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Zenefits Lost $200M Last Year
- ohstopitu 10y agoThey seem to have insanely high expenses. I wonder what their expenses are.
- Analemma_ 10y agoThe tl;dr is, it's to pay a lot of people for gruntwork. This has been talked about here before. Basically, Zenefits is in an industry that requires huge amounts of manual work. Dealing with payrolls and insurance requires navigating multiple Byzantine bureaucracies both public and private, and it's often work that can't be duplicated or automated. That's what you're paying ADP for, for instance. Zenefits claims that they use innovation and clever technology to solve these problems, but-- to put it charitably-- that's an exaggeration of the truth. Behind the scenes there's an army of people on the phone and sending email all day to keep it all running, fueled by VC money. It's not unlike all these food delivery startups, where the VC dollars ultimately go to a bunch of poorly-paid manual laborers, while the business owners sell the product below cost and try to figure out a working business model before the clock runs out. To me it doesn't look like they'll make it.
- rajacombinator 10y agoNot sure how much of that is accounting shenanigans but it doesn't sound promising. Aren't web businesses supposed to be high margin?