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

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

#41

Post by jaredhansen »

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?

>$4.5B Valuation for an SaaS business that doesn't charge for it's service and makes money from commissions?

In fairness, this is also a rough description of the business model of ebay (current market cap: 70.2B). Like Zenefits probably eventually will, ebay has added various bolt-on services, but its core business has always been, as far as I can tell, making commissions on transactions between others. See also: AirBnB.

>Did they invent something no one else can do? Why would insurance companies not just scrap the middle man and build their own thing?

It's not so much that the underlying technology is that mind blowing (it isn't, or at least, historically hasn't been). Indeed, I'm hoping they invest some reasonable chunk of this cash in improving ui/ux. But execution matters, and the mere fact that, like facebook, they didn't really "invent something no one else can do", doesn't mean they aren't creating a hell of a lot of value.

I don't know Zenefits' market or business well enough to have any idea whether $4.5B is reasonable at their current stage, but it's not beyond the realm of possibility.

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

#42

Post by GFischer »

BinaryIdiot wrote: post #39
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.

I think it's permanent.

pg defended it here:

https://news.ycombinator.com/item?id=6060954&utm_source=dlvr...

(I'm not a moderator here, though I was in another high-profile site) In particular, jbob2000 made several low-quality or sarcastic comments, not very in line with what HN wants.

The one that probably triggered the hellban:

https://news.ycombinator.com/item?id=9382992

was a sarcastic:

"Oh no! Giving something away for free! The travesty!"

but he had others like:

"Foursquare? What is this, 2009?"

which don't contribute that much.

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

#43

Post by blairanderson »

Seriously anyone working to create just a brokerage these days is pathetic in comparison to zenefits.

Also, zenefits knows that they don't really have a moat. Anyone with a brokerage license can come along and follow their model. They need to blow up while nobody is chasing them.

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

#44

Post by eueueu »

BinaryIdiot wrote: post #39
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.

It generally means that at any moment, you can be hellbanned and not know about it. If you're overly critical of something, you might be banned. If you offer a contrary viewpoint, could be banned. It's a dick move IMHO, and makes every forum that does it more of a circle-jerking echo chamber.

(I've been hellbanned a few times in the past, and for no real reason).

I expect this account will be hellbanned now :)

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

#45

Post by blairanderson »

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?

Nothing special. It's more a single service that handles all HR, which happens to make money from insurance commissions.

Other companies should be doing this!

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

#46

Post by mblevin »

boise wrote: post #24
runako wrote: post #14

Earlier quoted context omitted.

> Why would insurance companies not just scrap the middle man and build their own thing? One of the benefits of an HR solution like Zenefits is that it lets you shop among and switch between insurance providers. A captive solution wouldn't be able to do this as well or as independently as a third-party company. Zenefits also helps companies with more than insurance, services which would presumably be less interesting…

This is also true of a PEO (e.g. Trinet). Yes, Zenefits has a gorgeous interface which feels much more modern and sleek than something like Trinet. The trade-off is that the healthcare benefits are inferior for a small company - because unlike a PEO, Zenefits is NOT pooling together tens of thousands of young, healthy employees across many companies and getting a good deal from insurance companies. Yes, as an employe…

I would argue that this is actually the fundamental innovation here - shifting of the cost from the employer to the employee.

With Trinet, you get negotiated rates that are pretty fantastic - but all the employee sees is an outdated interface, and all the employer sees is the monthly overhead cost per employee draining their bank account.

With Zenefits, the employee doesn't see that their health care actually costs more (the employer typically covers the same amount regardless), and the employer doesn't have that monthly fee.

It's as compelling as it is accidentally insidious.

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

#47

Post by BinaryIdiot »

GFischer wrote: post #42
BinaryIdiot wrote: post #39

Earlier quoted context omitted.

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.

I think it's permanent. pg defended it here: https://news.ycombinator.com/item?id=6060954&utm_source=dlvr... (I'm not a moderator here, though I was in another high-profile site) In particular, jbob2000 made several low-quality or sarcastic comments, not very in line with what HN wants. The one that probably triggered the hellban: https://news.ycombinator.com/item?id=9382992 was a sarcastic: "Oh no! Giving something…

Ah thanks for the clarification. Today I learned.

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

#48

Post by jccodez »

calcsam wrote: post #34
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

a couple? also look up seabury smith. Here is a list of their subsidiaries. http://www.sec.gov/Archives/edgar/data/62709/000119312511047... You can't tell me zenefits justifies a 4 billion dollar valuation for what they are doing.
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