The following interview is a conversation we had with Kevin Busque, CEO and Founder of Guideline, on our podcast Category Visionaries. You can view the full episode here: the Story of Guideline ($1.1+ Billion Valuation)
Kevin Busque
Thanks for having me, Brett. Excited to be here.
Brett
Yeah, no problem. So I was looking at your LinkedIn and I see that you’d started a company in 1996 called Linked Up. So let’s start there. Take us back to 1996, what was going on 96?
Kevin Busque
Yeah, so I graduated high school in 1997. So this was actually the company that I formed in high school. And I really started this company in eigth grade. I would say I was building custom computers for local colleges and real estate offices. This is back when you could get margin by going to computer shows and slapping all that stuff together, really doing no testing whatsoever, but you could sell it to this is Back Gateway and Dell and all those types of things were super fun, compact. So yeah, I was doing that for a while. And then in 1996 I started getting into the services business. So this was Voiceover IP, Linux and Unix administration and building websites for real estate agents with inventory and all that sort of stuff. So my mom was a real estate agent, so I saw the need there and I started doing that and also like the prep for y two K if you guys remember that and all that nastiness.
Kevin Busque
So doing a lot of buy off grades and all of those types of things. So this was that company, which was great. And this is actually how I paid for my college. Yeah, that was kind of what I had to do. And then I got quickly hired by a company called Iris Associates, which was Ray Ozzy’s company, the developer of Lotus Notes and Domino. And that was like 1998, but really kind of got into computers when I was twelve ish and then heavily into computers, like in my basement type of into computers when I was 14 or so.
Brett
And where did that draw for computers come from?
Kevin Busque
Yeah, my father was a sergeant in the army, he worked in army intelligence, so he was running a computer lab eventually when I got introduced on Fort Devons in Massachusetts, which doesn’t exist anymore, I was brought up in the military. I was born in Fort Huachuca in Arizona, lived all over the know, kind of following my dad’s deployments around the globe. My mom was stay at home mom and then became a real estate agent. But he really introduced me to them. I think I got my first computer when I was twelve packard Bell from way back in the day, from like Sears, which was a 486 SX I think, something like that. So he brought that home and I really got heavily into this is before the Internet, any of that stuff, so was accessible. We got into AOL, Prodigy and all that stuff later.
Kevin Busque
And then my cousin James, his father James was instrumental in the MIT Media Lab and he really got me into it. He started another company called Manning Machine, which is around when Apple stuff was happening and they were going at it. And he ended up being a great engineer and developed a bunch of other cool devices like a magic mouse which was essentially a pointer for Panasonic back in the day. So he got me really involved in it as well. Like helped me replace my first hard drive. It was like 40 megabytes or something super crazy. But yeah, those two I think really got me into computers. And then there was some hardship in my life. My brother passed away when I was very young and that really led me down into getting deeply into computers and sort of unhealthy way, but really kind of made me who I am today.
Kevin Busque
And that’s kind of my introduction into the computing scene.
Brett
Nice, I love that. And to skip a little bit here, let’s talk a little bit about TaskRabbit. So I’m an avid user, hung up a lot of TVs, fix the toilets. You saved me from having to do a lot of physical labor with my hands. So I appreciate that. So you started that, what was it, 2008?
Kevin Busque
I think I read, yeah, 2008. My wife at the time, Lee and I started that company back in Boston. I ended up staying in Boston for college after Fort Devons as well, in high school in that area. So yeah, we started that company in 2008 out of need, which was great. We had a big dog at the time and this is right around when the iPhone came out. So mobile and all that stuff was starting to become really accessible and location data was accessible. So TaskRabbit ended up being something that it wasn’t originally intended to be, where you could sort of outsource all those jobs. It was really meant as a convenience mobile and location awareness tool originally, but of know, you kind of follow the money and Wiccan’s traction and it became like hanging TVs, assembling Ikea furniture, those types of things. But that wasn’t its original intent.
Kevin Busque
But yeah, then we took venture capital. I was still working in 2008 to 2010, just helping Leah with server infrastructure and all that stuff. She was doing all the coding of the actual application. This is like right when Ruby and Ruby on Rails came out. So it was all new, and I was kind of sorting that out with her. And then she pitched and we got funding in 2010, and that’s when we moved to the Bay Area.
Brett
Wow. And I see that you were VP of technology there.
Kevin Busque
Obviously.
Brett
You’re CEO today. What was that shift like for you? And how have you made that evolution from VP of technology to CEO?
Kevin Busque
Yeah, so it was interesting, right? Like 2008 in Boston, not really like a heavy tech scene, definitely not for consumer Internet sort of tech scene wasn’t available or nobody really had that awareness in Boston. So when we moved, I held my job till 2010, until we got actually Series A, I think, and I could take a salary. That’s when I stopped working for other companies. And then essentially I ran the platform and all of HR, which will lead me into Guideline as well. But as a Founder, you kind of just do what you’re naturally good at, kind of just fill the void of whatever needs to be done, right? So you just take on all those jobs. The transition for me was pretty straightforward, to be honest, because I was an entrepreneur. I had started other companies previously. I didn’t have any management experience, but I think I understand people pretty well.
Kevin Busque
I minored in sociology, which is the study of people. So had a good sense of sort of how to men and I played a lot of sports as well and as captain, all that sort of stuff. So I think I naturally am able to lead in sort of an authentic way that people appreciate, at least from performance reviews and all that sort of stuff. I think pretty natural for me at that state, for Guideline anyway. Yeah, that’s kind of the transition. But at TaskRabbit ran the platform, ended up having all of engineering on and off at TaskRabbit and then HR as well, which is kind of interesting. I’d obviously never done that before, but picking out employee benefits, including 401K, which I’m sure we’ll get into, but yeah, that was my role there. And then 2015, Leah had gone to Sweden already and kind of struck that deal with Ikea.
Kevin Busque
It was inevitable that it was going to happen. It just took a really long time to happen. But I knew I didn’t want to work for Ikea in any sort of no offense to Ikea, it’s just I’m a technologist and entrepreneur and I wasn’t going to do so. Yeah, I knew that was going to happen. So I ended up starting this other company called Guideline in and around my experiences from TaskRabbit in running the HR over there and picking 401. And what was available to me at that time wasn’t what I wanted for my employees. And I just started researching that and really figured out that I could do a better job than what was in market with an interesting sort of business model. If we focused entirely on the participant in this outcome. So that’s what I did. So myself and my two co-founders, who are my great friends, Mike and Cabs, started Guideline.
Kevin Busque
Actually, I started it technically first had to raise some capital to be able to pay Mike and Cabs as well. I could sustain my own self. And Leah was obviously still working, so were fine from a monetary standpoint. But Mike and Cabs both had at least Mike had kids at the time and Kaz was thinking about starting a family. So obviously there’s monetary constraints there. But interesting time for us.
Brett
I think everyone who’s listening will have heard of Guideline, but I think many may not know exactly what you do. So could you just talk us through at a high level what the platform does?
Kevin Busque
Yeah, absolutely. So the void we’re kind of filling in the market is for the small and medium business we’re talking about from one employee in our largest company is 2000. So we’re not, I would say, like super small business anymore. Although that’s exactly where we started and I think I saw that we’ll get into that. So what we do is a small business 401K platform turnkey. We integrate with your payroll. We take on all of the sort of Fiduciary duties that comes with a 401K. So we’re the record keeper. So we keep track of all the buys and all the assets and all of the notices that are mandated to be sent out and all that sort of stuff. And we’re governed by the IRS, the SEC and the Department of labor. So we have all three of them. So we have to keep track of a lot of different things.
Kevin Busque
And that’s really called our record keeping system. And then we’re a 316 Fiduciary. So that is plan administration. So we’re responsible for all the plan administration. And then on top of that is what’s called a 338. And that is where you’re getting sort of your investment menu, what investments are available, and sort of suitability for your investors on the platform. So we do all of that as well and then we end up delivering a product as well. Right. So how does the end user actually interface with your product? From a plan sponsor, meaning the company that’s signing up, but also as participants on the platform as well. So how do you make them understand what they’re investing in, how much to invest, what the match is like, all of those types of things. So we do all of that in one sort of bundled solution and we’re really the first one in the market doing that from start to finish.
Kevin Busque
Yeah, so that’s Guideline in a nutshell. And we’ve since expanded into IRAs, which are Individual Retirement Accounts and Sep accounts, which are kind of know mom and pop shops that maybe have one or two employees. So like handyman pizza shops, those types of things.
Brett
So I feel like conventional wisdom in Silicon Valley is you want to go enterprise, all the money is in enterprise, stay away from small business. You’ve taken a different approach here, so can you just talk us through that decision and why you decided to focus on the SMB market?
Kevin Busque
Yeah. So enterprise for 401 is really about assets, right? So if you have assets, meaning you’ve had a 401K for a long period of time, let’s like an example like Google, right? I don’t even know what they have in their plan, but it’s an enormous amount of money, probably a billion dollars. I have no idea. You compete with fidelity, right? And that’s where everybody ends up is on Fidelity. They have 30,000 plans and trillions of dollars, so everybody ends up over there at Fidelity. So for a startup to come out of the gate, right, with $2 billion in seed stage, like, how am I going to compete with Fidelity? I’m going to google, say, hey, Google, trust us with your 401K. It’s just not going to happen, right? So you look at what’s not available in the market and for us, these are called startup plans.
Kevin Busque
Not to be confused with like Silicon Valley startups, but plans that didn’t have 401K before are called startup plans. So these are companies that never have assets, right? And if you look at the legacy 401K ecosystem, most of the providers out there can’t monetize you unless you have assets because they bill on assets under management. So for us, because we own the entire ecosystem, we’re full stack. We don’t have to charge on assets. So we can actually focus and this is what I meant earlier, we can focus on participant outcomes, getting participants to save more for retirement and in the end provide them with more assets when they actually retire. So that was our focus. And us being able to deliver on that product with our full staff solution allows us to monetize small business in a way that’s never been done. So we charge SaaS based fees, so it’s $8 per participant, not per employee.
Kevin Busque
So you have ten employees and maybe eight participate. You pay us on the so it’s really nice for small businesses because they’re only paying for the benefit for those that actually use the benefit. So that was really important to us as well and then focused on that participant. We have an incredibly low eight basis points that we charge to participants and this is really just we don’t generate a lot of revenue on this. This is just for us to cover transactional costs. Like you want to take out a loan or you need a disbursement or something like that, where we have to pay our custodian to transfer assets around, that’s a cost to us. So essentially we cover that with eight basis points. But yeah, there was a need in the marketplace and we built a solution and this was a solution for a company like TaskRabbit.
Kevin Busque
And this is just kind of a problem that I saw in the market that nobody was delivering. I thought I could do a better job being a data person and software engineer with Mike and Cabs. We’re all in software, we’re not in finance. Had an inclination that we could solve this with data. And that was kind of really the precipice for getting out there in the market and where could we go that we could get quick traction and an amazing product? And we really built this product after something that I wanted, and I’ve done that throughout my career. The same with TaskRabbit, right. Like, this is something that I wanted and I think other people wanted it as well. And we just set out to build that. And luckily for us, were right and we got product market fit day one, which was great. Yeah.
Brett
And I know you touched on it there little bit, but let’s talk about your regulatory pain. So what was that like in the early days? And it sounds like no one on your team comes from that background. Right. So there was no one who was a CPA or whatever it would be that would even know how to manage all those different agencies. So where’d you guys learn how to do this? And what was it like in those early days? Was it just painful?
Kevin Busque
Yeah, it was just painful. And we started slow, right? Like, we didn’t dive in and have 100 customers overnight where we had to do all these filings. You have to file 5500 at the end of the year, which is essentially like a tax return for a plan instead of a tax return for a person. So we did it slowly, but my first hire was a lawyer and that was completely flabbergasted my investors, right? Like you brought in a lawyer this early. But we really needed some structure. We needed to understand the regulations, because just as much as we’re a fintech company, we’re also a reg tech company, right? Like regulation technology. So we actually had to build against ERISA, which is the Department of labor, and plans have to have certain attributes and you have to do certain things on a certain time period. All of those types of things are super important.
Kevin Busque
So we just had to know what were building. And then it took us a year and a half to do it from that point forward. So it was super interesting. We joke all the time. Like, had we known how much regulation there actually was, we probably would never have started this company. You’re two years in you’re a year and a half in before you even bring on a company and you’ve already built all this stuff right? And it just keeps piling up from a record keeping standpoint from a 316 standpoint and then there’s a filings the 5500 and all of this kind of stuff but what we ended up doing was building this large moat that we didn’t know were building but it became a moat for us and people have to outsource all this work and we have built this all internally which allows us to have this unique business model which is kind of just really interesting in the market for four hundred and one.
Brett
K and can you talk us through landing your first couple of paying customers that weren’t family or friends or investors or anyone related to you? Let’s talk through those first paying customers. What was that?
Kevin Busque
They become friends, but we didn’t really know them all that much when we started. But our first true paying customer, besides guideline itself, was plaid, which was really interesting. So we had a lot of connectivity, like obviously being in and around silicon valley, like I knew of Zach, got introduced pretty early on to Zach through actually what we wanted to do was connect to individual bank accounts, right? So like, where do you go to do that? You go to plaid. They didn’t have what we wanted at the time for retirement accounts. They only had bank accounts, cash accounts, checking accounts, savings accounts. So I went to them and started telling them what I was building and what I wanted to do and connect to other retirement accounts, because were thinking of doing individual investment advice at the time. We don’t do that now. But I wanted to understand how much did they have in wealthfront, how much did they have in schwab or whatever it was?
Kevin Busque
And they didn’t have the ability to do that. And I was telling them what I was building, they’re like, man, we really want this account. We really want this product that you’re building. And I want to say, this is 2016. And I was like, look, we don’t have it yet. This is October. I want to say October. And they wanted it by the end of the year. So we’re like, look, we’re on it, but putting somebody else on it right now is really tricky for us. We ended up doing it. We ended up really hustling getting a product out the door. They signed up that’s November. We had to file a 5500 later that year, which was just kind of crazy. We’ve got contributions running, all of that type of stuff, and we’re handholding this product all the way through, right? Just have the edge cases locked down so we don’t know how to do payroll reversals, none of that sort of stuff, right?
Kevin Busque
Luckily they were good sports and they signed up, and it’s kind of like pre beta at this point, but yeah, they were our first paying customer. Grew with us to 400, 500 employees, 600 employees, and they ended up transitioning off, and we can talk about this later when they were going through that visa acquisition, right? Like, this is why everybody goes to fidelity, right? This is kind of that momentum, but they were an amazing partner. They’re still a partner with us. We still use them. Love those guys. The great thing about engineers, specifically fintech engineers, is they’re highly educated on finance. So a lot of great ideas just coming from their participants to guideline. Some of them still haven’t. Everybody wants, like, mega backdoor Roth conversions, but we’ll get there one of those edge cases that 20 people want of the 600,000 people on our platform.
Kevin Busque
So we haven’t built that yet. But a lot of great stuff from having picking a wonderful first customer.
Brett
Nice. This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do.
Kevin Busque
You show up and host, and we.
Brett
Handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now, back today’s episode. And something else we like to always ask about are near death experiences. So I’m sure you see it in the media, but there’s just a lot of entrepreneurship that gets glorified. And I think if an entrepreneur or a Founder was researching your name, they’d be like, wow, look at this guy. He’s got it figured out. Raising all this money, having successful companies, all of this stuff, it just looks so cool. But I think what often doesn’t get told there is, like, the pain and the failure and all of that journey that happens to get to those successful headlines and successful stories. So talk to us about some of those near death experiences or just some of those very painful moments you experience while building.
Kevin Busque
Yeah, I think for different folks, different startups, pain comes in many different ways. So at TaskRabbit, pain for us was like product market fit. We were doing something nobody had ever done before. We developed a thing called service network. Like, explain that to somebody. It just didn’t happen. So that was really a tough spot. Right. And then for a Guideline, we almost died before we started, quite honestly, because I’m trying to raise capital. We don’t have a product. This is 2015. I’m coming off of TaskRabbit, which was an outcome, but it wasn’t like a home run, right? We didn’t sell it for a billion dollars or anything like that, so it was pretty difficult to raise capital. And luckily for me, some of the early investors in Guideline gave me a nice seed. But that was six months into me trying to raise capital. That was a six months of no’s until we got the pitch right, until we got the product focus right.
Kevin Busque
All of that took a really long time, and Mike and Cabs couldn’t join me. Aka, we couldn’t start building product until I raised capital. So there is that Catch 22 right there. It was a chicken and egg situation. So luckily we ended up getting some capital. We did a $2 million seed round from at the time it was called LHV, Lear, Hapu Ventures. Now. It’s just called LH. And then NEA Dana Grayson over there believed in what were doing and gave Know a shot at it. And then that allowed us to start building. And then once you start building a product and you see the types of people that are building the product, myself, Cabs and Mike, and sort of the focus on experience, the focus on the craftsmanship of the product, it’s much easier to tell that story. But quite honestly, six months in, mike and Cabs are antsy.
Kevin Busque
We’re all ready to go and I just can’t raise the capital. I’m like, we almost called it at that point, and maybe it wasn’t meant to be or we needed somebody else to be able to do that, but I think that was the closest we had come to sort of dying before we started. After that, I would say we’ve been incredibly lucky. It’s always been super positive, up and to the right product. Market fit, day one. I know how lucky that is because it does not happen for the majority of startups. But we got really lucky and I think we got lucky and were really focused, meaning the co-founders and myself, on what were going to deliver. And we had a lot of conviction that it was the right product. They were really excited about it. I was really excited about it. Everybody we talked to was like, this doesn’t exist.
Kevin Busque
Please make this. And I would say that’s another quick lesson is don’t do this stealth thing. Just stop at that because first mover advantage will work for a month. Honestly, you can generate code these days. That’s just not a thing. If that’s your differentiation, it’s not a differentiation. So tell everybody about it, get all the feedback. You can build a better product that’s going to differentiate you anyway. I’m still boxing there, so I’ll look at it now.
Brett
If we switch gears a little bit, let’s dive into some of the go to market side of the interview. So first one is around category creation. How do you think about your market category? And is this a category creation play? Is it just redefining existing categories or what are your thoughts?
Kevin Busque
I think from a large macro sense, this is an existing category, right? It’s called retirement. It’s been around forever in different ways and different methods to get there. But I would say we did create a category in the small business segment. Nobody was doing what were doing early enough. They had pieces of it. Sure, some plans were designed for small businesses. There were some record keepers out there that would do it. Nobody really had the full 360 degree integration like we did. So we put it all together and just defined this new market segment where you can get a turnkey 401K for $8. That is true and true, like something that didn’t exist previous. And now you see all the tailwinds with the state mandates for retirement. And if you have employees in California now, you need a retirement program. It was never that way before.
Kevin Busque
That happened last year. So were just kind know, timing was right, and we developed this private market solution in a new category, retirement for small business, where these features didn’t exist for participants that worked for small business before, and now they do.
Brett
And on the topic of timing, it doesn’t really seem like just luck or an accident, because with TaskRabbit, you nailed that timing, right? If you had done it three years before when the iPhone wasn’t out, or maybe GPS working as well, that wouldn’t have worked as well. And it sounds like similar here where you just nailed timing. So what’s your process for doing that?
Kevin Busque
How do you nail it? I’ll say that we nailed timing for a Guideline for TaskRabbit, I think we’re actually too early. If you look at the companies that came along later, they were smaller segments of what TaskRabbit did, like Lyft, Uber, DoorDash, you know, all of those we did on TaskRabbit years before, people focused on them as an individual product. So I think we’re just too early there. We’re trying to do too much too soon and really didn’t focus on it. With Guideline, I think we absolutely nailed the think, you know, the push from sort of mom and pop payroll into the cloud. So you’re talking about like, Zen payroll actually became Gusto. Zen existed. All of those types of companies intuit, Rippling, all of that stuff is starting to happen, right? So you need those companies to exist to do what we do. They have to be forward thinking.
Kevin Busque
They have to be tech forward. They have to have APIs. All of that stuff had to exist. And then, of course, nobody had touched 401K for 40 years. And then all of a sudden, we have legislation mandating retirement solutions. I think that was lucky. But the rest of it was very were very intentional in building the product that we built and that’s know, our go to market strategy was partnering with Gusto. And that’s why we focused on the small business for the first two years. We had a mutually exclusive relationship with Gusto for an entire year. And that was really like, hey, we’re both learning how to do like nobody before. So that was really important and very smart go to market strategy by both of us. I think Gusto and Guideline what did a really good job there and just focused on outcomes and user experience and all of those types of things.
Brett
And what’s the breakdown now when it comes to customer acquisition? What percentage. Comes from these partnerships, like the one with Gusto versus Direct.
Kevin Busque
Yes, 60% comes from a payroll partner. We have many at this point, 40% Direct on our website. They sign up through our website. But in the end, 92% of all of our customers are on an integrated experience. Right. So they have these 360 payroll connected experiences which are just, quite honestly, so much better, and allows us to handle compliance issues and payroll reversals and census issues, all of that sort of stuff. So we can do that programmatically with code instead of with people like legacy traditional 401K providers. So we can scale quite easily. We have 41,000 or almost 41,000 small businesses on our platform, and we’re 360 people. Wow. To give you some idea, fidelity has 34,000 total plans, so we have more than Fidelity, and we’re six, seven years old in the market.
Brett
Wow. And early on, was that the master plan? Was it to take this partnership route, or did that come early in 100%?
Kevin Busque
This is the master plan. This is what we built, our record keeping solution for our integrations. And you can outsource integrations now, and people connect to HRAs and payroll and all that stuff, but it’s what we do. It’s our bread and butter. We know every of all these online, forward thinking payroll providers, which makes our integrations better than everybody else’s. And that’s true. And that’s something that we really pride ourselves on. And the scalability of guideline compared to many others, it’s just kind of different. But yeah, four hundred and one K is incredibly data intensive, and there’s a lot of compliance around it. There’s a lot of things that people don’t realize you have to do. If you take funds from a customer and then you don’t invest those within a certain period of window, certain window. Like you have five to seven days in there.
Kevin Busque
I forget which one it is. You have to start paying them for market conditions. That’s just crazy. When you’re thinking about 30 or $40 million in contributions every two weeks, it’s a lot of money. So it’s a big deal on how we do things, and it kind of sets us apart.
Brett
And if you reflect on that success and the growth that you’ve seen to have such a large customer base, what do you think you got right? I’m sure there’s a long list of things you got right, but if we had to isolate one or two things, what would that be? How were you able to rise above the noise like this?
Kevin Busque
Yeah. I think for us and our mantra, and it’s kind of held between myself and the co-founders, is to do the hard thing first. And that was so smart to build record keeping as the very first thing we did. It wasn’t flashy, you couldn’t see it. This is all back end, right. This is all stuff that nobody really knows that you’re doing. You couldn’t show an investor. Like, how do you put a back end record keeping system on a pitch deck is pretty interesting to think about, but really doing that set us apart for a very long time. And even today, if you look back, there’s threads and hacker news and all this stuff, like, why are you reinventing the wheel? You can just use a census or matrix or whatever as a record keeper. It’s a commodity type business. But what people really didn’t understand was the value in the data and how that translated to an experience on the web or on your phone.
Kevin Busque
Having sort of a commodity. Record keeper didn’t allow you to differentiate on that experience because you were stuck with only looking at certain events that the record keeper would publish. So that was a big thing that we really got right and really set us apart. So there’s other companies that started around the same time that were orders of magnitude larger than them, and it’s really because of the acceleration that were able to achieve based on product experience and sort of these amazing integrations.
Brett
Now I want to switch gears and talk about funding. So as I mentioned there in the Intro 339,000,000, it’s some serious money. So first question there is, when you first became a unicorn, can you take us back to that day? What did it feel like for you? What was going on inside of your head? And you can’t give us the BS answer, give us the real answer. What was that like for you?
Kevin Busque
When I set out, I wanted to build a billion dollar company. So for me, that little box on my shoulder, I checked it and I was really proud about that. And I remember talking to the co-founders and like, man, guys, we kind of did it here. This is a huge milestone for us. In the end, it becomes a valuation, right? Nobody thinks about that anymore. It was kind of one of those things where you have that goal and you want to build a billion dollar company. And being able to say that my kids don’t understand that now, but eventually they will, that’ll be a cool experience for me. But other than that, it doesn’t determine our success in any way. We still have to pay the bills, we still have to do right by our customers and all that sort of stuff. But huge achievement overall.
Kevin Busque
We’re really proud about it. Motivated the team a ton, right? People can start to see those magic things like options actually pay off and what they can become. It’s really cool. And a lot of these folks have been working for me for 15 years, which is kind of crazy. I was just talking to one of my good friends. I won’t name him because we joke about this all the time, but he literally started with me when he came out of college and I just had lunch with him at Guideline and he’s got gray hair and I’m like, that was kind of a cool moment for me as well. But it’s nice to be able to do this stuff for the people that have worked for you for so long and the time and commitment and effort they put in. I was really proud of that.
Brett
And what do you do internally to maybe tame the ego a little bit or the confidence that comes? Because I’ve had a number of other unicorn founders come on and they say that’s always a concern that they have where it almost can go to people’s heads and they start to celebrate before the job’s done. Have you had to have any of those discussions internally and how have you navigated that?
Kevin Busque
Absolutely. I think one of the things that make Guideline great is, like, we have incredibly low egos across the board from executive team all the way through is really important. But I think you have to celebrate the moment, right? Like, you celebrate the funding round, you celebrate all of that stuff and then you talk about what’s next. And that is really about like, hey, this isn’t our exit plan. This is just a funding round. Nobody bought us for a billion dollars, right? That’s not the same thing. So this isn’t the end game and really focusing on that participant being somewhat mission driven. We’re all here because we want to make money and make a dent, right? Make a dent in what we do. But it’s not 100% mission, but it’s definitely 50% to 60% mission on focusing on retirement outcomes for participants. So you got to have those conversations, but it’s not like one and done.
Kevin Busque
We have all hands every week, right? Like, they need to hear it from me. They need to hear from the co-founders all the time. It’s not, hey, we made it because we got funding or we have $300 million in the bank or whatever.
Brett
And from all that fundraising, if you had to choose one lesson that you learned to share, what would that be? What should founders know about fundraising as they enter at this type of level?
Kevin Busque
Yeah, I’m a big advocate for not over engineering funding rounds. Find that partner, find that amazing partner company or venture capital or private equity, find that partner and really invest all you can into getting to know them. It was really difficult in COVID because we’re doing everything remote. That’s when we did our biggest round with General Atlantic, it’s really difficult to try to get to know some people that way and then kind of align on values and mission if they’re on board with that, making sure that’s really important, and then structure the round as simply as possible. Try not to get into preferences stack and doing all this debt and just keep it straightforward so that you do right by your employees and your other shareholders as well. So I think those are my biggest takeaways. And then I would say this last year or two has been I would say the last two years was incredibly difficult to be just kind of responsible in how you spend your money or what valuation you raise at.
Kevin Busque
To be honest, we passed around the valued guideline at two and a half billion dollars. And I look back at that now and it’s one of the smartest moves I’ve ever done as an entrepreneur was to pass on that round. I literally had a term sheet for $50 million at a two and a half billion dollar valuation, and I passed. And I did that because I knew we could never grow into that valuation with the money that were raising. So it didn’t make sense, right? And now you look at all of those companies that raise on those huge valuations and they’re out of cash. What do they do? Now, I don’t know if I was being intelligent or smart or lucky, but I’m really proud that we actually didn’t take that round because I think we’d be in a much different position. And now we’re at the point where we’re looking to be cash flow positive when we could be if we wanted to be, and we still have $130,000,000 in the bank.
Kevin Busque
So we’re in good position where we kind of control our own destiny. We don’t have to take capital if we don’t want to, just in a really good spot, and we’ll be cash flow positive with $85 million in the bank. So we’re going to be in a really good spot if this market turns and, like, IPO windows open and all of that sort of stuff. So I’m really proud of the company. We’ve made some hard choices and hard decisions as of late to put us in this position, but we’ve done it and everybody’s rallied around it. I think we’re in a really good spot.
Brett
You must be able to sleep at night much better than some of your peers who have founded unicorn companies over the last few years, and, like you said, raised at these insane valuations with revenue that’s not even close. Feel like they just have to be sweating like crazy right now.
Kevin Busque
It’s got to be so hard. And I’m not putting down I understand the decision to it’s exciting to take those big valuations right. I’m not saying you did anything wrong, but I do feel better about being responsible with our growth and the reality of growth and what that looks like, and not just drinking my own Koolaid here. So it’s a tough position out there for many startup founders that have, quite honestly, have amazing businesses, and now they’re being hamstrung by a financing round. That’s what I’m talking about. Keep it so simple. Keep it as simple as possible when you raise funding. I think that’s really a really smart thing to do. But it’s a tough environment out there. Hopefully, it changes pretty soon.
Brett
Yeah, it’s brutal. All right, I know we’re getting close to being up on time here, so we’ll end with one final question. What’s the big picture for Guideline? What’s the next three to five years.
Kevin Busque
Going to look like? Yeah, three to five years. We have a lot of exciting things coming up this year, which I’m super Q Three, q Four is going to be a moment for Guidelines. So I’m excited about it. But I would say overall, we’re still focused one, becoming a public company, not because of a fundraise or raising capital or exits for anybody. It’s really about building trust, specifically with this SVB and First Republic and all that sort of stuff. Really don’t want to be seen as like a Silicon Valley startup. That’s not a good label anymore, especially when you’re dealing with retirement. And we manage almost $9 billion in the market, right? So it’s not a small amount of money, but becoming public and being able to be really transparent about what the books look like and these are all stories that you can’t tell.
Kevin Busque
Nobody wants to hear them, right? So being able to do that in a public setting and just people being able to see the health of guidelines, balance sheet and PNL and all that sort of stuff will be a really interesting moment. And I think that will take away sort of the Fidelity narrative of like, yeah, you can start with Guideline, and then you need to go to Fidelity eventually, hopefully, that disappears. So that’s really our goal is to IPO at some point when that becomes available to us, but we’re structured and really focused on that. We’re in our third year of financial audits with Eny, so we’re getting there, and we’re setting up for that moment. But really, for us, we want to be the default retirement for every payroll provider on the planet. That’s our goal. Whether it’s a some other program, that’s what we’re focused on.
Kevin Busque
And really, that is like, there shouldn’t be a bad choice, in my opinion, for retirement program through payroll, and there are still plenty of bad choices. And you’re talking about high asset based fees that kind of rip the face off of participants, and they don’t even know it, which is another reason that I started this company. So I think you can do something where there’s a win across the board, and that’s a win for the payroll company, win for Guideline, and a win for the participant. I don’t think it needs to be a winner and loser situation. And right now, in a legacy environment, I kind of feel like it’s structured that way, kind of opaque. So we’re trying to bring transparency to that. And if you choose to go with a product like Guideline where you know what you’re paying and you know what you’re getting, I think we’ll have a good outcome.
Brett
Amazing. I love it. All right, Kevin, we’re up on time. So we’re going to have to wrap. If people want to follow along with your journey as you build and execute on this vision, where should they go?
Kevin Busque
Yeah, guideline.com very simple. We have a great blog there. We kind of announce everything that we’re doing or any market moments or education. We’re big on education, so you can go there personally if you want to see anything that I’m doing. It’s at Kevin Buskey on Instagram. I don’t post much at all, maybe like once every three months, but that’s the best I got for you as far as follow.
Brett
Awesome. Kevin, thank you so much for taking the time to share your story and really share some of these lessons. This has been such a fun conversation. I really enjoyed it and I know our audience is going to as well. So thank you for taking the time.
Kevin Busque
Really appreciate it, Brett. Appreciate it. Cheers. Cheers.
Brett
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