[boise]

This is also true of a PEO (e.g. Trinet).

Yes, Zenefits has a gorgeous interface which feels much more modern and sleek than something like Trinet. The trade-off is that the healthcare benefits are inferior for a small company - because unlike a PEO, Zenefits is NOT pooling together tens of thousands of young, healthy employees across many companies and getting a good deal from insurance companies. Yes, as an employer, you don't play the hefty admin fee you pay Trinet - but you just don't have access to better plans for your employees.

The other pain we've found is that at the end of the day Zenefits is simply a wrapper around third party services (healthcare insurance, payroll etc.). If everything is smooth sailing, there is no problem. the moment something goes wrong there's this super frustrating finger pointing session where you have to call Aetna directly, or Intuit Payroll and Zenefits blame each other, or no one wants to cop to a payroll tax filing error. If you have an employee waiting for some critical healthcare reimbursement, this he-said/she-said is the worst. Never had to deal with that with the one-stop-shop PEOs.

Zenefits has great software but the customer service needs some catching up. Maybe this round of funding will do it.

[mblevin]

I would argue that this is actually the fundamental innovation here - shifting of the cost from the employer to the employee.

With Trinet, you get negotiated rates that are pretty fantastic - but all the employee sees is an outdated interface, and all the employer sees is the monthly overhead cost per employee draining their bank account.

With Zenefits, the employee doesn't see that their health care actually costs more (the employer typically covers the same amount regardless), and the employer doesn't have that monthly fee.

It's as compelling as it is accidentally insidious.

[boise]

Yes, this is 100% true! My main point was not about the cost of the plans, so much as getting access to better plans. E.g. with Trinet we were able to get access to PPOs that had some out of network coverage. With Zenefits, as a standalone company of our size we only had access to EPOs (i.e. no coverage if a blood test or something got accidentally sent to an out of network provider.)

[mblevin]

Exactly - the theory of course is that Zenefits will be able to eventually negotiate down the rates and match or beat Trinet, but right now it's basically doing "awareness arbitrage" - especially with something that people only think about once or twice a year, which is a lifetime in startup land.

It's accidentally brilliant.

[chermanowicz]

This! Of course a company that reduces employer costs is going to grow like a weed. Nobody talks about the shift of cost to the employees.. it's an alarming trend with so many businesses these days; the optics are that you're getting a better experience, but the reality is that in many cases, you're paying more.