Zenefits CEO Parker Conrad had a great 2014. Based on a rapidly increasing valuation in 2014, Zenefits grew faster than both Uber and AirBnB. Now, just after the first quarter of 2015, Zenefits is now valued at $4.5 billion after raising $500 in Series C to grow the company even more. Just 15 months prior, Zenefits secured $15 million in series A funding.
Zenefits is not the first software-as-a-service (Saas) human resources solution for small and medium sized business, but it does have one important differentiator… it’s free. Zenefits offers an easy to use interface to perform all human resources functions. This includes onboarding new hires, payroll, benefits, and compliance.
Zenefits was able to grow so quickly because it’s ease of use makes it popular with HR teams and its price makes it popular with executives. What makes it popular with investors is how it makes it’s money. Zenefits earns money on the back-end from the providers of services like health insurers, financial services companies, and benefits providers.
The company understands HR and Saas. Conrad realizes startups like this that grow so quickly need large rounds like this to attract large number of sales, customer service and tech talent. These upfront cost will help them earn as many clients as possible and the profits will come later when the companies continue to use the service. When they raised their Series A round last January they had just $1 million in recurring revenue. They are on track to reach $100 million in recurring revenue by the end of this year.
Since it is still a private company it is still unclear how much CEO and co-founder Parker Conrad owns, but according to reports he is the largest shareholder. It is safe to say 2015 is shaping up to be even better than 2014, and this may make him a billionaire. However Conrad, in typical Silicon Valley style, hasn’t spent lavishly and continues to drive around in an old car.