← The Peel with Turner Novak
The Peel with Turner Novak
Building the $3B API That Didn’t Exist, Europe’s Regulation Problem | Marcelo Lebre, Co-founder of Remote
01:52:16
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- [00:03]
Turner Novak
Welcome to the Peel.
- [00:04]
Podcast Producer/Host Assistant
I'm your host Turner Novak, founder of Banana Capital. Today's guest is Marcelo Lebre, co founder and president of Remote, the payroll and international employment company. Remote plays their cards pretty close to the chest, but piecing together public information, I'd argue Remote is one of the most underrated software companies, doing hundreds of millions in revenue and generating a lot of cash. Our conversation gets into why Payroll is so complicated and hard to solve, why so much of the industry still runs on spreadsheets, the edge cases of software meeting the government, and the diagnosis of Europe's regulation problem. We also get into the insane story behind trying eight different startup ideas before remote launching in 2019, how Covid changed things overnight, and what he's learned about building culture and running Remote teams. A quick thank you to Gillian o', Brien, Vili Ilchev, Andreas Klinger, Masha at Day One, and Marcelo's co founder Yub for helping brainstorm topics for this A reminder that I publish two episodes of the Appeal every week exploring the world's greatest startup stories just like this one. Check out the back catalog of over 100 episodes and tune in next week for conversation with Nathan Benesh, founder of airstreet Capital and author of the State of AI Report. Now let's talk to Marcelo after a quick word from Numerl and Flex.
- [01:18]
Turner Novak
This episode is brought to you by Numerl. Numeral is the fastest, easiest way to stay compliant with US Sales tax and global vat. It's easy to set up and they automatically handle all registrations, ongoing filings, and their API provides sales tax rates wherever you need them with all the integrations you need. Numero sports over 2,000 customers in both the US and globally and they pride themselves on White Glove High Touch customer service. Plus they guarantee their work and they'll cover the difference if they mess anything up. They're fresh off a Fundraise closing a
- [01:48]
Podcast Producer/Host Assistant
$35 million Series B from Mayfield, which
- [01:51]
Turner Novak
they're going to reinvest into building an even better product. If you want to put your sales tax on AutoPilot, check out numerl at their new domain numerl.com that's n u m e R-A-L.com for the end to end platform for sales tax and VAT compliance.
- [02:10]
Podcast Producer/Host Assistant
This episode is brought to you by Flex. It's the AI native private bank for business owners. I use Flex personally and I love it because they use AI to underwrite the cash flow of your business, giving
- [02:20]
Turner Novak
you a real credit line.
- [02:22]
Podcast Producer/Host Assistant
The best part is 60 days afloat, double the industry standard. Flex has all the features you'd expect from a modern financial platform like unlimited cards, expense management, bill pay that syncs with your credit line and their new consumer card, Flex Elite. FlexElite is a brand new ramp like experience for your personal life. A credit card with points, premium perks, concierge services, personal banking, cars and expense management for your family members, network tracking across public and private assets, and a whole lot more fully integrated with your business spend. One card for your businesses, one card for your personal life. One card for everything. To skip the waitlist, head to Flex 1 and use my code turner to get an additional 100,000 points worth $1,000. After spending your first $10,000 with FlexElite, that's Flex 1 and code turner for $1,000 on your first $10,000 of spending. Thank you, Flex. And now let's jump in.
- [03:17]
Turner Novak
Marcelo, welcome to the show.
- [03:19]
Marcelo Lebre
Thank you. Happy to be here.
- [03:21]
Turner Novak
Yeah, I'm happy you're here too. Probably one of the coolest backgrounds of anyone who's been on the podcast before.
- [03:27]
Marcelo Lebre
Thank you. Many years in the making, for sure.
- [03:31]
Turner Novak
I should have asked you this before we started recording. Do you play the arcade game a lot? That's behind you.
- [03:36]
Marcelo Lebre
Not as much as I want to. What? I'd love to. So I have a kid and initially I bought it and he was part of the excuse why I bought it. At least that's what I told my wife. But I think I have more hours playing on it with him than on my own. I wish I had more time. I used to think about myself as a gamer. I still like to think myself as a gamer, but it's a platonic thing at this point.
- [04:06]
Turner Novak
Yeah. My favorite lately is Minecraft. I don't know how old your kids are, but mine are 9 and 5. So we play Minecraft together. It's mindless, easy. They love it. Kind of like playing with Lego.
- [04:17]
Marcelo Lebre
Yes. It's very relaxing. Like, we do the same. So we play on Switch and it's very like, I could just build random shit and then tear it down at the end. It's kind of nice.
- [04:29]
Turner Novak
Yeah. We've actually had twice now. So we made our house out of wood, which is. You'll learn why. Not a good idea. We've had it burned down accidentally twice because we've been like using. Well, because you can like, you use lava for a couple different ingredients. And I think one of them was me and one of them was my daughter. We're like walking with lava and accidentally Poured it and burned down the entire house. And you like, you know, so don't make a house out of wood if you're playing Minecraft.
- [04:53]
Marcelo Lebre
Yeah, we've been making roller coasters.
- [04:56]
Turner Novak
Oh, amazing. Do you actually. Okay, this is a totally different topic. People can skip over this. They don't want to hear it. So when you do that, do you actually go down and find like the. Where you can collect the tracks or do you make all the tracks yourself?
- [05:08]
Marcelo Lebre
Well, we make it. We use the easy version. And so we make it like, first we make really, really tall buildings, like as a massive lighthouse, very well decorated. And then we start building it up and then goes through the water and deep in the caverns and we make caverns and we find cool shit and it takes days and we completely go into ADHD mode and we end up doing something completely random. And then we're like, oh, we forgot the roller coaster.
- [05:37]
Turner Novak
Oh, nice. So do you do that in survival mode or creative mode?
- [05:41]
Marcelo Lebre
Creative. Yeah.
- [05:42]
Turner Novak
Okay.
- [05:43]
Podcast Producer/Host Assistant
I was gonna say.
- [05:43]
Turner Novak
Yeah, survival. That'd be a long time.
- [05:45]
Marcelo Lebre
Yeah, yeah. My kid goes. He started to freak out a bit when the creepy shit was coming up and he was like, oh, my God, dad. You know this part I don't like. Okay, so we'll go into creative mode.
- [05:58]
Turner Novak
Yeah. Speaking about creative mode, maybe this isn't even a relevant topic, but we should probably start talking about more other stuff. So remote, your company, really quick. For people who are not familiar, you guys are actually pretty big. For people who are not familiar with you, kind of. What is remote?
- [06:17]
Marcelo Lebre
Yeah, we're a global payroll and international employment company. So we essentially allow companies to hire, find, manage, and pay people anywhere in the world, no matter if they have their entities in any country or not. So it really does matter. And we have everything under the sun to help HR teams to do their best across the world.
- [06:38]
Turner Novak
Your co founder job tweeted recently that I guess there's rumors from competitors, they're saying stuff, but he's like, we're growing fast. We're free, cash flow positive. I think I heard on a different podcast he did with Excel, he mentioned hundreds of millions in revenue was his number. I don't know what you guys have said publicly. What's the state of the business? Is there a number you guys used publicly?
- [07:05]
Marcelo Lebre
No, not yet. It's not public yet, but it's still in the same vein. So hundreds of millions. We're about 2,000 people all across the world, fully distributed. So company grew very fast and we're sort of, you know, what we're in in a space that is supposed to be boring, with HR and payroll space.
- [07:27]
Turner Novak
Yeah, it's like the unsexiest.
- [07:30]
Marcelo Lebre
Yes. It's like, look, we exist specifically to make cool, excellent software in a very boring topic. In a topic that should be like, you get done and done, but it's like at the most competitive, most crazy space. The good thing is that Job and I are builders, and so we like, we don't really pay much attention to that. Every once in a while there's a crazy something happening and we have to react to it. But you keep building. That's essentially it. And I think it always happens when there's a company that is growing fast for whatever reason. I think it's a bit human nature that you have a tendency to like, oh, no, there's no way this can be possible. There's no way this can be legit. And so we always have these kind of sort of behaviors. Just ignore it and keep going.
- [08:21]
Turner Novak
Interesting. So, I mean, one thing I do have to ask you about. There's kind of a very public battle in the payroll tech company right now, like corporate espionage and spies and all that stuff. What's kind of been your. As like an outside observer to that? I don't know if you've found any spies internally at remote, but what's kind of been your perspective on what's going on?
- [08:45]
Marcelo Lebre
It's just such a distraction. Look, we saw it on the news. We saw it at the same time as everyone else did, as far as I know, not involved. My reaction to this is I don't know what's true, I don't know what's not. And of all the businesses that you can build out there, of all the kind of, I don't know, there are businesses where it really is a niche. I don't know if you're building something for a small cohort of potential customers. And it's very cutthroat. It's very hard, and it really probably starts to get crazy in that pain. But in our line of business, literally, the world is your Tammy. I know this is kind of corny for people to say for entrepreneurs specifically and founders to say, hey, the time is the world.
- [09:44]
Turner Novak
It's indefinite.
- [09:45]
Marcelo Lebre
But we run payroll for global business like any company in the world can be a customer. It's as simple as that. We run payroll for companies like Aston Martin and Burger King and OpenAI and. And all those big names. But we also run payroll in Portugal or Spain for a very tiny company of five people. So ultimately, any company in the world can buy from us and you know, people in our space now there's like three or four big names in this space and growing fairly fast. But in a lot of ways, we don't even see each other competitively. I mean, in some of the opportunities, we don't really see these opportunities, these competitors. So it, I mean, if, if, if there's any validity or, or not in these sort of things, I just find it a total, massive distraction because the upside is very minimum for the infinite downside it can bring now. And this is just to say if, if there's any truth to anything in any of the sides, be it the allegation, the victim or the defendant. So I really don't know. And sometimes I think about, I tried at the beginning, like, what do I think about this? And the bottom line is that there's nothing to think about. I think there's so much work in this space to be done. We're all working and building towards the future of work. Having a way for companies to hire, pay and manage people all across the world and remote. Started by building every single thing in all the countries in the world. Dude, this is a lot of work. We spent half a billion dollars in infrastructure to do this. And as far as I know, I think we're the only ones that did this in this way. Where every single country, we own everything. There's no third parties, there's no nothing. We don't duct tape anything.
- [12:02]
Turner Novak
Yeah. So what does that kind of consist of inside? What makes it so hard?
- [12:08]
Marcelo Lebre
Yeah, so think about, you want to pay someone. In Portugal, where I'm from, you have two ways. One is this person is either like a temporary person, contract is like a freelancer, sort of contractor, or you have your own entity and we run payroll for you. There's a third option that is employ record where we are the employer and you find the person and we pay the person for you. The person has a working contract, so and so forth locally, all this. And in between all these options, we can provide it. This means that in every country you have to have a legal entity. You need to understand all the payroll tax, corporate fiscal laws involved with everything, time and attendance. And then you have to absorb all this knowledge that by the way changes once or twice or more a year. And also, if you want to have a business that is not service business, you want a product that you want to sell, you have to build it into a product, into a platform, and so have a way to run fully complex payroll, end to end with as little human involvement of humans as possible. So this means that we had to go across the world. We spent, as I said, like half a billion dollars, like $500 million that we spent in investment to build the global infrastructure.
- [13:38]
Turner Novak
This is like capital that promote has wired outside of your bank accounts in like paying the people or.
- [13:46]
Marcelo Lebre
No, no, no, no, no, no, no. We, we fundraised because if you want to talk about those numbers, it's over $5 billion billion dollars a year like that we process. So it's money that is paid to people all across the world for their work, for the projects they do, for the employments. They, you know, people that you know, do taxable events like selling shares in the secondary, selling their businesses, you name it. And so it's think about automating a full HR department. HR and payroll department. That's us. So my point on all this big ARC is to say there's so much to do, then waste time on stuff like this or thinking about stuff like this. So I really have no. My business takes me so much time to really evolve and build into the thing that I wanted that I believe that it should be. There's no point.
- [14:50]
Turner Novak
Yeah, well. And so I think it kind of hits on an interesting point. Why is it so hard to do this? Why is it so hard to build? Because I would just assume as somebody who just hears like, oh, you know, payroll, you wire people money. Okay, there's an employment contract. It should be easy. So what makes it so difficult?
- [15:11]
Marcelo Lebre
I love this. I remember, I think first year of remote, maybe first year and a half or so. I'm an engineer. I started remote as CTO with my co founder and I remember one of the first board meetings, maybe not the first, but maybe 2 or 3 yuan. I remember. So Vili, who now founded Category VC, he was like, hey guys, what can I do to help?
- [15:47]
Turner Novak
Classic VC line.
- [15:49]
Marcelo Lebre
Yeah, he's actually one of few OGs.
- [15:53]
Turner Novak
Yeah, no, he's amazing in any way.
- [15:55]
Marcelo Lebre
He's like, yeah, what can I do home? And I was like, just go like, if you have any interest to cool tech payroll companies, I want an intro. If not fund them. Because I want to build connectors to all this. And in my simplistic mind, this was like six years ago. I thought, you know, I'm just going to plug remote into all the APIs across the world, push the numbers, get payroll and then push out the money. None of this exists. I think engineers are such pampered professionals because if I want an API to connect to AWS. Hey, here's 10 APIs per framework, per language. Hey, you want to connect to no stripe. Here's three APIs that you can just connect and plug in. And we live our merry way in our merry lives, thinking there's an API for everything. And this was very much like 2005, 2010 server Moto. And I realized that, we realized that in this space there's no such thing. There's no modern infrastructure for payroll, for global payroll. And then my, my second realization, realization was, holy shit, I'm going to have to build it. And so you ask like, why? Why is it so complex? So think about the complexity that is, you know, running payroll in the US it's that per every country across the world, times n. Because there are many countries where the complexity of payroll taxation is so dense that some questions are really unanswerable. So let me give you this example. If Turner now decides to move to the Netherlands and you're married, five kids, two dogs, one parrot, you lost a leg in a freaky accident, but your business is now going to be sold to a company that is in Shanghai, good luck understanding how your taxes are going to be. Because you are literally an edge case in every single item that I described. Why? Because in many of these companies, the countries, the fact that you're married puts you in a different bracket. The fact that you have more than X kids puts you in a very specific bracket. The fact that you have a disability puts you on another bracket. And the fact that you're going to sell an asset that is not even in that country puts you on another exception. And by the way, I'm now already talking about exceptions. And then the buyer is not even on that country, nor the country worth the asset you're trying to sell. All of this is of an exponential amount of complexity. And you think, holy shit. Yeah, it's complex, it's crazy, it's one off. No, I'm going to tell you that 70% of the people are edge cases for every government because the laws are made linearly. They are not thought out to be additive. And so the moment you start to compose those scenarios, that's when it's like, oh shit, interpretation matters a lot. And now you need an expert. But also eventually you'll need a writing and an underwriting from the country to say, yes, this is correct. So in the U.S. by the way, a lot of this exists. However, given the nature of the country and how forward looking it is from an entrepreneurial standpoint, a lot of these things are heavily simplified and heavily codified as well. Most countries do not have this. For instance Portugal, the definition of a startup has only existed in the past two years. Before that startup was not a thing. Stock options for instance in Germany are not a decent thing either. You have to read out loud the bylaws of a company as a corporation takes hours.
- [20:31]
Turner Novak
I actually do that.
- [20:34]
Marcelo Lebre
So this is the kind of INSANITY that times 200 countries across the world and it takes quite a lot. The way I usually joke about it is HR is payroll, payroll is tax, tax is legal math and legal math is extortion. So the way to think about it, all these layers have to be interpreted. Some are more linear, others are heavily subjective and heavily dependent on interpretation. So you have to develop the knowledge at all these levels to adopt and automate as much as possible. You have to have the know how that today is can be embedded in AI to make a lot of the decisions. And then sometimes you need a good interface with the local government to validate and execute upon some of these items. But, but that's, that's the challenge. And most people think well, but this isn't like, you know, payroll has existed for hundreds of years. You know people, I'm sure someone is going to say, well I remember my grand or great grandfather saying that they got like the, their pay at the end of with an envelope with the name of the company like this and then saying $200 for a week worth of work. Yes, it's true, but it evolved very slowly across dozens of years and hundreds of years in a way that most people then think, well I can really build a scalable business out of this because you can just add people to it. And so it became a boring sort of business way to do things locally in every country. So now with all the technology that was amounted and that our vision was okay, what if we can aggregate all this knowledge and build with the best automation possible in every country and then you can really build something that is different. But it really takes an insane level of obsession on a per country basis to capture all these tiny moments, all these tiny things that happen and change so many times and then make it into a product. There's a level of insanity there and I admit to it.
- [23:02]
Turner Novak
Yeah, Xamin sounds a little insane to take this on. One thing you mentioned I thought was interesting, you kind of hinted that a lot of people don't use software to do this. Like a lot of it is still kind of being done manually in the payroll space. People use agencies that they work with is it like a lot of. Just like some. There's like a lot of a woman at corporate who just spends her entire day with a spreadsheet that she's automating and using a bunch of software in different countries maybe to do it. And what does it kind of look like if you're not using remote.
- [23:36]
Marcelo Lebre
It's all as you said. But it's the tip of the iceberg. You have folks in countries using the Same software for 10, 20 years, software that is discontinued, that sometimes runs in virtual machines because it's Windows XP or Windows 2000 or because it was something that is, you know, because it's a glorified spreadsheet that has some rules updated once or twice a year and people don't like, yeah, like why? Why should I update this? And then the problem starts to happen when, you know, you reach out to these agents, agencies and they're like, yeah, I want to give a bonus to this person. Or now there's equity. Or now this person moved to another country. Or now this person got. Because laws are evolving also very rapidly now to account for all this migration of expats across the world. And a lot of the software that is being used is discontinued. So even big players out there that a lot of big companies use, modern companies use on the back office, they use it. It's a bunch of people, it's a massive workforce.
- [24:49]
Turner Novak
So it's a software company with just people in the background doing everything.
- [24:53]
Marcelo Lebre
And I can give you several. One massive example where in one country, the first AI engine we turned on that essentially does everything end to end, ran all the payroll. Great. In split seconds. And then we said, okay, just for sake of consistency, let's back propagate payroll and check against previous results. And we're like, oh, there's a discrepancy here. We must have done something wrong. And we look into it. We looked into it engineering, looked into it and we couldn't find anything wrong. We turns out the provider was making mistakes for years and no one would check because that's the hard reality. At the end of the day, most countries, they will not double check if it roughly looks correct.
- [25:55]
Turner Novak
So even the tax authorities, they'll just like, ah, this number looks decently close enough. We'll just take the money and we'll move on.
- [26:02]
Marcelo Lebre
Some countries, they still operate in that margin. Others have some level of automation, like high level. If it's just linear, it will be okay, but most of it not. And then if you're like, hey, I made 2 million this year and I'm going to pay zero taxes. You're going to be, nah, this doesn't look right.
- [26:24]
Turner Novak
I wish you could do that.
- [26:26]
Marcelo Lebre
If you do the opposite, they will also get triggered. Like, you made no money and you're paying 2 million in taxes. They're like, what the hell is this? Because it triggers. The way it mostly works is in many countries, you trigger the upper bounds. Like, is this too crazy or is this too low? If it's somewhere in between. That's why a lot of people go through tax scenarios in years and they don't do what's right, of course. And ultimately they're like, yeah, we got a letter, we got an audit, things are not peachy. And then you go back. That's why a lot of this can be automated. The complexity is so big and most organizations and countries and governments don't really have the will to really invest into it. So, yeah, it's a rabbit hole. It's solvable, but it's an incredibly annoying, boring space. But the outcome is great. The outcome is you build a business that takes the headaches out of people.
- [27:32]
Turner Novak
It's so fascinating, though, because if I'm a country, if I'm the country of Portugal, my revenue that I'm bringing in is basically taxes. You would think that I would be on top of optimizing efficiently collecting taxes and making as much tax revenue as possible, probably. But it's literally like in the us, like, you submit your taxes and they're just like, they don't even know what you owe. Like, it's just like, it looks like this looks directly correct. And there we go. It's like, what?
- [28:02]
Marcelo Lebre
Because it's, as I told you, like, the reason is if 60, 70% of the population was like, standard, then they would do it. But what I told you is that it's actually the opposite. 60, 70% of the people are edge cases or they have something going on that is, you know, that is not normal. That is not. That is additive in complexity. And so it grinds the machine to a halt because the infrastructure is very old and outdated. So it never really gets to see much more than, hey, we optimize for the norm and there's this normal distribution. We're going to check like this. We check for the upper bounds, we check for the lower bounds. Everything in the middle, as you said, is directionally correct. So let's assume that's right until there's an audit. That's why, you know, you know, a lot of people that, you know, get Surprised in an audit, both, both negative and positive. Like, hey, I overpaid taxes for five years. Awesome, you're going to get some bonus. But some people are like, oh, no, I owe like $100 just because something got misfiled or something.
- [29:12]
Turner Novak
Yeah. And one thing super interesting that you said, you talked about ways that I can kind of interact with this. When I just think about how large language models have evolved, it's literally take a bunch of text so rules and laws interpret it and then just execute on it. Right. Just do the thing. So it sounds like maybe this is a pretty down the fairway application of like, hey, can we use large language models and AI to automate some of this stuff? Is that a fair assessment?
- [29:40]
Marcelo Lebre
Yeah. So this was actually one of our unfair advantages. For years before this advent of AI, we had a. As part of our core way of running the business. Everything is documented, literally everything under the sun, how you take time off, how you do whatever. And most of it is public if you go to handbook.rima.com but it also means that things like the way we operate in every country across the world is also heavily documented.
- [30:13]
Turner Novak
Oh, so like each of the rules you've kind of like figured out for customers and in the product, every single
- [30:19]
Marcelo Lebre
thing was already documented. So the moment we had LLMs available or wildly available, we were like, oh, this is pure gold, because we'll just plug it in. And now you have these masterminds, LLMs, that can give you insanely complex answers or very fast straightforward answers to very insanely complex questions. Now we are at a stage where we still check them, because I'm not just about to give someone heavy impactful tax advice.
- [30:55]
Turner Novak
Yeah, some hallucinations in there. We all still get those, even though
- [31:00]
Marcelo Lebre
we tell LLMs to not make mistakes, but they still make mistakes. Anyway, the point is, it led us to massive improvements all across the board, from internal operations to external operations, product development. But a lot of it comes from our obsession with knowledge documentation on a per country basis.
- [31:25]
Turner Novak
Really interesting. I pulled it up the handbook.remote.com, i'll throw a link in the description if people want to check it out. And one actually super interesting thing that I saw, kind of tying back to the early comment about a lot of competition in the space. There's a lot of players. You guys had just recently announced actually a partnership with, I think Gusto and workday, where you're powering their global payroll. I'm not exactly sure what that was. So what happened exactly? Or what did you guys Announce.
- [31:53]
Marcelo Lebre
The story behind this is we started to build remote, and as I told you and alluded to as we were building it, we had to build a lot of the infrastructural things that do not exist or had not existed. So we thought about, you know what, why don't we make this available to others? There's a lot of adjacent businesses that we're good friends with that in a market of consolidation, they can treat what we do as a revenue opportunity and we treat them as top of funnel opportunity as well. So we started to create an API over pretty much everything we did. And across the years, we partnered with amazing people, amazing brands, Gusto, Personio, Bamboo, hr, and now most recently, very big partnership with Workday. So this means that we will power their operation in employer record, in payroll, in contractor management, and payments across the world using our infrastructure API. Right? So we are now that glorious API that I mentioned that did not exist, and now it does. And it amplifies. It does two things, of course. One is for my ego. And so it further, it amplifies our own belief because to be honest, six years ago, anyone talking to us would say, these guys are nuts. Building an API for global payroll, what the hell?
- [33:37]
Turner Novak
Just that it's a dumb idea or is it like, it's too hard?
- [33:41]
Marcelo Lebre
Yeah, it's too hard. A lot of the feedback we got is, holy shit, like, there are massive businesses out there. Massive. Just doing it. One single country, right? If you go into any country in the world, you'll find a local payroll provider that has been around for 20 years and is making like 600 million in revenue a year. And you're like, these guys are doing fine. It's just a simple country. Like, why don't you just focus on a couple countries? And we're like, we're insane to the point of, you know, having high ambition and, you know, but also very down to earth to understand that this takes a lot of work. And so look, we took on the challenge and it, you know, it feels a bit like walking in the dark with a bunch of people and everyone is asking you, are you, are you sure this is the way? And you're like, yeah, I can see it, even though you can't. And eventually it turns out, of course, turns out to be true. And you're not hallucinating, certainly not on shrooms and seeing crazy things. But. It's a weird journey, but well worth it, I'd say, because ultimately we really empower. That's a very cliche thing to say. There's a lot of people that, one, can build the business that they always wanted to build because they're able to offload all their crazy stuff to us from an HR payroll standpoint. And two, there's a lot of great people that can get finally hired in countries where they wouldn't before because it's just too complex for companies to hire them or pay them either locally or remotely, whatever you want to call it. Because as I said, even just running local payroll for someone as an edge case could be way too much. And we all know of stories of people that got turned away because they were an immigrant in one country, went into an office for a few meetings and an interview, but then was the past, but got turned away just because the company couldn't really find a way to pay them properly.
- [35:57]
Turner Novak
Oh, really? That happens a lot.
- [35:59]
Marcelo Lebre
It happens a lot, right? If you go to agencies, sometimes CPAs or local accountants that take over running the payroll business for small businesses, they don't really know how to handle all this, so they will more easily turn away business and people then handle it. And we saw like when we started, we had countries where we literally got told, we do not want your business anymore. You are too complex for what we like to do and we don't want your business, Please go elsewhere. And this was as simple as learning and expanding and learning landing and learning to expand our business there. And they would act as surf consultants. But it was way too complex. So just to give you a bit of flavor of why it's so messed up still.
- [37:02]
Turner Novak
So you were working with some of these CPAs that they were executing on a country by country basis, some of the payments for you originally, or am I understanding that right?
- [37:12]
Marcelo Lebre
No, not really. But my point is, you have to learn as you're going to build something. It's like, okay, I'm fairly certain I can build a modern house, but I have never built a house ever. So the best thing you should do is go talk to people that have built houses and learn like, what are tips and tricks, what are the things they do that work and what are the things they do that don't work? And it's like the Hannah Ford scenario where it's like, yeah, people were asking for faster horses and I built a car. So you have to hear what the faster horses look like so that you can envision the car. So meaning that you have to go into the local experts, talk to them, hear what they do, why are they the best, and then build something that is better than the best.
- [38:00]
Turner Novak
That's what I mean, that makes sense. And so I think you talked a little bit about starting the company. So when you guys first started it, I think you actually met from you and your co founder, Yab. From your wives, or now wives, like you were like dating at the time. What's kind of like the story of how you guys first met?
- [38:18]
Marcelo Lebre
Well, it's a very boring one, but essentially I had moved to. So I'm from Portugal, but I'm not from Lisbon. Lisbon is capital and I'm from a tiny village up north. And I went to Lisbon for work. I moved to Lisbon. I got a job there. And I was moving in a week over a weekend to start on Monday and on Sunday. So my wife told me, hey, you know what? At the time, girlfriend, she said, well, remember, you know, my. My friend from university, Carla is back in Lisbon. So she had gone to the Netherlands for her masters, I think, at the time. And she was like, oh, she's back in Lisbon. We should go for a coffee. And I'm like, yeah, let's go for a coffee. And she has a boyfriend. I'm like, fuck no. Like, I don't do those things. I'm not a. Not a social animal. And like, I don't want to. She was like, Marcelo, you don't know anyone in this city. Like, if, if you need something, if. If you're like, you literally have no one. So you know, Carla, you like Carla, so let's go have coffee at least. And like, okay, go have coffee. So we went and Jop was there and we were sort of third wheeling and we ended up talking geek stuff, nerd stuff. He was a researcher and he was walking me through his crazy setup at the lab. And we sort of hit it off and it was kind of nice. And then he emailed me a few days later saying, hey, I had this idea and I thought about you. You want to talk about it? And I was like, yeah, let's have another coffee. So we met and we started talking about. The first discussion was we were a bit like minded. You know the Spite Store. Familiar Larry David, like the Curb youb Enthusiasm?
- [40:13]
Turner Novak
No, I don't think so.
- [40:15]
Marcelo Lebre
Curb youb Enthusiasm, Larry David show. You know, he. At some point he. He opens a spite store. It's. It's a. It's a coffee place. And. But essentially to. In spite of the. His. The neighbor that had a coffee place that sort of treated him poorly. And he's like, I'm going to open it just to mess with him because there's. It should be. It's not. How hard can it be to build something properly? And we are always, we found ourselves to be very close together. Talking about in the same thought, talking a lot about something that brought us together was just like why People that some people that you meet, they are doing their jobs. They're so cranky about it. Like you go to any reception, you know, authorities or public offices or even just private practices and people are like computer says no, they don't want to help you, they don't want to do business. They just collecting a paycheck. Why is this like it's so fucking upsetting that you need something and you go to a place and that person has no interest in helping you whatsoever, even though it's their job. So we sort of talked about it and it was like, well the reality is people have that job because they couldn't find the thing that made them happy. They need the money, but they didn't have the opportunity. They couldn't find the opportunity to do the thing they're really good at. It wouldn't pay money. So how could we solve it? The first thought was, okay, what if we found a way to the best companies to hire the best people in the world and vice versa. We tried it. So we sort of okay, let's give it a go Job quit his job and I was running. I was essentially working double jobs. I would work until 9 to 6, then go home, work until 2am Sometimes more to build this. And we applied to a local incubator. This was 2012 in Portugal.
- [42:25]
Turner Novak
Oh wow. So this was like seven years before officially starting. Okay, this is a long time ago.
- [42:31]
Marcelo Lebre
So and so we applied and we got a bad rejection letter. Email at the time.
- [42:41]
Turner Novak
No, no, what they say it was
- [42:44]
Marcelo Lebre
very dumb, honestly, looking bad. It was more like, yeah, I don't think you guys know enough to build this. And it was very off putting to be honest. I thought about like it was super. I remember tiny incubator, they would invest like 20k or so. But in Portugal it was a fortune at the time. Would be enough for us to build
- [43:09]
Turner Novak
a good chunk of change. Yeah.
- [43:12]
Marcelo Lebre
And we sort of got a bit sad about it and yob was like, yeah, let's keep mulling on the idea, mulling over the idea. And he then got a job and we kept working on and sort of maturing this idea. We also start building other things. Some friends get together and they play soccer and whatnot. Job and I would build products. We build software together. That's what we do. And eventually came a point where I think our ideas. We built so many apps and, and platforms and shit over the years. So so many. There's a whole cemetery of apps in our GitLab repos that never saw the light of day. Or rather they did, but we didn't sell them because we suck at selling.
- [44:11]
Turner Novak
Why do you suck at selling? What did you do wrong?
- [44:13]
Marcelo Lebre
It was very practical, actually. So I can give you a few things that we saw, what we built. Of course. One was a vetted platform for companies and people. So we would only allow certain companies and certain people to apply.
- [44:30]
Turner Novak
So it's like a recruiting platform, Like a job?
- [44:32]
Marcelo Lebre
Yeah, it's like a job board, but highly vetted. We would hand pick companies and people to be in platform. And we didn't really want it to scale, but it was like a niche thing, more of an artisanal thing. It started to have some traction, but we were like, okay, so what if we make money? How? Like, he was in the Netherlands, I was in Portugal. How's this going to work? Like, who's going to pay the taxes? Where are we going to incorporate this company? Who's going to be the owner? How do we distribute money? And we sort of realized that to do it only in Europe is impossible. We'd have to start a company in the US and they were like, dude, this is a whole thing. Oh, why? Like, oh, wait, I have this another idea. Let's start building another idea. And we did this like seven or eight times. Another one was before Find My was a thing. We actually built an app.
- [45:32]
Turner Novak
This is Find My Friends.
- [45:33]
Marcelo Lebre
Yeah. So it was like, hey, you know, you just either share position of things or of people, friends, and you would always have the best path to meet them and see where they are. And this was 2013, so way before all this became a thing. It was funny because then it became a thing and we sort of killed it at the end because, like, oh, what if we now build a way? Because, you know, job was at GitLab, I was at another company, a CTO. What if we built a way, like Mixpanel to track data or signals, but simpler, not as fancy, much more down to earth, much more direct data to people. And we built it and then we started using it for some projects. Like, oh, we should start selling it. Yeah, let's also build. Build another app. So we. And this went on and on and on for like seven years. Like, and then. And we, I think we, at some point we just realized that we liked building things together. And that's what we enjoyed. But eventually came a time where we sort of both realized, look, we know enough, we've built enough. We've built teams, we've built companies for other people. Like, let's stop dancing around this and let's put our weight in minds into it. And then we started Remote.
- [47:11]
Turner Novak
So was it that big problem of you kind of mentioned, you kept running in this problem of how do we collect the money, how do we pay people? So it was like the reason that you stopped all these different projects was then the inspiration for. Actually, that was the idea for remote.
- [47:25]
Marcelo Lebre
Yeah. So it got us together quite a lot. Yob also felt this at GitLab, where they were also distributed. Paying people was not easy, and so on and so forth. And when you're having fun, then when you start talking about making money out of things sort of sucks the air out of the room. When it becomes so serious that now you're talking about taxes and lawyers and it serves like sort of locks, you win. And by the way, I know this. If you're listening to us and you're born and raised in the U.S. it sounds like, what the fuck is this guy talking about? Because in the US it's very, very easy to spin up a business and tear it down. In Europe, it's a massive nightmare. You are legally liable for every single thing that happens, even if it's a tiny company of one or two. So we have massive downside on starting a business. Tremendous upfront payment of taxes, even without realizing capital. So it's not as straightforward as we wanted to be. And at the time, that's as far as we were willing to go. We had our careers as well. We had our families to support, and we're having fun. So that's what kept us alive doing those things up until 2019.
- [48:50]
Turner Novak
Yeah. So 2019, it's a pretty interesting timing where you officially decided to do this in 2019. And then Covid hit depending on where you were in the world. End of 2019 being a 2020, what was just kind of the series of events just throughout that time period of we start the company, I'm assuming you get maybe there's some customers, but then all of a sudden, a couple months later, it's like, oh, shit, the entire world is working remote. And everything flipped. Can you just kind of explain from your perspective inside the company how that went?
- [49:25]
Marcelo Lebre
We started the business in January 2019. We started to build stuff and launched the first version in August, but was very much like a landing page. Hey, companies can sign up Here you can advertise some of your jobs and then we're going to connect both ends on employment and payment. And we started to get such big traction and then we're like, okay, maybe we should raise for it. Should we? We didn't really want to, but we met the folks at Index Ventures and were super early supporters of this crazy journey. And Hannah was, you know, it was so, she was so into like, she was so such a believer in the whole thing that maybe up until that moment I didn't really believe. I don't really look much into the future. I'm a builder and I thought, let's build this as much as we possibly can and then we'll see what comes out of it. And you was like, should we talk to investors? Should we take the call? And I told him, look, it's going to be a huge time waste. You can, of course. And we split the bill. But he's the CEO for all intents and purposes. Yeah, well, let's talk to these people and see what they're about. And our crazy, crazy idea had quite a lot of excitement around it. And I remember I was walking my dog, Yobu was walking his dog and he was like, the conversation went this way. This is the time for us to decide if we want to go the venture backed, we're out or not. I said, yo, I'm all in. If you're all in, then we go. If one of us is not, then we shouldn't. It's like, okay, we're both all in, so let's go. And we took the investment then just skyrocketed. We started to have so many customers even before the pandemic hit. So we started scaling pre pandemic. And once the pandemic hit, it just kept going. It's kept piling up and piling up to the point that we had over two months of back to back sales calls. We couldn't get bookings, time to book schedule with people. Yeah. And then the pandemic hits and we're like, what the fuck do we do? Will this affect us? We don't know. No one knows. We just keep working, we just keep going. That's it. One day at a time. We're all winging it anyway. So all of a sudden we have people coming to us, big companies saying, hey, could you guys help us? How do you do this distributed work thing? Walking companies through it, showing them how we did things. Business kept going. But to be honest, I felt that ever since I started this business, every year there's some fucking near apocalypse thing happening. First year was the pandemic. Then soon after the pandemic started to die out. It was like banks collapsing, economies collapsing. There's big bubble bursts, 2021, 2022. Then there's banks shutting doors, people freaking out. No one knows what's going to happen. Then one war started, everyone scrambling. Is this World War 3? What is going on? Market's going crazy again. Then another war starts, then we're in this very weird scenario. And so now we're in AI bubble or whatever you want to call it. Every year there has been something that is like world changing event for the past seven years. And at this point it's just rolled in the punches. That's it.
- [53:58]
Turner Novak
Does it help? It seems like maybe it'd be beneficial that the company that you're building is kind of a trend that's probably going to continue no matter what, what happens in the world, if that makes sense. Whether or not there's an economic crisis, people will still a need jobs and need to work, et cetera. But also people probably continue to
- [54:20]
Podcast Producer/Host Assistant
unlock
- [54:21]
Turner Novak
new economic opportunities globally. People working in a global setting is probably just going to continue to proliferate and get more pronounced versus not. Is that a good way to think about it?
- [54:37]
Marcelo Lebre
It's half of it. So the other half is. Companies also learned throughout all these events that they can de risk themselves if they start to operate across different countries. Not just for the commercial opportunity of being able to sell into a different geography, but also because you can set up an entity somewhere and we will help you set up your entity and then run payroll for you in whatever country. And all of a sudden you are not as exposed to a centralized economy. So if you have a company that is only operating, let's say in the US something happens with the dollar, you're screwed. If all of a sudden now your lease doubles, you're screwed. The salaries in a country like in a city like SF or the Bay Area or New York are certainly not the same as the salaries in London or Paris or Lisbon or Madrid. So all these are different parts of the same equation that balances out opportunity and talent across the world at the same time as it primes for execution. So we have big companies that are openly against sort of remote or distributed work, that are big customers of ours because they realize that they could come to us, learn how to build an entity in one country and then open an office there and have their whole global workforce in a single platform. Everything is straightforward for them. We take care of all the tax parts. We take care of all the details. If they have any questions, they come to us, we help sort everything out. And up until very recently, this was like, this was a whole thing. You would have to hire one of the big fours, pay millions for them to give you a report on how to set up an entity on how to employ people locally. And that's all a given with remote. So remote as a company. So that changed aggressively, we saw. And it also gives us the ability to go with the flow, meaning that we as a business, we're a big raft. So that if one part of the world is not hiring, the other part will counter and will start to hire because of the opportunity that they leverage. It's pure arbitrage and they are our customers. So if one size of the customer pool is not hiring, the other will. And it creates a big distribution across the world that gives you significant leverage and to keep growing and becoming even stronger.
- [57:25]
Turner Novak
And it's kind of interesting, like, even if a company is anti remote work, like you must be in the office, you know, nine, nine, six. Like we grind. It's all in person. You eventually you get to a point like, all right, we got to open a sales office in London. Like you're based in San Francisco. Like, we'll open an office in London. Maybe we're expanding into Asia, so we have an office in Japan and you got to hire people there. So it's like, even for the most in person cultures, like work cultures, it's still a global company if you're big enough.
- [58:00]
Marcelo Lebre
It didn't have a name. Now everyone says they're a distributed organization, a global organization. No one cares anymore. Either you're in an office or in the back of a van. No one really cares.
- [58:13]
Turner Novak
Yeah. Do you have any customers that work out of van?
- [58:16]
Marcelo Lebre
Yeah. Yeah.
- [58:17]
Turner Novak
Oh, really? Okay.
- [58:18]
Marcelo Lebre
We have like, as I said, like we, we have financial institutions like, as regulated as corporate as, you know, white collar and Thai as you possibly can. And we also process payroll for those folks that are traveling across the world. So to each their own.
- [58:39]
Turner Novak
Yeah. My wife actually has been trying to convince me to do like the van life thing where you live in a van and travel. I'm like, I don't know about this. I can't go that far.
- [58:48]
Marcelo Lebre
I mean, look, you got a starlink, got a way to travel, way to be. It's totally doable these days.
- [58:55]
Turner Novak
Yeah. So what have you found? Like, you've got to be one of the global experts on like working remotely. Like having a remote Team, what have you kind of found is just like best practices at remote. Like it for, for you guys that has worked in terms of like if I want to come to you, I'm like, hey, I need to figure out what I'm doing right or wrong with my own team. Like what would you kind of I guess giving me like an assessment of like here's some things you should think about and these are like best practices that we found and how I should approach it if I wanted to ask you for advice on this.
- [59:26]
Marcelo Lebre
So there are core tenets, there are, there are warnings. First is you must document everything. If you are working distributedly, people will not always be online to answer for things. Different time zones, different happenings. Document everything by default. It's one.
- [59:50]
Turner Novak
So what's a good way to do that? Do you use Microsoft Word Notion?
- [59:54]
Marcelo Lebre
We use notion very heavily since day one. Very big notion users.
- [59:59]
Turner Novak
So there's a lot of like work processes. Like you basically write out how you
- [60:03]
Marcelo Lebre
do a job, how do you do that, how do you take time off, how do you organize projects, what kind of projects, how do you describe things, what is expected of people, what are, what is a job at, what is a role, what is the pay? Everything is transparently documented so that you can just at max, just link stuff to people and people can find whatever they want and you're not there to just answer a basic question. So that's one second is asynchronous work is fundamental, meaning that you're not standing by idle, waiting for someone else. This often happens in the office, but people just don't see it. It is like, hey, well I need this. But John is not, I don't have it documented and John is not here. So maybe he went out to lunch. I'm just going to have a coffee while he comes back. And meanwhile John comes back and you're already talking to someone else. He sort of misses you. When you go back to John, actually John is now in a meeting. So you decide to wait for John again. So all of a sudden you wasted two, three hours waiting for John.
- [61:11]
Turner Novak
Might be end of a day you go home.
- [61:13]
Marcelo Lebre
Yeah, so this happens a lot. But in an office it's like, oh no, you know what? This guy works a lot. He was there, didn't even go out lunch, just on his computer all day long, non stop. But you produced nothing because you were waiting for John. So the basics of Async is you parallelize your work and you're able to do several things at the same time. It's called multiplexing. Because you did something, you shot that over to John. Now you're picking something else and you keep going. In your conversation with John, rather than wait for him, you recorded a loom or a video, you send it over, easy to convey the message and to have a sense of just the expression rather than just writing.
- [62:00]
Turner Novak
You could technically do that in an office as well.
- [62:03]
Marcelo Lebre
Yes, you can do this. Whatever you want, really. The third one is make no assumptions, because ultimately you don't know if someone is working at the same time as you are. Meaning if you want to build a distributed organization, you really don't know if someone is. If they have the same context as you, if they're ready to answer a call. You just don't know. So if you operate based on that assumption, you're going to really waste a lot of time. So you use the first two tenants, you do a lot of documentation and you work as in. But the core of that third item really is culture is what you tolerate. Just for the fact that you are distributed. It doesn't mean it's a lifestyle job. Because there's a lot of people that took a job at, you know, a company because it was just remote and they were like, well, I'm just gonna,
- [63:09]
Turner Novak
like, go to the beach and.
- [63:10]
Marcelo Lebre
Yeah, and it's fine, right? I'm gonna work three hours a day. No one really knows. No one checks. I did my thing and that's it. No, you really work fucking hard. And that's what you should tolerate is people working fucking hard and not less than that, just because it's remote. So culture is what you tolerate. Those are three of the core things. And then one advice is, of course there's what you're billing, how you're billing, who you're building it with is the important part. As you're hiring people, there's a lot of people that one are not great at documenting. They don't care about it, they don't care for it. Second, they don't really want a work in an async environment. This is a lot about how you personally work and handle things. A lot of people really feel that they need a connection, a human connection to be productive, and that's totally fine. But you have to acknowledge that different people work best in different kinds of environments. And this is still true in different offices. Right? It's not about. But it becomes even more pragmatically important in this sort of settings. And I guess the last item is you have to pay attention to the impact of the geographies and time zone because it can have a significant impact. For instance, in some areas of the world, there's a day of the week where people don't work or that people work and you are not expected to.
- [64:56]
Turner Novak
And it's different. It's different around the world, right?
- [64:58]
Marcelo Lebre
It's very different. Same time that if it may be 9am for you, it's probably 7pm for someone else across the world. You have to bake this into how you work. Meaning is it okay or are you not. Are you unable to tolerate this sort of marginal difference? It's totally fine to say no, I want to work with, you know, small team. We want to be in like small time zone. A difference. It's totally fine. So and same for, you know, people building offices, satellite offices, right? You know, hey, I have my full team in London. I, I now need a team in, I don't know, Nicaragua. So how will it work? How do you hire people for an office in a country you've never been, but you actually want to do commercial sales in commercial business in. So thinking about through this is like, okay, so do I, I need corporate law. Like I need to know how to recognize revenue there, how to transfer price works, how do I employ people there? So working through all these elements is key, right? Because you have to understand your potential, your upside, but also your liabilities, your risk. That's where we, companies like ours come in. Because Remote was built precisely to solve for it. Because it was a big, big pain. The big pain of how do I plan for executing rather than just focusing on my business and then have someone take care of it. So yeah, there's a lot of different nuances and I could go on all day long, but to be honest, over the last seven years I've sat down with so many founders and C levels, VPs of companies that are in this space, finance and HR. And they just want to know how to do things. And my advice generally is different on a person, by business, by business basis because it differs heavily on the culture, the people, the business, the geography, the financial needs and regulations as well. It really tailor. I can, you know, as I said, could share for hours the different things that we've learned. But it really is much better tailored one, tailored to a, a specific
- [67:20]
Turner Novak
angle. What is the most interesting, different, unique thing about how people work around the world? I think one I kind of think is fascinating is I think it might be Spain. They randomly just take off, they kind of take lunch, but it's at 3 to 4pm or something. Like that. Do you know what I'm talking about? Are there any interesting things like that you've just come across with the way different cultures might work?
- [67:43]
Marcelo Lebre
Yeah, there's all kinds of idiosyncrasies. So Spain used to have the siesta. It's not mandatory anymore. And in work you don't really see it much. But you do know certain cultures, they start working later in the day. They work super crazy hours. In some countries in the world, every month the employer has to print out all the things and take to the tax authorities. Like a stack of everything.
- [68:16]
Turner Novak
So you can't like electronically submit your tax.
- [68:19]
Marcelo Lebre
Not a thing.
- [68:21]
Turner Novak
Okay. That's such a waste of time. Like so much resources.
- [68:25]
Marcelo Lebre
Yes. In certain countries in Europe you have to wet sign every single document, our most documents. And if not wet sign properly with your passport signature. It's not valid. We're not talking about third world countries, we're talking about well known countries, heavy in bureaucracy. In some countries it's also normal for people to hire a company to quit. So they don't quit themselves. They hire a company to come in and say this person is quitting.
- [69:05]
Turner Novak
What? How does that work?
- [69:07]
Marcelo Lebre
Yeah, because it's a cultural thing. People don't want to face the sort of shame or interesting, okay, lack of statue of saying, I'm leaving to another company, I'm betraying you and leave to another country. In certain countries it's virtually impossible to fire anyone. And in many countries there's actually very permissive laws that allow people to circumvent any sort of lack of performance. Yeah, I could go on and on and on. It's in countries where you get deduction for riding a bike to office.
- [69:49]
Turner Novak
That was actually probably a good one. That's probably like a good.
- [69:51]
Marcelo Lebre
I'm not judging any. I'm just saying that they exist and you know, to each of their own again.
- [69:57]
Turner Novak
Well, I think one of the most insane ones was, I think our mutual acquaintance friend Andreas Klinger. He's the one who told me about that. When in Germany you need to have a notary live read I think all the documents. When you close a funding round or something, I'm just like, that would take a day.
- [70:18]
Marcelo Lebre
Yes, it does. It takes hours. It literally takes hours. And it reminds me the part in Dune, at least for those that watch the movies or read the book where the priest is just sitting there before the war reciting non stop crazy chants. It reminds me of that. You find all kinds of things across the world and it really is insane how you know, it's almost a question of perception, you know, you remember that meme that was going around, it's like, what is the color of the dress? Is it blue or is it gold? And everyone's like, no, first, this is blue, of course, right? Isn't this blue? And everyone's like, no, this is gold. What do you mean it's not gold? It's the same thing. Like, everyone. If I talk to you about a startup, you're like, yeah, startup. Is a startup. You know, it's business growing fast, starting a handful of people, just a bit of money. If everything. You ask this in every single country across the world. The definition is different, if it exists.
- [71:21]
Turner Novak
I mean, it might be risky. Like startups, they fail, you lose your job. Like, it's embarrassing that it didn't work. Yeah.
- [71:28]
Marcelo Lebre
There are countries where if you fail, if your startup fails, you are personally liable for the money that you took on from your investors and you're screwed forever.
- [71:41]
Turner Novak
Geez, that's crazy. I think. Have you come across. There's this account on Twitter, it's called Compliant vc. It's like this Europe. It's just a parody account. He's an investor from Europe. Have you seen this account?
- [71:53]
Marcelo Lebre
I don't think I did.
- [71:55]
Turner Novak
Oh, it's absolutely hilarious. It's basically run by a compliance company. They do like SOC2 compliance and stuff like that. But this account's name, it's Henrik Johansson. And he'll tweet things like, four months ago, I was introduced to a European startup founder. Today we met for coffee for four hours. The company is doing €800 in revenue, and I'm so pleased that they paid their $2,000 regulatory bill to register the revenue and they're paying proper taxes. So excited that next month I'm going to start my review process, and in three months, I may be able to invest in the company and I'll invest €25 and blah, blah, blah. And it just makes a parody of. Of the European regulations. I don't know if it's what you've come across. Probably one of my favorite Twitter accounts where he just kind of pokes fun of some of this overly bureaucratic, overly regulatory, onerous stuff that they kind of put on startups in Europe.
- [72:58]
Marcelo Lebre
I could go on and on about those, and they're not a joke at all.
- [73:04]
Turner Novak
So do you know why are there so many regulations? Because I'm in the US and I just think when I kind of see some of the stuff that's happening in Europe, I just kind of it just kind of seems like a little silly to me. Do you know the reason that there's so much and the culture is so different, so historically.
- [73:22]
Marcelo Lebre
So Europe is. Europe is not a thing. Meaning, and this is a very loaded sentence, Europe is composed of a bunch of countries, all of them entirely different from one another. So the European Union said, okay, we should. There must be some ground level truth to how we operate this organization, this sort of body, right? And what we want is economic stability, prosperity, and react as a bigger group as we will be able to further better defend ourselves both physically, geopolitically, but also financially. In order to do so, we sort of have to create a big denominator across all the countries. And then you start to see that there's big discrepancies across the board in everything. How you treat human rights, how employment laws work, how pollution is as understood. So you start to pluck holes here and there, right? And okay, so I need to increase how much this country is. Because the core basis is there's a balance across it all. No one has the upper hand, no one is so far behind. So there has to be some balance. So on this big wavy, wavy scenario, you start to pluck the holes. Hey, let's introduce this regulation that allows this country to pick up the slack. Let's introduce that regulation that does not allow that country to sort of go over the line and have such an unfair advantage over the others. And then let's also introduce this regulation that allows us to give away subsidies for a lot of different things. And in order to also give these subsidies, there's also this one country that has another law that allows them to take advantage out of that. So let's introduce this other law that does sort of regulate that. And the complexity of this generated a union that is essentially a regulatory body. I am personally a big defender of something called single responsibility principle. That's how I look into everything that I do.
- [75:53]
Turner Novak
I've never heard of that before.
- [75:55]
Marcelo Lebre
It's essentially when you're thinking you're looking at a team and you say, hey, this team is not performing. Why aren't they performing? Well, the first thing I ask is, what is the single responsibility principle? What is this team really responsible for? The one thing, what's the one thing that they care about? And sometimes people say, oh, it's this and that. No, no, no, the one thing, come hell or high water, that's the one thing you do care about. And there has to be one thing. And the single responsibility principle of the union, European Union, is to regulate. So what do regulators do? They regulate. And eventually, of course, as regulation is the main thing, creating the balance in order to keep building, innovating and all that, you introduce all the avenues, right? You introduce, okay, so we're going to create, have $3 billion to invest in innovation. Great. And here's 3 million regulations to distribute those subsidies. At the end of the day, those subsidies are badly allocated. Why? Because the theory does not meet practice. The theory of regulation rarely meets the needs of reality because they're often built, drafted by folks that never built anything ever. So it's as if you're a dentist, but you never saw a tooth in your life. You went through university, you read only books, and now you walk into a dentist, into your new cabinet, and you know, like, hey, here's a patient. Go drill for the first time. How do you think that will work?
- [77:58]
Turner Novak
It sounds like a disaster.
- [77:59]
Marcelo Lebre
Correct. So today we're, you know, that's a bit of the reading. Europe is filled to the brim with innovators, with people like, yeah, but like myself, like all kinds of other founders out there, with a high level of density of unicorns per capita, but all stifled. And because we're filled with regulation that is 20, 30 years old, if not more, that is built for other times, that is very inflexible and upheld by regulators that do not have any interest in moving. And those that do have the interest in moving, they work in a timeline of two to four years. Most of these businesses will not be alive by then because they are not allowed to thrive by then. Whereas if you go to the US you will build your way into it and you sit down with people and you reason through, why do you care about your business? And in Europe, it's just not possible. That does not work. And it's so stiff, it's so outdated. And the worst part is that we woke up late and realized this year, of course, with the report that came out from Mario Draghi that said, hey, wake up, European Union, we're late. Innovation is dying. We can't compete. We must unshackle everything. And we're in a bad spot and getting worse. Massive uproar. Everyone was like, oh my God, Vice president wrote this. We need to look into. Hit all the news everywhere across Europe. What came out of it was, okay, let's create a task force that is going to talk to banks and regulators to know how to deregulate. And everyone went into like, what the fuck just happened? So regulators decided to talk to folks that have nothing to do with entrepreneurship and innovation to talk about how to foster innovation and deregulation. So it went like polar opposite.
- [80:30]
Turner Novak
Yeah. So it sounds like the thing that was going wrong. It's like, let's just even go deeper into that avenue.
- [80:35]
Marcelo Lebre
Yeah, correct. And then what came out of it was more regulation. So it is as if right now what is happening is that, look, you're asking someone that has a hammer to screw the screw. They don't know they have a hammer. So they're going to keep hammering it. And this is the fundamental problem. We need deregulation. We need conscious, ethical, honest deregulation across the board. That's it. We have the power, we have the potential, we have the cash to do so, but we do not allow it. To give you a perspective. You know, in the US, the big LPs are, you know, funds, they are pension funds. Is illegal for pension funds to invest in any sort of risk based investment across most Europe. So there's no liquidity. Well, by comparison, there's very little liquidity to invest in entrepreneurship and innovation across Europe because all these tiny things that are not as tiny do not create the world where it's very common that you hear about founders that spend weeks or months, they spend months, not more, crawling across Europe to raise a fund, to raise a round. They get shitty terms, takes them four months or six months, shitty terms, super low valuation. They take a trip and in two days they raise a massive amount of money.
- [82:18]
Turner Novak
Crazy valuation in the us, I've seen it multiple times. Yeah.
- [82:22]
Marcelo Lebre
And it holds no value. It holds no value. There's no one taking lessons. Or rather the people seeing it are unable to act because we built such a heavy machine over these years that no one really has the courage to say, this machine has to be taken apart rather than patched on. So I'm an optimist. The fact that we see it means that we can fix it, but we'll probably still have to push very hard against old ways of doing things.
- [82:57]
Turner Novak
I don't know if you have a good solution to this, but I'm curious, based on how you just described it, if you could basically change anything in your opinion, you go in and say, I think these are the things we need to change. If we could fix things, what do you think should be done differently and whether that's make a tweak, start from scratch. I don't know if there's a silver bullet like one single solution.
- [83:20]
Marcelo Lebre
We have the people and we have the infrastructures to do all the things we need to do. What they need to do is bring in who's on the ground instead of bringing in. When this whole the Draghis report came out, they started to interview notaries and regulators and I'm like, no, no, go get the entrepreneurs, the innovators, the investors. Go talk to, go see what is being done outside, like in other countries. Go pull in, bring those. And I can tell you, I can promise you that I would gladly, and I do it on a country by country basis and remote as even involved in a couple of work streams in European Union where we're more than glad to spend time with them and tell them what's not working and what should be done instead. And actually more so than that, provide the data to back up our claims. This is not just, hey, it's a founder that raised 2 million, has a team of three and things they know best. No, it's people building businesses for decades with teams of thousands of people that I've seen a lot across the world and can do, really have the data to back up every single claim. Just bring them close. That's it. Like, you don't need to like, because you know, we will tell you like exactly what, how it is on the floor. And that's the one that, you know, there's a big book that I love there I carry with me for years called the Toyota Way.
- [84:59]
Turner Novak
Oh, I've heard of that one.
- [85:00]
Marcelo Lebre
What originated, you know, the lean startup and all that. It's where you pull in all those things from how do you build efficient processes, so on and so forth. And there's two core tenant, core, core items that are mentioned in there and this, this process, this book, you know, all the learnings that came from Toyota back in the day. There are two things are key to this. One is the way to optimize is to clean waste, reduce waste. If you have a bad system, if you go there and remove waste from it, it will by default just get better. So it's all about deletion, it's all about removing things that are not helpful. So that's one. And the second is there's a chapter talking about walk the floor. That means that it was introduced because the owners of the factories, you know, early days in Japan, they would not talk to the people on the floor, so they would vicariously try to solve problems they never saw.
- [86:05]
Turner Novak
Yeah, that's hard. It's almost impossible.
- [86:08]
Marcelo Lebre
So they started to walk the floor, like go there, see what is going on, see the struggles. Like, you know, we have a big tax team, we have a big Payroll, massive payroll team. We have a big people team, big engineering team. I can sit like anyone, all the best experts in the world on any topic with anyone and they will distill the best learnings because they see it, they feel it, they do it. And that's a very simple way to do.
- [86:38]
Turner Novak
Kind of sounds like what you just said. So you said removing things and then talk to the experts. It kind of sounds the opposite of what you described. The approach where it's like let's add new things that add complexity and then let's also talk to people who aren't dealing with the problems on a day to day basis. Yeah, it doesn't sound like a good recipe for success. Do you know why they've been doing that? Is somebody running the show that thinks that that's a good idea?
- [87:10]
Marcelo Lebre
Oh, it's a system. It's a typical system system. It's a regulatory body that regulates itself in all those departments. They're built on regulation and they move years at a time. That's how politics works. And what we need here is a closer reality, closer gap between both realities because both are important. We also need to understand that with too much deregulation comes chaos. And it's a very fine line, but we have to find the line. And we can't just be on the safe side of life forever because it will stale evolution. And if you stale, you die.
- [87:58]
Turner Novak
Interesting. Yeah, that's a good point. Actually one not really related note, but kind of related. Yab, your co founder told me in terms of making things disappear, taking things away, he said, you have a skill or an experience with making spreadsheets disappear. I don't know if there's a story behind this, but he told me to ask you about this. What's the story with that?
- [88:19]
Marcelo Lebre
Very early days. So one of my learnings in life is that humans will evolve at the brink of despair. And that's when you see the biggest revelations. What? When shit is about to hit the fan or already hit the fan, have to scramble to make something work. That's when the HAHA moments come up. And the first year of remote we relied heavily on a lot of spreadsheet work. Very early days. This was six years ago.
- [88:53]
Turner Novak
This is as you were building the software and trying to automate a lot of those things.
- [88:57]
Marcelo Lebre
Okay. And one day I said, enough is enough. I recorded a loom. And I said, you have four weeks. In four weeks I'm going to record myself deleting this. So do whatever you take. You need to find, you know the nearest engineer pull them into you to pull them closer and have them build whatever you need to build. Everyone freaked out. Holy shit. This guy is not like is deleting the whole company. We have so much important data and spreadsheets. And I said, sucks to be you. I am not about to build a company that is fully duct taped. If you want that, go work for our competitors. They duct tape shit. They have spreadsheets, they have manual workforce. We do things in a way of the future. We do things through automation. We do things through AI. We do things through thinking smartly. The biggest problem is that people are great at automating everything around themselves except themselves.
- [89:57]
Turner Novak
That's fair.
- [89:58]
Marcelo Lebre
And so that moment created sort of a existential threat to some of teams. Some of the way I do things. And we evolved massively. We left so much that today we still are able to do things that no one else in the competition is able to do. We can onboard people in a matter of hours. No one else does this. And we can do shit within internal processes that really no one else in the market can do because of how much we obsessed about documentation, product building, engineering and making sure that things are automated to the best of our ability.
- [90:36]
Turner Novak
What are some of those other things? So like onboarding people. Why is that so hard?
- [90:42]
Marcelo Lebre
Imagine you want to hire someone in whatever country and just. And you need them to start today. You just need them to start today. In most companies you will take a week or days at best to have everything processed, to have your insurance, to have your this, that. In a lot of countries you really can't work until this is all set up. In the US you can fairly much handle it easily. In many countries you really can't. You have to sort out everything ahead of time. And so it becomes like a proper thing to do. And it's an example. If you want to have, as I said before, an answer to a very complex question of any sorts, you should be able to get it in seconds or minutes rather than days or weeks. And this we can do is the kind of making very boring, complex things feel very simple and very nice.
- [91:46]
Turner Novak
I guess Job's on a roll with the questions. He actually told me to ask you one more. He said that basically every time you guys have raised money, I think it was one of you was either moving or having a baby.
- [91:59]
Marcelo Lebre
Yeah.
- [92:02]
Turner Novak
What's going on with that? Why do you guys have this issue every time?
- [92:06]
Marcelo Lebre
I generally don't know. It became a joke. But it's sort of a real one where I think by the time. So the first time we raised money, I became a dad.
- [92:22]
Turner Novak
This was back in 2019.
- [92:24]
Marcelo Lebre
2019. I became a dad and job was like, oh, this sounds funny. If something, you know, like, you know, not funny, not funny. Let's not do this again. Next time you raised, he was having a baby. And I'm like, not again. But okay, and you focus on the baby, I'll run the show. And we took turns and then. And we like, he moved to a new house. And I'm like, holy shit. And then, and then I think maybe the last time we raised, I moved to another house. And I'm like, look, at this point, this is a fucking joke. Because it's like the worst time to do the two very complex things that literally physically limit you from working. So either moving houses or having a baby. So it sort of became a thing. And you know, we keep saying, well, next time we raise, if we raise something, we're like, sort of we don't need to raise. And so we're in very good position for many different reasons. But one of it is like, one of us doesn't need to move. None of us needs to move and none of us needs to become parent again. So it's a bit of a running joke. Let's see when.
- [93:52]
Turner Novak
For people who don't know when you're fundraising, it's typically just adding another full time job. It's not something where you just kind of uptake a meeting with someone and they might just wire us $100 million. It's usually you make a spreadsheet. There's 50 investors, you got to talk to each of them multiple times. They all ask you tons of questions. You probably have to meet a lot of them in person. Maybe. I guess depending on the time when you're doing it, you might not. But it's basically just like adding another full time job on top of running the company.
- [94:22]
Marcelo Lebre
And very stressful one, right? Because if you imagine those 50, if you spend like three, four hours, three, four meetings each. So it's three, four meetings, one hour each. All of a sudden it's 200 hours that you put in. And if you had 200 hours, now all of a sudden you will also have to answer questions by email and you will have to wait because none of those are happening back to back. So you will very quickly add weeks of work that are very stressful. Why? Because maybe you don't need the money and it's fine. But if you do need the money, you're seeing a very big clock over Your head with time decreasing, like 24 hours style every second. Taking money away from the bank account and you're running close to the wire. And so it's very, very stressful. On top of it, you have a company to run. People may or may not know that you're running, they're raising. It's a big distraction because a lot of people don't understand it. People think the company needs to have money in the bank for many, many years and be always fine, otherwise they'll freak out. And so you always have to balance out the expectations of the team, your own, and the needs of the business. It is very time consuming and it's very draining as well, because that's the job of founder. You take on the things that no one else should take on. And that's your job to manage expectations, to paint the vision, the mission, and find the money for it and eventually build a business for it. Now we're in a very lucky position, and we're very lucky derived by a lot of hard work where we don't need to raise money because we're cash flow positive. That means that we make more money than we spend. We go and reinvest to grow the business. We're growing at a good clip and so we're in a good position. But I think that soon enough we may want to raise some money to make acquisitions to grow the business further. Hopefully none of us will have to go through the whole thing and we can dispel the curse of having babies and shopping houses. But we'll see.
- [96:53]
Turner Novak
We'll see. If I ever hear a rumor that one of you guys are pregnant or I see your house is listed on the market, I'll know in inevitable. They must be, they must be fundraising, IPO or something.
- [97:04]
Marcelo Lebre
Yeah, we'll see.
- [97:07]
Turner Novak
Well, speaking about growing fast or growing, how have you kind of changed and grown as a leader? I just know if you look at your LinkedIn, you're originally the CTO and I think you were the COO, and I think now your title's president. How, how have you kind of like made that evolution over time? Like, I guess you think cto, you think, oh, it's the engineer, like the tech guy. But now obviously you're not doing just that. Like, how did, how did that kind of happen?
- [97:34]
Marcelo Lebre
It. It. So one of, one of the books sort of marked me most in, in my upbringing, professional upbringing, was the Book of Five Rings from Miyamoto Musashi. And essentially it's a book. It talks about, you know, it. It's like it's like the Art of War, like a Japanese counterpart.
- [97:54]
Turner Novak
Oh, this is from 1645 is when it was written.
- [97:58]
Marcelo Lebre
So it talks about five chapters, five rings and dominate the different fire, water, air, earth. The fifth one is the void. And so the void and then you can derive whatever you want from these things. It's the beauty of these books and void is as a founder, as a leader, you do two things. You either create a void or you fill a void. And sometimes both. So my job at remote my contribution has been I started as cto, I built the best organization I could possibly build. I had done it in the past. So there was more textbook, there was a need in the operational world, there was a void that I came in to fill and then I created a bigger void as I wanted someone much better and that could take it on full time. Right. Because as a founder I'm always drawn to more things across the business. So hired Kick ass COO to be in seat and I started to take on more specific projects across the board. So what are the top three things that I could do to lift the business to make the business leap rather than walk. Currently I'm also focused on go to market. So I took that on. So today my remit goes from go to market. Operations, engineering all flows up somehow to me. But in practice, job and I split the bill across the organization and we work with the people that we need to work with to solve the biggest problems. So my professional arc has been filling the void and solving and creating the void. I fixed shit. I can see the path through the noise. I can hyper focus and hyper obsess very aggressively and that allows me to distill the most important answers in a very short period of time. So that's what I do.
- [100:12]
Turner Novak
Interesting. Speaking of hyper obsessed, I heard that currently one of your big things is health and you actually don't eat sugar. I don't know. That's what someone told me. What's been the story with just getting really into health and nutrition?
- [100:24]
Marcelo Lebre
Well, so I think second year into remote, my kid was two years old, company was growing very fast and I was adjusting to all this thing with being live 24 7, 24 hours a day, always alive, always online, you should
- [100:43]
Turner Novak
probably not get much sleep.
- [100:44]
Marcelo Lebre
And I was getting pinged all the time, day and night. I was answering slack emails and I found myself in a situation where I was stressed all the time, I was worried all the time. I was eating crap. I always in my mind I started by saying, okay, I can eat One type of junk food every week, just one. And then I found myself eating sushi once a week, kebab once a week, pizza once a week, random barbecue once a week, and pokeballs once a week. My nutrition is shit. I started to feel like I would sleep very poorly, I would not exercise at all. And I felt tired, endlessly tired, but a fatigue that is chronic almost. And I'm like, this can't be it, this can't be it. There has to be a way, not by brute forcing, that I can work more and feel better. And so I start to read a lot into things, into health, into how do you do things, into hormone regulation and metabolic regulation. Realize that it has to be a matching and a balance between your body and your mind. And within your body, within your mind you need to know, you need to know what makes you tick. And within your body you need to feed it and to nurture it properly. That comes into exercise and working out. And I'm obsessive and that's what I do, how I do all the things. So I got into a lot of that. I found a great functional doctor that I work with on a, on a regular basis. I read a lot into it. And so I decided to, I found out that the more intense my workouts are, the more intense my feeding regimen needs to be and my nutrition, my nutrition and my, my, my exercise needs to be. So if I want to work 16, 17 hour days for months on end, years on end, I need to work out a lot and I need to eat very well and sleep well and those are non negotiable. It's like a balanced system. If I eat super well and if I work out super well, but then I work five hours a day, I'm not going to feel well, I'm mentally not going to be there. Like I will feel like I'm missing out on a big part of my life. That is my mission with remote and the same for nutrition. If I work out super well, work super hard, but eat shit, I will not feel great. It's a very balanced three partite system. And I learned that the more I optimize for it, the better I can get. At the end of the day. My biomarkers are great. I do very elaborate blood work every three months, do very regular checkups. I wore all kinds of biofeedback and wearables, do, you know, give me pointers about what I do when I do it. And I keep optimizing for, you know, having a great life, being able to be A great dad and building a generational business. And live forever.
- [104:37]
Turner Novak
And live forever. Okay. Well, I was going to say, what's been like the most fascinating thing recently you've kind of like dug into? Is it longevity?
- [104:44]
Marcelo Lebre
Yeah, I guess so. I started to look, you know, I. When Brian Johnson started to do his thing. And I was also fortunate enough to meet him for a bit. And I was doing it for years already. And I find society evolved very fast in the last 10, 20 years. Food and nutrition evolved as well, but it evolved in a commercial way. Our bodies, our brains are not ready to process the kind of shit that we put in front of us. And I'm not saying, oh, is this mambo jumbo? No. Do some blood work and eat certain kinds of things and you will see the direct impact of them. It's not rocket science. It's not. It's not like, propaganda. No. If you eat processed sugar every fucking day, you will see an impact on your birth markers, if not worse, in your direct health. And that's one kind of example. I try to eat well. I remove processed foods as much as humanly possible. I avoid sugar. I'm not a sugar kind of person. Anyway, I eat a lot. I know I don't look like it, but I do eat a lot. I always did. I have very fast metabolism, or rather I metabolize things in a sometimes fast, sometimes not very efficient way, just very different. All metabolisms are roughly the same, just react differently. And I learned to deal with all these different. I think every person is their own very complex environment and machine. I can tell you what works for me, but I can also promise you they will probably not work 100% for you. We all have different builds, we have different needs. And that's what I spent the last five years or so working on because I feel great. I feel like in work 16, 17 hours, days, I have the energy to be with my kid. I have the energy to do things I love. Right Now I'm running 10k every day and working out as well. So last year I was doing a half marathon every week.
- [107:21]
Turner Novak
Oh, wow, that's intense.
- [107:22]
Marcelo Lebre
And so it just allows me to live life at my definition of its fullest. And I think that's the best.
- [107:31]
Turner Novak
Yeah, and you mentioned you're kind of like posting LinkedIn, Twitter a little bit more. Where can people find you online? LinkedIn, Twitter. Are those the two places?
- [107:40]
Marcelo Lebre
Yeah, those are mostly two places. Every once in a while I post on Instagram, but not a lot. I keep my private life to myself. I Don't like to share a lot. I certainly don't post anything about them or that you can identify them. But building a business like Remote teaches you a lot about building a business about yourself, about being an entrepreneur, about being a leader, about being a person, about the vulnerable parts, the hard parts, the true parts. I don't like to write about the beautiful things that I did that are so magical that everyone should copy them. No, no, no. I found out that by writing about the hard truths, the hard truth behind the hard truths, the sucky, fucked up shit that happens to people building businesses both professionally and personally, I start writing about it and you know what, first few tweets and LinkedIn posts, investors and friends were like, oh, like do you want to post about this? Is this the kind of content you want to write about? And I said, look, I don't care if I can help one person, one single person that is going through some hard bullshit in their lives, it's all worth it. And I started to get a barrage of people saying things like, hey, you know what? I didn't know I needed to read this. Thank you for writing it. And at first I thought, well, it's great to read this, awesome. And then it was another, and then another, and then another. And then the people that you were saying, well, maybe don't write about that. Maybe just write uplifting things. They're like, maybe you're onto something. And I'm like, no, I don't care if I'm onto something or not. I don't know. I can tell people what to do. I really. Turner, I can't say, hey, keep doing this because you're going to be a billionaire in five years time if you do this, this and that. No, I don't know, I've never done it. But I can probably tell you, look, I've done these things that don't work, so maybe you should avoid them. And I've done these things that work, but this was the context in which I did them. It's up to you to understand if you want to try them out and if you can match the context or not. And then I may be here to give you some examples of ensure my scars in professional way and help think through the models that allow people to get out of a jam if I can, if not, then I'll just straightforward say nothing to say about this. And I found that we sort of live in a world of make believe, sort of pretend and I am generally not interested in that. I'd rather spend time with my kid and my wife than join the make believe world of these social media.
- [110:58]
Turner Novak
Well, hopefully this this conversation wasn't make believe for people. Hopefully people learned some real stuff from it.
- [111:05]
Marcelo Lebre
The fact that I'm here says a lot.
- [111:09]
Turner Novak
Yeah. Well this is a lot of fun. Thanks. Thanks for doing it.
- [111:12]
Marcelo Lebre
Thanks for having me. It was had a blast and I
- [111:15]
Podcast Producer/Host Assistant
hope you had a blast. Thanks again to Numeral and Flex for supporting this episode. If you like this conversation, it would mean the world to me if you shared it with a friend who might enjoy it. If you missed last week, check out the episode with Kevin Hartz on what he Learned from the PayPal mafia and investing 20% of his latest fund in teenagers. Tune next week for a conversation with Nathan Beneach, co founder of Air Street Capital and author of the state of AI. Nathan has been publishing a report since 2018 and we talk about all the biggest trends he's watching, what most people are missing in AI, and if we're in an AI bubble or not. Author Upcoming guests include Gary Tan from yc, Chetan Puttigunta from Benchmark, Sophia Amoruso and Doug Song, and John Oberheide, the founders of Duo Security. If you don't want to miss any of these episodes, subscribe to my newsletter. The Split linked in the description to get each episode plus a transcript emailed directly to your inbox every week. Thanks again. See you next time.