How to Execute the Service to Product Shift for Scaling [Podcast #97]

Ozan Dağdeviren

Hello, and welcome to the startups of London podcast. I’m your host Ozan and the founder of startups of London. Today, I’m joined by Giovanni Luperti the CEO and founder of Humaans. And it’s double A so great coffees, entrepreneurs, whom Humaans, we Humaans.

Giovanni Luperti

Humaans. Humaans is perfect.

Okay, Humaans are the best. That’s nice. Thank you. Thank you for joining the chat, Giovanni. Tell us about the business. Tell us about yourself a bit just to get us introduced, and then we’ll dive into more interesting questions.

Thanks very much for having me today. Very, very exciting. In a nutshell. Yeah, I’m Giovanni, co-founder and CEO of Humaans. Born and raised in Italy, I moved from there to Milan, I started communication design there and have been now in London for 12 years, which has been a while, but definitely a place that I love and call it home. I’ve been in tech for pretty much my entire career. I work always with different startup and scaleup companies at different stages of growth. I’ve seen, scaling companies from like, 10 people to 100, from the 300 to kind of 500. And then about 2000 was kind of the largest companies and most recently, before signing Humaans, I was a cubed b2b personalization company in London, where I met my co-founder catalysts. And from there, we had this pretty special relationship, we managed to accomplish a lot in terms of like building high-quality software together. I was focusing on the product and design side kind was focusing on the engineering side. And that’s where we started to kind of see some of the challenges within the people space. And we got really excited about the problem. And we decided to kind of, you know, dive deeper into them. So yes, that’s kind of in a very nutshell, the story before we dive straight into Humaans,

Perhaps it’s interesting to mention at this stage that I have actually worked in recruitment HR for quite a bit, as an executive recruiter. My first company was in the recruitment space as well. So it is something that I’ve been exposed to, as you know, as a founder, when you build stuff, you do a lot of research around it, the competitors, and so on. And the landscape is definitely changing. But what I have found out, having spoken with a lot of founders. There is definitely a problem or a set of big problems in the, let’s say, HR tech space, which touches a bit on company culture, which touches a bit on the onboarding of staff. And that’s my first experience, a certain component of it touches on payroll and other areas. So, I think we are quite good as consumers when we see, okay, this works and this doesn’t work. But then I see a lot of founders, a lot of businesses that make an attempt to unify to fix. And I see a lot of them fail. Looking at the history of Humaans, before this podcast I’ve seen you have managed to grow quite a bit. So, I would be really interested to understand what you’re doing differently. What perhaps it would be good to start with, what is the page? What is the idea? What is the problem that you claim to solve? Tell us how you went about it.

For us, it really started with the employee experience interest pregnancy, like when we were curating, again, a bunch of other startups that we work with like, as a product people, you’re always exposed to the best piece of tech, right? Everything is fast. Everything is a leak. Use the Figma, use the assignor incredible interaction model. And when you actually look at the landscape of HR software for us was not the same level of the quality level of polish. And that’s again, specifically from a non-admin and let’s say non-power user perspective, that got kind of our attention, right? So, ok, maybe there is something there, why literally every single company. When they cross a certain size, they need a system of records for employee data. But why there is no kind of a real clear winner? Why there is no sort of slack of HR stripe of HR, an extremely beautiful product with a strong interaction model? And then starting from there, we notice a few other bits that were basically lacking to help us develop the product strategy for Humaans and division. The two components beyond the actual employee experience were around automation. So, this layer of integration, when you actually have incredible verticalized software, like DocuSign doing one thing really well in the contract management side, or products like greenhouse giving you been on the recruitment side as well. Just doing the hiring, very well or lattice and culture and on the performance. But it was basically not dismissing layer connecting everything in a way that was kind of, you know, more robust. And the last one was around scalability. Like often companies, they started with kind of some sort of all-in-one model when they are a little bit smaller, and then have the transition During the company scales. They’re not necessarily ready to kind of tap into the, you know, work day or a call or some of the word. So, they start to develop more level of frustration, than with the stack. They end up creating a custom stack that is hard to maintain. They build their own custom connectors they rely on engineering resources. So, for us was more; can we actually build something that can help alleviate this pain and accompany the transitioning from like, small to kind of medium or larger, before they actually ready to kind of onboard into one of these massive enterprise type of products? There was kind of the start of division for us.

That’s really interesting, I would really love to understand how that integration works. Perhaps, if you could go into more detail. And for the sake of this example, let’s compare a situation where a founder, who has built their company from five to let’s say, 30, people have been relying on the notion, Slack, Greenhouse, and perhaps some Google Spreadsheets and the backend. What does using Humaans get that specific persona in that case?

The idea specifically is how you make sure that you have this layer of infrastructure. This is basically acting in the background. So, sometimes, software tends to be a little bit too much in your face. Like everybody’s seeking more engagement, everybody’s seeking more stickiness with the product, which is again, totally fine. It is important. You want a product that people actually enjoy using it. But there is some element… For example, like you mentioned slack; if I’m using slack, and I’m enjoying it, there are certain things that you can do that are related to people’s data, like I want to see where people are when I see someone is working from home, I want to see if someone is working from a different location, or kind of in a training event. And maybe I don’t need to kind of in log into the HR system to tap into the information I would love for the information to be shown directly into a kind a dedicated Slack channel, for example. Or if I’m looking at an onboarding process, how do we make sure that we can streamline the process end to end to make sure that, from the moment someone has been marked as hired in green, our data can get automatically ingested from renounce into kind of Humaans? If you mapped basically the data with the same sort of E signature product contract management tool like you know, DocuSign or similar products, how do you make sure that you can basically capture additional data points, and basically fire contracts automatically when the contract is signed, automatically reinvest under the profile. So, you basically also improve the compliance element. So, in streamlining effective onboarding, the process is end to end. So, these are some of the bits that we’ve been looking at in terms of automation. And obviously, as companies get larger and larger, these can be more meaningful and painful issues that we tried to help to alleviate.

I’ve been just clicking around on your website, Humaans.io, for people who would like to visit. And I see integrations with G Suite calendar, Slack culture, and many more… I see data and analytics, insights, reports and payroll summary. I also see some core HR functionality such as employee database documents, absence tracking, and so on. What I have seen and witnessed both through my personal experience and vicariously through the people that I’ve spoken to is, with some businesses, the idea and the execution quality have almost a certain balance. This specific business seems like this is a success here, and is heavily reliant on execution quality. because the problems are there, the problems are visible. But people agree on the problems, right? It’s not a mystery that better software for people and culture management is needed. But, how do people go about it? How do people solve problems? So, in essence, my question is, in terms of growing the team, in terms of growing the business and the user base, the marketing side of the business, the tech side of the business, it is a lot of hard work, isn’t it?

Hundred per cent. Like, you mentioned something there about the execution that I’m personally extremely passionate about, like, we are operating in a category that is very busy, very crowded, very competitive. There are lots of players we obviously approach this problem from an angle that we believe is different is differentiated, like where we focus on best-in-class type of technology and play well with the ecosystem or the best-in-class compared to kind of an all-in-one model. But the reality is the execution is extremely important in order to succeed and obviously stand out, especially if the category is as crowded and as busy and… What I mean by that, you can start obviously, on the product side, how do you make sure that the product is extremely high-quality software, how to make it sure that you build a team of engineering designers product, people that genuinely care about the craft, and are prioritizing things. But working extremely close with the users from a sales perspective, or a marketing perspective, or customer success and support perspective, how do you make sure that experience with customers is not transactional, for example. With the space, the way we operate and often we have conversation with people where they feel a little bit frustrated, because HR buyers, people, buyers don’t necessarily experience really high-quality processes during a buying cycle. So, for us, it was pretty insightful and maybe coming from let’s say, a naive way of a product guy approaching says, for me was really important to say, Okay, I want to make sure that people understand that we are product experts, I don’t want to try and sell for the sake of selling, I generally want to make sure that we align on a problem that the customer is experienced. And we have the right partners to solve the problem and guiding them through the journey. So, this for us, our elements of execution, and IQ really exceed expectations with people just put in lots of care in everything that you do. Doesn’t matter if his product is made. If he says manifest support and success.

What do you think has been your competitive advantage? I know you’ve been part of the YC group. And perhaps within that answer, there’s some also insight about how it is different to build a startup in the US mentality versus the UK, and perhaps even the more European mentality, because I think you have a perspective having grown up in Milan. So, three different samples from three different places in the world. I would love to hear your personal experience and thoughts on that.

Yes, we went through the YC. program, beginning of last year. It was a remote program. Unfortunately, I haven’t experienced the full San Francisco YC journey there. But a good…

I think as you were exposed to many people…

Yes, 100%. And… But the majority of a good portion of our investors are also American investors from the Bay Area. But we got lots of exposure to founders. There are a few different elements that we do observe both from like, raising capital perspective, also how you think about building a business or going to market as well. One element, for example, for us specifically, is around the buyers and how they process things and how you think about the process. Like in the US, for example, people tend to be less risk-averse. When they adopt new technology, that is this element around, I want to be part of this exciting journey at the very start. And I want to try and contribute. So that is kind of really fascinating. And…

The bigger appetite for risk is…

Yes, yes. And we’ve seen a lot of that in the US versus when we have a conversation with buyers in Europe and Europe has been our focus. The majority of the companies we work with are in the UK and expanding globally as well. But there is more of an element of risk awareness, more of an element of “is this company? Is this technology secure? Is this company… That is putting lots of effort and care around the right components of building the business is going to be stable. It’s going to be around for a long time. Like there is more an element of this, you need to get people through the journey and explain why you’re going to put focus on the right elements. And not just get them excited about the incredible vision of incredible investors, which is definitely a portion of their point equation basically less prominent compared to what we’ve seen in the US.

It seems a mentality in -my understanding as… Let’s build it once. Let’s build it good. Make sure it works. Double-check, triple-check, and then let it work leave it to beware as in the US model. It’s more built-out iteration, constant change. being okay with change. And perhaps even when you implement something, having a certain feeling, okay, this is not going to be permanent. Perhaps you’ll need to change this in a year or two, this kind of perhaps the difference. It’s it sounds like a small difference, but it makes a huge difference in the user and the buying behaviour. So, where’s your customer base with that thought in mind is it US based? I’m guessing it’s international? If so, do you observe any differences between how your customers think and act based on whether they’re from Europe or from the UK or from us?

From a good market perspective, we’ve been focused on building for Europe. As I mentioned, we’ve got a good portion of the customer base. These in the UK a meaningful portion that he’s in kind of broader across Europe and Northern Europe, specifically. But the way we designed the product, the product composition was very much to support the distributor organization. So, something we’ve got a meaningful level of success was tapping into companies that went to Europe but expanded internationally as well. So as of today, in Humaans, we support employees across over 100 regions globally. So, we have companies employing people in China, Japan, or Europe, the US, and Brazil. So, there’s definitely a component, there’s very much international, but specifically from again, a focus and go to market Europe is the main focus. There’s also a specific reason. And there is about the buyer persona that we work with, like HR, people, they tend to be very community driven. So, what we observe is that the moment you can tap into a small group of people and we drive value for them. They get really excited about technology to get really excited about sharing within the community. So, there is a very important element of adoption through communities that we try to leverage also, as much as possible.

Let me understand what is the advantage of focusing on a certain geography, let’s say in your case, UK and Europe versus going all global. Because when you focus, of course, there might be advantages with it, but you’re leaving out a huge market, right, the US and the others? So why not treat the whole global market as a single market and go what is the case against it? What is the advantage of focusing on a single market in our case?

The way I personally say like from a technology perspective, you could do that. You can focus on making sure that your product is robust and can support a global audience. And there is a number of components that we’re already building technology. But the challenge is, again, how people buy technology. What’s the type of team composition that you need to have going back to what we discussed about the buyer is a little more risk-averse in Europe, versus more visionary in the US? You need to build a different sales function to go to the market in Europe. If I would have to go to the US today and say, Okay, we’re going to set up a presence in New York or San Francisco, we need to look at what the characteristics of the salespeople they’re like, how do we think about building a sales motion? How do we think about, you know, selling to those to those people as well? So, there is that component there. And there’s obviously an element of costs as well, which can impact. So, first of all, the ramp may be a little bit slower, because you’re familiar with the market. So, you need to familiarize yourself with different market costs. They’re also pretty different in the UK, or Europe versus us. And they can be bought from a marketing perspective marketing channel, or even from a salary perspective, where compensation in the buying area is more meaningful and higher compared to hiring a team in London or in Europe. So, these are some of the considerations where you want to be extra cautious before you just go crazy and global. The ambition that we have is obviously a meaningful ambition. We obviously want to be a global business. But the way you get there, you want to be mindful of the approach, because can be extremely expensive to go global from day one.

I’m fascinated by this very specific conversation. I think it’s like like a very rich, fruitful dialogue. So, I want to dig in a bit more here. How do you think the salesperson or the sales team… Perhaps the personality I should say… Or the salespeople and this system, the structure, the process that you set up? How do you think these are different in the US versus in Europe?

I think there is definitely this element of consultative versus transactional versus… It’s also the type of let’s say, companies that you can tap into and learn from, like something that is an advantage in the US, for example. there are so many SAAS businesses, that got to kind of a meaningful level of scale. So, there’s definitely this element of tapping into talent, they’ve got a lot of experience people that have seen a company scaling from like 10, 20, to kind of under 10,000 people in a substantial revenue acceleration there. So, the ability to tap into the talent can be extremely, extremely powerful and appealing versus…

You got more talent, which is experienced in scaling an organization and perhaps a bit more okay with uncertainty, and know how to deal with clients, issues and questions that come up in a certain setup, right? So that’s number one.

And it’s also a component of how talent perceives the opportunity of working at a startup, like going back again, this risk-averse component was personal experiences, the more talent understands the value of equity, for example, in an early-stage business because, the ecosystem is more mature. So, there are more companies to go to a meaningful level of scale, we see the dropbox of the word, its lack of the word sign of the word. And this company, obviously, were transformative for a number of very early employees. In Europe, there is definitely less of that. So…

Five persons… Sorry for interrupting. starting point may see a five-person company, for example. In Europe, the perception might be, Oh, this looks like it might go out of business in the next one and a half, two years, perhaps I should better stick with my organization, which is like 400 500 people or even bigger, whereas in the US. It’s like, yes, maybe this organization can go up to 60 people and 300 people, and I will be one of the first-time employees is that accurate?

Hundred per cent, hundred per cent. And this is why we often see actually, the early employees of American companies actually transitioning to the US, they are doing phenomenally well in Europe. But they only have a limited level of exposure, right? So, if I’m starting as a salesperson at you know, Asana, for example, with the, you know, 300 employees in the US, and I’m the first salesperson in the UK, unfortunately, the level of exposure, they’re not going to get to like the product teams and how the certain decision gets made is going to be a little bit more limited. But it will be beautiful, obviously, for more people to kind of join startups early in Europe, when these decisions can basically be made here. When they get exposure to the product. They can see why what’s the rationale basically around certain things, and they can educate the way you go to market can serve you as a better leader, when you actually have this conversation with prospects as well. You have more knowledge that you can leverage effectively.

Does the sales pipeline work any different the sales process and the pipeline in terms of demoing the product, the initial meetings, and the pace of death conversation? How would you comparable the market?

I guess the experience we have with the USA is a little bit limited compared to what we’ve seen in Europe. What I’ve seen in terms of pipeline is that there is definitely a level of acceleration that you can get in the US natural based on the number of companies like the US, obviously, it’s a really big market this reality. So, if you focus, let’s say, extremely narrow on the small businesses in the UK, they’ve got some specific characteristics, you’re going after maybe focusing on tech businesses, professional services, the pool of companies, is smaller. So, the velocity in which you can build a pipeline can be a little bit slower compared to having a similar focus in the US where actually the pool of companies can be maybe 10 times 20 times bigger, so you get more level of acceleration.

And just for our listeners, I would like to underline and emphasize a certain point; whether you get to a certain milestone in six months versus 14 months makes a huge difference in the world of a startup. Because you always have a limited amount of months and limited runway. So that’s actually a life or death timer ticking for any company, actually, because we have all these costs. So it makes a huge difference, actually, when you look at it from that perspective.

But obviously, that doesn’t mean that you can’t build a really meaningful business by focusing on Europe. Because, again, Europe is an incredible ecosystem. There are lots of businesses, they’re growing exceptionally well. So, it’s more about how big is your market. What is your focus, and how you go about tapping into the companies that are right for you at this specific stage of growth? And based on your product, of course.

I would like to touch on two more points, Giovanni. One of them is decision-making. And the other one is the resource management aspects of building a startup, which I think both are crucial, in your case, and in most people’s cases. So, let’s start with the resource management part. And then we can perhaps dive into how you manage that resource, and how you make decisions around that. But the resource itself. When I say resource, I think about two things. One of them is essentially the investments that you have had, or it could be a customer-funded business as well. So essentially money. The second part of the resources is the people. So, can you tell us a bit about that? I know, we’re a company of 30-plus people. Am I right? In that? Have you received investment? How was that landscape? What was the first initial phase of the company? And with that, how long has it been since you launched? I never asked that.

I mean, we are relatively new to the market. We’ve been building Humaans for a little over two years now. So, it’s still a relatively early days team of over 30 people now. And we raised about 20 million in total to date,

What was the first round like? if you could raise…

Raise it, whereas the first round, last year, we raised 5 million in total.

You build something and then you raised… How did that go?

I can share a little bit more around that. Basically, currently said, we moved on from qubit. And we had this vision for Humaans. But before starting to train to build the Humaans, we decided to kind of bootstrap it effectively. So, we build first some sort of you know, another business let’s say it was a vehicle to bootstrap Humaans really was a product agency. But what we did from there is the capital that we made from the venture reinvested strain into building the first version of the product from there has we’re acquiring more customers. When we realized that it was a meaningful level of traction, we decided to go down the venture route.  

So, it started like a service-oriented business, which created his own product, and then you are focused on the product more and more, I guess.

Correct. So, it was effectively not focusing on the HR component. The other business was nothing to do with it. But we use that as a vehicle to basically get some capital without going to the venture route.

That’s very smart. Good plan… But I’ve seen this with some other companies as well. Like I think a very unique way of doing business. But I think it works.

It is really important because we really want to make sure that it was something meaningful to be built. And sometimes obviously up in the craze of last year, some companies were able to tap into the capital in a way that was easier, let’s say compared to previous periods in previous cycles. But for us was really… We want to make sure before we tap into capital, that we actually have something that we have extremely high conviction. we believe there is some level of traction. we will be at some level of demand. And that’s how we really approached it. So, from there we when down to raise some capital, we connect with a number of incredible investors and then we got accepted into Y Combinator as well. So, we decided to take some money from the Moonfire venture. Y Combinator we brought on board a number of incredible investors. We got frontline involved rocked room as well. And from there, this was our first set of capital raises, which again total 5 million, which we announced early last year in March. And the team was still relatively small. And from there, we decided to be a little bit contrarian. let’s say compared to what was happening in the market like last year was a crazy market, right? Where companies capitalized in a way that was incredible teams were scaling extremely fast. For us, it was a little bit different. Like, despite the capital, we decided to hire relatively slowly, we wanted to focus on the core business fundamentals. we wanted to prove that the product was strong, and we wanted to build in the right way for the right set of customers. And this enabled us actually to make sure that our bar was relatively low. And when we then go to a meaningful level of scale, a meaningful level of customers. and this year decided to go down and raise more capital, despite the market climate, there is a very different competitive landscape than we had the last year. we were in a very strong position because we didn’t need to raise because we still have plenty of money left and plenty of runways. But that enabled us to be in a very strong position to tap into the capital are the terms that were right for us, and enable us to get get more acceleration as well.

What do you think is making the most attractive to the investors?

There are a few components, I’d say definitely, the market that is crowded, but still, there is no real winner, a category leader in a market that, as I mentioned, is really, really massive. There are definitely a few players that capitalize exceptionally well, and they’re doing well. But they are very similar in terms of like product composition. So, there’s definitely this element for us, which is more about, again, the best-in-class verticalized product approach, the market is very big, and execution, going back to what we discussed, the beginning, around how to make sure that we build an exceptional product, and to make sure we build an exceptional team, how to make sure we focus on the right, business fundamentals. That was a key component and key part of why investors were really excited about joining us in this journey and supporting us as we scale.

I am also looking back at your profile, and see you have worked as a mentor in a few places such as close as he can feature and level 39 as well, quite high-profile names, all of them. In your experience. How has that helped you make decisions? Think about decision-making. And how does it perhaps a core play with the other people that you have in your organization? What is your thinking process about decision-making and resource management and directing resources?

The most impactful things are when you’re part of communities and networks. And I guess there is a cap table as well, it’s kind of in a bit of a reflection of that when you have lots of investors there, operators they’ve got experience is the ability to tap into this community networks and people and absorb learnings from them. For me, personally coming from a product background, I definitely had some gaps in certain aspects of building a company, right, for example, say I’ve never done that myself. So I needed to kind of bridge some of those gaps and the ability to have a conversation with people that have done that was really, really helpful to kind of help me think okay, how do we think about you know, building assess motion? How are you thinking about building a go-to-market function? similarly, on the marketing side, or sharpen up some aspects of the product? Maybe okay, I’m a product person. I know how to do things in a certain way. How do you elevate there? How do you accelerate there, how to get more velocity? So, by having the ability to have that conversation, then you can do pattern matching in a way that is way faster. And that obviously is going to elevate the way in which you can do decision-making because you’ve seen things already like you had this conversation already. So, you can spot risks in a way that is way faster and more efficient. And to support the team in the best possible ways. Okay, we know that we can anticipate this as a risk. So, we might want to locate more resources. we need to hire more people into a certain area of the business because of the number of conversations, and people that have been on the journey before and have experienced the pain before. So, we know that we might get more risks on the side of the business. And let’s try and mitigate before it’s actually a problem. So that is the real component in my opinion there. They get unlocked by having those conversations.

Fascinating. I think I have so many more questions to ask you. But I think you’ve done amazingly well. I mean, what an experience with Humaans. It’s kind of like a textbook example of how to operate in a market where the problem is perhaps apparent, but there are a lot of competitors. and execution quality matters most. So, I think there are quite a bit of innovative approaches that you have done. Perhaps that goes beyond product innovation in the way that I see Giovanni is perhaps the innovation of the business model innovation of how you make and build the team and how you choose to grow. So, a lot of good things going for it. And I think this conversation was really insightful. Hopefully, it was as such for our listeners as well. But that’s all we have time for today. So, thank you for joining.

Ozan, thanks very much for having me today. Thank you.