Scaling Gusto from 100 to 1,000 Employees: What’s Changed?

I joined Gusto, a small business people platform software company, in June 2015. This came after a few years of getting to know the co-founders and finally deciding to leave the financial comforts of Fortune 100 consulting for a new challenge.

Gusto’s headcount was at Dunbar’s number of 148, so keeping track of who everyone was and what they did was relatively easy. Since then, we’ve grown quickly, all the way up to 1,000 employees at current count. In light of that growth, many people ask me: what has changed the most in the past four years? One might think that it’s our mission or objectives, but those have stayed consistent to a true north. What has changed the most is how we work.

from Social Norms to Market Norms

When I started at Gusto, we were governed almost exclusively by social norms. That is, we joined as missionaries to help small businesses scale. If there was a job that needed to be done, someone would do it. If a colleague asked for help, people stayed after hours to help. I worked so much harder than I did when I was in consulting, but the motivation was different — it was out of care and concern for people around me, rather than professional obligation. We operated more as an intrinsically motivated community than an extrinsically driven company.

As we’ve scaled well beyond 148 people, we have had to implement budgets, resourcing, planning processes, coordination meetings, and more. These are critical components that bigger companies need for coordination. They resulted in more monetary-focused exchanges, introducing more market norms into the way we work.

Ironically, this mixing and matching of social and market norms has been one of the hardest changes for us. As Dan Ariely addresses in Predictably Irrational, having both norms at play creates friction in collaboration. For example, in the past, if there was work to be done, anyone with available time would go do that work. Today, we think first about who is best suited to do the work, if they have the resources, and if they do that work, what the benefit to that team is. This coordination is necessary as we solve increasingly difficult puzzles. But it can leave people feeling confused at times, wondering why they weren’t needed to do something that they were willing to do or vice versa.

from Prioritizing Will to Prioritizing Skill

We have also had a meaningful change in the type of candidate we hire, moving from emphasizing willingness to do anything to emphasizing skills for a specific job. My interview process in 2015 was twenty hours long, with fifteen distinct interviews across three months. Afterwards, I commented to my wife that I thought the company knew me better than she did! This process, while effective, was inefficient and not scalable.

I believe Gusto’s goal for my interview process was to see if I was close enough in values, motivation, and work ethic — like joining a club or special-interest group. This was because there was so much to do that it required people who were deeply driven by the company mission and willingness to work hard, even without direct monetary award. Few, other than missionaries, would be willing to take a pay cut and tolerate the risk involved with a startup.

But, as we grew, the low hanging fruit disappeared. We no longer needed people to jump in and do it all. We needed people with specific technical skills to solve difficult puzzles. Plus, we had to create an effective, efficient, and easily replicable interview process for growing hiring needs. Hiring became an area of high investment for our leadership team, and the result was a tight interview process, tailored for each team and role. Now candidates can expect a standard phone conversation, an in-person interview, and perhaps take-home work, typically totaling three to six hours, not twenty. We ask questions to illuminate a candidate’s motivations and values, in addition to assessing their technical ability for a given role. While our ideal candidate profile and interview process may have changed along with way, our commitment to finding the best people who are also aligned to our company mission has not.

from Growing the Pie to Growing My Slice of the Pie

When I joined our company, we were working towards “growing the pie,” meaning growing the company as a whole by solving customer problems and not focusing as much on personal gain. As we have gotten bigger, the path to maximizing one’s own “slice of the pie” has become easier than growing the pie. For example, one can grow their slice by focusing on their own specific team, specific territory, and personal interests. In some cases, this mentality ends up being a win-win, growing the pie as you grow your own slice too. However, other times, the focus on growing your slice is at odds with growing the pie, leading to tension with the company’s overall goals.

An example where growing your slice could be beneficial:

You reorganize three teams in your org so that one leader has four more direct reports than anyone else. You’ve grown their slice. That leader has the time to meet with those reports and the expertise to give them guidance in their technical roles. The reports knock their latest product launch out of the park, leaving internal teams and customers alike happy with their work.

An example where growing your slice could be detrimental:

You reorganize three teams in your org so that one leader has four more direct reports than anyone else. That leader really pushed for this added responsibility and influence, but it turns out they don’t have the time to meet with their new reports or give much guidance. The new reports end up feeling neglected and directionless. The reports look to other leaders for help with their latest launch, leaving other people with added work and the project behind schedule.

As I’m sure you know, those examples greatly oversimplify the veritable stew of emotions that can come with these decisions. Tribalism and wanting to protect what I believe to be mine is a natural impulse — whether it’s my team, my influence, or my project. But when that is at odds with contributing to the company as a whole, I have to get creative to make win/win situations or reign that impulse in and go with what benefits the company.

To 1,000 employees and beyond

I hope that when I look back in 2024, we at Gusto have continued to refine the many ways in which we work, including balancing social and market norms, hiring for the right skill and will, and growing the pie. If the next thousand people are anything like the first thousand, I know that things will change in the blink of an eye!