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Gusto CEO to Zenefits CEO: 'I don't think a culture can be changed by tweets'

Gusto CEO Josh Reeves Business Insider/Julie Bort

Joshua Reeves, CEO of HR software startup Gusto, would rather not talk about the meltdown that occurred earlier this year at his rival, Zenefits.

He's busy running his own billion-dollar-valued startup with 30,000 customers, he says.

But everyone keeps asking him about it as the two companies, once partners, are now competing head to head.

And his comments have led to a public squabble of sorts with Zenefits CEO David Sacks.

Gusto recently added insurance benefits management software to its payroll offerings for small businesses. Zenefits recently added payroll to its benefits management software.

And, as we previously reported, you couldn't find two other competitors who have so much in common but such different cultures. Reeves wants Gusto to be warm and fuzzy. Zenefits is known for being hard-driving. That culture led to Zenefits' founder CEO, Parker Conrad, abruptly leaving the company in February over a scandal involving selling insurance without a license.

Zenefits current CEO David Sacks, who was previously COO, insists that in the four months he's been CEO, he's turned the culture around. He's a famous member of the PayPal mafia who founded and sold several other startups and is an angel investor extraordinaire.

Sacks went on a tweet rant last Friday saying it's unfair for everyone to keep lumping Zenefits in with another troubled startup that ran afoul with regulators, Theranos.

Sacks argued that Zenefits shouldn't be compared to Theranos because Zenefits openly admitted its regulatory and culture problems and he says its salespeople are all properly licensed now.

So, when Gusto's Reeves did an interview with Bloomberg's Emily Chang on Tuesday, she asked Reeves what he thought about Zenefits' makeover and that Twitter rant.

Reeves shrugged and said, "I don't think a culture can be changed by tweets."

The interview apparently didn't escape Sacks' notice. He later tweeted:

Tweet Embed:
https://twitter.com/mims/statuses/735601313333940226
I'm hearing disturbing rumors that some of Zenefits' denouncers are trying to copy our product as fast as possible.

(Sacks tweet was a reference to Marc Andreessen, who loves to rant on Twitter and loves the phrase "disturbing rumors.")

Reeves is not letting the copycat implication stand.

"It's worth pointing out that health benefits has always been on our roadmap even before Zenefits. It's a common misconception that we are trying to copy them, this is categorically untrue," he told us.

For proof, Reeves sent a slide from his original VC pitch deck fom 2012, before Zenefits was founded in 2013, which shows he planned to benefits software from the get-go. Gusto changed its name from ZenPayroll last year.

The pitch deck worked. Salesforce Ventures became a seed investor. Since then, Gusto has raised $136 million at a $1 billion valuation in an usual system that has landed him 75 big-name angel investors, as well as backing from Google Capital and other big VCs.

Here's the slide from 2012:

ZenPayroll Seed Investor Deck Q2 2012 Business Insider/Julie Bort