Gusto

Instacart

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.

Instacart

Instacart operates as a marketplace connecting consumers with personal shoppers and grocery retailers. Revenue comes from multiple streams: delivery fees and service fees charged to consumers (typically $3.99+ per delivery), tips to shoppers (passed through, not revenue), retailer partnerships (grocers pay Instacart for access to the platform and fulfillment services), and advertising.

Advertising has become the crown jewel. Instacart Ads lets consumer packaged goods (CPG) brands like Coca-Cola, Procter & Gamble, and Nestlé pay for sponsored product placements within the Instacart shopping experience.

When someone searches for "chips," Doritos can pay to appear first. This is incredibly valuable because it's advertising at the exact moment of purchase intent.

Ad revenue was $871 million in 2023 and crossed $950 million in 2024.

The retailer partnership model is key. Unlike DoorDash or Uber Eats (which listed restaurants without permission early on), Instacart works with grocers as partners.

Over 1,500 retail banners including Costco, Kroger, Albertsons, and Publix have formal partnerships. Instacart provides the technology and shoppers.

Grocers provide inventory and stores.

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.

Instacart

Apoorva Mehta was a 26-year-old Amazon engineer in Seattle who quit his job in 2012 to start a company. The only problem: he had no idea what to build.

Over the next year, he started and abandoned roughly 20 different projects. A social network for lawyers.

A way to track restaurant wait times. Nothing stuck.

Then one day he was too lazy to go grocery shopping. He looked for a service that would shop for him and deliver everything to his door.

Nothing good existed. The existing options were grocery store delivery services that only worked during specific windows, had limited selection, and required ordering days in advance.

Mehta wanted to order groceries the way he ordered everything else online — immediately, from whatever store he wanted.

He built a prototype in 2012 and applied to Y Combinator. The demo was rough — he ordered a six-pack of beer through the app and had it delivered to a YC partner's house during the application process.

It worked. He got in.

Instacart launched in the San Francisco Bay Area in 2013 with a simple promise: order from your favorite local grocery store and have someone shop for you and deliver within an hour.

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.

Instacart

Instacart grew by solving a problem one city at a time. They launched in San Francisco, proved the model, then expanded to other major metros.

Each new market required recruiting shoppers, signing up retailers, and building enough consumer density to make the economics work.

The COVID-19 pandemic was the inflection point. Grocery delivery went from luxury to necessity overnight.

In March 2020 Instacart announced it would add 300,000 shoppers, then raised that by another 250,000 weeks later. Order volume increased 500%.

Years of planned growth happened in weeks. The pandemic proved that grocery delivery wasn't a niche — it was the future of how a significant chunk of the population would shop.

The enterprise play is the long-term moat. By providing white-label technology to grocers, Instacart becomes embedded in their operations.

Even if a grocery chain wanted to build its own delivery service, they'd need years and hundreds of millions to replicate what Instacart provides. The more deeply integrated Instacart becomes in grocery operations, the harder it is to rip out.

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.

Instacart

The post-COVID hangover was brutal. After pandemic demand normalized, growth slowed dramatically.

The company's valuation dropped from a peak of $39 billion in early 2021 to about $10 billion at IPO in September 2023. Investors who bought at the peak saw a 75% paper loss.

The narrative shifted from "essential infrastructure" to "nice-to-have luxury."

Unit economics are perpetually tight. Paying a person to walk through a grocery store, pick items, bag them, and drive them to someone's house is expensive.

Unlike meal delivery (one restaurant, one bag), grocery delivery involves dozens of items per order, refrigeration requirements, and substitution decisions. Every order that requires a shopper to call the customer about an out-of-stock item eats into efficiency.

Amazon is the existential threat. Amazon Fresh, Whole Foods delivery, and Amazon's own logistics network represent a competitor with nearly unlimited resources and a Prime membership base of 200+ million.

Amazon has been willing to lose billions on grocery delivery to build market share. Instacart's advantage is retailer partnerships — Kroger and Publix use Instacart specifically because they don't want to help Amazon dominate grocery.

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.

Instacart

Instacart Marketplace — the core platform where consumers order groceries from 80,000+ stores for delivery or pickup, with personal shoppers fulfilling orders. Instacart+ — subscription service ($9.99/month) offering free delivery on orders over $35, reduced service fees, and credit back on pickup orders.

Instacart Ads — a retail media platform letting CPG brands run sponsored product listings, display ads, and coupons within the shopping experience. Instacart Platform (Enterprise) — white-label e-commerce technology that lets grocers build their own online ordering and fulfillment powered by Instacart's infrastructure.

Caper Cart — AI-powered smart shopping carts (from the 2021 Caper AI acquisition) with built-in screens, barcode scanners, and payment that let shoppers skip the checkout line.

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.

Instacart

Sequoia Capital was an early and consistent backer. Andreessen Horowitz invested in growth rounds.

D1 Capital Partners led the 2021 round that valued Instacart at $39 billion. Existing investors including Valiant Capital, T.

Rowe Price, Fidelity, and Tiger Global participated across rounds. Y Combinator was the starting point (Summer 2012 batch).

The September 2023 IPO on NASDAQ priced at $30 per share, valuing the company at approximately $10 billion.