4 ms·

Zenefits confirms 250 layoffs, 17% of company workforce

132 points by stygiansonic 11y ago

tarr11 11y ago
We are using zenefits and gusto right now. Gusto is pushing to switch for benefits management, but it's a bunch of work. I feel a little gross about staying with zenefits after hearing about their company, but it's mostly free and seems to work. They are also offering some other services like 401k, shift management and stock options planning. I'm sure at some point I'll consolidate on one of these platforms, but right now they don't seem stable.
- taway_20160226 11y ago
  I don't know if I am alone in this but I have had job offers where the deciding factor on yes/no from my perspective was whether the company uses Zenefits. Everyone I have spoken to on the subject has at least one horror story, and this was prior to the recent revelations. Add that to the general behavor of the company and the employees. Although the CEO "took the fall" for it, it simply cannot be the case that everyone else is blameless - the culture there is rotten to the core. Andreesen Horowitz, and Lars Dalgaard in particular should shoulder much of the blame for encouraging business practices which are shady at best and downright illegal in all probability.
  - rconti 11y ago
    Meanwhile, ADP is an absolute joy to use. clicks 80 times to add 8 hours of PTO for each day of the 10 days I'll be on vacation Nevermind, I can't actually do that because my account NEVER FUCKING WORKS. Between portal and ipay, the passwords at least used to be shared, even though you had to reset it literally every time you use the site. Now they're not even shared, you need to contact your HR department to get it reset, and even once you DO set a new password, it doesn't work. Talk about a dumpster fire of a company. Other than the website, I don't get why a normal employee would care about the difference between providers. What does one do with Zenefits that's so painful? Literally all I ever want to do is see pay statements and enter PTO. ADP's Oracle Forms implementation is a special circle of hell, so I don't really see how it could be worse.
    - x0x0 11y ago
      well, I'm 7 emails and 4 phone calls (on two of which those assholes hung up on me) deep into trying to get zenefits to approve a commuter parking reimbursement, including having to send screenshots of the submitted claim in their system to one of their employees because he couldn't see it. And I still don't have my money. Also, apparently I was rude to the supervisor I spoke with two days ago. Yet somehow their behavior -- wasting my time and repeatedly hanging up on me while on hold -- is totally cool.
justinzollars 11y ago
Sad news. Sorry if you were affected by this.
jtouri 11y ago
This is too bad, I feel sorry for the company in a way. This was a company I kept up with because it was fun seeing their growth. I didn't see the negative side of the culture until after Conrad stepped down and all hell broke loose.
timrpeterson 11y ago
How does a company, especially a nascent one like Zeenfits, survive in a space when they've suffered this type of hit? An industry all about trust and conservatism and a company playing fast and loose with the rules? Can it work out?
- tallanvor 11y ago
  They could survive. My guess is they'll basically focus on retaining as many current customers as possible, get through any investigations about their practices, and hope that once those are finished people will mostly have forgotten about what happened and be willing to give them a chance if their product is on par with others out there.
stygiansonic 11y ago
From the CEO: "These changes are almost entirely in the Sales organization, with about a dozen employees in Recruiting."
- w1ntermute 11y ago
  I wonder how many of them were thrown under the bus for cheating on the insurance broker licensing exam using Conrad's script.
  - JonFish85 11y ago
    In that case, I wonder if they'd have any luck with suing him, or if the onus is entirely on them for having used it? Not being a lawyer, I'd imagine this would be a civil case where they'd go after his money / stock.
    - FireBeyond 11y ago
      Doubtful. Even if they could claim they were 'pressured' into doing so, there was no real coercion - they made the choice to not go through the process.
kylestlb 11y ago
Layoffs are never fun... sad :( For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?
- pkaye 11y ago
  Some possibilities are: 1. They have been trying to automate their sales infrastructure so less staffing needs. 2. Business is down but they feel confident to work on the product development.
  - gravity13 11y ago
    Or a "Sales ALL THE THINGS" manic ex-CEO, who used massive rounds of funding to hire uncontrollably fast, was replaced by a more product-oriented one.
- trjordan 11y ago
  Zenefits is a classic enterprise sale, meaning you staff the sales team at: # of reps X average quota = expected sales. The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could. Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.
  - w1ntermute 11y ago
    Why exactly is it so hard to hire engineers as opposed to sales people? Isn't it just as hard to find a 10x sales person as a 10x engineer?
    - braythwayt 11y ago
      Without commenting on the possibility that 10x engineers exist, I can tell you from experience in sales that 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire. The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation. Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?
braythwayt 11y ago
> Human resources and insurance software startup Zenefits > has announced that 250 employees are being made redundant, > representing 17 percent of the company’s workforce. Before "being made redundant' became empty buzzspeak, it had a very specific meaning: When things are restructured in such a way that two people end up doing the same job, one becomes redundant. For example, if you have an in-house recruiting team, and you become aqui-hired by BigCo, they may decide that all recruiting will be handled by their existing team, and your recruiting team becomes redundant. Notice that the job to be done is still there, it's just that the company has more people doing it than necessary. But in this case, the company is laying off a lot of its sales force and recruiting team while mumbling further content-free buzzwords about refocusing its strategy. Meaning, they aren't growing any more, so they won't be selling as much or recruiting as much. The job to be done is no longer there. Therefore, those aren't redundancies, those are layoffs, pure and simple. The distinction is important, because "redundancies" can arise as you grow (e.g. acquiring), but "layoffs" imply that the engine is sputtering. Eliminating redundancies is a matter of optimization. Laying people off is a matter of scaling back your ambitions. The company is obviously trying to spin this, and VentureBeat is regurgitating their press release word-for-word without any editorial oversight whatsoever.
- Retric 11y ago
  Not necessarily. If MS decides to build Windows 12 from the ground up they may have a separate team work on Windows 11. After that project is done most of the Windows 11 team would be redundant. Edit: They even did something like this with NT 4.0, ME, and XP. Similarly, if a catalog transitions to a website once that's done the legacy catalog team could simply be redundant.
  - braythwayt 11y ago
    "Redundant" is not a pure synonym for "unnecessary" or "obsolete," and in business-speak it used to have the meaning I shared above. It used to arise a lot in mergers, where "efficiencies" arose by consolidating functions and making entire departments "redundant." If buggy-whips were to disappear as a business because Buggy 2.0 (a/k/a the automobile) comes along, it was not commonplace to say that buggy -whip manufacturers or their employees were "redundant," but to say they were "obsolete." That seems closer to the Windows 12 vs. Windows 11 teams analogy to me.
eldavido 11y ago
It irritates me that engineers never get laid off. This means companies still view their engineering workforces as "scarce" and hard to get, because they aren't paying market wages. Why is it only sales that gets the ax?
- asadlionpk 11y ago
  Here is what may be the reasons: - Because sales team is more easily replaceable than core engineering team. - There is less any redundancy in engineering team when compared to sales. - Zenefits is reducing their sales operation.
- jsprogrammer 11y ago
  Sales has probably gone through the pipeline of customers and engineering is probably still working on building out everything that was promised to customers?
- dragonwriter 11y ago
  The license requirement cheating (in one jurisdiction) and outright selling without a license (in other jurisdictions) were problems occurring in Sales (which may implicate some problems in Recruiting, as well.) I don't recall any of their problems being traced to engineering. So, while these are for PR purposes styled as redundancies, I think its at least worth considering that it may be more of a purge of the problem parts of the company.
- aliston 11y ago
  I can't tell if this is sarcastic or not, but there have been lots of engineering layoffs as well. Twitter and Yahoo, for example.
- mwnz 11y ago
  Why do you assume they aren't getting paid market wages? Your statement, in a way, is contradictory. Engineers are perceived as scarce, but they aren't paid market wages.
jeffehobbs 11y ago
See you guys in the stairwell.
- Scalability 11y ago
  Meet me in the well. It's going down.
brightball 11y ago
I wonder if that has anything to do with the success of Benefit Focus?
erichurkman 11y ago
If any of the layoffs were in the engineering groups, drop me a line.

132 points by stygiansonic 11y ago

We are using zenefits and gusto right now. Gusto is pushing to switch for benefits management, but it's a bunch of work. I feel a little gross about staying with zenefits after hearing about their company, but it's mostly free and seems to work. They are also offering some other services like 401k, shift management and stock options planning. I'm sure at some point I'll consolidate on one of these platforms, but right now they don't seem stable.

taway_20160226 11y ago
I don't know if I am alone in this but I have had job offers where the deciding factor on yes/no from my perspective was whether the company uses Zenefits. Everyone I have spoken to on the subject has at least one horror story, and this was prior to the recent revelations. Add that to the general behavor of the company and the employees. Although the CEO "took the fall" for it, it simply cannot be the case that everyone else is blameless - the culture there is rotten to the core. Andreesen Horowitz, and Lars Dalgaard in particular should shoulder much of the blame for encouraging business practices which are shady at best and downright illegal in all probability.
- rconti 11y ago
  Meanwhile, ADP is an absolute joy to use. clicks 80 times to add 8 hours of PTO for each day of the 10 days I'll be on vacation Nevermind, I can't actually do that because my account NEVER FUCKING WORKS. Between portal and ipay, the passwords at least used to be shared, even though you had to reset it literally every time you use the site. Now they're not even shared, you need to contact your HR department to get it reset, and even once you DO set a new password, it doesn't work. Talk about a dumpster fire of a company. Other than the website, I don't get why a normal employee would care about the difference between providers. What does one do with Zenefits that's so painful? Literally all I ever want to do is see pay statements and enter PTO. ADP's Oracle Forms implementation is a special circle of hell, so I don't really see how it could be worse.
  - x0x0 11y ago
    well, I'm 7 emails and 4 phone calls (on two of which those assholes hung up on me) deep into trying to get zenefits to approve a commuter parking reimbursement, including having to send screenshots of the submitted claim in their system to one of their employees because he couldn't see it. And I still don't have my money. Also, apparently I was rude to the supervisor I spoke with two days ago. Yet somehow their behavior -- wasting my time and repeatedly hanging up on me while on hold -- is totally cool.

justinzollars 11y ago

Sad news. Sorry if you were affected by this.

jtouri 11y ago

This is too bad, I feel sorry for the company in a way. This was a company I kept up with because it was fun seeing their growth. I didn't see the negative side of the culture until after Conrad stepped down and all hell broke loose.

timrpeterson 11y ago

How does a company, especially a nascent one like Zeenfits, survive in a space when they've suffered this type of hit? An industry all about trust and conservatism and a company playing fast and loose with the rules? Can it work out?

tallanvor 11y ago
They could survive. My guess is they'll basically focus on retaining as many current customers as possible, get through any investigations about their practices, and hope that once those are finished people will mostly have forgotten about what happened and be willing to give them a chance if their product is on par with others out there.

stygiansonic 11y ago

From the CEO: "These changes are almost entirely in the Sales organization, with about a dozen employees in Recruiting."

w1ntermute 11y ago
I wonder how many of them were thrown under the bus for cheating on the insurance broker licensing exam using Conrad's script.
- JonFish85 11y ago
  In that case, I wonder if they'd have any luck with suing him, or if the onus is entirely on them for having used it? Not being a lawyer, I'd imagine this would be a civil case where they'd go after his money / stock.
  - FireBeyond 11y ago
    Doubtful. Even if they could claim they were 'pressured' into doing so, there was no real coercion - they made the choice to not go through the process.

kylestlb 11y ago

Layoffs are never fun... sad :( For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?

pkaye 11y ago
Some possibilities are: 1. They have been trying to automate their sales infrastructure so less staffing needs. 2. Business is down but they feel confident to work on the product development.
- gravity13 11y ago
  Or a "Sales ALL THE THINGS" manic ex-CEO, who used massive rounds of funding to hire uncontrollably fast, was replaced by a more product-oriented one.
trjordan 11y ago
Zenefits is a classic enterprise sale, meaning you staff the sales team at: # of reps X average quota = expected sales. The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could. Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.
- w1ntermute 11y ago
  Why exactly is it so hard to hire engineers as opposed to sales people? Isn't it just as hard to find a 10x sales person as a 10x engineer?
  - braythwayt 11y ago
    Without commenting on the possibility that 10x engineers exist, I can tell you from experience in sales that 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire. The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation. Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?

braythwayt 11y ago

> Human resources and insurance software startup Zenefits > has announced that 250 employees are being made redundant, > representing 17 percent of the company’s workforce. Before "being made redundant' became empty buzzspeak, it had a very specific meaning: When things are restructured in such a way that two people end up doing the same job, one becomes redundant. For example, if you have an in-house recruiting team, and you become aqui-hired by BigCo, they may decide that all recruiting will be handled by their existing team, and your recruiting team becomes redundant. Notice that the job to be done is still there, it's just that the company has more people doing it than necessary. But in this case, the company is laying off a lot of its sales force and recruiting team while mumbling further content-free buzzwords about refocusing its strategy. Meaning, they aren't growing any more, so they won't be selling as much or recruiting as much. The job to be done is no longer there. Therefore, those aren't redundancies, those are layoffs, pure and simple. The distinction is important, because "redundancies" can arise as you grow (e.g. acquiring), but "layoffs" imply that the engine is sputtering. Eliminating redundancies is a matter of optimization. Laying people off is a matter of scaling back your ambitions. The company is obviously trying to spin this, and VentureBeat is regurgitating their press release word-for-word without any editorial oversight whatsoever.

Retric 11y ago
Not necessarily. If MS decides to build Windows 12 from the ground up they may have a separate team work on Windows 11. After that project is done most of the Windows 11 team would be redundant. Edit: They even did something like this with NT 4.0, ME, and XP. Similarly, if a catalog transitions to a website once that's done the legacy catalog team could simply be redundant.
- braythwayt 11y ago
  "Redundant" is not a pure synonym for "unnecessary" or "obsolete," and in business-speak it used to have the meaning I shared above. It used to arise a lot in mergers, where "efficiencies" arose by consolidating functions and making entire departments "redundant." If buggy-whips were to disappear as a business because Buggy 2.0 (a/k/a the automobile) comes along, it was not commonplace to say that buggy -whip manufacturers or their employees were "redundant," but to say they were "obsolete." That seems closer to the Windows 12 vs. Windows 11 teams analogy to me.

eldavido 11y ago

It irritates me that engineers never get laid off. This means companies still view their engineering workforces as "scarce" and hard to get, because they aren't paying market wages. Why is it only sales that gets the ax?

asadlionpk 11y ago
Here is what may be the reasons: - Because sales team is more easily replaceable than core engineering team. - There is less any redundancy in engineering team when compared to sales. - Zenefits is reducing their sales operation.
jsprogrammer 11y ago
Sales has probably gone through the pipeline of customers and engineering is probably still working on building out everything that was promised to customers?
dragonwriter 11y ago
The license requirement cheating (in one jurisdiction) and outright selling without a license (in other jurisdictions) were problems occurring in Sales (which may implicate some problems in Recruiting, as well.) I don't recall any of their problems being traced to engineering. So, while these are for PR purposes styled as redundancies, I think its at least worth considering that it may be more of a purge of the problem parts of the company.
aliston 11y ago
I can't tell if this is sarcastic or not, but there have been lots of engineering layoffs as well. Twitter and Yahoo, for example.
mwnz 11y ago
Why do you assume they aren't getting paid market wages? Your statement, in a way, is contradictory. Engineers are perceived as scarce, but they aren't paid market wages.

jeffehobbs 11y ago

See you guys in the stairwell.

Scalability 11y ago
Meet me in the well. It's going down.

brightball 11y ago

I wonder if that has anything to do with the success of Benefit Focus?

erichurkman 11y ago

If any of the layoffs were in the engineering groups, drop me a line.