Over the past few decades, we’ve seen significant changes in how employers think about their workforce. The historical model was to focus hiring on individuals in your geographic backyard, then provide those individuals with a paycheck, health insurance, pension, and—if they stayed with you long enough—maybe even a gold watch. Employers and employees had a tacit agreement: employers provided a stable income and job security, while employees committed to working in a traditional office environment and management structure, often for life. We’ve seen a rapid evolution of this model over the last few decades, partially catalyzed by tech companies moving towards a more egalitarian and meritocratic approach when building teams of knowledge workers. Increasingly, these companies focused on hiring the best talent and providing flexibility in everything from what their employees wear (shoes optional!) to how they work (open office designs).
One of the last bastions of the traditional work model has been having a geographically-concentrated workforce. Though remote work has become increasingly common, for most companies, it’s been the exception, rather than the rule. In many ways, remote work presents great benefits to all parties: employers get to hire the best global talent, including specialists that may not be available in their locale, and workers are able to earn a living wage without incurring the challenges of moving to and commuting in a dense geography. Even cities and governments benefit—they’re now able to attract employers based on the talent of their citizens.
In many ways, the COVID-19 epidemic has accelerated the arrival of the future. In this case, the gradual shift from concentrated to distributed work has suddenly become urgent and immediate. Unfortunately, the tools available to employers haven’t kept up. Paying a global distributed remote workforce is complex, expensive, and generally onerous. Doing so entails navigating a complex web of regional and national regulations, and the penalty for getting it wrong can be costly and time consuming. Thus, employers are left trading off between a number of flawed options. Employers can open a foreign subsidiary (expensive!) or hire a “professional employment organization,” a local firm that employs your employees for you—and typically charges 15 percent of payroll in the process (super expensive!). The cost of getting it wrong is higher than ever, as misclassifying employees can have serious consequences.
This is why we were so excited to meet the team at Deel. Alex Bouaziz and Shuo Wang have created a payroll solution for remote workers that’s built in a compliance-first way—the platform is already supporting employees in over 110 countries. Importantly, Alex and Shuo have coupled deep technical expertise from their time together at M.I.T with an exceptionally strong regulatory and compliance framework. We’ve seen that deep knowledge and attention to detail reflected in the company’s strong organic growth to date: more than 400 companies have adopted Deel’s solution since its launch at YC last year. Furthermore, Alex and Shuo are exactly the kind of founders we like to back—a combination of having deep technical backgrounds + an earned secret from their time spent as remote workers + the proven ability to attract an incredible network of investors and customers to their vision. That’s why I’m so excited to announce that we’re leading Deel’s Series A, and that I will be joining the board.
In addition to Alex and Shuo’s technological and go-to-market expertise, what really impressed us about the Deel team is their long-term product vision: ultimately, they aim to provide financial services directly to the employees on the platform. Traditionally, employers are the source of wages, benefits, insurance, and many other financial services for their employees. But those products are structurally challenging to provide to a global workforce, particularly those working as contractors. We believe that Deel is uniquely positioned to solve this problem and, in doing so, will create better access to both employment opportunities and financial services for the global workforce.
The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.