The Rippling investor memo is a masterclass in narrative-driven fundraising for complex products. Rather than relying on a standard 10-slide visual deck, Rippling uses 11 pages of dense text and targeted visuals to explain why they are building a 'system of record' for employee data that spans HR, IT, and Finance. The document argues that by winning the onboarding process, Rippling becomes the upstream source for all downstream business systems. The memo is remarkably transparent about the high R&D costs required to build such a broad product surface area, but counters this with impressive ea…
Key takeaways
- Rippling defines its core strategy as becoming the 'system of record' for employee data to exert platform power across other software categories (Slide 2).
- The company identifies employee onboarding as the critical 'ingestion point' that makes them the de facto source of truth for all downstream systems (Slide 3).
- Rippling positions itself as a hybrid of three categories: HRIS, Identity/SSO, and Endpoint Device Management (Slide 5).
- The product aims to solve the 'deadweight loss' of SaaS complexity by automating access across multiple departments like Sales, which may use up to 10 different systems (Slide 10).
- Early performance metrics show an average of 20% month-over-month growth in total bookings ARR throughout 2018 (Slide 8).
- The memo reports a Net Promoter Score (NPS) of 70 in January 2019, with a long-term average of 66 (Slide 9).
- The company acknowledges high OpEx burn due to the need to (re)build payroll, benefits, and IT systems simultaneously to reach an MVP (Slide 9).
- Rippling argues that the market for 'Employee Management Systems' will be less fragmented than the current payroll market, where leader ADP holds only 15-20% share (Slide 11).
The Narrative-First Approach to Fundraising
The Rippling 'Pitch Deck' is actually an investor memo, a format popularized by companies like Amazon and later adopted by high-conviction founders in the venture capital ecosystem. Unlike a traditional slide deck that relies on bullet points and large imagery to support a verbal presentation, this document is designed to be read in silence. It provides a deep, philosophical dive into the company's strategy, competitive positioning, and the structural mechanics of the market they are attempting to disrupt.
Slide 1: The Premise
The cover slide is minimalist, stating the company name and the core premise: "businesses should have a single system for employee information across every department within the company." It immediately identifies the problem by noting, "That’s not the way it works today." This sets a somber, professional tone for the 10 pages of dense analysis that follow.
Slides 2-4: The Strategy and the System of Record
On Slide 2 , the memo breaks down the strategy into three parts. Part I posits that being the "system of record" for employee data is the ultimate prize because it grants "platform power." The text references the founder's previous experience at Zenefits, noting how that company used HR data to sell insurance. However, Rippling proposes a broader approach: instead of just being a broker, they want to be a reseller and partner for all types of business software.
Slide 3 introduces Part II: Onboarding is the key to becoming the system of record. Rippling argues that because they are the "ingestion point" for employee data (SSN, bank accounts, home addresses), they sit "upstream" of every other system. If a new hire is entered into Rippling, that data propagates everywhere else. This slide contains a critical insight: "if you win at onboarding, you win everything else."
Slide 4 concludes this section by explaining that to win at onboarding, a company cannot be "monogamous" to one department. Rippling notes that while 30% of onboarding is HR-related, 40% is IT-related. They criticize "onboarding software" that acts merely as a checklist without actually connecting to downstream systems. This sets the stage for their multi-product, multi-departmental approach.
Slides 5-6: Product Overview and the Hybrid Model
Slide 5 provides a rare visual: a screenshot of the Rippling dashboard. It defines the product as a hybrid of three categories: All-in-one HRIS, Identity/SSO (like Okta), and Endpoint Device Management (like JAMF). The memo argues that while this seems like a "weird combination," it is the only way to truly control the employee record. It takes a direct shot at Okta, calling their "Employee Identity" branding "aspirational at best" because they lack the underlying HR data.
Slide 6 provides a concrete example of this integration. It shows how a user can add an entire department or location to an email list with one click. Because Rippling knows who is an engineer and who is in the San Francisco office, it can automate IT permissions and communication channels in a way that standalone IT systems cannot.
Slide 7: Competitive Breakdown
This slide categorizes competitors into three buckets: Payroll/HR (Gusto, Zenefits, ADP), Identity (Okta, OneLogin), and Device Management (JAMF, Microsoft). The memo makes a bold claim: "on the HR side, we believe our product is superior to every other system on the market." It also notes that in the Identity and Device Management categories, they are often not replacing a competitor but selling to companies that haven't purchased such systems yet.
Slides 8-9: Performance and R&D Investment
Slide 8 introduces hard data. It features a line graph showing "MoM Growth in Total Bookings ARR." The company reports an average of 20% month-over-month growth since January 2018, with the rate accelerating to 29% by January 2019. The text notes that the time it takes for revenue to double dropped from four months to three.
Slide 9 covers Net Promoter Score (NPS) and R&D. The NPS chart shows a peak of 80 in August 2018 and a dip to 40 in December, which the company attributes to a small sample size. More importantly, this slide addresses the "burn." Rippling admits that building a product with such a large surface area is expensive. They state that "roughly 2/3 of our headcount" (which was over 40 people at the time) were engineers. They explicitly tell investors that their OpEx burn is more substantial than most startups, framing it as a necessary cost to build a defensible "compound startup."
Slide 10: Why Now?
The memo addresses the timing of the business by pointing to the "SaaS revolution." As companies adopt more apps, the "deadweight loss" of administrative complexity increases. They also credit external factors: the success of Okta created API standards they could plug into, and the availability of off-the-shelf tax engines and benefits infrastructure made building a payroll system easier than it was five years prior. They also mention that "React and API-first development" allowed a small team to build a large product more efficiently.
Slide 11: Network Effects and the 'Supermarket for SaaS'
The final slide presents the "bull case." It compares the fragmented payroll market (where ADP has only 15-20% share) to the handset industry. Rippling argues that because their system has so many "adjacencies," it will benefit from network effects. As more third-party apps integrate with Rippling, the platform becomes more valuable, leading to a market where one or two leaders hold the vast majority of the share. They position Rippling as the future market leader of this new "Employee Management System" category.
What Rippling Does Well
The Rippling memo is exceptionally good at defining a new category . By refusing to be called an HRIS, they avoid being compared solely on payroll features and instead force investors to look at the broader administrative utility of the platform. The document is also refreshingly honest about its weaknesses , specifically the high burn rate and the complexity of the build. This builds trust with sophisticated investors who know that building a "compound startup" is capital-intensive.
Furthermore, the linkage between onboarding and the system of record is a powerful logical hook. It transforms a mundane administrative task (hiring) into a strategic moat. The use of specific growth metrics (20% MoM) and customer satisfaction data (NPS) provides the quantitative proof needed to back up the ambitious qualitative claims.
What is Missing from the Deck
Despite its depth, the document has several notable omissions typical of early-stage memos:
No Team Slide: While Parker Conrad's experience at Zenefits is mentioned in the text, there is no dedicated slide highlighting the backgrounds of the other 40+ employees. · No Specific Financial Ask: The memo does not state how much money is being raised or at what valuation. It is a document meant to generate interest and lead to a meeting, rather than a final term sheet. · Limited Unit Economics: While ARR growth is shown, there is no mention of Customer Acquisition Cost (CAC), Lifetime Value (LTV), or churn rates beyond the NPS proxy. · No Detailed Roadmap: The memo explains what has been built but is vague about the specific next steps for product expansion beyond the "Supermarket for SaaS" concept.
Founder Takeaways: What to Copy
Founders building complex, multi-product companies should study this format. If your value proposition is hard to explain in 10 slides, write a memo . It allows you to control the narrative and ensure the investor understands the "why" before they look at the "what."
Focus on the 'Upstream' Logic: Identify the one point in your customer's workflow where you ingest the most critical data. If you can prove that you are the source of truth for that data, your platform's value becomes self-evident.
Be Transparent About R&D: If you are burning more cash than your peers because you are building a broader product, say so. Explain why that breadth is a competitive advantage and how it leads to higher defensibility and better margins in the long run.
Use 'Linear' Growth Comparisons: Slide 8's use of a linear trend line over a MoM growth chart is a clever way to show that growth isn't just happening—it's accelerating. This is a much more compelling visual for investors than a simple cumulative revenue bar chart.
Frequently asked questions
- What is the primary thesis of the Rippling memo?
- The primary thesis is that businesses lack a single system for employee information across all departments. Rippling argues that by being the 'system of record' for this data, they can build a platform that controls downstream business systems. They believe that winning the onboarding process is the key to becoming this central authority, as it is the point where all employee data is first ingested.
- How does Rippling differentiate itself from competitors like Zenefits or Gusto?
- Rippling differentiates by refusing to be 'monogamous' to the HR department. While competitors focus on HR tasks, Rippling notes that 40% of onboarding tasks are IT-related and others involve Finance or Legal. By integrating Identity Management (SSO) and Device Management (MDM) directly into the HRIS, they solve a broader administrative problem than traditional payroll or HR software providers.
- What metrics did Rippling share in this early deck?
- Rippling shared significant growth and satisfaction data. They reported an average of 20% month-over-month ARR growth, peaking at 29% in January 2019. They also disclosed an average NPS of 66. Notably, they were transparent about their high R&D investment, stating that 2/3 of their 40-person headcount were engineers and that their OpEx burn was 'more substantial than most startups' due to the product's breadth.
- Why does the memo emphasize 'Network Effects' in a B2B SaaS context?
- Rippling argues that an employee management system has more 'adjacencies' than a simple payroll system. As more 3rd-party engineers build integrations for the platform with the most users, more clients will choose that platform to access those integrations. This creates a self-reinforcing cycle that Rippling believes will lead to a much higher market concentration than the fragmented payroll industry currently sees.
- What 'Why Now' factors does the company cite?
- The memo cites the 'SaaS revolution' as a primary driver, noting that even small departments now use dozens of disconnected apps, creating a massive administrative headache. They also point to technical evolutions, such as the rise of API-first development and React, which allowed them to build a large-surface-area product more efficiently than was possible five years prior.
