A defining step: When Hanno Renner was considering where to do his master’s degree after completing his bachelor’s degree as an industrial engineer, he decided on the Technical University of Munich. There is – in cooperation with the Munich LMU – the Center for Digital Technology and Management (CDTM), where he obtained an honors degree in technology management in addition to his master’s degree. Much more important than the certificate, however, was that he got to know people there with whom he would like to set up a company – which the CDTM, which aims to encourage people to start up, also stands for. Today his company Personio, headquartered in Munich, is one of the most valuable start-ups in Europe. According to the latest round of financing, it is valued at $ 6.3 billion (just under five and a half billion euros).
All team members already had experience working for start-ups, so Renner knew what he wanted to do with the new start-up. Because in the small and medium-sized companies, the few employees in human resources struggled with Excel lists or even with paper. “There were already digital solutions for everything else, but not yet a modern HR solution for small and medium-sized companies.” HR stands for human resources. So: payroll, vacation management, shift schedules and the like.
The four founders started the project while still studying at CDTM 2015. Except that they wanted to solve a real problem, the founders had little idea of the requirements that HR administrators would place on modern software. “We didn’t really know anything,” says Renner, “we learned from the customers”. His luck: “We found customers relatively quickly who helped us, but also paid.” At the same time, Renner also completed a master’s degree at the TU.
Personio was able to grow from its own sales at the beginning, so did not have to get involved with investors at an early stage. The first customers were mostly start-ups themselves. They were happy to be able to work on a solution that saved them the hassle of fiddling with Excel and other makeshift solutions. It was only when it became clear that there was an opportunity for strong growth that money was collected from investors for it.
The software runs in the cloud and is constantly being further developed
Personio was also lucky enough to have the right timing. There was already HR software for smaller companies, but most of them had many years under their belt. “On the other hand, we were able to develop completely new and modern software from scratch,” says Renner. Modern, which means, for example, that it runs in the cloud and is constantly being developed – Renner speaks of weekly updates.
Close contact with customers also allowed us to respond well to their needs. This also meant that the software had to be usable from all end devices. Renner explains why with an example that is also used in his own company: When an employee calls in sick, their status in the internal communication tool Slack is set to absent and their appointments for that day are canceled – fully automatically. But the employee can do this from bed on his mobile phone.
The further development of the company, which was ushered in with another round of investors, is also moving in this direction. In the future, Personio also wants to take care of processes that are not directly related to HR, but are rooted there. This involves, for example, the management of IT access when onboarding or when employees leave. As soon as the contract has been approved in the HR department, the necessary access authorizations should then be granted, and vice versa if the employee leaves the company. Such a degree of automation is not yet available for small and medium-sized companies. Larger solutions such as Workday or Servicenow are too powerful and too expensive for this.
The cloud solution could also accelerate processes, argues Renner. The workflow of documents in the system also makes it possible, for example, to sign an employment contract on the tablet while you are on the go, he says. Since it is not so easy to get good staff, nothing should be missed.
In order to attract employees, the company has to offer a lot
Even a successful company like Personio does not find it easy to find staff, says Renner. “We get 65,000 applications a year, but it’s still not easy to find the right ones.” And when they are in the company, they want to be treated well. Personio, for example, currently uses a 50:50 model when people are in the office, so employees are allowed to work from home for half of their working hours. In addition, employees can work 90 days a year from anywhere, for example just add a few more weeks at their vacation spot. Personio currently employs around 1000 people, and the number is rising. Around 800 of them work at the headquarters in Munich, the rest are spread across locations in Madrid, London, Amsterdam and Dublin.
Renner once reported in an interview that he was always available for the first five years since the company was founded, even on vacation. “I signed the contracts with the first 100 customers myself,” he says. That would no longer be possible in the meantime. Personio has not yet used up the money from the latest financing round because the business is growing rapidly. In any case, there is enough potential for this: the total of around 5,000 customers that the company now has are not even 0.3 percent of the total European market for small and medium-sized companies.
Personio earns its money with a classic rental model. A company with 25 employees has to reckon with 180 euros per month, support is already included. The company’s well-secured data centers are located in Frankfurt and Karlsruhe, and the data are all encrypted so that intruders cannot do anything with them.
You don’t feel any pressure from investors, says Renner, “our goals are always higher than those of the investors.” With the money on the side, you have all the more options to decide how to proceed. It should also continue with himself at the top, says the 31-year-old. At some point, many founders no longer wanted to run such a large company. One of the co-founders has already left, but: “I still want to.”