Zenefits' controversial cofounder has launched a new startup ... and investors were 'thrilled' to help him

Zenefits Parker Conrad ZenefitsZenefits co-founder and CEO Parker Conrad

Zenefits co-founder Parker Conrad wasted almost no time in starting a new company after he was forced to resign from his startup a year ago under a cloud of controversy.

On Tuesday, Conrad began his next act, officialy launching Rippling, a service that aims to provide businesses with an easy way to “onboard” new employees.

Rippling automates everything a small business needs to get a new employee started on Day 1.

This includes employment forms like offer letters, HR forms, issuing building key cards and a a new Mac computer (rented through Rippling and upgradeable every two years). The computer is loaded with all the corporate software and cloud apps the employee needs and is managed and protected with machine-learning security software from Cylance.

The idea is that someone at a company can essentially push a button to onboard a new recruit, and push another button to offboard a departing employee.

Rippling starts at $US8/employee per month. It also includes payroll software and has been in beta with about 25 companies, Rippling co-founder CEO Conrad tells us.

Rippling integrates with a selection of popular cloud apps like Google Apps and Box (similar to Okta) but it doesn’t integrate with Zenefits.

The idea is interesting, and could appeal to Rippling’s target market: companies with less than 500 employees.

But it’s equally interesting how easily Conrad bounced back from the controversy.

He’s back

Zenefits had raised a whopping $US580 million in its first few years of business. Just before things blew up on him, Conrad cashed out of $US10 million worth of stock. He left Zenefits with a good portion of his stake intact, sources told Business Insider at the time, but not on good terms.

With all that VC money, under his watch Zenefits had ballooned into 1,600 employees, tripling headcount in its third year. It was then accused of selling insurance without proper licenses. Conrad was blamed for creating a computer program that seemed to skirt the law in helping employees study for their licensing tests.

He may still be on the hook for legal consequences as a result of all that.

Zenefits famed COO, David Sacks, who had invested $US11 million of his own money, took over as CEO, and settled with the states.

He created a new version of the software, verified that everyone was licensed and implemented compliance programs. Sacks also laid-off employees, settled with investors, reducing the company’s valuation and gave investors a bigger stake. (Less than a year in, Sacks also resigned and the new CEO, under Sack’s guidance, laid off almost half the staff last month).

None of this deterred angel investors from supporting Rippling, Conrad told Business Insider.

He wouldn’t comment on how much the new company has raised, but Conrad told us, “We were kind of fortunate that the funding piece was relatively simple and straightforward. Other than one or two people, we didn’t even talk to anyone who wasn’t a Zenefits seed investor,” he said. “We could have raised 5 times the amount of money we ended up raising, just from the people from Zenefits we spoke to. That’s really nice. It feels good to have people who support you and back you and believe in you.”

Conrad also says that he’s learned from the experience at Zenefits.

“I experienced a lot over the last four years. It’s hard to walk away without a lot of perspective, and a lot of knowledge of what’s involved in building these companies, what’s around the corner,” he said.

Third time’s the charm?


In a case of only-in-Silicon-Valley, Rippling’s investors seem excited about the future prospects of Conrad’s new venture and not overly concerned by whatever happened in the past.

Rippling sent us comments from a few investors, all of which laud Conrad’s skills as an entrepreneur while pointedly avoiding any mention of the controversy that ended his stint at Zenefits.

“Building a business from scratch is not easy, and even though he’s been through it before, Parker still has the passion and drive of a first time founder. Parker has a unique combination of intelligence, drive, grit, and flexibility which is difficult to come by,” said Ben Ling, investment partner at Khosla Ventures.

“Businesses spend a lot of time and resources onboarding their people, and now it couldn’t be easier with the platform Parker is building at Rippling. Parker is one of the best founders we’ve ever worked with, and his ability to go from zero to one is one-of-a-kind. We’re excited to back him a second time,” said Garry Tan, Managing Partner at Initialized Capital.

“We love backing repeat entrepreneurs and are thrilled to be working with Parker again,” said Topher Conway, Co-Managing Partner of SV Angel.

“I’m thrilled to be partnering with Parker. Rippling is an outstanding concept — one that can really move the needle for a business,” said Angel investor Justin Kan.

As for Conrad, he’s ready to begin another journey that he knows won’t be easy.

“There’s nothing easy about building a company at all,” he said. “I find it really hard, just painful and difficult and if you are successful, it’s even worse than if you fail. You only really do this if you are driven to build something.”

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