Feb 28, 2020 · 33m · 20vc
20VC: Gusto Co-Founder, Tomer London on Why Most Founders Approach Fundraising With The Wrong Mindset Today, How To Construct A Values/Motivation Alignment Test To Determine The Right Investors For You & Why Delight Is So Crucial To The Success of Any Con
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In this episode of The 20 Minute VC, Gusto co-founder Tomer London joins host Harry Stebbings to discuss fundraising philosophy, product craftsmanship, investor alignment, and culture building. London outlines how prioritizing customer delight and intentional organizational values enables sustainable startup growth.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 29.3% of the talking time here. How this is scored →
Harry as informed peer 2.7 Guest teaching 3.4 Guest disagreement 1.7 Harry pushing back 1.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:29 Dismissing VC Twitter as an echo chamber
Tomer directly rejects VC Twitter as an unhelpful echo chamber that drains creativity, explicitly contradicting host Harry Stebbings who actively identifies as a major proponent of VC Twitter.
Hardest push from Harry ▶ 14:38 Challenging delight vs lean MVPHarry pushes back on Tomer's product framework, explicitly asking if investing early in delight contradicts the core startup principle of building the leanest possible MVP.
Biggest teaching moment ▶ 15:00 Replacing MVP with Minimum Lovable Product (MLP)Tomer corrects standard startup wisdom around MVPs by explaining that Gusto uses MLP (Minimum Lovable Product) because cutting delight compromises core differentiation.
Harry holds his own ▶ 19:15 Calling NPS metrics bluffyHarry demonstrates industry insider skepticism by directly challenging standard NPS benchmarks as bluffy, forcing Tomer to defend how Gusto uniquely extracts actual value from customer comments.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Tomer London's Journey and the Founding of Gusto | 1 | 2 | 0 | 0 | Harry invites Tomer to share his origin story, and Tomer describes learning Visual Basic at age 11 to automate inventory management for his family store in Israel before moving to Stanford. The exchange is warm, welcoming, and purely introductory with zero friction. | |
| The True Purpose of Fundraising: Creating Change | 2 | 5 | 3 | 1 | Harry quotes Tomer on fundraising being about creating change. Tomer gently reframes traditional investor-driven expectations, explaining that founders often get trapped doing things just to raise rounds rather than raising rounds to execute clear growth hypotheses. | |
| Navigating VC Twitter and Avoiding Echo Chambers | 2 | 4 | 5 | 3 | Harry asks about VC Twitter, admitting he is one of its biggest proponents. Tomer contrarianly dismisses VC Twitter as a distracting echo chamber that destroys the mental space needed for original thinking, prompting playful pushback from Harry. | |
| Strategic Growth, R&D Investments, and Cap Table Management | 3 | 3 | 1 | 1 | Harry asks about Gusto's $200M round and cap table strategy across 111 investors. Tomer explains their selective approach, treating angel investors with the same rigorous value-alignment interviews as full-time executive hires. | |
| Product Development Philosophy: Minimum Lovable Product (MLP) | 4 | 5 | 3 | 4 | Harry pushes back on Tomer's product design philosophy, asking if prioritizing delight conflicts with building a lean MVP. Tomer corrects the premise by rejecting the MVP paradigm altogether in favor of Minimum Lovable Product (MLP). | |
| Case Study: Designing for Delight with the Payday Email | 4 | 4 | 2 | 4 | Harry challenges the usefulness of Net Promoter Score metrics, calling them bluffy and superficial. Tomer accepts the critique in part but educates Harry on how Gusto extracts value by routing every comment into internal Slack channels for product teams to read. | |
| Scaling Product Development and Hiring for a Service Mindset | 3 | 3 | 1 | 1 | Harry asks about balancing rapid operational scaling with product development and personal founder growth. Tomer details how he continuously fires and rehires himself every six months to adapt to CPO requirements as Gusto expands. | |
| Intentional Culture Building in Rapidly Growing Companies | 3 | 3 | 0 | 1 | Harry references back-channel insights from Capital G investor Leila to ask about intentional culture building. Tomer emphasizes that small deliberate leadership habits early on dictate how company culture scales. | |
| Quick Fire Round: Books, Strengths, and Gusto's Future | 2 | 2 | 0 | 0 | In a rapid-fire sequence, Harry asks about book recommendations, operational strengths, YC learnings, and the five-year roadmap. Tomer gives collaborative, reflective answers to conclude the interview. |
Statements from this episode (15)
Founders should raise capital to execute goals, not set goals for fundraising
“Investors kind of set the tone. And sometimes the implied conversation there is, what do you need to do? You need to do A, B, and C in order to raise your seed bounce. You need to do D, E, and F to raise your series A. And I think that's just a really wrong wa…”
VC Twitter echo chambers destroy the mental space needed for original thought
“I think social media in general, like, you know, the amount of information, the amount of opinions, the amount of knowledge out there has a lot of positives, but it also has some negatives, and we talk a lot here about being in a bubble, and kind of the echo c…”
Gusto evaluates prospective investors using its employee interview criteria
“We're still doing this today, which is thinking about investors as team members. When you bring in a new Gusti, that's how we call our own team members. When you bring in a new Gusti on board, there's an interview process, right? And there's like a whole lot o…”
Gusto serves over 100,000 small business customers across the United States
“We're serving over a 100,000 small businesses across the country, across all these different industries.”
Gusto's $200M funding round compressed its next revenue milestone timeline by years
“Instead of getting to the next revenue milestone, in five years, we're going to get to shrink it to three years.”
Product delight cannot be added retroactively and must be designed from inception
“You can't add delight later. When you look at a product, our experience, you have to think about delight as an inherent part of the product itself.”
Founders should cut feature scope rather than product delight when launching
“So the way to solve it is not for us, it is not like cut the delight element out. It's got the functionality down. It's scope it down to a place where it's small enough that you can test it and then ship it.”
Gusto's payday notification email achieves one of the highest open rates ever
“It's the highest open rate email probably ever.”
The first 30 seconds of user onboarding establish a product's brand personality
“And for me, the way I think about this is a brand or a product experience is really like some, like a product is like a personality. It's like a person. And when you meet someone for the first time, the first 20 seconds, the 1:30 seconds really, really matter.…”
Net Promoter Score is insufficient on its own to evaluate customer sentiment
“NPS is not the one metric. Like, it's not the one place you go and you know everything about how people think about your product or love your product at all.”
Gusto streams every customer NPS comment into an open company-wide Slack channel
“The other thing is about comments, and you know, we have like a Slack channel in Gusto, it's open to everyone, where literally every single NPS comment has been read by many, many people in our Gusto team, and especially The product and design teams.”
Hiring solves 80% of the challenge of preserving product quality while scaling
“So I think 80% of this is really solved by hiring. And the other 20% is solved by making sure we don't miss out on opportunities that are not directly staring us at the face.”
Gusto grew from three founders to 1,200 employees in eight years
“So I think the company eight years ago when we started, we were three and now we're around 1200 people.”
Founders must fire and rehire themselves into new roles every six months
“This idea of kind of like firing yourself from your old role and hiring yourself to the new role is something that I think the three of us really took to heart and it's been really helpful.”
Gusto's co-founders spent five hours every Sunday aligning on company culture
“In the early days, Josh and I, we're meeting together every Sunday for four hours, five hours in, in Eddie's apartment building in San Francisco. And we were just talking about these, exactly these types of things, how to handle these things.”