Lessons from Parker Conrad

On Building a "Compound Startup"

Conrad is a vocal proponent of the "compound startup" model, a strategy that involves building multiple, integrated products from the outset, rather than focusing on a single point solution.

On the core idea of a compound startup: "I sort of take a very different point of view, and I call it building a compound startup, which is building multiple different products in parallel, focusing on sort of breadth versus doing one extremely narrow thing." [1]
On the advantage of integration: "The secret to building better business software is building a system where you can build multiple parallel business software applications that are all natively built into the same system." [2]
On the power of a multi-product offering: "You can actually just wipe out a lot of work and make things function much better if you can take on a whole host of interrelated applications and build one comprehensive solution." [3]
On the outdated nature of narrow focus: "I think there was this moment in time where it really was possible to do one narrow thing because there was so much greenfield territory in software as everything shifted from on-prem to the cloud... But Parker believes this approach is suboptimal because it limits the types of problems you can solve for your customers — especially big customers." [3]
On the necessity of parallel execution: "The challenge of a compound startup is that you need to be good at parallel execution across all of these different products. You’re only as strong as your weakest link." [4]
On integration as the product itself: "If the integration doesn't matter, then there's no product value to you or your clients for doing these things together. All you have is the difficulty and challenge of doing multiple things in parallel well. You want to make sure there's value to the integration." [4]
On the efficiency of reusable components: "The advantage is that we get to build once and then reuse that across every single product that we build." [1]
On the historical precedent for compound businesses: "If you look at companies like SAP, Oracle, and Microsoft, they actually look like compound software businesses." [3]
On the difficulty of transitioning to a compound model later: "You kind of have to almost refound the company." [5]
On finding undiscovered product-market fit: "Because the conventional wisdom is so strong in the idea that you shouldn't do this, there are these undiscovered islands of product market fit that are just beyond the horizon line. If you can sail out and make it there, everything else about your company will work.” [4]

On Entrepreneurship and Building a Company

Conrad's experience has given him a pragmatic and often blunt perspective on the realities of being a founder.

On the difficulty of starting a company: "There's nothing easy about building a company at all. I find it really hard, just painful and difficult, and if you are successful, it's even worse than if you fail." [6]
On the unglamorous side of scaling: "A lot of scaling up a company is not very sexy or strategic." [7]
On the constant administrative burden: "There's a lot of just administrative work that comes along with having employees." [7]
On the early struggles: "At Wikinvest, which got renamed Sigfig, we were constantly just two or three months away from not being able to make payroll." [7]
On the value of doing unscalable things initially: "It was a classic YC like do things that don't scale which is absolutely the right way to start a company the the correlary to that though is eventually you have to scale them." [8]
On the challenge of automation at scale: "Once things are being done manually at scale. it's incredibly difficult to go back and automate it the problem grows too complex." [8]
On the importance of solving a real problem: "It's starting with a problem that you have. and looking for the right way to solve it rather than you know a technology and searching for for what it can solve." [8]
On the CEO's role in pushing boundaries: "Typically, what can be achieved in a set timeframe far exceeds initial expectations, and it's your role to get people to accomplish more than they think they are capable of." [9]
On hiring people with something to prove: To achieve high performance, Conrad "prioritizes hiring people with a chip on their shoulder." [9]
On the illusion of a speed vs. quality trade-off: "It's very rare that you see projects that really move slowly, that end up just really nailing it at the finish line. Usually what happens is they're slow, and then when they get done, they're also bad." [10]

On Fundraising and Venture Capitalists

Having raised massive rounds for both Zenefits and Rippling, Conrad has a nuanced and critical view of the fundraising process and the role of VCs.

On the true value of top-tier VCs: "Many VCs think their best value-add is enhancing the probability of founder success, but their real contribution is the brand value and validation they offer." [9]
On the impact of a strong VC brand: "Prospective employees are more likely to respond to emails, potential customers worry less about the company going under, and the public starts seeing your business as legit." [9]
On the misguided advice from investors: "Most most investors no matter how smart they are they have no fucking idea what's going on inside of the company... and it's one of the reasons why I think most investors like destroy a lot of value at companies because the advice whatever advice they're. giving is almost certainly wrong for for the company." [11]
On the futility of chasing VC trends: "I sort of developed this, like, this view that like VCs, it was impossible to build a company that would ever fit into the thing that investors wanted to invest in... the time that it takes to build a business is too long. And the, the half-life of these trends is too short." [12]
On the most important factor in fundraising: "The important thing is to build a business that's so compelling that they can't afford to ignore you. And then all the other rules go out the window. And then it's like very easy to raise." [12]
On the danger of inexperienced VCs: "I think there's something very dangerous about a someone who's like a newly minted venture capitalist... because like there's just that dynamic where when things go wrong suddenly they feel like their back is up against the wall." [11]
On the power dynamic with board members: "If if someone's a board member there is always this thing and this sort of moral Authority. if not like legal Authority about the company." [11]
On the importance of traction: After being rejected by over 70 VCs for his previous company, Conrad learned that "traction wins." [9]
On the role of valuation in recruiting: "Rightly or wrongly, for better or worse, valuation is a very important tool for recruiting - particularly in the markets for software engineering, where the market is really tight." [6]
On the flawed VC-founder marriage analogy: Conrad "finds the marriage analogy for founder-VC relationships to be inaccurate and prefers the general contractor analogy." [13]

On Lessons from Zenefits and Failure

On the primary lesson from failure: "The only thing I learned is that failure sucks, and you never want to do it. There's not a lot to be said for that particular lesson." [7]
On learning more from success than failure: "You learn more from success than failure because companies can fail for many reasons, making it hard to know what went wrong. Success, on the other hand, requires getting many things right, offering clearer insights." [10]
On the cultural issues at Zenefits: An arrogant and reckless culture "led to every problem you have read about in the media." [14]
On his motivation after Zenefits: "I sort of decided the only way I was going to be able to communicate about this to people in the tech community, to the world more broadly than that, was to build this specific company, try and make it into a really big 100 billion dollar outcome." [15]
On the need for change in the industry: "If Parker and his team had one thing right it's that this industry is in desperate need of change." [14]
On the double-edged sword of hyper-growth: At Zenefits, they "would try five things and all of them would work," which was a "very different feeling" from his previous startup. [12]

On Leadership and Personal Philosophy

Conrad's leadership style is characterized by a relentless drive and a focus on execution.

On his primary personality trait: "I think that like my sort of like governing. uh sort of Personality trait is is impatience." [16]
On his leadership style: "I guess I I'd like to think I'm I'm sort of a wonderfully empathetic uh sensitive leader I'm not sure I have all that all that figured. out." [16]
On being goal-oriented: "I'm definitely like extremely extremely goal-oriented so trying to sort of like move the company forward." [16]
On his motivation for building HR software: "I am an unusually resentful of the sort of busy work, administrative work. It's why I was so resentful of having to of fax in insurance applications at my first company." [12]
On the satisfaction of solving problems for customers: "In this sort of perverse way I really get excited about stomping that out for customers, because I'm the primary user of our product." [12]
On his approach to sales: "I enjoyed selling something that I had built. I didn't want anyone else explaining why it was great or what was so awesome about it, because they were going to screw it up somehow." [12]
On the daily grind: "I'll grab coffee with my wife and daughter and then am in the office around 9 or 10. From there, I usually have about 8 hours of meetings." [6]
On the highs and lows of entrepreneurship: "Some days you're the fire hydrant, and some days you're the dog." [7]
On his advice to aspiring entrepreneurs: "My advice is is pretty much always like don't do it... you're. you're. you're most people are likely to fail." [6]
On his personal growth: "People always want you you know to have some some story of like personal growth and I think I'm like basically the same person." [16]

Learn more:

Lessons from Parker Conrad

On Building a "Compound Startup"

On Entrepreneurship and Building a Company

On Fundraising and Venture Capitalists

On Lessons from Zenefits and Failure

On Leadership and Personal Philosophy

Written by Antoine Buteau

Lessons from Nat Friedman

Lessons from Bill Walsh