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Sales is merely the scapegoat in this mess. The real source of problems at Zenefits was at the very top. The CEO raised way too much money before having a stab
by erdojo 11y ago
Sales is merely the scapegoat in this mess. The real source of problems at Zenefits was at the very top.
The CEO raised way too much money before having a stable and scalable product (or evidently knowledge of the industry and legal obligations). The sales goals were pure fantasy.
With $20M in revenue at the beginning of 2015, the CEO approved the hiring of over 1200 employees. What?! Imagine the burn. And set a 5x revenue goal in only the third year of business? Even on the heels of the previous year's 20x rev growth, it's still eyebrow-raising.
As a result, the sales leaders simply threw money and inexperienced people at the problem. They really had no other choice. You could have the smartest sales execs and that would be the Only. Option. to even attempt to meet those goals.
And it didn't work. Of course it didn't work. Even if the sales culture and incentive comp structures were perfect, it still wouldn't have worked.
To grow that fast - from $20M to $100M in a year - your product has to generate its own demand - to have so much value and solve an urgent problem that your phone is ringing off the hook. Prospecting, outbound telesales, lead gen etc. scale quickly in early days because of low-hanging fruit but then level off.
Unfortunately laying off a too-large salesforce was probably necessary, but NOT the fault of those people. At least the CEO is out. That was the best first step.
But given that I'm guessing they ended up at +-$50M in revenue in 2015 (clearly they didn't hit the $100M goal), it's not hard to predict that more big cuts are on the way.