Zenefits Reported in The New York Times

“The national health insurance brokerage market on which Parker Conrad set his sights is worth, by one estimate, $18 billion.

Zenefits didn’t set out to become a health insurance broker. Instead, Mr. Conrad found that the health care market could make for a lucrative business model. Zenefits produces web-based software for small businesses to manage their human resources operations. It gives companies that software free, but if they decide to buy health insurance for their workers through Zenefits’ software, Zenefits receives a substantial payment from insurance companies.

Investors praise the model for simplifying the process of managing employee benefits, and the legal requirements that come with them.

‘It’s the ultimate entrepreneur tool,’ said Ben Horowitz, co-founder of Andreessen Horowitz, which, with another venture capital firm, Institutional Venture Partners, invested $66.5 million in Zenefits this summer; that investment valued Zenefits at $500 million. ‘How do you deal with anything that is very complicated that you need to learn about to be in business? Are you really going to go learn about the Affordable Care Act? Probably not. Once you have Zenefits, that’s it. You’re compliant.’

Customers seem to agree. Zenefits signed up 2,000 small businesses that employ a combined 50,000 workers in just its first year of operation, the company says. Last December, 15 people worked for Zenefits; it now employs 220. Mr. Conrad expects that number to triple within a year.

Jules Maltz, a partner at I.V.P., said this of the company: ‘We’ve invested in 18 software-as-a-service companies, and these guys are in a different league. When you compare some of the largest cloud companies to where they were at this age, Zenefits is growing way faster.'”

Credit, Attribution, and Thanks: http://www.nytimes.com/2014/09/21/business/zenefits-leader-is-rattling-an-industry-so-why-is-he-stressed-out.html?ref=business&_r=1

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