Mar 16, 2016
The inside story of Zenefits - Business Insider
Sad to say, but in startup culture this behavior is rampant. Regulations take a back seat to growth EVERY TIME. What's even sadder is that when they are caught, they are politely told to stop doing it and further punishment is rare. The risk and magnitude of the repercussion is always minute compared to the potential growth opportunity.
Until regulators step up and enforce the laws - nothing will ever change.
Zenefits sets an example of everything that is wrong within this industry. Money talks, and when you become a billion dollar company overnight - regulators see you more as a future employer or campaign sponsor than an actual entity to be held accountable.
I agree. Too many regulators are shirking their duty and not protecting consumers. Another area is the failure to properly vet policy forms. The marketplace is rife with auto insurance policies with more exclusionary holes in them than Larry the Cable Guy's underwear. Likewise for CGL policies in the construction industry. Some of these policies are illusory.
Another new in-depth article on "self-disrupting" Zenefits from BloombergBusinessweek.
A couple of excerpts:
In California, they found, some of the sales team used Conrad’s macro to systematically cheat on the state’s training course, which included a section on ethics. “As far as a company doing what Zenefits has done, I don’t know that we have seen this before,” says Nancy Kincaid, press secretary for the California Department of Insurance, which has also opened an investigation. In March, Massachusetts’ division of insurance opened a third. Zenefits confirms that other states have since followed but won’t say which ones or even how many.
Sacks became CEO and is guiding Zenefits through its crisis cleanup. He has banned alcohol at the office and changed the company motto from “Ready. Fire. Aim.” to “Operate With Integrity.” In February the company laid off 250 employees, including the enterprise team. Sales Vice President Blond, Semaan’s boss, and any executive or manager known to have helped disseminate the macro are also gone. Zenefits says it has self-reported the findings of its internal investigation to all 50 states and is working with those that have opened formal inquiries. 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. The Star Wars-themed conference rooms will soon be renamed after inspirational entrepreneurs. Kegs have been replaced with cold-brew coffee. The stairwells are condom-free.
Zenefits Was the Perfect Startup. Then It Self-Disrupted
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