Q&A with Sarah Nahm and Nate Smith, Cofounders of Lever

by Y Combinator10/17/2018

We put together a list of the top YC companies by valuation as of October 2018. You can see that list at https://ycombinator.com/topcompanies.

Here’s a Q&A with Sarah Nahm and Nate Smith, Cofounders of Lever, one of the companies featured on the list.

What does Lever make/do?

Lever is the fastest growing Applicant Tracking System, the software companies use to power their recruiting. The companies that master hiring have the ultimate competitive advantage. Lever’s customers are global leaders like Netflix, Cirque du Soleil, Veon, Hot Topic, and Planned Parenthood. Many other YC startups—recent graduates and growth stage alike—are passionate Lever fans, too!

How many employees does Lever have?


How many founders?

Our CEO Sarah Nahm and CTO Nate Smith Prior founders: Brian Noguchi and Randal Truong

What is your most impressive recent product milestone?

As a company that has a fundamental commitment to user-driven design and modern engineering, we’re constantly shipping features big and small. With each release, we get closer to our mission: Help the world hire with conviction by unifying the people, data, and decisions.

For example, we recently released a fantastic agency portal feature, a game changer for recruiting teams working with outside agencies. The design of this feature is really smart, because it saves time in back-and-forth email updates the recruiters and hiring managers no longer have to send, and it helps companies to focus agencies on the roles that they want help with and not those where they don’t. Each Lever feature is thoughtfully incorporated into one seamless, simple design by distilling down to the essence of the value we’re adding. This latest feature gives us an even more complete picture of candidates from another important source, and it better unifies the people that deliver a great candidate experience.

What is the larger impact / societal impact of your product in the space you work within?

Lever’s ultimate ambition is to align the potential of every person in the world to meaningful work. It is hard to think of something more fundamental than that! If we can make each company and each person more effective by building better organizations, we’re amplifying what society is able to achieve.

Aligning talent and meaningful work also speaks to diversity and inclusion, something we’ve long valued at Lever. One signal of our efforts is that we have reached an even ratio of women and men within Lever’s employees and leadership. By valuing and modeling an inclusive workplace, Lever strives to enable more people to reach their potential at work.

What’s an interesting element of Lever’s company culture?

I’m really proud of Lever’s 5 company values: Raise the Bar, Know Why, Don’t Trust Comfortable, Champion Cross-functional Empathy, and Choose Reality. Our values describe what makes Lever unique from other companies, and we use them to direct how we hire, fire, coach, and reward people.

As one example, let’s dig into Choose Reality. Our values are designed to balance each other, and Choose Reality is the practical value. In its simplest sense, it is about getting stuff done. But beyond that, we believe there is great power in seeing what is right around us, choosing to be inspired by all of the opportunity that is smacking us in the face. This is the value that has gotten us through our toughest times as founders. When it seems like things aren’t going the way we’d imagined, what we’ve found time and time again is that there is an incredible opportunity in front of us; however, we have to choose it in order to benefit.

Lever’s culture is a huge strength; it is one of the top reasons engineers tell us they choose to join Lever. We have a fantastic blog about our company culture, https://inside.lever.co/.

Looking back, what motivated you to start Lever?

We wanted to create amazingly great software for people to use at work as good or better than what they got to use in their personal lives. That’s why Lever has always been committed to user design and engineering excellence. In addition, we wanted to help our customers solve the most important business problem that they had. We knew that if we solved the most important problem facing a business, people would pay for it. Finally, we wanted to make companies and software more human, more respectful of the people that they were created to serve.

Were there moments where you thought the company might die? Describe one of those and anything you learned from it.

Our near death moments are part of every new employee on-boarding! We’ve had our share, and I don’t expect that we’re ever immune from them. We talk about these moments with every employee, because they often are when fundamental culture is formed.

One moment was March 2013, when we threw away the entire product we’d been working on since May 2012 and decided to start over. We were in YC during summer 2012 and we worked with a single large customer that entire period out of their office, sitting next to their recruiting team. However, after working with them for 9 months, we hadn’t completed enough of what they needed for their entire company to start using it. Our project was cancelled. And when we looked at what we had built, it wasn’t fundamentally any better than the competition. At first, it seemed like we’d just completely wasted 9 months. We seriously considered calling it quits.

However, we kept going, because we realized that we’d just come out of 9 months of the most valuable design education into our users possible, and we were now uniquely in a position to imagine something fundamentally better. That’s when we got to work and started creating what Lever is today. 5 months later, we signed up our first customer, Change.org.

What was a particularly important insight you had about your market that made your product work?

The most important insight we had was that 2012 was the right year to start a new Applicant Tracking System company. I don’t think it would have worked out a few years before or a few years after. When we were researching different areas, we kept hearing a familiar refrain from managers we knew that hiring had suddenly become the biggest problem companies were facing, and everyone despised the ATS they were using. We figured that could only have happened if something about the world had changed faster than the products already created to solve this problem.

We came to realize that hiring had fundamentally changed—what was working before stopped working, and companies no longer saw value in hiring applicants. There was too much noise, and the great candidates that people really wanted never applied. Instead, companies now wanted to hire referrals and to source their own candidates. The reason people hated Applicant Tracking Software was that they didn’t want to hire applicants at all!

Hiring hasn’t gotten easier in the past 6 years either. Every company around the world has continued to experience hiring getting harder and harder as job tenures have shortened. Companies now have to re-hire 1/3 of their company every year to stay the same size on top of their growth plans.

For all these reasons, we realized that Lever has to be an ATS, but also much more. Beyond ATS, Lever is a full CRM for candidates. It is built to track relationships between candidates and companies over time, and a candidate can be created from anywhere, regardless of whether there is a resume or even a job yet. Lever is designed to feel like software that a hiring manager would use, not just a tool for recruiters to use. This fundamentally shifts how effective companies can be in recruiting, because their can leverage every employee to source, evaluate, and close the very best candidates collaboratively.

What’s one piece of advice you’d share with a young founder?

The advice to follow your passion in what company you start is common, and I don’t believe that it is always in the best interest of founders. Smart, creative people can become passionate about many things. However, the market for a product at a given time is mostly outside of a founder’s control.

I think that founders should be wary of following their current passion when it leads into a market without a good opportunity to build a successful business. This does not mean picking a market that seems safe or obvious. As YC often repeats, the best ideas initially look like bad ideas. So if your goal is to start an extremely successful company, an additional criteria is looking for an opportunity which is great even though most people don’t believe it is at the beginning.

When investors give the advice to follow a passion, I think it is important to consider that their incentives are different to some degree. Investors can take multiple bets at the same time, so it is OK if some of them do not work out. Great markets aren’t obvious at first, and if the founders that find one are more passionate, that can improve the odds of successful execution. However, founders can only dedicate themselves to one company at a time. Thus, I think founders should look beyond passion and critically evaluate the market for an idea before pursuing it.


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