Helping entrepreneurs conquer fear and launch with confidence with Ross Buhrdorf

Speaker A: We have built a embedded accounting solution for our customer base. Now, they could grow out of that and go to Intuit, that's fine. And use QuickBooks. We're cool with that. We don't want to limit that. And in fact, we even let them use a different bank account that can integrate with our invoicing product, for example. So we're always looking for the best solution. And we use Gusto, for example. We're never going to do what Gusto is. We're always going to partner. And that reason is that Gusto's the number one provider in that. And I'm not just plugging you, Brian. I certainly am, but it's the truth. I think it would be insane for us to do. And so we're looking for the best solution to partner with.

Speaker B: Welcome to the SMB Tech Innovators podcast. Powered by Gusto. On this show we explore the intersection of fintech, vertical SaaS and how software combats the rising complexity of running a business. Our goal is to share stories, advice and best practices from the leaders and innovators, investors behind today's cutting edge platforms. This episode of the SMB Tech Innovators podcast is brought to you by Gusto Embedded. Gusto has spent a decade building and testing its payroll tax filing and compliance infrastructure, which is available as a robust set of APIs so you can develop custom tailored payroll solutions. For more information, go to embedded.gusto.com here's your host, Brian Bush.

Speaker C: Um, on this episode of the SMB Tech Innovators podcast, my guest is Ross Berdorf, CEO and founder of ZenBusiness, an all in one platform for small business owners that consolidates the tools, services and expert support needed to start, run and grow a successful business. Ross, welcome to the show.

Speaker A: Thanks, Brian. I'm excited to be here.

Speaker C: I'm excited to dig into this one as well. I want to start with your background a little bit. So before founding Zen business, you were the founding CTO, I understand, of HomeAway. So can you tell us a little bit, maybe holistically, your entrepreneurial journey and particularly what led you to create ZenBusiness?

Speaker A: Yeah, I have always been an entrepreneur. I grew up, my parents were entrepreneurs, always had a side hustle in addition to their their regular job. And I can remember myself, I grew up in Nebraska, shovel and snow. I'd wait until it would snow and then I'd go around and shovel Snow and charge $1020. So I have always been an entrepreneur. Early on in technology, worked at Tandem Computers. We created the first fault Tolerant Unix box. That was very much an entrepreneurial thing. Although it was a big company and then from then on just was bitten by the startup uh, bug. So it always been at startups, HAL Computer Systems. I don't. People probably don't remember that that was the last computer built from the ground up in the. On the face of the planet that we sold to Fujitsu. And then was it excite.com search engine days. And then through a couple. Plenty of failed stuff and plenty of bad ideas. That's how you know when you have a good idea. And then landed at HomeAway, which was a great idea where we consolidated the vacation rental market across the planet. 28 acquisitions. It really cured me of wanting to be a CTO after I did that, if you can imagine integrating all those companies. And we bought a company in Marseille in, in France. And the database that ran that vacation rental company was primarily used at dental offices.

Speaker C: Oh my goodness. I feel like glutton for punishment is the. Is the thought that comes to mind when you describe that task as cto.

Speaker A: That's right. I got uh. And that was a great run we did. We, it was a fabulous team. We really created the vacation rentals market and did an IPO, raised a bunch of money, IPO'd and then ultimately sold it to Expedia for $3.9 billion. My plan was to take a year off. I made it 10 months and I tricked some of my colleagues to come over and we started up Zen Business. And Zen Business was really just looking at the marketplace and the players that were in the marketplace. And the thesis always from the beginning was hey, small business owners really need a leg up and they really need a consolidated all in one platform. That was the thesis from day one. Now we started out in formation as the entry point into the, to the market. We've branched beyond that, but that's still uh, very much a core. What we do is formation, compliance. Making sure you've got everything set to get off on the right foot. And then what is immediately adjacent to all that compliance is all the financial services, taxes and accounting. You can say that those are also compliant things. You need to keep your finances separate and track those. And then of course everything around the website and marketing and we do it all to get customers up and running. And uh, I'll put the last plug and we can stop talking about Zen Business. We are all in on AI. All this data that we have, which is pretty rare for small businesses because they've created it with us and because we have all Their financial transactions and tax transactions, we can really provide them with assistance. That is mind blowing because it's not just a generic LLM, it's an LLM that has already populated with all their data. So when we come up with a marketing plan or a competitive analysis, we know their demographic, we know where they live, we know exactly what they're building. We can really come up with some powerful, we call it do it for them. Our customers don't care about AI, uh, they just want it done. And so when we can do that forum, we can really make a difference because their biggest issue is time.

Speaker C: Yes. Let's dig into a couple examples while we're on that. Does that show up as, hey, if you offer called a website in a box for my new small business, does the AI help you write website copy? Does it help you categorize those early financial transactions and start to get your general ledger in order? Like I hear you on the do it for me. And I think that's something we hear all the time from small business owners. But I'd love a couple concrete examples of where that actually shows up in the platform.

Speaker A: Well, I think that right now, where it shows up in the platform, one of the things that's very popular is a marketing plan. Right. So folks want to know, okay, uh, especially in our segment because they're primarily first time business owners is okay, how do I market this? We've got a simple push button and it comes up with a really good marketing plan based on all the data that we have about them, how they should market their product, what they should charge for it, the competitive analysis. So that's a pretty big feature and functionality. We also have which is very popular, we have a search on the website. I'm a CTO gone CEO. I don't know if that's good news or bad news, but it was the last stop for me. I knew I didn't want to be a cto, so I had no other choice. But I still get very involved. And so Alex, our CTO and I, from the very beginning, what Alex and the crew have built is both internal infrastructure like for cs, for product, for operations, and the product that goes out to the customer. It's the same data store. So everything that goes in from our customers, from our calls, from our phone calls, from chat, everything is fed in there. Everything that we put out from a product point of view, that goes through confluence in the wiki and so then that comes out in the product. So if there's a question that a customer has, they can type in a query and we can pull out all of our data with the custom LLM that's built against that data store and give them a great answer. What's my ein? Why do I need an ein? Do I need this document in this state? Can you help me reset my password? So all of that is built from the ground up and that really makes for a powerful and seamless integration. So when the product folks and the engineers are building something, it's a single data lake.

Speaker B: Yep.

Speaker C: And that's really interesting. You mentioned a lot of your customers are first time small business owners. And what I hear you saying is a powerful way that I can trouble for folks is just good answers to for somebody who's done this before, what seem like the basic questions. But if you've never run a business before, these are really important questions that you don't naturally know. You got into this presumably to say, pursue a craft and now here you are having to figure out how to do your incorporation or why do I even need a state tax registration, all of these sorts of things. And if you have copilot who can answer those really effectively for you, that can become a really powerful tool to help somebody grow their business faster.

Speaker A: Yeah. And in fact, Brian, I'm gonna. You're gonna get. And this is where I would definitely go. When is this podcast going to come out? In a couple weeks. Good, good. So between now and then, we're launching a new AI feature which I think will revolutionize. So you're getting the key, you're getting the first one on this, that it is a key feature where you can, you're familiar with the Buy now button on Amazon. So we have built the form now button or the equivalent of the Buy now button for formation. So you click a button and we can deliver a formation for you using our AI platform. So that's truly revolutionary. It's truly, you know, where the industry is going and it's the ultimate in. We do it for you.

Speaker C: Russ, let's talk about who your customers are just a little bit. And I'm particularly curious if it's the same type of small business customer when you started Zen business as you're serving today. And what I mean by that is at gusto too, we talk about SMBs across the country as if there's one thing which is absolutely untrue there. Each business is a universe unto itself. But there are definitely different categories from folks like ZenBusiness who are technology startups, plan to grow very aggressively. There are folks more in the solopreneur category who kind of want to stake out and just do what they love and do it independently. There are folks for whom it's a side hustle. So I'm curious who is the typical small business that that's using your platform?

Speaker A: Brian, I know you get this answer or get this question that too and I'll give you my answer. Zen business serves the U.S. marketplace. So you can go to the uh, Small Business Administration and see the formations, what kind of formations they are or to the IRS and see what EINs are being created. That's us. So we are the general market for the US economy. And I'll just look over here. I've got this stat over here. I always bring up that SMBs employ half of the Americans. People don't know that this is 43.5% of the American GDP. And entrepreneurship, that bug has been, has doubled to the pre pandemic levels. So this is a big trend. More and more people are doing a side hustle in addition to their job. I think with the current economic conditions we think that's going to be even a bigger push into it. This is America. This is everyone from folks that, that mow your lawn to clean your house to professionals that help you with your SEO on your website to your marketing. It's everything in between. Now we much I uh, hallucinate that Gusto does this too. Just generally because the market primarily a service based economy in general the economy is about 80% plus service based. So we get a lot of service based business. There's still a lot of E Comm and we get folks that create entities to protect assets. So real estate or cars or boats or stuff like, like that for the legal protection. But it's the American small business economy is who we serve. Now it's particularly 10 or less employees. But Brian, that is the bulk of small businesses are those size companies. And so it really. I uh, remember when we were raising money the VCs would ask you questions trying to get you to go up market. I know you guys certainly do that. And I said what up market? The market is 10 or less employees. Yeah, that's where it is. The opportunity is here. And so that's what we really never try to get misdirected. That's our customer base, that's who we serve. Those are the folks that come to us and count on us to do a great job for them.

Speaker C: Yeah. And so Ross, I'm curious how you see, call it boundaries of the platform if you will or uh, where that idea of all in one sort of starts and ends. And what I mean by that is, hey, for say a 10 person business, do you have a sense of they can run literally their entire business just out of Zen business? Are there certain industries where you start to say we do need some integration points to some specialized tools because of X, Y, Z? Do you see some folks who grow beyond say that 10 employee marks and you find ways to keep serving them? There's just so much diversity in the SMB population. I'm curious how you think about where the boundaries of what all in one means for Zen business.

Speaker A: Yeah, we think of that on two, uh, aspects. Number one is we are here to provide the best solution for our customer. So we never want to lose track of that. Now our core of our business, what we absolutely dominate is formation and compliance. We are the best on the planet, ah, at that. So we make sure we build all of that and when then you move into what we also consider compliance, which is taxes, accounting, banking, all the financial services. That back end, we partner with some folks there, but it's not, it's because they do a better job than us. For example, we use 1, 800 accountants to do live accounting. We don't want to become a service business that, that deals that actually has staff that talks to people on the phone because 1, 800 does the best job at that. So we partner with that. But we have built a, uh, embedded, you know, accounting solution for our customer base. Now they could grow out of that and go to Intuit, that's fine. And use QuickBooks. We're cool with that. We don't want to limit that. And in fact we even let them use a different bank account that can integrate with our invoicing product, for example. So we're always looking for the best solution. And we use Gusto, for example. We're never going to do what Gusto is. We're always going to partner. And that reason is that Gusto's the number one provider in that. And I'm not just plugging you, Brian, I certainly am. But it's the truth. There's stuff like that we, I think it would be insane for us to do. And so we're looking for the best solution to partner with. And where does the boundary on the other question, like what do we do? And I think it's just, it's fundamentally we want to get you started off on the right foot, make sure that you've got your, your I's dotted and your t's crossed because if you goof that up. It's a big problem. And make sure you're compliant, have all your licensing and all your compliance. And then a big part of what we do then it's a whole financial services, fintech services with the banking, accounting and taxes, which is also stuff that we consider compliance. I know we don't think about it this way because it's second nature, but paying your taxes is a compliance thing. It's not a, it's not a thing like oh, I want to pay my taxes to build you run your business.

Speaker C: It's complying with the laws of the land.

Speaker A: That's right, that's right. Those are the boundaries for us. Now people want payroll. We haven't built out a payroll solution but we're looking to partner with. That's something we would definitely partner with. We provide extra insurance as far as uh, our insurance provider. We're never going to be an insurance company at. We never want to be an insurance company. But we want to provide the best solution for our customers. So it's curated and I think that's what our customers count on us to secure it, a solution for them.

Speaker C: So Ross, maybe quickly putting your CTO hat on when you make an acquisition like Joust and I think that became Zen Business Money Pro or you're building. You mentioned an embedded fintech, I think a bank account built on another embedded fintech platform. Let's get into the nitty gritty. Just quickly on the technical side, what do you look for from a partner,

Speaker A: a good partner for number one, and I don't mean to be flippant with respect to that. We have a Zen business acquires customers through affiliates. We have these partnerships and I'll just use the One800 partnership we developed with them. We took it to the next level in our industry and that's based on a long term close personal relationship we have with those folks. And so it's important that we treat our partners and our customers and our employees in this very upright and honest fashion. So that's super important. Then we get that reputation and we work with those kind of reputable partners and then you don't have to worry about any of the crazy other stuff. So then you can get down to work. Now the second piece is, I think is we're looking for the best solution for our customer. We're looking for modern technology that we can integrate with APIs. We have a set of APIs that we're building out. Some are better than others but, but we're building that out and that's what we expect from our partners, too. And then I think the last piece I'd add to that, Brian, is given that we are this platform that integrates other folks, there are some situations where we just link off, but it's very few. And even with the link off ones, we want the data back. And we want the data back so that we can pull it into our platform so that the customers can stay on platform.

Speaker C: Yeah, I feel like, Ross, what I'm hearing you say is a strong technical foundation, whether it's the APIs or how you're going to integrate. Two is there's got to be full loop of that data precisely going back to the top of the conversation, feeding back into a holistic picture of who is the Zen business customer, whether it's to feed AI or just serve them better. But three, I feel like you actually started with the thing that matters most, which is this. A partner with whom we can uphold our quality or high standard of customer experience with. Do they share a value with us? Are they committed in an equal way, not just to making money with this endeavor, uh, but to a, uh, customer experience that will actually help our small businesses.

Speaker A: Perfect. And I won't mention names, but we've made plenty of partners better because we're like, hey, we're getting calls. This is not working, you guys. You're not making it your SLAs. And most of our partners have made us through that.

Speaker C: I want to change gears just a little bit. ZenBusiness offers a breadth of functionality, services, expertise. How do you think about. I kind of want to phrase this as driving acquisition of more of that functionality or upsells, but maybe the better way to phrase it is actually, how do you think about that customer journey to. From somebody starting with, hey, that button formation through to using the breadth of functionality. Are you trying to actively encourage or push folks to use more of that functionality? Is that, uh, type of metric that you look at, or do you take it as more of a passive, hey, we have the menu available to folks and we trust those business owners to pick what makes sense for them.

Speaker A: Yeah, I think you laid it all out there. I think on the spectrum, we, we actually, we survey our customers and we ask the question of all of our customers, do you feel like we're pushing product on you? And they come back and they say, no, I do not feel like you guys are pushing product on us. And that's what we want them to have that experience, while at the same time we make, uh, everything available to our customers. And I'll Coming back to technology, Brian, we have a distribution engine built into the platform that now is becoming it used in the old days it was just a distribution engine where the 10 channels within the product or the 10 different places we could sell it within the product. We had a uh, if then engine or logical engine that would take data and say, okay, Brian needs to buy this now because he has this and we saw him start paying gusto so he must have employees. Let's see if we can uh, lend him money that or sell him work versus competition. Yeah, you got it. That used to be an if then engine. Now it's AI enabled. And so that whole distribution engine is pretty sophisticated even to the point Brian, where we have. I'm no longer in it, thank God. The product people on a monthly basis because each different product wants their bite of where they get distributed. They'll sit and they'll sit with the uh, financial folks and say, okay, hey, we need to sell this product here, so they're going to get that position, etc. Do the distribution or what's working, what's not working. And in addition we have a sales team and then of course all the email marketing and retargeting and everything. So all of that enables us. It's a long way to say, Brian. It enables us to hopefully give the customer a great experience in that they get presented with stuff that will actually convert. That's what we want. But we want it to convert because they're going to actually use it so that they don't churn and so that they engage. So that's the way we do it. I know I'm. It's not as elegant as I made it sound, but it is in there. We actually do distribute product. We do our upsells through that mechanism.

Speaker C: Yeah. If I can recap, I feel like I'm actually hearing a pretty comprehensive product LED growth motion, that uh, distribution engine that you talk about different channels in app to expose customers to new products and hopefully get them to acquire complimented by a sales team, marketing tactics, so on and so forth. But I really like what you started with which you're trying to calibrate that line and you never want to go over customers feeling like you're just pushing products. Like all of these motions have to build up to something that feels helpful, useful. Almost as if Zen business is saying, hey, we're one step, just one step ahead of you in this journey. Are you thinking about X just yet?

Speaker A: That's right. And then come full circle. Now Brian is all the AI Enablement. Now with the, uh, Zen business COO assistant, we can make recommendations. Hey, this is what we think you should be using an HR system at this point. If you're not, here are your options, here's one that's appropriate for you, et cetera.

Speaker C: Yeah, I love that. Going back to the idea of at the end of the day you're helping somebody who maybe didn't, uh, they wanted to pursue a craft but didn't necessarily want to check all the other 17 boxes. Compliance wise that it takes to run a business. You can see how that's really helpful. I'm curious if that fits into your idea. I feel like of the three boxes we talked about tools, services and expert guidance, so to speak, or expert advice. Is that how you feel like that shows up in Zenbusiness? Is it, uh, is that more tactical? You mentioned 1-800- accountant and the ability to talk to an accountant or bookkeeper along the way. Like where does that notion of trusted or expert guidance show up for your customers?

Speaker A: We have the highest trust pilot score in the industry and we view our customer success team not as a cost center but as a pillar of the business. They are, I want to say I hope there's customers probably listening, but our CS team is our number one customer and then our customers are our number two customers. And the view is that if we treat those folks great by providing them a great product that they have to service great internal tools, then they'll do a fantastic job with our customers. And they do. And all those folks love working here. We have a low turnover rate and we truly believe. I'm on the. I'm answering calls. I'll let a secret out here. Mark Cuban is sending any complaints that get sent to him, they come directly to me and we handle them. They go back to Cuban and we handle them for him. He's very customer support oriented and so are we. I see every review that comes by the website. When you form a business, this is long winded. You're finding out that is a critical time and there are a lot of complexity, a lot of questions and a lot of uncertainty. We do a great job getting you through the product, making it simple and easy. But there are some things. Hey, what's this mean? People can call us up, they can chat, they can email, and we'll answer their questions. And that's where it really pays to be available. And we want to be able to answer the phone for everybody. And we are geared up and this is a big deal for people. It's when we Surveyed our customers. The thing that comes out is you think, oh, I want to become wealthy and super rich and starting a business. That's not it. That's not. That's a like a number two or three. They want to make enough money so that they can afford their lifestyle so that they can have some freedom and some security financially. That's not about getting super rich. That's about getting a side hustle. Hustle that works or that get being able to fulfill their dream. So it's very much an emotional thing for people to make their dreams come true. And that's why we give out grants for example. Brian we give out grants. We have an internal team that rotates through the whole company. You can be a part of this team that grants. Grants. This is free cash we give to our customers and we get love letters from them all the time. That would make you cry. We get customers crying on the phone. You've changed my life. Thank you so much. So we really take it to heart that this is a big deal for people and we have to treat them that way and that's our goal. It would be. We would feel heartbroken if someone had a bad experience that was, that was a decent customer. Sometimes you get bad customers and there's nothing you can do with that. But we would never want to let anybody down.

Speaker C: Ross Almost as a sidebar, you got to say it's really fun to talk to somebody or a company that has a similar passion for small business. I see Gusto does something called the Impact Awards, very similar to the grants program you just described. Our founders parents were all entrepreneurs, ran small businesses. You talked about that as your background. There is something. There are just a number of similarities I'm hearing throughout the conversation on that emotional level. But I also think the other thing that you got to a little bit and how it shows up as a service. The term that's in vogue is rather than software As a service SaaS, it's service as a software that's becoming sort of the new idea. And I feel like that's a bit what you're talking about. Uh, the technology and the platform underlie in some sense the ability for those CS team members to be great advisors to customers to really put forward helpful, worthwhile advice. Whether it's about how to use a feature or what feature to use or just how to think about running a business. As you mentioned, these days all fed by AI. But I feel like you're describing what's becoming a very in vogue term and it's something that you all have been doing probably for a few years now. Ross, I want to start to close this episode, but two questions to wrap up as you look ahead, what do you think are the biggest challenges and opportunities for new entrepreneurs over the next few years?

Speaker A: Well, I think it is. Our company is coming up on 8 years old. When we started, Brian Gusto wasn't that old. Eight years ago wasn't that old. And we had the experience of like, when we're putting this platform together, we'd go out and look for partners and the partners would be like, your customers are too small. We charge $400 a month. And I'm like, our customers won't pay $400 a month for that feature. They'll pay $40 a month. And that was our experience was like, there wasn't reception. And then the pandemic hit and it was right around that time everybody started shifting. What in that time was down market. Where you and I were already at was down market. Everybody's got to be mid market. And so I, uh, think the biggest change is this tidal wave of entrepreneurship and dealing with being able to provide solutions and all of the vendors and ah, SMB going quote down market or where the market is with these small businesses, that has changed because there's a huge opportunity. And I like to use the analogy of in Hollywood, no one actually, I'm convinced no one actually works at the big studios. There's just five or six executives and everyone else is a consultant or a contractor. And they really have led the way of this distributed contract based economy, which is where everyone's going and everyone is becoming a consultant, contractor, or doing their own thing. Everyone outsources their private and personal life. Just big corporations outsource. We outsource everything that we can. That and Gusto exists for that reason. We exist for that reason. You used to go to attorneys, now you go to us for it. So I think that's the big tidal wave is the pandemic kicked it off. Now everybody has the ability to start their own business and really be competent and have companies like us do it for them so that they can live their passion. I think that's the big thing. The biggest challenge I think is I'm writing a book about the biggest challenge. Uh, the title of the book is Fear is a Liar. And I think the biggest challenge for folks and we surveyed it is Here again is a, is an emotional challenge is can you conquer yourself to be an entrepreneur? Can you deal with the, the boogeyman? Can you deal with the, the internal fears or God knows there's a lot to be fearful of in the world. But can you get past that and just get your side hustle going and ignore that, all of that noise and get focused on being successful? And I think that's, I think, Brian, it's 80% an, um, internal journey and with all the information and now AI, all the how to is out there.

Speaker C: Yeah. Ross, we always wrap up with advice on this show, but I feel like you just gave it to us. Besides, when it comes out, folks should check out your book. What I'm hearing from you is jump in, follow a passion, find great partners to help you run the business so you can do that compliantly, but really focus on build a tool set to conquer that fear, that self doubt so that you have the motivation, the energy, enthusiasm to show up and pursue that passion the way you want to. Ross, thank you so much for joining us today, sharing your insights and your journey. Before we wrap up, if listeners want to connect with you, go deeper, have additional questions, what's the easiest way to reach out to you?

Speaker A: I'm on all the channels out there, but, uh, you can just send me an email@rossenbusiness.com Ross, thank you again.

Speaker C: We really appreciate your time today.

Speaker A: Thanks so much, Brian. Great talking to you.

Speaker C: Thanks again for tuning into this episode of the SMB Tech Innovators podcast. We'll make sure to link to any resources that were mentioned in today's show in the show notes. Please. Also feel free to leave us a review wherever you listen to your podcast or to connect with the Gusto embedded team via LinkedIn. In particular, we'd love to hear any future guests you'd like us to have on the show. Thanks again for listening and keep a lookout for the next episode.