By Heather Somerville
SAN FRANCISCO (Reuters) - The former chief executive of human resources software firm Zenefits, Parker Conrad, on Tuesday made public a new startup that will compete with his old company, marking a comeback by the Silicon Valley entrepreneur who left Zenefits under a cloud.
Conrad's new startup, called Rippling, came out of what the tech industry calls "stealth mode" on Tuesday, offering services to help companies automate the employee hiring and firing processes.
These include generating new employee offer letters and severance agreements, shipping preconfigured computers with antivirus software, setting up email accounts, providing keycards to an office building, processing payroll and more, according to the firm's website.
Many of these services go head-to-head with Zenefits, the company Conrad started in 2013 and resigned from last year after problems surfaced over the company flouting state insurance regulations.
"I feel like I still have a contribution to make," Conrad said in an interview.
Zenefits offers human resources software to help companies get new hires on board and manage employee benefits, and also acts as a health insurance broker, working as the middleman between businesses and insurance providers.
Zenefits made a speedy ascent to a $4.5 billion valuation and was hailed by investors as one of the fastest-growing software companies in Silicon Valley history. But its fall was equally precipitous, once the company revealed that some staff who sold health insurance did not have the proper licenses to do so nor did they meet state-mandated education requirements.
Conrad was replaced by David Sacks, then the company's chief operating officer. Zenefits was hit with hefty fines following a number of state investigations and laid off hundreds of employees. The company's valuation tumbled to $2 billion and Sacks resigned in December.
Conrad has been at work on Rippling alongside co-founder Prasanna Sankar since June, and the startup now has about 15 employees and $7 million in the bank, Conrad said. He added that he is steering clear of insurance in his new startup.
"At Zenefits, it seemed like I always realized what we needed after we needed it," Conrad said. “This time I feel like I can see around the corner a little bit and be prepared in advance."
Rippling raised $7 million from investors including Ben Ling, a partner at Khosla Ventures, and angel investor and former Y Combinator partner Justin Kan.
Conrad said the funding round included more than 20 investors who had also backed Zenefits, and who together contributed more than 90 percent of Rippling's money.
(Reporting by Heather Somerville; Editing by Bill Rigby)