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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

#21

Post by Goronmon »

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?

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

I once worked for a company that built smaller products for insurance companies. No really big ones, but a decent representation of the market. We would put together an update for what was an internal application, and sometimes it would take 6-8 months or more for them to get around to deploying the new version to their users, assuming they didn't decide to just hold off for the next version for some reason or another.

These companies are pretty absurd in how slowly they move with anything, especially anything technology related.

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

#22

Post by xasos »

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?

They would probably have to build a product at least 2x better than Zenefit's current offerings to gain back market share. It looks like Zenefits is starting to be the way to do things as many smaller startups.

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

#23

Post by nolok »

chinathrow wrote: post #18
kauffj wrote: post #8

A fella named Kevin from Zenefits sent me email once asking about our human resource needs. I told Kevin that we have no need for human resources since our company was run entirely by strong AI. I signed it, Yours in the Singularity. Kevin never emailed me back.

So essentially, he spammed you?

No no no, this is a funded startup, he used the power of social relationship and communication medium to reach out and generate interest

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

#24

Post by boise »

runako wrote: post #14
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? 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 employer, you don't play the hefty admin fee you pay Trinet - but you just don't have access to better plans for your employees.

The other pain we've found is that at the end of the day Zenefits is simply a wrapper around third party services (healthcare insurance, payroll etc.). If everything is smooth sailing, there is no problem. the moment something goes wrong there's this super frustrating finger pointing session where you have to call Aetna directly, or Intuit Payroll and Zenefits blame each other, or no one wants to cop to a payroll tax filing error. If you have an employee waiting for some critical healthcare reimbursement, this he-said/she-said is the worst. Never had to deal with that with the one-stop-shop PEOs.

Zenefits has great software but the customer service needs some catching up. Maybe this round of funding will do it.

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

#25

Post by jccodez »

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 billion dollars.

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

#26

Post by jccodez »

Goronmon wrote: post #21
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?

Did they invent something no one else can do? Why would insurance companies not just scrap the middle man and build their own thing? I once worked for a company that built smaller products for insurance companies. No really big ones, but a decent representation of the market. We would put together an update for what was an internal application, and sometimes it would take 6-8 months or more for them to get around to…

I think there are some big players who do daily if not weekly releases. I worked for one. It is all tenant shared and they push client specific changes on a regular basis.

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

#28

Post by calcsam »

donkeyd wrote: post #3
tomblomfield wrote: post #2

"If you think about it like we’re driving a car, we want to go extremely fast at an extremely high speed, and go very far,” [CEO] Conrad said. “And if you want to do that you’re gonna burn a lot of gasoline. So this round we had to do the mother of all pit stops for gas and beef jerky, to continue building at the speed that we’re going."

I wonder what Marc Andreessen thinks of this statement... Context: http://www.businessinsider.com/marc-andreessen-on-startup-bu...

https://twitter.com/pmarca/status/515249537385250816

Parker Conrad: "@pmarca how should a CEO eval their own situation on this? What's the rubric / framework to decide if it's "too much"?"

Marc Andreessen: "Very dependent on individual circumstances. For example, you should be investing aggressively :-)."

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

#29

Post by joncalhoun »

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.

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