The $400 Billion Opportunity: Disrupting Corporate Training with Rene Janssen

The following interview is a conversation we had with René Janssen, CEO & Founder of Lepaya, on our podcast Category Visionaries. You can view the full episode here: René Janssen, CEO & Founder of Lepaya: $85 Million Raised to Build the Future of Employee Training

René Janssen
So very good. Very happy to speak to you here late at night in Amsterdam, but I saw that it’s bright and shiny in San Francisco. So great, I had it for you. And final thing to do for me.

Brett
Today, we’ll make sure this is as fun as humanly possible. So you may have a hard time sleeping because you’ll be so energetic and so excited after, but we’ll do our best. 

René Janssen
Well, that’s it for that.

Brett
Let’s start with just a quick summary of what you are building today. Tell us about Lapaya. And what Lapaya does is this is very simple.

René Janssen
There’s 3.3 billion people working around the world. And at the way that skills are changing and skills needs are changing, those 3.3 billion people need upskilling more than ever. They will be more effective in their jobs, more productive and happier. We provide an employee upskilling platform that helps all those people around the world to have the skills that they need to be effective, to avoid burnouts, and to be as productive as possible as they can in their jobs. I think what’s beautiful about the Paya is that we say, hey, let’s use tech wherever we can. But since many of those skills that makes you effective at work, the skills that help you convince a client, the skills that help you collaborate with a coworker, are, in essence, human skills. We managed to blend in humans in there as well.

René Janssen
So if you really need that one one practice, if you really need to get SCa, an expert on leadership at work, you can work with real human beings along the way as well.

Brett
How do you uncover this problem? 

René Janssen
I had it myself as probably a very standard, but I think also a very important way to start a business. I was helping build one of the large ecommerce platforms in the world, Lazada, which brought e commerce to 500 million people in Southeast Asia. When I was running one of the largest markets, Indonesia, I just figured out that the amount of people we needed to fix our problems and the amount of technical terms, warm bodies were throwing at problems made us extremely unproductive. And that also led to people being unhappy and running out of the door. Yeah, pretty much as fast as we could hire them. Now, we sold that company to Alibaba.

René Janssen
And I can say many beautiful things about Alibaba and also that they were right about one big red flag and due diligence is that our people process were not up to par. And then they looked around and I had my opinions about how we ran our people business before. So at some point got a request from the founders, from CEO, who said, hey, why don’t you move out of Indonesia, move out of Jakarta, come back to our head office in Singapore and help build up the people function, lead HR. Well, it was not a common thing, I suppose, to do for an entrepreneur, for a business leader, but I thought, yeah, we have 5000 people in the company. I do think they deserve better and we can do better as a company. 

René Janssen
And if you complain about something, well, you should dare also fix the problem. So I put up the baton, run HR for two years in that company and really struggled well with many things, let’s be honest. But also with this, I really struggled with how do I actually help my people to become effective? Because very simply speaking, the market is very traditional. You either still have a lot offline training providers or you have a lot of e learning providers. But if you really struggle with skills like leadership, with communication, with how to give a great presentation, you don’t need to lock yourself for five days with a traditional player into a conference center or hotel to kind of learn that. But watching videos and doing some exercise and e learning is too thin. So I was really looking for something myself in the middle. 

 

René Janssen
Couldn’t find it, build it, if I remember right. 

Brett
Well, Zada is a rocket Internet company, is that right?

René Janssen
Fully correct, yeah. 

Brett
In Silicon Valley, I think they were a very hated organization, but all my friends in Europe, that’s a much different sentiment there. I think they had a lot of respect and a lot of admiration there. And now it’s changed a little bit. I think people are okay with the idea of rocket Internet. Can you tell us what was it like to be part of the rocket Internet ecosystem and what did you learn from that experience? 

René Janssen
So I think I have a very balanced view. So I would definitely not be on the bandwagon. Of eight grid, but not on the bandwagon of everything is great either. I think what rocket was extremely good at was executing just very, very fast. And I think what I also learned is really how do you be very single minded about the one thing you need to fix and really just boost all your time, all your energy, all your resources in getting that done. But it also has a flip side, especially when companies grow and when things get a bit more complex, that level of single mindedness typically doesn’t work anymore and that you need to diversify. Little story I told about paying so little attention on topics like hr and making sure that people are productive, it’s fine. 

René Janssen
Early stage, I mean, if you start a company, you should definitely not over invest in any of those topics, but we probably should have started it a little bit earlier than having thousands of employees along the line. So I think early stage, it’s absolutely brilliant. Execution power, absolutely brilliant. But, well, like everything, there’s things that should have been better, and that’s typically kind of being mindful of complexity and the complexity when scaling really kicks in. 

Brett
Now, going deeper into the journey, take us back to 2018. When you founded the company, what was it about this problem that made you say, yeah, that’s it, the problem I want to go solve. Because I have to imagine that there was probably a long list of problems that you could have gone after. If you’re like most founders, we all have these lists or notepad of ideas. What was it about this idea?

René Janssen
I think basically two things that appealed to me on the one hand and the strategy one, which is simply that I gathered it myself and just thought, this can be done better than it’s being done today, and then let me just pick it up. But I think very practically, I started my career in consulting, one of the very large consulting organizations. And one of the things they did from day one is really think through, how can we make you a little bit better every day? And it was not altruism, of course, that’s the whole consulting model. You get people out of court, send them to a client and charge a lot of money for them.

René Janssen
But kind of the investment that yielded in me and me becoming a better professional, being more effective, I probably took that a bit for granted and then moving on and moving into more, well, startup, scale up other types of companies, I certainly notice I shouldn’t take that for granted, but I also saw what big implications that has on individuals. If you have someone that in the first months of your professional career takes care of you, helps you, gives you feedback as a learning path, as a growth path, it just helps you to get so much more out of yourself than, well, then if you’ve no one that’s helping you there and taking care of you in that way. 

René Janssen
So I think it was both a combination of saying, hey, this is something that we need, that companies need, and that can be done better, but also something where you’d say people deserve it and you just have felt myself, how much good comes from these kind of things? If I now reflect on that a little bit later, I think as a good european entrepreneur, we just fix a problem and then think about the global story a little bit later. I think we also need it as society. If you look, what’s been happening over the past couple of decades is that productivity growth has really been dropping and productivity growth is really how much more do you get out of every employee every year? And then 40, 50, 60 years ago, there used to be four, five, 6% more every year.

René Janssen
That’s a nice growth rate. Every person is four, five, 6% more productive. As a society, you create output, and every generation is a lot better off than the previous generation. But today those growth rates have dropped significantly. So just output person, irrespective of the debt, irrespective of the AI, has gone down to zero to 1% a year. Now, you can’t really grow an economy where the output per individual is just growing at 0.1% a year, because if you discount inflation, that means every next generation is worse off than the previous generation. And that’s how societies ultimately collapse. So apart from the personal story that companies needed, I really also think that we as society need to find ways to turn kind of all the evolutions in tech, in data, and AI in science into reality and make sure there’s our productivity again. 

René Janssen
Because if not us, then the generations after us deserve that. 

Brett
Avoiding societal collapse, I would say that’s a pretty noble mission.

René Janssen
I very often start my pitch decks with it, but I must say it’s also a way to put investors into a very dark mood straight away. 

Brett
Yeah, I could see that. Now, in those early days, was it an aha moment for the market as you started to try to sell this? Did people get it right away or did you have to really ram this and jam this into the market? 

René Janssen
In honesty, a bit a second, because there’s a couple of things that we do differently and harder. We tried. Many people were asking, what’s the one thing you do ten x better than your competition? And we said, well, we don’t but training and people development is a market which is already huge. There’s whatever source you take, but there’s four $500 billion a year being spent on this and, but it has just evolved fairly slowly. So it’s not doing one thing ten x better and therefore trying to roll up the market, but really rethinking the whole process. How do people learn? What can you replace bad technology? Where do you need kind of human interventions that, how can you do that at scale? How can you measure impact? All these elements need to be rethought a little. 

René Janssen
And, well, I think luckily there’s a lot of companies, almost all that invest in this, but it also means that in all companies, there’s people that have already opinions about it. And because we really rethought the whole end to end kind of value proposition. Yeah, that took a little bit of time, and that’s still what we spend a lot of time on today, kind of slowly convincing people to do it better. I think the beauty for the founders among there is that we see a lot of growth. So we always have to land the pilots. Kind of a first kind of believer at a client that says, okay, let’s come in, and then year after year, we can grow the number of employees we touch and grow our share of wallet within the company, this very much land and expand. 

René Janssen
And I think that’s a testament as to how maybe traditional the market also still is and how much time it takes to convince people that it’s time to move on to newer and better solutions. 

Brett
In those early days, what would you say was the most important go to market decision that you made, Raoul, actually.

René Janssen
Adding those human facilitators? I think we first started out like I think many tech founders were saying, let’s just do a tech platform. There’s a lot of content out there already. There’s a lot of trainers out there already. There’s lots of facilitators out there already. If we can help them with a simple platform that allows them to bring it all together into coherent learning paths and then measure the impact, that’s brilliant. But what we maybe naive in retrospect, had forgotten to consider is that meant that you had to do every sale twice, you had to sell to a client, and then you still have to sell to other external kind of training providers. You use you.

René Janssen
So after three months, my co-founder and were looking at each other and said, well, if this is the rate at which we’re going to expand, then we rather stop right now. And then we’re pretty radical and said, okay, we now kind of need to overturn the whole model and we’re just going to take everything upon us and we’re going to client and saying we’re just going to do leadership training, we’re going to soft skills training, we’re going to do personal development and we’re just going to do it better. And they would end to end. And weren’t necessarily people kind of experience on the content of that, so that we just needed to insource as soon as possible. But that was also the moment that started to get flying, not just trying to optimize something and do it a bit better, would you say?

René Janssen
Okay, here’s again $400 billion category and that needs overdrawing and we’ll take it all end to end, even though, well, we knew we probably had a lot of learning to do and would make a lot of mistakes. So yeah, just being bold, I suppose, and even a lot bolder than they were in the beginning was probably the biggest thing. 

Brett
You said 400 billion there. I’m sure that definitely makes venture capitalists perk up a little bit. And it made me perk up a little bit. So training, is that the employee training market or what is that market? 

René Janssen
Yeah, the global spend of corporates on people development. Got it. 

Brett
How is that ecosystem broken up? Obviously that’s a pretty big category. What are some of like the subcategories within that? And then what’s your market category? Where do you fit in that ecosystem? 

René Janssen
Yeah, so you can slice and dice as many ways you want. And if you look at the different geographies, headers, also different allocations to categories. But if you do it kind of very top down, probably 20 30% of that is spent on what they share. That investors know pretty well. Which are all your learning management platforms, your learning experience platforms, kind of all the tech that has come in over the last 20 years or so to kind of make learning as a process easier, but doesn’t directly teach skills, then there’s a single digit percentage points kind of share of that. That is really your content platform. 

René Janssen
So we all know the names that link to learnings and the courseras and the udemy’s and these kind of players, every brilliant and plural side, etcetera, are bring brilliant content libraries that are at people’s disposal if they want to look something up. And there’s of course a real outsource market level of mbas. And then that is probably 50 60% of the market that’s still being spent on kind of hands on, kind of direct training, very often very traditional in those rooms. Now, if you want to go one step further, about 50% of every dollar there is spent on soft skills, management skills, leadership skills, communication skills, all the skills that are essentially function at Nosti, but the ones that make sure you get your promotion. 

René Janssen
And 50% are spent on tens of thousands of skills which are very specific coding languages, details of marketing, all the kind of hard functional skills. We focus on that first bit. All those skills which ultimately are relevant for everyone, whether you’re a manager in a big bank, or you manage your first team in a small startup, or you might be a manager of a logistics company, really, those skills that make you progress through your career as a professional as you go along, that’s what we’re focusing on. And if you then look at euros, as always, and I’ve been consulting long enough, you can torture data as long until it confesses. But let’s say it’s probably $80 billion market that I can address with my current products today, this show is brought. 

Brett
To you by Front Lines Media Podcast production studio that helps B2B founders launch, manage and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit Frontlines.io Slash podcast. Now back today’s episode. How do you describe then your category there? Is it an upskilling platform, an employee training platform? Like, what is your subset of that category? What is your market category that you identify as being part of?

René Janssen
Yeah, so we today double as the people development category, but we’ve also thought long and hard about whether we indeed needed to come up with a new category because of the size of the total market. It’s so huge and there’s different opinions on it. But we, fair and square, want to sit in the category. That’s really about how can we teach you a human being skills that you can apply to more on the job, make you more productive, make you more happy. And that’s what we dubbed people development. 

Brett
When it comes to upskilling and to employee training, what are some things that organizations tend to get wrong? 

René Janssen
Many things. But I think most important ones are probably not being prescriptive enough, because training is probably like marketing, one of those things that we are all exposed to, all of us, and that also means that we all tend to have opinions about it, but it’s an art, it’s a craft in and of itself. So I think, one, many companies typically struggle to really have a very clear vision. What are the set of skills, what are the set of capabilities that we really need to upgrade in our workforce today? And then secondly, how do we kind of build programs that do that at skill? I think they very often, number two, then either give too much or too little choice to the individual employee with too much. I just mean asking you, what do you want to learn? 

René Janssen
Well, it can be a myriad of things, but there’s only a subsection of that’s actually relevant for you today and that you may be aware of. That’s a gap, but too little. That means the opposite, saying, this is the course I’ll subscribe you and it’s the one you’re going into. So how do you kind of say, hey, these are the kind of things that people at your current position, with your current capabilities would find useful to develop into and then letting you choose. So probably that’s the second biggest. And the third biggest is probably the people are a little bit set in your ways, if you’re being very honest. If I took to the big tech companies out there, it’s often, it’s 2024. Everything needs to be in line. So training needs to be a fully digitized solution. 

René Janssen
And I say, well, but we employ humans, and we exactly employ humans because AI can’t do everything yet. So how old is it that these skills that set people apart from humans could be fully thought and honed by technology, but vice versa? If you talk to the more traditional market, they’re still very happy with kind of in classroom training providers. And what we try to say is, hey, how do you find the best of both worlds? I use technology wherever possible because it scales. You can personalize, you can measure, but bring in human trainers, human facilitators, human coaches whenever you need, and that helps. And that’s probably the third thing that’s maybe still, that’s correct phrase, a little bit of a holy house in our category that we need to overturn, and you’re very busy overturning.

Brett
Now, I work with a lot of enterprise SaaS companies, and what I’ve seen over the last two years is ROI has become a very important part of every sales conversation. Even if there may be a very hard way to find a direct ROI there, everyone wants to talk about it for you. How do you quantify the ROI and what do those conversations look like when you’re trying to quantify the value and the ROI of this type of service or product?

René Janssen
Yeah, so luckily I operate in a market where to a large extent, kind of the return on the product was, were participants happy with it? Thumbs up, happy sheet, if we tend to call it. So the bar is relatively low, but especially when economic climate starts to shift, and theyve done that one or twice since were founded, you of course, get these ROI questions and we break that basically into two. On the one hand, there is a set of KPI’s of business drivers that you can directly impact with training. On the one hand, that is retention. So great managers, great leaders just are able to retain their team better and have people work for them longer. And there’s a direct business case to be made out of that, because every replacements and every lesser onboarding cost money.

René Janssen
And the second, and it doesn’t go for all function that goes for a lot of function, is productivity. But especially people on the sales side, on the customer success side, on everything. We have a fairly direct impact on kind of the top line of the business. You can measure productivity per FTE and therefore productivity increase after having gone through a program quite directly. Then the second, and that’s a bit more indirect, is that we have gotten pretty good at measuring whether people actually apply the skills that we’re trying to teach them after going through the Labaya platform, the buyer solution, which in essence just means if you get a cohort of a couple of thousand of leaders, are they exhibiting the leadership skills that we wanted to exhibit? 

René Janssen
Are they exhibiting the leadership behaviors that we want them to show as six months after we’ve gone through for six months that they weren’t shown before, that you can quite easily measure. And then there are a lot of meta studies that get linked back to kind of overall productivity and impact, notably Google. I think it’s a well known example, but let me give it anyway. I think Google started well by now, maybe 15 years ago, their famous product oxygen, which try to prove we can get rid of managers and we can just have engineers run engineering when the salespeople run the commercial side of the organization. And why would you need all these managers if you just give them clear, concise tasks and regulations? And by trying to prove that they could do without managers, they actually prove no.

René Janssen
Managers are very important, but not so much managers as a concept, but people in the organizations that exhibit a very fairly concise set of eight to ten to twelve kind of specific skills that would ensure that the engineers, that the salespeople, etcetera, were more productive of what they did. So, and these studies are very well known, and a lot of HR leaders or c suite leaders also just buy that secondary inference that if you’re actually able to show that people are showcasing these skills, are showcasing these behaviors, that then the link to the business value is already very good. 

Brett
What about the marketing philosophy? How would you describe or define your approach to marketing? 

René Janssen
I’m a pragmatist here, which generally means that my view on marketing is, let’s make sure that we reach as many decision makers as possible and try to get the story out of how we do things better. So we’re very factual, very content driven, push out a lot of research and numbers and trying to show, hey, we understand the business problems you have. That’s not fluff, that’s not generic. These are the things that are your mind. And then we link that with our solutions and we can measure, we show you that we fix those. That, for me, is the basis of the marketing philosophy.

René Janssen
And then whether you do that over the event angle or the publication angle, or kind of small roundtables, or kind of more direct kind of approach, that’s all tactics, but it’s really about how do you kind of stand out for the clutter. And that’s only about being precise. I often tell my marketing team, in essence, also very simple. Of course, I also get targeted by tons of outreaches, by tons of companies. And what are the ones to trigger me? The ones that I instantly have the feeling, okay, this is interesting because they know what I’m struggling with. And based on a very quick glance, there are similar companies that seem to have benefited from that solution. I’m looking for something as practical as that, and not too kind of out there, of too funky.

René Janssen
And that’s, I think, what the whole market team is trying to do. How do you really get on the shoulder of the clients and steer them towards solutions that help them with what keeps them awake at night? 

Brett
You mentioned marketing team there. What have you learned from building a marketing team? 

René Janssen
It goes back a bit to what I said about training and marketing. Many people have an opinion about marketing, but it doesn’t mean it’s definitely a science. But I do think marketing specifically is an art and a science, because influencing people, getting through, there’s a little bit of art in that as well. But I think what for me is the most important thing is that you want to be very clear about the metrics you’re trying to pursue. Are you just going or maybe just don’t go just for the biggest amount of mqls or the biggest number of profit you can get. But be very precise what you want to do. We run an enterprise sales game. We’re an enterprise solution, which means our sales cycles are complex. There’s lots of decision makers in there. 

René Janssen
So how can you really map and track what are the decision makers, how is the DMU set up? What are the different needs of those different layers in the DMU and how can you target them? On the one end, who can you measure that? And on the other end also have a certain level of faith and belief that you understand your buyer Persona. So you can kind of test stories approaches that resonate with them. And in all openness, I probably have a bit of luck having been in my buyers shoes, so that helps quite a lot is during that. But really having people that on the one hand can tell you a great story. Again, this is how I’m going to measure why that story resonates. So art and science, and there’s not that many people that are good at it. 

Brett
As I mentioned there in the intro, you’ve raised over 85 million to date. What have you learned about fundraising throughout this journey? 

René Janssen
If you want to get a sense on the macroeconomic climate, look at investors because they make every swing in the economy even a little bit bigger. But in all honesty, I think ive learned probably a couple of things. Ive raised rounds kind of on the great days of 21, 22. Ive also raised in Corona we did a fairly large series, see last year, mid 2023, when especially here in Europe, everyones keeping their powder dry. For me its ultimately about having that larger story. What is the problem you want to solve? Why is that important? Do you believe in it? And why are you both kind of fixing societal issues that people want to get behind?

René Janssen
But there’s also real dollars being spent on that issue that ultimately is the return from the investors and then really show how you are building the business towards that and to capture an increasingly large size of that market. And I think too often it’s either one of those, it’s either a very visionary story about the problem and a solution, but not giving enough faith to investors. And this is what you’ve done up until today to capture your share of the market, which you can extrapolate into the future, or its kind of a very numbers driven bottom up approach.

René Janssen
And as you can do with 20% month to month growth or something else, not the month growth afterward, its not that bigger picture that they can also just internally rally their folks behind and if they internally need to pitch, shall we kind of pursue this or shall we put this on an IC? Its exciting enough for people to kind of listen to that and say, that sounds like something we should solve. And as society we need this. So balance those two out. And again, thats not easy. And I think almost everyone, at least again on this side of the pond, potentially underestimates the level of preparation that needs to go into that, to get that nice and clear and to run that really as a process. 

Brett
Lets imagine that an early stage founder comes to you and they say, renee, I want to sell an enterprise product into HR or into learning and development teams. Based on everything that you know from your previous experience and everything youve learned from building this company. What’s the number one piece of advice that you’d give them? 

René Janssen
Call up yourself. Go on LinkedIn, call your friends, call whoever you might know kind of a lot around until you find five or ten or 15 people that are your potential buyer. Tell them to be as critical as possible and pitch the product you want to have in six months or twelve months as if you had it today, and ask them totally burn you down because they will come up with all kinds of questions and challenges that you really honestly hadn’t thought about by yourself. And if you can fix that, then you have a great product, then you can sell it. And great products that you can sell, you can scale, you can get investment for, and I think really focus on those real needs of your clients and make sure you understand them to the nth degree. That’s ultimately what it’s about. 

René Janssen
You can go back to what we said about Rocket maybe for a second, and I was probably faced out with enough marketing, you can ultimately sell anything. But the unit economics arent always going to make the sense that you want them to make sense. But if you have a great product that really from your specific buyer and make it as easy as possible, dont you use the cafe open enterprise, but pick an industry, pick a market at the fine enterprise even more narrowly understands what keeps them awake at night, and you can fix that, then you can scale it. 

Brett
Final question for you then well let you get off and get some sleep. Lets zoom out three to five years into the future. Whats the big picture vision here? 

René Janssen
The market we’re in is extremely fragmented. Every single market around the world has local players, and the biggest players per market have low single digit market shares. If we are serious, and I think I am, that human capital is the most important asset for people, for companies who stay competitive, and that we really need to invest much more in how we battle those burnouts, keep people happy and keep people kind of productive. There’s going to be a couple of handful of players that really dominates the people development space, and I’m convinced we’re all positioned to be one of them. 

Brett
Amazing. I love the vision and I can’t wait to have you on in three or five years to talk about all of the progress and all the success that you guys have had. We are up on time, so we’re going to have to wrap here before we do. If there’s any founders that are listening in that want to follow along with this journey, where should they go?

René Janssen
You can always send me a direct message renebai.com or follow me on LinkedIn.

Brett
Amazing. Rene, thanks so much for taking the time. 

René Janssen
Thank you, Brad was a pleasure. 

Brett
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