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Payroll startup Gusto raises $200M

• jsaundersdev 7y ago
  Good for them. I've loved using Gusto so far! Nothing but good experiences compared to my last payroll company
• toomuchtodo 7y ago
  What R&D does a payroll provider do? (Genuine question)
  • arcticbull 7y ago
    Make the software. I guess, specifically, research which features and products people want, then develop them haha.
    • samfisher83 7y ago
      R+D is just standard accounting terminology. Someone has to develop the software that goes under R+D.
  • wuunderbar 7y ago
    They do more than just payroll. You can view their website to see their other offerings.
    • deleted 7y ago
      [deleted]
  • hobofan 7y ago
    ML/automation for manual processes?
  • jasode 7y ago
    >What R&D does a payroll provider do? (Genuine question) Halfway down the Techcrunch article, Joshua Reeves mentions what "R&D" in NYC intends to work on: - While Gusto’s central product is payroll, Reeves sees two other product arcs he intends to develop more in the coming years as the company scales. One arc, which we talked about last year, is fintech features like Flexible Pay, a product that allows employees to receive their unpaid wages in advance, with the goal of reducing reliance on usurious payday lenders. The other product arc is health care and helping SMBs offer insurance benefits to their employees. “We want to be a force for universal health care,” Reeves said. - As Gusto explores additional products built around its payroll service, it has sought to expand its engineering R&D team. The company announced recently that it will open an R&D office in New York City in September, which it hopes will be able to both execute on these two products as well as others not yet planned. So, another way to state "R&D" is "new product development". Gusto wants to offer more SaaS capability than just plain payroll processing such as short-term loans, health insurance management, and other yet-to-be-disclosed new products. Presumably, in Gusto's slide deck to raise the $200 million, they convinced new investors that the money would be used to build new products. (side note: I didn't downvote your comment.)
    • toomuchtodo 7y ago
      Appreciate the reply, don't worry about the downvotes.
  • edawerd 7y ago
    Co-founder and CTO of Gusto here. This is a REALLY good question and something that's hard to appreciate until you actually to build a payroll system. I think a common misnomer is that if you're not doing ML/AI/AR/blockchain/[insert latest technology here], you're not doing R&D. The domain of Payroll turns out to be an incredible complex business domain. I think Ron Jeffries says it best in his post: http://wiki.c2.com/?WhyIsPayrollHard http://wiki.c2.com/?WhyIsPayrollHard The software design of such a complex business domain at scale turns out to be an incredibly hard engineering challenge, and something that is often overlooked when we think about big engineering challenges. A little known fact is XP and Agile were developed by Kent Beck while working on a Payroll system for Chrysler (In fact, Kent now works at Gusto to help us with our payroll system).
    • rdgthree 7y ago
      I'm CTO of Flip (https://flip.lease https://flip.lease), we handle a lot of rent payments each month. I get the same question a lot. Most people could not imagine the amount of complexity that exists underneath the seemingly simple guise of paying rent. Just wanted to say I can sympathize and I respect what you've been able to do, specifically from the technical perspective. (We use Gusto and it's been absolutely fantastic) Unrelated, my whole team was very impressed by the attention to detail in your rebrand. It's so difficult to transition the landing pages and internal product so seamlessly, again coming from the technical perspective. I imagine you're running a tight ship over there, and it shows. Congrats on the raise!
• jedberg 7y ago
  Oh good! I love Gusto, and their customer service has been stellar. I hope this allows them to get into more areas of payroll that I hate dealing with, like worker's comp insurance, or just managing my insurance for employees in general. That's my biggest sticking point, especially since I have people working in multiple states.
  • edawerd 7y ago
    Hi! Cofounder and CTO here. We offer workers compensation insurance in all 50 states!
    • jedberg 7y ago
      Is that new? Last year I had an employee in Washington and I had to call the State of Washington to set it up, for example. If it's new, that great! You should have told me. :)
      • edawerd 7y ago
        nope! we've had it for many years now!
        • jedberg 7y ago
          Then maybe we aren't talking about the same thing. When I added an employee in Washington, I had to apply online and then call them directly to get the employee set up. One of the things I had to do was buy Worker's Comp insurance through the State of Washington, because no one else will sell it. Also, I had to get my UBI number from them. Ideally I would tell you guys "I have a new employee in Washington!" and that would be the end of the story, you'd do all the rest. That's what I'm hoping you can get to at least! (To be clear, the part you can do today is already amazing and super helpful, I'm just being greedy because I'd rather spend time on product than on calling the State of Washington
    • sbr464 7y ago
      Would love to see the API open up/be offered again! We don’t use Quickbooks, but currently we are hacking the Quickbooks export with a bunch of JSON in the configuration UI, to provide extra context and more detail for team breakdowns, etc.
• nemo1618 7y ago
  I remember switching to Gusto early on in the life of my startup, and how surprised I was to realize that I was excited about payroll software. The UI and UX were 100x better than the stuck-in-the-90s software we were using previously. It made me really optimistic that starting a startup would only become easier as services like Gusto popped up to meet their needs. My only gripe is that I liked the old name (ZenPayroll) better :P
  • CPLX 7y ago
    > My only gripe is that I liked the old name (ZenPayroll) better I think you can blame the “laws, what are those” guys over at Zenefits for necessitating a rebrand.
    • Astroloth 7y ago
      False. ZenPayroll rebranded as Gusto in September 2015, months before Zenefits legal troubles went public.
      • jaxn 7y ago
        Though the name change did seem to coincide with a shift in focus away from only payroll, to include services similar to Zenefits. They did send me some cool Gusto socks during the rebrand though.
• Meekro 7y ago
  I love it when I don't have to think about things, and Gusto combined with Stripe (Atlas and card processing) have made it possible for me to not ever think about a whole lot of things. Now if only there was a company as good as Stripe/Gusto that did accounting+taxes, I'd really be set! I mean, "I give you access to my accounts, (almost) never think about you, and I have a proper set of books and my taxes are fully done every year."
  • Yabood 7y ago
    I heard many good things about bench.co.
    • bigchewy 7y ago
      The stories I've heard from CPAs and other friends is that it it's amazing for small companies < ~$300K annual revenue and then falls apart pretty quickly once you need to do something other than just basic reconciliation and pay taxes
    • Meekro 7y ago
      I'm actually a customer of Bench.co, but I've been somewhat frustrated and thinking about leaving. First, they are very slow-- the books for a given month are usually finalized at least a month later (so your May books won't be fully ready until July, sometimes even later). By the time they are ready, the information is "old news" and not useful for decision making. I end up running queries against my Stripe data to get more up-to-date financial info. Also, they keep asking me to manually classify the same transactions every month, things that have always shown up in my books every month. I would think they would have learned by now, and that they haven't is a red flag that makes me wonder what else is broken. Finally, they don't actually do taxes. My ideal bookkeeping system would automatically handle that so I don't have to think about it, in the same way that my Gusto payroll runs automatically without me having to even remember that it's happening.
      • whitepoplar 7y ago
        Maybe check out pilot.com? (Disclaimer: haven't used them, but have heard good things.)
• ulfw 7y ago
  Congrats to Joshua and team. Awesome product, awesome team!
• charleyma 7y ago
  Very exciting to see more companies open up prod + engineering divisions in NYC - I feel as though typical bay area tech satellite NYC offices are go-to-market focused first before expanding out to prod/eng so interesting to see Gusto go the other way first!
• tempsy 7y ago
  It seems like a good product, though I always get very uneasy by companies that have extreme company cultures. If you work there, you can’t wear shoes in the office (to give the feeling of being at home?) and apparently you need to change your LinkedIn headline to say you “Empower” X or Y. I feel like every blog post I’ve ever seen from this company is about their “mission-driven culture.” Can we go back to a time where employees aren’t asked to be 100% emotionally attached to their work, in ways like this that are clearly made more extreme by the company itself?
  • stevekemp 7y ago
    In Finland it is common for people to remove shoes indoors - I guess walking through slush/ice/snow in winters makes that a good habit - and that often extends to company-offices. Of course outside there it would seem a little odd to many, I'm sure. Though sliding around polished floor, in your socks? Never gets old. Maybe I'm just a child..
    • tempsy 7y ago
      This is in SF and I assure you no other company does this.
      • bennylope 7y ago
        Given SF's reputation for feces-free streets this does seem rather odd.
      • jamiequint 7y ago
        Our company does it too and I thought it was weird at first but now I love it.
    • SilasX 7y ago
      Right, but it's not weird there when everyone does it. This would be analogous to a "Change the world" company in Finland requiring everyone to walk around in the office in their full snow shoes.
    • 7y ago
• jeron 7y ago
  Used to work at a company that was using Gusto, much prefer them to the payroll my company is currently using, ADP
  • blang 7y ago
    Care to elaborate? Not being snarky, I've also been at companies using both and have had no preference.
  • delfinom 7y ago
    What's wrong with ADP? They have a fancy web interface and honestly, who cares once you get a direct deposit as an employee.
• dawnerd 7y ago
  I tried to use Gusto but no where on their site did it say I couldn't use it if I only had contractors. Their support was pretty bad about it too. Ended up going with Square Payroll which supports my model AND does it all for no monthly fee.
• qiller 7y ago
  One thing I don't like about Gusto is a platform lock-in for new features. We've been a customer since before there were health benefits available (and now have no intent to switch). Things we've been asking about like HSA contributions or prorated benefits were eventually added - but only if you use Gusto's own program. That's annoying...
• foobaw 7y ago
  Will Gusto ever expand to larger start-ups? (200~300 employees)
  • tejasmanohar 7y ago
    Just one datapoint but When I left Segment (400-500 employees), they were still ok Gusto
• doh 7y ago
  I'm really happy for them. I used to like Gusto a lot. It worked fairly well when we were a few people, but as we grew, things started breaking, especially as our setup started becoming more and more complicated. For instance, we have offices in 5 states and two countries. Gusto doesn't support outside of US folks, so we had to maintain two systems. One of the most frustrating things was the 2 day payroll. They turned it on for us, and the capped it at something like $60k even when we have millions of dollars in the bank account they have direct access to. Every two weeks, when the payroll supposed to be run, we had to contact support to request and exception which required a screenshot of our bank account balance. EVERY TWO WEEKS. There is a lot of small things like this that forced us to talk to their support almost on daily basis. In some cases we waited for an answer for months. As such, we recently switched to Rippling and are very happy with the decision. I'm glad that Gusto is working for so many people. I really enjoyed it while it did work for us.
  • x0x0 7y ago
    They completely fucked me over. Not only did they not pay out commuter benefits (send the confirmation emails, didn't actually put the money in my account), but they ignored 4 (!!!) support requests in a row, sent once per day for a week. It wasn't until I got on the phone and was rude to someone that they deigned to help... and then missed their self-imposed communication deadlines. Complete incompetent shitshow. So yeah -- in case you were pondering using Gusto, just know that * not paying out $250 in commuter benefits owed; * not noticing the extra cash in their bank account; * ignoring 3 polite emails to the support addresses, and one less polite request; * ignoring the first phone call; * requiring you to be rude; * blowing their self-set update deadline; is all part of the wonderful Gusto experience! If you use them, I'd strongly suggest checking that all your commuter benefit reimbursements actually landed in your bank account.
    • rdgthree 7y ago
      Are you sure this isn't your employer's mistake? With commuter benefits the employer has to manage everything themselves. If the benefit is a contribution it'll show up on your paystub, but your company needs to either reimburse you the amount (after you have already paid the commute cost personally) or provide you with a transit/benefits card. If it's a pre-tax deduction, it stays in the employer's bank account, again to reimburse you or provide a benefits card.[0] It doesn't really make sense for this to work any other way. Commuter benefits are pre-tax, so if they just paid you the money outright it would be a pretty explicit violation of tax law. There needs to be a paper trail showing that the benefit money was spent on the actual benefit itself. I imagine their team might be confused by your questions. [0] https://support.gusto.com/benefits/other-benefits/payroll-deductions/1007585111/Add-a-benefit.htm https://support.gusto.com/benefits/other-benefits/payroll-de...
• joevandyk 7y ago
  Gusto uses a Rails monolith. https://engineering.gusto.com https://engineering.gusto.com describes some of their experiences with it.
• ryanmercer 7y ago
  I truly don't understand why a payroll company would need to raise 200 million dollars and what they could possibly do with the bulk of it aside from buying 24k gold toilets. You're not going to hire 200 million worth of people, or buy that many ads, you could build your own server farm for a fraction of that and cloud services would take quite a long time to burn through that. So why? Why would you sell that much of your company to investors? Why would you invest that much money in a payroll company? I can sometimes understand it, say a company was working on some sort of energy generation and needed tens of millions of dollars of equipment/infrastructure to even start truly testing their idea, or you were going to sell some physical good that was going to sell for hundreds or thousands of dollars per unit and you've already been selling other versions but need a large amount of cash for the MOQ to manufacture your new hardware in the best setting and banks are hesitant to pony up, but for a payroll company?! This stuff always blows my mind.
  • user5994461 7y ago
    One way to think about it is that each employees costs $100k or $200k a year. So for $100M, you can comfortably afford a few hundreds people for a few years with all the office space, benefits and hardware required. A regular small-medium business really, nothing special.
    • ryanmercer 7y ago
      >One way to think about it is that each employees costs $100k or $200k a year. Those are some expensive employees, me and my friends don't cost anywhere remotely near that. I make 34k a year after 13 years on the job. A company doesn't have to hire in one of the highest COL cities in the country.
      • user5994461 7y ago
        It's fully loaded costs, an employee is a lot more expensive than just the yearly salary. Looks like they're expanding to NYC so definitely closer to $200k.
• golover721 7y ago
  I’m happy for them, seemed like an interesting company. Personally I had a bad experience with them as far as their recruiting went. As a very experienced candidate I was working with a senior recruiter who thought I was perfect for a position, however hearing my compensation requirements said he had to check in and get back to me. I never received a response. Perfectly fine with it not being a good match, but have the common decency to have some kind of response.
  • thewarpaint 7y ago
    I've never understood this behaviour. Is it because they don't want to send any official communication stating that they don't want to/cannot match your compensation request? Is it just bad blood? No idea.
    • aksss 7y ago
      90% of the time it's just because people are busy and have a god-awful amount of crap on their plate. They figure your interest will time out gracefully.
    • golover721 7y ago
      No idea, but it is obviously rude, but also in the current “lack of engineering talent” climate a very bad business practice. I have worked for a couple of FAANG and other large companies, and been rejected by many more. But they have always responded after the interview process began.
  • golemiprague 7y ago
    What's the big deal with no response? it just means no or that things fell between the cracks. Companies get hundreds or sometimes thousands of applications, just assume that the default is no unless they contact you with a yes. It is like in dating app, girls are getting much more yeses from men than vice versa, they can't give attention to any guy saying hi, even to refuse politely, so they just ignore it.
  • jkempe11 7y ago
    Hi! I'm a recruiter at Gusto. How long ago was this? I'm hoping it wasn't me; sometimes things fall through the cracks. If you're interested in chatting again, I hope to make this right. Feel free to email me directly: john.kempe@gusto.com
• peterlk 7y ago
  This is an aside, but can we define what a "startup" is? To me, if you have a repeatable business model and have scaled it to thousands of customers, you're no longer a startup. Is the convention that if you take private investment, then you are a startup?
• mbajkowski 7y ago
  Good for them. Used them for startup a few years ago. Worked really well and super simple to use when all employees were in a single state and we only utilized their payroll services. Once we started venturing into offering health insurance to employees though and our employees spread across multiple states / countries we were not able to customize the plans to our liking (we had some very specific ideas about how we wanted to subsidize insurance) and ended up switching to different provider. We ended up trading the nice Gusto (ZenPayroll) interface for a much more clunky one and most likely a higher premium, but the other provider was able to customize our packages without us having to devote much time to it, which at that point was worth the trade off. I'm sure Gusto has improved hence, and I would likely give them another try today as needed. By the way, for those switching payroll providers, in my experience it is better to do either on a quarter end or year end - while not necessary by any means, it can make it easier to gather all needed documents in case there are tax questions down the road.
  • cassowary37 7y ago
    nope (re being sure their ability to handle health benefits has improved)... just used them for a startup and their response to questions about integration with health benefits was essentially (3 days later) - um, we don't do that, but we'd be happy to sell your name to a broker. agree the interface is pretty, but failure to really support benefits will be a dealbreaker for many startup/small business folks.
    • mbajkowski 7y ago
      Thanks for the input. I was assuming things may have improved since I last used them a few years ago. My experience was similar to what you mentione above, back then. This may save me some time evaluating options for future ventures.
• sergiotapia 7y ago
  Whenever I work in a company that uses Gusto for payroll and benefits, I breathe much easier as an employee. It's easy and out of your way. Please send the design team love and compliments from me. A+
• Oblouk 7y ago
  Love Gusto! Some other services I love in a similar realm include: - Stripe - Pilot - OpenA401k (For me and my wife's solo 401k plans)
• eldavido 7y ago
  I keep wondering whether these guys will go public. They're at least 6-7 years old, have healthy revenues, and seemingly a lot of customers. I've wanted to see the financials for a while. Show us the numbers, Josh!
• sealthedeal 7y ago
  And to think Rippling could raise this for their series B
• git-pull 7y ago
  Wish list: - international employees (US, European countries) - better support for employees across-states (they already do many things well in this regard) - taxes - general accounting - atlas-type stuff (bank, incorporation) - maybe a specialized account manager / team to handle the above (I guess it'd be region-based CPA/lawyers?) Some of those are sophisticated things, but having one hub to view/manage it all from the top down would save oodles of time. Aside: Gusto's support has been very helpful, even as an employee, when I contacted them directly they went out of their way to help me solve a payment issue.