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Scott Orn

Scott Orn, CFA

Parker Conrad on Rippling's all-in-one payroll, benefits and on-boarding system and how employee data becomes an asset for organizations

Posted on: 08/10/2020

Parker Conrad

Parker Conrad

Co-founder and CEO - Rippling

Parker Conrad of Rippling - Podcast Summary

Parker Conrad on Rippling’s all in one payroll, benefits, and employee management system, and how making Employee Record data accessible with controls will make the organization more productive.

Parker Conrad of Rippling - Podcast Transcript

Singer: (singing) It’s Kruze Consulting’s Founders and Friends, with your host Scotty Orn.
Scott: Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Parker Conrad of Rippling. Welcome Parker.
Parker: Thanks, Scott. Thanks for having me.
Scott: My pleasure. So, we are huge fans of Rippling, at Kruze, We use you, guys, we promote you. Yes, I have a lot to talk about. Hopefully my energy level isn’t too high, just because I really like talking about things we use and you’re the person and your team creates a lot of stuff we use, so I’m super excited. But the last time we did this podcast, year and a half ago, Rippling had not launched yet, you were working on it furiously. Can you take yourself back to that moment? It was March, 2019, holy smokes, you’ve come a really long way.
Parker: Yeah. I mean, I remember it, it was right at the beginning. I mean, we were, as we are now, we were super excited about our product, but definitely, we had an extremely tiny footprint. I mean, I think we still have a fairly small footprint, but certainly a lot bigger than it was a year and a half ago. And it was fun talking to you about the market and how we thought about what we were doing and not a lot’s changed in terms of how we think about that.
Scott: I remember you had this quiet confidence, but you still weren’t sure. This is picking up subconsciously, you weren’t positive that it was going to work, but you felt good about … But you were very modest at that moment. You’re like, “Okay. I think I know.” It’s having a good hand in cards [inaudible 00:00:01:48], you had a good hand in poker, but you didn’t know how the hand was actually-
Parker: You don’t know what the river’s going to turn over.
Scott: Tell everyone what Rippling is and how you help startups and SMBs and other companies, handle their payroll benefits and their IT infrastructure.
Parker: Yeah. So, Rippling, the insight behind Rippling, if there is one, is that employee data within a company is very broadly distributed across the business and is not just about the HR department and HR systems. And I think the critical difference between us and other vendors, is that most companies, I think, misunderstand employee data as being an HR department and an HR systems thing. And we think that almost every business system in a company is tremendously reliant on information about employees. And sometimes that can be as simple as just the usernames and passwords for authentication into those systems. But a lot of systems, the underlying logic around how some of these systems operate, who gets access to what, how they’re configured, what level of permissions they have, the policies that apply to them, systems that have concepts like alerts and workflow, often those alerts or those approvals, or that workflow is triggered based on characteristics like, what is an employee’s job or roles in the organization, the alert or the approval is routed based on that person’s role or position within the organization. And so, all of these things across this wide array of business systems are secretly dependent on this understanding of who your employees are and what do they do for your company. And as a result of that, I think that there’s this wide swath of administrative work within a business, this irreducible crap work that nobody really likes doing, that is ultimately, in this unrecognized way, about solving that problem, about making sure that all of this information about employees is translated across all these different systems. And you see that in stark relief when you hire someone, you hire someone and suddenly you need to get them up and running in payroll and set them up with benefits and get their paperwork signed. But then you also need to set them up in email and Slack and Dropbox and Salesforce and GitHub and you need to get them added to the right email lists and Slack channels and the right policies and configurations and roles. And you need to get them their computer and it needs to have the right software and the right permissions set up on it. You need to get them key card access. You need to get them a corporate card. You have to have the right spending policies applied to them and on and on and on. But then of course it’s not … That’s just the most where you really see it, but there’s this ongoing thing that whenever anything about an employee changes, all or some subset of these systems are implicated and need to be updated. And so that was a very long-winded answer, but the net of it is that we think of the main difference behind Ripley being, that we are an employee system that connects very broadly across the organization, across HR, IT, finance, facilities, all this stuff, as opposed to a lot of our competitors, which are really very narrowly just the HR departments.
Scott: You said a bunch of really smart things there, but it used to be, you thought about payroll and benefits, but everyone, including us, is so tied to so many different web services. When a new employee joins, they cannot just start, they don’t just fire up their computer and start working. There’re at least 20 different systems you have to get access to, for pretty much anybody, especially at Kruze. And so, we found that when we hired a new person, payroll and benefits set up was actually relatively easy, but it was all these other systems that took a lot of time. So, our operations manager would spend three or four hours for every person and then we offload that to an IT services firm who does a good job, but that’s 140 bucks an hour. So now you’re talking $400 every single time you hire someone, that doesn’t include if you have to let someone go. What you guys have done with this, I don’t know what you call it, single sign on or authentication layer, whatever you call it, is really, really powerful, it saves companies a lot of time and money, it’s really amazing.
Parker: That’s awesome. Thank you so much.
Scott: And I think there’s another thing you said that was super smart, which is, you’re talking about access to this employee data. In most companies, there’s very limited levels of access, so usually it’s the CEO, COO, CFO, it may be a VP of operations or someone that has access. With Rippling, you can create different access layers and free that data up so the IT department can see it or other people in the organization can see it, make it more useful. And I think you’re kind of like, I don’t know, you probably have a better way of saying this, but it feels you’re unlocking a lot of data that can make the business run, make people’s jobs easier because they don’t have to keep checking back or keep checking to get access to something. Does that make sense?
Parker: Yeah. Well, so I’ll tell you one of my favorite features in Rippling, is our reports and our reporting capabilities. And there are two things that I like about reports, about how we approached it. One is that most systems in our space, the way they do this, they create a lot of canned reports. So, they create, there’s a report for this, there’s a report for that, there’s a report for this. And we decided very early on that we were going to essentially declare war on canned reports and that we wanted to kill all of them and create instead, custom reports. And the reason for that is the canned reports, you never have enough of them, there’s always like [crosstalk 00:00:07:58].
Scott: It’s impossible.
Parker: That’s what I mean by something a little bit different, so you end up with these systems that are developing hundreds and hundreds, even more, different canned reports. And eventually it’s clear, the only answer is really to create a custom reporting interface that’s sophisticated enough and simple enough that people can get to exactly what they want right away. And so that’s been a big area of focus for us and also a big going forward area of development.
Scott: The reason why we switched to Rippling, we switched about six months ago, we always knew we were going to get there, but the catalyst, there was two catalysts, with the reports, we could not get good reports from the old system. So, our VP of ops, our head of operations came to me one day, she’s like, “I can’t run any kind of report. I can’t get all this stuff we need.” And I was like, “Check and see if Rippling can get the reports we need.” She made one call, yes that. And then we’ll talk about this a little bit later, but working with independent brokers, huge. And those are the two. What you’re talking about, the reports for the audience, that is why we switched over to Rippling.
Parker: That’s awesome. The second thing I love about reports is that it’s embedded with the permissions in Rippling. And this goes to your point earlier, the permissions that you have in Rippling, stretch across reports, so you can set someone up in Rippling as an admin for a particular department, for a particular location, for a set of employment types, just for 10-99 contractors or something like that. And then those permissions can flow through across the entire system, for payroll, for benefits, for computer management, for apps and identity. But then lastly, even for reports, that you can run all the reports, but only for those people. And so, the data that’s coming into Rippling from all these systems or that’s housed within it, is suddenly just accessible to the right people who have the need for it.
Scott: You articulated what I was trying to say, where if some group manager needs a report, they don’t have to keep checking back with our head of operations or someone who has access to the reports, we can just enable them to be able to run whatever they need and it frees them up, it saves so much time. It gets rid of so many different bottlenecks just on a day to day basis. It’s pretty amazing. I mean, I look back on a year and a half ago and having this key insight about the authentication layer, really, it’s such a core foundational piece and it’s really what sets you apart from every other “payroll, benefits” you guys aren’t even like that, you’re more like a Salesforce, I can see Rippling being a Salesforce of this category. Does that make sense?
Parker: That is literally the analogy that we talk about in terms … One of the things that I think is really important about them, is that despite the word sales in their name, Salesforce is really a company that’s about customer data and it’s used broadly across all functions in an organization that have a nexus to customers and customer data, by support organizations, by CSMs, by finance, by everyone that needs that tie into customer data. And I think what we believe is that for whatever reason, there’s nothing like that on the employee side, that these employee systems have evolved as very narrow, HR department management systems and that you really need something like Salesforce, that is sort focused on employees and employee data across the organization, instead of just one function.
Scott: You said it perfect and having that sophisticated technology infrastructure, that more apps and more reports and all this stuff that can plug into, in the same way that Salesforce does. Salesforce, by having their API and being able to access all this stuff and build it into your business processes, you can see, their market cap goes up every single year, over 20 years. I think you guys, Rippling, can be the exact same way. I know in my head, some of the stuff we built internally … Parker just knocked on wood as I said that.
Parker: Freaking out a little bit here.
Scott: You’re super bullish on what you’re doing, because I think this unlocks so much for companies and we build custom software at Kruze and being able just to access that data and not have to worry every time if someone leaves or someone’s out of it, just so much easier. I don’t know, maybe I’ve been drinking the Koolaid too much, but I really like it.
Parker: Well, thank you.
Scott: Let’s talk a little nuts and bolts, ROI for SMBs. So, one of the biggest expenses you have as an SMB is your benefits expenses. And I didn’t quite understand the power of being able to work with an independent broker, through your payroll and benefits solution. And I was talking to one of your team members, Matt Donaldson, and he’s like, “We actually can work with independent brokers. You should really leverage that.” And this is a case study, Kruze has, we have 65 people now, we have people all over the country. So, I really care, most Silicon Valley companies don’t really care about what the cost of benefits are in Florida or Texas or North Carolina or Indiana or these places. But when you get an independent broker, they can save you a lot of money in these markets. So, we saved $30,000 just by using an independent broker. Was that something you were thinking about as you architected the system? What was the insight there to allow that function?
Parker: At my last company, we were an insurance broker, that was the only way that we made money. And one of the things that happened, is it was the number one reason we lost deals, is when people wanted to work with a traditional broker, they would say, “I really want to use this, but I want to work with a traditional broker.” And that wouldn’t work out. And so, our view at Rippling was really, we thought again, the employee record was the important thing and that if we were the employee record, there were going to be a bunch of ways that we would make money. And actually, it would be different for different clients. Some clients, we’d make money here, some clients we’d make money there and that we weren’t going to worry too much about that. And we were going to just focus on building this employee record that created all these business efficiencies. And then we were just going to say yes to everything in terms of, “Yeah, you want to use a broker, that’s great. You want to use someone else over here, that’s fine too. We can orchestrate all of this for you.” And so, there are a lot of companies that want to use a traditional broker and typically with some of these online HR systems, you have to make a choice about whether you want your benefits connected and online and tightly integrated with payroll, or you want to use a traditional broker. Rippling’s really the only one where you can do both and you can say, “Yeah, no, I want all of this automation. I want enrollments and open enrollments and deductions and stuff like that, to be managed online and with technology. But I want to have a traditional broker experience, someone that I can go to from a service perspective.” And things like that.
Scott: I love the say yes to everything, that’s such a really smart way because you guys have the technology underpinnings, it’s the same way you thought about the reports probably, how do we build best in class reports instead of doing the canned stuff, let’s just say yes to letting people make their custom reports and the same thing on the insurance broker stuff. That’s really, really smart. But you can do that because you guys invested so much in technology. You’re not trying to just take some chewing gum and piece some stuff together, you actually built a really strong infrastructure.
Parker: Oh, thank you.
Scott: You just raise a new round here, which is pretty amazing. Congratulations.
Parker: Thanks.
Scott: What are you going to do with that money? What’s the battle plan here? What are you going to do?
Parker: Rippling, unlike a lot, a lot of our spending is focused on R&D and much more so than most SaaS companies, about half the company are engineers, we’re 250 employees and most SaaS companies at the scale, it’s 10 to 20%. We’re going to try and keep it at about 50% engineering as we grow. We were marching down that path already and so I don’t think it’s going to really change our plans, but it’s definitely going to give us a little more confidence and it’s going to help me sleep at night. Our plan, post financing, is literally the same as the plan that we [inaudible 00:17:02]. The difference is in one version of that, it was like, I really hope that things are back to normal and there’s a vaccine in December, not April, because we need it to come by then, we’re going to need to fundraise, at a certain point.
Scott: This is how I think about our software development is like, it’s so appealing because you’re just getting these super clear ROIs and you’re like, “Oh my gosh, this is amazing.” But it’s going to take six months to build, or it’s going to take a year to build. And so you’re sitting there going like, “Okay, it’s going to really help my business and we’re going to have this great payback.” But it’s an investment and that one-year timeline is a big chunk of cash, especially for a company like you, where you have 50% of your team as engineers. I totally get the sleep at night aspect of that, probably would have done it anyways because it’s so appealing to make those investments, but you’re just cutting it a little tighter than you want to cut it.
Parker: Yeah, no, that’s right.
Scott: That’s great. So, it’s a big … Is there any, I guess you don’t probably want to break any news here, but are there any enhancements or things that people are really going to see or feel that are coming down the pipe in the next six months or something you can green light because of this?
Parker: Yeah. So, I can tell you, a big area of focus for us is that … I think, one of the things that I believe is that there’s a set of business software, what I’ve started to call business software middleware, that I think is really critical for a lot of the things that we are doing and they we’re going to do. And one example of that is reports. Reporting capability is sort of like a set of middleware functionality that’s critical for wide swaths of software. And in fact, most business software, I have this theory that the V1 versions of products, look completely different from each other when they’re in different categories. But the V10 versions, everything that rises converges and it all ends up looking exactly the same. And so, the critical functionality across some wide swath of business offers like reporting capabilities, alerts, approvals, workflow, some stuff around configurability, those become the really important product components and almost the thing that it does is almost secondary. And so, we’re going to go really, really deep on those pieces and just building reporting capabilities that are a hundred X better, that rival the best in class BI tools out there. We’re going to go deep on all of those other things and many of those things are really powerful, particularly when they’re connected to the employee record. So, then you can use that as this instrumentation layer around a lot of these other business systems, to extend the functionality of all of the products that you have connected up and integrated with Rippling.
Scott: I love it. I love it. Yeah, sometimes that stuff, outsiders don’t think of it as sexy, but it really does enable, it enables the whole enchilada, it really makes everything run so much smoother and enables stuff that maybe sometimes you couldn’t even anticipate. That’s kind of like the Salesforce analogy. I’m not sure if Salesforce 20 years ago, really anticipated some of the stuff that’s happened, but because they built it right and built it correctly, the customers could pull it in the direction they wanted to take it, which I think is pretty neat.
Parker: That’s right, yeah.
Scott: One quick, let’s just nerd out on accountants for one second, so I just want to thank you on behalf of the Kruze team, because I’m sure you knew this, I’m sure you architect this way, but your guy’s QuickBooks sync is so amazing. For people that don’t know, when payroll comes in to QuickBooks, we used to have to manually type in the journal entries and manually type in the employee [inaudible 00:21:05], that stuff. That’s just time, that’s mindless, people don’t want to do that. So, when Rippling came along, Rippling actually synced the entire thing into QuickBooks and it didn’t just do one transaction where we’d still have to break it out, you guys actually sync every single employee line item into QuickBooks. It makes our life so much easier. I didn’t really have a question, I just want to thank you for doing that.
Parker: That’s awesome.
Scott: Payroll is one of the more complicated things we deal with and so by you guys enabling that, it just saves us so much time and it’s about time savings, but it’s also about accuracy, anytime you’re typing stuff in, you’re going to have some mistakes. So, thank you for doing that. And also, I just want to … I think people maybe, they saw the big funding round, but they don’t maybe have clear metrics on Rippling. We’ve actually seen your guy’s market share at Kruze, go through the roof and part of that is because we’re so happy with the product. It’s like anything, people ask the mattress salesman, what mattress they sleep on and so for us, when people ask us what payroll we’re on, we can really articulate why we think Rippling is the best and why we like working with it. So, your market share is going crazy at Kruze. It’s pretty amazing.
Parker: That’s cool.
Scott: To wrap up here, we got to get you out of here, but I was talking to a couple of people at Rippling yesterday in prep for the interview. And I was like, “I’m having Parker on the podcast tomorrow. Is there any question you really want to ask him?” I was expecting Parker’s philosophy on startups or Parker’s philosophy on technology or some big, deep question they wanted me to ask you. And the question was, “Ask Parker about his chickens.” What’s behind that?
Parker: I mean, in the lockdown, there was a period of time where it was like, “Oh my gosh.” Eggs were running short in supermarkets and I’d always wanted to get backyard chickens. And so, we went out and we got two chickens, we built a coop. And yeah, I mean, I would say my overall conclusion from having chickens is, eggs at the farmer’s market are really inexpensive, really just get eggs at the farmer’s market because our chickens they lay some eggs, but mostly they lay turds everywhere and, oh my gosh-
Scott: Kids, I can’t remember from our last conversation?
Parker: Two kids, the kids love the chickens.
Scott: Can make one recommendation because my brother in law has chickens, the same setup as you?
Parker: Yeah.
Scott: Super important that that chicken coop is secure because there’s nothing worse than explaining a chicken down to your kids. I don’t know where you live, but in San Francisco there’s still raccoons.
Parker: Totally. Yeah, you either have to make sure it’s really secure or you have to maybe at some point, leave the door open and a little trail of raccoon treats right to where the chickens are. It’s one or the other, I’m not sure.
Scott: You just got to let the kids know, those chickens wanted to be wild and they wanted to be free.
Parker: The chickens flew away; its wings grew out.
Scott: That’s awesome. All right man, well on that note, we’ll wrap it up, but thank you so much and congrats on all you built. And I know it’s not just you, you have an amazing team. Thank you to all the engineers who make Kruze’s life easier by integration. Thank you to the support team. Terry Chow, my man, Terry Chow, he’s amazing, but I know you have a lot of great support people there and a shout out to Vanessa Woo, she’s a really great general counsel. Actually, she shared a lot of information with us, it really helped us through the PPE thing. So, you built a really great team there. (Side note not in the pod interview: we’ve compared the best payroll providers for startups, including Parker’s company, Rippling vs Gusto.)
Parker: Thank you so much, Scott and your support means just the world to us. Thank you so much.
Scott: You made our life so much easier and a lot better. Thank you, man.
Parker: Bye.
Singer: (singing) It’s Kruze Consulting’s Founders and Friends, with your host Scotty Orn.

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