Gusto CEO Joshua Reeves drops by Demo Day to share founding story and $6M seed round origins

There we go. How you doing? It's been too long. Good to see you. Oh, it's been so long. I'm so glad to see you. C Good to catch up. Um it's good to be here. Uh introduce yourself for the stream really quickly. Hello, I'm Josh. I'm the CEO co-founder of Gusto and we are right across the street. No way.

Literally my team walked up and was like, "They're across the street. Do you want to go say hi? " I'm like, "Sure. Let's go. Let's go. " Incredible. I have zero prep. It's good. Uh good placement, too. Did you guys do that on purpose? Well, we were an early adopter of Dog Patch. We came here 2017. Okay.

And uh we were surrounded by Jewel. Oh, yeah. Used to be this building. Crazy. That's crazy lore. Uber Autonomous Cars. That's the other tenant. Now it's Astronis NYC. Okay. Awesome. Um uh what batch were you in? It was 2020. Winter 2012. 2012. Winter 2012.

That must have been just after summer 2012 when I went through cuz I remember we used Gusto. What how did how did demo day go for you? Yeah. So, first off, it was smaller. It was down in Mountain View, but it was still like it was still like 70 teams. There was about 50 60 in the batch and it was twice a year.

Now it's four times a year. Um, and yeah, uh, I mean the shift was just starting to San Francisco. So, we were actually still based in Po Alto up until four employees. Yep. And then we moved up to the city and then a lot of companies are now here. Were you did you guys start with the payroll?

Was that the thing you were planning to build or did you kind of pivot into it? We were before YC definitely iterating and experimenting. Once YC officially started, we were like heads down. Okay. So, were you running payroll prior to demo day or did you need more time? Cuz did you ever not dog food the product?

So, we we decided we weren't going to pay ourselves until you could do it. There we go. That's great. And then we hit two milestones. I like it. This board's going hard. Yeah. No, we didn't pay ourselves till we could use our own product. And then we onboarded like 10 other companies. Okay.

But that was during Y that was during YC for demo day. We had to be able to say to everyone, yeah, we're using our own can process payroll. Otherwise, you have to be put a clown mat, you know, outfit on. We were we were three electrical engineering PhD dropouts.

What what credibility do we have building payroll software? What's the What's the the the craziest MVP version of running payroll? Like legally, can you just hand someone cash and fill out a form? Aren't there aren't there stores? How do you how do you ramp up? You can do it on a spreadsheet, right?

Obviously, you should use gusto, but like legally, can you just do it on paper? When we started the company, 40% of businesses in the US were doing it by hand. Wow. Right.

And you can there's like physical businesses out there in the world that still like run they do payroll service bureaus and you can like go into them tech business. Yeah. Exactly. And it looks more like retail. Yeah. About a third of companies are still using that type of system. It's errorprone. Mistakes get made.

You get penalized. yada yada. That's wild. Insane. That's crazy. Uh how was how was how was RA? Did you guys have any trouble raising or or people by that point were were pretty bullish? I'm guessing I think we stood out. There was luck. There was hard work.

A lot of stuff has to line up cuz you're raising at the same time with a bunch of other founders. Um Instagram had just gotten bought in the last year or two, I think, before that. And so a lot of the companies in the batch were in the social mobile local. I remember this kind of craze. So low.

The best time to build SAS is when everyone we stuck out as like we're building a business that has like very concrete need, very very established market. Y so we ended up doing really well in the batch in terms of the fundraising process. We raised a $6 million seed round which back then was a large amount.

Um and then it wasn't about spending it. Like when we did our series A, we still had two of that in the bank. But yeah, we had some great investors get involved and we're really grateful. Yeah. Uh we have a lightning round. We have two questions we've been asking everyone.

Uh favorite entrepreneur doesn't have to be greatest. It can just be anyone, but who's your favorite entrepreneur? Can I be snarky in my answer? Tor and Eddie are my co-founders. They're amazing. I think really highly of them. That's a fair that's a fair answer. I mean, I can go with a classic.

Any biographies that you are on your nightstand? Here's a personal story. U graduated 2005 Stanford and the commencement speaker that year was Steve Jobs. Wow.

That speech was was it's like a viral video and um that was a formative moment and I I really admire like that customer centricity that like imagine the future aspect of of Steve Jobs. Wow. Yeah, that's great. And then what's the first dollar that you made online? Was it gusto or were you doing anything before?

I mean back in the 90s I was building websites. I built a website for a coffee shop. For a coffee shop. So I mean that was I got paid for that. Do you remember how much you got paid? Uh, I think I did it for like 500 bucks. 500 bucks. That's pretty good. In the '9s with inflation, that's like $25,000 today.

It was I mean, yeah, if you just waited some time, bought Bitcoin crypto, good to go. Well, you put it all in payroll and I think it worked out. Maybe I'm Satoshi, you know. Fantastic. Um, more guests just ready to go. Okay, perfect. I just want I got a lot more questions, but great good to see you. Yeah.

Yeah, you congrats on all the progress with what you guys are doing. Yeah. Uh, and uh, yeah, good luck out there if you're uh, what percent what what percentage of the batch is already using gusto, do you think? Uh, we tend to do pretty well with YC batches. Fantastic. And we also do a Boba get together. There you go.

Boba, Boba, Gusto, make payroll easy, set up healthare really easy. We're here to serve. Well, thank you so much for helping us. We'll see you soon. Good to see you. And we will bring in our next guest