
ADP Begins to Roll Out a Zenefits Competitor - DavidChouinard
http://blog.zenefits.com/adp-2/
======
cddotdotslash
I admittedly don't know a lot about this situation beyond what I've read in
the news the past day or so. However, isn't it the case that Zenefits is
simply building an interface on top of ADP's payroll data? And, from what I've
read, it seems like they did this without following the proper procedures (did
they write some kind of web scraper?). So if that is the case, ADP has every
right to block them. If the situation was reversed and a large company was
scraping a startup's data to integrate into their own platform, the outrage
would be directed quite differently. So Zenefits is plugging into ADP's data,
not paying them for access, not following the proper procedures to get access,
and selling an interface on top of that data for a 10% fee, and then they
complain that ADP blocked them?

EDIT: Also, all of their press releases sound very immature.

~~~
ohitsdom
Zenefits has their users create an admin ADP user. Then zenefits uses those
credentials to pull whatever data they want. They chose this route instead of
working with ADP's third party system (without giving any justification as to
why). I might sympathize if ADP's API access was severely limited or extremely
expensive, but it appears as if Zenefits made no efforts to go this route.

~~~
cddotdotslash
Exactly. If I found a third-party company that was having users create
accounts on my systems for the purposes of pulling data out, I would block it
too, probably more quickly than ADP did.

Imagine if a company asked for your Google password instead of using the
proper API channels. I don't know many users who would do that.

~~~
pyre
> Imagine if a company asked for your Google password instead of using the
> proper API channels

This would be more like creating a new Google Apps email account for someone,
and allowing them to use it to (e.g.) manage things on your Google Drive (by
sharing a group folder with them).

How many companies hire a 3rd party accounting / HR firm (or person) to manage
their bookkeeping? How many of them create an ADP admin account for these
people so that they can manage payroll? How is this that much different than
Zenefits?

~~~
aioprisan
This is exactly how most resellers on Google Apps are set up, actually.

------
ohitsdom
This is getting ugly. Going against a ruthless goliath should help garner
public support, but the way they are doing it is very unattractive to me. And
as someone currently evaluating payroll solutions for small businesses, I'll
be steering clear of them.

------
phantom_oracle
Reading this story, the lawsuit story and in trying to keep up with this
entire fiasco...

You end up feeling both sorry and a sour taste in your mouth for both
companies. They're both obviously very good at "spin" and drumming up PR to
win support of their audience.

I previously thought things would get settled amicably, out of court, with
Zenefits saying "sorry", ADP saying "its okay" and the 2 companies settling on
some decent structure to use ADPs API (or whatever thing they use for 3rd
party access).

Now we are dealing with a situation where this is basically corporate-warfare
hitting the "lala-land" of Silicon Valley.

Google, Apple, Microsoft and other tech companies generally have this
corporate warfare amongst themselves and they also sometimes move in on other
industries, catching those players off-guard.

With that in mind, and also the fact that Zenefits can no longer be classified
as a startup - with +50 (or is it +100 employees) and a startup valuation of
US$+4,5 billion - this is just another case of corporate warfare.

I shall now neither pity or care for either party of this story, because no
matter how good the "spin" from each side is, this is just business as usual.

Any wall-street raider using HN may agree.

Edit: I'd also like to see how much longer this "post" stays as link number 1
on this platform, instead of getting "washed away" like yesterdays ADP link.
Then we can also know for a fact that YC is actively pushing the agenda with
their corporate interest in Zenefits (and proof that not all "good links
eventually surface to the top", without someone pulling some admin-user
strings at the top)

~~~
BinaryIdiot
> With that in mind, and also the fact that Zenefits can no longer be
> classified as a startup - with +50 (or is it +100 employees)

Ha, because of all of the manual entry they have to do as of February 2015
Zenefits had over 500 employees. When the CEO went on TWiST just a week or two
ago he said they were over 1,000 and hiring 100 new employees a month.

They're burning hard and fast.

~~~
pkaye
Why do they have to do manual entry?

~~~
BinaryIdiot
A vast majority of insurance brokers / providers simply don't have an API or
even an easy way to send insurance information. It's surprising how many HR
related tasks are still very manual in 2015 especially considering you should
be able to offload everything minus employee relations and hiring in HR.

------
noir-york
I believe that this is called a 'free market'. Also, called 'underestimating
your competition'.

This common misconception that big companies are hide-bound dinosaurs is
dangerous for any start up to hold. Most large companies are indeed oblivious,
but some elephants - if you tweak them hard enough - turn around and stomp
you.

Always respect your competition. Some of them may be smarter than you think.

~~~
beat
Something I've noted about the Silicon Valley startup mentality, and I'm
seeing in this discussion, is a lack of understanding of just how difficult
enterprise projects actually are. The attitude is often that big companies
work so hard for so long and spend so much on projects and still have crap,
that they must be lazy and stupid. This is _not at all_ the case. The
enterprise is full of smart, hardworking, determined people - as good as
Silicon Valley - and they _still_ wind up with crap and failure most of the
time. That's not a reflection on the enterprise, that's a reflection on the
difficulty of the problems the enterprise tackles.

Like I told someone at a Silicon Valley enterprise/health meetup last year...
if you saw a startup with $50M annual revenue, you'd think they're huge,
right? I've worked on three different projects larger than that, and they're
all small potatoes in their enterprises.

------
hoopism
I had never heard of Zenefits but I've read the articles that have come across
HN thus far. From the standpoint of a non-customer they come across as more
consumed with proving a point than just proving they are better.

I think they ought to adjust their strategy.

------
ghshephard
How is what ADP doing (blocking access to their service from Zenefits so they
can sell Opum), any different from what twitter does when it blocks services
like meerkat from accessing their service when they want to build a business
around periscope? I'm not saying that either organization (ADP or Twitter) is
acting benevolently (obviously, they are both acting in a competitive manner)
- I'm just trying to see if the two are acting in a similar manner.

~~~
BinaryIdiot
As far as I understand Zenefits is doing both screen scraping and manual entry
into the ADP systems and they may have never even talked to ADP. So instead of
hitting an API directly where ADP may expect a large amount of requests
Zenefits is hitting their normal website requesting hundreds or thousands of
users every hour.

I would have blocked them too. It looks far too much like malice from the ADP
side of things where it could be bot nets or something else versus a legit
company.

------
jilberish1990
Couple of points:

1)Zenefits has always known this could happen or at least they should have.
You have to play nice with ADP. Because if they don't work with you, you are
dead.

2)Zenefits has a super young CEO who doesn't know what he is doing. Where is
David Sacks in all of this? Isn't he the adult supervision here? Maybe he
hasn't run anything at this scale before? Maybe he and his Yammer gang don't
know how benefits and healthcare work?

3)What were the VCs who invested at $4.5B thinking? Any technical due
diligence would have brought this up. You had to clear this as a diligence
item before you put a dollar into the company.

4)The lawsuit is a shakedown. Its time for ADP to collect its dues. Its
nothing more than that. I expect ADP to extract a huge premium and then play
nice with Zenefits in an out of court settlement. Everyone will have a face
saving PR release after that. But isn't it interesting that this happens after
they pick-up their $500M round? I have heard rumors this was going to happen
in September last year. ADP waited until now. What a pest.

4)Time for Parker to go and be replaced with someone who has run billion
dollar software companies before. And that's not Sacks.

------
CPLX
Frankly, the simple fact that there is a headline on the Zenefits site that
says "ADP Begins to Roll Out a Zenefits Competitor" shows that they have
seriously lost their focus.

~~~
BinaryIdiot
Yeah if anything they should have "leaked" this story of a news outlet.
Putting it on the site is just insanity.

------
tomasien
I can understand that many people probably don't feel Zenefits is totally in
the right in this dispute as a whole, but I struggle to see how you can
dispute that ADP is being ridiculously two faced. I'm not sure how thinking
ADP is better than Zenefits or that web scraping is bad or whatever people
saying about Zenefits is relevant to the fact that ADP filed a lawsuit in
federal court saying they're NOT making a Zenefits competitor and then sent
out emails to customers saying explicitly that they ARE making a Zenefits
competitor. Whatever else you think about this situation, that is obviously
pretty screwed up.

------
jtwebman
I guess it really depends on what ADP's terms of service say. It is their site
and service. Clients can choose to stop using them. The Zenefits teams seems
very immature, maybe they should pivot and start offering more full services.

------
olafskyansian
I highly doubt this is a "new" product. They have offered payroll/HR/benefits
for eons. What would be game changing is if it is free...

------
fourstar
Who gives a fuck? In my opinion they are both competing for the same thing.
Why even give either of the companies more publicity than they deserve?

------
wnevets
zenefits post about ADP is making me dislike them and I've never used their
product.

------
xacaxulu
I'm gonna bet that ADP wins this one.

------
ams6110
IANAL but I belive the stock advice when you are facing a lawsuit is to shut
up about it. "We don't comment on matters under litigation" is the standard
line, and for good reason.

------
acconrad
This is pretty bad on ADPs part. But after reading the other HN discussion on
this topic[1], it seems like this is a company destined for as fast of a fall
as it rose. I hate to see big companies muscle out little ones, but I guess if
you're going to rustle the feathers of so many, you're bound to make some
powerful enemies.

[1]
[https://news.ycombinator.com/item?id=9692635](https://news.ycombinator.com/item?id=9692635)

------
bhouston
It is likely possible to identify the email address + name that are blacked
out email because of its pixel dimension if that is a major concern:

[http://snag.gy/DQEAX.jpg](http://snag.gy/DQEAX.jpg)

Just figure out the application and OS/browser rendering the email and compare
each possible email/name combination with this.

It is like a one-way hash with a fairly small set of possibilities. May be a
few hits though, rather than just one.

------
shaaaaawn
It's interesting, because if Zenefits had already IPO'd they absolutely would
not be able to take this approach. Too much shareholder risk. And this is just
as much a David Sacks thing as it is a Parker thing. I have to believe after
my 10+ years in Financial Services that David Sacks already disliked ADP from
his PayPal days. Zenefits is going to lose this battle, but it's about the
war.

------
gamblor956
Blatant FUD from Zenefits. ADP's new product is an online payroll/HR SaaS that
integrates across its entire product line.

Zenefit's product is a glorified remote bookkeeping service in which you enter
data into the Zenefits website and they re-enter it manually, and usually
incorrectly, into the ADP website and scrape the results, usually incorrectly,
so they can post a response several days later to your Zenefits account page.

One is a SaaS (ADP) and the other is a remote data-entry service (Zenefits).
Completely different. It's hard to argue that Zenefits should even be
considered a tech company, since most of their "integration" functionality is
driven by manual human labor and not technology. At best, Zenefits is a data-
entry service with a nice, shiny UI.

EDIT: Also...the new product is actually just an offshoot of an existing
product that my firm has been using for nearly a year. The new product, Opum,
is simply the small-to-medium business version of one of ADP's existing
enterprise cloud payroll/benefits products. It even uses the same (new)
interface as the enterprise product.

~~~
joshstrange
If they are so "completely different" then why would the ADP rep say:

> “We are coming out with a product to compete with Zenefits, a full service
> integrated online payroll and benefits solution.”

I can't seem to argue with Zenefits stance that they are being sued for
complaining that their access was cut off in an attempt to kill them off while
ADP launches a similar product... On top of that who is ADP to cut off access
that their clients are paying for? It doesn't matter if a human logs in or a
computer, the cost to ADP is the same. Here they are blocking access for no
legitimate reason while launching a competing product. This whole things
stinks and I think the smell is coming from ADP....

~~~
jasonlotito
> I can't seem to argue with Zenefits stance that they are being sued for
> complaining that their access was cut off in an attempt to kill them off
> while ADP launches a similar product...

That's not their claim. Their claim is that the reason they were cut off was
because of this product launch. They haven't presented any proof of this.

Simple fact is, the claim is coming from a company that has already made it
clear they are doing things they should not be doing. They have the burden of
proof. They have a mountain to climb.

Edit: As mentioned in the GP comment, this claim is also false:

"Within the same hour they filed suit, an ADP sales rep started selling a
brand new Zenefits competitive offering — called “Opum” — to our shared
clients."

~~~
eropple
_> the claim is coming from a company that has already made it clear they are
doing things they should not be doing_

I'm troubled by this assertion. I know firsthand that ADP will actively fight
attempts to integrate with them; their APIs are bad, poorly documented, and
have reliability problems. Should somebody attempting to do well for the
customer--and, yes, make some money, but it's not like Zenefits is inventing
problems to solve--not do well by the customer first and foremost?

Like, from my perspective: forget ADP, forget Zenefits. Is this better for the
customer?

~~~
justizin
Zenefits could simply implement ACH themselves, as ZenPayroll has.

ADP is not a monopoly.

Zenefits built a model that vaguely value adds onto ADP by using a more modern
web stack.

I'm no huge fan of ADP, but they're being generous to even consider
_themselves_ to be _competing with Zenefits_.

~~~
beat
The word "simply" does not belong in the same sentence with "implement ACH".

Signed,

Someone who worked on ACH for nine years.

ps: I'm pretty sure they're trying to do just that. But you have to consider
just how incredibly difficult ACH is - not just from a coding perspective, but
from a regulatory perspective. Banking and accounting legal entities need
created.

pps: ADP knows good and well that Zenefits is working on their own ACH
implementation with their buckets of cash. This is a preemptive strike.

------
beat
This strongly suggests that the shutoff AND the defamation lawsuit were part
of a planned strategy - that they're deliberately goading Zenefits'
notoriously outspoken CEO.

Which does not bode well for their lawsuit, but I don't think they're out to
win that anyway.

------
univalent
Zenefits needs much much better Mar-Comm. This is getting embarrassing.

------
infinitone
And the rabbit hole gets deeper... I'm guessing this Opum product is smoke and
mirrors to capitalize on this whole fiasco.

~~~
crazypyro
I think you should give ADP more credit. Even if they don't have the best
product, I would assume they would've foreseen competitors in the front-end
benefits field and have adjusted their business plans long before this back
and forth. Companies that have been in an industry for a long time can often
see industry changes coming, even if they don't have the agility to react
quickly.

------
catshirt
i hope ADP finishes this project soon i stop getting solicitations about it
from a new recruiter every week

------
makeitsuckless
I'm filing Zenefits in under the heading "companies that confuse 'disruptive'
with 'douchebag'".

------
paulhauggis
"We call on ADP to stop making life more difficult for small business
customers and live up to its corporate value: “integrity is everything.”"

See: Twitter, Facebook, and even Google. All of these companies have destroyed
3rd party companies by basically using them as a test base for new ideas and
features and then directly competing (and many times, cutting off the 3rd
party completely).

If you are going to base your entire company off of a 3rd party, you better
have a plan B if they completely cut you off.

~~~
theaccordance
This isn't that situation - Zenefits didn't build their entire platform on top
of ADP; they simply offered an integration for a portion of their customer
base that uses ADP.

~~~
paulhauggis
It is the situation. They based a portion of their business on someone else's
platform and it was pulled out from under them.

If it wasn't such a big deal, it wouldn't be all over the Internet.

~~~
theaccordance
10% is not "their entire platform" [http://techcrunch.com/2015/06/09/payroll-
giant-adp-cuts-off-...](http://techcrunch.com/2015/06/09/payroll-giant-adp-
cuts-off-small-business-clients-access-to-zenefits/#.wg0aq7:Vih9)

