Hanno Renner has never been one for a typical nine-to-five job.
As a student I didn't have money to afford renting sailboats and stuff like that,
so I tried to find a way how I could get out in the water
and had the opportunity to become a skipper and then drive around sailboats,
all around the world and get paid for it.
So perhaps it’s unsurprising that entrepreneurship,
not a fancy corporate job, as Renner’s calling.
Some of these things are indeed transferable. In the same way how you might
involve your crew in figuring out what to do today and how to go about their vocation,
you still also want to bring your team on board inside a company.
But the industry that Renner and his co-founders are trying to revolutionize
sits at the center of all business. Human resources or HR for short.
And clearly, they’re onto something. Personio, their HR software start-up,
is already valued at more than $6 billion, making it one of Europe’s most valuable start-ups.
Hanno Renner founded Personio in 2015 with three friends.
The four met while studying at the Center for Digital Technology and Management,
a joint institution from two of the main universities in Munich, Germany.
The idea for Personio came from the experience of one of Renner’s friends,
who wanted a software solution for organizing payroll and recruitment processes,
while working as a chief technology officer at another company.
Where did the idea for Personio come from?
HR in a small and mid-sized organization is often times managed
based on multiples of spreadsheets, and while usually spreadsheets can be
an effective way of managing people and data, it's different with HR data,
because there's so many people inside the organization that needs to access HR data.
These shortcomings were particularly apparent at small and medium-sized companies.
Most existing human resources information systems were created with large corporations in mind,
and were either too complicated or too expensive for these smaller businesses.
We are focused exclusively on the space of 10 to 2,000 employees. So that's the big differentiator.
With the vision clear, they got to work, but it wasn’t easy.
For the first 12 months, Personio was funded out of the founders' pockets.
What was the first year like? Are there any fun stories you have?
Talking about funding it on our own pocket sounds like we had money, which we didn't.
So we were students, we started working at university just in random rooms,
sitting together, working on the product. One story that came about just before
our first round of funding, when you raise a round of money,
you're kind of certifying that you've paid all your invoices,
so we had to pay everything that was outstanding.
It was literally, I still have a screenshot from that bank account,
we had like a couple of hundred euros left in the bank account.
In July 2016, they raised €2.1 million from early-stage investors,
including Global Founders Capital, which has backed the likes of LinkedIn and Facebook.
Since then, Personio has raised more than $500 million through several rounds of funding
from investors, including Northzone, which has also invested in Spotify and Klarna.
Its most recent round saw Personio raise $270 million, valuing the company at $6.3 billion.
The funding is set to be used for a new category of software called “people workflow automation.”
The aim here is to help HR remove barriers between company departments using Personio’s software.
So I can go in my dashboard and I can just request maybe an absence.
And then automatically it will end up here, in the same way also I can do it from Slack.
The focus on people and HR has definitely improved and gotten a lot bigger.
So people have understood that with a pandemic, there's increased importance of that function.
It also accelerated the need for people workflow automation,
because with so many different tools being implemented
with Slack, Microsoft Teams, and others, you want these tools to be talking to each other
and you want them to work together to avoid delays.
While the company isn’t profitable yet, Personio says turnover
doubled last year and then doubled once again this year.
The software business has grown from 350 employees in 2020 to over 1,000 in 2021.
It now operates out of five offices in Munich, Madrid, London, Dublin and Amsterdam.
It's like growing older yourself, you look in your mirror every day,
and therefore you don't realize that you get some wrinkles,
or maybe some gray hairs. And it's the same with the business.
Zoomed out there's a lot that has changed over the past five years.
Of course, being day-to-day into the business. It's not that we go from three people
to 1060 people in a few days. But it was essentially with every day, month, quarter,
there's been development and there's been change.
It’s an impressive story for sure, but what do the industry experts say? Can that growth continue?
The kind of expectations employees have nowadays of their software have really moved forward.
Whether it's from benefits management, whether it's sort of software supporting remote work
whether it's software that allows you to manage your career better,
I think there's all kinds of areas of HR software opening up
and really doing justice to the fact that the biggest assets companies have are their people.
But with tech giants like Salesforce and SAP also operating in the space,
can start-ups like Personio break through?
We saw with Personio, that they are truly becoming a system of record, right.
And so once you're embedded like that in the day-to-day HR life of a company,
there's some very natural extensions, right. So the initial extension that they chose
was to do payroll as well, and then recently, they announced that they want to
take this to the next level, and do automation.
So where does Renner see Personio in another six years’ time?
We’re still at a very, very early innings. We’re now having 5,000 customers in Europe,
which represents less than 0.3% of the market, so we can grow plentiful more
because all these companies need to digitize, all of these companies should
receive the support in managing their people more effectively.
The other part that we really care about is our culture, here at Personio,
and the core fundamentals when it comes to our core values, our operating principles,
they should retain the same and they should be able to
scale even as we get to 5,000 or 10,000 employees.