Episode Summary: 20VC Exclusive with Adarsh Haimath of Mercor

Podcast: The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Host: Harry Stebbings
Guest: Adarsh Haimath, Co-Founder of Mercor
Release Date: February 20, 2025
Episode Title: Mercor Raises $100M at a $2BN Valuation: Scaling to $70M in ARR in 24 Months | 9-9-6: 9AM-9PM - 6 Days Per Week: The Most Intense Culture in Silicon Valley | The Future of Programming, Models and Data with Adarsh Hiremath

1. Introduction to Mercor and Funding Milestone

Harry Stebbings opens the conversation by highlighting Mercor's impressive achievements:

• Funding: Mercor successfully closed a $100 million funding round at a valuation of $2 billion, led by Felicis.
• Growth: The company scaled to $70 million in Annual Recurring Revenue (ARR) within just 24 months.
• Work Culture: Mercor is renowned for its intense work culture, operating nine-to-nine, six days a week.
• Founding Team: Notably, all founders are Teal Fellows, making them some of the youngest unicorn founders ever.

Quote:
Adarsh Haimath [00:00]: “The round is 100 million and the price was it was at 2 billion... The businesses that succeed in a world where software costs approach zero will be built on network effects.”

2. Founding Mercor: From Debate Partners to Startup Founders

Adarsh shares the origins of his partnership with co-founder Surya:

• Long-standing Relationship: Adarsh met Surya at age 10, bonding over their mutual interest in debate.
• Debate Team Dynamics: Their collaboration in high school debate teams taught them the importance of partnership and mutual success.
• Transition to Business: Initially, they started a development shop without business ambitions, focusing on rapid software development and recruiting exceptional talent from India.
• Realization: They recognized that people were more critical than software, leading to the creation of Mercor's automated candidate platform and subsequent marketplace.

Quote:
Adarsh Haimath [05:06]: “Debate is a lot like founding in a lot of ways... Picking the right founding team is the most important decision you can make while starting a company.”

3. Scaling Mercor: Challenges and Strategies

Adarsh delves into the complexities of scaling Mercor:

• Work Culture: Despite speculations, the 9-9-6 work schedule emerged organically to ensure Sundays off, attracting team members passionate about the mission.

  Quote:
  Adarsh Haimath [11:26]: “The only reason we actually just floated those numbers out is because we didn't want our team working on Sundays.”

• Growth Rate: Maintaining a 50% month-on-month growth rate serves as a perpetual stress test, pushing continuous improvement.

  Quote:
  Adarsh Haimath [12:50]: “Everyone in the company needs to keep outgrowing themselves. Redefining what's possible for them, taking on new roles.”

• Scaling Culture vs. Software: Emphasizes that scaling culture is more challenging than scaling software, maintaining the foundational culture amidst rapid growth.

  Quote:
  Adarsh Haimath [13:16]: “Scaling culture is harder than scaling software... ensuring that that culture stays strong as the company grows.”

4. Mercor's Role in the AI and Recruitment Landscape

The discussion shifts to Mercor's intersection with AI and the future of recruitment:

• Market Insight: Human data and talent assessment have merged, necessitating experts to refine AI models in specific domains.

  Quote:
  Adarsh Haimath [13:42]: “Human data and talent assessment have actually become the same thing... it's a talent assessment problem and is a perfect application of the platform.”

• AI Collaboration: Mercor collaborates with top AI labs to enhance post-training models by placing experts through their platform.

  Quote:
  Adarsh Haimath [15:29]: “They’ll hire people through the Mercur platform to essentially help with post training models.”

• Model Infrastructure: Predominantly leverages OpenAI models, integrating improvements to enhance user experience.

  Quote:
  Adarsh Haimath [16:38]: “Whenever the models improve, the experience for applicants on our platform also improves pretty significantly.”

• Future of Programming: Discusses the evolution of programming with AI tools like Cursor, advocating for higher abstraction levels in coding.

  Quote:
  Adarsh Haimath [27:10]: “Programming is actually more important today. It's just going to happen at a different level of abstraction.”

5. Fundraising and Investor Relations

Adarsh shares insights into Mercor's fundraising journey:

• Natural Fundraising: Fundraising rounds often arose organically through introductions and positive momentum.

  Quote:
  Adarsh Haimath [33:27]: “All of our fundraising rounds is just that we didn't intend on doing the fundraising at the time. And it sort of just came to us.”

• Benchmark Partnership: A pivotal moment involved a unique interaction aboard a helicopter with Benchmark's Peter Fenton, solidifying their investor relationship.

  Quote:
  Adarsh Haimath [34:00]: “Brendan was on a helicopter with Peter Fenton from Benchmark. And we knew that they were the firm that we wanted to work with very, very quickly.”

• Efficient Use of Funds: Emphasizes prudent financial management, avoiding the temptation to spend raised capital immediately.

  Quote:
  Adarsh Haimath [37:07]: “Our goal isn't to deploy $100 million tomorrow. But... we just want to make sure that we have a balance sheet that is kind of commensurate with that long term.”

6. The Future Vision: Mercor as a Unified Labor Marketplace

Adarsh paints a bold vision for Mercor's future:

• Unified Labor Marketplace: Aspires to create a globalized labor market where every hiring decision is streamlined through Mercor.

  Quote:
  Adarsh Haimath [41:06]: “Merkur has created 100 billion jobs and has built the unified labor marketplace. Meaning anytime a company wants to hire a person for a specific job or task, they do it through Mercur.”

• Long-Term Goals: Envisions Mercor facilitating the creation and fulfillment of billions of jobs, effectively solving the matching problem across all industries and roles.

7. Rapid-Fire Insights and Personal Reflections

In a rapid-fire segment, Adarsh shares personal beliefs and lessons learned:

• Most Undervalued Role: Believes that recruiters are the most prestigious and undervalued positions within companies.

  Quote:
  Adarsh Haimath [37:39]: “The recruiting function of a company is the most underrated and undervalued.”

• Programming Evolution: Stresses the importance of adapting programming skills to higher abstraction levels facilitated by AI advancements.

  Quote:
  Adarsh Haimath [27:10]: “Programming is actually more important today. It's just going to happen at a different level of abstraction.”

• Board Aspirations: Would choose Sam Altman for Mercor's board to gain insights into the future of AGI.

  Quote:
  Adarsh Haimath [40:21]: “I would have to pick Sam Altman.”

• Personal Challenges: Acknowledges personal areas for improvement, such as driving habits.

  Quote:
  Adarsh Haimath [39:33]: “I should probably stop taking a lime... it's the most unsafe way possible.”

8. Conclusion

Harry Stebbings wraps up the episode by commending Mercor's intense work ethic and rapid growth. The conversation underscores Mercor's pivotal role in revolutionizing the labor market through AI-driven recruitment and highlights the company's ambitious vision for the future.

Notable Quotes

• Adarsh Haimath [00:00]: “The businesses that succeed in a world where software costs approach zero will be built on network effects.”

• Adarsh Haimath [05:06]: “Debate is a lot like founding in a lot of ways... Picking the right founding team is the most important decision you can make while starting a company.”

• Adarsh Haimath [13:16]: “Scaling culture is harder than scaling software... ensuring that that culture stays strong as the company grows.”

• Adarsh Haimath [27:10]: “Programming is actually more important today. It's just going to happen at a different level of abstraction.”

• Adarsh Haimath [37:39]: “The recruiting function of a company is the most underrated and undervalued.”

This episode offers a deep dive into Mercor's meteoric rise, operational philosophies, and future aspirations, providing valuable insights for entrepreneurs, investors, and professionals interested in the intersection of AI and recruitment.