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San Francisco, CA
Josh Reeves
Home  >  Companies  >  Gusto
Cloud-based payroll, benefits and human resources software for small businesses operating in the US.







Growth Rate (y/y)








Gusto’s revenue has increased steadily over the last three years and hit roughly $260M in 2021. Gusto’s revenue has two components:

  • High margin subscription revenue from SMBs using its payroll and HR services
  • Low margin commission revenue from insurance carriers for selling medical, vision, dental, and life insurance

Gusto also makes some revenue from interest earned on funds held for customers and payroll APIs, which allow other companies to launch payroll services using Gusto’s payroll product. Gusto has 200,000+ customers, ~3.3% share of SMBs (6M SMBs) and ~14% share of SMB employees (43M SMB employees).



Gusto has raised $696.35M and was last valued at $9.5B, with a valuation/revenue multiple of 36.5x. This is higher than legacy enterprise payroll companies like ADP (6.1x) and Paychex (11.4x), though these companies saw flat revenue growth in 2021 while Gusto grew at about 58% YoY.



Gusto was launched in 2012 by Josh Reeves, Tomer London, and Edward Kim as a payroll product for SMBs that replaced paper-based payroll with a modern, web-based UI. Gusto gave both companies and employees a web portal that they could use to check up on payroll, update their information, download their pay stubs, and more. Today, there are three core aspects of the Gusto’s product: payroll, ecosystem, and fintech.

Payroll: Payroll is Gusto’s core product with features for SMBs such as automated tax filing with the Government agencies, integrations with other SMB tools such as Xero, QuickBooks and Clover, and easy to understand pricing. Initially built only for employees, Gusto’s payroll product now also allows paying contractors in 80 countries.

Ecosystem: Gusto has used the employee portal to expand into HR services such as hiring & onboarding, time tracking, tax, insurances, and other benefits. Benefits are offered as bolt-ons to all pricing plans. Acquisitions like Ardius (R&D tax credits) and Symmetry (tax-withholding compliance) plug into the core payroll product but offer additional services on top.

Fintech: Gusto Wallet is a free mobile app for employees of Gusto’s customers that provides banking services/debit card and financial wellness features such as access to funds before payday. Provides Gusto with a source of high-margin revenue.



Gusto is an SMB-focused payroll product that has expanded into adjacent services through strategic acquisition and an ecosystem approach, primarily by partnering with companies that integrate with payroll. In contrast to Gusto are all-in-one HR solutions like Rippling with ambitions to eat up every people-related use case, including e.g. IT and expense management—but which don’t integrate with as many other services in turn. On the other hand, there are the enterprise payroll companies like ADP and Paychex that have SMB starter products.

Enterprise payroll companies: Two of the largest players here are ADP ($91B market cap) and Paychex ($46B market cap) which represent about ~20% of SMBs between them. They sell their SMB solutions, ADP RUN and Paychex Flex, via a SaaS-style pricing model similar to Gusto.

All-in-one HR solutions: Rippling and TriNet are two of the largest competitors in this space and both offer more feature-rich products than Gusto. Like Gusto, Rippling, started from payroll but has aggressively scaled-up to become an all-in-one HR solution that manages employee onboarding to offboarding.

TriNet and Rippling can both offer more services as PEOs (Professional Employer Organizations). By co-employing employees in a single pool, they can get scale economics on benefits and insurance plans and critically, make it easier for companies to hire remotely.

TAM Expansion


Embedded payroll

Gusto is offering payroll APIs through Gusto Embedded Payroll to SaaS startups such as Vagaro (salon and spa) and Houzz (home redecorating), and companies adjacent to payroll such as Xendoo (bookkeeping) and Timesheets (time tracking). Gusto can expand APIs to offer full stack HR services to SaaS companies that want to be more deeply embedded in their customer’s workflows.


Gusto is offering direct paycheck deposits, cards, and interest bearing accounts through Gusto Wallet and can expand into investments, lending, and P2P payments. Employees regularly use Gusto’s employee portal for pay stubs and benefits, which makes it easier for Gusto to sell them financial services, an advantage over other neobanks such as Chime, Acorns, and Juno. Banking products also provide Gusto another higher margin revenue stream.

Global payroll.

COVID accelerated the trend of remote employees/contractors spread across different countries. Today there's an 83% increase in job posts mentioning time/location flexibility in 2021 compared to 2019.

Deel, which started out focused on the use case of paying international contractors, has raised $629M behind its vision of a unified platform for both global and domestic payroll. Gusto’s recent acquisition of Remote Team (HR services for international employees) can help it scale up, but given that it’s coming from behind, its upside may be limited.


Scaling an ops-heavy core business: Payroll products like Gusto are operations heavy, and therefore the quality of the customer experience is partly dependent on the specific representatives that a team ends up dealing with. This poses a risk to Gusto’s ambitions to scale, because it’s difficult to scale a consistent user experience for an ops-heavy business.

Commoditization of payroll: Vertical SaaS products and other adjacent companies to Gusto can use API rails from the likes of Check (backed by Stripe; valuation: $725M), Pinwheel (backed by Coatue; valuation: $500M) and Atomic to integrate payroll and back-office functionalities just as they use BaaS startups like Bond, Lithic and Highnote to integrate card issuing and various fintech features.

Joshua Reeves
Edward Kim
Co-Founder & CTO
Tomer London
Co-Founder & CPO
Alyssa Dawson
Chief Legal Officer
Danielle Brown
Chief People Officer
Tolithia Kornweibel
Mike Taylor




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