Gusto

Drata

Gusto

Gusto charges a monthly base fee plus a per-employee fee. The Simple plan starts at $40/month plus $6 per employee per month.

Plus and Premium tiers add features like time tracking, PTO management, and dedicated support at higher price points.

The per-employee pricing creates natural revenue growth — as customers hire more people, Gusto makes more money without any additional sales effort. This aligns Gusto's success with their customers' growth, which is a beautiful incentive structure.

Additional revenue comes from embedded financial products. Gusto Wallet (employee banking), Gusto-run health benefits, 401(k) administration, and workers' comp insurance all generate fees.

The payroll platform becomes a distribution channel for financial services — once you process payroll for a company, you have a direct relationship with every employee and can offer them financial products.

Drata

Drata charges annual subscriptions based on the number of compliance frameworks supported and the size of the organization. Pricing starts around $12,000-$15,000 per year for startups doing a single SOC 2 audit and scales into six figures for large enterprises managing multiple frameworks (SOC 2, ISO 27001, HIPAA, GDPR, PCI DSS, etc.).

The value proposition is clear: companies spend $50,000-$150,000 on consultants and hundreds of engineer-hours on manual compliance annually. Drata replaces most of that with software that costs less and runs continuously.

The ROI calculation sells itself.

The platform integrates with 100+ tools (AWS, Azure, GCP, Okta, GitHub, Jira, Slack, HR systems) to automatically collect compliance evidence. This means customers don't need to change their existing workflows — Drata observes what they're already doing and maps it to compliance requirements.

Gusto

Josh Reeves, Edward Kim, and Tomer London were Stanford engineering graduates who noticed that every small business owner they talked to hated the same thing: payroll. Running payroll meant calculating federal, state, and local taxes, filing quarterly returns, issuing W-2s, managing direct deposits, and dealing with an alphabet soup of compliance requirements (FICA, FUTA, SUTA).

One mistake and the IRS sends a penalty notice.

The existing solutions were terrible for small businesses. ADP and Paychex dominated the market but were designed for mid-to-large companies.

Their interfaces looked like they were built in 1998 (because they were). Their pricing was opaque.

Their customer service required calling a 1-800 number and sitting on hold. Small businesses with 5-50 employees were dramatically underserved.

The trio founded ZenPayroll in 2011 (rebranded to Gusto in 2015) with the mission of making payroll dead simple. The first version was a clean web interface that let business owners run payroll in a few clicks — enter hours, review the numbers, hit submit.

Gusto calculated all taxes automatically, filed them with the government, and sent direct deposits. What used to take half a day took five minutes.

Drata

Adam Markowitz had a front-row seat to compliance hell. As the founder of a previous health tech startup, he spent months manually collecting evidence for SOC 2 and HIPAA audits — taking screenshots of security settings, documenting access controls, filling out questionnaires.

The process was entirely manual, mindlessly repetitive, and had to be redone every year.

His brother Troy Markowitz and friend Daniel Marashlian had similar experiences. Every startup that wanted to sell to enterprises needed SOC 2 compliance (a security framework), and achieving it typically meant hiring consultants at $50,000-$100,000, assigning engineers to collect evidence for weeks, and praying that nothing changed between when you collected the screenshot and when the auditor reviewed it.

They founded Drata in January 2020 with a simple insight: most compliance evidence is just proof that security controls are configured correctly. And since those controls exist in software systems (AWS, Google Workspace, GitHub, Jira), you can check them automatically via API.

Instead of a human taking a screenshot to prove multi-factor authentication is enabled, Drata connects to the identity provider and verifies it continuously. The compliance audit becomes a live dashboard instead of a binder full of screenshots.

Gusto

Gusto grew by being the payroll platform that accountants recommended. Accountants manage payroll for thousands of small businesses, and Gusto built a dedicated Partner Program for accounting firms.

When a CPA recommends Gusto to all their small business clients, that's efficient distribution at scale.

The product-led growth motion is strong. Gusto's clean design and simple setup meant small business owners could sign up, enter their employee information, and run their first payroll without talking to a salesperson.

Free trials converted at high rates because the alternative was going back to manual calculations.

Expanding from payroll into HR, benefits, and financial services followed the natural workflow. Once Gusto ran payroll, adding benefits administration was a natural upsell — the same system that calculates pre-tax deductions can also manage the benefits that create those deductions.

Drata

Drata grew through the startup ecosystem. Every SaaS company selling to enterprises eventually needs SOC 2 compliance, which means every startup is a potential customer.

Drata became the default recommendation in founder communities — YC companies told other YC companies, one startup's security team recommended Drata to their friends at other startups.

The sales cycle is short because the pain is immediate. A startup loses a deal because a prospect requires SOC 2?

That startup signs up for Drata the next day. The motivation is revenue — compliance is a gate to enterprise sales, not an abstract security exercise.

Partnership with audit firms was strategic. Drata works directly with audit firms who can use the platform to conduct more efficient audits.

This creates a two-sided network: companies use Drata to prepare for audits, auditors use Drata to conduct them faster. Everyone wins.

Gusto

ADP and Paychex aren't going to cede the small business market quietly. ADP Run is their small business product, and they've been modernizing it aggressively.

ADP has 70+ years of trust, massive sales teams, and relationships with every accountant in America. Gusto has a better product experience, but ADP has distribution that's hard to match.

Rippling is the most dangerous competitor. Parker Conrad (Rippling's CEO) is building an "all-in-one" HR/IT/Finance platform that includes payroll alongside device management, app provisioning, and expense management.

Rippling argues that payroll should be one feature in a broader system, not a standalone product. If companies buy Rippling for IT management and get payroll included, Gusto loses the deal.

Moving upmarket is hard. Gusto's sweet spot is companies with 1-100 employees.

Larger companies have more complex needs — multiple pay schedules, union rules, multi-state compliance, custom integrations — that Gusto's platform historically hasn't handled as well as incumbents.

Drata

The compliance automation market is getting crowded fast. Vanta (Drata's most direct competitor) raised similar amounts of funding and targets the same customers.

Secureframe, Sprinto, and other startups are also in the space. Differentiation is increasingly difficult when every platform connects to the same integrations and automates the same frameworks.

Expansion beyond startups is the growth challenge. Drata's core market is startups and mid-market companies doing their first SOC 2 audit.

Enterprise organizations have existing GRC (governance, risk, and compliance) platforms from vendors like ServiceNow, RSA, and OneTrust. Moving upmarket means competing against entrenched vendors with deep relationships.

AI could disrupt the category. If AI assistants can automatically fill out security questionnaires, generate policies, and collect compliance evidence without a dedicated platform, the need for specialized compliance software could diminish.

Drata is adding AI features to stay ahead, but the risk is real.

Gusto

Gusto Payroll — automated full-service payroll processing with tax calculations, filings, and direct deposits across all 50 states. Gusto Benefits — health insurance, dental, vision, 401(k), HSA, FSA, commuter benefits, and workers' compensation administered through the platform.

Gusto HR — hiring and onboarding tools, employee self-service portal, org charts, and document management. Gusto Time & Attendance — built-in time tracking with PTO management, holiday calendars, and overtime calculations.

Gusto Wallet — a free employee financial wellness app offering early wage access, savings accounts, and financial planning tools.

Drata

Drata Compliance Automation — the core platform that continuously monitors security controls across 100+ integrations and maps evidence to compliance frameworks like SOC 2, ISO 27001, HIPAA, GDPR, and PCI DSS. Drata Trust Center — a public-facing page that companies can share with prospects to show their compliance status and security posture, replacing back-and-forth security questionnaire exchanges.

Drata Risk Management — tools for identifying, assessing, and tracking security risks with automated workflows for remediation. Drata Vendor Risk Management — automated assessment and monitoring of third-party vendor security posture.

Drata AI Compliance Assistant — uses AI to help answer security questionnaires and generate policy documents automatically.

Gusto

Google Capital (now CapitalG) led the Series C. General Catalyst invested early and has been in multiple rounds.

Dragoneer, T. Rowe Price, and Fidelity participated in later growth rounds.

Y Combinator was the starting point (Winter 2012 batch). The company was valued at $9.5 billion in its latest funding round in 2022.

Drata

ICONIQ Growth led the Series C at a $3 billion valuation. GGV Capital led the Series B.

Cowboy Ventures was an early investor. Alkeon Capital, Salesforce Ventures, and Greylock Partners participated in growth rounds.

The company has raised $328 million total across multiple rounds.