Relocating for work and opening up borders in the post-pandemic world

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I immigrated to the States from India in 2014. The topic of immigration is near and dear to me from economic, cultural, policy, and geopolitical lenses. I will explore those themes through conversations with founders taking on problems that people living outside their home countries face. One of the major reasons why people immigrate is for better job opportunities, which require work visas, which put people (and companies) through a long, confusing, frustrating process. Of course, there are exceptions based on your home and destination country! In the post-pandemic world, more and more people and companies are embracing remote work, which means where you live is getting decoupled from where your employer is based. It is easy to imagine that the appeal of getting employees relocated to a foreign country for employers would drop as a consequence.

I talked to Germany-based Localyze’s CEO, Hanna, who is helping companies relocate employees! She has a counterintuitive thesis and recently announced her Series B!

In this conversation, Hanna and I talked about :

• Her experiences as an expat

• Unfairness in passports as a predictor of treatment

• Her philosophy behind helping more people live abroad

• The origin story and the evolution of the idea

• Impact of the YC experience

• Surviving the pandemic

• Bull thesis on relocation in a remote world

• Methodical automation of the immigration process

• Product experience for the employers & employees

• Go-to-market and network effects

• Expansion to the States

• Insights from their relocation data

• Relationship with payroll providers

Sar: You have been an expat in a few countries for several years. What are your German friends most surprised by when you tell them stories of working abroad?

Hanna: Every country has its anecdotes and challenges. When I moved to the Dominican Republic, people were very surprised at what you need to do to navigate the city safely (you had to get a security code when using a taxi, not walking around most areas after sunset). When I moved to China, people were very surprised by some cultural insights, food, and the size of Shanghai. What may be surprising is how fast you get accustomed to everything and how things become normal. That’s the part I really love - submerging in a new culture; it’s like trying out a whole new life when you move abroad. The more the culture is different, the more you will learn, but the more difficult it can also get. My experiences in Argentina, the Dominican Republic & China were more challenging and intense than in France, Italy, Spain, and Portugal - but the European ones were more relaxed.

Sar: What’s been the most “wtf moment”?

Hanna: Probably trying to get a US visa in the Dominican Republic. My ESTA (a light version of Visa) was canceled (long story), so I had to get a new visa. In the DR, that’s a real nightmare. Back then, you had to buy a number, wait 48 hours, and try to get an appointment. It was a maze that was very hard to get through. When I finally got an appointment (thanks to an official letter of recommendation by the UN), it was shocking to see how rude the treatment was until I went to the counter and they saw my German passport. Then it was suddenly all very easy. Seeing the injustice and how differently they treated people based on my passport was something I didn’t expect. Probably very naive, but this was an eye-opener.

Sar: I often joke that the visa process can make a person hate the country even before arriving. The immigration rules are complicated, the process is long, and the government portals are a mess. There are countless stories of countries losing out on highly skilled workers because of how immigration for work works in highly sought-after countries.

Hanna: The worst part of immigration is the degree of unfairness I mentioned earlier. In addition, there is very little service mentality - I often feel like people in embassies don’t do their best to help, which can come from government guidance, but it is still super sad. So I do understand people developing negative feelings towards certain countries. Leading economists say that completely opening borders to talent would positively affect worldwide GDP, so the restrictiveness doesn’t make sense. We want to contribute to opening borders even though governments don’t. The bureaucracy around borders and the paperwork are not the only problems. Settling in and integrating is super hard as well. That’s why our vision is to help with everything you need, from insurance and bank accounts to housing, mobile phone contracts, language classes, and a community to help you integrate better.

My goal is to accelerate change and help more people move abroad. If we can show companies an easy way to bring people across borders, they will look at international talent pools even more, creating equal opportunities for everyone. If we can show people that moving abroad is not so hard, we can encourage more people to do it, leading to more diverse societies. If everyone lived abroad at least once, we would have more understanding of intercultural differences, more tolerance, and maybe even fewer international conflicts.

Sar: You started Localyze with your cofounders in 2018. Talk about the first year after you started the company.

Hanna: We have experienced the end-to-end process of moving abroad, including building a network, learning a new language, and finding housing - so we tried to solve the whole problem at once - from immigration to settling in, with a platform that connects the right partners. But from a company perspective, the paperwork is the biggest challenge and a must-have, where they don’t want to work with someone who is just outsourcing the process to a 3rd party. So, we had to change the MVP in that direction, start with immigration, go deep, solve the whole problem ourselves, and then move downstream into the settling-in part.

Sar: I initially thought immigration was more of a confined problem, and you would later layer on the other pieces, making it easier to start living in a new country. So you went through quite a big change early on. What’s the backstory?

Hanna: I started playing around with the idea 5 years before we founded the company. The first time I tried to bring it to life was during my Masters in Berlin, where I started working on a blog for people moving to Berlin with other students. With no idea how to build a website, I didn’t get that far initially - but I thought, “if traveling abroad is so easy, living abroad should be as well.”. What I had in mind was rather a Tripadvisor for moving abroad. I was starting my Masters back then, and the first time I started diving further into the topic was with a class at the University where we got together in groups and worked on a business plan. The next iteration was still in another class, where a teacher gave me the feedback, “students won’t pay for this; try workers.” I finished my degree, started a Ph.D., and quickly realized I’ll never finish it - I quit after three months but wanted to finish a class I was teaching before starting at BCG. I started looking into government grants and cofounders. Franzi, Lisa & I go way back and got reunited by a Facebook post. The application for the government grant and the business plan (very German approach, by the way - I would do that differently now) took another year, almost the entire time I worked at BCG. We did a lot of pitching at events in 2017, further refined the idea, and officially committed to the founding journey in April 2018.

Sar: You went through YC in 2019. Did the YC experience fuel the fire, or did you make meaningful changes during your cohort?

Hanna: We didn’t make any bigger changes to the product then, we had to pay customers and initial PMF already, but it had a massive impact on our company. YC changed how we generally thought about products (test things fast vs. develop something perfect), gave us a “thinking big” mindset, and gave us access to a community. The funny thing is, we didn’t even realize we had such a good PMF until someone else told us - only then we started being a bit more aggressive in selling.

Sar: I often hear that from non-American founders when I ask about their YC experience. They would say being around highly ambitious teams was the needle mover.

Hanna: I 100% agree - you agree on one metric to focus on, and this is the only thing that counts & that you report on, which gives you no excuses, and there is a lot of pressure to perform against so many other great companies. I was surprised at how much you can achieve in a short time and how creative everyone got.

Sar: You raised a seed round in 2019 pre-pandemic and Series A in 2021 during the pandemic. The world went remote, and there were lockdowns. Suddenly, you were a global mobility platform in an environment that was fundamentally not mobile. What was the summer of 2020 like for you?

Hanna: Not great, tbh. We raised a smaller seed round as we were close to profitability and thought we could do our Series A quite fast. Then we lost 80% of our revenue from one day to another. 2020 was a hard lesson; we had to be extremely conservative in our spending and fight investors convinced we should pivot. Our investors were great and tried to support us, but no one thought we could still win with what we were doing pre-pandemic. It increased our conviction, but we also said if things didn’t change within 12 months, we have to reconsider, which was extremely tough. We reduced our salaries by 50% and had to use up our savings, which doesn’t make it easier. We stayed close to our customers and started seeing positive change six months in. I think it made us more resilient. We used the time for some bigger projects on the product side, building out our talent app. We communicated a lot about the direction and the challenges. We also looked at efficiency, to get the best out of the team. Many founders who started in the last 2-3 years only knew a world with endless cash and would benefit from such a lesson. If the team knows how much is possible with less cash, they stretch further and are more creative. As a founder, you can set your expectations differently.

Sar: If I were talking to a stereotypical Silicon Valley founder in a similar stage as you, I wouldn’t have heard about profitability. Can you say more about those signs of external validation?

Hanna: You can see our roots in the non-startup world there. I always liked to keep a certain ROI in mind. Regarding the external validation, it was hard to tell investors that the market was still there when bookings went to 0.

In the first three months, we did a ton of surveys and interviews, and HR teams confirmed that they would probably relocate people again. When the initial panic was over, and people started realizing that we have to live with the pandemic for a while, companies started bringing people over again. Companies did a ton of hiring, and most didn’t want to work across multiple time zones, even if they allowed people to work remotely. Many people still wanted to come to Europe with better healthcare, etc. Many companies settled on a hybrid model that required employees to be close to a hub. People still wanted to relocate, especially from countries hit hard by COVID.

Sar: The rise of remote work meant decoupling where you live and work within the same country. The Localyze thesis seems to be that decoupling need not to limited to the country one is from, and that relocation can co-exist with location-independent work! Talk about your bull thesis for the employee relocation market.

Hanna: I see people as the main driver for relocations - because no one will move to a country they are not interested in living in. Pre-pandemic, a PwC report said that 80% of millennials want to spend part of their career abroad. That would mean a massive increase in people needing visas and relocation support. I believe the number of people motivated to live abroad is still the same. With more location flexibility, those people will not only relocate once but live across five different countries in 5 years. We are also starting to see this in our data, with more customers offering their employees to move to other hubs and a rise of temporary remote work across Europe. If you spent winter in the Canary Islands over the last two years, you saw entire teams moving there for 3-4 months from Ireland, the UK, Germany, etc., for a few months, then moving back, then probably looking for another place for the next winter break. In Europe, you don’t need a visa, but you still need to register, and get your tax ID, insurance, etc. - the easier you can make the process, the more people will want to move across borders.

We work with companies in very different setups; some are fully back in the office, some work remotely, and some are hybrid, so I believe the company’s setup is secondary. Cross-border mobility will continue to be driven by people because traveling has become more accessible. The next rational step is to combine working with exploring the world. If I think about the world in 10 years, I believe that people will heavily use their 20s and 30s to live abroad, spend a year in Italy, and another in South Africa. Then move on to New Zealand. Some companies started supporting their employees to move wherever they want, even on digital nomad visas, and I think that’s the future.

Sar: What size of companies do you go after? Both you and your customers have inherent expansion opportunities once you launch in a new country. There are network effects in that sense.

Hanna: We started with tech companies. As we only offered immigration to Germany initially, our scope was limited to companies only operating in Germany. The more we expanded across Europe, the bigger the companies we could sell to, and now with our North American expansion, we can move into global companies. If you cover the most important markets, you can get the deal, but it’s hard to sell to Google or Meta while only serving the European market. It’s good to focus selling deeper into specific geos, as you can use word-of-mouth; HR is very network driven and getting your name out in specific markets helps. We have started selling quite a bit into consulting, traditional engineering, and retail - and continue to expand into more traditional segments. No company can survive long-term without international hiring in a world with a very strong talent war.

Sar: Let’s talk about the product experience for employers.

Hanna: If you dive into immigration, you will see that it is all rule-based; there is a decision tree behind - so I would argue that 99% of the process can and should be automated. We try to take all the work away from HR and make it as easy as possible for them. No one in HR loves immigration and relocation; it’s scary, knowledge intense, and prone to costly errors. HR gets involved with the initial documents we need. We send them notifications when we need a signature. We make sure that they have 100% visibility of where the process is at. In the background, our software and internal case managers handle the process. Right now, it’s roughly 80% by software and 20% by service. I expect a 90/10 ratio by the end of 2023, and a 2% service need in 5 years, which gives us the same margins as a software business with a support function.

Sar: Your timeline from 80% to 98% automation suggests increasing complexity.

Hanna: It’s all about automating workflows our internal case management team would otherwise have to do. The first 50% is the emails an immigration lawyer would send you, like “please send me this” or “please upload that” - this is just information and to-dos to be submitted, and those follow a logic. Then you have about 10% document filling and another 10% appointment coordination - which can also be automated. Now we are at 70%. Then you have communication and clarifying questions - 20%. You can automate some of that by directly displaying more information in the app. This can get more challenging because this is not a topic where people would appreciate chatbots, so you have to do it right. This is doable over time, as most questions fall into the same categories. The last 10% is “complex case assessments,” - where you have edge cases, rejections, and their complexity increases. It can be anything from someone that had a criminal charge to someone relocating with a kid (i.e., adopted kid = additional paperwork is needed). The more cases you process, the more edge cases you can cover, but complexity increases, and you will always need a person to escalate things to.

Sar: Talk about the employee experience.

Hanna: If you think about what an immigration lawyer does, it simply consists of sending information. We automated all that, plus support filling documents and booking appointments (with appointment scrapers). What we can do varies by country. In many cases, employees have to interact with the government directly, and we assess the case, fill out all forms, make sure everything is complete, and then ask them to upload it to the government portal.

Sar: How do you help employees with settling-in in destination countries?

Hanna: We run a curated marketplace for helping with housing, banking, and insurance. We are now expanding to language classes and transportation. We select the most relevant partners to offer tailored services. For example, in Germany, we only work with the three health insurers offering consistent English support. Doing a good job on the immigration side gives us a lot of trust, which we need to keep. Combined with offering the right information, selecting the right partners and integrating them deeply is important to have a seamless experience.

Sar: Talk about your business model.

Hanna: It’s a mixed model; we have a subscription and usage-based pricing. For every case HR adds, they pay an additional fee. When we sell larger contracts, companies can agree to a fixed number of cases per year for which they would get a discount, and we package them into monthly payments - that way, we get to recurring revenues. For smaller companies, we still offer the pay-per-case because they don’t have the predictability to know how many cases they will have each year.

Sar: What kind of immigration and employment situations do you cover today?

Hanna: We go country by country, but once we launch in a country, we do all types of visas. Right now, we operate in Germany, UK, Ireland, Netherlands, France, Spain, Portugal, Switzerland, Austria, and Poland - and launching in the US and Canada

Sar: What makes a country a good market? What is the launch playbook?

Hanna: We first go for the biggest talent hubs, where people want to move to, and companies have their hubs. We usually go in for an incubation phase, doing test cases with existing customers to bring all the knowledge into the product and test the workflows. After 3-4 months, we then do a public launch.

Sar: You announced your Series B in September this year and are gearing up for your US launch. You acquired an American startup to expand your local team. I’m curious about your comment to TechCrunch about how Americans care more about UX and UI than Europeans do. Can you expand on that? How does prepping for launching in the US differ from European expansion?

Hanna: The US has more startups, which naturally address the US market first. So there is more competition, which leads to more user experience pressure. In B2C, the difference is not that obvious as there is a global standard, but in B2B, there still is a difference between US and European products.

Regarding the launch prep - there are differences, as you have to do more localization in Europe, regarding languages, etc. You are tackling one market in the US, at least regarding language and messaging. Our approach is to go local first and tap into local networks. HR is relationship-driven; local networks exist, even in a remote world. So you can target specific US cities first, like New York, Austin, and SF, which you can also do in Europe. Getting the first traction and then expanding and investing in marketing once you have the first logos and testimonials.

Sar: The CEO of global payroll provider Remote is an investor in Localyze. Can you talk about your relationship with payroll providers?

Hanna: The payroll, PEO (professional employer organization), and immigration are complementary. While someone like Remote helps with everything around an employee hired outside of a company’s entity, from contracts to payroll, we work with employees hired directly via the company or via someone like Remote. We do only immigration and relocation. Take the use case of company X, hiring a Brazilian developer in Portugal through Remote. Remote does the contract, payroll, etc. - we make sure that the developer has a visa and work permit. Deel is moving into payroll to have more vertical coverage across the employee base, but the partnership potential is stronger on the PEO side. Integrations can be relevant but are more important for an HRIS or ATS.

Sar: You probably have a treasure trove of data on visa trends, acceptance rates, processing times, etc. Any interesting insights you can share?

Hanna: An obvious one is waiting and processing times and the most recent updates to processes (what works, what doesn’t) to avoid any rejections. A good example is US → Germany. Americans usually don’t need to apply for a visa but can directly come to Germany and apply for a residence permit on the ground. But, sometimes, waiting times in the city they are moving to are longer than embassy waiting times in the US, and in that case, processing can be faster if the person applies in the US at a German embassy. To determine that, you need accurate waiting times for all entities, which can fluctuate from 2 weeks to 3 months.

We have a great sense of which markets companies are hiring from and which are the upcoming ones - the new talent hubs growing. Nigeria is a good example.

Sar: What has been the most important learning about fundraising?

Hanna: The importance of storytelling and selling. If you are not confident about yourself, the business, and the direction, you won’t be able to sell it to an investor.

Sar: What do you think you are not paying enough attention to?

Hanna: Inside the business, I think it’s planning and long-term vision; I try to dedicate time, but I think it should be more. At the same time, fires are always burning, and most founders work in the business for too long vs. on the business. Outside of the business, it’s probably my hobbies; they suffered in the last four years.

Sar: Four years, three funding rounds, dozens of employees, and multiple countries later, what are you most proud of today? What’s on the horizon for Localyze?

Hanna: The team. We don’t come from another tech company we could poach tons of people from, so we had to get creative and hire in unusual places (from unusual backgrounds) - and we assembled an amazing team. The one theme for the next two years is global expansion - first, we are tackling North America - both Canada and the US - and next year, we’ll probably also target our first markets in APAC. We are investing a lot into the talent side of the product to offer the best experience for people crossing borders. We are planning a bigger release in December; stay tuned!

AngelList Stack is for startups that want faster fundraising, cleaner cap tables, and high-interest banking all in one place. Scaling companies such as Abound, Harness Wealth and Syndicate migrated from other vendors in less than a week with zero legal fees to gain an unfair advantage in managing their back-office. Learn more by signing up here.

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