Thread by @Contrary_Res

Today, Rippling announced $200M in funding at a $13.4B valuation. In 2023, the company had ~$350M in ARR.

But back in 2019 at ~$3M ARR, the team put out a Series A memo laying out everything they wanted to accomplish.

Here’s how they’ve stacked up to their own expectations…

1️⃣ In 2019, Rippling laid out the vision: "businesses should have a single system for employee information across every department within the company"

The risk was getting stuck in HR with a competitive market (Workday, Paycor, Zenefits, Gusto, BambooHR)

So what happened?

✅Today, Rippling published a similar memo from their Series F. The vision? Alive and well.

With the expansion into products like bill pay and global payroll, Rippling is on its way to building what they call a "cloud-native mega-vendor."

2️⃣In 2019, Rippling laid out how they would get to mega-vendor status:

• Part I: Being a system of record for employee data gives you a lot of platform power
• Part II: Onboarding software gives you the ability to be that system of record for employee data
• Part III: To win at employee onboarding, you can't be monogamous to any single department, or functional area.

Expanding to IT, ops, and finance would establish Rippling as a universal mega-vendor.

✅ Today, Rippling has moved beyond onboarding software. That "polygamous" multi-departmental relationship focus they had?

It's resulted in an average headcount savings of 20 people for larger companies.

"The administrative burden that Rippling solves is significant. The proof is that when businesses use Rippling, they need half the headcount in HR, IT, and Finance roles compared to what’s required if they use one of our competitors."

3️⃣ Even in 2019, Rippling already had a larger than normal list of competitors:

• HR: Gusto, Zenefits, Namely, ADP, Paychex
• Identity: Okta, OneLogin, LastPass, OnePassword
• Device mgmt: JAMF, MSFT

Prediction? "These companies are going to stay in their swim lanes."

✅ Today, the competition list has only gotten longer.

(+) Expense Mgmt: Ramp, Brex, Expensify, Navan, Concur
(+) Recruiting: Greenhouse, Lever, Jass
(+) Global EOR: Deel, Remote, Papaya

But Rippling is winning pretty often

"A central difference between Rippling and our competitors is that Rippling competes in multiple segments, more product lines, and multiple geographies."

4️⃣ In 2019, Parker Conrad hadn't articulated the idea of "compound startups" yet. Instead, the company talked about "compounding advantages.":

"Employee management system has many more adjacencies than a payroll system — probably 70 or 80 thousand of them. This introduces a different dynamic — one where any market leader has swiftly compounding advantages over the other competitors in the space. The company with the most integrations will get the most customers, because clients will naturally choose the product that can connect with the most of their current and future business systems..."

(con't) In 2021, Parker Conrad gave a talk at Startup Grind entitled "The One Thing Everyone Knows About Building a Startup is Wrong"

In it, he articulated the idea of a Compound Startup:

✅ In 2024, Rippling articulated the characteristics of a Compound software business, and how they checked each box:

• Longer / deeper R&D investment phase followed by better R&D efficiency: Rippling spends ~67-82% of revenue on R&D vs. Paycom (10%), Paylocity (11%), Paycor (9%), etc.
• Larger overall TAM: Obviously, compound startups address larger markets (e.g. Rippling expanded its TAM into expense management, global EOR, etc. beyond their original TAM of HR, payroll, and IT.
• Better CAC payback and S&M efficiency: "It’s a lot harder to acquire a new customer relationship (a new logo) than it is to sell a new, adjacent product to a happy customer." Avg. public SaaS company has 28-month CAC payback vs. Rippling at 17-months

After scaling 100x in 5 yrs from $3M ARR to $350M, Rippling has just started expanding:

• Launched Spend Mgmt (Sep 2022)
• Launched Global (Oct 2022)
• Launched Recruiting (Aug 2023)

"If software is eating the world, Rippling is going to follow behind, eating software."

Full Series A Memo:
Full Series F Memo:

You can also check out our full report on Rippling here: rippling.com/blog/rippling-…
rippling.com/blog/rippling-…
research.contrary.com/reports/rippli…