Letter #244: Shuo Wang (2022)
Deel Cofounder and CRO | $1M to $100M in 20 Months, The Hard Part: How Everything Breaks in Hypergrowth
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Shuo Wang is the Cofounder and Chief Revenue Officer of Deel, an HR and payments software company that grew from $0 to $500mn ARR and a $12bn valuation in less than five years. Prior to founding Deel, she was the Cofounder and Chief Technology Officer of Aeris, an air purification startup that was acquired by iRobot for ~$100mn. She dropped out of graduate school to start Aeris.
Today’s letter is the transcript and slides of a talk Shuo gave at SaaStr 2022 titled: $1M to $100M in 20 Months, The Hard Part: How Everything Breaks in Hypergrowth. In this talk, Shuo shares Deel’s journey to $100mn in ARR, where things “broke” along the journey, shares strategies Deel implemented to scale so quickly (forecast first, trust the process, use your data, go global early), thoughts on leadership (grow your org thoughtfully and hear your team), tactical advice on product and GTM (experiment and execute quickly, early support for sales, and make sure your customers love you), before wrapping up with key takeaways.
I hope you enjoy this talk as much as I did!
[Transcript and any errors are mine.]
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Coatue
Transcript + Slides
Thanks everyone for being here today. And I would just love to share with you a little bit of Deel’s journey, including myself and some of the learnings I have learned in the hard way with all of you.
So looking at the right direction is always a good start. When we build good strategies, we need to figure out which direction that we should go. So that's why I would love to share a little bit more about Deel. So we founded Deel at early 2019. So we got accepted by Y Combinator and then spent three months at YC, learned a lot, learned how to find product market fit, be able to build something that people want. And then later on, after one years of product improvement, to generate a lot of sales. We did our Series A in 2020 May, two months after the pandemic. But the company was found in 2019.
So three months later we did our Series B, and then six months later we did our Series C. And then another six months, we did our Series D, which made us raise from Series A to Series D within around 18 months. And by the end of 2021, we did $50mn ARR. And then by the end of March 2022, which is Q1 this year, we hit our $100mn ARR milestone. So based on the chart, we are the fastest growing SaaS company today.
But, everything looks really, really good, right? On the previous milestones or roadmap. But there are things that we have tried, failed, and then we restarted. So at the very beginning, as I said, looking at the right direction is very, very important.
So I tend to look forward instead of sideways. For example, when we first got accepted to Y Combinator, we want to build a payment platform that empowers international talents to get paid on time in a compliant way. And also to make sure that companies to hire international talents be able to send the payments with the most efficient way. So that's the idea of Deel. And then also, work remotely is a big trend at that time. And also, there is a huge talent shortage in the Bay Area. I remember a friend of mine, his name is Florence, he works at LinkedIn, he's from France. And then he was able to stay at home three days, work from home three days per week instead of five days, five days in his office in Mountainview. So at that time, I was thinking, Hey, if big company like LinkedIn, like Google, are already supporting that model, and then with the advancement of technology such as Slack, such as Zoom, such as Google Meet, I think work from home is going to be the big trend.
So that's why we decided to found Deel, with the idea of build a payment platform to empower international independent contractors to get paid on time. We use that idea, apply to Y Combinator. But during our time at YC, everyone loves the idea, but everyone hates the product. No one wants to use our product for two weeks. The entire program is only 10 weeks, and we waste one fifth of our time on selling a product that no one wants to use. There must be something wrong. So for the rest of the six weeks, we spend a lot of time to interview all the companies out there and then chatted with almost all the founders. 200 companies, 400 founders. We're just asking them that, Hey, if you are open to hire internationally, hire remotely, what are your biggest challenges and what kind of product that we can build to solve your solution?
So in the end, we focus on only two things, which is payment plus compliance. Because a lot of company founders, where HR leaders, where people management, they do not want to manage complicated local labor laws. So that's why we pivot from just a payment platform, but also a combination of payments plus local labor laws.
So after we built the products, everything goes really well. We were able to onboard a lot of clients. We closed our very first 100 clients. And then we did our series A. And then later on, only three months, we did our series B. So there are a lot of reports, and then we start to see a really, really good traction, and we start to see that hey, we really hit a product market fit. And then this is a really good timing for us to scale our team to generate more sales. And if this is the opportunity, we need to execute and we need to catch that. So that's why we decided to scale our sales team from, I remember just two AEs from to 10 AEs to 20 AEs. And later on, by the end of that year, we hired almost 50 AEs. And by the end of 2020, we hired almost 30 AEs globally.
So we had really fast growth for our sales team, but the one thing that I did not understand is the support to the sales team, which is very, very important. Today we call it the revenue operations function. So what's the definition of revenue operations? It’s the operations team that supports the revenue function, which they can support sales, design the quota, design commissions, and then design go to market strategies and leverage data to make the good strategies for the team.
But with the large number growth of scale the sales team, we didn't have that function. That reduced our productivity per AE. And also we ran into a very inefficient onboarding or enablement of our training of our AEs as well. So after we realized that, we focus on not only scale our sales team, but also scale our revenue operations team so that we can support it.
So after that, after we scaled our AEs, after we add more marketing, we have a lot of inbound leads, we have a lot of growth, and then we start to see the business start to grow exponentially. But the thing is, with huge incoming traffic, we didn't really scale our support team to support that huge demand and huge need.
So everyone in the support team or customer success team is a little bit burned out, including myself, because at the very beginning, I was on support. I would be on Intercom 24/7. Like, even during my night times, while I was asleep, I dream about Intercom, and I dream about the clients telling me that, Hey, I did not receive my payment today. What is going on?
And then so like, support is one of the functions that we definitely care about, and we would love to deliver the best customer experience possible. So because of the huge traffic that we have, the increased traffic that we have, and then we didn't increase our headcount planning for the support team, so our response time, and then the satisfaction of our clients to our support team has decreased a little bit.
So in that case, we still want to maintain the high standard. We still want to see 4.9 on TrustPilot instead of 4.7. Right? Because I'm Asian, I'm super competitive. Everything needs to be perfect. So we decided to just scale our support team. And that's what we did. And then we gained the trust back from our clients, and we actually booked individual meetings with all of our clients, shared with them the updates, and then walk them through the onboarding process program that we have rolled out. And then we started to build QBRs and then share with them the newest product upgrades so that we can achieve and then earn their trust back.
So during our interactions and then conversations with our clients, I have learned that they have other needs, and that they don't really have a good understanding on all of the products that we have been rolling out, especially additional products that is completely different from our main product. And then that's the time that we realized that, Hey, there's a huge potential, and then there are a big part of the revenue that we're leaving on the table.
So that's when we decided that Hey, it's time to grow our account management team so that the account managers can go after the clients, share with them the new products, and grow the accounts, do upsell and cross sell. So today, we have a very strong account management team. So that's why, with the scaling of sales team, with the scaling of account management team, we have grown our revenue from $50mn ARR by the end of 2021 doubled to $100mn ARR at the end of Q1 2022.
So a couple things that I have learned during that journey.
So definitely, forecast first. It’s really hard to forecast. So as a startup, especially when you don't—when the timing is really good, and it's just really hard to predict, hey, what is going on there? What to be expected? Because we're in a startup world, everything could change. But the thing is, during this uncertainties, we need to find some ways to measure uncertainties so that we can forecast. The forecast is not only about headcount planning, but also revenue numbers. In order to hit the revenue numbers, what kind of resources that we need to provide them? What kind of headcount for customer support, for operations? What is the growth? And where we can get new businesses. So forecast is very, very important.
So trust the processes. Because when we're small, it is good that myself and my cofounder, Alex, we're chill, we just say that, Hey, let's do this today, let's try that tomorrow, and then maybe we will see a result. But the thing is, as we grow, process is so important. We need to build a good system, we need to build the processes, and we need to make sure that our team follows the processes. Because even though at the very beginning it may slow down the growth, but in the end it is a really good foundation to scale the team.
And Use the data. As I mentioned earlier, at the very beginning we didn't have a revenue operations function, we did not have a dedicated data team to support the big sales team that we have just suddenly hired. So that definitely caused some problems internally, which made our sales strategy or AE performance less and less efficient and productive. But today, we have a full house revenue operations team, and also myself, I have a very technical background, I am a very data driven person. And even our Head of Marketing, Head of sales, he is right there, is very analytical and really, really good at using data and leverage data to build sales efficiency and the next strategies.
So another big thing, if you ask me that. Hi, hey, how did you guys grow from $1mn to $100mn within 20 months, I would tell you that because we set up the global footprint early. Since day one, we are not only a US-focused company, because the nature of the product, because it can definitely benefit global clients. And especially myself, I was born in China and moved to the States at the age of 16, and my cofounder Alex, he was born in France and he moved to Israel for college and then later on moved to the States for his master degree. And then we just have a lot of international experience, and we understand talents are everywhere, and there are many, many really great resources out there. So if we're open, and we're expanding globally, that is a huge stage like this, and a huge market that we can play. So that's why we decided that Hey, since day one, we're not going to be only a US-focused company. We're going to send a small sales team in Europe, in Latin America, in APAC regions. So even though it is one person that does SDR job, does closing, does partnership, does marketing, like covers 20 countries in each of the continent, it does not matter. Because when we truly find a product market fit and when we're really able to grow our business, it is really, really a good foundation and infrastructure that we can use to grow exponentially later on.
So today, most—I would say we split our revenue and then businesses like almost equally from US and international. So I highly suggest that companies, if you find a product market fit, you should go global early.
Leadership. That's a very good topic.
So I have never worked in a big enterprise. I did not have a really good training from Google, Facebook, Amazon, or LinkedIn, for example, or McKinsey, or BCG.
So Deel is my second startup. And I did my first startup while I was in Beijing. But during my startup journeys, what I have learned is that product is very important, and then we need to make business from the perfect product that we are going to introduce to the world. In order to do that, your engineering team is very important, your product team is very important, and your sales team is very, very important. So it may be odd for an early stage startup to hire a sales function at a very early on. If that is not the case, the founders needs to go out there and build the sales strategy and develop the pitch so that you understand what is going on with your business. So that's why today my title is CRO. It is really rare to have a founder as a CRO. But I'm enjoying this role.
And then basically what I have been telling my team is that the key function of this role is making money for the company. So if you are in charge of making money for a company, and then you will be able to oversee the most efficient way to produce revenue, and you will be able to leverage the core data internally to develop the best strategies for go to market function.
And also, at the very early on, I also cared a lot of culture. And because we're fully remote company, and it is very, very important that everyone that we hire can adapt to this remote culture, and then is comfortable to work remotely. So for the first 400 people that were hired company-wide, I interviewed all of them just to make sure that the culture is aligned, they can get a project done independently, and then they can be the good foundation, good base for the company. So I think most of the first 400 employees are still with us today. But it is really early to say, because we're only three years old.
I think another thing that is very important is that always listen to your team. Listen especially your sales team and your support and customer success team. Because they're in the frontline, and their feedback is directly, positively correlated to your product’s roadmap, and then the next biggest thing that you are rolling out. So listen to your team, they're the most valuable asset to you, because then they will be able to provide you immediate feedback so that we can grow together. So even today I still, even though today I'm not on Intercom, I'm not on Zendesk 24/7, I still review the tickets. And if there's anything escalate to me, I would jump in and I would set up meetings with clients directly just to make sure that their problems, their payments, and then the employee get paid on time with no blockers.
So product and go to market. We, at the very beginning, we tried many different things, many different strategies. So just want to see—including go global early. And then it's really hard for us to identify which is the best country or market that we should invest in. So we tested all of them with a very light investment, and then with a very simple model, very lean model.
And after we learned, we failed faster, we learned, we found the solutions, we understand what is going on so that based on our learnings, we execute our strategies. There is a saying which is called “Deel Speed.” What does that mean? That is we run things at the Deel Speed, we execute faster, we build the product fast, we expand our business fast.
And then another thing is that early support for sales team is very, very important. So that they have a really good understanding what is going on, and then also, they will be able to understand their performance, understands the efficiency, in a very analytical way. Because today, sales is not an art, it's a science.
So we should run the sales team, build this process as an engineering project. Leverage the data, build the systems, understand the fundamentals, so that we can put together a very efficient sales team, just like how we run engineering team or product team.
Sometimes churn is scary. But we cannot stop churn. There are many, many reasons that a client churn from you. It may not be because of you or your product or your team, it's just because the client wants to pivot, the client decided to change to a completely different direction.
But that is okay. That is okay. Churn. Don't be afraid of churn. And then don't get too nervous of churning. As long as we understand that the clients still love us, and in the end, in the future, clients may come back to you and start to use your product, or if they will not use your product, they can still promote your product to their colleagues or to the other founders or to the other companies. So that is one of the biggest things that I have learned during this journey.
So to summarize and then to recap, always set clear milestones and revenue targets. Because if we can break down those milestones and revenue targets, we can have a really good, clear communication, set good expectations with the team so that they are passionate and incentivized to hit the revenue target and the milestones together with you.
But along the journey, there are some unexpected challenges. But we are running a startup. A lot of things are unpredictable. But that is okay. As long as we trust the team, we work together, and everyone is empowered to solve the problem together, we'll hit our target.
And then another thing is data, again, is very, very important. So we should make decisions leverage data. If we do not have data, we should find all kinds of ways to collect data. Like, there are many times that we have changed our Salesforce setup so that we can collect data from our AEs when they won a deal, when they lost a deal, or when they got additional information from the client. So especially when we become a big company in the future, data is the foundation to make efficient strategies.
So overall, I think—just to emphasize that today we are in this world that a lot of founders are trying to find product and market fit, and then a lot of you may already have the product market fit. So I think it is a really good timing for us to 1) go global early, 2) make strategic decisions, leverage your data, and 3) set clear milestones and targets with the team together so that they understand what is going on.
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