Ashton Kutcher did it right by investing in Zenefits
The 70’s show star has already invested, through his firm Sound Venture, in Zenefits in 2015 – a HR startup which aims to simplify the human resources operations. Kutcher is a known venture capitalist and is highly successful at it. Other venture capitalists almost look like newbies compared to him. The actor has invested in more than 50 startups so far; Zenefits is the only HR startup he has invested in.
Why did Ashton invest in an HR startup? In one of his interviews to a media house he said, “Zenefits is positioned to be the most powerful enterprise software in the world. Great software connects people by removing friction.” Zenefits was named as the fastest growing company in the Silicon Valley in 2015, with a valuation of $4.5 billion in May 2015.
Started in April 2013 by Parker Conrad, who is also the CEO of Zenefits, the company offers cloud-based software as a service to companies for managing their human resources, easier onboarding process of payroll, benefits of the employees and insurance. The USP of the company is it offers its HR services dashboard to employers for free, and makes money by receiving commissions from insurers. In May 2015, Zenefits in a media interaction where it raised $500 million said, it has signed up more than 10,000 companies in the US. The company manages over $700 million in health insurance premiums, as on May 2015. In the fund raising event, Conrad said, “the faster you grow, the more capital you burn, because of this dynamic that revenues span over time and the costs are front-loaded. If we want to grow that quickly it requires a lot of capital to do the plan that we want to go out and do. Obviously we can grow less quickly and do it on a lot less capital, but we’re in this fortunate position where there are a lot of investors that see our SaaS metrics and say, holy crap this is going to be extremely profitable, all the numbers make a lot of sense.”
In the same event, Lars Dalgaard, general partner ar Andreessen Horowitz had said, “In my experience, Zenefits has achieved in two years is unprecedented. Zenefits has brought the benefits of software to a massive industry that had yet to embrace technology at scale. And their potential market includes tens of millions of employees, using multitudes of different business applications in companies of all sizes.” Andreessen Horowitz is also an invetor in Zenefits.
A month later, Zenefits got embroiled in a lawsuit filed by a 50-year old payroll provider ADP. Zenefits was blocked by ADP from accessing payroll information on behalf of Zenefits customers; the allegations which Zenefits completely disagreed. Much to the company’s relief, the lawsuit was dismissed by prejudice by the US District Court for the Northern District of California in October 2015 – a David vs Goliath case. After losing the court battle, ADP issued a statement saying this settlement would allow them to put the case with Zenefits behind them. This win shows how Zenefits is disrupting the current HR system & proving to be an indispensable HR startup for various companies.
Ashton’s knack of picking the right companies to invest makes Zenefits a smart choice for investors and companies who are looking for quick HR solutions. Kutcher has wielded his magic wand of investments on Uber, Skype (now bought by Microsoft), Fab, Airbnb, Foursquare, Spotify, Neighborly, Flipboard, among others . It’s there to see what these brands have become. Beyond entertainment, the 37-year old actor can teach a thing or two in investments in HR. You wouldn’t mind, will you?
Sources: (money.cnn.com, TechCrunch.com)