Eagan-based TempWorks Software came out loud and proud, disclosing record revenues of $21m sales and 99% customer retention rate throughout 2016.
We talked with CEO David Dourgarian to hear more about what’s working…
When and how did TempWorks Software form?
My father actually started TempWorks in 1997. Our family owned some ManPower temporary staffing agencies in Sacramento and South Lake Tahoe at the time.
TempWorks was created to manage the business using software and soon realized that there were others in the staffing industry who wanted to move away from DOS applications in the late 1990’s.
He worked in the business until 2008 when I took over from him as president and became CEO around 2011.
What exactly does the company do now and who does it serve?
We focus on light industrial staffing placements, and break down our customer base into three categories:
- if a company is under $5m/year then we deliver back office, payroll, and financing solutions.
- if a company is $5m-$25m in sales, we offer a product mix that is back office outsourcing and staffing software.
- if a company is over $25m in revenue then we provide a complete back office technology stack that does everything on a larger scale.
What makes your model work?
A client could by any one of these services from over 100 competitors. We have taken the unusual step of keeping our vertical focus very tight while also creating best of class in a combination of the areas above.
They turn to us for a one stop shop.
How many employees do you have?
About 150 predominantly in the Twin Cities metro, 2/3 of which are in our technology department.
How many overall customers do you count?
How have you maintained such a high level of satisfaction based on customer retention?
We actually aren’t afraid to say no if we don’t feel upfront that we can properly serve a new client. Our philosophy isn’t predicated on growth at all costs, as we’re closely held, never taken outside investment, and have a slow and steady mentality of sustainability.
What compels you to be so candid about your business metrics?
Building on the above, if we were venture-backed, 15% growth just wouldn’t be acceptable would it!? We would have to cut corners or take on more customers than we could responsibly serve long term to our standard just in order to make the math work. So we put that out there because we’re proud of our organic growth and retention!
Is it a pretty competitive market?
The Twin Cities alone has three suppliers of staffing software and nationwide there are 100+ suppliers of recruitment platforms of one type or another. So, yes.
What is your competitive advantage?
We’re putting the vast majority of our profits into technology to be the best at just one industry slice. I think we’re at about 15% market share right now, and we see growth potential in this niche 4-5x. Our clients are very happy and that’s how we win.
What does the near term future look like for TempWorks?
We will be rolling out a new technology!
What does your hiring approach look like?
Actually it’s hard to get a job at TempWorks…we are slow to hire and slow to fire. We want people who are looking for a lifelong career with a stable company.
My salary expense is relatively flat and our sales clip was 16%, just last year, so we’re doing something right. We’re not a venture backed company that has a mandate to spend X amount on hiring.
Have you ever considered the venture/private equity route?
I actually am turned off by it…venture capitalists are my largest source of spam. Really though, there’s a lot to learn from the one’s who have proven themselves, which is really few and far between when you look at their track record.
…and yet you announced to the world your numbers?!
Yeah they’ve been at it for a while now since we were on the Inc 500/5,000 and started putting our numbers out there so publicly.
What does revenue look like for this year?
I believe in constructive growth…we’ve had as high as 30% before and really realized that there is a sweet spot that’s aligned with our long term profitability, not just the here and now.
If we have another year like the last one, not just in revenues but with low employee turnover and client attrition, I will be happy!
Is there anything else you would like to add?
I’ve enjoyed the conversation, thank you for that.