The Next PayPal Mafia: Zenefits
If you're in tech, you've probably heard of the PayPal Mafia – former PayPal employees who would go on to found, fund, and lead the next wave of the most influential tech companies of the next decade, including Tesla, Youtube, LinkedIn, and more. But you probably haven't heard of the Zenefits Mafia. Let me tell you about them - they are the next great Startup Mafia.
The Story of Zenefits
The Zenefits story isn't all roses - it's far from it. In 2013, Parker Conrad and Laks Srini launched Zenefits to help startups and small businesses manage employee benefits and find insurance quotes. The company continued to build until it had a complete payroll and health benefits suite of products to replace traditional Human Resources functions. By 2015, the company had hired 1,000+ employees and raised $500 million+ from investors like Andreessen Horowitz, Founders Fund, Insight Venture Partners, and Khosla Ventures. Its funding round in 2015 valued the company at a whopping $4.5 billion valuation. It would be modest in today's world of inflated tech valuations but unheard of back then. A company that had just launched two years ago was already being labeled as the fastest growing SaaS company ever by Techcrunch, the hottest startup of 2014 by Forbes, and a startup to bet your career on by Business Insider. Zenefits was the 1A startup in the Valley and attracted some of the most ambitious employees. David Sacks, a member of the PayPal Mafia and the founder of Yammer, which sold to Amazon for $1.2 billion, even came out of retirement to join the company as its COO.
That's when the story starts to take a turn for the worst. While everything looked perfect from the outside, trouble began brewing under the hood. In November 2015, a BuzzFeed News investigation revealed Zenefits allowed uninsured brokers to sell health insurance, and the company was under investigation by at least one regulator. In some states, violating insurance licensing rules is a felony that carries up to 10 years of prison time and thousands of dollars in fines. A few months later, BuzzFeed News learned that Zenefits created a secret software tool to let California sales reps fake completing the required 52-hour-long online course for health insurance brokers. Parker Conrad, the CEO, and founder of Zenefits, stepped down immediately following the compliance failures, and David Sacks assumed the CEO position.
Zenefits was already hemorrhaging money, reportedly burning over $100 million in 2015 and even more in 2014, and now had to deal with negative press, which impacted their brand and sales, and all the work and legal costs needed to settle with states. In February 2016, David announced a layoff of 250 employees, roughly 17% of Zenefit's staff. The layoffs largely reduced the sales team, which we'll go into more detail about later in this piece, since they made up some of the top sales leaders in the world. In June of the same year, another 106 people, 9%, would be laid off by the company.
In December 2016, David shared with the company that he would be stepping down as CEO while remaining onboard as Chairman to begin a search for a permanent CEO. In his note to employees, David mentioned the CEO position not being "a job [he] sought" and how tired he was at the Z2 conference in October, where they revealed Zenefit's new software platform.
In February 2017, Jay Fulcher was appointed the company's new CEO. Six days after starting, Zenefits laid off another 430 people, about 45% of its workforce. This would be the third round of layoffs within a year. The company continued on a downward trajectory until eventually being acquired by TriNet in February 2022 at an undisclosed price. Unfortunately, the startup rocketship crashed.
David Sacks took a lot of blowback over the company's performance, even from Parker Conrad, who claimed Sacks ran the company into the ground by firing all the good people until selling to TriNet for pennies on the dollar.
The Zenefits Startup Mafia Is Born
From the ashes of the crash, you start to see the signs of an actual Startup Mafia being born. The term "Startup Mafia" gets used loosely these days, but even the best startups don't produce enough outcomes to talk about them like the PayPal Mafia. They may have one or two good companies, but you don't found, fund, and lead generational companies. Moreover, a Startup Mafia plays a part in each other's success by co-founding companies, hiring former teammates, and investing in each other's companies. The Zenefits Mafia, like a real modern-day mafia, "keep[s] it in the family."
Let's begin with Zenefit's controversial leader, Parker Conrad. In June 2016, only four months removed from stepping down as CEO at Zenefits, Parker started working on a new workforce management platform called Rippling. Parker started Rippling based on insights "hiding in plain sight" from his time building Zenefits. He noticed HR functions were drowning with busy paperwork, almost always due to having to update employee information across dozens of different software products. So, Rippling set out to build the "world's first system-of-record for employee data" and, by pretty much every measure of success, has done so. In May 2023, Rippling closed its Series E round, valuing the company at $11.25 billion. More importantly, the company does over $100 million in annual recurring revenue, grows over 100% year-over-year, and serves over 400,000 customers. What many expected Zenefits to become, Rippling realized. In 2022, TechCrunch labeled Parker Conrad as "Silicon Valley's comeback kid," and the story is not done yet.
Keeping it in the family, Parker tapped Zenefit's former Head of Engineering, Prasanna Sankar, to be the company's co-founder and CTO. Shortly after, Matt Plank, former Director of Channel Sales, would join Rippling as its VP of Sales and later be promoted to CRO. Later came the critical additions of Matt Epstein, former employee #1 at Zenefits and CMO, who joined Rippling as its CMO, and Stephanie Ho, former VP of Channel & Alliances, who joined Rippling as the SVP of Customer Experience. To round out the players next to their leadership team, Parker hired more Zenefits alums, including Lizzie Rouleau to be their VP of Sales, Shea Steacker to be their VP of Sales for UK/Europe, Ashley Kelly to lead Global Sales Development, and Meghan Marshall to head up Legal and Compliance operations. When you look at Rippling's Org Chart, one thing that stands out is their executive team is filled to the brim with top players from hyper-growth companies like Uber and Brex.
You don't have to look far from the tree to find the next startup from the Zenefits Mafia worth talking about. Laks Srini, the co-founder, and CTO of Zenefits, teamed up with Abhijeet Dwivedi, the former COO and CSO at Zenefits, and Hari Viswanathan, a former Staff Engineer at Zenefits, to co-found ZeroDown. The company helps people buy homes by fronting the down payment for them.
On ZeroDown's website, you see mentions of Zenefits and Parker Conrad listed as an investor next to other notable founders, Justin Kan of Twitch and Ryan Peterson of Flexport. The company has raised $136 million in funding from Y Combinator, Goodwater Capital, and the A-list of top founders like Sam Altman.
While most tech startups are known for their engineering talent, Zenefits is known for its world-class sales team. From one organization, Zenefits produced the CRO at Brex, the CRO at Rippling, the SVP of Sales at Navan, the SVP of Sales at Gong, the SVP of Sales at Modern Health, the Head of Sales at Linear, the Director of Sales at Verkada, and a few others.
Sam Blond was the highest-ranking member of the sales team at Zenefits and one of the loudest proponents of the Zenefits Mafia. His LinkedIn posts were the reason why I initially looked into writing this piece. He was Zenefit's VP of Sales and joined as employee #18. In 2.5 years, Sam grew the sales function at Zenefits from 2 sales reps and less than $1 million in ARR to 600 people in the sales org and greater than $70 million in ARR. After Zenefits, Sam joined Brex and became their CRO. Brex is valued at $12.3 billion and serves tens of thousands of customers, including Airbnb, Y Combinator, Carta, and ClassPass. After a decade of leading top sales teams, Sam joined Founders Fund, a top venture capital firm, as a Partner to invest in startups. Like all Partners at Founders Fund, Sam invests across various industries and stages.
Matt Plank, who we mentioned earlier, was employee #25 and the third sales rep at Zenefits. He was promoted several times from an Enterprise Account Executive position until he eventually became their Director of Channel Sales. He joined Rippling as their VP of Sales and was promoted to CRO at the start of 2023. Tyler John, former Director of Sales at Zenefits, became VP of Sales at Navan (formerly known as Trip Actions). Navan is valued at $9.2 billion and helps customers like Snowflake, Lyft, Okta, and Box with corporate travel and expense solutions. Jameson Yung, former Director of the Mid Market team at Zenefits, landed at Gong as their VP of Sales before being promoted to SVP of Sales. Gong is valued at $7.25 billion and is backed by leading investors like Sequoia Capital, Index Ventures, and Coatue. Hannah Wilson, former Enterprise Sales Leader at Zenefits, joined Modern Health as its VP of Sales before being promoted to SVP of Sales. Modern Health is valued at $1.7 billion and serves over 250 enterprise clients, including Pixar, Clif Bar, and Zendesk. The company offers a single platform that adapts to its client's mental health journey. Casey Bertenthal, former Channel Sales Lead at Zenefits, eventually landed a Head of Sales position at Linear. While still relatively early-stage, Linear has attracted funding from Sequoia Capital, and thousands of product teams, including Ramp, Retool, Loom, and Cash App, love the company. Lastly, Mark Kubera, former Mid Market Team Manager at Zenefits, joined Verkada as their Director of Sales. Verkada, the security systems maker, is valued at $3.2 billion and helps over 15,700 enterprise organizations operate safer.
While Sam Blond is just starting his venture capital investing career, others like Natalie Sandman and David Sacks have already built track records in the industry. Natalie Sandman, former Product Lead at Zenefits, joined Spark Capital as a General Partner in 2019. Notably, she led the Series A round of funding for Noyo, a leading benefits data platform co-founded by Zenefits alumni Shannon Goggin and Dennis Lee. Shannon was a Product Manager at Zenefits, and Dennis was a Carrier Integration Manager at Zenefits. In addition, Noyo has recruited several Zenefits alums to the team, including Spencer Anderson (CoS) and Utsav Kaushish (Head of Analytics).
David Sacks raised money for his venture capital firm, Craft Ventures, to invest in SaaS and Marketplace businesses. David recruited Ethan Ruby, former Business Operations at Zenefits, Mark Woolway, former CFO at Zenefits, and Brian Murray, former VP of Business Operations at Zenefits, to work with him at Craft. In addition, J Zac Stein, former VP of Operations at Zenefits, helps the firm source deals as a Venture Partner. Like Natalie, David has also invested in startups from the Zenefits Mafia. Notably, he led the Seed and Series A rounds for Cloudtrucks, co-founded by Tobenna Arodiogbu and Jin Shieh. At Zenefits, Tobenna was a Product Manager, and Jin was Head of Engineering. Cloudtrucks, the fleet management tracking system, raised $115 million for their Series B round of funding at an $850 million valuation. Cloudtrucks continues to add talent from the Zenefits Mafia, like Akiko Ito, who joined the company as its Head of Design.
In addition to Cloudtrucks, Craft Ventures invested in Niranjan Sabharwal's, former Head of Sales Strategy and Operations at Zenefits, startup AgentSync. AgentSync is building modern insurance infrastructure. The company was last valued at $1.2 billion. Rippling is listed as a customer on AgentSync's homepage. Craft Ventures also led the Seed round for Internal, an all-in-one platform for internal tools, founded by Bob Remeika, the former VP of Engineering at Zenefits, and Woflow, the data management and onboarding platform, founded by Will Bewley, the former member of the Product Operations team at Zenefits.
While less connected to each other than the people listed above, there is a football team worth of Zenefits Mafia members who hold key leadership positions at impactful companies. Zenefits produced the VP of Talent at Databricks (Michelle Delcambre), Director of Engineering at Salesforce (Kiran Gamini), CPO at Lattice (J Zac Stein), VP of Engineering at Compass (Henry Liu), General Counsel at Vouch Insurance (Kelly Wulff), CISO at Thirty Madison (Justin Berman), CRO at Homeward (Jamie Sampson), CISO at WeWork (Justin Calmus), CPO at Chime (Beth Steinberg), Director of Product at Dropbox (Jon O'Shaughnessy), Head of Talent at Mutiny (Soinneah Monks), Head of Product at Lattice (Ryan Hinshaw ) and Chief Customer Officer at Sendoso (Allison Tiscornia). On top of that, there are several startup founders from the Zenefits Mafia on the verge of or already breaking out, like Jin Stedge, the founder of TrueNorth; Maddie Hall, the founder of Living Carbon; Vishnu Nair, the founder of SILQ; Itai Turbahn, the founder of Dynamic; and Akshay Buddiga, the founder of Traba.
While the Zenefits Mafia still has a long way to go before catching the PayPal Mafia, they have a strong foundation to continue building on as the startups they are founding, funding, and leading continue to mature. The story of Zenefits serves as a great reminder that startups are hard, and sometimes the second act is better than the first.
