Gusto CEO Josh Reeves discusses the early development of Gusto's minimum viable payroll product during Y Combinator.
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.”
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…”