Gusto

Stripe

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.

Stripe

Stripe charges a flat 2.9% + $0.30 per transaction. That's it.

No setup fees, no monthly fees, no hidden charges. The simplicity is the product.

When a customer pays on a website using Stripe, Stripe handles everything — fraud detection, currency conversion, bank transfers, tax calculation, compliance. The merchant just sees money arrive in their account.

On top of the core payments, Stripe has built an entire financial infrastructure stack. Billing for subscriptions, Connect for marketplace payments, Atlas for incorporating a company, Issuing for creating virtual cards, Treasury for banking-as-a-service, and Radar for fraud prevention.

They're basically building the financial plumbing for the entire internet.

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.

Stripe

Patrick Collison was 19. His brother John was 17.

They had already built and sold a company — Auctomatic, an eBay auction tool — for $5 million while still teenagers in Limerick, Ireland. Patrick went to MIT, John went to Harvard, and they both dropped out because they had a better idea.

The idea was embarrassingly obvious in hindsight. In 2010, accepting payments on the internet was a nightmare.

You had to get a merchant account, negotiate with a payment processor, deal with a gateway provider, handle PCI compliance, and write thousands of lines of code. It took weeks or months.

The Collisons thought it should take five minutes.

They built a simple API — seven lines of code — that let any developer start accepting credit card payments immediately. No merchant account.

No paperwork. No phone calls with banks.

Just paste seven lines of code and you're in business. They originally called it /dev/payments, then changed it to Stripe in 2011.

Peter Thiel and Elon Musk — the PayPal mafia — were among the first investors. Sequoia and Andreessen Horowitz piled in soon after.

The Collisons had built exactly what every developer on Earth had been wishing for.

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.

Stripe

Stripe grew almost entirely through developer love. They didn't hire a sales team for years.

They didn't run ads. They just built the best developer documentation anyone had ever seen and let word of mouth do the rest.

The developer-first strategy was deliberate. The Collisons realized that in a startup, the developer usually decides which payment provider to use.

If you make the developer happy, you win the company. Stripe's API documentation became legendary — clear, beautiful, with working code examples in every language.

They also grew by growing with their customers. Early Stripe customers included tiny startups that later became giants — Lyft, DoorDash, Instacart, Shopify.

As those companies scaled to billions in revenue, Stripe's processing volume scaled with them. Stripe didn't need to acquire new customers because its existing ones kept getting bigger.

The international expansion was methodical. Instead of launching everywhere at once like Uber, Stripe carefully added country after country, making sure each one worked perfectly with local payment methods, currencies, and regulations.

By 2024 they were processing payments in 195 countries.

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.

Stripe

Valuation whiplash. In 2021, Stripe hit a peak valuation of $95 billion during the fintech boom.

By 2023, they had to mark it down to $50 billion during the tech correction — a 47% drop that made headlines everywhere. Employees who had been paper millionaires suddenly weren't.

The valuation has since recovered to $91 billion after a secondary share sale in 2025, but those two years were rough for morale.

Competition is relentless. Adyen, the Dutch payments company, has been eating into Stripe's enterprise market.

Square (now Block) competes on the small business side. PayPal is everywhere.

New fintech players pop up constantly. The payments business has razor-thin margins and everyone is fighting for the same 2.9%.

Going public is the elephant in the room. Stripe has been expected to IPO for years.

Investors, employees, and the media keep asking when. The Collisons have consistently said they're in no rush, but with $8.7 billion raised and thousands of employees holding stock options, the pressure to provide liquidity is enormous.

As of 2025, they've opted for secondary sales instead of a public offering.

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.

Stripe

Stripe Payments is the core — accept credit cards, debit cards, Apple Pay, Google Pay, and 135+ payment methods in 195 countries. Stripe Connect lets marketplaces and platforms pay out to sellers (Shopify, Lyft, DoorDash all use it).

Stripe Billing handles subscription and recurring billing. Stripe Atlas lets you incorporate a US company from anywhere in the world — fill out a form, get a Delaware C-corp, bank account, and tax ID in days.

Stripe Radar uses machine learning to block fraud in real time. Stripe Treasury lets platforms offer banking services to their customers.

Stripe Tax automatically calculates and collects sales tax in every jurisdiction.

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.

Stripe

Peter Thiel, Elon Musk, Sequoia Capital, Andreessen Horowitz, General Catalyst, Founders Fund, Tiger Global, GV (Google Ventures), Goldman Sachs, Baillie Gifford