Careers at Zenefits
Zenefits’ mission is to make it as easy as humanly possible for businesses to manage and care for their employees.
Parker Conrad first got the idea for Zenefits when he was working at SigFig, the finance startup he founded in 2011. He had a strong interest in health insurance, one gained through a bout with testicular cancer several years earlier. It was also driven by his belief that the Affordable Care Act, signed into law by President Obama in 2010, was going to change the market significantly. He began having discussions with insurance brokers, many of whom expressed their opinion that the law would negatively impact their business from small firms. Specifically, they thought that the many new requirements imposed by the law in areas such as compliance would discourage these companies from obtaining insurance for employees. Conrad saw an opportunity in this concern.
Hebrain stormed with Laks Srini, the Software Developer at SigFig. They reasoned that a major cause of small business resistance to the new mandates was the fact that many would not have the time to devote to the effort, which would be significant. Unfortunately, these firms also did not have the money to hire a dedicated HR staffer. Conrad and Srini decided that they would develop a platform that would be automated and would only require information to be entered once. Such a system would reduce unnecessary work and save time, making it attractive to business owners.
The two planned for the system to be an all-in-one, hub-and-spoke model, with each module representing an element of HR (payroll, health insurance, retirement, etc.). They believed that employers would be so happy to have an integrated system that they they would sign up for it in droves. HR service providers would be so encouraged by this demand that they would be willing to pay a fee to have their programs in the platform (the charge would be 20%). This would generate enough revenues for the system to not have to charge employers for using the software.
The two men launched the offering, Zenefits, in February 2013 –initially avoiding investors due to Conrad’s negative experience with them in starting SigFig. Its early customers were technology firms, who hated the idea of any paperwork. They loved the platform and word-of-mouth spread rapidly. Within a year, the firm grew from 15 employees to 450, and revenues increased from $1 million to $20 million. Within two years, the number of small business clients grew to 2,000. Zenefits‘ success attracted numerous investors, ranging from traditional firms like Institutional Venture Partners to celebrities like Jared Leto and Ashton Kutcher. Conrad was only too happy to obtain their funding.
Conrad set out to disrupt the healthcare industry, and his bargain paid off. The company now has over 10,000 customers, with over 1,000 providers and over 32,000 plans, operates in 48 states, and is valued at $500 million. Perhaps the biggest sign of its promise is that Yammer founder and original PayPal COO David Sacks came back from retirement to join the company as its COO (and is now its CEO).
Benefits at Zenefits
Business model of Zenefits
Zenefits has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:
- Benefits Providers: Benefits providers offer the following programs through the system: health insurance, flexible spending accounts (e.g., FSAs and HSAs), workers’ compensation, COBRA, property & casualty insurance, life & disability insurance, 401K plans, and stock options.
- HR Departments: HR departments sign up for the system and use it to manage the various benefits programs for their employees, communicating relevant information as needed.
Zenefits offers three primary value propositions: convenience, price, and cost reduction.
The company’s software simplifies the HR management process by enabling employers to work with HR service vendors/benefits providers through one party rather than through multiple brokers. It also makes the day-to-day processes involved with management easier by automating many of them (e.g., adding a new hire to payroll or removing a terminated worker from benefits) and integrating them into one interface. This saves time and increases productivity.
Zenefits’ business model enables employers to use its system for free. This is a significant incentive for organizations to sign up, as they can use the money normally associated with paying brokers for other purposes. Finally, the company’s automation of most processes helps reduce ongoing expenses for companies, as HR staff members do not have to print or fax as many documents.
Zenefits’ main channel is its software platform, through which its customers carry out most of their tasks. However, it also operates through the mobile channel. Customers can utilize its mobile app, Zenefits People, which enables HR staff members to connect automatically to their Zenefits accounts.
Zenefits’ customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company has moved further and further in this direction – it has designed several new programs to automate previously manual tasks such as assisting employees with insurance enrollment.
A prominent example of such software is Zenefits Payroll, released in late 2015. It takes information from other Zenefits systems and automatically runs payroll, saving HR from having to do things such as handle address changes or input time sheets. Emphasizing this strategy has enabled Zenefits to slow hiring in its customer service department, as there are not as many questions. This in turn has reduced employment costs. Despite this, it still offers live support to help staff when needed.
Zenefits’ key activities focus on platform management. The company’s business model entails maintaining a common platform between two parties: benefits providers and HR departments.
Zenefits encourages third-party developers to partner with the company by integrating their applications into the system for use by customers. It also actively partners with accountants, as it shares many of the same small business clients as that group.
Its program Zenefits for Accountants supports those who wish to give their clients HR and benefits resources, in addition to tax and payroll advice. Members have exclusive access to the Zenefits’ accountant partnership team.
Zenefits’ main resource is its proprietary software platform, which connects more than 1,000 carriers with more than 10,000 employers.
It also depends on its human resources to ensure customer satisfaction, namely its staff of 1,600 employees.
Lastly, as a relatively new start-up it has relied heavily on funding from investors, raising $583.6 million from 30 companies as of May 2015.
Zenefits has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. The company’s hiring slowdown is reflective of this reality.
Zenefits has two revenue streams. The company charges benefits providers a commission when customers purchase insurance through the platform. It claims that the fees are lower than those of most brokers.
However, the money it earns from this set-up is enough to allow it to make the use of its system free for employers, as the fees add up quickly. Zenefits also offers optional paid features through its core HR platform, such as stock options administration; also, in certain cases usage may incur an implementation fee.
info: David earned a Bachelor’s in Economics from Stanford University and a J.D. from the University of Chicago Law School. His past positions include co-founder and CEO of Yammer and COO and Product Leader of PayPal. Prior to becoming CEO he was Zenefits’ COO.
info: Laks earned a M.Sc. in Software Engineering from PSG College of Technology. His past positions include Software Developer at SigFig and Project Leader, IT at D.E. Shaw. He runs the engineering team at Zenefits.
info: Abhijeet earned a Master's degree in Computer Science from University of Pennsylvania.His past jobs include positions at McKinsey and the World Bank. He oversees corporate strategy as well as important initiatives around data quality.
info: Joshua is a graduate of Dartmouth College and Stanford Law School. He was formerly General Counsel and VP of Litigation, Regulatory Affairs, and Public Policy at Zenefits. He heads the firm's compliance, regulatory affairs, and government relations efforts.
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