Parker Conrad on Hiring: 'A Chip on Their Shoulder'

Rippling’s Vision and the Confidence to Compete with Salesforce

Approximately one month ago, reports surfaced detailing Rippling’s successful $250 million funding round, spearheaded by Sequoia Capital. Last week, further details emerged regarding the factors that led investors to value the five-year-old company at a substantial $6.5 billion.

A serendipitous opportunity arose for us to engage with Conrad personally at an event we hosted. While an interview wasn’t initially planned – due to a scheduling conflict with a previously arranged correspondent – the ensuing conversation proved highly insightful, covering both Rippling’s trajectory and Conrad’s guidance for entrepreneurs navigating periods of both success and adversity.

Insights for Founders Facing Challenges

Entrepreneurs whose ventures have encountered difficulties or experienced a loss of control may find value in reviewing the full discussion. In the interim, we’ve extracted key takeaways from the conversation, refined for clarity.

TC: Rippling is developing what you term an employee system. Previously, you highlighted a distinction from Salesforce, noting that while Salesforce centralizes business systems around customer identity, Rippling prioritizes employees as the core of its unified structure. What instills the confidence to draw comparisons between your company and a $300 billion enterprise like Salesforce?

PC: A common misinterpretation exists regarding Salesforce’s primary function; many perceive it solely as a CRM. In reality, Salesforce is a system designed to manage business processes and workflows across an organization, utilizing customer data as its foundational element. Rippling’s core concept, mirroring Salesforce, posits that a parallel set of business processes and workflows exists within a company, demanding similar tooling – workflow automation, reporting, analytics, policy configuration – but built upon a different base.

We envision a counterpart to Salesforce, re-centered around employee data. This represents the internally-focused system for managing a company, contrasting with Salesforce’s externally-facing role in customer and sales-related processes.

The ‘Compound Model’ and its Replicability

You articulate a ‘compound model’ involving the simultaneous development of multiple interconnected businesses, allowing for flexible integration and bundling for customers. You contend this approach is superior to concentrating on a single opportunity. However, how readily can this model be replicated by founders lacking your extensive network and resources?

I hold a belief that diverges from prevailing wisdom regarding company building – the notion that laser focus on a narrow niche is paramount – is potentially outdated. This approach has contributed to the proliferation of numerous, disparate SaaS products. A significant source of inefficiency in company operations stems from managing employee information across these fragmented systems.

A compound startup, conversely, entails building multiple products concurrently, addressing a broader business process challenge spanning previously separate systems. A decade ago, the central question was the potential for SaaS products to achieve billion-dollar valuations; the answer proved to be widespread. However, many of these focused opportunities are now saturated, while undiscovered product-market fit opportunities lie beyond the current horizon for those willing to tackle the complexity of building interconnected products.

Building a Team and Securing Funding

Given your background, you’ve been able to attract capital and recruit founders from companies that may have faced setbacks to lead these divisions. Is this approach easily reproducible?

A key element is organizational structure. We foster a business unit structure, empowering former founders to lead specific product lines as general managers. Currently, we have approximately 50 founders contributing to Rippling in various roles.

Finding these founders has become easier. My initial startup experience involved seven years of challenging progress and difficulty securing funding. Upon leaving, I faced job search obstacles and ultimately founded another company. The landscape has shifted; opportunities for founders with prior experience are more accessible.

Furthermore, ample capital is available. A compelling vision can attract funding, and a bold ambition can attract talented employees.

Navigating Post-Setback Investor Meetings

Your prominence grew with Zenefits. Following the challenges encountered there, how did you approach initial investor meetings for Rippling? Were they difficult?

Raising funds for Rippling after Zenefits proved surprisingly straightforward. Numerous investors offered strong support. I am deeply grateful to Y Combinator, Garry Tan, Initialized Capital, Mamoon at Kleiner Perkins, and a host of seed investors who committed immediately. Many conducted their own due diligence regarding the Zenefits situation. While some investors were hesitant, the overwhelming support from others mitigated any issues.

Rebuilding After Adversity

A Forbes article detailed your post-Zenefits period, including a six-week immersion in “Star Wars.” For those facing similar setbacks, how did you regain momentum and re-engage?

The experience is still unfolding. When things faltered, a stark contrast emerged: some entities possessed established crisis management infrastructure, while I found myself isolated, seeking refuge in entertainment and limiting external communication.

The process was lengthy. Restrictions on discussing the Zenefits experience created a realization: the only way to address the situation publicly was to build a company capable of achieving significant scale – potentially a $100 billion valuation – to initiate a broader conversation and reassessment of past events. This became the driving force behind my efforts.

The Value of a ‘Chip on Your Shoulder’

Garry Tan described you as a great founder because you possess a ‘chip on your shoulder.’ Does this resonate, and if so, does it stem from the Zenefits experience or earlier in your career?

Perhaps this is more of a therapy session! [Laughs.] I believe I’ve always possessed this trait, even before Zenefits. I actively seek to hire individuals who share a similar drive. A combination of ambition and a sense of humor proves particularly effective. While a ‘chip on your shoulder’ alone can be abrasive, those who balance it with humor are often highly productive and enjoyable to collaborate with.

The full video interview provides further insights, including Conrad’s perspective on Workday as a competitor and the potential for both collaboration and competition with third-party software companies integrated into Rippling.