Looking Back At The Crazy Roller Coaster Ride of Zenefits
Back in 2015 it seemed as if there was nothing that could halt the success of Zenefits. The start up firm was one of the biggest companies in Silicon Valley and it had grown at a rate that no one had really seen before. Zenefits offered free management software to companies in return for them acting as the insurance broker for that company.
It did not take long for stories to emerge about the partying that would take place in the office when a new client was signed or a particularly good deal was made. This was well-known to the co-founder and CEO of the time Parker Conrad who also joined in with these celebrations on a regular basis. Many people at the firm understood why these successes meant so much to Conrad. He had a troubled childhood and was also diagnosed with testicular cancer when he was a young man. He overcame the disease but it did mean that he became a firm believer in living for the moment.
One person who was notable from these parties by their absence was the COO, David Sacks. Sacks first became involved in the firm as an investor before taking on the role of COO. When he was hired there were rumors that he had been brought into the company to keep Conrad in check but this was something that both men denied. Their two roles were very different and though at first they seemed to get on well, the relationship started to sour because Sacks believed the focus should be on small companies not big business.
The disagreement between the two men may have started as a dispute about the sort of clients they should be going towards but it certainly did not end there. Sacks also believed that the company was growing too fast and that they should slow down when it came to hiring new employees. Sacks had already stopped hiring people in operations and believed that the same approach needed to be taken in sales.
Disagreements also started to arise between the firm and their employees. In the later part of 2015 all employees were told that all their annual leave would have to be cancelled. They were also not happy about the clawback policy which stated that if a client were to cancel in the cooling-off period, the salesperson would have to pay back the commission they had earned.
By 2016 it seemed as if the firm was in complete disarray. They began to be investigated for selling insurance in states where they did not have a license. Many of the employees that the company hired had a background in tech, not insurance. Some of them were told that they did not need a license as they were all covered under the umbrella of Conrad Parker’s license. Others were told that managers that held licenses would listen in on the calls and that this met the licensing requirements. However, none of this was true and an investigation into the company was launched.
Conrad was blamed for a lot of the problems and he left the company as a result. However, many people wondered why Sacks hadn’t taken action with some of the obvious problems in his role as COO. Nevertheless, the decision to make him CEO after Conrad’s departure was unanimous among the board and there were even rumors that Conrad himself made it known that he wished Sacks to replace him.
Since Sacks completed reinvented the way that Zenefits does business they are not making as many headlines any more but they are still in operation. They no longer offer any free packages but they are still competitively priced. They allow their customers to build a package that suits them so that they only pay for the services that they need.
Leadership also became more steady under Sacks and some of this could be because of the experience he has in working for large companies. He was the COO of Paypal before it became a household name and he also was the co-founder of Yammer which he eventually sold to Microsoft for $1.2 billion.
The role of CEO was handed over to Jay Fulcher in 2017 and since then the company has continued to grow. It has come a long way since the days when drinking shots at work was not only deemed acceptable but also actively encouraged.