Photo: Joshua Reeves
It’s high time an Internet company came along and disrupted the $38 billion payroll industry.That’s the plan for ZenPayroll, a startup launching today.
CEO and cofounder Joshua Reeves decided to create ZenPayroll after he experienced his own financial horror story. He discovered—two years too late—that an old 401K had gotten stuck in a slow-growth fund.
The payroll company “mailed documents to my previous address,” Reeves said. ” I didn’t know my 401K got reinvested for two years.”
ZenPayroll solves such problems. It gives employees a self-service portal so they can manage their money, 401K accounts, and other payroll-related items directly.
More importantly, it lets employers verify payroll with a few clicks of a mouse or via their smartphones. That’s a far cry from the extensive paperwork required today. Constantly changing regulations caused U.S. companies to pay the IRS an additional $5.3 billion in payroll tax penalties in 2011, the startup estimates.
Reeves says that’s in part because payroll is processed by technologies developed decades ago and the business is dominated by two ageing players: ADP, founded in 1949, and Paychex, founded in 1971.
So as Reeves went looking for investors, he had no problem getting people to open their wallets.
“It resonated,” he said. “All of them have used payroll systems” and they had “their own anger” of how complicated they are to use.
ZenPayroll raised $6 million from Box CEO Aaron Levie, Yammer CEO David Sacks, Dropbox CEO Drew Houston, YouTube cofounder Jawed Karim, Yelp CEO Jeremy Stoppelman, Badgeville CEO Kris Duggan, SugarCRM CEO Larry Augustin, and Zuora CEO Tien Tzuo.
Other investors include Sherpalo Ventures, Y Combinator, Salesforce.com, Google Ventures and Data Collective.