with 30 people at the time of the 50 million. And I've heard a little rumor on the grapevine that you do 9/9/6, so 9:00 AM to 9:00 PM, six days a week.
- AHAdarsh Hiremath
Mm.
- HSHarry Stebbings
Can you unpack if that's true, why you do it, and how that works in reality?
- AHAdarsh Hiremath
Yeah, yeah. It, it's really funny. Um, a lot of people ask me this question about the 9/9/6 thing. The only reason we actually just floated those numbers out is because we didn't want our team working on Sundays. Um, so I like to think of the 9/9/6 stuff as more of, like, a side effect than an objective. We've just really, really carefully selected for working with people who care deeply about the mission. And the side effect about that is they don't wanna wait until Monday to, to move the company forward. Um, so people really do it just because they enjoy being in each other's presence, they enjoy what they're working on.
- HSHarry Stebbings
Do you worry about creating a hustle culture with 9/9/6?
- AHAdarsh Hiremath
I think, to some extent, this is not something unique to Marqor. It's like, all the successful companies have had pretty intense cultures historically. And it's just a function of, uh, the startup, right? You gotta work harder than everyone else, obviously in a sustainable way, uh, to succeed. But like, the one thing I will say about that is that momentum is very, very energizing, and I think everyone on the team feels energized.
- HSHarry Stebbings
Everyone I spoke to also said that you're sucking up the most ambitious, young, hungry talent, and that it used to go to, say, a Scale or a Stripe of old, and now it goes to you. What do you think you've done to create a brand where the youngest, most ambitious young talent wants to go to you now?
- AHAdarsh Hiremath
I think when we select for people to, to work at Marqor, one realization that we've come to is that you can teach people a lot of things, whether it be, you know, technically, or going to market, or whatever. But the one thing that you can't quite teach people is to care. And that's one thing that we index on pretty heavily, uh, in our hiring process, and something that we really look for.
- HSHarry Stebbings
I heard that you've been growing 50% month on month continuously for, for quite a while now. That growth, to keep up, is, is insane. How does that feel internally, and what's the first thing or two to break?
- AHAdarsh Hiremath
The way I like to think about that level of growth is, it's basically a perpetual stress test on the business. Things are, are constantly breaking, whether it be process or, you know, you might need to hire people to fill in gaps quicker than you might ordinarily need to do, or, or whatever. But I think the main thing is everyone in the company needs to keep outgrowing themselves, right? Redefining what's possible for, for them, taking on new roles.
- HSHarry Stebbings
What does no one tell you about scaling that you wish they had told you?
- AHAdarsh Hiremath
Scaling culture is harder than scaling software. When you're adding people to the team very, very quickly, there, there's this dynamic that the culture that you create with the first, you know, 20 people, i- is in some ways the strongest the culture is ever gonna be. And ensuring that that culture stays strong as the company grows, uh, does new things, a- and new people enter the company is really, really challenging. But in some ways, the most important part of building
- 11:08 – 24:07
How Culture Breaks When Scaling So Fast
- AHAdarsh Hiremath
a legendary company.
- HSHarry Stebbings
We mentioned scale earlier. One of your ambassadors said to me that you are mostly doing data labeling for foundation models. Do you think that's fair? And is that a niche market or a wedge into a much larger market, in your mind?
- AHAdarsh Hiremath
Yeah, so actually, our insight about the market is that human data and talent assessment have actually become the same thing, right? Where, you know, I can take you back five years, where when we think of this data labeling or human data stuff, it's essentially a crowdsourcing problem, right? Let's say Waymo wants, uh, a bunch of their images labeled. You get a bunch of people across the world to draw boxes around stop signs, to make the model better at classifying stop signs. But fast-forward to today, and the nature of human data work has changed a lot. Now, it's GPT-4O or whatever model is not good in a particular domain, so we actually need an expert to make the model better in that domain, and figuring out who that expert should be...... is 100% a talent assessment problem, uh, and is, like, a- a perfect application of the platform. With a lot of the- the labs that we work with, uh, we're able to figure out who are the exceptional people in very, very specific domains, um, and have those people work with the- with the labs. Uh, and the interesting thing about this is that it's essentially a forcing function on our long-term objectives, right? When you think about Mercore building this global unified labor market, w- what do we need to make this happen? We need tons of smart people on the platform and we need the ability to predict job performance and figure out what those people should be doing, uh, whi- which happens to be the exact set of problems that a lot of the AI labs are having.
- HSHarry Stebbings
When we think about, like, the AI labs today, I heard through the grapevine that, as you mentioned, that you work with some of the top AI labs.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Mercore experts, how- how does that fit into these labs? What does that partnership look like? Just help me understand this.
- AHAdarsh Hiremath
It- it looks exactly the same as placing someone to work at any company, right? So just like Mercore might work with startups making their first hires or companies hiring in a more traditional full-time capacity, it's the exact same thing for, uh, a lot of the large AI labs. They'll hire people through the Mercore platform, uh, to essentially help with post-training models.
- HSHarry Stebbings
When you look at today, what is the, like, satisfaction on a hire basis? Like, is 90% of hires successful? Is 60%? What are the metrics that you place and what is the one core metric that you use for the success of the business?
- AHAdarsh Hiremath
Customers keep growing their relationships with us, so net retention is over 100% by- by a large margin. So, you know, as long as they keep expanding, it means that we're doing a good job at finding the right people.
- HSHarry Stebbings
When you get hires wrong, are there commonalities in why you get them wrong?
- AHAdarsh Hiremath
It's all dependent on the role, right? And what you're- what you're looking for. So at the end of the day, there might be commonalities, uh, but it's all very, very role dependent. There are many examples that I can think of, right? But i- different companies value different things, right? Uh, and depending on what they value, we can correct, uh, the- the talent prediction.
- HSHarry Stebbings
What role are you best at? What role are you worst at?
- AHAdarsh Hiremath
It's an interesting question because we place all kinds of talent at companies, right? Everything from software engineers to lawyers to doctors to financial analysts to consultants. So, like, a huge part of the Mercore platform is actually not, like, building specifically for any of these roles, but instead building technology that generalizes really, really well, right? You know, one example is the AI interviewer. We- we've built it in such a way that it can immediately pre-process someone's background and then administer a custom interview to a person regardless, uh, of what role they're- they're trying to take on, um, in a completely automated way. You can literally spin up this interview in under 10 seconds. So, you know, for example, for this, you know, podcast, right, you- you must have spent, like, a decent amount of time doing research. But imagine, like, you can just have an agent pull in all the information on someone's profile and put together what would be this superhuman interview or this superhuman podcast. That stuff is possible now, uh, and it's possible for pretty much all roles.
- HSHarry Stebbings
In terms of an infrastructure basis, what models are we sitting on top of today?
- AHAdarsh Hiremath
So it's interesting because the model landscape is just changing so- so quickly, but we- we leverage a variety of models and have been particularly, uh, thrilled with the OpenAI models.
- HSHarry Stebbings
Okay. So have we always been on OpenAI predominantly?
- AHAdarsh Hiremath
We- we've always used OpenAI, uh, in some capacity.
- HSHarry Stebbings
If improved, in terms of, like, any aspect of Model Air, what would make the biggest improvement on the business and the product today for you with Mercore?
- AHAdarsh Hiremath
I think a concrete example would be the AI interviewer. We've built the product in such a way that whenever the models improve, uh, the experience for applicants on our platform also improves, uh, pretty significantly. And, you know, i- in general this is something that's been, you know, on our mind, right? There's, like, this huge wave of models getting better and better and better, a- and can we ride that wave to make our product better and better and better? So to summarize, while we leverage LMS and all these models, uh, throughout our product, um, I think the whole product gets better as the models get better. A- and one specific example is the interviewer.
- HSHarry Stebbings
What do you think will be the next generation of models in terms of what they look like-
- AHAdarsh Hiremath
Mmm.
- HSHarry Stebbings
... first before we get to training data?
- AHAdarsh Hiremath
The whole market i- is shifting to reinforcement learning, right? You're- you're already seeing this with 01, 03, the DeepSeq models, and as a result I think we're gonna see really, really powerful models in specific domains that can reason extremely well, and I think that'll be really, really exciting and lo- unlock just a huge number, uh, of use cases across a variety of different industries, uh, and domains.
- HSHarry Stebbings
Do we live in a world of many, many specialized models, but very fragmented, or do we live in a world of monoliths with o- one or two very horizontal platforms?
- AHAdarsh Hiremath
I- I think we'll live in a world with many, many models with different use cases, right? We're already seeing this with a lot of application layer companies, right, where they all have these specialized use cases for how they want to leverage the models, right? For us it's hiring and beating the expert hiring manager, um, by a large margin. For another company it might be financial ana- analysis in a specific domain. So across each of these use cases I think these companies will need to make their models better for- for their own purposes.
- HSHarry Stebbings
How fair do you think the analogy is that the model landscape will be very much like the cloud landscape in terms of, you know, bluntly three or four juggernauts and it being very hard to switch out of? Do you agree that it's hard to switch out of them or do you think given the model transience it's actually much easier and much less defensible in that respect?
- AHAdarsh Hiremath
There will only be...... a couple of companies that are able to build these foundation models that everyone builds off of. I think OpenAI is a, a great example, uh, of one of those companies. Uh, and I think, you know, that analogy roughly holds. I don't anticipate there being 20 companies training foundation models that can all be, be leveraged in the same way someone might leverage, uh, OpenAI, for example.
- HSHarry Stebbings
In terms of, like, the post-training data side, (laughs) I'd just love to hear your thoughts on how much will be human data versus how much will be synthetic data moving forward.
- AHAdarsh Hiremath
I think a lot of it will be human data going forward. And I think a great example of this i- is evals, right? Evals for models definitionally have to be outside of model capability, right? In order to see whether a model is doing well at a particular task, you need to have an eval set created by humans that is better than the model at that particular task. And humans are gonna play a huge role in that, for example. And I think there are a whole set of other use cases, whether it be SFT, RLHF, you know, RL environments, like how the models of tomorrow are being trained, that all require these expert humans, uh, to essentially teach the model how to get better.
- HSHarry Stebbings
To what extent would you say that data is the bottleneck that prevents model improvement more than compute or algorithms?
- 24:07 – 24:40
The Future of Foundation Models
- AHAdarsh Hiremath
specific thing.
- HSHarry Stebbings
When you sell to clients, what is the moment where they're like, "Wow, shit, we've gotta use Macaw?"
- AHAdarsh Hiremath
When we're able to find exceptional people, uh, at the cost of software hundreds of times over.
- HSHarry Stebbings
But when you're in that sales cycle with them today-
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
... when are they going, "Yeah, we've gotta sign up"? Is it when they see the AI interviewer? Is it when you show them the price? (laughs) Is it when they meet a candidate? Like, whe- when is that wow moment for them?
- AHAdarsh Hiremath
It's usually when the first couple candidates start working
- 24:40 – 25:22
OpenAI vs Anthropic
- AHAdarsh Hiremath
with them.
- HSHarry Stebbings
How do they tend to sign up? Is it like, "Hey..." What i- what is that buying process? They buy one at a time? Is it on a per talent basis? Is it on a timeline basis? How does, how does a deal with Mercore work?
- AHAdarsh Hiremath
One interesting thing about Mercore is we don't have a sales team. There is not a single person who works, uh, on sales at Mercore, uh, outside of, you know, the founders. And these days what we're seeing is mostly customer inbound. So folks have heard great things about Mercore, uh, from other people who have hired through Mercore and then reach out to us, and then we go from there. So right now (laughs) it's more of a, a bandwidth thing than, than any, like, tactical or coordinated sales motion,
- 25:22 – 28:23
Data: Synthetic vs Human
- AHAdarsh Hiremath
I would say.
- HSHarry Stebbings
What percentage of hires is end-to-end done by software versus has human in the loop?
- AHAdarsh Hiremath
So on our end, the entire process i- is automated. So this is everything from a candidate hearing about Mercore and going onto the Mercore platform via job listing, us pulling in their resume, their salary expectations, and whatnot, administering a personalized interview based on both their background and the role, allowing them to get paid for their work. That entire process is automated.
- HSHarry Stebbings
What does a take look like on a per candidate basis?
- AHAdarsh Hiremath
It all comes back, uh, to quality. So, you know, I briefly talked about Uber, uh, and just going back to that example, right? When I get into an Uber, there isn't that much of a difference between the 4.8 star driver and the 4.9 star driver, because the unit of work is not exponential. But with something like Mercore, there's a huge difference between the top 0.1% and then the 80th percentile person. So usually for customers, it's not a question of price, it's a question of quality. And if we're able to find those 0.1% people or 1% people reliably at the cost of software, uh, and delight our customers, wha- wha- what we take is often a second thought.
- HSHarry Stebbings
I'm sorry, I'm... What- what is that take then? Is it, like, a standardized take? Is it, like, on a case by case basis? What does that look like?
- AHAdarsh Hiremath
It's on a case by case basis. For some customers it can be, you know, over 30%. For some, it can be less.
- HSHarry Stebbings
When you look at candidate completion rates, how much of that is India versus rest of world today? I know you specialize in finding amazing talent in India specifically.
- AHAdarsh Hiremath
So the reason we started with India is because, you know, our parents, uh, immigrated from, from India, Suri and I, so, uh, they went to these amazing schools. So we, like, started these recruiting campaigns from those schools specifically. And actually, like, one of the things that got us really, really excited about, you know, labor markets in general and the inefficiencies associated with it was, just because, like, one of the best engineers I've ever worked with on our team we found through a Facebook ad, and I manually interviewed him. And actually he didn't pass the interview, uh, but the reason that we ended up hiring him is he sent me a really, really long message about what exactly he got wrong in the interview and how to correct it. And, and I just felt like, "We gotta work with him." It was sort of that that prompted us to start in India. But if you fast-forward to today, actually the number one place that, you know, workers on the Mercore platform who, you know, have jobs through, through us, um, are from is actually the United States.
- HSHarry Stebbings
What, uh... Like percent-wise, is it like 60% US style?
- AHAdarsh Hiremath
Uh, yeah. It's- it's- it's- it's high up there, yeah.
- HSHarry Stebbings
And client-wise, all US too?
- AHAdarsh Hiremath
Mostly US, yeah.
- 28:23 – 29:29
The Future of Programming and AI
- AHAdarsh Hiremath
- HSHarry Stebbings
A lot of young exceptional people are being told today that they shouldn't maybe study CS anymore, because actually CS is becoming so automated.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Uh, 41% of code is now written by AI. In five years' time, that'll be extortionately higher. Do you agree with that advice, and how do you think about whether t- or not young people should learn programming today?
- AHAdarsh Hiremath
My take is that programming is actually more important today, and it's just gonna happen at a different level of abstraction. One could argue that the leap from Assembly to Python was actually maybe even a bigger leap than the leap from Python to natural language. So my answer there is that the way we define programming will look very, very different. It may be a person who, you know, has, like, average skills by today's standards in, in computer science who's orchestrating thousands of superhuman coding agents to achieve more than we thought, uh, was even possible. Um, but that skill set, which, you know, we can define as programming at a different level of abstraction, programming in English, is gonna be super important.
- 29:29 – 30:26
The Impact of AI Tools on Software Development
- AHAdarsh Hiremath
- HSHarry Stebbings
Can I ask, how has the way that you program changed over the last two years?
- AHAdarsh Hiremath
Yeah. I, I definitely use a lot of the, the AI tools. Um, they've gotten really, really good. Uh, a great example is Cursor-
- HSHarry Stebbings
What do you- what do you use, and how has it changed how you work?
- AHAdarsh Hiremath
Uh, a great example is Cursor. Uh, a lot of members of our team use, use Cursor and love it. Uh, I'm one of them.
- HSHarry Stebbings
Well, how has it changed how you work?
- AHAdarsh Hiremath
It makes doing, you know, things that would take a lot of time just so simple and elegant, right? A great example is testing. With a couple of prompts, you can just generate a more thorough test suite than, than, you know, anyone could've imagined, uh, for your application, for example. Um, a- and that just wasn't possible before. Or maybe it's, like, bringing the same consistency from, like, one part of the code base and refactoring it for another part of the code base. You can basically snap your fingers in Cursor and it'll get done.... today, which is absolutely insane
- 30:26 – 31:46
Why Software Will Become Commoditised
- AHAdarsh Hiremath
to think about. Um, and I think, like, the implication for software is that software is gonna get commoditized, uh, very, very quickly as these coding agents get really, really good.
- HSHarry Stebbings
What does a world look like where software's commoditized? What does that mean?
- AHAdarsh Hiremath
It means that people will be able to build applications much faster than was historically possible, and it also means that the businesses that succeed in a world where software costs approach zero will be built on network effects. The companies that don't could even give away their entire codebase and they'd still be alive, right? Uh, the marketplaces and companies like Meta, you know, and Airbnb, that have built these really, really strong network effects, will be the ones that thrive.
- HSHarry Stebbings
So, do you believe... Do you agree with people who say, like, "Ah, SaaS is dead. Because companies will just build their own software." Or do you think differently?
- AHAdarsh Hiremath
I think what we consider SaaS will change, right? In the sense that S- the next era of SaaS will be replacing entire services, right? You know, whether it's the end-to-end process of a recruiting agency li- like Mercore, uh, or another, you know, different service or, uh, that- that is incredibly manual, uh, and incredibly
- 31:46 – 35:38
Network Effects and Marketplaces
- AHAdarsh Hiremath
repeatable.
- HSHarry Stebbings
You said about network effects there.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
If I were to push you two the strongest network effect that you have within Mercore today, what do you think it is?
- AHAdarsh Hiremath
Break it down as in two categories, right? So, one is the network effect of a marketplace that you might see i- in a labor marketplace like Uber, uh, or a marketplace like Airbnb, where every additional company that hire through Mercore strengthens the marketplace, and every additional candidate on Mercore strengthens the marketplace as well because there's like a higher pool of really, really exceptional people to choose from. And the second network effect is, uh, e- or- or like data flywheel, is around this job prediction piece, where we're able to see who's performing well on jobs and the specific reasons why they're performing well on jobs, uh, and use that- that end-to-end data, uh, o- on people's outcomes to- to make it really, really easy to surface, uh, the person that might be the best for- for a given role, even if they themselves don't know it.
- HSHarry Stebbings
How do you think about building, like, stickiness, and switching cost, and making sure that 50 million is really fucking sustainable?
- AHAdarsh Hiremath
It all starts with quality. And I think a lot of the greatest products or companies of our generation have been usage-based, right? I think Stripe is a, is a great example of this. And the reason that that revenue is really, really sticky, uh, is because you're able to create these like six-star experiences, uh, for customers and candidates, and I think that's one thing that has resulted in our very, very quick revenue ramp, right?
- HSHarry Stebbings
When you think about the product today, what would you most like to change that Brendan and Surya would most not let you change?
- AHAdarsh Hiremath
Maybe running our en- entire, you know, internal hiring process for Mercore in a completely automated way, meaning Brendan, Surya, and I don't even talk to someone when they come into the office. Uh, and then we- we walk in the conference room to meet them the first time, a- and we're just like, "Wow, this person is awesome." And like, we couldn't have found this person even if we spent all day every day trying to find this person. And we're- we're getting there, a- and that's just super, super exciting for us.
- HSHarry Stebbings
How do you think about the future of remote and remote versus in-person? I don't think you can do 996 and do it effectively unless you're in-person. I think that motivation, that intensity, you feel in the same room.
- AHAdarsh Hiremath
Yup, and that's exactly why we do, you know, in-person in San Francisco. Brendan, Surya, and I all get super energized by being around people, and I think a lot of our best ideas for Mercore have, uh, come when we weren't even in a meeting, right? We were just sitting around, chilling, uh, discussing things, and then you have that aha moment, and I think there's something really, really special for in-person.
- HSHarry Stebbings
What was the worst product decision you made?
- AHAdarsh Hiremath
At one point, uh, Brendan, Surya, and I all thought that chat was the future of all UI at that time a while back. So, one of the initial iterations of the Mercore product was just built around a chat interface. Like, there was pretty much no other way to hire people unless you used the Mercore chatbot because we were so bullish on- on chat. Um, (laughs) I think we've come around to that. We now, like, mix chat with- with other things, uh, where applicable, or leverage LLMs in other ways. But for a while, we thought, like, the concept of a web app tomorrow would be dead, a- and the way you would interface with all web apps would just exclusively be with chat. So it, it wouldn't even be, you know, you clicking a button to hire someone. It would be you telling the chatbot to hire the person. Uh, I think, you know, it's possible down the line, but w- we may have mistimed a little
- 35:38 – 40:48
Raising From Benchmark After a Helicopter Ride
- AHAdarsh Hiremath
bit.
- HSHarry Stebbings
In terms of funding, dude, you- you've got some of the best on your cap table. You mentioned GC at the start. Talk to me. You've raised quite a few rounds in quite quick succession. How did you think about that, and do you agree when the money's on the table to take it?
- AHAdarsh Hiremath
An interesting dynamic about Evolver, you know, fundraising rounds, um, is just that, like, w- we didn't intend on- on doing the fundraising at the time, uh, and it sort of just came to us. You know, going back to the example, uh, about Benchmark, um, someone introduced Brendan to Victor. Brendan said we were heads down, uh, and then Victor, you know, convinced Brendan to- to have a conversation with him, and then the rest was history from there.
- HSHarry Stebbings
Can I ask, was it... Like, how did that process go down? So, Brendan meets Victor, and then you guys meet Victor, and you have a chat? How does that go down?
- AHAdarsh Hiremath
Brendan had the initial chat w- with Victor, um, and then, you know, afterwards, Brendan was like, "Okay, gonna, gonna get back to work." Uh, and then, you know-... afterwards, Victor asked Brendan if he'd ever been on a helicopter. And Brendan said no. Before you knew it, Brendan was on a helicopter with, uh, Peter Fenton from, from Benchmark, and we knew that they were the firm that we wanted to work with very, very quickly.
- HSHarry Stebbings
(laughs) And so Brendan comes back and goes, "Hey, guys, they took me on a helicopter. Let's do it?"
- AHAdarsh Hiremath
Had a couple more conversations with, with Victor and the Benchmark team, uh, and it was clear that they were, they were the best. So we, we wanted to be in business with them and, and work with them, and they've just been phenomenal.
- HSHarry Stebbings
Then how many months later is the next round?
- AHAdarsh Hiremath
The next lou- round was, think, about s- over, what, six months later?
- HSHarry Stebbings
Six months later. You don't need the money at that point.
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Talk to me about that round. How did you think about taking the money then?
- AHAdarsh Hiremath
It, it's interesting 'cause we, we again weren't focused on, on fundraising, right? Uh, we, we had built a, a business that was doing a lot in revenue. Um, you know, were paying out tens of millions to-
- HSHarry Stebbings
How much was it doing in revenue at this point?
- AHAdarsh Hiremath
It was doing, you know, e- eight figures in, in revenue, right? And, and we were, we were just like, "Okay, let's, let's be heads down." Um, but just like we, we felt with Benchmark, we, we wanted to be, you know, in business with Sandeep and Felisas and, and the amazing team there, um, which made it a no-brainer.
- HSHarry Stebbings
Do you enjoy fundraising?
- AHAdarsh Hiremath
Not really.
- HSHarry Stebbings
(laughs)
- AHAdarsh Hiremath
Not really, yeah. Uh-
- HSHarry Stebbings
Do you have a board, A- Adarsh?
- AHAdarsh Hiremath
We do. It's, it's, you know, Brendan, Suri, and I, and, and Benchmark, uh, on the board.
- HSHarry Stebbings
Is that it?
- AHAdarsh Hiremath
That's it, yeah.
- HSHarry Stebbings
(laughs)
- AHAdarsh Hiremath
And, and yeah, we, we don't enjoy fundraising. I think the thing that we really, really enjoy is moving the business forward. That, that's always a thing that, that founders enjoy the most. So we've been, you know, laser focused on that, and sometimes it just makes sense to, to do the round.
- HSHarry Stebbings
You s- you said about eight figures in revenue, though, when I think you raised that one of the rounds. Were you aware of how fast the revenue scaling was? Like were you guys looking at each other going, "This is, this is unbelievable."
- AHAdarsh Hiremath
We definitely had that moment, and at the time we raised that round, we didn't realize how much the growth was gonna accelerate, right? Or, or we knew of it, we were confident in it, but just the fact that it even exceeded our expectations, uh, you know, wrapping up Q1 of, of this year, uh, is something that we're, we're all, you know, really, really excited by.
- HSHarry Stebbings
And talk to me about this new fundraise. Was this new fundraise the Felisas round?
- AHAdarsh Hiremath
Yup, so the new fundraise wa- was led by, by Felisas with some, you know, other amazing investors, including GC, Benchmark, and others participating as well.
- HSHarry Stebbings
And how much was this round?
- 40:48 – 46:13
Quick-Fire Round
- AHAdarsh Hiremath
- HSHarry Stebbings
Listen, I wanna do a quick-fire round. So I say a short statement, and you give me your immediate thoughts. Does that sound okay?
- AHAdarsh Hiremath
Let's do it.
- HSHarry Stebbings
Dude, what do you believe that most around you disbelieve?
- AHAdarsh Hiremath
I think being a recruiter is the highest prestige position in any company. Because, you know, the recruiter is the one who controls the talent inflows and outflows of every company. And pretty much you can gather all you need to know about a company from seeing the talent inflows and outflows, so I, I think it's, uh, the recruiting function of a company i- is the most underrated and undervalued. Part of the reason I started Mercor.
- HSHarry Stebbings
Does the whole we should do more with less efficiency on a per-human basis not go against Mercor and the importance of recruiters?
- AHAdarsh Hiremath
Actually, it, it goes with it, right? Because, uh, efficiency's only possible if you find the right person. And solving that matching problem and finding the right person is really, really hard, especially with manual processes that don't scale.
- HSHarry Stebbings
Who do you think is the best person in the world at what you do, and what have you learned from them?
- AHAdarsh Hiremath
It's interesting. I've, uh, had this conversation with, uh, some members of the Mercor team before. I think one thing that we like to joke about is that company execs are a lot like athletes in a lot of ways, where there's like-
- HSHarry Stebbings
Mm-hmm.
- AHAdarsh Hiremath
... this drive and desire to, to win. Um, you know, maybe, you know, I ha- I had dreams of being a basketball player awhile ago. Definitely not what I do today, but... (laughs) You know, one person who I think really embodies that winning mentality is LeBron, uh, and I like him a lot, so...
- HSHarry Stebbings
If execs are like athletes, how do you treat yourself as an athlete?
- AHAdarsh Hiremath
Think there's an element of pushing yourself to win, uh, and focus on the right things and getting better every day. Uh, a- and that's just something that I think about, right? How can I be the best version of myself tomorrow and be an even better version the next day, uh, and continue that and have that compound for 10, 20 years?
- HSHarry Stebbings
What have you changed your mind on in the last 12 months?
- AHAdarsh Hiremath
I think-Part of it is the, you know, the SaaS, uh, answer I gave you a little bit earlier, that, just that over time it's become pretty obvious to me that the next generation of SaaS will replace entire services end-to-end. Uh, and I think that realization has sort of been part of the reason that we've, you know, built Mercor in this way.
- HSHarry Stebbings
What's one thing that you're doing today that you should stop?
- AHAdarsh Hiremath
I have to be honest with you, I think it's probably my Lime ride to the office when I'm running late for morning standup. Like, you know, we start at 9:00 AM every day, and sometimes it's like I'm leaving my apartment at 8:55. And I'll just, like, take a Lime and go straight down the hills of San Francisco in the most unsafe way possible. Uh, so I should probably stop that.
- HSHarry Stebbings
What do you know now that you wish you'd known when you started Mercor?
- AHAdarsh Hiremath
I would say just how hard it would be to, to build a business like this. I told you, you know, back when we decided to start Mercor, it was like a complete, you know, emotional decision where Serhii just looked at me and said, "Hey man, how hard could this be?" You know, Brendan came in with his optimism and we just did it. And I'm thankful for that. But I, I didn't really have grasped my mind around how hard building a business like this would be.
- HSHarry Stebbings
You can have anyone on your board. Who do you have?
- AHAdarsh Hiremath
I would have to pick Sam Altman.
- HSHarry Stebbings
You can ask Sam Altman any question. What do you ask Sam?
- AHAdarsh Hiremath
I would probably ask him more about what AGI looks like.
- HSHarry Stebbings
What would you want his answer to be?
- AHAdarsh Hiremath
I think it more comes from a place of curiosity rather than...
- HSHarry Stebbings
I know Sam. Sam would turn it back on you and go, "Why didn't you tell me first?" What do you think AGI will be?
- AHAdarsh Hiremath
When we achieve AGI or, or sort of like think about AGI, it will certainly involve, you know, doing more economically valuable work, right? So when more and more and more of economically valuable work has been automated to some extent, you know, research has been automated to some extent, I would broadly put that in the bucket of AGI.
- HSHarry Stebbings
It's 2035. Okay?
- AHAdarsh Hiremath
Mm-hmm.
- HSHarry Stebbings
Final one. Where is Mercor then? Paint that picture for me of how big you are, how many people you've placed. Where is Mercor?
Episode duration: 46:23
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