A conversation with Francesco Scalambrino (Co-Founder and Chief Product Officer @ Jet HR)

Article written by Ivo Pezzuto

In this episode of the “Forward Thinkers’ Talks Series” I have discussed about with Francesco Scalambrino, Co-Founder and Chief Product Officer of Jet HR, how SaaS business models can help companies reduce bureaucracy and boost productivity in HR practices.

Jet HR is a promising and fast-growing Italian tech startup that aims to deliver innovative, seamless, and user-friendly digital HR services to small and medium-sized enterprises (SMEs) through its proprietary Software-as-a-Service (SaaS) platform.

It was founded in December 2022, and in a relatively short period, has attracted the attention and capital of several prominent Italian venture capitalists, investors, entrepreneurs, and leaders of firms such as Exor Ventures, Satispay, Musixmatch, Bending Spoons, Casavo, Scalapay, Gellify, Talent Garden, Poke House, Lambda Alpha, and Santagostino.

Last year, the firm raised a pre-seed funding round of €4,7 mn in one of Italy's largest pre-seed rounds. The company's mission is to help firms simplify and streamline HR activities; increase automation and productivity through digitalization of tasks and enable rapid scalability of digital HR services. Most of all, the firm's greatest declared ambition is to help firms reduce bureaucracy.

Francesco Scalambrino, a mechanical engineer by training, is a passionate product designer and an emerging entrepreneur with a solid international background in the tech industry, particularly in the HR-tech space.

Before his current role, he held senior management positions at two international unicorn companies, as Country Manager - Italy at PayFit and Product Director at Oyster.

The interview covers the following topics:

·????? HR Tech

·????? SaaS B2B ecosystems

·????? Small and Medium-Sized Enterprises (SMEs)

·????? Recruiting and human resources development in tech firms

·????? Building organizations with an entrepreneurial mindset

·????? Creating a corporate culture that attracts and motivates top tier talents

·????? Boosting productivity and innovation through corporate agility

·????? Customer journey and the SaaS B2B platforms’ user-experience

·????? B2B SaaS Businesses’ KPI dashboard

·????? Artificial Intelligence in HR and HR Tech

·????? How a company can become a "game changer" in the market ?

Q&A

Ivo Pezzuto: Francesco, please explain to us what Jet HR is all about. Why do you think that Jet HR is a "game changer" for Italy? What is so unique about its business idea and business model? What is the innovation gap that your company is aiming to fill with this new venture?

Francesco Scalambrino: I will answer your question step by step, starting with the initial part of the question. Jet HR is a new platform that aims to provide easy HR solutions for companies that have 1 to 600-700 employees.

Typical tasks provided by Jet HR’s SaaS platform for its corporate clients include: hiring and onboarding employees; and managing employees' payroll and their bonuses, holidays, and expense reports. The service also includes, training employees and assuring firms' compliance with job security regulations.

We also provide laptops to firms for their employees. The core services are centered on the employee directory and payroll, but we offer a modular and horizontal product that can aggregate multiple services. We streamline user experience and facilitate the company's handling of HR tasks within a single platform, rather than relying on multiple service providers for the same tasks, some of which might not even provide digital solutions.

Regarding the second part of the question, we believe that Italy is a lovely opportunity for Jet HR since, currently, the right technologies are available; the country is ready to embrace digital transition, and the higher level of regulatory complexity and bureaucracy in the country may favor streamlined solution which provides a much better user experience.

We believe we have a first-mover advantage by providing a simplified solution targeted directly to the end-user, that is, the companies that use the HR Tech services.

This is a more viable value creation opportunity for our business than selling complex software (pro software) solutions, which require specialized skills to be used, to other service providers and intermediaries, who will then sell their products to the end-users. This way we can disintermediate the market and directly serve the SME users with a better solution for them.

Ivo Pezzuto: What are the opportunities and challenges of internationalizing a digital platform business model?

Francesco Scalambrino: I will try to provide a structured answer.

Internationalizing products that are subject to regulation, like our products, is very difficult. In a country like the United States, for example, the market size is large and attractive enough to encourage firms to innovate and build new products and services. The regulation there is quite harmonized and there are only some differences among the states. Even the language is the same across the whole country, and a good quality digital infrastructure is available almost everywhere.

In Europe, although the overall market is big and attractive, countries are much more fragmented than in the US. Besides, there are also several other differences among countries in terms of language; the level of digital maturity, market structure, and some aspects of the regulatory environment related to labor laws and tax codes.

Hence, expanding the business platform abroad in multiple European countries can be quite challenging due to fragmented markets and significant differences in the regulation.

In fact, even for markets which might seem to be quite similar to one another such as, Italy and Spain, the international expansion of the platform model abroad often may require rebuilding half of the product from scratch in order to fit the local market and regulatory requirements.

In some countries for example, accountants also provide payroll, labor law, and some HR services, while in others there is a clear separation between those who deliver accounting services and those who provide payroll and HR services.

Thus, for a company whose goal is to provide a simple user-experience to the customer, dealing with multiple countries regulatory complexities is particularly difficult.

Our belief is that a platform business should first pursue a leading position in one specific country (in our case this is Italy) before diluting efforts in other countries.

We will consider expanding in the future to other markets but only after reaching a strong position in the first market, and probably progressing gradually one country at a time.

Other startups in our industry, in my opinion, tried to scale up the business too fast in multiple countries (four to five) but since they were not big enough, eventually they ended up diluting their resources in multiple highly regulated environments.

Obviously, this strategy turned out to be very inefficient. Though, some companies have also pursued M&A strategies to grow faster in multiple countries in our industry, our belief as stated, is that a gradual internationalization model, one country at a time, is probably a more robust solution, especially when market fragmentation is quite strong.

Ivo Pezzuto: In terms of talent pool and availability of great talents with digital skills, how would you describe the differences among various countries based on your experience?

Francesco Scalambrino: For sure in Italy, we don't lack talents. We have good schools and good developers, and especially, good designers.

The challenge for us today in Italy is that in our specific space (SaaS B2B ecosystem) we do not have enough firms operating in the same space, thus we have to grow our talents since we cannot hire them from competitors.

This is quite different from my previous work experience in Paris, France, which has a very good ecosystem in terms of startups, and where there is a wider talent pool in the digital space and a larger number of unicorns.

In our business, we need talents who speak the local language and understand the local country's laws and regulations. This can make the recruiting process a bit more challenging in countries with a more limited specialized talent pool.

Ivo Pezzuto: Francesco, what are the corporate values and what is the organizational culture at Jet HR? How do you build a strong entrepreneurial culture and highly motivated and high-performing teams in your firm? How do you recruit, train, and reward your staff?

Francesco Scalambrino: If I have to summarize the answer in only a few words, I would say that the only thing that matters to us, at Jet HR, is the speed of iteration. We are very extreme in this aspect. To scale up the business, we need to iterate fast.

In our industry, there are a lot of non-digital players or digital players that produce software that is not easy to use. These incumbents have a lot of financial resources, but usually they are slow, despite having a lot more resources than we do.

Thus, our competitive advantage is in the speed of iteration. When we recruit new talents, we seek to achieve a good match between the candidate's skills, attitudes, and aspirations and our customer-centered culture, our rapid experimentation approach, and our strong commitment to speed of iteration between customers and our teams.

We also believe very much in empowering our teams. We have a lean organization with a minimal hierarchy. We tend to hire senior profiles and we grant them broad decision-making autonomy. This is a key component of our company culture. For example, in product positions like designers and engineers, we do not have junior profiles.

Also, our company operates as a fully remote organization and there is a great reliance on mutual trust.

Speed, trust, and autonomy (i.e., limited hierarchy and few rules) are key building blocks of our corporate values and culture. This lean organizational model also contributes to keeping overhead costs low.

Leadership in our organization is widely spread among our teams since we attract, recruit, and develop great talents with an entrepreneurial mindset, who are highly committed to our mission, vision, and corporate values.

As stated, we often recruit senior people, thus they are more empowered and require less mentoring. When a firm raises the bar so high in recruiting, then playing the role of a leader in the organization becomes a much easier job.

Ivo Pezzuto: We are living in an era of great transformations, frontier innovation, and exciting new disruptive technologies such as AI, generative AI, LLM (Large Language Models), etc.

Several HR tech firms are already operating in this space such as SeekOut, HireVue, Workable, Beamery, Fuel50, Eightfold, Fetcher, Textio, Paradox, Ideal, Entelo, and Skillate.

Is your firm currently following this trend and planning to develop AI-driven HR tech services?

Francesco Scalambrino: At the beginning of our activity, we were not focused much on this trend, but now we are starting to do tests, especially in the customer support processes using our proprietary content.

The goal of this experimental phase in the use of AI is to streamline and improve our internal processes.

Ivo Pezzuto: At this stage of your firm's growth trajectory, what is on your radar in terms of KPI dashboard (i.e., scalability, revenues, margins; EBITDA, cash flows, NFP, productivity indicators, customer satisfaction indicators, conversion rates, etc.)?

Francesco Scalambrino: One of the good things about being in a B2B SaaS Business is that most firms in this space share some similar metrics. At the same time, there are a lot of metrics that one can follow, so it is important to choose the right ones for the specific growth stage of the firm.

For our company's current stage, what we consider our "North Star Metrics" (NSM) is the Monthly Recurring Revenue (MRR), which is the predictable total revenue that a company expects to receive every month from all the active subscriptions, and the Annual Recurring Revenues (ARR), which refers to the projected revenues over one year, in other words, they are the monthly recurring revenues multiplied by 12.

A second tier of key metrics we regularly monitor are related to Customer Satisfaction and Customer Retention.

In the beginning, we were just undertaking qualitative studies on the customer experience through regular conversation with them and reading their feedback, tickets, and reviews, whereas now we are measuring much more quantitative indicators on customer experience and customer satisfaction.

We will soon introduce the Net Promoter Score (NPS) since we need to boost growth and we believe that a significant part of our growth engine will depend on users sharing in their communities the experience they have had with our SaaS services.

We hope that they will say that this tool is completely different from whatever they have experienced before. This type of Word-of-Mouth (WOM) communication can significantly boost our growth.

Our third tier of key metrics includes Gross Margin. Our top priority, at this stage, is still growth but the gross margin is gaining more importance.

So, I would say these three tiers of metrics are key indicators for our firm.

In summary, our goal is to reduce bureaucracy and help firms reduce time and resource allocation to manage complex and time-consuming administrative obligations for HR activities.

Our SaaS platform aims to fill the gap in the market through its simplified and user-friendly solution by automating activities and streamlining processes.

We are eager to scale up this business and to have a positive impact in the market.

The above article originally appeared in The Global Analyst, February 2024 issue. You can read the full article (free of charge) at the following link:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4711841

You may watch the full video interview with Francesco Scalambrino at the following link:

https://www.youtube.com/watch?v=RKmhE4Llz_E

You can listen the podcast to this episode at the following link or by clicking the QR code:

https://podcasters.spotify.com/pod/show/ivo-pezzuto-forward-think/episodes/Ep-2-Jet-HRs-Cofounder--CPO--Francesco-Scalambrino-e2h6bgj

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