Overseeing human resources payroll and benefits is can be a huge burden for a startup or small business. Zenefits offers an integrated software solution to make the whole process simpler and less painful. Cofounder and CTO Laks Srini talks today about the company and how it grew to be valued at $4 billion in just 3 years.
Laks says his mom would probably say he was a dumb child until about grade 7, but he always liked, and did well with, computers. He always wanted to do something on his own, and was also very ideological. His primary interest was never in just making more money with money. His thought was to use his skill set for something good.
He interned and then was hired at D.E. Shaw, until the opportunity arose for him to move to a startup, and it was especially interesting to him since it was in the financial sector. He started working for SigFig, which provided integration software for brokerages. Since he was still in India, they had to get him an H1 visa. He was hired in early 2011 and worked in the Singapore office until late that year, when his US visa came through and he was able to move to the US.
It was late 2012 when his friend Parker Conrad called him to ask him to be a cofounder of his new company. It was Conrad’s own experience and frustration in dealing with benefits and payroll that led to the idea for Zenefits.
In January 2013, they joined Y-Combinator. There they met someone doing a similar project who was close to launch as well, so Conrad and Laks quickly got their website up. While not every aspect was ready, they were able to get seven products launched by the end of that year.
Their ideas for how to construct the software was based on building not only what people wanted, but what they needed; it was also designed to meet their own needs. Effectively, they were building a system for themselves.
Zenefits has also always been a free product; their revenue comes from margins on types of insurance they are also able to sell through the software.
As it was growing, there was an everyday feeling that Zenefits could die – there were many existential crises that seemed overwhelming at the time. But solutions were found to reduce backlogs and overcome other problems.
In December 2013, they raised a series “A” of $15 million as they realized their business was becoming successful and they wanted to hire more sales, marketing and engineering personnel. In May 2014, they raised $66 million in a series “B” based on their fast growth. This allowed them to scale much faster, going from 14 to 35 in 2014, and from 35 to 200 in 2015 when they went to Series “C”..
With the rapid growth, they started onboarding people in batches. They developed a three-week bootcamp for new engineers, and Day 1 was the prime opportunity to talk about company culture.
Zenefits has always been about looking at functions essential to companies, and especially to employees, who need their paychecks and their insurance in place.
Laks also had to make the move from developer to manager as the company grew. One idea he learned was that there’s no such thing as overcommunication. When growing so rapidly, it became apparent that it’s important to stress the message of your company to be sure that everyone hears and understands it.
Advice to those starting out:
- It only gets harder
- If you don’t truly believe in it, don’t do it; you need that to make it through the ups and downs
- Don’t let visa issues stop you if you really want to be an entrepreneur