That Zenefits was likely the fastest-growing software startup was no secret in the world of software.
But the company offered some insight on just how quickly its growing when it released numbers on Wednesday – an unusual move for a private company. Most startups like to keep such data secret until they are forced to disclose financials for an initial public offering.
Zenefits has signed up more than 10,000 companies, with a combined 100,000-plus employees, to use its cloud software during the 18 months the San Francisco startup has been operating. Zenefits makes software for businesses to manage health insurance, payroll and other services for their employees. It gives the software away for free, and makes money by contracting with businesses to become their health insurance broker — the middleman between businesses and health care providers such as Anthem Blue Cross — and getting paid a commission.
Zenefits also said its revenue grew 20X in 2014 (which the Mercury News reported back in December) to reach $20 million when the fiscal year ends Jan. 31 It expects to hit $100 million in annual revenue by this time next year.
This growth rate cements Zenefits status as the fastest growing SaaS business in history, the company said in a news release.
Jules Maltz, a partner at Institutional Venture Partners and Zenefits investor, agrees: We don t see companies with this growth, ever, he told the Mercury News in an interview last year.
To compare, it took Workday and Salesforce about four years to get to $20 million, and nearly six years to reach $100 million.
Of course, none of these big dollars mean much is Zenefits burns through that cash and goes dark in a couple years. But for now, the company is on a tear. It has raised $84 million from investors including Andreessen Horowitz, Jared Leto and Sam Altman. It s one of the rare companies that Andreesen Horowitz has invested in twice in six months. It s valued at an estimated $500 million.
In November, Zenefits opened a new office in Arizona that will eventually employ 1,300 people. It started out with 15 employees; it now has a total staff of more than 520. It also recently hired David Sacks, founder of enterprise social networking company Yammer and one of the early executive leaders of PayPal, as the new chief operating officer.
But its growth has also been stunted by regulators, who have kept Zenefits from operating in some states, including Utah. There, Zenefits is in a pull-no-punches fight with the insurance commissioner who has declared the company illegal, alleging that Zenefits free software constitutes a gift, or a rebate, which is not allowed in the health insurance business.
Photo: Zenefits CEO Parker Conrad speaks at his office in San Francisco, Calif., Wednesday morning, Oct. 22, 2014. Karl Mondon/Bay Area News Group.
