David Noël: Hello and welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based in our wonderful province. I’m David Noël.
In this interview, you will hear a second voice asking questions in addition to my own. That voice belongs to my good friend and part-time co-host, Ian Krahn.
Together we interviewed the founder of a company called Payworks, which offers workforce management tools (including payroll) to businesses. The company was founded in 2001, and now employs about 200 people across Canada, servicing over 10,000 clients. In the interview, we do our best to understand the method behind that impressive growth.
If you enjoy today’s episode, and I hope you do, please consider adding a review on iTunes. Positive reviews will have a big impact on the success of the show, especially a brand new one like ours. Of course, please don’t be shy about sharing the show with your as well—the website is www.manitobabusinesspodcast.com
Without further ado, here is Barb Gamey:
[to Barb] All right, so Barb sorry for fumbling around here for 10 minutes. Thanks so much for your time today. I guess first of all, would you mind taking a minute and telling us what Payworks is and sort of the CliffNotes of how you came to build it.
Barb Gamey: So Payworks is a workforce management solution company. Many of our competitors call it the human capital management space. So we offer a variety of products, all cloud-based — so payroll, human resources, employee time management, employee self-service, and most recently, applicant tracking. So, the notion that as you’re looking to hire a new employee on board, then manage them, we have all of the products that will allow you to do that.
David: Perfect. It was founded in 2001, is that correct?
David: Can you get a little bit of background on what… Did you found it by yourself or was there a co-founder?
Barb: I have financial partners.
David: Okay, excellent.
Barb: So I spent more years than I want to admit in the payroll service space, and for a company called Comcheq which was a local company, locally owned and managed, national in scope, very successful company. It’s sold to CIBC and then later was acquired by Ceridian. So that’s sort of the genesis of Ceridian in Canada. I worked there for about 14 years. And through the acquisition CIBC, I’ve stayed, and then when Ceridian acquired the company, I left shortly after that.
I spent about a year kind of deciding what I wanted to do with my time after having been in the payroll business for as long as I was. Frankly, I thought the payroll business at the time in 1980-something was just a pit stop for me but ended up by falling in love with the industry. So when I left it, I sort of took a year off and decided what is it that I want to do and was approached by a financial partner, and then another financial partner to say, “Is there a room for us to create a payroll service offering to compete against the two behemoths that now monopolize the industry which is Ceridian and ADP?”
So I took some time and did a lot of research not only in Canada but the UK and Australia, and Germany and other countries to see what was going in the space to see where banks selling payroll businesses like they were in Canada, where they getting back into the business. What was the outsourcing trends looking like, what was this new SaaS model all about and decided that there was an opportunity for us to create an alternative to the large companies that were out there if we could provide a compelling enough value offering. I felt we could build a book of business.
David: Right, and so how did you go about getting that initial book of business and was it… Did you build some products first or were you kind of building relationships first or…?
Barb: No, we… What we did… We had seen from the inside out a couple of competitive systems, how they were built, their architecture. We had 20 plus years of experience on the Comcheq system knowing what frustrated us in terms of on-boarding new customers, what frustrated the customers in terms of how to use the products. So the first thing I did was tapped a lady on the shoulder who was the vice president of operations at Comcheq [inaudible] and said, “Would you mind?” She’d retired, I said, “Would you mind locking yourself in a room with me for a couple of days and designing a system that solves all of those known problems that we always tried to work around?” She jumped at the opportunity and stayed on board and is still on board today doing some great work for us.
Then once we got the system designed, the database structure designed and the technology piece kind of nailed, we then looked for some developers to start actually developing the product for us. As fate would have it, the lead developer from Comcheq was leaving. I’d known him for many, many years. He came on board and looked at our design and sort of put fingers to keyboard and we surrounded him with some other people, and away we went.
So the journey really from concept to paying our first people, first employees was about seven or eight months, so remarkably short. We paid our Payworks employees first, all four or five of us, and clapped, yay, the money went into the bank. So that was super fantastic. Then my other partner, who is Dave Johnston from the Johnston Group we paid his employees that following April and they all got paid and that was super fantastic. We thought well, okay now it’s time to go out and show the product to somebody.
Ian Krahn: What were the fundamental differences from kind of where you came from and then what you were kind of creating? What was the huge competitive advantage that this new system would have?
Barb: Sort of multi-faceted, but I would say we were lucky enough to throw out the baby and the bath water. We weren’t tied to legacy systems. We weren’t looking at having to bolt pieces of technology onto older technology leveraging newer… We were able to just say, “Let’s start with a clean slate and develop from the beginning.” So I would say technology certainly afforded us the opportunity to create a system that… When we say that our product is integrated, if you put an employee’s name into our system, it’s the same name that you see in payroll, in HR, in the ATM and all the way across. You don’t do it two or three times or have to hit a sync button to synchronize the information across multiple platforms. None of that. So I think technology really did afford us that opportunity.
The second piece was that I still believe and our business is built very, very much so on the fact that technology affords us the opportunity to deliver our service, but this is a service business. It’s a high touch business, so we’ve got a service model that has dedicated account managers that work Monday to Friday that are here. If it’s an ongoing conversation you need to have with us over a payroll issue or a problem, you’re talking to the same person. So in my view, payroll isn’t a transaction. It’s a cycle and it goes over multiple cycles, and so continuity in that conversation is super important. So we’ve developed a service model that we felt would set us apart from our competitors.
Barb: Then just in case that wasn’t enough to interest you with speaking to us, we thought let’s price it a little more economically than what’s out there and so if we… If you’re not interested in saving some time and you’re not interested in a better product, well maybe we can save you some money and that often catches people’s attention.
Ian: Now, when you were first starting, were you… I’m kind of interested in the market end of it. Was there an existing very easy market to get into? Is it something like, “Oh, every company needs this. We just got to position ourselves correctly.”
Barb: Yeah. It’s certainly the easiest or at least resistant to sales are companies that already outsourced their payroll. So they’ve made that philosophic decision to say, “This is something that’s not core to me and I can outsource it at a very reasonable price, and so I want the best mouse trap or the best widgets.” So those were sort of in terms of a receptive audience, where you would look to go first. I was the feet on the street. You develop something in a vacuum, you have lots of experience, but you do have to show it to somebody at some point.
So I remember taking my laptop the first four or five times and showing the product to the prospect and waiting for the reaction. You’re showing somebody your creation, is the baby ugly? That’s always a bit nerve-racking but was met with a lot of positive feedback right from the get go. Some of the features that we built into the system very early on weren’t being done in the industry at the time, so being very well-received. So that just gave us momentum to talk to more people. So it was really one by one and this is a volume business. This is a transaction business. It’s volume, you just have to build volume.
David: Yeah. Now, you mentioned that Ceridian and ADP are kind of the main players in the space now, is that right?
Barb: They would be the two large national players, but there’s lots of other players.
David: Lots of other companies. At that time, when you were starting out in 2001, was that still kind of the landscape or has it shifted a lot since then?
Barb: Yeah, so prior to when I started Payworks, every major bank had a payroll service division. ADP were in Canada and Ceridian was not in Canada and Comcheq was here. So there were essentially seven, six competitors in this space. Then the banks sold off their divisions, ADP and Ceridian respectively, and so there was huge consolidation in the industry. So through consolidation, I thought is there an opportunity to provide an alternative. And then there’s some other players…
David: So there was a timing element then, too. You were seeing that there was some changes in the payroll industry and that the banks were selling off and you thought… Did you see that as kind of an opportunity to become one of the independent payroll services that was offered?
Barb: For sure, we said very clearly, let’s just be the alternative.
David: Right, okay.
Barb: Because if we can pick off where they’re not successful at, we will build a nice book of business.
Ian: That’s awesome. So what were some of the challenges that you kind of encountered as you were starting that up? I mean obviously with software, you’re always going to find bugs and stuff like that, but what were some of the bigger market and competitive challenges that you faced?
Barb: Well, trust and respect.
Barb: I mean, you’re a new entrant into the marketplace. A business’ singlemost biggest expense is often their payroll. So I walk into a business who knows nothing about who we are and what we do and try to convince them that rather than giving their money to a multinational, they’re going to give their payroll money to me. So there was credibility issues, trust issues. And so very early on we adopted practices and policies that mirrored a company that was much, much larger than we were at the time, national accounting firm standards and practices, and banks and things that made sure that when a prospect is looking at us, we had the fundamentals in placed that were comparable to a company much larger than we were at the time.
David: Was there any element of… You sometimes hear stories of start-ups that are trying to appear bigger than they are, and there’s a little bit of a “fake it until you make it” sort of attitude that happens or was any of that present in the early days of Payworks? Or was it just that you were trying to get all your ducks in a row so that you could support a very serious chunk of business?
Barb: I feel like I’ve been faking it until I make it my entire life. That’s an interesting question. I mean there is always a brand strategy that says, associate your brand with somebody bigger and more respected in the vertical that you’re in and it is automatic. So any time a prospect would use our name in the same breath as a large multinational company, we felt good about that. So did we intentionally do that? You know, probably not, but one of the nice things very early on is that the Johnston Group are the providers of benefits administration to the Chamber Plans nationally, Chamber of Commerce Plans nationally. So I went out and spoke to many Chamber agents in the Chamber distribution system to kind of build a profile and talk about what we were doing and who we are. So there was some of that cross-pollination that happened very early on as well.
Barb: Sorry, and I think that simply our track record in the business for 20 years. We could point to people that we’re involved in the business very early on who…
Ian: Instant credibility.
Barb: Well, it weren’t just coming out of computer sciences program, weren’t just coming out of some area to build the next best thing.
Barb: We actually had some credibility.
David: Obviously, you were veteran of the industry as well, so that helped. Jumping back to the fake it until you make it thing, I think it’s interesting you said that you kind of feel like you’re still faking it a little bit sometimes. That’s a pretty common thing. I mean I’ve heard similar things from different entrepreneurs that I’ve been talking to. Why do you think that is?
Barb: I think it probably has something to do with… I say often that you know, I’m just a girl from Windsor Park. I grew up in Windsor Park, and I had average grades in high school, had a couple of teachers who saw something in me, and my father was an entrepreneur and my uncle was an entrepreneur, my other uncle is an entrepreneur. So I grew up in an entrepreneurial family for sure.
Barb: So I saw the very volatile world that entrepreneurs live in. My dad was in and out of business a few times, and so I think it comes from the expectation that so many businesses fail in the early days. If you haven’t failed, you’ve probably not experienced what you need to experience. So I think we all think it’s quite tenuous, that success is quite tenuous, that it might be gone.
Barb: I think that’s part of the entrepreneur psyche.
David: Yeah, okay.
Ian: So tell me about… Yeah, right in the beginning there, do you remember your first pitch, when you first took the baby in..? Walk us through what that was like, because that’s always that step off the cliff, right? It’s presenting it to somebody, walk us through that first time. Good or bad.
Barb: Yeah, I know, it was great actually. It was a financial services company in Winnipeg and I went in to meet with the finance officer. I met with her strictly because she was looking for a solution and Googled us and found us. So phoned us up and I thought, “Well, I better go down and see her.” As I said, I took my laptop, and I mean they were not that portable at the time, in my big suitcase. Then I went in and I went through the fundamentals of the system, why we designed it the way we did. One of the things that really set us apart at the time was what we call the payroll preview which is pretty standard in the industry now. But you enter your data, and then the results of that entry come back to you immediately with some time for calculation. But you’re able to see the results before you actually process a final payroll, which at the time no one was doing. You had to wait the next day or you wait for reports, or the turnaround was quite long. At that moment, her face kind of… I remember looking at her face and it was like, “Wow.” We are on to something here.
Ian: That’s awesome.
Barb: When we finished, I remember her saying to me, “You know there are a few elements in the system that I think need to be beefed up from the finance side.” We were working on them, we knew that. But I also didn’t want to wait until the system was locked down and perfect before we went out and started showing it to people. It was rip the Band-Aid off, go out there and get some feedback. See whether or not you’ve got some winning elements and then you can build off of that. Because I think if you wait to build the perfect mouse trap, you may never get to market, or the market may pass you by.
Ian: Yup, exactly.
Barb: So it was great. Her feedback was spot on and she was very enthusiastic for us, for what we were doing, and they were our first client.
Ian: That’s awesome.
Barb: The sort of funny part about the whole thing was when I did the business case for the company, I felt that kind of the average user would be about 15 to 17 employees, you know, reflecting mid-market or sort of corporate Canada that 80% of businesses employ fewer than 20 people, so on and so forth. Yeah, they were 112 people. It’s like, “Okay”.
Ian: Right to that.
Barb: Yeah, that was a little bigger than I thought.
Ian: Raise the bar right off the hop, right?
Barb: So that speaks of flexibility.
Ian: So what are you seeing now as far as an average client size?
Barb: It’s a little higher than that, but it does reflect mid-market Canada. It does reflect the business numbers in Canada.
Ian: That was the demographic you’re aiming for in your network.
Barb: That’s awesome.
Ian: So what were the growth patterns kind of in those first few years? Like did you see a flood of people come in, or you’re like, “Hey, I hit it. This is it.” Or was it still a little bit of a dragging a ball up a hill type idea?
Barb: I always say that doubling the company from one to two clients was easy. Doubling the company from 6,000 clients to 12 was a little more challenging. So in the early days, the growth curve is very much the hockey stick. It was straight up. And now, I talk about controlled growth, because you know, do you want to double your company every four years when you are doubling from 6 to 12 or 12 to 24. So it’s all about controlled growth.
Ian: That’s awesome. So tell us about that. So where are you now and what do you see in the next five years looking like a little bit as far as growing?
Barb: Well, we’ve got some 13,000 clients on the system right now. Top line is still a growing double-digit, 20%, 22%. It is not slowing down for sure. I think reputationally, we’re invited to more opportunities now than we were in the past. People know who we are. For the most part, people know who we are, and certainly not in every pocket of Canada, but kind of where we want to be. So, yeah it’s controlled growth in terms of the priorities of the company, obviously technology continues to be front and center in terms of the next product. We’re developing our next release and we got some great things happening on the product development front. So that’s really exciting.
Our customer service teams just continue to grow. There’s parts of the business that just scale out as you get bigger, and there’s parts of the company that sort of fundamentally change as you get larger. Things that you hadn’t, necessarily, hadn’t focused a lot of time on in the early days, you’re focusing more time on now.
David: What’s an example of that? Can you think of… Well both actually, I’m curious which, as a company scales, the amount that you’ve seen, which parts kind of seem to scale linearly, and which parts need to have to staircase approach?
Barb: I would say that certainly our service model has expanded linearly.
David: Right, so like service reps kind of per client sort of thing.
Barb: Yeah, exactly. There’s a bit of a formula approach to that, and as long as you don’t fundamentally change the service offering or the product offering, that should scale quite nicely. Marketing is another example, there’s new things that you can do, but you spend more money and you do more things. There is not anything sort of big or revolutionary that happens there. I would say things that you’re going to spend a little bit more time on certainly your business continuity and disaster recovery planning. More and more people rely on us, therefore that needs to be harder and harder, tighter and tighter. Security is a conversation that everybody has today. The headlines, the newspaper, are data breaches the norm now? Well, we hope not. So we spend a lot of time locking that down. Those are things that I think are more of a step, a step event.
Ian: Right, interesting. Tell me about your market strategy or marketing strategy. When you’re working on your business development and whatever else, not to give away the Colonel’s recipe, but what are you seeing to be effective in growing? Is it mostly not just word of mouth but company to company, or what have you guys seen to be effective?
Barb: Well, certainly, I mean, we’ve built the business on a direct sales force, so feet on the street, so face to face relationships. As you move upmarket and companies get a little bigger and a little more sophisticated, we still believe that that face to face interaction is critical. So we built a sales force of about 35 people now across the country and they go out and they represent our brand and sell them to new clients every day. So feet on the street is very important to us. Our presence on the internet, obviously, because people are shopping and so we think that our website and our brand is very well represented. That way, we’ve developed some very important partnerships along the way, I mentioned the Chamber.
We also are the preferred partner for the Canadian Federation of Independent Business, so in front of their members. They see our loyalty program. We have a deal with a referral arrangement with Meridian Credit Union in Ontario, one of the largest credit unions in Ontario is referring us, some exciting news out on the West Coast that I can’t talk about yet. But as we get larger and more opportunities come to us, the distribution channel opens up for us. So feet on the street, internet, third parties, kind of have it covered.
David: Two questions, one is a follow-up and then I want to circle back to something you said earlier. With the sales force, how have you found the structure, both of the team and of the process, to work and to change over time? In the sense of, you know, you were the company’s first sales person from the sound of things. Then obviously, eventually, built up a sales organization, and it sounds like there’s account reps that take care of accounts after the sale. How does that transition work, etc., basically the entire sales process for Payworks?
Barb: Wow, that’s a big question for me.
David: Oh, I’m sorry.
Barb: That’s okay, so yeah. So our sales force is divided by company size. So we have reps that focus on the under 50 market, the over 50 market and the over 250 employees. They work in geographic areas and they have sort of a sales lead that manages them. But I think from my perspective, because I was the first sales rep and because I have a sales and marketing background, I have a great degree of respect and empathy for those folks that are out there beating the pavement every day looking for new deals. So I’m uber fair on the sales front and don’t believe in flooding any territory with more reps than a rep can make a living and do a good job at and feel like there’s lots of opportunity. So our sales force tell us constantly that the environment is super fair and they’re well-compensated, and if they do a good job, there’s lots of rewards there. So we’re not messing with that, ever, too much, because it’s worked very well for us.
In terms of the, you know, you are a new sale, a new opportunity for us, the folks that are going to implement your account, so they’re going to convert you from your existing system, whatever that might be, onto the Payworks platform, depending on the size of the company, either work locally in the same market as the sales rep or they’re handled through the national service center here in Winnipeg. But it’s the hand in glove relationship, so there is a hand-off between the sales rep and the implementation person. The implementation is very hands on. The customer is brought through the process to the degree that they want to be. So some want to just give us everything in a box and say magically make it balance and work, and others want to be very involved with every calculation we setup, every profile and employee, whatever that happens to look like. So we sort of cover the waterfront there. Our service reps or the implementation reps actually go through the first run with the client. The first live run, and often the second and third run, until the customer is comfortable with the product.
So there is web training, there’s on-site training, there’s support here. And then following that, the next transition is over to the service team. That is a very formal hand-off process between the implementation person saying, “Thank you, Mr. Customer, we ran three runs together. Here’s a couple of things that you still want some additional training on. Here’s your service rep. Let me introduce you to that person.” And that individual is going to take over, and then you become kind of operationalized at that point.
David: Right, okay. Interesting. Circling back to something you said a minute ago about business continuity. I think payroll is a unique industry in the sense of like you said, there’s a lot of people depending on it. If someone gets hit by a bus tomorrow, God forbid, it could have a big impact on a lot of different companies. What does a business continuity plan look like for a company like yours?
Barb: For ours?
Barb: So yeah, our business continuity plan is data replication at a third party, in a very timely way. There is an offsite facility that if this building weren’t physically standing, we would be able to go to another building and actually operate. We’ve tested our DR plan, our business continuity plan this year, and it worked brilliantly. So for us, it’s a matter of… The next issue is well, what if the city of Winnipeg were… You couldn’t travel in the city. What if the snow storm were so big that the building was still here and still functioning and data was moving in and out, but people physically couldn’t get into the office? There’s obviously the issue of working remotely and working through the issues around that.
Ian: So you guys own four helicopters, then?
Barb: Right, exactly. Yeah, some flex passes for Air Canada and some Ski-doos and things like that.
Ian: Exactly, there you go.
Barb: Yeah, so we’re confident that in any sort of situation, customers, in any part of the country, can process.
David: Right, very cool.
Ian: That’s awesome. I want to jump to a little bit of a different gear. So there are other things that you’re involved in like the Prairie Theatre Exchange and different stuff like that, that I guess you find to be pretty important. Tell us about that kind of aspect of your involvement with community stuff.
Barb: Yeah, I guess I always believe that the healthiest community are the ones that have a high level of engagement from the business community and from people generally. I always believe that companies situated in Winnipeg should go out of their way to support things that are happening in our city, in our province. There’s lots of head offices in Calgary and Toronto and they can look after things that happen there, but we do have a bit of a national focus, because we have employees in different parts of the country. So for me, it’s a personal level of gratification, satisfaction to be able to hopefully make a difference and contribute, and give some time and volunteer. I think it also sets the tone for the rest of the staff. I think it’s just a bit of a leadership thing that when people see leaders doing that, then they will model and hopefully emulate that behavior. We had last year for the United Way Campaign, I’m super proud of the fact that we raised a $100,000 after being in business for 14 years.
Ian: That’s awesome.
Barb: It was a huge milestone for us. There’s company matching in there, but our employees were really engaged, and the signup sheet is actually upstairs in the lunch room now for United Way agency tours which are coming up at the end of August. So I think it’s just part of building a great community.
David: Yeah, that’s fantastic. In terms of your general outlook you said that you think it’s important for communities to have involvement from business leaders. I’m curious about that. You said that your father was an entrepreneur, you had other role models in your family that were entrepreneurs. Has that kind of shaped your approach toward the way that business leaders should interact with community? Or is that something that you kind of came to on your own?
Barb: That’s a really good question. I think it’s something that I maybe came to a little bit on my own. I certainly got from my dad that employees are the most important thing that you’re responsible for. I got that from my dad solidly. I got sort of the multi-generational business view from an uncle and another uncle. So I think parts of the entrepreneurial side of our family did have an influence on me for sure, but there was not a lot of community involvement. I would attribute it probably more to Bill and John Loewen…
David: Really? Okay.
Barb: …at Comcheq.
David: Okay, interesting.
Barb: Bill got me involved in my first workshop that was a board development workshop. They were looking for young people to sit in this board development workshop, and so he asked me if I would go and I did. Then i was asked to join the board of the contemporary dancers. I was like, “Holy, here I am, mid-20s sitting in these boards,” which was super entertaining and I found a lot of… Met a lot of interesting people and it really stretched me beyond… Here, I’m in the arts and I have had no exposure to the arts but…
Ian: Huge contrast to the day job.
Barb: A huge contrast to business and what I did every day. So yeah, it was probably more of the leadership at Comcheq that opened my eyes to that.
David: Interesting, in general, and this might include your former, I guess, bosses at Comcheq, but who would you say are kind of the business people or people in general that have formed the way you approach business and sort of the people that you want to emulate? I guess even in life as well, not just business but basically people that you look up to.
Barb: I hate that question.
David: I’m sorry.
Ian: Well, there’s Mother Theresa.
Barb: Yes, it’s just so… such a weighty question, because you feel badly if you don’t say people that… exactly.
Ian: We’ll edit it all off.
Barb: Yeah, exactly. I mean as I said, I think probably very early on, my dad was a serial entrepreneur and I…
David: What did your dad do by the way in terms of businesses?
Barb: He was in the typewriter business and calculator business. And then when that fell apart, he was in the early days of personal computers which were the size of, you know, steamer trunks and had very large contracts with Hydro and MTS and other…
Barb: And so he was sort of on the cutting edges of micro-computers and word processors at the time, and then started his own company. So yeah, I would say that from a very early age, my dad was a huge influence on me in how I viewed the relationship between an employer and their employees, or the owner of the company and their employees. So certainly, he was for sure and as I said, Bill and John Loewen at Comcheq, couldn’t have asked for better role models in terms of business and ethics and how they treated their employees and what they felt was important and the things, I think, that make good businesses tick for sure. And Dave Johnston at the Johnston Group, my other partner, he is so… I don’t know how I got so lucky to have those two folks as my business partners. Dave is very pragmatic in his approach to business and life generally, and I can always turn to him for some really specific advice and a very pragmatic approach.
Ian: Awesome. Kind of coming from that, from the leadership end of things, now obviously having a product or a service, an idea and communicating that, it’s one thing, but then, with you growing your team to the size it is and having the locations, what have you found to be a super effective style in management and leadership with your own staff that’s worked well for you?
Barb: In the very early days I felt it was important to have people around me that were more like me, because you were working really hard, lots of long hours, and you didn’t necessarily want to have discussions or debates about things that, you know, with people that weren’t like-minded. So I tried to have people around me that I felt were more like me, that would make the process a little bit easier. Changed that, and now I have more people around me that are less like me, which makes for longer conversations, more conversations, more debate, but at the end, I think we reached better decisions and better conclusions. So I think that growth affords you the opportunity to be able to do that, to surround yourself with people that complement you but are different from you. I think it also builds a really cohesive team.
Ian: How did you make sure that the right people were on the bus?
Barb: I’m not sure at all. I’m not sure… We’re not full yet. We still need…
Ian: Yes, still a bunch of empty seats.
Barb: Still some empty seats. I probably looked for people, first and foremost, that were a cultural fit. So individuals in senior leadership roles that I wouldn’t be having conversations about why matching United Way donations was important or why Flex Days were important, or what you know… So people that from a cultural perspective and how we wanted to grow the company were aligned with my thinking, and then specific skill sets around disciplines, whether it was finance or marketing or around customer service, so round those out with competencies. But I probably look for competencies second and compatibility probably more first.
Ian: That’s awesome. In regards to the product, you’re talking about your first pitch and when you first got there and there was some huge advancements that you had because of getting to start new that you are already in this kind of this leap ahead of a lot of people. So from where you are today, what are some of the big service type leaps that you want to make in the product?
Barb: So yeah, the gap is narrow for sure. Technology has allowed everybody to kind of catch up, and so, I think that we all, in the industry, are looking for ways to what is the next thing. And our competitors have gone a couple of different directions and I haven’t been there for so long that I can’t comment on what that looks like now, but we really look at a couple of areas. Employee self-service, which is really the ability to put information related to you and your pay on a device for you. What does that look like? How employees interacting with that information? They’re logging in for work. They’re looking for their shift schedule. They’re trading shifts. They’re looking for okays for time off. They’re looking for my last pay. I also am missing tax slip and I know I have an… So there is that whole distribution of information interacting with your employer at the employee level that technology allows you to do. So the sky is the limit, what does that look like?
So as we, Payworks, look to develop our mobile extensions on our products, we’re having some meaningful conversations with clients of all sizes to say, “What does that mean to you? What does that look like to you?” So we see that as a huge area, and we’re making great headway in that area, so we see that as a huge opportunity for us to move our product along. It also allows us to talk to the 300,000 employees that didn’t know who their payroll provider was before. You just got paid. You didn’t know who it was. Well now you open up your smart phone and you hit your app, and it’s the Payworks app, so you now know. So what is the extension around those individuals that weren’t exposed to you before? So that’s certainly a big area of our focus.
We’re also looking at enhancing our human resource side of the application. So it’s good and it needs a bit of care and feeding. So we’re focusing on about seven or eight product enhancements right now that we’ve identified.
David: You mentioned earlier, it’s sounds like all the software products that you provided are done in the SaaS model. Is that right, they’re all sold through like as a service?
Barb: Transaction fees.
David: Right. Now this may be getting to nuts and bolts a little bit, but I’m from a software background, so I’m curious. This isn’t necessarily the case, but I assume when you say that they’re sold under a SaaS model that the servers are actually off site relative to your clients. Is that…?
Barb: Yeah, so it may have been a bit confusing, so we’re actually a service bureau. So I liken the SaaS model to the software providers looked for an annuity on their product, because you recognize that annual maintenance fees were not as great as the first sale, so then you went to a SaaS model. Service bureaus have been doing that since the ’60s.
David: I see.
Barb: We just charge you transactionally for your business. And so beyond that, we also don’t charge any maintenance fees or licensing fees. So you pay your transaction fee every time you run your payroll, and it’s in perpetuity as long as you’re running a payroll with us, or paying employees or doing a function.
David: But your clients are I mean generally, unless they’re interacting with one of your service reps, they’re interacting directly with your software. Is that right?
David: Your software is hosted like here. Okay, on site at the Payworks office. So then…
Barb: It’s our cloud.
David: Right, is there any… Again, coming from a software background, I know that certain companies are going to have… I don’t want to say issues, but maybe some reluctance about using software that isn’t on site, right? I see you nodding your head quiteveraciously, so that is a problem that you’ve encountered?
Barb: Well, very early on. So when we started, if you remember the timing and you are from that background, you’ll know it was a dot-com bus. So we intentionally did payworks.ca not payrolls.com. And so we actually have software that was installed on the client’s site and we used the internet to transfer the data to us. We would calculate and return the result back to them. So weren’t fully web-enabled as our first launch, because for the very reason you talk about, the number of business applications that were fully internet-based then were a fraction of what they are now. So the uptake on them, there were some resistance there.
Barb: We want software. We don’t trust this. So we kind of dipped our toe in the water and said, “We need to get experience in this area but we recognize that philosophically, a part of our customer base, being the IT area, is not necessarily on board with this whole thing.” So it wasn’t until five years in, six years in that we said, “Okay, there are now more business to business applications being provided that are fully cloud-based. People are understanding that you don’t have to have the software installed locally, and that we can make a case for it.” There are still some today that we talk to that we have to walk away from because they don’t like it. But it was until six years later that we ripped the Band-Aid off and said, “Okay, we’re fully interne- based now.”
David: Interesting. Now did you identify that trend early on? Did you realize that everyone was going to go toward like, you know, they probably didn’t call it the cloud in 2001, but that offsite services were going to become more of a thing, and you were kind of shooting for that? Or did that happen… ?
Ian: Oh awesome.
David: Interesting. So then you almost kind of had to fake it for a little while. You are giving customer something to install locally even though the brains of the machine was happening offsite.
Barb: Yes, so your input vehicle was on your local machine and you would basically send us the file. We would do the calculation and return the file back to you, look at your reports. Away you go.
David: So correctly identifying that trend was probably a significant sort of ingredient in the early success of Payworks.
Barb: Well, I’d like to think that it was recognizing the trend probably more generously than it was. It probably had a lot to do with the speed of market as well.
Barb: We recognized that we could get to market faster if we did this two-part delivery as opposed to full meal deal.
David: Absolutely, but no one else recognized that, and eventually, the entire industry went there.
Barb: And so we just kind of did that and said okay, here’s what we’re going to do.
David: Fascinating. Interesting. So you kind of organically arrived to something before the rest of the industry, whether you want to call that identifying a trend or not.
Barb: I don’t know about the industry. Everyone was working on, it’s just we were smaller and nimble enough to be able to be there.
Ian: So you’re more agile player than the rest, I guess.
Barb: Because we had no customers, it was easy to be agile.
David: You’re right, but I guess that’s kind of the pattern of disruptive technology, right?
Barb: For sure.
David: You were able to adapt this thing that other people work because they were stuck in kind of their big corporations.
Barb: Well, and I think as well, you know, really where we were at was… If you looked at the number of business to business fully internet based applications, like really they were like 3% of all business transactions were being conducted fully over the internet. So I went, that’s a pretty steep hill to be climbing. I’m not sure that I want to be on the bleeding edge of that. So but I do want to integrate newer technology, so how about we look at bit of a happy medium. So it was the technology folks that obviously came up with this solution but it was really kind of where our head was at from a business to business perspective that drove a lot of that.
Ian: So how about risk calculation work for you when you first started. Did you see this as being quite a risky, gambling venture or were you pretty confident going, “Oh no, we can nail this thing if we get in it at the right time.”
Barb: Oh, God, no.
Ian: Because you always want to know that, right? We have new companies that get into this, it’s like where were their heads at that time?
Barb: I think, you know, sort of naiveté kicked in. It was a little bit the cockeyed optimism. But you know, I felt that if we offered a compelling value offering, that if the product was good, I felt that we could create a position in the marketplace of the alternative. I did believe that, because I just believed that from what I saw from the inside that we could make it better. So I firmly believe that, and as I said, right or wrong, I firmly believed it.
Ian: Yeah, that’s awesome. What type of advancements do you kind of see now? Obviously where technology is rapidly increasing, what type of stuff is available now that would have been a lot more handy to have back then? A lot of the cloud stuff, is it cost effective?
Barb: Yeah, so certainly, I think there’s some… We’re using some different languages or using some different technologies that weren’t around before. Mobile extension is a whole other world from development. So there’s just some newer things that they’re employing, that we wouldn’t have used before.
David: You mentioned, as far as the mobile extension, one thing that caught my ear a little bit earlier, you said that now that you would be actually getting direct access to these mobile apps to the employees of the customers, people who previously didn’t really know that Payworks existed. Is there an opportunity there? Is there something, and obviously, it’s a different way for you to present yourself, but what are the ramification of that, or is that still something that you’re figuring out?
Barb: Yeah, I could tell you but I’d have to shoot you.
David: Perfect. That’s a good answer. Well, this is a total shift from where we just came from, but you didn’t like my question about mentors. So are there any books that… Do you read? Are you into reading books? Are there any books that you think are good, that sort of have influenced how you think?
Barb: Yes, when I read, I read for pure enjoyment.
David: Excellent, okay, so what books do you enjoy?
Barb: Oh God, seriously? Seriously, I read James Patterson. I like James Patterson.
David: There we go.
Barb: Yeah, I don’t know.
David: Yeah, you go out to the lake and you read a nice book, perfect.
Barb: Exactly. No, I don’t go to the lake. I don’t go to lake.
David: No lake, okay.
Barb: No lake.
Ian: So obviously we’re younger guys, right, really love business and the entrepreneurial spirit. This is something that we’ve created and we’re obviously creating for other young guys in other businesses to kind of to look at and be inspired from…
David: Other young people, I just wanted to jump in there. There’s young Barb Gameys out there that we’re seeing too.
Barb: There’s young women out there.
Ian: Exactly, so and that’s something I kind of want to squeeze out as well is what would your advice or if younger people would come to you for advice and say, “Look, I have this idea. I want to jump in. How did you do?” What would be some of the advice that you’d give them?
Barb: That’s funny. I had a young guy from the University of Victoria reach out to me via LinkedIn. And he was contemplating a startup and liked their profile. I just got an email from him yesterday actually. He came in to Winnipeg and I spent two and a half hours chatting with them about his business ideas and what he was looking, he’s actually raising money in Calgary now and is about to launch. So good for him, but we talked a lot about the notion of flexibility that entrepreneurs have an idea. And it’s that idea generation that is so important, but to be flexible as you’re looking at that idea that take inputs from other people and develop it, and don’t be so rigid in your original concept that you don’t see that there’s an opportunity there that somebody else is helping you shape. So I talked about flexibility but I also talked about persistence a lot, that there is a persistence factor that you’re going to hear no a lot. You just have to believe that there’s something there and be true to it. So persistence is a big factor there as well.
Then I also think a healthy dose of reality. There’s also kind of that healthy dose of reality that says, “Okay, I really don’t like the sight of blood, so I’m not going to be a doctor.”
David: That was going to be a question that jumped into my head from what you said. I mean where is the balance between the persistence and the reality, right? We always hear of entrepreneurs who push way beyond this very difficult hurdles, both business-wise and personally, and they made it through and now they’re living the dream, right?
David: But you also probably don’t read about this much in the media, but I personally have encountered a lot entrepreneurs that are kind of on the other path where they’re really good at the persistence thing but they’re not so good at the reality thing and they’re maybe chasing something that they shouldn’t be.
Barb: Yeah, and I think and my answer to that is always validation, which is why I talked about getting out early with a product to get some early stage validation, because you can fall so in love with your idea that you can just keep engineering and reengineering and tweaking that for four years you’re in a vacuum, and by the time you decide that you’re ready, you would talked to a few people to validate the product, the idea, the concept and it’s just not there. So I think there’s validating that’s super important along the way, that a lot of people just sit, that simply miss it.
Barb: Miss that opportunity.
David: Right, now talking about entrepreneurs and you talked earlier about the fact that when Payworks was really young, you were able to move a lot more quickly than a lot of your competitors. Are you ever worried that you’re becoming one of the big guys and that there’s someone little out there…
Barb: Every day. Every day, and there are some new startups, for sure, that have our attention that we’re looking at. There’s the next better mouse trap around the corner. Yeah, so always.
Ian: With other players popping up and obviously having different people in space, have mergers or buying people out, has that crossed the table at all?
Barb: Yeah, I mean I get calls regularly from people looking regularly. Yeah, regularly from people looking to buy us, and we’re just entering into a phase where we’re looking to, you know, who do we want to acquire and why, and what does that look like. So is it a technology play, customer-based play, is it a specific vertical that you’re looking for more exposure? Is it an enhancement to your existing product set? So yeah, we spend a lot of time at a strategic level talking about build, buy, partner, what does that look like?
Ian: You, yourself, are you guys pretty firm in hey, even if we get an offer, we’re pretty set on our path of what we want to do here.
Ian: That’s awesome.
Barb: We’re not for sale.
Ian: That’s good. I like to hear that. Geographically speaking, how far have you covered already?
Barb: Victoria to Halifax.
Ian: Okay, do you have plans of going south?
Barb: Not in a way that you might think. I think our target strategic position is that at some point we would like to pay U.S. employees of Canadian companies. So rather than going into the State just to open…
Barb: Yeah, so really the play would be to pay U.S. employees of Canadian companies.
Ian: So you want to stay nationally. Okay, that’s awesome.
David: I could totally see the value there, because if I understand correctly, I mean, I’m not obviously an expert in the payroll space, but for companies to do that now, they would need to be using one of the payroll of companies, like one of the big ones that are already operating in both. And so you would be a Canadian homegrown solution for Canadian companies, but that opens up the possibilities of paying U.S. employees.
Barb: U.S. employees.
David: Interesting. Very cool.
Barb: Yes, some of these are a little further down the strategic plan but they’re on the radar.
David: Absolutely. Since we’ve been talking a little bit about mergers and acquisitions, and I mean obviously, some of this is probably the Payworks secret sauce, but I’m curious what things would cost you to buy versus build, etc.? What are sort of the differences that you’re looking for if you’re looking at younger startups that have built competing technology?
Barb: We just recently purchased some source code from a company out east, that they had developed a very specific piece of code for a very vertical market. Something that we’d looked at and thought, it’s interesting but it’s going to take us a lot of time to understand it and to do the work around understanding the requirements, but here’s a company that’s done a great job that don’t have a payroll arm, they have something else. So we could look to build or we could look to buy, and so I went out and spent some time with them. Looked at the code, felt we could integrate it fairly seamlessly. They were doing some things very similar to the way we do things, but then different in some areas that we thought we could learn from that. So we decided to buy that. And we’re just working right now on integrating that into our time management system. So that was an area, that would be one of the reasons why we would look to buy versus build, but we bought it. It’s ours. We’ll integrate it. We own it. It’s not a licensing arrangement. So we definitely have a propensity to build.
David: Interesting. Switching gears a little bit, and this is going to be my last question, unless Ian has any, just because I realized that we’re running out of time here, this isn’t probably the best question to close with, just because I’m curious, what sort of… You mentioned a bit about cultural fit especially when you’re hiring your senior team. What kind of things does Payworks do across the board in terms of trying to sustain or direct company culture?
Barb: Oh, I mean that is just so critical to everything we do. So you know, a policy that you send out on corporate security might have a very subtle shift in culture of employees, read it, and go, oh that sounded very Big Brother. So everything we talk about from people management to how we deploy our applications to how we support our customers is very much focused on is that the message we want employees to take from that. So an example would be we don’t have a dress code policy. We went to our employees and said, “You know, what should it look like?” They sat around the room and brainstormed and came out and said, “We just don’t have agreement on it. We think that we’re all mature people and that we can self-manage and self-govern,” and so our management team said, “Great, there’s no dress code policy here.”
We have a half-day flex program, five days where people can just take whenever they want onto a long weekend, medical appointments, whatever they want, and people have said, “It’s fantastic. It allows me to just do some stuff that I would normally have to do on the weekend or on vacation and it’s fantastic.” So everything we do is really focused around the message of that employees take away from our action, because it’s the actions that translate into the perception of what you’ve done. And the culture is bigger than me. I talk about it to the management team all the time. It’s okay for me to walk around the office and say, “Hey, what are you doing?” Look everyone’s shoulder and someone’s on Facebook and I will talk about what’s on Facebook today. And it’s one thing for me to do that, but everybody needs to be on the same page. Collectively, the entire management team needs to be on the same page.
David: Right, interesting.
Ian: That’s awesome.
David: Well, thank you so much for your time, Barb. If anyone is listening and you’ve got employees and you’re not yet using Payworks, use Payworks. Yeah, thanks so much.
Barb: You’re welcome.