How Gusto Built a $9.5B Company with Co-founder Tomer London

20:22I remember in COVID, for example, there was like one of the most, like one of the major newspapers, I think it was Wall Street Journal, read with this like headline front page was like the end of small business.

20:33Turner Novak:Really? Yeah. Because of COVID, everything is closed. You see that picture, like everything's blocked with like whatever. So this was like a couple of weeks into COVID type of a timing of this headline? Exactly. And everything was shut down. And that was before the PPP loans or when people were talking about the PPP loans. And, you know, that whole period, there was like a period of like at least called like nine months where lots of major like analysts and people out there, you know, where the consensus was like small businesses is going to shrink and shrink and shrink. Because, you know, again, if you're a restaurant, how are you?

21:12It's kind of an obvious thing for a restaurant. people can't show up because they're stuck at home how are you going to survive and um i would i'll tell you that this was this was one of the craziest moments for us as a company not just because okay we all had to like a thousand people now had to go work from home but just like the very very focus our entire reason for existence as a company and our heart is focused on small businesses and how can we make them you know successful and all of a sudden you see this headline in Wall Street Journal and you're talking with people and they're freaked out.

21:44So anyway, that was a difficult moment.

21:46Turner Novak:So what happened over the course of March and April, like externally with your customers, like inside of Gusto, like how did that kind of go just throughout the like going into COVID, the depths of it coming out? What was kind of like series of events? Anything interesting that was showing up in the data, like initially where you're like, oh, wow, something is going on. Oh, yeah. Yeah, so what was like that roller coaster of events? Okay, well, there's a bunch in there, but I'll say, okay. I want to hear all the events. When you can build anything, Amplitude lets you know how to build the right thing.

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23:30Turner Novak:Startups to switch to Monaco book three times more meetings. Start growing your revenue faster with Monaco. Try it now at monaco.com. We basically have an economic dashboard internally in Gusto and we see things like hiring, we see things like wages, we see like PTO. We really see how employment works in the world of small business in the US. And you saw the rate of terminations just like jump to a rate that we've never seen anything even close. Really? The rate of new hires dropped to all times low by far, like kind of like, I don't know, it was five or eight times, you know, worse than the worst times.

24:11Was this like by the end of March, this was already showing up or even before that? It was for sure by the middle of the year, but it's hard for me to know exactly when it was.

24:19Turner Novak:But by June, I know that we definitely saw this. So within like a couple months of COVID, it was like very clear in the data. Right. Exactly. Exactly. Okay. And then we, you know, similarly, when we look at, you know, people's cash flow, you can see also, we can see like cash flow issues. We have access to understand that as well. So all the economic indicators were quite bad in those kind of first few months. But it made sense. It's not surprising. You know, you open the data and you're like, oh, my gosh, it was this. You see this every day when you walk around, if you walk around or if you open the TV.

24:53So that's the first thing. Second thing is that as a company, it was a really interesting moment because, again, we were 100 % in office and then we had to all move or go home. So that's kind of work from home. That was interesting. We're not the only ones there. We were around 1 ,000 people, I want to say at that point. So, you know, it's not a small change. But the other thing is we just finished the planning cycle. And again, sounds like a big corporate thing, but actually it's quite important. You basically decide what are the big efforts you're going to do this year? What are the new products you're going to release?

25:28What's going to be your, where are you going to put your energy as a team, right? And then COVID happened and we looked at this and we looked at the world and we just threw the whole thing. We just threw it out into the trash can and we asked ourselves, okay, what do customers need right now? And what customers needed when you spend time with small businesses, what they need is guidance. They need reassurance. They need to understand, okay, so what's the playbook here, right? What's the playbook? You know, there's a, there's a, there's a national or like actually a worldwide pandemic. What's a playbook?

26:00And there isn't a playbook.

26:01Turner Novak:I was going to say, yeah, that probably not happened very many times before. Exactly. So we try to build a playbook for it. We try to say, Hey, here are the things, you know, the best practices across all companies we speak with across, you know, like our conversations with the gut, with different government agencies, here's the best resources available for you right now. Let's make it really, really easy for you. So So, you know, there's a bunch of new, I don't know if you remember, but there was like a couple of weeks period or a few weeks period where every other day there was a new regulation or a new type of program that was launched by different states or the government in order to try to help people get through this.

26:38So there was like a forlough program, like how do you maintain people through forlough? There's like a tax incentive program to keep your employees if you're a small business. And then there was the PPP loans. And each one of these, we went in really, really, really seriously. and we actually changed our, we talked about left navs earlier in the conversation, right? We changed our left nav and the first item was not run payroll anymore. It was actually COVID-19 and what to do with it. So you click on it and then there was all these programs ready for you. We try to be super proactive. Like, hey, listen, in your state right now, there's this new tax credit.

27:11Click here. We're going to automatically fill out the form for you, fax this for the government, get the answer back and kind of make sure you got the funding that you need. And then with PPP, we spent an incredible amount of time with banks in order to quickly take the requirements for the government and make money available for our customers. And I feel incredibly proud of that work because we were, I think we were able to save quite a bit of businesses, quite a few businesses from shutting down.

27:42Turner Novak:It sounds like you kind of like productized a lot of these pretty complicated things that were happening and just made it as simple as possible for your customers to access and get to them. Instead of you going to the, you know, the government, the U.S. government website, downloading a form, slowly kind of filling it, trying to figure out from your data, like, you know, try to justify the size and like the impact of the PPP loan. Take that to your branch, talk with a teller, hope that they will do the right job. And then, you know, wait until they're them kind of giving you a response and all that stuff.

28:13Like you can just like in one click, we pre-filled all this information for you. There's a couple of questions that you had to answer on the spot. You click a button and you should get access to the PP loan very, very quickly. So something that we're really proud of, and interesting, in product land, we use NPS a lot over the years and Net Promoter Score. It's a number that we care a lot about, less about the actual number in an absolute term and more about the trajectory. And kind of the reading in terms of where's the momentum going, up and down, obviously. What are the comments? So people who are promoters to you, what are the comments and what do attractors say?

28:54And then also like segment it according to different types of customers. So that's how we use NPS. Something really special happened. We didn't expect it at all, or in retrospect, it sounds obvious maybe, but like NPS just jumped up to like, I want to say 88, 89, and stayed there for a very, very long time. And by the way, in our industry, if you have a positive NPS, meaning like larger than zero, you're ahead of the curve.

29:17Turner Novak:Okay. So this is in payroll, the world of payroll and HR and all that's where the NPS is very, very low. Gusto, when we started the company, like, you know, first few years was always, um, you know, and still today, actually, like, like our, our focus is in our, where we're trying to get to and where we're, where, uh, what we call success is when we're above 70. Um, but, uh, all of a sudden jumped to like over 80 and we talked with customers, you read what promoters say. It's all about like, Hey, I've noticed that you, you're, you were there for me. You're, at that point, mostly a payroll product.

29:48But for some reason, you helped me finance my business through the pandemic. I didn't expect you to do that. That was really cool. It tells you care.

29:56Turner Novak:I think a lot of people, if you don't run a small business, you don't realize how hard the financing aspect is. Because, I mean, a lot of times what happens is you're on the hook for you employ some people. You got to pay them. You have suppliers that you're paying. You have equipment that you need to buy. And then you have some revenue coming in from your customers. But at the end of the day, if you're mostly selling to consumers in your community, you might have, if you hire someone on your team, you really don't usually think about it as a monthly liability overhang. It's kind of like a perpetual thing.

30:32Turner Novak:I have 10 people. I need to make a million dollars a year to pay them and keep them on my team. And then you also maybe have, I got this big order. I got to order all my stuff for the year. So it's another like million dollars. You might have like a couple, you might have seven figures of like cash outlays that you know is coming. And then suddenly when your revenue goes to zero, you like, that's huge. So if you can say like, hey, we'll help you offset that. We'll help step in there for you. I think that's, I could see why people were so, so in love with Gusto after that. And you know, they usually think of like how the world of product and kind of, you know, I guess creative work happens.

31:11in some ways that, you know, you don't know, like, it's very path dependent. So, okay, so what does this mean? So this is the first foray that Augusta has ever had in basically called, like, lending, right? It wasn't our money. We worked with the banks as partners, but we kind of got into what you're saying, which is this world of cash flow, like understanding what does it mean when, you know, you have to pay this team, but you don't have income to use that for payroll. And, you know, by getting exposed to that world more and more and spending more time on that problem area. We ended up actually building a product years later.

31:47It's called Payroll Bridge. But that solved is not the case of a new pandemic. But what that solves is something that happens all the time for small businesses, which is like, okay, I need to go pay my employees this Friday and I have this awesome customer that's going to pay well more than what I need to pay for. But unfortunately, they're going to pay me on Monday. I'm going to get paid on Monday or Tuesday. the company gets paid on Monday, Tuesday, but I need to pay on this Friday. So what do I do? Am I going to tell my team that they can't, they can't, you know, like go and do their groceries?

32:18They can't pay their rent because they can't afford it?

32:20Turner Novak:It's technically illegal to not pay payroll or something. There's like a lot of like laws. Of course. Around like, of course. I remember like that was a big deal. I think with SVB. Right. When SVB happened, it's like, it was on a payroll week, right? Yes. Where, how did that go inside Gusto? Were you guys using SVB or exposed to it anyway? Yeah, we did not use SVB exclusively. So what we did is at that moment, we had multiple banks the whole time that we used for payment processing. So if one bank goes down, like the other bank is something that we can rely on. And that's exactly why you built resilience for cases like that.

32:58It's not that I knew that SVB is going to go down or anything like that, but more like, you know, resilience system, you want to have like multiple. So no, it did not affect us as a processor. However, some of our customers were banked with SVB. So then when they, on Wednesday, had to go and say, okay, I'm going to go pay my employees, run payroll, you know, there's no bank.

33:18Turner Novak:Because you pulled cash from the bank. There's no bank to pull cash from. Yeah. So, you know, so they obviously, you know, if we did not step in to help them, they would not make payroll for their employees. So what we did is we reached out to identify all these people ahead of time, all these companies ahead of time. We reached out to them. And we actually, you know, we researched and we understood that this is a temporary issue and it's going to be probably resolved in the next few days or a week through like the acquisition of the bank or whatever kind of ends up happening. So we knew that, you know, that those dollars are there.

33:49They're just not accessible right now because of the whole SBB collapse situation. So we ended up extending credit for them. Basically, we paid payroll for them. We reached out to them. We told them, hey, you're an SBB customer. You're impacted. we're going to be make you can run payroll safely we're going to make payroll for you and we're just going to debit your account to get paid back next week that works extremely well I spent you know several days on the phone with customers like one customer at a time calling them and um kind of a lot of people were very very worried about it obviously so we we went and helped them do that um and I think that um there's a couple of uh kind of big learnings here I think which is, you know, if you're building a social network for dogs, it's okay to maybe not have redundant.

34:36Yeah, yeah, it's fine. You know, like it's going to be annoying if like your service goes down for a few minutes or even like two days.

34:42Turner Novak:Like your dog is trying to check their phone and they can't like their other dog's posts. Like, that'd be a little unfortunate for the dog. Exactly, exactly. The owners are going to be pissed for a little bit, but they're going to forget a week later. Yeah. But if you're running financial services, if you're moving real money, if you calculate people's taxes, you know, redundancy is the name, and, you know, the system stability is the name of the game. And that's really, really important to build it. And in fact, you should build it, I think, in a way that's like so, so resilient that you can resell it later.

35:12Now, whether you decide to do it or not is a business question. But I think when you build an internal system where the bar is, hey, this needs to be good enough to be its own product on its own, that you think about things differently. And that's what we ended up doing as well. We have a business called Gusto Embedded where we actually take a lot of our payments processing, our tax processing, and we result as an embedded payroll product for large platforms like JPMorgan Chase uses it and US Bank uses it and Xero Accounting uses it. There's a bunch of other kind of business platforms that offer payroll that's powered by Gusto.

35:51And in that way, you know, kind of like the AWS thing, right? In that way, you can really ensure that you have an amazing internal system if it's truly at the scale of serving external customers.

36:02Turner Novak:That's kind of interesting because you could say there's different lenses to look through that kind of product where Gusto should be going out and acquiring all these customers and getting them on your own platform. Is this good or bad idea to be outsourcing it? Or you can also think of it as maybe Xero or JPMorgan is now a go-to-market partner essentially for the Gusto payroll rail Yeah. How did you know when it was like, okay? Because you're basically saying like, hey, we were going to try to acquire these customers, but now we're like, US Bank is probably going to get them for payroll. How do you think through that calculus of like, okay, this is probably the move to do?

36:41Totally. Yeah, yeah, yeah. That's a great question. So the way I think about this is, one, Gusto serves under 10 % of the market today still. This is like Gusto customers? Gusto.com. Okay. Like small businesses, only 9 % of small businesses use Gusto today. So there's 91 % more to go. So, you know, it's a huge market. So this is like a way for us to go and enable, you know, small businesses to reach and use Gusto technology through other means. That's one thing. The other thing is like, you know, small businesses, there's lots of different types of small businesses, lots of different reasons and kind of ways of running your back office.

37:19Like I don't, I think that some people are going to, like vertical SaaS, for example, is like one area where I think, I still think very highly of as a way for, you know, people to run their business.

37:31Turner Novak:So vertical SaaS, this would be like if you're a bakery, there's a software provider that makes software that's custom tailored to running a bakery. Right. does specific things that only bakers need. Exactly. And the payroll button, there's like a payroll button in the software, just like pay all your bakers or pay the cashier, pay the employees. Exactly, exactly. So, you know, if you're a spine salon, like if you're a spa business, there is a bunch of those kind of vertical SaaS, like Vegaro is one of them, for example, and they have that payroll tab there and that payroll tab, you run payroll, it's using Gusto.

38:06And there, so that's an example. So there's a bunch of businesses, I think, out there that small businesses that will benefit from a business in a box and then they will need payroll in that box and Gusto is happy to be that payroll in the box for them. So that's how we're thinking about this in terms of competitive landscape and all that stuff. The other thing I'll say is that Gusto is not just payroll. So this is Gusto embedded payroll at this point we're talking about. Gusto is way more than payroll at this point. We're really doing a bunch of things around compliance, running your business, your HR compliance, your benefits, your time tracking, timesheets, all that stuff.

38:41It's really all about, I mentioned cash flow, tax credits. There's a bunch of things that we're doing way beyond payroll. I think every business can decide how they want to run their back office, and it could be through one of our partners. It could be through Gusto. And then, by the way, again, the market when we started had, this is 15 years ago, ADP and Paychex is the biggest payroll companies out there, they still exist. They're still doing really well. So that's quite interesting, right? So again, this is a very, very large market. So there's a lot of different... There's room for a lot of products.

39:24Turner Novak:And so talking about back when you started, so what was running payroll like when I think it was called Zen Payroll? Right. So Zen Payroll doesn't exist. How am I paying people? Like, because couldn't I just like go to the bank and say, like, just wire this money with this person? Like, what was so hard about running payroll? Yeah, that's a good question. Okay, so first, like, what is payroll and how is it different than payment, right? So, okay, payroll is not just like wiring someone money. That's actually illegal to do if you're... Oh, you can't do that. You know, it's crazy, right? The payroll means that you get somebody a proper W-2 at the end of the year, that you, as an employer, withhold taxes, that you pay the different government agencies in the right time, you do the right filings at the right time.

40:08So there's a bunch of taxes, there's a bunch of compliance, there's a bunch of payments.

40:11Turner Novak:Could you technically do all that yourself if you were calculating it in a spreadsheet or something? People used to kind of do that, right? Yes, you could. And then you'd have to go get the W-2 filings and fill them in. Right. Also, it makes it match the spreadsheet. Exactly. So the IRS has a fax machine you can use and the fax number you can use, you can print in your printer and fax things in. The same thing you need to do for every state agency that you are employing people in. So even if you have only one employee in a place like New York or Washington state, you may have four different agencies you need to report on a quarterly basis, on an annual basis.

40:47You need to pay them sometimes on a weekly basis depending on your pay schedule. So it gets complicated really, really fast in the US. So that's why payroll companies existed. We didn't invent payroll companies. But when we started, to answer your question, the way it worked is that, and this is like, it's a fun story. So my co-founder, Josh, actually has this story where in his previous company, he wanted to kind of go set up payroll to pay himself and his co-founders. And, you know, you go to their website. Obviously, there's nothing you can do with the website. You could just call. So, okay, you call, then you get a person on the phone.

41:25And for you to go actually pay yourself, you actually need to meet a salesperson in person in a random coffee shop in your area, in your neighborhood.

41:34Turner Novak:It's like a dude in a suit with like a briefcase. A dude with a suit with a briefcase that comes with a big stack of paperwork, explains to you, like ask you, like basically onboard you to payroll, ask you all the questions about, you know. Just live in the coffee shop. Live in the coffee shop. Like Josh does not drink coffee. So the rep bought him like a hot cocoa. So imagine a founder of a company sitting down with a hot cocoa, with a rep of the other person, sitting there for hours and hours and hours instead of, you know, and he's like, dude, I have all this work to do. Why am I sitting here with this guy?

42:04But that's how it was just to set up. So you had to meet the person and, you know, then if you fill up the paperwork, you can't obviously pay someone on the spot. It needs to go to the headquarters and takes a couple of weeks to go. And then every time you need to run payroll, you need to call in the hours. Really? Or, you know, if you're a techie, you can fax the timesheet. So that was kind of how the big companies worked. There were a lot of small kind of mom and pop kind of payroll processing shops that did similar things, but maybe gave you even more of a warm kind of day-to-day, you know, kind of number to call and ask questions about HR stuff as well.

42:45So these are kind of local payroll bureaus. But that's how it looked like. I know today it sounds insane.

42:50Turner Novak:um i remember my first big corporate internship i had there was like a payroll room oh yeah there's like four ladies who ran payroll all day yes like that's all they did and anytime i think i definitely had to go like talk to them a couple times which is usually like i had different hours or something i had to like change something i had to like literally go and tell them like hey this number is different now or something yes and this is probably i mean there's probably like a couple thousand people that worked at the company. We literally had four payroll ladies. Yeah. Yes. And one of the craziest thing about payroll, I think, is what's the cost of a mistake?

43:27What is it? If you, if you, if you're late, you can get sued, obviously. Like in terms of like the wire going to the employee? If you, yeah, if you didn't pay your employee on time, you can get sued. Can take down your business. because these are really important, you know, rules and regulations in order to protect the employees. They make a lot of sense. Yeah, I'm assuming there's probably times

43:53Turner Novak:throughout history where just people just straight up didn't pay their employees. And that's obviously bad. So like, let's get some laws in there. This thing is so important that there's literally verses in the Bible explaining what are the terms that you should be paying employees. Really? Yes. Okay, so this goes back to the beginning of humanity. Think about how important it is. Like, it's about like, hey, you know, if you hire someone to do a job for you, like you should pay them on time. that's like it's kind of like it's the stuff societies are built on yeah right well like why would i work for you if you're not going to pay me like that's kind of how it works that's a part of the contract and here's the other thing that people don't think about which is like what happens if you don't file your taxes correctly as an employer right so imagine you know you paid an employee and then you know the payroll company or you uh made just put the wrong number in the wrong box in like some sort of a quarterly filings that's you only figure out the mistake that mistake sometimes sometimes it takes a year and a half for you to learn that you made a mistake why is it because you put it in a let's say you put it in the beginning of the year it's only in the end process it gets processed at the end of the year when you do your w-2 okay and that's actually more than the end of the year because it's like april right or even later um and then that employee gets that in their w-2 and they're like okay that looks good they go they file their taxes with it and only then it can get discovered.

45:14So, and then by the way, that employee at that point may not even work for you anymore. So the government comes back to you and say, hey, you made this mistake and you need to go fix it. And here's the employee that's impacted and you need to go and find that employee and tell them, hey, they're now moved. They're in a different part of the country and you're responsible to make sure that they know that they need to fix. Here's your new W-2, the W-2C, the correction for your W-2 and you need to refile your taxes with it right now. So these things are incredibly complex and the repercussion of an error is very, very high.

45:47And I think that's one of the things that I think software can be really, really, really good at is ensuring accuracy, precision, reliability over the long tail for many, many, many types of customers. And that's why, you know, we spend so much time building our infrastructure. That's why we build our embedded business. That's why this is something that we're just like absolutely insane about, like in terms of the, you know, the reliability of the infrastructure that we build.

46:16Turner Novak:You mentioned that you can, you know, it sounds like a lot of faxing of stuff. And so like the probably like the average listener of this podcast is saying like, I've not used a fax machine in like, some people probably like ever. Yeah. Right. So like, why is that still going on? Like, why have we not made better tools? Like, why is the government fix some of this stuff? Like, why is it so outdated seemingly? Yeah. So the the the story of the U.S., a beautiful story. One of the parts of it is the fact that it's incredibly like one of the principles of how distributed things are and how, you know, localized things are right.

46:53So you have tens of thousands of localities from a payroll standpoint. Really?

46:59Turner Novak:Is this like a county? It's a county-based. In some states, it's a county-based. In some states, it's a school district-based. Yeah, that's true. You'll sometimes get these, like, just weird, like, a couple dollars deducted on your W-2 for, like, the city district, school district, or, like, special interest district or whatever. Exactly. So you have, like, streets in the U.S. where at the end of... You look at the end of the street in the cul-de-sac, and you have three neighboring homes, and each one of them has a different set of tax codes. Really? Yes. So those all might work at the same or different companies that then need to figure that stuff out.

47:33Turner Novak:Right. When they're paying. Exactly. So you need to know which side of the street you are on in order to know how to calculate your taxes correctly. So that's kind of one crazy kind of payroll fact. Another crazy payroll fact is some of these localities are so small, they don't have like, you know, big, robust systems or something like that. It's literally a person who is working on in the office. and, you know, there's like a new resolution that was passed by the town committee about like a new tax or kind of a new thing we're going to do differently. And, you know, that person now updates the town and the way they update the town is they put it on the bulletin board and maybe there's like, you know, puts it on the local newspaper.

48:11How are you supposed to know as a small business who employs someone in that particular, you know, called like county, but this person is kind of working remotely or something like that, right? How are you supposed to know that? So what Gusto does today, and it's not just, I talk a lot about the infrastructure and the software, but there's also a lot of operations involved. And these are, for example, people who've been in the industry for decades and they know to call that lady. They know their phone number to ask her how her kids and grandkids are doing and then ask her, did anything change recently that we should know about as a payroll processor?

48:48And then we bring it and update our software with that. So you asked about faxes. I answered about like, hey, it's actually much more than just the faxes. It's literally bolt-in boards.

48:56Turner Novak:It's bolt-in boards. But that's the sort of stuff that we love doing because it saves the headache from the business owner to figure this out. And it gives them peace of mind that they don't need to know all this random shit. We got this for them. Yeah, I know your dad ran a clothing store for like 40 years. I mean, maybe that's an outdated number. He's still running it. So yes, I guess that would make now, yeah, over 40 years. This was back home? Yeah, in Israel. Okay. What else did you learn from your dad? Like anything specific about running a small business? The biggest thing for me is the many hats that small businesses wear.

49:38And, you know, I think society right now for many, many, many people built in a way that kind of feels so structured and built for you. So in other words, you graduate from school, you decide you want to be, you know, what's your profession? And many professions have sort of career ladder and you go from like one thing, like, you know, an analyst to like, you know, an associate and whatever that is. And then maybe you do like a master's, like whatever that is, like this kind of a career ladder. The same thing happens in so many professions, not just like in, you know, in a few. And all of this is obviously made up.

50:11It's all made up because in the end of the day, what matters is serving the customer, right? So the company created all these, the companies created all these ladders in order to build an organization that ends up actually on the other side of it, you know, supporting customer. But when you're a small business owner, you don't have any of that stuff. What you have is yourself and you need to figure out how do I get customers in? How do I finance my inventory? My dad has a clothing store. So how do I finance my inventory? How do I sell? How do I know what sells so I can get more of, right? How do I price things?

50:41A new competitor moved in. How do I deal with that?

50:45Turner Novak:Yeah, he's undercutting me or better product maybe. Exactly, exactly. Different product. And then, you know, taxes are changing. How do I do that? Like, again, the interest rates goes up. All of a sudden, I can't afford these, you know, the cash flow here. These are all things that, again, business owners need to think about. They need to protect. There's a bunch of ways of doing this. So this is not, you know, new. But you, as a small business owner, need to think about every department, everything. instead of having like a you hire a person and there's all these different teams like there's a marketing team there's an inventory team there's a fraud team like it's like literally just you you're a team of one exactly that's how you start now then over time you obviously built you do build teams um and if you get really large you do build like these career ladders and all that stuff we talked about but um you know the the most incredible and uh inspiring thing for me about you know, entrepreneurs, builder, business owners, business operators is this point that there is no walls between departments.

51:44It is this you and you need to figure out how do you serve the customer and build a good business and grow it. And, you know, if you did it, great. You get the reward. If you failed, you're out of job. That's beautiful, I think.

52:01Turner Novak:I mean, yeah, that's kind of like the beauty of capitalism in a way. And then if you did fail, I mean, especially in San Francisco and Silicon Valley, like people like, oh, you built this thing. You did like, well, come work for us. Like, so it's like, there's almost like a, there's a little bit of a safety net. Maybe that's not the right way to describe it. But like, as long as you're like ambitious and. Yeah, I think here's the real. So I agree with you in startup world, but like in, in kind of real world, like SMB, small businesses. The say, like the, the entrepreneurial dream is the safety net.

52:35Like, enabling, having us as a society, as a country, as a state, making it easy for people to start businesses, that is the safety net. Again, that's why you see so many immigrants, for example, start businesses. It's not because, you know, like... You're not being forced into starting a business. Like, you want to. Exactly. It's like your dream almost in a lot of cases. And often it's really hard. Like if you're coming in again from a different culture, I came from Israel, you're coming in from a different culture, it's really hard to get a job. It's really hard because you don't know how to say it.

53:12You don't know that there's so much nuance in culture. There's so much nuance in language. There's so much nuance in, you know, in like the workforce, I would say, one country over another. That, you know, having the opportunity to start a business helps you, you know, actually show your worth out there and create something valuable and provide for yourself and your family. So, you know, I think the safety net is that. And by the way, what's the opposite of the safety net is when things get harder. If, you know, if we as a society make it harder for small businesses to start and to people to go on their own.

53:43And I think that's something that we should always be, you know, very mindful of. Like, you know, how the rules, the regulations that we put down as a society, the culture that we do, that we have, how that enables, does that enable entrepreneurship or not?

53:59Turner Novak:Are there any cases where we're getting too close to that going away? Like, do you feel like there's anything we need to be cognizant about? Like, hey, we are maybe limiting entrepreneurship in some cases. I think there is a gravity for just, you know, government democracy regulation, where it's very easy to add and it's very hard to remove. You know, it's very easy. Like, it's very, very, very, so we call this like the, you know, it's a different type of inflation, right? It's a regulatory inflation, right? So that's, again, one of the things that's going back to Gusto's mission. Like, you know, government's going to keep regulating.

54:45They're going to keep adding rules. It doesn't matter which party. It doesn't matter which side. Like, that's kind of, you know, lawmakers make laws. Yeah, I think there's like some chart that just shows like a number of laws or like the length of the tax code. They always just go like this. They just go straight up over time. Yeah, exactly. It's kind of like in software engineering, the kind of level one way of being proud of your work is to count how many lines of code you added to the code base. But the level two, the true people who are kind of deeper in understanding the architecture often actually get much more excited about removing lines of code.

55:23And it still works. It works better, maybe. works better and more, you know, easier to read, easier to use, easier to, you know, reuse. So, but we are in a place where there's going to be, I believe, regulation, inflation, we're going to continue. So then that's where technology companies could come in and help. I think the nice thing, again, about technology is that we can take all these rules, all these regulations you throw at us. And, you know, we work really, really hard to codify it and, you know, build robust systems around this. So you don't need to worry about this stuff.

55:53Turner Novak:Yeah, it's like almost your role. the job you're serving for your customers is removing the complexity, removing the navigation of all the laws and the regulations. Like, you don't want to all comply. You don't want to do them all, but it's really hard. So there's the, and also one more thing. There is the, all these regulations also come from a good place. You know, no senator or like, you know, government, you know, official comes in and say, I want to ask. I want to make it hard for you to start your business. No one, you know, it always comes from a good place. So there is the one part of it, which is, as I mentioned, like making it easy to navigate all these rules and just, we just do it for you.

56:34So you don't need to worry about it. We're just done for you. But there's the other part, which is like, actually there's a bunch of these, you know, programs, government programs that are really helpful for you, but they're so complex that you may, it may be hard for you to actually take advantage of them. And as a result of that, only big companies end up having access to it because they have whole departments to read the tax law on the tax code and figure out how to get those. So again, the example, you know, I shared earlier is like, you know, tax credits, right? So there's all these, you know, different types of tax credits.

57:03There's, you know, dozens of them. Every state has their own flavor of it. And they're all coming from a good place. Like, hey, you know, did you hire a veteran? Great. There is like some incentives, tax incentives for that. Hey, did you, again, invest in research and development? Great. There's a tax incentive for that, you know, and so forth. There's a bunch of these. So we help you find those opportunities and then go and do the filings for you so you can get the benefit of these programs and not just leave them for the big companies to enjoy.

57:33Turner Novak:Yeah, because in theory, there's a lot of, if I've just got lawyers on staff, they can just spend all their time or the tax professionals. I mean, the same company I was mentioning earlier that I worked at, there was a tax department. We had, I don't know, there was like eight or 10 people. It was an international company. so again like an SMB competing against selling international with someone who can maneuver around a lot of that stuff easier like it just gets really tough um what I think probably one thing I thought was like kind of funny was basically the one piece of advice your dad gave you was like never start a company like don't even try it yeah so like what's the story of like actually starting like zen payroll back when I think it was like 2012 12.

58:18Yeah.

58:19Turner Novak:Yeah. I had like, how did it all get started? It sounds like Josh was in the coffee shop with the sales guy filling out the forms. Like what the hell going on? Yeah. Um, yeah. So, so yeah, my dad gave me that advice of like, you know, son, whatever you do, don't start your own company, just go work in it somewhere that pays, it pays well and, you know, take care of your family. And the reason is like, again, where he came from is just incredible amount of stress of, you know, like it's just so many ups and downs in running the business and not knowing if you can make the next payroll and not knowing if you can, you know, you'll survive basically.

58:53Turner Novak:Is he able to use Gusto? Are you guys in Israel? No, we're not in Israel. Oh, okay. No, so you can't use Gusto yet. But he, so I think that kind of mental thing is something that was very instructive for us as we started the company because we understood that we're not just building a business tool. We're trying to build a partner for the small business owner. And the difference if you think about like the place it's in your brain with like a partner versus a tool, like a tool is something that you're responsible to do it correctly. Here's a hammer, like make sure you don't hurt yourself with a hammer.

59:22But a partner is someone who is like helps you take stuff off your plate and like and give you some sort of reassurance. Like, hey, you know, I got this for you. I'll give you that peace of mind. That's what we're trying to do. We try to do it like honestly since day one. if you go through our user experience in the early days, the way we wrote the copy, the way we built proactive moments in the application where we remind you of things or ask you of things just when we absolutely have to. And we speak to you as a human and not as a, you know, like whatever data processor.

59:52Turner Novak:Yeah. There's like hearts and like fun graphics and the UI and stuff makes it feel a little more like you're, you know, it's like human, like kind of personable. Yeah, that's some of the visuals involved, But I would say, you know, there is a bunch of just user experience components around like, you know, how do we only ask you the very, very few, like the fewest questions possible in order to get the job done. And then every time we introduce, if we ever introduce like a new concept for you to know, we treat you respectfully and talk to you like a human being explaining it very, very, very well.

1:00:27So, you know, we assume you don't, you're not a tax expert, but you're again, you're a small business owner. You're now walking from, you know, your desk to the bathroom. And during that, you're trying to, those one minute walk, you're trying to pay a contractor, right? So how do we do that for you? So it's really, really, you know, easy to use. So there's a bunch of these kind of user experience. We can talk about user experience, like principles and all that stuff if you want. But that was a huge innovation for us. And it did, this user experience innovation. And it did come from thinking about, you know, our small businesses, how their lives are doing, how their day-to-day looks like from an emotional standpoint.

1:01:00And we want it to be in a place in their lives that gives them relief and even like a smile to their face and not just like, here's another cold tool that is, you know, whatever, you know, powerful and efficient. So now, by the way, the good news is that that language about having a partner that's on your side and an assistant and all that stuff is like, oh crap, we're now in the world of AI and agents. Like this is exactly the time for it. So we're super, super excited. about this because this is technology in a way that we are always waiting for. So we're building a bunch of these experiences now that really do feel like you're talking with someone that's kind of the agent experience with co-founder and some other stuff.

1:01:42But yeah, that's kind of the story of like some of the inspirations just to see the emotional ups and downs that my dad has. And then yeah, how we started the company. I came in from Israel. Were you in school at the time? I was, yeah, I came here for a PhD program at Stanford in electroengineering. I had a startup company back in Israel. And we talked about my dad already. I was all around small businesses. I started small businesses. Like that kind of world was, you know, was kind of my world. And I was lucky to meet Josh and then Eddie as a part of this kind of Stanford community, wider community.

1:02:18And we connected on that small business experience as connection. And we looked at the software and kind of the world of software in general. We all were entrepreneurs. We built companies in the past. So, you know, we wanted to build something together. And it's this obvious, there was this moment that was kind of felt obvious to us, which is like, hey, there's so many companies that are, technology companies that are focused on consumers. So many technology companies are focused on enterprises. But in small business, for some reason, it's a huge market, but there's just not a lot of success stories there.

1:02:51What's going on? Do you know what the disconnect or the issue was? Like, why weren't they at the time? I did not know it at the time, but like my explanation, seeing the past 15 years of this still being the case, I would say, although much better, but still being the case, is that often companies start, like software companies or technology companies, start focusing on small businesses because it's easier, more available to them to kind of reach as their first set of customers. But as soon as humanly possible, they go off market. Why do they do that? Because of ACV, because of the size of the deal.

1:03:21So you can make more revenue from those customers. So imagine, you know, you need to sell, you know, whatever. You sell your CRM product for like a small business with five employees. You can make$1 ,000 a year. Or if you sell exactly the same CRM, but for 5 ,000 employee companies, like, you know, that 1 ,000 now becomes like$50 ,000 or$100 ,000 in there. Just like the same amount of work, but 100 times more revenue. Exactly. Same software, same product. so by the way that means it's not just like more money coming in it also means that it's now you like there's just there are just simple playbooks if you have a product that can sell for$100 ,000 software product that can sell for$100 ,000 there's a playbook that's very very simple what do you do now to get customers which is you hire sales people to go down and establish relationships there's enterprise sales and all that stuff there's a whole playbook with how do you market to these people, target list and all that good stuff.

1:04:22But it's well done. It's something that's been done many, many times before and there's a playbook for that. For small business, not as much. By the way, consumers on the other side, there is also a playbook. And that's obviously mass marketing and all the good stuff that we learn from just consumer products over the years. But small business is kind of weird. It's in the middle. You don't make as much money as enterprises. You can put salespeople in the street, right? But you also, there's not that many of them that like a billboard is going to, you know, in a marketing company, it's going to get you a bunch of customers.

1:04:53It's kind of just in the middle. So that's why I think there hasn't been a lot of companies that stayed in small business. So how did you approach just getting people to start using it and like scaling it up?

1:05:07Turner Novak:Like what's the trick? Because you cracked it, it seems like. Yeah, so we, the thing that we, I think we realized is that, is to think about the small business owner as a single decision maker. So that's like more like feels like consumer. But on the other side is professional. So that feels more like enterprise. So you took like an element from enterprise, which is professionalism of decision making. This is not like a emotional decision making of like I prefer purple over green for my iPad cover. But it's professional. It's considered. But on the other side, it is also a single decision maker.

1:05:48So it doesn't have the complexity of an enterprise deal where you have like 10 different departments that all need to align on the strategy and give you a budget and all that stuff.

1:05:55Turner Novak:So it's kind of like a consumer that's making a decision that will improve their business or something. There's an objective behind it. Exactly. It's an objective decision that's done by someone who feels like a consumer. Okay, so what does that mean actually? So what it meant for us is that the whole name of the game is word of mouth. And to make word of mouth successful, you really need a product worth talking about. A product that people really love. So our thesis to start was like, hey, we're not going to be able to afford salespeople walking down the streets in order to go and sell our product.

1:06:33The way that we're going to be, that we're going to grow is have incredible customer love. I mentioned that NPS of over 80, over 70. Small businesses, they do talk with one another and they do recommend products to one another. And then that's going to be really the engine for our growth, just referrals and word of mouth. And that ended up being the right hypothesis and that's been working really well for us. And it's not that we haven't added scalable marketing around it and scalable sales processes around it. Of course we did. Because, you know, it works. Like, you know, if you take a product people love, you also, you know, go show up on Instagram or in social.

1:07:14Like, guess what? You just sell more of the same product people love. You add a salesperson who gives you a call to help you, you know, finish onboarding. That works. It's, you know, it's positive for the business. Great. But like the core of it is customer love.

1:07:28Turner Novak:And you have this concept of minimum lovable product versus any of the other ones, minimum viable products, like what most people think. So is there a difference between those two of like minimum to get it out there and then minimum of like the customers actually love it and recommend it? The problem with minimal viable products is that often they are, you get a product out there that works, but when the customer sees it, it solves a problem in a very, very, you know, called like, local way and not thinking end-to-end across the whole user experience. So in other words, often Minimal Viable Product is focused on what is the smallest product we can ship in the shortest amount of time that checks the box of saying we did the thing that we said it's going to do.

1:08:19Okay. The problem with that is that sometimes you launch a product like this, you're proud that you were able to ship it quickly, and then people don't use it. And you're like, okay, I guess this was not a good product idea. Let's throw it away. It doesn't work for us.

1:08:32Turner Novak:Did you run into that issue at all? Like you tried something and it was minimum viable and it just didn't work, but the pushing it over the edge to minimum lovable suddenly it was like, oh, this is amazing. Honestly, we kind of went with the minimal lovable product since the beginning. Oh, really? And it's because of, again, this point that I made earlier around like for Gusto to grow, for Gusto to get new customers, we had to have people love the product. So you can't launch anything that's not lovable. It's very, very, very important to do it lovable. So, okay, so what does that actually mean, right, to be lovable?

1:09:02There's kind of three parts to a great user experience, in my opinion. The first part is that the thing works. It solves the problem, right? You're trying to get your employees insured. Let's say health insurance. Like the health insurance works when you go to the doctor, right? And you can kind of enroll quickly and all that stuff. That's called like kind of the functional side of things, right? The second side is intuitive. So what does intuitive mean? Well, if you're a small business owner, the bar for intuitive is very, very high because, Because again, small business owners and us normal people are not experts.

1:09:33Yeah, you might be doing it in like a minute.

1:09:35Turner Novak:Just make sure this, click a button and it works. And it's like, I know where to go. You don't need to watch videos to understand how you work. You don't need to read like manuals. It's just like very, very intuitive. You go and you say, I want to get health insurance. Great. Here's the options for you. Here's what it means. And then, you know, we go and you kind of get, you know, get the health insurance that you need for your customers. customers. And I think for that, these two things already kind of clear the bar for a minimal viable product for the MVP, right? But to really get to the minimal lovable product, that's kind of where you add the last piece of the puzzle, which I would call just delightful.

1:10:11So what makes a product delightful? What makes a user experience delightful? Well, it's a product that anticipates your needs, right? It's a product that just looks at you and already knows, hey, you know what? I know this is the first time you're getting health insurance. So I'm going to assume that you're not sure which health insurance is right for you. So I'm going to proactively tell you, hey, companies like you in your industry, in this area, usually offer this sort of benefits package, right?

1:10:37Turner Novak:Here's how much it costs. Because they would be looking that up probably like on the side while they're signing up. That's exactly right. It anticipates the sort of problems that you have, the sort of questions you have in your head. It tries to answer it for you already without you going and looking for like the left now and find like, where is the tool for like benefits comparison, right? That would be the MVP approach. The MVP approach is like, okay, great. Let's build a benefits comparison tool, like a benefits benchmarking tool. And there's a tab somewhere that you can go and find it and click on it and you see graphs.

1:11:02That's great MVP. But how does the customer know how to find it in exactly the right time, right? So that should just be a part of that minimal, lovable product. That's all about like helping you, like the headline of the product is not health insurance, but rather, you know, help you find and get health insurance for your employees. And that includes that obviously important point, which is like help you figure out what package to offer.

1:11:26Turner Novak:And then how has AI enabled you to incorporate more of that into the product? Because it's probably, you can include more things or like move faster or something. Like how has that changed? Yeah, so there's a bunch of places, but I'll say, okay, so a couple of things come to mind. So first, just understanding the sort of questions people have in their minds. Now every PM at Gusto, every engineer, every designer can just go to Claude and ask our data questions about our customer behavior, customer questions, everything anonymized, of course. So this is like internal, like amplitude type of dashboard data, or this is like usage data inside Gusto?

1:12:05So you have access to all the comments from our NPS surveys, all the comments from our, you know, different customer feedback surveys, things that our salespeople, our customer care people write down and like the actual like, you know, transcripts of the kind of conversations, again, everything anonymized. And then you can go in and ask, hey, you know, when people ask, when people start the, in this example, people are trying to get health insurance, what questions do they really have in their minds? And Claude can go and kind of help you find those things and start this research for you. It used to be that this is a research question that you would need to come up with.

1:12:41And then, you know, like either you do it as a designer, PM, engineer, or you get a user researcher to go and kind of recruit customers and go and kind of go through this process that can take weeks or even months. Now you can just like ask the question to Claude. And that's going to really help you accelerate it. It's not the end, obviously. The question is just the beginning of the work, but it can really help you accelerate. That's one example. And then the other example is like execution, right? You can just build much more than you used to be able to. So, you know, Gary Tan had this really great post that I really loved around like, you know, boil the ocean.

1:13:16The often advice you get for product and design is, you know, don't spread yourself to thin, right? Don't peanut butter your roadmap. Like it needs to be really, really focused and actually really agreed with it for the longest time. But his argument, which I think is a really good one, which is like, if there was a time to boil the ocean, there was a time to actually go and try to build multiple products at the same time and increase your ambition this is the time to do it because it does make it much easier to build new things so I do feel like that's something we're seeing at Gusto too

1:13:46Turner Novak:yeah that was actually one philosophy of Sam Blonde at Monaco prior guest of the show he's like we're building this like all in one CRM no point solutions here we build every single feature and it's because it just takes like a day to make the feature like just make everything Like, it's like the compound startup kind of philosophy of just build all these different things because, you know, it takes, again, it's like, just, I'll just do it in the background for a day and then it's done. Like, why would you not do that? Yeah. We used to launch, call it like four to six major feature announcements a year.

1:14:25We now easily do the same amount in, call it like six months, like twice a year. And we're well on our way to do it once a quarter and I think once a month. Like I think this is happening. It's going to happen. There's no question about it. So you have already... We're already doubled the velocity of like just the pair engineer ability to get features out there, out and running. And you think you'll be able to 10 or 12 exit? I think we can double again and probably double again.

1:14:51Turner Novak:Really? Yeah. And this is because using AI coding ships the code faster, and then there's a process of reviewing it and designing the features like it just happens quicker? I think it's the whole software development process. So it starts, as I said earlier, about researching. It's much, much, much faster to understand what the customer's issues are and to find detail around it to then help you design a good product, right? So that's kind of the first thing. You know, same thing with like kind of now coming up with prototypes to kind of make the fine product decisions. Then it's like actually shipping, like building the code for this and then kind of shipping and taking it outside to the world.

1:15:27Even like kind of just like actually exposing the world to your new product and like telling the world about it and doing the launch and, you know, doing the experimentation, all that stuff is. And the reason I'm so confident is not just because the models are getting better and better, but also just, you know, it's just like looking at Gusto. Gusto has many teams at this point. different teams have different, you know, I would say, kind of strength in how they use AI and, like, different proficiency in AI. And there's just tons of opportunities. So, you know, and it's very clear that that's the direction where we're going.

1:15:58Turner Novak:One thing I know you did recently, you made, like, a kind of a big acquisition, like, for the scale of Gusco. It sounds like it was, like, maybe, like, a little under 10 % of the size of the company. It was called Guideline. The company you guys acquired. How, like, what was that? How did you approach it? Are you doing more acquisition? Like, how do you think about that as a company like Gusto right now? Yeah, yeah, yeah. Okay, so we acquired Guideline. Guideline is one of the leading 401k providers in the US. And they are very similar to Gusto, where they kind of take, kind of say everything you said, like I just said about payroll in the past hour or so.

1:16:34Now, copy-paste it, but change it to 401k. You will hear the same thing from Kevin and their team over there. They really took this approach of building a delightful, easy-to-use product that's easy for the employee side, easy for the company side. And they built it in a way that's extremely robust and scalable to, again, tens and hundreds of thousands of companies. So we've been partnering with them since they started. Many of our customers already use Guideline, so that match works extremely well together. Now, bringing the two companies together, same code base, same database, same application, it just opens a bunch of doors to like um you know even better products whether it's like payment speed stuff um you know get your money faster invest it faster uh whether it's things like um you know um the just the integration like you feel like you're all all in the same uh mobile app for example as an employee uh take it take your 401k with you where your um where your gusto wallet is which is kind of the mobile app uh where you get paid in gusto um so so that is the that acquisition that was very significant But yeah, we're excited to do this.

1:17:45And I think the M &A is a very, you know, there's a very interesting way of just adding fuel to the fire of what Gusto is already doing. And I would say, I would just call it accelerating the roadmap that we already have. And that's the bar when we think about, you know, companies to acquire and products is we ask ourselves, what is the acceleration value of this company to Gusto? So in other words, like looking at our roadmap, where does whatever that company has, where does that sit in our roadmap? And what would it mean for us if we make it, you know, bringing it now? That's how we figure out whether this is a good idea or not.

1:18:22Turner Novak:And so it's like, could we build this ourselves? Yes or no? How many customers do they have? What's the value of bringing that all inside of Gusto? It's kind of like an equation there where you decide if it's worth kind of pursuing versus not. Yeah, so everything is around acceleration, right? So it could be acceleration of the product roadmap. So, hey, this is something we thought we're only going to get to in two years, or actually we'll be able to get it quicker, right? So what's the value of actually getting that quicker? By the way, with AI, now that equation changes because, well, we know we can build it, but maybe it wouldn't take us two years.

1:18:58Maybe now with AI, it's going to take us one year. So the bar is higher, actually, on acceleration for on product development. There's also, to your point, acceleration of like customer base so perhaps like we're bringing in a customer base um and we can you know uh accelerating again at that point and then there is the acceleration of like go to market motions or talent that we bring in and all that stuff so um so that's how we look at it it's kind of like there's two different values there's the value to acceleration to gusto that's one number right you can put a dollar amount of that and then there's the other number which is like you know um what's the valuation of this company if it goes out there and tries to shop itself right And those numbers have to align, obviously.

1:19:38You can't, you can't, but they're two very, very different numbers. Really? Oh, yeah.

1:19:44Turner Novak:What's been the biggest example of like a contrast, like difference in kind of like perceived and implied and or like market value of some of these things? Yeah. Like whether Gusto or other. So I won't give the name of the company, but honestly, it happened multiple times. So, you know, we go and we measure the acceleration and, you know, we look into this and we're like, oh, this is a really great product. They built it right. The code base is fantastic. the team is great, this feels like it would be a really great match to Gusto. You measure the, you say, okay, you know, it's probably going to accelerate us for 18 months, let's say, and then you come in with numbers like that's worth for Gusto, let's call it whatever, like$50 million, let's say.

1:20:20Okay, cool. So it adds enterprise value for Gusto, let's say$50 million. Okay, cool. Well, the problem is that these companies right now, you know, let's say they're making$50 million as their revenue, right? So now all of a sudden, and you put a multiple on that, like, you know, wherever the market is, but like, it's not going to be 1x, right? If the company's growing and the profitable. It's an AI company

1:20:41Turner Novak:that might be worth like a trillion dollars. Exactly. So it's interesting because if you're that founder of the acquired company, there's a very interesting dilemma because listen to what I said. What I said is like, hey, it's the value of the company, right? And the code base for us is$50 million. The problem is that they make so much money. That's a problem, actually. right in a way it would have been so much better for us like if i say gusto to acquire them if they only made five million dollars let's say yeah because then it would be like a 10x multiple to get to the 50 and everyone's really really happy yeah you know from that so um that's just like an example of an interesting dynamic that we've seen multiple times where it's like the kind of quote like the the business value itself like the like the revenue the value of the revenue to the acquired exceeds the value of the acceleration by us, which is the acquirer.

1:21:36Turner Novak:Yeah, because then you'd basically have to be justifying like what's the valuation of the cash flows and like modeling all that into Gusto and like making sure it's all about Often we don't want that revenue either. We are excited about the product they build and like the code base and the team and we want to bring that into Gusto and we're quickly using AI to make it available to all of our customers. Actually, they don't care at all about their$50 million of revenue. because I'm not buying them for revenue. I'm buying them for the team and the product. So that's something that's quite interesting.

1:22:05I think the lesson, there's no lesson learned. Like if I'm a founder, right? And I'm kind of like listening to this and I'm like in this kind of series A, series B sort of stage, the lesson learned is still go as fast as humanly possible, build a great business. You don't want to slow down in order to get acquired. But it is just true that if you do want to get acquired before your next round, you should actually start these conversations quite early. So the acquirer has a chance to look at you before your revenue basically increases to a place where you're no longer a potential target.

1:22:36Turner Novak:Yeah, it's almost like the opposite where VCs want you to grow as fast as possible. And you're just like, don't actually get that big yet. Because it's not as interesting to you yet. Because the value to us is the technology, again. We're not here to buy the business and the customers. Interesting. One last final question. Do you have a favorite founder or kind of historical person from history that you just get a lot of inspiration from? or have learned a lot from? Simon Perez is one of the founding fathers of Israel. And he has this book called, No Room for Small Dreams. And what's interesting about that person is that you just understand his history, his biography.

1:23:14He went through lots of ups and downs of changes in kind of his politics. But the thing that's inspiring the most to me is I think that in every single chapter, he always just like was a symbol and was a leader who promoted thinking bigger. Think bigger, think more ambitious. Again, no room for small dreams. His point is a lot of like, it's as hard to make your small dream come true as it is to make a large dream come true. So you might as well just like, shoot, try to go bigger. And I think that is such a simple idea, but is very, very powerful, actually. Very powerful.

1:23:51Turner Novak:Yeah, I feel like it's one of those things like anyone can incorporate that in whatever they're doing, whether they run a business, they're an athlete, like they're a parent, like they're like anything. Exactly. Yeah. Well, this has been a lot of fun. I feel like I've probably learned way more about small businesses. Actually, I would say more than I would want to, but I actually like learning about small businesses. I mean, it's like an interesting part of the economy that not enough people talk about. They're the best. Yeah. This has been a lot of fun. Thanks for doing it. Yeah, absolutely. Thank you.

1:24:20Turner Novak:And thank you to this episode's sponsors, Numeral, Flex, Amplitude, and Monaco. If you enjoyed this, please like, comment, subscribe, and share this with a friend who's building for small businesses. Make sure I check out the back catalog of over 150 episodes with investors like Gary Tan from YC and Alad Gill, and the founders of companies like Robinhood, Sweetgreen, and Mercury. Tune in over the next few weeks for conversations with Jamie Simenoff, who founded and sold Ring and scaled it past 100 billion in revenue inside Amazon, Emily Choi, the COO of Coinbase, and Aydin Senkut, founder of Felicia's Ventures.

1:24:54Turner Novak:If you don't want to miss any of these, subscribe to my newsletter, The Split. Link down in the description, you get each episode plus the transcript emailed directly to your inbox every week. Thanks again for listening. See you next time.