Payroll Fintech Gusto Hires Square’s Information Security Head as It Inches Towards an IPO

Online payroll company Gusto is scaling its security team, starting with the appointment of Square’s former head of information security, Fredrick Lee, as its chief security officer. The move comes as Gusto lays the foundation for a potential initial public offering (IPO).

“With hiring Lee, we are taking another step towards a likely IPO three to five years from now,” Rick Chen, head of communications at Gusto, told Bank Innovation. 

When Lee takes on his role later this month, his first task will be to scale the company’s security team.

“Gusto is growing aggressively,” said Lee, who prefers to be called Flee. “At the top of my to-do list is making sure the security team scales with the rest of the business as we add more customers, products, and features. We have aggressive hiring plans around specialized and dedicated security roles.”

Lee, who will report to Gusto co-founder and chief technology officer., Edward Kim, did not disclose the size of the current security team and declined to elaborate on the specialized roles he is looking to fill.

Lee served as payment company’s Square’s head of information security for over two years and Bank of America’s security VP for five years. At Gusto he will also be exploring innovation opportunities around data security, consumer protection, compliance, platform security, and even the company’s privacy policy as it pertains to consumer data.

“At Square, we wanted to help people start their businesses. So, my job was to make sure the client’s business has a security cage,” he said. “For instance, for a coffee shop that would mean a secure Wifi to run payments. At Gusto, it’s similar, but perhaps we are dealing with even more sensitive information, like people’s bank accounts, social security numbers, health insurance data etc. So my job is going to ensure that we continue expanding a security system that accommodates all that data as we scale.”

Lee will also overlook Gusto’s security strategy related to consumer protection, risk management, and compliance. 

Security is most effective when utilized as a backend engineering resource, Lee explained. This means building a scalable system with enhanced platform security and authentication, among other things.

Lee begins at Gusto on March 18.

Founded in 2011, and based in San Francisco- Gusto provides payroll and benefits services to small- and medium-sized businesses in the U.S. with 200 employees or less. Over the past few years, it added features like health insurance and 401(k) retirement offerings.

Last July, Gusto raised $140 million in a Series C funding, bring the company’s valuation to $2 billion. The round was led by T. Rowe Price Associates Inc., Y Combinator Continuity Fund and General Catalyst.

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