Remote: Building Borderless Business

While a bit late to the press, we are excited to announce our continued support of Remote. 9Yards first invested in Remote’s $150M Series B led by Accel and with support from existing investors Index, General Catalyst and Sequoia. 9Yards also doubled down in Remote’s $300M Series C led by Softbank and alongside every existing investor. Over the last couple years, we have been exceptionally proud investors in Remote and believe deeply that the team is building a generational company.

Even though Covid-19 accelerated the physical dispersion of workforces, the push to remote work and the evolution to distributed teams was well underway before the pandemic and will continue well after it. At 9Yards, we believe that this theme of “remote work” is actually much broader and more powerful than some give credit. We believe that we are in the early-innings of a world where there is seamless, efficient, borderless business — and we are actively investing across the infrastructure to enable that. We believe that this shift is fueled by several factors:

• Globalization: Companies are expanding into new geographies quicker than before. Even in our own portfolio, over 50% of our teams are already selling into multiple countries, an activity that used to be reserved for public companies.
• Generational Behavior: A younger workforce (especially at Gen-Z comes online) is demanding more flexible work environments. We are seeing the shift away from concepts like the 5-day work week and the office requirement to help boost employee retention.
• Labor Markets: In countries like the United States, labor markets are among the tightest we have seen. A robust fundraising environment has fueled a race for best talent, especially in the engineering world. This has pushed companies to recruit outside of traditional talent pools.
• Technical Debt: A shift in the broader macro environments has refocused corporate attention on the bottom-line. Many tech companies who have spent generously on headcount and R&D in the past are now starting to think about where they can get leverage. Much of this can be found by pushing costs to cheaper geos.

While a very polarizing topic amongst companies and twitter VCs, global teams are not going anywhere and the pressures from these trends will continue to intensify — certainly as long as the cost-benefit of hiring overseas continues. Unfortunately, a big hurdle for building a distributed workforce is finding a scalable, legal, and cost-effective way to employ and pay employees. Each country has different labor laws, languages, currencies, benefits, and tax requirements. This creates enormous complexities for HR departments of any size.

Historically, these companies have used a fragmented set of disconnected vendors to hire & pay a global workforce. For example, many companies would use PayPal and Wise to pay contractors, many of which were illegally categorized as such. Alternatively, companies could use Professional Employment Organizations (“PEOs”) to hire individuals via an Employer of Record (“EOR”). However, these services are notoriously expensive (charging a percentage of salary), cumbersome and offline. Often times, companies are forced to set up a legal entity in each country they wish to hire in, which is frequently expensive, time consuming, and unscalable.

Enter Remote. Remote is a global, cloud based HRIS & payroll company. Remote offers SaaS HR management, payroll, benefits, taxes, and compliance solutions in 75+ countries through a wholly owned network of local legal entities and banking infrastructure. This verticalized infrastructure allows Remote to offer their customers a seamless, flexible, and robust platform at costs that are lower than other solutions and in a format that is more compliant. In the same way that Stripe allowed any companies to integrate payments, Remote allows any company to employ a global workforce.

The Remote Advantage

Remote sits at the intersection of four massive and growing market opportunities — the $27B Human Capital Management software market (15% CAGR), the $34B Remote Work Transformation market (24% CAGR) and the $65B Payroll Services market (11% CAGR). The payroll industry is one of the most exciting payment opportunity today — it generates $15T of volume annually, yet 40% of the market is controlled by regional services firms and 75% belong to companies founded before 1971. The way we work is changing but the way we pay workers has not.

This robust market opportunity has fueled many new entrants to the space. The traditional global payroll model consists of a thin aggregation layer that sits on top of exiting regional payroll providers. While this model allows for quick geographic coverage, it ultimately leads to several issues that worsen with time & scale:

• Pricing: Fees & commissions are paid to the aggregated third-party payroll providers
• Timing: Onboarding & changes can take weeks and are subject to third-party service outages
• Security: IP is technically controlled by third-party payroll providers, not the global EOR
• Product Velocity: New products need to be individually contracted with each 3rd party provider

Remote decided to do things differently and build the only full-stack player. Remote fully-owns its legal entities and banking infrastructure in 75 countries. While this immediately combats pricing, timing and security issues with third-party providers, over the long-term, it enables Remote to quickly launch new products and features like flexible benefits, equity management, IT provisioning, global wallets and a fully-automated self-serve offering. As we have seen time and time again, the ditch digging of building your own infrastructure is time intensive and difficult, but leads to an enduring competitive advantage that widens with time and scale.

Profit + Purpose

Remote was founded in 2019 by Job van der Voort and Marcelo Libre and, in less than three years, the company has grown to serve thousands of companies and employ tens of thousands of individuals. Job and Marcelo believe that the most innovative companies should have access to the most qualified workers, anywhere — borders, tooling and HR admin need not get in the way.

For this reason, we believe Remote operates at the intersection of profit and purpose. For communities globally, Remote democratizes access to professional opportunities. As someone who immigrated to the United States in search of opportunity, this one strikes close to home!