Your Next Cofounder Is an AI | Edward Kim, Co-Founder & CTO of Gusto ($10B)

0:00Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college pc. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more.

0:42Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. In 2030, every small business will have a co-founder type agent that is running their business for them. And they're really just focusing on why they started that business in the first place. This is Eddie Kim, co-founder and CTO of Gusto, a$10 billion company, millions of businesses run their payroll benefits and hiring on.

1:19They just launched Gusto co-founder, an AI that runs your back office. You just approved the important stuff and it might just change the way we run business itself.

1:27Edward Kim:Just imagine like the amount of time savings that a business gets when they no longer have to like babysit these like AI has accelerated so many things. Actually, these like 10 things that you have, these are the bottom of Excel. If you have this very powerful AI that knows everything, what does it change in the way you run your business in like two or three years? Will it be able to help you make strategic decisions? Yeah, I mean, we live in this interesting time when everything's changing. changing. And I'm sure a lot of small business owners are using Gusto and they're also listening to this podcast.

2:01Can you talk about what AI is changing for small business owners? Because a lot of people are not using it yet. They're like, oh, I used it a little bit. I haven't seen any impact. Yeah. Well, we're seeing in our data, a lot of small businesses start starting to use AI to help run their business. And I think maybe even a little bit more so than your average like tech startup or enterprise business. And I think the reason why is because just out of necessity, right? Small businesses have so much less resources. They have to be a lot more creative. So we see a lot of small businesses actually use ChatGPT and Anthropic and Cloud and things like that to help run their business.

2:39I'd say a lot of them are still using it a little bit more as like a chat bot or like a question and answer, maybe more of like a search type functionality and occasionally content creation. But I think there was a huge next level of unlock that we're starting to see some of the even more on the edge small businesses use AI for to help automate and actually run large parts of their business. So you would say level one is this chat bot, level two, what would you say? Level two is like, is yeah, I mean, you can call it agents, but really it's moving one step up from the like question and answer, like search type functionality and the content creation functionality and more into like, here's my business that operates.

3:20It has a set of processes that are usually recurring, like running payroll, approving timesheets, approving time off, things like that, that I have to do week in and week out. And now I can have AI through agents, through a product like Gusto, actually run all this for them. And they can be involved as much or as little as they want, But we're seeing some of the more cutting edge small businesses be more comfortable with being less involved and maybe just kind of like saying responding yes on their phone. Like, I approve this. But really, Gusto is doing everything else for them. That's, you know, when it comes to things like payroll and taxes, there are so many things that you just don't know about.

4:01Like, if you don't know, you don't know. And things just go on by themselves. And I've read that you actually saved small businesses$70 million in tax credits. Can you talk to me about this? Like as a small business owner, right? If my CPA doesn't tell me anything, I don't know it exists and I'm losing those dollars. Does Gusto do that for you? Yeah. And that's one of the ways that we're leveraging AI. We're using AI to analyze all the things that we know about a small business and proactively letting them know of things that they should be doing or the things that they should know about to help improve their business.

4:36And what you just referred to is called the R &D tax credit. When you're like developing something? You're developing something. It's a tax credit that's given to any business in the U.S. that's doing some sort of qualified research. Now, here's the thing. Many people, including myself, when I first learned about this, think that it's only applicable if you're doing some sort of like hard science type research, like you're trying to build like a nuclear fusion reactor or find the cure to cancer. but actually it's available to a lot more businesses than you may think. And we help this one company called Kibana Pools, where we use AI to let them know that they are actually potentially eligible for this R &D tax credit.

5:22And not only did we do that, we actually helped them fill out the forms, also very much assisted through AI that they then submitted to the government agency and ultimately got like, I think it was like$50 ,000 in R &D tax credits, not just one time, but year after year. And they've actually been increasing the amount that they're getting. So literally the tax credit, if you're not familiar, there's a difference between deductions and credits, right? Credits is literally the same as the government just mailed you a check. So I remember doing this for my business for LinguaTrip, and I think it was dependent on how much we're paying our CTO.

6:00Does there have to be a specific person who's responsible for...

6:04Edward Kim:Yeah, that's one of the, so basically like the way it works is like you have like a set of like expenses, things that you spend money on that like fall in this bucket of research, right? And some of that is like, oh, I bought this like fancy equipment, right? But some of it is also like, I spent a percentage of my time researching this new way to do something, right? And so that is also an expense, right? Because that's part of your salary, right? So if your role is primarily in doing some sort of research or development or really just innovating in some way, you can claim the R &D tax credit, the part of your time, aka your salary that is being spent towards that.

6:46Right. And again, like it applies, of course, to like hard sciences. It applies to software development. So if your title is like primarily a software engineer and you're building something that doesn't exist today, but also applies to a lot of small businesses are innovating on different ways to do whatever that they do. Right. Absolutely. Especially with AI. I feel like everyone is trying to build something for their company. Exactly. Yeah.

7:11Edward Kim:They're trying to run their business a little bit more efficiently through AI. right? And they don't have, they're experimenting, they're researching how to do that. I think that would qualify as potential free credits that they would get. One of the ways that we can help small businesses, we do help small businesses, is AI can like analyze all this data that we have about every single individual customer that's using Gusto and tell them, hey, you're eligible for this tax credit. We think it's going to be about X amount, right? And by the way, we've also done most of the work for you, filled out most of the form.

7:45Edward Kim:All we need you to do is review it and sign it. And there's a good chance that you will get this tax credit. Right. And it's like as a small business owner, you're like, whoa, that's just like free money that I didn't. I just like kind of found like some money in my jeans that I didn't know about. Right. Like you should be absolutely getting that. And I think that's one of the ways that AI can really help small businesses. Is that what co-founder does or what is this new gusto co-founder thing? So that is kind of in the same vein of what Gusto Co-Founder does. Co-Founder takes the way that we've kind of thought about how are most people using AI in a small business and how do we level it up to do a lot more for the small business, right?

8:25Edward Kim:And essentially what Co-Founder is, it is a tool that allows you to automate anything and everything about your small business. That could be things that we already do for you, like running payroll or proving time off. But it could also be things like emailing your customers, right? Or texting you the weather today. And, you know, one example is like a tour guide company, right? Where they have a list of guests that are coming in to get a tour and it's going to rain today. And so the small business owner uses Gusto Co-Founder to set up an automation that says, send me a text message every time it's forecasted to rain today.

9:03Edward Kim:And if it is, if I reply with yes, go ahead and email all of my guests that are coming in today to let them know that it's forecasted to rain and that they should wear something warm or bring an umbrella. Does that mean you're connecting your CRM to Gusto or how does it get all the information about customers? Yeah. So you can think of Gusto Co-Founder as a mashup between all the best parts of, for the tech folks out there, OpenClaw, Claude Cowork, and Gusto. So what about it is kind of like OpenClaw? One of the primary features of Gusto Co-Founder is that you don't actually really interact with it through our website.

9:43Edward Kim:The first thing you do is you set up text messaging connection. So you communicate through text. You can communicate through Slack if you prefer. So basically, you can communicate with it and work with Gusto Co-Founder anywhere that you're at. You don't have to be in front of a computer. then we add in a bunch of connectors those are mcp connectors you can connect gusto co-founder to things like your notion your spreadsheets things like that and thirdly and finally it comes out of the box with everything that gusto already does for you right so it has knowledge of all of your people what jobs they hold how to contact them it has knowledge of your payrolls and it can take action on all of those things as well.

10:29Edward Kim:And when you combine those three ingredients together, you get something really, really powerful for small business. If I'm a small business and I'm, I just started talking to Gusto co-founder, what is it going to look like? Is it going to ask me like, do you want to run payroll or suggest stuff? Yeah. So the first thing it does is you go through like a really short onboarding. And the first thing it actually does, it asks you for your phone number and then it kind of establishes connection you've you you verify the code and everything and now like you can like now it has a second second way to communicate with you not just through the web app uh but typically through the web app when you log in there's like a you know you you'll see a big chat um input you'll see a bunch of ideas these ideas are like things that we think that gusto co-founder can help you automate for your business they're not personalized yet but we we're we're we just launched it and so So like, yeah, definitely the idea is to like, where is your 401k?

11:24Or where is your health insurance?

11:25Edward Kim:So if you have like a lot of hourly employees, right? You have a different set of things like timesheet approvals and things like that. That probably wouldn't make as much sense if you're a tech startup where all of your employees are salaried, right? So we obviously have all that data and we can kind of like customize the like, the out of the box automations that come with Gustavo Co-Founder. We could even do it, by the way, by verticals, right? So the processes that a dental practice has might be a little bit different than the process that a doctor's off, a medical doctor. Yeah, a content creator, right?

12:00Edward Kim:And so you can get really hyper-personalized. And the cool thing is that Gusto has a lot of this data to sort of curate, here are the problems that either we're already solving for you, that we can solve even more for you, or here's some new things that like you might want to think about. How does it know my process? How does it learn about it? So you have to, you basically, you tell it, right? You say like, here's how I run payroll every single week. I talked to this one business on Gusto that is like a spa slash massage, right? And a lot of times, this is actually very common. They track the work of their therapist, for example, in one system.

12:45like let's say for example mind body whatever you use for booking right yeah for booking that that information is in one system then they actually export data from there they put it

12:55Edward Kim:into google sheets and then they have all these calculations right so in this case um they say oh if the massage therapist um performed you know this many 60 minute massages and this many 90 minute massages then we'll pay them this much for each amount right and if they uh upsell like hot stones or like cbd oil they get 15 each time that they do that right so then they have to like calculate all that right and then also tips right here's how we manage our tips we pull it and here's how it gets split up based on seniority and things like this it's pretty complicated and so they actually spend a lot of time in that step to figure out what to put into gusto right what's the bonus what's the tips what's the commission and then when they do that when they hit the run payroll in gusto as you probably know it's very very fast and very easy right but it's kind of what I call the work before the work.

13:46Yeah.

13:47Edward Kim:That actually takes a lot of time and that sits in their processes and in their other systems. So yeah, the business has to like kind of, kind of, a lot of times they actually have this documented in a Google Doc somewhere, right? Because they give it to some employee and they say like, just run this payroll for me. Here's the process that we run. All they do is copy paste that into Gusta Co-Founder and just say, just do this for me every week, two days before my payroll is due. and let me know before I can have a chance to approve it. Zootopia 2 has come home to Disney+. Let's go! Get ready for a new case.

14:22We're going to crack this case and prove we're the greatest partners of all time! New friends. You are... Gary the Snake. And your last name? The Snake. Dream theme. New habitats. Zootopia has a secret reptile population. You can watch the record-breaking phenomenon at home. You're clearly working it. Zootopia 2, now available on Disney Plus Rated PG. Tomorrow morning is knocking. Stock your fridge now. How about a creamy mocha frappuccino drink? Or a sweet vanilla? Smooth caramel, maybe. Or a white chocolate mocha. Whichever you choose, delicious coffee awaits. Find Starbucks frappuccino drinks wherever you buy your groceries.

15:02Can you talk about other use cases? So running payroll, I feel like it already saves a lot of time. Can you give me more like intermediate to advanced use cases? I know our business is different. What those small businesses can do in the first week to start actually saving hours. Yeah. So hourly employees, like there's this like kind of like wild goose chase that happens to a lot of our customers. And if you're a small business on Gusto, you have hourly employees and you have like,

15:30Edward Kim:let's say in 20 employees, you actually have managers that are managing those hourly employees. every single week you go on this wild goose chase of like some getting people to submit their timesheets right so everyone's supposed to submit their timesheets by a certain time you know on friday or whatever and many people just don't do it they don't clock out um and so you start slacking everybody hey can you submit your timesheets how much how much hours did this person work because they forgot to clock out and it says they worked 24 hours which is obviously not possible there was a mistake there and so that's one of the things that gusto co-founder can actually do for you right text on your behalf on your behalf because it connects to like text and and slack right so if your company is using slack gusto co-founder not you as the human ceo uh is now going on this wild goose chase for you so you don't have to worry about it it's going to slack your manager and say hey um employee a and c didn't submit their timesheets uh can you have them go submit it.

16:30Edward Kim:And then once they've submitted, can you actually approve those timesheets? And then I'll check back with you in a day to see if it's all taken care of, right? And at the end of the day, the CEO just gets a status report from Gusto co-founder saying, hey, I'm tracking these three people to submit their timesheets. If I don't hear back from them by Friday, I'll let you know. And that way you can kind of go ping them yourself. What about taxes, health insurance? Is that part of what Gusto co-founder does? Yeah, so a big part of it is also just kind of not just like helping them automate the business processes that a small business has, but also just being very proactive about things that the small business may not know that they should be doing or things that they should know about, right?

17:14Edward Kim:So compliance is a huge aspect of what we do at Gusto. And there's a heavy compliance tax that businesses have to face, right? every month or a quarter there's new tax laws that come up and many of them actually apply to small businesses you see them in your city, local propositions that you have to vote on and those kind of translate to new rules or laws that a business has to know about, right? And there are like tens of thousands of these, how can you expect a small business? To just catch up with everything. Yeah, to just know everything and so the thing that And like 90 % of those probably don't even apply to your business because a lot of them are like, if you're in this industry or if you have people who are above the salary or you have more than five employees.

18:01Edward Kim:And so what Gusto can do is take everything that we know about that business and take all the compliance knowledge that we have. And then we proactively let the customer know, hey, this is something that is a new thing that you need to be thinking about. Right. And for many of those things, we also just have a button that's just like take care of it. for me, right? You just click that button and Gus the co-founder, if it's able to, can just take care of it for the small business. So there is this like proactive, like, here's things that you may want to know about that you haven't asked me about, right?

18:34Edward Kim:And that's a big part of what Gus the co-founder does as well. Does it suggest, because this is a big problem for me, I actually built an agent that runs through my QuickBooks and like analyzes everything that's going on with my revenue and then tells me like, hey, you can be optimizing your taxes with these tax strategies. Totally. And then I bring them to my CPA. Yeah. And she tells me whether it's good for me or not. Right. Is there something that Gasto co-founder can do? Like, as you said, identify some expenses that would be eligible for R &D or say like, hey, I don't see your 401k. You could be saving a lot of money or you're overpaying for health insurance.

19:15shall we move you on a different plan? Because they raised your prices by 20 % again. Exactly. That's what they do.

19:21Edward Kim:Yeah. I mean, you could even take it a step further. You can basically, you just have a chat with Gusto Co-Founder either through a web interface or maybe you just have some free time. You just have that idea and you just send Gusto Co-Founder a text message saying exactly what you did. And it'll connect. You have to authorize it, of course, but it'll connect into QuickBooks or there's actually a lot of expenses that businesses have on Gusto as well, right? Because there's an expense reporting, expense reimbursement feature that we have. And you tell Casa Co-Founder exactly what you just said.

19:53Edward Kim:And then you can also just say, hey, write this report for me. And this is the email address of my CPA and email that report to the CPA so that they can kind of like get back to you. And when they reply, send me a text message that they replied and give me a summary of it. That's all possible with Gustav Co-Founder today. If you want to stay ahead in the AI era, follow Silicon Valley Girl podcast on your favorite platform. New episode every week on AI careers and how to not get left behind. So once it has access to all of this and it already has access, what does it change in the way you run your business in like two or three years?

20:37If you have this very powerful AI that knows everything, Will it be able to help you make strategic decisions and what type of decisions?

20:43Edward Kim:Yeah. I mean, so first of all, just imagine like the amount of time savings that a business gets when they no longer have to like manually babysit these like processes, right? They actually take a surprising amount of time. So I think first of all, like that frees up the small business owner to like think about things that are more important to their business, frankly, right? How do I grow this business? What are some new products? Uh, what are some new things I should be researching? Right. And then, and then also, by the way, get more R &D tax credit for it. Right. Um, and so I think it just, step one is just like, it just gives a little bit more breathing room to small businesses, a little bit more headspace to think about the things that they should be thinking a little bit more longer term about.

21:28Um, but then also like with all the, you know, uh, compliance knowledge, all the data that we have about the, the, the business, again, we can kind of like proactively let them know, what things that they should maybe start to think about, right? Based on an analysis of their business. Yeah, of like that industry, like what's going on in that industry and you're part of that industry that might apply. Yeah, yeah.

21:50Edward Kim:So one automation, I think it might be actually one of our idea, our canned automation that comes out of the box is like, do a weekly analysis of what my competitors are doing and send me a report over email or Slack. slack me a report um of what's going on with our competitors and give me three ideas of things that i can do to um uh to to stay ahead yeah right and gusk co-founder will do that for you you'll wake up right yeah and and um i love those automations i have one for competitors and i also like running audit of like what i'm doing and inside ai inside my dogs and saying what can i optimize what do you very repetitive.