On January 3rd, I had the honor to chat with Eddie Kim. Like myself–Eddie happens to be a Stanford alumni. Unlike me–Eddie is the CTO and co-founder of a $9.6 billion company named Gusto: a payroll, benefits, and HR solution for businesses in the US. It’s already hard to find Asian unicorn founders, finding Asian near-decacorn founders is an order of magnitude rarer, making Eddie a certified legend. Despite his success, Eddie remains a very down to earth and genuine person, and I greatly enjoyed chatting with him. Without further ado:

PARENTAL PRESSURES

A common trope with some truth to it, is that many Asian parents pressure their children to pursue more stable, high-prestige careers, such as being a doctor or lawyer. I asked Eddie if he had experienced this:

I got pressure from my dad. My dad was a doctor and, like many Asian parents who are doctors, wanted their kids to be doctors. I think there was a fair bit of pressure from my dad, and then from my mom through my dad, to become a doctor and do pre-med and all that stuff. Of the STEM subjects, which I really liked and was good at, I was good at math, chemistry, and physics. The one that I didn’t like was biology. For me, it always felt like it was about memorizing things as opposed to actually using your brain. It seemed like being a doctor would require more of this, where I have to memorize all these different body parts and so on. I never really considered becoming a doctor, even though my parents really wanted me to. For them, it was the safe path, a prestigious occupation. There’s a lot of good to like about it, you’re saving lives and things like that, and you make a decent amount of money. 

However, once I was in college, my parents encouraged me to be in control of my destiny, which meant potentially starting my own business. They were supportive when I talked about it. Part of it was also that my dad is a doctor who started his own private practice, so he was an entrepreneur himself. When I was really young, my dad was just starting out. He immigrated from Korea and they didn’t have a lot of money. Once he became a doctor and had his own private practice, we were comfortable. We weren’t super rich, but money was not a huge worry. We’d always have food and basic necessities. We couldn’t buy super luxurious things and go on vacations, but it was enough that I could take risks early on. I think a lot of the reason why they were supportive of me starting my own business or doing something more risky was because even if it failed, it wouldn’t be devastating. I’d still have a home to go to and could fall back on my parents. It wouldn’t be a huge burden. So, I think I maybe had a little bit of a different experience than a lot of Asians once I was in college.

I asked Eddie if he thought that his parents were more understanding because they themselves were business owners:

Absolutely. My dad was a doctor and my mom was the one doing all the back office work. She was the receptionist, the insurance biller, the payroll runner. It was a small venture, just my dad and my mom, and they had one employee for 30 years. My dad never worked for a salary, he never joined Kaiser or anything like that. So, he definitely had a more entrepreneurial mindset.

My own mom is a small business owner, and Eddie’s parent’s attitudes paralleled my own parents’ so far. Since I sometimes ask my mom for advice when it comes to business, I wanted to see if Eddie did the same:

Not really. The whole tech world was so different from what they knew. Even questions about how to raise money or what is pre-money post-money valuation, all this sort of tech stuff, they had no idea. They weren’t practically helpful in that sense. But my mom was always super encouraging. She was very supportive, even though she didn’t really have a lot to contribute. It was more moral support more than anything.

SCARCITY MINDSET

Another common immigrant trope is having a scarcity mindset. This often persists even once families establish themselves in America. The traditional wisdom in startups is to build as lean as possible, and at first glance, having a scarcity mindset should help with this. I asked Eddie if he had this mindset and how it was expressed in his startup.

I remember, even though my parents’ practices were doing well, it wasn’t always like that. It started from nothing. We would rarely go out to eat, and when we did, it was at some chain like Sizzlers or maybe Red Lobster. Nothing super fancy. The thought of ordering an appetizer or a drink that wasn’t water felt wrong, like we were getting ripped off. There was definitely this mindset of being very frugal and not treating yourself to unnecessary luxuries. 

As I got older, I was influenced by some of my friends, who had less of a scarcity mindset. They would go out to nicer restaurants. We all had jobs post-college. We weren’t making tons of money, but while I was always about saving everything, they were not. At my first job at Volkswagen, I would pack lunch and figure out how to save about 60-70% of my salary. The rest was for rent, food, and gas. I was able to save, not a ton of money, but I had this mindset of frugality and saving as much money as possible. I’m not sure for what, but it was just the thing you do for a rainy day. My friends, on the other hand, were not saving money at all. They would go out to bars and fancier restaurants. That’s how I got exposed to it. Even though I was always a bit more on the frugal side, I started to see the value in treating yourself a little bit more. I learned from my friends that there’s no point in money if you’re not going to use it for something. What are you saving it for? I think the combination of how I grew up and my friends’ influence helped me find a balance.

I think it wasn’t until my second startup, Gusto, where we had the fortune of raising a lot more money than my first startup. Often, we had this mindset that you could spend a little more money and get higher quality stuff. For instance, instead of buying an Ikea desk, we bought from a company called Room and Board. It was a couple hundred more dollars per desk, but they were much nicer than an Ikea desk. Or like our first hires that we made, right? You can go for super cheap, outsource offshore to build your first product, or you can hire someone that’s really good, pay a little more, and be more generous with equity to get really top talent. 

So, I think it was at Gusto where I learned that if you have the resources to do so, it’s better to spend a little more. Don’t go super cheap on every single thing, don’t go frivolous and pay top dollar for everything either. But there’s a range, I would say, if it’s a range of one to a hundred, I would say a range of 70 to 80, or maybe 80 actually, where I think it’s worth spending that much because you just get so much more for it. Long term, it pays itself. 

There’s a moment where once you have the means, I think your mindset should shift a little bit. Not to go extravagant, but to not have so much of that scarcity mindset that we grew up with. 

BEING ASIAN AND BEING A LEADER

As I always do, I asked Eddie how he felt being Asian qualified his experience as a founder, and if it was something he thought about a lot:

I think to a certain extent, but not a ton. It’s not something that is always top of mind and something that I’m very self-conscious about or have imposter syndrome of. But also at the same time, it is something that’s kind of in the back of my mind. I sometimes ask myself, do I have what it takes to be a leader of hundreds of people in the organization? Will people not respect me as much because I’m Asian and Asians tend to be perceived as less of a leader than say, a white person. And so you definitely have a little bit of that, but also at the same time, I feel like whenever I have those thoughts, I tell myself that, no, why can’t you break the mold, right? Why can’t you be one of the first Asians that have done X or Y, right? Or one of the few Asian co-founders of a unicorn company, right? And so then I start to get excited about the concept of, “Hey, I can actually show people that it can be different.” And then, so it kind of turns into more of a motivating factor for me.

Eddie’s answer seemed to be focused on being a leader. From the research I did, it seemed like Eddie struggled in the transition from being an individual contributor to more of a manager role (or people empowerment at Gusto). I asked Eddie how he approached crafting his leadership skills.

One was, I had people that I could talk to that had more experience in it than I did that were very generous with their time and giving me advice and mentorship. Some of this came through investors that were early in the company. Our first seed round was basically a horde of angel investors that were entrepreneurs, right? It was people like Aditya, who was the head of engineering at Dropbox at the time. It was Jeremy Stoppelman, who’s CEO of Yelp. Drew Houston of Dropbox was among the founders of tech companies we wanted to invest in as some of the first investors. Through that, either directly or through people they knew, I got connected and would meet with some of these people regularly to get their advice on whatever issue I was facing. I remember actually talking to Aditya, at South Park in Soma, discussing how to structure comp bands. 

Having people around to ask was really helpful. I read a lot of books. I have this shelf full of business books. Things like High Output Management from Andy Grove, The Score Takes Care of Itself by Bill Walsh, and Mindset by Carol Dweck. Those are my three favorite business books that I read and they really helped me learn the tactics as well as the characteristics that are helpful in becoming more of a people manager. A lot of it is just experience. You do, then you fail and you learn. Like anything else that you spend time on, the more time you spend on it, the better you get at it. It’s really a question of how fast you progress. You will progress the more time you do something. Some people progress really fast, some people progress more slowly. But the point is that as long as you do something for a long period of time, you stick with it, you do get better at it. And then you like it even more. So it’s those three things: people, literature, and your own experience.

CUSTOMERS VS. FEATURES

When I spoke with Siqi, one of the things we talked about was how different potential customer segments can want completely different types of products and features, and how to think about where to prioritize. I asked Eddie for how he navigates this with Gusto:

In an unrealistic scenario where you have unlimited resources, it’s always better to have more features than less. However, the reality is that you have constraints in your resources and can’t do everything all at once. You have to decide how to invest your limited resources. You could build new features, improve the quality and scalability of what you have, or create new front doors into the product and focus more on acquisition and growth type efforts. 

At Gusto, we often have larger companies asking us for additional features for their businesses. At the same time, we have many small businesses that don’t know about us yet. So, we have to decide whether to focus more of our resources on creating more features for these large companies or creating more awareness of Gusto for all the small businesses that haven’t used any of our features. 

It really comes down to what you want to prioritize. For different companies, the answer will be different. It’s important to stay disciplined about who your customer is, who your target demographic is. It’s easy to just answer feature requests and get pulled into a direction that some of your customers want in the short term. This might help you get more money in the short term, but over time, you might find yourself not really focused on who your product is serving. 

Many companies have to be aware of this danger. If you start to prioritize too much of the short term feature requests and chase revenue short term, then you can miss the bigger picture. This company is building a product that works really well for this customer demographic. 

At Gusto, we always think about who our customer is. For us, it’s really the small businesses. It’s very enticing to try to go upmarket and land companies that are in the 100 or 500 employee range or a few thousand because they pay you so much more money than small businesses. Every once in a while, an opportunity comes along where a larger company says, “if you do this, then we’ll sign up”. This could be a huge deal for the company. It’s really hard to say no to those things, but you have to, because you really want to stay focused on who you’re serving. 

I asked Eddie to go a little deeper on the dangers of chasing the short term requests of the larger companies:

I think the danger is that there are two risks to this. One is you are diverting resources from something else. That could be a global maxima versus a local maxima. So that’s an opportunity cost that you could be missing. The second risk is that you lose focus on what makes your product or company so special. If we, for example, went and built a bunch of enterprise type features in Gusto that allowed any company to customize it to their heart’s content, that would be a very confusing experience for the 99% of our customers who are very small, who don’t want a customized solution because they have no idea how they want to do things and they want Gusto to guide them on how to do things.

GOALS FOR LARGER COMPANIES

Since Eddie is one of the few at the helm of a $500M ARR startup, I wanted to ask him what startups at that size prioritize, and if rapid growth was still the goal:

I think as you get more mature as a company, you start to think less about just growth at all costs. You start to think about growth at a reasonable price. There’s actually a non-standard technical term for this called GARP – Growth At a Reasonable Price. The rule of thumb for a later-stage company is that you want a GARP of 40 or above. GARP is essentially your growth rate minus your operating margins. So if you have a growth rate of 40% year on year, you’re growing your revenue 40%, then you should be breaking even because your operating margin is going to be zero. So 40 minus zero is 40. If your operating margin is 10%, then it’s 40 plus 10, which is 50. So that’s awesome. You’re going to get a really good response from your investors and the public.

Markets will be very happy if you could accomplish 40% year on year growth and 10% operating margins, right? You’re putting out 10% of profit cash flow every single year. If you’re growing at like, say 60% year on year, which is incredible growth, you can actually be negative 20% operating margin, and still have a GARP of 40%. You’re still going to be in a really good spot. So this formula really balances your growth with your profitability, your operating margins and using this rule of 40 is a pretty good rule of thumb for the markets when you’re a later stage company. When you’re early stage, it doesn’t really make any sense to use. 

Eddie’s comment on how “the markets would be happy” suggests to me that mature startups at this stage are looking at the numbers more at an IPO angle, and determining what public investors want to see.

BENEFITS OF DEI

At this point in the interview we ran out of time, but there was still one question I had for Eddie that I really wanted to ask. At the time of writing, the daily Twitter discourse was about DEI, so I wanted to get Eddie’s opinion on DEI. I emailed him the question after our interview and he graciously responded:

Gusto clearly takes DEI seriously given the RISE report. Do you feel that DEI is important at every stage of a startup or does it start gaining importance once a company is a certain size?

In my opinion, DEI is actually the most important in the early stages because there really is a vicious or virtuous cycle when it comes to building diverse teams. If you start early with a diverse team, you’ll attract more candidates from diverse backgrounds. The opposite is true too. 

I actually wrote about it a couple of times: 

https://engineering.gusto.com/growing-our-engineering-team-in-denver-diversity-begets-diversity/

https://engineering.gusto.com/staying-ambitious-on-diversity-new-goals-for-gusto-engineering/

SHOUTOUTS

If you are looking to start a business and/or hire your first employee or contractor, please consider using Gusto, the #1 payroll software in 2023!

Additionally, Gusto is hiring across technical and non-technical roles. You can find their job postings at https://gusto.com/about/careers

Thank you Eddie for speaking with us!

On December 15th, I had the honor to chat with Kevin Chou. Kevin is one of the foremost Asian American founders, having founded a number of gaming and web3 companies (Rally, Forte, Blocto, Gen.G, and Kabam) and currently spends his time working on Superlayer, a crypto venture studio he co-founded two years ago. Kevin also serves on the board of trustees at his alma mater UC Berkeley and notably made the largest donation to the school from an alumni under 40 years old. Without further ado:

FINDING YOUR OWN VOICE

In my research for this interview, I came across an article where Kevin said “Not working has helped me realize that by far the most important thing is finding that voice in your head that’s truly, authentically you”, but he never got around to sharing how to find your own voice, so that’s what I asked him:

One way to think about it is to try to meet as many people as possible, people that seem to inspire you–could be from all walks of life. It could be somebody in the government, the political field, someone doing nonprofit work, or even a church figure. Reach out to as many senior people, people that you admire, people whose work seems really cool. Reach out exactly like how you did. Say, “I’m a new graduate. I’m still trying to figure out what I want to do with my career. I’m really inspired by what you’ve done. Can I set up 30 minutes with you to talk about what you do, what you like about it, what advice you have, etc.?” It’s shocking how few people do this. I know it’s potentially a little scary. You’re reaching out to people who you don’t even know. 

Personalize a note, find them on LinkedIn, or social media, or email, and just send them a note. It’s actually surprising. I took a look at your note. And I was like, “You know what, it’s half an hour of my time. If I could help somebody, I think about it as just paying it forward.” I think a lot of people who’ve had some success in their life are very happy to pay it forward and try to help young people figure out what they want to do, because I think we were all there when we graduated.

On a personal note: I’ll add that my success rate with my cold emails to these founders is about 5-10%, which Kevin noted was within expectations. That’s not to discourage anyone from emailing, but to set realistic expectations as to the response rate. If your response rate is better than mine, I’d love to hear what you’re doing so I can copy you!

ON BEING ASIAN

At Asian Hustle Network, our one recurring question is: “how has being Asian qualified your experience as a founder?”, here is Kevin’s response:

I think about it all the time. I didn’t grow up in an Asian community. I grew up in a very small, rural community. So it was a lot of white and Hispanic folks, and I didn’t really have any Asian restaurants in my town. There were only two other Asian kids in my high school. When I was a kid, I thought it was weird that I was Asian. I looked different from people, ate different food than other people, and my parents didn’t speak English as fluently. I tried to blend in and not really focus on it. Then I went to college at Berkeley. There, I found a lot of friends and felt like I fit in a lot more. As a founder, it’s again, thrust into an environment with very few Asians as CEOs. There are a lot of Asians in technical roles. I think I’ve been incredibly successful. Lately, there have been more and more Asian founders, but there’s not as much of a cohesiveness around it as much as, for example, the Indian founder community is very tight. The Pakistani community is very tight. There are a lot of other ethnic communities that are founders that I think are tighter.

I had recently talked to Bryant Chou from Webflow, and his method of approaching this was to take a colorblind approach when it came to business. I mentioned to Kevin that his approach seemed the opposite of Bryant’s:

I definitely feel differently about it. I’m doing business with a lot of people. In general, when I’m doing business, I’m working with all different types of people. But in terms of people that I want to help out, it’s very natural that I’m more likely to say yes to an interview or try to help somebody else out if I see a little bit of myself in them. Ethnicity helps. I’ve done a lot of business in Asia, including having a 300 person office in China and starting an esports company called Gen.G, which is based in Seoul, Korea. 

Going to Asia, it’s a huge advantage to speak the language and understand some of the cultural aspects. I think about how I can take advantage of the good parts of being an Asian founder and entrepreneur, and then there are probably times where it’s a net negative, and I try to mitigate those as much as possible. 

For example, during COVID, there was a big group of Taiwanese American entrepreneurs, like Steve Chen from YouTube, and Kevin Lin from Twitch, and Jameson Hsu. We decided to go to Taiwan during COVID. There are lots of times where we’re celebrating Chinese New Year together, and just like Chinese New Year events that you go to, and you meet a bunch of other founders. Having kids and a family, I spend a lot of time just enjoying meeting people from those cultural events. 

Pulling on this thread, I asked Kevin what kinds of detriments he felt Asians faced:

I don’t think there’s as much of a detriment anymore. I would say in 2006, I was incredibly lucky that I was a VC. When I joined investment banking, there were like two other Asians in my hundred person office. And in all of the venture industry, there were maybe 10 Asians (circa 2005). How many CEOs were successful, CEOs of companies that were Asian, you had Jensen who ran Nvidia and that’s about it. There were just not many Asians. You think about all the .com companies, all of the e-commerce companies that were started in the late nineties and in that era of the technology world. It’s hard to think of many Asians. I would say Jerry Yang comes to mind.

Although he wasn’t the CEO initially, back then it was really hard to be a CEO who was Asian and trying to pitch to someone who’s generally not Asian. The investors do a lot of pattern matching. For example, they might think, “These kids are from MIT. That’s a good pattern match. I’m interested.” While nobody’s explicitly saying, “I don’t want to fund a woman or someone of a certain ethnicity,” they’re just pattern matching. They’re taking lots of meetings and they might think, “Something’s a little off about this one.” Think about it, how many CEOs have been Asian? It was a lot harder, but today there are a lot more, which is good. I think it’s less of an issue today. On the positive side, a lot of Asian founders get credit for being smart, being technologists, and for hustling. I don’t think it’s much of a detriment anymore the way it was 20 years ago. That’s good for the better in that regard. 

Going off his comment on the lack of Asian CEOs, I asked him what kinds of things he practiced or studied to overcome the additional headwinds he faced:

If you want to be a CEO, everyone has different perspectives on this. My perspective, especially in the context of the Asian Hustle Network, is that one of the Asian stereotypes is that they’re quiet, smart, and they work really hard, but they don’t know how to get out there. They don’t know how to sell or get deals done. So, I think being a good communicator and developing your own leadership style in a way that is authoritative, compelling, and authentic is important. Everyone has their own way of doing this, but there is a certain projection or pattern match of somebody who is going to be a good CEO. As a founder, you’ve got to be someone who can overcome obstacles, regardless of your ethnicity or gender. You have to be good at running through walls. Being good at sales, being able to get your ideas across in a compelling way, these are all incredibly important. These days you can do that via a variety of means. It doesn’t have to all be in person. 

FUNDRAISING 

I have some friends who are looking to raise a pre-seed round for their startup. But they were having some difficulty as they weren’t located in the Bay Area and didn’t have existing connections to angel investors. I wanted to see if Kevin had any advice for people in their position:

It’s definitely a lot easier if you’re from Stanford, MIT, Cal, or other top programs with a technical background. If you’re not from that, my biggest advice is to move to San Francisco or New York. If this is what you want to do, you have to do it right. If you wanted to be an actor or be in show business, you would go to New York or Los Angeles. That’s where everything is. The various angel investors, seed investors, and larger institutional investors are primarily in these two markets. I would say the Bay area still tops, but New York is a very close second these days. It’s much easier if you go out, attend some of the easier events, meet some people, spend some time networking, and then get invited to other events. You start meeting investors, figure out what events they are going to, go there and meet them, and talk to them about your ideas. There’s no substitute for meeting somebody face to face and talking.

Kevin later added a few additional thoughts:

As a young entrepreneur, there are two ways to build a company. The way I did it was through luck. I raised half a million dollars for my first round in 2006, which wasn’t a lot of money. We were incredibly frugal and had enough money to pivot a few times. This is a harder way to do it because it involves a lot of networking to find investors. I was fortunate to have spent two and a half years as a VC in the industry, so I knew a lot of VCs. My own firm and a few others were willing to write me a check, but I chose the firm I used to work with because they offered better terms. However, the best way to build a startup is raising a few hundred thousand dollars, around $200,000. Those types of deals are easier to get. Ideally, you can even avoid raising anything because what you can do is get a few friends together who are technical and build the thing, launch it, and get some success. Then raise money. It’s much easier raising money once you’ve built something than when it’s just a story.

When I say I’ve been pitched hundreds of Gen AI startups, I would say 80% of those pitches did not build anything yet. A lot of those emails start with, “I’m looking for pre-seed funding and here’s what I’m looking to try to do.” I generally don’t even read those emails. And I think a lot of other investors don’t either at this point. So if you haven’t met the team, if the team doesn’t have a really good background in exactly the area that they’re tackling, it’s an easy archive email. 

Whenever somebody built something and emailed me, “Here’s a link to the thing I built,” or “Here’s a video of the thing working,” I generally take the time to go take a look at it because I’m always interested in what’s new. I’ll take way more meetings with somebody who’s built something. 

And there you have it! Just building something and getting a few users will put you ahead of most pitches.

TAKING CARE OF YOURSELF AS A FOUNDER

The last question I asked Kevin was how he dealt with the emotional toll that being a CEO takes.

You have to have either a community or a relationship. Besides parental relationship, some meaningful relationship in your life that is going to ground you through the tough times, because without that, it’s just so easy to slip into that place. These days, it’s much more normal to talk about the importance of mental health. Mental health, emotional health is incredibly important. I think it’s all rooted in physical health, too. It’s really hard to run a startup if you’re not physically healthy. If you’re not physically healthy, that also drags down your emotional and mental health. So I think physical health is actually the very base of the pyramid.

From SoulCycles to sports, for example, I highly recommend a book that has been really helpful for me. It’s a book called Younger Next Year. This book came out, I think, over two decades ago. I recommend it to everyone. You don’t even have to read the book. The very basic thing to do is strength training two times a week, and then try to do some cardio exercises, another three to four days a week. So basically spend five or six days a week being physically active, with two of those days being strength. Exercise and eat reasonably okay. That is my number one advice to people with a stressful lifestyle. Having a grounding of physical health is super important. 

Then we get to the question that you started with, which is emotional health. Emotionally, mentally, it is incredibly important to have a community and to have a relationship that you care about. I know all this sounds like, “How am I going to do all this stressful stuff in your life?” But the whole point is, if you’re going to run a marathon, you have to pace yourself. The number one thing that I find is, if time permits, have something that you like doing. Ideally, that’s something that ties into physical health, because that way, you kill two birds with one stone. Whether it’s hiking, or a sport or something else, do things that you enjoy a few hours a week, because otherwise, you’ll just burn yourself out. So physical health, relationships for mental health, and then do some play every week.

I asked Kevin what exercises he tends to do and mentioned that I do mostly cardio:

Strength training is the number one thing that I recommend for everyone. That can come with all sorts of different things like circuit training, some sort of boot camps. It doesn’t have to be super intense, you’re not looking to necessarily get ripped and get a six pack. It’s just strength training, kind of a total body core strength training. Find something that you like that gives you energy, it could be a class, it could be one on one, it could be doing videos, something that you enjoy. Strength training doesn’t have to be a chore, it should be reasonably fun. On the cardio side, I love playing tennis, and lately pickleball. That’s what I do most of the time. On the weekends, I’m generally hiking, because I like spending time in nature with my family. 

There’s a website called Bay Area Hiker, or BA Hiker, I think. It has all sorts of great hikes that are all ranked by community. You can search by area and city. We like driving out to Half Moon Bay. Near the ocean, there’s a ton of great hikes along the one freeway. If you drive south from San Francisco, as you get towards Pacifica, there’s a lot of great hiking trails that take you above the one freeway. You get a gorgeous view of the ocean and the waves coming in. It’s just beautiful.

SHOUTOUTS 

If you like mobile games, check out Bored Button, a free mobile game where you can earn valuable loyalty points–made by one of Kevin’s companies. Bored Button is available to download on the Apple App Store, Google Play Store, and the Amazon App Store.

Thank you Kevin for speaking with us!