Parker Conrad thinks he can beat Zenefits, the company he founded, and he just got $45 million in funding to prove it

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Rippling, a new startup from Zenefits founder Parker Conrad, is offering a service to help companies manage and better use their employee data.
It offers features for both human-resources and information-technology departments.
The company just raised $45 million in a Series A funding round to grow its business.
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Inside the typical company, you’ll find employee data strewn across several frequented disconnected systems.

Human resources has information on workers that it uses for their paychecks and benefits. The information technology department has data on them that it uses to authorize to log into their computers, access their email, and use certain software programs. But it’s a good bet that the HR department’s data isn’t in sync with the IT department’s, and there’s a decent chance that even within those departments, the data they hold may not be in sync across the various software and services they manage.

Parker Conrad thinks his new startup can sort all this out. Rippling is aiming to be a kind of One Ring for employee data and the services that require it. The company offers services for both HR and IT departments — software to manage payroll and benefits as well as access to computer systems and services — that tap into, for each customer, a single repository of that client’s worker data.

"That’s the kind of crazy thing behind Rippling — doing all those things in one system," Conrad said.

Rippling offers services for both HR and IT departments

Conrad is a controversial figure in Silicon Valley. He was fired from SigFig after having a falling out with his cofounder. At Zenefits, he publicly retracted a job offer to an engineer after the prospective employee asked people on Quora whether he should accept it or another one from Uber.

Later, he himself was forced out of Zenefits following an internal investigation into the company’s compliance with insurance licensing requirements. The company was investigated by state and federal regulators and was accused by the Securities and Exchange Commission of misleading investors. Conrad ended up settling with the SEC, paying a more than $500,000 penalty without admitting or denying the charges. Meanwhile, Zenefits reported after he left that the company had fallen far shy of its revenue targets during his tenure.

Despite this past, Conrad found a ready audience among investors and customers for Rippling. The company is a kind of iteration on Zenefits, whose service allows HR departments to administer payroll, benefits, and similar functions.

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Conrad’s new startup offers a broader range of features than Zenefits, because it offers services for IT departments as well as HR divisions. But it also differs because it comes out of his insight that managing employee data is a problem across corporations and that different departments could benefit from being able to tap into a common repository of worker information.

For example, someone inside a corporation might want to email everyone in its San Francisco office. The HR department almost certainly has data on where employees are working. But the IT department may not. It may or may not have an email list of San Francisco workers; if it does, that list may well have to be manually updated.

With Rippling’s system, information such as that can percolate across departments, because it’s all located in the same database. The system can easily create an email list consisting of a company’s San Francisco workers or everyone in its engineering department or all managers of a certain level. And the system can dynamically update those lists whenever someone’s job title or office location changes.

Similarly, the types of software or services employees are authorized to use are typically dependent on their title and the department they work in. Although the IT department oversees such authorizations, the HR department usually has the job title and department information. Because all that information is in one system with Rippling, much of that authorization process can be automated. When someone is hired or changes position, the system can be configured to automatically provide them with access to particular software or services.

"I’m convinced that the … effort and administrative work required to maintain this distributed employee record across all these different system, that that’s the cause of just 90% of the crap work of running a company," Conrad said.

"Really, the way the world should work," he continued, "is you should have one system that companies and their employees could come to make changes in this one place and it would propagate everything out to all these other systems.

"That’s what Rippling is, and that’s what we do."

Rippling is focusing on the onboarding process

But his bet can seem a bit audacious. By offering such a broad range of functions, Rippling is taking on a large collection of both startups and entrenched players — everyone from Microsoft to Okta and OnePassword, to ADP and his old company, Zenefits.

Conrad thinks Rippling can win out by positioning its service as the one that companies use to register new employees and to allow clients to do as much as possible through that onboarding process. Rippling’s employee registration service can be used to not only set workers up for paychecks and benefits, but also can be used to configure what software is on their computers and what corporate systems they have access to. He’s betting that if Rippling can capture employee information — such as their name, title, and address — when they start, it can be in a position to be the service that other systems depend on for a true and updated record of that data.

He also thinks the way he and his team designed Rippling will win over customers. Although the service offers multiple functions, Conrad and his team designed it to be easy for companies to adopt. Many can do so with two days or even less, he said. And the service is separable; clients can use its HR features, but not its IT ones, or vice versa.

Investors are impressed. Last week, Rippling announced that it raised $45 million in a Series A funding round led by Kleiner Perkins. The new funds gave the startup a valuation of $295 million, according to Pitch Book.

The San Francisco company has about 70 employees, 50 of which are engineers, Conrad said. It plans to use the new funds to grow its engineering team and to modestly expand its sales and administrative staffs, he said.

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Source: Business Insider – twolverton@businessinsider.com (Troy Wolverton)