Gusto founders’ perspective on SaaS 3.0 and embedded fintech

Embedded Partners
Gusto co-founders josh, eddie, and tomer

Welcome to the SMB Tech Innovators podcast blog series powered by Gusto Embedded, where we explore embedded fintech with SaaS leaders. We aim to share stories, advice, and best practices from the leaders and investors behind today’s SaaS 3.0 for small business financial services.

In this episode, we speak with Gusto leaders Tomer London, Josh Reeves, and Eddie Kim to get their perspectives on what it means to be on both sides of SaaS 3.0. In addition, we get their insights on product growth despite challenging economic conditions, what’s most exciting in embedded fintech from a developer’s perspective, and how SaaS leaders should think about key decisions like when to offer additional services or even launch a platform, among other topics.

Topics include:

  • How Gusto has dealt with demanding economic environments in the past.
  • What they view as most exciting about embedded fintech for SaaS applications today and in the future.
  • The founders’ perspective on customer segmentation, the evolution of fintech, and trends in better SMB tech.
  • Lessons learned from actually embedding financial products.

Gusto Leaders:

Josh Reeves

Co-Founder and Chief Executive Officer

Tomer London

Co-Founder and Chief Product Officer

Eddie Kim

Co-Founder and Chief Technical Officer

(The following excerpts are from the event and podcast and have been transcribed and edited for clarity.)

“Wherever there’s pain or discomfort, there’s opportunity. This is why a company exists, to go and solve that pain. The economic cycle has ups and downs, but maintaining a focus on solving pain is due north through both parts of the cycle.”

Josh Reeves

Co-Founder and Chief Executive Officer

Startups should focus on what they can control, especially when times are rough.

Q: How have you, together, dealt with tough economic environments and made decisions for a fast-growing company amidst uncertainty?


At Gusto, from the beginning, we’ve taken a customer-first approach. To us, that means focusing on the things you control as it applies to our customer experience. 

In February 2020, we all woke up one morning and understood that we were not going to the office anymore due to the global pandemic. We had just finished our annual planning and were excited about the company’s direction. Instead, we set those plans aside and talked as a team about how to help our customers survive. One result was that we were one of the first companies to help tens of thousands of small businesses access their PPP loans to keep their businesses running.

“Our job is to do everything we can to help these businesses survive; we’re not just a payroll company; we’re a small business survival company.”


As founders, many of you and your teams are navigating a recessionary environment for the first time. There are pros and cons to both parts of the [expansion/ contraction] economic cycle. At Gusto, our tax credits product is one that is even more compelling in a recessionary environment.

Embedded fintech APIs are like time travel — you get to access the provider’s tech and experience.

Q: What are you most excited about in embedded fintech? From a developer and engineering perspective, how do these APIs transform fintech companies?


As the CTO I’m most excited about how, by embedding our API, our partners can benefit from the 12 years of experience and knowledge we’ve gained at Gusto. 

In tech, it’s all about iterations: how fast can you iterate to learn from your customers, and from your mistakes, to improve your product? Payroll is hard to get right. It’s not just complicated; the number of iterations you get to perfect something is fixed. 

The best analogy I can think of is SpaceX. You learn by launching rockets one at a time. This model is very expensive. Payroll is interesting because there’s nothing you can do to increase your iteration cycles — you only get one W2 filing per year. The IRS doesn’t give you a second chance when you make a mistake, notices come significantly delayed, and it can take two to three years after you’ve filed [to learn where you made a mistake].

Gusto has been at this for many years now. We’ve had many cycles to learn from and we’ve become really good at it. Payroll is not the same as shooting something into space, but to businesses and their employees it’s just as important to get it right. You don’t want your first iteration for payroll to result in a hundred-thousand-dollar fine!

“What I’m excited about is, through our APIs, other service providers get to time travel and take advantage of Gusto’s 12+ years of payroll experience. You cannot shortcut that experience.”

Eddie Kim

Co-Founder and Chief Technical Officer, Gusto

SaaS 3.0 and embedded fintech give customers more options for their user experience.

Q: From a product lens and user experience, what’s most exciting about SaaS 3.0 and embedding financial services?


Think about early word processors: you could write a document, you could change some fonts, but then you couldn’t print it or export it to PDF or do anything real-time. It’s the same today with many small-business service providers: they have access to information about their e-commerce flows or bank accounts, but they can’t actually use the data in the real world.

I’m really excited to see more integrated solutions that put payroll and HR functionality where customers work day-to-day. Embedded fintech is a movement towards making your product much more useful and creating more value for your customers and their employees.

Some customers will always prefer a dedicated solution, just like many prefer traditional financial institutions or local retailers; but for others, it’s more efficient. Plus, embedding additional financial products creates more stickiness for your product.


At the end of the day, all that matters is making the life of your customers better. Vertical SaaS is a big trend and Gusto Embedded is one key way we’re advancing that trend in order to help small businesses. But more important than trends in embedded fintech is the customer pain these providers can solve with embedded financial services.

Embedding financial services looks different in different verticals.

Q: Please share some anecdotes from the conversations you’re having with other SaaS leaders building SMB tech.


SpotOn is a good example of a point-of-sale system focused on restaurants and other businesses. They represent an excellent use case for in-app financial products. All the action happens at a restaurant’s point-of-sale system, it’s the center of the business. Employees clock in and out, promote products, connect and manage inventory, and manage compensation. The restaurant POS space is one step ahead of many other fintech companies today.

Other verticals are in different phases embedding financial services. For example, financial institutions are interested in helping small businesses manage not just their checking accounts but their entire financial position in real-time. But this can mean connecting lots of providers via their APIs.

Payroll is often one of the most significant expenses many SMBs have, so including it in the embedded fintech portfolio is important. There is a lot of interest in the small business ecosystem, and there are over six million employers in the US, so this is a massive market.


People are learning [how to leverage embedded fintech], and how to price it. Are SaaS companies doing this to drive top-of-the-funnel activities and ACV expansion? Are they bundling it within an existing subscription tier to drive higher retention or pricing it as an add-on? 

We can help, give advice, and share best practices with partners on a case-by-case basis. A lot of embedded fintech is more than just plugging in an API or reading some documentation. It’s meant to be a higher-touch relationship.


There are different ways to embed fintech APIs and specifically to build embedded payroll. You can use more APIs and build the user experience exactly how you want it.

The other option uses pre-built Flows. For example, there is a Flow to run payroll or add an employee. Oftentimes SaaS leaders start with UI components and then, over time, move towards more API customization for their situation. For many, I think that’s the best way to build payroll.

Embedding fintech APIs is about trust as much as technology.

Q: What lessons has Gusto learned from actually building with embedded fintech platforms?


Gusto has a product called Gusto Wallet. Employees who get paid through Gusto can download the Wallet app, open a bank account with a debit card, and connect to a bunch of functionality around budgeting, savings, and building financial resilience. We only developed part of it ourselves.

When we started building Gusto Wallet, the market was very early. Today there are many banking-as-a-service providers. What’s interesting for me is the trust. When you do a partnership with an embedded service provider — and we’ve built partnerships on the banking, processor, and infrastructure sides — you need to look the other partner in the eye and make sure both are aligned to be successful. Initially, I viewed these providers as vendors where you can access API docs and start coding without talking with anyone. But that’s the wrong way of looking at things. You need to ask “What are you doing to help us be successful? How can we work together and be partners instead of just vendors?”


Looking at many financial products and the financial institutions that offer them, many times the data they need for underwriting comes from the source of pay for that customer.

To get a loan, you go to a bank and what do they ask you? They’ll ask you for your last two pay stubs and your W-2s. They’re trying to understand if it makes sense to offer you that product.

Visibility into that data via API offers an advantage that other financial institutions don’t necessarily have because there’s friction to ask for that level of information. When you combine payroll data with other embedded fintech, you can offer contextual financial products. It can give you a definite advantage when it comes to selling these other financial services embedded in your product.

From provider to platform: timing, maturity, and staying true to customer needs.

Q: What advice would you have for the smaller and growing SaaS companies about when it’s the right time to become a platform?


There are two components. First, look inwards in terms of technology: how hard was it to build? At Gusto, we’ve been thinking about Gusto as a platform for a long time. We can do it because we built technology in a way that partners can use. 

And second, look at the market to see if partner needs are in sync and customers are ready. In the past three years, the number of SaaS providers focused on small businesses has grown dramatically. Today there are hundreds of these really exciting companies that have identified niche customer needs. The timing is really important.


First, you have to feel confident that your product is mature enough to offer as a pop-up. There’s a saying in payroll that rings very true to me: “Don’t trust anyone with your payroll unless they’ve done it for at least seven years.” Whatever service you offer, you have to feel confident you can do it correctly before building a platform. 

Second, you need to assess your platform maturity. As a startup with a MVP, you’re less worried about the architecture and how the back-end APIs interface with your front-end user experience. As you mature you start to care about that because that’s how you scale development. At a certain point, you’ve learned the right architecture and interfaces; now you can allow your partners to use the same APIs. As you scale you also gain confidence that your platform can process a high volume of transactions.


Not every product needs to be a platform. Every business has different strategies and approaches. At Gusto, we’ve been working with partners for eight years. It started as lightweight relationships where we would route traffic. From a user perspective, that’s not a great customer experience — being sent to another website to create another account login. Now embedded makes sense for us.

As long as you have a business model that creates a better customer experience, customers will use more of what you offer. That’s the beauty of SaaS. We didn’t invent that, but I love that backdrop for our partner companies.

Listen to the entire podcast with the Gusto founders on Spotify or Apple.

Learn more at Gusto Embedded and to get notified when new podcasts are available, subscribe to the Gusto Embedded Newsletter.

Updated: December 13, 2023

Brian Busch Brian is currently Head of Marketing at Gusto Embedded; the only payroll API with 10 years of experience and actionable data behind it. Before joining Gusto, Brian held leadership positions at Cloud Elements, Kapost, and Captricity. He holds a BS in finance and a BA in philosophy from Boston College and an MBA from the Cal Berkeley Haas School of Business.
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