A year after Zenefits scandal, ousted CEO starts over with new startup

He’s back.

To many people in Silicon Valley, Parker Conrad will always be associated with the insurance licensing scandal that shook human resources startup Zenefits last year and cost him his spot as CEO in the company he founded.

But a year later, Conrad is trying to put that mess behind him with a new San Francisco-based startup called Rippling. And apparently his history at Zenefits isn’t giving investors pause. Conrad has raised $7 million for his new venture, and more than 90 percent of that came from investors who also backed Zenefits in its early days.

“I think they believe in me,” Conrad said in an interview with SiliconBeat.

The new company, which Conrad co-founded with Prasanna Sankar — Zenefits’ former director of engineering who left to join Conrad — offers an online platform that helps companies onboard new employees. Rippling collects employees’ information, gets their payroll set up, activates their accounts in Salesforce, GitHub, Slack or whatever other internal programs they need, and sends them a computer already loaded with the software specific to their company and their job.

Rippling shares similarities with Zenefits, which provides cloud-based software that helps companies manage their human resources actions, including payroll and time off requests.

But Conrad insists the two companies are “very different” and don’t compete.

Perhaps not surprisingly, given what caused Conrad’s downfall at Zenefits — Rippling doesn’t touch health insurance.

“I think there’s a lot from my time at Zenefits that I’m really proud of, and I’m kind of blood brothers of a lot of the people still there, and I love the company dearly,” Conrad said. “But Rippling is what’s next for me, so that’s what I’m focused on.”

Conrad was forced to leave Zenefits last year after an internal investigation found he had masterminded a product called Macro that allowed its health insurance brokers to fake requirements for completing the 52-hour online training course required to become a licensed insurance agent in California.

The scandal caused a mess for Zenefits, which has laid off hundreds of employees since. In November, California regulators required the company to pay $7 million in fines — the same amount Conrad has raised for his new startup — as punishment for letting brokers sell insurance without licenses.

In Conrad’s defense, an adviser close to him said Macro didn’t allow would-be brokers to skip tests within the training program — or the state licensing exam itself — it just allowed them to pass over some of the training hours.

Conrad, who has about 15 employees working for him at his new company, wouldn’t discuss the legal ramifications of the Macro scandal, or whether he’s still liable for mistakes made at Zenefits. But he said he’s learned some lessons from his time at his prior company.

“I’m a lot more experienced at this point than I was when I started out there,” he said.

Conrad said while he is excited to be making a new product, he could take or leave the CEO title.

“It feels good to be building something. I really have fun with that. I enjoy that,” he said. “Being back at the helm of a startup I’m less sure about. That stuff is really hard and rarely a lot of fun in my view.”

Photo: Parker Conrad speaks at his former office at Zenefits in San Francisco, Calif., Wednesday morning, Oct. 22, 2014. (Karl Mondon/Bay Area News Group)

 

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  • Makikiguy

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