Zenefits

“I think there were some small mistakes made, but they were company-wide. They were under all departments, not just his. Everyone knew about it. They weren't ethical mistakes, and he sort of, you know, took the fall.”

“Palmer Luckey is another one where I backed Andrew in the very first round, and he was controversial given what happened at Meta early on with him. I think in both cases, they basically got thrown under the bus in one form or another.”

“At Zenefits, we kind of had this theory that was ultimately, I think part of like the downfall of the company that, you know, we could move through the market more quickly by doing a lot of things manually. And then, you know, we would just replace it with sof…”

“First, he was ousted from Zenefits for regulatory and compliance issues, which David Sachs then took over, and now he's dealing with competitors having spies infiltrate his company.”

“We had just invested in Gusto, which was a competitor that was growing not quite as quickly as Zenefits. But the reality is Gusto has endured and become a massive company, and Zenefits didn't.”

“And then the next year, our plan was to go from 20 to a hundred. And we ended up going from 20 to 65, and I got fired, ah, basically within a week of the end of the fiscal year.”

“David really sort of He hired a sort of a comms person that he works with a lot, this guy named Lanny Davis, and they just focused on like attacking me, like over and over and over again for like six months, and it became this huge thing. And David, well, he w…”

“And they took the model, Parker, and Sam built that model at Zenefits, and then they reproduced it at Rippling. Massive outbound model.”

“I should have sold, we got, we could have returned the fund once over in whenever the fidelity markdown was, like literally putting an SPV together to sell Zenefits and then the markdown, the fidelity markdown happened and it killed the SPV. That was one, that…”

“There was only one person who was named as being aware of the misconduct, and there was only one person who was fined and held accountable by regulators. In fact, he was fined more than the company.”

“When I then handed the torch to the new CEO, we had two hundred million dollars in the bank and sixty million of ARR with a clean bill of health.”

“There was a smear campaign. You know, paid for. By someone still at Zenefits. There were legal threats made to force him to sign an, you know, not, sign this doc, sign this legal document that would allow them to have a non-compete in California so that he cou…”

“We had huge hiring goals and I remember we hired people off of just 30 minute phone screens and that was it. So it was a true, like just needed to get butts in seats as fast as possible.”

“You should never do anyone where you can't see the future through the founders.”

“The reality is the importance of picking the right company it just really defines one's career. I attribute so much of my success to joining the right businesses. Now, like, I was able to perform within those businesses, and, you know, for context, we're talki…”

“I just wanted to join this guy's company because he was going to build a hundred billion dollar business. You know, we didn't realize that outcome with Zenefits. He's going to with Rippling.”

“But what happens seemingly universally, even at the best companies in the world, like Zenefits in 2014, is there are outlier performers That perform at something like three X to the bottom performer. And so you get a team of like 10 people, even when you're in…”

“When we added all of these new SDRs into the mix, not only were they less effective than the more tenured existing reps, they actually made the existing reps far less successful because we had to tap into this TAM base that people were less likely to convert.”

“I think Parker was wrongly scapegoated and run out of town at benefits. Then he, and he proved it by going to build rippling into a business that's much bigger and better than reference benefits ever was in the exact same space.”

“The only one he could name was Zenefits, and they broke the law.”

“What most folks do wrong, almost all COs I remember I actually did it with Sam and Parker in the early days of Zenefits, and then they got it right, is they just don't calculate Just the amount of human capital it will take to hit these numbers. And they usua…”

“One of my favorite Parker stories is I joined in late 2013, so my first full year was 2014, and about a quarter in, we were shooting for a revenue target of ten million dollars by the end of the year. We started at something like half a million dollars of ARR.…”

“David was not really interested in making Zenefits successful. You know, almost every decision he made at the company was wrong. The decisions he made from a product perspective, from a strategy perspective, the people he. Fired the people he promoted, like al…”

“When Zenefits was very young and immature, we had a goal of going from like 500,000 dollars in ARR to ten million in ARR in one year. This was 2014.”

“At Zenefits, I pushed off hiring anyone in this function for too long. I didn't have an appreciation for it.”

“It's almost universally true where the product that you are selling at your business, you have the buyer of that product internally... And so companies probably under leverage that internal resource around you know, what the buyer, if they are selling to this …”

“And so the actual result of hiring a bunch more SDRs and AEs wasn't that we had incrementally more revenue, but sort of less efficient revenue on a per rep basis. We actually had less revenue. We closed less revenue by hiring all of these people because it was…”

“Zenefits alone produced as starting as AEs, the head of revenue at Rippling, the head of revenue at Gong, the head of revenue at Modern Health, the former head of revenue at TripActions, like all of these came out of Zenefits alone”

“Parker actually convinced Riley, who was, had moved over from Zenefits to Outreach to give us, like, a free seat in the early days which was a great play because we became a big customer of theirs.”

“And so what, the way that we kind of described what we did to people was we basically wrote an email that was something along the lines of like, look, I'm sure that you have like you know, an automated process for like onboarding employees and managing HR and …”

“We never had accountant partnerships when all of our competitors like Gusto, you know, had an enormous amount of their revenue in the early days came from the accounting channel.”

“Four months into Zenefits we were in 2014, our target was ten million in ARR. We started 20 14 about 500,000 of ARR.”

“We changed the revenue target to twenty million. Like two days later, Parker couldn't keep the secret and we hit it.”

“Embracing this identity around sort of like fast growing tech company raised a bunch of money. That was a mistake. And I think the right thing to do or what to try and do is associate your company with what you do. Had we been known as, you know, the best heal…”

“I got to this point where I was convinced that you know, David was not really interested in making Zenefits successful. And, you know, almost every decision he made at the company was wrong. You know, he the decisions he made from a product perspective, from a…”

“If I had fought at my last company, being forced out by A-sixteen Z and David Sachs, and had stayed in place, like, if we could replay the videotape, what would the outcome for that company have been? I believe that it would have been very different”

“A big part of how I think about Rippling is that this is a way for me to sort of prove, mostly to myself, But also to the extended community, to my friends and family, to the general public, and all that kind of stuff, that this is how things might have turned…”

“At my last company, I had board control and everything, but when investors sat me down and said, look, if you don't resign, we're going to sue the company, we're going to go to war with you know, suddenly you're like, crap, how do I survive that?”

“So I left right after Parker left. So, you know, when Parker was fired from Zenefits, I wrote him an email saying, Hey dude, like, you know, I'm, I know you're going to start a company and I want to join you.”

“Zenefits grew from zero to fifty million dollars in like Less than two years in ARR”

“My hypothesis is that, You know, if you need to create a large hyper-growth company, whatever you've built in the first, like, 18 months or something is sort of the extent to which you're going to build in the life cycle of your company.”

“We've seen that at Zenefits where we unsuccessfully tried to enter into new markets and, you know failed continually.”

“It's very similar playbook. Yeah, it's not very different.”

“So one of the ways we grew really quickly at Zenefits in terms of hiring was we were able to tap talent all over the world. It was just easier to bring them To Vancouver in terms of immigration than like the US.”

“Zenefits is a really good classic one. Parker was a single, non-technical founder who pitched an idea to YC, and he got in that way.”

“When you see those kinds of battles with Zenefits and Utah and Zenefits. Ultimately prevailed.”

“We give the core system away for free, and we make money in, in a variety of different ways, but one of them is that we act as a broker on companies lines of health insurance.”

“In Utah, the insurance commissioner in Utah decided to take action, said that, listen, one of their missions as a DOI was to make sure that there was fair competition between all brokers in the state, and everyone was on a level playing field, and they said th…”

“Technically what the bill did is I think it actually didn't change the law. What it did is it clarified that the existing Utah law never made benefits illegal in the first place. So it was a clarification rather than a change to the law”

“I think what I probably would have done differently in the case of Utah is I probably would have, I wish I had realized earlier in the process that we were in sort of a political battle rather than a legal battle with the Department of Insurance.”

“Small business owners in our case, like tend to be politically very well connected. And so when you have, you know, small business owners who, you know, in Utah who have, you know, if you have a company that has You know, 50 or a hundred employees, like, that'…”

“So they saw that there was nothing on our page, so we threw up fake logos, like, Zenefits was huge at the time, Dropbox, you know, those kinds of companies.”

“The partners at Andreas and Horowitz called me to see if I would be interested”

“It's not often when you have thousands of customers and plenty of cash with which to be able to kind of affect this pivot and to go in this new direction.”

“That's a, you know, a business that was coming up on a hundred million dollars in revenue.”

“The thing that was clearly a huge point of validation for me that I was excited about is more than 70% of our customers moved with us.”

“We're sort of at the 65% gross margin place right now today.”

“So I do believe that we have some targets that get us into the 80% plus gross margin range. My view is I believe that we're sort of somewhere between 12 to 18 to potentially 24 months away from that.”

“On average, we probably mostly have the bulk of our contract values are somewhere between five and 15,000 dollars per year.”

“We have basically around 10,000 customers. These are customers that are in some cohort Consuming some or all of our product line.”