Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

techcrunch.com

Post reply on HN
Print view View original

31–40 of 91 posts

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#31

Post by bane »

jccodez wrote: post #25

I do not see it. I worked forMarsh & McLennan Companies, Inc. It has been around for years, has billions in revenue, and owns Mercer HR Services with customers like Toyota Motor Corp., Halliburton, American Airlines and many many others. They have a platform, SASS model, and nothing much different that what zenefits is doing. Even in the mid market they are extremely competitive. I do not see this is worth 4.5 billio…

It's surprising how frequently businesses switch out their benefits and HR services as well. This is a very crowded space.

> The company said it’s on track to hit annual recurring revenue of $100 million by January 2016, and hit $20 million in annual recurring revenue in January this year.

So it sounds like they're actually worth around $100-400 million at this point in non-imaginary money, which is impressive for being so new and in such a competitive space.

> Our sources previously told us that the company expects to lose more than $100 million in 2015

ouch.

I guess their sell point is that this can be considered recurring revenue. So if companies they contract with grow, or don't switch to some other vendor, this turns into lots of money. But their customer acquisition costs are insane right now.

How we value companies is clearly completely broken.

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#33

Post by eatbuckyballs »

tvanantwerp wrote: post #17

My company had considered to switching to Zenefits, but decided to stick with the local middleman we've already got. The difference, according to HR, was that he knew for certain that a phone call to the current rep would fix almost any weird issue--with Zenefits, despite the convenience of doing things online, he couldn't be sure that was the case.

No to mention their platform is still far off from what i'd call user friendly. I have to download excel sheets, edit them and upload? Really??

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#34

Post by calcsam »

jccodez wrote: post #25

I do not see it. I worked forMarsh & McLennan Companies, Inc. It has been around for years, has billions in revenue, and owns Mercer HR Services with customers like Toyota Motor Corp., Halliburton, American Airlines and many many others. They have a platform, SASS model, and nothing much different that what zenefits is doing. Even in the mid market they are extremely competitive. I do not see this is worth 4.5 billio…

Marsh & McLennan has a market cap of $30B -- though this also includes the Oliver Wyman consulting firm & a couple other subsidiaries

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#35

Post by BinaryIdiot »

We're using Zenefits at the current start-up I'm at. It's not half bad. I am only a user so I can't speak for how the entire system works but from my perspective it took all of the annoying HR, payroll and insurance paperwork and put them into a single place where I can always access it, digitally sign it and fill it out / update it. This is the first place where I didn't have to manually sign up or print anything which was great.

It's a valuable service in my opinion and I'm surprised there are not more companies that make this stuff all together. $4.5 billion valuable though? I'm not sure especially since I'm only seeing the user side, not the management side.

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#36

Post by pxlpshr »

I'm the first tweet on their homepage expressing my profound love for Zenefits. Great product, my praise is authentic.

Happy to see they've raised a boatload of capital. I look forward to more product development and additional customer support resources. If I had the means to invest at a $4.5B valuation, I would.

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#37

Post by BinaryIdiot »

sschueller wrote: post #4

$4.5B Valuation for an SaaS business that doesn't charge for it's service and makes money from commissions? Did they invent something no one else can do? Why would insurance companies not just scrap the middle man and build their own thing?

> Why would insurance companies not just scrap the middle man and build their own thing?

Maybe I'm wrong (I'm a user of Zenefits but only from the employee side) but Zenefits seems to bring all of the disparate services (generic HR forms, payroll, insurance) together in a single place with flexible insurance coverage. If an insurance company did this I don't think they could offer as much unless they're going to branch services out. Plus this let's a company switch out insurance providers without changing services.

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#38

Post by bane »

joncalhoun wrote: post #29
jccodez wrote: post #25

I do not see it. I worked forMarsh & McLennan Companies, Inc. It has been around for years, has billions in revenue, and owns Mercer HR Services with customers like Toyota Motor Corp., Halliburton, American Airlines and many many others. They have a platform, SASS model, and nothing much different that what zenefits is doing. Even in the mid market they are extremely competitive. I do not see this is worth 4.5 billio…

I suspect that if HN had been around when Google was raising we would have read the same type of comments there. Based on the numbers in the article, they could very well be in the billions of rev within a few years if they can maintain the growth.

The problem I have with valuations is that they're supposed to somehow reflect what somebody might pay to buy the company. But because of the hamfisted way they're calculated they seem to be so huge or so small (depending on the case) that they're essentially meaningless.

For example, here's a company operating in an ultra-competitive space, from a fairly interchangeable position (middle-man) that has a supposed value on the market that's 225x what they expect to bring in in revenue during 2015. And they're losing 5x their projected revenue in customer acquisition costs (yeah yeah, growth stage and all that). "Valuation" as a term is clearly divorced from actual business realities.

People who claim to be smarter than I will say "but the investors figure the company's market position in through their N-round investment terms". So what do I know?

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#39

Post by BinaryIdiot »

triangleman wrote: post #32

jbob2000, you are hellbanned, that means every comment you've made for the last few weeks has been hidden from this forum.

Not to go off topic but this is a thing on HN? That's psychologically terrifying (though I'm assuming deserved). How does it work, exactly? Is it permanent? Just curious.

Re: Zenefits (YC W13) Just Raised $500M at a $4.5B Valuation

#40

Post by trimbo »

joncalhoun wrote: post #29
jccodez wrote: post #25

I do not see it. I worked forMarsh & McLennan Companies, Inc. It has been around for years, has billions in revenue, and owns Mercer HR Services with customers like Toyota Motor Corp., Halliburton, American Airlines and many many others. They have a platform, SASS model, and nothing much different that what zenefits is doing. Even in the mid market they are extremely competitive. I do not see this is worth 4.5 billio…

I suspect that if HN had been around when Google was raising we would have read the same type of comments there. Based on the numbers in the article, they could very well be in the billions of rev within a few years if they can maintain the growth.

> I suspect that if HN had been around when Google was raising we would have read the same type of comments there.

Before raising, Google had a substantially better product than Altavista running on a dev server in the stanford.edu domain.

Post reply on HN