A top Sand Hill Road private-equity firm stopped backing generic payroll companies and now invests only in vertical-specific ones. Their reason: general payroll faces brutal competition, but a specialized solution can dominate its niche and "slaughter" competitors.
One of the most recent calls was from one of the largest tier 1 private equity firms in the world. And they said, we are not investing in general payroll companies. We will only invest in a verticalized payroll company. And why? You got to think, why would they say that? Well, a general payroll business is way too hard to compete. There's too much competition out there. But verticalized, you can slaughter everybody. Okay, so, and that's from, again, the really, really smart money out on Sand Hill Road, so.
