SV Icons: Josh Reeves, Gusto
Socks culture at scale
Josh Reeves is the CEO and co-founder of Gusto, an HR software platform used by hundreds of thousands of businesses.
Around ten years ago, he wanted to solve an impactful problem, and he saw that many small and medium businesses manually managed employee records, payrolls, and benefits. At the time, two other large companies were doing payroll automation, with a total market share of ~50%. Reeves saw that these small and medium businesses were willing to pay $100-$200 to manage the records of each employee, so once he developed a product, he knew he couldn’t use salespeople to grow his business and instead would have to rely on word of mouth.
It was still a low penetration, fragmented market, so his odds were good. If he built an excellent product and grew it virally, Gusto could still win the market. The formula for Josh is straightforward: 1) understand the problem and 2) solve the problem that you care about – because you'll be doing this for the next ten years. He noted that he would burn out if he didn’t care about the problem he’s working on. "We encountered this [payroll management] problem because we each had our own businesses and other startups," Reeves emphasized during the dinner.
MLP - minimum loveable product. This is what Josh was building for his customers immediately. Because details matter, and in products that rely on word-of-mouth growth - it might be critical to have usable products with good UI instead of dirty MVP.
Josh believes that the founders' culture becomes the company's culture. Imagine walking into an office for a professional meeting, and upon opening the door, you're welcomed by a crowd of busy, shoeless workers. And before you go any further, you, too, must take off your shoes. Welcome to Gusto. Reeves was raised in a "no shoes" household, and when he and his co-founders began working on Gusto in an upstairs bedroom of a Palo Alto house, they continued the tradition. And when the company started to grow, the tradition remained.
Josh is a big believer in Web3 - because it brings credibility to the industries where transparency and trust are issues.
A few other takeaways he had for future founders:
Segment your market and tailor your product to who benefits most from your solution and who is underserved. For Gusto, it is to streamline the payroll of small and medium businesses, selling to business owners who want to focus on their core products;
Continue checking where you can provide real value and expand to new, compelling product lines with significant opportunity, even if it may seem competitive to an earlier offering. For instance, Gusto's sold their APIs to companies with specific niches in HR platforms. This API offering, however, competed with Gusto's core product but opened up a massive new distribution channel in which Gusto already had the back-end system built. In the long run, Reeves believes this is the right decision for Gusto's customers, employees, and investors;
Once you get past product-market fit, every major challenge comes back to people and people management;
Defining a culture and value system authentic to you and your co-founders is essential. Your values/culture should permeate into recruiting to ensure that culture is consistent;
Engagement with VCs is a long-term commitment, so before fundraising, understand why a person became a VC and what they are passionate about.
Organizer: Georgi Koreli
Editor: Jacky Lin
Contributors: Kaitlin Highstreet, Martin Schneider