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Meet the startups helping other startups go remote

Hiring employees anywhere is harder than it looks. As the coronavirus pandemic changes the workplace, investors are buying into companies offering solutions.

Remote work

In the past, hiring remote employees was a luxury, and one that many startups couldn't afford.

Photo: Alistair Berg via Getty Images

Job van der Voort's hiring philosophy at GitLab was simple: "Find the best person for the job and figure it out," he said. Easier said than done.

The fully remote company didn't care where employees were located, a luxury that opened the world's talent pool to the software-development toolmaker. But as van der Voort found out, hiring employees from anywhere came with a barrage of legal headaches, including how to legally onboard someone from another country, pay them in local currency and provide benefits.

In January 2019, he left his job as GitLab's VP of Product to create a new startup to solve the dilemma.

"I thought to myself, how can I make a meaningful impact in the world? And ultimately the result was me thinking, how can I create more remote jobs?" van der Voort said from his home in Braga, Portugal. "I think the only way to do this is to solve the largest problem of properly hiring remotely, and I think this is it."

Van der Voort's company, Remote, is just one among a cohort of startups helping other startups go remote. The sector is growing with companies like Atomic-backed Terminal, which helps build remote engineering teams, and has been a hot investment area thanks to the coronavirus pandemic, which forced many people to work from home.

Previously, hiring remote employees had been a luxury, and one that many startups couldn't afford. Big tech companies hired around the globe by investing in offices in foreign countries or putting an army of lawyers on the task of figuring out employment laws.

But startups, smaller and more cash-constrained, have had to approach the challenge piece by piece, figuring it out on the go. "I realized this was a problem, and I realized that there was no good solution, because we tried everything at GitLab," van der Voort said.

Investors are buying into the business opportunity. In April, Remote announced it had raised $11 million in seed funding from firms including Two Sigma Ventures, Index Ventures and General Catalyst. A month later, remote payroll provider Deel raised a $14 million series A round from Andreessen Horowitz, entirely over video.

"I think finding the person and paying them is something that can be done relatively easily, and the hard part is wrapping it all together and making sure that it's a) legal and b) the correct taxation considerations are given," said Deel COO Dan Westgarth.

So far, Deel has largely targeted contractors around the globe, though it does some full-time employee onboarding as well. It works with more than 400 companies, including startups like streaming company Pipeline and handbag maker Italic.

Remote focuses on full-time employees and is setting up corporations in each of the countries it services. That way, workers are considered to be employed locally. Remote started with a few countries including Denmark, the U.K., India and the Netherlands, and plans to soon expand to markets including Australia, Brazil and Canada.

One surprising outcome of the pandemic is an increase in interest from the big tech companies, who had previously expected to sign on employees and bring them to work at headquarters, van der Voort said. Now that the employees are stuck in their home countries, some Silicon Valley giants have started hiring them locally through Remote instead of forcing them to move to the U.S., he said.

While the COVID-19 crisis accelerated the remote work trend, startups like Terminal have been working with companies for years to help them build out teams abroad.

The company, created from incubator Atomic, built out tech hubs in cities across Canada and in Guadalajara, Mexico. "Terminal was really built to help companies solve the talent wars," CEO Clay Kellogg said. "Pre COVID-19, there were five open roles in the Bay Area and New York City for every one engineer."

Eventbrite, Hims, Earnin and other startups contracted with Terminal to help sign on engineering talent. The developers could then work in one of Terminal's hubs, providing the camaraderie of an office feel and a community for tech events. Coming out of the pandemic, Kellogg expects the office-optional, flexible work arrangement to dominate.

"COVID-19 is unfortunately the catalyst for remote, and what historically may have been a fraction of the company's talent strategy has changed significantly," Kellogg said. "What we've seen now is everyone on the leadership team and every functional group is leaning into remote."

The shift isn't just an acceptance of remote work, but a realization that far-flung employees will need support, Kellogg said. That's where he sees businesses like his stepping in.

"That's where I think there's going to be a lot of interest in the next 12 to 24 months," he said. "How do you support those teams? How do you do that in a way that makes your engineers or your remote employees in general feel that they are not making any trade-offs in their own professional development, or in their own career development, by virtue of being remote?"

Van der Voort cautioned that companies are facing more than just a logistical challenge of setting teams, but a cultural one as well.

"We're used to how offices work, it's culturally defined," he said. "That is not the case for remote work. There's not standards. There's also nothing to fall back to."

Protocol | China

Everything you need to know about the Zhihu IPO

The Beijing-based question-and-answer site just filed for an IPO.

The Zhihu homepage.

David Wertime/Protocol

Investors eager to buy a slice of China's urban elite internet will soon have the chance. Zhihu, a Beijing-based question-and-answer site similar to the U.S.-based Quora, has just filed for an IPO to sell American Depositary Shares on the New York Stock Exchange.

What does Zhihu do?

Zhihu is China's largest online Q&A platform — the name comes from the expression "Do you know?" in classical Chinese. It was founded 10 years ago by Yuan Zhou (周源), a former journalist, and spent two years as an invite-only online platform. It quickly built a reputation as a source for quality answers and has drawn a community of elite professionals, including ZhenFund managing partner Bob Xu and venture capitalist Kai-Fu Lee, also an early investor.

Over time, the Chinese-language Zhihu has become more mainstream, and now says it hosts 315.3 million questions and answers contributed by 43.1 million "creators." (Quora, about one year older than Zhihu, had almost 61 million questions and 108 million answers by the end of 2019). The website has grown into a content platform where people also keep diaries, write fiction and blog as social media influencers.

Zhihu users do not look like China as a whole. Most than half are men, most live in "Tier 1" cities and more than three-quarters are under 30 years old.

Zhihu continues to emphasize the quality of its content. "Zhihu is also recognized as the most trustworthy online content community and widely regarded as offering the highest-quality content in China," its prospectus says.

Zhihu's financials

Zhihu registered for its IPO via the Jumpstart Our Business Startups Act, a.k.a. the JOBS Act, which has reduced disclosure requirements for companies with less than $1.07 billion in annual revenue. Zhihu's revenue doubled from 2019 to 2020, but still only reached $207.2 million, and the company is short of profitability with a 2020 net loss of $79.3 million. The company says it's "still in an early stage of monetization" with "significant runway for growth across multiple new monetization channels."

Trend lines are good. Zhihu has managed to double revenue while keeping expenses largely constant, with selling and marketing aimed at growing Zhihu's user base as the biggest single expense.

The company is trying to diversify its revenue streams. In 2019, 86.1% came from advertising. 2020 saw advertising account for 62.4% while "content-commerce" — meaning native advertising — took in 10%. The rest was mostly paid memberships.

What's next for Zhihu

After years of evincing a relaxed attitude toward monetization, Zhihu is putting itself in the hot seat to do just that. Zhihu is betting that monetizing Chinese web users will get easier over time. The prospectus describes "significant growth potential" in China's "online content community market" and says average revenue per user in China is expected to more than triple from about $55 in 2019 to about $199 in 2025, with revenue in the overall market reaching a projected $200 billion in 2025.

The company looks like it will basically try everything to monetize, and see what sticks. It plans to "ramp up our online education service" and to "continue to explore other innovative monetization channels, such as content e-commerce and IP-based monetization."

The prospectus also mentions AI frequently, touting Zhihu's AI content moderation tool wali as well as a "question routing system" and "feed recommendation and search systems." However, the depth and quality of content remains far more important to Zhihu's success. Users have joked on Zhihu about the poor quality of its wali filter.

What could go wrong?

Zhihu could fail to turn a profit. Like most content platforms, Zhihu has found it hard to monetize its traffic and the vast amount of free content at its core. The platform was built on the premise that anyone can acquire professional knowledge easily, which means users are not inclined to pay.

Since 2016, Zhihu has tried many monetization models: paid physical/virtual events, online courses taught by its top creators, premium memberships and paid consulting services. None have been a hit. Zhihu Live, the paid virtual event product, attracted a lot of public attention in 2016 and 2017, but since then its popularity has waned. According to the prospectus, Zhihu currently has 2.4 million paying members, or only 3.4% of its monthly active users.

Zhihu also faces intense competition. Defined narrowly, it has no rivals, with would-be contenders like Baidu Zhidao and Wukong, owned by ByteDance, falling by the wayside. But Zhihu has positioned itself as something more: a community for diverse content. In this regard, it's competing with big public-facing social media platforms such as the Twitter-like Weibo and Bilibili. While Zhihu's 68.5 million monthly active user base is growing fast, Weibo has over 500 million and Bilibili over 200 million. Zhihu differentiates itself with the quality and depth of its content, but maintaining that creates inevitable tension with the business imperative to expand.

Like every content platform in China, Zhihu is subject to rigid state censorship and faces harsh penalties for failing to police speech itself. Politically-sensitive questions are nowhere to be found on the platform, while other topics including transgender rights have been censored in the past. Even so, in March 2018, Zhihu was taken off every mobile app store for seven days at the request of Beijing's municipal Cyberspace Administration. Authorities did not specify why, but the suspension probably related to subtle criticisms of Xi Jinping on the platform; Zhihu promised to "make adjustments."

Zhihu's prospectus is largely mum on the censorship question, perhaps because the company feels it's gotten good enough at doing it. Zhihu says it has a "comprehensive community governance system" that combines "AI-powered content assessment algorithms" with the ability of users to report each other as well as "proprietary know-how." These resemble the same tools most big Chinese social media platforms use to censor content and keep in Beijing's good graces.

Who gets rich?

Here's what we know:

  • Founder, CEO and Chairman Yuan Zhou currently owns 8.2% of Zhihu, with another 8% worth of options, which he can exercise within 60 days of the IPO, held in a separate holding company controlled by a trust of which he is the beneficiary. Following exercise, Zhou will have the vast majority of aggregate voting power.
  • Innovation Works, beneficially owned by Peter Liu and Kai-Fu Lee, owns 13.1% of Zhihu. According to corporate database Qichacha, Innovation Works invested about $153,000 in an angel round in January 2011, then made follow-on investments in the C and D rounds.
  • Tencent owns 12.3%.
  • Qiming Entities owns 11.3%. According to corporate database Qichacha, Qiming invested $1 million in Zhihu's series A, then made follow-on investments in the B, C and D rounds.

Kuaishou, Baidu and Sogou also own stakes, as does SAIF IV Mobile Apps Limited.

Innovation Works' Kai-Fu Lee and Peter Liu, and Qiming Ventures, both of which invested early and often, look like the biggest winners besides founder Zhou.

What people are saying

"Zhihu, if it ever wants to be a truly massive platform, will need to go out of the hardcore knowledge-sharing space, and become more mainstream, more entertaining, and yes, even less intellectual. But to capture that market, who better to partner with than Kuaishou, who built its business on exactly those characteristics?" —Ying-Ying Lu, co-host of Tech Buzz China.

"After separating video content into its own feed, Zhihu is now in competition with Bilibili and [ByteDance-owned] Xigua Video. Education-themed videos used to be one of the important growth drivers for the latter two apps. Now [Zhihu], the app that specialized in educational content, has joined the game." —Lan Xi (pen name), independent tech writer.

David Wertime

David Wertime is Protocol's executive director. David is a widely cited China expert with twenty years' experience who has served as a Peace Corps Volunteer in China, founded and sold a media company, and worked in senior positions within multiple newsrooms. He also hosts POLITICO's China Watcher newsletter. After four years working on international deals for top law firms in New York and Hong Kong, David co-founded Tea Leaf Nation, a website that tracked Chinese social media, later selling it to the Washington Post Company. David then served as Senior Editor for China at Foreign Policy magazine, where he launched the first Chinese-language articles in the publication's history. Thereafter, he was Entrepreneur in Residence at the Lenfest Institute for Journalism, which owns the Philadelphia Inquirer. In 2019, David joined Protocol's parent company and in 2020, launched POLITICO's widely-read China Watcher. David is a Senior Fellow at the Foreign Policy Research Institute, a Research Associate at the University of Pennsylvania's Center for the Study of Contemporary China, a Member of the National Committee on U.S.-China Relations, and a Truman National Security fellow. He lives in San Francisco with his wife Diane and his puppy, Luna.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
People

Citizen’s plan to keep people safe (and beat COVID-19) with an app

Citizen CEO Andrew Frame talks privacy, safety, coronavirus and the future of the neighborhood watch.

Citizen added COVID-19 tracking to its app over the summer — but its bigger plans got derailed.

Photo: Citizen

Citizen is an app built on the idea that transparency is a good thing. It's the place users — more than 7 million of them, in 28 cities with many more to come soon — can find out when there's a crime, a protest or an incident of any kind nearby. (Just yesterday, it alerted me, along with 17,900 residents of Washington, D.C., that it was about to get very windy. It did indeed get windy.) Users can stream or upload video of what's going on, locals can chat about the latest incidents and everyone's a little safer at the end of the day knowing what's happening in their city.

At least, that's how CEO Andrew Frame sees it. Critics of Citizen say the app is creating hordes of voyeurs, incentivizing people to run into dangerous situations just to grab a video, and encouraging racial profiling and other problematic behaviors all under the guise of whatever "safety" means. They say the app promotes paranoia, alerting users to things that they don't actually need to know about. (That the app was originally called "Vigilante" doesn't help its case.)

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Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

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Why the CEO of GoFundMe is calling out Congress on coronavirus

GoFundMe has seen millions of Americans asking for help to put food on the table and pay the bills. Tim Cadogan thinks Congress should help fix that.

"They need help with rent. They need help to get food. They need help with basic bills," GoFundMe CEO Tim Cadogan said. "That's what people need help with to get through this period."

Photo: John Lamparski/Getty Images

Tim Cadogan started his first day as CEO of GoFundMe about two weeks before the pandemic wrecked the world. He knew he was joining a company that tried to help people make extra money. He didn't know his company would become a lifeline for millions of Americans who couldn't pay their bills or put food on the table.

And so after a year in which millions of people have asked for help from strangers on GoFundMe, and at least $600 million has been raised (that number could be as much as $1 billion or more now, but GoFundMe didn't provide fundraising data past August) just for coronavirus-related financial crises, Cadogan has had enough. On Thursday, he wrote an open letter to Congress calling for a massive federal aid package aimed at addressing people's fundamental needs. In an unusual call for federal action from a tech CEO, Cadogan wrote that GoFundMe should not and can never replace generous Congressional aid for people who are truly struggling.

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Anna Kramer

Anna Kramer is a reporter at Protocol (@ anna_c_kramer), where she helps write and produce Source Code, Protocol's daily newsletter. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

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