By Cack Wilhelm and Jake Storm
The push to remote work and distributed teams has been underway for years, as companies and hiring managers realize that one can find excellent talent not just in Silicon Valley. Companies like Kellogg or Hanes employ 56% and 88%, respectively, of their workforce overseas and they aren’t an aberration.1
We have watched Covid accelerate this trend, with individuals dispersing to smaller cities and towns and closer to family, be it in the US or elsewhere. Based on analysis by early-stage venture firm Initialized Capital, we should expect this to persist. Post-pandemic the Initialized survey would suggest that Silicon Valley has fallen in founders’ eyes to #2 behind “distributed or remote” for the most desirable company headquarters.2
The trouble has often come in the complexity of actually hiring that talent and formally employing a person. This has been a blocker for some. B2B companies are often accustomed to setting up regional offices, especially for sales account executives and corresponding pre-sales engineers. And many companies have one-off situations for a key developer who moved back to his or her home country, but many fast-growing mid-market companies are still figuring out how to scale a dispersed, multinational workforce.
We believe this trend toward larger, more dispersed, multinational companies has been accelerated by COVID-19 and is here to stay. CEOs and management teams are often acutely aware of “tech debt” and the trouble it causes but less aware of the “operational debt” from doing manual, complicated workflows by hand, but we have come to appreciate that employing a multinational team is just that.
This is why we invested in Papaya Global, because we believe that providing a SaaS platform through which a company can aggregate, manage, and pay all of their international workers is highly valuable to companies. Papaya has innovated in three key ways:
- Product: Papaya takes away the complexity of personnel type (contractors vs. direct payroll vs. employer of record), provides a singular view, and synthesizes into actionable reports and analytics. Papaya can start to answer “is it cheaper to hire an engineer in Ireland or Argentina?”
- Automation: Papaya automates the communication with each of these payroll service providers and removes manual toil on the part of payroll and finance teams.
- Pricing: The industry has always charged a % of payroll and Papaya has changed that: Papaya charges a flat rate per employee / per month and takes no increasing tax for a higher-paid employee.
Applying a SaaS platform here to centralize and orchestrate is not a new concept, with companies in the IVP portfolio like Steelbrick (sold to Salesforce) having done the same, in their case to streamline and centralize the configure, price, quote process in sales.
Country-by-country payroll has always been services- and headcount-centric, and prior to Papaya had not been solved elegantly with software. At a glance, Papaya’s centralized SaaS platform and dashboard abstract the true level of detail going on under the hood; international payroll is highly detailed and nuanced and requires extensive domain knowledge.
With that in mind, the Papaya team was the clincher for us. We did not find a question that the CEO, Eynat Guez, could not answer. Eynat previously founded and grew a company focused on global mobility and relocation, and another focused on payroll outsourcing in Asia; Eynat knows the market in which she’s operating and the buyer persona to whom she is selling.
Cack Wilhelm and Jake Storm are Investors at IVP, a later-stage venture capital firm based in Menlo Park, CA.