How I decided it was time to start making deals

COVID-19 showed co-founder Edward Kim what Gusto needed to start doing more of, faster.

Three men - Tomer London, Joshua Reeves, Edward Kim - sitting together in an office lobby

Gusto co-founder Edward Kim (right) told Protocol about his and his co-founders' acquisition moves.

Photo: Gusto

Click banner image for more How I decided series

HR technology startup Gusto grew over more than a decade into a business now valued near $10 billion. It began as payroll management for small and medium-sized businesses and has since expanded into including employee onboarding and insurance among its offerings for about 200,000 customers. Gusto built and grew those offerings internally, avoiding acquisitions until last year, when it started making deals quickly.

The company struck a deal in June 2021 for Ardius, which helps SMBs manage research and development tax credits. A month later, Gusto bought tax software company Symmetry and then, in October, acquired Remote Team, which allows businesses to hire and pay workers globally. Co-founder Edward Kim explained the company's decision to start making deals.

Kim’s story, as told to Protocol, has been edited for clarity and brevity.

What got me excited about what we started building nearly 11 years ago — myself, Josh [Reeves] and Tomer [London] — was the chance to solve a real problem SMBs were facing. My parents owned a medical practice in Southern California. Every day after school, I did homework alongside my mom in the office as she calculated payroll by pen and paper.

I knew that my mom was not the only one: that there were millions of business owners just like her.

I was a technical founder, the CTO. The first year or two was me just learning how payments work, how money moves around the banking system in the U.S. and then also how payroll works. Essentially just building out the prototype. We said that we wouldn't pay ourselves until we could do so using our own payroll system. It was a good motivating factor for us.

That's been the DNA of the company: starting from the initial payroll system and building a great engineering, product management, design and data team to help us build all the things that came after that. Over the past year or two, that philosophy hasn't necessarily changed, but opportunities presented themselves that gave us some buy opportunities.

What changed everything was COVID-19. Things have always been difficult for small businesses, but COVID-19 just made things a lot more difficult.

How do we get better cash flow into the hands of small businesses? That was one of the things we were thinking about a lot. That led us to look at Ardius. Many small businesses are not aware of it, but are eligible for R&D tax credits. Ardius figured out a way to get this tax credit into the hands of small businesses without having to hire super expensive accountants. We saw a huge benefit to joining forces.

We didn’t have the luxury of time. We couldn't wait two years to build what Ardius had built and get it in the hands of small businesses.

Also with COVID-19, businesses needed to hire remotely — now. There wasn’t the luxury of time to wait. That was the thinking behind the acquisition of Remote Team. It was like a time machine: let’s go to the future and get this capability and give it to our customers today.

Acquisitions are definitely a team effort. Sometimes it is like hiring, you get referrals. Sometimes, like with Symmetry, you have a long-standing relationship. Six months into starting our company, we started using Symmetry. Our engineering teams have collaborated a lot with their engineering teams just because they're such a core part of our payroll engine.

There are a lot of ways that acquisitions go wrong. You can be excited about the potential, but you need to think about: What are the risks? One of the biggest is integrating: How can you take an outside company with its own culture, people and infrastructure and integrate that with the acquiring company?

One quirk of Gusto culture: For every person, once we decide to make an offer, we get everyone who talked to that person during the interview loop on a call, secretly invite them and everyone gives a big celebration. With the acquisitions, we did exactly the same thing. We treated it like we're inviting someone to join Gusto as an employee and inviting each individual into Gusto.

COVID-19 was an example of how difficult times surface new ways that we can help customers. I wonder if we will see similar sorts of things for however long this kind of economic uncertainty lasts. We just have to keep listening to our customers and see ways that we can help, and then also see if there are other companies that can help us compress the time to get there.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories