Let’s be candid. Payroll processing is generally not something a lot of people get excited about, unless it’s payday and the direct deposit hasn’t happened. And that might just be the point. Payroll, with all of its tax and legal complexities, is not something companies spend time changing unless it fully breaks down. What if a company created payroll from an entirely different perspective?
A company that is trying to do that, ZenPayroll, has created quite a stir in both the traditional investment (VC) and the celebrity investment worlds. On Thursday (Nov. 20), Zen announced its newest investors, bringing its current take to $26.1 million.
Who’s on the list? From Hollywood, we have Ashton Kutcher and Jared Leto. On the government alumni side, we have Karen Mills, the former head of the U.S. Small Business Administration. Who else? ” The CEOs of Evernote, Eventbrite, Stripe, Constant Contact, SurveyMonkey, WordPress, Instagram, and the founders of PayPal, Yahoo, Reddit, Nest, Twitter, HubSpot, and Mint,” according to a ZenPayroll statement. And Josh Silverman, president of U.S. Consumer Services at AMEX and the former CEO of Skype. (The issued statement has the full list of announced investors.)
Since its Series A funding earlier this year, ZenPayroll has more than quadrupled its rate of payroll processing. Today, ZenPayroll is processing over $1.5 billion in annual payroll for thousands of small businesses across the United States. In 2015, ZenPayroll plans to complete its nationwide expansion and expand its support for larger companies.
Even the investor quotes are atypical.
“Modern software is sweeping through every industry and simplifying all the processes that used to be unnecessarily complex and expensive. There’s no better example of that trend than ZenPayroll, which is breathing new life into the payroll industry,” said Max Levchin, co-founder of PayPal. “ZenPayroll gets that payments are actually about people, not transactions. I’m proud to support their team as they seize a massive market opportunity and empower entrepreneurs to succeed.”
“I invest in technology because it is an industry that has the potential to dramatically improve human life with incredible speed and scale. ZenPayroll has made tremendous progress over the past few years, and yet they are at the tip of the iceberg. They have the potential to impact millions of businesses and hundreds of millions of employees around the world,” said Jared Leto, artist and entrepreneur. “Getting paid and rewarding your team for their hard work should be one of the most enjoyable moments of the month. I’m proud to support ZenPayroll on their mission to humanize compensation.”
What makes this cloud-based payroll service different? Almost all payroll services focus their efforts on making the systems work smoothly and easily for their customers, the company managers who run payroll. Zen’s approach is to focus on employees. For example, the profiles stay with the employees as they change jobs. The employee goes to the new job, the company notes his new salary and that’s that. Deductions, social security number, address, bank details and everything else is the same.
Zen treats each payroll as an opportunity to interact with employees, to associate that monetary event with supportive messages, citing something good they had recently done. It facilitates separating payments across multiple bank accounts, so that an employee can save automatically and for multiple purposes (vacation fund, child’s college fund, investment fund, etc.).
Oh and yes. It costs a lot less. A base price of $25/month and then $4/person for the first ten and then $2/person after the first ten.
“Payroll should be about people, not just payments,” said ZenPayroll CEO Joshua Reeves. “We’re not encumbered by ‘This is the way it has always been done.”
One example of the older approach are companies that still insist on getting a cancelled paper check to setup direct deposit, even though it’s no longer necessary. “The reason these older systems are (the paper checks) is because no one is asking, ‘Why?'” Reeves said.
With this new round of investments, Zen is preparing to start offering services to larger enterprises (it’s overwhelmingly focused now on smaller companies). But what about moving into related services, such as B2B order tracking, time tracking, shift scheduling or expense reimbursement? Reeves said no and for good reason.
The expertise that Zen’s team has amassed involves tracking tax and payroll rules and regulations for the federal government and as many state and municipal governments as it can master. Although that is a massive list of complexities, it’s the same for all industries. Zen’s task is mastering tons of geographies, not verticals.
Payroll doesn’t change by industry, but almost all of the related services—including true B2B interactions—do, he said.