Tom Ellis has gone from bootstrapping his business to finding alternative financing methods to grow and secure big private equity deals. His startup, ShiftKey, has attracted funding from top-tier investors like Clearlake Capital Group, Health Velocity Capital, Lorient Capital, and Pantheon Ventures.
In this episode, you will learn:
- Business pivots
- How ShiftKey works
- Making private equity deals work
- How your business will be different after a private equity deal
- Tom Ellis’ advice when starting your own business
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About Tom Ellis:
Tom Ellis is the founder and CEO of ShiftKey, a marketplace technology platform transforming the future of work by empowering licensed professionals to choose their pay rate, define when and where to work, and connect directly with facilities looking to fill open workforce needs.
After spending more than a decade in healthcare staffing, Ellis recognized the limitations of the traditional agency approach and was inspired to create a solution that wouldn’t just create business efficiencies, but would transform the future of work and empower licensed professionals to embrace independence and flexibility.
In 2016, Ellis founded ShiftKey, headquartered in Dallas, Texas. Since then, facilities have posted more than 50 million hours of open shifts on the platform, and Hundreds of thousands of licensed professionals have engaged on the platform.
In 2022, Ellis was named #1 on the Dallas 100 Fastest-Growing Companies in the DFW list and was also a winner of EY’s Central Plains Regional Entrepreneur of the Year Awards.
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Connect with Tom Ellis:
Read the Full Transcription of the Interview:
Alejandro Cremades: Alrighty hello everyone and welcome to the dealmakerr show. So today. We have a really incredible story and it’ a story here. You know if a founder that has been building scaling fin adcing I mean he really understands you know. How that looks like and also what it looks like. But also we’re going to be talking about the private equity side of things today when it comes to the transactional side of the equation so without farther ado let’s welcome our guest today Tom Ellis welcome to the show first. So originally born in Seattle.
Tom Ellis: Um, thank you Thanks for having me. Ah.
Alejandro Cremades: I know that you moved them eventually to Oregon so give us a little of a walk through memory lane. How was life growing up.
Tom Ellis: Life was good. Ah you know, moving from one city to another one is always an interesting move and then so he first landed in Eugene Oregon and a few years later moved up to Salem I was a bit of a sports nut growing up I played basketball most of my life up there. And yeah, lucky enough to be a part of the ah 96 state champion basketball team up there.
Alejandro Cremades: That’s amazing. That’s Amazing. So It sounds like you had the leadership you know peace covered. You know we change. Obviously you are executing very nicely nowadays you had the dealing with the uncertainty covered you know from Moving. I Guess you know how do you think that all those different you know aspects whether it was the leadership side you know playing sports or the uncertainty of moving to new places making new friends. The unknown How do you think that all shaped who you are.
Tom Ellis: I mean I think playing sports is a big deal I think you know I try and instill this in my daughter today too is that one of the things you get from this is the ability to focus and learn how to work hard and understanding that you are out there. There is competition and. If. You don’t put in the effort. You’re not going to get the reward so. It’s part of ah part of playing sports and a big part of growing up for me. Yeah I mean I think that’s something that just happens basically in anyone’s life. You know world was a little different back then? um I think it’s funny.
Alejandro Cremades: And what about dealing with uncertainty.
Tom Ellis: No one asked me back then if I wanted to move. They just kind of did it? Um, but you know kids have a little bit more control these days and a few more opinions but all in all I think you know it can be a good thing. It can be a challenge and you know just like anything else. You got to find your way to work work through it.
Alejandro Cremades: Now in your case you did a little bit of selling you know, advertising you did the selling of a equipment for fitness. So a little bit of everything you know when it came to selling So um, before that was obviously before you became an entrepreneur entrepreneur but I guess.
Tom Ellis: You know, um.
Alejandro Cremades: How do you? How do how important? do you think selling is and how important do you think really understanding a master in that has helped you in becoming an entrepreneur later on.
Tom Ellis: Well so I mean I think everyone should have a sales job at some point in time in their life I think it was incredibly important to me 24 hour fitness you know really taught me a bunch of what it means to again put in the work grind out phone calls. You know back then it was a. Ah, small area and we all had to learn how to pitch in front of each other. Um, so once I got to staff care and staff care was you know much more of a um you had to make your 100 phone calls a day my recruiting class there was like 27 people within the first two weeks about half of that was gone. And without my time at 24 hour fitness and learning how to grind it out and be there and work. It could be a little overwhelming for some people. Um, so that’s why there was so much turnover I mean by the time I left staff care I think there was only 3 out of 27 left by the time I actually wound up leaving myself. So. You know you kind of start with that foundation and what it means to so to sell and to work and to understand how to make money with a phone and then that translated into being successful at staff care which then as I started my own company. It was a lot about you know, knowing how to just sit down put in the work make the phone calls.
Alejandro Cremades: Now Let’s talk about being successful because obviously you’ve definitely made it happen. We shift key but it was not that easy to get into it because it was shift key the result of a pivot. So what happened there with the pivot I mean what was that original.
Tom Ellis: To try and be successful.
Tom Ellis: Because it’s part.
Alejandro Cremades: Idea you know you guys eventually shut it down and you know eventually you landed on shift key. But what was that sequence of events that needed to happen for shift key to see the light of the day.
Tom Ellis: Yeah, so it was definitely along a long road I made a lot of mistakes along the way learned a lot of things along the way. My first company started in 2011 I was just going to get into physician staffing myself I had a partner join who knew the nursing side. And that became what we eventually turned into shift key because I had walked into his office one day and he was trying to fill a shift and back then it was all done by a phone so it was 1 shift at a time you know it was literally will you take this 2 to 10? Will you take this 2 to 10 repeatedly dialing the phone and I said to him. If ah, if that’s our plan we’re never going to be able to scale this as a business because you’re limited on having time to recruit new nurses and and do more work so I I was basically like let’s post these shifts online see if the nurses will log in and pick them up luckily enough for us. They did. I just had used some third party software to get that done. Um and eventually I approached them about you know I’m working with nurses in particular right now. Um I don’t want to put anyone to work that may have an expired license or an expired credential that they need so kind of can I get some expiration dates built in. And they told me ah no, thank you. It wasn’t part of their business model and so then I had to try and figure out how to get software made on my own I was fortunate after ah, a couple follies I got introduced to a friend of a friend who was running a development shop out of Austin Texas and we started building then what is shift key. So.
Tom Ellis: Took us almost three years to get that built and that’s when we shut down my old company and pivoted into shift key. So there’s 1 more thing that we did along that road. It wasn’t just the credentials but previous company we used to do the the old school way also with the client side and that was.
Alejandro Cremades: My god.
Tom Ellis: You know, call them and try and get the needs out of them to put post them in in the system new one when we got shiftke was allowing the clients themselves to log in and post shifts and the nurses to log in and fill shifts and the nurses to register themselves as they’re going through that so it really created a marketplace instead of. You know a staffing company which is what we have been before.
Alejandro Cremades: Now in this case I mean 3 years to build. You know the the platform the technology I mean that’s that’s that’s insane I mean probably I’m sure that you thought many many times to give up. Because I mean 3 years is a long time. Why why? so long.
Tom Ellis: Well so again, the ah, the guy that I had building shiftkey for me was running his own personal dev shop and along that way a few times he took a few other full-time jobs and so I had to convince him to come back and eventually. He was ah working at under armor in Austin and I was like okay, it’s the time it’s time for you to just join us full time and let’s get this thing started and kicked off the ground. So once he finally agreed yeah I shut down the old company I ah. Ah, hired 6 of the people that had worked for there to move into my townhouse and everybody worked off my ping pong table to try and get shift key off the ground. Um, so it was a very pivotal moment and something that we just needed to do um because you know part of. Even the learning process for me on on getting software developed was more than just hey I need a 2 wo-sided marketplace I had to figure out a lot of that ahead of time so I spent a long long time. The first time I tried to outsource the build I got a wiref frame back that was like 10 pages or so. And ah, over several months I eventually turned that into 72 pages and that’s what I sent down to ralph to get started on version one of shiftkey because it’s it’s a little bit about figuring out. Okay well what happens if I click this and what should that do and what does it mean for the.
Tom Ellis: Worker and what does it mean for the facility.
Alejandro Cremades: Because for the people that are listening to really get it. What ended up being the business model of shift key. How do you guys make money.
Tom Ellis: Yeah, so it’s ah it’s a 2 sided marketplace right? So we have facilities that need nurses right now and we have nurses who can log in request to works shifts. So the cool thing about is it. It really does empower the nurse to do what they want right? So it’s. Work where they want when they want for how much they want and on the facility side. They get the choice too right? So they get to post the shifts they get to approve shift requests. They you know, get to fulfill their schedule in that way so most of it right now is in post acute market which is you know long-term care skilled nursing. Assisted living facilities. But at the very onset you know we knew that this had potential to do more and so that’s why we built you know shift key not nurse key so it’s really around ah specialties skills, credentials and shifts all right? So if you think of a specialty. It’s like your RN versus lvn. Skills is what are they comfortable doing the credentials that verify that they can do that work and then shift-based so we do think that there’s a lot of potential for other industries in this although we’ve tried to remain very focused on the post-acute market for right now. And we’ll eventually expand into other ah other avenues.
Alejandro Cremades: Now in this case I mean building A marketplace is very complicated I mean you have the supply the demand you need to have the liquidity in the marketplace. So that people are able to find what they’re looking for in a short period of time I Always say that there’s like the chicken and the egg right? Ah I mean you want to. Shoot the chicken and step on the egg you know because you are so frustrated in the process of building this now. How did you guys go about making sure that you had that liquidity in the marketplace and and and how did you go about finding the weakest side of the equation so that you could You could really build that up quickly.
Tom Ellis: How? ah.
Tom Ellis: Well so there’s been a nursing shortage in the us for years right? And um, we had already been posting shifts at the previous company online. So we knew that the nurses would log in and start picking them up if we built the demand side up with the facilities. So the big question when we pivoted over to shiftkey was are the facilities going to log in and post shifts and sometimes that was a bit of a challenge right? because as a a nurse or a staffing coordinator working in a building if they needed help they were used to picking up the phone and calling someone instead of logging into a system and posting needs. So was a lot of education. But luckily we had had you know some good clients who have worked with us and were willing to continue to post shifts to then build up the supply side of the nurses to be able to come in and eventually you know work.
Alejandro Cremades: Now you guys bootstrapped the operation I mean which is remarkable because typically on those marketplaces you need. Ah you know quite a bit of money to really get the networking effects going in the right direction and and get the community the marketplace to really work in the in the in the right ways. Now you guys fully bootstrap this why why did you bootstrap this you know versus maybe taking some Vc money and and having a little bit more oxygen.
Tom Ellis: Yeah, so I like I would have loved to have had some Vc money at the very beginning. But unfortunately I wasn’t too good at at raising any capital back then I didn’t even know it was possible. So when I I started. It was just an $80,000 sba loan with my first company. Um. Eventually got that to be more I thought the banks would work with me through a lot of this and it was funny like we we got. We went from the 80000 to like 300,000 and we outgrew that by putting people to work and I went back to the bank and I said hey I did it. Did my job I got all this money deployed can I have more and they said well come talk to me next year so it was one of those things. But also when we made that transition I went to a factoring company and a factoring company is one of those that will just buy your invoice from you and that they get a bit of a ah ah a bit of your revenue. But. It allowed me to scale in a way that I never had been able to before. So even though I didn’t have the vc money I wasn’t working with runways I just or or burden rates I I had the ability to still scale my business in the way that I needed to but it also relied on me needing to get the sales and have the people go to work. In order to be able to do that so we had to be profitable. You know very early on and we were you know it was it was how I made my livelihood and what we needed to do so from that sense. It was great in that you know we’re we’re not a company that’s out there that has you know 0 profitability. We we do make money here and we.
Tom Ellis: We are going to continue that as we move forward. It’s ah, kind of 1 of the core things that we do.
Alejandro Cremades: Would you say that perhaps bootstrapping also was a little bit a little bit challenging too because you’re on a very thin line and you don’t have that much room for errors because obviously an error could be fatal. So ah. So Yeah I mean I’m sure that you probably dealt with with some of those moments that you’re like oh boy, you know here we go this is we’re like about to hit the cliff.
Tom Ellis: Yes, I’ve I’ve got a few good stories about that. Probably the funniest one was even at the first company I had to walk into. Ah my sales guy’s office and say if you book 1 more shift this week. We’re out of business because we won’t be able to pay the nurses. So one of the biggest problems we have is actually getting too big too. Fast was was one of the main things and then later on you know I I found myself you know, driving down to our biggest clients office every Friday afternoon to collect a stack of checks to go put them in the bank before four o’clock so that way I could pay the nurses who had worked over the weekend. So yes, we’ve we’ve definitely walked some very fine lines to make sure we got all this done but you know that’s that’s part of being an entrepreneur and part of what you got to do in order to get the job done.
Alejandro Cremades: Um.
Alejandro Cremades: And then what about growing the team because I mean obviously now you know you guys and we’ll talk about that in just a little bit. You know you, you’ve now landed some money some capital There’s like 300 employees another 300 from another investment that you guys have done so what’s the um. How did you go about also growing the team in a way that that it was sustainable so that you wouldn’t you know, grow too fast on the on the on the payroll.
Tom Ellis: Well I mean I guess the first thing first is ah you know in the sense of some of those hard lessons that you learn along the way is we had a few debates back about you. You grow team top down or bottom up. And we learned through this process the top-down is the is the way to go all right? You go get the best leader you can and let them build their team and I think that’s important for a lot of reasons but probably the most important if you’re at a rapidly scaling growing company if you have someone that’s ah you know, kind of more of the worker that you’re hoping to make a manager that’s great. But they’re not going to scale at the speed that the business is scaling. So if you have someone who is you know good to great. They’re going to have the ability to still scale and grow their team and manage it all in the right way. Um, but that was one of those first things I learned from private equity as well. Um. You know when I when I first did the deal I actually told them ah now that I’m a real Ceo. What’s the expectation of me and they told me be a good recruiter so that really played on my strengths because I had spent you know quite a bit of years being a physician recruiter at one of my previous companies.
Alejandro Cremades: Yeah, no kidding. So let’s talk about the um capital side of things because you know in this case, you guys took money from private equity and after bootstrapping the operation. You know you had this profitable you know, ah a company.
Tom Ellis: Yeah, okay.
Alejandro Cremades: Why did you think that it was the the right thing to do at that point in time to take you know that 150,000,000
Tom Ellis: Yeah, So um, I Guess best place to start with that as a story is and when we first started doing this and we’re looking around and and nobody else is doing anything like what we were so we eventually got a couple years down the road. We started seeing some competition out there. And we knew as a team that it was probably time to try and mature a little bit as an organization to go out there so we made a plan to do that. Um, and you know.
Tom Ellis: I guess one of the other funny things to say is our our accounting process when we got the deal done was just export to Quickbooks from shiftkey and I didn’t have a single financial person in the building. So I don’t have any background in finance at all and I had largely done most of the jobs myself that shiftkey had so. As I’m going through and trying to recruit people I know what they’re going to have to be doing at scale to be able to you know succeed. But that’s really what it was it was it was time to mature the business to try and go after even more market share to be 1 of the industry leaders.
Alejandro Cremades: Now when you got the money I mean how? ah I mean obviously first and first and foremost before you been getting the money. How was that process of um, you know they they. Getting the p firm and and closing the deal. Also you know you had built something meaningful so making sure that you were you know, looking at all the different angles and making sure that things were done right? So what? What can you tell us about that.
Tom Ellis: Yeah, so it was early Twenty twenty that I met with ah an m and a company first and told them that by the end of the year we were going to try and get a deal done with private equity. They said great come back and see us in November. Um, but obviously then going through covid and the the increased demand and all the stuff that happened there. It became a ah you know, ah even faster scaling business for us because nobody else in that time could fill shifts the way we could fill shifts. Um, so I went back to them and you know I want to say it was may so not that not that much longer and said hey I think that we might need to get something working earlier and they said that they thought they actually had someone for us on a buy side. Um, so they were going to represent the buyer. Um, instead of us. Um, so it took a month or two they became uncomfortable. You know we obviously didn’t have the financial functions in-house at all. We’re doing the best we can. But so they passed so then we started our actual formal process after that so that kicked off early November we had Lois I think.
Tom Ellis: You know we probably had 10 or more um, by the time we were done with that started going through diligence after picking one and they started trying to change the deal on us a little bit so we had had multiple offers so we went back to um, ah laureent and said hey if the deal still stands. We’re in.
Alejandro Cremades: Um.
Tom Ellis: They did all their diligence and we finally got it closed on st patty’s day of 21
Alejandro Cremades: Wow. So then how how much time all in all.
Tom Ellis: Ah I mean I’ve spent a lot of time in market at this point because you know even growing faster and faster after the transition. You know there’s more and more opportunity. So you know it hasn’t slowed down at all I Guess it’s probably the best way to say that we continue to.
Alejandro Cremades: Um, yeah.
Tom Ellis: Ah, be out there and in front of investors and and working and you know getting the latest deal done was obviously a big win.
Alejandro Cremades: And we’ll talk about this now. So obviously 150000000 there was a minority. It was a minority investment now how how would you say that the dynamics changed. When the money came in you know, especially the corporate structure. You know you were used to broadly they you know doing things quickly quick books you know, like more like the boosttrappy way now when you receive external money you know probably gets a little bit more serious and professionalized know the yeah the operation. So. Were there a lot of changes in that regard.
Tom Ellis: You know there’s some ah you know, not everything moves as quickly as what it used to um, but a lot of that is just around security and making sure I I don’t think we’re so big now that we don’t still move with speed. But. You you know when you’re doing it all yourself obviously things can move a little faster now they help me be more professional and get the right people in the door so we could scale faster. Um, but 1 of the big things you know with with us is you still you got to be able to get the work done. So there’s there’s no excuse of. We’re going to do things slowly around here. We’re still moving very quickly as as quick as we can.
Alejandro Cremades: So tell us about the 300,000,000 that they got injected. You know, um a little bit later so all in all 450000000 first tranche one hundred and fifty and then the second trench of 300000000 more of a continuation vehicle sort of saying so.
Tom Ellis: Most yeah.
Tom Ellis: Both yeah.
Alejandro Cremades: Tell us about that team that deal too and how would you say that has impacted Also the the operation.
Tom Ellis: Yeah I mean so that’s not money. That’s just directly injected into shiftkey that’s more for our private equity company to be able to pay off some of their investors. Take some chips off the table and and allow the company to still grow. So. Day to day for us. It’s still just about going out and trying to accomplish the goals that we have and it’s about you know, having the vision and the mission and the values all done So that way you can go out and do those things. Um, but you know getting deals done with private equity is great. Obviously you know you get to take home some money along with that. But. It doesn’t really change how we operate the business on day to day and I I’ve been very fortunate and then our private equity company has been a true partner to me so things that I need to bounce off of them ideas that they have we we work really well in Tandem together. So Laurean Capital’s been great.
Alejandro Cremades: Got it now. Let’s let’s let’s so let’s shift gears here for for just a little bit if you were to go to sleep tonight and you wake up in a world where the vision of shift key is fully realized.
Tom Ellis: And.
Alejandro Cremades: But does that world look like.
Tom Ellis: Ah wow. Um, so I’ve been working a lot in this post-acube market right? We did our our strategic investment of onshift and so onshift does the scheduling side. Facilities. So if they want to schedule their employees. That’s what that tool is used for but we noticed going through and doing the deal with them that you know those facilities were missing a ton of shifts and so this would give us the opportunity to use our work workers to fill those positions. So that’s kind of step 1 is being able to take and give to the market this you know machine that helps them with a lot of their problems. The majority of the problems that they have on a facility basis is ah revolved around staffing and how do they staff their people. How do they get the. Ah. You know, independent workers through shift key and have it all blend into 1 unified place now expand that even further. Um, you know there’s so many industries that could benefit from this. Um, you know I I don’t have them all down. We’ve dipped our toes a little bit into dentistry just to see what that looks like there’s the therapies that are out there. And there’s lots of industries that are just even outside of healthcare altogether. Um, so again, it goes down to specialty skills credentials and shifts if if we can bring this you know and we can be the platform for licensed workers right? to have the ability to work independently choose you know where they work when they work.
Tom Ellis: For how much they work. That’s the the long-term realized vision.
Alejandro Cremades: Now here we’re talking about the future. So let’s talk about the past with that lens of reflection. So if I could be bring you back in time you know back in time to that moment that you were thinking about building something and you were able to give 1 piece of advice. That younger self what will that be and why given what you know now.
Tom Ellis: Well I mean the the most important thing is it’s all about the people right? you you can do a lot of wonderful things with a lot of wonderful people around the table with you. Um and understanding that is incredibly important and I got really lucky with some of the people that I worked with. I’ve been fortunate also with the people that I’ve recruited since getting things done a little bit more but you know there’s no perfect answer I think the thing for a true you know entrepreneur is understanding that you’re going to have to put in the work. Still um, but knowing that. There’s also great people that are out there that could help you do that. You don’t have to do it all yourself. Although sometimes it’s going to feel like that.
Alejandro Cremades: Now I guess in the in this in this journey as a founder tool I mean I Guess as a follow up to to to lessons learn and learning I guess for your development as a founder so that you were able to grow at the same pace as the company.. What would you say has been the Book. Or maybe like the resource that has impacted you but the most when it came to achieving breakthroughs as a founder.
Tom Ellis: Um, so for me a lot of that was understanding What my job was going forward right? and I got a lot of that from laureent when I had that conversation. What’s the expectation around me because if my job then is to grow this executive team and be a great recruiter.
Alejandro Cremades: M.
Tom Ellis: And get the right people sitting around the table with me that makes a lot of things go a lot smoother than otherwise they might um so there isn’t a particular book that I thought was just that changed my life I did really like tribe of Mentors If You haven’t read that one I think it’s great. It’s a lot of different perspective around the same set of questions which I thought was great because you know there isn’t one answer to anything. There’s different approaches to a lot of things and I think that’s what I liked about that book.
Alejandro Cremades: I love it now for the people that are listening Tom that will love to reach out and say hi. What is the best way for them to do so.
Tom Ellis: I yeah I mean we have lots of options for you. shiftkey.com obviously is the is the main one but there’s also you know we have Linkedin and Twitter and all all of the normal social media avenues.
Alejandro Cremades: Amazing. Well hey Tom thank you so much for being on the deal maker show. It has been an on earth to have you with us today.
Tom Ellis: Thank you Sir appreciate it.
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