Take Two: Rippling’s Success After Zenefit’s Downfall
Startups fail. There’s no way around it. Recent studies found that nearly 70% of tech companies fail. These failure rates are seen in all industries, regardless of experienced entrepreneurs, capital raising activities, and consumer demand.
Building a successful business is hard, which the founder of Rippling can probably attest to. Before he started Rippling, he created Zenefits, which may ring a bell. Zenefits attracted a plethora of bad press, ultimately being accused of fraud in compliance regulation.
In 2016, the human-resource software provider was under the spotlight for allegedly telling brokers to inflate their number of hours in the pre-certification program. Under California law, insurance brokers must complete 52 hours of pre-certification coursework to sell insurance legally. The hour inflation was done by using the former CEO’s tool, known as the Macro.
Despite still successfully passing the pre-certification exam, the Macro gave brokers the ability to stay logged into the state’s program regardless of their activity level, boosting up the training hours without actually completing the work. It was estimated that nearly 80% of the brokers were selling insurance illegally from inception up until 2015 when board members were alerted.
Creating a new company is hard enough, not to mention the difficulty of building a business when your reputation as CEO was previously tarnished. This was the case for Parker Conrad, the entrepreneur behind both Rippling and Zenefits.
However, the tarnished legacy has no place in Conrad’s new business as Rippling is thriving and reaching new levels that Zenefits was never able to obtain with a $6.5 billion dollar valuation to support that. Diving into the employment specifics of Rippling will help show that the company is stronger than ever despite the prior company’s scandalous spotlight.
The data we will use to make this analysis is from Osterus, a powerful software program that combines thousands of data points to generate useful and valuable statistics. Not only can Osterus be used to make business decisions, but it can also help ease the time-intensive burden of due diligence.
Let’s first start by looking at the work experience distribution. We can see that most employees have between 5 and 10 years of experience with 44.3% of employees found in that category. The next highest category is the 10–15 year category with 22.8%. There are only 1.8% and 5.5% of employees in the 0–1 and 1–3 categories, respectively.
This information tells us that Rippling is prioritizing employee experience in the hiring process. They aren’t looking to hire fresh graduates in intern and associate positions. Instead, they are focusing their hiring efforts on attracting experienced talent that provides the business with valuable insight and expertise. This supports the growth strategy of Rippling and can help explain their recent success.
The current employment duration distribution is also very telling. Most employees are found in the 0–1 category with 64.5% while the 1–3 category shows 28.8%. Employees with the company for over 5 years are nonexistent. This makes sense as the company is relatively new with a start date of 2016.
There would be very few employees with the company from the start due to capital restrictions. In the next few years, we would hope that employees with under 3 years with the company will begin to transition into latter categories, such as the 3–5 and 5–10 year categories. Building a successful company relies on having qualified labor grow alongside the business.
The data shows us that the top prior employer was Zenefits, which makes sense considering Rippling is almost an exact replica of Zenefits. Amazon, Microsoft, ADP, Google, and Uber trail close behind.
Even though there are employees from Zenefits in Rippling, there is a plethora of other outside experience that is contributing to the success of Rippling. Not to mention that the CEO and other officials aren’t going to make the same mistake twice.
The breakdown of employees by job titles also sheds light on the success of Rippling. The largest job title category is software development with 24.39% of employees there. Next, we see that sales are a top priority with 14.09% of employees found there. An emphasis on generating top-of-the-line software and focusing on generating sales has helped Rippling grow into the enterprise it is today.
Not far behind sales are customer service and general management with 11.82% and 6.82%, respectively. Prioritizing customers is a great business move as Rippling would not be successful without their customers. General management is also a vital component of running a successful business to keep all employees operating at peak levels to promote productivity and efficiency.
Let’s analyze where employees are working. The top city that Rippling employees work out of is San Francisco with 30.2% of employees located there. We see that New York, Seattle, Los Angeles, and Denver are all hovering around 5% of employees. The workforce is strategically spread out across the United States, allowing Rippling to reach more consumers and generate additional sales.
Finally, looking over the gender distribution will help us rationalize the success of Rippling. The overall breakdown is 69% males to 29% females. Although the overall breakdown isn’t the best for promoting diversity in the workplace, there are many categories that have a large female representation.
The general management and customer service categories have almost a 50/50 distribution with 48.89% males to 51.11% females and 51.28% males to 48.72% females, respectively. This is a great distribution for the company; however, sales, software development, human resources, and engineering are all heavily male dominant.
Are you starting to see why Rippling has become so successful in recent years? The success of any company comes down to how effectively they are using their resources. Employees are a top resource at all companies. Having the right employees can take a crumbling company to a recognized enterprise.
Rippling would not be where it is today without the strong labor force in the company, which was supported by the statistics from Osterus. This is just the start of the insight employment statistics can provide us when it comes to analyzing companies. Understanding what’s going on behind closed doors helps us make both employment and investing decisions.