On this episode of Build, Maggie sits down with Tomer London – the co-founder and head of product at Gusto. Maggie and Tomer talk about how to build products that delight customers and how to track and measure delight in a world where metrics reign supreme. Tomer also shares the four pillars of product development that guide his team’s work at Gusto. This one is a must-listen for product managers who want to reduce friction and create more delightful moments for customers.
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Maggie Crowley: Welcome to Build. This is Maggie and today I’m really excited because I have an absolute rockstar on the show, Tomer London, the co-founder and head of product at Gusto, which if you haven’t heard is a company that’s reimagining payroll, benefits and HR for modern companies and my personal favorite is the little email I get that says I got paid. So, Tomer, thanks for coming on the show.
Tomer London: Yeah. Thanks for having me.
Maggie: Yeah. So, I want to spend the majority of our time today going deep on what it takes to build delightful products. But first, just give the listeners a quick intro to you in how you came to be the co-founder at a company as awesome as Gusto.
Tomer: Thank you. Yeah. I’m one of the three co-founders. Josh, Eddie and I started the company in 2012. I was a part of YCombinator and today we’re over 800 people in San Francisco and Denver. We serve over 60,000 customers nationwide. We help them with their payroll, with their HR, with their benefits. Really everything small businesses need to start and build their teams, powered by technology.
Yeah, and I guess my personal background … You know, I’m originally from Israel actually and, you know, we have a lot of small businesses in my family. So, my dad has a clothing store for more than 35 years and my aunt has another one down the street actually and my grandpa had another one. So, really this world of small business was something that I grew up around and developing software for them is just helping people in my family.
Maggie: Right. So, then how did you guys start Gusto specifically?
Tomer: Yeah. So, when I moved here 2010, I actually didn’t know anyone in the U.S. So, I was looking for friends. I met Josh through the Stanford alumni network and he went to school with Eddie and the three of us just got together as friends and we hung out a lot. I actually moved in with Josh and a few other friends. You know, I feel like I had … Josh, Eddie and I all had experiences running previous companies. We had previous startups, some more successful than others, but none are as successful as Gusto. One of the things that we really learned I think in that kind of earlier chapter in our lives is that people are the thing that just matter the most and finding the right people to team up with when you start a company is like incredibly important.
So, I think the three of us has this, you know … We were lucky to have that life lesson already and when we met each other honestly we just had this really amazing chemistry and we knew that we wanted to work on something together. So, we spent months talking about different technologies and ideas and, you know, hanging out, kind of imagining what we could build together as a team. We ended up really focusing on helping small businesses because all of us have that small business background with our families and, you know, we kind of took that lesson that if people are the most important part of every business then what we can do to help small businesses really is to help them build the best teams and help build great places to work so their team can thrive, so the company can thrive.
That’s kind of how it all started. We started with payroll specifically because that’s the … First, it’s a huge pain point for small businesses. Apparently a third of businesses get fined every year for not doing payroll [inaudible 00:03:13] correctly. These are, you know, enormous fines that can make companies go under and it’s hard enough to start a small business. Half of them fail after two years. So, it’s something that we saw that we can be a major help with just better, you know, technology to calculate these taxes and file and make the payments.
But the biggest point there was that, well, you know, while we do that we have the data and we have the trust of the employers to then go and solve more problems for them. That’s how it kind of over the years expanded into what we do in employee onboarding and health insurance and 401(k) and surveys and a bunch of other kind of functionalities that we have to help companies build and grow their teams.
Maggie: Right. So, payroll was sort of the wedge that you used to expand into the rest of that area.
Tomer: Exactly. It was the perfect one because it was a real, real big problem and it had all the data.
Maggie: Right. Exactly. So, then one of the things that we talked about when we caught up before this was this idea of building delightful products and what that means and how that came to be at Gusto. So, can you tell me a little bit about what is a delightful product and why that mattered for you guys specifically?
Tomer: Yeah, totally. So, you know, I feel like when you sell software to small businesses, one thing that’s important to realize is that small businesses really think many times like consumers. Like regular day to day people, which means that decision making when they go buy a new product, whether it’s an accounting product or marketing product or whatever they’re buying, they behave a little bit like consumers. So, there’s usually one or two decision makers, so decision making is pretty simple and often they’re pressed for time. They just want to make sure that they buy something good, they look for trust online, you know, recommendations and stuff like that and all of that means that when you design and build a product for small businesses there’s a lot to learn from consumer products of how you design and build your software.
One of the things that really connected for us earlier on is this idea of just building a delightful experience. You can see how products that are delightful from your personal life, you end up talking a lot about them with your friends and you end up, you know, just wanting to stick around and despite lack of functionality sometimes because they just make you happy.
So, for us, we felt like, you know, that’s a huge part for us and we’re really focused on small business. One of the coolest things too, is that when you think about payroll, the word delightful is not the first thing that comes to mind. So, when we went to the market with the tagline of delightful payroll and we just had a payroll service earlier on, you know, it kind of got a lot of people to raise their eyebrows but also get pretty interested. They’re like, “Okay, what is that?” So, that worked pretty well.
Then, you know, this idea of just building user experiences is something that we think about every day here in the product team and design team. So, I’m very happy to talk more about that if you’re interested.
Maggie: Yeah. So, I think what I’m curious about is it’s one thing to hear, you know, “We want to build delightful products.” I think most PM’s would say, “Absolutely I want my product to be delightful. I want this experience to be amazing.” But then when it comes, you know, it’s Q2 planning time right now, you know, Q2’s about to start, how do you measure that? How do you make it more concrete for business results?
Tomer: So, I think that’s a great, great question. So, I think for us there’s kind of four steps or like four components of a product that’s ready to ship. It’s trust, function, ease of use and delight. You can’t ship a product where, you know, if you build in a way that will, you know, reduce trust for the customer, you can’t ship something that doesn’t have the minimal function. Similarly, ease of use, it has to be easy to use and intuitive. Finally, delightful. The point of putting all these things, not one on top of each other but rather one next to each other, means that they all have to be a part of the kind of first shippable product.
So, to answer your question of how do you measure and prove to stakeholders that this is something that’s worthwhile doing, you don’t. Because the philosophy is that it’s a half product, it’s an incomplete product if it’s not delightful until you first ship it. Over the years definitely there’ve been situations where we, you know, we’ve cut scope of an initial feature launch and launched it in a way that’s not delightful [inaudible 00:07:19]. We can talk about what delightful means after [inaudible 00:07:22] operationalize it, but bear with me for a minute.
So, you can launch that V.5 and say, “Well, we’re going to add the delight stuff later” but that never works out because then it’s extremely hard to prove and measure that specific component. It’s just not very measurable. So, two things. So, one, when it does come to … Well, you want to make sure that it actually moves your business. Right? So, how do you know whether that’s true? You look at the end to end holistic experience of the customer. You ask customers why do they stick around? Why do they love your product? You can use obviously NPS surveys, you can do [inaudible 00:07:56] qualitative research and then you kind of see, at least in Gusto, it’s over and over and over again it’s the user experience and it’s like those moments of the day. Even when you started … When you opened the show you first said that you love getting your payday email. Right? That’s a great example.
So, it’s like the value’s not in the specific slice of functionality for a feature, but rather in the holistic experience.
Maggie: Okay. So, I’m with you on this but then I think let’s say that you’re in a situation where if a lot of our listeners are probably in companies where this might not be part of the way that they talk about a release, they might be more of a NVP company versus the minimum [inaudible 00:08:33] products company. So, in that case, if someone’s working on a V2 or they want to add in more of this delightful stuff, how would you coach them in how to talk about it, how to prove that it’s valuable?
Tomer: That’s a really good question and honestly it’s a pretty hard thing to do. It’s like, you know, innovating within a … Like against, like an ongoing momentum [inaudible 00:08:55] of how a company’s building their product is actually quite hard. If I were to advise someone in this situation I would say that probably the best place to do it is to, you know, when you work on a product that’s truly separate, kind of get to a place where you negotiate the timeline and not the scope with your expectations, like with management or expectations across the board and then it’s about you deciding on the scope and how to build it but you’re still committing to the timeline.
Tomer: What you may decide to do is to say, “Well, you know what? I’m going to give a little bit less functionality. Or not a little bit, maybe like 30% less functionality but I’m going to get the delight because there’s a great opportunity to make people smile and I think it’s going to make a difference and I’m going to measure it by qualitatively talking with customers [inaudible 00:09:40] qualitative research or showing the NPS comments and the NPS changes for people who use this product and for people who don’t use this product.” Then you may get enough sufficient data and sufficient results to go and bring it back to the company.
But honestly it’s tough. It’s, you know, changing a company with the current momentum [inaudible 00:09:59], it’s tough and we didn’t have to do that. That’s the truth [inaudible 00:10:03] from day one that was a core part of our thesis of how to win in the market.
Maggie: How have you guys tracked it? Has it been primarily NPS and measurements like that? Or have you created some other way to sort of dashboard your delight score?
Tomer: No. It really is looking at qualitative surveys. So, you look at NPS. Definitely they look at comments around NPS. You can, by the way, NPS can feel like very kind of high level and there’s lots of ways of doing it wrong and I’m not saying it’s the one measure that can fix everything, but it is actually … If you do it correctly I think it can add a lot of value because you can learn what your promoters are saying on one side and you learn what your detractors are saying on the other side and it gives you a really good perspective.
You can also make it a little bit more connected to the business metrics where you do an analysis of what’s the LTV of promoters versus detractors and you can track their behavioral and you can literally … It’s like, you know, if the product team is bringing NPS up by five points, here’s what it means for LTV. But I don’t think that that’s again, the end all be all. It’s really all about in the end taking a little step back from the day to day metrics and ask yourself, “What’s my thesis?” If the thesis is in this market delightful products, ones that make the people talk about it with a kind of sparkle in their eyes, are the products that are going to win, then this is … Obviously that’s what we should do. Even if it’s tough to measure.
Maggie: You know, which markets … What are the characteristics of a market where you think that really helps? Is it where it’s really crowded, there’s tons of competition? Or is it where everything else is sort of not … You know, where it might be a competitive advantage to have a more delightful product? Like how do you think about that?
Tomer: Yeah. So, I think it’s basically part of the overall brand. Right? So, it’s markets where strong brands can make the difference and that’s usually when there is a kind of an irrational/emotional side to buying or to buying decisions. So, everywhere that … You know, anything that’s consumer and anything that honestly in my opinion B2B, these are the markets.
Now, here’s the interesting part. You know, like there is a lot of research in behavioral psychology and economics to show that all buying decisions are irrational decisions. Including in like, you know, the U.S. government that goes out and, you know, spends billions of dollars on stuff. So, I feel like in a way all brands in the future if you look at, you know, 10-20 years from now, all brands are going to be much more kind of consumer oriented [inaudible 00:12:21] the way we perceive it today or more kind of connected to the emotional side. And you see it already. In other words, if you’re selling, you’re in the business of creating delightful product. Whatever you’re selling.
Maggie: Yeah, I think it’s interesting. We talk about that a lot being in the B2B space ourselves, that the people you’re selling to are also people who are buying in a consumer space at the same time ’cause they’re all just people. So, if you’re able to bring the same type of quality experience that they might expect from a B2C company even in their business context, you know, you’re automatically going to do better than someone who’s not bringing that extra level of delight to their product.
Maggie: So, then when you’re working on a product at Gusto, you mentioned a little bit earlier that you might want to take out some of the scope so that you can make time to have these delightful moments included in the product. How do you help people figure out what things they don’t actually need to include in that first ship?
I think the most important thing to take into account is that you’re not done with the first version. The first version is always the preparation for the second version and this next iteration and the next iteration. So, interestingly, the initial scope of the actual functionality doesn’t matter as much because you will probably, hopefully if you ship fast next month or two months from there you’ll already have like a better version out there. So, the point of the first version is really to prove out the hypothesis of like, “This is something that people want and are willing to pay for” or, “This is something that’s going to move one metric or another” depending on what’s your north star metric in your product team.
In other words, I feel like there’s strong pressure always to get core functionality inside in there and for this situation I was actually like stressed less about the amount of functionality and like the amount of kind of people that you can serve with this initial version, and stressed more around the end to end hypothesis and whether you can prove that. That includes, again, those four points around trust, function, ease of use and delight.
Maggie: Right. Yeah, I love that framework and that it’s not one after the other but all of them together side by side because you’re right, I feel like if we were to ship things that had maybe a couple fewer features but a more coherent, comprehensive, nice experience end to end, the user’s going to be just as happy with that, if not more happy than if we had just had all the features but a less good experience.
Tomer: Exactly. The way we ship stuff, we often work in pilots. So, we have like a … The first version that’s, you know, supposed to include all of those four things, all of these four kind of pillars at the same time, but very, very, very limited scope of functionality and you ship it to a small group of people that you know that they’ll be … You know, that’s what they needed. They don’t need more than that. Then slowly you add more functionality until you get to a place where, “Okay, this is a V1.” Then you go and you kind of ship it to [inaudible 00:14:55] availability. But you kind of iterate extensively on the scope but you don’t iterate as much on just the elements of like, “Oh, now I’m going to add delight. Now I’m going to add ease of use.”
That’s really hard. I don’t know even how to do that. How do you build something and then iterate it on like ease of use?
Maggie: Yeah. Interesting. I mean, the only thing I can think of is that if you know you need to make a big change but you’re not certain on all the interactions, maybe then you ship that and you can work on making those interactions more delightful as you go.
Tomer: That’s tough, because often there’s this question of can you kind of stick delight on top of something that’s existing and I think sometimes, you know, you can be lucky that way and you have an opportunity like that, but most times you have to just think about the interaction holistically to create those moments of delight. Maybe I’ll talk a little bit about what is that delight thing.
So, for me, it can sound really squishy but the way to make it real is when we do reviews here we always talk about what are the moments of delight within the user experience? You know, a flow can have, you know, five, seven different steps and then you will often find at least one place where, you know, this is like, “Oh, this is … If I’m in the shoes of the customer that moment, I am relieved.” So, that’s a moment of delight. Or if I’m in the shoes of this person, I’m happily surprised because I didn’t think that you’d automate something and you did. Those moments are … You know, you just need to take a step back for a minute and put yourself in the customer’s shoes in each one of those steps and you’ll figure it out really quickly what is that moment.
So, you know, the example that you gave is a really good one. We thought about payroll as a whole, like the entire experience of running payroll and getting the hours in and all that stuff. It was very clear that a really delightful moment is to figure out, you know, go to your bank account and see, “Oh, I have more money in my account. I just got paid.” That is a delightful moment.
So, then the question is, once you identify that delightful moment is, how do you reduce friction? How do you make that moment so more people feel it and then how do you amplify it? So, in that example of a payday email, it’s instead of you needing to log in to your bank account and kind of check in multiple times, we deliver you the news over email. So, that is nice because then you got all of a sudden instead of like 10%, 20% of people getting that moment, now you have 100% of people or at least everyone that has email accounts, which is almost 100%, get that email.
Then finally is how do you amplify it? [inaudible 00:17:18] okay, what else should we say there other than “Congrats, you got paid” and that’s where you can really think about the person’s day and how to celebrate, how perhaps to connect them to their company better. So, our email for folks who are not receiving those, feels [inaudible 00:17:32] kind of this nice long infographic that starts with, “Congrats, you got paid” and then tells you a bunch of fun facts about your pay and about how you earn over time and what you can do with the money and stuff like that and connecting you back with your employer to say thank you.
So, we got a lot of great feedback over the years and it’s probably one of the best hiring tools we ever had too because most candidates that we meet also mention that. More than that I think it’s a good example for a moment of delight and how extra investment in it can make a big impact.
Maggie: So, then, you mentioned hiring. When you’re bringing PM’s into your team, is this a skill, how to look for those moments of delight that you guys are actively teaching people who come on to the team?
Tomer: Yeah, absolutely. That’s exactly right. So, you know, if we take a step back, Gusto is all about helping companies build great places to work. So, if we are here to help other businesses build great places to work, we need to be really, really great at that ourselves. So, we invest a lot in people who come and join us, in their professional development, and in the world of product, you know, there is a set of material that we go through as someone on boards and one of the things that we go through with folks is definitely kind of our product philosophy. As you go through the different design critiques that we do, we do two design critiques a week, we always stop to ask that question, “What are the delightful moments and how might we amplify them?”
Maggie: Right. So, you’ve included that not only in your onboarding but also in the process that you do regularly to evaluate the things that you’re working on.
Tomer: Totally, because, you know, a few years after when you’re in, you don’t remember the onboarding anymore.
Maggie: Right. Yeah. Yeah, exactly. Yeah, especially at a high gross startup. You know, I’m sure things are changing quickly in the scale and the way that your team is organized is changing over time. So, that’s probably something that you’re right, people would sort of lose track of if it wasn’t continually reinforced through the way that you guys talk about product.
Tomer: Totally, and we learn new things every day too. So, you know, what was true in how we onboarded people two, three years, ago, is just much better now and we learned a lot of new things.
Maggie: Well, Tomer, this has been incredible. I just have one last question for you. What are you reading these days or what are you listening to that you’re recommending to your team to learn and get better at building?
Tomer: I think one really, really great read about balancing innovation and with strict timelines and, you know, kind of the day to day requirement of a business is Creativity, Inc. I’m sure it was mentioned in the past in the podcast but it really tells a really great story about Pixar. The person who wrote it is Ed Catmull, who was the President of Pixar and it’s just brilliant. You know, it really tells the story of how might you build a totally exciting new product with a timeline of eight years without getting almost any market validation, market feedback and I think it just could be really inspiring for SAS and software folks because our problems are so much easier. We get feedback all the time.
Maggie: Awesome. Creativity, Inc. We’ll have to read it. Actually I have to admit, I haven’t read it even though people recommend it constantly. So, I might finally put that up on the top of my list.
Tomer: All right. Awesome.
Maggie: Well, Tomer, thanks again for coming on the show. I think plug for you, you’re hiring on your product team I’m pretty sure. So, if anyone listening is interested in building delightful products they should look you up. Where’s the best place?
Tomer: Yes, absolutely. Hiring for product design engineers in both San Francisco and Denver and go to Gusto.com/careers and I would love to talk with anyone who’s interested.
Maggie: Awesome. Well, again, thanks for coming on the show everyone. Give us a shout out, give Tomer a six star review only obviously and let me know who I should talk to next. Thanks.