here.

Pave helps companies plan, communicate, and benchmark employee compensation. Today, the company has 160 employees, more than 3,500 customers, and is valued at $1.6B. Founder and CEO <a href=https://www.ycombinator.com/"https://twitter.com/matthewschulman?lang=en\%22>Matt Schulman</a> has created one of the most comprehensive and thorough recruiting processes, which has made him one of the most successful recruiters in the YC community. We sat down with Matt to hear his insight on <a href=https://www.ycombinator.com/"https://www.workatastartup.com/companies/pave-2/">building a team</a> in the early stages of his company and today as a CEO of a growth-stage company. </p><p><strong>Many of the first Pave employees were hired as a contractor before converting to a full-time employee. Would you recommend this strategy to founders? </strong></p><p>I strongly recommend the contract-to-hire setup in the early days of a startup, as it led me to have a 100% close rate with the candidates we wanted to convert to full-time. This strategy worked for two reasons: </p><p>1) By the end of the contract, the contractors had poured weeks of energy into the work – learning the code base and investing their time – and getting to know potential coworkers. This escalated their sense of commitment.</p><p>2) I was flexible on working hours – open to them working nights or weekends. This made it easier for the candidates who were busy with full-time employment to say yes to working with Pave and earn extra income on the side. </p><p>To convince people who were employed to work for Pave as a contractor on top of their current job, I framed the process as a mutual evaluation. This is an opportunity to evaluate the company and come to a mutual decision at the end of 2, 4, or 6 weeks together – no pressure. We paid them a fair market rate, and as mentioned, we were flexible on working hours. One contractor worked their day job until 5:00pm and then on Pave from 6:00pm-2:00am, for example. They were excited to be able to build something from the ground up and work closely with me at the earliest stage of the company – which is another strategy I used to encourage people to work with us. </p><p>Before Pave, I was an engineer at Facebook and regularly worked on side projects. These projects were my fun, guilty pleasures because when I built something from the ground up, I felt an emotional attachment to the work. Usually engineers at large companies feel part of a machine, but when they build something full-stack from the ground up, there’s a magical allure to that work. I gave those contractors ownership over the work and often jammed out with them – working side by side at all hours. (One note: I did not have the contractors touch customer PII.) Within weeks, we’d both know whether Pave would be a good fit, and if so, we were already committed to each other.</p><p><strong>What were you looking for in early employees? </strong></p><p>When starting to build out the team, I was given a tip that the first 10 hires would set the tone for the next 100. Because of this, I personally recruited 100% of the early Pave employees. I sourced people, took phone screens, went to dinner, coffee, and on walks with candidates, and spoke with them for hours on Zoom and Facetime. It was an all-encompassing process. But I found that early advice to be accurate: The first 10 employees are the most important aspect in the company’s life cycle – other than finding product-market fit – and recruiting has to be the founder’s priority.</p><p>When recruiting for the first ten employees, I wasn’t looking for experts in specific areas but generalists with rapid career growth, passion for our mission, and a hunger to work. Those early employees readily tackled whatever fire we were facing that day from engineering work and sales to back office and HR. I also had a deep level of trust with those first ten hires, as they were all in my network. </p><p>Today, I still look for mission alignment and hunger but there are times I need to hire a specialist. I identify the tightest set of criteria for the role and only talk to people who fit that criteria. This is very different from the early days when I was solely looking for generalists who could fill multiple roles.</p><p><strong>How did you convince those early employees to join Pave? </strong></p><p>I always found ways to continue our conversation even when I could sense the candidate wanted to turn down the offer. I would do this by scheduling future conversations – saying that I needed to share something new with them – and then I would get to work writing a Google Doc that showed how I planned to invest in their career. We still use this strategy at Pave today, but it has evolved and is now affectionately called the collaborative Google Doc.</p><p>The collaborative Google Doc is shared with the candidate and used throughout the entire interview process. The document outlines expectations for the role and frames the interview process in stages, communicating which stage the candidate is in at any given time to ensure we are working within their ideal timeline. We encourage the candidate to comment and add their thoughts to the document, including feedback for me and their thoughts on the interview process.</p><p>As we get further into the interview process, I get more specific about what I’m looking for in a candidate. And when we get even deeper, I write multiple pages on what I’ve learned about their career aspirations through our conversations and backchanneling, and how I’m going to support them. </p><p>When it comes to backchanneling for potential executive hires, I try to talk with at least 10 people and ask, “If I have the privilege to be this person's manager, I want to set them up for the utmost success. What are your specific recommendations about the best ways to set this person up for success and unleash their full potential?” This 360 review is shared with the candidate right before I deliver the compensation package. I outline what I learned about their strengths and weaknesses, and specific ways that I’ll push them and support them.</p><p>When I communicate compensation, I lay out all the facts, including cash amount, equity (shares and dollar amount), and the benefits package. In addition, we also share:</p><ul><li>The salary band for the role (and implicitly their position in it).</li><li>The level that the employee will be in the organization, along with more information on our leveling framework and what each level means.</li><li>The methodology for determining the compensation, like the market data we use (75th percentile for similar stage companies).</li><li>Broader information on compensation philosophy, including how someone moves through the band, gets promoted, etc.</li><li>Additional info on equity: current preferred price, current post money valuation, details on vesting, PTE window, 409A price, and more – essentially everything they need to determine the actual value of the grant.</li></ul><p>We’re ultra transparent about compensation because compensation should not be a guessing game; people deserve to understand every aspect of their compensation package and how it was derived. I then offer to meet live to answer any questions or discuss feedback – or ask them to leave their comments in the Google Doc. Most candidates will ask questions in the document, as it can be more approachable.</p><p><strong>For every open role at Pave, a Slack channel is created to drive urgency and ensure no detail goes missed. Tell me about this process. </strong></p><p>As a seed-stage company, I was creating Slack channels for every role. Today, Slack channels are created for roles that I’m involved with – like hiring a head of finance or VP of engineering. The process still looks the same, however. </p><p>I create a Slack channel for that role and add relevant stakeholders. Every morning I ask for an update. What’s the movement? Have we sourced any more candidates? Have we talked with candidates X, Y, and Z? I do this to keep the process moving forward every day. I also post updates – sharing with the team when I spoke with a reference, for example. When we extend an offer, I use this Slack channel to encourage stakeholders to reach out to the candidate through text messages or Loom videos. </p><p>Loom videos are an interesting medium. If you’re a candidate and receive six Loom videos from different people at the company, it may feel bizarre and a bit overwhelming. But the videos show we are excited about the candidate and also gives insight into our energetic culture. </p><p><strong>You also review email copy and do drip campaigns for candidate outreach. Tell me about this. </strong></p><p>We have a pre-written email sequence that is sent from me or the hiring manager depending on the context, and then we use <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/gem/">Gem to automate this. The response rates for these campaigns are much higher than if the emails were coming from a recruiter. Before the emails are sent out, I’ll spend 30 minutes personalizing 30 emails (one to two sentences at the onset of the email) that will be sent to target profiles. And then it’s important you do a drip. If you only send one email, most of the time the candidate won’t respond. I find sending a third email with a short message like, “Hey, any thoughts?” leads to the most responses. </p><p><strong>How do you think about where your job ends and your team begins when it comes to recruiting?</strong></p><p>Today, if I’m not the hiring manager, I delegate and come in only at the end of the process for a sell call. The process looks vastly different if I’m the hiring manager. I spend a lot of time reviewing resumes and identifying the top 25 profiles in the space. Every outreach to them is very personalized, and I have time to do this because I focus on quality over quantity of candidates. Quality over quantity was a big lesson for me, actually. At first, I would look at all inbound resumes and thousands of applicants. But I have come to realize that I have more success when I map out the market and find the top 25 candidates in the space. Then I'll find a way to get one of them in the door.</p><p><strong>Describe the ideal candidate for senior-level positions when Pave was a smaller company. </strong></p><p>As a company of 35 people, we didn’t need managers who delegated – which has merit at a later-stage company. We needed people who would personally take on the hard work. Often, first-time founders hire someone senior for optics reasons. Instead, you should look for someone earlier in their career who has grown at a crazy high slope – often referred to in the tech industry as a high-slope candidate versus a Y-intercept candidate. There is a time and place for both types of hires, but as a 35-person startup, almost always go for the slope, not the high Y-intercept. And in some cases, you may meet exceptional candidates with both high slope and high Y-intercept. This is the dream case!</p><p>Another mistake first-time founders can make is rushing hires by trying to squeeze them in before a term sheet. Don’t try to meet some arbitrary deadline or cliff date. If it takes six months or a year to hire an executive, that’s ok – wait for the right person.*<br><br><em>*This answer has been updated to clarify the founder’s intention behind the statement.</em></p>","comment_id":"6348578e2184dc0001eebf80","feature_image":"/blog/content/images/2022/10/BlogTwitter-Image-Template--8-.jpg","featured":true,"visibility":"public","email_recipient_filter":"none","created_at":"2022-10-13T11:23:10.000-07:00","updated_at":"2022-10-26T08:44:29.000-07:00","published_at":"2022-10-17T09:00:11.000-07:00","custom_excerpt":"Pave Founder and CEO Matt Schulman has created one of the most comprehensive and thorough recruiting processes, which has made him one of the most successful recruiters in the YC community.","codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"61fe29e3c7139e0001a710a7","name":"Lindsay Amos","slug":"lindsay-amos","profile_image":"/blog/content/images/2022/02/Lindsay.jpg","cover_image":null,"bio":"Lindsay Amos is the Senior Director of Communications at Y Combinator. 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In 2010, she was one of the first 30 employees at Square and the company’s first comms hire.","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/lindsay-amos/"},"primary_tag":{"id":"61fe29efc7139e0001a71181","name":"YC Continuity","slug":"yc-continuity","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/yc-continuity/"},"url":"https://ghost.prod.ycinside.com/learnings-of-a-ceo-matt-schulman-pave/","excerpt":"Welcome to the third edition of Learnings of a CEO. You can read previous editions here.","reading_time":7,"access":true,"og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"email_subject":null,"frontmatter":null,"feature_image_alt":null,"feature_image_caption":null},{"id":"63f91878d2b0220001e8d6e9","uuid":"a99f2458-1bdd-4a40-81e6-36ee441b133c","title":"Congratulations to the 2023 YC Top Companies!","slug":"yc-top-companies-feb-2023","html":"<p>We’re excited to present the 2023 YC Top Companies!</p><p>The startups are separated into 3 lists: YC’s top <a href=https://www.ycombinator.com/"https://www.ycombinator.com/topcompanies/" rel=\"noopener noreferrer\">private</a>, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/topcompanies/public/" rel=\"noopener noreferrer\">public</a>, and <a href=https://www.ycombinator.com/"https://www.ycombinator.com/topcompanies/exits/" rel=\"noopener noreferrer\">exited</a>. Private companies and exits are sorted by the company's valuation from their latest funding round, and all are valued at over $150M. Public companies are listed in alphabetical order.</p><p>The Breakthrough Companies list highlights the fast-growing companies we’ve doubled down on – which means they’ve all received significant additional investment from YC in their post-Demo Day rounds. </p><p><strong>Here are stats about the companies on this year’s list:</strong></p><p><strong>&gt;</strong> More than 290 private YC companies and 33 exits are valued at over $150M, over 90 are worth more than $1B, and 16 are public. </p><p><strong>&gt;</strong> 58% of the companies have HQs in the Bay Area. 27% of the companies are fully remote, and 55% list themselves as partially remote.</p><p><strong>&gt;</strong> YC Top Companies have HQs in 40 countries including: United States, India, United Kingdom, Canada, Colombia, Indonesia, Mexico, Nigeria, Argentina, Brazil, Chile, France, Spain, Israel, Netherlands, Philippines, Portugal, Germany, Egypt, Ireland, South Korea, Peru, Singapore, United Arab Emirates, Australia, Bolivia, Switzerland, Algeria, Estonia, Finland, Hungary, Italy, Norway, Romania, Sweden, Senegal, Uganda, Uruguay, Venezuela, Vietnam</p><p><strong>&gt;</strong> YC W16 is the most represented batch (by percentage). 23% of the companies from W16 are on the YC Top Companies list. </p><p><strong>&gt;</strong> Here’s a sector breakdown of the top companies:</p><ul><li>B2B Software and Services: 43%</li><li>Financial Technology and Services: 19%</li><li>Consumer: 13%</li><li>Healthcare: 12%</li><li>Industrials: 7%</li><li>Real Estate and Construction: 3%</li><li>Education and Government: 3%</li></ul><p><strong>&gt;</strong> 10 new companies joined the lists since August 2022:</p><p>Private:</p><ul><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/treasury-prime/">Treasury Prime</a> (YC W18) - Embedded banking software platform and marketplace</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/onesignal/">OneSignal (YC S11) - Engage customers through personalized omni-channel messaging</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/skill-lync/">Skill-lync (YC W19) - Online engineering college for India</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/tigereye/">TigerEye (YC S22) - Modern enterprise software for sales leaders</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/zeitview/">Zeitview (YC W15) - Inspection software for renewable energy &amp; sustainable infrastructure</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/ontop/">OnTop (YC W21) - A bank for remote workers connected to payroll</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/obie/">Obie (YC S19) - Insurance and risk management for landlords</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/nabis/">Nabis (YC W19) - The largest licensed cannabis wholesale platform</li></ul><p>Public:</p><ul><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/presto/">Presto (YC S10) - Digital meets physical for big chain restaurants</li></ul><p>Exits:</p><ul><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/nurx/">NURX (YC W16) - Medicine or testing kit, prescribed online, and delivered to your door </li></ul><p>One thing to note is that this is not an exhaustive list of YC’s top companies. 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Today, more than 200,000 businesses use Gusto for payroll, employee benefits, talent management, and more. And with the recent addition of <a href=https://www.ycombinator.com/"https://embedded.gusto.com//">Gusto Embedded</a>, developers now use Gusto’s APIs and pre-build UI  flows to embed payroll, tax filing, and payments infrastructure into products. </p><p>Last week, Gusto <a href=https://www.ycombinator.com/"https://gusto.com/company-news/gusto-embedded-one-year-in-fueling-smb-tech-success-at-scale-with-critical-compliance-/">announced they have dozens of new partners across verticals like laundromats, health &amp; beauty, and construction building with Gusto Embedded. The company also announced they are making it easier for software providers to keep their payroll customers in compliance.</p><p>YC’s <a href=https://www.ycombinator.com/"https://twitter.com/anuhariharan/status/1557784730543632384/">Anu Hariharan</a> sat down with Gusto co-founder and CPO <a href=https://www.ycombinator.com/"https://twitter.com/tomerlondon/">Tomer London</a> to talk about building for new customer segments and the future of embedded finance — sharing advice for startup founders and CEOs along the way. </p><div class=\"kg-card kg-audio-card\"><img src=https://www.ycombinator.com/"https://ghost.prod.ycinside.com/content/media/2022/08/Founder-Fireside---Tomer-London--Gusto-_thumb.jpg?v&#x3D;1660587475243\" alt=\"audio-thumbnail\" class=\"kg-audio-thumbnail\"><div class=\"kg-audio-thumbnail placeholder kg-audio-hide\"><svg width=\"24\" height=\"24\" fill=\"none\" xmlns=\"http://www.w3.org/2000/svg\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M7.5 15.33a.75.75 0 1 0 0 1.5.75.75 0 0 0 0-1.5Zm-2.25.75a2.25 2.25 0 1 1 4.5 0 2.25 2.25 0 0 1-4.5 0ZM15 13.83a.75.75 0 1 0 0 1.5.75.75 0 0 0 0-1.5Zm-2.25.75a2.25 2.25 0 1 1 4.5 0 2.25 2.25 0 0 1-4.5 0Z\"/><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M14.486 6.81A2.25 2.25 0 0 1 17.25 9v5.579a.75.75 0 0 1-1.5 0v-5.58a.75.75 0 0 0-.932-.727.755.755 0 0 1-.059.013l-4.465.744a.75.75 0 0 0-.544.72v6.33a.75.75 0 0 1-1.5 0v-6.33a2.25 2.25 0 0 1 1.763-2.194l4.473-.746Z\"/><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M3 1.5a.75.75 0 0 0-.75.75v19.5a.75.75 0 0 0 .75.75h18a.75.75 0 0 0 .75-.75V5.133a.75.75 0 0 0-.225-.535l-.002-.002-3-2.883A.75.75 0 0 0 18 1.5H3ZM1.409.659A2.25 2.25 0 0 1 3 0h15a2.25 2.25 0 0 1 1.568.637l.003.002 3 2.883a2.25 2.25 0 0 1 .679 1.61V21.75A2.25 2.25 0 0 1 21 24H3a2.25 2.25 0 0 1-2.25-2.25V2.25c0-.597.237-1.169.659-1.591Z\"/></svg></div><div class=\"kg-audio-player-container\"><audio src=https://www.ycombinator.com/"https://ghost.prod.ycinside.com/content/media/2022/08/Founder-Fireside---Tomer-London--Gusto-.mp3/" preload=\"metadata\"></audio><div class=\"kg-audio-title\">Founder Firesides: Gusto&#x27;s Tomer London on building for new verticals</div><div class=\"kg-audio-player\"><button class=\"kg-audio-play-icon\"><svg xmlns=\"http://www.w3.org/2000/svg\" viewBox=\"0 0 24 24\"><path d=\"M23.14 10.608 2.253.164A1.559 1.559 0 0 0 0 1.557v20.887a1.558 1.558 0 0 0 2.253 1.392L23.14 13.393a1.557 1.557 0 0 0 0-2.785Z\"/></svg></button><button class=\"kg-audio-pause-icon kg-audio-hide\"><svg xmlns=\"http://www.w3.org/2000/svg\" viewBox=\"0 0 24 24\"><rect x=\"3\" y=\"1\" width=\"7\" height=\"22\" rx=\"1.5\" ry=\"1.5\"/><rect x=\"14\" y=\"1\" width=\"7\" height=\"22\" rx=\"1.5\" ry=\"1.5\"/></svg></button><span class=\"kg-audio-current-time\">0:00</span><div class=\"kg-audio-time\">/<span class=\"kg-audio-duration\">118:07</span></div><input type=\"range\" class=\"kg-audio-seek-slider\" max=\"100\" value=\"0\"><button class=\"kg-audio-playback-rate\">1&#215;</button><button class=\"kg-audio-unmute-icon\"><svg xmlns=\"http://www.w3.org/2000/svg\" viewBox=\"0 0 24 24\"><path d=\"M15.189 2.021a9.728 9.728 0 0 0-7.924 4.85.249.249 0 0 1-.221.133H5.25a3 3 0 0 0-3 3v2a3 3 0 0 0 3 3h1.794a.249.249 0 0 1 .221.133 9.73 9.73 0 0 0 7.924 4.85h.06a1 1 0 0 0 1-1V3.02a1 1 0 0 0-1.06-.998Z\"/></svg></button><button class=\"kg-audio-mute-icon kg-audio-hide\"><svg xmlns=\"http://www.w3.org/2000/svg\" viewBox=\"0 0 24 24\"><path d=\"M16.177 4.3a.248.248 0 0 0 .073-.176v-1.1a1 1 0 0 0-1.061-1 9.728 9.728 0 0 0-7.924 4.85.249.249 0 0 1-.221.133H5.25a3 3 0 0 0-3 3v2a3 3 0 0 0 3 3h.114a.251.251 0 0 0 .177-.073ZM23.707 1.706A1 1 0 0 0 22.293.292l-22 22a1 1 0 0 0 0 1.414l.009.009a1 1 0 0 0 1.405-.009l6.63-6.631A.251.251 0 0 1 8.515 17a.245.245 0 0 1 .177.075 10.081 10.081 0 0 0 6.5 2.92 1 1 0 0 0 1.061-1V9.266a.247.247 0 0 1 .073-.176Z\"/></svg></button><input type=\"range\" class=\"kg-audio-volume-slider\" max=\"100\" value=\"100\"></div></div></div><p>You can also listen on <a href=https://www.ycombinator.com/"https://open.spotify.com/episode/0FTnE08QzuCg6I21S4PB8e?si=ShDfsjwnRWKYH0LjwzI-rg\%22>Spotify, <a href=https://www.ycombinator.com/"https://podcasts.apple.com/us/podcast/159-yc-founder-firesides-gusto-on-building-for-new/id1236907421?i=1000576161014\%22>Apple Podcasts</a>, and <a href=https://www.ycombinator.com/"https://twitter.com/i/spaces/1dRKZldrvOzJB?s=20\%22>Twitter.

1:28 - Tomer describes Gusto Embedded and the complexities behind compliance.</p><ul><li>Gusto Embedded takes ten years of Gusto’s experience building payroll software and compliance and makes it available to any software company wanting to ship their own payroll product to the market. </li></ul><p><strong>5:00 </strong>- Why did you decide to pursue startups as the company’s first target audience? How did you think about customer segments in that first year? </p><p><em>Over the last ten years, Gusto has scaled to build for multiple customer segments – starting with startups, then SMBs, accountants, and now with Gusto Embedded Payroll, developers who are embedding payroll directly into their software. </em></p><ul><li>When you have a grand vision, where do you start as a founder? Choose a customer segment. Make sure you choose a segment where 1) they have an important customer problem, 2) the product you are building solves that problem, and 3) you can reach your customer. </li></ul><p><strong>9:30 </strong>- Who were your competitors in the early days? </p><ul><li>The old, traditional payroll solutions, which were complex. With Gusto, <em>anyone</em> can run payroll at <em>any time</em>. Gusto also focuses on employees, a critical part of the system, by building a great payroll experience for them. </li></ul><p><strong>11:30 </strong>- Why did you decide to build for SMBs after startups? </p><ul><li>Look at your current customer base and learn from customers adjacent to the market you want to expand into. When you do expand into another vertical, make sure you maintain that early customer love.  </li></ul><p><strong>14:45</strong> - How did you maintain the customer love of the existing customer segment? </p><ul><li>Think about your long-term vision and don’t put yourself in a corner when you want to move to the next segment. </li></ul><p><strong>17:00</strong> - Most startups find it hard to tackle the SMB market. Why do you think this is the case? </p><ul><li>Traditionally SMBs are hard to reach and use incomplete or manual solutions. Since 2000 an entire generation of business owners had to learn to trust online financial services. Today, SMBs are online and looking for solutions.</li></ul><p><strong>22:25 </strong>- What is different about serving SMBs as a customer versus startups? </p><ul><li>Startups come and go, and the real economics come from the big winners. Focusing on startups is a good place to start your journey, but think about how to scale with them.</li><li>There are more small businesses than startups, and they are around for a long time – but most don’t grow to thousands of employees. You need to build a business model that works with that dynamic. </li></ul><p><strong>27:00 - </strong>Why did you pursue developers and how did you decide to service them? </p><ul><li>For many verticals, it is much better to have an all-in-one platform to run your small businesses. But payroll is really hard to build yourself. Gusto Embedded helps partners deliver a more integrated solution for customers without investing the several years and tens of millions of dollars.</li></ul><p><strong>29:00 </strong>- Gusto went from directly acquiring small businesses as customers to creating an embedded solution – essentially  “giving up” the relationship with the customer. How did you think about that? </p><ul><li>Evaluate the future of the industry and don’t ignore reality. Be the one to create that future. In this case, many payroll customers want all-in-one solutions. We can either try to meet those needs directly, or empower hundreds of partners to customize unique solutions.</li></ul><p><strong>33:00 - </strong>How should founders think about who to partner with? When should founders build directly for the industry and when should they go the embedded route? </p><ul><li>Think about the unique insight you have in the business you’re creating and make sure you own your destiny around that insight.</li><li>For your customer, what does a successful product look like, and could you partner with a company to fulfill those needs.</li><li>Your product must be high-quality. You have to put enough resources behind whatever you own. For everything else, you must ensure you bring in the right partner. It’s all about the end-to-end experience. </li></ul><p><strong>39:30</strong> - Gusto now makes it easier for software providers to bake compliance into embedded payroll. Tomer, I think developers looking at a payroll API would assume that compliance is baked in. But there are often steps companies have to take beyond just calling APIs. Tell us if that assumption holds.</p><ul><li>Regulation can change every quarter and every year. This is built into the product. We protect the customer and make it easy for developers to ship something quickly that is compliant for the long term.</li><li>One third of the companies in the U.S. get fined for mistakes on payroll. </li></ul><p><strong>43:00 - </strong>Compliance is the hardest part of payroll to build and ultimately has to be right. It took ten years of experience in compliance to launch this into Gusto Embedded Payroll. What advice do you have for founders who are building complicated, yet essential, components for an industry?</p><ul><li>Determine the parts of your product that are highly regulated and which areas are not. Build a culture that ensures quality-first in those highly-regulated areas, as well as a culture where people can iterate quickly in other areas. You can’t build a monolithic culture.</li><li>Embrace cross functional work. </li></ul><p><strong>46:00 </strong>- In the early days of Gusto, what guidance did you provide to your engineers about building payroll? What areas could break and which areas could not break? </p><p><strong>48:40</strong> - Looking back, would you have done anything different? </p><ul><li>Start charging what you feel is the value you provide; fix downwards versus upwards. 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