S6E1: Co-Founder & CRO, Shuo Wang, and Deel are Reimagining Payouts for Businesses on a Global Scale

Welcome to The Room Podcast. I'm Claudia Laurie, co-CEO and founder of Pryve.

And I'm Madison McIlwain, partner of seed stage investments at DefyVC. Claudia and I are friends first, and business partners second. Living in the heart of Silicon Valley, we know what it's like to be on the inside of innovation, having worked at flagship companies like Gap Inc. and Uber. Now in our roles as a founder and a funder, we're changing the face of technology through our mission to bring more people into the room where it happens.

With past guests such as Shakshir Mehrotra of Coda, Michelle Zatlin of Cloudflare, and Grammy Award-winning Ciara, our past guests' companies are currently valued at over $73 billion. If you're a first-time founder or emerging funder who wants tactical insights into starting a company, venture capital funding, hiring, and more, this is the podcast for you.

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To kick off our 6th season of The Room podcast, we sit down with Shuo Wang, CRO and co-founder of Deel. Deel is a global payroll solution that helps businesses hire anyone, anywhere. Using a tech-enabled self-service process, any startup can now hire independent contractors or full-time employees in minutes. The need for a simpler way to hire abroad was obvious to Shuo as she herself was born and raised in China, moving to the US at 16. Once stateside, Shuo was drawn to MIT where she became a mechanical engineer. This experience opened many doors, including ultimately meeting her co-founders for Deal. After her first company, Aris, which put to work that mechanical engineering degree in a more predictable way, she started Deal in 2018. Deal is infamous for being quoted as the fastest company to get to $100 million in revenue in the history of startups. By the fall of 2021, Deal was valued at over $5.5 billion with investments from Coatue, Altimeter Capital, Andreessen, and many more flagship investors. Today, Deal has over 6,000 customers of whose companies have employees in over 150 countries. It's not every day Claudia and I interview founders who were born in the same decade as us with this level of success. As you listen in, expect insights and themes such as the power of rapid feedback in early product building, how to align your business's growth with your customer's success, and the future of global hiring. Let's open the door. Shuo, thank you so much for joining us in the room today.

Thanks for having me today. Super excited.

We like to start at the beginning with all of our guests and ask about where did you grow up and how has that shaped your view of the world?

I was born in China and then I came to the States at the age of 16. After I moved here, I need to deal with myself, especially my family are far away. So I think at that moment I learned I need to be independent, I need to be great at problem solving, right? So there are just a lot of things happen. I need to think out of the box and to find a better solution, especially at the time English is not my first language. And then when I first landed, I didn't really know much about English. I think that's the first thing that I have learned: be independent, be tough, and then be able to solve my own problems. And then after that, my mom had a business. She imports like motorcycles, golf carts, ATVs from China, and then she would wholesale of those along the East Coast, so from Boston to Miami. During the weekends, I always help her manage the business, and then we have a very big warehouse. My mom definitely inspired me about building a business later on, build the company, be able to manage the employees, do the accounting, all the finance, where to find the market, how to do the sales, and what is the pitch like, right? So those are like, you know, all I think at that moment all come from my mom. And then later on, I went to MIT. I started my undergrad. For a Chinese kid, the expectations from your family is either you're a doctor, you're a lawyer, or you need to like— or you're an engineer. I grew up with doctors. My grandparents whom I grew up with, they are all doctors. But then later on, I just decided, okay, I would go to MIT. I would study engineering. After graduating from MIT, I stayed for another 2 years for master's. And then during my days as master's at MIT, I met my good friends. My first company, Aries, and then my co-founders are from MIT. We basically hang out every day and we take the same class, same major, and then we decided to start this company together. And then I think it definitely an influence from the, the environment around me and also the group of friends that I hang out with and then how we wanted to build a business or build a project.

Oh my gosh, I think Claudia has more to relate on some of that story in your lived experience than I might be able to. With Claudia's own background immigrating to the States as a young girl, that there's so many challenges that you overcame in that early moments at 16, learning English, learning a new culture, a new school system, all of the above. And along the way had this incredible role model of an entrepreneur and your mom who was persevering through some of those challenges here in the States and finding both of your way to what became your new home. And in that vein of early identity and kind of what it was like moving here and then ultimately seeing what it's like to be an entrepreneur in the States firsthand. So mechanical engineering, you just learn how to think and you learn how to build much more in the physical sense. How did that degree specifically translate into your early work experience founding Aeris?

Aeris is a consumer electronics company. So we would design consumer electronics products like smart air purifiers, the air purifiers that you see from Dyson. So the control systems or the app, the mechanical design, the product design is actually very related to mechanical engineering, how we design a product. My co-founder and I, we're both from China. We just decided, hey, we want to go back to China, experience the environment there, and then founded our product, an air purifier, and that could be a good fit for that market. So that's how we started.

It's incredible. It's always interesting to hear those early founding journeys before the big breakout business that you're known for. It's really cool that you've had that experience. And also, I think a testament to many founders who are often struggling with an early idea or early traction. It's not the end of the road if the first thing doesn't go as far as you would hope. And so with that, would love to focus a little bit more on the very early days of what came to be Deal. It's 2018. There's a full year before there is even a whiff of there being a global pandemic. What prompted you and your co-founder Alex to get curious and start thinking about global hiring?

Alex and my first co-founder, we're all good friends from MIT. So we hang out a lot, right? After the first company, Ares, later on we sold it to iRobot, and then I was trying to figure out, okay, so what should I do next? I wanted to try something different other than hardware. I want to try software. And then at that time, like, you know, payment was really popular in China. Like, you can just transact the money on your phone and you can sometimes do it across border and just makes international transactions super easy. Also, at that time, Alex worked with a lot of international talents. He can hire talents internationally. It will help him to build the product faster and it will save him like a lot of initial cost as a founder. So we'll get together And then we just combined our idea, that is, we wanted to build an international payment platform for international talent so they can get paid easier. Because at that time, Alex did experience a lot of rocks or bottlenecks when it comes to paying international talents that he has been working with. Also, at that time, I was in China and I learned from my friends in the Bay Area that they have been using Slack. Because of Slack, they were able to communicate with their colleagues, and then even though they're in the same office sitting next to each other, they use Slack to communicate with each other. They were able to work from home 3 days per week instead of 5 days, so something like that. And I was thinking that it's interesting. If you can work from home 3 days per week, probably you can just work from home. And then if you can work from home, probably you don't need to stay around the San Francisco Bay Area. Seattle or Miami or San Diego, wherever that you want Later on, if you want to travel to UK or to Paris, you can do that as well while working. So that's where I see the trend about people be able to work remotely. That could be the future. So that's why we combined our idea. We think it's a good direction. We applied to Y Combinator with the idea and we got accepted to Y Combinator. That's how we started D.O. at the very beginning.

That is so incredible how you had that vision before or global circumstances really forced that. So it seems like there was a bit of this aha moment there of, hey, like, why do we need to work in offices in person all the time? Could you walk us through what the early days of being at YC was like and what was the MMVP of the Deal product?

I have a very good story to share there, right? When we first got accepted to YC, right, everyone loves the idea about they can make international talents easier because a lot of founders like myself and Alex, they work like, you know, international talents. And a lot of them are international founders as well. And then they just automatically need to pay talents overseas. But our first, first MMV is very complicated to use. Everyone hated that product. We have designed a complicated interface for people to use the product. And then sometimes it's just the payments cannot get released on time. So that is our first prototype. And then we learned and then we didn't gain much users in the early days of YC. And then we decided we decided, hey, if the idea is good, we need to focus on the product. So what kind of product that we can build? What are the features that the founders really like? What are the real problems that we can use our product to solve for the founders? After 2 weeks of initial testing the water, like, I think for the rest of 6 weeks, we just continuously chat with a lot of founders inside the YC community, document all of their interests and product requirements. And based on that, we do all of the second prototype. And then we were able to present the second product, like, right before Y Combinator, the demo day. The second product is, is what Deal is today.

I'm curious, what was the first country folks were using Deal in order to make those payments simpler?

I remember the first client of Deal is called Sensama. It's a company from the same batch. They're still using Deal today.

That's awesome.

It's always cool to see with YC companies so much synergy between folks in the batch and how those businesses grow together in many ways. That's super cool.

So you went into this, the YC program. We've had other YC founders on the podcast. You know, you're in this hyper intense moment, 10 weeks, you need to pump out a product that people actually want to pay for, and you find a product people are willing to pay for. You find your first customer. What in a sentence is this core product?

In the early days of this product, we want to build a custom for international independent contractors. That's the first sentence that we use at the YC Demo Day and make it simple enough for users or potential clients to understand.

This is just so much more complex than I think anyone who, like me, is from the US and has only ever lived or worked here to understand how complicated it is to hire internationally because you have to be able to pay taxes in another country. You have to have a legal entity set up in another country. In order to pay taxes on those employees. And so most startups, even if they will save a lot of money, quote, quote, hiring engineers abroad, they're not going to be able to save money on the legal fees.

That's why they're using Deal. You know, we have entities globally. We have localized team, legal team, payroll team, accounting managers, payroll managers in-house, right? So we can help them to solve the problem. So they don't need to pay a lot of legal fees. So the legal fees is just one part. Potential later on, anything went wrong with the employee, right? And then the employee in the end sued the employer. So that could cost the startup a lot of money. So that is the potential risks that like by using your product, we can help them to reduce or to mitigate the risks. So that it is a very complicated system that we're building today. The concept is easy. You just go out there, build an entity, and then I have 'My employee is employed under your entity,' and then that's it. That's what people see. But behind the scenes, there is a legal team, there is payroll managers, right? There is taxes. And then also there is recruit holidays, vacations, or health insurance. All of those we need to be able to help our clients who are the employees to optimize what to strategize.

You've obfuscated this entire process of hiring internationally and really streamlined it for any company that is getting off the ground and wants to hire with a global-first mindset. And that is incredibly exciting from an access standpoint, as well as opening the door to having a global-first team. And you've done so incredibly fast and incredibly exciting. In the fall of last year, in 2021, your team announced your Series D raise, which brought in $425 million new capital for a valuation of $5.5 billion. First of all, congratulations. That is amazing. And you have some hallmark investors on your cap table today from Coatue, Ultimeter Capital, Andreessen, and many others. I'm sure there's a lot of interesting stories getting to work with some of those iconic investors, but we're curious Who was the first person to say yes to investing in Deal?

YC is definitely the first one. And then I think for our Series A, Andreessen. I remember Anish, our partner, I think first of all, he was really interested in this space and then he met our team in January and then we got the investment in March. It happens very fast.

It's always exciting to go from an idea to start building people on the team. Whether it's investors or employees, because that's just such a critical piece of growth. Not only do you need to grow your investor base, your employee base, but you also need to grow your customer base. And today, Deal has over 6,000 customers with many impressive customers such as Coinbase and Shopify. How would you define your role as co-founder and chief revenue officer?

I always tell people that what I do is I'm in charge of making money for the company because I need to make sure that the revenue growth is there, make sure that the go-to-market strategy team can be efficient, right, can be productive, and then the ROI is good and the level of execution is good. So I think because of that, we are growing fast, and then we were able to make it to $100 million within 20 months, from $1 million to $100 million within 20 months, the fastest growth to $100 million, like ever.

Massive congrats. And myself as a founder, I'm also focused on the revenue side of my business. And it's really difficult figuring out how to monetize, how to get to that first million, $10 million, and beyond that. And so I'm curious to pick your brain around working alongside your sales organization and your unique go-to-market motion. I think it's really important not only to innovate on product and innovate on a bunch of different things, but you also need to innovate on your go-to-market. So could you speak a little bit more about your strategy there?

One of the reasons Deal grow this fast is because we go global very early. So since day one, we didn't only focus on US market. We have a team in Europe, we have a team in APAC and Latin America. So we started build international sales even though the team is very small, one person, two people, things like that. It definitely helped us to understand the global market very well. It definitely helped. We want to scale the international market. The foundation is set up. So I think that is one of the reasons that we have been growing this fast. And then I think number 2 is the team. They're really good. All of our sales leaders, marketing leaders, growth leaders, also the operations team, how they work together and then how they build and optimize the strategy is incredible. Another thing is not only we build the strategy, but also we see a problem, we find the solutions, right? And then we go find different solution, and then we execute, and we find the best solution, and then we, we focus on that one best solution so that we can build this entire system and the process that we have today. The level of execution and then the teamwork that we have made us today to become the fastest growing company.

Often sometimes for startups, they feel resource-strapped. They have only a certain number of people doing many jobs, and thus it's really important to execute at kind of the highest level, as you're mentioning, in order to really grow the business. I'm curious, as you're managing the team, what are some tips that you would give founders ensuring that everyone is operating at that level of excellence, even though it might be a lot of work?

Take the sales team as an example. It takes ownership, that's what we say, ownership. They're not just there like for closing, they're there for helping clients with onboarding, helping clients making sure that they get used to the platform and then they can make the first payroll successfully. This level of ownership that can build a really, really good culture. So I think that is important to build this layer of trust between sales and then our clients. So that's number one. I think number two is definitely wherever that you can measure data. Measure it and then make decisions using data, especially sales and then go-to-market data matters a lot because they're very expensive. You may invest a lot of money on go-to-market, you may invest a lot of money on building the sales team, but if the, the return is not there, it's going to be very complicated for you to scale the team later on.

It's really interesting hearing you talk about the data-driven approach to the go-to-market motion that Claudia was alluding to. We recently had the founding growth partner at Bessemer on the podcast. Mary DiFornio, and she has this concept of a leading indicator in your revenue number, a, I don't know, sub-number, if you will, that can help you and your team predict what you think those quarterly revenues are gonna be. Twilio can use their API calls. That is a directly correlated revenue indicator before the revenue actually hits the books. I'm curious for Deal, do you have an internal metric that you would leverage as this leading indicator of revenue?

Definitely. Our model is built based on retention and then also how many new employees that started within a certain period of time. And then, then also we'll be able to measure the efficiency of sales reps and then the number of clients and then also the growth of the clients. We'll be able to project next quarter, what is the revenue going to be like? And then if we hire more reps, what is the revenue going to be going to be like? And then, then if we have attrition from the team, what is the revenue going to be like? All of those data points that we collect and then we'll be able to build an indicator of revenue forecasting.

It's great that when your 6,000 startups, small and large, are growing and hiring, you're growing, which is a very symbiotic relationship in the ecosystem and specifically in COVID, a season where remote hiring really accelerated. How would you think about this being the catalyst for certain growth opportunities within Deal?

I think it is still early of this global hiring market. I would say last year people start to think about hiring globally and then they don't know what to do. And then this year we have so many platforms out there from Deal, from our competitors. So everyone has a lot of options and they They will, like, know more and more about hiring remotely, and then they will understand what are the benefits of hiring remotely, hiring internationally. That will influence more and more founders, more and more HR and people leaders out there to hire remotely. It is going to be the lifestyle. It is going to be the mainstream. And then today, we're still at this very early stage of this huge, massive market.

We believe so too. And we are excited to touch a little bit more on like the future of HR in a second. When we tell these amazing stories of companies like yours that have both had a massive impact to much smaller companies who are now able to hire in ways they weren't previously able to, it's easy to look at it and think, wow, everything was so great. It's— we always like to ask, when was a moment when things didn't go as planned in the deal story?

One of the first get accepted to Y Combinator when no one loved our product. I think that's the first step. And then the second thing is we see huge growth, right? That's why being able to forecast really well is very important because that's why we build all of those models with all of those data and then we want you to forecast like moving forward, right? So I remember last year around September or October, we see a huge growth and then we see a lot of clients, but our support team, we were not able to handle that huge amount of volume or the growth of the clients. So I think at that moment, the clients were like tagging me and Alex on Twitter and saying that, hey, I just contacted your support, but no one has been talking for, for 10 minutes. What is going on, right? I really need help. Before that, our support is really good. Like, you know, Alex and myself were on support. We were able to solve clients' problems within 2 minutes, and then we're always there Answering their request within 10 seconds. And then we see the real growth. We see, wow, the thing is getting real. Then we realized that, hey, we need to right now scale our support team, scale our success function immediately. That is definitely one of the moments that I realized that, hey, we're really going to grow very fast. We really need to think about the operations and then the support functions in the company. And then we started to invest a lot, focus a lot on the support functions. And today, if you check our trust pilot, it's 4.9. If you contact our support, I guarantee you people will be there and then chat with you and the problem solved within 2 minutes. There are the things that I've learned the hard way.

When you scale quickly and things do go up into the right in one area of the business, that can often break other areas of the business. And it sounds like this is an example where things broke for a moment and you quickly got in there and were able to fix it. And bring back up your customer support standard to what it has continued to be because now you're, we said 6,000 customers, you're in over 150 countries where you're supporting hiring remotely. And if we just think about that's just an incredible unlock for any first-time founder, second-time founder who wants to hire and might not have access to those other markets.

We have a dedicated country expansion team. They're Navy SEAL, like, Equivalent of small team, but really good at execution. They are always on like a special operations. Whenever we see a high demand in that one specific country, we need an open entity in that country. And then we have a whole process about open entity, what kind of resource, what kind of people with payroll and then taxes that we need to figure out, right? And then this team will go there and then open the countries. And then in that model, we opened 80 30 countries having a DEO entity just last year. Then by the end of this Q2, we'll have 110 entities on DEO.

I probably could talk to you all day about some of these intricacies of the business. It's probably another podcast actually, but instead of going all the way down that rabbit hole, I'd love to take us back up a step and think about HR as a whole. It's very popular these days to talk about things like Web3. Web3, the future of the internet, distributed work, distributed ownership, but we're really curious to hear what your perspective is on instead of Web3, HR3.0, and what you might think the future of hiring looks like in this new world.

Globalization, people should be able to hire wherever they want, and then Thailand have more options, more opportunities onto them, like, you know, to work not only domestically but internationally. Just because how, how much technology has developed today. So previously, 20 years ago, 5G, smartphone is not there, but today smartphone is everywhere. And then 20 years ago, Slack and Zoom were not there. So people has to be in the same office and be able to communicate and be more efficient. But today everyone's using Zoom, everyone's using Slack. So I just think the trend of globalization or hiring talents internationally it's going to grow and then become the mainstream and become the main lifestyle. And also that created a lot of opportunities worldwide as well.

We've chatted a little bit about Deel's past and how you've gotten to the point you are today. We've chatted a little bit about the future of HR, hiring, this global economy, but would love to shift gears a little bit and ask you what is in the future for Deel? What can we look forward to?

Deel As an HR and payroll company, we definitely want to open in as many countries as possible to provide full coverage to our clients and make sure that we always provide them the best and the most optimized hiring solutions for them. So I think that that is number one. Number two is moving forward, we also have a lot of fintech products that we are providing our clients and users to use. And then it comes to an international level. The financial services or the fintech products that we're providing, I think that is going to be a big trend and then that can really benefit the users getting paid on Deal.

There's a lot of exciting things to look forward to. And I think just as a startup founder myself, scaling, hiring internationally, making sure that we're able to team here connected with, you know, our teams in Argentina or China is just going to be incredibly important. So. Very much excited for that product roadmap as well, personally. Shifting gears a little bit away from Deal, but more onto you specifically, Shuo. What is next for you personally? What are you excited for, for the rest of the year?

What I am super excited about is how we are expanding, you know, internationally. And then I'm going to go meet the teams there. So I have travel plans to meet my team in Europe. And then to meet my team in APAC, to meet my team in Australia, right? And then help them build the go-to-market strategy in country and then help them to build the process and then the system. So that is what I'm super excited about. And also new products coming out. So we are rolling out a global payroll product and that is super, super exciting.

Kind of a life hack to start an incredibly successful company that has outposts all over the world and get to travel for work. Shuo.

Yeah, living it. It's remote work and then definitely not only travel around, but to see different things, different people, meaning different perspectives, and then have this creativity and the imagination and new designs, new ideas. That is what is really exciting.

I know both Claudia and I've had the chance to both travel for personal and also travel for work. Myself, when I was working at Gap Inc., my team of developers was in Hyderabad and had the chance to go meet them in India, which was an incredible experience because exactly to your point, we just have different perspectives walking into the room and we're able to leverage those different perspectives to be able to build what I thought was really cool technology for the Gap global ecosystem. And Claudia had a similar experience with Uber.

Absolutely. I think what was really interesting, Shoa, was when you were talking about how building globally and having those like GMs launch new markets, it really harkens back to what made Uber really successful. Successful and grow really quickly in the early days, and I was a product manager there. We would have to travel to India, Mexico, you know, Amsterdam in order to meet the team there, and it was really cool to see how each team was really functioning as its own business unit, almost like as a startup in a new market. Major testament to the importance of going global and then how cool it is to go and see those teams and learn from them.

This is our closing question: that we ask all of our guests on our podcast, and it is: Who is a woman in your life who has had a profound impact on you and your career?

I would definitely say my mom. She's a very tough and determined lady. And then the fact that she moved to the States by herself and then built a business definitely inspired me. Yeah. So I would say my mom.

Thank you for sharing that. And we're grateful for moms and women in all of our lives who can show us what paths are open to us and opportunities that we can continue to follow in this world. So thank you, Shuo, so much for taking the time today to share a bit more about your story, deal, and the future of HR at the hands of your incredibly exciting company.

Thank you, Madison. Thank you, Claudia. Really had a great chat and had a good time.

Thank you so much for joining us today at The Room Podcast. If you want to hear more from The Room every week, subscribe to our newsletter at theroompodcast.com/newsletter. We'll be back next week with a new episode and inspirational guest. Tuesday, May 24th, 10:00 AM Eastern, 7:00 AM Pacific. See you in the room. Support for The Room comes from Silicon Valley Bank. Silicon Valley Bank understands these questions can keep founders up at night like Claudia. For over 35 years, Silicon Valley Bank Silicon Valley Bank has helped high-growth companies through scalable financial solutions, plus insights and expertise that many other banks just can't. Which could be why 50% of US-based venture-backed tech and life science companies bank with SVB. Learn more at svb.com/next. Silicon Valley Bank, built for what's next.

Cooley is a global law firm built around startups and venture capital. The firm has been been devoted to entrepreneurs and investors, partnering with both to transform breakthrough ideas into successful companies. Cooley works with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth and long-term success. Since 2005, Cooley has been ranked the number one most active law firm representing VC-backed companies going public. Learn more at cooley.com and cooleygo.com. Cooley's award-winning free legal resource for startups. All opinions expressed by Claudia Madison McIlwain McIlwain and podcast guests are solely their own opinions and do not reflect the opinion of The5VC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.