Parker Conrad Says Founders Have Been Building Software Badly for 20 Years

What’s the right way to build a software business? Many startup advisors say B2B software should solve one problem, acquire customers, and then add features as the business grows. Serial founder Parker Conrad, now founder and CEO of Rippling, an HR software startup valued at $13.5 billion in April, thinks that’s the wrong way to do it.

Conrad said on a recent episode of TechCrunch’s Found podcast that he believes the advice given to software company founders over the past two decades has been flawed.

“I think the conventional wisdom about how to build business software has been to focus very narrowly, build one very narrow thing, and go very deep,” he said. “I think the result of that conventional wisdom over the last 20 years is that we’ve been building business software badly. The side effect of building these very narrow applications is that companies now have to manage 100 different separate pieces of software to run their business, and that’s very inefficient.”

Conrad is naturally talking about his book here. Rippling aims to be a one-stop shop for everything from payroll to expense management and corporate cards to IT solutions. When Conrad was asked what he thought of the competition, he said it depends on what the potential customer is looking for. In finance, Conrad said Rippling competes with Brex and Navan, and in payroll solutions it could compete with Gusto.

“The secret to building better business software is to create a system where you can build multiple, parallel business applications that are natively built into the same system,” Conrad said.

Building software this way allows companies to take one set of data and build multiple applications on it, he said, which can result in a unified user experience. It also gives companies more options for pricing their offerings, he added.

While there are certainly areas that are worth focusing on and delving into, such as cybersecurity, Conrad’s view that platforms perform better than feature-specific companies makes sense — especially in times of economic crisis when businesses can’t afford to spend too much on software.

TechCrunch reported last year that many SaaS startups would likely struggle or consolidate after the market rollercoaster of 2020 and 2021 led to a slew of single-focus startups emerging and getting funded.

At the time, Loren Straub, a general partner at Bowery Capital, had something similar to say. Straub told TechCrunch in January 2023 that no one wants to back a startup that has a product that doesn’t do much more than one feature, because they don’t have a moat or something that sets them apart from their potential competitors. She said companies don’t like spending money on single-feature technology in general, let alone when budgets are tight.

VC Mark Goldberg, then a partner at Index Ventures who has since launched his own fund, echoed this sentiment when he spoke to TechCrunch last year, saying that large firms are more likely to take less-than-stellar deals from existing deals before signing a new one with a one-dimensional startup.

“Before Slack was sold to Salesforce, one of the scary things was Microsoft launching Teams,” Goldberg said at the time. “We all in Silicon Valley thought it was a good product and it was better than Slack, but a lot of people didn’t care. Why do we need a separate vendor? That’s an area where the best-in-class might not help.”

Conrad hopes the horizontal approach he’s taken at Rippling will both attract and retain customers when the market is volatile. So far, it’s working.

“Every software industry now has about a dozen competitors and it’s incredibly crowded,” Conrad said, adding that customers prefer an approach in which a software company “builds a system that kind of ties it all together and gives people one system that ties a lot of those capabilities together and wins.”