Alex, welcome to Giant Ideas. Thanks so much for joining us.
Well, thank you so much for having me. Excited for this.
At the time when you guys started, there were a few people trying this. COVID obviously helped, a big driver, I imagine, of everyone's growth in this sector. But you guys specifically won. You are the biggest, the best. What is it that you did differently to others that made you win?
Well, I like to think we're the biggest and the best. I think we still have a lot to do to get there. For context, Deel today serves over 45,000 companies across a multitude of HR and global payroll services. We've evolved a lot as a company. I know a lot of people like to paint us as one of the COVID winners, but the truth is we were only one year old when COVID started. We started in 2019, and COVID started in March 2020, which corresponded with us raising our Series A. I think the team did a decent job at riding that wave, not on purpose, to be honest. We were a very small company, 15 to 20 people at the time, but the fact that we were enabling a lot of companies to hire globally really played into the hands of what a lot of people thought COVID was pushing forward. Today we've evolved a lot as a business, very much focused on building infrastructure to help companies scale, and remote workers are just a part of this.
Alex, I was talking to a founder, Elliot O'Connor, who knows us both, in preparing for this. He told me to ask you about something quite specific, which he thinks was profound: when you were starting out, you started by enabling companies to hire contractors rather than employees, when everyone else was starting with employees rather than contractors. So you kind of zigged when others were zagging. Is Elliot right? Was that an important early decision?
Look, the story of Deel where we got really lucky is we followed our customers. The initial idea was very simple: a lot of companies are hiring globally, and one model is through freelance. It was very common for companies to hire people through the freelance model. The unique insight I think we had was I know how the French system works, how the Israeli system works, how the company's system works. I know that you cannot just send money to someone on TransferWise or PayPal; that doesn't work. There was definitely something there by design. You need to understand local structure to engage money in another place. We were very sure of ourselves; we knew we had to fix that problem. We launched the freelancer product as our first product, and it's still one of the key products today. Then we followed our customers. I remember getting on customer calls and them telling me, 'No, but Alex, I really want to be able to hire employees in different geographies.' I was like, 'Well, we don't do that just yet.' After hearing it once, twice, three times, you think, 'Maybe I should just build it.' The story of Deel is built through following our customer base. We went from contractors to employees where you don't have infrastructure, to employees where you do have infrastructure, to having your full employee base on our HCM, to managing immigration because some employees needed a visa. So I think we're very much the story of if you listen to your customers post your initial idea and conviction, you can build something really big.
And in the very early days when you went through the accelerator Y Combinator, did that involve pretty radical changes to what you were trying to do? Did you essentially pivot a few times early on?
Yeah, I think I'm quite academic, and so was my co-founder. I went all the way to a PhD, which I eventually dropped out of. Y Combinator in many ways feels like school a little bit. They usually take pretty young people, put them in a room, and kind of put them in that time bubble. I don't know if you've ever watched Dragon Ball Z, when you're in that time chamber where you just focus on delivering for your customers and growing. It was very interesting because they really put us in a place where, based on how they function, you have group office hours every other week, and you need to show progress, growth, that you've talked to customers and built a good business. That allowed us to be in a quote-unquote time chamber that got us to focus on the metrics that were super important, including talking to our customers. Through that intense three months, you have to be very honest with yourself: is what I'm building the right thing? Am I talking to the right people? Am I trying to convince myself that I'm building something great? That experience was super valuable because throughout this whole time as a team, we pivoted back and forth between ideas almost three times. I remember our YC partner, Aaron Harris, joking around a week before demo day saying, 'Oh guys, they pivoted on Friday,' which was eventually what the idea of Deel was. I think that time chamber is very well served for founders to get to the right market and product.
So you guys are famous for being the fastest from zero to 100 million of recurring revenue. I think you did it in two years.
We were, but you know, AI and Wiz have changed the game a little bit there.
Yeah, but still not bad, and you're now up to a billion, I believe, and more. But let's talk about not the 10 to 100 million, but the one to 10 million, that really early journey. How did you very tactically go about doing that?
The interesting part is that time chamber I talked about is something we carried on till today. Very much looking at month-on-month growth, how we're evolving, even week-on-week growth still. We kept that same mindset. After those accelerators, after you graduate and get funding, you're kind of alone. One thing we were able to tackle was carry this forward. We kept doing the same thing: every month, are we growing? Are we going forward? Are we in the right direction? Are we onboarding enough customers? Are we talking to enough customers? That really helped us carry the momentum. The combination of that and doing monthly investor updates, telling your investors where you are and what you're doing, keeping yourself accountable, is what carried us to eventually raising our Series A and the momentum we built there. It was a mix of a lot of cold calling and cold emailing, trying to bring as many customers on the platform, and just iterating really quickly. Funnily enough, with scale, that hasn't really changed; it's just a lot more people doing it at the company.
You guys are probably the best example of a startup doing speed of execution essentially. VCs and founders love talking about speed of execution. I'd love to demystify that a little bit with you, Alex, and talk in reality about what that has been like. What does speed of execution mean to you? What are the tactics you did deploy and still deploy? What's the culture you need to build to move fast? And why does speed matter so much?
It's obviously a very loaded question, and my answer is always the same. As a company gets bigger, the beauty of a small startup is everybody is in the room, so everybody is moving fast because you're holding each other accountable all the time in constant momentum. The more people you bring in, the more the company scales, the more it becomes normalized to get something done later on. Today, maybe I'll get mad at someone after this call because in their email they said, 'I'll get back to you on Thursday,' and I'm like, 'Did you want to do it Tuesday? Why don't you get back to the person at the end of the day?' That's the type of momentum you need within a company for it not to become stale. It applies to everything: how fast you launch product, iterate, try new things, hire, fire. That momentum is very important for all of us and for me as a person. I want things to always be moving, trending in the right direction with our customers. Generally, you have to be the status quo where as your company scales, everyone says you need to slow down, but we're always against that. One fascinating thing happening now is with the whole AI bubble, I think very pragmatically, this new technology has made it great again for founders to go into the details and move really fast. That part of the job I really love, and people are pushing back on me internally saying, 'Please lean in, let's change as fast as we can.' If you narrow down to speed, for me it's about how do you create constant momentum, make sure everything is always moving forward, and no one rests on their laurels. Whether you read a book like 'Empired Up' or you should always be uncomfortable. If the organization feels comfortable, it's because they're not challenging themselves to do better. That's what speed has always been about.
That speed obviously compounds, doesn't it? Over many, many decisions, many people as the company grows, that speed compounds. As the company grows, what do you look for in people? What are the characteristics of the employees you're trying to get to make sure that as you grow across thousands of people, you're still quick?
I don't think running across thousands of people is the thing you should be doing as a company. There are different scenarios. In our case, we have infrastructure we had to deploy across 150-plus countries, and building payroll engines locally is very complicated. But you should always optimize for having as many A players in very high talent density teams. If you can't because of the business setup, then you need a very high bar in hiring. One trap I've seen a lot of companies fall into is when you're looking to hire really fast, you tend to lower the bar. Your internal team just needs someone to do the job, but is that person the right person for the business? Maybe not. As long as they can do the job, they'll be inclined to hire them, which I think is the downfall of most companies. When you start having that mentality of 'I just need the help,' that's when the company's culture and talent density start to fall apart, which has huge repercussions. If I'm an A player carrying the team on my back, there's a point where I'm like, 'Screw it.'
I'm just going to go somewhere else where they evaluate players better. That has always been super important to us. We've always spent a lot of time thoroughly thinking about who we're bringing to the company and what part of the culture we want them to embody. The reverse side is we also fire quite fast. What's important for me is I want the A players to be empowered to do their best work, and a big part of that is making sure they're surrounded by other A players who want to be here. So we have a pretty strong culture of making sure the talent density stays high.
So you obviously hire brilliant people, but one way you supplemented hiring employees is you bought companies. You bought an unusually large number of companies, I think 13 companies in 6 years. Is that partly to get entrepreneurial talent into Deel alongside yourself and your co-founder? Is it as much about getting that founder DNA in leadership positions as it is getting the product they built?
It's a mix of both, and this is something quite misunderstood about Deel's strategy that has paid significant dividends. The way you go multi-product as a business is typically two paths. The first is the founder spends a lot of time thinking about the problem set, like I did for payroll or HR, and the first products we built were freelancers. There's only so much you can do. Then comes the second wave of product. The two paths are either you hire PMs from companies that have built similar products and say, 'Here's my budget, go build it within our ecosystem,' which I think is fine, but I do think there's something special behind someone deeply caring about a subject, building a company, spending years going deep and talking to thousands of customers. That's the best way to build companies. The other way is acquiring companies with amazing founders who have built a great business, piggybacking on all their learnings and years of spending time with customers, and rebuilding that inside the application. Then you give them the resources and say, 'We love your product.' Typically you do this with a company that's had Series A or maybe Series B at max, and you give them the infrastructure to rebuild their full suite of product inside Deel with the knowledge and experience they have. When you're a founder building towards product-market fit, you tend to build so many features. But if you were telling me at Deel, I could tell you the features that bring zero value. The higher impact is you get them to build what actually matters and drop the things that didn't drive sales or customer experience. That was super valuable. There's another reason we do M&A, which is more revenue-driven. We are the largest company in our market, and payroll is a very sticky product. You don't change payroll provider unless you have a very bad reason. So being able to buy companies in our space, buy amazing logos, move them into our infrastructure, show them how much better we are, and show them all the other products we can consolidate for them is very helpful. M&A is probably one of the most underappreciated strategies to grow a business, and it's really helped us develop a lot faster than most companies.
