With Scott Orn

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Scott Orn

Scott Orn, CFA

Parker Conrad explains how to bring Payroll, Benefits, HR & IT together with Rippling

Posted on: 03/27/2019

Parker Conrad

Parker Conrad

CEO & Co-Founder - Rippling

Parker Conrad of Rippling - Podcast Summary

Parker Conrad founded Rippling to simplify a startup’s entire back-office by uniting Payroll, Benefits, HR & IT.

Parker Conrad of Rippling - Podcast Transcript

Scott: It’s Scott Orn at Founders and Friends podcast and Kruze Consulting. And before we get to just a fantastic podcast at Parker Conrad at Rippling, quick shout out to Brex, our sponsor. Brex makes credit cards very easy for startups. There’s no personal guarantee. They’re easy to provision for new users. It’s easy to sign up. They sync into QuickBooks very easily. You know it’s the trend, it’s easy to use Brex. Check ‘em out. And when you go through the signup flow, just type in Kruze Consulting, K-R-U-Z-E and you get a discount. Hope that helps. Brex is a great product. And now to a fantastic podcast with Parker. Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting and today my very special guest as Parker Conrad of Rippling. Welcome, Parker.
Parker: Thanks. Thanks for having me.
Scott: So we’ve been using your software at Zenefits and now Rippling for many, many years. It’s awesome to meet you in person. Huge fans.
Parker: Cool. Thanks so much.
Scott: Vanessa started using Zenefits way back in the day. Probably one of the first accounts to ever use Zenefits and we’ve had a great run and it’s been amazing. And now you started a new company called Rippling. Do you want to kind of retrace your career a little bit and talk about Rippling?
Parker: Yeah, sure. I mean, Zenefits, as you know, grew very quickly and one of the reasons that it did was because it was the first company to have this idea of sort of all in one HR. And that’s since been emulated by pretty much everyone in the industry. But it started with Zenefits and what people were always really impressed by was that you could come into Zenefits and there was this button you could click to hire someone and they would sort of be set up automatically across all of your HR systems like payroll and benefits. Before that, they kind of did payroll or there were like that admin tools and there were sort of other time tracking systems. But no one kind of tied them all together. And by connecting those systems up to it dramatically simplified life for the HR department. And one of the things I started to realize towards the tail end of my time there and that really developed with Rippling is that that problem is not unique to HR departments. You know, every functional area of the company has this problem of like systems proliferation. You know, sales teams, seven years ago the only system you used as a sales rep was Salesforce. And now there’s like eight different systems. You know, Salesforce and Gong and Outreach and Calendly and Zoom and a whole bunch of different things. And-
Scott: We use most of those. Yes.
Parker: Anyway, what it creates is this sort of administrative pain across the company and where that pain comes from, I’m convinced, is that all of this software, they’re each separately managing a database of who your employees are. And it might be as simple as just like usernames and passwords. If it’s a payroll system, it’s social security numbers and salaries and all that kind of stuff. But as a business owner, if you think about it, you have a hundred different places where you need to sort of maintain a list of who’s in your organization. And I became convinced that that’s the source of like 90% of the administrative work of running a company. Like 90% of just the kind of crap work of just making thing A work with thing B really ties back to this problem. And I thought the solution was to have what we call an employee management system and notably, we don’t call it a payroll and HR system even though it is also those things, that encompasses payroll, benefits, HR and IT. And that you have one system, you add employees in this one place where you or they make changes in this one place and we handle everything across all of that stuff. They get set up in payroll, they get enrolled in insurance. They’re in all of your HR systems. But they also get a computer that ships before their first day of work.
Scott: They get access, right? Too like all the software [crosstalk 00:03:58]-
Parker: They get access to all the software that they need, everything is pre-configured with the right … You know, if it’s on their computer, the right software’s installed, the right policies are enforced. They’re on the right email lists in G suite, the right channels in Slack, the right role or license type in Salesforce. And the system is smart enough because it’s also the HR system. It knows that well this person is an account manager and that has implications for what email list they should be on, what software should be installed on their computer, what systems they get access to, and it’s different if they’re an account manager than if they’re a software engineer. And you can talk to all these systems in terms of those concepts. Like you can say look, I’m hiring a software engineer and Rippling is smart enough to understand well that means they need access to [inaudible 00:04:43], but they probably don’t need Salesforce. And you can sort of instrument all that in this way that when you make changes in Rippling, whether it’s to someone’s department or manager or role or salary, we handle all of the propagation, all of the sort of downstream second order effects across all of these different business systems. They all kind of happen automagically across HR, payroll, benefits and IT.
Scott: And so, I think I told us before the mic’s got turned on, but we spent something like three or four hours per each employee that we hire to turn on all of this stuff.
Parker: And I’m surprised it’s only that. And you know what? We talk about onboarding a lot because that’s the most visible pain point. But what happens is information about employees is changing all the time. You know, people get married, they have a kid. Congratulations by the way.
Scott: Thank you.
Parker: Their manager changes, they get a raise, a new role. Each of those things has a whole host of downstream implications. And some of them are really obvious. Like if someone’s salary changes, it needs to change in payroll, but it also needs to change with the life insurance carrier or the disability insurance carrier, with the FSA vendor, with the 401k company. Like there’s a whole host of other [crosstalk]
Scott: Promotion and they go to different email lists or different Slack channels, on different roles here.
Parker: And with Rippling you sort of set that up once and then you never have to think about it again.
Scott: And the other thing is that you haven’t talked about, which is anyone who does termination. So we do terminations on behalf of all of our clients and there’s always this mad rush to turn systems off or you forgot to turn something off. No one wants to do a termination, but when it does happen, there’s always like a one hour sprint to turn off the password manager and box and every other system that they have access to and make sure there’s no leakage there. And that’s something Rippling [crosstalk] right?
Parker: For an employee and we walk you through generating a final paycheck them. And you can schedule a termination. So you say this is Friday at 5:00 PM and we turn off their access to their computer so they can’t walk away with that. We shut down access to all these different accounts. You don’t have to worry about forgetting to turn off their access to one of your sales systems, which means they can download a list of all your customer-
Scott: Totally. And by the way, we’ve made that mistake internally before. And so that’s why I’m so hypersensitive about this. You’re just automating a ton of stuff. I think that the other thing just the macro picture is like all of our lives are getting so embedded with software, especially our business lives. And you talked about the eight different systems that sales reps use now. It’s totally true and we’re doing the same thing. And part of the value we bring to our clients is putting them on the right software. But having like an easy way to manage all that for them is hugely valuable.
Parker: Cool.
Scott: It’s super exciting.
Parker: Yeah. I mean for people who are listening who are software engineers, one way that I think about this is we’re trying to find what is every system that has an employee object in it and just sort of abstracting out that employee object into one central system so that it’s fed by this sort of one underlying source of truth of employee data.
Scott: That’s amazing.
Parker: Which makes it much easier to make changes to hire someone, to terminate someone. You know, all that kind of stuff.
Scott: So you had this idea as you’re finishing up at Zenefits or just you felt the pain when you’re there and then [crosstalk]
Parker: I’ve seen this in every company that I’ve worked at. You know, every company that I’ve been at develops the sort of systems administration pain. And in some ways, the deadweight loss of the SaaS revolution is this sort of increasing systems proliferation across all of these different functional areas of the company. From Zenefits I saw that people wanted this sort of like all in one system. That the connectedness of having payroll and benefits together was really important. And I sort of understood like it’s not just about payroll and benefits and you don’t want a system that just does payroll and benefits. You want something that can handle these pain points more broadly, which means payroll, benefits, HR, but also apps and services, computers, password management, all that different stuff.
Scott: Yeah. Kudos to you, man. The funny thing is until I heard about what you’re doing, I never even contemplated it was possible. It was just like one of those hey, we’re just going to have to slug it out. And our operations manager, Tatiana, does it for us now, but I used to be the person at Kruze Consulting for our first like 15 team members who did all this. So I have literally-
Parker: It’s the digital equivalent of taking out the trash and it’s like if you’re like the founder, like you’re the one doing it in the early days, and eventually you develop these sort of administrative functions across the company. When you have HR people and HR people and IT usually with like the coordinator title, finance coordinators, that are all kind of just doing this like systems administration.
Scott: I mean I took out the trash, so to speak, every Saturday or Sunday for like every time we hired a new person, I’d be in before they started on Monday to make sure that the computer is set. It was miserable. It was terrible.
Parker: We had at my last company, our CMO was in charge of laptops.
Scott: That was me.
Parker: Every Sunday, he was running to Apple store like grabbing a bunch of computers for the people starting on Monday.
Scott: Oh my God. And then like-
Parker: I mean at first we ship those out automatically. So you hire someone, the computer shows up before somebody starts working and it’s already got everything installed and everything configured correctly.
Scott: That’s amazing. Yeah. I want to talk about payroll and benefits and all that stuff, but the point I think you’re making where you say … Like Tatiana, again, is amazing.She’s the operations manager. But your software can enable her to be more scalable so she doesn’t have to do as many ground out type of tasks and she can do more sexy stuff that’s high-value stuff for us, like analysis and things like that. So you’re actually cutting down the number of people a business needs to hire for overhead or support and making them more scalable, and also making that person happier by giving them a higher value job, which is really cool.
Parker: Yeah, I mean the way, the way I think about it is sometimes people are like is this software mean like oh, we’re going to like fire our HR people? And usually like real HR people don’t view their job as doing this kind of systems administration. So it allows people to do is to focus on the real HR task. Things like company culture. What kind of environment do we want to build-
Scott: Compensation structures. Yeah. Yeah.
Parker: How do we recruit the best team? Because the administrative work has been sort of automated in the background.
Scott: And by the way, that’s in your career, you’ve done an amazing job ‘cause Zenefits made our life as accountants much better because we can get a company up on Zenefits really quickly and not spend a ton of time picking benefits for small companies. Like we hated that. Do you know? So like thank you for in your career, you’re slowly making our life better at every stop. So after Rippling’s a huge success, we’ll see what you do next. And they’ll probably make our life [crosstalk 00:00:11:46]-
Parker: Hopefully I’ll stick around [crosstalk]
Scott: You got like 10 or 15 years of this one. So Matt at Rippling, what’s Matt’s last name?
Parker: Matt Plank.
Scott: Plank. Yeah, that’s what I thought. He’s a great guy. He’s amazed by the way. I think he runs like your sales or operations. He’s incredible. So we’ve been talking back and forth. And one of the things that I didn’t quite realize when Rippling launched, I understood the connectivity aspect of it, on the apps. I didn’t know that you guys offer payroll and benefits. And so Matt actually, to his credit, sat me down for like half an hour. We did a Zoom and he explained how you guys do that. Do you want to kind of walk the audience through that and why it’s important for Rippling to offer that?
Parker: So the first thing is with Rippling, we say yes to however you want to use the system. So there are people that for whatever reason are totally like embedded with an existing payroll system and they use us just for on the IT side, for apps and hardware. Conversely, there are people who use us for payroll and benefits. But on the IT side, they have like someone else that handles that. And obviously, there are a lot of companies that do both, which is where I think a lot of the power of the system comes in. One of the reasons you want to do this all in one system because sometimes I tell people like, hey, we’re an HR system, like a payroll system that also does your ITm and it’s kinda like superficially like what? Why do you have like a payroll system that does IT as well? And the reason it makes sense is that most of IT, both the sort of administrative work in IT as well as sort of IT security is fundamentally about who should have access to your systems, how they should be configured within those systems. And those are almost always questions about what is someone’s role within your company, what’s their function, do they work for your company? And so when you can connect that up to an HR system, you can automate wide swaths of IT administrative work because the HR system is the repository of that information. You know, what is this person’s role? Like what do they do for your business?
Scott: And by the way, I’m the person right at Kruze Consulting who gets these questions we hired a new contractor or new staff accountant. What access do they get and what they don’t? Having it in a pre-conditioned formula would be so much easier for me.
Parker: So every IT system that does this kind of stuff on the IT side, they have this concept called a user. So you have like well, this user has access to this system or this other system. And the thing is like real people and businesses don’t think in terms of users. They think in terms of people in roles and employees. And so, when someone comes to you and asks you that question, they’re asking you what access [crosstalk 00:14:25]. Well, access should a staff accountant have, right? And because you’re doing both your sort of HR and payroll as well as your IT in one place, you can talk to your IT systems in terms of those concepts. So rather than saying there are 37 individuals on this email list, you can say I want all of my staff accountants to be on this email list and it kind of handles that automatic thing. Look, having a one employee system for your company, you know, payroll and benefits and HR are a critical part of that. When people ask me sort of like “Okay, how is Rippling different than the other sort of like modern payroll and HR systems out there?” I sort of think of first there being sort of three generations of these systems. And the first generation is you have these like very sort of like isolated payroll systems. You know, something like an ADP has like no conductivity than anything else. It’s just payroll and there’s a tremendous amount of manual work because like it knows like nothing about your organization other than payroll. And then you-
Scott: And you have “run payroll”, which is two hours every two weeks for whoever’s doing it.
Parker: And it’s a lot of time because every time you run payroll, you sort of have to ask yourself this question of what has changed in my companies since the last time I ran payroll? Are there people I’ve hired that I need to add to payroll? Are there people I’ve terminated that I need to remove from payroll? Is there someone who’s gotten married and they’re withholding allowance has changed, which means I need to update that in payroll. And then you move to these sort of modern payroll systems that usually have some kind of all in one HR, more automation across sort of like the HR department and HR functions. And I think that there’s going to be this as the third generation of these systems that I think Rippling is the first of, that sort of says this data about your employees needs to be used outside of the HR department. HR is the repository of this employer record, but it needs to be kind of liberated in a way that like every functional area of the company has systems that tie into it. So that when you hire someone, it’s not just about getting them up and running with payroll and benefits, it’s all these other things as well. But the other thing that I think it’s important on the payroll side is I think that like every company that’s built sort of one of this modern sort of second-generation payroll systems, they’ve all started, and this includes myself, you sort of start from this position where they’re like a lot of unknown … There’s a lot that you don’t know and you don’t know what you don’t know. And-
Scott: It’s a complicated space, too.
Parker: It’s a very complicated space. And to start you have to make a lot of assumptions in your data model, in your architecture of your software that you then discover and you discover this when you get to tens of thousands of clients and you’re going from companies with 20 employees to companies with 500 or a thousand that a lot of these assumptions were completely wrong and the world is a much more complicated place than you understood when you got started. And as a result, they’re just little things that don’t work well in most of these systems and a lot of times it’s like the same things. I think one classic example is just contractors. You know like every system, every modern payroll system that did this, they built a payroll system for employees and they were like well crap, people have contractors. And so they built this entirely separate thing over here for contractors. But because it’s like a totally separate world, as you start to add in features and functionality for employees, you don’t have them for contractors. And suddenly you have people who are like “Well, I have contractors on my health insurance plan.” You’re like “We can’t do that.” Or “I have time tracking software that I want to use for contractors”. “Well, that’s not possible.” “We need our contractors to sign documents” and it’s like “Nope, we don’t do that either.” And one of the benefits, one of the really fun things about Rippling is that I think uniquely, we got to start this with all of the benefits of hindsight, of knowing exactly what are like the 50 nitpicky things that you run into at scale that if you just knew about them on day one, you could have built it right and it wouldn’t have been a problem. And so there’s like dozens of examples of like that on how I think Rippling just as a payroll system is something that works much better than a lot of other payroll systems out there. And it scales. It’s not something where you get to 50 employees and you start feeling like eh, this [inaudible] not working here for me.
Scott: Also, I think this point, you guys can handle very small companies too. Like not that’s your target market or anything like that, but because your software is written in the right way, you can do a two-person company and we do a lot of like two-person companies that turn into 10 person companies in six months. And then they’re 25% companies in a year-
Parker: And there are 75 person companies-
Scott: And you’ve lived that. But that’s actually a huge advantage. And then it’s like so easy for us to hand off those kinds of clients to you.
Parker: I have this like a very crazy view of HR software and company size that I don’t think as anyone else agrees with. And this is probably incredibly boring so you’ll probably-
Scott: Breaking news here.
Parker: You’ll edit this out of the podcast, but basically, most people think that there are different software needs for small companies and large companies. And I think that that’s completely wrong. And basically where I think that belief comes from is that in the HR space, there all of these sort of like long tail incidents, sort of low incident-like characteristics of employees in the US population. As one example of this is like a garnishment-
Scott: I was gonna say like child support or something like that.
Parker: Exactly. Garnishment is like the company has an obligation because of a court order to withhold from an employee’s wage, is often because of the child support. Making the numbers up here, but maybe one out of 50 employees or one out of 100 employees in the United States this applies to that. And so if you’re selling software to a 20 person company, superficially, there are a lot of 20 person companies out there that this does not apply to. And if you are selling software to a thousand person company, like every thousand person company has this issue and they can’t use your payroll system if it doesn’t support it. But what happens is like any 20 person company, they’re only ever one hire away from like suddenly needing this. Like very, very urgently.
Scott: Also the sales reps at the big boys probably prey upon that and are constantly messaging-
Parker: And then you got to switch and that’s painful. But it’s actually more than that because there’s not just one thing like that. There’s like 50 things that are like yeah, most small companies don’t have people working outside the US. But sometimes they do and the system needs to support that. It needs to support different currencies, different sort of address structures, things like that for work locations that are outside of the country. And so what happens is yes, like it may be unlikely for any small company to have a garnishment, but it is highly likely that every small company has at least one of these like big company features and one of these weird things. It’s like you can never find a company that doesn’t have like something. And so like the right system is one that handles all of the complexity, all of the sort of feature requirements that like a large business definitely needs, but you do it in a way that you can kind of gradually reveal that complexity to user so that you don’t need like a lot of training to use the system. But it’s like when you need it like it’s there.
Scott: Huge on the not needing a lot of [inaudible] ‘cause sometimes in the past we put our clients who are startups themselves and don’t have a lot of time onto some software, it’s too intimidating for them. And so they don’t use it and then we can’t figure out why they’re not using it. Like what’s going on here? So being able to kind of gradually onboard them and reveal features is really smart because then they don’t get overwhelmed. They’re comfortable with it from day one and it starts adding value from day one.
Parker: Yeah, no, I think that that’s the right way to build software.
Scott: So you guys because you build it the right way, you can take the little guys on. And what’s kind of your target market right now? Is like 100 person companies? 500 person companies? Like where are you going?
Parker: We’re kind of two to a thousand today is our target market, which is a big range. But I genuinely believe that if you have the right product that works for a thousand person company and a two-person company, you actually have a much better product for the two-person company and for the thousand-person company.
Scott: Is there like a client base that’s working really well for you? Like startups for example, or maybe like health tech companies or Fortune 500? Like where are you getting like the traction right now?
Parker: I mean, I’ve seen this at all of the companies that I’ve started is tech companies in California, they just adopt more things more quickly. So your conversion rates are always a little bit better there. But I mean, we have tons of companies using this now. I mean, most of our customers are not tech companies.
Scott: That’s a great sign, yeah.
Parker: So just last month we had like a DJ company sign up. This is a company they have 120 people that are working as DJs. And there’s a lot of complex needs they have around documents and getting people onboard correctly. And they have to sign a lot of terms [crosstalk] a lot of different remote locations. So it’s much easier to do this in software than it is to do it on paper when people are sort of not located centrally in one office. And they just became a client. We have another company that hires people to do telephone repair. You know, literally, climb telephone poles. And so it’s not your typical kind of like tech sort of office workforce, but they have people all across the country. There’s a ton of documents they need them to sign in. Rippling is sort of unique [crosstalk] you can get everything signed electronically. Not just offer letters, but like everything else you need. You can really easily track like what’s been signed, what hasn’t. This administrative pain is like much more broadly applicable than just tech companies. Like not everyone has like Github, but everyone’s got like something that they need to get employees set up with.
Scott: I love the signature stuff because there is a ton of that and I can’t tell you how many times I’ve gone back in your [inaudible] and looked at the offer letter. Looked at the IP agreement. And it’s hugely helpful to have all this stuff in one place. So I can imagine getting all this stuff signed beyond just like your typical HR stuff is super valuable, and keeping it fresh and keeping it updated.
Parker: Yeah, that’s right.
Scott: That’s amazing. Maybe talk about kind of the pricing structure and how people get onto Rippling. Like what’s the process? Do they call you? Do they call Matt? Do they go to the website? And how do they get a demo and how does this all work?
Parker: You are right to the website, You can request a demo right there and usually, you can schedule it like right there ‘cause it’s all connected up with Calenly. So you can just pick a time that works for you. And you can also create an account right there and you can sign up without talking to someone. But we always try and have a conversation ‘cause even if you were sold, then that sales conversation becomes just more of a consultative call. Sort of like here’s the way you can get the most out of the system and here’s the way you should think about it.
Scott: Also there’s probably features people don’t know because you guys do so much that it’s helpful to have a sales conversation.
Parker: Yeah. I mean they can sort of probe and be like “Hey, do you guys do this? Do you have that? And by the way, did you know that you can do this in the system?” The surface here and the products are in large, so there’s a lot of capabilities.
Scott: Cool. And then you guys charge a monthly fee or how does it work?
Parker: We charge a monthly fee and the monthly fee depends on what you use. And our goal is basically to be less expensive than the corresponding competitive products in each of the areas that we’re in. So if you use Rippling just for payroll, we’re going to be less expensive than Gusto, than ADP, than Paychex and all those guys. If you use as just for SSO and app provisioning and things like that, we’re going to be less expensive than like an Octo or a OneLogin or something like that. If used just for computers, we’re going to be less expensive than that equivalent. Collectively, if you decide to use us for everything, you’re going to pay more collectively to us, but you’re going to be saving in all of those different areas. And you-
Scott: Plus the man hours that you’re automating. For us, on that four hours for set up, I think our IT consulting firm charges $140.00 something like that. So that’s like a $600 or so set up per employee. So your guys a subscription is like peanuts compared to that. It’s an amazing value prop.
Parker: Cool. That’s good to hear.
Scott: Yeah. Yeah. I’ll send you the numbers because I know-
Parker: That’s awesome. Send us the numbers, we’ll post them on our website [crosstalk] use some marketing.
Scott: Cool. So if you’re interested, you can get, it’s a no obligation, go on, start an account, try it out. You’ll get hit up by a salesperson that’s going to educate you on how the software works and how you can automate a bunch of this stuff. That’s pretty awesome. As we’re closing here, I’ve taken a lot of your time, so I appreciate it. Maybe just kind of reiterate Rippling what you’re doing and where to find you?
Parker: So Rippling is all in one payroll benefits, HR and IT. And the basic idea is to solve this problem that companies have where there are too many places where you need to set up and manage your employees. And so there’s an HR problem that people might be familiar with and there are systems that do a decent job just on the HR side of getting people up and running with payroll and insurance and stuff like that. But what no one I think has really done for SMBs is extending that to say look, it’s not just that you’re going to click a button to hire someone and you’re going to get all their documents signed and they set up in your HR systems and pay and enrolled in benefits. It’s also that we’re going to add them to all of the software that you use. Things like G suites, Slack, Salesforce, Github, Dropbox, Expensify. Give them single sign-on going forward so they can sign into those services with one click. Configure them and add them to all the right groups and lists and channels and policies and things like that within those services. And then also like to ship them a computer. So get them their computer before their first day of work and make sure that all the right security policies are enforced from like an endpoint security perspective or SOC 2 audit perspective. Install the right software based on their role in the organization and sort of manage that and monitor it for threats for you going forward so that you’re protected against malware, you know, things like that.
Scott: So you do it all. You’re unifying HR and technology. It’s really amazing. Congrats on the new company and thanks for coming by, Parker. (Side note not in the Pod: our team has compared Rippling vs Gusto, two of the best payroll providers for startups.)
Parker: Thank you very much.
Scott: Cool. Alright, thanks. Hey, it’s Scott Orn and I hope you enjoyed that podcast of Parker Conrad of Rippling. He’s amazing. We’ve been using his software both at Rippling and at Zenefits for a very long time. Tons of respect for him and I’m really glad we got him on the recording. And then before we finish up, quick shout to Brex. They make startup credit cards very, very easy. No personal guarantee for the founder. That’s a big one. They also have great rewards. They integrate into QuickBooks really easily. It’s easy to provision new users. It’s a really good credit card solution and we recommend it. And onto the next podcast. Take care and thank you again, Parker

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