Deel on Operating Cadence

I. Session Takeaways

Date: March 2024

Deel Overview

• Deel is building the operating system for global HR and payroll. The company was founded 5 years ago
• They currently support 40,000 businesses, generate >$500M million in ARR, and are EBITDA profitable
• Deel scaled from $10M ARR to $57M ARR to $280M ARR to $500M+ ARR in the last four years

Multi-product revenue is key to sustaining growth at large scales

• Deel's first product enabled companies to hire and pay contractors compliantly across the globe
• At $10M ARR, Deel expanded to multiple products driven by customer need(s) and requests
• Customers approached Deel for additional services to hire full time employees and process payments
• Multi-product enables Deel to expand horizontally to serve a larger footprint of a company’s HR needs
• Alex’s learning is you can’t add enough ARR on your first product to sustain growth at very large scales
• The stacking of multiple products growing 10% m/m is what has helped Deel grow so fast in 5 years

Alex on the importance of multi-product revenue

“Two years into the business was when we started our multi-product strategy. We started with one product, which was how do you hire someone as a contractor in another country and make sure they have everything in order to pay them. The cycle of growth we live through is the cycle of how we talk to our customers. Our customer would come to us and say we want this person to be an employee not a contractor. Eventually we realized this was a big business and then we launched our current product where we employ someone on your behalf….Stacking those two products together and you growing 20% plus month/month is what got us to that scale. Eventually, those products even start to plateau and that’s where multi-product strategy is interesting. You need to figure out your product roadmap when you get there.”

‍

Deel’s approach to scaling in an operationally intensive market

• To build a fully automated payroll platform, it would take 4-5 years. Therefore, they made the intentional decision to scale headcount to maintain operational excellence while they build automation. Over time, their plan is to close the “automation gap” by investing in engineering.
• They select not to hire in the Bay Area and New York, and instead rely on markets with more affordable salaries. This has enabled them to scale headcount very fast without accelerating growth in their burn.

Alex on scaling aggressively

“When you deal with payroll, the length for full automation on a payroll engine is probably four to five years with probably like 50 to 100 engineers. So we built a very different operational way of building products which is ops into automation and then close the gap. And that enabled us to launch so many products really rapidly.

‍

Deel Speed. Maintaining velocity and customer centricity at scale

• “Deel Speed” is a company principle that was defined in 2021. Speed does not mean “move fast and break things” as payroll requires 100% uptime and perfect compliance. Customers are unforgiving.
• Instead, it is a principle that encourages getting things done today and not pushing work to tomorrow. 
• This is a top-down principle that Alex and Shuo (co-founders) set within the company.
  • Alex firmly believes this has to come from the CEO/founders and they try to model this behavior
  • Alex and Shuo are often some of the first people to respond to customer feedback in Slack.
• Deal Speed particularly applies to customers. If a customer has an issue, the reaction is to prioritize solving it.

Alex on Deel Speed and its top down nature

“One of my employees came up with [Deel Speed] in 2021, which has since become a principle at the company. It’s not about going fast and breaking things which doesn’t work in payroll. If anything it leads to problems and mistrust. It’s more about getting stuff done now versus tomorrow. Moving fast now makes a significant difference. If you didn’t get paid you would be like WTF. We wanted to have a culture where if anything comes up [with customers] we wanted to solve it now…The only way for this culture to scale is that it has to come for you. For me, if I don’t show urgency to solve things, you lose the customer support and success [that got you to success] and eventually becomes what you dreaded and tried to disrupt in the first place.”

‍

Tactics to maintain Deel Speed

• To scale and operationalize the principle of "Deel Speed", Deel has leaned heavily into Slack. The idea is you can put processes and structure around ideals that feel "unscalable" to get them to work at much larger scales. Below are a few examples of what Deel has done to maintain speed.

Example: Deel's Tactics for Speed

Tactic 1: Review Slack Channels

• Deel monitors every review source (G2, Twitter, official feedback)
• All reviews are centralized into one channel and are tracked by the a 7-person team
• For every piece of critical feedback, the 7-person review complaints team will evaluate the issue and tag the right people to fix the issue. This means negative feedback is either 1) addressed or 2) evaluated in real-time
• Deel places a premium on urgency in customer facing channels

Alex on the reviews channel

“This is a channel where anytime anyone reviews Deel we get a notification. If we ever get a bad review or complaint, we have a review complaints team jump in and turn it around. This happens across the whole business. We tag the [right person] and encourage them to fix it.”

‍

Tactic 2: Product Slack Channels

• Product reports to Alex. There are 50-70 small product teams and 3 product leaders that report to Alex

• Each team, 70 total, sends Alex weekly deliverables on Slack. This includes 1) what they shipped last week, 3) what they are shipping next week, 3) core blockers, and 4) progress against OKRs
• He spends about 5 minutes reading each, and Alex can get a full picture of the product organization in 1 hour
• By being intimately involved in product, he can counter the loss of pace typically experienced in larger companies 

Alex on why he uses a product Slack channel

“As you grow you start to have dependencies between teams. There are a lot of reasons not to go fast anymore as you grow. Having that accountability of knowing exactly what is going on inside of the product really does help. Generally what I have is weekly reports from each of my teams”

‍

Tactic 3: Customer Facing Channels

• To scale "customer centricity", Deel has created customer-facing Slack channels. Currently, they have about 300-400 rotating Slack channels. In each channel, they have a customer success manager, Alex, Head of Success, and a 3 person client support team (for 24/7 coverage)
• If a customer leaves feedback, the CSM (or anyone in the channel) can trigger action on the feedback. The feedback is logged in Zendesk and the relevant teams are tagged to solve the issue. Alex is often one of the people responding and tagging DRIs. Again, this drives urgency and models behavior as others see the founders jumping on tickets, etc
• This has proved to be a win-win for customers and Deel. Deel receives near-instant customer feedback and customers issues are resolved quickly. Since launching this process, Deel’s churn rate has declined by 2%!
• Alex also emphasizes the importance of getting out of the ivory tower and being close to customers at scale. To this date, Alex will join customer calls, particularly when they are onboarding or launching new products.

Alex on scaling customer facing slack channels

“Their CSM can trigger the Slack channel. The request activates a Zendesk workflow which creates a Zendesk ticket. End-to-end it took the CSM 10 minutes to get a full revolution. We do this at scale across all of their customers… The first person to answer, whether it’s a good thing or not, is me and my CTO. I fired my CRO because he was against [customer channels] and it was the best decision I ever made.”

Proactivity in customer support is a myth - become the best at reacting to customer issues

• Most companies are OK with "bugs", but they are not OK with bad support when something goes wrong
• Deel has learned you can buy yourself credibility and trust by being responsive and fixing issues fast
• Deel's strategy is to 1) react fast, 2) fix the root cause, and 3) never be reactive on that issue again
• The philosophy is that over time you'll become more proactive as you address common issues
• The only area where Deel is starting to invest in proactivity is in upsell and cross-sell mechanisms

Scaling customer centricity at Deel through world-class support

• They uniquely have 24/7 support on the employee and user side. They use a process called swarming, where whatever requests comes into L1 and are quickly routed to L2 and L3 based on the type of context and who can solve it the fastest. They shortened the close time for tickets through this process.
• On top of this, every customer at Deel has a team of 3 success managers. These 3 success managers combine to provide 24/7 support. The ACVs of the customers are large enough to justify this. To help with the coordination across shifts, they have built client notes on top of the support engine. This enables any of the 3 success team members to answer your question in real-time 
• Deel’s operating principle is to internalize everything to maximize context and ability to serve customers well. This means every agent is part of Deel. They also have payroll managers, lawyers, and HR in every country they are actively supporting.

Alex on internalizing customer facing teams at Deel

.“We want to internalize everything. So every single support agent is part of Deel. We own L1, L2, L3, and contextually for the business, we have payroll managers, lawyers, and HR in every country. That's actually why our structure is so big because we hired all those people in house so that we can build the infrastructure”

‍

Alex’s calendar. No recurring meetings. Async-preferred with emphasis on delegation.

• If someone asks for a meeting - Alex often asks them to write the issue to see if it is solvable async
• Oftentimes, Alex can solve the issue or route the person to the correct place at Deel to solve the issue
• As you scale, one of the key parts of your role is funneling issues to the right place vs. solving yourself
• Today, Alex can only handle 10-20% of the problems that come his way, but he knows where to route them
• If a meeting needs to get scheduled, he tries to keep the meeting to 15 minutes - protect the calendar! 

Alex on the importance of knowing where to delegate

“I think it’s a trait of character. We are a global company. I want people to feel like they can rely on me whether it's external or internal. Generally I feel I have done a good job of being on top of things when it matters and bringing on the right people. Redirecting and delegating to people is a very important skill. If I can solve 10-20% of the problems that’s a lot, but I know who to send it to and it makes a significant difference. It’s about funneling the right things into the right places and building the muscles so those people pick it up straight away without needing you [eventually]”

‍

• Alex does not have recurring meetings with his C-level but communicates with them frequently on an ad-hoc basis. However, he does promote a structured onboarding process for new hires. During the onboarding period, he’ll do frequent syncs to align working styles with the new executive

Deel’s GTM Journey

• Current State: Shuo (co-founder) leads Sales and is the CRO. The sales organization is broken down into four sub organizations each with their own Heads of Sales: US Enterprise, US Mid-Market/SMB, Rest of World Enterprise, and Rest of World Mid-Market/SMB. Shou also runs partnerships and growth (top-of-funnel). The GTM team is roughly 500 to 600 people
• They transitioned from founder-led sales to AE/leader-led sales between $5M-$8M ARR. They started letting go once the team could close deals without them (e.g., the founders) and they could teach other people to sell the product the same way.
• At the time they hired two Heads of Sales to see what would work better: The first leader was more experienced with 10+ years of experience from Salesforce and the second leader was a person early in her career from an e-commerce startup. Only the second leader worked out. She still leads the EU sales region and generates 40%+ of revenue for the company.
• Sales needs to become a machine. The way teams talk, their output, how long it takes to close a deal, etc. All of these metrics are worth measuring. One thing Alex would have done differently is to invest early into revenue operations to clean up the data in Salesforce because this is the foundation for making good decisions in sales. Without clean data in the CRM, it will make pipeline management and tracking difficult. This is expensive to fix.
• With good data, Shuo’s entire focus is to consistently optimize and drive performance in the funnel. Despite scaling the team, Shuo and Alex remain close to the details of performance in GTM

Alex on letting go of sales

“We started letting go when we raised our series B and started to feel redundant in the process, about $5 million in ARR. We hired two heads of sales, one in the U.S. and one in Europe. We hired a very experienced no-haired person in the U.S. who was at Salesforce for 10 years plus and then a hustler, young lady, 30ish, coming off an ecommerce startup. Funnily enough, the first person lasted 1 year and [the hustler] brings in 40% of the organization’s revenue today.“

‍

GTM Tactics

• At $10M ARR, you should still be joining sales calls. He would join first calls with someone on his sales team and let them take the deal home. This 1) gave him great insight, 2) helped sales team members learn, and 3) kept him close to customers. He could go back to those customers for references.
• Create avenues for salespeople or team members to access the leadership team if they need it. You don’t want to lose deals because leaders didn’t feel “accessible” to the sales team. This only becomes a bigger problem as you get larger as you feel further away from reps closing deals. Examples are below.

Example: Deel's GTM Tactics

Tactic 1: >$100K ACV Slack Channel

• For any Deal greater than $100K ACV, they create an automatic Slack channel with the salesperson, their boss, and one executive sponsor. This makes sure there is always one executive involved in the deal and gives the salesperson permission to escalate anything if they need it

Tactic 2: “Hail Mary” Channel

• If a salesperson thinks they are going to lose a deal, they can provide a summary of a deal and ask someone on the leadership team to “throw a hail mary” and email or reach out to the c-level/leadership team. They saw a 30%-40% increase in engagement after implementing this. Again, it gives salespeople permission to escalate.

Deel’s approach to leadership hiring

• Common advice is leaders won’t scale. This hasn’t been the case for Deel. 90% of leaders they had at $1M ARR are still at the company and running functions. Not all of them have scaled to “c-level”, but they are leading meaningful portions of the business.
• Alex breaks up functions as the roles get too broad. This has helped him retain great people. As an example, his Head of Growth used to run all of growth and marketing. At $300M ARR, he realized that his Head of Growth was great at product/engineering growth and not marketing. He split the role. His Head of Growth now owns all traditional “growth” and he has a marketing leader. The same is true within sales where they have multiple Heads of Sales for different regions
• His advice is to overinvest and hire people with strong-potential. The successful leaders at Deel all fit this archetype and have scaled into leadership roles at the company

Alex on breaking up roles to help people scale

“It doesn’t mean they scaled all the way, they scaled in where they had strength. My head of growth, which used to do all of growth and marketing, when we got to $300 million ARR, that's when I realized I needed to split marketing and growth. She is significantly better at growth and it would be hard to find someone who cares as much but we have a gap in knowledge, we have a gap in quality of work on the marketing side”

‍

Deel’s approach to competition. Focus on customers and execute relentlessly.

• Deel operates in a competitive space and it could have been easy to get too focused on competition. In general, their philosophy is competition should not live “rent free in your head.” They try to keep a pulse on competition (e.g., why customers churn, why they lose), but beyond that they focus on execution
• Alex believes they are winning for one reason: execution and hard work. They work harder and faster, which compounds over time. They screen for hard work in interviewing. They tell everyone joining that Deel is not a 9-5 job. It’s a place where you’ll work hard and with some of the best people you’ll meet.

Alex on competition

"Most of them are surprised by how much we don’t care about our competition. I think you need to keep a pulse on the market, on your customers. Why are they churning? Why are you losing the deals? What are you missing? I think you should be looking forward, not backward. I think if you want to outscale them they should not live rent free in your head. The second thing in our case, is that we just work harder.”

‍

Maintaining team quality at scale

• Alex interviewed every person until 600 people (at that point, he was the bottleneck). He now only interviews in departments he thinks are not doing well where he needs to act as a bar raiser.
• They let go of the bottom 5% of the company every month. This is the culture they’ve built with execs.
• Deel is also very output driven. They built an internal tool that maps activity across products like Figma, Zendesk, Slack, etc. This helps them keep a pulse on who is actually working in the organization.

Maintaining approachability at scale

• As you scale, you will be further removed from lower levels within the organization. You probably don’t realize it, but people all over the company think highly of you and are probably a little scared of you. It is important to remain approachable to keep a pulse on the organization. Below are a few tactics that now work for Alex. Come up with ideas that are authentic to you.

Example: Alex's tactics to maintaining approachability

Tactic #1: Welcome Notes

• Each week, Alex’s EA sends him a list of new joiners. He sends a “templated” personalized message to every new joiner on Slack. This creates connection and humanizes him to people he doesn’t work with directly

Tactic #2: “Deelaversy” Notes

• Alex sends personal notes to everyone on their “Deelaversy” and asks them what they’d like to see in the product. He gets great product ideas and feedback from these notes. Again, it humanizes him with people he doesn’t usually work with.