As Zenefits Stumbles, Gusto Goes Head-On by Selling Insurance

After HR startup Zenefits lost its founding chief executive officer this year in an embarrassing regulatory compliance scandal and cut 250 jobs, another San Francisco startup saw an opportunity to capitalize on its larger rival's implosion. Gusto, a venture-backed unicorn specializing in payroll software, is pushing harder into Zenefits' main business: selling insurance to small companies.

Josh Reeves, co-founder and CEO of Gusto, said Zenefits' recent stumbles have helped send customers its way. "It definitely creates an even bigger opportunity because we have a lot of clients, who were on Zenefits, who are moving to Gusto," he said.