It’s a sweltering September day in Washington, D.C., and Deel CEO Alex Bouaziz has a pressing question for his staffers, who are packed tightly into a nondescript gray sedan driving around Capitol Hill. “What is the one thing I really need to know about U.S. politics before meeting all these congressmen and congresswomen?” the 30-year-old Frenchman asks from the back seat. “I really don’t want to look too stupid.”
One executive is quick to offer up a truism, a minor variation on “money is everything.” But Bouaziz already knows that. Deel, his San Francisco–based startup, has been challenging the recondite world of international labor law compliance since launching in 2019, splashing around its $675 million pile of VC cash to help other companies handle legal and HR operations in 100-plus countries. In a land grab reminiscent of Uber and Lyft’s early city-by-city showdowns, Deel has been scrambling to grow as fast as possible—even if that means exploiting gray areas or allowing clients to bend a regulation or two.
“We are pushing borders in terms of global hiring,” Bouaziz says. “It’s not something people are used to.”
His software has been an instant hit. Thanks to the pandemic’s uprooting of office work worldwide, Deel’s revenue skyrocketed from $1.4 million in 2020 to $169 million last year. Sales should more than double this year, coming in around $350 million. In terms of annual recurring revenue, a popular metric in the software business, it was at one point the industry’s fastest growth ever. It has been “a bit of a fairy tale,” says Deel investor and former Disney Studios chairman Jeffrey Katzenberg.
In 2021, Bouaziz was featured on the Forbes 30 Under 30 list. He and his cofounder, Shuo Wang, 34, briefly became billionaires in 2022, thanks to a fundraising round that valued Deel at $12 billion. (On the secondary market, Deel’s valuation has since fallen back to about $7 billion, making each cofounder worth something like $850 million now.)
But moving fast has consequences, and Bouaziz has come to Capitol Hill to make nice with regulators, who are concerned about claims that Deel has misclassified its own full-time workforce as freelancers. Bouaziz insists it was a misunderstanding and has scheduled two marathon days of meetings to clear things up. That includes a sit-down with Rep. Adam Schiff (D., California), who with five other members of the House wrote an open letter in July expressing concerns over what Schiff described as Deel’s “serious abuse” of labor laws. “If it is likely that Deel is unable to abide by employee classification laws themselves, and they are in the business of helping their clients classify their employees, how sound can their advice be?” the lawmakers asked.
Misclassified employees weren’t Deel’s only governmental headache. Earlier in September, Deel had become entangled in a probe by the Commodity Futures Trading Commission into a client, My Forex Funds, which was formally charged with fraud by U.S. authorities. Bouaziz says Deel has removed it and more than a dozen similar foreign currency trading firms as customers upon advice from his banking partners. Deel was not directly implicated, but Papaya
Global, a rival New York–based HR software startup, seized on the moment to launch a marketing campaign questioning whether Deel was taking “shortcuts” on compliance to “pursue a strategy of growth at all costs.” Some companies have left Deel for Papaya since the scandal, a Papaya representative told Forbes. Other clients, including Nike and Subway, were embarrassed by the situation and asked Deel to remove their logos from its website (both remain clients, Bouaziz says).
These speed bumps are unlikely to seriously diminish the demand for Deel’s service, though. The workforce is inexorably becoming more remote and global. Bouaziz is a living embodiment of that shift, splitting his time among his home offices in Paris, London, Tel Aviv and Dubai.
After Bouaziz’s first startup (a video creation phone app called Lifeslice) failed, he reconnected with old MIT classmate Shuo Wang in 2018. Later that year at startup incubator Y Combinator, the two spent weeks building debt collection software before abandoning it to become a payments platform for companies with independent contractors abroad.
By late 2019, sales were growing a steady 20%—not annually, but every month. “Holy cow,” Aaron Harris, one of their Y Combinator mentors, remembers saying upon hearing the numbers. “Do you realize how well this is going?”
Prior to the pandemic, international hiring was almost exclusively done by large enterprises. For smaller businesses, the associated costs were prohibitive. “The reality before Deel was that it was honestly almost impossible to be completely compliant,” says Christophe Pasquier, cofounder of the productivity software startup Slite and one of Deel’s earliest customers.
When Covid-19 forced remote work into full swing, Bouaziz and Wang saw a make-or-break moment. Thanks to a $14 million Series A funding round in May 2020 from VC shop Andreessen Horowitz, Deel sprinted to establish foreign business entities in-house. That way, if a customer wanted to hire someone in Germany, for example, that person would technically be employed through Deel’s German entity.
In the early days, a five-person “Navy SEAL” team was tasked with going from country to country incorporating local business entities in rapid-fire succession. Speed was vital. Set up a country too late, Wang says, and Deel might lose a geographic market to smaller competitors such as Remote ($3 billion valuation) or Oyster ($1 billion). Deel ultimately raised four funding rounds that spiked its valuation to $225 million (September 2020), then to $1.3 billion (April 2021), $5.5 billion (October 2021) and finally $12 billion (May 2022). Its investors include Spark Capital, Coatue and Laurene Powell Jobs’ Emerson Coll...
One executive is quick to offer up a truism, a minor variation on “money is everything.” But Bouaziz already knows that. Deel, his San Francisco–based startup, has been challenging the recondite world of international labor law compliance since launching in 2019, splashing around its $675 million pile of VC cash to help other companies handle legal and HR operations in 100-plus countries. In a land grab reminiscent of Uber and Lyft’s early city-by-city showdowns, Deel has been scrambling to grow as fast as possible—even if that means exploiting gray areas or allowing clients to bend a regulation or two.
“We are pushing borders in terms of global hiring,” Bouaziz says. “It’s not something people are used to.”
His software has been an instant hit. Thanks to the pandemic’s uprooting of office work worldwide, Deel’s revenue skyrocketed from $1.4 million in 2020 to $169 million last year. Sales should more than double this year, coming in around $350 million. In terms of annual recurring revenue, a popular metric in the software business, it was at one point the industry’s fastest growth ever. It has been “a bit of a fairy tale,” says Deel investor and former Disney Studios chairman Jeffrey Katzenberg.
In 2021, Bouaziz was featured on the Forbes 30 Under 30 list. He and his cofounder, Shuo Wang, 34, briefly became billionaires in 2022, thanks to a fundraising round that valued Deel at $12 billion. (On the secondary market, Deel’s valuation has since fallen back to about $7 billion, making each cofounder worth something like $850 million now.)
But moving fast has consequences, and Bouaziz has come to Capitol Hill to make nice with regulators, who are concerned about claims that Deel has misclassified its own full-time workforce as freelancers. Bouaziz insists it was a misunderstanding and has scheduled two marathon days of meetings to clear things up. That includes a sit-down with Rep. Adam Schiff (D., California), who with five other members of the House wrote an open letter in July expressing concerns over what Schiff described as Deel’s “serious abuse” of labor laws. “If it is likely that Deel is unable to abide by employee classification laws themselves, and they are in the business of helping their clients classify their employees, how sound can their advice be?” the lawmakers asked.
Misclassified employees weren’t Deel’s only governmental headache. Earlier in September, Deel had become entangled in a probe by the Commodity Futures Trading Commission into a client, My Forex Funds, which was formally charged with fraud by U.S. authorities. Bouaziz says Deel has removed it and more than a dozen similar foreign currency trading firms as customers upon advice from his banking partners. Deel was not directly implicated, but Papaya
Global, a rival New York–based HR software startup, seized on the moment to launch a marketing campaign questioning whether Deel was taking “shortcuts” on compliance to “pursue a strategy of growth at all costs.” Some companies have left Deel for Papaya since the scandal, a Papaya representative told Forbes. Other clients, including Nike and Subway, were embarrassed by the situation and asked Deel to remove their logos from its website (both remain clients, Bouaziz says).
These speed bumps are unlikely to seriously diminish the demand for Deel’s service, though. The workforce is inexorably becoming more remote and global. Bouaziz is a living embodiment of that shift, splitting his time among his home offices in Paris, London, Tel Aviv and Dubai.
After Bouaziz’s first startup (a video creation phone app called Lifeslice) failed, he reconnected with old MIT classmate Shuo Wang in 2018. Later that year at startup incubator Y Combinator, the two spent weeks building debt collection software before abandoning it to become a payments platform for companies with independent contractors abroad.
By late 2019, sales were growing a steady 20%—not annually, but every month. “Holy cow,” Aaron Harris, one of their Y Combinator mentors, remembers saying upon hearing the numbers. “Do you realize how well this is going?”
Prior to the pandemic, international hiring was almost exclusively done by large enterprises. For smaller businesses, the associated costs were prohibitive. “The reality before Deel was that it was honestly almost impossible to be completely compliant,” says Christophe Pasquier, cofounder of the productivity software startup Slite and one of Deel’s earliest customers.
When Covid-19 forced remote work into full swing, Bouaziz and Wang saw a make-or-break moment. Thanks to a $14 million Series A funding round in May 2020 from VC shop Andreessen Horowitz, Deel sprinted to establish foreign business entities in-house. That way, if a customer wanted to hire someone in Germany, for example, that person would technically be employed through Deel’s German entity.
In the early days, a five-person “Navy SEAL” team was tasked with going from country to country incorporating local business entities in rapid-fire succession. Speed was vital. Set up a country too late, Wang says, and Deel might lose a geographic market to smaller competitors such as Remote ($3 billion valuation) or Oyster ($1 billion). Deel ultimately raised four funding rounds that spiked its valuation to $225 million (September 2020), then to $1.3 billion (April 2021), $5.5 billion (October 2021) and finally $12 billion (May 2022). Its investors include Spark Capital, Coatue and Laurene Powell Jobs’ Emerson Coll...
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Forbes (Digital) - 1 Issue, December 2023 - January 2024