Disclosure
Reeves: Gusto rejected 11 VC firms to raise seed solely from angels
“We had, I think, like, over 11 VC firms offer to invest. We actually chose to do the round with no VC firms. It was all angels, so we raised from, you know, twenty-plus CEOs and founders. It was, you know, the CEOs and founders of, you know, PayPal and Stripe …”
Insight
Reeves: Small businesses need opinionated software partners, not just passive tools
“Small business, you know, they want an opinionated partner, right? They don't want just a tool. They want just a set of menu of options. They're super busy. They're wearing many, many different hats, and they don't, frankly, have the resources to go hire all o…”
Assertion Supported
Reeves: 40% of US companies faced annual penalties for payroll mistakes
“40% of companies in the U.S. Were making mistakes and getting penalized every year.”
Disclosure
Gusto founders withheld salaries until software could process them
“We're also gonna add the pressure of, well, we won't pay ourselves until we can use our own system to pay ourselves.”
Assertion Supported
Gusto delayed public self-serve launch until months after Demo Day
“After demo day, we actually did not launch the product. That was also kind of a non-obvious choice we made. We'll probably talk about the seed round we did, but we actually didn't launch publicly where you could like come up as a stranger who we've never met, …”
Assertion Partly supported
Reeves: $100B incumbents ADP and Paychex served under 30% of small businesses
“You had this amazing combination of, you know, some big incumbents like paychecks and ADP worth, you know, over a hundred billion dollars together at that point. So like clearly big, big incumbent market presence in terms of like economic value, but also an in…”
Disclosure
Reeves: Gusto's early angels included Systrom, Stoppelman, Shah, and Collison
“Kevin is a friend from college, and Instagram, I mean, he's an investor in Augusto, so, you know, it was fun to talk to him about some of the scaling stuff, but actually, I think, ah, you know this more than anyone, like, tech is pretty broad, so even back the…”
Disclosure
Gusto's first prototype hotline drew calls for astrology and relationship advice
“Within, like, a week we had a prototype where you could basically Call a number. It would ping us. We'd have it route effectively. You could just buy some keywords on Google, and then all of a sudden start, you know, getting real people calling you with questi…”
Assertion Supported
Reeves: Gusto pivoted to building a payroll system before starting YC
“So by the time we started YC in January, we were already building a payroll system.”
Assertion Supported
Reeves: There are about six million US employers across industries
“There's about six million employers in the U.S., and so, you know, if you're going to get to real, real volume in the space, you have to go into many, many industries.”
Assertion Supported
Reeves: ~550k US Employers Form Yearly; 52% Reach Year Five
“There's about 550,000 new employers each year in the U.S., and the historical stat is that about 52% make it to year five.”
