How Gusto built a $9.5 billion company by identifying a burning problem

Tomer London is the co-founder and Chief Product Officer at Gusto, the payroll and people platform used by over 400,000 businesses. He grew up helping run his dad’s clothing store in Israel — an experience that sparked his mission to build better tools for small business owners. After moving to the US for a PhD at Stanford, he met his co-founders and started Gusto.

In today’s episode, we discuss:

• Reinventing payroll without any prior experience
• Why you should hire for humility, not just talent
• Gusto’s scrappy customer research: cold calling from a walk-in closet
• Why founders should embrace customer rejection
• Why “emotional urgency” matters more than polite feedback
• The weekly co-founder ritual that built trust
• How Gusto expanded from payroll to a multi-product platform
• Building products customers actually love
• And so much more

Referenced:

• ADP
• Eddie Kim
• Gusto
• Intuit
• Josh Reeves
• Paychex
• Steve Jobs’ “Secrets to Life” clip
• Steve Jobs’ Stanford Commencement Speech
• Wells Fargo
• Y Combinator

Where to find Tomer:

• LinkedIn
• Twitter/X

Where to find Brett:

• LinkedIn
• Twitter/X

Where to find First Round Capital:

• Website
• First Round Review
• Twitter/X
• YouTube
• This podcast on all platforms

Timestamps:

(00:00) How a childhood around SMBs shaped Tomer’s founder mindset

(03:24) The three things that led to the creation of Gusto

(07:17) Hiring for humility, not just talent

(09:28) The tug-of-war test for product-market fit

(11:58) Why founders should actively seek rejection

(15:34) Gusto’s scrappy customer research: cold calling from a walk-in closet

(17:45) Betting on SMBs – and ignoring investor advice

(20:44) “It’s not an MVP, it’s something that wows people”

(24:09) Serving SMBs vs. startups

(28:36) How to find the right co-founders

(31:09) The weekly co-founder ritual that built trust

(35:02) Reinventing payroll without any prior experience

(38:49) Gusto’s “start small” GTM playbook

(42:16) The big opportunity Gusto wishes they tackled sooner

(43:58) How switching costs became Gusto’s moat

(47:25) The two lucky breaks that gave Gusto an edge

(51:56) What Tomer learned about customers from his dad’s clothing store