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A Product Market Fit Show | Startup Podcast for Founders
How Gusto’s $10B founder raised $6M, built a team of 5—& hit $5M ARR in just 2 years. | Josh Reeves, Founder of Gusto
Jan 6, 2025
Josh Reeves, Founder and CEO of Gusto, discusses his impressive journey in creating a payroll software giant now valued at $9.5B. He emphasizes the power of starting small, focusing on tech startups in California, and the value of iterating on product with a lean team. Reeves shares how customer interviews clarified their target market and the significance of addressing real pain points. He also reflects on the role of Y Combinator in accelerating their growth, highlighting the importance of maintaining a strong company mission and fostering customer loyalty.
56:33
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Quick takeaways
- Focusing on a niche pain point in payroll for small businesses allowed Gusto to build a meaningful and impactful product.
- Maintaining a small team in the early stages facilitated faster decision-making and enabled effective iteration on the product.
Deep dives
Founding Vision and Early Days of Gusto
Josh Reeves emphasizes the initial challenges and motivations that drove the creation of Gusto, highlighting a focus on solving significant pain points for small businesses. The founding team, comprised of second-time entrepreneurs, intentionally targeted payroll as a critical area in which they could make a meaningful impact. Despite raising $6 million from notable investors, they operated frugally in the beginning, launching with just a five-person team and prioritizing the needs of small businesses over larger enterprise clients. This commitment to address a niche, albeit unexciting, service like payroll laid the foundation for their success, as they recognized the need for simpler, more accessible solutions.
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