Overcoming SMB Roadblocks: Expert tips from Gusto's Josh Reeves | Episode 1988

0:00you have to build a product that people love. That organic word of mouth and referral, you know, is still the biggest driver of top of funnel and leads to gusto. And that's because if you're serving smaller business, you're going to make less revenue per customer. So it can't just be a paid acquisition game. You have to have something that's super useful. People want to evangelize, you know, share on social, etc. And that has to be a key part of how you're creating, you know, more funnel and more top of funnel leads into your product. This Week in Startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business.

0:36Vanta makes it easy for companies to get a SOC 2 report fast. Twist listeners can get$1 ,000 off for a limited time at vanta.com slash twist. Open Phone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20 % off any plan for your first six months at openphone.com slash twist. And DevSquad. DevSquad helps startups design better products. If you need UI and UX expertise and don't want to hire an entire design team, head to devsquad.com slash startups and book a call. Mention that you're coming from Twist to get 10 % off.

1:19Hello and welcome back to This Week in Startups. My name is Alex at Alex over on Twitter. One of my favorite startup clusters in the entire world is the HR tech space. Now, I know it's not quite as headline grabbing as quantum computing or, I don't know, drone based deliveries, but it's incredibly important and so large that it's actually built some of the largest and most valuable tech companies out there in the world, and especially on the private markets. One of which is Gusto. It's a unicorn worth nearly$10 billion. dollars and today i have its co-founder and ceo josh reeves here on the pod josh hi thanks for coming on great to be here alex i'm excited this is a inaugural like long-form episode for you thrilled to be here tell more of our story and connect with your audience yeah for he's referring to the fact this is my first long-form interview uh here for twist normally jason does these but we want you to do even more episodes so i'm going to pick up the occasional one here and there now Now, before we get into gusto, Josh, I have a couple of notes about your history.

2:19I know you were at Zazzle back in the day, but I hear you also were the CEO and co-founder of a company called Unwrap, and that was sold back in 2010. I know nothing about it. I couldn't find much on the internet. So what was that and why did you sell it? So, I mean, there's a bunch of things I could go through. I want to talk about Unwrap. I'll just add, if you want, to that background. I studied electrical engineering as my undergrad and master's. So hopefully we'll come back to how three electrical engineering alumni from Stanford got into the HR tech space. But yeah, my journey was graduating, deciding not to do the PhD.

2:54I worked at an e-commerce company called Zazzle for three years, my first time as a product manager. And then it was in 2008 that I started a company with a friend. Facebook platform had just launched. This is when it was all web centric and desktop centric. So this is kind of still in the early, early days of mobile. you could build what were called canvas apps so kind of third-party developers for the first time being able to build into the kind of facebook e-commerce or ecosystem rather um this is also what brought about companies like zynga if you remember back in the day and so we were honestly just like trying to build stuff i would say kind of a very different approach than gusto we had friends starting companies we decided to go start dabbling ultimately our products were things like bringing e-commerce products into facebook you could kind of build a page with dazzle listed there or etsy listed there kind of more of a referral program type dynamic and then we sold the company like you said there was a period of you know big fish eating small fish um we sold the company uh to a company called context optional they got acquired by a company called efficient frontier who was then acquired by adobe all in the span of 14 months uh and so that was a little bit on that chapter 14 months were they all just running out of money like sequentially what how did that possibly come together so quickly um well i wasn't again running those bigger companies you know the beautiful part about that experience for me was it's when i first got exposure to running payroll for our small team hiring some contractors setting up state tax registration doing health insurance um but i think what happened in the space is it just got pretty frothy.

4:35I think there was a bunch of M &A, Salesforce bought one of the companies in the space, Google bought one of the companies. Again, a lot of people were kind of wondering, what is social? How will it work? And these were the companies that were at least in theory, you know, best in a position to help, you know, bigger companies navigate that space. It's interesting to hear you talk about the early era of mobile and kind of a desktop focused web, because that's still the context that I live in today. Like I'm always on a multi-monitor setup, unless I'm like in the car, literally. But the world today seems to be so much more mobile first.

5:08I'm starting to feel almost left behind by the state of the web, if you will, because everyone now just wants to be on a smaller screen. And to me, it just feels like regression. Like we have these awesome desktop computers. Why would we not default to them? But I know that that's me sounding increasingly okay, boomerish, but it's not that long ago that that still was the norm. I mean, 2010 is less than a decade and a half. It's just not that far back. I mean, there's just changes afoot on all dimensions, as you know, obviously, you know, wearables and lots of different types of devices. But I'll just bring us back to small business for a sec.

5:43The reality is small businesses, actually, most of them don't have computers and monitors, and a lot of them are on the go. and so part of what even enabled gusto was mobile because if you were pre-mobile era like going to go install some software on your family computer when you get home and your kids playing a video game it actually made sense to do stuff like payroll by hand on pen and paper and when we started the company like 40 percent of companies in the u.s did payroll on pen and paper so we actually had a thesis that like mobile cloud paperless these were the ingredients that made it possible for someone to now actually do things like payroll in a much more digital friendly way and obviously some of our progress has been made possible by that transition yeah i mean other companies that came out of a similar idea like the docu-science and so forth like the idea of taking something literally off the paper and into i guess the internet has been a pretty successful business approach now for for a very long time but i want to double click on smbs because yeah I've been thinking a lot about the state of how small businesses approach the modern world, because it's now very digital, very e-commerce based.

6:49I mean, Gusto does everything through the cloud and so forth. And we saw the recent catastrophe from CrowdStrike that hit a lot of people, small companies, big companies kind of up and down the thing. And so you have a lot of S &B clients who kind of depend on you to hold a lot of their data because it passes through your systems. And so I'm just kind of curious from like the CEO perspective, thinking about making sure that you don't let S &B data out. Has the CrowdStrike mess caused you guys to rethink any elements of, I don't know, like your cybersecurity posture as a business? So first off, CrowdStrike issue did not affect us or our customers, but we definitely had some gusties who were at airports and kind of got stuck waiting there for a period, which was unfortunate.

7:33it uh but what i would say is from day one like for us starting the company and kind of we were talking earlier about my prior startup each of my co-founders that had prior startups we actually after having done those experiences like wanted to tackle a problem that we could spend decades making better like hopefully dedicate most of our professional life to so to get to the heart of your question like we had to from day one given the product space we're in be hyper obsessed with how we secure data how we secure all the different private information like when a company is set up on gusto they're giving us their ein their ssn their bank number their routing number and then you know 10 days later we're debiting thousands of dollars from that account to go process payroll pay their taxes pay their employees so even when we were like five employees this was again back in like 2012 time frame there's a period in at least silicon valley where everyone wanted to put beta on stuff and you were kind of like proud about that oh yeah like gmail was in beta for like 10 years like i don't know that almost was a positive thing at some point like we had none of that with gusto like it wasn't a page where you have like the whole team listed like no no this is like a system that works that's reliable that's accurate and it needs to show up that way every single step of the way even when we were just five people now that we're 2600 strong i would say we're even better at that but it's always been important for our business yeah well actually just uh while i was prepping for our chat today i was going through the the public and gusto cybersecurity page discussing how you guys keep things safe because I was thinking about exactly what you said.

8:59If you're working with these companies and they're giving you their corporate DNA and access to their blood veins, their cash accounts, you can't afford to make a mistake. All that's to say that I'm very glad that I'm not in your shoes because it sounds like in today's cybersecurity climate, it's going to be hard to always be right and not have any mistakes and not have to go apologize to people. Data is an asset and it feels slightly like a liability in today's business climate just because people are getting compromised and i wonder if we're ever going to reach a state in which that's not a concern that people have to worry about kind of year in year out i don't i don't know if that's ever possible but it would be nice to get there at some point i mean if you if you play it a little bit of the theoretical right the only way to you know fully not have anything be dependent on someone else is to do everything yourself and like at least in our space again you know we do many products now we'll probably talk about that in a bit but like when we started the company 40 of companies in the u.s did payroll by hand and like if that was an easy to use experience that'd be wonderful like almost uh 30 of those companies in the u.s that you know basically made mistakes like got fined and had problems every year the government so you know i would say the balance here is you want to work with a system that is obsessed with security.

10:17And then, you know, what I say to the team is like, when we process now, like over half a trillion dollars through gusto, right? Like that's an incredible responsibility. And, but that's also a sign of like us building something useful that people appreciate and care about. And then we got to do it right. What's the timeframe on the half trillion dollars? Is that yearly? Is that monthly? I don't have a good vibe for how quickly you're reaching that number. um well we're growing quickly as you know and then because once you set up with a product like gusto if we do our job right which we do then people stay on the product uh so there's you know several hundred billion a year and on top of that the cumulative gets even larger oh yeah no i was just going back through some of your releases and you guys were talking about doing um tens of billions of dollars of payroll each year back in i think february of 24 so to hear you say half a trillion i was like wow seems like quite a lot of growth um but let's start there so back in june of 2023 you guys dropped a pretty significant milestone that you had at that point 500 million dollars in trailing revenue so not a run rate but a trailing number the most conservative metric possible and i realized that it's been 13 months since we had that conversation and the economy's been interesting i think it's fair to say so i'm curious how has the last year been for gusto just from the straight business perspective yeah i mean we're growing quickly i'm not going to share as a private company getting into like the entire kind of quarter by quarter i know you would find it very interesting alex um but we i would say are more focused on like what the next several years look like so i think inside the company we talk a lot about is how do we compound because what i can share you look at our customer account for example like we're at about five percent of the employers in america right so that's pretty small relative to the opportunity you look at the number of new employers started every year and you know we're well north of 10 percent that's still really small relative to our potential so uh what we're excited about is you know creating more awareness about gusto solving problems for the customer and then obviously doing more for them over time so on the 10 number is that all llc's c corps s corps like any corporation in the u.s you're working with 10 of the new ones yeah well more than 10 uh so we focus on employers so there's give or take every year actually millions of new businesses formed so i think the stat for last year is around 5 million new businesses formed but uh there's obviously fewer employers created every year so there's about 6 million employers in america and every year give or take and this is what's pretty interesting um there can be some impact from macro.

12:55You talked earlier about, you know, obviously the economy can have an impact on broad-based kind of business creation, hiring trends, et cetera. But even at low points of the economic cycle over the last several decades, you still have, you know, three, 400 ,000 new employers every year. And at the high points of those economic cycles, you have five, 600 ,000 new employers. So several hundred thousand employers regardless. And that's kind of really special. We think that's part of like what makes the economy strong is that people starting new businesses, if something doesn't succeed, try the next business.

13:27And the stat that we also obsess over is only about half of those new employers make it to year five historically. We hope through our work, we actually start moving that needle and help companies survive longer. Listen, a strong sales team can make all the difference for a B2B startup. But if you're going to hire sharks, you need to let them hunt and you can't slow them down with compliance hurdles like SOC 2. What is SOC 2? Well, any company that stores customer data in the cloud needs to be SOC 2 compliant. If you don't have your SOC 2 tight, your sales team can't close major deals. It's that simple.

13:59But thankfully, Vanta makes it really easy to get and renew your SOC 2 compliance. On average, Vanta customers are compliant in just two to four weeks. Without Vanta, it takes three to five months. Vanta can save you hundreds of hours of work and up to 85 % on compliance costs. And Vanta does more than just SOC 2. They also automate up to 90 % compliance for GDPR, HIPAA, and more. So here's your call to action. Stop slowing your sales team down and use Vanta. Get$1 ,000 off at vanta.com slash twist. That's vanta.com slash twist for$1 ,000 off your SOC too. So I think a lot about kind of, you know, North Star metrics for companies.

14:34And, you know, of course, we talk a lot about revenue, employee account, customer account, and so forth. But I really like the idea of measuring Gusto's success kind of as what fraction of new employers are using it. And if you're over 10 % now, I mean, how long does it take you to reach 20 %? At which point it would be one in five. We're making progress, Alex, is the quick of it. You know, we obviously internally have lots of specific metrics and goals that we set. I mean, what I can share more is again, a backdrop here is this is not a space that we entirely invented. You have other companies out there.

15:04And when you look at all those incumbents added up, it's about 50 % market share. So there's still a huge percentage of companies in the US, like back to the topic we had previously, doing this on pen and paper. And so that's kind of what we obsess over like small business, a lot of technologists, entrepreneurs, they get really excited about serving large companies, enterprise, we've met many B2B SaaS companies that are all about scaling up to like the million dollar,$5 million contract. What I think is cool is that there's more and more companies out there like Shopify and Square and Toast and, you know, obviously Intuit is kind of the original one and us included now that like really, really care about bringing great technology to small, medium-sized business.

15:45And in that segment, it's a lot of greenfield, right? It's a lot of folks that were basically doing it manually before and now are adopting cloud-based systems for the first time. If we had this chat a week earlier, I wouldn't have talked to the CEO of Huntress, which does cybersecurity for SMBs. And I was talking to him, I was very curious about how his company approaches the SMB market, because it's famously high-churn. Companies die, like you mentioned earlier, or they just run out of money or just cut back on services. they're often difficult clients but what i learned from him is that they work a lot with managed service providers msps and that essentially allows them to connect to one company that then has lots of smbs on the other side and he said those are a bit more sas-like and they they're a bit more stable and so forth and i was thinking about gusto and your work with embedded payroll which you launched back in correct me if i'm wrong 2021 yeah okay cool and someone that worked behind And the scenes got started way before that, but that was when we first announced it.

16:41Yeah, I remember that conversation. But I was curious if adding partners on the Gusto embedded payroll side is analogous to perhaps Huntress working with MSPs on getting their service out to more SMBs, essentially aggregating demand to single points that make it easier for you guys to scale, I suppose. So actually, there's three different parts of our kind of main go to market, Alex, and you just brought up embedded. the thing that's more analogous is actually our gusto pro gusto accounting channel program so let me talk about that a little bit and then we can come back to direct and hopefully that's helpful to any entrepreneurs out there who are looking to build you know sas products for smb um so it's actually back in 2013 that we went live with uh our gusto accounting program so today over 17 000 accounting and bookkeeping firms are a part of the gusto ecosystem and the way that looks is these folks join our platform and then they add their clients directly onto gusto so one accounting firm might add 10 20 50 100 small businesses onto gusto and so that's what's i think analogous to the example you gave and so that's been a really vibrant part of our go-to market um you know what what helped us i guess with having that conversation because i think a lot of folks would in theory love to have channels like that and it's obviously been a strength of ours is you have to have a product that makes sense for that partner to bring up and talk about with their client.

18:05And in our case, you know, payroll is what we started building from day one. It's the least optional part of the stack. The good thing for the accountant segment was it was actually something a lot of times they were forced to do themselves by hand for their clients as just a cost of like keeping that client. So when I said manual, like a lot of times it wasn't just the business owner doing payroll manually. It was the accounting firm or bookkeeper helping the business owner doing it manually. So when we started talking with them and said, hey, we can bring you a system that actually will save you a ton of time.

18:34You can get all the credit. Like say you brought this great product to the client. It'll build a tighter relationship between you and them. It actually gives the accounting firm the chance to go move up the stack, do more higher value added services. It was music to their ears and again, beneficial to us in terms of creating more awareness and adding more customers to our platform. Yeah. Okay. So then on the embedded side, because I thought that was going to be a good fit here, but it seems like i missed the mark a little bit embedded then is a way to let other companies kind of use gusto technology inside of their service so i suppose looking at the direct the embedded and then also the accounting partners um which is growing the fastest right now inside of gusto all are growing very very quickly i'll just give your listeners you can have a child by the way i know i know everyone says i love other children the same but i have i have four children alex i I mean, literally, I think you might, that's not a figurative thing.

19:26We have four kids, five and under, and they're all my favorites, frankly. But yeah, Gusto Embedded for us is a chance to help other small business ecosystems. Like, you know, Chase, for example, has a lot of small businesses. You have a bunch of vertical SaaS players out there that have their, you know, business in a box solution. And so for us, we really obsess over what's best for that small business and customer. and when we realized that all these partners had these small business customer bases you know they were partnering with gusto is kind of a referral relationship what they really wanted was to have native payroll inside their product but they did not want to build it from scratch and that was basically the insight that led to gusto embedded so you are right like it does give us in terms of how we do customer acquisition once the partner is set up once they've deployed the payroll product powered by gusto then you know it really is them driving adoption awareness and attach and for us you know it is scaling nicely in terms of then you know thousands of businesses being added through that avenue um and it's it's a much higher touch relationship right like going and signing a partnership like that is the definition of like enterprise sales very high touch kind of c-suite to c-suite engagement but but i'll also highlight on the direct front like that's been our bread and butter from the beginning and like i'm confident and excited that that direct small business focused on new employer motion will get us to a million plus smbs in the coming years and we haven't talked about that too much but the key for that kind of uh go to market to work is actually um you know proving out it's always a big segment in smb or small business uh but you have to have good cac payback you have to have good unit economics you have to have good gross margin and if you can execute that well and prove like right through the net dollar retention through your cohort performance they're like yes companies join some will shut down but others grow bigger and they also might use more of your product suite you know then you can actually have a great business in that segment and again it's not just us several other companies i think have proven you can have a great a great business in small biz land so if you're selling to s &bs and you're doing it via a direct channel putting aside the other things so long as you have a multi-product setup such that you can have a relatively strong long-term net dollar retention for companies that survive you can afford to have kind of higher gross turn from smbs and offsets because the other ones are growing so quickly that actually makes a lot of sense to me but given that there's one more ingredient there's one more key ingredient i mean the one more big key ingredient i just i kind of skipped through really fast it's like you have to build a product that people love because that organic word of mouth and referral you know is still at the biggest driver of top of funnel and leads to gusto.

22:11And that's because if you're serving smaller business, you're going to make less revenue per customer. So it can't just be a paid acquisition game, you have to have something that's super useful. People want to evangelize, you know, share on social, etc. And it has to be a key part of how you're creating, you know, more funnel and more more top of funnel leads into your product. If you use multiple devices and apps to run your business, you need open phone, open phone simplifies your communications with one simple app, and open phone has rethought what a modern business phone can be. What's magical about open phone is that it works through a simple, elegant app right on your existing phone, or you can even use it on your desktop.

22:49I know because we use it here at launch and our sales team loves it. And you know what those phone numbers, those discussions, all those text messages, we need those to be on launch phone numbers. We don't want those on people's personal phones, where if they leave the company, it's distracting, it's annoying to your sales team as but one example. And we love having a shared number for customer support as well. We do a little round robin where different people can pick up the one phone number. So customers have one number, but we can have that phone call go to multiple people on the team. So we, you know, can just have somebody pick up the phone quicker.

23:23It's that simple. Answering the phone quickly is a best practice and it makes people love your product or service open phone is already super affordable at just 13 a month my lord that's affordable but twist listeners can get an extra 20 off for any plan the first six months that's incredibly generous just head over to openphone.com twist and what if you have an existing number with another service that you hate well open phone will port them over at no extra cost easy peasy lemon squeezy so head over to openphone.com twist and get a free trial and get 20 off but that sounds that sounds doable.

23:58And the way that I've heard VCs and other founders describe SMB-focused tech companies is it's impossible, but you're the second CEO I've talked to in a row who has pretty positive things to say about selling to this particular company demographic or cohort. Why is there the dissonance between your kind of lived experience and then the common wisdom, if you will, out there in the market? Because it feels pretty far apart from one another i mean i i think probably and this is you know all opinion like is it harder than the like enterprise kind of sass playbook it probably is and part of that is because for a lot of products like smb probably isn't a viable segment to pursue one of the benefits of payroll for example and there's other products like it is that everyone needs it right so like anytime you start carving the market up to like hey only a small percentage might need it your life gets a lot because small, medium-sized business is not one segment.

24:52You have geographic diversity, you have industry diversity. And so you have to have the right set of products that are really, really widely needed, not as, you know, vitamins, but medicine. Like if I used to say, when I started the company, and I'll say it now, I've said it a lot. Like if you don't pay someone, they quit, right? Full stop. Pretty simple statement. So what we help solve is not an optional thing. When our customers set up and use Gusto, like it has to work and it has to be something that gets done right. And like, if they don't use us, like their employee isn't going to get paid.

25:24So I think that was a big, big, like enabler. And then you have to be able to execute, you know, once you have one product scaling and succeeding, you know, building out additional product lines. And so again, I think, you know, pros and cons to every segment, but that's some of the complexity. If you overcome it for a small business, it can be an amazing, amazing segment to serve. So on the expanding the number of products you guys offer, Gusto has expanded over time, you guys now do some HR onboarding, and you do benefits. And I know you guys had to deal with remote to do international contractors.

25:58And it's been pretty accretive, I'd say on the product side for a very long time now. But one thing that I've also heard a lot lately is, you know, founders have to focus, they need to be super dedicated to this niche or whatever their vision is. And so I'm curious how do you at gusto balance the desire to expand into doing more stuff for your existing and future customers but also not losing a grip on what you do at your core and not losing kind of focus on the stuff that's made you where you are today yeah i think it comes down to like the definition of what is core right so like other things i mean anything like is gusto going to start building satellites or rockets um no i hope so oh no that's definitely i'm sorry to burst your bubble but that's not in our plans um you know we we have a lot of opinions on like how we can go achieve our kind of full potential we have again a point of view on like how the employer employee relationship evolves how the employer journey evolves and how the employee journey evolves and like we just really have uh i guess a strong conviction on like how the future could look very different than the present but then it becomes sequencing like what do we do now versus what do we do next and you have to couple that i guess my advice would be you can get caught up in strategy land i think sometimes too much with concrete customer feedback like the biggest way that we prioritize additional product lines to launch to our customers is what they're asking us to go help with and when we are building out something right and it's sometimes either first party and i'll about like health benefits as an example which is the first party like we built that ourselves there's also obviously in some cases a third party solution you can use which we do for 401k for example um but the biggest thing is having it be something that customers are asking for and then there has to be a way you can prove that there's a better together dimension to it so with health benefits like we had employees and employers on gusto getting paid using payroll and then they are setting up health insurance, right?

27:54We're a broker today, so we're not the health carrier, but you know, all the information you need to go do that enrollment, right? To submit the, know your name, your address, you know, who's in your family, all of that information sits very much in payroll already. So there's right off the bat, just an efficiency from having like one place to go update stuff and not have to go enter it into multiple systems. And then second, as changes happen, as someone joins and leaves the company, as someone has a kid, et cetera, Like, again, just one place to go update that information, streamline and simplify.

28:24Just one example of how that better together thesis has to be there. And if you can prove that, then as you launch these additional products, the key in our space, at least, is you want to keep the product staying as simple and easy to use as possible, even while it's growing more powerful. And that can be really, really tricky, right? It's easy in the two by two to make a product more powerful and more complicated. But how do you make it more powerful and keep it simple is where we spend a lot of time and obsession. well on that point i mean the most powerful and worst software in the world is concur which is i think from the corporate perspective amazing because you can have it set up with any rules you want but if you try to actually use it as an employee it makes you want to physically die so yes there is a trade-off there have you ever like looked at a new gusto service or product and thought yourself there's no way we can ship this it's too complex and like pulled it back and forced a reduction in i don't know ui busyness or whatever the the vector there is well we we definitely iterate but like what i would say is first off our goal is to scope something pretty narrow pretty small to start i mean i can even case study payroll when we went live in 2012 uh december of 2012 you know it was a product in only for california-based companies that only if you had never paid someone so new employers only if they're fully salaried um and full-time uh and and like that's who we could help now you know within the next 12 months we expanded to other employment types and obviously being able to migrate from an existing provider but like a key part of our at least our approach to product development is how do you get to that minimum lovable product that's kind of the terminology we use inside gusto like because if there's a thesis we're trying to prove around hey there's a pain point customers tell us they're frustrated with something they want us to help solve it like how do we get to the kernel of actually us solving it and making it useful.

30:15And then we can layer in all the additional features and functionality over time. But that iteration is really, really important. I want you to double click on MLP, because of course, MVP is a very standard bit of Silicon Valley Arcana, minimum viable product. People have different definitions of that, to be clear, minimum lovable product. Tell me how you define that internally. Yeah, so for us, I mean, the reason why we have that framing and how we ultimately then how it shows up in our business model, we kind of talked a little bit earlier, but like with small business these are first off really really busy people right like they don't have large departments or staffs they're kind of wearing 20 hats as our mental model and like i used to say gusto could take two of those 20 hats off their head now i say we take you know 10 of those 20 hats off their head um but like they have to have something that's easy intuitive simple to use and so that's part of why scoping and simplifying matters so much that's the minimum piece of it and then lovable um you know it's it's i think easy in product software land to kind of build incremental features and functionality like for us to both stand out as a you know disruptor to the incumbents and for us to live into you know just our potential it has to be something that when you use it or you know engage with it you go wow this makes my life so much easier simpler i never thought it could be this fast or this easy and that's the lovable piece it doesn't have to be comprehensive yet.

31:38It's not to check every single checkbox, right? But if you get that moment of someone going, wow, I'm so grateful. Like, thank you. This is amazing. I can't, like, I can't imagine what I did before. I forget what I did before. I'm going to use this now. This is what I'm going to use going forward. And I'm going to tell my friends about it. That's the lovable piece that we find really important. And then again, there's the iteration to kind of keep adding additional functionality as needed, but it, but it's what's key to our whole growth model, right? In small business land, you have to build products people love.

32:05And I actually like that. I would argue it would be great if in every segment you had to build products people love, because that would create a little bit more accountability. The most loved products are the most successful companies. That's not always the case in other segments, but in small business land, that's a necessity. In fact, I think it's actually kind of the inverse, because if you think about giants like, and Josh is not saying this, I am. So if there's any hate mail, let it come my way. But like, you know, your SAPs, your Oracles, these are not companies that are famous for being cuddly with their customers, you might say, Or having user interfaces that are modern and slick and easy to grasp, if that's fair.

32:38So I agree with you, but I think the SMBs then almost, they almost sound a little bit more like consumers in the way we think of like B2C, like it has to be approachable, easy. It has to have an element of virality to it. So is selling to SMBs as a business kind of like the B2B equivalent of B2C in that case? I mean, I think it shows up a lot in talent. So when I think about the team and the talent, how much we weight, things like UX, UI, is that just the role of our design teams or does everyone involved in product development have to have empathy, connect to the customer, meet with them, interview with them.

33:10Like we do, you know, sessions with our leadership team across down to every part of the organization to make sure that that customer proximity is very, very clear and evident. I'm not sure that matters quite as much in an enterprise setting. but i have an anecdote i can share maybe to add to your commentary and we'll see hopefully this doesn't drive too much flame but you know uh it is what it is it's my opinion um but i i uh when i was an undergrad at stanford i kind of was just a very curious person i'm still a curious person but i for some reason i was meeting with like the registrar and like understanding better like what software stack they use and so i was like talking to the person there about how they were migrating at that point this is you know 20 years ago plus from like a bunch of native homegrown disparate siloed products to people soft if you remember a product that no longer exists so maybe that's a little bit simpler um and they said that it's going to take it's going to take two years to deploy and by year four it'll be roi positive was like the theory and i remember thinking i'm like a 19 year old kid i never i built software for fun like not in a business context but it just didn't like compute for me i'm like what why would software take two years to deploy and why would it not be actually helping till year four somehow and i think there's just you know here's a little bit of my diatribe like software i love software software is there and it's in its ideal form to give people superpowers right like that's what software can and should be and when instead it's like people learning how to use the software like when i see books on how to use software or people you know god bless them like on linkedin saying i'm amazing at using this thing and i took this certification class like it it bothers me because software should just give you superpowers make your life better easier and a lot of software doesn't do that frankly so you know we're doing what we can at gusto but i hope others i mean there's a lot of other companies obviously that believe in this philosophy too and yes you could argue it's a little bit of like a consumer tech philosophy because in consumer if you don't build a great product nothing works no one will use it you don't grow at all but like why doesn't that same mindset exist in enterprise like i think it's It's definitely been key to our success.

35:14And I would argue more companies approaching it that way will also benefit. Hey, startups. Does your product need a facelift? Well, a lot of companies get up and running quickly. And that's part of the idea here in Silicon Valley and in startup land. But hey, the design suffers. Maybe you got flawed UI. The UX decisions were made in a rush. And that can be the difference between product market fit and not getting product market fit or weak product market fit, medium product market fit, or strong product market fit. Well, here's the good news. DevSquad's asynchronous design squad is here to help you.

35:47Our long-term partner, DevSquad, built this service specifically for startups like ours. That means you don't have to worry about winging it yourself, and you don't have to buy a subscription to an unlimited design service and have them under-deliver. No, thanks to DevSquad, you can buy hours from expert designers who will handle everything for you from UX audits to very sophisticated UI design. And the result is going to be an improved user experience and ultimately happier customers and a more successful business. So if you need to map your user flows, maybe you need to craft some interactive prototypes, or maybe you need to conduct a rigorous usability test, DevSquad has you covered.

36:28So if you are ready to transform your startup's UI without the painful overhead of having to hire an in-house design team, just head to devsquad.com slash startups and book a call. That's right, devsquad.com slash startups. Mention you heard about the service here on This Week in Startups, you get 10 % off. I mean, just to answer your question, you're selling in the direct model. If I'm making Alex Inc. an S &B and I have two employees and I want to use Gusto, you're selling to me, the person who owns the company. but if you sell an enterprise contract to uh he will pack an enterprise for i don't know 10 000 slack seats the actual end user is never going to be in that conversation they're not going to be in the implementation the timing the selection the product nothing and so they're never going to have a say and that's why i think you can get away with lackluster products but it sounds like because you guys have to go out there and sell to individual business owners i mean it has to be good and that's that's where the virality and kind of people willing to talk about your product comes into play because if it's not good, not easy to use, they're going to go tell their friends, I tried Gusto.

37:31I didn't like it. You shouldn't use it. So there's going to be a negative virality element to going direct to SMBs as well. I mean, I call that accountability. And I think it's actually a good thing, right? And if you have an aligned business model, right? It comes down to business model too. We haven't talked too much about business model, but our business model is pretty straightforward. A lot of companies have it. It's a subscription-based business model you know based on how many employees are in the company you know getting paid by gusto for example and also how many different products from gusto that company is using whether they've adopted benefits or whether they've adopted time tracking or 401k etc um that's how we basically make more or less revenue from that company and it's a monthly billing process so if we do our job right they're evangelizing they're trusting us more as they have more needs they use more of gusto and if we do our job poorly, you know, they're frustrated and they might churn.