May 13, 2020 · 24m · top-founders
1754 Parker Conrad Gave Rippling CTO 40%, Kept 60%, 2,000 Customers "$36m ARR Not Far Off"
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this interview, Rippling co-founder and CTO Prasanna Sankar discusses founding the company alongside Parker Conrad, developing their all-in-one HR and IT architecture, and the unit economics driving their trajectory toward 36 million dollars in ARR.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 50.4% of the talking time here. How this is scored →
Nathan as informed peer 5.7 Guest teaching 1.8 Guest disagreement 2.0 Nathan pushing back 3.2
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:42 Prasanna flatly stonewalls forward revenue question
Prasanna abruptly declines to answer whether a $30M run rate is attainable within 12 to 24 months, stonewalling the line of questioning after touting unprecedented growth.
Hardest push from Nathan ▶ 13:51 Nathan calls out vague hyper-growth claims as unverifiedNathan refuses to accept Prasanna's evasion, pointing out that founders who claim hyper-growth without providing verifiable metrics are often exaggerating.
Biggest teaching moment ▶ 1:50 Prasanna explains algorithmic competitive programmingPrasanna corrects Nathan's naive assumption that competitive coding measures typing speed or lines of code, explaining timed algorithmic ranking systems like Google Code Jam.
Nathan holds their own ▶ 14:45 Nathan resolves the ACV cohort math for PrasannaNathan resolves the mathematical inconsistency between customer count and run rate by articulating how historical smaller cohorts dilute blended ARPU despite higher enterprise ACVs today.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Reconnecting Post-Zenefits and Founding Rippling | 4 | 3 | 1 | 1 | Nathan inquires about the transition from Zenefits to Rippling and asks if competitive programming is scored by lines of code per minute. Prasanna gently clarifies that it is based on solving complex algorithmic problems under time constraints. | |
| Target Customer Profile and Contract Values | 5 | 1 | 1 | 1 | Prasanna describes the target customer profile of 5 to 100 employees and contract sizes around $15k to $20k per year. Nathan translates the annual figures into monthly run rate averages. | |
| Fundraising Strategy and Aiming for One Hundred Billion | 5 | 2 | 2 | 2 | Nathan asks if Rippling is taking the VC-backed billion-dollar-or-bust approach, and Prasanna elevates the ambition to a hundred billion or bust. They review the early capital raised and the 60/40 equity split between Conrad and Sankar. | |
| Network Effects and the HR App Store Thesis | 6 | 3 | 3 | 5 | Prasanna presents Rippling's vision as an HR app store with winner-take-all network effects. Nathan immediately scrutinizes an unrealistic one-to-two-month CAC payback claim, forcing Prasanna to concede that figure only covered sales rep commissions. | |
| The All-in-One Architecture Advantage | 7 | 1 | 3 | 6 | Nathan multiplies 2,000 customers by the previously cited $20k ACV to estimate a $36M run rate, which Prasanna disputes as inaccurate. When Prasanna refuses to provide actual numbers citing Zenefits fallout, Nathan points out that listeners will do the same basic math. | |
| Clarifying ARR Projections and Moving Upstream | 8 | 2 | 4 | 8 | Nathan directly challenges Prasanna for asserting hyper-growth while declining to provide concrete metrics, calling unquantified claims suspicious. Nathan helps clarify that historical cohorts paid less as the firm moved upstream, eventually prompting Prasanna to admit that $36M ARR is not far off. | |
| Go-to-Market Distribution and Early Cold Email Outreach | 6 | 1 | 1 | 1 | Prasanna outlines the distribution channels and early cold email strategy targeting founders and CTOs. Nathan demonstrates SaaS sales expertise by detailing typical quota multiples and inside sales compensation structures. | |
| High Net Revenue Retention and Organic Seat Expansion | 7 | 2 | 2 | 4 | Prasanna shares that net revenue retention hit 300% during their financing round due to rapid seat additions among fast-growing clients. Nathan benchmarks this against Looker's 130% retention rate and calculates their monthly burn rate from their 30-month runway target. | |
| The Famous Five and First-Principles Thinking | 3 | 1 | 1 | 1 | The interview concludes with rapid-fire questions covering personal habits and business influences. Prasanna shares an unexpected interest in financial trading, noting that coding and trading both reward first-principles thinking. |
Statements from this episode (23)
Prasanna Sankar emailed Parker Conrad to partner immediately after Zenefits firing
“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.”
Rippling's ideal customer is fast-growing companies with five to 100 employees
“Our sweet spot customer is five to a hundred employees in their company, especially the ones that are growing fast which have a lot of changes that are constantly happening in the company that needs to be synced in all these business systems they're using.”
Rippling's average revenue per customer is $15,000 to $20,000 per year
“We are around, I think, 20, 15 to 20 K. Per year? Per year, yeah.”
Rippling was forced to build health insurance due to intense competition
“Especially we thought we could sort of like get away without building the health insurance part. But you know, the competition was so intense that we had to sort of build it. You know, every other player in the market was offering it, so we had to build it, so…”
Parker Conrad laid out Rippling's four-to-six-year product roadmap on day one
“Parker sort of sat on day one and gave a four-year, six-year roadmap. And, you know, we've largely been executing that.”
Parker Conrad invested $500,000 of his personal capital into Rippling
“Day one, Parker put in, you know, half a million of his own money.”
Rippling raised $10 million within its first nine months
“Beyond that, maybe in nine months, we sort of raised around ten million dollars.”
Parker Conrad and Prasanna Sankar split Rippling's founding equity 60/40
“Parker owns more equity than I do. We split it sixty-forty.”
Zenefits grew from zero to $50 million ARR in under two years
“Zenefits grew from zero to fifty million dollars in like
Less than two years in ARR”
Rippling's SaaS app store model is a winner-take-all network effect business
“The ultimate play is like an app store where any SaaS developer can sort of plug in plug in and publishes app and you know, rippling provision seats and licenses on top of this on, you know, and provides distribution for these apps, right?
So it's, it is clear…”
Rippling's total customer acquisition cost payback period is roughly nine months
“It's our sales rep comp that we sort of recoup on the first month. So our total payback might be like, you know, nine months or something like that.”
Hyper-growth startups rarely build beyond their first 18 months of product scope
“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.”
Zenefits continually failed when trying to expand into new markets
“We've seen that at Zenefits where we unsuccessfully tried to enter into new markets and, you know failed continually.”
Rippling had over 2,000 paying business customers by May 2020
“We have around you know, 2000 or more than that customers.”
Rippling was close to reaching $36 million in ARR in May 2020
“Thirty six million dollars in ARR is not really far away.”
Rippling targeted founders and the C-suite before expanding to HR titles
“We were targeting at that point in the beginning, it was like founders you know, CEO, CTO. It is mostly that. And then as we sort of continue to grow and scale and expand you know, we went into the HR job title, the idea admins and so on.”
Rippling uses an inside sales playbook very similar to Zenefits
“It's very similar playbook. Yeah, it's not very different.”
Rippling had roughly 300% net revenue retention during its Kleiner Perkins round
“When we raised our last financing round from Kleiner, it was around 300%, which was something, you know, abnormal.”
Rippling's expansion revenue comes primarily from organic seat growth
“Most of it has been seed upsells, which is automatic, right? Like we don't even put, you know, we have not done historically a great job on upsells so far. You know, right now we're sort of investing more on that, but most of it is just like organic seed ads.”