Last week we published the first-ever list of Top YC Companies by Revenue, highlighting the 50 YC companies that achieved the highest net revenue in 2022.
Much of that list is made up of companies that have been up and running for a decade or more. That makes sense, of course — the longer a company has thrived, the more time it has had to nurture what works and build up that momentum. Even so, a handful of relatively new companies (including one that went through YC just three years ago!) managed to break onto the list.
How’d they do it? I asked co-founders from three of these newer companies for their insights, hoping to learn a bit more about what they’re doing, what they’re doing so right, and what’s next.
The companies:
- Deel (W19), an all-in-one HR platform that makes it easier to manage an international workforce.
- Whatnot (W20), a shopping platform for buying and selling things like trading cards, sneakers, or fashion via live video streams.
- Nowports (W19), a digital freight forwarder that makes it faster and easier to ship cargo to and from emerging markets.
While the companies are each in wildly different spaces, throughout the interviews there was a clear common thread across the three: they each went after problems their co-founders saw first hand. They made something that people want. Something that they themselves wanted, or that the people immediately around them wanted.
Deel was created when its co-founders, just out of college, experienced how heavily where you live impacts the opportunities you get. Whatnot was built after its co-founders — both collectors of things like Funko Pops — noticed that many online sellers were relying on a clunky mashup of platforms to do their jobs. For Nowports, it was about solving the pain points one co-founder saw growing up around his family's business.
For the interviews below I spoke with Alex Bouaziz of Deel, Grant LaFontaine of Whatnot, and Alfonso De los Rios of Nowports. All interviews have been lightly edited for clarity and brevity.
Deel
Founded: 2018
YC Batch: Winter 2019
Founding city: San Francisco, CA
Company size: 2,700+ across 100+ countries
What is Deel?
Deel co-founder Alex Bouaziz: We built the first global HR solution for companies hiring around the world. You’re a company, you want to scale, you want to go global. We build the infrastructure so that you can hire anyone, anywhere, and give them the best experience in the world.
What’s Deel’s origin story? Where’d the idea come from?
Alex: I’m from France, originally. [Deel co-founder] Shuo is from China. We met at MIT then lived across different countries; we had opportunities to meet amazing people, but pretty rapidly saw that where you’re based definitely impacts the type of opportunities that you get in life. […] Some of our best friends went back to their home countries and struggled to get jobs that paid $1k or $2k a month, while some of my other friends [in other locations] were getting paid way too much money if you ask me!
The idea is that there’s talent everywhere. Enabling this talent and empowering this talent to get the best opportunities is really what Deel is all about.
Has Deel’s focus changed at all over time?
Alex: When we started, we just wanted to help companies hire anyone compliantly as a contractor. Very quickly, through working with our customers, we understood that we could do more.
We started helping them hire people as employees, opened 100+ entities around the world, started building payroll in-house … and realized now that people are getting paid on Deel, we could also become this source of truth and give a better HR experience to people.
When you think about about HR, it’s never a product you love. Typically it’s not global so that everyone has the same experience. We wanted to be the first real solution where everyone has an amazing experience, and where it’s a standardized experience around the world.
How does Deel make money, and what’s the main driver of revenue?
Alex: We’re at about 20,000+ customers today, from small companies all the way up to big companies like Nike and Royal Bank of Canada. And a lot of YC companies. Depending on the type of worker you want [to hire] — contractor, employee, global payroll, etc — we charge a fee per month per employee. It’s quite standard, quite transparent.
The idea is that you come in with one specific person that you might want to work with that might need a visa or whatever — we solve that problem for you. Then you realize that through us you can really have all your types of workers — regardless of their countries — in one place and you stay and grow.
When did you know this idea was working?
Alex: [Early on] we’d talk to companies and say “How do you work with that person? How’d you hire them?” and they’d say, like… “Oh yeah, we pay them on PayPal, or TransferWise.”
It was like… dude, I’m French, and I can tell you that as a French person, you can not just send me money on PayPal and have it work. Something was wrong here. At the beginning it was very hard to explain to people that there is more to it when it comes to compliance and with working with someone in another country.
From running our [previous] companies, [Shuo and I] both knew from different angles that there was just no way people were doing it right. We knew there was something to solve.
Who were your first customers? What about your first “big” customer?
Alex: YC companies, because we were doing YC when we built our first prototype. […] We went from launching the product to 13, maybe 15 customers in a week. It was a decent sign of like.. okay, maybe there’s something here.
We might’ve had bigger logos at the time… but when we closed Reddit, it was a big deal for me. It was one of the top 10 websites, one of the most visited on the Internet! I’m a pretty big gamer and Reddit user, so I was very proud. That was the first one where I was like… whoa, okay, cool, there are companies using [Deel] that I love.
"You can be too scared of tripping and therefore not move."
If you had to pin your revenue growth on any one thing, what would it be?
Alex: We have something called “Deel Speed” internally. It’s one of our principals. Deel speed is very much about execution. I don’t know if you’re familiar with the concept of “Amp It Up”, from Frank [Slootman] at Snowflake … but the idea is that you always need to create momentum in getting stuff done and moving fast. I think this is how, as a company, we’ve been able to grow as fast as we did across markets, across products. You need to finish something by the end of the week? Let’s try to do it by Wednesday, and try to go faster — constantly create momentum, and try to move fast.
In a business like ours, where people get paid on the platform, people get their payrolls, their pay slips, they live with that delivery date. If you don’t have a notion of service and this notion of speed… imagine me telling a customer “Oh, your employees didn’t get paid? We’ll get it next week, after the weekend!”
That doesn’t work. You need the right culture inside of the company, which is super customer-centric and super execution-centric because they trust us with what, at the end of the day, is the heart of their company: their employees.
With a focus on moving so quickly, how do you avoid tripping?
Alex: Oh, we trip all the time! As long as it’s not enough for us to feel it too much, it’s okay.
I do think people overthink a lot of their strategy in general, and their execution in general… which means that someone else is running faster than them and out executing them. I actually think that tripping is part of the work. As long as you do it the right way, and you learn from it, and you pivot fast when you see something isn’t going in the right direction, that’s the only way to keep momentum inside of the company. You can be too scared of tripping and therefore not move.
Any advice for founders just getting started?
Alex: Always create momentum, and talk to your customers every day. Anecdotally, this morning, I pulled up a list of 100 employees on the platform and emailed them for feedback. Talking to your customers, and getting feedback, and trying, and building.
That momentum that we had very early on, we still have that today. And that’s very deeply rooted in the company culture, and every single successful company that I’ve seen has that. Eventually they lose it over time — but when you have it in the beginning, it’s your job to keep it as long as you can.
What’s next for Deel?
Alex: Over the last few years, something we’ve done really well is aggregate all of this data around global employment, global taxes, and global benefits. Employing hundreds of people. Terminating some people, as well. And understanding all of the local jurisdictions; how do you do all of that the right way? We’ve got a very unique knowledge, and want to make that more accessible [beyond] just our internal wikis.
It’s something we’ve been working on pretty heavily and that we’re very excited about. One of the things that we’ve built is our own content management system with all of the different variables that you can think of when it comes to employments, benefits, taxes, and everything, so that our customers will be able to get all of the answers that they want without even talking to our customer service reps. What is the employment tax in this or that country? What are the best benefits to give in that country for that person? All of this is knowledge we’ve built over time, and that we’ve learned in practice – not in theory.
We also recently launched something called Deel Lab, which works with universities to build bigger/better data sets to understand global employment and benefits at scale. The combination of generative AI, global employment data, and proper academic research on these topics… it’s going to be a game changer for any company thinking about going international.
Whatnot
Founded: 2019
YC Batch: Winter 2020
Founding city: Los Angeles, CA
Company size: About 400
What is Whatnot?
Whatnot co-founder Grant LaFontaine: Whatnot is a livestream shopping platform and online marketplace. You can kind of think of us as QVC meets Twitch, where anyone can be a Sotheby's-style auctioneer or a QVC-style host.
What’s Whatnot’s origin story?
Grant: We built Whatnot because… me and [Whatnot co-founder] Logan, we’re both collectors. We were trying to build a great marketplace for collectors. A lot of the places that people shop from online hadn’t changed much, and we just thought there was something there — a better experience.
As we did that, we could see a lot of collectors hacking various platforms to try to do livestreams… and the experience was really clunky, right? It was hard to buy, it was hard to bid. There was no easy way to do shipping, and it wasn’t a high-trust environment.
We just didn’t love the experience, ourselves, of buying, and live streaming, and attending livestreamed auctions. We thought we could make it way better — so we went and we built it, and it took off very fast.
How does Whatnot make money?
Grant: Whatnot makes money in two ways. Any time an item sells, we collect a fee from sellers. And then about six months ago we introduced an ads business, so we also make some money off ads.
What’s the main driver of revenue?
Grant: Our biggest category is sports cards, but fashion is probably our fastest growing segment. We sell things across 80 or 90 different product categories.
When did you know this idea was going to work?
Grant: Once we were able to get our third or fourth category working. When we started, we were just on Funko Pops… and, you know, that’s a great thing to collect, but you can’t really build a business just around a Funko Pop marketplace. For us to credibly say we could build a real business around it, we had to be properly multi-category.
How do you decide which category to go into next?
Grant: Mainly based upon what users want.
Has that ever led you astray?
Grant: Not really. There’s one or two categories where it was either hard to get supply or [the audience was] just too small. When we went into designer toys, the supply base was hard so it never took off. Then we sold these fairly niche collectible fig pins that a lot of Funko Pop collectors collect. That category was… very, very, very tiny. Even though a lot of our customers said they wanted them and were very vocal, in practice there just wasn’t enough buyers or sellers.
If you had to try and pin it on any one thing, what do you see as the reason for Whatnot’s success?
Grant: We try and deliver very fast for our customers. It’s our speed, and that we talk to our customers all the time, and try to deliver an experience that they want.
Has how you think about revenue, or how you track it, changed over time?
Grant: In the early days we just didn’t even track it. We were just like: is the thing working? So the best metric for us there was sales, and whether we were retaining buyers and sellers.
As we got bigger, it became more about the healthy underlying economics of the business and more about contribution margin. For each sale we’re making, are we losing money? Are we going to be able to scale this thing over the long term? GMV, revenue, contribution margin, and gross profit are probably the things we monitor most now.
What’s next for Whatnot?
Grant: We’re going to continue to make the core experience much better, and easier to use, and we’re going to continue to expand categories. We’re working on [categories] like electronics right now, and sporting equipment. And we’re expanding [to new] countries — we just recently launched to UK and France.
"If you don’t build something people want and understand your users, you can’t keep doing it. Nothing else matters."
Any advice for founders just getting started?
Grant: I think YC’s advice is among the best, which is: build something people want, and then keep talking to your users.
As you have a hypothesis, and you’re starting a business, you’re almost certainly going to get it wrong at first. Just being very close, listening to people, and trying to figure out where you can solve a problem… that’s how you do it.
Anything other than that is, broadly, a distraction. Fundraising, hiring people, trying to build a scaled company… if you don’t build something people want and understand your users, you can’t keep doing it. Nothing else matters.
Nowports
Founded: 2018
YC Batch: Winter 2019
Founding city: Monterrey, Mexico
Company size: 800 people across 10 countries
What is Nowports?
Nowports co-founder Alfonso De los Rios: Nowports is a digital freight forwarder for emerging markets with a strong presence in Latin America. We believe that transforming the supply chain in emerging markets can fuel their economic growth, so we are building a complete suite of supply chain services for their businesses.
What’s Nowports’ origin story? Where’d the idea come from?
Alfonso: I come from a family of traditional freight forwarders, growing up watching the pain points of their operations — the mountains of paper and many phone calls from stressed operators.
I decided to study computer science. [I knew this] traditional industry which was the same for the last 70 years — the import and export industry, it’s mostly dependent on emails, phone calls, manual documentation, etc — and on the other side, it was perfect to disrupt, to give more visibility to customers.
Around the beginning of 2019, with [my co-founder] Max, we decided to start Nowports. I was working at a startup as a software engineer. He was working as a software engineer, and he also had a traditional logistics background — he worked for a traditional logistics company for years. We both had this perfect mix of logistics plus technology.
Let’s walk it back and talk about freight forwarding a bit. For a lot of people, shipping stuff is just kind of… magic. You send something from Point A, it arrives at Point Z, and most people don’t see the complex machinery in the middle. What’s Nowports' role in all of this?
Alfonso: Our role at the end of the day is to be the source of truth — the only company that can tell you, in real time, where your [shipping] container is geographically, which documents are missing, and that can save you many hours per week on documents that you’d need to fill in manually for each import or export.
How does it compare to what existed before, with more traditional freight forwarding?
Alfonso: When we talk about traditional freight forwarders, usually they operate mainly through email. They don’t have a track-and-trace tool. And to move a container from point A to point B, you need to send more than 80 documents. Per container!
There are companies moving more than 200 containers per month, and they’d have this huge [pain point] of data and information they don’t have automated access to. Meanwhile traditional logistics teams are spending more than 15 hours per week on manual reports. We basically eliminate all of that.
Then at the end of the day, using all of that digital information, we can provide additional services — we can provide financing, we can provide insurance. That has helped a lot with the revenue.
Can you tell me more about the financing side of it? If someone wants to import cargo, Nowports is helping to finance that?
Alfonso: Yes — usually these clients would go to banks, and the challenge with banks is: 1) they take a lot of time with the approval process, and 2) the [client’s] collateral is not that big — you’re using your warehouse or your credit history as collateral. What we do is use that cargo you’re moving with us [as collateral]; we create this cycle where the more cargo you have, the more we can finance of your supply chain.
What were some of the biggest challenges so far in building Nowports?
Alfonso: Number one was coming to understand the ideal customer profile.
When we started, we were mainly serving e-commerce and small-to-medium size enterprises, but we found out the companies that really needed Nowports in the region were actually the medium-to-big enterprises. It took us around 3 years to figure out that those were the customers that not only liked Nowports, but really needed Nowports.
The second [challenge] was connecting all of the parties into one platform. We’re talking about shippers, carriers, customs agencies, the sales/logistics teams of our customers… it was a lot of parties to coordinate.
The third one was the pandemic. That was a big challenge for our KPIs, but also to the customers that we were serving.
Can you tell me a bit more about how the pandemic impacted Nowports?
Alfonso: To be honest, what happened is that for three months, most of our customers decreased their volume significantly — by 90-95%. A big part of our customer base is in the automotive industry. They didn’t know if demand was going to be there, if they needed to keep producing cars.
First we saw a decline of volume, which was scary but we figured it was temporary. We were more scared once we saw that our customers were no longer importing that much from just one country; they were [suddenly] diversifying their trade lines. Our pitch, our model was based on China-to-Latin America. We needed to change all of that — we opened a new office in India, a new office in Vietnam, all during the pandemic. It was a regulatory challenge, a recruiting challenge, and most importantly an operational challenge to understand what was different in customs in India, and in Vietnam, and these other countries where we diversified.
We were [a company of] around 60 people when the pandemic started. We’re at around 850 right now.
How’d you manage that?
Alfonso: We got as much advice from YC portfolio companies as possible. We talked a lot about practices we implemented internally; clear KPIs, and documentation.
Documentation was super important. When the pandemic started, we were operating in just one office. Now we have thirteen. Documentation, and the way we managed information, needed to be less dependent on the person [creating it].
By narrowing the type of customers we’re serving, the documents became super [standardized]. We decided to focus on retail, automotive, and manufacturing industries. Those are the three industries we serve; we don’t do pharma, food, etc. Then inside of our platform, we have the documentation needed, the processes needed, for every type of customer journey for just those industries.
Why those three?
Alfonso: It was a bet that these were the industries that made sense not just this year, but for the next 10 to 15 years.
There’s a lot of automotive companies [for example] being established in the region in Latin America. I don’t want to bore you with this, but … the automotive industry has these specific needs around its supply chain model. To give you an example, a customer in Latin America can have expenses of $500,000 if a container is delayed by one or two hours because of their just-in-time supply chain model. If the container does not arrive in time, they are not producing cars, and there’s this domino effect on their costs and productions.
So we created this platform around those types of notifications. We notify you in time if a truck is delayed by two hours, by two days, by two months… all of which happens! At the end of the day we can’t control whether or not there are delays, but we can be the only one that lets you know in time. Our pitch [to each industry] needed to be aligned with that industry, specifically.
If you had to pin Nowports’ success so far on any one or two things, what would it be?
Alfonso: It’s solving a real pain, in a really big market.
90% of the things around us were once in a shipping container. Latin America is the second biggest market in the world of logistics — it’s just after Asia. It’s actually bigger than the US [market], and it’s growing 9.5% year over year. It’s a really attractive market, and it had this pain point of digitization.
The second thing is the possibility of cross selling services. In Latin America we’re cross selling insurance, financing, international payments, etc. It really increases revenue per container. Not 100% of our customers need financing/insurance/etc, but a big part of them do.
"It’s solving a real pain, in a really big market."
You’re about five years into this now. Any surprises along the way?
Alfonso: There are surprises every week, to be honest. It’s an industry that is changing a lot.
I’ll mention something very specific. A lot of companies based in China are now diversifying their supply chain not only to Latin America, but to India, to Southeast Asia, etc. It’s been a really big challenge for us to keep growing at the pace we’ve been growing. We had to find other shippers, other customers. It felt like a moment where we needed to restructure all of our operations.
That change… was that gradual, or sudden?
Alfonso: To be honest, it was super fast! Mostly from Q4 of 2022 to Q1 of 2023.
To give you an idea, one really big enterprise client that we have at Nowports changed up suppliers. From December to January, [they went] from being centralized in one country to operating in more than fourteen countries right now.
I’m not sure how familiar you are with this topic, but China is in a commercial war with the US. [Because of sweeping changes to import taxes], manufacturers decided to move their production plants and their shippers to other countries. To Taiwan, to Southeast Asia, India, etc.
At some point demand declined massively from China. We were the freight forwarder known as the experts on China-to-Latin America; that was our pitch. We needed to change everything, to not depend only on one country but to be super diversified there.
How’d you do that? What even is step one of doing that?
Alfonso: Step one was something very non-scalable.
It was flying to all of our top enterprises and clients and understanding exactly where they expect to have their shippers for the next few years. We didn’t know that [automatically]; it was too early. We knew that Customer X wasn’t moving things from China anymore — but from where is it moving? Europe? Southeast Asia? We had to re-collect all that data.
This phenomenon that I’m talking about is mostly known as “nearshoring”. Usually it’s really good, because a lot of companies are [starting operations] in Latin America; they’re building a plant here [in my home town] of Monterrey, Mexico, for example. It’s a challenge, in terms of operations, but I think in the future it’ll be really good for Nowports.
Any words of advice for founders just getting started?
Alfonso: Talking from my experience, focus on one specific type of customer and one specific need that they have. One error we made at the beginning was saying “We’re the freight forwarder for everything! You can move everything through Nowports!”
We never grew until we decided to serve one type of customer, from one trade line, and one type of product. Attacking niches is good, in my opinion, when you have the opportunity to convert that into a massive market.
What’s next for Nowports?
Alfonso: We are in a transformational moment of not only being the supply chain operating system of Latin America, but of all emerging markets.
We don’t want to conquer the US market; we don’t want to conquer Europe. We want to provide all the financial, logistics, and software tools for companies in these emerging markets, including Southeast Asia, North Africa, etc. I’m not saying we’ll do that this year — but our vision, and the next step, is to digitize and become the backbone of these regions to help them grow by international trade.
Originally published on Y Combinator : Original article