Eddie Kim - Co-Founder & CTO at Gusto

(Joel Beasley at 00:00:00) Hello, my friends. Today we are talking to Eddie Kim, the CTO and co-founder at Gusto. And we discussed the four phases of leadership when scaling an organization, how incremental improvements create fantastic products, and what it looks like creating an environment where ideas can be challenged respectfully. All of this right here, right now on the Modern CTO Podcast. Here we go.

(Joel Beasley at 00:00:24) This is the Modern CTO Podcast. Hello. Hello.

(Eddie Kim at 00:00:37) Hey, Joel. How's it going?

(Joel Beasley at 00:00:38) Good. Can you hear me alright?

(Eddie Kim at 00:00:40) Yes. Can you hear me okay?

(Joel Beasley at 00:00:42) Yes. Do check it out. We got a new studio.

(Eddie Kim at 00:00:44) Oh, nice. That looks pretty slick.

(Joel Beasley at 00:00:48) I know, right? We just finished it last night. This was the last piece. Came in last night.

(Joel Beasley at 00:00:52) Very exciting.

(Eddie Kim at 00:00:52) Yeah. I like the colors that you picked.

(Joel Beasley at 00:00:55) Thanks. This is the first episode with it.

(Eddie Kim at 00:00:57) That's awesome. Cool. Well, I'm honored.

(Joel Beasley at 00:01:02) Where are you calling in from today?

(Eddie Kim at 00:01:04) I'm actually in Chicago right now. Normally I'm working out of San Francisco where I live. But, you know, just kind of decided in this world where we can work from anywhere to hit the road. And I've been kind of just driving east with my fiancée. We both can work remotely and just kind of visiting cities that we've always wanted to see. And so now I'm in Chicago. Eventually I'll kind of hopefully make my way to New York.

(Joel Beasley at 00:01:34) Do you feel pretty safe there, though?

(Eddie Kim at 00:01:36) Yeah, we've been pretty safe. We've been trying to get Airbnbs for longer periods of time and just, you know—I'm super paranoid about this kind of stuff, so I'll rewash all the dishes and sanitize everything before we move in. So yeah.

(Joel Beasley at 00:01:54) I'm not even that concerned about COVID. It's just the crime rates have sky—not the disease itself, but the crime in New York and Chicago have just gone up. We have family in both areas. And so, you know, they don't live in the cities. They live outside the cities in the more rural areas, but they're definitely talking about it, moving back down into Florida or moving to Texas.

(Eddie Kim at 00:02:18) Oh, that's really interesting. We've been mostly staying in small towns right outside of national parks. So, you know, right outside of Zion for a little bit and Yellowstone. And so much more kind of rural areas versus big cities. This is the first kind of city that we've stopped at. Haven't felt unsafe personally. So.

(Joel Beasley at 00:02:43) So is this a travel exploration? Are you looking for a new place or just taking advantage of the remote opportunity and exploring the US?

(Eddie Kim at 00:02:53) Yeah. Yeah. More the latter. I love San Francisco and definitely have no intention of leaving personally. But I also just love to travel and, you know, I was kind of getting my wanderlust after a year of just working in my apartment in San Francisco.

(Joel Beasley at 00:03:11) Right. Are you going outside at night and looking up at the sky? You see the stars out at night?

(Eddie Kim at 00:03:16) When we were definitely outside of the national parks, so outside of Zion, Yellowstone, yeah, you just look up and you see so many more stars. And around that time was when that NEOWISE comet was visible with the naked eye. And, yeah, I mean, there's just so many beautiful places in the US, and it's been really nice to rediscover all of them recently.

(Joel Beasley at 00:03:42) Yeah. I'm a big fan of the sky and the universe in general. Yeah. I'm pro-universe.

(Eddie Kim at 00:03:48) I was going to say, but me too.

(Joel Beasley at 00:03:51) I went—oh.

(Eddie Kim at 00:03:53) Oh my god. We have so much in common.

(Joel Beasley at 00:03:53) I went out to Colorado a week or two ago to try to, because I was really feeling it, you know. I was like, I need to go see the stars. I usually do that. I usually travel a lot and so I'm always in a place where, you know, every month or so I can go sit out on a porch somewhere, some Airbnb, some travel destination I'm at for speaking and I can just look up at the sky. I could just get in that feeling of the sense of awe you get from how small you are.

(Eddie Kim at 00:04:22) Yeah. Totally.

(Joel Beasley at 00:04:23) Yeah. It's different. I love it when I go to the planetarium and stuff, but it's different when you need to go out and see it with your own eyes. And yeah. So I went out to Colorado. I was out there for a week and the whole week it was cloudy skies.

(Eddie Kim at 00:04:34) Oh, really? Oh, bummer.

(Joel Beasley at 00:04:35) Yeah. But I said there's got to be some beautiful positivity here. I got to see—got to see a friend and have a socially distanced trip, the first one in seven or eight months.

(Eddie Kim at 00:04:46) Yeah.

(Joel Beasley at 00:04:46) This whole COVID thing has been crazy. I actually want to give you a big thank you. So we are actually customers of Gusto.

(Eddie Kim at 00:04:54) Oh, cool.

(Joel Beasley at 00:04:55) And we absolutely love the product. We switched from QuickBooks Payroll a few—about a year or two ago. And the thing that was so cool is you guys were 100% on top of it. When all of this came out, you were educating us as customers, you put a new tab in Gusto immediately, and then you created these exports that were one-click exports. And I sent that to my banker. And it was during the time when the rules—it came out solid.

(Eddie Kim at 00:05:23) Changing every day.

(Joel Beasley at 00:05:24) It was changing every day. And so he was like, "I need another one." He's like, "How are you doing this so fast?" Because he's like, "I've got all size companies that I do banking for. You guys are 10 people, and you're getting me perfectly formatted stuff instantaneously." I was like, "Well, Gusto is keeping up with the stuff, and they just have a one-click export, and it's really simple." Yeah.

(Eddie Kim at 00:05:45) That's really awesome. It's so nice to hear that. I remember just, you know, when the first announcement of the PPP came out and then also how the forgiveness was going to be done, our team was just scrambling every single day. We would figure out what is the best kind of interpretation of the current legislation and then basically shipping that as soon as we could. And the next day, you know, they would change the rules because the government just can't really pick a—make a decision on it. And so we have to change it the next day, and it was just constant iteration and iteration. But, really, that's what we're here for. Right? We're here to help enable small businesses and help them succeed. So for us it's—that's our job. That was our moment to be there for our customers. And so it's really great to hear personally, anecdotally, how that's benefited you.

(Joel Beasley at 00:06:43) Yeah. And it's the best marketing ever. Right? Because now I'm so pumped about it, and I'm telling everybody that's doing the small business stuff. And I don't know if you go for bigger businesses too, but at least in my position, the people I'm running into—it reminds me of Stripe in the sense that you just sign up for it. It works. It's beautiful. It's the best product, and I don't know. I'm just—I never thought as a kid I'd be a fan of a payroll software.

(Eddie Kim at 00:07:13) Well, we did our job then, I guess.

(Joel Beasley at 00:07:13) Yes, you did.

(Eddie Kim at 00:07:18) Yeah. We still have a lot more to do. Obviously, you know, COVID is not over. And, you know, now there's the HEALS Act, and there's a lot more ahead of us. So, you know, but it's great to hear that kind of affirmation along the way. I'll definitely pass it on to the team.

(Joel Beasley at 00:07:31) So when you were a small child, did you want to make payroll software?

(Eddie Kim at 00:07:36) I cannot say that that was the case. I was not as a kid being like, "This is the problem I want to solve when I grow up." I did grow up around small business. My parents started their own small business. My parents both immigrated from South Korea. My dad did his residency here in the States and eventually started his own medical private practice. And, you know, just like a lot of small businesses, it's like mom and dad running the business. So my dad was obviously, you know, seeing all the patients and essentially kind of the face of the business. My mom was, you know, running the back office. In fact, there was literally a back office where—because both my parents worked, my mom would pick me up in the middle of her work, pick me and my sisters up from school, and then literally just drop us off in that back office where we would basically do our homework until they were done working. So I kind of grew up being surrounded by all this office equipment and checkbooks and all these things that my mom did to kind of keep the business running, which was all the payroll, writing the checks, the accounting, bookkeeping, invoicing, all that stuff. And so while I can't say that I was like, "Okay. This payroll thing is something I want to fix when I grow up," it was a problem that I saw my mom struggle with every single day in running that business. There's a lot of just manual stuff and papers all around me and, just always kind of being excited about technology. I think there was always—you know, as a kid, and I'm sure a lot of CTOs can relate to this, you just want to find ways to make things better and string together different technologies and APIs to make life a little bit easier for people you love. And that's essentially kind of, I think, how I grew up. It wasn't payroll specifically, but I did kind of have a lot of familiarity with a lot of the manual processes that small businesses struggle with.

(Joel Beasley at 00:09:38) That's interesting. My first real business that did well started because my parents owned a real estate office. And so after school, I'd go to the real estate office and I'd sit there. And I wasn't doing homework, but I was really writing code and they were, you know, some agents were complaining essentially. And I just was like, "Oh, I'll write a little tool for that because I know how to do that." And so I wrote this little tool to help them market their properties and then they're like, "Oh, can you do something for this?" And then, you know, it sounds like a neat story but it was over the course of several years and so I built all these little tools and ended up combining them together and selling them off. But, yeah, that feeling of seeing people experience a problem and being able to provide the solution, that's one of the core foundational elements of the entrepreneurial thing. It feels good. I haven't found there's—there are few things in life that feel that good, like solving someone's problem for them and how excited they are.

(Eddie Kim at 00:10:38) Yeah. Yeah. And, you know, it's a common theme I hear over and over again that it starts with just wanting to fix something small, make something a little bit better. And then in hindsight, when you look back, you kind of see how all these things kind of add up and kind of piece together to, you know, what you're doing now or the mission or the vision that you have, you know, in your company or in your life. And in hindsight, it becomes clear, but your path to getting there, your route to get there is a little bit circuitous and kind of go in the general direction. But then it's in hindsight, it all makes sense. And so that's kind of—I've seen this in so many, you know, things when it comes to company building, when it comes to apps that I worked on, and when it comes to how we build product, how we kind of find things that resonate with our customers. It's much more clear in hindsight than it is, I think, in the moment where, you know, in the moment, you just try to solve some problems. And then somehow, I just find time and time again, this just kind of comes together.

(Joel Beasley at 00:11:43) What were some of the earlier projects you were working on or problems that you were solving far before Gusto?

(Eddie Kim at 00:11:49) Yeah. So right before Gusto, I got really into Android app development. So I essentially started my own one-person Android app shop where I would write—you know, Android was still really in its infancy back then. It was probably around what was it? 2009 or 2010 or something like that. So there were only two Android phones. It was API version three for the Android SDK. And iOS was far ahead of Android in terms of just basic functionality. And so I had kind of built my own business, basically, writing a bunch of utility apps for the Android platform. Things like—you didn't even have the ability to take a screenshot on the Android phone. They actually thought of it as a security vulnerability at the time. So I kind of found some way to hack my way into taking screenshots and basically package that into an app that you can download from the App Store. You couldn't copy-paste text, which is a real big annoyance for me. All these things that you kind of take for granted on your phone, you couldn't really do a lot of that stuff on Android back then. And so I kind of focused a lot of my efforts on building a lot of these utility apps to make, you know, working in Android a little bit better and more in parity with the iPhone at the time. So essentially, I was doing that for, you know, two or three years before deciding to start Gusto.

(Joel Beasley at 00:13:17) So what created that need? So you're sitting there, you're building these Android utilities, you're enjoying it. You're learning. You're growing. And then how did Gusto come about?

(Eddie Kim at 00:13:27) Yeah. So that's, you know, another one of those circuitous stories. I had been doing this Android app business for a few years. Actually, it turned into a fairly, you know, financially lucrative business. For the first time in my life, I didn't really have to worry about money because, you know, people were buying these apps. And at that time, Google would literally do a direct deposit into your bank account every single day. So it was really cool to wake up with a little bit more money than I had the day before. So I kind of got this business to a maturity where, you know, I could pretty much have, I guess, financial independence relatively, of course, but, you know, more than a pretty simple life. More than I ever thought I needed. So after doing that for a few years, I kind of really thought about, do I really want to continue writing apps for the rest of my life? And as much as I enjoyed doing it, I kind of really—I think was at a point in my life where I just decided I want to do something much bigger and solve a much bigger problem. So I, you know, had all this time on my hands, so I decided on a whim to run the San Francisco half marathon. And at the starting line, I actually ran into a college friend of mine, Tomer Hennessy, basically since we graduated from college. And it was one of those moments where, you know, we said hi. So good to see you again. Let's catch up. Grab some coffee after this race is over. And so, you know, after the race—I couldn't walk, by the way, for three days because I didn't really train properly for it. So probably, you know, more like a week went by and we finally decided to get coffee together. Actually had the creamery in San Francisco, which I just read yesterday or two days ago that that just shut down, unfortunately, because of COVID or partially because of COVID. And we just kind of reconnected again. I think we were both in this similar life stage and mindset of us wanting to do something much more meaningful and dedicate our lives to something that we could be doing for the rest of our lives. And so we kind of just connected on that. And we both had connections to small businesses and that was really the start of, I think, how we started working together. And Josh and Tomer, our third co-founder.

(Eddie Kim at 00:15:47) So three of us kind of really started this company early 2012. It's been almost eight and a half, nine years now.

(Joel Beasley at 00:15:55) But what was the moment where you're like, okay, we're both in this position in our life. We both want to do something greater. We want to solve a problem. And then you guys were like at the kitchen table and your mom's like, fix payroll. Like, how did that actually happen? How did you narrow it down to Gusto?

(Eddie Kim at 00:16:10) You know, it was, again, like this finding your way to serendipity thing. It's such a common theme. Like, I can't say that there was a moment where we were sitting around a table and we're like, we're doing payroll. That definitely didn't happen. But, you know, for all of us actually, the three of us, we had a—this is actually our second company that we had started. So we all kind of had personal experiences with the pain of running payroll. I had just grown up around it. Josh and Tomer had as well. Tomer's dad owns a small business in Israel, like a clothing shop. And so I don't know, it's just one of those things that kind of made sense. And we talked about it. We talked to accountants about it, accountants that we had worked with in the past because we had done startups before. This was our second startup. We had a lot of friends that were doing startups and also had this similar problem. And the more we talked to people, honestly, just the more excited we got about it because everything kind of aligned with this being a big problem that small businesses deal with every single day. And that was really, I think, the start of it.

(Joel Beasley at 00:17:20) That's pretty cool. Yeah. It definitely is a big problem. And when I was out there searching for solutions, I was pretty frustrated with the first one. And then so I decided to—I was like, QuickBooks is just so old. Like, everything about them was old. And I said, alright. Well, what I'm going to do is I'm going to do my science thing that I do. So I get a spreadsheet, go sign up for 10 services, and then just experience all of them, and then pick the one that doesn't make me think. That's just like the easiest one. And then when actually, when we were doing our production meeting a few weeks ago or a month ago, I said, um, let's do products that we love, that we use, and let's talk to some of those people. And Gusto is always on my mind. How can it not be? It's on my mind every two weeks when I get the emails.

(Eddie Kim at 00:18:09) Yeah. People love those emails.

(Joel Beasley at 00:18:12) So you went to Stanford. Was that before your Android app company, or is that why you were doing that?

(Eddie Kim at 00:18:20) That was before. So I graduated from Stanford. I took a job at the Volkswagen Electronics Research Lab, which is kind of like this research arm of the Volkswagen Group. Volkswagen Group owns like seven or eight different car brands. So I worked there for a few years, left to do my first startup. And then after that, it's kind of when I went off to do the Android app development on my own and then kind of Gusto after that. So I guess that's kind of like the big arc of my life.

(Joel Beasley at 00:18:50) What was that first startup?

(Eddie Kim at 00:18:52) Um, it was called Pickling. It was like a photo printing business. And a coworker who I really enjoyed working with at the Volkswagen Group, and this was back in 2008, I had started reading a lot more about this thing called Y Combinator, which is like this small little incubator at the time. People didn't even really know what incubators meant, or the concept of one wasn't really a thing at that time. But I was really excited about what they were doing, this concept of just getting a small amount of funding to build a prototype and start a business. And so we had applied, and we both got into Y Combinator. And, um, yeah, we quit our jobs the same day and decided to start our first company together.

(Joel Beasley at 00:19:39) That's a bold move. It's exciting though, right?

(Eddie Kim at 00:19:42) Yeah. It was a really exciting move. It was very scary. At that time, you had to move to Boston to start your company. So we were, you know, the next week, we're on a plane to Boston, and we just worked out of an apartment building and built a prototype of our company. But it was a lot of fun. Like, we definitely learned a lot during that period. And ultimately, that business didn't really work out. But, you know, towards the tail end of it, we started writing iOS and Android apps as part of our product as a way to—you take a photo with your phone and then you send it to the service. They print it and mail you the photos. And that was kind of how I got into the whole Android development. Because after the company, I was like, I really like writing Android apps, so I'm going to keep doing this for a little while longer. And so, yeah. Again, like, kind of one thing has always led to another. And in hindsight, it kind of makes sense. But at the time, you know—

(Joel Beasley at 00:20:41) You're just going through life.

(Eddie Kim at 00:20:42) Yeah. Just going through life. Exactly.

(Joel Beasley at 00:20:45) So I talked to this guy, awesome guy, Peter. He started—he's a professor of computer science at Stanford, and he started a company called, like, Sisu, I think. Sisu Data. If that's not right, Jake, just correct me. But they do some, you know, big analytics AI to discover like the why behind the data. That's like their big thing. And he was talking to me a lot about the research that they were doing. So he was—because he was a professor there. Companies like Facebook or the big companies would come and have them do research, paid research projects and things like that. Is that how you got your job from Stanford to Volkswagen? Were you doing research at Stanford with Volkswagen and met them? Or how did you get that?

(Eddie Kim at 00:21:26) No. Mine was just much simpler. Um, there was a posting that was made to some internal job board. And I just always grew up loving cars, and I also love technology, obviously. And so when I just read this posting, it was literally my ideal job. It was the combination of the two things that I was really passionate about, cars and technology. And so my job was mainly working on essentially the infotainment system for Volkswagen and Audis. Volkswagen owns Audi. And so I was working a lot on connected navigation systems and connected speech recognition systems. All these things that we take for granted today—a lot of cars have Internet connectivity, and they take advantage of that to improve the overall technology experience, the driving experience. But at that time, it was not a thing. And that was my job, was basically to explore what the future could look like for cars when Internet gets into it. And a lot of really cool applications when it comes to navigation and traffic and speech and voice control. So, yeah, that was—I don't know. I just kind of stumbled into it, and I was like, this is a cool job. I applied for it, and then they invited me to work there.

(Joel Beasley at 00:22:47) When I was going through the process of selling my first company, I found out who investors are, what that whole world is. And then I found out that there's this whole pecking order, and then at the top, there's these asset holding companies. And so I started researching them because the first time I found out, because it was real estate related, it was like Better Homes and Gardens owned like 10 different brands, I believe. I could be wrong. But it was one of them owned a bunch of different brands, and they were out in Parsippany, New Jersey. Because I went to their office, and you're in this giant circle, and it's like Century 21, Coldwell—it's all the logos of all the different things.

(Eddie Kim at 00:23:23) Yeah.

(Joel Beasley at 00:23:23) I'm like, how does this work? I don't understand. This doesn't make sense. My whole life, these have been separate things. And so I got into the whole trying to peel back. And one of the ones I came across was Volkswagen. I was blown away. They own so many different brands.

(Eddie Kim at 00:23:37) Right. Yeah. Yeah. Yeah. The same experience. You walk in the office, they have a big mural of all their brand logos, and it's like Volkswagen, Audi, Skoda, Lamborghini, Bentley. And you're like, oh, I didn't know these things were connected to each other. And then when you work there, you realize you see the similarities, actually. Like, the Lamborghini has the same, or very similar infotainment system as Audi's. They just kind of recycle all that stuff. And, obviously, there's some benefits to—

(Joel Beasley at 00:24:04) Brand efficiency.

(Eddie Kim at 00:24:04) Yeah. Yeah. Exactly. But yeah. Then you see it later. It's like, okay. This is the exact same thing.

(Joel Beasley at 00:24:13) Okay. So you like technology. You're into cars. Me too. Have you gotten into the Teslas? Do you like the Teslas at all?

(Eddie Kim at 00:24:20) Yeah. I think they're awesome. They're awesome cars. Yeah. I won't comment on the stock because I don't really know what the deal is with their stock. Although I keep reading about it in the news. But, I mean, I'm convinced that electric cars are the future. We're going to think about gasoline automobiles, internal combustion engines like we do stick shifts today. Mhmm. I love driving a stick shift. It's just like—it's—you feel much more connected to the car. And I've had—

(Joel Beasley at 00:24:54) Horseback riding.

(Eddie Kim at 00:24:57) Yeah. So there's all these things that you like personally better. But then a part of me is like, okay, logically, a stick shift doesn't make sense anymore. You can make automatic transmissions way more efficient, and they can shift gears way faster than a race car driver could with a manual transmission. And I think we're going to feel the same way about electric cars. Like, some people just really like the feel of an internal combustion and just little explosions going on in the compartment in front of you. But when you think about it logically, when you compare advantages and disadvantages, I think electric cars, they just blow internal combustion away.

(Joel Beasley at 00:25:39) Electric motors are just superior motors.

(Eddie Kim at 00:25:41) They're superior. Yeah. Yeah. Yeah. So and then you think about, like, okay. What's the best electric car? Tesla. That's obvious. Yeah. I'm very bullish on electric cars in general.

(Joel Beasley at 00:25:51) I've got that Robinhood app I started using a few months ago for stock investing. So I bought some of the Tesla stock when it was down because, you know, I just saw the market go—it crashed several months ago. And when it crashed, I was like, well, I've got some savings, and I don't—to me, it was just a giant sale. It was like, okay. Everything's on sale because it always comes back. Right? It's either it comes back and you make money or it doesn't come back and we're in a third world situation that money is not going to matter a whole lot. Digital money is not going to matter a whole lot anyways. Right? The two extremes of it. But, yeah, and I just keep getting the alerts. I was just like, unbelievable. It was up at over $1,900 or something today, and I was just like, this is insane. This is crazy. It was $400 back in March.

(Eddie Kim at 00:26:43) Yeah.

(Joel Beasley at 00:26:43) And, uh, yeah. But I started reading the news around that and other EVs just being interested. And there was some really cool news about this company in China. Can't remember the name of it. But they're already releasing thousands of autonomous taxi services. Like, this is our—in Shanghai. This is something that's—it's not like, oh, in the next quarter, we're going to—it was like it was already done. It was two different Chinese companies had large fleets of electric vehicles operating autonomously through apps in Shanghai. And then the one company, its goal was within the next two years to have a million of these electric cars on the roads. I was like, I'm so happy. I want the news report for that. I want the news report for like, Tesla just released 10,000 autonomous vehicles in Silicon Valley. You know what I'm saying? Like, I want that for us.

(Eddie Kim at 00:27:40) Yeah. Yeah. Yeah. Yeah. I think it's an exciting time for the industry. I remember when I was at Volkswagen. They were actually very bearish on electric cars. They were bullish on clean diesel. So it was all about clean diesel, and basically, they were convinced that they were the future and that electric cars just couldn't perform at the same level as diesel or gasoline engines. And now they have, you know, they have e-tron. They have—they definitely pivoted. And so there's been a huge shift in the industry in the last 10 years.

(Joel Beasley at 00:28:16) Yeah. I saw—it's like there's a lot of companies excited about—I think it's hydrogen. I'm not sure if that's what it is, but they were building new gas stations and talking about how it's the future. And I was like, okay. Cool. I'm just happy that we live in this time. Like—

(Eddie Kim at 00:28:28) Yeah.

(Joel Beasley at 00:28:28) Let's explore all the alternatives and see which one wins. Right?

(Eddie Kim at 00:28:34) Yeah. Totally. Totally.

(Joel Beasley at 00:28:37) So I'm curious about the economy and data and all of that. I'm curious to know, you guys have a lot of data, right, about businesses and payroll and economics and recovery. Are you able to look at that data and determine any useful information about the economic recovery?

(Eddie Kim at 00:28:57) Yeah. And it's been one of the really cool things about the scale that Gusto is at today. We have enough data where we can actually, I think, have some really good insights into the direction and the current state of small businesses. If you look at ADP, which is the largest payroll provider, they have a really good pulse on what hiring is like, employment levels, things like that for large business. ADP focuses much more on the enterprise. And in fact, they'll release those numbers before the government releases their kind of employment figures. And so they're kind of like a bellwether in some ways in how the broader economy is doing and how many people are hiring and layoffs and things like that. Um, I think Gusto's quickly getting to a spot where we actually have a good pulse on that for small business. And so what we're seeing right now is, obviously, small businesses are impacted very heavily because of COVID and various lockdowns and things like that. And we saw a pretty precipitous drop, you know, at the beginning of this year when all this started. What we're seeing now is small businesses are really starting to hire back their employees, but we're also seeing that they're not working as many hours as they were previously. So it's definitely making a recovery, but in terms of total wage that, you know, employees of small businesses are making, they're still struggling. They're still having a hard time. They're not making as much money as they used to to pay for all their bills. Because although we're seeing people getting hired back, they're not getting the full number of hours that they had before. In fact, I think what small businesses are trying to do is they're trying to bring back as many of their employees as possible and spreading out kind of the hours across all of them so they can give—I think small business, they really care about their people, and so they want to kind of help as many people as they can.

(Joel Beasley at 00:30:58) Yeah. It's interesting because you also have, like, you can see that data, but you can't really see behind the scenes in the sense that, like, if the company asked, you know, okay, if you can take the time off, you know, take the time off. Like, we don't know exactly, like, what the picture looks like for why it's doing that. But it's good to see that we're in, like, a positive trend direction.

(Eddie Kim at 00:31:15) Yeah.

(Joel Beasley at 00:31:16) For why it's doing that, but it's good to see that we're in, like, a positive trend direction.

(Eddie Kim at 00:31:21) Yeah. I think it is more positive than it used to be. I think there's obviously still a lot of uncertainty for small businesses. I mean, COVID, you know, has resurged back. It's starting to flatten a little bit, but also at the same time, a lot of the stimulus that they got, like the PPP loans, EIDL loans, they're kind of expired now or they're running at the tail end of it. So I think there's still a lot of uncertainty. And meanwhile, COVID obviously hasn't gone away. So we know that with small businesses, they still have a lot of uncertainty on what the future holds for them. So they're by no means, like, out of the woods, better than, you know, where we started at the beginning of the year. But, I mean, make no mistake, they're still struggling a lot. And Gusto is, you know, we're trying to help them as much as we can.

(Joel Beasley at 00:32:08) Yeah. And, you know, the PPP definitely helped. I know because, like, I got it for our company. We took a huge revenue hit when all of this happened because we were doing leadership training as our primary product, and so that was, like, an easy cut for everyone.

(Eddie Kim at 00:32:24) Yeah.

(Joel Beasley at 00:32:24) Yeah. And so we just, like, lost customers. We lost, like, half our revenue. And so what we had to do was figure out how to adapt, and I'm happy to report that, like, today, not only we have more employees, we're doing better, we're making more money than we ever have before. And that crunch of the market doing that forced us into this entrepreneurial corner, and we just had to figure it out. And we created new products, new ideas, and sold. We said, alright, look, we need a product that we can sell that has, like, a sales cycle less than fifteen days. Right? Like, we need a short product that we could sell at a high volume. And we ran all the numbers and we came through, and I'm, like, incredibly grateful that it worked. But at the same time, you know, it's not over yet. Right? We just got things afloat. We got things positive. And then, you know, like, there's moments where you get cash flow positive or unbelievable feeling. But now it's like, okay, how do we, you know, there's still massive economic uncertainty. People are, you know, there's just new stuff in the news every day. And it's like, okay, well, we want to grow. We want to be safe. We want to, you know, stack up savings. What is this PPP loan going to be like to repay? I actually have, like, a webinar with the bank that I used later this week to figure out more information about the forgiveness because that still seems pretty vague.

(Eddie Kim at 00:33:56) Yeah.

(Joel Beasley at 00:33:57) So it's just an interesting time. I feel like it's, uh, how business people felt in, like, the 2009 time. Right? Like, when that crash happened. That was right when I was doing real estate software, right when I was starting, and people were buying it because we saved them money through the software and they were slashing everything because real estate was not doing well then. But yeah, it's definitely, you're in a very stable business though. You're in the payroll business. That's a good market to be in. Right?

(Eddie Kim at 00:34:30) Yeah. I mean, Gusto was, you know, we didn't avoid the impact either because, you know, a lot of small businesses going out of business or cutting their workforce, our business is definitely impacted. Our success is really kind of aligned with the success of small businesses as well. So, you know, I think we've definitely kind of went through a little bit of a rough patch as well. But, you know, I think we've also started to see as businesses hire back. And we are interestingly, we've seen a lot of businesses get started during this time. You know, that's been a nice tailwind for the business as well. Yeah. I mean, I think one thing that's been really cool to see, in some ways we knew this about small businesses, but I think just seeing it in action was such a cool thing is how resilient small businesses are. You know, when their backs are on the wall, like, they kind of get really creative, they pivot, they do what it takes to survive. And then some of them, like, thrive in these challenging environments. And so, yeah, it's just been such a cool thing to witness how tough small business owners and entrepreneurs are during this time.

(Joel Beasley at 00:35:42) Gotta make it though. You gotta go. You gotta eat. Yeah. You gotta, it's that instinct and that drive. I'm curious to talk, so I got to read a lot of content about you before the show, and I saw this four phases of leadership thing, and I was just like, this is absolutely brilliant. I want you to explain. Can you explain to me the four phases of leadership from a business starting to the growth point you're at now?

(Eddie Kim at 00:36:09) Yeah. So I think I have this unique experience, or not I'm not the only person that have gone through this. But it started out as, like, the technical co-founder of the company and have seen our engineering team scale from, basically, myself to around, you know, hundreds of engineers that we have in the company today. And, again, like, kind of looking back, it's more clear to me the different, like, phases that, you know, I saw the engineering team go through that I saw myself go through over the past, um, eight and a half, nine years. So, yeah, I've kind of been thinking a lot more about these different phases. This is definitely, you know, obviously, everyone's experience is a little bit different, but this is kind of what I've experienced. You know, phase one is just all about, you know, and lots of entrepreneurs, even small businesses will relate to this, it's just about figuring out, like, what's going to work. Right? Like, getting that product market fit. And you basically have one job is to get traction. Like, build something that people want. And in this phase, like, the biggest challenge you face is if you have, like, business partners or co-founders, it's kind of an ego problem. The number one reason why startups fail is not because of any external force or because a competitor, like, completely destroyed them. They self-implode because of founder fights, essentially. A lot of those founder fights just come from ego. Like, you know, I want to be in this meeting. I want to, you know, be the CEO or, you know, I feel left out of this thing. And, like, I've seen time and time again how really good startups, they fall apart because founders just can't get over their own egos. And so this is, like, the number one thing you have to think about in this phase one. It's just, like, you need to focus on building something that the customers want and not let your egos get in the way. And one thing I learned, and I still believe truly to this day, is that if you're looking for fairness at every single, like, sample of time, you're not going to get it. You have to get over that. And I do believe that there are times where a different co-founder has more challenges or less challenges. Sometimes they have it harder. Sometimes they have it easier. And sometimes you feel good, and sometimes you feel bad. I believe that over time, like, things kind of even out. And, you know, I think things equalize and reach equilibrium in the end. But any sampling of time more often than not, it's like the burden exists on one person more than the other. And if you can't get over that, then you're kind of doomed to fail from the beginning. You have to be able to get over that. And I think that's kind of the first lesson that I learned, and I think the first phase that you have to get through as an early stage company.

(Joel Beasley at 00:39:02) Yeah. I'm, like, mesmerized. I'm, like, yes, yes, yes. Preach. In my head, I'm thinking this is going to be such a good clip. I can't wait to pull this clip. No. You're exactly right. I know exact, as you're talking, I'm just, like, running through my past experiences or stories from others, and I'm just, like, I feel you. This is a hundred percent that, you know, figuring out how that formation works with the personalities on the early team, and that is just critical for, it's like building a house. You need a really solid foundation. Right?

(Eddie Kim at 00:39:34) Yeah. And you need to be in it together, basically. Like, one thing that really, I think why I learned this personally is, I think a lot of technical co-founders, CTOs, early stage, they feel this burden more than others in the beginning. Because at that point, if you're a technology company, like, your job essentially is to build the prototype. Right? And more often than not, that burden falls more heavily on the CTO than the other co-founders. I can always make fun of, you know, CEOs because I'm the CTO, I guess. But, like, in those stages, like, the CEO is kind of, you know, they're putting together, like, IKEA furniture and making sure, like, the bookkeeping and all that stuff is, like, in order. And, obviously, I'm diminishing that role, like, purposefully. I don't, like, truly believe that. I think they have an important role to play. But in the beginning stages of the company, like, you know, you really just need to build something that works. Right? And it's usually a technology thing. You have the code. And then in the meantime, like, because, you know, investors want kind of early access to the company, especially if you're kind of a promising company, they're the ones that are taking out the CEO to, like, you know, nice dinners and, like, Warriors games and, like, they're kind of like schmoozing the CEO to try to, like, develop a personal relationship with them so that, you know, they can make an angel investment when it comes time. And so I just remember a lot of moments where, you know, working sixteen hour days, like, coding furiously and just coding and sleeping and pretty much it. And then the CEO is, you know, out of the office half the time because, you know, they have all these investor meetings. And then as a CTO, you're just like, I want to be there. Right? That sounds fun. I want to do that. And then, like, if you let that go on too much, like, you can let the ego and you have this, like, sense of resentment start to set in. And for a lot of companies, that's kind of where it ends, honestly. They just can't get over that. And I've talked to many co-founders that kind of go through that as well. You have to be able to get over that ego thing.

(Joel Beasley at 00:41:36) Yes. Yeah. And, I mean, people can't see, you were smiling when you're making fun of the CEO a little bit. But what's hard is that, you know, their primary job is sales. Right? Like, organizing to make sales. And while you're waiting for the product to be version one, there's, you know, you gotta find ways to fill your time that are useful. Investor meetings, uh, there's only so many potential customer meetings you're going to have because they're like, okay, we'll try it. Where is it? You know?

(Eddie Kim at 00:42:02) Yeah. Yeah.

(Joel Beasley at 00:42:02) So yeah, it's a, but it's a good thing when, you especially, you know, you got to work with those people before. You learned each other. But, like, phase two, twenty engineers, when you start, like, managing teams and teams of teams, what are you learning there?

(Eddie Kim at 00:42:15) Yeah. So this is kind of this phase where you raise, like, maybe a Series A. You've hired, you know, twenty-four engineers, and you're kind of managing multiple teams. You know, for me, it's like you manage, like, maybe two or three, like, pods. And you still, like, have a lot of code that you're writing because a large proportion of the code base is yours. But at the same time, you have kind of more management people management type responsibilities. And I think the second phase is about really deciding whether you're going to go, like, kind of more the CTO route, like, kind of the technical, you're the technical architect. You're making the call on how things fit together from a technical perspective. You're also keeping an eye out on where the technology is going, or you kind of decide to go down the more, quote, like, VPE route, the VP of Engineering, which is much more responsible for the people management aspects of the engineering org. And I think the second phase is about choosing which one you're going to go down. Either choice is fine, and they're both perfectly valid choices. The choice, like, that is not good, and I fell into this trap in this phase two, was trying to do both for too long. I thought I could juggle, you know, being, you know, hands on keyboard, still contributing, um, as one of the senior engineers, and then also kind of basically scaling the people aspects of the engineering org. And, you know, for me, like, I would wake up every day and I have essentially two things to do. I have, like, future server-side bugs to fix, and then I have, like, I need to think about, like, what promotions look like. I need to think about how do I create a framework for people to give peer feedback to each other. People are asking for, like, what's the salary band system like at the stage of the company? Right? You're starting to kind of come up with all these things that are necessary as you grow the engineering org. And I would wake up, you know, with both of these jobs and, you know, just loving engineering, like, loving coding. I would obviously pick the first one, the code, right, to do. And then, you know, you have a one-on-one come up and you're, but you're in the zone. You're so close to fixing that one bug. And so you just move, you know, you reschedule the one-on-one, right, till later in the day. And you do little things like that. They add up over time. And when you do get to things, like one-on-ones or thinking about what salary bands look like, for example. You kind of, you're so tired at the end of the day, like, you don't really do that good of a job. And so this is something I've definitely experienced where I just have a natural tendency to get sucked into the code. Right? Like, I get this, like, time dilation effect. And I know a lot of CTOs, you know, experience this. Oh, I know. Yeah. That's why we got into it. Right? And, uh, yeah. I think, ultimately, you just have to be much more intentional about, you know, which route do you want to go. And it's a combination of, I think, what the company needs and what you want to do personally. You have to do what you're excited to do personally. Otherwise, that's just a recipe for burnout as well.

(Joel Beasley at 00:45:26) And I think that's super important. I want to, like, heavy emphasis on what you just said because it's not what you think is the coolest thing to do. It's like you have to, like, have some introspection and figure out where do you enjoy spending your time, what do you want in the future, like, what drives you? Because maybe you enjoy the coding a lot, but from a growth perspective, you're going to go through a little bit of pain to do something you're uncomfortable with because you want those skills for the future. You want, like, for me, so I wrote code for seventeen years, pretty much every single day, basically all the way up until this podcast got, like, you know, big. And when I was, like, reluctant to stop writing code. Right? But then I thought to myself, I'm like, okay, well, there's, you know, as I went through my different projects too, not just with this podcast, but I grew some software companies, like thirty plus engineers, and that's, like, as far as I got because then I sold my interest or left the company. I just had started a lot of things, built platforms, and then sold them off. And I learned a whole lot, but, yeah, being intentional about where you are in the stage and choosing and knowing, like, what skills you're picking for yourself in the future and doing difficult things, I just realized that there was this one specific day I was just, like, you know, I had two or three teams.

(Joel Beasley at 00:46:50) I was just like, if I had 30 or 40 teams—and I like to say this, right, because I'm biased because I chose this path—but I was like, as an engineer for so many years, knowing how much impact I could create as an individual contributor is what drove me to managing a team, which is what drove me to managing teams of teams, which is what drove me to found a company. Because the thing that drove me from day one of "Hello World," that caveman feeling like I just made fire—that was because I was impacting the world. I was making change. I was doing something. I was having effect on objective reality, and I enjoyed that. And that's been a driving factor.

(Joel Beasley at 00:47:33) But it was through introspection that I figured that out. What really drives me is being able to create change, helping people solve their problems. And, you know, writing code is how I did that for a long time. And then now I can have enough experience where I can coordinate other resources and create a bigger impact too.

(Eddie Kim at 00:47:52) Yeah, totally. And I had this really funny story of sometimes you want to be intentional. It doesn't always work out either. So it takes a few tries of being intentional.

(Joel Beasley at 00:48:02) Oh, yeah.

(Eddie Kim at 00:48:03) So I was really intentional. I was like, okay, I'm gonna go down this DPE route, and I'm gonna learn how to be a good manager. So I asked a bunch of people what books should I read to be a good manager. And I came up with three, which was Mindset by Carol Dweck, High Output Management by Andy Grove, and then The Score Takes Care of Itself, which is Bill Walsh, who was the head coach of the 49ers back in the Joe Montana days. And so I bought those books, and I basically said—you know, I was talking about earlier, I love to travel, I love New York. I've never lived in New York, but I just have this affinity to New York. So I was like, okay, I'm gonna just fly to New York and take my three books. I'm gonna read them all in a hotel room, and then I'm gonna come back having learned a lot more about being a manager because I want to be really intentional about this. And so I was really excited about this. What ended up happening was the opposite. I actually ended up spending that whole week—I just coded basically that whole week in the hotel room. I didn't even leave the hotel room except to eat. But I had finished this big feature that I was excited about. And I came back like, okay, I finished this thing, this feature for payroll. And then I realized when I got back, like, wait a minute, I just completely failed at what I was trying to do here. And what started as an intentional effort to kind of go become a better manager totally backfired because just being in that environment all by myself, no meetings—it just helped me to do what I was trying to avoid even more. So that was kind of a bitter lesson that I learned. And from there, I think I was, you know, thinking about it more. And sometimes you learn from those failures. And gradually, it kind of started to spend more time learning how to be a good manager and doing, making mistakes, correcting, adjusting. And a lot of times, you know, you enjoy things that you start to get better at. Just like you were saying, when you write that first "Hello World," you feel like you accomplished something, you got better, you just leveled up. And that makes you want to do it even more. And so that's kind of the path that I took. It was not just like, I'm gonna be intentional and then big bang, go to New York, come back, I'm gonna be a really good manager after that. It takes months and years of being intentional and failing and getting—

(Joel Beasley at 00:50:41) Trying.

(Eddie Kim at 00:50:41) Trying, over and over.

(Joel Beasley at 00:50:41) You gotta read something. You're like, okay, this leader handled this situation like that. And then you have to wait for that to naturally come up. You can't force it.

(Eddie Kim at 00:50:48) And when it—

(Joel Beasley at 00:50:49) Does come up, you have to be like, okay, I'm gonna apply that thing, and then you get experience. And so it's quite the development cycle as a people leader. All right, so phase three, you get 50 engineers, right? The company is growing fast. What are you focused on there in phase three?

(Eddie Kim at 00:51:05) Yeah. So phase three, you've kind of—you're in this growth phase or hypergrowth phase, and things are going really well for the business. And it's kind of like Newton's first law of motion, where, you know, in phase one and phase two, things are at a standstill. No one even knows you exist. And you need to put some force into it to kind of try to get some traction in your business or whatever you're doing. In phase three, it's like the opposite. Right? It's—well, it still is the first law of motion where things that are moving, things that are growing, I actually find that they tend to stay in that state as long as you don't screw up, basically. So your goal is now completely different in phase three than it was in phase one and phase two. Instead of trying to get something started, you just try not to screw up in phase three. You're trying not to make mistakes that can lead to bad customer experience or—it's just all about, how do I keep this thing going and how do I just make sure I don't basically mess up to stop the traction and the growth that you're seeing? And so phase three is all about preventing failure. And you learn through phase one and phase two all the different failures. You know, you bring on new people. They don't know what they're doing. They don't know the process. So you rely a lot on documentation. You start hiring more experienced managers who have made mistakes and learned from them in the past. You don't relearn those. And so you do all these things from hiring to process and documentation that really are designed to minimize failure so you can kind of stay in phase three as long as possible. That's really what phase three is all about. And sometimes, you know, that comes with some turbulence. Nobody likes to get layered, obviously. So no one wants to—your early employees are not gonna be happy when you start, you know, thinking about or having conversation about, hey, look, maybe we should go hire someone who's led a team of engineers in the past. I think we could all benefit from that. Or when you start putting in processes, the old guard doesn't always like that because—and rightly so—because they know how to do everything, right? There's all this stuff that just kind of slows them down. But they're really designed for the future employees to help them from making mistakes and preventing failure. And so all of these things, you kind of are in this transition where you're putting these things in place to really prevent failure. That's what phase three is all about.

(Joel Beasley at 00:53:35) Yeah. I feel you. When refining your systems as an organization, your business processes, you know, it's definitely frustrating. I actually had a firsthand experience of that this week. But the interesting thing about that is that we've drilled it into our culture so hard because we do the podcast and we hear all these people come on and give us insight and advice, and we kind of take the things—we actually track it on a spreadsheet in different advice and how common it's given, and we organize it by that. But one of these things was, you know, a solid foundation that's acceptable to change, that's okay with the change. And so I've noticed that the responsibility is on me to be extra explicit when I'm communicating about, okay, this is a point in time where we're gonna make this change. We understand there's a lack of efficiency here. Here is why we want a solid foundation. And it's just a lot of communication, but that falls on to me to do, right?

(Eddie Kim at 00:54:35) Right.

(Joel Beasley at 00:54:36) And I was actually specifically curious when you were talking. So as a cofounder that's a CTO, when you were in phase two, phase three, how involved are you or how are you getting updates on sales numbers and reports?

(Eddie Kim at 00:54:51) I was still pretty in the loop with those things. And I'm not sure how much of it was because I was the CTO and a leader of the company, and how much it is because I'm a cofounder in the company. It's probably a combination of both. I'd imagine, you know, a really good engineering leader needs to really have a really good pulse on sales and how the business is doing because it's not just about creating technology for technology's sake. It's creating technology to solve a problem for customers. So it's probably a little bit of both. I was definitely very—I still am today, actually—on nontechnical things, like how the business is doing. A lot of those things, I hear about them and I'm like, okay, you know, technology could actually solve this problem. If I hear about our customer support or there's a lot of repetitive tasks that we're hiring a bunch of people to do, and they could be spending their time on much higher order things to help our customers, a light bulb goes in my head of, like, how can we use technology to solve this problem? How can we automate it or build tooling to make it easier? And so I think it really is important for a CTO to still be very actively involved in those kind of more business aspects of the company.

(Joel Beasley at 00:56:18) Yeah. We do our updates on sales once or twice a week. And so we're always paying attention to, you know, these are new customers and, oh, I happen to know that person or connected that person. I mean, we're really, really small, right? But I was just curious about the cadence. And I bet most of it, you're definitely getting a deeper dive as your cofounder title than you would be just as a CTO because that's just the different—there's differences.

(Eddie Kim at 00:56:48) Yeah.

(Joel Beasley at 00:56:48) But, yeah, were you looking at that type of stuff weekly or monthly? Or—

(Eddie Kim at 00:56:53) Probably more like weekly than monthly. I think monthly is definitely far—

(Joel Beasley at 00:56:56) Too long.

(Eddie Kim at 00:56:57) Too long. Yeah. And that's the other thing you invest a lot in phase three is kind of a good data infrastructure. So before phase three, you can pretty much just get a good sense of how the business is doing through, you know, someone putting together a spreadsheet, pulling data from a few different—from Google Analytics or something like that—or just talking to people on the company. You really get a good sense of the direction the business is going. But in phase three, I think it becomes much harder questions to get the answer to. And so you need to kind of settle on definition of churn and add and things like that. Things that are, you know, surprisingly—they seem pretty simple to answer in the beginning. How hard is it to figure out what the churn is in the business, right? These actually become much harder because the business just gets more complex. And so I think this is a phase where, you know, you start investing in good business intelligence, data infrastructure, data warehouse, and things like that. And it allows everyone to kind of get a good pulse and have the same perspective on how the business is doing.

(Joel Beasley at 00:58:04) And then phase four, 300-plus engineers. When I saw this—I don't know. So I talk all the time about how my biggest recommendation—people ask me when I go speak with the topic, they want me to talk about fear and executives and getting to take more chances. And I know I saw that in your notes. So can you talk to me a little bit about phase four?

(Eddie Kim at 00:58:26) Yeah. So phase four is probably—I think the most interesting one to me because, you know, I would say, arguably, phase two or three, I think there are a lot of books written on it. And so I think a lot of CTOs, they're like, yeah, yeah, phase two, phase three. I get it. I've heard that advice before. Phase four was kind of, you know, I think for me, a little bit out of left field. Because it's almost the opposite of phase three. In phase four, you kind of look around. Everyone's working really hard. You have a huge organization. But you just have this feeling that you're not moving as fast as you could. In phase one, you always made fun of those 800-pound gorillas and said how slow they are and how your advantage is your speed and your nimbleness. When phase four, you kind of look around, you realize you've become that thing that you made fun of in all the previous phases. And not really sure why because everything seems to be, you know, in good shape because of all the work you did in phase three. And what I realized is what starts to set in because of phase three, because you're growing so fast and the failures are kind of the thing that you're most worried about, it gets taken too far, and then you kind of have a fear of failure that starts to set in the organization. So all of a sudden, because there's so many processes in place, people are looking to follow the process and not really taking a step back on asking themselves, is this really the best thing for the business, really the best thing for the customer? Engineers, because you have so good data infrastructure, PMs give engineers a spreadsheet of a list of features to build that are back-ranked by some scoring mechanism, some algorithm to figure out what is the most optimal order of things to build. And then engineers are just like, you know, it makes sense logically, especially if you're an engineer, but you're just not inspired by it anymore, right? Just kind of like a list of things to burn down. And so—and then also, you know, we were talking about communication and polish. You want things to—anytime you introduce change, you want it to land so well, you want everyone to understand that you spend a lot of time on the comms and polishing and making sure that the sequencing of the—we call it the tick-tock at Gusto, not TikTok, the app, but there's a schedule down to the minute of when we do an all hands, when we send out an email, all the different—the comms plan, right? You invest a lot of time in that. And then but that also kind of leads to so much polish that sometimes it's for a very fairly simple message, you're reading through an 8-page memo basically on Google Docs, right? And it gets lost, right? And so phase four is—I think—where you realize that these things are kind of slowing you down, and you kind of need to unscale a little bit in order to scale further. And so you start having a little more nuanced conversation about when these things are appropriate and when these things are actually not appropriate. So, you know, a few things that you do—I've noticed that we've done at Gusto, which has really kind of helped us, I think, to enter this new kind of renaissance phase—is we will introduce not just data, but we're getting better at storytelling, right? You marry the data with the customer anecdote, the connection to the customer, and that all of a sudden becomes—puts a lot more meaning and motivation behind the work that you're doing. You get better at just communicating much more directly and clearly, right? In a more succinct, concise way. And you try to polish things as much as you can, but not to the point where the essence of the message is lost. And, yes, that means that sometimes—and I've definitely done this many times—sometimes you say something that may overstep or that may kind of land incorrectly. It's not quite what you meant. And that causes, you know, some more conversations.

(Eddie Kim at 01:02:46) A lot of times if that happens, you may need to walk back, apologize for something that didn't land quite well. But it's through that process that you have some of the best breakthroughs. I remember having an off-site to talk about this very issue that I feel like we're slow. I feel like there's something we could be increasing in terms of our velocity. There's something there.

(Eddie Kim at 01:03:10) And I had this off-site that I had planned out. Again, I had an agenda planned out. We're going to do breakout sessions because it was a 20-person leadership group. They would have different topics. They would use stickies, they would vote, and then we come back together and discuss and synthesize. And I had things planned out to five-minute increments. And when we kicked this off, for some reason, people just started talking much more openly. And this five-minute kickoff that I had planned essentially turned into an all-day discussion.

(Eddie Kim at 01:03:42) And all of my plans of how to run this off-site to solve this problem kind of got thrown out the window. But for the first time in a long time, people were actually talking about real issues and being direct and just making mistakes sometimes, but then also learning from them and how they communicate. And at the end of the off-site, I kind of asked everyone for feedback. How do you all think this went? Really kind of expecting to hear the worst.

(Eddie Kim at 01:04:11) But what I heard was the opposite. Everyone said, this is, of all the meetings we've had in the last six months, the best meeting that we've had. And there was even one engineer who had joined fairly recently. He was thinking if Gusto was even the right choice for him. But after this off-site, he really kind of shared that this is exactly the type of challenges that I'm looking to solve.

(Eddie Kim at 01:04:36) And so I'm reenergized here. And so it even had effects on people's engagement because of this conversation that we had. So yeah, I think what I thought would be better as a structured, well-polished, well-planned-out thing—sometimes I think just letting it be, being more comfortable with less structure, I found to be a much more productive use of the time, and we had much better breakthroughs. And so now when I kind of—I care a lot about creating psychological safety at Gusto.

(Eddie Kim at 01:05:12) And I think my definition of psychological safety has changed a little bit. When I see people challenging each other in a respectful way, obviously, but really engaging with each other and debating things and not being afraid to do so, and not feeling like it will be an attack on them personally or they're being attacked personally—that to me is true psychological safety. You've created an environment where that kind of discussion can flourish. Whenever I have something and I look around and everyone is really silent and everyone just kind of nods their head, I wonder if people feel like this is a psychologically safe environment because maybe they're afraid that if they speak up, if they challenge that, they're going to get their head chopped off or something like that.

(Eddie Kim at 01:05:57) So kind of my thought of how do I create psychologically safe environments is really, I think, changed as a result of this phase four that we're in. So I think it's a lot of the unscaling, but kind of removing some of the things that you did in phase three is kind of how you get to that next phase in the company.

(Joel Beasley at 01:06:16) Yeah. Human behavior is absolutely fascinating. Right? It's largely repetition and reward. Right?

(Joel Beasley at 01:06:24) It's when you see it happening, rewarding it—it just speaks volumes to the group. And yeah, I know exactly what you're talking about. I know what it's like to not have a team where that was—where you could do that, and that was a much more unsuccessful team. And having a team where that exists, where we can go in and debate the idea on the merits of the idea and debate in the truest sense of the word. I think actually—I'm not a political person, but I think from a behavior standpoint of humans, which I'm fascinated over, I think showing them every four years debates on TV that are not—

(Eddie Kim at 01:07:08) Yeah.

(Joel Beasley at 01:07:09) —debates, messes with the fundamental meaning of that word. And it's not about throwing mud and yelling and screaming and having the nicest talking point. It's about dissecting the merit of the idea itself and finding truth and consensus amongst the people. Right?

(Eddie Kim at 01:07:26) Yeah.

(Joel Beasley at 01:07:27) And when that can happen in a genuine way, back to your cofounder conversation. Right? When you three or two as cofounders can do that, because here's the thing: you're going to have to do it all the time.

(Eddie Kim at 01:07:43) Yeah.

(Joel Beasley at 01:07:43) These problems, these issues, these milestones, they just keep appearing. And so you need a good team that can come to decisions together and move forward from things. And then, of course, you can tell when there's tension even from a debate. You get two genuine people going in and you know when there's more tension or not. So you can use jokes or personal relation—that's why personal bonds are important to develop, because you develop them before you need them. Right?

(Joel Beasley at 01:08:11) And so you can rely on that social credit, which are conversations I don't hear happening a lot because they're kind of—some of the stuff I'm describing is kind of ambiguous, but it's there and we know it instinctively that it's true. But yeah, those things are just massively important. I'm curious for you, where you're at today, being in this phase four with hundreds of engineers and a growing company that I'm a fan of, how are you structuring long-term goals for yourself right now? Are you planning things in weeks, quarters, years? How are you planning, and not just for Gusto or the company? I'm just talking about you and your life and the things you want to do.

(Eddie Kim at 01:08:51) Yeah. So I think for Gusto, we've kind of shrunk the cycle in which we do planning. We still have annual planning, mid-year planning. But we've actually largely minimized, at least in our engineering, product, and design team, the amount of work that goes into quarterly planning. And instead, we're kind of figuring out what is the most important thing for the next four weeks, working on that.

(Eddie Kim at 01:09:18) That doesn't mean that we're not taking on long-term projects. Sometimes it is a long-term project. We need to figure out a way to decompose it into smaller four-week cycles. And that four weeks is kind of our primary planning cycle right now. And this again comes from a learning that we're not going to be able to predict what the world looks like, especially now with COVID, in the next 12 months from now.

(Eddie Kim at 01:09:44) But we do know—we've learned time and time again—is that as long as we're going in the right direction in a smaller increment, I have a high degree of confidence that when we look back, we find our way. Right? We adjust every month or so and not kind of try to hit this 12-month-long timeframe plan. So this is kind of where we're at in terms of our EPD team.

(Joel Beasley at 01:10:08) So you're taking an iterate towards greatness type deal?

(Eddie Kim at 01:10:12) Yeah. Yeah. That's a lesson I've learned my whole life—of you don't have to have the whole plan out together. Just know that you're kind of going in the right direction and then adjust. You learn along the way.

(Eddie Kim at 01:10:26) And if I kind of evaluate it from an overall what's best for the business—because to me, that's a much better way to go. You need to have a long-term vision, but then also kind of you can't rely on that longer roadmap for too long.

(Joel Beasley at 01:10:41) Boom. Mic drop. We did it. We made a podcast. How do you feel?

(Eddie Kim at 01:10:45) Great. This is a lot of fun. Thanks, Joel.

(Joel Beasley at 01:10:47) Yeah. Thank you so much. All right. Thank you. Thanks.

(Joel Beasley at 01:10:51) Bye.

(Eddie Kim at 01:10:51) Talk to you soon. Bye-bye.

(Joel Beasley at 01:10:55) Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you would like to hear discussed on the podcast, either add me on LinkedIn or send me an email: [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.