Zenefits
| File:Zenefitslogo.jpg | |
| Founded | February 18, 2013 |
|---|---|
| Area served | United States |
| CEO | David O. Sacks |
| Industry | Human resource management |
| Revenue | |
| Website | www |
Zenefits is a company based in the United States that offers cloud-based software as a service to companies for managing their human resources, with a particular focus on helping them with health insurance coverage.[1][2] It was named the fastest growing company in Silicon Valley in 2015.
History
Zenefits was started by its ex-CEO Parker Conrad, who had been a co-founder of Wikinvest, and Laks Srini, Conrad's colleague and a software engineer at Sigfig, to help startups and small businesses find insurance quotes and manage employee benefits in one place. It was part of the Winter 2013 batch of start up accelerator Y Combinator, and officially launched on February 18, 2013.[3]
In October 2013, Zenefits, that had so far been operational only in California and New York, announced that it was rolling out to the other 48 states in the United States, albeit only for businesses with more than 20 employees.[4] In January 2014, the company announced the addition of commuter spending, flexible spending, and 401(k) support in an attempt to replace the more mundane functions currently handled by companies' human resources departments.[5]
In July 2014, the company announced support for stock options in its cloud HR platform.[6]
In November 2014, Zenefits opened an office in Scottsdale, Arizona. They planned to hire 1300 employees over the coming 3 years.[7]
In December 2014, David O. Sacks, founder of collaboration service Yammer that had been sold to Microsoft, joined Zenefits as the Chief Operating Officer.[8][9]
In January 2015, Zenefits announced that it had revenue of approximately US$20 million in 2014, twenty times the corresponding figure in 2013, despite offering its platform to users for free and making all its money from commissions charged to insurers for being the insurance broker.[10] In April 2015, the company announced that in March 2015, it had added more clients than it had added in its previous 15 months of operations.[11]
Parker Conrad was both criticised and praised when he revoked an offer to an employee who posted a question on Quora to choose between Uber and Zenefits, pondering the question of which would help him land a job at Google in the future.
In May 2015, payroll provider ADP blocked Zenefits from accessing payroll information on behalf of Zenefits customers.[12] In a post on the company's blog,[13] Zenefits alleged ADP was spreading "fear, uncertainty and doubt" about Zenefits data security due to worries about increased competition. In June 2015, ADP filed a lawsuit accusing Zenefits of defamation.[12]
In January 2016, an internal legal investigation found the company had created and used a browser extension to skirt training, licensing, and certification requirements around selling insurance across state lines. This revelation came amid other reports of internal misconduct and led the California Department of Insurance to begin its own investigation.[14] The Massachusetts Division of Insurance launched its own similar investigation in March 2016.[15]
In February 2016, amidst the scandal, Parker Conrad resigned as CEO and director. COO David O. Sacks was named as the replacement CEO.[16]
Funding
Zenefits was part of the Y Combinator Winter 2013 batch.[3] In July 2013, Zenefits announced the completion of a seed round led by Venrock and Maverick Capital, with investors including Andreessen Horowitz, Yuri Milner, General Catalyst Partners, Garry Tan, Justin Kan and Alexis Ohanian. The round also included angel investments from Box co-founder and CEO Aaron Levie, Quora co-founder Charlie Cheever, former Googler and Twitter VP of Corporate Strategy Elad Gil, Weebly co-founder David Rusenko, former Googler and Badoo COO Ben Ling, Google’s Head of Spam Slamming Matt Cutts, BuildZoom co-founder and CEO David Petersen, and Inkling co-founder and CEO, Matt MacInnis. Including the company's initial US$372,000 raised from Y Combinator, the company's total funding to date was US$2.1 million.[17]
The company raised its Series A in January 2014, about nine months after graduating from Y Combinator. The US$15 million round included investments from Andreessen Horowitz, Maverick Capital and Venrock, and was aimed at helping Zenefits go after larger customers around the world and become the one-stop solution for Human Resources for their client companies. The round was also accompanied by the addition of Andreessen Horowitz General Partner Lars Dalgaard, the former CEO and founder of SuccessFactors, to the Zenefits board of directors.[18]
The company raised a $66.5 million Series B, announced on June 3, 2014, from return investor Andreessen Horowitz and new investor Institutional Venture Partners, at a US$500 million valuation.[19][20][21][22]
On April 21, 2015, TechCrunch reported that Zenefits was raising somewhere between US$300 million and US$500 million at a valuation worth of US$3 billion, and possibly as high as US$4 billion.[23][24] On May 6, the round was reported to have closed with US$500 million raised from investors including Fidelity Management, TPG, and Comcast Ventures at a valuation of US$4.5 billion.[11][25][26]
Reception
Zenefits has been identified as one of the fastest growing software as a service companies in history.[20][27] Its revenue growth rate has been compared favorably with such companies as Workday and Salesforce.com,[10] while its valuation growth was also noted by Forbes as being among the highest in 2014.[28] The Wall Street Journal has discussed the rapid growth in Zenefits' own workforce as it scales to cope with a growing clientele.[29]
The New York Times has noted that Zenefits' rapid pace of growth puts a lot of pressure on the company, and cited Zenefits co-founder and CEO Parker Conrad as saying that problems that other companies have a year to solve need to be solved by Zenefits within eight weeks.[1] Forbes staff writer Brian Solomon noted how Zenefits had beaten Airbnb and Uber to become the hottest startup of 2014.[28]
See also
References
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