Zenefits opens second Arizona office to continue hiring spree

Zenefits has opened yet another office in Arizona, the latest of many signs that the startup is on a growth streak unparalleled in the subscription software business.

San Francisco-based Zenefits announced Tuesday it has signed a 10-year lease for a five-story, 135,000-square-foot office in Tempe, Ariz., that will house 1,000 employees. This is the company’s second footprint in Arizona; in November, it opened an office in Scottsdale that now houses 600 employees and can hold twice that. Zenefits’ arrival in Arizona last year was the largest expansion from a California-based tech company into the greater Phoenix region since PayPal in 2010.

Arizona may seem like an odd choice for a tech firm created in Silicon Valley, but the Bay Area’s real estate market wasn’t suitable for Zenefits’ quick growth. Buildings are larger, cheaper and easier to come by in Arizona, allowing the company to invest in marketing, hiring and developing, rather than pricey leases.

“With this fast growth, we need more people to join our team – and a place to put them,” Parker Conrad, CEO and co-founder of Zenefits, said in a written statement.

The company employs more than 1,000, up from 15 in January 2014.

Founded in 2013, Zenefits makes HR software for businesses to manage health insurance, payroll, maternity leave, 401(k) plans 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.

In May, the company announced that it had raised $500 million at a $4.5 billion valuation, for a total of $584 million in venture financing.

Zenefits has signed up more than 10,000 companies, with a combined 100,000-plus employees, to use its cloud software service. The company said its revenue grew 20X in 2014 to reach $20 million. It expects to hit $100 million in annual revenue by January next year. It is widely considered by investors and industry experts as the fastest-growing startup in the Software-as-a-Service sector.

To compare, it took Workday and Salesforce about four years to get to $20 million, and nearly six years to reach $100 million.

Its rapid-fire growth has not been without conflict, however. Zenefits faced opposition from Utah’s insurance commissioner and was initially banned from that state, before that governor signed a law allowing it to operate. It is also in a very public, bitter spat with payroll giant ADP, which earlier this month blocked Zenefits from accessing payroll information on behalf of customers. ADP then sued Zenefits for defamation, and almost in the same breath, launched a competing product aimed at replacing Zenefits.

Photo: Zenefits co-founder and CEO Parker Conrad, courtesy Zenefits


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  • Mama May

    I applied to these clowns. I didn’t get hired. My guess is they really (REALLY) want younger people, with less experience but with some familiarity in sales. These guys are ramping to sell. Time will tell if their product is robust and foolproof. Apparently, there are other companies now in this business, including developments from ADP.