Megan Driscoll, the CEO and Founder of PharmaLogics Recruiting, grew her company’s revenue from $3.8m in 2014 to $11m in 2017, a 188% increase, and hit around $13m in 2018.
PharmaLogics Recruiting is a bio-pharmaceutical recruiting company that places top talent at companies devoted to the development of medicine that improves and saves lives.
In this interview with Eversprint‘s Malcolm Lui, Megan shares how she and her team accelerated their high value sales by:
- Providing recruiting services under their Anti-Fee Model at 1/2 the cost of traditional recruiting firms which led to a significant increase in repeat business.
- Hiring younger and lower cost recruiters that they could train up with their sales and recruiting processes.
- Benefiting from economic resiliency of the bio-pharmaceutical industry: this sector is the last to slow down during a recession, and the first to recover.
Malcolm Lui: Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Megan Driscoll, the CEO and Founder of PharmaLogics Recruiting, a bio-pharmaceutical recruiting company that places top talent at companies devoted to the development of medicine that improves and saves lives. Welcome to the call Megan
Megan Driscoll: Thanks for having me
Malcolm Lui: Megan, you grew your company's revenue from $3.8 million in 2014 to $11 million in 2017, a 188% increase, in 2018 you're on track to hit around $13 million dollars. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond the quick intro and how your company differs from the competition?
What they do, and how they differ from the competition
Megan Driscoll: Sean. So we offer recruitment services internationally. We have an office in Basel Switzerland to service our European clients. We've worked further from further afield. But I would say in general we're sort of more European U.S. based placement firm. We work with all kinds of companies so not only just like finance firms both in the biotech or the pharmacy but companies that support those firms like zero and see demos as well as consulting firms who also provide services to that industry. So our main focus is to again focus on companies that are improving and saving lives. And then whatever talent needs they have we help source and find them and how we're different we're really quite different actually. One of the reasons this kind of relates back to what we'll talk about next I'm sure one of the reasons why the growth has been so substantial over the last several years is the launch of our anti fee model which we basically launched when we came out of the last recession of 2009. And essentially what we do now is we provide our services for roughly half the cost of traditional recruitment services. And that was a bit of a game changer for us because we've not sacrificed any of the quality of the process if anything actually we've sort of amped up the partnership and the collaboration with our clients. So they're getting a better product and they're paying less money for it. So that definitely has differentiated ourselves substantially.
Malcolm Lui: Would you say you know fit your anti fee model is the number one biggest driver of your growth
Megan Driscoll: Yeah. And just to kind of summarize I guess know most people are familiar with recruitment and how it's delivered the traditional way of recruitment is a send you candidates you pick one the one you choose. You penis fee and the fee is always between 20 and 30 percent of that person's base salary. And I get paid that when the candidate actually starts with you the way we do it is we actually are billing hourly and we've capped it at that 20 percent fee and over the last 10 years we've maintained an average fee of 13 and a half percent which is like I say roughly half of a 25 percent sort a traditional fee. And so we kind of just have the 25 percent fee fee that is dominant of any recruitment industry it's not just in biopharma it's kind of across the board is kind of made up it's not really based on any substantial detail like time it takes to find candidates or process or client. It's just kind of the fee you pay real estate fee is like why did we pay 5 percent to our real estate agent who made that up. I don't know. So what we've done is coming out of the recession I was looking for something to kind of keep us going.
Megan Driscoll: We were concerned that we might go out of business actually too. Nobody was hiring I mean it was obviously as you know a terrible year 2009. And I read an article in an Entrepreneur Magazine about a comment that Steve Jobs had made which in a recession cannibalize yourself you can afford to do something crazy because your operating expenses are so low that whatever you try it doesn't work. You know you can just do it. You can just go back to what you were doing before so yourself for lunch. And so that's kind of what I decided to do I decide it's kind of yourselves free lunch and totally do away with the 25 percent sort of fee model and go to something that would be more attractive from a cost perspective and without sacrificing any of the service that you get from working with a retained search recruiter. And it really took off for me mean people we kind of became like a no brainer like why would I go pay a full fee when I can have all this service and pay like
Malcolm Lui: Right. Exactly. And it's. And even though your revenue might be cut in half you're in here. You made it up on the volume side. And just having more clients and getting more repeat business as well.
Megan Driscoll: Exactly we went from making maybe 30 15 to 30 to 40 placements per year to making hundreds I think in 2018 we'll place over 500 people internationally.
Malcolm Lui: Good. So the the the A.P. model is a big driver of your success. Are there or to any other drivers and maybe to other drivers that drove your sales over the past couple years.
Other sales drivers beyond their Anti-Fee Model
Megan Driscoll: Yeah I think there's unintended and unexpected consequences to making a change like the one that we made on one of them was the types of people who would be attracted to work in our kind of new environment proved to be also a huge benefit. So in order to deliver this fee at this level you know this sort of 30 percent off fee. Ultimately there is no big shiny fee. So a recruitment firm oftentimes will attract. I would say any company will attract high high sales focused people they want to earn a lot of money they're definitely money is a big motivator for them. And you know everyone I meet has met somebody in sales who they have not been fond of because their sales and you know they were kind of like you in the back and steal their money out of your pancreas if they knew it was in there. And that was kind of the type of person that was a successful recruiter in our office. They weren't people that you'd want to go have dinner with after work not pressure.
Megan Driscoll: And this new model because of the pricing structure because we have to keep the price low and because there's no person that's going to earn a 30 thousand dollar fee at the end of placement has allowed us to hire a lot of younger sort of young and hungry fresh grads or people out of school maybe a year or two and their cost basis is much lower but they're also incredibly excited that they're able to be molded into kind of what you want them to do you teach them kind of ethical right way to be in sales and it's not sales at all costs. And so our sales team is not what I would call truly sales. I would say you know it's like very combination of persuasive and sales but also a huge dose of customer service focused. And so that's been a really nice reason for our success today sort of unintended. I didn't know that by hiring younger people that I would get this kind of person out of a group of people that I really enjoy so much so
Malcolm Lui: Fantastic
Megan Driscoll: Much more.
Malcolm Lui: Fantastic. Yeah it makes for a more pleasant environment and everyone enjoys it better and that in turn also gets better results for the company for themselves for the career for the clients. It's a win win win all round.
Megan Driscoll: Yeah for sure
Malcolm Lui: Is there a third driving factor of your sales over the past few years
Megan Driscoll: You know I would say that in general I always advocate for the biopharmaceutical industry at large or life sciences in general. I do think that it's got the best wherewithal. If I were starting another business I would consider starting a business that aligned with life sciences especially the time of year the sort of period of time we're in right now we're very likely going to have another recession in the next 18 months to two years. I would want to be considering aligning myself with biopharma if it's possible. They're the first to feel the recovery of a recession and the last to feel the effects of once it started. And you can. I've been through too now because I was but I was recruiting in the 2002 biopharmaceutical as well then and in the 2008 recession and in both times we really didn't have pain for like six to 12 months after everybody else was feeling pain. And we recovered almost two years ahead of everybody else too. So I do just think that we have had being in this industry. It's just a strong industry and one that you know you just driven by the need. Right. And that's not going to change especially the baby boomers
Malcolm Lui: Right now. So just to recap the three factors that were driving your sales one you're a.. Fee model 2 you're able to hire younger people at a lower cost but at the same time they're people that you can train up and and indoctrinate into your culture and way of doing things which has multiple benefits. And the third one is that you're in a space that's resistant to two recessions has as much as one space can be and at the same time it's also a growth sector as well. That about
Megan Driscoll: Exactly.
Malcolm Lui: Sums it up
Megan Driscoll: That about sums it up. They can't
Malcolm Lui: Okay great. It's a quick question on your anti fee model. You are spending you know your revenue assuming the number of clients engagements you have
Megan Driscoll: Right.
Malcolm Lui: A flat. Essentially your revenue gets cut in half by your pricing
Megan Driscoll: I.
Malcolm Lui: Structure.
Megan Driscoll: Agree. With
Malcolm Lui: Now
Megan Driscoll: Their
Malcolm Lui: Does that essentially mean you know your margin is
Megan Driscoll: Your
Malcolm Lui: Big enough
Megan Driscoll: Part.
Malcolm Lui: To absorb that. Because you said before you're still maintaining the same quality of work. So you know how
Megan Driscoll: Yeah
Malcolm Lui: To how did all that work out.
The revenue and cost structure of traditional recruiting firms
Megan Driscoll: Well a traditional recruitment firms. I mean I would say again I'm thinking about it from biopharmaceutical perspective but this is the same in most industries most recruitment firms are what I would call kind of like mom and pops or a guy in his basement you know putting up a shingle basically their individual or 10 12 employees. And the reason for that is they don't need to have a lot of employees to make a lot of money because the volume doesn't need to be that. They can survive. A good recruiter right at a run a routine search with 25 percent if he's making 50 60 thousand dollar fees will only make five 10 15 of those a year to have a really good year particularly if they work for themselves in their basement and they get to take all of that revenue in for themselves. Our model is completely different than that. We are much more based on volume and what happens when a company sees that they they can use us and spend fifteen thousand dollars instead of thirty thousand dollars and they think oh gosh I'm going to give them a bunch more work so we don't get a job from a client per year we get on average between 10 and 15 jobs from clients on an annual year.
Megan Driscoll: And ninety five percent of our company our clients repeat with us year after year and that's been true. That number is held in the mid to high 90s since we launched in 2009. So we rely on our existing customers taking that in the following year and we do we've done that because we've delivered a great service model. So it's the pace but it's also that they're getting people in seats and placements are being made and they're filling their needs with great candidates. If you don't have that then it doesn't matter what we charge rate because we could charge 50 percent off and if the candidates thinks or we don't come to a placement they're not going to continue working with us. So the models only successful if we are able to build on business year after year and so far we've been able to do that for the last several years
Malcolm Lui: Right. So it sounds to me that The way one driver as the White work works really is that essentially you're not paying for marketing costs and new client acquisition costs and you're getting a lot of repeat business and that's how this models really working
Megan Driscoll: I would say that was true in order for us to get where we are today. We needed to have repeat business. I mean for most of the years I would say like 2011 12 13 and 14 we couldn't keep up with the amount of work we were being given. I couldn't hire enough people to fulfill the orders that we were getting. It really was a we were overwhelmed with the amount of success that we were having. I didn't even have a business development team at all because we just didn't need to do business development because we couldn't keep up with the work we had. It also led an issue as it developed over time. We also got large contracted projects. So we would have to hire 20 people in the EU medical directors for example and then that led to a 40 person build out. And so our pricing structure definitely changed to where it's not hourly it's more like CBE. We're still 30 percent off but we're kind of getting it paid in sort of large chunks upfront so to speak but we're still charging only 50 percent. So that was kind of I would say at first that's how we grew just organically in that way.
Megan Driscoll: But the industry is small unit ultimately and there's like 10 or 15 big players and then there's the rest of the folks. We do a lot of work with small businesses and small businesses. You know a venture backed Life Science firm startup may be around in three years it may not. We're kind of hedging our backs and hoping that you know out of the hundred small business clients that we work with that three of them will take off and if they take off they can hire 60 70 80 people in a year and we want to get that work if we work them in their first year and they give us tenure. They also don't have a lot of bandwidth they don't have a lot of human resources support or help. We provide all that to them as well. So we'll actually write job descriptions and we'll help them work through the interview questions and behavioral interviewing technique and so we give them a lot of services. Like I say we overdo it with regard to all the services we provide to our clients because we know again we know that we need them to continue coming back to us year after year
Malcolm Lui: Right.
Megan Driscoll: But things that change in about 2014 when we really needed to do some business development to grow this even further and kind of expand. So 2016 with our first real investment and business development we hired somebody full time we hired somebody full time in 2015 but we got so much work that we had to put them back into our project. Well 2016 was the first time we actually hired a business development person and then in 2017 we built out that team. So now we have a team of nine people globally who are doing business development for us and some of them have only been doing it for less than six months. So we've made a real investment recently in sort of acquiring new business and going out there and marketing to get it up until that point we really didn't need to.
Malcolm Lui: Okay. Can you share how your biz dev team goes about finding new business
How they go about finding new business
Megan Driscoll: I think it's very traditional we traditional and in but I mean that is by way of the way you get business in general not traditional probably by the way that recruiting firms get good business traditional recruitment firms will go after business by the hiring manager so they'll call a hiring director of Tuesday for example and pitch a quality assurance candidate to them. We don't do that we only approach human resources talent CEO as our CFO. We are not going in kind of that back door if you will. We want to kind of walk in the front door. We want it to be a collaboration and a partnership right from the get go with human resources. And if they're not onboard we you know we want to work with them until they can become onboard with our platform and our programs. So essentially what we try to do is just we're trying to make connections with human resources and talent acquisition people across the globe and getting them familiar. If they're not familiar with us already with how our products work we have a couple different options of how someone could work with us. A.C. is one of them the small business platform is another they're all slightly different but they're sort of catered toward the size of company and what a company might need and what they're trying to accomplish. Sometimes we provide onsite support for example if someone living out in Seattle providing onsite support for a very large find out there. So that's essentially what we're doing is kind of reaching out contacting by phone by email very traditional in that regard and trying to get a meeting with them.
Malcolm Lui: Okay. I know you do any sort of marketing and advertising to get people to raise their hand and maybe even reach out to you directly without
Megan Driscoll: Yeah
Malcolm Lui: Your team
Megan Driscoll: So
Malcolm Lui: Reaching
Megan Driscoll: Hard
Malcolm Lui: Out to the.
Megan Driscoll: Find marketing. I'm sure everybody feels this way but it's really hard to know whether or not the money you spend is giving you any. What's your return on your investment for marketing is always something that's really hard to attain. We were primarily in LinkedIn in both our advertisements and are reaching out the majority the vast majority like if you're not on LinkedIn in the fans industry then you're probably not really working full time so it is a great resource for us and that's where we traditionally spend our dollars.
Malcolm Lui: And again you're you're not advertising on LinkedIn you're actually doing a manual reach out
Megan Driscoll: I
Malcolm Lui: To individuals
Megan Driscoll: Know we are advertising we're doing both. Yeah.
Malcolm Lui: Okay see ya advertising anything they do in the paper click ads.
Megan Driscoll: Yeah it's a little bit of a bigger program. We kind of have a yearly spend that we have to spend and then we create targeted ads and things like that.
Malcolm Lui: Okay. An hour away and that's been pretty good.
Megan Driscoll: Who knows. You know I can't say I wish I could say I always have. I always have wanted to say this directly led us to this opportunity. I've never been able to create a clear line into those things. Now you know do I get phone calls. Yes all the time we get phone calls and people calling me even directly I've been in this industry for almost 20 years and so. But usually there are people who have worked with 15 years ago or 10 years ago who are reaching out now did they see LinkedIn added it reminded them to call me maybe you know I don't know I don't know and
Malcolm Lui: Okay.
Megan Driscoll: We don't have a really good mechanism for finding out that's a tool that somebody should develop
Malcolm Lui: Right. Okay.
Megan Driscoll: Fantastic ally marketing our ally
Malcolm Lui: Yeah.
Megan Driscoll: App
Malcolm Lui: Oh there are ways of doing it. It depends if you have your system set up or if people click on an ad and you start tracking who clicked on it and how they progressed through the client journey from initial click
Megan Driscoll: I
Malcolm Lui: All
Megan Driscoll: Think
Malcolm Lui: The way
Megan Driscoll: That's.
Malcolm Lui: To speaking with one
Megan Driscoll: Yeah
Malcolm Lui: Of their
Megan Driscoll: I
Malcolm Lui: Team
Megan Driscoll: Mean I
Malcolm Lui: Members.
Megan Driscoll: Think that's really easy to track when you have an actual product that you're selling. You know I feel like when you're a services business it's not as easy to just make those direct line connections and often
Malcolm Lui: Yep.
Megan Driscoll: Those that we can track when
Malcolm Lui: Yeah
Megan Driscoll: We do see that that has happened. They don't go anywhere we end up not finding out that client for one reason or the other. Interesting
Malcolm Lui: Right. It is interesting.
Megan Driscoll: I know I know. You know we do see that tracking we are able to see when those things are happening and I haven't seen a single time where we've need someone to reach out to us and that's resulted in a big project. Most of it is relationships and maybe it's just that we have such a strong name for ourselves in the industry already and we've been doing this. You know I've been in recruitment in this space for 20 years. I mean a lot of the people that we work with are people that I've known. I mean the industry is very insular in that regard. When someone leaves a talent acquisition position Amgen for example they often wind up at Pfizer down the street you know so it's not like they leave the industry very often
Malcolm Lui: Right. For 2019. What are your plans. What are your targets
Their 2019 plans and targets
Megan Driscoll: To have a new BD team relatively you know most of them have less than a year of experience. They're hoping to really kind of cash in on their efforts if you help. We've decided recently as of about me before five months ago that up until this point we've only been a permanent placement organization. So only placing people who are full time looking for full time work only working on jobs that are full time. And we've been getting requests of some of our clients to ask us to help them with temporary staff. And although it might seem like it's the same business it's really not the same business. So the same group of candidates that you would call for a temporary role that you would call for a permanent role. So it is kind of a different business fine but we did decide that that was something that at this point we could handle in terms of having the process and the setup to be able to do that. So we did launch contract staffing this year and we're hoping to potentially acquire a smaller contract staffing firm in 2019. Got a couple that we're in communication with already such that we can kind of like Gaslight that group basically
Malcolm Lui: Right.
Megan Driscoll: We really want to be full service in 2011 by the end of 2019 we hope to be full service
Malcolm Lui: Right. OK. Yep. Are you comfortable sharing your revenue targets in 2019. No in 2018 you were you know years over now. Looks like you're you're booked about 13 million in 2018. Share what your revenue targets are for 2019.
Megan Driscoll: Yeah. So 2019 without the acquisition we should be close to 50 million I would say for sure with the acquisition. But there's one in particular that we're hopeful about we will probably close to 30 million if that were to go through
Malcolm Lui: Well nice. That's a big jump.
Megan Driscoll: Contract staffing is very low margin work. So perm placement is very high margin 30 percent margins and contract. You're lucky to get 10
Malcolm Lui: Wow big difference
Megan Driscoll: Yeah. Huge difference. So although the revenue number looks really good though the bottom line is not nearly.
Malcolm Lui: And I guess the reason for that is that the math time that you need to invest to find a candidate is about the same between the two. But the problem is that they are leaving and then you need to fill them again and again. That's why the margins of solar
Megan Driscoll: Now that's not really it it's much more about the the margin between what you pay that candidate and what you bill the client
Malcolm Lui: Ok
Megan Driscoll: Writes I'm taking the revenue. If someone's on their books they they annually make a hundred thousand dollars. I get to take that hundred thousand dollars as revenue to my company but it's not really a hundred thousand dollars because I have to pay the candidate 80 grand of that hundred. I'm only making
Malcolm Lui: Oh I
Megan Driscoll: Twenty
Malcolm Lui: See temps
Megan Driscoll: Thousand
Malcolm Lui: That
Megan Driscoll: Dollars on
Malcolm Lui: You're actually
Megan Driscoll: Temp staffing
Malcolm Lui: Hiring them and sourcing them.
Megan Driscoll: Exactly
Malcolm Lui: Ok. You're not finding them a temp staff that they know that they're going to keep on you for six months on their books.
Megan Driscoll: Yes
Malcolm Lui: You're actually now at an agency with a team of people that you're contracting out.
Megan Driscoll: Exactly. Yep.
Malcolm Lui: Yeah. Got it. Got it
Megan Driscoll: Yeah. No contract staffing companies look really big because they have these really huge revenue numbers but often they make less profit than I make. You know my my 11 million dollars is probably the equivalent to one hundred million dollar firm
Malcolm Lui: Right.
Megan Driscoll: In terms of the amount of revenue that we both are making. No amount of profit rather or even turns that we're making
Malcolm Lui: Right. Exactly. Now in my conversations with other recruiting firms say you know one of the challenges they find is finding the candidates the place but you haven't mentioned that as a challenge. Is that because you've got some secret
Megan Driscoll: Yeah
Malcolm Lui: Sauce
Megan Driscoll: That's not
Malcolm Lui: There
Megan Driscoll: Really
Malcolm Lui: To
Megan Driscoll: A challenge.
Malcolm Lui: Make
Megan Driscoll: That's not one of the more challenging is finding enough recruiters to come work at our office. That to me has been a challenge and continues to be a challenge and I think we'll will continue especially as unemployment falls. In that way I would not necessarily be upset about a recession and quite frankly it is very very hard for us to find people to come work for from a logic even though we're an employer choice. We pay very well above what I think other new grads or fresh grads would earn. It's just there's a there's just not a lot of people out there looking for work.
Malcolm Lui: So finding candidates to place is not not really a challenge. Maybe I haven't talked to enough people that sounds very unusual
Megan Driscoll: Yeah I mean I would say again being in the industry for 20 years. It's a very small industry. Everybody knows everybody. I would say I was a very first responder on LinkedIn with Linked In recruiter. You have access to anybody and the engine that we use to find candidates is I would say very assembly lines. I like to refer to it. And we have a very strict policy our way soapy for how we go about getting talent in the door and getting candidates is a non issue for us.
Malcolm Lui: Okay. It plastic to
Megan Driscoll: Much
Malcolm Lui: Last.
Megan Driscoll: More difficult for us as managing and stage process which requires I would say kind of high level project management skills. And when you have a young office you have young people and they don't necessarily have high level project management skills. So more of our issue is just being able to manage the candidates through the end game through the interview process and kind of negotiating your offer because the person that's doing that is maybe younger than you know a 45 year old seasoned recruiter that works in his basement has been doing this for 20 years. That whole part of managing a candidate the process is quite easy for them.
Malcolm Lui: Right. OK. Two questions for you Megan first. Who are your ideal clients. And the second one. What's the best way for them to contact your teen
Their ideal clients.
Megan Driscoll: I mean ideal clients. It's pretty broad group rate be anywhere globally either a life signs up near biotech pharma or a med device firm or any company that services though those kinds of firms would put it could be a potential client. Anyone looking for talent in those areas and it doesn't really need to be in science directly. So we place a lot of people in finance and accounting and human resources and administration. As long as they're sitting at a company that is improving and saving lives we're willing to take on that work. Our recruitment process works in any industry we've just chosen to sort of focus on helping companies that are devoted to that kind of development of drugs. And so the best way to reach us and we have a website WWE from Ajax recruiting dot com and you can always find me personally I'm linked in many ways Megan Driscoll and Lincoln with me directly.
Malcolm Lui: Great Megan making you spell your last name. They make it obvious to people who are looking for you. Nathan
Megan Driscoll: Yeah for sure the r i s c o l l My first name Megan and e.g. n
Malcolm Lui: All right. Fantastic. Thanks so much for being on the call. Megan I really appreciate hearing the insights about how you grew your company so fast.
Megan Driscoll: Yeah. Thanks for having me.
Malcolm Lui: We've been speaking with Megan Driscoll, the CEO and founder of PharmaLogics Recruiting, about her company's rapid growth. For interviews with other fast growing high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit every sprint dot com.
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