The Compound Startup Advantage: Why The CEO of Rippling Believes Focus Is Overrated

"Integration is the product."

As we gear up for 2025 SaaStr Annual, May 13-15 in SF Bay, we wanted to take a look back at one of your favorite SaaStr conversations with Parker Conrad at SaaStr Europa. Parker came to London to share just what he’s learned building a $12B+ compound start-up. And … the top mistakes they made.

And come meet Rippling and learn its secrets to building compound products when their VP of Product Anique Drumright joins us on-stage at 2025 Annual!

The Compound Startup Advantage: Why Parker Conrad Believes Focus Is Overrated

4 Unexpected Learnings from Parker Conrad on Building Compound Startups

1. What started as an apology became Rippling’s greatest strength – Conrad initially felt he needed to apologize for breaking the “focus” rule, but discovered that “everything that is great about the company” came from its compound approach.

2. Don’t try to evolve into a compound startup later – Unlike conventional wisdom about starting focused and expanding, Conrad believes it’s “really hard” to transition from a point solution to a compound startup: “You kind of have to almost refound the company.”

3. One person can run payroll for 2,000 people across a dozen countries – The integration benefits are so significant that Conrad personally runs payroll for Rippling’s entire workforce as a “part-time job.”

4. Cross-selling generates $5M+ in new monthly revenue – Rippling’s cross-sell motion alone drives over $5 million in net new ARR each month before counting any new customer acquisitions.

In the world of SaaS, conventional wisdom has long dictated that focus is paramount. Investors love it, advisors preach it, and founders internalize it: “Do one thing and do it exceptionally well.” But what if this foundational principle is actually holding companies back?

Parker Conrad, founder and CEO of Rippling (and previously Zenefits), makes a compelling case that the “focus above all” mentality is not just limiting—it might be fundamentally wrong for many businesses.

The First Rule About Building Software Is Wrong

“If there’s one rule that almost everyone universally agrees with about building software, it’s that focus is really important,” Conrad explains, citing Silicon Valley luminaries Bill Gurley and David Sacks who consistently advocate for narrowing your focus.

But Conrad has a provocative counterargument: this conventional wisdom is “wrong, or at least extremely limiting.” He argues that there exists a set of companies that could be built—but often aren’t—because they break this cardinal rule of focus.

The problems with the focus-first approach, according to Conrad:

1. It limits you to problems contained within one vertical—when many of the deepest business challenges involve collaboration across different systems and departments.

2. The narrow approach has been picked over—fifteen years ago, you could start a SaaS company in any vertical and likely succeed by being first. Today, every space has multiple competitors.

3. The single-product mindset creates expansion challenges—”How do you go to product number two if everything about your company is oriented around just having one product?”

Enter the Compound Startup

Conrad’s alternative is what he calls a “compound startup”—a company building multiple products in parallel that are deeply integrated and seamlessly interoperable.

The advantages are substantial:

1. Untapped Market Opportunities

The obsession with focus has left “undiscovered islands of product-market fit just beyond the horizon line.” Compound startups can navigate to these opportunities precisely because others won’t venture there.

2. Five Key Product Advantages

Parker details five specific advantages that compound startups have over point solutions:

• Deep integration between products: Products work together in ways impossible with separate vendors.

• Integration with underlying systems of record: At Rippling, all products tap into employee data, unlocking unique capabilities.

• Shared core components: Critical features like reports, workflow automations, and permissions are built once and deployed across all products, allowing for significantly deeper capabilities in these areas.

• Shared UX: Customers gain “superpowers” by learning one system, making them more likely to buy additional products.

• Pricing advantages: Compound products can optimize pricing across their entire bundle, allowing them to “run circles around competitors” in specific product categories.

The UK Launch Example: Integration as the Product

Conrad uses Rippling’s UK launch to illustrate his point. Payroll in the UK, like many business processes, is complex and interconnected. Companies typically manage this through disconnected systems—an HRIS here, a payroll system there, separate systems for pensions, hours tracking, annual leave, and banking.

“Anything can go wrong at any point between any of these systems,” Conrad explains, making it “a tremendous amount of work.”

The compound startup alternative? One integrated system handling everything. The proof of effectiveness? Conrad personally runs payroll for Rippling’s 2,000 employees across a dozen countries as a “part-time job,” while UK companies with even small teams often spend 5-6 days monthly just managing payroll.

Beyond Traditional Boundaries: Rippling’s Three Clouds

What makes Rippling fascinating as a compound startup is how it has expanded far beyond its initial HR focus. The company now has three distinct “clouds”:

1. HR Cloud: Traditional HR and payroll functions.

2. IT Cloud: Setting up employees in apps, device management, and IT systems.

3. Finance Cloud: Expense reimbursements, bill pay, corporate cards, and more.

This structure enables a seamless experience that starts when a company hires someone. One button click in Rippling sets up the new hire across HR, payroll, all relevant apps (Slack, Dropbox, GitHub, email, Salesforce), provisions their computer, and establishes them within the company’s financial systems.

This integration extends globally, eliminating the need for separate software stacks in different countries—a pain point for increasingly distributed companies.

Building a Compound Startup: Key Principles

For founders considering the compound approach, Conrad offers these guidelines:

• Find shared components: Identify functionality that can be built once and reused (reports, analytics, permissions, workflow automations).

• Seek pricing advantages: Structure offerings so customers save money by buying multiple products from you.

• Organize for parallel execution: Create business units with entrepreneurial leaders who can run individual products relatively independently.

The Go-to-Market Challenges

When pressed on go-to-market challenges by interviewer Sam Blond, Conrad acknowledges the difficulties but highlights how Rippling’s compound approach is a strength:

Competing with Point Solutions

While competitors like Deel and Remote might focus solely on international payroll, they typically lack the full integration Rippling offers. These competitors often “secretly run on other payroll systems country by country,” creating administrative complexity that Rippling’s integrated approach eliminates.

Sales Organization Structure

Conrad reveals his preference for dedicated sales teams for each product, despite internal disagreement. His rationale:

• Training capacity: Sales teams can only absorb so much product knowledge.

• Expertise depth: Specialized teams can develop deeper expertise on specific products and competitors.

• Focus on smaller products: Separate teams ensure smaller products don’t get ignored in favor of easier-to-sell offerings.

However, he acknowledges the pendulum likely swings between centralized and specialized sales organizations “every five to seven years” as companies adjust to their evolving strengths and weaknesses.

Brand Challenges

Perhaps the most significant challenge is articulating what Rippling actually is. Without clear analogs, customers typically approach Rippling seeking solutions to specific problems—not the full platform.

The sales process often involves showing customers how their immediate pain point is “a symptom of this deeper underlying disease” that Rippling’s integrated approach can solve. While customers rarely buy just one Rippling product, they also rarely purchase all 24 upfront—most start with around seven SKUs and expand over time.

Starting as a Compound Startup

Contrary to conventional wisdom about starting focused and expanding later, Conrad reveals that Rippling deliberately launched with three distinct product areas:

1. Payroll and HRIS

2. Device management

3. Identity and application management

“Companies that start with one thing with this plan that someday we’re going to build the next thing—they very rarely get to the next thing,” Conrad explains. “The first thing just sucks up more and more time and energy and effort.”

By starting with three integrated products centered around employee data, Rippling established its compound identity from day one.

The Rippling Cross-Sell Engine

One of the most impressive aspects of Rippling’s compound approach is its cross-sell capability. Conrad reveals that cross-selling to existing customers generates over $5 million in net new ARR monthly—before counting any new logo sales.

This success comes from three key components:

1. An account management organization focused on selling new SKUs to existing customers

2. Standalone sales organizations for major product areas

3. An internal “ad system” using machine learning to show customers the products they’re most likely to adopt next

The Lesson: Compound Startups Can Create Enduring Advantages

While Parker Conrad admits he was initially “apologetic” about Rippling’s broad approach, he now recognizes it as the source of the company’s greatest strengths:

• “Anomalous” growth persistence year over year

• High net dollar retention (130%) even during significant headcount reductions among customers

• A thriving cross-sell business

What started as an approach that seemed to contradict established wisdom has become Rippling’s defining advantage.

For SaaS founders, Conrad’s message challenges the bedrock principle of focus. The right question might not be “How do we narrow our focus?” but rather “Where are the interconnected problems that a compound approach could uniquely solve?”

In a SaaS landscape where differentiation is increasingly difficult, the compound startup might just be the path less traveled that makes all the difference.

4 Things Rippling Got Wrong: Learning from Missteps

Even as a multi-billion dollar success story, Rippling’s compound approach hasn’t been without challenges. Parker Conrad candidly shared several areas where the company struggled:

1. Product launches lacked marketing polish – Conrad admits that Rippling is “generally not very good at” product launches from a PR and marketing perspective. The company tends to “not be seeking the limelight from a press perspective,” potentially missing opportunities for market education and awareness.

2. Brand messaging remains confusing – “The thing that we have found to be the most challenging about our business is the brand question of like, what is Rippling and how do we describe it,” Conrad reveals. Without clear market analogies, explaining the full value proposition continues to be difficult.

3. Sales structure creates internal conflicts – Conrad acknowledges “tremendous disagreement internally” about how to structure sales teams, with ongoing tension between specialized product-focused teams versus unified sales organizations. This pendulum swing requires constant rebalancing.

4. Customer experience fragmentation – Similar to Salesforce’s challenges, having multiple specialized sales teams can create a disjointed experience for customers. Conrad admits this is an ongoing challenge: “The knock on this is… the sales experience for customers having multiple sales teams going after customers and not having a coherent and cohesive experience.”

These challenges highlight that while the compound startup model offers tremendous advantages, it requires constant refinement and a willingness to navigate complex organizational and go-to-market dynamics that single-product companies can avoid.

And come meet 10,000+ of the best in AI, B2B, SaaS and Cloud at 2025 SaaStrAnnual.com May 13-15 in SF Bay!!