Y Combinator Startup Podcast
Customer Obsession Made Gusto A $9.6 Billion Company
Mar 18, 2025
Josh Reeves, Co-founder and CEO of Gusto, takes us through the journey of building a $9.6 billion payroll and HR company tailored for small businesses. He discusses the challenges entrepreneurs face with outdated payroll systems and the shift from a marketplace model to user-friendly payroll solutions. Josh emphasizes the importance of customer obsession and agility in scaling a startup, while also revealing how Gusto leverages AI to enhance support for small businesses and navigate operational hurdles.
24:58
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Quick takeaways
- Gusto recognized a critical issue in payroll management for small businesses, leading them to simplify and modernize the process effectively.
- Their customer-first approach to product design emphasized warmth and whimsy, fostering loyalty and positioning Gusto as a partner for entrepreneurs.
Deep dives
Identifying a Pain Point in Payroll Management
The founders recognized a significant problem in the payroll management process for small businesses, which often operated with outdated systems like pen and paper. They found that a staggering 40% of U.S. companies were making payroll mistakes and incurring penalties due to inefficient practices. This recognition became the foundation for creating a solution that simplified and modernized payroll, appealing to mainstream small business owners. By addressing these common frustrations, they aimed to resonate deeply with a target audience that needed accessible and reliable solutions.
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