Miles Clements (00:03):

Welcome to Spotlight On, I'm your host Miles Clements, and today I'm here with Marcelo Lere, The Co-Founder and President of Remote. It's nice to see you in person. By the way, in all the years that we've been working together, I think this is like the third or the fourth time we've actually met in the same room. So I'm going to start with an easy one. Can you share with us for folks who don't know, what is remote and where did the idea come from?

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Marcelo Lebre (00:25):

Sure. Remote is a global HR platform. I like to think about us as the HR backbone of companies. We help companies find, hire, manage, pay people across the world, which is a very nice way to say that. We break down barriers between talent and opportunity for companies to hire and pay people, manage people across the world, and people to just find the best job of their lives and be hired, whatever they are.

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Miles Clements (00:51):

I always think the founding story of this company is so interesting because you were living in Lisbon running engineering for Unbabel, which is a translation service. Job, your co-founder was living outside of Amsterdam and he was running product for GitLab, a DevOps software company. How on earth did the two of you actually meet? How were you introduced and then how did you go from a translation, API and a DevOps software company to spinning your life building tools for remote teams?

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Marcelo Lebre (01:20):

So my girlfriend, she said, Hey, my friend from school, Carla is back in town. She used to be in the Netherlands and she's now back in town. We should go grab a coffee. And I said, okay. And my wife said, and by the way, she has a boyfriend. And I'm like, oh no, it's one of those bring double date kind of thing. I don't feel like it. I'm not a social animal. And I went and I was sitting in a very small coffee place with this Dutch guy and they were trying to make up for topics for discussion and we realized that hey, we're both kind of on the same page. We were both geeks. And we started talking and talking and it was actually okay. It was not like, oh my God, I fell in love, but it was okay, A couple of hours that we went for a nice coffee. Then a few days later he emailed me about he had an idea he wanted to explore and if I could help him out from a tech side. Then we met up for another coffee and we started talking about we were both very passionate about people doing the things they're really, really into. If you get a job, it should be a job that of course puts food on the table but actually makes you happy.

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Miles Clements (02:46):

Right? And the idea of this time was around remote work specifically?

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Marcelo Lebre (02:50):

No, we were very much on just getting people to find the right companies and the companies to find the right people. Not necessarily it was about quality than anything else. And we started building stuff randomly. It was like this compulsive thing. Some friends go out and they play football or basketball or whatever, and we would get together or just work remotely and build stuff. We built over the years, so many different apps that we never launched. Why? Because we would have fun building them, and then when it came a time to actually publish the app and start making money out of it, we always were, the barrier was always the same. It was like, okay, he went back to the Netherlands and I was in Portugal. We have to set up an entity. This sucks. So who's going to pay the taxes? Who's going to make the money?

(03:54): Can we, if I do it in Portugal, how can I give you the money or half the money and vice versa. So fast forward, I ended up after different jobs and while building stuff on the side j ended up joining in Bevel as their VP of engineering. And I was leading a team of 50 engineers, give or take. Job was at GitLab, joined GitLab early on as well. And we kept building our stuff, but we both suffered the same problem from different ends of the spectrum. He was hiring people across the world, had troubles properly, streamlining how you employ people, how you pay people, how you create the homogeneous experience for everyone straightforward. And now on the other side, because the company was super cool, but it was so local bound, whenever I was hiring my pool of candidates and talent was super limited, either how I would spend months and months and months trying to find someone that was willing to move out of their job or convince someone to move into Lisbon sometimes with their family, take a pay cut because we couldn't pay in Lisbon what you often pay outside because otherwise you create an imbalance and injustice with your colleagues, local colleagues.

(05:24): And so it was like this massive, massive pain. And there was this one moment I remember having this conversation with Job where we were like, okay, we know enough, we've done enough. We know people that if we want to do something can help us enjoy the journey or whatever. When are we going to do something? We now have the belief because one of the reasons we never really pursued any of those apps that we built was because we never felt that anything was strong enough for us to put our careers behind it. My wife was five months pregnant, yo had a nine month old baby. And that's when it came a time where we said, look, it's never a great time, but now we both know enough about building businesses, building teams, building organizations that we can really make a dent into something. And so collectively, what is the point that we both understand?

(06:26): What is the topic we both understand so deeply that we can really make a dent? And that was it. So we met around this distributed way of working space and to be fairly transparent when we both quit, I remember quitting the day on the day and I said, I'm going to quit. I think we're close to the idea, we want to build, I'm going to quit. And so I quit and then the next day, Carla, his wife just sends me a video of him coming down the stairs, half shaky saying I quit. I just quit. I had a conversation with my boss and it was somewhere beginning December.

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Miles Clements (07:06):

And this is like 2019, 18.

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Marcelo Lebre (07:08):

December, 2018.

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Miles Clements (07:09):

2018. And so we have a lot of founders who listen to this podcast and I think they'd really benefit from your perspective on what happened from there. So this is late 2018 and you and Job share this insight around remote work and that the best companies in the world, even if they're based at a physical headquarters, are still going to want to tap into great talent globally. That's 2018. Fast forward and not too long after that covid hits and everything gets flipped upside down and the growth of the company just starts completely accelerating during a very difficult time in the world. And then a lot of growth happens for remote from there and you guys are building a real company and then the market turns and the focus for everybody goes to efficiency. And you look at your customer base and everybody's been hiring like crazy, all of a sudden people have hiring freezes and then all of a sudden workforces are contracting. And that all happened in the span of three years. I mean, I always say that Remote has lived a decade of most company building journeys in three years. So when you reflect on it all, what lessons are there to take from the experience?

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Marcelo Lebre (08:18):

You could almost call it a shit show, but you could. But it is life - for all the different things that happened, the pandemic, a lot of things happened in a very short period of time, and as a company you have to build this figurative raft that enables you to be afloat of all this change because this change will not go away. We will not see less crazy days, they will be different, but it will continue to happen. And that is very important lesson. The fact that you have to keep adjusting, be light on your feet, take your lessons fast and move doesn't mean that you keep pivoting your business or you keep making drastic decisions, but like rocket ships and high speed planes, you can't make really knee-jerk decisions otherwise you're going to deteriorate and crash into the atmosphere. You have to make small, subtle, continuous changes into your course so that you keep adjusting into the ride.

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Miles Clements (09:27):

Yeah, I really always have admired the thoughtfulness that you and Job have applied to a series of events over the last couple of years that really have been existential for the company. And you seem to have this clear decision-making framework around doing the right thing. And I think Covid and the market fluctuations have been challenging for every founder out there. But you also happen to be in the global workforce business and your core business is how people get paid. It's like a very personal sort of thing. And so I go back to Covid when everybody in the world was dealing with really, really difficult circumstances and customers were scared and didn't know what to do. And then I fast forward to the banking crisis which we were right in the middle of because we provide payroll to people and all of a sudden banks are crashing.

(10:17): People don't know what to do. And now if you recall the dates, which I know you do, it was like on a Wednesday and Thursday and people needed to hit their mid-month payroll the next Monday. And I just remember the clarity of thought amidst a lot of panic that you and Job, you've always known, well, this is the right thing to do and it may or may not impact the p&l, may or may not impact our cash balance, but we're going to be there for customers and maybe there's some lessons you could share about how you find clarity of thought amidst all that chaos.

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Marcelo Lebre (10:46):

I think it has a lot to do with our character and the way we do things. So your point is you stay calm, you stay the course and you keep going. One, that is the rational analogy analysis that we did, but also from a human standpoint, I think this is fundamentally also important to all the decisions is because I'm very rational. Sometimes I look at a spreadsheet or I look at a chart and something and I say, well, this sucks, I'm going to do this. But when you look and think on the back of that, what does this mean? Are you going to go through a room and figuratively because Remote doesn't have rooms and say, Hey, 30 people out, you're fired or we're now going to hire a hundred people temporarily just to do this, or no, forget about it. We don't want the risk.

(11:40): We're not going to support payroll - sucks to be you. We have more customers. By the way, our exposure was very small given our exposure across the world and the amount of customers we have, our exposure there was not that, but it was still a few million at the end of it, those few million could have had a massive, massive impact in those customers. And so from a human standpoint, what is the right thing to do? Put aside the company, what is the right thing to do? And that is, it's also up for debate because in that case it was like a financial scenario, but Remote is also exposed to wars and geopolitical crisis and in those cases the right thing to do is not sometimes as trivial.

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Miles Clements (12:29):

I want talk about remote work for a second because I literally think there's no better expert in the world than you on this topic. To put this into context, when I go back to the original investment, when we first got to know each other, when we invested in remote, I think the company had $4 million of ARR growing quickly. But a lot of people said, this is crazy. It's a covid phenomenon. This growth rate's not going to sustain itself. And this is two years later you've got hundreds of millions of dollars of revenue and tens of thousands of customers and more than a thousand employees and it's a real company. Something's obviously working. So can you give me the definitive argument in favor of remote work being a permanent thing?

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Marcelo Lebre (13:11):

Numbers, when you look at the analysis that has been done by researchers and economical researchers in this space, even before the pandemic hit, we already seeing quite some growth. And all of a sudden you have this another way that actually companies progressed very well and succeeded across this pandemic. And then this period, which to us it now feels like a blurred few days, but it was actually two years. And so it's huge, huge amount of time companies adapted to it, learned to deal with it and evolved with it. And so it actually proved that you can do it, but then okay, you're out of it and people are like, oh, are people going back to the office? Then we started to see a lot of people refusing to, we started to see companies realizing that they had a growth in productivity achieving more with the same amount of people.

(14:13): But right now it's actually an economical phenomenon where a lot of the people that work in this remote or distributed setting move to different countries or within the same country outside of the big cities because they can have a better house, better quality of life, cheaper and have access to a lot of different other things to some they consider more healthy On the backside of it, there is a huge amount of people that are now putting money into a local economy that did not exist up until then. So the numbers show us today, there's a huge peak in terms of people and companies allowing remote work and a year or two after it starts falling out and then it's stabilized across the last years and there's actually an indication that it could be growing, but at the very least has stabilized, right? And so we could say from the numbers, at least 30 40% of the people were companies that went into remote work did not want to go back to an office.

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Miles Clements (15:26):

It seems like remote work in some circles became this polarizing topic at some point, but people miss a lot of the subtlety and they don't totally understand what the spectrum of remote versus in-person looks like. So sure, on the one hand you have maybe a progressive set of companies that are fully remote, everybody works from home, and then you have companies that are really, really culturally committed to being physically in person at a headquarters. That's great. But in the middle you have companies that maybe they have a headquarters in San Francisco and it's like a work three out of five days from the office and two out of five from home policy and then they have some local entities across the country and then they need to hire some distributed employees across the world. And it's just a little bit of a lot of different employment needs being met. The takeaway for me has always been the traditional way of running payroll on ADP every other week doesn't really work for that kind of a workforce. Yes, and it seems like that's where the world is heading, but I don't know, you're the expert. Tell me if that's wrong.

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Marcelo Lebre (16:28):

We learned that the world went through the pandemic. You had to find a new way of working, a new way to engage with people. Money isn't free. You can't raise around just because you feel like it and because today you're going to say that you're going to use crypto or blockchain or something else for no reason whatsoever. And people are all of a sudden realizing that good CFOs are hard to find and that you need to know your way around the Excel sheet and you need to understand how to best deploy your cash. So if all of a sudden realizing, okay, I need to hire 10 people and I have a million dollars, what am I going to do with it? Am I going to hire those people out of London, out of SF, out of New York or can I actually hire the same level and skillset across the world and rather than 10 people, I can actually go to 15 and still have my war chest money because I made a significant smart investment in the way that I hire people across the world.

(17:54): And at the same time, these people are mostly well paid above local average. So you give people great work life, great work conditions, great pay, it's a win-win win. And that is another learning that came into in the back of all this change.

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Miles Clements (18:13):

I think there's, in my mind there's kind of two defining characteristics to how you and Job have built Remote. The first is that you yourself are a remote company, so you sort of live the journey of your customers on a daily basis. The other is this commitment that you share to doing things that are hard. We talk about building a full stack product or a vertically integrated product, and I think that the commitment to doing the hard things and taking a long-term view on the competitive landscape is a really unique thing that I've appreciated from the two of you. Help me with the definition, what does it mean to be vertically integrated? What does it mean to build a full stack product in this market?

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Marcelo Lebre (18:50):

Having a full stack product essentially is you not depending on others and building your own things, the things that you truly depend on, and there are fundamental to your mission. To us, when we started this company, it was very obvious that looking at around the incumbents and the companies that were offering something similar in this space still today, they depend on third parties to do the basics. So the first principles are not there, meaning of course there's one problem, which is the experience not having the platform clunky go through. It's clunky going through the whole life cycle with this sort of experience, but a lot of companies were built and big companies were built in this space like that. Now we're in a much more demanding world where knowledge is around all these spaces is much prevalent. You can go to any LLM and ask any questions about employment or payroll across the world, which is awesome.

(19:55): But at the same time, when you're offering this sort of basic important offering, because what we offer is necessary in every company in the world and what we do is fundamental, it's people's livelihoods. If we don't pay your salary on time, you may not be able to afford a food put on the table for your family. And there is a big weight on our shoulders. And when we saw how fragmented the space was, we had a firm belief in need to build something that would absolutely address this. It would go from taking the status quo of every definition of what running payroll, running employment in the different countries, take it apart and build it better. Even today, we are the only one company that fully understands what it is to operate in all these countries that we operate across the world and we're all across the world right now.

(20:52): This means that we of course we have a big team that understands in every country what you need to do, but we also understand that there's knowledge that not only you take and that you offer this to your customers because we are also often seen and as an expansion to the HR teams across the world, but that you're often requested to have a seat at the table with the local governments and sometimes a more broad geo organizations that want to know what it means to operate in this future of work. And we are always requested to have a seat at the table and we're happy to do so. Why? Because there is what we have today as this understanding of what an employment and what work relationship could look like or paying contractors or offering payroll or even just managing people on a platform and what it means, but also how it is seen in the eyes of new technologies.

(21:58): Where can you use AI in this space? What should countries do in order to foster this travel of people and of companies hiring across multiple geographies? In some countries the definition of employment is so outdated, so old that doesn't even allow you to classify properly how one company in country A cannot hire someone in country B but also have this person having a visa from country C. So all of this is insanely important and in order to operate properly and not take shortcuts, not get people in a dangerous situation of being deported, of not being paid on time or even not having the answers that all of a sudden, I'm Portuguese, I'm now in the us if I need to know right now if my wife's going to have another baby and we get another dog and also I got run over by a bus and I got a parrot and parakeet and whatnot, do I get any tax exemption? Is there any changes to it? I need to know. And I also want to know that the company that is supporting me has all this knowledge and will walk me through all this.

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Miles Clements (23:22):

Right? But go deeper on that. The point of having a place at the table in these local markets, because I remember when we were in the early days of doing our homework and building our thesis on this category, if you just peruse the websites of a bunch of the competitors, people are like, we have presence in 350 countries. And I was like, oh, well this must be an easy thing to do, but you nominally have a presence in 350 countries, but you don't have employees there. You don't own entities there. You don't really have relationships with the local officials there. So if that's what it is to sort of move fast and break things and just throw the big number on your website, how did you do it? And I always found that there was just more substance to the numbers behind remote. What was it like in the early days of doing this ditch? Digging in local geos,

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Marcelo Lebre (24:10):

Whenever you operate and you set up an entity in a country, you need time to understand how to run, how corporate taxes work, how payroll taxes work, how HR laws are applied, how HR lifecycle is applied, what are the benefits, what is the market culture? Because let me give you an example. In Portugal, there are 14 salaries in a year. In other countries there are 13. Now in Portugal you can have 12, 13 or 14. Up until a few years ago, it was normal for an employer to negotiate net salary and still is in many countries you don't negotiate. Gross growth is calculated very differently in many countries, split into different parcels, into different entities. Sometimes if you don't understand the basics of this, and of course this doesn't mean that the founders founders have to sit through and read through literally every manual, but sometimes we do and we don't like it, but we do.

(25:27): And then take the time to learn, codify it in some way that enables you to be faster and serve that onto your customers. Shortcuts do not exist and so you have to do the work. It's like a PNP problem, either there are problems for which before you do the journey, you know how this journey will look like and the solution, there are other problems. You have to go through it first to understand the solution. And this is very much the case. You have to learn, hire the right people, have the right handholding at the beginning and then detach and build it. Because if you vicariously try to build it, you're going to make a lot of mistakes and you're inevitably going to go through shortcuts. There are not going to cost you, but they will cost your employers and the people you're supporting on the ground quite a lot. And that is first principles. It is about direction. It's not about speed, it's about quality. It's about building a great product with an excellent service. Totally. And that to me, that is to each their own. I will always have respect for anyone building companies in this space because it's hard, because it's old. You have to continuously push for innovation internally and also externally with your stakeholders,

(26:48): But you also have to understand that you're working with laws and sometimes regulations that exist for hundreds of years. You can't just come in because you just got a huge amount of investment and go into one country and say, Hey, you're not going to do this.

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Miles Clements (27:07):

I think this is the perfect encapsulation of how you guys do things differently. I mean, if I just play back some of the things that you said in the last 45 minutes or so, do the right thing. When we were talking about navigating the global pandemic, navigating the bank failures and the guiding principle was do the right thing for your customers. Now you're saying there are no shortcuts. Do the work. And I think that is kind of the ethos of the company that you've built and we, you've never chosen from a marketing perspective to market our exponential growth rate and all the other great metrics that this company generates because we're helping people process payroll and pay their employees. They don't give a shit how fast we're growing. They want to know that we're doing things the right way. So because I tell you this all the time, but I really envy the way that you guys are building the company. 

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Marcelo Lebre (27:56):

Appreciate it.

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Miles Clements (27:57):

This has been awesome. It's really our pleasure. Thanks again for being with us.

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Marcelo Lebre (28:00):

Thank you.

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