Two weeks ago, Joe Biden's presidential campaign was running on fumes, with pundits speculating that the candidate may not have enough money or support to make it much longer. Then he won the South Carolina contest in a landslide, and everything turned around.
Now, Biden has a commanding delegate lead over Sen. Bernie Sanders in the Democratic primary, while all the other leading candidates have dropped out.
In San Francisco, a once high-flying software start-up is poised to benefit from Biden's revival.
Zenefits, a provider of payroll software, is the single biggest vendor, from a financial perspective, to the Biden team, according to The Center for Responsive Politics, which tracks campaign fundraising and expenditures.
The site says the Biden campaign has made 315 payments during the 2020 campaign, totaling $6.85 million, ahead of the $6.6 million paid to digital data company Infogroup. Biden is now reeling in capital and bulking up his staff, meaning bigger payments to Zenefits, as he gears up for the general election in November.
Zenefits provides a suite of cloud-based back-office tools, including software for managing payroll, employee benefits and human resources. It's among a number of emerging tech companies to get traction in the political sphere because of a focus on helping small, nimble businesses manage employees who are spread all over the place and are largely glued to their mobile devices. Stripe, the fast-growing payments company privately valued at $35 billion, and Gusto, a Zenefits rival, have also won business with a variety of campaigns and candidates.
"A campaign has some of the same sort of challenges that a small or mid-size business might have," said Zenefits CEO Jay Fulcher, who joined the company in 2017 after previously running Ooyala. "They're looking to mobilize and ramp their teams as quickly as they can, and are looking to buy and implement technology to help them manage their workforce. The nature of a campaign workforce is weirdly starting to to look like the nature of the new workforce."
The financial figures provided by CRP reflect the Biden campaign's use of the Zenefits platform, not the amount paid directly to the company. Fulcher said he couldn't comment on revenue. Based on how Zenefits' subscription business model works, the campaign is likely spending between $10 and $30 a month per staffer, which would put annual revenue to Zenefits in the hundreds of thousands of dollars.
The Biden campaign didn't respond to a request for comment.
In addition to Gusto, Zenefits competes with ADP, which is used by the Sanders campaign and was the choice of Kamala Harris; Paychex, the service used by the Pete Buttigieg and Tom Steyer teams; and Complete Payroll Solutions, the primary service used by Elizabeth Warren.
Zenefits was also tapped by the long-shot candidate John Delaney and got some business from Warren, but Biden has been by far its biggest political client ahead of the 2020 election, according to CRP.
While the Biden surge is good news for Zenefits, Fulcher has done his best to keep the company out of the headlines in his three years at the company. That's in part because, prior to his arrival, Zenefits had a spectacular rise and equally rapid fall befitting of the worst stereotypes about Silicon Valley start-ups.
Valued by venture capitalists at $4.5 billion in 2015, just two years after the company's launch, Zenefits was growing largely by cutting regulatory corners in the health insurance market, while also fostering a tech bro culture of heavy drinking and sex in the stairwells. Founder Parker Conrad resigned as CEO in scandal in 2016.
When Fulcher joined, he immediately cut about half the staff, following earlier layoffs, to whittle down costs and focus on serving small and medium-sized businesses.
This is Fulcher's first presidential election at Zenefits, but the company has prior experience in the market. Zenefits worked with the Hillary Clinton campaign four years ago, Fulcher said. And, while he couldn't say much about the details of the relationship with Biden, he acknowledged that the company's earlier work is relevant to its current engagements.
"There’s some amount of referential stuff that goes around," Fulcher said. "People had a very good experience with us. That’s known among those setting up and launching these campaigns."
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