Sebastian Fallert: Co-founder and CEO of Ben announcing a $27m fundraise!

0:00Hello and welcome back to the Scaling Europe show. I'm Seb Johnson. I'm joined by another Seb today. This one is the co-founder and CEO of Ben, who are just announcing their whopping$27 million Series B. Congratulations and thank you for joining me. Thank you so much. Thanks for having me. How are you doing today? Good. It's a wonderful Monday, great week ahead. But yeah, looking forward to Christmas as well. How does it feel to be done with the Series B fundraising process? big relief of course right like in startup land you're either before funding funding round or after funding round yes and yeah it's been it's been an interesting few months like lots of conversations as always you get punched in the face more often than not and now i found a great new partner and yeah ready to get back to building amazing so that new partner's mercy adventures but of course i think existing adventures atomico cherry dn capital uh quantum light they all Kim on board as well.

0:55Can you tell me a bit about Mercy Ventures? Why are you happy to be partnering with them? Yeah, UK-based fund, really great partner for the next part of the journey. We met them quite a while back. They're really interested in HR tech, which is broadly what we do. Lots of passion for our space, very knowledgeable, had looked at lots of other competitors over the years and sort of fell in love immediately, so to speak, and then spent a good amount of time with them looking really deep right and like really trying to understand what we do and like ultimately like great great process like very very uh good vibes there amazing can you touch for those who don't know uh can you touch a bit about what ben does i mean for context i actually used to work at i think a semi-competitor of yours i mean a lot of my career has been spent in hr tech before this was a deal and before deal as a uk company called collective benefits which is now called onzi so i'm very well yeah i'm super familiar with your work for a long time actually uh but for those who don't know can you just kind of touch on kind of yeah your proposition and what you've built yeah 100 so ben stands for benefits which is uh fun my great name we think we are we're six years old we literally just had our birthday at the end of november which is crazy obviously like time flies when you're having fun and what we do in a nutshell we do one thing and we do it really, really well, which is global benefits management for multinationals.

2:21So if you are a company that has complexity and benefits often are complex, but they get even more complex. If you have multinational deployments, you have a very heterogeneous workforce, you have like all those bits, like rules for this employee should get this in that country, it should be like that. That's when the benefits management platform comes in really handy. and we are the big challenge in this market and like doing this for very, very cool companies. Amazing. How do you solve that complexity for companies? Yeah, it's a great question. So the thing about benefits is like, they're very different from country to country because of local regulation, because of customs, but also they're very different from company to company because ultimately it's a very cultural thing.

3:04You know, it maps to the complexity of your org chart of how your company is structured. And what we did like many years back, We said, okay, we have to build this complexity from the ground up. So our entire product is built from the ground up to be very modular. We think of it as Legos. We have Legos all over the office. Everything is a building block. You can build any benefit anywhere in the world. And that's how we can listen to our customers and then put together what they need in order to solve their complexity. We also use payment cards. So like, that's another interesting thing, which is something we started very, very early on, where you can put money on a payment card, Visa card, MasterCard, anywhere in the world.

3:42And that often saves you to connect to local suppliers, because especially in smaller markets, employees can just go and like use the payment card and pay for products with their benefits allowance, effectively removing the need for an integration. Amazing. And so you're, I saw that you're live and you're supporting employees in 140 countries, which is? That's absolutely astounding. I mean, what are the biggest complexities or problems that you face with being covering so many regions? Well, usually it is about really understanding how the region actually works. Like what is the company looking to do in a particular region and what is common and commonplace in that particular geography?

4:23And that's where we increasingly use AI to understand the complexities of the market, the regulation. And then we build the rules. and the rules end up configuring approval flows. So for example, in some markets, if you have a health insurance, you need to submit a form as part of your health declaration. And it is an upload of a PDF. And it's that type of thing that we learn about the market increasingly through AI and then we can build it into our product. So as an employee, you can then do that in a compliant fashion and that saves the HR teams lots of admin and makes the whole thing smooth.

4:57So that's what you mean, I guess, when you call yourself AI native, is it? Yes. So we were quite young when ChatGPT got released to the world in 22. So we were just in time, I think, like to really be able to stop and think and say, OK, let's make sure we are engineered in a way that we can take full advantage of these amazing tools that we're going to get better and better and better. And like, it's not disappointed, right? Like over the last three years, it's just been phenomenal, like how these models have improved. So we use it everywhere. Like it's really quite astounding, like across the business, we use AI to transcribe calls gather requirements, really make sure like we understand what the customers want.

5:35Increasingly, our system gets auto-configured through AI. I mean, that's where the generative sort of comes in. And then obviously facing employees, facing admins, lots of little helpers are beginning to do hard work, like be that recommending benefits to employees, personalizing the experience, communication. You know, AI can draft a campaign for you. It can suggest a topic for you. Maybe it's mental health, maybe it's well-being, like based on the interaction data on your platform. So that's been very, very cool. And, you know, with all these models getting better, our product is just going to keep getting better as well, which is awesome.

6:10Amazing. And, you know, raising the money that you did from Mercy Ventures, what was the thing that sort of gave them the conviction to invest? It's always an interesting question, right? Like, and we did, we did, we did ask him, ask him that question. So fundamentally, I think they believe in the long-term opportunity in this space, as in benefits is probably one of the largest markets you can think of, because every employee is in theory, a potential end customer. It's something that companies have to offer in most markets. It's statutory and definitely want to offer because it's commonplace and they think it's a good thing to do, which we obviously agree with.

6:47And so fundamentally, like a huge market to address that really hasn't been cracked properly. Like if I asked you, you know, like, what is the canonical solution to manage benefits if you are an enterprise company, like it doesn't really exist. Like there are a bunch of existing platforms that are increasingly old, you know, 15, 20 years old. Some of them are owned by a broken business, which introduces interesting, you know, like incentives or disincentives. And that's, I think, really what gave them conviction and the opportunity. And then I think talking to my co-founder, David, and I, like we're so passionate about this space.

7:19Like we have a very clear view of how broken it is in many ways and how it could be so much better. and obviously like looking like pointing at the last few years of execution great growth fantastic team we've assembled and happy customers like i think that's really what gave them conviction amazing can you share anything about that growth that you've seen yeah so i mean um obviously like when you're small you know like growth is easier but uh especially on the back of going after enterprise customers like in the beginning we were working with like smb and mid-market customers which inherently like the great deal sizes of like 40, 50, 60K, which is commonly referred to as like SaaS death value.

7:58Like it's not where you want to be because if it's a sales lead motion, if it's quite an intense motion, which it is in our case, it's a complex product. You may, you know, be out of pocket in the end. And especially last 12 to 18 months, like we've been finally managing to push these large enterprise deployments, multinational, half a million, 1 million, 1.5 million type contracts. And that obviously like means you get to like double and call the business. amazing that's phenomenal results and i also saw that you've seen some success in the us are you like how did that happen was that like a real pull from the market or was that like a very strategic push can you talk a bit about that it's been such a big topic like at every funding round every interaction the question has been okay nice you're in the uk you're in continental europe but what about the us arguably one of the if not the largest benefits markets in the world almost like a cliche in terms of health insurance and all of that.

8:49And we got taken to the U.S. through the pull of partners. So like we use a bunch of distribution partners, which have been amazing to us. They're like consulting type business who talk to potential customers and then bring us in. And that's how we ended up talking to a handful of amazing household names like out in the U.S. And it turns out they have an acute need. And what we do out in the U.S. is a bit of a mix of supplying local products. especially when it comes to payment cards. So in the US, it's quite popular to also give money on a card that employees can spend. That's a big deal for us, but also serving US customers out of the US.

9:27So imagine you are headquartered out in New York or San Francisco, but you have tens of other markets that you might not understand as well, and you might have the US covered. It's often that motion that we will talk to a US customer and then end up managing the complexity of everything that's not the US. and that's been a really successful inroad for us. That's a bit interesting. When you talk about an inroad, is that, you know, are you going to set up shop somewhere? Are you thinking about moving over there yourself? How strong is that pull through your partners being? It's a really strong pull and like for the first time following this funding run, we will put boots on the ground and hopefully have some amazing people out there in the US still making up our mind, like where exactly, how exactly in this day and age, obviously you can cover the globe, you know, as we do now, right?

10:11Like from here, but fundamentally like being there is important especially for our larger customers amazing that's that's super exciting did you see any like i don't know unique complexities to landing in the u.s market i mean obviously the benefits themselves are very different to a lot of europe and the rest of the world and you know the heavy health care insurance um but just like you know are you foreseeing any complexities about maybe having the business in two separate locations and expanding that way yeah certainly i mean the u.s is a very complex market and we're still to a degree like scratching our head in terms of how do we go to market literally like head to head with existing players out there our hypothesis is again to go through partners so like that seems to be an amazing route that's worked so far and we have a bunch of other amazing partners lined up in terms of running a business in two different places like the us is close enough and like we're not sort of planning to properly as in hire 100 people out there like for the time being it's going to be covering the key bits around relationship management and sales, also working with our partners out there.

11:13So in some ways, it's sort of like dipping our toe in the water, but it's a big lake, right? So hopefully it's going to serve us well. Amazing. When you look forward to the expansion and, you know, I guess the next year or two, what are going to be the key markers that you've been successful? What do you be measuring yourself against? It's a great question. And I mean, every business sort of ought to ask, like, what are the North Star metrics? Like, what should we be holding ourselves accountable for? Like, obviously, being a startup, it's still all about growth. Like, it's about getting bigger in terms of revenues.

11:43But increasingly, it's also about retaining our customers, like making sure they grow with us. Like, especially like the new crop of customers, the proper enterprise household names. They might start with us in like one country, two countries. And it's all about making sure they have an amazing experience and want to expand from country to country. Because ultimately, that's the big opportunity, like working with them globally in all markets. And so the biggest marker ultimately, besides growth, is customer satisfaction. Like, do they love the product? And that's something that we want to hold ourselves accountable to across all teams.

12:20Yeah, super interesting. Is that one of your key go-to-market strategies? Is it a real land and expand opportunity that you find when you launch maybe with one enterprise client in one market, but actually if it goes well, there's scope to do five, ten markets? A hundred percent. Like if you think so historically, like as you start a SaaS business, like usually you have to start somewhere. So you will start in the SMB, the mid market. Often you're a bit capped in terms of expansion potential because it is, you know, just a local company. Like working with like some of our newest crop of customers, they are global and we are still in the land and expand motion.

12:56Like we have landed. We're now building there and like hoping to delight them. But ultimately the size of the price is to work with them globally. Absolutely. got it interesting and you know you've been on this journey for quite a long time like you said you know five or six years but still very very early what are some of the biggest learnings that you've you've learned from building in this space so we probably underestimated the complexity like i like i would say like both david and i like we're outsiders to this industry like we we approached we approached it in a positively naive way right like we were like how hard can this be launch a bunch of payment cards, you know, give it to customers.

13:34That was sort of 2019, 2020, like during COVID, right? Quite a while ago by now. And then as the company grew, like we quickly got pulled into proper benefits, right? Like customers were like, okay, this is great. You are fresh. You're new. We like your product. We like the cards. But can you do pension? Can you do insurance? Can you do life insurance and so on? And also, can you do it globally outside the UK? And especially in the beginning, we were like, yeah, sure, we can do it. and then had to go back and actually build back and like got punched in the face in terms of like promising stuff that we couldn't keep right like especially in the early years and so like the big learning is this stuff is complicated it's different in every country different it's different from company to company so building something that's highly customizable highly flexible and building it properly often quite boring right like focusing on the boring bits is probably the most important learning because it would pay off in the long run.

14:29Yeah, especially when you're dealing with compliant tax payroll related products, you know, you have to make sure that, you know, the number one thing that people really care about is like, you know, does it do the job that you require it to do? And that requires a lot of complexity when you're dealing in 140 different markets. You know, this is your second startup, I guess. Your first I saw was acquired by Secret Escapes. What have you learned from doing that, you know, doing one successful startup already that you kind of brought with you on this second journey? Yeah, I mean, I often say like, you don't make the same mistakes again, you make different mistakes, which is quite a funny one.

15:05So my previous company was, it was very different. It was a B2C company. It was in the travel industry out of Berlin, I'm German originally, which we sold to Secret Escapes, amazing company based out of the UK, which took me to London actually. And so the business models like aren't that comparable. I think the bits that are quite transferable are around the company building, right? Like at which point do you invest into HR? At which point do you formalize your values? At which point do you invest into management structures, progression? It turns out like that's the stuff that's easily overlooked.

15:35You know, like while the specifics around the go-to-market, the marketing, the product development are quite transferable and also actually not transferable, but quite unique to a particular industry. Like go-to-market and travel is very different from go-to-market for a B2B sales company. but hiring the right people making sure they love working for you and making sure they can progress year after year after year like that's where you need to build a very strong foundation so for example we chose to invest into hr very early we would i think we were 18 people and we hired like an amazing people lead who helped us doing lots of that from paid transparency to progression frameworks and it served us incredibly well i think what do you look for in a an employee a team member so fundamentally it's curiosity i think uh like we we often believe that experience is a little bit overrated it's changing now right like now we are a bit older like we're in a regulated space like we are looking for people who've done this before as well but fundamentally it's around curiosity and grit like just wanting to figure stuff out especially in an age of chat gpt ai like how much worth it's like having memorized knowledge or having done something before like where you can have a co-pilot like guiding you i mean we've seen people at ben you know this being their second job just skyrocket and like progress so incredibly fast because their mind was just working at 100 miles an hour and they were just curious to figure this out but like how do benefits work in colombia how do i do this how do i do that and like they would often be you know much much you know faster like out the gate compared to some folks who've done this before amazing and uh you You know, I guess going back to the AI question, it's kind of popped into my head that you're dealing with an incredibly complicated product, complex product that needs to be compliant, that needs to tickle the boxes.

17:28How open or receptive have clients been to like an HR native, sorry, an AI native HR platform? Have people raised concerns? Are they worried about it? And how do you deal with all that? Yeah, I mean, I would say it's changed over time already. like if I think back a year or so that was I think the time where everybody was asking for it everybody had an OKR you know bring in AI solutions procurement were really interested and increasingly like there is still a lot of readiness and obviously everybody wants it because why wouldn't you but it's becoming a more thoughtful buying process like we're now for the first time I mean just the other day like we're onboarding a large global airline and they have an AI governance council.

18:14And like, all of a sudden, we were faced with some really, really good questions around like our data governance, like, how do we run evals, right? Like, where do we host our models? And that just wouldn't have happened a year ago. So I would say like, there's huge demand for it, but the procurement and process and how people think about it has massively matured. That's really interesting. Have you noticed a difference at in different markets, either UK, Europe, and then US? Not necessarily, actually. I mean, to be fair, much of our procurement is global and we're getting similar questions in similar markets.

18:48It seems like this is one where global deployment has just been almost in lockstep. As in, it's been, I mean, everybody's blown away by how quickly this technology has come down, right? And then become commoditized in everybody's hand. It's just amazing to see. Amazing. Well, thank you so much for joining me. If I could just ask one more question. Of course. What are you most excited about building or deploying or launching in the next 18 months? It's a really good question. So what we are in the process of building is almost like a virtual account manager that is working for the benefits and reward leaders and the admins on our platform.

19:32because that's where lots of the complexity is, right? And that's where we find that they're amazing at their job, but nobody can understand everything across 10, 15, 20 markets or so. So we're investing heavily into having the knowledge inside the platform and having the ability to interrogate the platform in terms of how is it configured, in what market, what does it do? And lots of other cool stuff coming as well, but that is sort of probably the closest to sci-fi that I can think of. So I'm incredibly excited to get that into our first beta tester's hands in the next few months. Amazing. That sounds great.

20:09Well, look, congratulations again on the funding raise. It's amazing news and best of luck. Amazing. Thanks for having me, Seb.