
San Francisco Startup ZenPayroll Raises $20M, Finds Novel Ways to Lure Workers - swohns
http://blogs.wsj.com/venturecapital/2014/02/19/san-francisco-startup-zenpayroll-raises-20m-finds-novel-ways-to-lure-workers/
======
joshuareeves
I'm the CEO of ZenPayroll and we're excited to share this news with everyone.
Funding is an enabler, not a destination, and we're eager to use these
resources to serve our customers.

As some quick history, the company is a little over two years old and we were
a part of the YC W12 batch. My co-founders and I started the company because
we had felt the pain of using existing solutions at our previous startups. We
also have family members running small businesses, and we had been exposed
first-hand to the frustration of doing payroll manually (which is still how
many companies in the US do payroll).

We felt that modern software could make this complex process much simpler.
It's been fourteen months since our launch and we're proud to be processing
hundreds of millions of dollars in payroll, and serving countless small
businesses across the country. I remind the team often that building a great
company is a marathon, not a sprint, and we're still at the early stage of our
journey. We have much more to do!

During this interview with the WSJ, I talked at length with Debbie about some
team programs we put in place. People are the foundation of any great company
and the ZenPayroll team is the entire reason we've been able to do what we've
done over the past two years.

I wanted to clarify some of the programs she wrote about:

(1) Housing stipend -- the main driver of this perk is actually the desire to
have folks live near the office. We would offer this type of program
regardless of where our office is located (even if it was in a lower cost
area) because we see a big benefit to folks not having to commute. We realize
that not everyone can live nearby, and several of our teammates actually live
on the Peninsula, East Bay, or other parts of SF. Our inspiration for this
perk was the housing stipend Facebook provided it's employees early on, when
they were located in downtown Palo Alto.

(2) Flight at one-year anniversary -- it’s easy in startup life to become
caught up in the day to day. We’ve always found it rewarding to travel because
it gives everyone perspective, and taking a step back can help people better
understand what’s important to them, which makes them a better teammate as
well. We put the two-year expiration in place as a specific restriction so
teammates have to do a trip during that year. They don’t have to go of course,
but we do everything we can to encourage them to do it.

(3) Workation -- similar to #2 above, we’ve found that changing our
environment helps us think about things differently. Many other startups do
similar types of retreats, and we’ve really enjoyed going away as a team for
5-6 days and working on smaller cross-functional projects that can be
completed during the workation. It’s also a team bonding event, and yes, many
folks in the office like to cook breakfast. :)

------
pkfrank
The "Novel Ways:"

1) Housing stipend of $500/mo if employees live within a 10-minute walk of the
office

2) A semi-annual retreat / hackathon where employees cook meals, hang out,
bond, code, and present their projects

3) Plane ticket anywhere in the world that must be used between their 1 and
2-year anniversary at the company.

I know of many companies that already do #1 and #2, but I suppose I haven't
heard of this complimentary vacation ever before. Seems like a pretty awesome
perk, which shows they respect and value work/life balance.

~~~
slg
The $500 per month housing stipend seems a little disingenuous. If the concern
was truly about employees and rising real estate prices, why not raise wages
by $6000 across the board? It isn't like real estate magically drops in value
half a mile away or commuting longer distances is free. Is the policy an
attempt to remove an excuse why an employee can't be in the office? Do they
want the ability to call an employee during the evening and have them on site
10 minutes later? Do they want to ability to lower wages in the future with
less resentment (it is a lot easier to cut perks than salary)? Maybe it is
cynical, but those all sound like more realistic reasons to have a housing
stipend based on proximity to the office than true concern for their
employees.

~~~
robotresearcher
In a non-cynical mode:

1) turns your employees into neighbours

2) reduces wasted commute time

3) increases exercise compared to drivers (10 mins is better than nothing
(edit: twice a day!)) thus reducing medical costs

4) reduces absenteeism due to dental appointments, kid concerts, etc that tend
to be near home. Improves family life.

5) reduces the carbon footprint of the business

6) reduces the car-related absenteeism: breakdowns, maintenance appointments,
even injuries and deaths.

Increasing salaries would do none of these things.

~~~
robotresearcher
Oh boy, I just thought of a really good one:

Some parents with young children find it difficult to get time to be alone in
private while not exhausted. This can cause awful stress on a relationship.
"Lunchtime" with a partner at home can make a big difference.

This might not sound like a big deal to the pre-kid people, or those with tons
of energy after the kids are in bed, but for some people this is a
relationship-saver.

~~~
monkeynotes
Lunchtime at home? Better hope you are not on lunch making duty at the office,
it's company culture don't you know. You do want to be a team player don't
you?

Besides, how reasonable is it to expect to be able to raise a family in
downtown SF? Surely if you want space, good schools, and room to grow an extra
$500 in downtown rent terms isn't going to make that much of a difference.

~~~
robotresearcher
Doesn't have to be every day. Doesn't have to be SF. And $500 makes $500
difference* no matter where you are.

Edit:

(* ok, maybe $300 difference after taxes.)

------
bradmccarty
A bit of an outsider's perspective, from someone at a company (FullContact)
that does some similar things -

1: Free EcoPass and/or free parking - EcoPass is a pretty killer bus pass that
lets you take the express routes and you can even do long trips for a severely
discounted price. The airport from downtown, for instance, runs $11. With
EcoPass it's $2.50. We've found that many people would rather take the bus
than drive, even if driving and parking in Denver isn't nearly as much of an
inconvenience as it is in SF. It also solves the "car trouble" issue for most
people.

2: $7,500 each year for vacation - In a startup, you're going to work harder,
probably for a bit less money, than anywhere else. Burnout will happen. This
is our way to combat it. We remove the obstacle of "can't afford a vacation"
by actually paying you to take one.

3: Powder Day Policy - There's 8 inches at Vail and you can't stand to be
inside? Go. Take the day. Just don't screw over your team and make it up in
the next two weeks. The same holds true when it's 72 and sunny for the first
time in a month and you need to just get away.

What we found - First, the obvious. Recruiting engineering talent isn't easy.
The same can be said for just about every position that a company needs to
fill, but engineering is especially difficult. By way of comparison, we have 9
positions open right now and almost 3,000 applicants. Of those, only 2 percent
have applied for the engineering positions.

79 percent have applied as "I just want to work at FullContact".

While that's a drastic difference, it's also better than what we were seeing
prior to adding the "non-traditional" benefits as part of the
recruiting/retention plan.

The real questions that will hit ZenPayroll (as they have us) are these -
You're going to start getting a LOT more applicants. How much time do you have
to put in to filter them? Are you going to start getting a lot more GOOD
applicants? How many of them just want to game the system for a year to get a
taste of the good life? Are your processes good enough to weed them out?

As an outsider with common ground, it's good to see even more companies taking
this approach. But as an insider to the turbulence that they can create, I
would urge them to make sure that they're as prepared as they can be for those
bumps.

------
nathan_f77
ZenPayroll is hiring:
[https://zenpayroll.com/careers](https://zenpayroll.com/careers)

I'm a software engineer at ZenPayroll, and it's truly an awesome place to
work. The founders and team have taken great care to build an amazing company
culture, and I'm really excited to see us grow over the next few years.

~~~
xauronx
How elitist is the hiring process? I'm always really hesitant to apply to
places like that. I'm consistently one of the best developers at my job, I'm
really good at getting shit done, and have a ton of faith in my ability.
However, as soon as I think about applying at a "trendy" start up, I envision
someone grilling me for hours to hand write sorting algorithms on a white
board. I have no interest in that, and I feel that it has very little bearing
on how good someone is at software development.

~~~
grinich
This is like complaining that you need to write an application essay to get
into college. _" But I'm not going to be a writer..."_

If the company is awesome, just suck it up for a day. Once you join you can
try to change the interviewing process.

I think the thing most people don't realize is that these traditional
"interviewing" techniques (like whiteboard coding) are just what gets you in
the door. Your real interview starts on day 1, and if you don't perform at the
real task, you'll be asked to leave.

Writing sorting algorithms is like tuning a guitar. It's true there exist
people who are good at tuning but actually terrible at playing (ie: good at
puzzles, but lousy programmers).

But there are few, if any, amazing guitarists who can't quickly tune an
instrument. It's a signal.

~~~
vonmoltke
> This is like complaining that you need to write an application essay to get
> into college. "But I'm not going to be a writer..."

If my application essay was graded for spelling, grammar, sentence
construction, complexity, and other features like I were writing for the AP
English exam, I would agree completely with that statement. However, the
purpose of such an essay is to communicate why you will succeed in your
studies and why the university should admit you. Yes, it takes a minimum level
of writing proficiency to do this, but that should be secondary to the
message. If you are a university admissions officer who is grading essays on
proficiency you should be fired for not doing your job properly.

> If the company is awesome, just suck it up for a day. Once you join you can
> try to change the interviewing process.

Which just perpetuates the system.

> I think the thing most people don't realize is that these traditional
> "interviewing" techniques (like whiteboard coding) are just what gets you in
> the door. Your real interview starts on day 1, and if you don't perform at
> the real task, you'll be asked to leave.

Then why the hell are you doing them? Just randomly choose a resume that has
enough buzzwords and make that person an offer.

> Writing sorting algorithms is like tuning a guitar. It's true there exist
> people who are good at tuning but actually terrible at playing (ie: good at
> puzzles, but lousy programmers).

> But there are few, if any, amazing guitarists who can't quickly tune an
> instrument. It's a signal.

Writing sorting algorithms for a software developer is like tuning a guitar
for a musician. Both are broad terms that cover a number of specialties. Most
specialties of software developer can write efficient sorting algorithms, but
some can't because they have no need to. If you want to hire a guitarist,
advertise that you are looking for a guitarist; don't advertise that you are
looking for a musician and reject everyone who isn't a guitarist at the
interview stage.

------
seancoleman
I can't emphasize enough the severity of pain that ZenPayroll is solving.
While running a startup in 2012 with multiple W-2 employees and contractors,
the industry standard small business payroll solution was QuickBooks Online
Payroll. Although it certainly abstracted many local and federal legal & tax
complexities into something a first-timer could work with, I still spent at
least 10 hours a month running payroll, a process of manual steps that
software could easily automate.

The interface was confusing, web-unfriendly, and left me questioning how much
money I needed to budget for quarterly taxes (both state and federal) and why
we were sending so much money to the IRS for such a small startup. At the end
of the day, I always felt captive to QuickBooks. Software should be
empowering, not shackling.

~~~
NDizzle
We've used paychex for years. It's not great, but it's not quickbooks.

[http://www.paychex.com/](http://www.paychex.com/)

------
qdpb
> Mr. Reeves said he’s been “amazed at the changes” and has watched housing
> prices rise. Local companies should take some responsibility, he said.

And to take "some responsibility", he made it easier to push housing prices
even higher by subsidizing already well-off employees?

~~~
sokoloff
He is using that phrase in the sense of his (perceived) responsibility to his
employees, which is undoubtedly stronger than his responsibility to the
overall city.

~~~
jhvh1134
Other than obeying the law and paying taxes, he has no responsibility to the
city. Why has it become so fashionable to project obligation onto others? The
guy is creating 20+ jobs this year, what more would he need to do to fulfill
this "responsibility to the overall city?"

~~~
untog
_Why has it become so fashionable to project obligation onto others?_

Why have people started talking about responsibility to your environment as if
it's something new?

~~~
sokoloff
Where does someone's butterfly effect responsibility end?

If I create a startup and hire 20 people, and some of those 20 people like to
eat some particular type of food for team lunches, and their presence at that
eatery makes the lunch line longer for other patrons, do I have some
obligation to apologize to those patrons for the long line?

If my 20 employees don't elect my $500 stipend to live within walking
distance, what pennance would adequate for me to apologize to citizens of
earth for the increased CO2 emissions from their driving and to the citizens
of San Francisco for the extra 40 vehicle trips that would be foist upon the
city? For good measure, he's paying people $500 a month extra to live within
walking distance. For this, he gets a river of crap?!

At some point, companies employ people, those people get paid, those people
spend their money consuming other items, but the company has no responsibility
to apologize for that 3rd level effect consumption, IMO.

------
asucks
Hopefully they use some of this funding to start expanding to new states
quicker. I was told last year they'd be available in my state by Q3 2103. That
deadline came and went and now I'm being told "by the end of 2014."

The current major companies offering payroll (SurePayroll and ADP) are both
expensive difficult to use. I'm currently with SurePayroll and it sucks major
balls. It's expensive, (I have 1 full time employee and 1 part time employee
that I pay both by check and I think it's upwards of $80 a month for the two
of them). Simple tasks that should be easy take multiple steps. I tried
updating my bank account information and they required me to fax it in. I'm
under 30 and have never used a fax machine. Huge time drain just to update an
account and routing number.

I want so badly to switch to ZenPayroll, as I've read so many great things
about it. I'll keep crossing my fingers they'll hurry up and get more states
on board. The online payroll space is absolutely ready for a game changer, and
a company that gets it right will make a ton of money.

~~~
binxbolling
Definitely agree regarding their coverage -- only being in 7 out of 50 states
is no minor drawback.

The death of ADP and its ilk can't come soon enough. Payroll might not be as
'sexy' as some other markets, but you're right that whichever start-up can
battle the big guys here will absolutely make a lot of money.

~~~
gamblor956
ADP will never be simple because it's not supposed to be. It also won't die
for the same reason. It handles payroll processing _worldwide_. Payroll is
complicated enough when you're just dealing with city, state, and federal
payroll taxes. Can you imagine how complicated a system must be to account for
all of the international rules and variations of payroll _and make it
accessible via a unitary interface_?

ADP is targeted at corporations with payroll across multiple jurisdictions.
The Apples, Googles, and Microsofts. It's not targeted at, nor intended for
small businesses, even though they offer a SMB product. If you're not at least
dealing with payroll across multiple states, you should be using a your bank's
payroll service offerings, or (if you trust them) a local payroll service
provider or a payroll SaaS.

------
stephenitis
I paid a dinner visit to a friend at ZenPayroll and did feel a strong family
culture at their dinner table. very unique culture that should be more
standard in our startup community.

------
kareemsabri
Not an economist but my instinct is that if a housing stipend became
widespread practice for startups in SF it would aid in inflating the market by
making prices artificially low.

Pretty good perk for now though, I'd take it.

------
imkevinxu
I have nothing but the utmost respect for Joshua Reeves, every interaction
I've had with him has been very genuine and the way he runs his company and
culture reflects that. Congrats on the raise!

------
codingfounder
What's ZenPayroll's story? How did they get started?

~~~
joshuareeves
I'm the CEO of ZenPayroll and I made a comment to the main thread with more
background on the company, and our mission.

Here's a link:
[https://news.ycombinator.com/item?id=7265814](https://news.ycombinator.com/item?id=7265814)

There are also two recent blog posts we've made which might be helpful. The
first is about the funding, and second is our 2013 Year-In-Review, which
highlights what we've been working on.

[https://zenpayroll.com/blog/series-a-
funding](https://zenpayroll.com/blog/series-a-funding)
[https://zenpayroll.com/blog/zenpayroll-2013-year-in-
review](https://zenpayroll.com/blog/zenpayroll-2013-year-in-review)

Hope this helps!

------
pla3rhat3r
Too bad they're still not available in every state.

