Tomer London On Raising $700 Million To Build A Payroll and HR Software Platform Enabling SMEs To Manage And Grow Their Workforce

Tomer London, co-founder of Gusto, a company with over 2,500 employees, relates what it means to go from humble beginnings to building a hypergrowth business. His journey is an exciting blend of personal history, entrepreneurial lessons, and hard-earned wisdom.

Gusto has attracted funding from top-tier investors like Kleiner Perkins, Sands Capital, Fidelity Management and Research Company LLC, and Cross Creek.

In this episode, you will learn:

• Tomer London’s upbringing in a small business family instilled a deep understanding of entrepreneurship’s emotional rollercoaster.
• His military service taught him invaluable lessons in humility, discipline, and teamwork, shaping his approach to startup challenges.
• A failed early startup experience highlighted the importance of effective go-to-market strategies alongside solid product development.
• Gusto, initially ZenPayroll, was born from extensive conversations with small business owners to address their unique challenges.
• The company’s success is attributed to its customer-centric approach, ensuring product development is driven by direct feedback.
• Participating in Y Combinator gave Gusto critical support and momentum, leading to rapid product development and funding.
• Gusto’s vision focuses on empowering small businesses and their employees, simplifying back-office complexities to foster growth and success.

 

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About Tomer London:

Tomer London is the Co-Founder and Chief Product Officer at Gusto. He is responsible for the development and execution of the product vision — reimagining how modern payroll, benefits, and compliance should operate.

Tomer was previously a Product Development Intern at Bump Technologies, a PhD Candidate at Stanford University, and the Co-Founder and CEO at Vizmo.

Tomer has also worked as a Researcher at Intel Architecture and as a Commander at the Arrow Defence System Academy.

Tomer London completed their PhD in Electrical Engineering at Stanford University. He then went on to complete a Master of Science in Electrical Engineering at the same school.

In 2012, Tomer attended the Y-Combinator winter program. He completed their undergraduate studies at the Technion – Israel Institute of Technology, where they studied Electrical Engineering.

Connect with Tomer London:

• LinkedIn
• TheOrg
• Crunchbase
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty. Hello, everyone, and welcome to the Deal Makers Show. so so Today, we have a really amazing founder, you know a founder that has built a massive company. i mean We’re talking about a company with over 2,500 people, so you can do the math you know and the level of impact that they’ve had. and We’re going to be talking about how to think about opportunity, how to talk out to your customers to be able to get it right when it comes to the product, going through the experience of an accelerator, as well as getting going on startup fundraising, which is you know one of the things that you need to do as a founder of a hypergrowth company.

Alejandro Cremades: And then also feeling the pressure to expand product amongst many other things. But really praise yourself for a very inspiring conversation. And without further ado, let’s welcome our guest today, Tom here in London. Welcome to the show.

Tomer London: Thank you. Thank you. Excited to be here.

Alejandro Cremades: So originally born in and you grew up as well in Israel. So give us a walk through memory lane. How is life growing up?

Tomer London: Yeah, totally. So yeah, grew up in Haifa in Israel. um And, you know, I grew up around a lot of small businesses. So my dad has a small business for over 35 years now, a clothing store.

Tomer London: So for me was just a big part of my childhood going after school and helping around and whether it’s helping clean the store or answer phone calls or selling and learning how to sell, that was a huge part of my childhood. And then for a small business family also, that’s what you talk about at the dinner table. You talk about the customers, talk about the vendors, talk about how things are going.

Tomer London: And then finally, there’s also like the, the non glamorous parts and the parts that kind of make you, you know, kind of really appreciate that the hard work that goes into building a small business. Um, where, you know, I remember my dad kind of, uh, needing to skip different, you know, family events and things like that. Um, just dinners, things like that to just go and, and, um, to this back room that we had in the house with this, um, um, calculator, if you remember the ones with the ribbons in the back, that’s kind of like, you know,

Tomer London: And he was like, um you know, needed to spend hours and hours and hours to close the week and see the cash flow and understand whether, you know, where the business was. So, you know, my child was a lot around kind of that kind of small business and kind of um stress as well as false, the wonderful things coming from building, you know, kind of building your own dream and making it a reality. And that’s just my dad. I also had my grandfather and my aunt headed off different small businesses. So, you know, honestly, that was kind of all around me.

Alejandro Cremades: So what was it like to to see your parents perhaps going through the roller coaster of emotions of being a business owner?

Tomer London: Yeah, it’s the emotional piece that’s that really stuck with me, you know, that’s kind of what I a lot of ah with the memory. So these are things such as, you know, seeing my dad coming in the house, like at the end of the day, and like, kind of see like this bright, you know, kind of face and like a big, you know, big smile, and you know, ah this was a good day today, good day of work. And, you know, he, he would be really quick to share like the, you know, the revenue for today or to share the big win it could be like you know getting you know uh like uh like kind of renewing his rent with like a lower price so it makes the business more profitable could be having a new employee joining and i’m really proud and excited about the the work of that employee but then there’s also the again the negative kind of emotions where you know there’s a stress of like oh my god there’s all these loans that into repay and that there’s like a holiday that just

Tomer London: that this calendar year means that there’s more days in the hall, more days of, you know, holidays, people have more time off and we’re going to get less customers. And um so that’s totally just kind of a part of, of, of, of, you know, what it means. And, and definitely start with me. I remember, you know, kind of thinking to myself, um you know, about different career paths and things like that. And I felt like, you know, um for me, like running a small business like that, that, that seems really, really, really hard.

Tomer London: um And I kind of got um closer and closer to software when I was, I think in my teens, early teens, and it was actually to build um software to help in the store. So I had all these lists to keep track of the inventory of the store and to see what we need to order. So it could be, you know, this was ah this is this was ah like a men’s clothing store. So um is it like jeans? Which jeans are missing for each size, for each model? Is it suits? Is it shoes and all that stuff? And you know, if you keep losing, I kept losing my list.

Tomer London: um I needed to recount things. So that’s obviously, you know, a waste of time. It was very frustrated. So I was thinking, you know, computers are really good at this stuff, remembering things, right? We have a 83, 86 at home. um And I was lucky enough to get introduced to, um you know, Visual Basic, which is a very simple programming language, really, really easy for a kid to learn um by the the like the the bookstore that was just next to my dad’s store, actually. um And so I picked up this book, this really big, thick book. It was all in Hebrew, which was good for me because I didn’t have English back then. um And I kind of learned how to build a simple um program. And I built like this very, very simple inventory management program that was super helpful. And my dad bought a PC to his store as a result. And for me as a kid, you know I was like, I don’t know, 11, 12,

Tomer London: um My mind was blown like, wait, like you’re buying a PC just for this software. That’s like, you know, I felt like I was really kind of making an impact. And it’s funny how those things go, but you know, looking backwards, it’s like, oh, look at that. Tomer at the age of 12 was already building small business software. But, you know, sometimes life, you know, kind of, you know, obviously there’s a lot of ups and downs and they did a lot of other things, but sometimes it’s funny how kind of, you know, you kind of close the circle. And and for me, small businesses is just honest. And for Josh and Eddie, who started the company with me and many of people who work in Gusto, we we love small businesses and we have this kind of direct connection to them.

Alejandro Cremades: I mean, in your case, you know as you were saying, you got exposed to programming you know very early when when you were actually at the store with your parents. And then from there, you know you actually went to the military. you know I want to ask you here, what kind of discipline do you think it gave you you know those three years that you spent in in the military in Israel?

Tomer London: yeah and You know, it’s so interesting. So in Israel, there’s a three years mandatory service for men back then when I was there it was two years for women, three years for men. And they basically kind of put you wherever they want. So you you yes, you have some some say on which you need to go to. But it’s it’s the military’s decision. And I really wanted to go to the you know, the software kind of computer engineering sort of units, where Israel is the dev really kind of amazing units around that you learn a lot and develop your skills and and do things that are meaningful. ah But I they didn’t pick me and I ended up ah they put me in a combat unit, which in the Air Force, which was not my pick was not number even 17 on my list, you know. um So that

Tomer London: That right there for me was a big learning um of just like, you know, um humility, and how to deal with things that are not in your control. You know, I think up to that point, you know, I did well in school and I generally was, I felt like I was in control in my of my life and like, you know, doing homework and, you know, doing different projects and things like that. I was always ahead. I was two steps ahead.

Tomer London: and then over over all of a sudden like you kind of get a big like kind of slap in the face like hey it’s all cute and nice but in the next three years you’re going to do this thing and this thing is is nothing like you’ve ever done before and it’s actually quite difficult. So um that was one huge learning humility and I kept getting that slap in the face every few months in the in my military service because you know I would say military um at least the Israeli military you know they they They have, um you know, it’s it’s it’s not a creative effort. It’s not a creative, um you know, sort of project. Like you you go there and you have a role and you need to do your job. And there’s not a lot of what you can do around it. You kind of need to do what you’re told, at at least when you’re a very junior, which, you know, was I was. um That was really hard for me. um But I’ll tell you what, like at the end of it, like in the last few months of of my of my service, um i I was so,

Tomer London: full of excitement and energy towards the next step, which was for me that, you know, going to the test neon and learning, studying electrical engineering, I just could not put down like calculus books and physics books and like the kind of first couple of semesters. I was already swimming and ready to jump in um because I think i I gained appreciation for how lucky it is to be in a place where you can go and study in an undergrad degree and and really kind of pave your own path. And the military, again, for three years, 18 to 21,

Tomer London: um You kind of need to do what you’re told and obviously you know do the best you can with with with with that. um But you know I was very excited about that next thing. I’ll say one last thing, which is camaraderie is one thing that I think I really took from it. So this amazing there is an amazing experience of like when you and a group of ah of other people come together and um you have a shared destiny where you know it’s it’s either you do it together and you win together or you lose together. like it’s it’s It’s up to us to get together and figure this thing out. and this thing may be really really complicated community dangerous can be you know something that you never thought you’ll you’ll you’ll have to do. um and When you look back like that camaraderie is so amazing it’s just it’s just it’s a tight human relationship that even today twenty years later um you know i feel so close to these people that was in service with anything there’s some commonality with startups.

Alejandro Cremades: A hundred percent. Now talking about startups I mean after this you did electrical engineering then you did a bunch of internships and then you build your first startup. And as they say you either succeed or you learn. And in this case there was a lot of lessons learned. So what happened there.

Tomer London: Yeah, totally, that’s a good way of saying it. So so yeah, so I was, um so so here’s the thing. i Like any normal adult, I had to have all these calls to service centers as a part of my life. It could be calling your cellular phone provider, it could be calling your doctor or your or the hospital or something like that, right? And then when you call in, it just is an extremely annoying thing where you gotta wait and you have this IVR that speaks to you slowly and tells you if you want this go to option number one please listen carefully because our menu has changed you know and you kind of need to go and that was like god damn it like we got it there has to be a better way and I remember thinking like at this moment right now this second there’s millions of people

Tomer London: who are doing nothing but just waiting for that freaking IVR to to finish, you know, that voice menu. So that was like the pain point. And, you know, back then, um this is 2008 or 2007.

Tomer London: um Back then, you know, the iPhone was super, super early. I don’t even remember if it was launched back then. um But everyone had a feature phone. And these are phones that these Nokia phones that had um or Samsung phones um or blueberries ah that had um um a sorry, blackberries, blueberries.

Tomer London: ah that had like ah internet connection so you had this really kind of simple W WAP internet and i was thinking hey would it be cool if you call one of these centers but instead of waiting on the line you can just visually see all these menus and can navigate yourself and even self serve without talking with somebody that was really that sounded cool so um i got together with a few friends we were again we were doing art degree in electrical engineering. I quit my job. I had like a part-time job at Intel, which was also really fun, but another topic for another day. And I quit that job to start this thing um with with a few friends. And we built the technology. And it was actually quite cool. it was I’m i still today pretty proud of the the kind of the way it was it was built, because um um technically, it was multiple technical challenges that were difficult. Because it you didn’t need to install an app. There was no app installed. You just call. Boom, you get a menu on your screen.

Tomer London: um So um and then so the technology was like, OK, product technology you got a good prototype. Things looked good. We felt good. We raised a little bit of money, like see from from, you know, government and from some some friends. And then we went out to do the selling. How hard could that be? The technology is amazing. The product is amazing. Everyone’s just going to gobble it all up. Well,

Tomer London: Unfortunately, no one bought it. Unfortunately, I spent months and months of month i spend much and months and months um kind of trying to figure out how to go to market. How do you sell? you know I knew how to sell clothes in a clothing store. I knew how to sell you know maybe like kind of simple things. I did some door-to-door sales for like internet, a high bandwidth internet.

Tomer London: um um and things like that. But I didn’t know how to sell for huge enterprises with like hundreds of millions of dollars in budgets. And I failed there. And as a result, like we kind of got stuck. um We got some LOIs. We got some even like some um you know um early ah pilots going on. But we didn’t really do the sale. So um that’s where that’s where we got stuck. And you know lots of learnings from this. But you know I would say the primary one is When you cut when you build a plan and you know try to figure out how the startup is going to work, obviously the product and technology are critical. But if you have that and you have no go to market, you’re dead.

Alejandro Cremades: I hear you. I hear you. Now, in your case, you know one door closes, another one opens, and for you the next door was to go to Stanford to get your PhD. And that was a pivotal moment because that is the moment where you really got going with your co-founders at Gusto. So how did that happen? How did the you know the band you know come together?

Tomer London: Well, first, here’s a funny story. I thought that Stanford was in England. um i I learned about Stanford because of ah um this amazing commencement speech that Steve Jobs did in 2005. Incredibly inspiring. If you haven’t heard it, you should. I listened to it probably dozens of times at this point, and where he talks about you know your ability as an entrepreneur and as a human being to make a difference in the world. um I was i was you know incredibly inspired by it. And it was done at Stanford. I was like, wait, where’s the Stanford place? I heard of Harvard and MIT from movies, right? But I never heard of Stanford. So anyway, um apparently Stanford, ah ah in spite of the name, it feels like it’s from England. It’s actually in in Silicon Valley, and I heard of Silicon Valley, and I kind of got into it.

Tomer London: a little bit more. um A friend of mine ended up actually going there. um So, ah you know, decided to to apply and there was kind of, you know, landing at in San Francisco and then going to Stanford for my electrical engineering PhD. And, you know, i I didn’t know anybody. I was literally came on my own. You know, I had one friend who was actually on vacation when I landed, so he was not there. And I was literally just trying to figure out how am I going to find some friends and you know find a community. um There’s a lot of things that I did and one of them was to apply to this cool program that Stanford has called Stanford stanford alumni mentorship program that connects current students with peer with prior students um and that’s how I got to know Josh um who’s around my same age um and you know we kind of learned

Tomer London: that um kind we met through that, which is cool. We learned that both of us have startup experiences. He had a startup previously. I had a startup. um you know We’re both electrical engineering graduates. And um um we that’s kind of how we got together. And you know we then started spending time every week to just brainstorm ideas, you know like things that we care about, problems we see in the world, ah areas where we think technology can help.

Tomer London: um And um over time also, we brought in Eddie, my third co-founder still kind of kept brainstorming ideas and things like that. And we ended up um you know looking at multiple different areas. But the area that kind of kept kept coming back and stuck and stuck with us is how can we help small businesses succeed? Because you know our personal lives, we had small businesses and our families and so forth and friends. And we felt like there’s so many software brands that are focused on consumers.

Tomer London: There’s so many software brands that are focused on enterprise, but not many focused on small businesses. And they have lots of problems. And it’s a huge market. There’s six million employers in the U.S. And when you talk with them, they got a lot of problems to solve. So we kind of jumped on that. And and piroll was our first um um really started with bill as the first pinpoint.

Alejandro Cremades: so How do you go about then speaking with tons of small businesses to make sure that you would get the product right before even touching the product? which I think that one of the yeah issues that I see all the time is that founders build on assumptions you know instead of building based on data points that they’re able to capture.

Alejandro Cremades: And that’s where many of them fail, but it sounds like you guys got that right. So how did you think about like, Hey, maybe, you know, we should have a chat with all these small business owners to really understand well, the product be before we even build it.

Tomer London: The cool thing is when you talk with a lot of um of your customers, a lot of potential customers, and umm and and you talk with like 10, 20, 50, 100, and you talk with them about their day, talk with them about the problems that they’re seeing, what ends up happening, it’s not just data points.

Tomer London: you You build intuition. Your brain connects the dots. So then a week later, a month, a year later, when you’re in front of a problem trying to solve for them, you can bring up that intuition. And that intuition will be probably more correct than not. So what we do even today at Casto is um really trying to make sure that everyone who builds a product, definitely the product management team, the design team,

Tomer London: but also other folks on the team, marketers for sure. um Guys, just spend time with customers and build that intuition. So you’re right. like there’s I think the one mistake people make is to just completely rely on their intuition without even talking with customers. That would be like a crazy thing to do.

Tomer London: But there’s another problem which is people who overly relying on data points without really getting the qualitative side of spending that face time. It’s like, oh, i you know, I looked at you know some statistics and here’s what I think the statistics are telling me to do. And I think that really misses the point. You’ve got to spend time with the customer. um So, okay, so how did we get from this to that? Honestly, pretty easy.

Tomer London: i we You see it in a room, you open Yelp and literally that’s what we did. You open Yelp and you say, today I’m going to talk with Spas and Salons in San Francisco. And Yelp gives you all their phone numbers and you call one by one. You call, call, you talk with them. The next day I’m going to talk with barber shops and you talk with barber shops in San Francisco.

Tomer London: So we kind of did that. We also, literally every place we go, we introduce ourselves and try to create conversation. We had friends that you know started startups and other small businesses. And we you just everywhere you go, those small businesses exist. That’s the nice thing. It’s unlike when you build enterprise software, you’ve got to find the right buyer in the right place. Honestly, with small businesses, it’s easier. It’s a little bit more like consumers. They’re everywhere. um So we did a lot of that, a lot of repetition. I got a lot of nos from all of this. And you know we were looking for you know What are some huge problems? And and the problem of, you know um um you know obviously, it’s really hard to start a company and build a company. one of the hard the One of the hardest things is anything around team and people. There’s kind of two big ones. It’s money and people, right?

Tomer London: um And the people one was one that we felt is not addressed right, because when we talked with um these small businesses about the software that they use for payroll and for HR and things like that, and these are really small businesses, they felt like this is not the right that this software was not built for me. It was built for big companies. This software is you know not friendly. It’s too expensive. it’s easy It’s hard to use. Why is it not as simple as my online bank? Right. um So we felt like there was a great opportunity there.

Alejandro Cremades: So at what point do you were you like, I think we got it. I think we we see a pattern here. I think it’s it’s time to start to get going.

Tomer London: Right. So you’re trying to build that conviction, right? When you’re exploring all these ideas. And one of the ways to look at to to get conviction is look for emotions. So um when the customer is super pissed off, or when the a potential customer is super pissed off, and when the potential customer is super excited about something, that’s where your ears need to perk up. Anything in the middle, the 90% in the middle doesn’t matter. It’s the top five and the bottom five that really is the signal, right? Because people are nice and they want to be nice to you. and you know so they’re going to be most of them are going to be kind of in the middle okay so what we learned so that’s kind of a crazy story so we had um

Tomer London: I did like around 30 conversations at that point with people around their payroll product, that the product of the useful payroll. And I had two different people who mentioned to me that for you know that their payroll provider name was ABC. I’m just going to use like ah like a name here. Not my real name, but ABC. um They told me they they just wanted to tell me. They help they felt compelled to tell me that they have their password to ABC is fuck ABC.

Tomer London: And that was crazy, because like first, I didn’t ask people fast forward. So there may be even more than two people. And second, you know like obviously, they were upset. Obviously, they felt disappointed. right So that’s where it is a huge opportunity. So that was like one of these aha moments. There was more. like Here’s one another example. um you know There’s this account that we knew. I knew personally she worked in in a company that I was ah was involved with.

Tomer London: and we just um took her for lunch and say, hey, you know, we have this idea, we want to build a new payroll product and bring it to the market for small businesses. And we came in, we had like a presentation, we have like this whole spiel, we wanted her to give us feedback, right? None of that happened. What did happen is the moment we opened our mouths and said we want to build a payroll product, she just started saying stop.

Tomer London: you need to do this, you need to do that, this is broken, that is broken, this is why I hate that product, this is why this product is broken, da da da da. And you kind of saw again the engagement, the excitement, so you knew like, okay, there is something here. um So I remember like in those kind of days, and this is kind of all the span of a few kind of days or a couple of weeks, two weeks, um we we kind of built up more and more and more confidence that there’s something there.

Alejandro Cremades: So obviously the rest is history. I guess for the people that are listening, what ended up being the business model of Gosto? How do you guys make money?

Tomer London: Right, so we started really identifying with this pain point of of of payroll, and then quickly we figured out like, hey, you know, if you solve payroll rights, you already have all the employee data, you already have this important moment of employees joining a company, you have this important problem to solve around taxes and compliance. So we figured out like, you know, payroll could be just the first out of multiple different problems that we can solve for our customers. So it ended up being being this very broad prompt platform. So today we solve, you know,

Tomer London: um um payroll, but also helping you get your company started and also helping you, um you know, um with ah time tracking and helping you with benefits and compliance stuff and tax credits, even, and and many other things, international contracts for payments and more and more and more things. um And the business model is simple. There’s kind of basically two revenue streams. The first one is subscription revenue. So, you know, you got to basically pay every month, like a pair of employee per month.

Tomer London: um And then that subscription can have multiple pricing points, depends on which products that you use. And then the other, um the additional revenue streams coming from commissions for our benefits business. So, you know, in the US, small businesses often, you know, use a small group of health insurance and that’s, and you know, we don’t charge the customer for it, but we do get a commission because we are the brokers um on this health insurance product.

Alejandro Cremades: So, obviously, Y Combinator was a pivotal experience, too, for you guys. And I think that that, obviously, to kickstarter the whole financing um side of things with a very successful seed round. So, why was Y Combinator so pivotal for Gusto?

Tomer London: Totally. Yeah. Well, why, why see for us um is it just was really, really, really helpful in the early days, honestly, still today. That’s one of the cool things about that. It’s it’s a community you kind of carry with you and, and you know, kind of.

Tomer London: reconnect and there’s all these opportunities to to go and and help you improve your company. But you know back in the early days, the thing that was really cool is that it’s basically this three months program or a two and a half months program. um And at the end of it, there’s demo day. So you have back then, there was like 50 companies or 55 companies, and we were one of them. And you look right, and you look left, and you’re like, gosh, these are really smart entrepreneurs and builders and engineers.

Tomer London: And you know your your friends but you also kind of competing on the on in the end what investors are going to invest in you know investors are going to come into them a day they’re going to pick like one two three companies whatever their budget is um they many angel investors um and you know you’re kind of competing not not for customers but for for like the quality of of how much progress you made in those two and a half months so what ends up happening is you know you ah just figure out that you just got to go all in here.

Tomer London: You’ve got to bring every single you know calorie that you have to you know through the table. So in this two and a half months, we worked super, super hard. When we started, we you know we we barely had like a line of code. And and we ended up um um these two and a half months with a prototype. So definitely not a full payroll product, but a prototype. um And 30 customers are using the the prototype.

Tomer London: I’m so we felt like you know we kind of were able in this in this very short time i think we collapse a year of ah like a year of work two and a half months. I just working you know like crazy you know weekends and evenings um and and making a lot of quick decisions.

Tomer London: um And um you know challenging ourselves, too, because we look right and left at, gosh, like I always felt like we we’re at the bottom half. At every point of the of the process, I felt like you know we’re probably you know one of the least you know kind of successful companies in here. And it’s not because I didn’t feel good about us. It’s more like I felt like, gosh, these guys are amazing.

Alejandro Cremades: So all in all, obviously, you know that propelled you guys, that allowed you to also raise a very successful seed round. So for the people that are listening to, how much capital have you guys raised to date, and what has it been the emotions of going through all the different financing cycles and expectations from investors?

Tomer London: Yeah, I think you know so we raised over $700 million dollars in our existence. um We’ve been around for over 12 years. um And every round is different. But where we are today is you know I’m really, really proud of it. We’ve been profitable now for over a year, um actually quite profitable, i still going really, really well. So we’re no longer in this place of like kind of needing this infusion of cash to keep the company. So that’s that’s an awesome milestone.

Tomer London: um But you know in the in kind of as you go, I would say in the early days, you need to have, um you know you raise the the kind of the seed round, the A round, even ah even the B round somewhat to build a product and kind of build that initial vision of like, hey, if we build this, you know we’re going to have like a like you know a great product market fit. And it’s not just you know we’re building a product if you’re not selling a customer. We had customers already in seed and then series A and then series B.

Tomer London: But then when you go more like around the series CD and and later, um that’s where more like a game of numbers it’ is more. OK, we should have a good product market fit. And now it does go to market scale does economics. Are you profitable? Right. Is this going to hit a wall around profitability?

Tomer London: um So it kind of becomes less about the the promise of the and and the vision for the future, and more about like, oh, yeah, what have you actually done? And how does that compare with other opportunities out there, right? Which is kind of like, you know, very rational, and and I think, and and I think really, you know, the right way of doing things. You want kind of this series DE e phase, you know, investors that are not just charmed by the, you know, the founders and, you know, who they are as as people, although that is, I think, important because you’re, you’re Relying on their to and other management to take you to the future to come to the future

Tomer London: But you want them to be very rational and look at the numbers and ask themselves and kind of look at patterns across other other companies and ask, you know, is this a good business? It’s going to be a great business. So, you know, the later rounds were really led by, you know, folks like T. Rowe Price and Fidelity and like some of the kind of more like, um you know, yeah private to public um sort of investors. and And that’s kind of how how our journey has looked like.

Alejandro Cremades: So obviously, when you get investors say on board, when you have over 2,500 employees like you guys have today, which is really remarkable. And and being a profitable company too, that’s unreal. Vision is very important, right? And they’re all betting on the vision. And to that end, dfey I was to ask you, Tomer, if you were to go to sleep tonight,

Alejandro Cremades: and you wake up in a beautiful world where the vision of Gosto is fully realized. What does that world look like?

Tomer London: All right, so I wake up in this magical world. um So, you know, that but there’s a few kind of sides to our mission and each side will paint that picture a little bit. So the first one is around peace of mind. So it’s the idea of can we help small businesses and um and and entrepreneurs, um you know, make it easier for them or give them peace of mind when they start their business and where they grow and they maintain their business. So in that future world,

Tomer London: you know, I wake up in the morning and every person who has an idea that they’re excited about, um you know, that they can go out there and start their business. And obviously, you know, it’s always going to be hard. You need to build a real business. So that that doesn’t go away. But you have the peace of mind that all this stuff in the back office, all the compliance stuff, all the kind of the mechanics behind the business is solved for you. So you can really focus on your product and your service. So that’s the first thing. The second thing is um this idea um of great workplaces you know helping the small businesses these medium businesses growing businesses have great places to work um so what is a great place to work right it’s a place where you come in and you feel valued you feel like you’re compensated correctly you feel like you know your performance is evaluated correctly you feel like you have opportunities for growth.

Tomer London: um You feel like you can have good personal relationships with other people around you so that is again another part of our vision and what we’re trying to do whether it’s like that kind of the that all the work we’re doing around benefits making enterprise level benefits available for small businesses. um Or whether it’s things like performance reviews and like kind of training and kind of help small businesses be a little bit more.

Tomer London: kind of bring all the insights and professional stuff and making it easy and simple and consumable for small businesses so they can be successful as well. The last part is personal prosperity for employees. And that is like when you get paid, right? If you’re the individual getting paid, get that paycheck to do more for you, right? So in the cases of emergency, have access to that pay earlier if you need it, if you’re you know If you need that, um um if you’re saving up, have an easy way of taking that paycheck immediately and putting that into savings. We have products already around all this stuff and it’s a very promising part of Gusto. um so But yeah, it is a a really big part of our vision.

Alejandro Cremades: So now let’s talk about the past, but doing so with a lens of reflection, because you’ve been pushing this for close to 13 years. I mean, 13 years in the corporate world is like a thousand years. It’s really unbelievable. no so So that’s how that’s had a long time. Now, let’s say I was to put you into a time machine.

Alejandro Cremades: And I bring you back in time. I bring you back in time maybe you know to 2012, that moment where you’re in Stanford and they you guys are starting to think about maybe a world a world where you can really um bring a solution to those payroll issues that you were seeing with small businesses. and right there on the spot, you’re able to have a chat with your younger self, with that younger Tomer, and you’re able to give that younger self one piece of advice before launching what ended up becoming gusto. What would that be and why, given what you know now?

Tomer London: Yeah, yeah. I think, um you know, there’s a lot, there’s a lot like I would say, probably, but the thing that pops up in my mind is usually the hardest and the most important, the best parts, but also the hardest parts and the is all around people, right? Because people are, they’re everything, right? If you know you have a problem with your go-to market, guess what? The right person can help you. If you have a problem with your product, guess what? The right person can help you.

Tomer London:So it’s all about people. um And I think the mistakes that you know ah some of the mistakes that we made over time that are that were most kind of difficult and were around ah people as well. So I’ll give you one example. And probably this is the advice I would i would i would give to myself 10 years plus um time ago.

Tomer London: is um you know you have this this moment where the startup starts to take off right things are starting to work out you’re starting to see product market fit you got like some nice press that people start to hear about you um still very very early on you’re still the initial team like I don’t know 10 20 30 people.

Tomer London: um And then you start like for your job, open jobs, you start seeing these amazing people applying, like amazing on paper, like, you know, people who worked the best companies and managed hundreds of people and, you know, did this incredible work and and And you look at this and you’re like, they want to work for us? That’s crazy. You know, we’re just this little company. So you jump on it. And, you know, maybe in the interview process, you’re like, huh, this is interesting. they’re They’re talking differently and they act differently. And their answers are very different than the other candidates. Other people we hired here. But, you know, what do I know? They have much bigger and better experience than I do on paper.

Tomer London: um And then sometimes those people are amazing because they do teach a lot of things, but sometimes um it’s that it doesn’t work. And it doesn’t work because what a lot of times what makes um zero to one successful is not what makes one to end successful. And you can have someone, you can have processes and you know kind of ways of working that are amazing to take a company from a hundred million ARR to a billion dollars in ARR, but If you try the same thing at 1 million ARR, it’s just going to completely fail, right? So you need to bring in people. um Obviously, experience is important and then look into it and you can get a lot out of it. But people you need to bring people who are absolutely open to do things completely differently in spite of their experience. So that’s one thing I would look we’re looking back, um I would advise myself.

Alejandro Cremades: I love that. So, Tomer, for the people that are listening that would love to reach out and say hi, what is the best way for them to do so?

Tomer London: Oh, yeah, I’m on Twitter, tomerlondon. So feel feel free to to reach out there. You know, gusto is hiring across the board. um So just check out our our hiring page and gusto dot.com. And yeah, thank you. Thanks for for for this 100. This was really, really fun.

Alejandro Cremades: Amazing. Well, Tomer, well, thank you so much for being on the Dealmaker Show. It has been an absolute honor to have you with us.

Tomer London: Thank you.

*****

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