The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Gusto Co-Founder, Tomer London on Why Most Founders Approach Fundraising With The Wrong Mindset Today, How To Construct A Values/Motivation Alignment Test To Determine The Right Investors For You & Why Delight Is So Crucial To The Success of Any Con

Feb 28, 2020

Tomer London, co-founder of Gusto and a former Stanford PhD, dives into the nuances of fundraising and product development. He explains why many founders have the wrong mindset about raising capital, advocating for a focus on values and alignment with investors. Tomer emphasizes the importance of creating 'delight' in products, and he shares insights on constructing a values/motivation alignment test to find the right investor fit. His story from software beginnings to leading Gusto offers a fresh perspective on scaling and company culture.

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ANECDOTE

Early coding for his father's store

Tomer London's father owned a small clothing store and tasked him with managing inventory.
At age 11, Tomer taught himself Visual Basic 6 to automate this, sparking his passion for software.

INSIGHT

Fundraising as a Tool for Change

Tomer views fundraising as a means to create change, not as the ultimate objective.
It should enable specific goals, not just be a milestone.

ADVICE

Raise Funds for a Reason

Founders should approach fundraising with a clear purpose tied to business goals, like scaling customer acquisition or expanding R&D.
Don't raise funds just because it seems like the expected step.

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Tomer London is the Co-Founder @ Gusto, the people platform for small businesses providing one place to run payroll, manage benefits, and support your team. To date, Tomer and the team have raised over $520M with Gusto from some of the industry's leading investors including General Catalyst, CapitalG, Kleiner Perkins, T Rowe, Fidelity and more and then individuals including Shopify Founder Tobias Luttke, Sam Altman, Max Levchin, Matt Mullenweg, Kevin Hartz and Elad Gil to name a few. Prior to Gusto, Tomer did a PHD in Electrical Engineering at Stanford and before that was Founder and CEO @ Vizmo, mobile self-service technologies for enterprise to try to fix customer care.

In Today’s Episode You Will Learn:

1.) How Tomer made his way from creating inventory management software for his Father's small business in Israel to Stanford and founding the unicorn that is Gusto?

2.) Why does Tomer believe that most founders approach fundraising with the wrong mindset today? What does he mean when he says, "fundraising = creating change"? What is the "values motivation alignment"? How can founders use it to help them select the right investor for them? Why should you add investors just as you would new team members?

3.) Having raised over $200M in the latest financing, how does Tomer think about when is the right time to pour fuel on the fire and go big? Is it a fundamentally different mindset when you have so much cash thrown on you? What would Tomer advise founders with suddenly expanded budgets? With 111 investors on the Gusto cap table, what would Tomer advise founders when it comes to cap table management?

4.) What have been Tomer's biggest learnings when it comes to building a delightful product at scale across different segments? How important does Tomer feel time to delight from the UX perspective is? How does Tomer think about testing levels of user delight? NPS? Product analytics? How does Tomer think about the balance between product development and going all out for scaling?

5.) How has Tomer seen himself change and evolve as a leader of the last 5 years? What elements has he found super challenging to come to grips with? Where does Tomer believe he has a superpower on the flip side? Question from Laela @ CapitalG, what specifically did you do to create the culture that you did in the early days?

Items Mentioned In Today’s Show:

Tomer’s Fave Book: No Room for Small Dreams: Courage, Imagination and the Making of Modern Israel

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