From the very boring world of employee onboarding platforms and 401(k) management, another tantalizing allegation of corporate espionage has emerged.
We’ve been following the ongoing battle between HR software giants Rippling and Deal all year. Both companies are currently embroiled in a lawsuit featuring planted moles and accusations of organized data theft. Now, as first spotted by Axios, the second act begins. 401(k) management unicorns Human Interest and Guideline face off in federal court over embarrassingly brazen allegations.
Here’s an excerpt from Human Interest’s lawsuit against the guidelines filed this month in federal court in Utah: “We’re going to tear HI apart. That’s going to be the easiest thing to do.”
That’s what Brandon Stelli sent a text message to his brothers on January 29th. Brandon and his brother Brian continued to receive salaries from Human Interest and continued to log into their company-issued laptops each morning, reminding them that access was “restricted to authorized persons” and that they agreed to “protect sensitive data,” according to the suit. Their third brother, Erik, worked in a competition called Guidelines.
According to the suit, the Steli brothers didn’t just talk big. They allegedly called their operation “Sterli Takeover,” a name that reveals either surprising arrogance or a deep misunderstanding of how corporate espionage works. In other words, it is done very quietly.
The complaint alleges that Brian and Brandon, who worked as junior inside sales representatives at Human Interest, engaged in a months-long scheme to systematically collect their employer’s most sensitive information, including partnership leads, customer data, and internal strategy documents, directly into Guidelines.
But not just for anyone in the guidelines. Human Interest alleges that the brothers shared this information directly with the company’s chief executive officer, Kevin Buske, and chief financial officer, Stephen Wu.
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Asked for comment, a Guideline spokesperson sent the following statement: “Guideline believes the allegations in this lawsuit are false and without merit. We are defending ourselves vigorously and look forward to presenting the facts and demonstrating that these allegations are unfounded.”
Human Interest did not respond to TechCrunch’s request for comment.
According to Human Interest’s complaint, two days after Brian Steli resigned from Human Interest on February 24, he made a request that purportedly revealed the entire operation. “I have a big favor to ask of you,” he allegedly texted a former colleague named Castro, who still works for Human Interest. Next came the question, “Screenshot of the ISR team’s total lead flow this month.”
Based on her complaint, Mr. Castro was probably more understanding than she was letting on and responded, “Can I ask why?” Brian responded with a grinning emoji.
The screenshots Brian wanted weren’t just sensitive. According to Human Interest magazine, it was a crown jewel. Total lead flow represents the fundamental pool of potential customers and is a key determinant of growth trajectory and market penetration. This is information that Human Interest has spent years and millions of dollars cultivating through proprietary business processes and partnerships with payroll providers. It creates what the lawsuit calls a “significant information imbalance” and puts the type of information that provides a “substantial strategic advantage” into the wrong hands.
Reading the complaint, it appears that Mr. Castro understood the seriousness of Mr. Bryan’s demands and the transactional nature of his betrayal. “I’m certainly willing to play dirty, but I need to be offered a job (lol).”
According to the complaint, Brian brazenly promised employment at Guideline in exchange for the data. When Mr. Castro did not respond immediately, Mr. Brian spoke again the next morning. “I still need that favor.”
Castro reportedly replied, “Brian, you know I can’t do that.”
Brian didn’t stop there, according to the complaint. Mr. Castro allegedly made phone calls and sent emails, but when Mr. Castro stopped responding, his wife, Mr. McKenna, contacted them on his behalf.
The complaint highlights a systematic intrusion. Before resigning, the brothers allegedly downloaded documents with titles such as “Leads Data” and emailed the files from their work accounts to their personal Gmail addresses (that of Brian and his wife). You may be able to completely bypass Human Interest’s detection systems by logging into your personal email on your work laptop.
On February 27, the day Mr. Castro allegedly fired him, Mr. Bryan contacted another Human Interest employee, Chloe Garza. The suit says he had a “close personal and/or familial relationship” with Steris. Request: Internal metrics from Slack channels. Garza also refused, saying, “Yes, that’s why I can’t send you anything related to HI.”
Brian’s response, as characterized in the complaint, is eloquent. In the same conversation, he allegedly wrote, “Mitch (another sales rep at HI) would be the only one who would really give me the information that GDL (Guidelines) wants.” The complaint alleges that the confessions are stored in text and are readily available.
After Human Interest’s management called an emergency meeting to remind employees of their confidentiality obligations, Bryan ridiculed their efforts, according to the complaint. “LOL, Horn is using fear tactics, LOL,” he texted Castro. “I heard that many people were scared today.”
What elevates this to suspicions of corporate fraud and extortion is the alleged involvement of top management. Human Interest maintains that this was not a rogue employee going rogue, but an orchestrated operation with the blessing of executives.
After Human Interest sent the cease-and-desist letter in early March, Eirik Steri emailed the brothers updates, according to the complaint. He spoke with Andrew Conley, Guideline’s senior vice president of sales. The message read: “Andrew is amazing and everyone is really rooting for him. Everyone is expressing how fired up they are about this situation. This thing is going to blow over and we’re all going to be super fired up.”
Then came what Human Interest characterizes as extortion. Guideline has agreed to a $9.3 billion acquisition by payroll giant Gusto, which TechCrunch reported earlier this month as a $600 million deal. As part of the transaction, Guideline planned to sell certain assets and accounts associated with competing payroll companies. When Human Interest inquired about purchasing some of these assets, Guideline’s CFO allegedly gave the company an ultimatum: drop the lawsuit or cancel the transaction.
TechCrunch’s Marina Temkin reported that multiple sources said Gusto was looking to sell Guideline accounts associated with competing payroll companies, but Gusto declined to comment on those sale plans at the time.
Today, in response to a question from TechCrunch about whether Gusto intends to pursue an acquisition, a spokesperson confirmed its intentions, writing that “the deal has not yet been finalized” and that “Gusto and Guideline will remain separate companies,” but at the same time. “Partnering with Guideline means a more seamless integration of payroll and 401(k) management all in one place for the small businesses we serve, and we’re excited about the future.”
Gast also clarified that the company is “not a party to the litigation and has no involvement in the allegations.”
Unsurprisingly, there’s a lot of talk in the startup ecosystem about how the human resources software space will become a theater of corporate warfare, especially with Rippling and Diehl battling over espionage allegations and RICO violations.
It may sound silly, but this is serious business for Rippling and Deal, and the stakes are just as high, if not higher, for Human Interest, the Steri brothers, and Guideline and its management.
Human Interest has raised more than $700 million at a $1.4 billion valuation from investors including SoftBank, Baillie Gifford, and TPG. Guideline has raised $340 million with support from General Atlantic and Felicis, and was valued at $1.2 billion in 2021.
This story has been updated with comment from Gusto.
