How did Zenefits become successful
How Zenefits helps small businesses compete with big tech
Jay Fulcher, CEO of Zenefits, explains how small businesses can scale in the age of AI and automation.
Of Dan Costa
On this episode of Fast Forward, my guest is Jay Fulcher, the CEO of Zenefits. We talked about the future of human resources and how small businesses can compete with big technology companies.
Dan Costa: I think most of our listeners will know and have heard of Zenefits, but the company has changed a lot over the years, especially since you took over. What is Zenefits Today?
Jay Fulcher: We have made a lot of changes as a company. Today we are primarily a resurgent, comprehensive technology platform company. Zenefits 1.0 was actually a pretty clever business model, but it was a very service-intensive model and company. What we have done has become a very comprehensive platform for managing people, benefits and human capital for small businesses. Our whole approach is how to provide the technology and expertise that small and medium-sized businesses need to be competitive.
Why do people come to you What problem do you solve for small business?
I think the reason we're resurrecting and growing so fast is because small businesses really never had a level playing field. We talk a lot about the fact that nearly half of the workforce in the US, 48 percent to be precise, works for companies with fewer than 500 employees. For the most part, these companies have just been banned from the technology we offer that enables them not only to compete for the best talent, but to harness and use that talent in order to be able to grow their businesses.
We are, in our opinion, providing these companies with a very sophisticated, but user-friendly, very employee-friendly technology platform that employees can use to solve a lot of headaches, compliance issues and regulatory issues on the way. It gets them out of their everyday lives and allows them to focus on the really meaningful work that they are most interested in.
Is this for companies that have a HR department but want a technology stack that they can deliver services on? Or is it for small businesses that might not even have an HR team?
It runs the range. We have thousands and thousands of customers in the United States, and that ranges from companies with maybe a handful of employees to companies with 1,000 employees. Ultimately, for the most part, I'd say that about 20 percent of our customers come from either an outsourced workforce environment or an environment where, frankly, they don't necessarily have a HR product or platform within their organization. About the other 80 percent are coming from some other kind of skill, whether it's spreadsheets or a relatively rudimentary HR platform, and are now really trying to have that kind of technology that they'll use to scale their business can.
Which of these technologies have large companies used that small businesses can use?
First and foremost, we are in an age of transparency. I think these small businesses are really looking for insight, guidance, and help regarding: Where can I find talent? How do I integrate them seamlessly into my company? How do we both pay competitively, but also in such a way that the best results are achieved? What services are required to attract the desired talent for our company? Then up to learning and developing and all of the professional development work. We are in a world where the workforce is very different from what it was five or ten years ago. This is a workforce that has different expectations than what they expect from their employer.
Let's dwell on that a little. I remember the first time I was looking for a job, the salary was important to me. Then of course I wanted some kind of retirement plan and health care. None of this was negotiable. It was either there or it wasn't there. It was good when it was there, but honestly, if the money was right, I would probably take the job anyway because I really needed the job. How do people look for jobs that are different today?
The reality is that we are in a world where, over the next few years, about 80 percent of the workforce will be Millennial and Gen Z employees. These are employees who have a fundamentally different view of the social contract with their employer. You expect all of the things you have been looking for, but those expectations go way beyond hoping those things are there. These are prerequisites for people to make decisions about where to go to work. The reality is that small businesses, small and medium-sized businesses with really up to 1,000 employees, need sophisticated tools to deal with regulatory and compliance issues. They also need tools that will give them better opportunities to capitalize on the talent they've gained for their business and enable them to attract.
Much of it is about learning and development. A lot revolves around performance management. Much of it really revolves around employee engagement. I think Zenefits was really different from others in some ways because we really focused on the employee experience. We really focused on making sure people are exceptionally dynamic with the tools a company uses to manage their workforce. That was probably almost never said, was it? Where companies really focused on making sure that the internal tools that employees, managers, and executives had to work with actually enabled them to do their jobs better. It wasn't one of those things you had to work with because you had to. Instead, you need to use the product and use the technology in a way that actually adds to your work experience.
This is what Zenefits really focused on. I think it's the thing that allows us to compete as effectively as we do.
Has that affected the development of the product? What do you think of the software you create? I'll point this out, and that's completely random, but Zenefits is currently the choice of PCMag editors for both HR management software as well as for the administration of social benefits. This is difficult as it is a highly competitive area. Did your product development cycle change when you changed your business model?
It did. I think that we basically took a much stricter and more differentiated approach to the manufacture of our products. I think in the early days, in many ways, we focused on delivering products quickly and delivering products that were minimally profitable in order to get customers what they needed. When we started moving on with marketing, now that we have much larger and more demanding companies as customers, it has become important to us to make sure that we have really high quality, very reliable, and very reliable software for all areas of application that we focus on focus. So it has changed in some ways, not just the existing products we deliver every day, but the roadmap as well.
We have new ideas, such as how we think about analytics, how we think about not only helping a single company deal with the insights and analysis of what is going on in their own company, but we find it too very much of our customers they are really interested in all comparative aspects. How does my company compare to other companies that look like me in terms of size, demographics, or location? How do I start making smart decisions, not just what I'm paying people, but what are competitive advantages today? What do they look like? What is really necessary? If I want to open another office anywhere in the country, where should I do it, given the industry I work in, the size and scope of my business today, and the type of talent pool that is really needed? will my company go? We are able to deliver these types of insights because of the large audience, the thousands of customers we have, but also because of the way we have taken a certain approach to the way we think about data .
This is really interesting because we've all seen these reports of the average salary of an engineer in Austin, Texas and the average salary of a media manager in New York City. I can tell you that some of these industries are well known everywhere. They're wildly gone, and it's not very actionable in general. But with the size and diversity of your customers, that seems to give you a huge advantage.
The other thing too, and it's not limited to tech companies. As a result, many of us in technology and making software for a living often tend to look at the world through a lens specifically aimed at tech companies. The things I am describing that are really necessary for small businesses to apply to a wide variety of industries, professional services, and healthcare. I mean the list goes on and on and on. Because of this, it has been some kind of fundamental fundamental transition for us to think about. So how can we use data for small businesses the same way a large company would if it had a few hundred thousand employees?
Talk to me a little about how Zenefits fits into the gig economy. It is amazing how many people not only have a part-time job, but also work full-time as a freelancer. Many of these small businesses may have five or ten employees, but they have 30 contractors that they work with and have a professional relationship with. How does Zenefits fit in?
Sure it does. We realized a few years ago that the notion of contractors, part-time and / or contract workers is not just an idea that does not go away, but also expands over time. It's really important for us to develop products and features that don't actually ask employees whether they work full-time or not, and honestly not whether they're geographically specifically where the company's headquarters are located or not, and instead offers an employee experience that is truly inclusive and basically looks at both full-time and part-time contract workers in a way that allows companies to understand what they are going to do as there is no better description they will breathe in and out in terms of size and girth and their capacity to burst around talent.
That depends on a variety of different factors, depending on the industry you are in. We need to be able to provide the kind of technology and systems that will allow them to do this in an intelligent way. in a way that can be closely monitored, measured against a way that hopefully allows contractors to feel part of the team and really feel like an extension of the company's value proposition and culture. The way we designed our products and how we built our capabilities is with that in mind.
So, I want to talk to you a little bit about this strange state that we're in right now in some kind of economy. You mentioned that we kind of turned around. Unemployment is very low. The GDP is pretty reasonable. At the same time, I have the feeling that workers in the economy are extremely insecure. There is not much job security to be felt. We are likely to get into a recession soon. I mean just by the numbers - we've been saying that for a while.
We have. It's been a long, long time, but that only makes it more inevitable. How do you reconcile the fact that unemployment is so low and at the same time there is so much uncertainty and people are worried about automation and all these different things? What trends will shape the workforce over the next five years?
Well, you've had some great shows on some of these topics that I've seen. So I think the battle for intellectual capital for me in general will continue to rage. Businesses will really focus on making sure they are getting the kind of talent they need in the locations they want, and basically getting and using those resources as they see fit, more or less of the kind over time managed. Again, I think companies are realizing in many ways that in this new world of work, it's not really about managing the workforce. It's about leading the workforce. We don't have time to go through that this morning, but they are two different concepts. It takes some kind of cultural and otherwise diverse mindset the way leaders think about building businesses today.
We are in a world where there is a lot of technological disruption. I think there is a lot of fear and concern about how people drive and get and ultimately try to realize their career potential. I think a lot of that depends on learning and professional development, as well as the opportunities that employees are looking for. So I think the successful small and medium-sized businesses that will grow at a pace that will basically drive the U.S. economy will be the ones that really embrace this notion of employee development and embracing, the notion of learning and the Understanding that the way people think about the tools and skills from a technology perspective that they make available to their employees will have a tremendous impact on whether or not those employees love their job, love who they are for work, love the work they do.
One of my favorite stories about Zenefits is the fact that I once had a Chief People Officer. She ran a pretty big company with several hundred employees who told me that the reason I bought Zenefits was because of the CEO and I thought it told our employees about our company. I think it's this notion that drives a lot of what is going to happen over the next decade when it comes to how people think about how technology can basically be used to unlock human potential in some way exploiting that is really positive and helpful and not trying to manage and ... It's no longer an order to control how these companies think about their talent base I guess.
Do you think there is enough space? I think this is absolutely true for engineers, for knowledge workers, hopefully for writers for a little longer. But do you think there is enough? What happens to truck drivers, taxi drivers, and retail workers? Will they also be able to use these tools?
These are great types of existential questions. I spend a lot of time looking at this because I think it's a really big, interesting question. I'm certainly not an expert, but I think from my point of view, we'll see that the types of jobs people can do will continue to improve the types of value people can provide. Companies will evolve. I don't think this is the end of an era where technology can basically replace a multitude of different things, including the 80 percent. That's a really high percentage ...
I may have made this up.
However, we can agree that a large percentage of jobs will be changed forever. But I think we can also agree, but there are quite a lot of jobs that we haven't imagined yet that I think will emerge from this transition in how technology is used differently.
I will definitely bring you down as a techno optimist.
I am a techno optimist.I mean, for God's sake, given what I do and what companies we work with and what results we see, how could I not be?
Well. Well, I'm going to take you to a darker place now and ask you the three questions I ask everyone who comes on the show. Is there a technology trend that is affecting you or something that is keeping you up at night?
There are probably a few, but for me, first and foremost, I think digital rights are personal rights. I think the tech industry has an obligation, a responsibility, to protect privacy in a way that is far deeper and more aggressive than before. Our own company invests a lot of time, energy and money in this topic, especially because we strongly believe that it is important for small and medium-sized businesses to feel secure about the way in which their data and information are stored . And in situations where it needs to be shared appropriately, that it is safely shared. I really worry about social media and the worry of making sure people really feel like they have their own information and data.
Do you think the government is the organization that can impose some rules and regulations that make sense?
Government plays a role, but I think profound changes, when they work best, are usually made by the industries involved. Whether it's cars, or whether it's technology, or whether it's public utilities or whatever, in the end I think it's really important for companies to get involved and decide that we're doing the right thing and make sure we secure people's information.
Very good. Is there some technology that you use every day that still amazes?
One of the things, and the risk of maybe being a little selfish, is one of the things that I think is really interesting right now, just the role wellness plays in the workplace. We only see some really interesting ones, both uses, but in a way it was thought of leadership in how people should think about wellness, right? We live in a time when we are experiencing some kind of epidemic stress and burnout and we see people who are really struggling with this notion of how to balance personal and professional life. Of course, we can agree that these lines are forever so blurry that technology has played a pretty profound role. But one of the things that I think is really cool is whether you're talking about companies like Headspace or Calm, there are some really cool things that happen in the spa.
With Arianna Huffington and Thrive Global, we launched a wellness application that basically allows employees to really understand and openly assess what's going on with them personally and professionally. It teaches them some micro-steps and some changes that they can make in their professional life so they may not be on the path to stress and burnout and all those other problems. I mean, I think things like that are really cool. I look at my own career and think back over the last 25 years, and I would have liked to have known if I hadn't taken a vacation in two years, or we were close to having a baby, or I might have recently been into one promoted to a new job where I had resources available that could help and guide me, that had nothing really to do with my employer, but everything to do with my own ability, my own career and my own work-life balance to the extent that this is not a contradiction in terms. Anyway, I think this stuff is really cool. I think that's really interesting.
It's really very interesting. At first, people might think that wellness and work shouldn't be related, but there has always been a relationship between employers and the health of their employees. When you think about managing a factory floor, you need to maintain a safe environment. You need to have rules and regulations and make sure your employees are not harmed. In the modern workforce, you have stress and a sedentary lifestyle. I think wellness is just one area that we think is very close to what we do as an HR platform and so a lot more things are going to come from us in that area.
Very cool. If people are interested in and interested in Zenefits, how can they tell you online
consequences ? You can follow me on Twitter at JBFulcher, and I really want to encourage everyone to check out Zenefits.com and the blogging environment we have there. I think we have a lot of provocative, thought-provoking ideas on all of these topics that we covered this morning, and many others.
Originally published under https://www.pcmag.com .
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