Inside Deel’s $1.4B+ ARR Growth Machine

Scaling to 1.4 billion in ARR.

Oh no.

We grew from something like 800 to 1.4 plus, right, in the last year. I think at that scale Deel has been profitable for the last 3 years, which is not something most startups growing at this pace can say. The main idea behind Deel was there's amazing people all around the world, right? We wanted to basically build the infrastructure that helps amazing companies like yours or larger ones be able to hire the best talent in the world. Payroll, HR, kind of like the core part of your business. What started as a small product to help some of our friends be hired by such companies kind of became today the platform that's used by more than 40,000 customers to scale globally. We've always been super cash efficient. Started the company in 2019. We raised about $4 million out of Y Combinator. I think we're kind of Silicon Valley outsiders. We got to series A. We had actually only spent like 300K, about 350K.

Having Mickey and Kuatu and Andre doubling down I think is priceless.

I can comment on that, but I still think the business personally is undervalued, right? But it's fine because I think the way I look at it is we don't need the money per se, right? We've been profitable for a long time. We've got quite the war chest, right? We built a pretty unique playbook. It's super unique and I think most companies should look at it. The TL;DR is because when we do acquisition of some of the smaller companies for product, we basically build a way to fully integrate their product and their customer base in like the span of 12 months. And one super interesting thing that came from Shu and I think that's what you want from those co-founders is how excited she was about us working together even more initially than like the idea we were going to work on. We kind of like ideated together, spent a lot of time together and like having someone that's just, I believe, you know, you should ask her, but even 6 years in has so much trust into each other and just excited to be building together is just unparalleled.

Thank you for having me.

It's the part of the law, right?

We're trying.

Oh yes, we miss you.

Undisclosed location. That is London, correct?

Yeah. She's my better half. That's what I would say.

Very fashionable, very persistent. You know, she's made Deel possible in many ways. I think I, you know, every time I meet founders, I think about all of the experience I've had with Shu and I feel for them because I think it's such a big part of the journey and I wouldn't, you know, I wouldn't change that for anything.

Yes. Well, you have the numbers we haven't disclosed yet, but that's good.

It's okay.

Correct. And I think that was one of the best things we've ever done. Like I think scaling revenue is so hard. Obviously, everybody at a company is a salesperson. Everyone needs to be part of the go-to-market motion. I think that's what makes a company great, right? From your ICs and customer support all the way to your leadership. But I think having a founder taking care of sales makes them care a lot more about the details that I would say a professional hire may not care about as much and I think it's made a significant difference for the business.

So as you said we started the business in 2019. And the main idea behind Deel was today we're in London, tomorrow you can be in Israel, in Dubai, in Nigeria, wherever. There's amazing people all around the world, right? We wanted to basically build the infrastructure that helps amazing companies like yours or larger ones be able to hire the best talent in the world and we really saw a huge gap in that market at the time. Now, fast forward seven years, almost seven years. It's actually Deel's birthday very soon. We're going to do something fun. You know, what we've done is we've really evolved, right? Like, we've kind of built what we think of as the platform and ecosystem for companies to be able to grow global, right? Payroll, HR, kind of like the core part of your business. In today's world, companies have started to go global much more. And there just wasn't any tools there. And what started as a small product to help some of our friends be hired by such companies kind of became today the platform that's used by more than 40,000 customers to scale globally.

You know we go from small companies that are coming out of Y Combinator or Techstars and others all the way to large businesses like a Coinbase or Shopify, a Cloudflare or even large banks. And one of the funny parts is we've kind of scaled out of tech which is very fun for me, right? So you go from like airlines, you know, potentially oil and gas and like it's such a beautiful world out there and it's really been amazing to see that as we've scaled from like the small niche of what we know, right, me and Shu are, you know, engineers or like MIT grads into being able to cover so many different fields. It's really fun. You say Shu is very fashionable. You know, when we're able to support brands like Hermes or, right, it's just amazing to see the use cases being so different.

Yeah. So, the story of Deel when it comes to fundraising is actually a fun one because I think a lot of founders appreciate it more than others. We've always been super cash efficient, right? I love telling that story when we came to our series A. So, we started the company in 2019. We raised about $4 million out of Y Combinator. Which, you know, today as a seed round would probably be very small for a lot of those AI companies. So we raised that seed round and we realized look it might, you know, we're kind of, I think we're kind of Silicon Valley outsiders, right? We always were and that can be an advantage or a disadvantage and at the time we said maybe this is the last time we ever raise money. So that mindset really like taught us how to build sustainably, right? Like having growth as a mindset but still doing it the best way possible. And when we got to our series A, we had actually only spent like 300K or 350K. And we kind of kept that culture because what we saw is it really changed the dynamics of fundraising, which is something that like most founders don't realize in my opinion and it's really helped me fundraise. When you're fundraising, you're basically selling a part of your business and sometimes you need it, but in my opinion, you should always be in a position where you don't actually need it. And running your business in a way so that you don't really change the trajectory. And the reason I'm getting there is because we actually had not raised any capital for a very long time. I think since 2022 until we raised some more money this year and there's a lot of drivers to why we raised that money, right? One is because we had grown so much as a company that I think you know the equity was worth more. So we've been pretty active when it comes to acquisitions specifically in a market that I'm sure we'll talk about that I think is consolidating a lot. But also, you know, the dynamics of being able to work with people like the Ribbit teams, right? Like Mickey, who I think is one of the most exceptional investors. Being able to bring him on to the cap table was something we're very excited about.

Until all of the others started doing the same.

Um yeah it was really nice to upgrade that graph right the first time around and then my friends at Wiz decided to do better and then every single AI company is like crushing that graph at the time. Look for us it was never about that right I think we're a small company at the time and you know we're very focused on growth I think you know the early stage things one of the things we learned pretty well through you know going through Y Combinator is being very focused on like our customers and growth and we kind of kept that mindset out of YC which was I think a precursor to helping us build and it's still something we do today very very focused on like how much are we growing month over month how can we do better and things like that. And I'd say that generally applying that over the first like 18 months and 20 months I think that's when we hit 100 million ARR really really helped us and you know I think if you look at how we've been accelerating right while being profitable I mean now you know our numbers so you know you can kind of say we grew from around something like 800 to 1.4 plus right in the last year. I think at that scale you can definitely see that this stayed as like a core part of the culture of the company in terms of like how we perceive growth. But the one thing that's important is what I was telling you before like Deel has been profitable for the last three years which is not something most startups growing at this pace can say.

I think there's a like again having Mickey and Kuatu and Andre doubling down I think is priceless.

Yeah. So actually it was very interesting. So, we weren't planning on raising money. And what happened is, the Ribbit team, and I hope they don't mind me sharing that, they actually wanted to invest for a long time. And the problem with my fundraising style, and I've learned a lot actually from that, is that I was always the type of I don't like doing road shows. I don't like meeting a lot of investors and trying to get a term sheet. It just never really worked for me. Well, well, I haven't really tried. It just doesn't fit my personality too much. So what I've always tried to do is build relationship with a few investors and then kind of let them proactively look at the business and then if they ever thought that they wanted to own a piece of it, potentially offer us cash for a new valuation. And that's what I've always done, right? If you look at our last funding rounds, every single of our rounds came from insiders because they were super close to the data, right? I didn't spend too much time with external investors because I was very very focused on the business. So the people that were closest to the business, right, the Kuatus of the world, I think saw a lot of value in the company and kept whether it was buying secondaries or being involved in the round, right? And you can see that in the last round where Ribbit did the round but Andreessen and Tiger were the two big funds that kind of collided themselves. So what they actually had done was spent four months due diligence in the business. So they wanted to invest before they never really had we never really had the opportunity. Eventually I think Nick and Mickey were like, 'Okay, let's actually have a real look at this.' And the whole goal of that due diligence was for them to buy some secondaries in the business. And I think eventually they liked the company enough that when they were starting to have some movement about potentially raising a round, it kind of came together where they say, 'Hey, you know what? We'd be happy to lead it.' And I think you know after having not raised money for a long time it was a good way of giving a stamp to the business and having a completely external investor come and invest into the business is also a great valuation. It's a great validation of where you are as a company too.

I can comment on that. But no, yeah. Yeah. I think look, I think the business I still think the business personally is undervalued, right? But it's fine because I think that the way I look at it is we don't need the money per se, right? We've been profitable for a long time. We've got quite the war chest, right, to be able to build a lot of different things. You know, I think as we're looking at potentially being a public company, I think it's important to be careful when you raise money and to make sure that especially when you look at the public markets today, right, that you're pricing the company at the right price. So, payroll is not seen as a sexy industry,

No, apparently not.

Go. Yeah.

Maybe.

Yeah, I think there's a lot to it. Like first of all, when you talk about payroll, HR, even IT, right? Like what we've seen is generally it's an underserved market, right? I think our products are good. I think they're not even where I want them to take, right? I think the experience we can give to our customers is going to be really amazing and the tools that are being used today are like accepted and they're not great. Right? I've never seen someone say I love my HR product or I love my payroll product. And I think we have a long way to get there, but this is really our ambition, right? Kind of changing this market is one of the reasons we've been pretty successful. It's underserved for sure, but I think it's like one of the most important parts of your company, right? Like you're actually building you actually want to give the best experience to your employees because if you don't have employees, if you're not giving them a good experience, then what do you have left in your business, right? So I think it was always obvious to us that serving companies better in this market was going to be big. Now how big is always a question right as you're thinking about total addressable market how big can you build a company and I think we've actually done a pretty good job at reinventing ourselves right like when we looked at the market the first thing that really differentiated us is we thought every single payroll and HR system which is totally normal first thinks mono-country right like you're an entrepreneur you're launching your you need payroll for your country, right? You need HR for your country, it makes sense. And I think one of our unique takes in the markets was, well, what if you were thinking about going global, right? Whether you're a smaller or bigger company because of how international we are as people, right? I'm a French guy that moved between Israel, London, Shu was born in China, moved around as well. So for us, the world was global by default, right? So serving for global makes a lot of sense for us. That I think that unique insight really made us build for something that was very different and then eventually as we built those things one of the interesting things about Deel is we really followed our customers. I won't bore you too much with the details but we launched the first product and then we saw that our customers needed a second one because that one wasn't just making their needs at the time so we built a second one, the third one and now I think we have over 12 different products and that's where the growth really comes from right obviously our main products which is the one where you can employ people with our infrastructure has been growing really nicely. But you can see like all of our different products kind of stacking up into something that we think is going to be pretty beautiful.

I think we've got a very good playbook. So it depends on the product that you're building, right? Like different products have different complexity in terms of how you're working. I think if you were to like simplify it a lot, like there's like apart from being the HR system for your company at a global level, the two things we're really known for is you want to hire John. John lives in Poland, but you don't have an entity in Poland because you're a small company or you just never plan to open for one person an entity in Poland. Well, we have all of the entities around the world, HR, legal, payroll, finance in every single country so that we can employ this person on your behalf and give them a great experience without having you setting up structure there. And the second one that most people look up to us for is at some point it makes sense for you to open in Poland. But when you do, we help you open the company and we actually run payroll for you in that country. And before Deel, right, the way people were structured is that they had like one provider for Poland, one for France, one for Germany, one for the US. Like very very very messed up infrastructure, right? So giving them the ability to have like one vendor that understands, invests, right? Like tell me how hard is it? Well, we're still not where I want us to be, right? And I think it's going to take us years to get even better. But having one vendor that cares enough to go and do the work is what's very unique about the market.

So like one small insight like Deel is a fully remote company. We have 7,000 people across 120 countries.

Fully remote.

It's a huge advantage. This is what most people...

Yeah. You don't feel you're a huge company when you're fully remote cuz you don't have anybody.

I feel like we're still a very small startup. Like for example, we have our SKO in a couple weeks. I remember being there last year and like suddenly you have like a thousand people behind you and you're speaking like you guys all you're all at Deel, right? And then like that's just a thousand people. There's 7,000 of them at the company. The thing is it's so core to our business because the reason why you know we have so many people in 120 countries is exactly as you said like going into every country is so complicated and what you want is the real local expertise and if you don't have those people then you're just going to joke yourself. Like as much as I respect some companies in the market like if you're like fully in the US what business do you have into understanding how to run payroll in like Brazil right? So I think there's no way to scale that business and have the knowledge that you need to have if you're not willing to build a company the way we have.

You know having Deel on Deel has been one of the biggest learnings for us. You know, when I first built my first companies, I built, don't ask me why, but I built like a video product, consumer video product, like Musical.ly at the time, TikTok style. And like one year later, I realized I actually don't like making videos. So I was like I just I had this realization like building a product you don't use is a very bad idea. So one thing we do at Deel is we call it Deel on Deel, right? Like we really do it. Everyone on Deel is getting paid on Deel. Every new product we build, my HR hates me for because they have to be the first users on it. So it's something I would recommend to every founder. It's like just brute force it and use your own product. If not, it never works.

But yes, it is the best product for ourselves.

I actually wrote a cool article about it a couple days ago. I actually wrote you saw it. It's the first time I write an article on X and it didn't go too bad.

It went it was fine. Yeah. I mean tons like I think I wouldn't think we do it perfectly at all, but we've been very thoughtful about how we build a business. And I mean I do suggest you go and read it because I did spend some time writing it. But I'd say like I said in the article, most companies are remote. As soon as you start being on two floors, three floors, you don't know the people in your company. Whether they're sitting in the third floor or they're at home, it doesn't really make a difference to you, right? So I think the most important part if you were to run a fully remote company is just being super mindful on like how you treat people, how you onboard them, how do you take care of them. And honestly I think Deel would not be what it is today if we didn't have the access to talent and the infrastructure that we've built. And I recommend most companies to really rethink their strategy when it comes to being all in office. When you're a small company, there's nothing better than being all next to each other. When you're a larger company, I would really challenge that aspect of it.

Yes.

Sure.

Yeah. I mean, for us, the way we thought about this was we're building a product for the world, right? We want to help companies around the world be able to hire globally and set up infrastructure globally. What people don't understand is that global hiring does not just mean a US company hiring in Germany, right? Sometimes it means a Peruvian company hiring in Chile, a Nigerian company hiring in Kenya. And that really what makes this very interesting, right? It's like you're really building infrastructure for the world and it should work for every company. So, we were very intentional about this. We hired people from across the globe and to go across the globe and even sell to local companies from the first year of the business. You know, I've my country manager in Brazil that has been with me for 5 years because we've been selling to Brazilian companies since we've started. I actually think it's a cheat code if you think you have product market fit to start going global very early and I actually start seeing it more and more. I don't know if you've seen like some of the AI companies like a Harvey for example that's going into Europe right now or obviously OpenAI, Anthropic they're hiring all over Europe or Latin America and APAC. I think if you have a sense that you have something great going global early is a big differentiator and that actually even reflects in our revenue numbers right like 50% of our revenues come from American companies but the other 50% of our revenues come from European companies, Latin American companies, APAC based companies and I think that's a superpower.

There's a ton, right? Like obviously the one that's worrying a lot of people is both the fact that the number of junior hires, right? Like new grads hire is kind of declining. And actually I'm pretty opinionated about it. I actually think it will change and some of the key operational roles right with all of the different tools that are being built up like the Clauses of the world and others and we've actually built and a lot of companies do that internally a lot of tools to help our team and give them superpowers. There's an obvious path towards a lot of those roles may not exist, right? Like if you're pressing buttons inside of a website as your main job, you know, those jobs may not be there anymore. That said, like I have very strong opinions in terms of like where they're going to be going. I'll take you to the new grad one because I think it's super interesting, right? Like the new grad one where people are like, well, you know, if Claude can do your work for you, right? Like you don't need a new grad like they need to be trained. You only want senior people. I actually think most of those people, most of the new grads, they're going to be so good at using those AI tools, they're going to put all the people that are in the older range, out of business, and be able to do 10x more just by having lived through like this revolution of those tools really existing. And you know when I see my little sister and like how she's using you know an OpenAI into her homeworks or stuff like that I'm like yeah the way they are so AI native in terms of how they see those tools and how they are such a big part of how they operate is just going to be such a disruptor right a lot of companies today I talk to they work towards how do I make my team adopt those AI products right like they're reluctant to adopting them and things like that I think that new generation is going to be so AI native that there's just going to be some of the best hires.

Yeah.

Look, the way I look at it is with every single industrial revolutions comes new jobs, right? So, I think...

For us, it's been a bit easier, right? Because sadly opening an entity in France or Germany is going to be a bit tough for Claude to do, right? So I think actually regulatory moat is something that's very strong right like in different countries we have different licenses that are very hard to acquire. We've got entities everywhere. We've got payroll engines and all of the rules right up everywhere. I think that's like a key part of the defensibility for sure of Deel. And the second part is actually completely honestly like we've got pretty strong tailwinds in terms of how we operate, right? Like today we're a 7,000 people company at like 1.4 billion in run rate. Like in my mind we could double revenue without increasing headcount, right? Because of all of the superpowers that we can give our team. So in all honesty, I feel like we've got a very strong AI tailwind type of business and we'll be very excited to see where those tools are going to bring us.

I mean, you know, blue collar is something that's growing really fast for us, for sure. But even the white collar workers, like I'm pretty confident that when it comes to like will all the white collar workers be out of jobs. I don't think so. I think you're very far away from this. You know, Dario might think differently, but I think you're very far away from it.

Oh,