Growing a Tech Startup (MemSQL/SingleStore) in Portugal to 40+ Employees

When I joined SingleStore back in 2016 (the company was still called MemSQL back then), the entire Engineering team was based out of San Francisco, with a couple of people in Seattle. Our culture and processes evolved around everyone coming to the office daily. So, when I decided to move back to my home country Portugal in late 2017, I was very worried about becoming much less impactful at work. However, despite a lot of initial struggles, I was able to grow my impact and also start an engineering hub where we now hire 40+ people (mostly in Engineering).

Over the last seven years, I've learnt a lot about expanding engineering teams abroad. And not just from our experience in Portugal, as during this period we've also started hubs in Ukraine and India. Furthermore, plenty of discussions over the years with peers in the space have also broadened my perspective.

With this in mind, I've been wanting to write down some notes on the topic of "expanding teams abroad" in the context of startups and scaleups.

How to start a new engineering hub for a mid-to-late stage startup?

Let's say you're an executive at a company that's been primarily based in the US so far. Most likely, the majority of the team is going to be in San Francisco/Seattle/New York. These are expensive places for talent, but it's also where a lot of the experienced people are. However, as companies have become more distributed, more startups are looking to go abroad in order to expand their talent pool. But how do you start? And how do you handle the legal logistics?

There's a few different options here:

1. Just start publishing job openings in the countries where you're comfortable hiring (on LinkedIn and other websites).
   1. Most likely you'll hire people as "full-time contractors", which means they're legally contractors, but with FTE-like expectations. This is extremely common, despite it being in a bit of a gray legal area in most countries.
   2. Alternatively, you can use a EOR (Employer of Record) service such as Remote.com, Deel, Papaya Global, etc. to hire these people.
2. Going out and making a conscious effort to grow in a specific country. You will likely try to start by hiring a local site leader who can spearhead things, and they may or may not have "Country Manager" in their title.
   1. In this model, it's much more common to bootstrap your own legal entity to hire people in the country. This can be advantageous over using an EOR:
      1. EORs are expensive, so if you're planning to hire a lot of people in the same country, you can save money in the long run by doing things on your own.
      2. Market perception — credibility amongst talent and other partners is enhanced when you have your own legal entity.
      3. From a legal standpoint, EORs are new and it's not entirely clear what risks they might have for employers.
      4. You can be more flexible when it comes to certain benefits and perks.
   2. One crucial aspect of this model is whether your "site lead" is someone that will act as a pure site lead or if they'll have a main role in the company. I'll revisit this very important topic later.
3. As a "third alternative", I'll just point out that there are some other more intricate solutions, such as hiring an outsourcing company that will find people for you in an ad-hoc fashion (with the option to convert them to employees if things go well), or acquiring a business that's located in the country where you want to expand to.
   1. Because this is a bit more esoteric, I won't really consider these options during the rest of the article.

So which option should you go with?

The answer, without surprise, is that it depends. If you're trying to build a fully global, distributed company, you should probably partner with an EOR and just start hiring whoever you can find all over the place. But, if your culture values in-person collaboration (even if infrequent), and you want to have a more tight-knit team, then you likely want to have a few "hubs".

How did we do it at MemSQL/SingleStore?

The second option is what we went with at SingleStore. However, I'd like to point out that mostly happened by accident. We didn't initially intend to start a hub in Portugal when I requested to move here from the US. But as I started to show that it was possible to be effective as a sole remote employee, it started to make sense that we should hire more remote folks. Of course, being from Portugal, I knew a lot of people who would be a great fit at SingleStore. And so it happened, and we started ramping up a few hires here in 2018/2019.

By late 2019, we realized that it made sense to set up our own legal entity here and we partnered with a third-party provider to bootstrap it. Since then, we've hired upwards of 40 people, mostly in Product & Engineering.

Geographically binding teams

Possibly the most important contributor to our success has been the fact that I have been adamant against geographically binding teams from day one. In other words, I've always pushed back on the idea that teams should have their members in the same timezone/region. Instead, teams should be distributed and comprised of members from different regions. This is the most effective way of preventing silos, enabling team mobility and avoiding cultural differences between teams (which leads to better collaboration).

In turn, this means that managers will have direct reports in multiple countries. Again, I have been a very strong advocate of this, despite tremendous pressure against it from various parts of the organization over the years. As an example, we did not do this when we started our India hub and we eventually reversed course. It makes a lot more sense to me that teams and the org chart are designed around the different skillsets of individuals, and on what the business needs over time, rather than on people's physical location. This also gives people a lot more freedom to move around teams (which is great for employee retention!).

The local leader is very relevant, and they need some level of freedom to operate

So, if teams are distributed and decoupled from their physical location, why should there be a local site lead? And what do they have to do?

I was never given a title such as "Country Manager" or "Engineering Site Lead". However, titles don't really matter at startups, and I still performed this role for the last four years. What are some of the responsibilites I had?

• Finding physical office spaces for us
• Organizing internal bonding and knowledge sharing events
• Running local meetups
• Hiring for all teams across the entire company who have open headcount and are okay with hiring in Portugal
• Attending and sponsoring local career fairs and other events
• Working with HR, Accounting and Legal to make sure we are properly prioritizing several issues around benefits and other legal logistics
• Advocating for remote-first practices and async communication across various teams
• ... (and more)

To do all these things, I've found that some level of freedom is very important. I did not always get the ownership I wanted from the organization (and this is where titles are probably important), so it was sometimes very hard to push things through. With this in mind, I highly recommend that the local site leader can make decisions on a number of things on their own. This includes which events to attend, the physical office space to rent, and more. Of course, it's also important for HR to work closely with the local site leader to decide things like perks and benefits (which should be somewhat consistent across countries, but in accordance to local laws and common practices).

The legal logistics in Portugal specifically

Each country has its own set of legal shenanigans to deal with — and European countries are notorious for some really complicated regulations. I've spent a lot of time over the last few years reading varying bits of the Portuguese Labor Code (I swear it's a fun read!), but while some of these are actually important to comply with, many are not actually enforced and shouldn't be a cause for concern. This is where experience and knowledge matter, and so it's important to be in touch with people who have done it before and are attuned with the common practices in other companies.

As one example, it's customary in Portugal to give employees a "meal voucher" debit card which is charged with a daily amount of cash. These cards only actually work in specific establishments, and the government allows companies to charge them for up to 9.60€ per day per employee with essentially no taxation. This is a great way of giving employees roughly 2500€ of tax-free income per year! Most people in Portugal see this as part of their salary and since you can use them in cafés, restaurants, bars and even night clubs, they're not strictly associated with "meals". However, this comes at odds with the practice of providing employees with free catered lunch which is somewhat common in Silicon Valley. Should you still do this if your employees are getting a daily "meal voucher" top up on a special debit card? Or is the "meal voucher" top up just a way of giving employees some tax-free income? Each company has to find their answer to this kind of benefit discussion.

Another example is time off. The law dictactes that employees in Portugal should receive a minimum of 22 paid days off per year at a minimum. Furthermore, the law states that employees of companies with more than 9 employees have to finalize their "holiday schedule" by May 1st of the calendar year, and then this schedule has to be on display somewhere in the office until October 31st. In addition to this, employers also have to guarantee that employees are doing at least one block of 10 vacation days in a row. All of this, again, comes at odds with the commonplace vacation flexibility of tech companies in the US, where unlimited time off is quite usual. So, companies expanding their workforce abroad have to decide how to handle this, but it's very common to just have 22 days in the work contract, but then give employees full flexibility over when and how to schedule them (and even go above 22 days without noting it down anywhere).

I have only touched the very tip of the iceberg here. There's a lot more complications such as oncall schedules (and payment for it), how to optimize salary structures, how to deal with stock option taxation, health insurance during travel abroad, and so much more.

Finding talent in Portugal

Of the first 10 people we hired in Portugal, the vast majority were referrals of existing employees. SingleStore has a very generous referral program where employees get paid a few thousand dollars for recommending someone who ends up passing the interviews and then working here for at least a certain amount of time. But, as companies grow, it becomes harder to rely on these as a source for talent.

So, over the years, we've found two main new ways of finding people:

• Career fairs (especially SINFO, which we've attended every year starting in 2020, and highly recommend)
• Networking (this is more of a case of continuously meeting people, going to local meetups, giving talks, writing blog posts and fostering as much conversation with folks in the community as possible)

In general, we've found that what works especially well for us is hiring more inexperienced people and growing them here. We've focused on hiring a lot of people fresh out of school, and then giving them big hard projects where they have to take responsibility over large areas of the product very quickly. This "trial by fire" approach is very efficient and allows us to quickly spot strong performers.

In addition, we've done a lot of summer internships (some 15+ summer interns in total). And I have another piece titled "Observations on Tech Summer Internships in Portugal Versus the US" which goes into more details on these.

Of course, we've also hired some amazing experienced people, but that's been the minority so far. One thing to keep in mind is that in my experience, people in Portugal tend to be much more conservative about switching jobs. This is primarily a cultural thing, but it's changing quickly within the tech bubble.

Working across time zones

One of the first questions I get when I talk about our presence across multiple countries is "how do you juggle the time zones?". But I have previously written about "async communication", and there's enough resources on the matter nowadays. What I've found to work best is to give employees a lot of flexibility, and the way to start this is by reducing most if not all standing meetings. Leaders should really question the value they're getting from these (and I totally see their value sometimes) versus the drawbacks they bring to everyone's schedules.

Fostering local events and diffusing the culture

In my experience, a lot of the best ideas inside organizations come from in-person collaboration, and random brainstorming opportunities. Because of that, we've always fostered plenty of opportunities for people to get together. The most important thing about these is getting people from different teams together, which leads to ideas that are harder to come by during our regular work weeks.

It's also been important to do a lot of travel. I've worked towards ensuring that different people in our leadership (CEO, CxOs, VPs, but also dozens of other people) fly to Portugal and spend a few days here with folks. We tend to have at least 1-2 visits per quarter. And one that thing that was absolutely essential was the sheer amount of travel from Portugal to the US that our first 4-5 hires here took on. In the beginning, we were traveling to SF and Seattle extremely frequently, and while this was costly to the business, it ensured that we were in sync with everyone there and that the culture developed early on persisted in Portugal. Now, we travel much more infrequently and most people don't travel at all — the cost is too high and the return on investment just isn't there anymore.

Salaries

Let's talk about salaries. How do we and other companies expanding in Europe manage salaries? Honestly, I have nothing more to add to what Gergely Orosz already wrote in his essay "The Trimodal Nature of Software Engineering Salaries in the Netherlands and Europe". The more you pay, the better the talent you can get, but only to a certain degree as many other factors are important to attract and retain folks.

However, I would like to touch on stock options. I've heard some people say that people in Portugal don't value these, and taxes are really high, which makes it pointless to award stock option grants to employees here. I completely disagree. Yes, the taxes are really high on these since the exercise tax (the paper gains between the strike price and the fair market value at the time of exercise) will be counted as income gains and thus will be subject to income tax (which is very high in Portugal). However, stock options are still important to motivate people in the long run since they can still lead to a great payout if companies do well.

Hiring in Marketing, HR and other functions

So far, we've hired 1 IT person, a couple of HR folks and some people in Marketing and Sales as well. For these roles, we again leveraged referrals but also the usual online job listing websites such as LinkedIn. It's been great to have different parts of the organization in Portugal, since, as I mentioned before, this leads to more interesting conversations and ideation which is fantastic for the business in the long run.

Having a full-time HR person with experience of the Portuguese regulations and legal complications has been an absolute game changer. I really wish we had done it earlier since relying on outside counsel for this never worked particularly well for us (the incentives just aren't aligned when you're billing hourly for advice, versus when you're an actual employee of the business with a vested interest in its success).

Wrapping up

Since late 2019 and early 2024, we grew from 3 people in Portugal to over 40 (~10% of the company). We're also on our 4th office space in Lisbon (we outgrew the first three), and we have a second office space further north in Coimbra.

It's been an amazing journey, and I'm super proud of the people we've hired and what they've achieved. I'm also super thankful to everyone who helped along the way!

If you're going through a similar journey or want to chat about any of this, feel free to reach out. I'm happy to meet anyone to talk about this kind of stuff.