Imagine what it would feel like to make your housemate a millionaire within in a year.
Your startup’s software enables companies to onboard, resource and pay their contract workers. It’s specific, but sticking to this underserved niche has allowed you to grow very fast. You have 4,500 contractors on your system and you recently had a 24-hour period where you booked 5,000 days of freelancers. Clients include Google, Expedia, CNBC and the Economist Intelligence Unit.
This is Peter Johnston’s story, the founder of Lystable. “I’ve only been doing this for a year, so I’ve no clue what I’m doing really,” he adds. But he’s probably the only person who thinks that.
A designer by trade, the ex-Google employee realised how unfit for purpose the old-hat, usually spreadsheet-based systems being used to deal with freelancers were.
Lystable is not a marketplace for freelancers, or project management software – it’s a management tool that sits between those things and partners with both sides to help make businesses’ lives easier.
“In the early days, I kept quoting a report to investors which found that 50 per cent of companies in the next two years will have more contractors than full-time employees. And 95 per cent of them don’t know how to handle that or what their processes should look like.”
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Johnston realised that, despite a lot of time and effort going into managing contract workers, there was no permanent solution available for Google – and, presumably, for other firms. “The problem had become too big. And I knew I didn’t want to be there forever, so I started thinking that maybe I should jump in the deep end and just build something.”
While doing a entrepreneurial project at Google Campus (a staff perk), Johnston met Eze Vidra, ex-general partner of Google Ventures and European head of Google for Entrepreneurs. “It was literally a ‘I’m thinking about doing something’ moment”.
Vidra put Johnston in touch with Jon Bradford, the managing director of Techstars in London. “He’s Northern Irish too, so obviously he picked me straightaway.” Joking aside, Johnston was accepted into the accelerator’s programme, leaving Google and joining as a solo founder. “It was the best and worst thing I’ve ever done. It’s absolutely brutal. I actually didn’t turn up for the second week. I had no business plan, no set-up around me. It was so difficult.”
This is when Johnston’s housemate “lent – invested” in him, while also lending a hand in getting things off the ground. Another turning point was meeting Mark Evans, partner at Spring Partners and former chairman of Goldman Sachs. Handing over £250,000 to Johnston, he introduced him to a network that saw him raise a total of £500,000 in under a month.
A fantastic reality
Since then, the 27 year-old’s life has been a whirlwind. Lystable has now done three rounds of funding. Last December, Paypal co-founder Peter Thiel upped his stake in the company, taking total funding to £2.3m.
When I met Johnston, he was armed with a suitcase, ready to fly out to San Francisco. By the end of this year, he knows he’ll have needed to relocate the majority of his team out there. “It’s starting to make less and less sense being in London. Our clients, investors and leads are predominantly out there. Being able to grab these amazing people for a few minutes on the phone is pretty tough if they’re just waking up and our day is finishing.”
Lystable is also a good example of a high-growth firm that has quickly out-grown the capital. “London has been immense for several particular buckets of startups. Fintech – guys like Transferwise are absolutely killing it. Then you’ve got the ex-Cambridge alumni crowd who are getting a tonne of funding to do really interesting things like biotech and AI. But when you look historically at which big Saas firms are in London, it’s really just one, Datasift, which isn’t that well-known.”
And a difference between European investment firms and US counterparts has been a reticence by the former to back a business designed to dominate a particular part of companies’ workflow – all Lystable’s partnerships with freelancer marketplaces are with American platforms.
But Johnston is keen to impress how important it is that Lystable remains a vertical business. “There are probably 50 talent management startups in London now, and the reason most of them will struggle to be worth more than $1m is that they try to do too much.”
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Johnston says the best piece of advice he ever got was from Adam Ross of Palantir, who told him to say no to potential clients if it risks spreading the firm too thin just to satisfy their demands. “We need to be able to achieve the same thing for a law firm as a hospital. And if you can do one core thing well, rather than being fairly dispensable, you become almost impossible to remove.”
But Johnston’s ambitions go much further than nailing his initial offering. “If you work in banking, you get a Bloomberg ID and that follows you around. I want Lystable to provide the equivalent for freelancers.” Work may not look all that different over the next few years (although we can all hope for Keynes’s 15-hour week), but it isn’t a stretch to imagine that most people will move between companies a lot more fluidly.
“An engineer doing six months with Google, then six with Merrill Lynch would move companies but would keep their unique Lystable ID with them. That will allow them to connect into these enormous firms that use our system almost instantly. We already enable people to ‘lyst’ their freelancers from wherever they are, rather than it be a three-month HR process.”
Of course, companies that dwarf Lystable are already building similar – Facebook has, and Silicon Valley darling Slack is giving it a good go. “I happen to think Facebook for Work and the like are not the way to go. That’s your social currency, not your professional one. But we’re definitely going to be building something. Look at Airbnb, Facebook. These firms have almost as many contractors as employees already. It’s the holy grail.”