Recall Sessions: Tomer London on Building Gusto from ZenPayroll to 400,000 Customers

18:43Somrat Niyogi:I actually don't know. Yeah, the accountant product is interesting. So we knew a lot about small businesses, but we didn't know much about accountants. And we started noticing that some accountants start using our product and they have multiple customers. They were using on behalf of their clients. Their clients brought them in and said, hey, can you like collaborate with me on the account? And then so you had this one user, like, you know, that had like 10 different accounts. And they were complaining all the time because it was very hard to log in and log out and log in. And they're like, I love you guys, but this is really annoying.

19:07Somrat Niyogi:And we had like a new engineer joining. I think it was Omar. And, you know, we did this thing where, you know, within your first week or two as an engineer, you have like a little project and you kind of start and then you kind of build from there. So that's kind of the entry project. So his entry project is the accountant dashboard, which ended up being Gusto Pro today, which has, you know, like incredible amount of traction. Tens of thousands of accountants use it to run, you know, their payroll business. But it was kind of like called like an intern project. And that's what it started. And then, again, if you listen to the story, it's less we went out to the market and try to get them and more like they showed up and we just found a solution for them.

19:49Somrat Niyogi:Now, over time, we did hire actually a couple of sales folks. Like this is like year three, I want to say. who went out there and were more like, again, inbound, like accepting the calls, trying to kind of get accountants to add more clients into their book of business as opposed to going out there to accountants. And that was helpful, and we still do that today. But it's less selling. It's less pushing their open. It's more pulling their open. In other words, like the market's already there pulling kind of the product from you. So my advice to these situations is like, look, if you can get like an accountants or any channel, the way you get, I think the best way of working with them is that if they, again, they want your product, it's not that you're pushing the product to them.

20:30Tomer London:Let's talk about this sort of notion of focus. Like, you know, I always, when I talk to founders, they're always thinking, okay, you know, in this case of the accountant, you're like, okay, should I work on an accountant product? Should I not work on it? You know, how do you think about these trade-offs around this is distracting in the near term? A lot of founders, they're all ambitious. They want to do things. And you're always like, hey, I kind of like it, but we need to get this first thing done really, really well. How did you guys approach that in the early journey? I know you did payroll for a few years before you added benefits, as an example.

21:06Tomer London:But in this accountant, it sounds like you kind of worked on the accountant thing. Tell us about focus in the early days.

21:12Somrat Niyogi:Yeah, that's a great question. I think that's the main job. And I want to talk to you about how AI changes this. Maybe that's the next question. Right, right. But as we built Gusto in the past 15 years, knowing what to focus on is just absolutely critical because you have incredible talent and you want to focus on the highest impact things and everyone's excited to build things. So there's always new ideas. So you need to have principles to guide what are you going to focus on. And I think that's what, again, great product people or product managers do. They start with, like, hey, here's a strategy.

21:43Somrat Niyogi:Here's the principles. So our principles in the early days were as simple as, like, the way Gusto is going to win, back then it was called then payroll. is by building a product that customers absolutely love, you know, as measured by NPS over 80, for example, and this measure, like, this kind of viral word-of-mouth growth. And then once we do that, we get the right to do more things. So it started with, like, make payroll in California really, really, really great. Get there, get to that scale. It's like, okay, cool. We got to a place where it's like, okay, you know, customers are really happy.

22:16Somrat Niyogi:This thing is going really, really well. we can afford to take two engineers and then ask them to focus on expanding to additional states because we feel pretty good about California. And then even then, we didn't go 50 states. It was like, okay, how about we add one state or two states and kind of see how that goes. We added Texas and Florida because it was easier states to add. And then that, again, started kind of working well. And then we decided to kind of add more bandwidth to this effort. Similarly, with health insurance as our kind of second large product and time tracking. And, you know, now we have over 20 products like, you know, R &D tax credits and, you know, time tracking, time scheduling, like 401k.

22:57Somrat Niyogi:We've got a lot going on right now in the product, like finance, bill pay, invoicing, a lot of other things. But we only expanded once we felt like the core of that principle was fulfilled, where we have a high NPS product people absolutely love and it grows on its own so we can go and do.

23:14Tomer London:Do you think that's a good rule of thumb around this NPS as like a bar on initial product? Did you ever throw anything away where you kind of you added something and then you're like, this is not working? Yeah, absolutely. Yeah, we threw it. We killed several products along the way. And I think if you don't. How do you. So tell me about that, because, you know, everybody thinks every product they've got to build is like, you know, amazing.

23:39Somrat Niyogi:Yeah. Yeah, so we launched several things. Several years ago, we had a different... It's called QSHRA. So this is basically... It's a type of health insurance plan. The goal was to help... One of our goals is to reduce the cost of health insurance for employers, and this was one kind of regulatory framework to do it. The belief was that people don't use it in the wild a lot, and it's because it's too complicated, but we're going to make it really, really simple. We shipped the product, and it didn't convert. Like, we had people start using it, and it was just too complicated for people to understand, unfortunately.

24:16So we were not able to solve that need that we were really focused on, which is make things simple.

24:22Somrat Niyogi:It wasn't simple.

24:22Tomer London:How do you know when to kill something? Like, because, you know, obviously for founders, they still believe. You know, even saying, you know, hey, you had to believe, you still believe. Like, when do you know to sort of look in the mirror and say, hey, this is something's not working?

24:39Somrat Niyogi:There's the numbers and then there's the sentiment from customers. I would say, you know, you need to get to a place where both of them tell you the same story. So don't believe in your thing unless you see both of them being very positive. And don't kill your thing until it's clear that both of them are really negative. And if they're not, then there's probably an opportunity. You found some things, for example, like the numbers go amazing, but people hate it. It's like, okay, well, probably we should improve the product, but there's a good hook here. If it's the opposite, we're like, customers who use it absolutely love it, but no one uses it.

25:08Somrat Niyogi:It's very, very, few people actually attach to it and use it. They're like, okay, probably we need to figure out onboarding, go to market, and, you know, how to simplify the product further. And unfortunately, in that product situation and others that we've had over the years, too, we got, like, you know, negative kind of signals from both of these. And, you know, I think there's a good question about, like, how long do you let it run? You let it run for a month or four or six months. I think we made mistakes there. There's some things that we took way too long to run. And that's probably the repeated mistake we're doing.

25:37Somrat Niyogi:We're kind of giving things a little bit more too much time before we kill them. I think, you know, at our scale today, since we have so many customers, you can really get a good data. Like, after a month, you know. And after three months, you definitely know. But we had time that we let something run for nine months.

25:53Tomer London:Let's talk about the first 10 hires. You probably know them from the top of your head, but without getting names, who were some of the first hires? Like roles? How did you know? You're always like, when do I hire? Because sometimes you meet founders that are just like, I'm ready to hire, hire, hire. Were you guys slow to hiring? Were you like, let's just hire 10 people right away? What was unique about your hiring process? I mean, I know a lot of people know about Gusto's experience. It's very, very special. I'd love to have the audience kind of hear a little bit about the early days of Gusto hiring or Zen payroll hiring.

26:30Somrat Niyogi:Yeah, yeah. So, you know, we kind of have an unfair advantage in that space because we are a people company, like helping companies with their HR, growing their team, building their team, paying their team, and all that. So we care a lot, a lot about the details around how do you build a great team, how do you manage a great team. And one of these things is hiring. So, you know, for us, you know, it's a very high stakes thing. So, you know, to bring someone on the team. I would say one of the things that we've done very much from the very early days to be very, very specific what exactly we want this person to do.

27:04Somrat Niyogi:So it's not just like I need an engineer, but rather like here's what this person is going to be working on. And therefore, here's the skill set and the talents that I'm going to optimize for. And therefore, here's where I'm going to source from. And here's the question I'm going to ask. And here's how I'm going to evaluate if this person is the right person. So kind of starting from the work and kind of going backwards as opposed to starting with like this imaginary profile. The second thing is like definitely for the first 50 hires, I would say, focusing on full stack people. So as much as possible, and I would say even more than 50, whatever full stack means in that world.

27:37Somrat Niyogi:So if you're talking about, you know, an engineer, you want someone who has good design taste. You want someone who cares about product management, like prioritization. You want someone who understands the business, like as much full stack as possible. And if you're talking about like a go-to-market person, same thing. It's like you want to sell it. We also can market. We also can do research and also can understand, you know, economics and product. So as much full stack as possible. And then, you know, like there's a certain cultural element where, you know, you came to our office. We were working with our shoes off until we were like 2 ,000 people to make it feel like home because in our home we took our shoes off.

28:12Somrat Niyogi:So it felt very natural. And you kind of saw the energy and you see the energy and the spirits like in people, how much they care and how much they're bringing kind of their full selves to work. And I think that was like a pretty good filter on both sides. So if the candidate came in and it was like, oh, this is too intense for me, this is too weird, they would opt out. And then on the other side, it's kind of us setting expectations. Hey, this is the sort of place where we want you to be yourself. We want you to bring everything, bring all your energy. We want you to build that empathy to small businesses and kind of that connection to the customer.

28:47Somrat Niyogi:Yeah, I think that's some of the things.

28:50Tomer London:Well, let's talk about today, we're going to talk about AI because, you know, we can't not have this conversation. We'd love to talk about how is AI transforming Gusto today. And whether it's, you know, we'll talk about how you're using AI in the company and so forth. But let's talk about just however you want to answer that question. A lot of talk about AI's kind of impact to small businesses, startups, the way engineers work, product people work, every single department's being affected. How is Gusto approaching AI today?

29:24Somrat Niyogi:Yeah, I think we're really lucky to live in the world in this time where there's this incredible platform shift and clever shift in technology and expectations of what's possible. Honestly, it's just amazing because the sort of stuff that I thought was possible three years ago and what I think through today just really changes how big I'm thinking about what Gusto can become. And that's just really, really exciting. I'm an engineer in terms of my undergrad degree and my graduate degree, and I felt pretty confident in my technical abilities to understand kind of where the world is going in terms of what's possible with software.

30:04Somrat Niyogi:It's just so crazy how that opinion changes. Every week or two, I re-underwrite, rethink, like, oh, my gosh, we can do even more. We can do even better. Even better user experience for our customers. Solving problems even faster for them. Solving more problems for them. Being available for them in more places. So it's just super cool.

30:28Tomer London:It's super cool. What is, at the size and scale that Gusto has, number of employees, Like, how do you even make tradeoffs? Like, you know, at least among the investor community, there's a lot of, you know, chatter about, oh, headcount. Why do you need more headcount? You know, you can do more in theory. And this is still early in terms of whether it's actually executing in practice or ROI. But there's a hypothesis that, hey, you don't need to have more headcount. You can do more with the team that you have. What is your point of view of how, at the size and scale of organization of gusto, around the messaging you're kind of telling the organization around AI's role in everybody's job?

31:12Somrat Niyogi:We look at this as like a superpower. So like, hey, imagine being in the workforce when they invented the PC, right? Or the computer, right? And you were working just with pen and paper, and all of a sudden they put a PC on your desk. Now we can decide, am I going to turn this thing on and learn how to use Word and Excel and whatever? Or am I just going to keep using pen and paper? And the answer is, of course, I'm going to use the computer because it gives you the superpower, right? So I think this is where we are. Now every single Gusty has this computer at their disposal. All of a sudden, this new superpower.

31:45Somrat Niyogi:And our expectation is that people are going to just jump right into it and try to become experts in it. And I believe that it depends on which kind of parts of the company. Every part is impacted a little bit differently. But I would say overall, I don't think I'm hyperbolic by saying engineers, for example, can be 10x more productive. I was going to ask. I don't think it's hyperbolic at this point. I was going to ask about that in engineering specifically.

32:09Tomer London:Yeah. In engineering particularly, are you all seeing in the organization sort of increased kind of throughput? There's a lot to build. There's a lot of problems to solve for small businesses. What are you seeing right now? Yeah. because you guys are in this moment right now.

32:27Somrat Niyogi:I'll tell you about myself. So, you know, I haven't coded. You remember me. Yeah, yeah. You remember for a long time ago. You've never seen me code. Yeah, I have not seen you code. Exactly. And so I know how to code. Right. But I didn't. And why? Because it's just, you know, the distance between, I was just explaining this to my dad on the phone on the way here in the morning. So you got like the PRD, right? Like the spec. And then there's a distance between the spec and a product. And that distance is the code, right? And it used to be that that code took you. And if you had an idea, that code would take a team of professionals for weeks and weeks and weeks in order to make it happen.

33:00Somrat Niyogi:And that just, like, I think work of two weeks cannot be done in a day. And this is, again, talking about my own personal experience of coding. While I am back to coding, I'm now coding. There's three different products that I'm working on. I ship something every weekend at this point. And sometimes it's small things. Sometimes it's large things. And I can tell, like, right now this thing that I'm working on, it's an internal product right now. So it's like a really, really cool dashboard I'm excited about. But it definitely, definitely would have taken me like weeks and weeks and weeks. And I did it like in basically 24 hours this weekend.

33:29Somrat Niyogi:And this is just like my personal example. And when I look at the engineers at Gosto who are, you know, called like AI pill, like people who are like, they get it. They're using cloud code. They're, you know, all day long have like multiple agents running at the same time. They're definitely 10X. Maybe they're 20Xing their bandwidth. Now that said, not every single thing you do can be 10Xed. So it depends on the sort of projects you're doing. So some projects, like if you brand new, like kind of products out of scratch, amazing. You can totally 10. You can 20x that thing. If you're looking at like a very, very complex code base, maybe it's not 10x.

34:01Somrat Niyogi:Maybe it's like 30 % faster. Maybe it's 50 % faster. But it's definitely faster. And I think ignoring it and pretending it's not real is just a mistake for people.

34:11Tomer London:And how are you approaching it from, you know, is it internal use cases? Is it like, hey, how are we, you know, I know you have launched Gus, was it last year? How are customers experiencing that? Because that's a change for small businesses, too. For sure. I mean, obviously, you know, there's been, you know, call the phone. They've had some, but, you know, sometimes that can be scary for small businesses. Oh, no. For sure. Like Gusto has always built this amazing brand of a relationship with someone. Yes. How are you all thinking about how AI is being used in that customer experience?

34:44Somrat Niyogi:So similarly, it's how I was talking about AI giving us superpowers inside Gusto to Gusties. The goal is to give that superpower to small businesses. And I think there's only a handful of companies out there that can really kind of put a stake in the ground to say, like, hey, we are giving that AI superpower to small businesses. And Gusto is one of them. So that's our goal. And Gusties is kind of our assistant product that helps customers run their business, really. And we have lots of other kind of places within the app, within the experience to help people. For example, like, you know, scheduling is like if you run a coffee shop, for example, and you have like a schedule with like, you know, with, you know, three shifts a day and, you know, 15 people and you're going to figure out how do I do this?

35:24Somrat Niyogi:It takes it can take like two hours every Friday to figure this out. Now, you know, with gusto scheduling, you just click a button and it automatically takes all the different kind of, you know, conditions and all the issues and all the everyone's restrictions. And puff gives you like a good schedule and you can kind of correct it and change it. But instead of taking two hours, it can take you like, you know, 10 minutes. That's like a small example. There's like many, many examples like that within our app. And we're just starting. So I'm very, very excited about it. You mentioned customer service.

35:50Somrat Niyogi:You know, here's the thing. Like Gusto has hours of operation, for example. So you call our customer support, and we have specific hours of operations. We're trying to be as accommodating as possible. But it will be hard to answer at 2 a.m. in the morning. Well, that's when you get actually a voice agent, and you talk with our voice agent. And, you know, people absolutely love it. People absolutely love it. Because, listen, if the bar is like I get nothing done and I was able to get something done, that's already better than what it is. And now our goal is to take it from like I'm able to, let's say, serve 80 % of the cases or 50 % of the cases and I'm bringing up to 80 and 90.

36:24Somrat Niyogi:And the more it can do, the more, again, superpowers the small business has when they can call in whenever they want. They can get things resolved.

36:31Tomer London:I know we're running out of time here. What's next? What's coming up for Gusto in 26, 27? Kevin, what can you share about what's sort of top of mind for you and the leadership team?

36:41Somrat Niyogi:Yeah. So, you know, our focus is small businesses. We're growing really, really quickly. We're very, very happy with how things are going. And again, I feel like AI is that new superpower that we're bringing to our customers. So there's a lot of work on that front. It's going to be a lot of news around being able to use AI to solve problems for a business, being able to use AI to access Gusto and use Gusto from everywhere you are. And then we're also solving more problems for our customers. So whether it's the world of HR, insurance, benefits, or whether it's things around your financials and kind of how you run your mind from a cash flow basis.

37:15Somrat Niyogi:There's a lot going on in Gusto right now. So stay tuned.

37:20Tomer London:Well, I appreciate you taking the time today. A lot of little tidbits for our founders. If they want to learn more about Gusto and they want to sign up, what's the best way for them to do that?

37:29Somrat Niyogi:Go to Gusto.com and check us out. And, you know, Gasto is the most popular, you know, payroll benefits, HR for startups, for technology companies in the U.S., YC companies, and so forth. So, you know, it's definitely the right way to go. Well, thanks, Tom. I appreciate your time today. Thank you.

37:49Somrat Niyogi:Hey, this is Ben Casnoka, co-founder of Village Global. Thanks so much for tuning in to the Village Global podcast, where we go deep on all of the biggest topics in tech. If you enjoyed this conversation, please subscribe to our YouTube channel. You can check us out on Spotify, Apple, wherever you get your podcasts. We'd love to see you for the next one.