Notable New SMB Initiatives from Gusto, Mastercard

We came across two interesting new initiatives from companies we closely track on Localogy Insider.

The first involves Gusto, the small business payroll and benefits provider. As a reminder, Gusto has been on the small business scene for now almost a decade (2011) having raised over half a billion dollars during that time and now valued at $3.8 billion according to Pitchbook. The company reports having more than 100,000 small businesses on its platform. 

Gusto’s latest move is a product that enables small business employees to access earned wages between payroll dates. You might think of this as a form of payday lending, without the exorbitant interest costs and fees. Some cocktail napkin math suggests as many as 500,000 small business employees (assuming five employees per company on the platform) could have access to the new offering. 

This strikes us as a pretty smart new offering from Gusto. Payday loans are a horrible business from the point of view of any individual who needs money before their regular paycheck is cut. By offering this service, we’d expect Gusto will earn additional advocates among its user base. As we have written and observed, building and leveraging customer advocates is super important in the SaaS space to lower customer acquisition costs (CAC) and reduce churn rates. The new offering is part of the Gusto digital wallet which enables employees to put aside money for savings purposes. 

Measuring ‘Digital Readiness’

We also track a lot of what Mastercard is up to with respect to small businesses. So we read with interest that the company launched its Small Business Digital Readiness Diagnostic Test tool that aims to help small businesses assess their digital readiness (as the name implies). As a small business myself, I took the test by going to this link.

The test covers the waterfront. That’s par for the course for tools like this. What we mean by that is the test is designed for both retail and service businesses. As such, the questions about inventory management for a services company are really quite irrelevant and strikes us as sub-optimizing the value to Mastercard (since we’re sure they use this data for prospecting) and to the business owner (since asking a service provider to comment on inventory isn’t helpful).

Nevertheless, the effort is commendable and might help some small businesses figure out the digital path they are on. The test includes about 20 questions and took about 10 minutes to complete. If they’re reading this, we’d suggest a more user-friendly scroll bar on the right. It was a very kludgy experience to move from question to question or section to section. 

So I took the test and got the results. The image below shows how the results are delivered. It wasn’t clear to us how well we scored. Did we do better or worse than the benchmark? Frankly, it’s pretty confusing. Making matters worse, the layout is not user friendly. To us, this seems like a well-intended effort by Mastercard. But with poor execution. 

 

More from Localogy

Mastercard Study: Digital Payments are the Now Normal

Gusto’s New Target: Health Insurance

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