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Pilot - Payroll, benefits, and compliance for remote teams

This week on the show, Aakash and Xand discuss Pilot [www.pilot.co]. Pilot focuses on helping companies hire, pay, and manage talent internationally. They solve the complexities that come with international hiring. Their competition is traditional enterprise personnel management solution providers and apathy. Pilot needs to be pleasant to use, and they have to get in front of people who would benefit from the new capability of the Pilot product -- painless international hiring. Xand and Aakash agree that there is a demand and the product can disrupt the traditional players, but they disagree on go-to-market. Go-to market risk is the make-or-break for Pilot. Xand thinks outbound sales and SEO are the best channels. Aakash thinks partnerships would be most fruitful.  

Contact:

Email: allschemesconsidered@aakash.io

Twitter: @aakashdotio [twitter.com/aakashdotio]

Music credits:  Syn Cole - Gizmo [NCS Release] provided by NoCopyrightSounds.

Autogenerated Transcript

Recording edited

Aakash Shah: [00:00:00] Hello, and welcome to All Schemes Considered. I'm your host Aakash Shah. And this is the podcast where we evaluate the ideas that venture capitalists have recently invested in. As usual I'm here today with my cohost Xand.

Hello, everybody. Today we're talking about Pilot. Their website is Pilot.co, and they described themselves as a platform to help companies, handle payroll benefits and compliance for remote contractors and remote employees. they're not focused only within the United States.  They allow you to hire across country lines. So you could assemble a team that has someone in Germany, Japan, and Brazil, or you could probably also use them to assemble a team that's entirely based within the United States. 

You know, from my experience working at yeah, a company that was remote first [00:01:00] for 10 years before the pandemic hit, and, you know, all these quarantines happened and suddenly remote work became very hip and happening.

There are some competitors in this space. Tri-Net has an offering. Tri-Net is a very large, employee management software company. And the one we use at Parse.ly is called Oasis, which was recently acquired by a company called Paychex. Paychex with an X they're very hip. and I can definitely say there's a lot of frustrations that come around managing taxes and benefits. And all the other stuff around hiring people remotely. so I think, there's definitely a market there that Pilot can go after the question is will they be able to capture that market? what about you, Xand, what thoughts do you have? 

Xand Lourenco: [00:01:46] I know sometimes on the podcast, we look at different companies that maybe are trying like an automated or some sort of,  fancy or clever way to automate some bit or part of a business that, many startups tend to have.

[00:02:00] But I think the interesting thing about Pilot is that I don't think they're doing that, right. Like  it's,  kind of a startupy low-friction, subcontracting or outsourcing platform, if that makes sense. So I don't think there's anything extremely, technically advanced about what they're doing.

It's kind of an outsourced HR compliance department for modern 24th century startups, right. Who are looking for a low-friction, low-effort way to just get this done and hire remotely. And they're willing to pay a little bit more for the kind of ease of use and lack of friction.

Aakash Shah: [00:02:32] Does that make sense?   (Xand actually said this line) 

And I think that makes plenty of sense. you know, there's a lot of opportunities out there for new products where,  there's an established market, but the tools within that established market are starting to age a little in there. They're becoming kind of ready for disruption to use, you know, the very, buzz word phrase,  if Pilot is just better to use than a lot of the, other more enterprise software out there, that means there [00:03:00] will be a space for Pilot in the marketplace and, , Just being better is a competitive advantage after a while, especially when you're dealing with huge and antiquated systems, you know, that are frustrating, which,  employee management software, our PEO software is not a sexy space that has had a lot of disruption of this sort.

  A good example for me would be comparing Robinhood to the established brokerages out there.  Robin hood does not provide everything, but it provides enough and it does it very well that they were able to garner a large percentage of market.

And now they provide a large number of trades. They're still not the size of the larger brokerage is out there, but that's okay. They don't have to be, they just have to. Have captured enough to make sure that they keep running. And that's what I think Pilot is trying to do here. 

Xand Lourenco: [00:03:53] Yeah, I agree. 

Aakash Shah: [00:03:54] So I think,  we've established what Pilot is.

We've established that [00:04:00] there is a need for it.  people do want to hire and pay contractors around the world because they want to access that global talent. Both because, you know, there might be someone brilliant that's not within your local community. And also it might be cheaper to hire someone outside of the local community.

 Pilot looks like it works as a payment platform and also like a relationship management plan form. All this is sensible. My question is how do they go to market? How they built this product? How do they get people? To actually use it. And how do they get people to pay for it?

Xand Lourenco: [00:04:36] Yeah, that's a great question, right? I'm not sure,  I know many startups and many -- even small businesses that they tend to have less money to kind of leverage something like this --  but especially now in the midst of a pandemic, I think there's a huge market for this and that. I don't really know what they're go-to market.

Cause like  don't see any kind of  major inbound  marketing. I just don't know what their go to market is. I can kind of get a sense 

Aakash Shah: [00:04:59] of it. [00:05:00]  Well, as we've said a few times on this podcast, there are kind of two approaches to building marketing channels. Right? You could commit to a marketing channel because you have prior experience in that space and it could just work out very well for you. This would be similar to, you know, a salesperson, a VP of sales when they start a new company, or when they joined a new company, just leaning into outbound sales and enterprise sales, because they have that experience and they know how to deliver with that marketing channel.

So that's one approach you can do just commit to a marketing channel and because you're good at it, you're able to get that initial traction. The other approach is to analyze your customers or your prospects, your potential buyers and see where they are. And, then try and  meet them where they are with that marketing channel.

 This is why you see a lot of blogs around web development, because you know, a lot of developers are very comfortable [00:06:00] with, Googling something and then maybe buying something after reading three or four articles, after a company has proved that they are an expert in their space and then buying something from that company, whereas they respond more poorly to direct outbound sales.

Xand Lourenco: [00:06:15] yeah, , most developers I know actually would dismiss you immediately There's actually not even a way to outbound sell a developer. 

Aakash Shah: [00:06:22] Yeah. and for the listeners, if you're not familiar, outbound sales is when someone just reaches out to you and says, Hey, I have something that I think you're interested in buying.

and usually it ends up in your inbox. And that actually brings up an interesting point in that the only channel, the only channel that everyone from the. Front of line,  BizDev representative to the CEO, the only channel that they all use and they're all, going to be available, be an audience for is outbound sales, because everyone has an email address and everyone has an inbox and everyone [00:07:00] beats their,  at the very least you're going to get them to read your subject line if nothing else.

I think the cause of that, that's why a lot of companies initially, lean into outbound sales and outreach. because , it's one of the easier ones. It's one of the faster ones to get going. Cause it immediately starts conversations if you're lucky, 

Xand Lourenco: [00:07:17] cause you can just start emailing people.

It's a low kind of a low friction way to. 

Aakash Shah: [00:07:22] Yeah. So now that we've spoken about some of these channels and kind of how they could be used, who is Pilot's buyer, and then once we know who their buyer is, we can think about  what channel we might want to use to talk to them.  

Xand Lourenco: [00:07:36] it's pretty clearly aimed at small to medium sized startups who are comfortable in a digital space, right? the kind of presumption of Pilot is that you're a company, that's got some cash and is already pretty comfortable with hiring  white collar labor across borders. And that's kind of clearly what their value prop is. 

They're not saying, Hey, use us to do all of your employees. They're saying,  [00:08:00] Hey, you're a startup with 10 people and you need, a junior to intermediate front end developer. You can either pay somebody in the Valley 200 grand or you could pay somebody in Romania 65.

He'll be just as good. And , you're kind of arbitraging the difference. There's no kind of content to  get people comfortable with that idea. It does seem to be a company very much aimed at other companies who are already on board with that idea who already don't mind hiring people in different times zones,  in different countries or languages, you know, well, language, you know, you have to have a shared language obviously, but it seems aimed at kind of the traditional, digital-first  startup or small business. 

Aakash Shah: [00:08:41] And do you think there's enough of these? What is the size of the market of, you know, kind of smallish, not large enough to necessarily adopt a, huge platform, but still a large enough to want to hire outside of  their local area? 

Xand Lourenco: [00:08:57] yeah, I mean, But the trick is finding them all.   [00:09:00] This isn't aimed at like Intel or IBM. Right? You're not going to pick up like a 5,000 employee contract because any company that big we'll just do this in house. If there's no, you know, there's no reason to use a service like Pilot, but I think if you can aggressively find, I think there's a lot of startups and small businesses who are digital first, who are between 10 and 50 employees who would do this, who would be like, "yeah, it makes a lot more sense for me to hire somebody for 40 or 50 grand in Mexico or Argentina or Portugal than it is to pay someone in one 50 to do the same job in the U S". The trick though that the problem with outbound sales and the problem with not having a huge inbound market is that's a lot of ground to pound, right?

Like it, if you're kind of picking up, you figure like your ACV for this. They tried, they tried a thousand bucks a month per employee. So you figure your average contract value is going to be what, 24, 36,000 a year. So you've really got to get a lot of volume [00:10:00] to make up the difference there. And I think that's where it's not, it's not really an enterprise sales team, if it doesn't seem like a go to market could be entirely based on enterprise sales here, maybe.

But I think that might be their limiting factor. They're constraining factor. It's just, you got to pick up all of these little deals to make it worth it. 

Aakash Shah: [00:10:19] And I think you've hit on a very interesting point of enterprise sales. When you have to have a human kind of manage the sale and manage the interaction, it becomes very expensive and you need to have high contract values to make that worth doing and make that profitable.

 Doesn't mean it's impossible. You know, there are plenty of companies out there , that do , outbound outreach initially, and then the sale might be very quick to do. It might only be like a one week sale instead of a six weeks, six months sales cycle. So a good example of that is Yelp.

Yelp does lots of very aggressive outreach to everyone. Like if you have a Yelp [00:11:00] for listing, they will call you and they will try and sell you on ads or whatever. there's a IOT company called Samsara that does the same thing for trucking companies, because trucking, you know, it's hard to do SEO for people that want trucking solutions.

But you need to have a shorter sales cycle to really make it worthwhile. And so you get that volume, which can be tricky.

 So it seems like we're currently on the edge about if the go-to market is there, like there is a problem. It's a good enough solution if they have a good enough interface and they're not too clunky to use. Is that their only solution? Is blasting out, thousands and thousands of emails and trying to get in front of as many people as possible, the only way they can grow?

Or do you think there's anything else they could do? 

Xand Lourenco: [00:11:49] Yeah. I mean, take a look click over to their blog. They've got like no content,   they're putting out maybe what, two articles a month on their blog. So  I think that the way, the way you kind of do a good go to [00:12:00] market here is you, you both get the people who need the solution now and you build  your pipeline.

 I should preface this, that maybe outbound sales is working for them. Like maybe they're, dogfooding their own product. If you can find a great salesperson and you know, in England or, you know, Germany or Portugal, who's willing to work for less and work for commission and they have good English, maybe  your acquisition cost isn't that high.

And maybe like a 1224, $36,000 account does make a lot of sense. You know, , if my acquisition cost for a $12,000 count is 2002 grand or three grand, I'll do that all day. You know, I'll just scale up my sales team and continue doing what's working. So I can't say for sure that they're outbound, like maybe they don't do inbound sales, cause it's not worth it, their pipeline saturated.

But that being said, I think an easy way to g- to market a lot faster would just be to start popping out content  about like, all about like hiring remotely, benefits, cost-benefit analysis, like, how much you could save hiring from different countries. It's like ratings for different white [00:13:00] collar workers from different countries and like arbitraging that and against local markets.

Of course there's a market for companies who are already comfortable at this. There's a much larger pool of companies who are not. And who I've kind of been forced into remote work recently and are maybe just dipping their toes and the whole idea.

So you could kind of do two things, right? You could use your blog to position yourselves as experts in the space to companies who already are looking for this and use it as like SEO, inbound marketing, but you could also use your blog to position yourself as an expert on why this is so much better, you know, you could, you could kind of see using your blog, create FOMO around, "Hey, everybody's doing this, you know, like you're, you're like a small company or a startup who has got 6,000 employees you've only ever hired locally."

Now you're in the middle of a pandemic. You need new talent, you need good cheap talent. You can't find it. You're getting, you're getting leapfrogged. So here's a platform for you to find great talent from across the world that will help you kickstart whatever it is you're [00:14:00] doing, . 

Aakash Shah: [00:14:00] So that's interesting. You're digging into the  customer problems, right? The customer problem might be like, they don't know how to work with a remote team. They don't necessarily know how to hire someone that might not be local . And a lot of times  instead of learning, they might just be opting out of doing it.

Xand Lourenco: [00:14:17] yeah, 

Aakash Shah: [00:14:18] exactly. I think that's interesting. I think it might be a little difficult to create an SEO strategy around that simply because the searches might not be there.  I'm sure if you dug in and you found what people are actually searching for, you could relate that back to the value offering of Pilot.

But, I think that could be a little tricky. What jumped out to me actually is a opportunity for partnerships with job boards, job boards that allow letter effectively remote postings and not actually partnering with the, people posting the job listings, because if you're posting the job listing, maybe you're already comfortable with doing remote and you probably already have a solution, but almost trying to use the contractors or [00:15:00] employees that you're working with  as like the growth mechanism. So you and I both work remote. if we're, maybe we're already on Pilot, we are already getting paid through pilot. When we leave our job, we tell whatever company we go work for in the future. 

"Hey, I know it might be a little annoying, but . It's easy to hire me, even though I'm in a completely different country because we can use this platform called Pilot and it's pretty cheap. And it could work. Like I know it works and it's very easy to use."

 Something like that could be an interesting opportunity. And then I think they might have to lean heavily on word of mouth from their current customers, because if they're really good, then people will certainly take them from their current job to their next job.

 It's a slow growth loop. Like it's not, you know, people don't change jobs every two months. They shouldn't be. But, you know, over the course of five to 10 years, like we saw with Zendesk, if you're good, if people learn how to use you, they'll take you as operational software from one location, from [00:16:00] one employment to another place of employment.

yeah, so that's what jumped out at me as possible growth opportunities  that might be. Going to where the customer is, because it might be hard to understand exactly what people are searching for and finding that intent, for SEO or for paid ads online. Right? 

Xand Lourenco: [00:16:20] Yeah. 

Aakash Shah: [00:16:21] I don't know.

What do you think about the partnerships idea? 

Xand Lourenco: [00:16:24] No, that that makes a ton of sense. That's a great way to insert yourself in a process that's already happening. And yet, to your point, it offloads the work of convincing companies to hire remotely to the job board sites who are trying to drum up business.

So as Pilot, I don't have to convince people that this is a good idea. That's the job boards problem, or whoever I'm partnering with. That's their problem. I just have to convince people I'm the right solution for the hiring bit. Once they've already committed to the idea of hiring. And I think that's a...

Yeah, I think that's a really solid path to growth as well and possibly something they're already doing. 

Aakash Shah: [00:16:55] Yeah. And actually you don't, I, this just occurred to me. You don't have to go through job boards. You can go through [00:17:00] recruiting firms or like placement companies. Right. And a placement company would be super excited if they could say,

 "Hey, look, we have a dude that's in the same time zone. He's just on a different continent. He speaks the same language and he'd love to work for your company. 

Xand Lourenco: [00:17:13] yeah. And, 

Aakash Shah: [00:17:14] you know, a recruiting firm, like the way recruiters make money is they usually take the 20% cut of the salary.  you know,  they would definitely pay $12,000 for a payment, a placement and subsidize the cost of Pilot.

So, you know, and this, you know, this guys, this might be something that they're already doing. We don't know. We're just two guys. evaluating this company from 30 to 45 minutes of it, researching them on the internet. but yeah, that's our take. I think if they can find a growth model and if they can continue just being a better solution than what's out there, they'll probably be successful.

I don't know if they're going to be IPO-for-a-billion dollar successful, but if you get big enough and if you're enterprise software, eventually someone will buy you. 

Xand Lourenco: [00:17:58] Yeah. I mean, they're, [00:18:00] they're going might not be to IPO, right? Like if they're, if they're cruising along with them, you know, with evaluation of like a hundred, 200 mils, someone picks them up, like that's a good exit, you know.  That's a solid,  epilogue for a company like this, Even if you're not aiming at IPOing , I think plenty of founders would be happy 

Aakash Shah: [00:18:13] with that. Yes, absolutely. And it looks like they've only raised the initial lie Combinator funding. So, the flight time there gave them 120 K and they cash out for a hundred million. Y Combinator is happy too, so, 

Xand Lourenco: [00:18:28] yeah, exactly.

Aakash Shah: [00:18:29] That's everything from us. If you have any questions or if you have any comments, please reach out. See y'all next time, 

Bye

I sincerely hope you enjoyed that episode. You can find me Aakash on Twitter @aakashdotio. So that's A A K A S H D O T I O, or you can find me at my website: aakash.io. This time "dot" is not spelled out.  Aakash.io also has [00:19:00] past and future episodes of this podcast, but whatever podcatcher you're listening on should have those episodes too.

Catch you all next time.