ZenPayroll is now Gusto as startup expands into benefits

Gusto will immediately offer workers' compensation product nationally, but initially will only offer health benefits services in California.

It was just days before Demo Day in August 2011 when Joshua Reeves found himself in a pinch.

He and his partners were about to present a new payroll platform they had built as part of Y Combinator, and they didn't have a name.

On somewhat of a whim, they chose ZenPayroll.

The name has served the startup well in the four years since then, but Reeves, the company's CEO, admits it was inherently limiting.

So today, they changed it. Meet Gusto.

"Gusto for us was really inspired; it's represents a human experience," Reeves said. "We are trying to really detach from the current terminology in the industry."

At the heart of the rebrand is another big announcement: the company formerly known as ZenPayroll is expanding into health benefits and workers' compensation. The new services will be fully integrated with Gusto's flagship payroll system.

Gusto will immediately offer its workers' compensation product nationally, but will broker health benefits only in California. Reeves said Gusto plans to roll out its benefits product to more states in the coming months.

For now Gusto will still maintain existing integrations to other benefit software providers. One such provider is Zenefits, a unicorn startup that is rumored to have its own expansion plans in place. According to Buzzfeed, Zenefits is planning to expand into payroll, turning the one-time bedfellows into direct competitors.

Reeves still hesitates to call Zenefits a competitor. The companies share several key investors, including actor Jared Leto and Box CEO Aaron Levie.

What's more, Reeves says the existing pool of customers is ripe for the picking. "There are millions of folks not using anyone," he said.

While its growth and valuation still fall short of Zenefits (which is reportedly worth $4.5 billion) Gusto has had significant growth over the last year. In April the company raised a $60 million Series B round led by Google Capital. Gusto has since built an office in Denver and added more than 275 employees this year.

As it stands now, Gusto's customer sweet spot is businesses with 1 to 100 employees. In the next few years, Reeves hopes to up that figure to the 1 to 500 employee range.

Gusto also plans to stay independent. Reeves said his company has already turned down several opportunities to sell itself, because he believes there's too much opportunity in a multibillion-dollar market.

"We are going to stay private until an IPO happens, which will be at some point in the future."