Page 52 - Forbes - USA (February 2018)

Entrepreneurs DIVERSITY

lieve that diversity is in itself a core strength that ing officer in 2015, they made it a priority to fi nd MARGIN

will enable us to write better software and build a woman. Lexi Reese, a veteran of Google and PROPHET
better products,” he wrote. American Express, is one of two women on the
In line with more than 80% of startups, ac- six-person executive team, and fi rmwide, women
cording to a 2017 Crunchbase study, Gus- account for 51% of Gusto’s 525 employees. Even

to’s three founders are men. Kim and Gusto’s after Gusto began its diversity initiative, applica-

CEO, Joshua Reeves, both 34, met as under- tions from women didn’t flood in. Gusto assigned
grads in Stanford’s electrical engineering depart- two in-house recruiters to the job, and it hired

ment. They launched Gusto in 2012 along with TalentDash, a Singapore-based firm that sources
Tomer London, 33, an Israeli immigrant who got talent, to look exclusively for women.

to know Reeves while a Ph.D. student at Stan- Though hiring women engineers took more
ford. Like its boom-and-bust competitor, Zene- time, Kim says, Gusto never dropped its stan-

fits, which launched the following year, Gusto dards. “It bothers me when people say that prior- WAREHOUSE
sells cloud-based comprehensive subscription itizing diversity lowers the bar in terms of the cal- À LA CARTE
software to small businesses to help them man- iber of talent you’re able to hire,” he says. “Th at is

Getting goods from
age employee records like payroll and health simply not true.” Nor, he says, was there any push- supplier to store is a

benefits. At the outset Gusto even had a simi- back from inside Gusto. $163 billion global industry
ripe for a rethink, says
lar name, ZenPayroll, which it changed in 2015 Gusto also addressed its compensation policy.
Sean Henry, the 21-year-old
when it started offering a more complete selec- Since 2016 its salaries have been audited by Mercer, cofounder of Stord, an

tion of employee-tracking soft ware. a human resources consulting firm, which has found Atlanta-based on-demand
warehouse service.

Zenefits attracted $584 million in venture cap- no gender pay disparity. Benefits include 16 weeks of

paid leave for a primary parent, So you’re a kind of
warehouse Airbnb?
HOW TO PLAY IT BY JOHN BUCKINGHAM plus an additional $100 a week Customers choose us not
for groceries and food deliver- just for our warehouses
At Armonk, New York’s IBM, spreading the gospel of but for our software. The
ies, $100 a month for six months
diversity has been a priority during the tenure of chief industry runs off emails,
of housecleaning and up to $500
executive Virginia Rometty. She wasn’t dealt a pretty phones and faxes—the
for a baby-sleep coach. average warehouse order
hand when she took the helm in 2012, but she has takes 25 minutes of human
played many of her cards well, buying back stock and Gusto’s women- only re- interaction. We said, “If

boosting the dividend. She’s also invested heavily in cruiting effort lasted six we build software to give
IBM’s Strategic Im peratives business, which includes analytics, cloud, months. It stopped, Kim says, customers more transpar-
mobile and security and accounts for nearly 50% of sales. The stock because “we exceeded our ency into trucks and
has a 3.6% dividend yield and is a bargain at 12 times next year’s warehouses, we can help
goals.” In 2015 Gusto was them be more effi cient.”
earnings.
trying to hit 18% women en-
How many facilities

John Buckingham is chief investment officer of AFAM Capital and gineers, the proportion ma- do you have?
editor of The Prudent Speculator.
joring in computer science as In the ballpark of 160.
undergraduates, according to We go to mom-and-pop
operators and tell them
ital and hit a valuation of $4.5 billion in 2015 be- the National Center for Education Statistics, and Stord can give them access
fore running into regulatory problems relat- it reached 21%. Since then it has started staff - to customers that wouldn’t

ed to the way it sold health insurance. It sacked ing a Denver office, where it aims to increase the otherwise use them.
its CEO, reworked its business model and saw its engineer head count by at least 25 this year and How do you persuade them
valuation slashed to $2 billion. Gusto, meanwhile, where the company is reprising its women-only to adopt this new model?
grew less feverishly. By late 2015 it had raised recruiting strategy. Now that 17 of Gusto’s 70 en- Everyone’s competing on
delivery speed against
$176 million from firms like CapitalG (formerly gineers are female, it’s getting a little easier, says

Amazon. We can integrate
Google Capital) and General Catalyst, and 75 in- Gusto’s HR head, Maryanne Brown Caughey. our software into their

dividual investors handpicked by Reeves, includ- “It’s kind of a domino effect,” she says. “Women existing warehouses, then
see where they need to
ing Ashton Kutcher and PayPal cofounder Max know they’re joining a welcoming community.”
add distribution points

Levchin. That year it broke through to a $1.1 bil- While Gusto has made progress, its engineer- in Stord’s network for a
lion valuation. Forbes estimates Gusto’s annual ing team has no Latinos and no African-Amer- better supply chain.
revenue at nearly $100 million. icans. Kim says Gusto has two hiring goals in How fast can Stord move?
At the start, Gusto’s founders acknowledge, 2018: senior women and racial diversity in en- If Walmart in Georgia MARGIN PROPHET BY AMY FELDMAN LEFT: THOMAS KUHLENBECK FOR FORBES

diversity was on the back burner, and as it gineering. “The way we make progress is by fo- orders 5,000 units from a
supplier and that supplier
grew, they found that it didn’t happen organi- cusing on one problem,” Kim says, “and then we needs a new warehouse
cally. When it came time to hire a chief operat- move on to the next.” in Atlanta, they can get it
within 24 hours.
FINAL THOUGHT
“Urging an organization to be inclusive is not an attack. It’s progress.” —DASHANNE STOKES
50 | FORBES FEBRUARY 28, 2018