Unscalable by Charlie Guo

Author:Charlie Guo [Guo, Charlie]
Language: eng
Format: epub
Published: 0101-01-01T00:00:00+00:00

CHAPTER 9: ZENEFITS

Parker Conrad, Cofounder & CEO

Zenefits is a modern HR company that’s aiming to be the one place to connect and manage all of your HR services. The company was founded in 2013 by Parker Conrad and Laks Srini, years after similar companies such as ZenPayroll (payroll services), inDinero (accounting and tax services), and Workday (HR services).

Despite being around for only two years, Zenefits is currently valued at a staggering $4.5 billion (as of May 2015). As you might expect, the company has had an unbelievable growth trajectory so far, and it has been labeled the “fastest-growing SaaS company ever.” ¹ One of the most fascinating lessons that Zenefits has learned is that growth trumps nearly everything.

While this is certainly true from a fundraising perspective, for Zenefits it has proven to be true from a business perspective as

well; they have solved some truly intractable problems simply by growing at a mind-boggling rate.

To help put that growth rate in perspective: Zenefits and DoorDash are the second- and third-youngest companies in this book, but their valuation put together ($5.1 billion, as of 2015) dwarfs that of every other startup here combined . It’s a striking (but not uncommon) example of Silicon Valley’s power-law distribution: the big winners are so big that they overshadow the returns from most other companies, including small and medium winners.

GUO: What did Zenefits look like when it first launched?

CONRAD: When we first launched, our product let companies enroll in health insurance online. You could see quotes and prices, pick a plan, and enroll in it without leaving the site. It also integrated with your payroll system to generate individual pricing and set up employee deductions.

At the time, we were actually racing another company in our Y

Combinator batch. It was called SimplyInsured. Originally it was fairly different from us, but about halfway through YC, the founders decided that they wanted to do what we were doing, and the company pivoted into our market.

So we found ourselves sprinting to be the first ones out the door. Because the first company that launched would be summarized as “Company XYZ launches to make insurance benefits simpler for small businesses,” and whoever launched a couple weeks later would get “Company ABC seems to be derivative of XYZ and does the same thing and why are they doing the same thing as Company XYZ?”

It wouldn’t matter that we had started our product first if they launched theirs first.

The feature set of that first product had two sections. The first let employers pick plans and fill out necessary application forms. The second let employees choose a plan from the ones their employer offered. Both of these parts are critical, as you need both in order to fully enroll a company in insurance. But because we were panicked about SimplyInsured, we wanted to just launch something in order to get out the door. So when we had our launch article in TechCrunch, the only thing we had built was the employer portion of the product.

Literally half the product didn’t exist yet.

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