20VC: Deel CEO Alex Bouaziz on Raising $300M+ at a $17BN Valuation | Deel vs Rippling: WTF is Going On | Management Lessons from Ben Horowitz and Nik Storonsky | Deel's M&A Playbook: Lessons from 13 Acquisitions: What Works & What Doesn't

30:25And that didn't actually matter to me two or three years ago. But today, when I see the path to get to the numbers we want, which is not insane, by the way, like what I love to tell investors is like, okay, today we have, yeah, have you done any consumer deals or are you like anti-consumer no i've done consumer deals okay like what would you say to like if i was a company coming to you and telling you okay today we have 1.5 million people getting paid on deal we're going to get this to 10 million people would you think that's crazy no okay so 10 million people given that today we're over a billion in in there would mean that quite a bit more revenue right so basically you need to get to 10 billion in air to be the 100 billion exactly but you can also push that even further like again consumer investors if i was telling you that we will do payroll for 100 million people over the next few years it's not that crazy but it's quite crazy that's actually harder to believe when you actually look at tam and when you look what do you mean everyone needs payroll every single person in the world gets payrolled almost right like okay maybe not every single person or most people in the world get payrolled right yeah i mean a that's your time every single worker in the world yes and no i don't think it works for all parts of all companies one it doesn't work for all geographies two you're not working in japanese agriculture my friend i i do payroll for oil and gas for agriculture companies for airlines you're wrong we do payroll for a lot of people and then you actually look at assumptions on like market take okay let's do this in five years time what does the market map look like is there like one winner who gets 80 % or is this like a 25, 25, 25, 25?

32:01It depends how much I spend on brand awareness. No, no, no, it doesn't. I think we can be very aggressively winning most of the market. I actually think the gap between 10 to 100 million over the next five to 10 years is not that big. If the brand is known, if we build infrastructure, that really changes. Where would you most like to spend on brand marketing that you haven't yet? Do you want to do an F1 car? Well, we'll do some of those actually. So you'll see some of them coming already in the works. The thing about brand marketing is I actually don't know the subject well enough. So you're going to have to give me a little bit of time to get educated in terms of how this works properly.

32:34And we'll probably make a bunch of mistakes in the meantime, but we're going to try really hard. I do think there's value into F1, into football, into golf and things like that. For us, it's an interesting thing to navigate because I want to be able to kind of make both sides of the equation happy. So if we own B2B assets that we can bring, you know, customers at events and things like that. It's great for short, like investing into our customers and getting them to be excited about the company. But at the same time, if I can get the end user and the fans excited, I think there's like a long term value aligned brand here as well.

33:07Where would you most like to cut spend that you haven't cut spend or can't cut spend? I would love to cut spend on the pure paid marketing side. I think that'd be cool. And I think that comes from brand awareness. The bigger your brand, the less you need to pay per leads. that's very aligned in terms of where we want to go. Obviously, DIA is a very operations-heavy business because we have maybe a couple thousand people in operations around the world. And I think over time, with AI and with a lot of the infrastructure we're building, we'll be able to have the best performers to add the business and reshuffle there a little bit.

33:40Where's AI impacted DIA most? We spoke before about kind of speaking about the future. When you look forward, where do you think AI will impact DIA most function-wise? Pure operations, right? like automating through agents task one, two, three, four, five, six, that are being done manually today until they're fully automated through tech, right? Like just being able to bring like a Manus.ai type of software, really a big game-changing impact for us. Do you use Manus today? We use a competitor and them until one of them becomes good enough for our solution. But I really like the Manus guys, so I think they might be it.

34:12But they're not good enough today? No, because it's so early. Do you have AI customer service tools? Yeah, we built a lot of AI stuff. So one super interesting thing at Dill that has actually been probably the best investment we've made at the company is we built our own knowledge base. So two, three years ago, I was talking to one of my board members and telling them how, you know, we have like that very unique knowledge, right? Like global employment, global benefits, global payroll, very, very detailed kind of like mini encyclopedia at Dill with like 20 ,000 articles and like 70 ,000 different data points changing every year.

34:43I was talking to my board member. We were keeping this in like Google Doc and Notion. I was like, you know, I think this is going to be one of the biggest thing at Dill, right? Like if we can actually know our knowledge and own it, it's going to just make such a big difference for how we operate. And I was jamming at night with Sebastian, actually, from Klarna, who is like thinking about AI 24-7 and probably one of the sharpest mind in terms of like integrating AI into your business. And I was like, Sebastian, I need to do something about this. And he came to me and he said, you know, I'm actually building our own knowledge base inside of Wiki.js internally.

35:16And it's working really well. And I'm like, shit, that's actually brilliant, right? Because you can build parameters, you can build your own infrastructure, and then you can layer AI on top of your own data. So you're in full control and there is no hallucination. You actually own the data itself. And we did that like over the last two years. And it's probably one of the best investments in the world we could have ever done, because like every single time you come and talk to us, we're able to get the right data almost straight away about the very specific use case we're talking about, which is impossible for most other people to get, you know?

35:43What have you not invested in internally that with the benefit of hindsight you would like to have done? I think you learn lessons from mistakes. We underinvested in our internal tools and processes. I told you, I look up to Nick a lot. And Nick's mantra is build everything. If you own everything, you do everything well. So I don't know if you know, but Revolut builds everything. I think he's right. I think in many ways, like software is a lot of SaaS are not tailored enough to the different applications that we want to build. and owning most of the software makes a significant difference in many different places.

36:13But let me give you a very small project that we're very excited about. A very strong example. Over the last year, we built our own Jira-like product internally. So basically like ticket management at scale because being able to route the right tickets to the right person. So let's say you have a problem, you're a customer, you want to talk to payroll, you want to talk to HR, you want to talk to finance, whatever that is. Being able to write your own tickets is very critical, right? And like no software was really agile enough to be able to do this. And now what we're launching like this week internally is like the ability to just as a salesperson as a csm at whatever within the company being able to type your problem and like basically with ai automatically create the right ticket automatically routing it to the right person and cutting the time at like 90 percent in terms of resolution that we can have and like that only comes from being able to build a lot of your internal infrastructure and it's the dumbest thing to do when you're small but it's the smartest thing to do i think as you scale and the moment at which we should have started should have been a lot earlier because when we knew we were on the path of like we know where we're going we can start making longer investments and longer bets we should have like transitioned this a little bit what is the sign that you should transition to build own couple hundred percent you're on your growth plus profitability is a good sign when we started here's another example right like building your own payroll engine like i'm kicking to you about earlier is like a very bold move right it's something that you go like why would you do this right like payfit is a unicorn in friends just doing payroll in France.

37:36Gusto is a unicorn in the decacorn in the US, just doing payroll in the US, right? So building our own internal infrastructure from ground up with the ambition of rolling out the 100 plus countries is like something that most people will look at and go, you're a little crazy. And that's true. It's like a very crazy play actually. But when you're four years into the business, you're profitable, you're on path to grow really fast. You kind of have some decisions to make, right? Like how big of a company do you really want to build? can you make a lot of those long-term plays that you think are going to be significant for the value of the company and for your customers and that's where we kind of got into a place where we're like okay do we want to be an acquisition outcome with a great one two three products or do we want to actually own the rails like be as close to the metal as possible in a way that no one has ever done before i think you can only start making those plays when you are you know truly profitable and truly growing at the pace where it's okay to take a couple hundred people and build the infrastructure that's going to serve you tomorrow i think my biggest takeaway from nick actually is how he treats Revolut in some ways like an incubation unit for new product testing and he has like 26 27 new product bets where he gives people like two million bucks a year and then really measures cadence and how they progress.

38:46I'm not there yet I'm not there yet I think for me what's most important is we've kind of gone through it's an interesting phase at the company today we've gone through having two amazing products into having now like 10 and like for me the most important is making that system work amazingly well together so like I'm not really looking to launch like 10 new products next year. It's not really my thing. It's more like, how do we give the best end-to-end HR and payroll experience to our customers? And then when I get into a place where I'm like, okay, we've kind of like killed the market the same way we had for like global payroll, EOR, et cetera, then that's when we might make more new bets.

39:18How do you do sales teams there? Because when you have 10 products, you think that verticalization is great. They can really know the product, really know the problem, but then it's really hard to do the cross-sell well and sell the suite. What's the winning solution? Yeah, well, here's an interesting data point for you. I know you love data. 60 % of our revenue actually comes from cross-sell today. So cross-sell is actually a big part of what we do. Well, expansion, cross-sell and expansion as well for our customers, right? So we do well and they want to open new countries or they just hire more people and things like that.

39:46So the way we've done this is basically, and I think it's pretty similar to like a couple other big organizations like Oracle and others, but it works really well for us. We basically have what we call our core salespeople and they sell the product that we feel are fully mastered inside of the company, right? From an enablement perspective, from like an experience perspective, from like an end-to-end perspective, we feel like we're in full control. Our core AEs will quickly ramp up and quickly be the best in the market at selling this. And then we have what we call those overlay teams. So it's like our IT business.

40:15So we acquired Huffy, for example, a company you invested in, which is doing amazing for us. It's grown almost 100 % year on year. It's very specialized, right? And we're building a lot of IT products. So you have an overlay team that is brought by the core AE team when this is an interesting product for the customers. But at the same time, it's a standalone and a LEN product. So you can actually have leads that are only interested in this and they will be the ones selling it before moving it to a core AE. And we do this across like all of the different products. So immigration, global payroll, all of those different products.

40:43And like an interesting thing is over time, some of your product become mature enough and your organization and your data and your knowledge becomes mature enough that you can bring some of those products into the core team, right? That's like our holy grail is for things to be so smooth that I can bring one of those products into the core team rather than having overlayies on that front. When you think about building out the sales team, what's been the biggest lesson for you and how you've done it successfully? It is a freaking hard part to scale. One thing I always tell early stage founders that we did really well actually, and really helped us, because if you think about deals revenue split today, 50 % comes from the US, a little over 35 % comes from Europe, and the rest is that kind of rest of the world, and we're growing all parts.

41:21One move we did pretty early on is hire salespeople in different geos pretty early on just to understand the market. So instead of having like a lot of salespeople just in one country, hiring a few salespeople into other countries and kind of say like, go and figure it out was really helpful for us because it really helped us ramp up across all markets really fast and having a strong understanding of what's going to work, what's not going to work and how we should reshape our strategy. For example, we launched Japan two years into the business and like it didn't work for the first year and a half.

41:50And then eventually we changed country leads with all of the learnings from the first one and now it's doing really well and all of this kind of happens in parallel where like a lot of people are like yeah it's going to defocus you you shouldn't be doing that i'm like hire a sales guy see if he sells or if she sells and if they do amazing you can ramp up and hire more of them if they don't then it's fine you'll let them go and change them i get you but how do you think about defocusing you know i don't i don't think having one person running around when you're like 10 people 20 people trying to sell something is defocusing the only thing that can be defocusing is if they come and start telling you you know for Brazil, I need this specific thing for this country.

42:24And here you just say like, no, sell what you have. But I really don't think having salespeople in different places is defocusing. And that really helped us move really fast in shaping go to market. Listen, it clearly worked. And so this is a hilarious debate, because I know shit, and you know, everything having lived it. But like, I don't agree. If it works, they need more time and more resources. And if it doesn't, you need to do something about it. So it does objectively defocus you. Like I think of this with our media companies today, we could do new shows. We could do different types of shows.

42:55We could do politics. We could do consumer, fashion, food. Defocus. Win what we do. When it comes to sell, I don't think there is any defocus because if they sell, it works. Then if it works, you'd be the happiest person in the world to give them more resources. If it doesn't work, it's okay. You tried. You said 50 % US, 35 % Europe, 15 % out. Yeah, maybe it's 30 % Europe, but in those numbers. A kind of ballpark, yeah. Circa. when you're at 100 billion market cap 10 billion in revenue what are those numbers then it'll be more or less the same it hasn't changed from 1 million ARR to this stage so I don't think it will change that's fascinating you mentioned Hoffi one really interesting element is 13 acquisitions in six years it's a lot and all of your board members told me I had to touch on this and they're really successful which is also not all really successful but we've made the most of them let's put it that way.

43:50Hoffi is really successful. Hoffi is very successful this is why you bugged them in the first place. It can be a 10 billion dollar company I think DIT so basically what we do with acquisitions we have a quite an interesting playbook I think that's what most of the investors were mentioning you what we do is we do two types of acquisitions we either do acquisitions that are core to our market and then we in a way buy the team buy the revenue bring them in-house and kind of rip and replace their infrastructure with ours pretty fast and we're pretty good at this actually. Or we buy smaller companies that are in adjacent domains that we want to get into.

44:23And what we usually do is we don't try to patch things together. We take the founders and we rebuild the full infrastructure from ground up. And the way we do this is kind of interesting because it really worked for us. So theory of sales, most salespeople take nine months to a year to be comfortable selling a product. And in that process, you're going to have a couple early adopters, which are actually the best people in your organization. that are willing to try to sell something new because they're curious and they want to. And what happens with acquisition and the way we operate is we basically bring the product, rebuild all of the front end inside of Dill while being connected to the backend of the current company.

45:00And that happens in like two months. So we can basically like launch the product that we've just acquired in the space of two months and then give it in the hands of our sales organization so they can start learning how to sell it. In parallel, we're rebuilding the full backend of the product inside of Dill natively. And in the period of like, depending on how complex the product is, it takes us like three months to 12 months to rebuild the full backend and migrate all of the customers and all of those things in parallel. But in parallel, your sales org starts selling your product. The early adopters see DIT and they start selling it.

45:28And, you know, it doesn't work as well sometimes and it takes time to ramp up, take time to fix bugs and they hate you for having sold this. But over time, you learn so much that you can really quickly, quickly close the gap and build the best product really, really fast. so that when the organization decide itself that it's ready, which is like usually nine months later, you can actually start ramping it up and selling it much more aggressively because it's amazing and it really works. If we weren't doing this, you would basically spend 12 months integrating and then start selling and have another delta of like 12 months to be able to really reach the scale that your good market team needs to have.

46:02So that like very interesting playbook of like integrating the front end, giving it to yourselves or migrating all the customers in parallel and the backend, like really paid dividends to us And all of the acquisitions we have have grown by like hundreds, if not thousands of percent in the last years. Dude, after 13 acquisitions, you do build a real nose for deal making. And you're a deal maker. I love you for many reasons, but you're a brilliant deal maker. What have been your big lessons on how to price a company when you're buying it? How to incentivize founders with re-ups, with stock, with cash comp?

46:37What are those lessons? Yeah, I have one founding principle on this actually who came to me from my father. So my father in his past life did over 50 plus M &A. That's actually how he grew his business. One thing he taught me on deal making was the only way to get a great deal done. If both parties come out of the equation five years later saying we're happy this deal was actually happened. So structuring the deal in a way that's fair for both sides, even if you have the upper hand, making it in a way that like you look back on this and say, hey, you know what, as the founder of the other business, I'm so happy this deal went through is the most important part.

47:16So whether it's on retention package, whether it's on like how many people from the team you keep, whether it's on like how brutal you are about the integration, like a lot of the things that go there need to be aligned so that you're optimizing for both sides to be really happy about the deal. And it's not obvious because like a lot of those negotiations transparently, like we have the upper end as the company that's buying, right? So we could be assholes and be like, whatever, you know, I'll just get the best deal possible. But sometimes we'll over optimize on like the outcome of the acquisition down the line versus the best deal we could get.

47:46is now a good time to buy are you seeing a lot of companies who are not in the ai wave and not doing insane insane lovable growth where they've fallen out of favor with venture investors and you have the chance to pick them off at good prices yes of course and i think this fundraise is definitely going to be helping on that front and doing more acquisitions that was one of the reasons we also raised the capital as you know venture capital always comes in flavor of what's everybody looking at at the moment, right? So this comes in circles, right? And in cycles, right? So eventually things will shift.

48:22And I think the companies that are maybe not AI first or in that AI hype just need to kind of hold tight and make sure that they deliver for their customers and stay close to their customers and kind of rise above the noise. If they can do that, I think they'll come up on the stronger hand. If they cannot do that and they're amazing, then we're always looking to buy. How do you think about the founder packages in terms of like cash versus stock? more cash, less cash, how to do those incentive plans, right? It's situational. Sometimes we make acquisitions where we really want the founder to stay.

48:52And sometimes we actually don't think the founder is needed. So I'm going to assume you're talking about the part where we do want the founder to stay. And if we do... If you don't think, do you tell them that? Yeah, why not? Like, it's not a bad thing, right? When you get to a point where you've worked for seven, eight years in your business, there's kind of two ways to behave, right? first way of behaving is acting like you're going to be there for the next five years and then living after one year which i've seen many people do or there is just being honest like hey is this what you want to do for the rest of your life is this where you want to work like if you give if we give you the resources if we give you the infrastructure do you want to be here for a long time and again you cannot always measure those conversations and you're not maybe not always going to get the right honest answer but i think it's important to have like frank and honest conversations here and like for example going back to huffy when we acquired huffy like i was not going to run the IT, right?

49:43It's so far out of my scope in terms of truly understanding the business, the buyer, the profile, what we need to build, et cetera, that if you remove Sammy and Michael, it's going to be very tough, right? So the alignment here has to be very package, equity-oriented. It has to be very aligned that they're going to be here for a long time and they're here to really build. Some other companies, it's a bit different where, actually, if anything, I don't even need the leadership, right? I just want the customers, the infra, and a few other things that they have, right? So being very upfront around like, hey, this is what we're going to need just sets you up for a better relationship.

50:12This is what I told you before. It's about keeping people happy. I've made the mistake of keeping a founder for a year or two into a business where he wasn't needed anymore. And it's sad. They lose their greed, they lose their effects, and it just doesn't work out. So having this conversation, I think, is part of creating a deal where both sides of the equation come out happy. The beautiful thing about Venture is it's the most forgiving business in terms of your buy price because the upside is exponential. It's very different to PE where like you know what you've got like a two to three expanded upside in most cases if you spend 50 % more than you should if you buy Hoffi I'm just taking bullshit numbers here because I really can't remember but if you buy Hoffi or X company at 75 not 50 if you do it well it doesn't make a difference how price sensitive are you on buy I like to pay fair market value so revenue growth quality of the team gross margins potential of the business you know we'll pay depending on like how and in that case adding a full new line of business to deal which is very critical right not just being core product we'll pay the right price we won't overpay we won't underpay and we're known to pay the fair price so if it wasn't between a 50 and 100 i'll go at 75 probably stack rank me and you were in review what's the number one acquisition you've made best performing in terms of what infrastructure long term of the business impact or revenue it could be either it could be impact through revenue it could be impact through infrastructure payspace so payspace is a company amazing company we acquired them about a year plus ago 15 year old business three brothers and one brother from another mother that's how they like to talk about themselves in south africa and they basically had been building the payroll infrastructure we wanted to build for the last few years.

52:05We looked at every single company in the market, and I have a very aggressive corp dev team, as you may realize, and nothing was good. Most of the infrastructure, most of the technology, most of the teams were very weak. And we just stumbled upon that team in South Africa that not only understood payroll really well, but were forced to build global payroll because South Africa was such a tiny market that they had to expand to all countries in Africa in order to be able to create a real business that can really scale to their ambition. And without realizing they had built payroll infrastructure that could scale in multiple countries because they were forced into it from the get-go.

52:43And we met them and we looked at the product and we said, that is probably one of the best product we've ever seen. We're just going to bring it in-house, give them the resources, and just start building out on top of this, like all of the infrastructure we really need. one year into this we've got infrastructure in Singapore in Canada in Australia in India in Malaysia like and we're building like 10 to 15 new engines per year and that is giving such an incredible experience to our customers if I would have gone into building payroll engines and infrastructure on my own it would have taken me five to ten years to get it right that just fast-tracked everything we could do in like it literally shortened our timeline by five plus years in terms of getting it right how much did you pay for it you know over a hundred million dollars let's put it that way over a hundred it's a nice rule which is like you can say right over axe yeah a hundred million dollars yeah a bit more than that but it's like long-term strategy of the company the quality of the founders of the people of the product and how much it helps from an infrastructure perspective from a gross margin perspective from an experience perspective it's probably the Instagram to our Facebook.

53:54On the flip side, you humbly said not all have worked. You don't, I'm not expecting you to name a company. No, I won't name them. I won't name them. I'm not expecting you to name a company. Name the founder. Take me to one that didn't work. And what were the lessons for you from that that impacted how you think about the playbook? I think the ones that didn't work were mainly the ones where we said why not instead of hell yeah so you know they come to us and they are at the end of the line they have some revenue they have something that's adjacent enough for it to be kind of relevant but not in scope enough for me to truly care and you know it's there so you're like why not and i've learned a lot from this so you know we get a decent amount of acquisition in balance if it's not a hell yeah i just don't go for this anymore and that was like a big lesson for me and we what i will say we've always managed to make the best out of all of those acquisitions so if If it wasn't that, hell yeah, we still most of the time got really, really great talent out of this that shaped the company in many different ways.

54:58But now I won't go through the struggle as much. I will just hire the person if I like them. How quickly do you know if it's not great? Pretty quickly. Yeah. We're pretty aggressive on integration. I think integration, we didn't talk about this, is the most important part of doing M &A really well. And we've got a team that's really good at it. You know, combining our HR team with our core dev team and our operations team. I think we can execute really fast on acquisitions and integrations. If there is reluctance from many parts of the business to integrate, it probably means that it was a bad acquisition.

55:2613 acquisitions, six years. With the new round, you obviously reset the price. You have kind of more opportunity to buy. Reset the price to its real value. You know, we could have raised even more and at a higher price too. How much could you have raised at? 20? I could have raised that higher, but not with the people I wanted. What is the 13 acquisitions in 24 months? we're very opportunistic i want the best founders to join us if we can acquire them and they're really talented we've been doing and you know there'll be some news about this pretty soon actually consolidation in the market we're starting to see a lot of companies that raised a lot of money in our space that want to join forces and we've actually acquired one company that in the uk a very known company in the uk in our space and you'll know about it pretty soon i'd say decent chance that we'll do a bunch of them you know i wouldn't put a specific number on this but like 20 like 30 like no probably in the next 24 months between 5 to 10 most likely we've already done one so you know nine to go i can't wait to get offline then you can tell me what this is i don't know if it's one of mine is it one of mine no it's not one of yours it's already done so you would know i'm gonna be honest you did acquire another one of mine i think and i didn't realize until i saw the list of acquisitions which one i think atlantic money yeah we did Great example.

56:44I mean, they're a great team and they, you know, brought us licenses in our payment infrastructure. We're building our payroll infrastructure, also building our payment infrastructure. They made us win two years in terms of like how fast we could get our structure. You're profitable. Is that a strategic decision? Other players in the space are not? Is that like a... Well, no, it's just true. They're very nuts. Other players in the space are very nuts. I think I told you this before, but when we raised our Series A, and maybe you can ask Anish about this. we had raised$4.3 million in our seed round.

57:13We showed up to our Series A pitch meeting with Andreessen's team, having burned, I think,$400K a year and a half later. So what I'm trying to say here is, as a funding principle, we've always favored sustainable growth. What's important for me is for the business to be sustainable over growth. And then if we can grow as well, amazing. And the reason for that is if I'm a company in HR and I'm burning$300 million a year as a customer, I really would want to put my team on that platform because the uncertainties behind it is pretty big, right? And for me, what's most important is to have a long-term partner that can really scale with me.

57:52You know, one thing that's interesting in our go-to-market is as we grew, we started signing like four or five years deals, right? Or even seven years deals. Because payroll is something super stable, something you invest in, not something you change every year, right? It's not the type of software that you want to change on a yearly basis. Being able to show super strong financials where you're like, hey, we're 15, 17 % EBITDA. We're generating profit. We've been generating profit for three years. It's such a strong signal that you can build with us in the future and for the long term. So it made sense for us.

58:21if you look at yc it's a very valuable source of getting in early who gets more yc companies you're rippling i think that yc founders are more and more international and they move to the bay area so by design i think a lot of them understand the value of deals straight away and want to hire from back home but the truth is now we do everything we do us payroll we do hr we're kind of like the full-stack solution for early stage founders as well so i think our market share there is pretty high. If you had to IPO in the next 12 months, what would you most need to change about deal? 12 is a bit short.

58:54Give me a bit more time. Why is 12 short? No, seriously, like at a billion in revenue and profitable and growing the way you are, like legitimately it's not. At this stage, this is a personal choice. No, it's more. There's like SOX compliance infrastructure. There's some leadership hires we need to have in place in order to be able to go out. There's things to be done there. And my take is you want to have like four or five clean quarters with your exact team before you go public as well. Right. So there's a couple of different things at play here. What would need to change most significantly?

59:25I think it's just about being ready. Like if our infrastructure is ready, if our compliance is ready, if our leadership team is ready, which I'm just reiterating from my last answer, then, you know, we'll consider going out. That's kind of our plan. Do you want to be a public company CEO? I think that as long as I'm the best person to run this business, no matter whether it's public or private, I would like to be the one running it. Best and worst thing about working with your dad? I love working with my dad. Honestly, not a lot of negative things with working with my dad. I think the best thing is wholeheartedly trust him and he's able to drive a lot of decisions in a way that comes with experience that I don't have.

1:00:01I'd say if you want to say one negative thing is like a lot of people have a strong misconception of working with family, at least in the United States, which was like a little weird to me. But most of the people that know us very well, they understand the dynamics between the two of us and how we work. And the closer you are to us, the more you understand how valuable the relationship really is. I work with my brother. And actually, I think the trust that you have with a brother, a father is so special. The only lesson I have is there has to be a hierarchy, which is like a co-CEO-ship. No, yeah, the hierarchy is, thankfully, my dad kind of looks at the business and understands that I'm leading it and allows me to, despite sometimes his very strong opinions, allows me to make the mistakes that I want to make.

1:00:42Where has he had the strongest opinion that you've disagreed with him? Many times, actually, we disagreed all the time. He hates that story. But the biggest thing he disagreed on with me, which actually was the best decision we ever made as a company, was building up our infrastructure for our Employee of Record product. Basically, the way Employee of Record work is we enable you as a company to be able to hire anyone anywhere without having a local entity. We have local entities all around the world and we employ people on your behalf. As a more risk-averse person and, you know, an acting CFO at the time, looked at the business and told us, hey, if you actually own the infrastructure, you take on so much liability.

1:01:22Let's work with partners, which was how the old school model was. And at the beginning, I pushed back and I said, you know, partners, they work on Windows Vista. They don't have the same care for customers. They don't understand service the way I think about service, the way you think about service, which is service of today, it's not going to work. And when your CFO says like too much risk, you're like, okay, we'll try. We tried for two months and I came back and I said, open the entities, which he pushed back on until he decided not to. And today our employer of record product generates, I think over 25, 30 million dollars a month, right?

1:01:55So best decision for the business ever. Yeah, dad. I love the way you chose the one that worked out perfectly well in your favor. Yeah, yeah. The good thing is everybody is super aligned. just want the best for the business, the best for our shareholders, the best for our employees. Having people that you can look at in the eye and tell the truth, because anyway, you trust each other is a huge advantage. And by the way, like people don't realize that Shuo, my co-founder, is like my sister, you know. I have three sisters, so I wouldn't say the sisters I never had, but she's my fourth sister in many ways.

1:02:26And you know, a lot of people like to think about funding companies with people as marriage. I think about a bit more as family for the sake of my wife being happy. And, you know, I think this type of relationship is super critical. And the more trust you can establish, the better. And if it's trust that was given by nature, even better. If not, you know, you need to build that type of trust over time. Dude, I want to do a quick fire round with you. So I say a short statement, you give me your immediate thoughts. What have you changed your mind on in the last 12 months? I've really changed my mind on being much more prepared across different topics.

1:03:00So we had policy situations, litigations, like PR, right? Like, and I think a lot of those things there showed and exposed a lot of things in the company that we hadn't thought about, right? Like I don't exactly wake up thinking, we need to be really strong at policy or we need to be really strong at litigation. So we're much more prepared and we're consistently thinking about where do we need to reinforce ourselves, which is external to purely product and customer's experience, which maybe we didn't do as much before. Are you a wartime or a peacetime CEO? I think I'm in constant wartime, sadly.

1:03:33Do you kind of enjoy the fight? Is there a masochistic enjoyment? I like fighting people in product and go to market. I want you to kick my ass because you build a better product. But I'm going to give you a roundup for your money because I'm pretty decent at building good products. So I love the fight when it comes to fighting through who is going to serve our customer better. And I think there's some amazing companies in our space building that way. and all of the money that flew into this space and the quality of the people that we have just makes it a super, super interesting fight. Other fights just not my style.

1:04:05I'm not a very litigious person. How would you have liked Ripley to behave? Well, I think you should read our lawsuit in Delaware. Three years of a poor way of competing in the market. You should have a read. A lot of those things are tied to old stories and old demons and we're in the crossroads, but it's okay. You know, it's not deterring us and we're able to perform for our customers. So it's all that matters. Which founder do you think is most underrated today? I would have said Tarek a year ago from Kalshi. Did you introduce me to him like three or four years ago? Yes, he was one of the most underrated founders I ever knew.

1:04:39And then the guy just turned the heat around like fucking crazy. And he's now one of the most hyped companies in the world. So you know what? I've actually learned to love two founders that I think are some of the most underrated founders in the world. And I think their companies are amazing and everything they'll touch in the future will be just as amazing. I don't know if you know them, but the first one is Johannes from Cree. Dude, he's in Project Europe. I met him through Project Europe. Okay. He invested in it. What a dude. He's one of the most underrated founder I've met. Why do you say that with him?

1:05:12I think he's the right mix of clear thinker, first principle, and at the same time relentless. he's got that like hands on fire that someone that has built a 4 000 plus people company usually loses and on the same spirit i don't know if you know fred from voy but those two guys i've been falling in love with swedish tech recently i think a lot of people have but i've been i've been falling in love for the last few years and those are two of the people that i've met that i know are gonna either take those companies to huge numbers or build new businesses that are going to be significant. Why have you been falling in love with Swedish tech?

1:05:51I think the mentality of the founder there is really good. Good people, honest people that truly care about building great companies and great product. There are those tall giants that are sweet at the same time. They're in an ecosystem where like, it reminds me in many ways of the Israeli ecosystem where it's a very tight-knit community. If you look at the successful Swedish founders as well, right, like the Klarna's of the world or the Spotify's of the world, like Daniel, Sebastian, they kind of paved the way for those founders to be able to build great companies. And I think they've really capitalized on this in a way that no one has before.

1:06:23How do you feel when I say this? I love Fred and Johanna's too, but I think they're both in really shitty markets. They're just hard businesses to make. Well, it's always a hard... I bet on the founder and not on the business. Remember? I do, but dude, at scale, you got to fucking add in. No, for sure. But I think they're going to have very long carriers. oh i agree and if they're listening let me do your seed of your next company who do you not have on the board that you'd most like to have on the board well he's gonna love this i really really love alfred lin from sequoia he's gonna be sad about that one he passed on my seed round when i had no idea what i was doing me and shu met him in a coffee shop during or right after yc and i've just learned to know him over the years and just like I actually think he's one of the best investor in the world.

1:07:12So why? He cares about funders in a way that's very rare. And he understands the businesses a lot more deeply than a lot of board members want to. And I saw that firsthand, right? I mean, Alfred is on the board of Kalshi and Tarek is a very close friend. And I think the impact Alfred has had on the business is very significant. Same thing for DoorDash and others. I think he's the right mix of sweet, sharp and well-advised person that has seen things before. And I think he was an operator before as well. Can I ask you, why do you not have Socorro on the cap table? Ask him, not me. Sadly, they invested in every competitor you can think of.

1:07:51I have a great relationship with the team. Honestly, I think... Do you mind investors doing competitive investing? Not as much as I used to. obviously if you're investing in a competitor that i care about right then i cannot share as much as i can i used to share with you but i've grown to careless and in that specific case you know i have a great relationship with the with the sequoia team i think rollof sean julian all of those guys are amazing and like you know i i get to work with them in different ways but if you ask me like you know who would i have wanted on the cap table that i don't have today it's definitely them and it's probably definitely our friend final one i like to end on a tone of optimism what are you most excited for for the next five to ten years what is like this gives me fucking energy look the way i think about our business which a lot of people find super boring i actually think this is why you passed not because you don't think there's a lot of potential into payroll but because you think it's a boring business i don't think it's boring because the way i think about this and this is what like really drives me right when i think about payroll hr i I think about like such significant moment in the life of people.

1:08:57It's where you get your paycheck. It's where you get your pay slips, your mortgage letter, your business visa, your payments, right? It's where you submit your expenses. So it's like a place that you interact with all the time in like very unique key moments and events in your life. And it's like super disregarded, right? I've never had someone come up to me and tell me I fucking love my payroll software. It's the best thing I've ever used, right? And I'm like, when you're in such critical moments of the life cycle of people, right? New jobs, like uncertainty, you can build such a strong relationship with your end users if you actually care to invest into the relationship you have there.

1:09:33And you can create, going back to brand awareness, I think a very, very strong brand where hopefully one day people will tell you, well, I fucking love my payroll software. Like deal is the place I want to be hired on, is the place I want to be paid. And that gets me excited, right? Like building the first truly global brand that you love as an end user to get paid on. And that really shares your value and understands your moments is like what in the long term of the business gets me excited. I got to ask one more. You said critical moments in life. I've just become an uncle. And I know you're going into that direction.

1:10:07I just want to ask for my brother. What's your single biggest advice to my brother on what it takes to be a great papa? She's like six months old. I think, well, she's older than mine. So it's a bit tougher to say. My baby's three months old. You've only got one? Yeah, I've only got one. It's my first baby. So it's been a very fun year, as you can realize. Have you got help? Not yet. My parents and my wife's parents are super helpful. She's so little. I want to spend time with her. That's the perk of remote work. I'm seeing her truly grow up, which is very unique. And I very value this in a way that most people can't understand.

1:10:42You do secondary so you can have a night nanny. that's why secondary exists i maybe without jinxing it i think my daughter realized that anything was not going to happen for now so she decided to sleep through the night but uh no look we were very lucky that uh you know my wife has a nice mat leave policy and we're able to be with her and she's three months old she's like changed how i view the world in many different ways and uh she uh definitely is uh is a very life-changing moment i never realized what people like what people really meant by this, but like in the back of your head, it's like the thinking about the like small moments you're going to get to spend with her is like a big deal.

1:11:19So I think your brother probably would have tips for me more than the opposite. But the one thing I would say is like, this is where remote work actually shines, right? Like actually get to see her every day and a lot more, I think than the average dad. Dude, I so appreciate the friendship. I so appreciate you. Thank you so much for this. This has been fantastic, dude. Well, thank you so much for taking the time. And by the way, I think you're the first podcast I do in a while. So So I don't know if that means that I'm back to less working, but I don't think so. But before we leave you today, I love seeing the team come together to make this show happen.

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