Billion Dollar Unicorns: Gusto Gets Fresh Round Of Funding For Growth

According to an Allied Market Research report, the global cloud-based payroll software market is estimated to grow 7% annually to $10.3 billion by 2023. San Francisco-based Gusto is a Billion Dollar Unicorn in the industry.

Gusto’s Offerings

Gusto, formerly known as ZenPayroll, was founded in 2011 by Stanford alumni Joshua Reeves, Edward Kim and Tomer London. Gusto was founded when its founders realized the glaring gaps within the payroll processing solutions available for small businesses. Not only were the products inefficient, but also expensive.

To address the demands of the small businesses, Gusto set up a payroll tool that was aimed at simplifying the process for small organizations. Its services allowed organizations to process payroll, file taxes, integrate with financial software, and provide some employee self-help assistance. Inspired by the success of the product, Gusto expanded services and began selling other related services such as employee benefits, 401(k) retirement plans, 529 College Savings plans, and workers’ comp insurance for small organizations.

Today, it remains focused on businesses with less than 200 employees, and offers them payroll services with additional features including health insurance and 401(k) retirement plans. It boasts of a customer base of more than 60,000 companies, and believes that it can address a market of over 30 million small businesses in the country that employ nearly 48% of the American workforce.

Gusto’s Financials

Gusto operates on a subscription-based model. Subscriptions start from $6 per month per person plus $39 per month to a monthly fee of $12 per person plus a base of $149. Premium tier service comes with additional features such as employee offers and onboarding, managing paid-time-off requests, employee directory and surveys, access to certified HR professional, and access to an HR resource center. Gusto is privately held and does not divulge its financials. Its revenues and profitability figures are largely unknown.