Nicole Sahin on Gobalization Partners & International Hiring

Nicole Sahin of Globalization Partners - Podcast Transcript

Scott:	Hey, it’s Scott Orn at Kruze Consulting and welcome to another episode of Founders and Friends. And before we start the podcast, let’s give a quick shout out to Rippling. Rippling is the new cool payroll tool that we see a lot of startups using. Rippling is great for your traditional HR and payroll. They integrate very nicely. But guess what? They did another thing. They integrate into your IT infrastructure. They make it really easy for when you hire someone to spin up all the web services and their computer, which sounds kind of like not a huge deal, but actually we did this study at Kruze. We spend $420 on average just getting a new employee’s computer up and running and their web servers up and running. It’s actually a really big deal. Saves a lot of money and the dogs are eating the dog food. We see a lot of startups coming into Kruze now using Rippling so please check out Rippling. Great service. We love it. I think we have a podcast with Parker Conrad. You can hear it from his own words, but we’re seeing them take market share so shout out to Rippling. And now to another awesome podcast at Kruze Consulting’s Founders and Friends. Thanks.
Speaker 2:	(singing). It’s Kruze Consulting Founders and Friends with your host Scotty Orn.
Scott:	Welcome to the Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Nicole Sahin of Globalization Partners. Welcome Nicole.
Nicole:	Hi, very nice to be here. Thanks for having me.
Scott:	Yeah, so Nicole is the founder and CEO of Globalization Partners and they are a partner of Kruze Consulting. We send them business, we send them startups when they’re going international. And that’s why I want to have Nicole on the podcast. Maybe you could just kind of start off, how did you have the idea for Globalization Partners? And retrace your career a little bit.
Nicole:	Yeah, happy to. First, I’ll say what we do and then I’ll tell how we got there. Globalization Partners is a global expansion platform. And when I say platform, I mean people, international subsidiaries and legal infrastructure and technology. Basically, whenever our clients want to hire an employee in the UK or China or Mexico or Canada, normally in order to hire that person, they would have to figure out how to run payroll in that country, which also triggers a lot of corporate tax and legal and just complicated stuff to deal with internationally. Instead of them doing that, they identify whoever they want to hire in that country and we put that employee on our payroll. And the way it works ultimately is anybody can hire, find the best talent anywhere in the world and they can put somebody on our payroll in any of 175 countries without having to deal with any of the legal HR tax complexities and literally we can onboard somebody totally compliant with local benefits in a couple of business days in 175 countries and the employees love it and the clients love it. Yeah, that’s what the business is.
Scott:	It’s a really amazing service. You’re being kind of charitable with the complexity. It is mind-blowing complexity and different languages, different lawyers, different stuff. And you make it super simple for our clients. And that’s why we refer your business.
Nicole:	Thank you so much. Yeah, I really appreciate that. It’s complicated for us and everything underneath the business was extremely challenging to build from a legal tax infrastructure. If you can imagine our corporate tax returns, we have companies and we have over 60 companies around the globe, but our clients don’t have to deal with any of that because we literally lift that burden from their shoulders.
Scott:	It’s absolutely fantastic. And then how did you have the idea, was this a need you saw in the market or were you doing something similar?
Nicole:	Yeah, yeah. The way I had the idea is I used to work with a company that helped, I used to help companies expand internationally from an international compliance perspective. A typical example would be when Tesla was first expanding internationally and they called and they wanted to hire two people each in 18 different countries. And basically, in that situation, the normal situation is that they would have to set up a company in each country around the globe. And no matter whether you want to hire one person or 10 people in a country, you always have to incorporate a subsidiary, register a payroll, follow the local HR and tax regulations, run payroll locally in locally compliant way, sometimes set up a bank account and it’s really complicated. And most of my clients, like most of your clients, were high growth companies who really just wanted to hire one or two people in any one of another foreign country. After helping set up so many companies around the globe for all of my clients year after year and navigating all the complexities for them, I thought, my God, if I could just set up one company in each country and give all of my clients access to it, I would have a much more scalable business model. And also, my clients would be a lot happier with that solution. Literally we take the entire legal and tax burden off their shoulders, they don’t even have to deal with any of it. And the employees are legally employed by us, but for all intents and purposes they’re engaged by the client. The employees feel like they’re part of the client’s team and it’s very effective and seamless. Our clients have, we have a 95% client satisfaction rating and we really pride ourselves on that.
Scott:	That’s huge. To just to kind of take it apart a little bit, startups don’t have to create that foreign subsidiary and try to run payroll themselves. They’re kind of piggybacking on your infrastructure, right?
Nicole:	Exactly. Exactly. Yeah. And there is a point like when some things getting bigger, it’s really successful in a country, of course at that point they might be ready to deal with some of that stuff and we would never argue the point. But most clients, they just want to hire one or two people up to 10 people in a country and it just helps them get started. And in fact, many of our clients are pretty big companies that, they’re only going to ever have a couple people in a country and they just, it’s like so much to deal with from an audit, tax, legal compliance perspective that they just leave their employees with us on an ongoing basis. And the employees like it too because we have good benefits plans in place that the clients could never have access to directly. And local HR support and all of that.
Scott:	Yeah, and it’s the amazing thing about it is they have like a sense of they’re going to be taken care of in that country and they’re, like you said, the local HR support compliance and the companies don’t have to worry about it at all. Sometimes I’m sure you’ve heard this a million times, but we’ll have our clients call us and they’ll be like, I just got off the phone with a big startup law firm and they’re telling me I need to create a subsidiary in three different countries and do all this crazy compliance. And we’re like, whoa, whoa, whoa, whoa, whoa. Slow down. How many people are going to hire? And then we point them to you folks because you can handle this. But how do you manage that? Sometimes lawyers or maybe not, I don’t think it’s malicious. They just maybe don’t know. But they’re giving out advice like start these international entities and those are really hard to unwind once you start those things.
Nicole:	Oh my God. Yes. Here’s the thing. I started the company eight years ago and at that time, so this is not a well-known industry yet. When I started the company eight years ago, I’m very cautious, I’m an operator naturally rather than a salesperson. And I knew when I decided to set this company up that if I could figure out the legal and tax underpinnings of the business that it would, that there would be a huge market opportunity. And from my perspective, I don’t ever want to build a company that I can’t look my clients in the eye and say, “Public company director, I know what you’re dealing with and you can trust me and rely on me. We’re not going to let you down. We’re managing the compliance properly in each country.” The legal work to figure out the complexities under for each country and build literally a new industry to help companies expand globally quickly was just fundamentally major work. And, but yet here we are, eight years later, we’ve had I’d say over 1,000 clients use our platform. We’ve had some companies do major exits. One of our biggest clients had a $1.8 billion exit with people in 25 countries and they sailed through due diligence.
Scott:	That’s amazing.
Nicole:	Because they, all their legal paperwork was done correctly. Our team had the IP and noncompete agreements on lockdown where according to local law and ultimately their success was our success. And so at this point I can say that the business model works. Our lawyers on the ground in each country, we usually work with Littler Ogletree, which are big law firms. They love us, they invite us to their conferences and our legal team are like celebrities with them. And yeah, it’s been a lot of work. But yeah, I think that the model is gaining, it’s been validated over and over, but it’s not well known yet. But it’s so compelling. It’s so compelling. It’s such a great market opportunity for our clients to be able to go after global growth and I know how my business works. If I know that I have a great salesperson who can instantly tackle the market in London, I’m going to, I want to hire that person. I don’t want to wait six months to figure out how to deal with legal stuff.
Scott:	Or most of our clients are, it’s still in development phase, so three great software engineers in another country are incredibly valuable to them and they can bring them onboard so fast. Do you ever wake up in the morning, you’re like, you must have spent years building the infrastructure? Do you ever take a deep breath and you’re like, we did it, we made it, we built all this infrastructure? How crazy is this?
Nicole:	Thank you. Yeah, I have to say I do sometimes. I’m so confident in it that, on the one hand, I take it in stride like yeah, of course this is what we’re doing and people ask what keeps you up at night? And I think they expect from a high gross company founder to hear, “I’m really freaking out about this or that.” And to be honest, what keeps me up is I’m just excited.
Scott:	That’s awesome.
Nicole:	Because I know we’re on it. The platform is secure. And we bring on hundreds of people onto our platform every single month and they’re all happy. And we have been able to build it scalable and sustainably. And for me that was part of why it was really important to me to make sure the foundation was really secure because in my previous company, there was a problem with client retention because they were, consulting is, international expansion consulting is really complicated. Nobody’s going to be happy unless you have a scalable solution that’s just easy. I think that our clients just love it and they’re happy.
Scott:	I like that. I like your line about how what keeps you up at night is you’re just excited. That’s the true testament. I have a lot of nights like that too. I’m like, oh this is awesome. I can’t wait to go to work. There’s something you said that I loved, which was, it’s been battle tested through M and A because I feel especially for us, we’re the kind of the same way, we’re selling two companies a month. You get instant feedback from the acquiring lawyers, the acquiring corporate development people. How did you kind of make that, how do you message to them and do you have the giant checklist you go down and just kind of spring into action? Or how do you handle it when that, I always call it the Bat phone. When the Bat phone rings and one of your clients is going through M and A?
Nicole:	I think we’re just prepared. Our clients have access to the information that they would need. That’s I guess one value is that we have a client portal, a client facing portal, which is data privacy compliance for EU data compliance protection. But the clients have access to whatever information that the employees have signed over to give them within the confines of the law. It’s they have access. The contracts and everything are at their fingertips. I will say also that’s to their major ability, because you know how it is normally when a small company is hiring internationally, nothing’s compliant. Nothing’s in one place. Everything’s right at the client’s fingertips.
Scott:	Yep. That’s actually huge. Just to pause for one second, we did the same. We have a box folder. Don’t you love the look on their face when you’re like no, no, no, everything’s there. There’s no crazy sprint. We’ve already done the work.
Nicole:	Yeah, exactly. And then also, the employment contracts that we use, there are employment contracts and these are legally our employees. Our legal team in the US and internationally, our internal international legal teams and our third-party counsel have validated and vetted to make all the clauses. They’re legit. They protect the client, they’re compliant with local regulations. And so that helps a lot too because I think that’s the sticky part with M and A. And that’s okay now here’s the catch. I think this market is heating up and the thing is, is that what I always tell my clients is, look, or the industry is starting to catch hold, but like you don’t want to skimp on outsourcing your global legal infrastructure. I’m sorry we’re not the cheapest company in town, but guess what? When it comes to terminating an employee or going through M and A, you just can’t afford to, you wouldn’t hire a lawyer who was doing something else in their spare time or hanging laundry in their spare time and you don’t want a school in Ethiopia who’s hiring your team for you on the side. You need a company that works professionally to the highest standards of similar to what an American legal team would require for a job.
Scott:	Well I always kind of message I feel exactly the same way as you do. I message that these are the kinds of things that when companies are going through diligence, it can, if it’s done improperly, it can trigger a retrade on the deal and all of a sudden you cost yourself 10 to 50 to a $100 million because the acquirer senses weakness and knows you haven’t buttoned things up and they get kind of emboldened to dig in other places. And so, having everything very straightforward, very easy for them to access, pays off and it actually builds a lot of confidence and it helps the deal close in a way.
Nicole:	Yeah, yeah, oh absolutely. Absolutely. And also, if you think about the international tax structuring that is required just to hire a few people because you have to question, okay these people in France, they’re generating revenue. Is that revenue taxed in the US? Is it taxed in France? Things like that that you just wouldn’t even think about. Those are the kind of things that are going to pop up and be huge on accrued liabilities that you would just never think of. And I can’t say in every single case, it’s always been taken care of to date for all of our clients. We haven’t heard of any issues. Now that said, I can’t say maybe they also have, besides working with some people through us on our payroll, maybe, I don’t know that they also have a contract manufacturing facility in France that nobody told us about.
Scott:	Yeah, we have stuff like that too. Yeah. You’re like, you forgot to tell me about this during onboarding.
Nicole:	Right. Right. Yeah. We don’t accept liability for everything. What we tell our clients is we’ll make sure that the laws are followed in accordance with the law in that country related to employment and we’ll take care of it.
Scott:	That’s fantastic. When you started the company, did you foresee this globalization and the wave and it must have been really exciting and what got you going. Because I would say 50% of our clients are hiring internationally now where they usually start with contractors and then they start working with a solution like Globalization Partners.
Nicole:	Thank you. Yeah, I agree. I think I did foresee that. And I will say I think it’s only going to continue to accelerate. And there’s two reasons. First of all, you would think, oh, we’re outsourcing. We’re not outsourcing. By and large, our clients are high growth companies, engaging talented sales people overseas, which means they’re exporting American products globally. That’s awesome for everybody. However, the one thing I do think will happen in the future more is that there’s 2 million engineers’ shortage in the United States. Every tech company I know they don’t care. They’ll hire tech talent wherever they can find it. And I do think that there will probably be more of that in the future besides just salespeople.
Scott:	I totally agree. We actually see more engineering hires, but it’s outsourcing is the wrong word because it’s like you said, there’s such a talent deficiency that the companies are just going, they’re just being very practical and guess what? They pay these people very, very well, American wages because they’re just so happy to find them. It’s not a cost play. It’s a talent and my company needs the skillset type of play.
Nicole:	Yep. Yeah, I know engineers are going to run the world.
Scott:	I know. I know. I need to probably need to go back and learn how to code. What are you seeing country wise? Are there some hot, this is hot or not? Are there any countries that everyone’s going to? Or people that we’re treating from? What are you seeing out there?
Nicole:	Well, first of all, I would say that’s really fun to be in my career. I’ve been doing, I’ve been in international business for about 20 years and what has happened in that time, so in around 2004, 2005 the big trend was everybody did, was outsourcing and they were outsourcing to India and China. And I think at that time people were just excited that the concept of telecommunications and that you could hire discount labor anywhere around the world. That definitely came back to bite people. And I’m not saying that people don’t take advantage of lower cost jurisdictions now ever, but I think the shift has, the focus now is certainly not on that. That’s kind of a trend that, unfortunately the time zone is just too challenging to work in a country to outsource the whole department to India. You’re just not going to get the same quality. Anyway, it just mostly time zones and also just cultural style, work style differences that are just kind of hard to navigate unless you have like an Indian founder or something. But what is beneficial? Okay, so then there was a stage of massive global expansion and everybody trying to hire everybody quickly. Then there was the recession of 2008. Of course, everybody retracts. If you have a bunch of subsidiaries you have to dissolve them. And then basically I think it’s been on a tear of global sales expansion ever since. And then just recently we’ve seen an explosion of more engineering talent being hired globally.
Scott:	Are there any countries that you’re seeing, you mentioned India maybe 10 or 15 years ago, but what are the hot countries that A, sales talent and also engineering talent?
Nicole:	Okay. I would say historically that, okay, so the number one country always is Canada. Canada’s not even another country.
Scott:	That’s really interesting. I thought you were going to say China. But yeah, Canada, that’s amazing.
Nicole:	It’s the number one because there’s so much stuff between the United States and Canada. I will say it’s not as, it doesn’t seem as complicated. Most people they’ll just figure it out. Sometimes you’ll just run payroll up in Canada. But it’s much more complicated than you would think. It’s definitely not simple. It’s surprisingly complicated.
Scott:	Is that because they have laws, their laws are more employee friendly? Or is it more tax stuff? Or what’s driving that?
Nicole:	It’s the tech. It’s the tech. It’s they use GST, which is goods and services tax and it’s really complicated the way, just to me it’s just surprisingly complicated. The differences between the US and Canada, that there’s like nine different provinces I think. Several different provinces. It’s just a different system. And I think the idea is just Canada and so I think that’s what catches people off guard.
Scott:	Yeah, I do have an amazing education system. They pump out engineers like crazy and it’s kind of fun to see like Shopify and some of these other companies really taking hold there and retain those people. But yeah, I can totally see why people would, they’re like, hey, they’re our neighbor in the United States. Let’s go to Canada first kind of thing.
Nicole:	Exactly. And then beyond that, I think the first stop has always been, was always the UK. It was, the traditional story literally five years ago, I’d say 90% of the time if a company was going into Europe, they would set up a UK subsidiary first and then they might hire onesies and twosies throughout Europe if the UK was successful. Now that has changed significantly due to Brexit. The UK just basically took a week off the flying leap off the stage internationally. And now people for the last two years or so have been, it’s pretty spread out. They’re going into the Netherlands first with their headquarters. It could be France, it could be Germany. I would say those are the first locations we usually see and sometimes the UK and Ireland as well.
Scott:	I never, I didn’t think about Brexit affecting that. That’s crazy. And that person that they used to hire was always a salesperson. I always remember the international VP of sales in London and they’re going to conquer the continent for whatever tech company that hired them kind of thing.
Nicole:	Totally. Totally. Then when once they have their UK or their European setup, then they inevitably go into Asia. And I would say the typical structure there would be VP of sales in Asia, and then that person goes and hires a team throughout Asia. That’s typically what we see. And then there’s Brazil and Mexico. And at that point if a company is that successful, they’re doing pretty well.
Scott:	They’re going everywhere. When you see people tackle Asia, are they going into Singapore first? Or China first now? Or what are they doing?
Nicole:	It depends on the company, but sometimes China, sometimes Japan. I personally would probably vote for finding a really strong VP of sales in Singapore or Hong Kong and letting them come up with this plan and usually if it’s strong high growth company, they’re going to pick a couple of different countries and hire one salesperson in each. I will say what things that I’ve seen not be good.
Scott:	I was just going to ask you a biggest mistake, so that’s a perfect segue.
Nicole:	Okay, perfect. The biggest mistakes I would say are sending a US person over to whatever country, let’s say China, to go be the VP sales Asia. It is a disaster and nobody does this anymore. But I think sometimes people are tempted because it’s like they’re very, they know their person, but the problem is, and also in China especially, a lot of people are really good at speaking English and they’re really good at selling themselves to an American headquartered company. Because they speak English. But that doesn’t mean they’re the right person for the job. And in fact, China has been so high growth that we’ve actually heard stories of one person in China having three jobs for three different clients because the client doesn’t really know what’s going on and as long as they’re presenting to the, as long as they’re reporting up well it’s fine. And the other, the big mistake I would say for China is hiring somebody who speaks English and reports up well to you without necessarily having the qualifications and the skillset that you need.
Scott:	That’s really good advice. Are there any other doozies that you see companies make?
Nicole:	Oh my God, I think it’s basically…
Scott:	The look on your eyes was awesome there if you’re listening to this on the podcast it was awesome.
Nicole:	Yeah, I’ve heard all kinds of stuff. We had a client, this is a million years ago, they hired somebody in the middle of Germany who was living with a mistress in the middle of some rural village in Germany, but they were payrolling him in France to be in France and to run France. And when we found this out, we were just like, okay, that’s just, first of all, you can’t, like this guy was in rural Germany and you’ve appointed him to tackle the continent. He won’t do it from there. And he’s not taking his job seriously.
Scott:	Yeah, he’s with his mistress half the time. That’s amazing. How do you combat that? Do you do surprise check ins? Or what do you do to make sure that?
Nicole:	Well, at the end of the day, the clients choose their talent. We’re not a recruiting firm.
Scott:	Yeah, I didn’t mean that it’d be your job, but how would a client check up on and make sure there’s progress?
Nicole:	It depends on the country. Most countries, a lot of countries, so we have HR people on the ground in country and a lot of times they want to go meet our HR. It depends on the company and the culture. In Brazil for example, totally normal that actually almost required, the people in Brazil will go into our office, meet the HR person and that type of thing and sign the paperwork and it’s comforting for the employee and it’s comforting for the person. Very much so. And I would say this type of scary thing is unusual. If we notice something that was off, we would definitely tell the client. There’s no doubt about that. But I would say by and large, the scary stories are the fun ones. But by and large, in my experience when I first started hiring people internationally to manage my own company, I was scared too, even though I’ve done this for my whole career because I was scared that these people wouldn’t carry the talent, the mission of the company and they wouldn’t really know us. And in my experience, they’ve added so incredibly much to the company. We couldn’t have done it without them. They’re as passionate, dedicated and loyal to the company as we are. And their insight is incredibly valuable. I would say where our team comes into play really helpfully, for the client is helping them negotiate with the employee. There are things that pop up. In the UAE for example, I remember one time, in the UAE it’s common for the employees to have an education allowance for each child that they have. And the man who is an employee of our client had a newborn and the manager emailed the chief revenue officer and said, “Hey, this guy has a newborn. We need to add his education allowance for the third kid.” And the HR director calls and is like, calls us and is like, “Okay, this is a newborn, why do I have to pay this kid’s tuition?” And basically, it was valid for her to know that, okay, I know it sounds weird to you, but it’s like a family bonus and this is totally culturally normal. Your local manager in region isn’t pulling your chain or trying to do a favor for his employer friend and this is a trustworthy, normal thing. And we do recommend it or if you don’t want to do this then we’ll handle it or whatever. And I think that’s really helpful. The other time we get involved is if there is a tricky situation. And I think personally I think this is worth its weight and gold. Our team handles helping to wind things down and create a mutually beneficial solution on both sides. And that is priceless, I think.
Scott:	It’s huge. Especially with data security and what social media and all kinds of stuff. You’re totally right. That’s really amazing. I just want to recap, being able to hand off a startup to Globalization Partners is such a relief for us and the fact that you can execute and get them into the right countries and not spin up all this legal infrastructure every single time. It’s just, it’s crazy. And so, if you’re a startup listening to this, please check out Globalization Partners because it really does save you a ton of headache. And we didn’t really cover the tax returns but we do a lot of tax returns. Incorporating all those foreign subsidiaries on the tax returns, and if you don’t do it correctly, you get a $20,000 fine per form per year per subsidiary. It’s totally insane. You’re actually doing, you’re doing God’s work for these companies that are expanding internationally and we love it.
Nicole:	Thank you. Thank you. For me personally, we get joy out of it. It’s really fun. We believe that besides making it easy for everyone to do business everywhere, it’s also there’s a mission behind the company of how fun is it? Once you take the fear out of it, the fear of I can do it wrong, it’s really amazing to be able to just capture as much market share as you want globally to take over the world and to work with people from all over the globe. We love giving that access to our clients and intend to do more of it.
Scott:	And you’re also empowering these employees internationally to have better career options than they might’ve had before you. It’s huge. Well Nicole, thank you so much for coming by. Do you mind just kind of telling everyone where they can find Globalization Partners?
Nicole:	Absolutely. Thank you. You can find us at globalization-partners.com. We have dual headquarter offices in the United States, in San Diego and in Boston. And look forward to speaking with everyone. Thank you.
Scott:	Awesome. You did a great job. Thank you so much for coming by and we’ll catch you later.
Nicole:	Thank you for the opportunity. Take care.
Scott:	Of course. Bye Nicole.
Speaker 2:	(singing). It’s Kruze Consulting, Founders and Friends with your host Scotty Orn.

Nicole Sahin, CEO and Founder of Globalization Partners, talks about helping high growth startups hire internationally

Explore podcasts from these experts