I Bootstrapped A $60M/Year Global Payroll Solution

Lilia Stoyanov

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Published: October 12th, 2021

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Lilia Stoyanov

Founder, Transformify: Workforce Management System

$5M

revenue/mo

Founders

Employees

Transformify: Wor...

transformify.org

from London, UK

started May 2015

$5,000,000

revenue/mo

Founders

Employees

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Hello! Who are you and what business did you start?

Started as an all-remote company back in 2015 when remote work was still seen as an exotic perk reserved for digital nomads, Transformify grew up exponentially over the years.

Empowering the future of work, global payroll, and payments to international contractors and employees across 184 countries, Transformify reached profitability in 2019 and achieved 650% revenue growth in 2021 (and the year is not over, yet).

We see an unprecedented shift to distributed teams spread across the globe, as to stay in business, all companies need to be flexible and hire the most qualified candidates regardless of their location. Often, hiring highly skilled experts on a project basis is the best way to ensure superb quality within a capped budget.

Speaking of budgets, due to Covid-19, budget controls have become more robust than ever before and the businesses no longer have the luxury to underutilize their teams. The share of contingent workers and international contractors working on a project basis is constantly increasing. An interesting study published by SAP Fieldglass reveals that 42% of the workforce spend is already going to external resources - international contractors, consultants, guest lecturers, freelancers, etc.

What's your backstory and how did you come up with the idea?

My background is in fintech and before starting Transformify I was CFO of Skrill/ Paysafe and Director PTP Europe at Coca-Cola Enterprises. On top of that, I am an angel investor, own a successful management consulting business focused on M&A and business transformation, teach fintech, blockchain, and financial transformation as a professor at Zigurat Business School, Barcelona, Spain and act as an expert evaluator at the European Commission. In 2017 Transformify and I received the 2017 First Women Award in the UK and 2018 the Female Entrepreneur Enterprise Award.

i-bootstrapped-a-60m-year-global-payroll-solution

Transformify was conceived naturally when I was still Director PTP at Coca-Cola Enterprises. As the company was going through a business transformation process, lots of highly qualified people lost their jobs due to automation and process optimization.

Being driven by client needs and requests is always the best way to go.

Initially, Transformify started as a platform connecting highly skilled professionals with businesses around the world on a project basis, facilitating global payroll, payments, and compliance.

Later, we added social impact programs for people with disabilities, victims of abuse living in safe shelters, vulnerable youth in detention centers, refugees, etc.

In 2016, we participated in an event organized by Virgin Startup, and an article was published on the web page of Virgin Unite. Later, Sir Richard Branson tweeted information about Transformify. At that moment, from a largely unknown brand, Transformify became a company of interest to journalists and global partners.

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The second ‘’wow’’ moment for us was when Transformify became a member of the Digital Skills & Jobs Coalition of the European Commission along with big names like Google, Oracle, and SAP.

As our pledge to the Digital Skills & Jobs Coalition of the EU Commission was around digital skills and job opportunities, it came as no surprise that Transformify received an Innovate UK grant in 2020 to tackle unemployment amid the Covid-19 outbreak and develop an AI-driven Applicant Tracking System (ATS). With the invaluable post-grant utilization support of Newable and Innovate UK Edge, we managed to achieve all KPIs.

Take us through the process of designing, prototyping, and manufacturing your first product.

As lots of entrepreneurs across the globe have no access to VC funding, we decided to bootstrap Transformify to demonstrate that it is possible to achieve your business goals relying on alternative sources of funding. I speak at many conferences and events across the globe both as a professor, angel investor, and female founder and all the time see the hope and inspiration in the eyes of people who hear that there is always a way if you are persistent and openly ask for advice from other entrepreneurs who have already been through that phase.

To me, it was very important to draft the product roadmap and the go-to-market strategy. Running a business on a shoestring budget means that you need to have a very clear idea as to when and how the business will be monetized. Bootstrapped businesses by default take longer to develop due to cash restrictions and it is important to launch each business line/product at the right time. Working on several products at a time is likely to result in no MVP when you run out of cash.

Transformify first launched its core platform allowing highly skilled professionals to register their GDPR compliant profiles, outline their skills, apply for projects and receive secure payment. We launched it in 2016 simultaneously in the US and Switzerland to explore the user feedback and enhance the functionalities. Our pilot clients provided invaluable feedback on their needs and expectations.

In 2017, Transformify was among the very few startups selected to participate in the K-Startup Grand Challenge in South Korea. The accelerator program is extremely competitive and only 49 companies were admitted out of more than 1600 applicants. We had the opportunity to expand our business across Asia and adapt our product to the local market.

The abundance of movie studios, e-commerce companies, and fashion agencies gave us the idea to build our Vendor Management System (VMS). Imagine that a movie studio is shooting a battle scene and needs 10,000 people for a week. They are all paid the same pay rate but that’s the only easy step in the entire process.

Naturally, our core platform easily hosted the newly built VMS (vendor management system) that allows movie studios and all businesses utilizing a temporary workforce to easily find international contractors, manage their talent pool, and easily message these people if there is a new project. Each international contractor has a GDPR compliant profile and provides their invoice and payment details. The self-billing invoices are automatically issued on behalf of the temporary workers once the project is completed. All payments can be transferred only once and the data is automatically reconciled and pushed to the accounting system of the movie studio.

Being driven by client needs and requests is always the best way to go regardless if the business is yet to become profitable or already generating sufficient profit and seeing exponential revenue growth like in our case.

The AI-driven ATS (Applicant Tracking System) was needed to help job seekers switch careers amid Covid -19 outbreak. Flight attendants are a good example as the aviation industry was badly hit by endless lockdowns and travel bans. Many flight attendants lost their jobs and there are very limited career opportunities within the same industry. At the same time, flight attendants have been trained to deal with difficult customers up in the air, speak multiple languages, and can manage stress and change shifts. These are ‘’ transferable skills’’, that if properly outlined can secure them a job within a different industry, let’s say as account managers or customer support executives with companies like Amazon and Google that are constantly hiring.

Our AI-driven ATS (Applicant tracking system) was funded by an Innovate UK grant as it solves an important social problem - helping people to upskill, reskill, identify their transferable skills and join the workforce instead of becoming long-term unemployed.

Last but not least, the Employer of Record (EOR) solution was added to our services 2 years ago. Often, our clients like working with international contractors so much that they offer them full-time employment. The EOR solution allows hiring employees compliantly across the globe without the need to register local legal entities or open bank accounts in those countries.

To go a step further in helping our clients’ businesses thrive, we complement the EOR solution with offers from our co-working space partners. This way, Transformify’s business clients have the flexibility they need when expanding across new geographies.

Describe the process of launching the business.

Transformify was registered as a business in the UK in 2015. It was a very smooth online registration and in 24 hours we had our new business. Our concept was around remote work and freelancers spread across the globe as I am a digital nomad and enjoy work and travel. The most brilliant and interesting people I met when traveling overseas or participating in accelerator programs (K-Startup Grand Challenge, 2017 and Vienna Business Agency Startup Program, 2018).

Our strategy is unusual not only because we rely on freelancers crowdsourced via our platform, but it is also unusual because during the early years we offered as many of our products as possible for free. The ‘word of mouth’’ marketing, SEO, and storytelling proved invaluable in growing our business without breaking the bank. The moment when we realized that it was time to monetize, we already had 5000 business clients, 350 partners, and 300 000 international contractors registered in our database which explains our tremendous revenue growth in 2020 and 2021.

Moreover, I am very strict when it comes to quality and engagement and all dormant accounts that have not been used for more than 6 months are automatically deactivated as part of our Terms of Service.

If a paid marketing channel is not performing as expected, trying different strategies over and over again to make it work only burns cash. Pouring extra cash to try one more time because your competitors do it is not the right way to go.

Scaling a business brings new challenges and I wouldn’t say that it is easier than launching a business. The big difference is that profitability and exponential revenue growth provide a different level of comfort if compared to heavily funded businesses that are yet to reach profitability.

Since launch, what has worked to attract and retain customers?

Our customers are attracted by the simplicity of our products and our social programs. Doing good to society at large attracts like-minded businesses that become loyal long-term clients as we relate to the same values.

As Transformify is bootstrapped, we have the liberty to adjust our pricing strategy and revenue KPIs which allows us to provide custom pricing and be more flexible than most VC-funded companies that on top of the client expectations need to manage aggressive revenue and growth targets set by their investors.

Like with luxury goods, our business clients value the ‘’personal touch’’. Their key account managers are there for them to assist with unexpected business needs, custom payment preferences as in many countries the local banks require specific information to be included in the payment details or additional documents to be presented (Certificate of Completion, Statement of Work, etc.). Often, I speak with clients or get involved in resolving key customer requests.

Our brand reputation and tailored customer support allow us to be selective and take on board those customers that will benefit the most from our products and services. I have the privilege to politely turn down customers whose expectations are too far from our core products. Although Transformify is fully customizable, not all customization requests will add value to the business. Instead, they are likely to result in shifting our valuable resources from work that will benefit all our customers to developing custom functionalities that will benefit a single customer.

Speaking of marketing, since the beginning, it is content marketing, SEO, and ‘’word of mouth’’ that has always worked for us. Transformify rarely invests in paid social media or Google Ads campaigns as the ROI is minimal and some channels perform times better.

Our Referral Program that shares part of Transformify’s revenue with our partners referring new business clients to Transformify is also very successful. Over time, we secured key strategic partners like WeWork and Payoneer.

The beauty of the revenue share basis is in the fact that the referral costs are incurred only if revenue is generated. This is a big difference from paid advertisement via social media or similar advertising channels.

How are you doing today and what does the future look like?

Unlike most businesses that were badly hit by the Covid -19 pandemic, Transformify is thriving. 2020 was the year when we started slowly to monetize our customer base while monitoring the readiness of our solution architecture and infrastructure to scale fast.

It may surprise you but many businesses fail just because they are not ready to scale, not because there are no customers interested in buying their products and services. To me, monetizing the entire user base in “one go’’ was a clear “no go’’.

Of course, as Transformify reached profitability in 2019, we were privileged to choose our own monetization pace and focus entirely on product development, infrastructure, and system readiness instead of on raising the next funding round.

Achieving 650% revenue growth in 2021 is good but to me, it only points out that there is a lot more we shall do by the end of 2021 to fuel our growth in 2022 and beyond.

Transformify serves businesses and individuals across 184 countries and we are now focused on growing our market share across a handful of target markets as losing focus is a big threat to every business profitable or not.

I was featured on the Top 50 Women in Tech list.

Through starting the business, have you learned anything particularly helpful or advantageous?

It might not be what you expect to hear from someone who had started a global payroll business but it was the hiring mistakes that cost us valuable time and financial resources early on. When our brand was still largely unknown, attracting top talent was a challenge, and instead of waiting for longer to recruit the right candidates, I was lured by the opportunity to move fast with people who were not as qualified as needed.

Launching content marketing campaigns and expanding our network of journalists across multiple territories at the same time was fantastic but also a wrong move. Focusing on just one market would boost our brand awareness faster.

Do your homework and research not only your direct competitors but also those companies offering complementary products that can easily add your future product to their portfolios even before you launch it.

Failing fast was something I learned on the way. If a paid marketing channel is not performing as expected, trying different strategies over and over again to make it work only burns cash. It is best to set clear targets and timelines and if the desired ROI is not achieved by then, simply move to the next channel. Pouring extra cash to try one more time because your competitors do it is not the right way to go.

Speaking of copying the strategies of your competitors, this shall be done only if you are sure that these strategies work for them. Just seeing that your competitors sponsor posts on Linkedin or Facebook is not enough to conclude that these channels are delivering tangible results.

What platform/tools do you use for your business?

Transformify uses Jira and Confluence since day 1 as to us project management and documentation are of utmost importance for the success of the business. I want to be able to track the velocity and productivity of our team and understand the drivers behind the graphs and numbers.

Clockify is the tool of choice when it comes to time tracking as it seamlessly integrates with Jira which saves time and effort.

We use Buffer for scheduling social media posts and HubSpot as a sales and marketing tool.

What have been the most influential books, podcasts, or other resources?

Recently, I read The Everything Store: Jeff Bezos and the age of Amazon. It was a big relief to find out that even Amazon faced big challenges with software development and operations.

Now, I stress less if some functionality doesn’t work as expected upon launch. It is more important to identify the issues and address them faster than to delay a product launch forever because you want to make sure that there will be no issues at all. Chances are, there will always be something your team has overlooked but meanwhile, your competitors have strengthened their positions by launching an alternative product under your nose.

Advice for other entrepreneurs who want to get started or are just starting out?

Be open to networking and never say “no” to a meeting request regardless of who the person asking you for a meeting is. You never know what to expect and often great ideas come from neglected meetings and boring discussions.

Do your homework and research not only your direct competitors but also those companies offering complementary products that can easily add your future product to their portfolios even before you launch it.

Never run out of cash. At any point in time, you shall have enough cash for at least 6 months given your forecasted spend. The more, the better.

Are you looking to hire for certain positions right now?

As Transformify is growing rapidly, there are many open roles at the moment. We are constantly looking for Sales Development Representatives across several markets, Senior Symfony PHP Developers, Data Scientist, Machine Learning Engineer, UI/ UX Designer, and more. You can find more information here: Link.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!