Episode Transcript
[00:00:07] Speaker A: Okay, everybody, today I am very excited to have a chance to talk to GP, formerly known as Globalization Partners founder Nicole Sahin and Nat Natarajan. And then we'll talk a little bit about the company and the market and the space and why this is so important.
[00:00:26] Speaker B: Yeah, absolutely. So I'm Nicole Sahin. I'm the CEO and founder of Globalization Partners, also known as and I founded the company and with it the global employer record industry about twelve years ago in 2012, with the intention at that time of building a way for companies to hire anyone anywhere, quickly and easily. At the time, it was really complicated. At any company that wanted to hire an employee in another country would have to set up their own subsidiary in country or registered office, figure out payroll, HR legal compliance in country, and ultimately expose the company to the HR legal and tax jurisdiction of a whole other country, oftentimes just to hire a couple people in that place. Since then, the global employer of record industry just has really taken off, especially since the pandemic. We saw billions of dollars of venture capital flood in right around the time of the pandemic. And that industry, it's very much accelerating and grabbing market share, but it's also, as an entrepreneur, it can feel like it's been too. Besides all the global legal infrastructure, there's software on top. No one's completely automated all of it yet, but our fundamental belief is that 90 95% of the business can be automated. There's always going to be human stuff that happens that requires people to support things on top, which is also where we specialize. And now it's almost like there's a new era upon us because there's so much global growth compliance opportunity to really rewrite the way businesses and companies do business internationally in an even more exciting way. And Natarajan is our chief product and strategy officer. He has just an unbelievable background. I'm going to introduce you, Nat, on your behalf, because nobody's going to say it like I talk about yourself the way I would, but Nat's the guy who made it possible to file a tax return turbotax on an iPhone and what he's done for simplify simplifying taxes in the United States. Also ancestry.com comma ringcentral. He has a long background of using AI and software to be at the forefront of technology and making things easier for everyone everywhere, and joined GP a couple years ago to take advantage of the unbelievable opportunity that we have to help people find the greatest opportunities anywhere they are in the world and connect them with the world's best employees.
[00:02:45] Speaker A: That's quite an intro. I want to hear more about your background.
[00:02:48] Speaker C: No, no, thank you. Thank you, Nicole. That was very flattering. Josh, super excited to be here. I think last we met was in San Diego, maybe in November. Look, I joined GP a couple of years back. I was really inspired by Nicole's vision of trying to create a platform which enables people to be hired anywhere on the planet to create opportunities. So I'm just excited to be on the mission with her and to continue using technology to make this easier for our customers and professionals across the globe. I've been with many different companies, ancestry, ringCentral into a turbotax, PayPal, travelocity, and all of them using technology to make things easier for customers and users has been my mission, and I'm super excited to be on this mission with Nicole.
[00:03:41] Speaker A: Well, and I've seen the product, and it really is sort of amazing how you guys build something that sort of sits on top of a lot of other systems to make this happen. But before we get into that, Matt, let's just do a little quick discussion of the problem.
I don't know how many people listening to the podcast are aware of the EOR market, but Nicole or Nat, what is the typical problem that companies run into that encourages them to call you? I mean, if I want to hire somebody in another country and I call them on the phone and say, all right, I'd like to hire you, then what happens?
[00:04:16] Speaker B: Yes, I'll take that one. So in the old days, in the old days, you know, a dozen years ago, so what would happen is that you'd say, I want to hire you. And then it's like you hit this roadblock of unbelievable legal, tax and HR complexity that would require 100,000 emails and about six months to get through before you could set up a company in that country, before you could figure out how to run, which is required to run payroll, which is required to employ people.
Employment is really highly regulated in other countries. And then typically when you hire people in other countries, you would have to file a tax return in that country. Like file audit requirements, comply with audit requirements in that country, all for one, you know, typically one guy, because it was often one salesperson in each jurisdiction. And what we did was we set up our own legal entities all over the globe with the idea. It's so much more scalable. If we have one company on the ground in each country, our customers contact us. And a typical deal would be like, hey, I need to hire us. Couple salespeople in this country. Or that country or both countries, and they go onto our platform, draft an employment contract using our AI guided chat wizard. When they hit send, the employment contract, locally compliant employment contract is sent out from our company on the ground in country, assigning the employee to work for that customer. The employee works for that customer for all intents and purposes, but legally there are employees. So basically the platform globalization partners platform keeps customers out of the legal, tax and hr jurisdiction of doing business in all of those different countries and lets us manage all of the compliance for them. So basically, as long as they're in alignment with our platform and using our platform, they're not technically doing business in all those countries, but they get the benefits of it. So a typical case would be again, companies wanting to hire a few people or like an m and a transaction. So let's say a company is spun off out of a huge company. You know, suddenly they need to set up, they need entities and like, and need to employ maybe 100 people across 15 countries. There's really no way to do that quickly or easily except using a platform like ours. And we're really known as the gold standard and compliance, which is really important. You know, if you're outsourcing all of your global compliance to a third party, it better be set up well and correctly, right?
[00:06:33] Speaker A: Yeah, theoretically, though it is. It is. It sort of like a peo around the world where the employee, if it's a full time person, actually works for you on behalf of your client.
[00:06:45] Speaker B: It's similar. So a PEo in the US, which is a very America centric industry, the customer still would have to have a company on the ground in that country. Ours is fully employer of record. But, yeah, it's not dissimilar. It's not.
[00:06:59] Speaker A: And when you started doing this, I don't think eor existed as a concept or a name, did it?
[00:07:06] Speaker B: It didn't, no.
[00:07:07] Speaker A: So where'd that name come from? Because a lot of people don't even know what an Eor means.
[00:07:12] Speaker B: Well, originally I was trying to do, I called it a global peo, but it's inaccurate. But the reason I was doing I called it that is because I knew people would use it. So for search engine optimization, we use the term peo, however, it's inaccurate. And I think employer of record, it's just a. We've had an issue with the industry still. A lot of people don't even know this industry exists. People who know it exists love it. And they're like, thank you, God.
[00:07:39] Speaker A: Investors are very high on it. I know that.
[00:07:41] Speaker B: Yeah. So it's a great industry because of the amount of complexity it simplifies and administrative overhead and headache that adds no value to a business. But employer of record, because technically we are the employer of record. There's really no easy way to describe it.
[00:07:58] Speaker A: But if your client wants to let somebody go for performance reasons or otherwise, how does that work?
[00:08:07] Speaker B: They contact us and we contact you.
[00:08:09] Speaker A: And you actually tell them that they're.
[00:08:11] Speaker B: Being terminated, which is a huge value because in the US you can let people go quite easily. But in most countries there's just so much, so much regulatory issues and processes that have to happen. So having our HR team handle it on the ground and, you know, all the, our software has all the paperwork already drafted up, so like, they don't have to contact a lawyer or anything like that. It's just we take care of it.
[00:08:34] Speaker A: And you're aware of the leading issues in each country in terms of work practices. And this goes obviously for contractors or part time people or other employment relationships.
[00:08:44] Speaker B: Correct.
[00:08:45] Speaker A: And the other thing about the market I just want to just discuss fairly briefly is there, I would assume the way this market works is the very large companies set up their own entities in each country and they don't have this issue. But even large companies do have this issue in jurisdictions where they just don't have enough people. Right. So this is not just for SMBs.
Tell us a little about your clients.
[00:09:08] Speaker B: Absolutely.
[00:09:09] Speaker C: We have clients of all different sizes.
[00:09:11] Speaker B: Right.
[00:09:11] Speaker C: I mean, we have some of, some of the Fortune 100, Fortune 500 and we have a lot of people across the globe who are small to medium sized businesses. I think the thing that the use case and angel double down on this is we have CEO's of large multi million dollar companies come to us and saying, I'm scared of the compliance of expanding globally. And I really want someone like you to help me navigate that. And these are not small companies. So the same challenges big companies have expanding in places that they're unfamiliar with. Small companies have the same thing. And we are providing a platform for both sizes of customers to solve their pain points. So we have customers across and you're.
[00:09:54] Speaker A: Trusted by ADP and a lot of big companies that deal with scale.
[00:09:59] Speaker B: Exactly.
We are the partner of choice. We say we're the partner of partners because all the big global HCM and global payroll companies really are partnering and integrating with us as a shared go to market platform.
[00:10:12] Speaker A: So let's talk about the tech part of this, because I think what's confusing to me and maybe has been confusing to other people is a lot of people think an EOR is a tech platform, and I think some of the newer competitors are sort of selling this like it's a new HCM system. Your strategy is a little bit different since you started doing this so early. Talk a little bit about how you. What is the technological solution that you provide?
[00:10:40] Speaker C: Yeah. Let me start by saying, Josh, that we are a human company, right. And we're using technology to make things easier. We have HR professionals in more than 50 countries. We are dealing with human beings. We need to make sure that we are there to handhold them through complex issues. So we started off with people, we'll continue with people. We are using technology to augment and make it better and easier for our customers and our professionals who are on our platform. So we really, you know, we are combining the two. We're combining people with technology. And I think in this industry, it is critical to do that. You cannot be just a tech platform without the people to back it up. And Nicole has built that infrastructure both on the entity side as well as people in all these jurisdictions, which is unique for us.
[00:11:30] Speaker B: It is. And I'll just add to that, I mean, coming from a well known Silicon Valley chief product officer, Rockstar Nat, basically, it's nice to hear that he's true, because ultimately. So I guess our thought is about 90 or 95% of the employer record industry can be automated. So things like sending out employment contracts and tracking employee time and expense reports, like, that's a no brainer, right? That's just paperwork. And even though that software doesn't exist, we're building it, and have built it in many cases, there's still, like, human issues that come up. You can't just terminate your employee by sending them a pink slip. You know, it's like they're. Or if somebody's sick or on maternity leave or, you know, these are humans. These are humans that are employed on behalf of our people. And so the way that you treat people is so critical to our customers who are employing teams around the globe who have to contribute. And, like, everything's not black and white. It's not just software and paperwork. It's the human element. And that's really where.
[00:12:28] Speaker A: Okay, I totally understand that, but these. These vendors, like, deal that kind of came out of nowhere, that are running around buying payroll companies. Would your argument be that they're most. Those are guys trying to apply technology to a problem that really isn't purely a technical issue? It seems to me like you started something that was very service centric and very solution oriented, and all of a sudden, it's turned into a tech space.
[00:12:52] Speaker B: I think it's both, to be honest with you, I think there's different ways of going about it. But ultimately, and what we hear from our customers all the time, and our partners who come to us in droves, like I said, we're the partner of partners because they're looking for a gold standard. And we get a lot of customers from other employers, people who try it out as a software and realize they ultimately need the human side, too. So, you know, you can build it as a service, or you can build it as software and ultimately realize that you need the service. You can't, you can't be successful without, without the human element and or your customers can't be successful. So I think a small startup, like, I see the attraction, because again, 90 something percent of it could probably be automated. But if you ignore the human touch, you're really going to end up in a difficult situation with your most important asset, which is your employees.
Hence our approach.
[00:13:45] Speaker A: So I think one of the initiatives I believe you guys are working on is creating a new language for the market to understand what you do and promote. This idea of a global growth officer or a chief global officer and a global growth platform, is that intended to replace the EOr category? Tell me a little bit about how you define that so people can understand where you guys are going.
[00:14:12] Speaker B: I can take that, too. Ultimately, I guess that the.
Ultimately, the idea is that, you know, yes, we have an employer of record platform, but it's around global growth and global compliance. And the idea that all of that can indeed be outsourced, you know, if you need somebody to support and help with global growth and global compliance, that's something we can support.
[00:14:36] Speaker C: Yeah. Let me just add to this, Josh, you had mentioned Eor. What is that? That's a very technical term.
And when people wake up and they think about going global, they don't think of Eor first.
So we try to make sure that it's easy for people to understand what we do and what we support, because the breadth is much.
[00:14:58] Speaker A: Do you think that people who should be worrying about these global growth issues, the head of HR, the head of the legal finance, all of the execs, none of the execs, all of them.
[00:15:10] Speaker C: Worry about it today.
All of them worry about it today because they all have different aspects.
[00:15:15] Speaker A: Isn't a big part of your business helping companies decide where to locate people and what the potential risks or downsides are? Or upsides are of locating people in different jurisdictions, or is that sort of left to somebody else to figure out?
[00:15:32] Speaker C: No, we are actually, we have deep knowledge. We have deep knowledge across the company and we have built it, and we share that knowledge with our customers and our prospective customers to help them decide what is right for them based on whatever needs they are trying to solve. And so we have a very consultative sales process to make sure that they actually get what they, what they're looking for.
[00:15:57] Speaker A: Right.
[00:15:57] Speaker C: Do spend time helping.
[00:15:58] Speaker A: So they may, they may say, we need a bunch of salespeople in Canada. And then you might say to them, well, where in Canada? And who are they selling to? And. Right.
[00:16:06] Speaker C: Or saying, hey, do you, I mean, understand the full burden cost of what, what this will mean, right. There are three other places where you could take a look at. And a lot of our customers stay with us for multiple years, right? And they expand. So they go into one country and then they come to us and say, hey, where else do you think these are? See, some of the challenges here are the roles we want to hire. Could you help us figure out where we should go, where we should expand? What should be the range of salaries we should consider? So we do use our insights and our knowledge to help our customers grow.
[00:16:39] Speaker A: Given the size of the market and how fast you guys are growing, do you believe that the big HCM providers would want to get into this market? The Oracle SAP workdays of the world or. I know you work with ADP now.
[00:16:51] Speaker B: We are getting into it through us. You know, I mean, I think they don't want to build it from scratch because it's actually incredibly complex. You know, most, most companies don't want.
[00:17:00] Speaker A: I can't even imagine how you guys do this with all these different groups of people in every part of the world.
[00:17:05] Speaker B: Totally. And I think more than you would expect. I mean, what we have heard, too, is a lot of the startups that started off in this space, they underestimated it, too, because they think it's all software. It's just not. And that's what we hear from our large, largest partners, too. And so that's actually a core part of our strategy. Some companies in this market are really trying to be everything to everyone. Redo Global payroll, Redo Hris. We feel like by focusing on global compliance and really pouring all of our resources and brains of our brainiac teams, you know, everybody into that and doing what we do best will ultimately be much more successful and then have a shared go to market with the biggest payroll and HCM companies in the world. So those companies include ADP, Paychecks, Workday, Trinet, all of which have different levels of partnership. But Cosell resell fully integrated partnerships on the roadmap with the world's biggest HCM and payroll companies.
[00:18:01] Speaker A: Okay, so we use ADP. So if I called ADP and said we needed to hire somebody in such and such a country, they may actually might bring you guys in?
[00:18:08] Speaker B: Yes.
[00:18:08] Speaker A: Yeah. Okay. How big is the talent and non compliance and payroll part of this? Companies dealing with training, onboarding, ongoing talent management.
Talent management related, the selection, the assessment, do you do any of that, or do you think that's just not your area?
[00:18:31] Speaker C: Yeah.
So I think the question you're asking is, do we help with recruiting? Did I get that right, Josh?
[00:18:38] Speaker A: Well, if I go to you and say, because I'm in. We've been through this in our company. We've just, we've used basically local employment agencies. But, you know, I need to hire five people in Canada.
I want to train them. I want to orient them towards the company and the products and the services. I go to you, you handle the. You don't handle the hiring. We still have to recruit them, right?
[00:18:59] Speaker C: That's right. You have to hire them. We will onboard them compliantly. We will make sure that you decide what benefits you want to offer them, what range of salaries you want to offer them, and then if you want to terminate them, we help you with that as well. The actual training on the company itself, we help in cases, but most of the times our customers want to handle that themselves.
So that's not a capability that we see a lot of in the market, but we do.
What should we pay them? How should we onboard them? How should we make sure that we are compliant and if we have a challenge with them, if you want to terminate them, how do we do this in the most expedient way for them and for us? So we help them through this lifecycle. But what happens in their company, how they manage, their onboarding, their training, that's something which, that our customers like to do. Nicole mentioned this. We have the partner of partners, so we partner with the top payroll companies, they're the top HCM companies, and we service all. I mean, all leads. There are Fortune 100 companies all the way down to a startup with three people.
[00:20:04] Speaker A: Do you think. I mean, we, Kathy and I have asked a lot of our Chro friends about Eor. A lot of them don't know what the words mean.
[00:20:12] Speaker B: Yeah, I know it's really complicated.
We're working on it.
[00:20:19] Speaker C: Yeah. Josh, I'll use a technical term, maybe in an HR context. Right. No one knew what the cloud was and everybody uses it. I believe we will be that. That category.
[00:20:32] Speaker A: Okay.
[00:20:33] Speaker C: Global growth, you will think of us.
[00:20:36] Speaker A: What else would you like people to know about the space and what they need to understand about the issues before they call you?
[00:20:44] Speaker B: Yeah, I would like people to know. I mean, I think there's, there's a lot of employer record vendors or companies that, that can help hire people internationally and say that they can help hire people internationally. But I would just say the quality of what you buy is really of utmost importance because you're outsourcing your global compliance to a third party. And as an entrepreneur who's built teams and God knows how many countries, you know, these are the most important people. They're building your company. It's so hard to get the right talent on board. We want to make sure that they're paid right, that they're paid well, and then, of course, also any time that you do a transaction. So, you know, most companies that are using our platform are using it because they ultimately want to exit the business or go public.
These are serious businesses with real investors. Making sure your compliance is tight on the back end is critical. So you can't just outsource employer of record to just anyone. And so I just really think that's important for companies to know and be aware of.
[00:21:45] Speaker C: Yeah. The other thing I'll just add on, Nicole, to what you said is we are a compliance company first. Right. That's our job. One, two, and three. And then we are taking that knowledge, those insights from black lateral law, and creating those insights. And we are AI forward now. We are giving that knowledge set in the hands of our customers, which I think is unique.
We have gone from black letter a lot of insights and the transactions that we built up over the last twelve years, which is a treasure trove for us.
[00:22:20] Speaker A: Well, you guys, thank you very much. I think you're in a enormously fast growing market that's really incredibly important for every organization. It's amazing to me how it kind of came out of nowhere and it's suddenly becoming so massive. So thank you for spending a little bit of time today, and we'll do a lot of more fun things together.
[00:22:38] Speaker B: Thanks for the opportunity. Josh, nice to speak with you.
[00:22:41] Speaker C: Thank you. Josh.
Sa.
