How Zenefits’ Founder Turned The ADP Crisis Into A Rallying Cry

Zenefits CEO Parker Conrad steps into an elevator at his company’s headquarters in downtown San Francisco. Running between meetings and scanning emails on his laptop, the startup founder still manages to say hello to a few of the more than 1,000 employees he’s hired since launching the HR software platform in 2012.

One employee, with a knowing look, asks him how’s it going on this Monday afternoon.

“Last week was a shitty week,” he says with a smile before stepping out the elevator and asking his assistant a few questions about his schedule later that day.

Curse notwithstanding, the 35-year-old Manhattan native is still being delicate in describing last week’s firestorm. ADP, the HR services giant with more than $10 billion in revenue, deactivated Zenefits accounts within their payroll system. ADP and Zenefits previously worked together in a partnership: An ADP employee even worked out of Zenefits office to help the startup sell ADP’s payroll services to its clients. But ADP is now claiming that Zenefits was improperly accessing client information from ADP’s system. The crisis escalated quickly with ADP throwing a lawsuit at Zenefits -- and Conrad personally -- on grounds of defamation and the "intentional interference with prospective economic relations."

For his part, Conrad sees both the account cut offs as well as the lawsuit as signs of something other than security and libel concerns. Instead, Conrad says the whole crisis comes down to one thing: competition.

“ADP is trying to compete with us. Good freaking luck to them,” he said in an interview with LinkedIn. “The product that we saw really meets the extremely low standards that ADP has set for most of its products. I have absolutely no problem competing with them on that front… The truth is payroll is a commodity. There are a zillion systems out there.”

(When LinkedIn reached out to ADP for comment, a spokesperson said they had nothing further to add at this time) 

It’s fair to say that not every startup CEO would react with such vigor after a Fortune 500 company turned so dramatically from friend to  foe. Yet Conrad isn’t your average founder. Prior to launching Zenefits, he was fired from his previous startup by his co-founder and college friend. He flunked out of Harvard (he returned a year later and graduated). If those trials didn’t test him enough, he also battled testicular cancer.

Conrad has become so accustomed to setbacks that he now has gotten to a point that he thrives off them. Rather than view each of these challenges as deal breakers to his career or company, Conrad said he found them all “very motivating.”

Matt Epstein, Zenefit’s VP of marketing and first hire, saw this fiery disposition in Conrad early on. Somewhat jokingly, Epstein says he is convinced that Silicon Valley -- the HBO series about a fictitious startup called Pied Piper that is trying to get off the ground -- is based off Zenefits. Like Pied Piper, Zenefit’s road to nearly $600 million in funding and a $4.5 billion valuation has not been smooth sailing. And like Richard Hendriks, Pied Piper's founder, Conrad hasn't wavered in his vision for the company. 

“Why do we keep going in the face of all these setbacks? I have had five moments here where I thought there is no way we are going to come back from this and everything I work for is gone,” said Epstein. “Parker is the only one in the room that helps you keep your eye on the ball and look at it just as as setback.”

It’s clear when talking with Conrad that he is aware that his fighting spirit has been essential to his success. Now, he intentionally hired other people who have similar dispositions. He refers to it as people with “chips on their shoulders” that they can turn into motivation.

“People who almost have some insecurity they are trying to compensate for can be incredibly effective at getting stuff done,” he said. “You have the sense that they have something to prove to the world either about themselves or their abilities.”

Motivation aside, Conrad is convinced that Zenefits has other traits that make them ready to take on anything that ADP -- or any competitor for that matter -- wants to throw his way. Although Zenefits has quickly grown to more than 1,000 employees, the founder says he is constantly impressed by the speed to which his team can move. Alluding to certain products and services that Zenefits now has in the pipeline, Conrad said ADP’s threat has turned into a “rallying cry” for the entire company.

"He doesn’t like to fail, but he genuinely wants to solve the pain for our customers," explains Epstein. "He believes that we are best poised from a team perspective to solve this and knock it out of the park." 

This is the first time Conrad has dealt with a threat of this level as CEO, but he says he has managed issues in the past that have felt very similar. Namely, when he was managing editor of Harvard’s student newspaper, The Crimson, he felt like he was running an organization whose primary responsibility was to go after the administration. He liked journalism, but what he really enjoyed more was “taking on the authorities” and exposing their hidden agendas.

Conrad might be the underdog in this fight as well, but it’s likely he wouldn’t have it any other way.

“It is a lot more fun to be a pirate than it is to be in the Navy,” he said. “Now there is a villain we are fighting against as an upstart band of revolutionaries. That is a position that is often scary, but it is thrilling and exciting.”

READ MORE: Parker Conrad on What Every Entrepreneur Needs to Know about Obamacare (But Few Do)

For more news from LinkedIn's New Economy Editor Caroline Fairchild, click the follow button at the top of this post and follow her on Twitter here.