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Building the new remote work ecosystem, with Gusto co-founder Josh Reeves

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In this exciting new episode of Off Mute, Remote CEO Job van der Voort meets Gusto co-founder Josh Reeves. The two share their stories at the forefront of distributed work and discuss the driving factors that led to the creation of Gusto Global powered by Remote, an exciting new partnership between the two companies.

Through the episode, you’ll hear how Josh and his housemates co-founded Gusto; how they went about disrupting the payroll space; and the challenges they faced as a company. Josh shares his thoughts on how the pandemic accelerated the remote working space and his tips on achieving success, not only for the individual but the distributed team as a whole. Josh also speaks about new uses of AI technology that can give “superpowers” to anyone willing to experiment a little.

Gusto has been a success story since its inception as a payroll solution. More than 300,000 businesses already use Gusto, and with Gusto Global powered by Remote, Gusto customers now have the ability to hire, pay, and manage talent from anywhere. It’s the ultimate advantage in the new world of distributed work.

Episode transcript

Job: Hi, I'm Job, Co-founder of Remote, this is our podcast called Off Mute, and each and every episode, we explore the challenges of managing distributed teams across the globe.

In today's episode, I'm talking with Josh Reeves, the Co-founder and CEO of Gusto, a product which helps small and medium businesses with the payroll benefits and much more.

And I'm so excited to tell you that we at Remote have a partnership with Gusto so that all customers of Gusto can truly hire anyone from anywhere through Remote.

We'll be talking more about this in a chat today alongside talking about what it was like navigating through a pandemic, disrupting the payroll process, and even looking into the future. Josh is a really inspiring individual and I learned lots from our chat, so I think you're really going to enjoy it.

Hey, Josh, thanks for taking the time to be on with me today. There's so many things to talk about, but let's start at the beginning. You are the Founder and CEO of Gusto. What is Gusto?

Josh: Gusto, well, we call our product the people platform. We serve small and medium sized businesses, and we love to solve pain at the connection between the employer and the employee.

That means we do things like payroll, so all the tax filings, tax payments, it means we help set up health insurance. It means we help with employee onboarding, but we're 11 years in. We serve 300,000 businesses today, over 300,000. And I still feel like we're early in the journey.

Job: That's amazing. 300,000 businesses, it's so many. You wonder how big the world is if it's like 300,000 businesses. It's just incredible. How did you get started in the first place?

Josh: So it was a team effort. So, today, we're close to 2,500 Gustees, but we started with three people. So, I'm one of three co-founders.

We came together because we wanted to tackle a really big problem. We had felt some of this pain ourselves in running prior small businesses, and we had family who had run small businesses. So, it was really a combination of that personal experience.

Then doing some research and trying to figure out is this just a small problem or is it a big pain point? And when we saw how many businesses were doing things like payroll by hand, making mistakes, getting fined, we thought, “Hey, maybe there's an opportunity here to use technology to actually make it easier, simpler, and make it more fun to build a team, build a company, things that are really meaningful and important, but sometimes can be bogged down with all of the kind of headache and burden of running a business.”

Why is payroll so hard for remote teams and small businesses?

Job: I think about this sometimes myself, which is, “Well, if I knew how difficult it was to start a business in this industry doing these kinds of things, would I have started it?” I would love to hear your experience in 2011.

You're talking about doing payroll by hand. How did you even get started trying to start solving that? What did the first version look like and how did you get to that point?

Josh: Well, there's probably the masochistic tendency to both of us where the bigger the pain point, the more exciting we get. Not because we celebrate pain (quite the opposite), but that means that if we can actually help remove the pain, make it better, that we can actually create real value.

And so, go back to the early days, three co-founders, we'd all had prior startups. I had run a small business with a couple employees. I had set up payroll, I had set up state tax registration, I had set up health benefits.

And so, there was just really that personal experience of saying, “Hey, this feels overly manual, too much paper, a lot of stuff offline.”

At a time frame, it was 2011 where three big technology trends were becoming quite pervasive. So, Cloud, Paperless, and Mobile. We didn't invent those trends by any stretch, but we got excited about them as modern technologists, using them to create a product that in our space at least, someone could use with no training, no background.

And so, it was really this kernel of what is work and payroll is a very important part of work. It's obviously the mechanism in which people get paid, but also a company stays compliant in terms of the local state and federal requirements.

And so, that was kind of where we got started. And all of that is ideas and thought, then you get into building mode as you know very well. We set the goal of not paying ourselves until we could use our own system to pay ourselves. So, those first several months had that added incentive as well.

Job: I love that. It's like if you would've failed at that, you would've had a terrible experience because after several months, you would be without cash. That's amazing. I absolutely love that.

You told me some of this in private, but at one point, you went across the country visiting small businesses to get them to become your customers?

Josh: From very early days, we wanted to serve mainstream small, and medium sized businesses. Although we got started in Silicon Valley, some quick stats here, there's 6 million employers. There's obviously millions more outside the US.

But over 98% of those employers are less than a hundred employees, and over 50% are less than five employees. And so, that's really mainstream small business are these smaller companies in towns, communities, across the country.

And so, we've always been obsessed with connecting with customers. By 2015, we had reached all 50 states, and in the U.S., 50 states in some ways operate like 50 countries given how different they are.

And so, we had also grown as a company. We were a couple hundred people at that point, and I saw all these customers onboarding setting up, and so just got really excited about the chance to go meet some of them. Obviously, not able to meet all of them given how spread out they are.

And so, yeah, I did a road trip with some fellow colleagues. We were in an RV, we visited many companies across the U.S., drove from California to Florida, 4,000 plus miles in two weeks, and gave out these extra mile awards, where we actually found small businesses to celebrate, gave them this award.

It included some money to donate to a charity of their choice, and we tried to just shine the spotlight as much as possible on those companies.

Job: I love that. I have to admit, I've met very few customers most of my time at GitLab prior because we were operating as a remote and distributed company. And now, again, as Remote, you meet them at conferences.

It's rare that I actually go to a customer, and I don't even know where it would start because most of our customers are, of course, fully remote. So, I would end up visiting people at their homes. That's hilarious. You go ahead Josh, if you have something to say.

Josh: I was going to say, I mean, we have mechanisms to connect through digital too. So, whether it's calls, video chats, surveys, feedback. It’s fun in our business because of how again, mainstream small businesses are and also our customer base.

If I'm just wearing a Gusto T-shirt or some of our teammates are, and they're walking around and visiting a small business, if they're a customer, the employees will immediately react because amongst many things that we do, we're the company that sends that email that says, “You got paid today.”

And so, it's usually this big smile or this exciting moment, and then always a chance to say thank you, we're honoured to serve you. And then I always love to ask as a follow-up, “How could we get better? What are the things we can do to improve” and that can happen, digital and non-digital, both are important.

How did Gusto change as the world shifted to remote work?

Job: So, 2011, you get started; 2015, you're travelling across the country; 2020, a pandemic happened. What happened in your business? What happened with Gusto?

Josh: Yeah, I mean, two lenses to talk about. One, our customers, we have all of these small medium sized businesses in the U.S. and their teams. So, immediately, it was clear that they were in a duress.

Depending on the industry, what it really did for our team was it served as an amazing galvanizing moment of how we can be helpful, how we can make their lives better in a moment where a lot of stuff is both out of their control and out of our control.

And so, that became primarily focused around creating awareness of the various different government programs, activities, things like PPP, when that became a program, making it easier to go, not just know about it, but actually collect the necessary information to apply for it.

And so, it really was a motivating moment for the team. We always exist to serve, that's our purpose as a company. But that moment in particular was I think a highlight for it.

And then from a Gusty lens (we call ourselves Gustees), started with making sure everyone was safe and able to be in a place with their family where they were able to stay healthy.

And then obviously, a lot of changes to how we work to enable us to effectively all work from home for an indefinite period of time.

Job: It must have been an interesting period where you had to provide a lot of care for your customers that were in a difficult position. You, yourself and all your colleagues had to change the way you were working. I can imagine that it must have been incredibly overwhelming.

Josh: A company doesn't exist for its benefit; we exist to solve pain for others. And if we're using technology as our enabler, that means it's going to be probably a big problem space and a high growth rate. But there's always checks and balances on that.

So, if quality degrades, that's a good reason to slow down. If challenges arise, that's a good reason to slow down. If the business model isn't strong, that's a good reason to slow down. But I would say change is the one constant generally in the growth and journey of scaling a company. We hope to build Gusto for many decades.

So, I can think of that moment as an acute moment to your point of lots of change. But frankly, people join a startup because they want to navigate a change, be a stakeholder, have an impact.

Definitely don't wish another pandemic upon anyone, us included. But I definitely know that in the next 10 years there'll be a lot of changes, some that we create, some that are out of our control. And what matters more is how we navigate it than believing they're not going to happen.

Job: This is the point at which I am trying to not be obvious, but steering the conversation about the partnership that we have.

So, I'm just going to ask you, well, the world started working from home. That's what happened in the beginning of the pandemic, and you started making changes in your product roadmap as well, I suppose.

Josh: I mean, it doesn't have to be a COI reference. We're eager and excited to celebrate that Gusto and Remote are our partners, and it's because we have this shared passion for compliance and making sure we scale and build our products and our businesses in a way that will stand the test of time.

But yeah, to get really tactical, we serve a lot of small, medium-sized businesses. These can be one to five person companies. They could be 50, 100, 500 person companies. But again, the majority are less than five. That's just the data from the census.

And so, we were actually surprised to see, and I think maybe many folks were surprised, but even smaller companies immediately started having more multi-state employees.

So, to start, even within the US, having people be in multiple states, it could be adjacent cities across state lines, or it could just be because people are now working from different locations.

An employee working in a different state, incurs wholly different compliance rules, requirements and local payroll taxes. And so, we accelerated our work around making it easier to hire and build a team across state lines.

But for the same reason, we also saw folks looking to hire internationally. And so, international contractor payments became accelerated. Today, we're in over a hundred countries.

But then in particular, we saw a big need and something we had not built ourselves around the ability to go hire not just contractors, but employees too in other countries. And when we did our research and looked at the landscape, it was very clear that there was one company, Remote, that had done the work the right way.

There's a lot of ways in these compliance spaces to take shortcuts or cut corners. And so, doing it the right way doesn't just lead to a better business outcome in my opinion. It also is just the right thing to do in terms of the customer's trust they're giving us to do something so important in their lives.

And so, yeah, really excited today, we're working with Remote. It means that from the Gusto app, our customers are able to basically hire in more places. We have a roadmap to add more countries.

Obviously, we're starting with Canada, but eager to get to all of the countries that Remote supports, which I believe is 80 plus, maybe soon to be 90 or 100 plus. You would know better.

Job: Thanks for doing my work for the day, Josh, we can just continue with the rest. It's going to be all countries, that's the explicit goal of when we started Remote. We want to be anywhere.

Like I don't want anybody in any location to not have access to great opportunities and as far as we're able to go everywhere, we'll try to actually go everywhere.

Was there something during that period of time when the pandemic started, you had all this work, what were some of the things that you learned that surprised you that were different than you expected them to be?

Josh: Probably one thing on the Gusto side is prior to the pandemic, we were a heavily in-person centric work culture. And I think what matters most here when I advise other companies is to be intentional. I don't think there is a one size fits all. I don't think there is just one way to work for all companies, frankly.

Fast forward to today, Gusto is a hybrid company when it comes to distributed. We have offices and we have folks near offices, and we have anchor days to make it easier to coordinate when to come in. And we have a lot of Gustees that are not near an office. We call these centres of gravity.

We want to have clustering of teams and we want to be intentional on how a team gets distributed. Should it be one person in a totally different location from everyone else or should there be a 10-person team in three locations?

And these are all just again, topics I think that are worth spending time on. There isn't a right or wrong, but the worst outcome to me is just anything goes. And so, a big shift for Gusto from being fully in person to then fully working from home.

And now we're, like I said, on a hybrid journey, and I think that's going to be the right approach for Gusto. If you'd asked me five years ago, I would've probably said something different. That's the whole point. We're going to keep iterating and adjusting but trying to stay true to our values throughout the whole process.

How do people connect when they don’t work in the same place?

Job: For you personally, did you feel a change in your own life? How was your own experience? I suppose that you spend your life between the office and working from home?

Josh: There's a personal journey here, I'm happy to share. Maybe some can relate, maybe some have totally different life journeys.

But when we started Gusto, we worked out of the bedroom and the house that Tom and I were living in. And Eddie, our other roommate, or other co-founder became a roommate as well.

So, commuting … I guess, in some ways, we were working from home (maybe it's a return to the past), but commuting was walking up the stairs. I would say the next 2, 3, 4 offices, I probably lived within a block of each of them. And my goal is to be as close as possible to having no commute in my life.

And that's simply a personal preference, although I think most people tend to not like commuting. Today, I have an hour plus commute. I think it's worth doing because I really enjoy seeing my teammates.

And I go into the office a few days a week, and I think it's awesome to spend time with them and be in brainstorm mode. I also try to visit our other offices, and I also spend a lot of time like right now at home on Zoom.

And so, I guess my journey is probably maybe in that way, like most people, it's hybrid, it's mixed, there's a lot of different things happening.

The main thing is to optimise on … for my role, am I able to do my job effectively? Am I able to be a good leader for Gusto? Am I able to make sure that the team is aware of our priorities and that I'm able to connect with Gustees?

I don't want to be isolated from the team, that would be really painful and frustrating for me. I love that connection.

And on the flip side, this isn't a pandemic thing. Many years ago, when we started our second office in Denver, I knew that I had to build that muscle of how to connect with folks not using in-person time, because frankly, we had more and more of the team a thousand miles away from me.

Job: I always talk about this when people ask me, “Well, how do you make sure that you communicate effectively and bond with each other if you are all apart?”

And I often say, well, once your company gets to a certain size, then maybe you're not working remotely, but you might have multiple offices, or you have an office with multiple floors and you're not going to be able to overhear and by osmosis, learn anymore what other people in the office are doing.

Is there anything particular you did at the time when you opened your Denver office, that looking back now that's very similar to how you would operate as a hybrid organisation in terms of communication and keeping each other informed?

Josh: Yeah, I mean, there were a bunch of, I would say, practices that we employed. I think some we still would employ with other offices, and some I think do translate frankly to a more distributed team structure.

One was being intentional about which teams and what sequencing. So, we want to have it be a full stack office with teams from all departments. But one person from every department doesn't make a very functional office either.

So, which teams were growing at which pace was one big thread. Me being pretty high touch and hands-on interviewing the first 5, 10, 15 people in that office because they're going to set the DNA and set the foundation for that location, felt like very worthwhile work to do.

Even if the company itself now was probably 150 at that point. In terms of all hands, something I did that was more physical was fly there every month and do all hands from Denver, all hands from SF.

On the flip side, we've been a Slack native company since our origin. We leverage a lot of digital communication to share updates, to share information, to share OKRs, company priorities, financial performance, and obviously, a lot of that is self-serve, and that's not at all connected to face-to-face interaction.

I guess some of the variables are dimensions I would highlight, but the main thing to me is being intentional. Again, thinking about it, spending time on it, having a feedback loop, having a goal, seeing what's working, seeing what's not working, versus believing that just because some other company did something a certain way, it's right for your company. I think every company is quite different in this dimension.

What changes are coming with continued remote work adoption and now AI tools?

Job: That's a great insight. I don't want to make this too much of a Job learns how to be CEO from Josh but what do you think will happen over the coming years?

We went through this change where now we're working distributed, remotely, we're pretty comfortable, we're beginning to become comfortable with that model. I think modalities that we use are video and chat.

And for the average business, I think much of their payroll, the HR is now happening on nice platforms like Gusto. What other changes do you expect over the coming years for businesses, small and big?

Josh: Well, I mean, something we really deeply believe in and care about is the future of work itself. And this thing you spend so much of your time and hours of your day doing called work cannot, should not just be a transactional activity.

It's a chance for a group of people to come together hopefully with a shared goal and create something of value. That's how I describe a team in any company, frankly.

There's probably, hopefully, some shared philosophy and values around the way that team works, whether it's 3 people, 50 people, or 500 or larger. We have norms and different traditions.

Obviously, Gusto and Remote try to make a lot of the things that can make it harder to build a team easier that aren't how a company stands out or specialises. We call that the peace of mind bucket at Gusto.

So, one of my favourite emails we send customers is an email that says, “Here's all the quarterly tax filings and paperwork you need to do this quarter. We did it all for you, have a good day.” And you can imagine that's a pretty positive moment in our customer's life.

But I think it's also spending more time and being more intentional with how to build a team, and what does it mean to hire someone, and what does it mean to onboard them, and what should they be paid? And how should you approach benefits?

And I think these are actually topics we're spending more time on, not less time, because every company is about the people there. Nothing is possible in a company without the people that join and contribute.

Anyway, that trend to me is really important. It's why we call our product the people platform. We have a belief that work can be a source of purpose and meaning, and community and connection, not just a paycheck. And I think that's a trend that's going to continue for the indefinite future.

Job: So, that's going to replace everybody with AI, is what you're saying.

Josh: AI is a tool, it's a technology, much like Cloud, much like having wireless communications, and all these tools are meant to make people more powerful, give them superpowers if you want to call it that.

And so, that's the trend now, making sure we're intentional with the first order or second order, third order impacts of these technologies and the pace of change. That's a worthwhile conversation. But I think AI to me is really an incredible tool and an amazing technology. It's kind of in its hype cycle phase.

So, there's a lot of real incredible transformative change underway, and also a lot of fluff and BS happening. The fun part of any big tech cycle is knowing or guessing which one's which, but after you know kind of which thing was transformative and which thing was just getting attention for the sake of it.

In terms of Gusto, we're going to be applying some of these technologies and we have been, to make things like tax compliance easier, simpler, to make health insurance enrolment better, faster.

And to our customers, I don't know if they need to know too much about how we do it behind the scenes, they just want to make sure it's always compliant. It's fast, it's efficient, and it's actually always accurate. That we're a partner to hear, to help them, and that's how we've been successful as a business.

Job: That’s great.

What has Gusto experienced that could only happen because of remote work? 

Job: Last question, Josh: in these past years, has there been a time where you thought, “Well, this is a challenge that can only happen in this new world of distributed and remote work?”

Josh: Obviously, navigating the pandemic that first day, everyone being at home and actually, the company functioning is probably the easiest example that comes to mind, but I can think of more.

I mean, even the simple ability to access incredible talent is probably the one that I would point to. This is pre-pandemic. Even at that point when we had a culture of being very office-centric, we would find a specialist in payroll compliance that had 30 years of experience.

And we made the exception because that was incredible, unique talent, and we knew that they just didn't happen to be near one of our, at that point, two offices. Which is not surprising. Only having two locations means we weren't able to access that broad pool of talent that we could have if we were more flexible.

And so, we made exceptions then. And I think today, we think it's a balance, being able to hire in these centres of gravity, these clustered areas gives us, hopefully, the goal is a chance to have more community and connection amongst those teams.

But also, where we're hiring today, as far as we can tell, it's about a pool of 150 million people that are in those locations. That's a pretty big pool of talent to get access to, and obviously, that wouldn't be possible without distributed.

Job: Josh, thanks so much for being on.

Josh: My pleasure and I hope it was useful. Thanks for the invitation.

Job: Thank you so much to Josh for taking the time to talk more about Gusto. We at Remote are so very excited about this partnership.

And that's it for this episode of Off Mute. We'll be back in two weeks with the next episode in the series.

But in the meantime, please subscribe to the podcast and if you like what you've heard, give us five stars as it helps others like you find the podcast. Thank you for listening to Off Mute from Remote, catch you next step.

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