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Tomer London: Payroll is a major pain point for small businesses, selecting the right initial customers drives growth, and building trust is essential for mission-critical software | a16z Live

cryptobriefing.com 2 h

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Key Takeaways

Payroll is a major pain point for small businesses, often leading to frustration among owners.
Effective payroll management can unlock valuable employee data for solving broader business challenges.
Selecting the right initial customers is crucial for long-term success and word-of-mouth growth.
Close collaboration with initial customers fosters valuable insights and product innovation.
Identifying potential design partners involves assessing their feedback and engagement.
Direct conversations with customers provide deep insights into their experiences and needs.
Understanding both employer and employee experiences is key to product differentiation.
Building trust is essential when selling mission-critical software to traditional SMBs.
Strategic partnerships can enhance trust and credibility in early-stage startups.
Balancing customer feedback with product vision is vital for successful product development.
A structured approach to gathering feedback from diverse sources supports innovation.
Trust and credibility are critical components for startups aiming to establish a strong market presence.
Customer feedback should be integrated into a broader strategic framework for product development.
Engaging directly with customers helps identify key areas for product improvement.
Payroll systems can play a strategic role beyond compliance, contributing to business growth.

Guest intro

Tomer London is the co-founder and Chief Product Officer of Gusto, a payroll and HR platform serving over 300,000 small businesses and valued at around $10 billion. He co-founded Gusto after talking to hundreds of early customers to identify payroll pain points and optimize the self-service product experience. His approach to incorporating customer feedback while maintaining product vision drove the company’s scaling from a three-person startup to hypergrowth success.

The challenges of payroll management for small businesses

Payroll is a significant pain point for small businesses, often causing frustration among owners.

— Tomer London
Many small business owners experience anger and frustration with their payroll vendors.
Understanding these challenges is crucial for developing effective payroll solutions.
Every time I talk with a small business owner… you got a lot of emotions, you got a lot of anger and frustration.

— Tomer London
Effective payroll management can provide valuable employee data for solving additional business problems.
If you do a really good job with payroll, you’ll get the chance to then solve additional problems.

— Tomer London
Payroll systems can integrate with broader business operations, enhancing overall growth.
Addressing payroll challenges is a critical market need for small businesses.

Importance of selecting the right initial customers

Selecting the right initial customers is crucial for long-term success.

— Tomer London
Initial customers serve as the seed for word-of-mouth and future growth.
Providing great service to initial customers is essential for building a sustainable business.
You wanna make sure to bring in customers that you can really provide great service to.

— Tomer London
Working closely with initial customers allows for valuable insights and product innovation.
Focusing on people that will help us generate learnings… they enabled us to actually let us spend time with them.

— Tomer London
Customer feedback plays a crucial role in refining products and services.
Strategic customer selection is vital for startups aiming for growth.

Identifying and engaging with potential design partners

Identifying potential design partners involves assessing their feedback and engagement.
It’s just people that when you start working with them and asking them questions their answers make sense.

— Tomer London
Engaging with customers through direct conversations can yield valuable insights.
I was sitting with an accountant… and we just said hey, you know you’ve been using different payroll providers.

— Tomer London
Direct customer engagement is crucial for understanding product-market fit.
Personal interactions help gather detailed feedback for product improvements.
Valuable early adopters contribute meaningfully to product development.
Customer feedback is essential for identifying key areas for innovation.

Understanding employer and employee experiences

Understanding both employer and employee experiences is crucial for product differentiation.
Here’s a product insight: we should have the employees have their own self-service admin.

— Tomer London
Separating employer and employee interactions can solve awkwardness in product use.
The employee experience is as important as the employer experience in product design.
Considering all user experiences is critical for creating effective solutions.
Product development in HR tech must prioritize user experience for both parties.
Differentiating products requires a comprehensive understanding of all user interactions.
Enhancing user experience can lead to better product adoption and satisfaction.

Building trust with traditional SMBs

Building trust is essential when selling mission-critical software to traditional SMBs.
When you’re selling something that’s very painful but also mission critical… you really have to engender trust.

— Tomer London
Trust is crucial because SMBs cannot afford to mess up payroll.
Selling software to SMBs requires understanding their unique needs and concerns.
Establishing trust involves demonstrating reliability and credibility.
High-stakes environments demand a strong focus on building customer trust.
Trust is a key consideration for software vendors targeting traditional SMBs.
Effective trust-building strategies can enhance sales processes and customer relationships.

Strategic partnerships and credibility in startups

Building trust with customers in early-stage startups can involve strategic partnerships.
We started working with accountants more and more closely… if accountants believe in gusto then that can help their small businesses also believe in us.

— Tomer London
Partnerships with trusted entities can influence customer perception positively.
Credibility is a critical component for startups aiming to establish a strong market presence.
Strategic partnerships can enhance trust and credibility in early-stage startups.
Demonstrating credibility through partnerships can attract and retain customers.
Trust and credibility are vital for gaining customer confidence in new ventures.
Partnering with credible organizations can boost a startup’s reputation and growth.

Balancing customer feedback with product vision

Balancing customer feedback with product vision is crucial for successful product development.
You gotta have a funnel of ideas… that funnel should include new customers, prospective customers, investors, teammates.

— Tomer London
A structured approach to gathering feedback supports innovation and growth.
Overreacting to customer feedback can derail product development efforts.
Integrating feedback into a broader strategic framework enhances product innovation.
Diverse feedback sources provide a comprehensive view of customer needs and preferences.
Successful product development requires a balance between vision and customer input.
A strategic framework for feedback collection can guide product improvements effectively.

Direct engagement with customers for product improvement

Engaging directly with customers helps identify key areas for product improvement.
Direct conversations provide deep insights into customer experiences and needs.
How are things going? Tell us the pros and cons.

— Tomer London
Personal interactions can reveal hidden challenges and opportunities for innovation.
Gathering detailed feedback is crucial for refining products and services.
Understanding customer experiences informs product-market fit and development strategies.
Direct engagement fosters strong customer relationships and loyalty.
Customer feedback is a valuable resource for continuous product enhancement.

The strategic role of payroll systems in business growth

Effective payroll management can unlock valuable employee data for solving broader business challenges.
Payroll systems can integrate with broader business operations, enhancing overall growth.
If you do a really good job with payroll, you’ll get the chance to then solve additional problems.

— Tomer London
Addressing payroll challenges is a critical market need for small businesses.
Strategic payroll management contributes to business growth beyond compliance.
Payroll systems play a pivotal role in supporting business operations and decision-making.
Leveraging payroll data can drive innovation and efficiency in business processes.
A well-managed payroll system is a strategic asset for small business success.