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Retail Trading Infrastructure
Jul 6, 2023
Kevin Busque and Steven Wu, CEO and CFO of Guideline, on the 401(k) and payroll ecosystem
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Guideline is a startup that provides a platform to manage employer-sponsored retirement accounts and payroll integrations. Kevin Busque and Steven Wu, its CEO and CFO, discuss how the company uses its proprietary tech to navigate from the industry-standard asset-based fee structure for investment management to a subscription-based model. They share their insights on how Guideline is disrupting the space by charging below the industry average of 1.5%, how it distinguishes itself from traditional players, and what the next five years will look like for the company.
The following interview was conducted by Sacra—April 2023
Background
Kevin Busque and Steven Wu are the CEO and CFO of Guideline. We talked to Kevin and Steven about the role that 401(k) providers like Guideline play in the growing app store ecosystem of payroll providers, the business models of 401(k) plan providers like Fidelity and ADP vs. the emerging models of companies like Guideline and Human Interest, and what Kevin brought to Guideline and learned from his experience founding TaskRabbit.
Questions
- Kevin, you previously co-founded TaskRabbit. Can you talk about your experience founding a seminal gig economy company and how that inspired you to start Guideline?
- Can you talk about the 401(k) space before Guideline and draw a distinction between 401(k) space after Guideline? What made the 401(k) space an attractive market to operate in as an entrepreneur?
- Guideline charges employees a 0.08% fee on assets and charges companies USD 49-USD 129 per month. Can you break that down to how it compares with the legacy players?
- What was Guideline’s initial product-market fit and how did you acquire your first 100 customers?
- Guideline partners with payroll platforms like Rippling and Gusto to power integrated 401k offerings. Are payroll partnerships the primary way that Guideline acquires customers? What does it take to be a preferred provider? What stops Rippling and Gusto from offering their own solutions?
- Once a business chooses a provider, the product is sticky and churn is low. Can you talk about the retention dynamics, what if any breakpoints there are where it’s natural for a company to switch providers and how Guideline thinks about winning business away from other providers?
- The end-user employees of 401(k) products may not always have control over the choice of retirement plan. Can you elaborate on this point, specifically regarding how you aid employees while recognizing that the ultimate decision-making power may not rest with them? Can individual employees have a meaningful say in selecting the 401(k) program?
- From a buyer perspective, how do you position yourself in a space now with companies like Human Interest and InvestWell?
- Can you talk about the decision to offer products to businesses and individual savers all in one? Along with that, can you talk about the importance of building a consumer brand in 401(k) that people can recognize?
- Can you just talk about your vision of going upmarket, getting into bigger companies, and then where do you see opportunities for adjacent expansion for Guideline?
- In five years, if everything goes right for Guideline, what does it become and how has the world changed as a result?
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