> “We are coming out with a product to compete with Zenefits, a full service integrated online payroll and benefits solution.”
I can't seem to argue with Zenefits stance that they are being sued for complaining that their access was cut off in an attempt to kill them off while ADP launches a similar product... On top of that who is ADP to cut off access that their clients are paying for? It doesn't matter if a human logs in or a computer, the cost to ADP is the same. Here they are blocking access for no legitimate reason while launching a competing product. This whole things stinks and I think the smell is coming from ADP....
That's not their claim. Their claim is that the reason they were cut off was because of this product launch. They haven't presented any proof of this.
Simple fact is, the claim is coming from a company that has already made it clear they are doing things they should not be doing. They have the burden of proof. They have a mountain to climb.
Edit: As mentioned in the GP comment, this claim is also false:
"Within the same hour they filed suit, an ADP sales rep started selling a brand new Zenefits competitive offering — called “Opum” — to our shared clients."
I'm troubled by this assertion. I know firsthand that ADP will actively fight attempts to integrate with them; their APIs are bad, poorly documented, and have reliability problems. Should somebody attempting to do well for the customer--and, yes, make some money, but it's not like Zenefits is inventing problems to solve--not do well by the customer first and foremost?
Like, from my perspective: forget ADP, forget Zenefits. Is this better for the customer?
I'm sorry, but I've seen numerous comments to the contrary.
Regardless, that they have APIs and documentation, regardless of your opinion of their quality, only supports my assertion.
ADP is not a monopoly.
Zenefits built a model that vaguely value adds onto ADP by using a more modern web stack.
I'm no huge fan of ADP, but they're being generous to even consider themselves to be competing with Zenefits.
Signed,
Someone who worked on ACH for nine years.
ps: I'm pretty sure they're trying to do just that. But you have to consider just how incredibly difficult ACH is - not just from a coding perspective, but from a regulatory perspective. Banking and accounting legal entities need created.
pps: ADP knows good and well that Zenefits is working on their own ACH implementation with their buckets of cash. This is a preemptive strike.
On a side note, can we name[0] these strategies just as they do with chess moves so that when someone says "pulled an XXXX", it encapsulates the move and references it. On a long run there could be a website which defines these and references all the previous attempts and responses. I think it would be very useful for founders/team when they are short of time and are brainstorming counter moves. Also perhaps we would internalize these patterns just as a GM does.
[0]: If there is already a resource I would like to know about it.
It's not a fun bet.
> It doesn't matter if a human logs in or a computer, the cost to ADP is the same
It's understandable that they're upset but they should work to keep these problems from spreading outside of their legal team and not get flustered with their competition. From the sound of it they've completely taken their eye off the ball for this distraction and it could easily pave the way for ADP to steamroll them competitively while they sop up their tears.
When they've already been cut off, it's a bit too late for that.
I don't mind if part of the company spends a couple days focusing on this. They need to figure out a plan for the customers that got cut off, too.
It doesn't sound to me like they've "completely taken their eye off the ball". What are you basing that on?
I wish one of the YC tests for "how smart are these founders?" was "do you think spam is a good growth hack?"
To be honest, the obvious first growth hack is spamming... anybody can do it. Finding a way to leverage an existing audience without cheating or engaging in slimy behavior takes real thinking....YC companies doing this at some point starts to reflect on YC (And these are not the only two instances of this, it seems like every YC company does it to some extent.)
Zenefit's product is a glorified remote bookkeeping service in which you enter data into the Zenefits website and they re-enter it manually, and usually incorrectly, into the ADP website and scrape the results, usually incorrectly, so they can post a response several days later to your Zenefits account page.
One is a SaaS (ADP) and the other is a remote data-entry service (Zenefits). Completely different. It's hard to argue that Zenefits should even be considered a tech company, since most of their "integration" functionality is driven by manual human labor and not technology. At best, Zenefits is a data-entry service with a nice, shiny UI.
EDIT: Also...the new product is actually just an offshoot of an existing product that my firm has been using for nearly a year. The new product, Opum, is simply the small-to-medium business version of one of ADP's existing enterprise cloud payroll/benefits products. It even uses the same (new) interface as the enterprise product.