Parker Conrad’s Revenge Fantasy

Introduction

Parker Conrad: Rippling was born out of kind of this, like, revenge fantasy. That’s what kind of got the company going, and it’s certainly what kept me going for the first couple years. I love the people I work with. I sort of really like the problems that we’re solving. I feel like we’re, you know, making a difference for customers in this sort of small way for their companies. And that’s all extremely motivating. But early on, you know, it’s a grind. People come to me all the time and they’re like, “Oh, I’m thinking about doing—you know, starting a company. What do you think?” And my advice is always like, “Don’t do it. It’s a terrible idea.” And people always sort of laugh and be like “Ha ha.” But, like, it’s very—like, it’s very real. Like, I do think that it is, like, much, much harder than people expect. It’s not just that it’s hard to be successful, it’s that it’s sort of really kind of soul destroying, like, even when you’re successful.

Brian Halligan: Okay, in this episode you’re going to hear from Parker Conrad. He’s one of the most compelling CEOs in Silicon Valley, in my opinion. He runs Rippling. It’s an amazing back-office software company. It’s a $17-billion market cap with 4,000 employees. Incredibly successful. Almost everyone, including myself, never thought he would get this company off the ground, and that’s because he was very violently fired from his last company, Zenefits.

And I remember when that went down and I thought, “Man, he’s done. He’ll never get up off the mat.” And I’m really impressed he has and how well he’s done. He’s also had a lot of drama with a competitor deal very recently who was spying on information inside his systems. And there’s a lawsuit and arrests and all kinds of drama around that. So there’s lots of good drama in here for you who are into that, but in between the drama there’s some pearls of scale-up CEO wisdom. He’s not your typical CEO. He rethinks things from scratch in a way that I find compelling. I like the way he thinks about hiring. I think it’s quite interesting how his company has over 100 former founders in it. I like the way he thinks about scaling without getting sclerotic—4,000 people is pretty big. It’s still moving fast, very hard to do. And I like how his chip on his shoulder can supercharge his whole career, and that can supercharge yours, too. So he’s going to get into that. Parker’s basically written the book on turning your darkest professional moment into your greatest competitive advantage. I hope you like it.

Using the chip on your shoulder as a superpower

Brian Halligan: How you doing?

Parker Conrad: Doing pretty good.

Brian Halligan: At Sequoia, one of the things they always talk about is they like founders with chips on their shoulders. Do you have a chip on your shoulder?

Parker Conrad: I think so. I think it’s like, you know, maybe faded a little bit over time. You know, I tried very hard to keep it honed to razor sharpness, but I think certainly Rippling was born out of kind of this, like, revenge fantasy and, like, that’s what kind of got the company going. And it’s certainly what kept me going for the first couple years.

You know, there are a lot of other things that I love about my job. I love the people I work with. I sort of really like the problems that we’re solving. I feel like we’re, you know, making a difference for customers in this sort of small way for their companies. And that’s all extremely motivating, but yeah, early on, you know, it’s a grind when you’re starting a company. And this wasn’t like, my first rodeo, it’s my third. And doing it the third time around, I think they’re really—like, it was helpful to have this, like, extra bit of motivation that was there for me every night when I went to bed and, like, every morning when I woke up.

Brian Halligan: Do you think that you have exacted revenge on those doubters and those people who did you wrong, or not? And do you think you’ll ever put that to bed in your own brain, or is it a source of constant motivation for the rest of your life?

Parker Conrad: I don’t know. So have you ever seen there’s a South Park episode.

Brian Halligan: Probably, yeah.

Parker Conrad: The Underpants Gnomes?

Brian Halligan: I love it. It’s my favorite episode.

Parker Conrad: So it’s sort of—you know, underpants, for people who aren’t familiar with it. You know, the kids sort of follow these gnomes that are, like, stealing everyone’s underpants, and they follow them to their secret underground lair. And they’re like, “Why are you stealing everyone’s underpants?” And there’s this sort of secret plan for world domination. And it’s like, step one, like, steal underpants, Step three, world domination. And the kids are like, “What’s step two?” And they’re like, “Oh, shit. We never really—we never really thought about that.”

And sometimes I think it’s a little bit like that with me where it was like, you know, I felt like when things went south at Zenefits, I wasn’t allowed to talk about it, and the entire story was being written by sort of my antagonists, you know, that were just saying all the stuff that, you know, I felt wasn’t true, wasn’t actually what was going on. Like, it was unfair and I couldn’t do anything about it. And so for me there was always kind of this idea where it was like step one, build this, like, multi-hundred billion dollar outcome in, like, the exact same space, and by doing it in exactly the opposite way of everything that they said was like the right way to do it. And then, like, step three was somehow like, you know, get revenge on all of them. And, like, step two was always sort of vaguely like how’s, like, A connected to B was, like, sort of has always been sort of unclear. The company’s a lot of fun. You know, like, I started out and …

Brian Halligan: And not just revenge.

Parker Conrad: Yeah, I mean everyone sort of told me, well, you need to develop—actually early on, like, our series A investor, you know, I was very open about these motivations, and Mamoon was like, “Hey, that’s kind of dark. Like, maybe you should—maybe should talk to someone about that.” And actually, there’s an exec coach that came in, and I talked to this guy and, you know, he was sort of constantly like, “You need to have all these positive motivations and no negative motivations.” And he went and he did sort of interviews with all of my direct reports of the company. And one of his questions was like, “How do you feel about the fact that Parker is, like, motivated in these ways?” And everyone was like, “I hope he never loses it.”

Brian Halligan: Okay.

Parker Conrad: And so there was definitely, like, that element of it but, like, over time, I think, you know, despite all of my attempts to sort of like focus my anger on this stuff, I think that yeah, like, a lot of, you know, sort of day to day is like, you know, all of that stuff is very distant, and it’s much more about sort of the excitement of what we’re building, and the problems that we’re solving and the people that I work with, who I really enjoy working with.

Brian Halligan: Yes or no, have you exacted revenge on your antagonists from Zenefits?

Parker Conrad: I don’t think so.

Brian Halligan: Will you at some point answer that question as a yes? And at what point is that a yes?

Parker Conrad: I’m not sure that there is any …

Brian Halligan: $100-billion IPO kind of thing? It’s like, “Okay, check. I was right.”

Parker Conrad: I don’t think that that—I’m not sure that like one leads to the other, you know?

Brian Halligan: Okay.

Parker Conrad: And I think that you don’t necessarily get that kind of satisfaction. But also, everything sort of fades with time. It stops being the thing that is, like, the focus of what you’re doing every single day.

Brian Halligan: I remember when that whole thing went down, and then I remember you got your Series A and I thought someone painted a scarlet letter on you, and I was like, it’s going to be hard for him to raise again. And you raised. Can you talk about that fundraise, and how did it go down? Like, getting over that must have been non trivial.

Parker Conrad: It was a weird process, because there were definitely—like, I mean, at the time Rippling was doing really well. I mean, like, the numbers, we kind of showed everyone our numbers, and the numbers were, I think, quite impressive.

Brian Halligan: And you had personally, you know, angel funded it, I assume. You seeded it.

Parker Conrad: I did some amount. And then we raised a seed round where we had a bunch of, like, really early believers aligned. And a lot of them were former Zenefits seed investors.

Brian Halligan: Yep.

Parker Conrad: Who backed me again. And a lot of sort of people in the YC community. YC partners initialized, you know, Garry Tan, Sam Altman, all those guys.

Brian Halligan: So you’re doing the A, you got the scarlet letter.

Parker Conrad: And so then we went out to raise our Series A. And it was, very controversial and, you know, there were—like, every firm was really interested because the numbers were so good. And I think there were a couple of firms that went really deep. Like, basically at the time, the partner at Sequoia, Mike Vernal, who was looking at the deal, Mike came to me and he said, “Look, there’s one reason to do this deal and there’s one reason not to do this deal. And they’re the same reason.” And that was what everyone was trying to figure out. And I think Sequoia went really deep, and I think Mike told me that you guys did—because Sequoia always does this just incredibly deep diligence—you know, talked to, like, 50 different executives or people in management positions at Zenefits to really understand the picture, and came away with a lot of conviction that they felt like, okay, we at Sequoia feel very, very comfortable with this.

Unfortunately, we didn’t end up working with Sequoia at that point. It was a little bit later.

Brian Halligan: Yeah.

Parker Conrad: But a couple of other firms did that as well. And there were a couple that kind of just like, backed out. And, you know, one firm’s sort of lead guy there, you know, called up David Sacks, and, you know, I got a phone call on a Sunday night, said, “Hey, so and so spoke with David. We’ve got to cancel the [inaudible] meeting on Monday.” You know? Like, it was just—there was sort of a more superficial amount of diligence on it.

There were these two camps and, you know, but even so, there were enough people in the camp of, like, we’re excited about the business and not concerned about the history, that the round was, like, really competitive and got done, you know, on great terms.

Brian Halligan: Nice.

Parker Conrad: We were pretty excited about it.

Brian Halligan: When was the last time you saw David?

Parker Conrad: I have not spoken to him since about a week before I left Zenefits.

Brian Halligan: I see.

Parker Conrad: I’ve sort of, like, seen him across the room at a conference since then.

Brian Halligan: Is there anything you want to say to him today?

Parker Conrad: Probably—probably not a great idea.

Brian Halligan: [laughs] How about I’ll say it for you. “I told you so.” [laughs]

Parker Conrad: I don’t actually think that that’s what—I think, like, if I was talking to David or, like, Ben or Lars …

Brian Halligan: Yeah.

Parker Conrad: It would really be like, “Why?” You know, like, why—like, I look at it, it just—it feels like it was so unnecessary.

Brian Halligan: Yeah.

Parker Conrad: You know, like, even in a world where they were like, “Hey, we’ve gotta make a change,” like, those types of things are usually not accompanied by the type of character assassination. And it was like a deep and prolonged effort. Like, they hired people, and those people were sort of doing this in the media, like, pitching stories, like, week after week after week. And that is just, like—it’s unusual. It’s expensive. It’s like a lot of effort.

Brian Halligan: I remember it went down, and I remember the media, they wrote some things that were very tough. They basically blamed a lot of stuff on you. I don’t remember the prolonged. But why do you think they thought that was a good idea? I mean, they’re relatively rational economic actors.

Parker Conrad: Some of this, I think, is David. And some of this you sort of see in the way that David, I mean, is like, you know, very successful as sort of this more political type of actor. And I remember David came to me at one point—you know, at Zenefits, when we were having our own sort of conflict with ADP, we ended up in some litigation with them. And David told me, he said, “Look, here’s the thing. If you’re ever in kind of one of these media shit fights, you want to attack, attack, attack, attack. And if the other guy rolls over and cries uncle, that means it’s working, and you want to keep attacking, attacking, attacking, attacking.”

And I think that that was like his playbook. Like, that was sort of the way it operated. And some of it, it wasn’t just that, like, they blamed me for everything. I mean, like, look, ultimately I’m the CEO. You know, I am responsible for things. It was the way that things that were mistakes, you know, that were like, “Hey, we thought this was what we were supposed to do and it was something else,” were instead—the legal word for this would be like, there’s some “intentional” kind of thing for what was, I think in retrospect, much more just sort of accidental. Like, as companies are growing quickly and, you know, little things that, you know, you sort of don’t recognize as—or just unaware as, like, things that suddenly are, like, actually you overlooked something.

Brian Halligan: How did you feel when you first saw it? I assume you didn’t have a heads up. You saw it. Like, was it anger? Was it confusion? What did you say to your wife? Like, what was going on inside the four walls of your body?

Parker Conrad: One of the things that happened right before the announcement is I was, like, so depressed about the whole thing that I stopped looking at the media. And I didn’t read stories about me or about Rippling for, like, five or six years from that point. It was a long time—or Zenefits. And my wife would always read them, and so when the announcement came out, there was a press release that we had drafted, you know, that was like, you know, me and, like, the people from Andreessen and, like, David. And it was sort of one of these sort of anodyne things that was like, “Hey, look, company needs new type of leadership.”

Brian Halligan: Yeah.

Parker Conrad: “Parker, you know, like, great job taking it this far.”

Brian Halligan: Yep.

Parker Conrad: “David coming in. Wants to spend more time with his family.”

Brian Halligan: Typical stuff.

Parker Conrad: Typical stuff. And instead they just—like, David issued a different press release. And the press release was like, “This company has a whole bunch of compliance problems. It’s because, you know, Parker doesn’t care about compliance. He’s not here anymore.”

Brian Halligan: Yeah.

Parker Conrad: And it went south from there. And I remember, you know, when it came out, I mean, it was such a shock. It was just very unexpected. And then it just got worse from there. And it was actually my wife that read it and turned to me and said, “Oh, they fucked you.” And she was like, “Don’t even read it. Don’t look at it.” It was deeply depressing. I mean, there were really, really dark moments. And some of, like, the chip on the shoulder was kind of like, I’m either—there was sort of this one little ray of light, this one path out, which was like, you know, build this company and make it successful or, like, it’s just all over and you kind of give up. And it was kind of like it felt like those were the two choices. And that was very hard and very depressing, but it was also, like, very clarifying and very motivating that I felt like, okay, like, this is the only thing that I’m here for, and this is the only thing that I care about is, like, making this thing work.

Brian Halligan: Okay. A lot of people listening are founders, CEOs, people who want to be CEOs. You’ve been through some crises and some shit shows.

Parker Conrad: Yeah.

Why not to start a company

Brian Halligan: I have, too. Advice for people? Crisis going on. Most CEOs hit some big shit show crises during their tenure. Any advice?

Parker Conrad: People come to me all the time. They’re like, “Oh, I’m thinking about doing—starting a company. What do you think?” And my advice is always, like, “Don’t do it. It’s a terrible idea.” And people always sort of laugh and be like, “Ha, ha, ha.” But it’s very—like, it’s very real. Like, I do think that it is, like, much, much harder than people expect. It’s not just that it’s hard to be successful, it’s that it’s sort of really kind of soul destroying, like, even when you’re successful, and very hard to kind of manage your psychology through that process. And people come out the other end, and there’s a lot of—you know, there’s a lot of, I think, talk about, you know, failure being sort of this positive thing that you learn a lot from. And actually, I think you don’t learn a whole lot from failure, and you learn a lot more from success. And it’s really hard. You know, usually I think people—I see many more people that do something like this and don’t succeed, and it sort of destroys a lot. You know, it destroys marriages, relationships, you know, ambitions. You know, like, people kind of come out like a shell of their former selves. And so it’s not something that I’d recommend.

Brian Halligan: I kind of agree. I describe HubSpot as like two steps forward, one giant step back, two steps forward, one giant step back.

Parker Conrad: Over and over again.

Brian Halligan: It looks smooth and easy from the outside, but man, it was a grind. It was not easy. And there were a lot of moments where I really hated my job.

Parker Conrad: Yeah.

Brian Halligan: You feel the same way?

Parker Conrad: Yeah. I mean, I would say that one thing that was different about Rippling, I think in part because of the experience at Zenefits is like, people sometimes ask me, like, you know, what I learned, and insouciantly I’m kind of like, “I didn’t learn anything. Like, you know, Zenefits failed for dumb reasons and, like, there was nothing to learn from that.” But I do think that, like, you know, over time you sort of slowly accumulate a kind of pattern recognition about, like, what matters and what doesn’t. And that makes things a little bit easier, because there are a lot of things that come up where you’re like, “This probably doesn’t matter.”

Brian Halligan: Yeah.

Parker Conrad: And it sucks but, like, it’s nowhere near—and no matter how bad things have ever been at Rippling, they have never come even close to how bad things were in the sort of six months, like, you know, right after the end of Zenefits, or when I left Zenefits. And so everything kind of pales in comparison. And that is always this sort of comforting in a way.

Brian Halligan: You brought something up: what matters and what doesn’t. Like, what matters that people don’t think matter and what doesn’t matter that people think matters?

Parker Conrad: I mean, sort of the advantage of having done something before, I think you start to have good judgment about what is—you know, because so many of the things that come up are probably like, doesn’t matter.

Brian Halligan: Yeah.

Parker Conrad: Not going to make a difference. And some things come up are like, “Ooh, that one’s going to count.” And I think it’s hard for first-time CEOs to really see the difference between those. It feels like everything’s going to matter, and that’s part of why it’s, like, so overwhelming and awful.

Brian Halligan: Yeah.

What actually matters as a founder

Parker Conrad: And some of the things really actually do matter.

Brian Halligan: What really matters? I think getting your strategy right. Like, where are we headed in the bus? And getting the right people on the team are really important things. And a lot of other stuff can fall by the wayside.

Parker Conrad: Yeah. I mean, those things matter.

Brian Halligan: Getting, like, your mission set up so people can get excited about the darn thing.

Parker Conrad: Yeah. I’m trying to think like—I mean, I think, like, there are little things that go wrong that feel very consequential in the moment, that you start to realize over time don’t matter. And, like, if you’re not growing, that obviously matters. At Rippling, it took us, like, two years to get to a point where things started working.

Brian Halligan: Yeah, HubSpot was about that too.

Parker Conrad: And, like, for two years, it was sort of this exercise to try and like, basically beg the team not to leave until things started working. But there was also, like, zero doubt in my mind that it was going to work. And that was sort of a big difference because, like, I sort of knew that, like, if you built these things and got to this sort of—you know, this island of product market fit that was admittedly pretty far over the edge of the horizon line but, like, I knew that there was land out there, and that if you could get there, this was going to work. And I, you know, having seen what was working and why at Zenefits, I just had, like, unshakable conviction that this was—and so there was never a doubt that was going to work, and it was merely about, like, whether, like, quite frankly, we could prevent everyone from quitting, like, before we got there. And so early on, actually, like, you know, trying to just keep the team together mattered a lot.

Brian Halligan: Yeah.

Parker Conrad: And at that point, whether it was, like, working today or not, like, didn’t so much, in this very specific context of the company that I was building. And I think for a lot of other companies that’s not true because, like, you know, you might believe that things are going to work, but you’re probably wrong. Or, you know, like, if you have a lot of conviction about it, your conviction is, like, misplaced.

Brian Halligan: Yeah.

Parker Conrad: Maybe mine was, too. But, you know, like, I was sort of crazy enough, or believed that I had reasons to believe that this was going to work.

Brian Halligan: Parker, you’re kind of a contrarian along a lot of lines. That’s one of the things I’ve always liked about you. What do people have totally wrong about being a CEO? Like, there seems to be sort of a rule book around it that is kind of getting rethought these days, and I feel like you’re rethinking pieces of it. What’s all wrong about CEOing? What are these founder-CEOs, what mistakes are they making?

Parker Conrad: Well, I’ll tell you—I mean, I don’t know. I know so little about, like, any business that’s not my own. So it’s hard for me to have, like, big opinions about, like, sort of the ecosystem. But I think that, like, one thing that I sort of believe in that maybe is becoming like, you know, more of the conventional wisdom today is I’ve always struggled with the idea that as a CEO, you’re supposed to kind of manage top down through a set of deputies. And, you know, you hire people who are knowledgeable about this area, you trust them and you let them kind of do their thing. And that’s just never worked for me. Like, what’s worked is you kind of have to reason from first principles. And you can do that with some of your lieutenants who can help you through it to sort of convince yourself of exactly what the right approach is in that area. And you have to have, like, real and on-the-ground understanding of what’s actually going on yourself. And if you don’t have that—like, that’s the only thing that’s worked for me. And it’s really—it’s tough to scale. It’s tough to scale that. You know, it’s hard on you, I think it’s hard on some of the other people. But it’s the only thing that sort of worked for me and the only thing that’s really worked for Rippling. And so we have a leadership principle that we formalized on this that we call Go and See, that’s basically like, look, if you’re—and it’s true for me, but it’s also true for executives and managers that, like, you know, you’ve got to go right to the ground.

Brian Halligan: Coal face.

Parker Conrad: Yeah. And get—that’s a good way of saying it, right? And you’ve got to—you know, something—there was a point in time where things were just, like, really going wrong with tax operations. And, like, you know, we’re a payroll company, and one of the things that we do is we do these sort of quarterly filings for clients. And, you know, there are thousands of agencies across the country that you need to send these to. And there are a million little things that can go wrong, and if anything’s off by, like, a penny, clients get angry letters about this, and it’s really bad.

Things were going wrong. Like, the rate at which clients were getting notices from Rippling, we knew was, like, higher than the notice rate at other companies. And it was like an existential threat to the business. And, like, that was something where there was some muscle memory for me that this was actually something that would kill the company.

Brian Halligan: It matters, yeah.

Parker Conrad: You know, it was something that matters. You know, the only thing that worked to solve it was what happened is I got, you know, like, me and my COO and the person running the team and someone else, and we sort of wiped out our calendars and we sat down and we said for the next week, you know, we’re going to just be tax-ops agents. And so we’re literally going to—you know, because there was this growing backlog of notices that needed to be addressed that clients were sending us, and we’re just going to pick from the queue and start figuring out, like, calling up the tax agency, why did the client get this notice, what happened, you know, why did they believe that, you know, the amount was wrong or the money didn’t get there, or the filing was not on time or something, and then reverse engineer it in our systems and be like—and it was just like doing the actual work of doing it, was the only—and then sort of like by doing that, we developed this understanding of, like, what was broken about the process, what was broken about the systems, what were the changes that need be made. But it was, like, impossible to diagnose or understand without sitting there and doing that.

Brian Halligan: Okay, on the “what matters” thing, it seems to me from just listening to you—and I also spoke to a couple people on your team—a lot of things matter. And then one of the insights I think you’ve had is details matter from the CEO on down. And you’re in the details in a big way for a company that has four or five thousand employees. Is that fair to say? I think more so than me, for sure, it seems like you are. Like, you sit in the middle of the engineering floor. It sounds like you are on the coal face for somebody in a pretty good-sized organization.

Parker Conrad: I certainly try to be. And so I view that as like a huge compliment, you know, from the team. I think the place where I try and do that the most, and what’s maybe sort of most unusual about Rippling is that I’m the only full admin for Rippling in Rippling. And so I run payroll for the entire company across dozens of countries. I manage sort of benefits and a lot of IT policies and other stuff within the system, approve expense reimbursements, things like that.

Brian Halligan: I was similar at HubSpot. I was a very active user of HubSpot, one of the most active users for many years.

Parker Conrad: So I think that’s important. It’s, like, one of the things, like, people, you know, learn when they join Rippling is, like, the CEO approves every expense reimbursement over $10. And the reason for that is not that I’m like this jerk that’s, like, harassing people about their expenses, it’s that I’m trying to actually use the product in the same ways that clients would, that a diligent controller or you know, sort of accountant would use the system, and help review it in the same ways that they would, and try and use that to sort of iterate and improve on things over time. There are a lot of things that we get wrong as a company, but I do think that that element is like a little bit of a superpower, because I know that, you know, the CEOs of you know, ADP …

Brian Halligan: They’re not doing that. No way! [laughs]

Parker Conrad: … they’ve never run payroll in their life.

Brian Halligan: No.

Parker Conrad: Like, never.

Brian Halligan: No way.

Parker Conrad: You know, there’s a sort of on-the-ground understanding of the system, and that doesn’t mean that, you know, we always get everything right. But I think that, you know, it’s a sort of control on the system. And one of the ways that it played, one of the things that I’m most proud about is that we did this study where we looked at companies that use Rippling and companies that use anything other than Rippling. And some of them use, like, modern systems, competitors of ours that are sort of more recent market entrants, some of them use the more old school systems. And you just look at how many people those companies have in HR, IT and finance roles and GNA roles within the organization based on LinkedIn data. And what you find is that the companies that use Rippling at any given size range—so you have to look at it by company size, obviously—you know, companies that use Rippling have about half the people in those functions than companies that use anything else.

Brian Halligan: I love that stat. I love that stat.

Parker Conrad: And that’s—look, I think that that—you know, it’s not that, you know, our pitch is not like, “Hey, like, you know, like, lay off people if you use Rippling,” it’s those extra headcount, they represent all of this administrative burden. They represent attacks on your business, because those are people that are just moving data between systems, dealing with administrative pain that you could instead redeploy for things that matter within your business.

Scaling your team

Brian Halligan: Parker, so you’re in the details. You just talked about your own CEO journey from, like, the four of you to there’s forty of you to there’s four hundred of you, there’s four thousand of you. Somehow you’ve managed to stay in the details. How has your job changed? What advice do you give to that founder with 40 people on how to scale it? How did your job change, and how did your day to day change?

Parker Conrad: I think probably the most important thing was the people a level below me. And honestly, I think probably their jobs have changed a lot more than mine has, because the executive team at Rippling has been pretty stable over time. There’s been some turnover, but I think a lot of the people that are there, you know, like, our CRO was the eighth person in the company. And, you know, my COO joined when—you know, right after the series A. But he and I, you know, had known each other since college, so we’ve been friends for a long time. You know, there have been a bunch of people that have sort of been there a long time, and so there’s just, I think, a lot of trust. And I think everyone’s sort of grown in their function and in their job over time.

Brian Halligan: One of the things I’ve noticed, Parker, VCs do as soon as they make their investment, like, the first thing they say is, like, “We gotta uplevel the team.”

Parker Conrad: Yeah.

Brian Halligan: And when I look at the best companies, a lot of the management teams are kind of homegrown. Like, a lot of HubSpot’s management team’s been there since the pretty early days. What do you think of that advice? I think homegrown’s really underrated.

Parker Conrad: Homegrown’s underrated, but also, like, sometimes the people that you’re trying to grow are not going to make it.

Brian Halligan: Sometimes.

Parker Conrad: And so I think what I would say is, like, hiring people that you just are really close to—I mean, it’s weird to say, but hiring people that, like, you’ve worked with, that you’re friends with, that you enjoy working with, like …

Brian Halligan: Really lowers the risk.

Parker Conrad: Really underrated, actually.

Brian Halligan: Lowers your risk. It’s underrated. Yeah.

Parker Conrad: And so …

Brian Halligan: Went to school with.

Parker Conrad: Yeah. There are people that we brought in that, you know, we hired that were not like that, that have been unbelievably successful as well.

Brian Halligan: Yeah.

Parker Conrad: But there is something to the fact that, like, you know, for a long time, Rippling’s CMO—he’s now stepped into a different role, but—was this guy Matt Epstein, who was like—you know, I worked with him as CMO at my first company. He was CMO at Zenefits, he joined Rippling, was CMO at Rippling. Like, it was just this longstanding professional relationship that I had. And there’s sort of something to that. I feel like I have a pretty good sense of whether someone’s going to make it or not. And I’m sort of wondering like, how would I do your job at Sequoia and advise, like, an entrepreneur on their team? I would have a lot of humility about it and I’d be like, man, I just don’t know how I would explain that or judge that. And one of the problems, I think, for investors is I think it’s actually really hard to do from the outside. And so even if you have, like, done it yourself, you know, you’re just not spending enough time at the company to really know about this exec and whether they’re going to make it. And so the advice is, like, maybe not all that useful. And then, you know, if you’re an entrepreneur that’s doing this for the first time, I don’t see how anyone figures—I mean, looking back I’m like, I don’t understand how anyone figures their way through this, because it seems so hard to know having not seen it before.

Brian Halligan: I’d say the one thing I’ve noticed with so many of the early-stage, mid-stage startups is their hit rate on hiring that external been-there-done-that CMO, is 50 percent within 18 months. It’s much harder than it looks. People don’t talk about it. In this vein, you’re interviewing somebody, what’s your filter? What are you looking for? What’s your process? Is there anything unusual you’re doing around there that you think you might have some intuition that people don’t …

Parker Conrad: Here’s what I do, and I’m not saying that what I do is, like, the right thing to do.

Brian Halligan: Yeah.

Parker Conrad: But usually what I do is I send candidates all of the investor materials that I’ve prepared. So I send them—like, we write up a memo on the business, there’s, like, some metrics, and I send all of that to them ahead of time so they have context. And they show up to the meeting and I’m just like, “Look, this first meeting is really just a chance for you to ask me questions. So, you know, I’m sure you had a chance to look through this. You know, what didn’t make sense to you? What were you like, ‘I don’t think that’s right.’ You know, what did you have questions on? And let’s talk through it.” And then usually we sort of talk through their questions. And sort of secretly, I’m sort of judging them by how that conversation progresses.

And so some people have no questions, and that’s usually a pretty bad sign. Or some people have clearly fake questions. And some people—actually, even very skeptical questions are really good if they’re smart. There are some people that immediately get to the core of the issue, where they identify the two things that are going to really be problems. And then sometimes we have a great discussion about it, because I’ve thought about those things, too. You know, I spent a lot of time—I’m like, “Here’s how we’re approaching it. Here’s what I think, and here’s what didn’t work, and here’s what I think is going to work. And this is why this is so important.” And sometimes the people that ask those really challenging questions, they get it really quickly and they’re like, “Oh, yeah.” And that means also that—and then as a consequence of that—and I think it works, because it kind of simulates what the actual working relationship is going to be like, where we’re going to have those types of conversations in our one-on-one meetings. And that’s going to work.

And so that’s always been the thing that’s been most telling for me. That and back channel references.

Brian Halligan: Yeah.

Parker Conrad: I usually ask people, “Give me six references, not two—because everyone’s got two. So give me six.” And then I call two randomly from that list, and then I try really hard to find people that are not on your list.

Brian Halligan: I’m the same, yeah.

Parker Conrad: And that’s been really telling. The thing that I’ve always—I don’t have a good answer for, is I found it’s really hard to summon great executives on demand. And so …

Brian Halligan: Wait, what do you mean by that?

Parker Conrad: Well, it’s like suddenly someone leaves, or someone is, like, not going to make it and is—you know, and you’re like, “Crap, I need a CTO.” Our current CTO, who’s amazing, was someone that randomly fell into my lap, you know, that someone at Sequoia introduced me to. And it was like, wow, like, this is amazing. And it was very clear that, you know, this person was exactly who we should hire. But we’d hired someone else, you know, six months earlier. It was not working out. And we hired that person sort of like it was one of those things where we had been looking for so long.

Brian Halligan: Yeah, you gave up.

Parker Conrad: You know, looking for so long. And it was like, “Oh, maybe, maybe it’ll work.” You know, and we had …

Brian Halligan: Does that ever work?

Parker Conrad: Never. Never. It never does. But, like, what are you gonna—I mean, like, we’d been looking—I don’t know. I think we’d been looking for, like, a year.

Brian Halligan: Yeah.

Parker Conrad: You know, it’s just …

Brian Halligan: And all his direct reports report to you in the meantime, which is, like, brutal.

Parker Conrad: Yeah. And so—I mean, I’ll tell you what doesn’t work is like, usually, like, exec recruiters don’t work.

Brian Halligan: Okay. I was just about to ask you that. Okay.

Parker Conrad: Exec recruiters are, you know, great at sending you solid B candidates.

Brian Halligan: Yes.

Parker Conrad: And there’s always the exception that proves the rules. So we hired our CFO, who’s amazing.

Brian Halligan: Good person to hire through an executive recruiter.

Parker Conrad: Through an executive recruiter but, like, actually, like, really incredible.

Brian Halligan: Yeah.

Parker Conrad: And so there are some exceptions, but usually they send you a lot of B candidates. And the problem is that I think the really incredible people, they get snatched up …

Brian Halligan: Totally.

Parker Conrad: Before they know …

Brian Halligan: Before they leave.

Parker Conrad: With an exec recruiter. Like, they’re—they’re like—you know, they’ve always got people pinging them.

Brian Halligan: Yeah. And they’ve got a million options.

Parker Conrad: And they’ve got relationships with people, and someone is yanking them out and, like, they sort of—you know, they sort of secretly whisper to their spouse that maybe they’re thinking about leaving. And there’s five people that morning that heard about it and are already like, you know, been talking with them for a long time and have worked with them before.

Brian Halligan: And have been nurturing them around a drip marketing campaign. Okay, let me ask something related to this. You hire someone, it’s a month in, you’re like, “I might have fucked this up,” but it ended up working. Has that ever happened?

Parker Conrad: Never.

Brian Halligan: Okay, so a month in, if your gut tells you it’s not right, you just—how long do you wait?

Parker Conrad: Always longer than a month.

Brian Halligan: How long do you wait? Six months?

Parker Conrad: Yeah, Like, I mean, like—and the frustrating thing is, like, I see this behavior in managers at Rippling, and I get very upset about it and very angry about it. Like, “Why did you—why did you fuck this up?”

Brian Halligan: Yeah.

Parker Conrad: You know, like, you can see it happening. Like, I have this conversation all the time where I’m like, “Okay, here’s your team. How many of these people right now—like, tell me which of these people you would bet your career on.” And like, “Whoa!” And it’s like, “Well, this person and this person.” And I’m like, “None of the rest?” They’re like, “Well, it’s a tough, you know—” And I’m like, “Okay, get—you know, like, fire all—like, let’s start over, you know?” And like, “Oh, no, you know, like, yeah.” But, you know, there’s all kinds of reasons why, you know, not yet. And inevitably …

Brian Halligan: They’re all gone in a year.

Parker Conrad: They’re all gone. But it takes a long time to get there. And it’s so frustrating, so infuriating, and it’s like, why can’t you as a manager just do the job that we expect of you and make the hard decisions? And I make all the same mistakes myself.

Brian Halligan: Right.

Parker Conrad: You know, it’s like, you know, equally difficult for me when things are not working out.

Keeping velocity high

Brian Halligan: It sounds to me from people I’ve spoken with inside of Rippling and yourself, that it was an intense startup—and all startups are pretty intense—but it’s now an intense scale up. You’ve kept that pace and intensity up as you scale through the years. Most of the founders I work with are really struggling around 100, 150 employees to bring in new people they didn’t know well, there are a couple middle managers showing up. That intensity and that pace doesn’t seem to scale. How have you scaled that?

Parker Conrad: Well, I think one thing that I believe very firmly is that there’s ultimately only one person in the organization. There’s only one constituency for speed, and it’s you as the CEO. And so it’s really one of your biggest jobs is to sort of set the clock speed of the organization. And the reason is is that everyone else in the organization can sort of solve for all of their problems by just extending the timelines. You know, like, they can get it done, you know, in the ways that they want to get it done. You know, they don’t have to, you know, sort of make unreasonable asks of people that they’re—you know, like, every other constraint can be solved for with more time. What happens is things start to get, like, really slow, and there are real problems with that for the organization long term, but usually not for, like, any individual manager or executive within the company.

And so you’re the only natural constituency for moving quickly. And so you really have to be—you really have to care about it, and you have to sort of pay attention when people are trying to slow it down. And so one of the things that happens is like your team will often come to you and they will present you with what I call CEO-in-a-box decisions, where they will say, “Look, we can do A or we can do B. Like, you choose.” And it’s this illusion of choice.

Brian Halligan: The tyranny of “or.”

Parker Conrad: Yeah, but it’s an illusion of choice, because the choice has already been made for you. Because the important choice was the decision that A and B cannot coexist. And usually, like, my immediate reaction when someone brings me something like that is to just on principle insist that we have both A and B and, like, understand, like, what laws of physics are violated that prevent A and B from coexist—it’s like the second law of thermodynamics problem. Sometimes it’s like it’s much harder for the team to do A and B, and they would prefer not to do that. Sometimes it’s actually just as simple as asking people for a third path, you know, to say, “I don’t like these options. Like, can we just think a little bit harder, and is there some way to kind of get there?”

When you think about, like, the pace at which organizations move, I think the natural thing is people sort of believe, man, if you’re like tyrannical CEO, that’s, like, driving people really hard and, like, you know what’s going to happen at most, maybe it’s 20 percent more. Patrick Collison has this great site that he put together on sort of like things that moved absurdly quickly and things that moved very slowly. And it’s this example of, like, the space program to land someone on the moon was, like, four years and the Van Nuys bus lane was, like, two decades or something in San Francisco.

And you sort of look at these at two different organizations that might both have good, well-meaning people and, like, you know, the organization that moves quickly, it’s like an order of magnitude faster. It’s not, like, 20 percent faster. It’s just amazing what you can accomplish. And so maybe the sort of slightly more positive way of articulating this is I think that people are often capable of so much more than they believe themselves to be capable of. And so if you can sort of challenge them about the perceived constraints on the problem and explain to them the impact of being able to do A and B and, like, what happens if we could do A and B?

Brian Halligan: Yeah.

Parker Conrad: Startups are somewhere between completely impossible and very, very, very, very hard. And there’s such a narrow ray of light that passes between those two. The companies that make it through, usually at multiple points in the journey, find ways to do things that are seemingly impossible. And you have to sort of acknowledge that what you’re asking for is, like, really hard, and you understand that. And it’s just there’s no other way, you know? And so let’s sit down together and think about whether it’s possible. And sometimes people find clever solutions or new reserves of possibility to kind of get there. And if you kind of do that enough, it compounds and, like, you can accomplish a lot more than the company that isn’t doing that.

Brian Halligan: I had a line where somebody would bring me something like that and I would say, “When Moses came down from the mountain and he had the tablet, was there an 11th commandment that we all missed that we couldn’t do this thing we’re talking about right now?”

Parker Conrad: [laughs] Yeah, exactly.

Brian Halligan: It’s like, it’s not a law of physics. We can figure it out. Okay, I hear you’ve got something like 40 or 50 ex-founders on your management teams in your company. What’s going on with that? Why are you doing it? How do you manage that chaos?

Parker Conrad: I think it’s actually a lot more than that now.

Brian Halligan: Okay. Why?

Brian Halligan: Are you acqui-hiring or hiring—like, what’s the—what’s the …?

Parker Conrad: Sometimes we acqui-hire, sometimes we hire. It’s a profile that we look for. You know, Rippling, you know, we sort of coined this phrase—I know HubSpot’s been doing this for a long time, but we coined this phrase of, like, “compound software.”

Brian Halligan: You know, I’m really mad at you about this.

Parker Conrad: Yeah.

Brian Halligan: Because we are a compound startup, but we never came up with a clever name like you. It had totally stuck.

Parker Conrad: Yeah.

Brian Halligan: And everyone’s like, “Parker’s the original.” Like, we’re the original compound.

Parker Conrad: For sure. HubSpot was doing it long before us.

Brian Halligan: Well done.

Parker Conrad: But the reason that we do this is because I’m convinced that this is the right way to build software, and that actually we’ve been building software wrong for a couple of decades now. And most people believe yeah, yeah, yeah, you’re doing compound software. There are some, like, sales and marketing advantages to building, you know, good enough but integrated products. And, like, that’s not it at all. Like, I think the belief is that actually you can build better products by building them in this integrated way, and you can do it because the fact that these things are deeply integrated and seamlessly interoperable on its own makes them better. But also, when you’re building across, like, multiple applications, you can afford to invest much more deeply in a set of capabilities that are common to all of the applications. You know, things like analytics and permissions and workflows and custom objects and stuff like that.

But I think a lot of—you know, and this was sort of the original—like, before we were this articulate about what we were doing and why, it was one of the original founding principles of Rippling was that we were going to do more things, not less. This focus thing was bullshit. And, like, you know, that was, like, what David wanted us to do, but that’s completely wrong and we should do it this way. And so a lot of …

Brian Halligan: Same with HubSpot. We’re like, this whole focus thing, like, just do one thing really well. We were like, nope, we’re going to be very thin, but we’re going to get to table stakes at some point. It was the exact same thesis we had.

Parker Conrad: Yeah. But a lot of the history of the company is trying to figure out novel solutions for the very real challenges with that approach, because there are a lot of reasons why it is easier to focus on one thing. Along the way, a lot of problems come up, and there are bottlenecks that develop in different parts of the organization. And one of the places that a bottleneck forms is really at the level of sort of executive attention around these things. And so you end up needing people who can be like the CEO of these products or who can drive things forward, who can find a path. Because a lot of people who are, like, very good managers and executives in engineering or product or whatever, what they do is they come to you with problems. And so they say, “There’s a series of gaps we have. Like, in order to win, here’s like, a long list of things we need to do.” And they unroll the list, and it rolls out onto the floor and goes all the way down the hallway, you know?

And, like, we’ve prioritized it by sort of most important on down. And I have a team of this size, and this is about one-quarter’s worth of work is like, you know, these things this far down the list. And so we’re gonna do one-quarter’s worth of work, and we’re gonna solve these things. And that’s what it is.

And the problem is, yeah, but the list goes all the way down the hallway, and they’re like, “Well, but my job is to sort of—you know, that’s your problem.” Right? And so they’re asking you to find a way to make ends meet, because their job is just to kind of move down the list. And then you’re still fucked, because at the end of the day, they’re going to do those things, but you’re still not—you still haven’t solved the problem, which is like, you need to win. And so you need people who can find ways to do the impossible, that sort of understand, look, the CEO that’s asking you to do unreasonable things, like, I didn’t create this situation. Like, the market created it. This is the reality that we find ourselves in, which is like, we need to do these things, and if we don’t, we’re dead, we’re screwed. And so we need to find some way or some alternate path or some sort of—you know, there needs to be some effort to solve the whole problem or, like, it doesn’t matter.

Brian Halligan: And you think ex founders are particularly good at …

Parker Conrad: I think ex founders understand that.

Brian Halligan: … breaking the laws of physics.

Parker Conrad: Or they just—they’ve been in situations where they understand that, like, yeah, like, it’s like, we either—you know, they’ve sat there and stared at the dwindling bank balance while—you know, while the sales isn’t working and they’re like, “Oh, shit.” And they understand that, like, yes, it’s absolutely true that, like, you know, this is a reasonable set of expectations for the team this week, this month, this quarter, this year, and yet if we do the reasonable set of things, we’re dead.

Brian Halligan: Yeah.

Parker Conrad: And so, like, we can either give up, or we can try and find a way to accomplish an unreasonable set of things.

Brian Halligan: How do you manage them, though? Founders are typically a little unruly, want a crap ton of autonomy, often don’t play with that well with others. Like, how do you manage the chaos?

Parker Conrad: I don’t know if I’ve found that to be the case. Like, you know, if you’ve started a company—I mean, look, there’s all kinds of people but, like, you know, man, like, you’ve got to convince a bunch of people to work for you. You know, when it doesn’t make any sense, you know? And, like, there’s a certain amount of charisma or interpersonal skills that you’ve had to, like, develop, like, even if you didn’t have it. I think that most people are more well-socialized than that, but there are always, I guess, exceptions. And we give people a lot of autonomy, because, like, the best thing in the world for me is someone who can run with something, you know, and sort of take it off my plate. Like, that’s ideal. So everyone’s aligned on there being that kind of autonomy.

The Deel drama

Brian Halligan: Just switching gears briefly. Deel, your main competitor. Been a lot of drama around it. Do you want to talk about it?

Parker Conrad: Sure. Weirdly, I would say Deel is a competitor, but probably not the main one. You know, the companies …

Brian Halligan: You got a lot of them.

Parker Conrad: Yeah, there’s a lot of—you know, if I was like, “Who’s our main competitor?”

Brian Halligan: It’s a crowded space.

Parker Conrad: I would be like, man, you know, in payroll, it’s probably Paycom, Paylocity, ADP. You know, Workday for HCM. Maybe, you know, Gusto down market.

Brian Halligan: Yep.

Parker Conrad: You know, we come up against Deel in specifically this sort of global part of the business where I need to hire someone in XYZ country, and I have, like, one or two people that I’m hiring there, and I don’t know anything about it and need some help. But, like, that’s where we compete with them. But we have, you know, much, much stronger competition with these other companies. It’s just that this weird stuff happened with them.

Brian Halligan: Tell me about it. So when was the first inkling you had that there was a spy, that someone was spying on—someone from Deel was spying on your company?

Parker Conrad: The weird thing about “spy” is like, “spy” makes it sound …

Brian Halligan: It’s great. It’s a podcast.

Brian Halligan: Sort of sexy and fun.

Brian Halligan: That’s the idea, Parker. [laughs]

Parker Conrad: Which for podcast, great. But I think it’s really like, it’s not that Deel was spying, it’s that they were stealing. And it was just theft, pure and simple. From the CEO of the company.

Brian Halligan: Yeah, it’s worse.

Parker Conrad: And the thing that happened is we got a reporter who was writing a story, sent us a bunch of, like, Rippling internal Slack messages, that many of which were sort of cropped in sort of unflattering ways and taken out of context, and was asking for a comment on it. And just because of the context, it was very clear for a bunch of reasons when you thought about it, that the only place that this could have come from, like, it had to have been Deel. No one else would have known to send this stuff to that reporter. And so the implication was that Deel had full access to our Slack. And then from there, so we sort of knew what was going on immediately.

Brian Halligan: But even before that, did you have an inkling in some territory that they were winning an unusual number of deals and, like, how are they doing it? Was there an inkling before that?

Parker Conrad: You know, once you started looking, you know, there were these examples. Like, when this story came out, you know, there were customers that wrote into us, and former customers, you know, that wrote into us. And there was a guy that was a former Deel customer that took a demo with Rippling and was talking with us, came to us because he wanted to switch. And he spoke with a Rippling account executive, and within hours he got a WhatsApp message from Alex Bouaziz, the CEO of Deel, you know, who he never met before, that was like, “Hey, I hear you’re like, you know, looking at other stuff, like, you know, let’s try and find a way to get you to …”

Brian Halligan: Seems like an awful big coincidence.

Parker Conrad: And he emailed at the time. And this was before we knew anything was going on. He emailed his rep and he was like, “Whoa, this is super weird. Like, this freaked the hell out of me. Like I—you know, how did Deel know?” And of course the rep thought nothing of it. So it didn’t go anywhere, right? Until later you look back and you’re like, “Oh, yeah.” You can actually trace the person that was a Rippling employee that Deel started paying to send them all of this internal—steal Rippling internal data, including mostly, like, CRM data. Just like every opportunity we were working, every customer we were talking to, the pricing we were offering them, the objections they had. You know, it was just every single day, just sending all of it directly to Alex Bouaziz.

Brian Halligan: Do you think Alex and crew targeted someone or took an employee and got them to work for you? Or there was somebody working for you that they got to?

Parker Conrad: It was definitely the latter.

Brian Halligan: They co-opted somebody.

Parker Conrad: And, you know, the thing is that hasn’t been talked about a lot is it really seems like it was—you know, it wasn’t just us. There are a bunch of other companies. So, you know, there was …

Brian Halligan: That they were doing it to, or in the industry writ large is a lot of this going on?

Parker Conrad: No, no, that Deel was doing this.

Brian Halligan: I see.

Parker Conrad: You know, like, we were not the only ones.

Brian Halligan: Yeah. It was a defined play.

Parker Conrad: Yeah. I believe that that company was built on this foundation of theft from competitors, and that that was like a critical component of what they’re doing. And so, you know, one of the things that we decided to do is we decided to be extremely public about this and come forward.

Brian Halligan: Even before that, so you get this thing from your press guy, like, they have to have access to our Slack.

Parker Conrad: Yeah.

Brian Halligan: And then you ran a honeypot operation to kind of prove what you thought. Can you just talk about that meeting and what was going on? Can you just give us a glimpse behind the scenes of what happened in that meeting?

Parker Conrad: Well, so actually first, before that, what happened is we needed to figure out, like, who was doing this.

Brian Halligan: Yeah.

Parker Conrad: And my assumption was that this was probably a former employee that left, you know, because sometimes people leave one company, they go to another. And sometimes people—like, you shouldn’t do this. It’s wrong, it’s illegal, but sometimes it happens that people take some stuff on the way out. And so I was like, maybe there’s someone who kind of like did their new employer a favor on the way, and sort of unethically, instead of, you know, what we would do in a situation like that is we would say, “Whoa, whoa, whoa, like, don’t, you know, delete that. We don’t want—” you know, and unethically they said, “Goody.” You know, like, great. And then what we did is, you know, the sort of light signature of the behavior that really popped up was the search history in Slack. Like, there were certain searches that this person had to have been doing.

Brian Halligan: So did you invite your IT guy in? Like, how did it …?

Parker Conrad: Well, so this is the crazy thing is the search logs in Slack are not visible to Slack clients.

Brian Halligan: Oh, you pinged Salesforce.

Parker Conrad: And so—and in fact, like, cynically, I think they were doing it in this way precisely to avoid detection as they were doing searches. And then getting things from—not joining the channels, but getting things from the preview from the actual searches. And so really, the only way we were able to do this is we got introduced to some, like, very senior people at Salesforce who, like, to their credit, you know, sort of agreed to help us track this down. And they pulled from their own internal logs what this search history was. And it was very clear exactly who the person was, and that person was still an active Rippling employee.

Brian Halligan: Who is the one who came up with the idea to look at that particular thing?

Parker Conrad: To look at the searches?

Brian Halligan: Yes.

Parker Conrad: I can’t even remember, but it was so obvious.

Brian Halligan: It was like you called a meeting of a bunch of smart people and like, “How are we gonna catch them?”

Parker Conrad: I mean, it was a small team. It was like, you know, me, my general counsel, like, you know, the deputy GC. You know, it was like two or three people on legal, two or three people in security. And it was like, “Hey.”

Brian Halligan: How are we gonna catch them?

Parker Conrad: You know, to get this, the Slacks that we saw, they must have done these searches to get—you know? And these are weird searches, like someone—and so we’ve got to be able to find this. And so then we—clearly there’s one person that was, like, doing this, and it was very clear who it was. And the big sort of insight was like, well, look, it’s actually—because we were thinking, like, is there something that we could do where we could put something in Slack, you know, like maybe like put, like, a fake customer in Salesforce with a phone number that, like, goes to our law firm, put that in Slack and, like, see if a Deel sales rep calls that phone number, you know, and, like, kind of triangulate that way. It was too hard to sort of know, like, because we—it was too hard to see what Deel would be doing with it. And so the insight was realizing that you could flip it around and you could actually—the thing that we could see was the searches, and so we could see what this guy was searching for. And so we had to do it the other way. We had to give some information to Deel and see if this guy searched for it.

Brian Halligan: How did you get the information to Deel?

Parker Conrad: So, you know, look, a lot of companies that are in competing spaces have some somewhat regular exchange of, like, legal letters where, you know, for whatever reason, you know, they send you a letter and they’re like, “We’re angry that this person joined and make sure that they’re—” you know, or this person recruited someone they weren’t supposed to recruit. And, you know, and so this is a sort of fairly—there’s a sort of low level of that that was kind of happening. And so there happened to have been a letter that they had sent us about something or other related to a Deel employee that had joined Rippling that we had, you know, sort of, I think at the time had decided, we’re not even going to bother responding to this. But we suddenly said, “Well, let’s respond to it.” And when we responded to it, we decided to put together, like, a screenshot of a Slack message that was basically like a fake Slack message, although to make sure that it wasn’t actually fake, we actually had someone send that Slack message so we could be like, “No, no, it was a real Slack message.” But we put this thing together. And the Slack message, what’s actually the funniest part of this is that initially this was designed by the legal team. And man, the Slack message was so boring.

Brian Halligan: Yeah.

Parker Conrad: It was like no one would have cared. It was so uninteresting.

Brian Halligan: Yes.

Parker Conrad: And this was a very, you know, closed circle of, like, you weren’t allowed to tell anyone about what was going on. And so I called up our former CMO who was like—that he had moved into a new role at Rippling. But he was like—one of the things about him that’s so amazing is he’s, like, just great at writing, coming up with, like, cold email messages. And so he was always the guy we went to when we needed, like, a new cold email to send people that was—and so I called up Mepstein and I said, “Mepstein, we need you to write a cold email that’s going to have a 100 percent S1 to S2 conversion rate.” Like, definitely someone’s going to have to click on this. And he came up with the actual thing. And it was this message that sort of suggested that there was this channel in Rippling Slack called D-Defectors, where ex-Deel employees were talking about Deel, maybe in ways that were unflattering. And we sent them the message, and then just for added sort of theatrical effect, we blacked out, like, key parts of it, you know, to really be like, what are the blacked out parts of it? And it was included in this letter that we sent to their CFO, who is, you know, the CEO’s father, and their outside counsel and their head of legal, that was the sort of person’s title. So there’s only three people. One of them, you know, presumably it’s not the outside counsel, and then the other two are quite senior within the company. And we sent them this letter, you know, at, like, I think it was like 8:00 pm, and then we waited. And I remember waking up at, like, four in the morning and checking my Slack, and there was just all these messages. It was like, holy shit, they did it! And like, we were getting …

Brian Halligan: Somebody was searching on that channel.

Parker Conrad: He was searching and going in this channel. And like, you know, it was purposefully a weird search term. It’s never been searched before. We checked. You know, it was not a real channel, you know, so there’s only one way that this could have happened.

Brian Halligan: Okay, now you know who it is. Your month and a half search is over. Then what happened?

Parker Conrad: Well, then, you know …

Brian Halligan: Who approached him.

Parker Conrad: So the employee was based in Ireland.

Brian Halligan: Yes.

Parker Conrad: And Ireland has—the Irish legal system has an extraordinary form of relief in civil litigation that allows you to file an ex parte process. So basically you don’t have to alert the other side. You can go to court and get, without the other side being aware of it, an order from the court that’s effectively sort of like a warrant. You know, in the US legal system that exists in like a criminal case, but not in civil litigation. And so we were able to get this because of the sort of strength of the evidence that sort of there was a court order to get access to this guy’s phone. And so there was a court officer that came to …

Brian Halligan: Police officer-ish person.

Parker Conrad: I don’t know about police officer, but court officer. It was like a solicitor is the …

Brian Halligan: Uniform?

Parker Conrad: I actually don’t know. But in the Irish legal system there are solicitors and barristers and, you know, and so maybe more like a lawyer.

Brian Halligan: Was he wearing a white wig, or …? [laughs]

Parker Conrad: Man, I don’t even know. Now I’m going to look that up. But anyway, you know, they showed up at the office, met this guy, was take—you know, sort of went into a room for a meeting, and there was this team raid with, you know, sort of forensic IT people. The sort of officer of the court said, “Look, I’ve got this order for your phone.” And he sort of said, “I don’t have my phone with me, I need to go get it.” That turned out not to be true. And then he sort of, while he was, like, going to get it, kind of ran into a bathroom and locked himself in the bathroom. And what we later learned is that in the bathroom he did a factory reset on his phone, tried to flush it down the toilet. And then came out of the bathroom and, you know, the court officer was telling him, look, you’re violating the court order. There’s—you know, this is something that you can be in prison for. And he ran out of the building and took off.

Brian Halligan: Yep.

Parker Conrad: And then, you know, over the next sort of 10 to 12 days, there was this sort of ongoing legal process to try and get, you know, sort of like real, like, police enforcement of this to get this guy to get a lawyer, and, you know, get contempt charges filed. And eventually what happened is he, you know, sort of facing, you know, sort of these legal consequences, he eventually sort of like turned and sort of started cooperating and said that he had destroyed his phone. But he also—he told us—and this is all, you know, in the sort of court proceedings and the affidavit that he produced, but according to these proceedings, you know, allegedly what happened is that immediately after he left our office, he called Alex, the CEO of Deel, told him what had happened. Alex said someone would reach out to him, you know, allegedly. And then two attorneys at Deel, like employees of Deel who were attorneys, called him back and they told him to destroy his phone. Which is, like, that’s a bad thing for anyone, but it’s really bad for attorneys to be saying that. Told him destroy his phone, get a new burner phone, call them back, delete all of his accounts. And they offered to relocate him and his family to Dubai and get him out of the country. Dubai is …

Brian Halligan: No extradition.

Parker Conrad: You know, like, not a lot of extradition options. One of those lawyers, by the way, who was based in the UK, practiced law in the UK, has since relocated to Dubai himself since this all came out. And so there was this crazy thing where he detailed—you know, like, the person who was doing this detailed everything that happened, and how he was recruited by the CEO directly, and sent all of this information to the CEO. And was paid, how he was paid, and, and sort of all of this stuff.

Brian Halligan: Do you think this is going on a lot in tech?

Parker Conrad: I don’t think it’s going on a lot. And look, I think the reason that we really came forward with this …

Brian Halligan: Yeah, you went very public.

Parker Conrad: You know, obviously there’s a reason for Rippling that—you know, for the business, we need to defend the business. But, you know, more importantly, I do think that if Deel sort of moves forward, like in a way that’s unscathed, there is this risk that the Overton window shifts and that this becomes a norm, you know, that it’s sort of like, ah, you know, your competitor paid someone to steal your CRM data. If you can’t stand the heat, get out of the kitchen.

Brian Halligan: Yeah.

Parker Conrad: You gotta be doing the same thing.

Brian Halligan: Set a precedent.

Parker Conrad: And everyone’s got to have an espionage team and a counter-espionage team. And I just don’t think that that’s the—that’s not the way I want the world to work. And one of the things that’s actually—there’s a lot of crazy things about the story, but one of the things that, I think, is the craziest to me is that, you know, Deel’s largest investor, Andreessen Horowitz, has made it very clear that they do not care. Like, it does not—they are totally fine with what happened here, and they’re going to continue to back these guys, presumably because they have three billion reasons to do so. If you’re making enough money, it doesn’t matter how you got there or what you did, or the rules that you broke or the lines that you crossed or the ethics that you transgressed, if it worked and you got away with it. And so there’s—the board seems like they’re not going to hold them accountable. And so we felt like we kind of had to do something.

Brian Halligan: Appreciate that, by the way. You’ve had a lot of drama. If a movie is made, which I think it should be, who would you like to play you. And who would you like to play Marc Andreessen?

Parker Conrad: Oh, man, I will …

Brian Halligan: Or Ben Horowitz.

Parker Conrad: I love it if there’s a movie that gets made, hopefully the movie’s about Deel and I am sort of a minor character.

Brian Halligan: [laughs] No, I think the better movie would be your arc and all the interesting stuff that’s happened around you. Who plays Parker?

Parker Conrad: Man, I don’t know. That’s a good question. Hopefully someone extremely good looking. We can maybe have, like, some slight departures from reality since it’s a movie.

Brian Halligan: And I mean, playing Marc Andreessen and replicating that noggin of his is going to be tricky.

Parker Conrad: Yeah, for sure.

Brian Halligan: Jean-Luc Picard. Like, it’s gonna be tricky.

Parker Conrad: Oh, yeah, that’s a great one. That’s a good idea.

Closing reflections: there is no map

Brian Halligan: Okay. Anything else you want to tell the audience? Any other advice you would give to founders and people who want to go from four people to forty to four hundred to four thousand and forty thousand someday?

Parker Conrad: I think, like, everyone kind of needs to find their own path through this stuff. It’s one of the things that’s kind of hardest. Like, I don’t really think that there are a lot of rules and recipes. And so, you know, it’s why I probably have a lot more—you know, there was a point in my life when I was very angry at investors. And I think I’ve sort of reached some point where I actually have a lot of empathy for investors and, like, how hard it is to be in their position and how impossible the job is. Because I think it’s really hard, you know, even if you have a lot of experience yourself, you know, like, people all find their own paths and things change.

Like, Rippling was like a business that was like, so close to what we were building at Zenefits. Like, it wasn’t—it was the same industry slightly tinkered with kind of the sort of principle, kind of the foundational principles of sort of what we were building. But, like, the world was, like, four years into the future from when I had started Zenefits. And that one thing, like, changed everything. It was like all of the things that, you know—or many of the things that had worked for us at Zenefits didn’t work at Rippling. And, like, you know, just like everything was different because of a few changes to the starting assumptions. And it really sort of made me realize why so much of the advice that people give out about how to do this is so useless, because everyone is fighting yesterday’s war, you know, from their own experience. And, like, things are very different. You know, things have changed just because of the slow advance of time, if not because this is a completely different business in a completely different industry with a totally different set of people. So it’s a real struggle. And it’s probably one of the reasons why I’m like, “Man, it sucks. If you have any other thing that you can go do, maybe that’s the right thing to do instead of getting involved in this whole thing.”

Brian Halligan: I appreciate you. Thank you on behalf of the listeners. You’re an inspiration to many. Congrats on all your success. Congrats on your revenge tour.

Parker Conrad: Well, thank you very much.

Brian Halligan: Appreciate you.

What we learned

Brian Halligan: Okay. Hope you liked that interview with Parker. I really liked it. He’s a smart guy. On hiring, he’s got a bunch of cool ideas, some of which I’m definitely going to borrow. I like his idea that if he’s got a candidate that’s coming to meet him, he sends them an old board deck or his investor memo, lets them read it, and he spends, like, the first half of the interview just talking about that in. And the reaction of the candidate to that memo and the ideas they come up with really says a lot about them. I love that he does that.

He relies a lot on reference checks. He does something interesting there. He asks the candidate to give him six references, which is kind of a lot. And he only calls two. He’s trying to figure out if they have six references or not. But then he leans much more heavily on the blind references. And this is something I did as well. I would say 60 percent of my decision criteria was around the third-party references of people who used to work for them. So I thought that was interesting.

This is something we didn’t do at HubSpot, but I really liked how he hires a lot of ex-founders. And he talked about how ex-founders are used to “breaking the laws of physics.” They’re used to just really tight constraints and having to really do hard things. And so he has this sprinkled throughout his org, and he’s had a lot of success with them.

He likes his senior team to be a mix of homegrown talent and been-there-done-that talent. And this is pretty consistent across most of the CEOs I interviewed. And I feel like it’s a little bit of conventional wisdom in scale-up land that you just hire a bunch of been-there-done-that people. I’m not sure that’s right. A lot of HubSpot’s team over the years was 50 percent homegrown and 50 percent been-there-done-that. And that mix, I think, is just about right.

I took some things away on pace. He’s at 4,000 people. A lot of companies slow down when you hit 4,000 people. He seems to be keeping the pace up. And he does a few things that I think are smart, and a lot of the CEOs I interview do a couple of these things. First, he really tries to stay on the coal face with the customer. He’s one of the most active users of Rippling, the product. He runs payroll for all 4,000 employees in Rippling. He stays very close to the customer experience through that. He stays on the coal face with the employees, too. He sits right inside the engineering organization where he can see what’s going on, hear what’s going on. And he talked about the CEO sets the pace. CEO slows down, the org slows down. CEO speeds up, the org speeds up.

One of my big takeaways on Parker is he doesn’t have a chip on his shoulder, he’s got a boulder on his shoulder. [laughs] And that boulder really drives him. He calls it his revenge tour, the whole company. I think this is pretty common amongst some of the best CEOs, and can be a real motivator. And in his case, David Sacks put a boulder on his shoulder. I have a chip on my shoulder, and I had an old boss put it there. I had a guy I worked for for a decade. When I went to resign, he said, “You’ll be nothing without me.” And this is like 30 years ago and I still remember it. And if I really want to get fired up, I think about the day I resigned from that company. So boulder on the shoulder, super useful. Channel it. I think it can be really useful for you.

My last thought on Parker and about scale-up startup land writ large. I meet with lots and lots of founders these days. There’s a new breed of founder I call five-tool founders. Now, a great baseball player can hit, can hit with power, can catch, can run and throw, all at an elite level. And I’m noticing a new breed of founder who is kind of like that. And I think Parker’s one of them, I think Bret from Sierra is one of them. Mati from ElevenLabs, Gabe from Rogo, Dara from Delphi, where they’re very good at coding, they’re very good at design. They have vision, they can recruit and they can sell. Those are all five tools that they have in their bag. And I’m noticing more and more of them. And if you’re one of those founders that’s deeply technical like them, but can’t quite story tell and sell, I would work on that and get some coaching on that and get some feedback on it, because those five-tool players are worth their weight in gold. And if you can be a five-tool player, that really opens up a lot of doors for you. Okay, those are my thoughts. Lots of takeaways from Parker. I’ll see you on the next episode.