Gusto buys Remote Team in bid to support more international hiring
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Techcrunch news:
Gusto buys Remote Team in bid to support more international hiring
https://techcrunch.com/2021/10/26/gusto-buys-remoteteam-com-in-bid-to-support-more-international-hiring/
Image Credits: Bryce Durbin / TechCrunch
The labor market is changing. More workers expect to keep working in a remote manner, even if many large employers are reticent to support the movement. The longer the pandemic drags on, the more it appears that work will look quite different in the future. As TechCrunch has reported, startups have already cast their lots in with a remote future, often building their early teams across time zones and geographies.
The trend is pronounced enough that we’re seeing private tech companies get acquisitive to better support it. This morning, for example, payroll and HR provider Gusto announced that it is buying Remote Team, a startup that focuses on supporting far-flung staff.
As part of its news item, Gusto also announced that it now supports paying contractors in 80 countries and quick tax registration in all 50 American states.
Remote Team, unlike Gusto, is an early-stage startup. Crunchbase has but a dusting of data regarding its history and capital raises, for example. In the view of Gusto CEO Josh Reeves, Remote Team was at around the Series A stage of startup life. Putting current fundraising trends aside, that means that the smaller firm likely had customers and a go-to-market motion that was just hitting its stride.
In contrast, Gusto has raised nearly $700 million in capital, again according to Crunchbase data, most recently adding $175 million to its accounts at a valuation of just under $9.5 billion. Gusto is, therefore, in the current parlance, essentially a decacorn.
Or, as we like to think of it at TechCrunch, a company that should go public.
Regardless of our views of the current late-stage unicorn market, Gusto could offer Remote Team something that simply raising more capital could not, namely scale. Per Remote Team CEO and founder Sahin Boydas, selling his company to Gusto made sense because it could offer more reach into the global corporate footprint than raising oodles more private funds would allow the startup on its own.
Boydas indicated that support for more countries is coming, implying that Gusto’s ability to support international hires will only grow in the coming quarters.
Terms of the transactions were not disclosed, but Gusto’s CEO did indicate that equity was a component of the transaction. Translating that a little, the deal was executed in both stock and cash. Regarding the latter element, Reeves told TechCrunch that his company’s Series E earlier this year was not put together to fund the company’s day-to-day operations; Gusto still had most of its preceding round in the bank. You raise extra capital when you can, and, we’d add, when you want to buy some smaller companies that have tech or staff that you want to tack on to your current business.
We’d not be utterly shocked if Gusto bought another company or two before it goes public. (The company has now purchased three smaller firms, counting Remote Team. The previous two were Ardius and Symmetry, for those curious.)
On that front, Gusto said that it is growing at around 50% per year, but didn’t share more than that. TechCrunch pressed Reeves on the lack of details regarding its financial performance, essentially curious why he won’t share more at this juncture given that we expect to be able to look back at this period when his company goes public. As with every CEO we put that question to, the answer was polite.
Summing: Gusto’s small and midsized business focus doesn’t preclude it from seeing demand for more international and interstate hiring, so it’s tooling its service to meet the need. It will prove interesting to see how the larger Gusto-versus-Rippling rivalry bears out. The two companies have a history of not getting along, and Rippling recently put together its own mega-round, adding $250 million to its coffers at a $6.5 billion valuation.
Looking ahead, we’re curious if Gusto and related private technology companies get into the corporate spend game, another corner of the startup work that is awash in both venture capital and market demand. You can see the synergies somewhat easily; Gusto wants to help SMBs start and run their businesses regardless of where they or their workers are based. And if Gusto is going to help make payroll work for those firms, why not add in another category of spend to the mix?
Gusto`s blog
Building and growing a great business starts with hiring the right people. But for decades, large corporations have had a distinct advantage—crossing state lines and going global to tap into new talent pools. Backed by all the money, people power, and resources they need, big businesses are able to navigate the complexities of multi-state and international labor laws and tax compliance issues. Meanwhile, startups and growing businesses that would benefit from extending their reach into the worldwide workforce have historically been left behind, boxed in by geographical limits in hiring.
Geographic borders can no longer be barriers to hiring the best talent available. And businesses of all sizes deserve accessible, affordable technology that levels the playing field, bridges the talent gap, and helps them build representative, diverse teams. That’s why we’re shipping several new features, including international contractor payments in 80 countries and simplified business registration in all 50 states + Washington DC. And we’ve acquired Remote Team, Inc. (“RemoteTeam”)—which enables growing businesses to hire remote workers internationally.
Eliminating Geographical Barriers to Hire Domestically and Internationally + Acquisition of RemoteTeam
Remote work isn’t going anywhere. In fact, it’s becoming an increasingly important part of the employee experience at many growing companies worldwide. The global pandemic has only accelerated the appetite for and adoption of distributed workforces. With faster internet speed, more widely available workplace technology, and the rise of open source collaboration and online upskilling/reskilling courses, there’s more opportunity than ever for distributed workforces to grow and work effectively beyond borders. The advisory firm Gartner now estimates that 53% of the U.S. workforce will remain hybrid or fully remote. And, according to a recent Gusto survey of 2,000 business owners, half now manage a remote or hybrid team and manage the associated challenges.
This is the era of the empowered employee. As businesses compete for talent, businesses are realizing they have to meet employees wherever they are to accelerate hiring and attract candidates. Yet, for all the geographic flexibility and freedom they offer for employees, those models have historically come with an onslaught of compliance headaches for founders and people leaders alike. Our focus at Gusto has been to bridge that gap, so that balancing employee and business needs doesn’t have to be a binary choice.
To help us augment and accelerate that work, we’re excited to bring aboard RemoteTeam. Worldwide remote work isn’t just an issue that RemoteTeam is tackling for the businesses it serves—it’s an experience they live every day. Led by Sahin Boydas, with a workforce spanning from Turkey all the way to Silicon Valley, including a hub in the heart of Austin, TX, RemoteTeam knows firsthand what it takes to juggle time zones and international contractor payments. RemoteTeam’s expertise in enabling worldwide workforces, coupled with the core functionality and added resources of Gusto’s People Platform, will accelerate our ability to support international talent strategy for the 200,000+ businesses we serve. We’re thrilled to see the innovation they’ll bring into Gusto’s product offering for years to come.
Gusto product screenshot of international contractor.
New Features to Support Remote Work
Cortex Health—which provides a platform for HIPAA-compliant follow-up calls and care to patients—went from being an employer of 10 in one state to an employer of over 500 workers in 40 states in a matter of months. And Approveme.com, an e-signature platform based in Arizona, now employs contractors across the globe, from Canada to South Africa. Businesses like these use Gusto’s people platform to break down geographical barriers to hiring talent domestically and internationally so they can continue their success and growth. And, we’re expanding our services with many new features, including:
State tax registration in all 50 states. Getting registered in a new state is a multi-step process that typically takes days, if not weeks, to wrangle—which can create hurdles to paying employees as quickly and easily as possible. Now, companies can register across state lines quickly and efficiently. We handle the paperwork with state and local agencies so entrepreneurs can start paying their employees quickly and focus on growing their businesses.
Contractor Payments in 80+ countries: Entrepreneurs and growing businesses can now process payments for all of their contractors in one platform, on every continent except for Antarctica, in just a few clicks. Startups and businesses will be able to pay contractors in 80 countries worldwide, including India, the Philippines, the United Kingdom, and Canada. And we expect to support international contractor payments in 100 countries across the globe by the end of the year.
Mobile Time Tracking and Geolocation: Providing peace-of-mind for founders means enabling trust. In a world where work is distributed, employers need to rest assured that work is getting done, especially when workers are no longer all under the same roof. And employees need the ease and convenience of logging their hours on-the-go wherever they are in the world. Through our Gusto Wallet mobile app, Gusto is now enabling time tracking and geolocation for employees who need to log their hours and employers who need to review and approve them.
Remote Hiring & Onboarding: New integrations with recruiting and applicant tracking software to save time through combined workflows are now available. Businesses can also use Gusto to manage job postings and send out customized offer letters. And Gusto has simplified the processing of sharing documents and keeping track of forms in one system of record, as well as team-building features—like personalized notes—so new hires feel included, including remote employees.
Gusto’s People Platform
Gusto exists to unlock opportunities for entrepreneurs and their employees. We’re more than a tool businesses use, we’re an advocate and advisor they trust. Our people platform provides businesses with the guidance and expertise they need to hire, pay, insure, and support their teams—from modern payroll and benefits to expert HR advice.
By expanding the reach of our offerings and acquiring like-minded software services—first with Ardius (an AI-powered R&D tax credit solution) and Symmetry (the longtime leader in payroll infrastructure technology) and now RemoteTeam—Gusto is continuing to solve unmet needs for growing businesses. We’re excited to help businesses accelerate and scale their growth by unlocking opportunities to access capital, streamline back-office processes, and engage talent.
Remote Team Blog
The story behind RemoteTeam and how a remote world became a reality.
10 years ago I moved to Silicon Valley, after many startups in Istanbul. Throughout these years and following, my startups were run with 100% remote teams. Since settling in Silicon Valley, I’ve met with over 500 investors, and raised from more than 50+ investors. For a long time, when I told investors we were a 100% remote team, most of them told me this was a bad idea. They told me many reasons why it was not a good plan: time zones, communication problems, lack of local creativity, etc. I even heard that remote work will not work. They gave me all the possible reasons why remote work was going to be my ultimate failure. Many people also told me that being a remote company was not going to bring in new investors and might, in fact, deter me from raising more capital. In addition, they told me I would be a company that nobody would want to acquire because larger companies mostly prefer local talent. These comments weren’t just from investors, but also from advisors, partners, and even other entrepreneurial friends of mine. I always felt defeated trying to explain all the benefits of remote work to my colleagues and community including investors. So I continued on knowing in my heart that this was the best approach to building a company and rarely mentioned this fact to investors unless necessary. I was content in going forward knowing my remote team approach was working and frankly, thriving.
RemoteTeam was an idea that came through the lifestyle of our founder Sahin Boydas. He was a remote entrepreneur in Silicon Valley who built and exited companies while working remotely. Sahin saw this trend of remote work, way before it became mainstream, and knew deep down it would become such an important factor for tech companies and competing large companies looking to have an edge against their competition.
Since the early days in Silicon Valley, the atmosphere has changed dramatically in relation to remote work. Investors, partners, advisors, and entrepreneurs now vehemently advocate for remote work, with many of the most successful unicorn companies embracing its advantages.
There’s so much interest and promotion of remote work, that it’s easy to see the 7 environmental factors that led to this boom in remote work culture:
- 📡 Better internet speed: high-speed internet made a remote living and work possible
- 🛠️ Tools like Slack and Zoom: platforms allowing group communication and ways to collaborate effectively and efficiently
- 🏞️ Inadequate and expensive talent in Silicon Valley
- 💵 The high cost of living in Silicon Valley:💡Thousands of resources and boot camps, which sparked the “self-taught” developer trend and made more talent available around the world: explosive self-taught programs allow anyone in any country to learn on their own given the boot camps guidance.
- 👩🏿💻 The rise of open source and rise of working together to build software: shared technology platforms allow for better collaboration and sharing of resources for engineers globally..
Remote work is now extensive. Covid expedited many trends in their infancy, and remote work happened to be one of these micro-trends that became completely necessary during Covid and beyond. We also see a more general trend of “talent is everywhere”. It is evolving faster, easier, and cheaper to become a software engineer. Silicon Valley itself cannot provide enough workers for the demand for talent. The number of disruptive startups in multiple categories is growing exponentially, further breaking down the limited resources like engineers required to succeed.
In a short period of time, RemoteTeam grew rapidly. Our team has reached 40 employees and thousands of users. Our dynamic team of 100% Turkish software developers and RemoteTeam’s CTO Adam Dilek, who empowers and this team with his many years of experience, are what underlies RemoteTeam’s rapid success.
We raised a seed round from notable investors such as Active Capital (lead), Larry Braitman, Adam Nash, Jude Gomila, CapitalX – Cindy Bi, Minal Hasan, IT-Farm, and many others. RemoteTeam became a prominent player in the remote work industry.
RemoteTeam Joins Gusto
We’re excited to share that RemoteTeam is now part of Gusto.
Gusto’s modern people platform supports more than 200,000 businesses with full-service payroll, health insurance, expert HR, time tracking, remote hiring and onboarding, and many other services. And Gusto has become a vital advisor and tool that helps startups and entrepreneurs to take care of their teams, so they can create successful businesses.
As we learned more about Gusto’s culture and Gusto’s vision, we realized that we have many shared values and strong alignment for how to help businesses to be better positioned to navigate the era of remote work. Gusto feels very much like a family and they have an incredible culture that we were thrilled to join and be a part of. Gusto and RemoteTeam coming together will accelerate Gusto’s initiatives of remote work and the future of work.
RemoteTeam is bringing fantastic talent from Turkey and many other remote locations to Gusto’s team of nearly 2000.
We are thrilled to be a part of such a fantastic team and with Gusto’s support we will be able to deliver greater impact and reach our dreams even faster.
