The job market is changing. More and more workers expect to continue working remotely, although many large employers are reluctant to support the movement. The longer the pandemic continues, the more it looks like the job will be very different in the future. As TechCrunch reported, startups have already set their sights on the distant future, often building their first teams across time zones and geographies.
The trend is pronounced enough that we are seeing private tech companies becoming acquirers to better support it. This morning, for example, payroll and human resources service provider Gusto announced that it was acquiring Remote Team, a startup that focuses on supporting remote staff.
As part of its news, Gusto also announced that it now supports payment to contractors in 80 countries and fast tax registration in all 50 US states.
Remote Team, unlike Gusto, is a start-up startup. Crunchbase only has a bit of data regarding its history and capital increases, for example. In the opinion of Gusto CEO Josh Reeves, Remote Team was pretty much at the A-Series stage of startup life. Putting current fundraising trends aside, that means the small business likely had customers and a go-to-market movement that had just hit its stride.
In contrast, Gusto has raised nearly $ 700 million in capital, again according to data from Crunchbase, more recently adding $ 175 million to its accounts for a valuation of just under $ 9.5 billion. Gusto is therefore, in everyday language, essentially a decacorne.
Or, as we like to think of at TechCrunch, a company that should go public.
Regardless of our take on the current late-stage unicorn market, Gusto could offer Remote Team something that simple fundraising could not, namely scale. According to Remote Team CEO and founder Sahin Boydas, selling his business to Gusto made sense as it could offer more reach into the company’s global footprint than more private fundraising would allow the startup alone.
Boydas said support for more countries is coming, implying that Gusto’s ability to support international recruitments will only grow in the coming quarters.
Terms of the transactions were not disclosed, but Gusto’s CEO indicated that equity was a component of the transaction. Translating this a bit, the trade was executed in both stock and cash. Regarding the latter item, Reeves told TechCrunch that his company’s E-Series earlier this year was not set up to fund the day-to-day operations of the company; Gusto still had most of his previous turn in the bank. You raise additional capital when you can and, we would add, when you want to buy smaller businesses that have technology or people that you want to integrate into your current business.
We wouldn’t be totally shocked if Gusto bought another company or two before it went public. (The company has now purchased three small businesses, including Remote Team. The previous two were Ardius and Symmetry, for the curious.)
On that front, Gusto said he’s growing by around 50% per year, but hasn’t shared more than that. TechCrunch has pressed Reeves on the lack of details regarding his financial performance, essentially curious as to why he won’t share more at this point given that we expect to be able to look back on this period when his company goes public. As with every CEO we’ve asked this question, the response was polite.
In summary: Gusto’s focus on small and medium businesses doesn’t prevent her from seeing the demand for more international and interstate hires, which is why she shapes her department to meet the need. It will be interesting to see how the greater Gusto-versus-Rippling rivalry plays out. The two companies are used to not getting along, and Rippling recently put together its own mega-tower, adding $ 250 million to its coffers for a valuation of $ 6.5 billion.
Looking ahead, we’re curious whether Gusto and the associated private tech companies come into the game of business spending, another part of startup work that is teeming with both venture capital and market demand. You can see the synergies quite easily; Gusto wants to help SMEs start and run their business, regardless of where they or their employees are based. And if Gusto is going to help make payroll work for these businesses, why not add another category of expenses to the mix?