ZenPayroll Has Raised $20 Million To Help Business Owners Conquer A Major Time Suck
Series A investors include Kleiner Perkins Caufield & Byers and General Catalyst Ventures. Previous investors include the CEOs of Yelp, Box, Dropbox and Yammer. The company has raised a little over $26 million to date.
Joshua Reeves and Edward Kim, the CEO and CTO of ZenPayroll respectively, first met Kleiner Perkins investor Randy Komisar at Stanford University. They were Komisar's students and Komisar mentored them throughout their careers. Komisar says he was interested in ZenPayroll from the beginning so his investment in the company came together quickly.
"I focus on three things when I invest," Komisar, who also invested in Google-acquired Nest, told Business Insider. "The people and the team...the problem...and the business. This is a team I admire and respect; they're mission driven."
According to Reeves, 6 million small businesses in the United States currently use pen and paper or excel sheets to handle their payrolls.
ZenPayroll offers an easy-to-use alternative to Paychex, ADP and Microsoft Excel. Frustration-saving features include the ability to e-sign documents and automate all payments. Local, state and federal payroll taxes are paid by ZenPayroll automatically.
ZenPayroll also strives to make the payment process more fun for employees. Rather than receive a monthly paper statement, ZenPayroll sends emails that exclaim, "Cha-ching! You got paid." All pay stubs are stored in the cloud so employees don't have to stash them offline. When an employee leaves the company, he or she can still access all of the information.
The service costs a base fee of $25 per month per company, and the first ten employees cost $4 per month, with each employee thereafter costing $2 per month.
Reeves looks at the funding as an "enabler," - a necessary growth tool that shouldn't be too celebrated - and not a "destination."
"Each year of ours has a a focus," says Reeves. "In 2012 we were in [startup accelerator Y Combinator] and raised a seed fund. We launched at the end of the year. 2013 was about building out the product. As we move into 2014, we want to amplify all of the programs we have in place." ZenPayroll currently employs 25 people.
Word of mouth is a big driver of ZenPayroll's growth. The company did an internal survey and found that 87% of participants had recommended ZenPayroll to someone else. While Reeves won't say how many businesses use ZenPayroll, the amount of money it manages for its businesses has grown significantly. In August, ZenPayroll had processed $100 million total for its businesses. Now it has processed $400 million and Reeves says the company will be close to passing the half-a-billion mark this month.
Reeve's goal isn't to create just a cheaper alternative to current payroll solutions. It's to make employer-employee relationships stronger.
"A lot of our focus is on how you perceive compensation," says Reeves. "A lot of companies make it into a very impersonal event. Work should be rewarded and rewarding. When we set out to make ZenPayroll, it wasn't about creating just a better, cheaper and faster product [than ADP or Paychex]. It was more about rethinking compensation."
Here's a video explaining how ZenPayroll works: