From startup to unicorn in under two years
Luisa Alemany, Ioannis Ioannou and Nick Mickshik chart the remarkable rise of global employment platform Oyster
- Founders launched company to solve business problems in international hiring and provide access to knowledge jobs in developing countries
- B2B SaaS platform enables companies to hire, onboard, pay and provide benefits to distributed teams in a locally compliant way
- Industry-disrupting model attracted Series C funding of $150 million in April 2022, giving Oyster a valuation in excess of $1 billion
- Company targets an aggregate annual flow of $1 billion in salary payments to emerging countries by 2024 and placing one million jobseekers around the world in remote work roles by 2027
Born in Beirut in 1980 when Lebanon was in the grip of civil war, Tony Jamous left his native country aged 17 for a “magical” opportunity to study computer science, subsequently attending the IMD Business School in Lausanne, Switzerland. After graduating he founded Nexmo, an API platform for building communication applications. There, he and Head of Growth Jack Mardack grew the business to $100 million in revenues in less than five years, hiring knowledge workers in more than 50 countries to build and scale the platform.
Managing a large workforce over many disparate geographies enabled Jamous and Mardack to experience the benefits of a globally distributed team collaborating by using offices and hubs in London, San Francisco and Singapore, but there was a downside beyond the admittedly steep logistical challenge: they felt that many workers, as contractors, were condemned to second-class employee status, without the employment security and other financial and social benefits of staff.
Nexmo went public via a $230 million merger acquisition with Vonage in 2016 (the combined entity was subsequently bought by Ericsson in 2021 for a staggering $6.2 billion). After a successful exit, Jamous took some time out to consider what to do next.
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"We decided to create a kind of machine that can be used to deliver impact for individuals"
A platform with a mission
On a trip back to Lebanon, he was struck by the depth of the talent pool leaving universities who, if they wanted to maximise their abilities, had little choice other than to leave homes, families and friends and pursue employment opportunities abroad. Convinced that “international hiring was broken”, he resolved to do something about it.
Jack Mardack was equally determined “to be our own solution to this problem” and together, in autumn 2019, they conceived the company that was soon to be named Oyster (to call to mind the expression “The world is your oyster”).
The startup was born of two convictions regarding international hiring. First, current methods were complex, time-consuming and expensive for businesses. The second conviction was that, although the global talent pool was more skilled than ever, access to knowledge jobs was very unequal in geographic terms. Locating globally in-demand talent had become easier, but hiring it had not.
Exacerbating this scenario was an ethical conundrum: knowledge workers in developing countries had to choose either to uproot their lives and emigrate to where the jobs were, work remotely as a contractor, or take mediocre employment at home.
For Jamous and Mardack, this reality also penalised developing economies: the talented young knowledge workers they produced had to leave their communities to maximise their skills, which meant their communities were not recouping a fair financial return on their investment.
Mardack says: “We decided to create a kind of machine that can be used to deliver impact for individuals by looking broadly at problems of unequal distribution of opportunity and, as a result, economic inequality, and other community-plaguing issues such as brain drain.”
Oyster was thus founded as a global employment platform with a profound social-impact mission: to create economic opportunity anywhere in the world, regardless where an individual is based, by enabling companies to hire, onboard, pay and provide benefits to their distributed teams in a locally compliant way.
The aim was to create impact at four levels: people, businesses, local communities and the environment (urban and natural). It would do this by reducing brain drain, reducing wealth inequalities (by helping improve how wealth is distributed to workers around the world), improving job security, and bringing auxiliary social benefits, such as reducing the carbon footprint of transportation in cities.
The business model
According to Verified Market Research, in 2020 the HR/distributed workforce sector accounted for a global HR software market worth nearly $16 billion. This was projected to reach $33.57 billion by 2028, growing at a CAGR of 10.10% from 2021 to 2028.
Employers of Record (EORs) accounted for a large share of the distributed workforce sector. These were largely non-digital, admin-intensive firms that traditionally charged a percentage fee of the total cost of employment, which could range from 18-60%, plus onboarding fees. Others charged an upfront fixed fee, often with additional “hidden” fees, and required clients to sign up to long-term contractual commitments that often proved unsustainable for companies.
To disrupt this market, Oyster would be a B2B SaaS platform that charged employers a simple monthly fee per foreign employee. The platform would be fully automated, so the incremental cost of adding a new employee would be virtually zero; hence it would generate a healthy software gross margin – unlike other largely manual models.
Oyster’s fundraising journey
The founders now set about fundraising. Even allowing for the fact that both were seasoned entrepreneurs with extensive experience in dealing with the venture capital community, their fundraising journey was remarkable. In April 2020, armed with just an investor memo to testify to Oyster’s putative existence, they raised seed funding of $4.2 million, with London-based Connect Ventures as lead investor.
Just two months prior, the World Health Organization had declared the Covid-19 outbreak to be a global pandemic. With the world going into lockdown, the founders knew they had to move ultra-fast. By the end of the year they had put together a team of 20, all working remotely, who had industry-leading experience in B2B/B2C growth, SaaS HR, compliance and fintech. The stellar line-up included former Bain consultants, an eBay product-management veteran and a former Uber senior exec.
Connect Ventures co-founder and general manager Pietro Bezza explained why he had been so keen to "land" Oyster: “Remote work is a theme that fully resonates with the mood of the times and with the market narrative […] Those companies who will be able to build a scalable infrastructure will be the enablers of this work revolution and will be multibillion-dollar companies. One of these key enabling factors is Oyster. Mission: normalising remote hiring.”
Oyster grew rapidly in terms of team size and product capability following the seed raise. In mid-September, it announced it expected to end the year with over $0.6 million gross annual recurring revenue (ARR). Country coverage also grew from five countries to 60, covering over 90% of the global knowledge-worker population. The founders estimated Oyster’s current total addressable market (TAM) to be worth $17 billion, growing in 10 years to $63 billion by 2030, and targeted $100 million ARR in five years on the back of this projection.
“The Oyster team is one of the most mission-aligned companies we’ve ever seen.”
A Series A round of $20 million followed in February 2021, with California-based early-stage VC Emergence becoming lead investor. Less than six months after the Series A, in June 2021 Oyster raised $50 million in a Series B round led by New York-based VC Stripes. It now embarked on expanding its HR offerings for distributed teams, including a country-specific cost calculator so customers could know exactly how much it would cost to hire a contractor or a full-time employee in a particular country.
The Series B concluded, Oyster continued to grow rapidly, expanding the team fivefold and the customer base eightfold. Revenue had increased eightfold since the beginning of the year, while the platform added new modes of employment for remote workers and benefits for distributed teams. Country coverage had expanded to 91 countries, accounting for more than 95% of “employable” knowledge workers globally.
In April 2022, Oyster raised Series C funding of $150 million, valuing it in excess of $1 billion. The round was led by Georgian, a Toronto-based VC that invests in high-growth B2B SaaS companies. Georgian also lays claim to a higher purpose: to “support causes that help more people access the benefits of technology and that mitigate negative societal impacts of tech”.
Georgian’s Margaret Wu said: “The Oyster team is one of the most mission-aligned companies we’ve ever seen. They’re the kind of company we deeply admire – not just a unicorn, but an ‘impact-unicorn,’ a business that creates enormous value as the direct result of its social-impact mission.”
Historically, companies looking to grow through external investment are obliged to make financial return to shareholders their main, if not sole, priority. Oyster's founders are well aware of the tension between this objective and targeting social impact, but are convinced that Oyster defies this truism. Mardack says: “The genesis of Oyster was rejecting the assumption that you can’t integrate commercial success and positive impact in one organisation. We believe there is an opportunity for oil and water not just to mix, but to reinforce each other in a kind of ‘one-plus-one-equals-three’ way, so that commercial success begets positive impact begets commercial success in a kind of virtuous cycle.”
In mid-2022 Oyster published its first Impact Report, intended to gauge progress towards its aims. This identified two main metrics to measure impact: by the end of 2022, to enable access to employment for 90% of the population of new knowledge workers based mainly in emerging markets; and to place one million jobseekers around the world in remote work roles by 2027.
The report also revealed Oyster’s ambition to “catalyse a more favourable status quo” in configuring the employment system via distributed working. Another Oyster goal is to see an aggregate sum of $1 billion per annum flowing into emerging countries in the form of salary payments by 2024. These are hugely ambitious targets. Can they achieve them? “How do we get there? I have no idea!’ Mardack replies. “We have only been in existence for two years and have barely connected the dots.”
But he is quick to point out that it’s not just about the metrics for Oyster: “We are trying to awaken the tens of millions of jobseekers in the emerging world to have a different expectation than they have had for a very long time. I think that is happening and I am deeply surprised and deeply proud and deeply humbled to see it happening.”
Ioannis Ioannou is Associate Professor of Strategy and Entrepreneurship at London Business School
Luisa Alemany is Associate Professor of Management Practice at London Business School
"Oyster becomes a unicorn: fundraising for an impact-driven enterprise" is due to be published by London Business School Case Collection this autumn
