(public).sospep.subjects ~ view article ~ zenefits

<h1 style="text-align: center;">zenefits</h1>
<h2>[WHAT]</h2>
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<li>] By Claire Suddath and Eric Newcomer @Bloomberg.com - a16z backed startup making HR software implodes with its own HR problems, founded in 2013 by parker Conrad, paypal mafia David Sacks joined as COO in 2014, details on how this unicorn ...</li>
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<h2>[WHY]</h2>
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<li>]&nbsp;analysis - startup company -</li>
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<h2>[WHERE]</h2>
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<li><strong>] READ THE FULL ARTICLE</strong></li>
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<li>]&nbsp;<a href="http://www.bloomberg.com/features/2016-zenefits/" target="_blank">http://www.bloomberg.com/features/2016-zenefits/</a></li>
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<h2>[WHEN]</h2>
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<li>] 2016-05-09</li>
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<h2>[EXAMPLE]</h2>
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<li>] <strong>idea</strong> for zenefits came from personal issues dealing with health insurance benefits</li>
<li>] Before a company in the U.S. offers health insurance to its employees, it has to comb through thousands of plans offered by hundreds of insurers, and then select the two or three options that best suit its employees, based on age, marital status, and location. The smaller the business, the less likely it is to have someone with enough time to sort all that out. &ldquo;We have 10 employees. We&rsquo;re not big enough to have an HR department,&rdquo; says Scott Yates, founder and chief executive officer of BlogMutt, a content service startup based in Boulder, Colo. &ldquo;We can&rsquo;t do this on our own.&rdquo;</li>
<li>] <strong>business model</strong>&nbsp;= free software, rev from commisions on insurance plans companies purchased</li>
<li>] Zenefits launched in April 2013 through startup incubator Y Combinator. Conrad had recruited one of SigFig&rsquo;s top engineers, Laks Srini, to be his co-founder, and he expanded Zenefits&rsquo; scope to include payroll, 401(k)s, Cobra, offer letters, and other HR-related chores</li>
<li>] grew from 15 employees to 1,600 in three years; raise $580 million in three fundraising rounds; and become one of Andreessen Horowitz&rsquo;s biggest investments. Last year it was valued at $4.5 billion, which made it, in Valley parlance, a &ldquo;unicorn&rdquo; several times over.</li>
<li>] &ldquo;There&rsquo;s a low-level panic that suffuses the organization, a constant pressure to keep moving faster and faster and faster.&rdquo;</li>
<li>&nbsp;] &ldquo;My dentist said they couldn&rsquo;t run my insurance claim through, and it took three months to get someone at Zenefits to fix it,&rdquo; says Brittany Keppel, a former office manager in Brooklyn who also had trouble getting Zenefits to sign her up for Cobra when she was let go from her job in January 2015. BlogMutt&rsquo;s Yates says he deals with Zenefits problems every few weeks: &ldquo;Names appear in records incorrectly. Dates are wrong. I don&rsquo;t know where the breakdown is, but the biggest problem is there&rsquo;s no quality check.&rdquo;</li>
<li>] This was the mess Sacks encountered when he joined Zenefits in December 2014. He showed up on his first day to find that he didn&rsquo;t have a desk or a computer. Head count was approaching 500 employees, but the office management company didn&rsquo;t have an office manager. There wasn&rsquo;t even an IT person to fix the printers. Conrad hadn&rsquo;t forgotten to fill these positions. The way he saw it, Zenefits was full of gifted engineers; if their computers weren&rsquo;t working, they should be able to fix them. Of course, time spent futzing with the Wi-Fi was time not spent building the product or dealing with customers. To Conrad, that just meant the engineers needed to work harder. &ldquo;I guess the way I saw the chaos at that point was that it was undesirable,&rdquo; Sacks says, &ldquo;but if there was none of this, then there wouldn&rsquo;t be a need for me to be at the company.&rdquo;</li>
<li>] Conrad worked closely with Sam Blond, Zenefits&rsquo; trim, tanned vice president for sales, who liked to party. When their team closed a big account, Blond and Conrad poured shots for everyone in the office. Zenefits had kegs in its office.</li>
<li>] Most of Zenefits&rsquo; problems remained internal. Investors couldn&rsquo;t see them. Those they could see seemed fixable&mdash;as demonstrated when Sacks flew to Salt Lake City and stood behind the Utah governor while he signed a law allowing Zenefits to operate in the state. In May 2015, six months after Sacks joined the company, it raised $500 million in a third fundraising round, at a valuation of $4.5 billion. Zenefits also said it would quintuple annual recurring revenue, to $100 million, by the end of 2015.</li>
<li>] &ldquo;They told me that they were expanding so fast that once a month had gone by, I was guaranteed to move up,&rdquo; says Aaron Semaan, 28, who joined as an entry-level sales rep in April 2015, making $35,000 a year.</li>
<li>] But, as the company has publicly acknowledged, not all Zenefits brokers had passed their tests. &ldquo;I was giving [clients] to people who didn&rsquo;t have their insurance license,&rdquo; Semaan says. &ldquo;They were selling insurance illegally. Like, it was really illegal.&rdquo; He says that one woman worked at Zenefits as an account executive for four months without passing her exam. &ldquo;I had multiple talks with my boss about it. I would tell him, &lsquo;I don&rsquo;t think it&rsquo;s fair or right for me to be setting people up to make these sales when they don&rsquo;t even have licenses.&rsquo;&thinsp;&rdquo; His boss didn&rsquo;t respond to interview requests</li>
<li>] Zenefits had hired Cooley, a law firm, along with consulting firm PwC, after BuzzFeed published a series of articles about Zenefits&rsquo; use of unlicensed brokers. Washington state&rsquo;s insurance commissioner had already opened a formal investigation into the company; according to BuzzFeed, 83 percent of all Zenefits sales in the state were made by unlicensed brokers. The company could be fined as much as $20,000 for each violation. If this were true in other states, Zenefits was looking at millions of dollars in fines.</li>
<li>] The lawyers laid out a more damning situation. In California, they found, some of the sales team used Conrad&rsquo;s macro to systematically cheat on the state&rsquo;s training course, which included a section on ethics.</li>
<li>] Conrad resigned from Zenefits on Feb. 8; since then he&rsquo;s spent part of his time at home binge-watching Star Wars: The Clone Wars, according to a friend. A person close to Conrad says he regrets resigning and is already working on a new company.</li>
<li>] Sacks became CEO and is guiding Zenefits through its crisis cleanup. He has banned alcohol at the office and changed the company motto from &ldquo;Ready. Fire. Aim.&rdquo; to &ldquo;Operate With Integrity.&rdquo; In February the company laid off 250 employees, including the enterprise team.&nbsp;</li>
<li>] Fidelity Investments, which owns a stake, has slashed its valuation of Zenefits from $4.5 billion to less than $2 billion. There are rows of empty desks at the San Francisco office; the company plans to downsize from four floors to three.</li>
<li>] And yet, despite his downfall, Conrad is still a coveted name in Silicon Valley. People want to meet the man who created a $60 million company in just three years and made good on his promise to shake up the insurance industry. Dalgaard says he&rsquo;s been getting e-mails from people eager to work with Conrad since the day his resignation went public.</li>
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<h2>[HOW-TO]</h2>
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<li>]</li>
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<h2>[REFERENCE]</h2>
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<li>] SRC=hn(275)/<a href="https://news.ycombinator.com/item?id=11659828" target="_blank">comments</a>(219)&nbsp;</li>
<li>] <a href="https://www.buzzfeed.com/williamalden/zenefits-under-scrutiny-for-flouting-insurance-laws?utm_term=.ffOl7AQ4Pj#.akegXnkGpA">https://www.buzzfeed.com/williamalden/zenefits-under-scrutiny-for-flouting-insurance-laws?utm_term=.ffOl7AQ4Pj#.akegXnkGpA</a></li>
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<h1 style="text-align: center;">&nbsp;</h1>

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