Gusto is one of the most celebrated business operating in the small business cloud software space, having raised more than $300 million to date and generating ample press for its approach to disrupting the payroll and HR space. Last week we visited Gusto’s impressive new offices in San Francisco’s waterfront to sit down with the HR startup’s marketing head Tolithia Kornweibel, who will also be a headline speaker at our Tech Adoption Summit in November.

Gusto’s new San Francisco offices in occupy a former repair facility for ships

Our conversation with Tolithia covered a wide range of topics, from partnerships to competition to customer experience. Here are some highlights.

  • Gusto has barely scratched the surface of its opportunity. With 60,000 current customers, Tolithia noted Gusto has only reached 1 percent of the available market.
  • Because the HR/payroll market is so fragmented, Gusto’s biggest competitor, in a sense, is pen and paper. In other words small businesses that have not digitized their payroll process and may be reluctant to do so. She noted that 58% of small business with employees (solo shops are not on Gusto’s radar) still do so manually.
  • Accountants are a very important partner channel for Gusto, as are accounting software platforms like Xero and point of sale players like Clover, As Tolithia points out, synergy with POS systems is pretty clear. “They [SMBs} are making that decision at about the same time they are thinking about hiring people.”
  • Gusto isn’t stopping with Accounting and POS as channel partners. “We want a breadth of partnerships. We want Gusto to be compatible with whatever stack people are using.”
  • Further, she said Gusto is looking at adding solutions that go beyond its core of HR and payroll. “We have always had an ambitious mission, as any good startup should.”
  • Lending seems to be a next logical step for Gusto. It already is offering financing in a sense through its Flexible Pay service, which allows employees to get paid when they need the money (assuming they’ve already earned it) rather than on a fixed payroll schedule.
  • Gusto is very mindful of its brand image and bristles at phrases that imply people are interchangeable parts. “We like to say humans aren’t resources.”
  • Gusto is concerned about an economic downturn, but believes it is positioned to weather the storm. “We increase value relative to the customer, so that is still a good choice in a down market.”
  • A bigger fear for Gusto than the economy is a competitive battle that erodes trust in SaaS tools to solve problems for SMB. “In a customer acquisition arms race, the winner is not always the best product. That could slow us all down.”

You can listed to the full podcast here. The interview with Tolithia begins at the 3:25 mark.

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