Last updated: February 24, 2023
ZeroChaos, founded in 1999, was a little-known company that I first became interested in years ago. They provided contract employees (or “contingent workforce solutions”) for Uber, Google, IBM, and many other large companies.
My interest and reason to write this article is that my old company Museum Hack started to receive a lot of applicants for our remote positions from people who had previously worked for ZeroChaos.
But who is ZeroChaos? And what did they do? Could their former employees be trusted?
Keep reading to see a collection of my notes and links from research online.
ZeroChaos Company Timeline
- 1999 – Founded by John Riley and Mark Lowrey
- 2000 – They took $1.8M in venture funding, details undisclosed
- 2001 – Harold Mills joined the company as executive vice president, and their sales jumped from $700k to $48M in one year after Mills joined
- 2005 – Harold Mills, AP Capital Partners and approx 16 other angel investors purchased ZeroChaos from John Riley and Mark Lowrey for an undisclosed amount
- 2010 – ZeroChaos reports annual revenues of $664M
- 2011 – Purchased by Snow Phipps, a NY private equity firm for over $200M
- 2015 – They were showing annual revenues of $3B, and Harold Mills stepped down as CEO and took the role of Vice Chairman of the board
- 2019 – Rebrand to Workforce Logiq in January
- 2023 – Magnit is the company name today, after a merger (or acquisition?) of Workforce Logiq
This was their old logo:
Between 1999 and 2001, ZeroChaos had sales of only $700k and probably no profits to show for.
This all changed in 2001 when Harold Mills came on board as the Executive Vice President.
Harold Mills and ZeroChaos
Harold Mills came on board in 2001 as Executive Vice President and in one year sales jumped from $700k to $48M dollars. That is an increase of 68x. Absolutely incredible!
In 2005, Harold Mills decided to purchase the company and recruited AP Capital Partners and several angel investors to put together the money to purchase the company outright from John Riley and Mark Lowrey.
Over the next 10 years under Harold Mills’ leadership, the company continues to grow at an incredible rate. Today they are showing over $3B in sales. You read that right, THREE BILLION DOLLARS – and you have probably never heard of them before you read this article.
Harold Mills’ Secret Sauce
This is by no means the only strategy that Mills used to turn the company around, but I found this sales technique especially compelling.
According to this article:
Their first large customer was EDS (Electronic Data Systems). Part of Mills’ strategy was to ask them to pay ZeroChaos what they were being charged by their lowest-priced competitor, a price Mills knew they could beat. Then they created a schedule, comparing what that rate was versus what ZeroChaos would have charged. Then, to sweeten the pot, ZeroChaos would give back to EDS, every month, a check for the difference. The first month it was around $5,000, then it grew to $10-$15,000 and within 18 months, Mills was flying to Dallas to deliver a monthly check for $250,000. Mills said, “We had to come up with ways to demonstrate value to a customer and showing up every month with a check was pretty effective.”
“We started off small and proved ourselves; then those companies became a great customer reference which opened doors to others,” Mills explained. “When you deliver checks each month, your customers sell for you. I could say to a potential client, ‘You’re fighting with a handgun, but EDS is fighting with a bazooka’…That has an impact.”
What a brilliant and bold move. Who is this Harold Mills, and where did he come from?
I will definitely have to explore the life of Harold Mills in a later section or post. I’m loving this guy.
ZeroChaos and Uber
Formerly, Uber contracted ZeroChaos to run their Customer Service department.
Originally, Uber hired their own Customer Service department. At some point they decided to outsource their Customer Service department to ZeroChaos. From what I have read, Uber made it seem like it was just a simple change of who held the employment contract. They sent contracts with limited information to their employees and they promised benefits, flexible schedules, and opportunities for full time employment direct with Uber in the future.
The scheduling was managed by an odd “shift system” in which shifts would be posted weekly, and employees would wait eagerly to try to get decent shifts the moment the shifts were posted. Anyone who was a few minutes late to pick up shifts would end up with the bad shift times.
One CSR said “It was like the scene in The Hunger Games where all the players are dropped in and there’s absolute chaos trying to get supplies they wanted. That was what it was like every week to pick shifts.”
These promises were unfounded. Many of these employees were terminated by ZeroChaos with just an email that read “your contract has ended.” Since that time, I believe that Uber has completely changed how their customer service department is handled and made big improvements.
ZeroChaos and Google
Most people who apply to work our remote jobs at Museum Hack have done ZeroChaos work for Google. Through my research it seems that Google contracts with ZeroChaos to provide thousands of “ad reviewers” for Google Ads.
Whenever an ad is posted to Google, it must be reviewed for accuracy, completeness, relevancy, and appropriate content. ZeroChaos employees are the people who review these ads.
ZeroChaos pays $15 per hour, and uses the same type of shift scheduling system that seems to drive the employees crazy. (Sometimes referred to as “eBay for people.”) Every day as ads get posted, ad review shifts get posted by ZeroChaos and thousands of people are waiting for them to appear so they can clock some more hours.
These ad reviewers often complain that they are given little to no guidance or oversight. They also complain that their contracts can literally end at any time with just a short email stating that “your contract has ended.” This makes for a very unstable work environment for these individuals.
To be fair, I don’t really blame ZeroChaos for this. They are probably just doing what their client asks of them and doing their best to create jobs when work is available.
ZeroChaos: Is It a Scam?
Short answer: No.
When ZeroChaos launched, its original business model was to provide a “shell company” for 1099 contractors to work for/through. They offered to handle taxation, invoicing, collecting payment, benefits including a 401k and other services.
In 2001, TechRepublic posted an article about their business model.
Their original sales pitch went something like this:
“Downtrodden freelancers! There is no impending doom with ZeroChaos,” promises one of the site’s pages. “Evils such as administrative paperwork, insurance nightmares, and do-it-yourself tax reports are now crushed. With ZeroChaos, you work when, where, and how you want with nothing shackling you down.”
They were known as a shell company or W-2 processor company. I found an old forum conversation that freelancers had in which they seemed to think it was a scam to skim money from the freelancers’ pockets. The business model was flawed as evidenced by the fact that their sales were quite low while operating under this business model. But as far as I can tell, ZeroChaos had pure intentions. Everything was legit.
Juicy Gossip
I spent several hours trying to dig up some juicy gossip about ZeroChaos. I figured that a megalith multi-billion dollar company must have made some major misstep at some point or tried to cover up some scandal.
But as far as I can tell, this company is squeaky clean! I was completely surprised to find that there really has never been any negative press around them.
I found two minor tidbits of gossip:
- They had a minor worker classification blunder back in 2010. According to this article: ”The U.S. Department of Labor’s Wage & Hour Division has recovered $61,191 in back wages for 81 employees of APC Workforce Solutions, doing business as ZeroChaos.”
- An employee on Glassdoor accuses ZeroChaos of providing more work to younger employees and states that “some raters have filed EEOC age discrimination complaints.” As far as I can tell, nothing has come of this publicly.
Screenshot of a Glassdoor review for ZeroChaos
This incredibly successful company’s worst “scandal” that I can find was basically an accounting error for $61k that was repaid to employees in full.
How many multi-billion dollar companies have managed to grow at an incredible rate like ZeroChaos and managed to stay almost entirely out of the press? I imagine the number is very small.
News about ZeroChaos
- Press release about Performance Excellence Program and Proven Performers Designation Of their list of netPolarity, Mindlance, Login Consulting, Latitude 36, KForce, etc – I assume these are staffing companies who refer candidates to ZeroChaos, and they each get a commission when ZeroChaos hires one of their people?
- ZeroChaos Opens India Office (Twitter video)
- This article references “Uber’s invisible contract workers” and ZeroChaos … “the company’s customer support operation can be similarly cutthroat and contingent, according to BuzzFeed’s Johanna Bhuiyan. Members of the company’s customer support representative team, which fields user complaints and inquiries, worked remotely on renewable, six month contracts and were at first considered “normal, full-time employees,” according to one worker. “But when the first contract period ended, Uber did not renew,” Bhuiyan writes. “Instead, it asked its first CSR team to sign contracts with ZeroChaos, a workforce management company.”
- BuzzFeed report – Contracts And Chaos: Inside Uber’s Customer Service Struggles
- Uber reply to BuzzFeed report: The reality of customer support at Uber
- Dec 2015: ZeroChaos CEO steps down
Acquisition by Snow Phipps Group
- Purchased in Dec 2010 from AP Capital Partners, “acquiring Orlando-based ZeroChaos from AP Capital Partners in December for more than $200 million” perhaps using financing from a business development company.
- List of investments by Snow Phipps Group
- Incepture acquisition for ZeroChaos, listed on SPG site: Title is incorrect but looks like SPG funded this as part of consolidation + growth for ZeroChaos?
“ZeroChaos was once Central Florida’s largest locally based, privately held firm until New York private equity firm Snow Phipps Group bought a majority share of it. The company has more than $3 billion in annual revenue, operates in 45 countries and has more than 100,000 contingent workers.” source
AC Capital Partners: Timeline
Sometime in 2004 or 2005, ZeroChaos started talking to APCP. Not sure if they sold entirely, minority, or a majority stake. Great timeline on their website, which includes:
- Jul. 2005: ZeroChaos (ZC) ousts industry leader, Manpower, for $150 million IBM contract, world’s #1 procurer of IT labor.
- Oct. 2005: ZC makes the Inc. 500 list of the fastest growing US companies, ranking at #71 overall and #3 of 32 in the Human Resource Outsourcing sector.
- Jan. 2006: ZC acquires New York-based FlexCorp Systems, an +$80 million provider of strategic payrolling and management solutions for contractor workforce; FlexCorp ranked #119 on the Inc. 500 listing.
- Jan. 2007: ZC quadruples revenue in 2 years and adds major global Fortune 500 clients.
- Jan. 2008: ZC achieves fourth straight year of record earnings with major expansion globally driven by client demand, even within the context of a dramatic decline across the industry.
- Jan. 2009: ZC achieves record earnings for a fifth straight year in a row amidst industry-wide declines and global credit crisis.
- Jan. 2010: ZC continues delivering record earnings and acquires 3 new firms, adding RPO, screening, and healthcare industry experience.
- Dec. 2010: ZC achieves approximately $1B in gross revenue. APCP sells ZeroChaos to Snow Phipps Group, delivering a 16.2x to LP’s in 6 years as per their investor relations department.
Crowdsourcing Solutions
I think there’s a lot more to research here, and I believe there is something really significant and special to ZeroChaos (some unique selling point for them). More info here on SpendMatters.
ZeroChaos Today
Today, ZeroChaos has more than 500 internal employees in more than 40 countries and manages more than 100,000 workers worldwide.
At the time it sold in 2011, ZeroChaos had grown to become Florida’s largest minority-owned business, one of Central Florida’s largest privately held firms, and a global player in the temp-workforce business.
Conclusion
This is a big company and they are only getting bigger.
Especially after Covid-19, with more and more work shifting remote. Today they are known as Magnit. I’ll update this if I find more info.