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: https://www.adp.com/
• Eddie Kim:   / edawerd  
• Gusto: https://gusto.com/
• Intuit: https://www.intuit.com/
• Josh Reeves:   / joshuareeves  
• Paychex: https://www.paychex.com/
• Steve Jobs’ “Secrets to Life” clip:    • Steve Jobs Secrets of Life  
• Steve Jobs’ Stanford Commencement Speech: https://www.youtube.com/watch?v=UF8uR...
• Wells Fargo: https://www.wellsfargo.com/
• Y Combinator: https://www.ycombinator.com/

Where to find Tomer:
• LinkedIn:   / tomerlondon  
• Twitter/X: https://x.com/tomerlondon

Where to find Brett:
• LinkedIn:   / brett-berson-9986094  
• Twitter/X:   / brettberson  

Where to find First Round Capital:
• Website: https://firstround.com/
• First Round Review: https://review.firstround.com/
• Twitter/X:   / firstround  
• YouTube:    / @firstroundcapital  
• This podcast on all platforms: https://review.firstround.com/podcast

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