9 min read
Sep 6, 2017
Any way you look at it, Gusto, the maker of a popular platform for managing HR, payroll, and benefits, has all the markings of a successful long-term business.
First, there is a founding team that cares deeply about a real problem and is obsessed with fixing it. Then, there is a large addressable market that had been neglected for a long time. Throw on top of that a great product, unwavering customer focus, and ingenious marketing strategy, and you have a recipe for an exciting growth story.
It is no wonder that the company has attracted interest from who’s who in the tech investment community at $1B+ dollar valuation.
How did Gusto gain early traction and how has it scaled to over 40,000 paying customers? We’ll take an in-depth look at the strategies behind the company’s journey to a unicorn status.
Gusto was founded in 2011 as ZenPayroll with a mission of making it easier for small and mid-sized businesses to manage their payroll. For businesses mired in a manual process or using outdated systems, the company offered simple, cloud-based software to streamline all payroll-related calculations, payments, and filings.
For a small business owner, the value proposition is simple: Gusto gives you a peace of mind on the back end, freeing you to do what you love most and serve your customers.
The three co-founders — Joshua Reeves, Tomer London, and Edward Kim — each had prior businesses and experienced firsthand the pain of using other payroll systems or doing it manually.
Gusto co-founders: Tomer London, Joshua Reeves, and Edward Kim (source)
With an estimated half of six million businesses in the US still managing payroll on paper and with spreadsheets, they saw a huge opportunity in an underserved market that historically did not have access to high-quality software.
The company’s timing with launching the platform was just right. The widespread acceptance of new digital realities — paperless transaction processing (e-payment, e-file, e-signature), cloud-based software solutions, and secure online information transfer — enabled success of a product that some 10 years ago would have been a hard sell.
Gusto’s business strategy is a reflection of how the company’s founders view their startup journey: it’s a marathon, not a sprint. They are not taking any shortcuts or hacks to achieve short-lived hyper growth, instead mastering the basics of what it takes to succeed in the long-run.