Opportunity: Budding tech ecosystem. Once the land of copper, cattle and cotton, Arizona’s economy is swiftly diversifying and fostering the development of education tech, HR tech, fintech and electric vehicle companies. More entrepreneurs with big ideas are leaving Silicon Valley for the Phoenix area and its lower cost of living and affordable workforce. Local angel groups, venture capital firms and incubators are putting in the time and resources to grow the tech economy. While the pandemic disrupted our collective plans, many companies pivoted, innovated and didn’t lose a beat. And, the momentum is building.
Dan Ellis knows what it takes. He founded an e-commerce company in San Francisco in 2005, raised venture capital, opened multiple offices and left it behind to return home to Arizona with his family eight years ago.
In 2017, the entrepreneurial itch hit again and he co-founded ClearChecks, a software platform to automate and streamline the hiring process for small businesses. The software was designed for bottom-up adoption from small business owners looking to simplify their onboarding, not for enterprise scale deployment.
Within the company’s first year it hit over $1 million in annual recurring revenue and it was steadily growing month over month until this time a year ago. As the Covid-19 pandemic engulfed the country, ClearChecks and its four employees saw its business drop by nearly 40% last spring.
“The market froze and no one was hiring and so our volume kind of dropped off the cliff,” Ellis said. “The good news is we were a small startup and we're growing and so we were able to absorb that shock.”
With little overhead and the ability to work remote, Ellis and the team were not impacted by pandemic safety measures as much as many other small businesses. Ellis credits the Paycheck Protection Program for helping other fellow small businesses survive, and in the process, helping ClearChecks as well.
“What's actually crazy is that when PPP came in May, and all these restaurants and places got their funding to reopen, it created a huge boom for us.”
By June, the business was back above pre-pandemic levels and the momentum has only swelled since then.
ClearChecks reached its highest monthly revenue level in February and it's on track to beat it again in March. There are 30,000 businesses using the platform now and the company is on track to breach the $10 million annual revenue mark.
“This is the story of kind of being a startup and growing,” he said. “The startup road map is... It's never a straight line and so a little bit of it is, you know, a little bit of luck.”
The company now has 10 employees, four of which are in Phoenix, and they’ve just opened their office space after a year of pandemic delays. Ellis said the company is hiring sales people now and its always on the lookout for good software engineers.
Part of a system
“PayPal Mafia” is an aspirational phrase on the lips of entrepreneurs and investors across the Valley. This moniker refers to a group of former PayPal employees who went on to found companies like Tesla, YouTube, LinkedIn and Yelp.
One such former PayPal executive, Jack Selby, is the chairman at InvisionAZ, one of many groups in the Valley helping the tech ecosystem in the state bloom.
And like Selby, Ellis is also looking to help spark startup growth in the Valley. He also runs Main Street Ventures, a small angel investing outfit for him to work with other entrepreneurs.
“I love building startups from zero to one,” he said. “When I moved back here, part of the thesis was to have this kind of incubation studio idea where I would do angel investing.”
He said he hasn't been able to devote as much time to it during the pandemic, but there’s a legion of other Valley investors who have made it their mission to make Phoenix the next big tech hub.
Ellis says Phoenix is still looking for its “tent pole company,” that will produce an overflow of entrepreneurial talent to go out and found new companies in town. But with more investment, attention and activity in the Valley, it’s just a matter of time, he said.
ClearChecks
What it does: Software platform that automates and streamlines the hiring process for small businesses.
Employees: 10
Founded: 2017
Location: Phoenix
The outlook: Continue to grow and add members to sales and engineering teams
