[jccodez]

I do not see it. I worked forMarsh & McLennan Companies, Inc. It has been around for years, has billions in revenue, and owns Mercer HR Services with customers like Toyota Motor Corp., Halliburton, American Airlines and many many others. They have a platform, SASS model, and nothing much different that what zenefits is doing. Even in the mid market they are extremely competitive. I do not see this is worth 4.5 billion dollars.

[bane]

It's surprising how frequently businesses switch out their benefits and HR services as well. This is a very crowded space.

> The company said it’s on track to hit annual recurring revenue of $100 million by January 2016, and hit $20 million in annual recurring revenue in January this year.

So it sounds like they're actually worth around $100-400 million at this point in non-imaginary money, which is impressive for being so new and in such a competitive space.

> Our sources previously told us that the company expects to lose more than $100 million in 2015

ouch.

I guess their sell point is that this can be considered recurring revenue. So if companies they contract with grow, or don't switch to some other vendor, this turns into lots of money. But their customer acquisition costs are insane right now.

How we value companies is clearly completely broken.

[joncalhoun]

I suspect that if HN had been around when Google was raising we would have read the same type of comments there.

Based on the numbers in the article, they could very well be in the billions of rev within a few years if they can maintain the growth.

[bane]

The problem I have with valuations is that they're supposed to somehow reflect what somebody might pay to buy the company. But because of the hamfisted way they're calculated they seem to be so huge or so small (depending on the case) that they're essentially meaningless.

For example, here's a company operating in an ultra-competitive space, from a fairly interchangeable position (middle-man) that has a supposed value on the market that's 225x what they expect to bring in in revenue during 2015. And they're losing 5x their projected revenue in customer acquisition costs (yeah yeah, growth stage and all that). "Valuation" as a term is clearly divorced from actual business realities.

People who claim to be smarter than I will say "but the investors figure the company's market position in through their N-round investment terms". So what do I know?

[trimbo]

> I suspect that if HN had been around when Google was raising we would have read the same type of comments there.

Before raising, Google had a substantially better product than Altavista running on a dev server in the stanford.edu domain.

[calcsam]

Marsh & McLennan has a market cap of $30B -- though this also includes the Oliver Wyman consulting firm & a couple other subsidiaries

[jccodez]

a couple? also look up seabury smith. Here is a list of their subsidiaries. http://www.sec.gov/Archives/edgar/data/62709/000119312511047... You can't tell me zenefits justifies a 4 billion dollar valuation for what they are doing.