Embedded Payroll

Embedded Payroll

In this episode of Startup Hustle, Matt DeCoursey untangles the complexities of payroll with Andrew Brown. Our guest is the CEO and co-founder of Check Technologies from New York, New York. They also discuss the benefits of an embedded payroll system for businesses.

Covered In This Episode

Are you struggling with payroll processing? Taking care of payroll is a time-consuming, complex task. But with tools and tech like the ones in Check Technologies, the opportunity to build your own system is opened.

Listen to Matt and Andrew as they have a founder-to-founder conversation on payroll and software platforms’ current issues. You also get insider tips about raising money and how to compete with big industry players. Of course, opinions and insights on the future of payroll are shared.

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Are you ready to learn new entrepreneurial wisdom? Tune in to this Startup Hustle episode today!

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Highlights

  • Andrew Brown and his backstory (02:38)
  • What are the biggest problems of software platforms? (04:45)
  • Businesses overcoming the disgruntling effects of the pandemic (08:30)
  • What does the future of payroll look like? (09:33)
  • Should you consider the cowardly approach? (11:16)
  • Andrew’s experience in competing with big players in the payroll industry (11:52)
  • The story of how Check Technologies started (14:50)
  • What makes Check Tech difficult to manage? (18:55)
  • Getting real on starting the fundraising round (27:27)
  • Andrew’s advice for founders who want to raise money (29:22)
  • Funny stories of failures and learnings along the way (31:47)
  • How complex are taxation and payroll? (39:39)

Key Quotes

Payroll is not the sexiest business. It’s, conceptually, pretty boring. But the way we convince people to come and join, more than anything else, is actually based on the importance of the work. And how interesting it is once you dig into it.

– Andrew Brown

In payroll, you get it from all angles too. Because, certainly, you know the employee side. You also get it from the business owner’s side. And then, you get the government coming after you, too, talk about not mixing with people’s money.

– Andrew Brown

You’re not a startup when your brand is big. Your brand name has become a verb. That’s the criteria. We decided a couple years ago, on this show, that if the name of your company is often used as a verb, you are no longer a startup.

– Matt DeCoursey
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Rough Transcript

The following is an auto-generated text transcript of this episode.

00:00.00

Matt DeCoursey

And we’re back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation I’m hoping helps your business grow. All right, so we use all kinds of software platforms; all kinds of stuff at our business. In fact, the average business is using a double-digit number of software platforms. And so many of them, when you look at, you’re like, gosh why can’t I get my payroll in here? Why can’t I figure out a better, cleaner, and faster way to get the payroll needs added into the software platform that I’m either building, running, or using? That’s exactly what we’re going to talk about today. Before I introduce today’s guest, today’s episode of Startup Hustle is powered by FullScale.io, which, by the way, as of the recording date, it’s Full Scale’s fourth birthday. So, happy birthday, Full Scale. Hiring software developers is difficult and Full Scale can help you build a software team quickly and affordably. And also has the platform to help you manage that team. Visit FullScale.io to learn more. With me today, I’ve got Andrew Brown. and Andrew is the CEO and co-founder of Check. You can go to www.checkhq.com. There’s a link in the show notes for that and learn all about what they do. They are a venture-backed company with a very sophisticated software platform. Straight out of New York, New York, Andrew, welcome to Startup Hustle. Yeah, I want to hear a little bit more, but yeah as I mentioned in the intro, I think everyone that builds different platforms and uses different stuff has this need for payroll and HR infusion.

01:23.20

Andrew Brown

Appreciate you having me on. Excited to be here today.

01:34.88

Matt DeCoursey

But adding that in it can be a whole, it’s like a whole separate can of worms. You’re very much aware as the co-founder at Check. But let’s get a little bit of your backstory and what brought you to where you are today with the company.

01:56.26

Andrew Brown

Yeah, absolutely so. Um, first just to make sure we’re talking about the same thing you know, Check what we are. We’re an embedded payroll platform. So we’re a platform that folks build on top of to create new payroll products and services and. That’s most people. It’s probably not the nine types of company they would think to start. You know the way that I came into this space is I’m a developer by background. I was running a different business before in the consumer space called oyster that I ultimately sold to Google and coming out of that business I felt like. Running a media company was interesting but as a developer I really wanted to be running a software business and and building infrastructure and services that other folks could build on top of and when I looked around at you know the way software was working and what I found was that payroll is really this unmet need for so many companies especially in the real world and. And payroll for software engineers is – thing. But if you’re running in a restaurant or you’re running a you know plumbing business or you generally you know have blue-collar workers who have you know tips and bonuses and commissions. There wasn’t software that really met the needs of those types of folks and those business owners and so we built Check as a platform. That ah, the vertical SaaS companies and others can build on top of you know to offer payroll products to their customers.

03:11.22

Matt DeCoursey

So yeah, you talk about this? Well so Stripe was one of the lead investors in a $75000000 round. That’s right folks 75 with an m behind it. And you know Stripe really hit the scene by doing something. That’s probably what caught their interest in you is they made it so much easier for developers to actually just pay just be able to collect payments and I think that if you’re new to tech startups and you’re just now integrating anything payroll. You may not or anything payment collection. You may not have an appreciation for what a pain in the butt that was 8 or 10 n years ago and you know so with Check is this you mentioned building on top of What like what was the biggest problem that that software platforms have and like what I mean what? What was the real obstacle in doing any of the stuff that Check is is solving the problem for um.

04:11.55

Andrew Brown

Yeah, absolutely so and I want to explain 2 pieces here. 1 is the customer problem they have and then one is actually why payroll is really hard. So one of all the customer problems imagine service titan is ah you know one of our important partners and their power.

04:28.20

Matt DeCoursey

With yeah.

04:30.75

Andrew Brown

And you know think about HVAC installation plumbing. You know, local field services type businesses and for them those business owners come onto the service titan platform and they are managing their whole business. There. It’s how they do scheduling and time tracking of their employees. You know you have an uberlink experience to see you know. The person coming to your house is the palmer. You know there is that sort of thing and what was happening though they had the employee roster they had all the time but you know at the end of every week or end of every couple of weeks the business owner basically just ended up with a flat file like literally a CSV here.

04:52.00

Matt DeCoursey

Um.

05:04.50

Andrew Brown

Employees here’s the hours they worked, you know, maybe here’s the bonuses and commissions they earned then it was basically up to the business owner to figure out. You know what? the heck to do with that in order to actually get their employees paid and so they have to export it and. Take it into some you know, big legacy payroll provider and email them a file or upload it through some you know FTP system or something to try and make the whole thing work, and it’s clearly an antiquated process. You know, not the way it should be and so service I and wanted to say hey like let’s complete the process for payroll right here in our application. We’ve already got the data. Let’s you know, add a few buttons such that the business owner can say great all the correct payments and actually transfer all the funds. You know the employees and all the tax authorities so that was the customer problem that they wanted to solve and you know your question is a good one which is great. Why didn’t you check for that? You know why can’t they just do that on their own.

05:49.53

Matt DeCoursey

Like the wrong and.

05:54.91

Andrew Brown

Um, and the answer is that payroll is one of the most complicated spaces you’re going to find. It is crazy hyperlocal. So you know we live in a country that doesn’t just have one government. It doesn’t even just have 50 at the state level. It is literally one of the local governments. I’ll just take Pennsylvania as one example.

05:59.84

Matt DeCoursey

Skills.

06:12.48

Andrew Brown

They have payroll taxes that are all the way down to the school district level. A lot of places pay for schools based on property taxes. Not Pennsylvania they pay for schools based on payroll taxes. So that means as a company that wants to offer a payroll service. You got to know.

06:26.17

Matt DeCoursey

Where we like.

06:27.72

Andrew Brown

What are all those different jurisdictions? What are those rates? How do you calculate them if someone you know lives in New Jersey but works in Pennsylvania or vice versa and heads companies headquartered somewhere else. How does that all factor together and so and you know if you sort of you pull way back and think about like.

06:37.97

Matt DeCoursey

Enough. Of this.

06:44.41

Andrew Brown

What’s that relationship between the business and the employee you know, probably one hundred years ago you could just hand cash to someone and that was yeah pretty much the end of it today. That’s just not true. It really is all those taxes that you have to withhold and all the benefits you have to deal with that make it complicated and that’s where Check comes in. Check is an abstraction layer in a platform that contains. All of that complex regulatory knowledge you know inside of our business and so that our partners don’t have to worry about that. They can just worry about the frontend.

07:09.22

Matt DeCoursey

You know when you look and and well said because payroll really is from a lot of businesses. It’s a real pain in the butt and for all the mention. All the reasons you mentioned. How did the pandemic and people working suddenly work remote? How did you get up to speed with that because I know a lot of businesses had a hard time because I’m in Kansas City and in Kansas City there’s this invisible line that splits the city. Half of it’s in Kansas and half of it’s in Missouri and we went from. Having people that were coming and working in a place which was Kansas every day to know technically when they were staying at home. They were working in Missouri or wherever the hell they were doing that threw a major curveball at you or was something that was pretty easy to handle.

07:52.52

Andrew Brown

I think in a lot of ways. It actually was a real advantage for our business because we’re developers by background. We approach this platform from the beginning. We’re only going to solve one kind of use case. We want to make sure that we can handle, you know, the most complex edge cases that our platform partners are going to throw at us. So dealing with, you know, multi-state taxation and people being in different places was something that we really already were able to handle and so and so as small business owners. You know, ah so many of them still have you know paper processes things coming out of excel you know.

08:18.40

Matt DeCoursey

Life.

08:27.64

Andrew Brown

I think folks sometimes imagine it’s all you know you know you know, perfect software today. It really is not, and so as they realized during the pandemic hey actually this stuff is important my life just got more complicated from how I pay people perspective really drove them to to go and sign up for the services that that our customers are offering.

08:44.61

Matt DeCoursey

So you’ve been quoted as talking about the future payroll as personalized and embedded tell me more about what you mean with that? Oh sure.

08:53.21

Andrew Brown

Yeah, so I’ll start on embedded and then go to personalize what I mean by embedded is that as a business owner. Especially imagine, you’re starting up. You know a new coffee shop, a new local business you no longer have. You know as we go forward here, we are going to be signing up for. You know a bank account in – place and then signing up to accept payments somewhere else and then maybe do your accounting somewhere else and then lastly go sign up for a payroll provider. It’s just not the way it’s going to work. You’re going to go to one platform that knows your business. And has an all in one system for managing it and it’s going to help you manage your workforce. It’s going to provide financial services to you and those are all going to be embedded in that one application and so and the payroll piece of that is what Check powers our view is that payroll is not going to be this separate thing you go sign up for it’s actually going to be deeply Linkedin. You know that service that really is the system of record for your business and that’s frankly that just hasn’t existed in the past. It’s a massive sea change for how these businesses think about you know, operating compared to what they’ve been doing for the last you know – TenTwentyPlusYears it always surprises me I talk to these folks and. You know, many of them have an office manager or business admin and these are small companies. You know 10 none employees and they’re still spending 3 four-five hours every week or two munging data and spreadsheets and double Checking numbers. You know all just. Do the basics of getting their teams paid and so by embedding it in that system of record you can really cut out an awful lot of that and make it much much more automated.

10:24.86

Matt DeCoursey

So this is a founder to founder question here because you know it was some of the earliest advice that I got as a startup founder was to and this sounds weird at first was to consider the cowardly approach. Meaning like don’t take on the giants. Don’t be like hey, I’m going to take on Amazon and Google or or whatever now you took the opposite approach because you were immediately competing with some pretty big titans, right? I mean just meaning like there’s a lot of well entrenched. Large publicly traded companies that have their own payroll technology or process payroll or whatever did that feel intimidating in the beginning of this or did you see that they were perhaps not able to be as. Agile or or weren’t as equipped to fill in some of the gaps that smaller that small businesses needed.

11:22.26

Andrew Brown

Yeah, it’s a great question and I’m going to actually disagree with you a little bit on the approach that we took because there are absolutely. There’s a ton of payroll companies out there. Many of them are large, you know $10000000000 plus publicly traded companies and it’s an industry that’s been around a long time. So there’s no question about that.

11:31.16

Matt DeCoursey

Um, yeah.

11:40.60

Andrew Brown

I think when you really dig into the space. It really surprises people and while they are large on an absolute basis. They’re all actually reasonably small from a market share perspective. So adp is the biggest company in the space. It’s close to $100000000000 market cap

11:41.99

Matt DeCoursey

Are.

11:50.17

Matt DeCoursey

Yes.

11:54.72

Andrew Brown

They’ve got maybe 15% of the market actually and everyone else is substantially less than that and so when I looked at it what I saw was 2 things I saw a really big market and that had you know a lot of players in it none of which was um.

11:56.70

Matt DeCoursey

Um, okay yeah.

12:10.49

Andrew Brown

Was dominant. There wasn’t any you know giant player that could sort of box Out. You know a new entrant and and I also saw a space that was dominated mostly by legacy incumbents and that as ah, a you know new Startup Player. We could actually build a business bottoms up like. Honestly, not worrying so much about competition if we know find our customers meet their needs and help them provide great services to the businesses on their platform, I felt like we’d do well.

12:33.50

Matt DeCoursey

So when it comes to what you do and and by the way that’s a great answer I didn’t realize that I look at an industry like payroll and you know the question is how much meat’s on the bone and you know who and who’s consuming it. You know 15% well, that’s ah, a big chunk of market share that there’s a lot. A lot more out there and the biggest one is at 15%.

12:54.80

Andrew Brown

Correct. Yeah, everyone else is, you know, sub 10 and and even most of the big ones that are you know ten plus billion dollar companies are sub 5. They’re you know 1-2-3-4 percent, that sort of thing.

13:04.43

Matt DeCoursey

Sure, and this comment isn’t directed to anybody in the industry but sometimes in a lot of different industries when you get the you mention like legacy players that come in. Um, they often have a hard time. You know like just adjusting or adapting or sometimes have. Aren’t that innovative and they have become ah, they’re right for disruption is a fair way to put it and you know you could say the same thing with a company like stripe entering you know, entering an industry where you know payment processing was pretty much. Ah, you know there’s only a couple players in there. And then there’s a few little microprocessors underneath that but you know where’s your problem and what do you solve? So when you look at something for those of you listening? Ah let’s go back to what Andrew was talking about and he’s using the example of Pennsylvania. Of these little tiny changes that occur and then all of a sudden you have to know just in the United States you have to take into consideration any federal changes any state changes any local changes and they’re all. They’re all very very different when you were in the beginning phases of this did you just begin with one state. Or did you have to like I mean how do you go about it because you know I say you gotta eat the elephant one bite at a time where you sink your teeth in none.

14:24.98

Andrew Brown

Yeah, eating the elephant one bite at a time is an awesome way to put exactly how you have to go about tackling this problem, and so yeah, we did a few things and you had to take 1 step at a time. The first thing is we said we were going to run on our own payroll system from day 1

14:29.82

Matt DeCoursey

Yeah, grab.

14:44.11

Andrew Brown

Full stop. So that meant to myself, my cofounder we weren’t going to pay ourselves to take a paycheck until we could build the system to a point where it actually worked for us. Um, so you know that gives you pretty good motivation to actually build the thing out and we happened to be based in New York we started the company here and so New York was the one state that we supported and.

14:49.69

Matt DeCoursey

Fair.

15:03.94

Andrew Brown

We also are a distributed team though, and so our none and none employees respectively were based in Atlanta and in San Francisco, so that meant we had to support three states. You know pretty quickly within the first you know a few months of the business and honestly for the first year or 2 of the company. That was actually basically the approach we took. It was you know we were small but we were – 8 none people and you know spread across – eight states. It was every time we hired someone knew we would add support for that state and go 1 by 1 and that took a period of years. It was a full three-year journey for us to go from.

15:32.50

Matt DeCoursey

And with.

15:39.16

Andrew Brown

Ah, you know, starting standing, starting to be in all fifty states and actually running payroll across the whole country and and you know the last thing I’ll say there. It’s not something you can do as an individual. It’s a team effort and we realized that we had to.

15:45.37

Matt DeCoursey

Yeah, yeah.

15:54.68

Andrew Brown

You know we had to go do a lot of you know, learning and reading and research we needed to bring on experts as well. So We made a real point from early on bringing in folks who you know had been on Compliance teams as you know the big scaled payroll companies who’d been on Payroll Operations teams at other places and really. Yeah, marrying that knowledge in with the product and engineering folks in the company to make sure that we could tackle these problems in the right way.

16:15.45

Matt DeCoursey

Did you ever have a point or a situation where you’re like we haven’t done North Dakota yet and you actually hired someone there as an excuse to actually get that put a Check Mark next to that.

16:25.52

Andrew Brown

I don’t know about an excuse. We definitely had the reverse which is like oh wait. We just found this. You know, amazing engineer this amazing salesperson and they live in you know North Dakota wherever it was like oh wait. We don’t support this yet. But multiple times we’d you know, push someone’s start date back a week or 2 to to make sure that we actually had time to land it or in a couple of cases. Our none employee comes to mind. You know his none task was hey you know welcome to Check and by the way if you want to get paid in two weeks like you need to you know, add support for your state by ah you know by the time payday rolls around. So. There was, you know, back in the early days totally ah you know I think that’s your normal startup experience. But no, it’s ah you look I think we’ve been lucky to achieve a fair amount of success and scale now and it’s something I really actually like to remind the team of and Harken back to and from the early days. You know you don’t.

17:01.72

Matt DeCoursey

That’s whatever he did. That’s what everyone wants to hear on day one right.

17:18.39

Matt DeCoursey

Ah.

17:19.90

Andrew Brown

You don’t know how to do everything and you got to go just figure it out and throw yourself against it and sometimes having you know external deadlines like hey you need to pay someone on your team is just an amazing forcing function for helping you to you know, kind of figure out these problems that otherwise might seem intractable or like they’re going to take a really long time.

17:30.54

Matt DeCoursey

I can tell you what I’m sitting here still thinking about the complexity of keeping up with. Tax rate changes because I think that you know like you look at any city and now they want to build a new stadium or the gas tax or this and you know these these are little fluctuations of like point zero five percent here or there that don’t I don’t know I think as employees we might not notice them. Same way but you got it I mean how do you even go about keeping track of that on a nationwide basis is there his tax code is in volumes not pages like it’s in like true true volumes. Oh.

18:13.12

Andrew Brown

Yeah, you’re hundred percent right it’s incredibly hard and really what you have to do none of all, it requires a team so we have you know a team of folks who are it’s it’s our compliance team and all they do is they it’s it’s legislative research. And keeping abreast of not only what are the current laws. But what are the ones that are coming down the pipeline because you imagine you know those have a big impact on our or you know product and engineering roadmap and you know then translating those those laws and rules and regulations into ah you know what are the rates and what are the things that we need to know so that we can actually implementing them.

18:37.86

Matt DeCoursey

Um.

18:49.15

Andrew Brown

Implement them making sure our you know product and in teams understand what’s needed there and then just doing that you know consistently and and repeatedly and there’s not a. There’s no one secret sauce. You know it’s not an Ai algorithm where we know every rate it’s it’s you pay attention. You know there are.

18:55.43

Matt DeCoursey

I know them.

19:04.40

Matt DeCoursey

Um, everything.

19:04.94

Andrew Brown

There’s a lot of them but there are only so many states and there are only so many local places and the thing that I think most often surprises people is that you also often can’t just like to read the book either like you can’t just even read the the law that’s been written because you know.

19:08.71

Matt DeCoursey

Many.

19:19.60

Andrew Brown

Half the time the legislators writing it weren’t you know 100% clear on what it meant there’s real interpretation from you know on the part of the Irs or whatever. The local agency is that sort of thing. There’s a fair amount too of calling up. You know.

19:30.21

Matt DeCoursey

And

19:32.48

Andrew Brown

Person in Rhode Island who you know works in the tax collection office and saying hey you know we’re implementing this should it work in way a or way b you know how do you interpret this and having back and forth there too. So that’s the nuts and bolts of our business.

19:35.35

Matt DeCoursey

If.

19:44.83

Matt DeCoursey

I couldn’t do it man. I’m not that detail-oriented. Once again, with me today, I’ve got Andrew Brown, the CEO and co-founder of Check. If you want to learn more about what they do, there’s a link in the show notes or you can go to CheckHQ.com. A really amazing and impressive company dealing with some really complex stuff. I find that, you know, there’s so much I want to talk a little bit about, like the infrastructure and being that kind of a business. Before I do that, I want to remind everyone that finding expert software developers doesn’t have to be difficult. Visit FullScale.io where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs and then see what available developers, testers, and leaders are ready to join your team. Visit FullScale.io to learn more. Um, so. But my business partner at Full Scale and the person that founded this podcast with me Matt Watson would be absolutely in love with this business. He will say and don’t take this wrong way. I love boring businesses. The businesses that turn the gears that tighten the bolts and do all of that. Um, so you know with that you can look at some of these things and hr isn’t sexy. Payroll isn’t sexy. Um, the complexity of it might be for developers and we’re just talking about Full Scale. You know, helping people find developers. How did you go about recruiting? My notes say you have anywhere between this number of employees. That’s a pretty broad range. But how do you go about recruiting people for years like I said sometimes you you’re competing you want top talent. You’re sometimes competing against. Things that I don’t know on the surface sound a little more fun than HR. So what was your approach to getting the right people in and on board?

21:42.80

Andrew Brown

I completely agree with you by the way. Yeah payroll is not the sexiest business. It’s conceptually pretty boring but the way we convince people to come and join more than anything else is actually based on really the importance of the work and actually how interesting it is once you dig into it.

21:59.84

Matt DeCoursey

Um, yeah.

22:01.13

Andrew Brown

You think you know the type of software that a lot of people write and I’ve written a lot of the software myself. It’s a web app. It’s a mobile app. You know things like that like they’re interesting services to build to be sure, but they don’t necessarily intersect and impact the real world and people’s lives you know a Check. It is very obvious, you know. Every day and especially on Fridays and you know if we don’t do our job. Well, we hear about it and not just you know if you haven’t paid someone but if it’s an hour later than you know they were expecting it to you know, a lot of people are living paycheck to paycheck if payday is late like. They might not make it to work that day because they may not be able to put gas in their car. They might lose their job as a result you know and that is yeah that is. It’s a real responsibility to take on, but it’s a lot of fun too to realize the impact that you’re having in that regard and if you pull even further back than that recognizing that.

22:37.71

Matt DeCoursey

Exactly yeah.

22:55.66

Andrew Brown

A lot of ways. What I tell folks who are joining our team is. We’re really you imagine ah a kind of benevolent you know technologist who’s actually in charge of of you know the whole us the the system that they would put in place on top of it to you know, kind of calculate and and collect and file taxes is basically what Check is is trying to build and that’s ah.

23:04.63

Matt DeCoursey

Um.

23:14.33

Matt DeCoursey

It’s a.

23:15.70

Andrew Brown

Pretty hairy, pretty audacious thing to go after you know the payroll system in this country moves $10000000000000 a year. You know we do, you know, increasingly a large portion of that and so it’s pretty gnarly. Pretty fun technical problems to get into and you know that attracts a certain type of person.

23:29.86

Matt DeCoursey

Yeah, I think that yeah one thing I’ve learned from hiring developers at Full Scale is that it’s not always about the money, so we’ll first give them that to get that out of the way, but developers like to be challenged. They want to do complex things and like the really good ones do, and there’s, I think, once you get below the hood. You’d see oh wow. There’s a lot there’s a lot of math there’s a lot of complexity here. This isn’t boring. Um, you know it’s ah but it’s so interesting that so many I think that the modern consumer and user of just the internet and software. Often underappreciated the complexity of certain things and um, you know I’m also the founder of https://gigabook.com, which is a fully customizable booking platform and you know people think that when you you build one layer of software and they think oh well, it’s time for the next layer and that’s just the equal level of complexity. It’s not it. It. It becomes exponential. Every time you stack a new thing on. And man I can only imagine at CheckHQ.com. It’s the same thing with scheduling like people look at it and they’re like well this should this should be you know be easy you’re putting something on a calendar or taking it off. Okay that is not hard.

24:22.19

Andrew Brown

All life. A.

24:37.40

Matt DeCoursey

It’s the 10000000000 things and the way they interact with each other and that spider web it creates and I’ll tell you what don’t mess with people’s money if you get someone’s pay I can. Yeah, as we are building Gigabook we would be in the earlier stages of any software platform where you’re so often stabilizing things and learning what you need to Learn. We would know if it was broken because our phone would go Ape. Like it would go from not ringing at all to all of a sudden. It’s like ringing ring ring ringing with it’s like um, ah, it’s like you know at that point that’s like you don’t you don’t need an application performance management platform or a bug Checker or anything to tell you that there’s something wrong because the phone.

25:09.46

Andrew Brown

Yeah, yeah.

25:22.92

Matt DeCoursey

Well or your inbox or whatever. However, I’m assuming that was probably the same way for you along the way.

25:28.84

Andrew Brown

There’s no question and in payroll you know you get it from all angles too because certainly you know on the employee side. You also get it from the business owner’s side and then you get the government coming after you too talk about not mixing with people’s money, you know.

25:35.91

Matt DeCoursey

Yeah, oh yeah, yep.

25:41.78

Andrew Brown

Yeah, the IRS is not very understanding if they don’t get their money. So you have to be able to deal with all of those parties properly and that still leaves out our actual customer. You know the software platforms that are building on top of us who you know who are the folks we deal with most closely as well.

25:57.71

Matt DeCoursey

So you’ve had a lot of success when it comes to fundraising and you know correct me if this is inaccurate, but my notes show 119000000 plus over four rounds. Um, and. You know with a recent series C led by Stripe, how difficult was it for you to raise money in and the very beginning phases like yeah I said you. Sailing into this headwind and investors say things: This is a crowded marketplace. There’s an £800 Gorilla over there and over here and over there. How are you going to compete with this like how was the very initial rounds? Ah. You know how those go for you. Did it get easier or more challenging over time?

26:43.82

Andrew Brown

Yeah, and I think we’ve been really fortunate from a fundraising perspective which is I’m a – time founder and and sold my – business to Google and so as a result of doing that. Yeah, we had a fair amount of credibility in the space and frankly, a fair amount of.

26:48.78

Matt DeCoursey

Um.

26:55.73

Matt DeCoursey

Is.

26:59.19

Andrew Brown

Relationships in space too. So our 2 rounds were led by bedrock which is run by a guy named Eric Stromberg who was my cofounder at my none business and you know super close friends as well. So you know, having you know some of that track record and those relationships made it. You know, it was a whole lot easier as we were getting going. The other thing that really benefited us is I think it actually investors were not scared away by being a big and complex space. That’s what got them excited. It said hold up, you’re tackling a you know multi-hundred billion dollar industry.

27:18.22

Matt DeCoursey

Um, yeah, yeah.

27:30.51

Andrew Brown

1 that is still dominated primarily by incumbents that are, you know, many decades old if not approaching a century old and actually doing it in a way that no one else is approaching it right now. All the other payroll companies are either services, businesses or product businesses. No one has really built a platform payroll company. Um.

27:49.70

Matt DeCoursey

1

27:50.18

Andrew Brown

You know if that works that’s going to be clearly $25000000000 plus business. That’s the type of bet that the venture capitalists like to make, so I think in the early days, we didn’t find the fundraising to be all that difficult. You know as time went on. You know it goes from being an idea to obviously being a business and you have to actually show you know the traction and the metrics and so in that regard I would say it got more challenging and that said we’ve been ah you know, really fortunate for the business to have really I think largely played out the way we expected. You know when we first entered it and so. Ah, you know have continued to have success along the way there.

28:27.45

Matt DeCoursey

What’s ah, what’s a tip that you could give for any founder when it comes to raising capital like what are some of the things that you think that you did or really just the best advice you could give to a listener that’s trying to raise money at any stage.

28:41.11

Andrew Brown

Yeah I think the first thing is about a mindset sometimes founders approach fundraising with a scarcity mindset which is oh like I don’t have capital today I need capital like where am I going to get it. You know what investors might give it to me.

28:54.32

Matt DeCoursey

That’s it.

28:58.50

Andrew Brown

I think when you do that you’re already starting totally on the wrong foot. You need to start from a position of having an incredible business Here. You know we are going to build an amazing company and the investors who get to be a part of that. As you know, incredibly fortunate to be able to benefit from the fruits of. You know our hard work and and all the the work that the folks on the team are doing and so you know you really want to put yourself in a position to and in many ways actually being so selective about you know the folks who you want to bring on that journey with you because they’re going to have a big impact on it along the way too. You know it’s ah.

29:31.51

Matt DeCoursey

Is.

29:33.13

Andrew Brown

It’s a lot easier to get divorced than it is to switch out. You know one of your investors or or wanting your board members and so I think really approaching it. You know with that mindset of hey do I want to work with this person for the next you know ten plus years and have them be. You know. Weekly if not daily basis someone that’s going to be having you know, a big influence on you know the future of my company. That’s where I start and you know it’s a privileged position to be able to do that. But I actually think when you start with that mindset. It has its own and sort of self-fulfilling prophecy effect where investors see that they understand that. They’re attracted to your own confidence and belief in your business and and and you know then it all works out better from there.

30:11.98

Matt DeCoursey

You said something in my book Million Dollar Bedroom. I’ve got a whole section and it’s easier to get rid of your spouse or partner than your business partner.

30:23.50

Andrew Brown

No question.

30:25.18

Matt DeCoursey

You know, like yeah I mean it’s and maybe even less expensive. You never know. Do you know they actually have um, ah couples counseling for business partners now. Yeah, they have it for business partners and it doesn’t even that doesn’t even.

30:33.79

Andrew Brown

Do they really? I hope that is something I never need. Yeah.

30:39.79

Matt DeCoursey

Yeah, right? True. But yeah, they have it, and it’s a need, and the same thing goes for investors and once you get people on your cap table. It can be a real challenge. Do you have any funny stories or anything you can share about raising capital one? I put it this way. Everyone’s blown a presentation or a deal or just like you know like chase the rabbit down the absolute wrong hold. Do you have any funny stories or failures that you’ll be willing to share?

31:08.54

Andrew Brown

Oh man, let me think about this one. Our fundraisers truly have been pretty straightforward and look. Here’s how I think about it and to me like the hardest parts with our fundraisers have honestly always been about navigating like how to keep folks happy and.

31:18.17

Matt DeCoursey

Of this.

31:28.27

Andrew Brown

You know in our case, investors are really important folks for sending customers our way and working with Check is a big strategic decision. So even if you’re not going to be investing in our company, I still want to maintain a really good relationship with you and think you have a positive, you know, kind of association with the company.

31:38.74

Matt DeCoursey

But

31:47.40

Andrew Brown

I definitely gotten myself into to one or two sticky situations where you’re in the middle of a fundraise and things are moving quickly and you know you set up a meeting with a you know a big name firm and then kind of the process gets out the head and so and at least in – case, we had signed a term sheet ahead of time and then you know I went into this meeting with the big name firm and wasn’t you know. Lying or anything I was direct to them like hey we already signed the term sheet. But when you start the meeting on that footing. They’re like, like why are we meeting here? What’s going on is that that was not great. In retrospect I probably would have handled that one a little bit differently but yeah, that’s probably the best one I got.

32:19.62

Matt DeCoursey

Fair enough, fair enough, all right. So much so that I’m just kind of looking for your opinion on this. You know there’s a lot of and I normally don’t date episodes when you know we’re recording this at the end of June this isn’t going to be out until you know, roughly August and the. You know the landscape of things can change pretty quickly but we came into 2022 with people feeling bullish about life. Both markets everything crypto you name it all like running hot. And then we get into the second quarter and things have started to crumble. There’s a lot of you know depreciation and valuations from companies you hear all this stuff about oh venture capital is slowing down and all of it. I’m personally of the belief that great companies with great founders and great teams are going to still get funded regardless of market conditions. How do you feel about ah and you know some of the too has also been industry like you look at insurtech oh my. You know there’s I mean there’s things in insurance act that went IPO and they’re at one of what they came out with what’s your what’s your outlook on on Vc funding and maybe even just fintech in general going forward. Is it Rocky? Is it like yeah I don’t know you tell me.

33:22.70

Andrew Brown

Yeah, yeah.

33:37.82

Andrew Brown

Yeah, I mean I’m a huge long-term bull on fintech for sure and that said there’s no question that the last six months have been. You know a huge sea change in just the perception from everyone involved in the industry investors operators you know. All around clearly the playing field today looks a lot different than it did in November or December of last year and at the same time I mean what you said is unequivocally true. Great businesses at the end of the day can be built in any market. In many cases I think the best businesses are actually built in lean times because it forces you to actually be efficient and build.

33:59.34

Matt DeCoursey

It or.

34:05.29

Matt DeCoursey

Um.

34:13.42

Andrew Brown

Actually a business. You know it’s not just a company or a product or towards a vision. It’s a real business which you know I think at the end of the day sometimes gets lost. You know when markets are really frothy and really hot and so I mean that’s the sort of hat that I like to wear and that I you know remind our team about and talk to our investors about it.

34:24.88

Matt DeCoursey

So.

34:32.55

Andrew Brown

I have no idea where the markets are going to be a year from or 3 years from now. But I know that if you know we’re making money and we’re growing quickly and we’re serving our customers really well and you know working towards our you know multi-decade long vision. I don’t know what our valuation will be when we raise the next round but I know we’ll be able to. I know we’ll do really well and you know well we’ll stay on ah on a great trajectory over the long term.

34:47.90

Matt DeCoursey

Of.

34:52.75

Matt DeCoursey

Yeah, I think that a lot of that news is very difficult to digest because you know they say oh the amount of dollars that go out. Okay, that tells me that there’s more dry powder in BC Bank accounts than before. Um, and then I think a lot of it is just really skewed because not all of us own a billion dollar business you know like so those numbers can can can look really weird if you look at them because you know you get companies like I mean uber was about to go public and they’re still referring to them as a startup.

35:13.78

Andrew Brown

Life.

35:26.21

Matt DeCoursey

Like me, you’re not a startup when your brand is big. Your brand name has become a verb. That’s the criteria. We decided a couple years ago on this show that if the name of your company is often used as a verb you are no longer a startup. Is that fair?

35:26.82

Andrew Brown

Yeah.

35:40.90

Andrew Brown

I think I probably go even wider than that. That is more than fair I would say yeah.

35:46.90

Matt DeCoursey

Ah, and to all of you listening I hope the name of your company at some point becomes a verb because that means you’ve probably done something. Well. Right? So here we are at the end of another episode of Startup Hustle with me again today I’ve got Andrew Brown the CEO and co-founder of Check. And with that it is time for the founders freestyle. Before we move on to that, a quick reminder that today’s episode of Startup Hustle was powered by FullScale.io. Finding expert software developers doesn’t have to be difficult, especially when you visit FullScale.io where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs and then see what available developers, testers, and leaders are ready to join your team FullScale.io. It only takes like 2 minutes to fill out the form. Go do it, people. We talked to Startup Hustle listeners all the time. Now, I mentioned in my episodes of Startup Hustle. With the founders freestyle. I’m not the only host, make sure you tune in weekly and hear what Andrew Morgans is invariably saying about Amazon-related stuff or e-commerce. Join Lauren Conaway, the founder of InnovateHER, who talks about so many things that I’m afraid to touch on a public basis. Also join Matt Watson to talk about technology and his mostly weekly episodes now. Andrew, we are at the end of the show, and you know as promised I’d like to give you the mic and give you a chance to talk about anything that stood out during the show or I mean it’s your freestyle you get to choose what you do with it.

37:24.71

Andrew Brown

Amazing! Well why did I do this? I’ll tie in with a sort of economic climate conversation. We were just having that with our business and our customers. So you know the folks we work with and who Check sales to us. Or entrepreneurs they’re they’re innovators who are building and you know new platforms to serve different types of small businesses and and then also staffing companies who are ah you know serving you know, different segments of the employer economy as well and and the types of conversations we’re having with those folks right now are twofold. It’s around you know. What are profitable growth avenues you know for my business um on the platform side and on our direct business side. It’s how I save money. How can I you know grow my staffing business with fewer people and be more efficient at doing it and and those conversations are definitely different now than they were six months ago and

38:04.65

Matt DeCoursey

Awesome publish.

38:14.71

Andrew Brown

You know the thing that we’ve we’ve seen with Check and and our big focus is on being you know, amazing partners to the folks that we work with and really showing them that hey the way to have profitable growth and the way to you know, really succeed in this environment is to you don’t leverage platforms like Check you know Leverage folks where you can and you know. Enter New areas you know, release new business lines, and keep serving your customers. Well, you know, even through down markets and do it without having to build you know massive teams on your side and and you know really increase your burn rate and so. That’s you know exactly what Check provides and you know we’re excited to keep working with that with all the entrepreneurs who we power to to help them build their business through this environment.

38:50.71

Matt DeCoursey

Yeah, a couple things stood out here one. Ah, a reminder of the complexity of taxation and payroll providing. Um yeah I’ve given a lot of. Advice to people over the years that you know they try. Don’t do this shit in-house people. It’s not for you. It’s not worth it. There’s too much to keep up with and you’re not going to get a positive ROE or ROI now. I also love it. Talking to any founders that you know your company’s what 4 years old is that is correct 4 years old and you we talked about headwinds and like the idea that certain markets could be saturated and you know there’s and I love I love them.

39:22.85

Andrew Brown

Yeah, about

39:38.66

Matt DeCoursey

Love the approach of you know what? That’s not going to worry me, I’m not worried about the competition. We’re coming in. We think we have a solution, we have disruption. We have value that we can add and provide and then going forward into that now with that you get a massive total addressable market. I don’t know are you only doing United States or do you do other countries and you’ve you’ve got I mean the world potentially and that’s you know everyone everyone that has a job gets paid somehow some way and so you got a lot to deal with there.

39:59.17

Andrew Brown

Um, yeah, we’re US only for now like yeah now.

40:14.16

Matt DeCoursey

You’ve obviously found traction and done a lot of great stuff. And, you know, being able to raise money. And a lot of times that, you know, part of it is intimidating when it comes to going against giants. Yeah, I appreciate the brave approach there, like I mentioned at the beginning. You know, I had received the whole idea of the cowardly approach was that you can go somewhere, you do something that no one else is doing. And people leave you alone long enough to get really good at it now. You know, there’s a different approach for everyone, and you’ve clearly been successful with that. Then, another thing is I love any platform that people can build on top of and within in order to either improve their own business now. As someone who is a purveyor of software development services, I tell people all the time, you have to look at whether you want to buy it or build it. We’re in this golden age of tools similar to Check HQ that are going to, you know, if you think about someone out there lessing is, like, man, this is a great product for me. I was thinking about building this. This is one of those things I don’t think you should consider building. Like this is a whole level of everything. And they run into this a lot with Gigabook. They’re like, well, we’re thinking about building our own scheduling component. I mean, there’s a bunch of stuff out there for a more than reasonable price. And they’re going to keep up with all the complexity.

41:34.39

Andrew Brown

Um, yeah.

41:43.65

Matt DeCoursey

Unless you’re ready to have a compliance department alongside you know to to service one portion of your software platform. It’s probably better to check out what Check does. Andrew, thank you so much for joining me, man. I’ll catch up with you down the road.

41:58.17

Andrew Brown

Thanks for having me on. This is a lot of fun.

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