Written by Jason Myers

Major Tom touched down at the Ellie Caulkins Opera House midway through Denver Startup Week in the form of a rock star panel, befitting of David Bowie himself. In some corners it might seem unusual to welcome these entrepreneurial all-stars back to terra firma by dissecting their still living creations, in fact I’m pretty sure that’s against the Geneva Convention; no one was hurt during the proceedings, but everyone walked away enlightened.

Denver Founders hosted the event and MCs Chris Franks and Josh Churlik sat down with founders Edward Kim of Gusto (nee ZenPayroll), Stuart Wall of Signpost, and Lawrence Hester of FareHarbor. All three of these companies have offices in the Denver area that are experiencing hyper-growth. In the past year these companies have each hired in excess of 250, 150, and 60 people respectively.

  • Gusto provides payroll, benefits and compliance solutions for small- and medium-sized businesses.
  • Signpost offers a marketing engine and CRM platform that helps local businesses develop and maintain relationships with their customers.
  • FareHarbor delivers online booking and reservation software that caters to a diverse array of tours and activities.

All of the evening’s founder’s shared details about the origins of their companies and how they’ve been able to navigate the perils of hyper-growth.

Where It All Started

One way or another, family functioned as the inspiration for the creation of each of these companies.

For Edward Kim, the seed for Gusto emerged after witnessing people he knew struggle with back office tasks. He described how his own parents, small business owners themselves, used to sit and write checks from a checkbook when it came time to do payroll. Kim and his co-founders knew there had to be a better way and thus Gusto was born.

Stuart Wall was in graduate school when he committed to help his sister, a software engineer, advertise her professional services. He admitted that despite pumping two grand into the effort, nothing came of it. Yet, he realized that a market existed. He worked in a standard job for a few months after finishing his MBA, but Wall quickly decided to bootstrap his own project full-time.

The first company Lawrence Hester started sold croutons. No lie. But the impetus for FareHarbor came when visiting Hawaii with his then girlfriend. The plan was to meet his brother, who lived there, and embark on a vacation full of activities. What he didn’t anticipate was his brother bailing on them, and leaving the pair with no plans and no guide to help them. As he struggled to get information about various activities it dawned on Hester that there had to be an easier way to find and reserve things to do. The original idea was an AirBnB for boats, but has since expanded to include a whole host of activities.

Stepping on the Scale

Because the theme of the evening was hyper-growth, all of the founders addressed various aspects of how the process of intense scaling unfolded. Of course, there would be nothing to scale from without their first customers, and given their current client bases it’s worth a brief detour to where it all started. How, then, were these companies able to sign up customers without a sales team?

Wall shared that he used to go door-to-door, selling directly to small businesses. On top of that he also enlisted anyone he knew who was willing to try out his service, including his barber. The only drawback to that was whenever he went to get his haircut his barber wanted to talk shop!

Meanwhile, Hester and his co-founder perhaps set a new record for consecutive days without hearing the word “yes” from a prospect. The final number? 65 day. Ouch. Starting out in Hawaii had its advantages though. The island is small and it was hard for people to keep saying no forever.

Kim and the Gusto crew got picked up by Y Combinator, which recommended their services to subsequent cohorts. When asked if they ever messed up their own payroll, Kim simply laughed and admitted that they had. In fact, the founders vowed not to pay themselves until they could do so with their own software. It took a few attempts, but obviously they figured it out.

From a Few to Many

From such humble beginnings emerged Goliaths. All three founders readily acknowledged that they found success in non-sexy industries. None of them are social endeavors, share pictures, or involve crowdsourcing.

There is no single propellant that launched these companies forward. Hester suggested that too many companies focus on their social media presence, counting followers and likes instead of spending the majority of their time landing new clients and generating revenue.

Kim said that he started his first company just to start a company. People who do this tend to follow trends and end up being one of many competing for the same thing. By the time he started Gusto he admitted he matured more and shifted his focus on solving more foundational problems. His perspective reoriented once he realized he was ok with geeking out about fixing a “mundane” problem.

For Wall, his big take-away was that no amount of traditional research can match going out into the field and getting actual experience. He suggested that end-consumer businesses are more volatile, and while B2B endeavors may seem less interesting from 10,000 feet, they have a viability advantage.

Signpost grew from having Wall as the only sales person to over 100 internal sales representative. Nowadays Signpost divides their sales reps into multiple teams, but all the reps are educated on the entire client base and have the ability to talk to any business or industry.

Kim attributes Gusto’s success to building a great product and listening to their customers. Increasingly, customer service has emerged as a differentiator between similar companies, and Gusto takes customer service seriously. In an industry notorious for poor customer service and giving people the runaround, Gusto re-cast the mold for what service should be.

Referrals account for about 20% of Gusto’s sales, according to a rough, on-the-fly estimate from Kim. They are able to get a lot of sales from accountants as well. Gusto established a volume discount fee structure to entice current customers to sign up additional clients, too.

Out in Hawaii, Hester claims that FareHarbor only had 100 clients a year ago, and only two of them were on the mainland. Realizing that the contiguous U.S. was a huge untapped market Hester enlisted his friend who, no lie–crashed and burned on Shark Tank–to oversee the expansion of their mainland sales. He developed a killer sales script and growth exploded like a Michael Bay film.

Culture Club

One of the reasons many people want to work at a startup is because of the company culture. Culture is easy to maintain when the staff is only 10–20 people, but preserving those personal connections are next to impossible when hyper-growth is the rule of the day.

Kim was quick to make an important distinction on the subject, isolating culture from values. Values, to Kim, are immutable and don’t change whereas culture is the implementation of those values. So although culture can change, a company’s values should not.

Wall flat out admitted that carrying over the same level of camaraderie from startup to hyper-growth modes was extremely difficult. With more people in the company, not to mention spread out across multiple offices in different cities, inter-personal relationships are harder to maintain at the same level they were before. Still, Wall does things to consciously reinforce Signpost’s culture like emptying the dishwasher at work every day.

Over at FareHarbor, Hester is looking to expand his staff from 90 to 400 in the next year, and says his biggest challenge is maintaining the DWIFT (Do Whatever It F#*$ing Takes) mentality that led to their initial success. Through no fault of their own new hires didn’t go through the trenches that the core group did, so imbuing the DWIFT mindset to these individuals is a very real hurdle. He admits that he’s still trying to figure out how to keep his preferred level of craziness as the company grows.

Denver Calling

One thing all three companies have in common is the fact that one of, if not the first expansion move they made was to Denver. All three companies picked Denver using the same methodology. They posted job openings in multiple cities but the applicant pool in Denver distinguished itself immediately from the other cities. Combine that with the Denver’s vibrant startup and technology scene, and a less expensive cost of living than New York, San Francisco, or Hawaii, and the decision was “easy,” according to Kim.

As is customary for Denver Founders events, the evening’s guests parting shot consisted of advice to burgeoning entrepreneurs.

Kim circled back to the values issue. He said that early on Gusto spent two days nailing down their company values. While it may have seemed a bit touchy-feely at the time, he said that they had leveraged those values in the succeeding years more than anything else. Figuring out what your company stands for and how to achieve that is paramount.

Wall focused on product/market fit. He said that companies that iterate fast enough can come out ahead, but that founders need to be willing to do a reality check. In other words, if you know what you’re doing isn’t working, it’s probably time to pivot. His other suggestion was to find the right people. Many people tend to hire people that are similar to them, but he claimed that there is real value in hiring someone whose personality is a total one-eighty from your own.

Hester succinctly brought the proceedings to a close, imploring people to 1. Serve your customers, and 2. Love what you do.

Sounds simple enough, right?

Watch the full panel talk here:

Jason Myers
Jason Myers is a skilled technical writer and editor with background in data analysis and research design. A proven performer in the creation, composition and evaluation of documentation and web-based content for technical and non-technical audiences. He is experienced in cultivating brand voice through written content and utilizing digital technologies (such as SEO) to increase reach and conversions. Visit his website http://contentdoctor.net/.