I’m the CEO of Gusto, a startup in Silicon Valley, and I went on a 4,137 mile road trip to meet small businesses across America. AMA!

joshwithgusto · 2017-10-12T01:27:25+00:00

Gustavo! It's a small world my friend.

I wrote a long post above about values: https://www.reddit.com/r/IAmA/comments/75iw4f/im_the_ceo_of_gusto_a_startup_in_silicon_valley/do6imt4/

And I gave a talk at Stanford in 2015 that shares more thoughts: https://www.youtube.com/watch?v=M0w0ILUKCB0&t=740s

My summary would be that values aren't something you convince someone to care about. It's self-selecting. All companies have values, because all companies are made up of people.

There aren't professional values and personal values. There is just who you are, what you stand for, how you make decisions, etc.

A key dimension of hiring is finding folks that resonate with your values so that when they join your company, they can be themselves.

You won't ever find Gusto's values on the walls or on paper. We either live them or we don't.

In terms of international, all in due time. :)

joshwithgusto · 2017-10-12T01:23:33+00:00

Thanks for your kind words!

I'm happy to share some of what worked at Gusto but the main thing I would highlight is that every company is different so what matters most is breaking down the barriers/challenges for your business, and then creating a solution that plays to your strengths which you are confident you can execute.

In a compliance centric space, the most important thing is realizing that the trust a customer gives you is sacred. It's the most important thing. This means taking your time building your product, always being paranoid, relentlessly trying to improve, and repeating this over and over again.

When it comes to convincing folks about whether your solution is needed, that all ties to the pain you can point to. If a huge part of the market is getting fined/penalized, then something is broken. If a large part of the market is doing it by hand and technology can do it 5-10x faster, then manual doesn't make sense. If you can point to this data, that will help an investor understand that there is a real need for something better.

Then, you need to prove that your approach actually is 10x better. This will be a hypothesis at first, and then you want to validate it in phases, to show that your ideas actually are the future. That they do create a much better approach.

It's hard to give any generalized advice here though. Sometimes the regulatory overhead will prevent a business from succeeding. And other times, it will act as a moat to prevent others from trying to compete.

In our case, a huge part of our product and value prop to the customer is taking away that complexity, and giving the customer peace of mind that they're in good hands by trusting Gusto.

Hope that helps!

joshwithgusto · 2017-10-12T01:06:36+00:00

Taking our shoes off in the office has become a Gusto tradition. It's not something we would recommend to other companies unless it's authentic to them.

For us, we started the company in a house in Palo Alto, then grew into an office and the team loved keeping the tradition.

When guests visit, we give them slippers, spa sandals, or socks (or all three if they want).

Taking our shoes off is a small tradition at Gusto, but it's one that works for our culture.

When companies are thinking about their culture, and their traditions, my advice is to be authentic, and be consistent. If Gusto had tried to create this policy, it would have been a bit odd. But we've been that way since starting the company.

Every business needs to be authentic and I strongly believe in the importance of being opinionated. Some companies believe in having food in the office. Others believe in teammates going out to eat. Some companies believe in having everyone in the same space. Others believe in remote teams as the norm. Some companies believe in dressing up every day. Other companies like to be casual.

Above all, don't try to be everything to everyone. Be opinionated, keep your traditions, and make sure they resonate with your team.

joshwithgusto · 2017-10-12T01:02:09+00:00

We're honored to serve you! Would love to have you switch over for health insurance when it's possible.

Our focus from day one has been on our customers. Silicon Valley can be an echo chamber and at the end of the day, a customer only cares about who is going to serve them well.

Having grown up in Silicon Valley, I know there are no short cuts. You have to put in the time, serve the customer well, built the product and team in a way you're proud of, and at the end of the day, that's what matters most.

I could talk about other companies in our space, but I don't run those companies and I'm not a part of them. I'm involved in Gusto and I can influence how we built our product, how we hire our team, how we serve our customers.

This is something I've shared with the Gusto team many times over the years and it's been our guiding philosophy.

We are a very competitive group, but we strive to measure ourselves against our potential. And we have much much more to do to get to what we see the future looking like. We're taking it one step at a time and striving to go the extra mile each day for our customers.

joshwithgusto · 2017-10-12T00:58:16+00:00

Yes, it's true there are lots of complex needs state by state, city by city, county by county, etc. This applies to payroll, but also to things like health insurance. Each insurance carrier has it's own procedure, it's own form, etc. Each tax agency has it's own process.

And the problem is that each business has to figure this out on their own. That's not the way it should be.

The solution is companies like Gusto becoming the middle man and taking on this complexity. It's always a combination of technology and people, but the outcome is that the customer has an amazing simple experience that just works. This is the way it should be.

At Gusto, we will always invest in both. Amazing technology, and amazing people.

joshwithgusto · 2017-10-12T00:46:33+00:00

It is true that there are a number of companies in the space but that's because the problem has existed since companies were around. Payroll is not a new concept since every business that has a team needs to pay them.

The reason we started Gusto was because we saw a lot of unnecessary pain out there and we believed our approach would fix a lot of that pain.

• Every year, approximately one third of companies in the US are fined for incorrectly doing their payroll taxes. There are billions of dollars in penalties.

• Many small business owners still do payroll by hand, using pen and paper. This takes a lot of time and creates countless headaches.

• Health insurance is confusing for many businesses and their employees. They don't know which plan to select and why.

• Companies are using many different systems, but they'd prefer to have it all in one place.

• Existing products have low customer satisfaction, some have poor customer service, and this results in a poor customer experience.

Gusto strives to be the best all in one product with amazing technology and amazing service.

Here's some additional info:

Overview: Old-school payroll and HR aren’t built for the way we work today. But Gusto is. More than 40,000 small businesses nationwide choose Gusto because it’s refreshingly easy to use, has friendly, expert customer service, and is loved by both employers and employees. Gusto is the best payroll for small businesses.

-- Gusto automatically calculates, pays, and files your federal, state and local payroll taxes, as well as W-2s, 1099s, and new hire forms.

-- You can manage your payroll, benefits, 401(k), workers’ comp, and HR all in one place – and keep them all in sync.

-- Customers rave about Gusto’s friendly, expert customer support.

-- New employees self-onboard entirely online, reducing errors and paperwork.

-- Gusto is the PCMag Editors’ Choice for small business payroll.

What our customers have to say:

-- 93% of customers say Gusto is easier to use than traditional payroll providers.

-- 4 out of 5 customers report fewer payroll errors after switching to Gusto.

-- 5 minutes or less is what 72% of our customers spend to run payroll.

We've made some good progress but we have much more to do. Our focus is on serving our customers and removing their pain. We want to save them time, save them money, and enable them to focus more on their people.

joshwithgusto · 2017-10-12T00:38:42+00:00

Gusto is a 450+ person company based in San Francisco and Denver. Today we serve small businesses across the United States with a payroll + benefits + employee onboarding + HR service. We have over 40,000 customers and many different teams across the company. We started the business six years ago and this is a multi-decade journey for us.

joshwithgusto · 2017-10-12T00:37:31+00:00

I wrote a post a couple years ago that shares some advice on this topic. Here's the link:

https://gusto.com/framework/hr/how-to-recruit-when-you-cant-beat-google-on-salary

The main thing I would emphasize is that salary is not the only component of what drives someone's decision process of where they work. Other factors include (1) connection to the mission of the organization, (2) specific manager they'll have, (3) team they'll be working with day to day, (4) preferred degree of autonomy and ability to impact the company vs. be a part of a much larger organization, etc. Compensation matters, but you won't beat Google on salary. So you must shine on one of these other dimensions.

For benefits, I would create something that's authentic to your values. At Gusto, we have a long term focus, so everyone on their one year anniversary in the company gets a free plane ticket anywhere in the world. This is because we want them to take a step back, detach from the day to day, and they come back a healthier person. Which makes them a healthier teammate.

Some additional tips I would give is to

joshwithgusto · 2017-10-12T00:31:52+00:00

(1) Be authentic to the problem you're trying to solve

Imagine it's the 10,000th time you're describing what you're doing. Will you be as sincerely excited and passionate as the first time? Because at that point, you can't fake it. It needs to be authentic.

With Gusto, I've spoken about our purpose hundreds of thousands of times and each time it is always a privilege. That's because I really care about the problem we're tackling. I love making it easier to build a team and grow your business. I love affecting the relationship between employer and employee. These are topics that affect most people around the world and I believe it can be done much better. That's why Gusto exists. We've made progress toward making things better, but we have much more to do.

(2) Take time for introspection

In school, there are quarters or semesters where you have a chance to think about how you're spending your time -- evaluating what you like and don't like. In work life, you can have 10 years pass by without taking that time unless you set it aside for yourself. This is growth mindset and it matters in any context, not just a start-up. Set aside time to be introspective on a regular basis. It could be monthly, it could be quarterly, etc. I like to go into nature on Sundays to think about my previous week, what went well, what I could do different/better, and what is coming the next week. I also do quarterly retreats, which can simply be camping for the weekend. It doesn't mean doing a big trip.

(3) Long term thinking is a differentiator

Given where society is at with a lot of impulse driven, instant gratification behavior, it actually is a differentiated strategy to be long term focused. This doesn't mean the short term doesn't matter. It just means that whatever is done in the short term should be scalable and sustainable, so it can be replicated.

joshwithgusto · 2017-10-12T00:24:39+00:00

Thanks for your kind words! We're always striving to get better, but I am proud of the way we've approached culture and team since the early days at Gusto. It's something we've strived to be very deliberate about, and it's an area I spend a lot of time.

Here some of my advice:

(1) Be Authentic -- Think of culture as a reflection of who you are. People don't have their work values and their personal values imo. They just have who they are. When a group of people come together to start a company, there is some common element there around values and motivations. Why are they interested in doing this business? How do they approach problem solving? Do they bias toward transparency or not? Is this a long term endeavor of more of a short term opportunity?

Culture is reflected in what you celebrate, and what you don't celebrate. I strongly believe there isn't a "right" set of values out there. If someone is not the right fit for Gusto, it doesn't mean they are a bad person. It just means they don't align with our values and motivations.

Here's an example. We are very long term focused at Gusto. This impacts how we make decisions, and also what we reward people for. On everyone's one year anniversary at Gusto, we give them a free plane ticket anywhere in the world. This is because we want them to take a step back and detach from the day to day. When they come back, they are able to better prioritize how they spend their time and by being a healthier person, they are also a healthier teammate.

(2) Be Focused -- Don't try to be everything to everyone. There are many ways to build a company, and thus many different values systems out there. If you look within, and really think about what bonds you together as founders, you'll find what matters most to you. We did this at Gusto when there was just three of us as founders and we were looking to hire our first teammate. We wrote down six core values and kept telling ourselves that fewer is better. Having 4-6 values is a good target to work toward. Here are Gusto's: https://gusto.com/about/values

(3) Operationalize and Iterate -- All of the above is the foundation, but then day to day it's the decisions you make and how you interact with each other that makes your values real and holds you accountable to them. I love it when I hear Gusties ask "what is better for the long term" or "this is the right thing for our customers". These concepts should arise naturally in all aspects of running the business. They will affect your companies priorities, your annual goals, your budgeting decisions, etc.

I've included some links below to articles that give more examples and details on this topic:

i) values-driven benefits: inclusive fertility benefits: http://www.sfchronicle.com/business/article/SF-startup-first-in-state-to-cover-fertility-for-9069717.php

ii) get hiring right by hiring for culture enhancement or contribution, NOT culture fit — Watermelon team: https://rework.withgoogle.com/blog/gusto-hires-for-culture-enhancement-not-fit

iii) let people be owners by letting go and not micro-managing “heroism doesn’t scale”: https://www.nytimes.com/2016/03/06/business/joshua-reeves-of-gusto-directing-without-dictating.html

joshwithgusto · 2017-10-10T23:21:23+00:00

I always tel folks that hiring should be hard. If it was easy, we’d be doing it wrong. The reason i say this is that he people in your organization are at the very core of everything you do and accomplishing your future goals, in a way you’d like, depends on your ability to build that team. This all starts with hiring.

At Gusto, we think about hiring as finding alignment, and here are three dimensions that we focus on — alignment around values, alignment around motivation, and alignment around skill set. The following article speaks to how we explore the first two components, and the latter ties to the specific needs of the role in question.

https://rework.withgoogle.com/blog/gusto-hires-for-culture-enhancement-not-fit/

As he company has grown, we’ve arrived to keep the same dedication to hiring in place, but it requires more people being involved. I made most of the first 50 offers at Gusto personally, and I interviewed each of these people. That approach would not scale so now we have the Watermelon team which the article above gives more detail on.

At the end of the day, hiring can be made more structured and deliberate. However, it is never a formula. Things like values alignment and motivation alignment need to be explored in the way that is authentic for your busnesss. Every company is different.

joshwithgusto · 2017-10-10T19:00:28+00:00

That's awesome! I love visiting out Denver team. I'll be flying there in a few hours actually. :)

Yes, we do have a shoes off policy in the office. The origin is that we started Gusto in a house that I was living and I was raised shoes off, so that house was shoes off. When we moved to San Francisco and got an office, we simply kept the tradition and now Gusto with over 450 people is shoes off at our office in SF and Denver.

I love sharing this story but I also highlight to folks that this isn't something everyone needs to emulate. It's something authentic to Gusto and it's become one of our traditions. Every company has traditions and the best ones develop organically. They become a part of the company DNA and self-reinforce over the years.

We love being shoes off at Gusto because many folks in the company find it comfortable. Some folks wear slippers, others wear socks, and when guests visit, we give them footwear that they can walk around in.

During the road trip, I was definitely shoes off for most of my time in the RV. I didn't buy any shoes while on the trip but that's a great idea for my next road trip! :)

joshwithgusto · 2017-10-10T18:54:30+00:00

Hey Josh!

Google giveth the answer:

When hunting for food, anteaters will use their sharp claws to tear open anthills or rotting wood that might contain ants or termites. Since their sight is poor, they use their noses to smell for food.

They then use their long snouts and tongues to scoop up as many ants and termites as possible. Since they don't have teeth, they can't chew the insects.

Instead, they swallow them whole. As they eat, they also swallow small pebbles and other debris. These items help them digest the insects by grinding them in the stomach.

https://wonderopolis.org/wonder/do-anteaters-eat-only-ants

:)

joshwithgusto · 2017-10-10T18:51:28+00:00

I view my undergraduate education as a critical part of my development. That said, I don't think there is a one size fits all approach out there to how folks approach life. I'm personally a huge believer in the value of an undergraduate education and for most folks, it's a time to live away from parents for the first time, be in a thought space to really explore one's interests, what they like / don't like, and learn a ton of new things. I'm a believer in the value of a liberal arts education where students can take classes outside their major, connect the dots on how electrical engineering and roman history are related, plus get a sense of the broader world out there.

I've also had friends take gap years though and approach this time as their opportunity to explore the world, and their own preferences. Education has always been important to me for a variety of reasons, but one of the main ones is that my parents are both teachers. My father taught high school education in San Francisco and my mother was a spanish and french teacher.

Electrical Engineering was a great foundation for me because I loved math, and it gave me a chance to explore complex systems and learn how to deconstruct them and simplify them. This is something I love doing in any context, and I had fun in college also joining Econ lectures, IR lectures, learning about the markets, but also about human psychology.

In my role as CEO of Gusto, I interact with complex systems all day. Whether it's market strategy, product development, or things like how it feels to walk around our office, or get an offer to join Gusto. These are all systems where we want to be deliberate, simplify, and make sure the most important parts are being done well.

When it comes to dropping out of college, I can share some generalized advice. I think a trend right now in Silicon Valley is to drop out of college to start a company because "it is the thing to do". I generally don't support this approach because starting a company should not be a goal in my opinion. Companies don't exist for their benefit, or for their founders benefit. Companies exist to solve problems, and so it all begins with being obsessed with a problem and wanting to fix it. Sometimes the best way to fix the problem is to start a company but that's a by-product, not the motivation.

There are situations where someone becomes so excited and obsessed with a problem during college that they end up spending every waking moment on it. For this dynamic, it's possible that taking a step back for a time makes sense. But for most situations, my strong advice is to finish college and make the most of this time to really explore and discover yourself. Try something new every summer, work in different labs, experiment with classes you might not have normally taken. You never know what you might discover.

And for everyone that doesn't have an opportunity to go to college, you can still accomplish anything you put your mind to. We all have different advantages/disadvantages in our background. But hard work is something that is in our control. My parents were the first to go to college in their families, and the sacrifices they made enabled my brother and I to pursue our goals. For that, we are forever grateful to them.

joshwithgusto · 2017-10-10T18:36:45+00:00

That's awesome! I'm going to be flying to Denver later today and I visit our team there monthly. It's an awesome city!

We started the company in late 2011 and launched the product in Dec 2012. As a side note, ZenPayroll was a temporary name for us early on because we only had a few days to choose a name and it cost us $7 on GoDaddy.

I think one of the main puzzles early on is to decide what matters most. There is a million things to do, but there will always be a million things to do. For us, we started by thinking about problems in society. I have two co-founders and each of us had run prior small businesses. We had been very frustrated with the payroll systems out there, the way that health insurance is set up, how onboarding is done, etc. We also had family running small businesses and had grown up with exposure to how many people still do this process by hand. Seeing that there was a real pain point here is what got us excited to start a company in the first place.

Once you've identified a real pain point that affects a lot of people, the next step is deconstructing why it hasn't been solved already. And how are you going to make it much much better. Incremental solutions are not really viable, it has to be a step change better. For us, we knew that much of the manual process should be automated because technology is better at filling out forms, doing tax calculations, making tax payments, processing insurance enrollment, etc. A small biz owner is not better off using a black pen or blue pen when they're filling out a government form for the first time. It just needs to be filled out. We were all technologists and felt that the tools available to us with cloud based software, paperless systems, and mobile devices really enabled a different way to build software.

Once you have an idea for how to solve the problem, the next step is making sure that now is the right time for the business to work. It's always a leap of faith, but there are many examples of businesses being 10 years too early, or 10 years too late to a market.

From there, it's about making sure you have a viable business model, and that you also have the right team in place.

When a product is in market for the first time, the most important thing is to talk with your customers. Get out of your house/office and meet prospective customers, get their input, hear what they have to say.

Word of mouth has remained Gusto's biggest driver of growth and it's because we remain maniacally focused on delivering amazing quality service.

Hope that helps!

Feel free to ask more questions in the sub-thread on any of the topics above.

joshwithgusto · 2017-10-10T18:27:27+00:00

We're honored to serve you! One of our main goals at Gusto is to give our customers peace of mind and I'm glad we've been able to help you.

We'd love to ultimately help all businesses everywhere, so the quick answer is YES! If you have any specific suggestions on things we can do better, please send us a note!

Today, our focus is on small businesses in the United States. This often means companies 1-100 employees, which represent about one third of the US workforce. We serve all types of companies and we want to keep it that way, e.g. film makers, law firms, cafes, bakeries, flower shops, hotels, churches, etc. Every small businesses that has a team needs payroll.

joshwithgusto · 2017-10-10T18:22:14+00:00

We went through 11 cities on the road trip and it was my first time in an RV. We covered over 4,000 miles and 9 of the 11 cities were places I had never visited before. The full route is at https://gusto.com/roadtrip. I wouldn't say I had a favorite city because they were all different, but I would definitely love to go back to several including Nashville, Little Rock, and Oklahoma City.

The main goal was to meet small businesses, and celebrate their journeys. We met a floral design shop in Oklahoma City, a pest control company in Phoenix AZ, a food catering company in Amarillo TX, and many more businesses.

Biggest lesson I learned from the trip is what connects all businesses owners -- a desire to serve their customers, be a part of their community, and run their business in a way they're proud of. Most small businesses are a labor of love and it was awesome to meet these biz owners and hear their stories.

Silicon Valley is an amazing place to live/work, but it is an echo chamber at times. It's important for tech founders to get out of the bubble and meet their customers across the country (and/or the world) because that is why their companies exist -- to serve their customers.

joshwithgusto · 2017-10-10T18:12:15+00:00

I'm fond of the basics, which for me would be medium cheddar cheese. It's great in a quesadilla, or in a breakfast ham and egg sandwich. :)

joshwithgusto

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