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Sacks was appointed CEO of the company following scandals over unlicensed employees
On Monday, Parker Conrad, founder and CEO of Zenefits, resigned from his position following months of bad press, and possible scandals. He was replaced by Yammer founder David Sacks, who was also the first Chief Operating Officer of PayPal, and a member of the PayPal mafia.
In other words, Sacks has been around a while, and in a blog post about his new position, he did not mince words, blasting the company, and his predecessor, for what has gone over there recently.
"I believe that Zenefits has a great future ahead, but only if we do the right things. We sell insurance in a highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die," he wrote.
"The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong."
Founded in 2013, Zenefits offers cloud-based software as a service to companies for managing their human resources, with a particular focus on helping them with health insurance coverage.
It was named the fastest growing company in Silicon Valley in 2015, and it raised over $583 million, including a $500 million round at a $4.5 billion valuation in May of last year.
Recently, though, reports had begun to surface that the company was employing people to sell health insurance, even though they were not properly licensed to do so, resulting in many of its sales being essentially invalid.
Around the same time, Fidelity cut the value of its shares in Zenefits by 48 percent.
So the writing has been on the wall for Zenefits and Conrad for some time. Now it's up to Sacks to do something about it, and he is wasting no time in making moves to shore up the company's image, announcing that he has appointed Zenefits' first Chief Compliance Officer, former federal prosecutor Josh Stein.
The company has also been undergoing an independent audit since December.
Again, Sacks was blunt about what he sees as the reasons for everything that went on under Conrad's leadership, pointing to a "culture and tone" that "have been inappropriate for a highly regulated company."
"Zenefits’ company values were forged at a time when the emphasis was on discovering a new market, and the company did that brilliantly. Now we have moved into a new phase of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders," Sacks wrote.
"As an entrepreneur myself, I know that Zenefits can never lose its innovativeness and willingness to experiment. But at the same time, I believe a new set of values are necessary to take us to the next level."
For him that means having integrity, putting the customer first and making Zenefits a great place to work for employees.
"I’m making my first actions as CEO about culture and values because I believe these things are fundamental to a company’s success and who we are and want to be. I want to push down decision-making ability into the company. Culture and values enable us to do that by ensuring that everyone is aligned around the right goals."
One thing is for sure: Sacks is wasting absolutely no time at all in trying to whip his new company into shape.
CEO turnover in 2016
There was a lot of CEO turnover in 2015, and so far it looks like 2016 is going to be no different. The first month of the year is not even over and already a slew of big companies already have new faces in charge.
In addition to Zenefits, mobile messaging app Tango announced that it was replacing its longtime CEO Uri Raz with co-foundr and CTO Eric Setton. After that Indian e-commerce company Flipkart revealed that Binny Bansal, its COO and Co-founder of Flipkart, will become its Chief Executive Officer.
Digital sports blog Bleacher Report also got a new CEO in Dave Finocchio, who had previously been in charge of the company in 2013, before stepping back from day-to-day responsibilities in 2014.
Slava Rubin, founder and CEO of Indiegogo, also let go of his position, becoming the company's Chief Business Officer instead.
(Image source: dealbook.nytimes.com)
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