“Sometimes benefits brokers come by the Zenefits office, and they refer to me as Darth Vader,” says Parker Conrad, chief executive officer of Zenefits, the insurance benefits technology startup that's threatening to change the landscape of the employee benefits business – drastically and irrevocably.

“They see me as Satan or the most evil person in the world,” Conrad continues. “But one of the things I think they don't realize is that if Zenefits is fortunate enough to continue on our current trajectory, then, yes, Zenefits will be extremely destructive to agencies. But I think it will be extremely positive for brokers, for the individuals themselves. Brokers are as much a victim of the state of technology in the insurance industry today as their clients are.”

Average consumers might not realize the threat Zenefits poses to the insurance industry because from an employee's perspective, benefits obtained through Zenefits are identical to those obtained through a traditional brokerage – and the company also hosts a support team to manage the day-to-day employee issues that arise within any benefits package, so the average consumer wouldn't experience any loss in personal attention or support from someone who can help with a plan question or issue.

It's only when you explain the Zenefits model to one or two employees at a small or mid-sized business – the employees trying to handle HR and payroll duties on top of another full-time job – that the public begins to get excited about the concept the brand represents. That's what's got the insurance industry frightened. Probably with good reason: The company reached $20 million in run-rate revenue after its first 20 months.

“The best way to help you understand how we're different and how it works is to explain what happens when you hire someone through Zenefits,” Conrad explains. “As an employer, you can come in and say, 'I want to hire John. He starts April 1; I'm paying him $80,000 a year; he reports to this person and he works in our sales department. I'm giving him this many stock options.' You click 'hire,' and you're done at that point. The employer doesn't have to do anything else.”

After those steps are taken, Zenefits will email the new employee an offer letter based on a preloaded company template. It generates confidentiality and any other necessary employment agreements, and the employee can sign them all digitally before returning them. Zenefits collects the necessary payroll details – Social Security number and bank account information included – and then sets it up for the new hire. The company handles any W-4s, I-9s, Patient Protection and Affordable Care Act notifications and any wage notices required by state law.

Then, of course, there are health, dental and vision benefits, plus any flexible spending or health savings accounts.

“All of that stuff gets handled automatically – and sort of 'automagically,'” Conrad says. “The employer isn't involved in any of it, and the employee does it all online well in advance of the first day of work.

“The difference is integration,” he adds. “Instead of managing 20 different systems, the employer only has to log in to Zenefits.”

And the service and technology that supports the Zenefits model is free for employers to use; they pay broker's fees, for insurance, and Zenefits also offers revenue shares for partners (such as ADP, which shares revenue for payroll clients generated by Zenefits) and has built out extra features that employers can purchase, such as time and attendance software.

“The way I think about our business is as a hub-and-spoke model,” Conrad explains. “Zenefits is the hub, and there are several spokes that come out of that hub; we make money on all of the spokes, and the hub and connective tissue, we give away for free.”

It sounds like a killer deal for employers – but the efficiencies Conrad has created in Zenefits also represent, to many brokers, the end of the benefits world as they know it.

“I think this is one of those industries that needed a breath of fresh air – frankly, that needed to be disrupted,” says Sue Wakamoto-Lee, senior benefits advisor at Zenefits. “We haven't done anything differently in the benefits world for decades. Even today, they're still using paper applications – that's what we were doing in the '80s.

“We didn't even have personal computers when I started in the industry,” she continues. “It's still the same now, and that makes no sense in a world where you can access anything you want on your phone walking around town. The industry needed to change.”

Wakamoto-Lee's previous employers include One Risk Group, the Leavitt Group and Mercer Health & Benefits, and she says when she jumped on board in June 2014, “it was a risk.

“When I updated my LinkedIn profile to show I was starting at Zenefits, I got pinged by several people who said, 'I can't believe you went there! Are you crazy?!'” she says. “Folks were very curious as to why I would make a leap like this.”

But Wakamoto-Lee says she knows a good thing when she sees one.

“I went from a five-minute commute to a cushy office right by my house to an hour-and-a-half commute into San Francisco because I knew this would be a once-in-a-lifetime opportunity,” she says. “There was no such thing as a tech startup in benefits.”

And, she concedes, “It was scary. I've taken the last 20 years to build my reputation in the Bay area as a broker and a consultant in the benefits arena, and I had to think, am I willing to risk that?”

She's happy with the decision she made, though.

“Folks like me who come from the traditional benefits brokerage world and bring our experience with us are extremely valued here,” she says. “I definitely spend less time on the phone having to deal with day-to-day employee-level issues because we have an entire support team that does that. One of the pieces that I didn't enjoy as much as a traditional broker was having to follow up on employee-level issues that would sometimes take time away from working with my clients on the bigger picture, but I knew I had to do that because employees were important to them. I have a whole team now, and I can tell a client, 'Your employee can get way more personal attention, one-on-one, with our support team, than I could give.' And that frees me up to work on a client level.”

She also says that one of the biggest myths she hears about Zenefits is that they don't have consulting resources for clients.

“We do know what we're doing here,” she asserts, “and because we know what we're doing, we're attracting more and more folks who understand that, yes, we are a tech startup, and our platform is amazing, but we definitely do consult for our clients, too.

“I'm able to focus on what I love to do best, which is consulting with my clients and helping them find a viable solution to whatever problem they have in the benefits they're offering their employees – whether it's cost or plan design or recruiting and retaining employees,” she continues. “I'm able to do that because the day-to-day, administrative headache side – I don't have to do that. We have a whole area of the company that's structured to take those things off my plate so I can work with more clients and do it better. I can download information straight out of our portal to analyze, pull apart and put back together to be able to present to clients.”

Conrad says that the benefits advisor position is one of the most crucial in his company, given the focus on client service, and that many of his advisors express similar sentiments.

“Most of the folks in the benefits industry got into this business because we wanted to help clients, to advise them and to be a trusted consultant and advisor around these difficult decisions that are genuinely confusing and complex, what plans to choose and how to structure benefits,” he notes. “But most brokers — that's not what they're doing most of the time. That's maybe 5 percent to 10 percent of your time. Most of your time, you're dealing with a twisted legacy of paperwork and antiquated technology and poor systems that have been left to us as an industry of producers and insurance agents.

“If you look at the people who are benefits advisors at Zenefits — they don't spend any of their time on that because the software handles it automatically,” he adds. “They can spend 100 percent of their days being trusted advisors to their clients around these difficult issues, which is why they got into the industry in the first place.”

Conrad credits his own experiences running SigFig, a startup he helped found before Zenefits, with his inspiration for what turned out to be his million-dollar idea. The company comprised about 25 people, and Conrad says, “we were always too cheap to hire anyone in HR, so we were doing all this stuff ourselves. I saw firsthand how painful it was – it wasn't just the insurance piece; it was all these different systems, like payroll and 401(k).

“The insurance is the most painful, by far, because it is the most backward of all of them, and it's the one stuck in 1986 with no technology to speak of,” he adds. “I understood that problem because it was the problem that I had – and the frustration I had – as a business-owner.”

“Parker has said before: 'If Zenefits were to fail, the reality is, we've completely changed the benefits industry for the better,'” Wakamoto-Lee says. “And I wholeheartedly agree with that because we've taken something that has been done the same way for decades, and we're doing it better and more efficiently.”

When she first met Parker, she says, although she'd seen video of her new boss, “My first thought was, 'Oh my goodness, my CEO is a kid. As I've gotten to know him, I call him the 'anti-CEO' because of his personality … If you were to walk into our office, and you didn't know what Parker looked like, and I told you to go find the CEO, I don't know that you'd be able to find him. He doesn't elevate himself above us; he doesn't have a corner office with a view of the city; he sits at a desk just like the rest of us.

“One of his mottos and values for our company is 'radical transparency,'” she adds. “So when I sit down with Parker and have a little bit of a complaint, he listens, he asks good questions, and sometimes we banter back and forth about how we should move forward, but he doesn't discount what I say, and he takes into account that I have been in the industry for decades and have been doing this for a long time, I might have a perspective he hasn't thought of.

“He's real,” she concludes.

Of course, the expansion Zenefits has undergone over the past months hasn't been without growing pains. Last year, the Utah Insurance Department told the company it needed to charge a “fair market value” for its cloud-based HR software – and it was obvious the entity objected because Zenefits poses a significant threat to traditional Utah benefits brokerages. The Utah Insurance Department deemed the free access to the software a “rebate,” arguing that offering the software for free to employers was essentially an attempt to sweeten any benefits deals made with them.

However, because there's no requirement to sign up for insurance in order to use the third-party software, in February, the Utah House and Labor Committee voted in favor of a bill that would clarify the “anti-rebate” issue and allow Zenefits to operate in the state.

“I think those kinds of regulatory problems are mostly blips,” Conrad says. “We understand the anti-rebating laws in every state and are extremely careful to make sure Zenefits is in compliance with them 100 percent.

“When this happens, it's not really at its heart a legal issue – it's really a political issue,” he continues. “Brokers have gotten together and are seeking to protect themselves from competition using the state regulatory framework. The anti-rebating laws are an excuse – it's not really what's going on.

“I have a lot of confidence that we're going to prevail on any anti-rebating issues if they happen anywhere else – but it also makes me kind of angry, to be honest,” Conrad adds. “I look at it as: I'm playing by the rules and building something that's much better for businesses. I understand that it's really hard when folks lose business. I don't like losing customers myself. But seeking that kind of regulatory relief is not the ethical way to play the game. People are putting on their black hats and crossing over to the dark side when they take those steps.”

And although Conrad doesn't quite subscribe to the “no such thing as bad press” adage, he does note that anti-rebating suits like the one in Utah can backfire on brokers.

“There's been a lot of press in Utah about how Zenefits is getting banned in the state because it's such a great service that local brokers can't compete with it,” he points out. “What happens is, local companies read about us and want to check Zenefits out. These efforts end up backfiring because they educate the population of businesses about what we do and how great our service is.”

Other issues he's faced, though, have been the kind of problems a growing business has in only the best of circumstances.

“It's really hard to build a company – and really hard to build a company at the scale at which we're doing it – with as little time as we have to do it,” Conrad says. “I expect that we'll have more than 2,000 employees by the end of the year. That growth and headcount is matching a growth in demand and a growth in revenue, but it's hard to scale the business out that quickly. And a lot of companies say that kind of growth is hard to do well, but most of the time, that kind of growth is happening over several years instead of in one year.”

And Conrad also notes there've been many, many moments that keep him moving forward with the startup.