Gusto CEO talks building a business, and HR department, from the ground up

When Josh Reeves, Eddie Kim, and Tomer London launched Gusto (then ZenPayroll) in 2012, they wanted to help small businesses better support their employees. For them, this mission wasn’t just professional—it was personal.

“We had all run small businesses. We also had family running small businesses,” Reeves, Gusto’s CEO, said during a recent episode of HR Brew’s People Person podcast. “And as technologists, we really wanted to bring all of these exciting technologies to small businesses, because all too often, they’re on their own, including in the HR function.”

The trio has since raised $746.1 million at a $9+ billion valuation from investors including General Catalyst, Capital G, and T. Rowe Price, among others, to help simplify payroll and benefits for more than 400,000 US businesses—all while navigating how to do the same for their own organization.

Reeves sat down with Kate Noel, SVP and head of people operations at Morning Brew, to discuss his experience building a business, and HR department, from the ground up.

The following has been edited for length and clarity.

Take us back to the early days. What did HR look like when you started?

So from the very beginning, I think we probably had an added complexity than most companies on HR and people, which is we decided we were not going to pay ourselves until we could do it using our own product.

You need to unpack that just a little bit.

Well, so given that we were going to build out this system to automate, streamline, leverage, paperless, mobile, cloud, we wanted to make a product that, again, anyone could use…And if we’re going to go prove that, it can be that intuitive, that easy, that simple, we have to dog food it ourselves.

So the first task was literally building our product…But we did think a lot about, when we’re adding someone to the team, the first person we were adding, what is going to be the approach we take to hiring?...that was when we actually codified our values…and that became a key part of our hiring process.

What a bold take to be like, okay, “I’m not going to pay myself or those who are part of this until we know, for a fact, the product is what it says it’s going to be.”

Founders are a little bit more of a unique kind of creature. We just really, really, we had a confidence, we had belief that we could create something useful, but then it takes a team. So we hired some more folks, mostly on R&D…it was actually in 2013, so now we’re live, the product is launched, we’re now 10 people…And that was in the time period of when we added our first people team member to the company.

So at that point, as a founder, you were thinking, “We’re growing, so bringing an HR person makes the most sense”?

I was doing many jobs…which I think a lot of business owners can relate to…What was clear was that we’re adding more people to the org, I want to be just as intentional with how we hire, with how we onboard, with how we give feedback, with how we celebrate and reward performance, what function is helpful to this, what type of background or person could be a good partner to me. Obviously that’s someone that has a passion or an interest in people.

It just makes my heart so happy hearing the things that mattered to you, because the values you care about are the things that are our mission statement in the people ops world.

I think all leaders are, in their heart of hearts, it’s a people function. What does leadership mean? It means setting up an environment for other people to go do incredible work. I can’t change or separate the concept of leadership and a lot of people and HR topics.

Once you found that HR person, how did you know they were the right person?

A bit unique to Gusto, we were attracting people, to every function, whether you’re joining for engineering or marketing, who care about people topics...this is our obsession as a company…but the first person we actually had…her name was Jessica Yuen. She actually did not have a formal background in HR, but she had a deep passion for people…I always get caught up on the term “HR.”

Why?

Any term that gets used a lot, there’s going to be amazing positive associations, which I have with the term, but also there’s baggage, which a lot of folks have. So “resources,” right?...There’s another version of this that triggers me…human capital management…People are not capital…let’s treat them like people.

For more from this conversation, tune into the People Person podcast on Apple Podcasts, Spotify, and YouTube, or watch it below.