Gusto Founder: IPO “Not if, but When”
August 13, 2019 | Contributed by: Charles Laughlin
Gusto CEO Josh Reeves sat down for an interview this week with Yahoo Finance and talked about his company, its commitment to the small business market, and his desire to maintain Gusto’s independence.
On the latter point, one path to ensuring Gusto’s ongoing independence is an IPO, which Reeves characterized as a matter “not of if, but when.”
Reeves would not be pinned down on a timeline to going public, however. “We have all the resources we need to just keep building products and serving the customer.”
Gusto has now passed the 100,000 customer threshold and has raised $316 million in venture capital to date. Its current valuation is a whopping $3.8 billion. We recently reported on Gusto’s latest venture round, clocking in at $200 million.
In the interview, Reeves points out a few things that help explain Gusto’s success.
Focus on Simplicity
Reeves compares SMB SaaS to enterprise SaaS in the interview, noting enterprise is all about customization. In SMB SaaS, the key is to build a product that is dead simple.
“With small business, it is more like the consumer market,” Reeves said. “You have to build a really easy-to-use product.”
We wrote this week about the challenge of driving engagement with small business software. A key finding from our Modern Commerce Monitor survey research is that SMBs crave simplicity in the products they use.
Reeves said the companies organic approach to customer acquisition is another key to its success.
“We do some paid, but word of mouth referrals is the primary driver of our growth,” Reeves said. “If we don’t do a good job for the customer, we don’t get more customers.”
Getting customers is probably a little more challenging for Gusto than Reeves lets on. It is true, however, that in an era of rising customer acquisition costs, SaaS companies that can let their product and customers act as their de facto sales channels are in a far stronger position than those relying on advertising or direct sales. This requires building the right product for the market, making it dead simple to use, and delivering seamless customer experience.