Has Rippling won? with Parker Conrad from Rippling

Introduction (0s)

• The text introduces Parker Conrad, the CEO and co-founder of Rippling, a global HR company that offers services such as payroll, onboarding, and time tracking.
• Rippling aims to provide a single system for managing various back-office functions, including HR, finance, and payroll, using one set of data for all applications.
• The text mentions that Parker Conrad is a serial founder, having previously founded companies in the financial services space.
• The text highlights the shift in Parker Conrad's career focus from financial services to HR, with his founding of Zenefits and Rippling.
• The text briefly mentions Parker Conrad's first company, which started as Wick Invest and later became SigFig, a consumer-oriented product.

Parker’s previous startups (2m48s)

• The speaker's previous startup, SigFig, struggled to raise funding despite pitching to 75 investors over two years. Investors constantly shifted their focus to new trends, making it difficult to build a company that aligned with their ever-changing interests.
• The speaker's experience at SigFig led him to believe that building business software offered more control over outcomes compared to consumer-focused businesses, which felt unpredictable and subject to fickle market trends.
• The speaker's first company, Zenefits, was born out of his personal experience with the cumbersome and outdated processes involved in employee onboarding, particularly in the realm of health insurance. He recognized the potential for a software solution to streamline these processes and saw an opportunity to build a business that could generate revenue independently of heavy investor reliance.

Leaving Zenefits and starting Rippling (6m9s)

• The speaker was forced to leave their previous company, Zenefits, and started Rippling with the intention of creating the company Zenefits could have become if they had stayed.
• The speaker believes there are key differences between Rippling and Zenefits, particularly in how Rippling views employee data.
• Rippling sees employee data as a fundamental building block for all business software, not just HR software. They believe that understanding employee data is crucial for building better business software applications.
• Rippling aims to create a system where all business software applications have a deep understanding of employee data, leading to improved features like permissions, approvals, reporting, and analytics.

Horizontal integration in HR software (9m8s)

• The conventional wisdom in business software development has been to focus on narrow, deep applications. This has resulted in businesses needing to manage numerous separate software systems, leading to inefficiencies.
• Narrow applications often lack depth in essential capabilities like reporting, permissions, approvals, and workflow automation.
• A better approach is to build a system that can support multiple parallel business software applications, all integrated within the same platform.
• This approach offers several advantages:
  • Improved integration between applications.
  • Enhanced integration with underlying data, such as employee data.
  • Reusable platform components, allowing for deeper development of essential features.
  • A consistent user experience across all applications.

AI skepticism for software (11m57s)

• The speaker discusses the trend of companies building AI into vertical software, similar to the shift from on-premise to cloud-based software. They believe that while there is a current focus on AI point solutions, the market will likely consolidate into more singular systems that integrate AI capabilities across various functions.
• The speaker expresses skepticism about the current hype surrounding AI, particularly the focus on chatbots and superficial AI implementations. They believe that the true power of AI lies in its ability to analyze large amounts of data and identify anomalies, rather than simply mimicking human interaction.
• The speaker compares the current AI landscape to the dot-com bubble, acknowledging that while the potential for AI is significant, it is difficult to predict which companies will ultimately succeed. They emphasize that early movers in AI may not necessarily be the long-term winners.
• The speaker shares their experience in building software, highlighting the importance of designing products that are flexible and adaptable to changing business needs. They emphasize the need to avoid creating separate systems for different types of users (e.g., employees vs. contractors) and instead focus on creating a unified platform that can accommodate diverse user types.

Managing the competition (20m58s)

• The speaker discusses the importance of prioritizing software development over operational processes, citing Zenefits' mistake of focusing on commercial operations before technology. Rippling, in contrast, adopted a "software first" approach, automating tasks and integrating them into software solutions.
• The speaker explains that Rippling's competitive landscape is diverse and situational, with competitors varying by geography, customer size, and specific product areas. They compete with companies like Gusto, Paylocity, Paycom, UKG, Workday, Sage, Cel, Payfit, Employment Hero, Jamf, and others depending on the context.
• Rippling's competitive advantage lies in its comprehensive platform that integrates various HR and business functions, offering a single solution for multiple needs. This approach allows them to win against competitors in specific areas like ATS or global employee management, as customers prefer a unified system.
• The speaker acknowledges Rippling's extensive marketing presence, particularly in New York City, but clarifies that it's not a result of a large-scale outdoor advertising campaign. They attribute the visibility to a specific campaign that may still be running in the city.
• The speaker highlights the challenge of brand awareness, noting that Rippling's competitors, like Paylocity, have higher name recognition among potential customers. This emphasizes the need for continued marketing efforts to increase Rippling's visibility and market share.

Growth marketing strategy (26m34s)

• Rippling invests significantly less in marketing compared to its competitors, resulting in lower brand awareness. The company is experimenting with different marketing strategies in various markets.
• Rippling prioritizes research and development (R&D) over sales and marketing, allocating a substantial portion of its budget to R&D. This focus enables the company to continuously improve existing products and develop new ones.
• Rippling currently has five new applications under development, with two expected to launch in September or October. The company is also building two new cloud platforms, adding to its existing HR, IT, and finance clouds.
• Rippling boasts a highly efficient sales and marketing strategy, with a customer acquisition cost (CAC) payback period of 17 months, significantly lower than the median of 28-33 months for public software companies. This efficiency is attributed to the company's strategic growth approach, avoiding excessive spending.
• Despite achieving significant success and a valuation of $13.5 billion, Rippling's leadership believes it is too early to declare victory. The company remains focused on maintaining its growth trajectory and continuously improving its products and services.

What a founder should focus on (29m36s)

• The speaker believes it is too early to celebrate the company's success, as they are not yet profitable and the company is still private.
• The speaker enjoys working with the talented people at the company and finds the product they are building to be satisfying.
• The speaker is the main user of the company's product and uses it for various tasks, including payroll, benefits management, and expense reimbursements.
• The speaker believes that being a direct user of the product allows them to have a valid opinion on its development and provides valuable feedback.
• The speaker prioritizes "going and seeing" by directly observing and experiencing problems within the company, rather than relying solely on data and dashboards.
• The speaker believes that founders should focus on the things they hate within the company, as these are the areas that are most likely to cause problems and are often avoided due to discomfort.

VC-founder power imbalance (35m2s)

• The text discusses the power imbalance between venture capitalists (VCs) and founders in the tech industry.
• The speaker, a founder, describes how VCs often have more power and influence due to their repeated presence in the industry and close relationships with media outlets.
• The speaker highlights the fear that founders experience when dealing with VCs, particularly when facing threats of being ostracized from the industry.
• The speaker suggests that the media often reflects the views of VCs more than those of founders, contributing to the power imbalance.
• The speaker emphasizes the lack of alternative career paths for founders, leading to a sense of vulnerability and dependence on VCs.

Host discussion (40m23s)

• The discussion centers around the idea that founders should embrace challenges and work through their weaknesses rather than immediately hiring for them. This is supported by the example of Parker Conrad, who founded Rippling after experiencing failures with his previous company, Zenefits.
• Conrad's approach to leadership involves direct involvement in all aspects of the company, including customer service and approval processes. This contrasts with other founders who delegate more.
• The discussion also touches on Rippling's marketing strategy, which relies on unconventional methods like out-of-home advertising, rather than a large marketing budget.
• Conrad's experience with Zenefits and his subsequent founding of Rippling is discussed, highlighting his resilience and willingness to learn from past mistakes.
• The conversation concludes with a call for founders to be more open about their experiences, particularly regarding negative interactions with investors. The discussion emphasizes the importance of speaking out against bad behavior and the power imbalance that exists in the industry.