The Fallen Unicorn: How to Lose a Company and Become a Billionaire

Six years after his first HR startup, Zenefits, collapsed, Parker Conrad has taken revenge. His new HR startup, Rippling, was valued at $11.25 billion, while Forbes estimates Conrad’s net worth at $2.2 billion.

Conrad was forced out of Zenefits in February 2016, and under new management, the former unicorn cut costs and more than halved his valuation. However, by April 2016, after spending a couple of months at home feeling depressed and watching Star Wars while the Securities and Exchange Commission (SEC) and insurance regulators began investigating his startup, Conrad was back in action with a new HR. -startup – Rippling.

He had a lot of ideas on how not to repeat past mistakes, and many venture capitalists were ready to help him. Today, the value of technology stocks has fallen, and many venture capital companies have taken a wait-and-see attitude. However, 42-year-old Konrad is ready for a crisis – a month ago he raised $ 250 million in Rippling.

Although Conrad declined to be interviewed for this article (and neither he nor Rippling commented on his condition), in a May video interview from his home in San Francisco, he revealed that Rippling still had funds from previous funding rounds and no need for a new one. capital. “For me, the goal was to protect the company from any potential macroeconomic shocks,” he said at the time. “I can’t predict them at all.”

Now his second HR startup is poised to weather the storm with tons of cash. In total, the company has raised $700 million from leading firms such as Kleiner Perkins, Sequoia and Initialized Capital. After failing with Zenefits, Konrad hired Rippling staff to prevent the mistakes of the past. They include General Counsel Vanessa Wu, who came from the public company LiveRamp, and CFO Adil Syed, who used to work at Snap.

The American Forbes first wrote about Rippling two years ago as part of the “Next Billion Dollar Startups of 2020” rating. Conrad tried to get back on track with Rippling, which aims to simplify human resource management through software, and has been open about this work.

At its peak, Zenefits was valued at $4.5 billion. Rippling is now worth two and a half times that. Conrad, a plump man with a reddish beard who grew up in a wealthy family and attended Harvard, entered the billionaire club for the first time. Its co-founder, 34-year-old Prasanna Sankar, former director of engineering at Zenefits, is now also a billionaire, and Forbes estimates his net worth at about $1 billion.

The benefit of Rippling is that it not only automates payroll, it automatically manages the software tools, apps, and workgroups that new employees need—and updates them as employees get promotions, change teams, or leave. This is not the most attractive part of administrative work, but it can save companies countless hours of top management time, as well as the associated hassle and costs.

The company has grown rapidly since its inception. Today, its regular annual revenue (ARR) exceeds $100 million – the company declined to give an exact amount, while in 2020 this figure was $13 million. Accounting revenue lower than ARR is a marketing metric that software companies prefer to use for subscription, such as Rippling.

“At the beginning of Rippling, it often happened that we contacted clients, and they shied away from us because of Zenefits,” Conrad told us this spring. “I always thought that we just need to create a much more attractive product that people will be interested in … We need to become twice as good to overcome this obstacle, and at some point the doubts will disappear, and this will give the company a huge boost.”

Translation by Natalia Balabantseva