23 ms·

Zenefits cuts nearly 50% of workforce

187 points by elsewhen 10y ago

65827 10y ago
The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Why? I get how capital and return on investment work, but maybe it's time for a different model.
- mbesto 10y ago
  > is so destructive in this town Destructive to whom?
  - ryoshu 10y ago
    The people who get hired then laid off.
    - deleted 10y ago
      [deleted]
  - Analemma_ 10y ago
    One answer: destructive to other businesses that can't compete with VC-backed price dumping. A good recent example was wash.io: they undercut and drove out a bunch of laundromats in San Francisco, and then, just to put the cherry on the stupidity cake, they went out of business themselves, so now there are a whole bunch of people in SF that can't do laundry. There was an extensive Twitter debate about this that I would link to, but it appears to have all been deleted.
    - pliny 10y ago
      Where did all the washing machines go? Did they destroy them? If all those places sold their washing machines when they went out of business then the capacity for doing laundry was conserved.
      - untog 10y ago
        Come on. You can't just conjour up a laundrette like you spin up an AWS instance. You need to find real estate, employees, equipment. All of those will have been redistributed when the business shut down and any new proprietor will have to start all over from scratch.
        djrogers 10y ago
        I think the GPs point was that presumably the equipment and real estate still existed at some point after wash.io shut down. They could have been sold off as businesses rather than simply being dumped through an auction house, but it sounds like that's not what happened.
      - dragonwriter 10y ago
        > Where did all the washing machines go? Presumably, to places where a VC backed startup hadn't destroyed the laundromat industry. San Francisco is not a closed economy.
      - karthikb 10y ago
        Knowing how high-cycle industrial equipment goes, probably scrapped.
      - vkou 10y ago
        > Where did all the washing machines go? Probably to community theaters (Or hotels, or the equivalents thereof) in Pittsburgh, who picked them up for a discount at a liquidation auction. Great news for out-of-state community theater, bad news if you need your laundry done in California. Either that, or they went straight to the junkyard. Move fast and break things.
    - GVIrish 10y ago
      That sounds like a good subject for a long blog post or article in the SF Chronicle.
  - staticautomatic 10y ago
    To the companies at issue and their employees, obviously.
- idiot_stick 10y ago
  >The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Silicon Valley is the only town I know where a thing like "profitability" is seen as a weird number. Maybe I'm missing your point, but these jobs wouldn't exist if it wasn't for endless VC capital and ridiculous valuations, so I'm not sure the net effect is leaving these former employees "worse off". >but maybe it's time for a different model. Be self-sustaining or go under; why should it be any other way?
  - staticautomatic 10y ago
    An angel investor recently responded to my pitch materials by scolding me for saying that our unit economics were strong enough to make most of our revenue profit (which is true). He said it "wasn't smart" and that other investors would question whether I'd thought through our business model. Months later, I am still at a loss for words.
    - pault 10y ago
      Maybe he was implying that it should be reinvested in growth?
      - staticautomatic 10y ago
        He claimed that costs would outstrip our margins as we grew. I have to assume he just thinks this is how startups work, because most of the costs he specifically brought up don't actually exist in our market/business model. In any event, if you have an instinctively negative and suspicious reaction to profitability, then as a business person, I want nothing to do with you.
        rhizome 10y ago
        "Nobody ever lost a funding round for using Heroku."
- ryanSrich 10y ago
  The fetishization of startups and venture capital is to blame. There's no concept of creating a sustainable business when you take someone else's money. Investors need 1000x + returns on investments because that's how it works. 1000 startups they invest in fail so 1 has to pull the weight of the others. This model is broken for sure, but I don't know what they cure is.
  - tabeth 10y ago
    The cure is simple. Stop being greedy?
    - pfarnsworth 10y ago
      Silicon Valley is the greediest place on Earth. That's why we're all so "successful". If making more money, either because we want all the nicest things, or because we just want to keep our heads above water, weren't on the top of our minds, no one would be working as hard as we do.
      - user5994461 10y ago
        It's not a valid explanation when you see the usual equities and salaries people get at startup nowadays.
      - phil21 10y ago
        The funny thing is - this wasn't the case even 20 years ago. Silicon Valley was still a place you went primarily to work on cool stuff, secondarily to hopefully get lucky and build a company worth a shitload of money. You went there to change the world and work with the best, money was a decent side benefit but not required. Most took a pay cut (after cola) to move there and work on these awesome computer things everyone was talking about. Now it's 100% about the money - just look at what is being funded. Almost no real "tech" companies - just a bunch of folks writing slightly different variations on how to sell ads. I have to try to keep a straight face when I have some obviously-way-more-talented-than-me engineer telling me about some silly worthless app they are working on. It obviously does not move humanity forward or progress the art of their profession in any way - it's just a lottery ticket people have deluded themselves into thinking they are "making the world a better place". The change in tech startups has been extremely sad for me to watch. What used to be inspiring is essentially now one step removed from fraudulent. This take is not completely fair - there are a lot of startups also doing interesting things - but it's closer to reality than not - and nothing like what you envisioned as a "startup" even just before the dot com era.
- jrs235 10y ago
  Software developers are hopefully socking away a lot of their income while the days of great pay are here rather than spending it. When the housing bubble burst around 2008 many real estate agents found themselves in trouble because rather than saving while the going was good they were spending it on new cars, new larger house, nice vacations. Edit: this isn't to say we are in a bubble that will burst, its to say that eventually developer pay will come down (as supply catches up)
  - throwawaydbfif 10y ago
    Eh, developer pay and engineering in general has been a high paying field for eons. It takes a lot of specialized knowledge to do and that's only becoming more of the case as the industry further specializes and expands. It's like how there used to be one kind of doctor and now there's hundreds of specialties. The only ones hurt will be generalists. It's not like you can pull a guy off the street and have him do 90% of dev jobs. The number of people capable of doing the job well will mean it always pays fairly well. Real estate on the other hand can be done by anyone with some charisma and decent reading/writing ability which is probably about 50% of the population. These are the niches where high paying jobs don't last. Look what happened with Uber recently, once the job seekers catch on to an easy source of high income it's a few years or less before that income dwindles from excess supply
- brilliantcode 10y ago
  People also declared profits were sooo yesterday... in 1999.
- hkmurakami 10y ago
  Fund sizes raised basically dictate the exit outcomes needed to satisfy LPs. Raising from small funds ameleriorates this somewhat, but that isn't the sexy thing to do so people seem to rarely do it.
- gnopgnip 10y ago
  If you have a sustainable business you can get a loan instead of giving away equity. The problem is that you have to consider what your competition is doing. If you can take out a loan for $200k and grow by 15% a year your lunch will get eaten by the startup that gets $10m in funding. But generally a startup will only get funding if there is potential for the investor to get a great return on their large investment, so many ideas are not competing with startups.
- alistproducer2 10y ago
  This may seem off topic but bare with me for a sec. I've been shopping for a house and have started to learn about how real estate transactions work. One of the things I was surprised to discover was the amount of selling costs produced by middlemen (9-12%). Given the pricing of homes, this is far from an insignificant cost. From my calc considering current interest rates, the breakeven time for reselling a home at the price you bought it, is ~ 7 years. Sell before that and you have to jack up the sale price to try not to lose a sizable chunk of change. As I buyer I'm constantly reminded that they are free to me, but as they say "there's no such thing as a free lunch." These costs are just passed on to the buy via a higher price; hence the [now] fallacious "home prices always rise." If the cost of housing rises with each transaction, then it seems logical that the economy must grow to support higher wages to support higher costs of living, right? This got me wondering how much of the necessity for growth is a by-product of unnecessary middlemen taking cuts of various commodities?
  - alaskamiller 10y ago
    All the time on everything. That's how a sustaining economy works. Every one gets a piece by inserting themselves in the pie. But the same time the idea is that everyone in the chain is delivering value or else they wouldn't be there because someone else will provide something better by ruthlessly removing said intermediary out when it is no longer efficient. If you have a better way of selling houses between people without the need for that 9-12% you would be doing it now or you would have done it by now. Literally the definition of a founder. You find opportunities to exploit.
    - alistproducer2 10y ago
      From the sellers side, the agent makes sense. Although I would argue a flat or time based fee is more appropriate than a percentage of sale price. The buying agent delivers relatively little value once the purchase agreement has been signed so I would argue they are essentially rent seekers.
  - nradov 10y ago
    That's not how markets work. Clearing prices are set by supply and demand, not by the seller's costs.
- Florin_Andrei 10y ago
  > We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Why? Because money is god round these parts.
- harryh 10y ago
  They don't think it be like it is, but it do.
- jonathanmarcus 10y ago
  Bryce Roberts from OATV is trying to offer an alternative path via his http://indie.vc http://indie.vc program.
kristineberth 10y ago
Bummer, they were on a hiring rampage here in Vancouver last year.
- snegu 10y ago
  According to the article, they are planning to hire more engineers in Vancouver (along with Bangalore).
- joeax 10y ago
  Sometimes I feel that a well-publicized hiring binge usually precipitates a layoff. I've seen it happen enough times that it makes me skeptical when I hear terms like "explosive growth". Over the years I've had recruiters from Theranos to DraftKings contact me, both with the spiel of "unlimited growth", and we all know how those went. :/
- EnFinlay 10y ago
  Looks like they still are [1]. But the salary seems unbelievably high for the experience levels they're asking for. [1] https://ca.indeed.com/cmp/Zenefits-Development,-Inc./jobs/Software-Engineer-3efabcfeb10e24de?q=zenefits https://ca.indeed.com/cmp/Zenefits-Development,-Inc./jobs/So...
  - ohstopitu 10y ago
    But I was under the impression that Vancover was incredibly expensive. Your take home pay at the end of the year would be 88k - 116k (if those numbers are to be believed). After accounting for rent and other expenses, I feel like that's average at best.
    - jonknee 10y ago
      It is, but Vancouver is also well known for not paying well. It's expensive because of a real estate bubble, not because it is overflowing with high paying jobs.
      - 10y ago
temp246810 10y ago
I worked at Zenefits for a year. Was employee ~600. This move was much needed 1 year ago - just an awful place to work all around. Most of the raelly good people I met there have left - the people I know that stayed either had golden hand cuffs or weren't the high achieving type, to put it nicely.
- JonFish85 10y ago
  > golden hand cuffs Those aren't really worth much anymore -- once you hit a bump in the road, employee options are the first things to be wiped out. If investors received a larger share as has been reported, it's in preferred shares, which probably wipes out the employee options.
  - jhpankow 10y ago
    That's why I called mine bronze handcuffs.
    - mi100hael 10y ago
      Sounds like plastic zip ties might be more appropriate at this point.
      - bredren 10y ago
        These work in a riot.
  - temp246810 10y ago
    As much as I want to shit on Zenefits I think they actually doubled up employee options as well. Sacks was pretty good about handling that situation. Still agree with your overall point though - it's going to be a long, long time before those shares are worth anything.
    - JonFish85 10y ago
      If everyone gets 2x shares/options, there's no change in ownership -- someone lost out, otherwise they wouldn't do it. And preferred shares are tickets for the front of the line, and quite possibly with onerous terms that aren't public (whether it's a multiplier, or something else). Between a lowered valuation and more shares given to investors and the burden of a high valuation..... things don't look bright for the future of Zenefits, and especially not their employees.
tarr11 10y ago
Sachs is right that the SMB market is very cost sensitive. We use both Zenefits and Gusto (mainly because of legacy issues - neither offered both benefits + payroll when we started) Zenefits manages our health insurance and onboarding, and Gusto does payroll. We don't pay Zenefits directly. With this layoff, there's about zero chance I would consider switching to their payroll service (even though it's about 20% cheaper than Gusto) Gusto has a really solid UI. However, their problems are that unlike ADP, they require a long lead time (5 days I think?) for payroll. They also don't differentiate between part time and full time staff which makes this prohibitive if you use a lot of part time staff with few hours. Neither service provides a "full stop" HR solution - we have to use WhenIWork for timesheets and scheduling, and Workable for an ATS. I could justify their pricing if this was all rolled in. Gusto recently doubled their prices so we are looking at OnPay which is about 1/3rd the price of either Gusto or Zenefits for payroll.
- edawerd 10y ago
  Shoot me an email -- I can see if we can get you on our 2-Day ACH program for running payroll
  - tarr11 10y ago
    Thanks, just sent you an email.
    - edawerd 10y ago
      BTW, we also do health insurance and on-boarding, and there lot's of benefits to it being under the same roof as payroll. Feel free to reach out if you're interested in moving those over to Gusto!
  - sahaskatta 10y ago
    I'd be interested in this too. How do I contact you?
    - edawerd 10y ago
StClaire 10y ago
I first heard of Zenefits when the CEO withdrew a job offer for someone who asked (anonymously) on Quora if they should accept an offer from Uber or Zenefits. The CEO didn't want anyone who wasn't all in for Zenefits "world changing" product. Since then: that CEO got busted for writing a chrome plug-in to help people get around California's webinar requirement to get a license to sell insurance. And the new CEO—the old COO—sent out a memo that sex in the staircases and alcohol in the office are not OK. And he had to give away a huge portion of equity to early investors who accused the old CEO of turning Zenefits into a criminal enterprise for using unlicensed brokers to sell insurance. This news does not surprise me.
- brilliantcode 10y ago
  Usually right before a major market correction, at the peak of a bubble, unsavory, downright illegal and deceptive elements are introduced because of the monetary incentive. I'm looking at the headlines and thinking whether the clock has begun ticking.
  - joeax 10y ago
    There was a thread a few days ago called "Who's Firing?" that seemed like kind of a spoof. Suddenly it seems more relevant.
  - driverdan 10y ago
    It has nothing to do with bubbles. They started doing it years ago to grow faster. There are some good articles about what happened.
  - mathattack 10y ago
    "Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett
  - adventured 10y ago
    Weak correlation. The bad actions at Zenefits were going on several years ago. The same was true of Theranos, their ill behavior goes back nearly to the beginning of the company. There may be somewhere between 250 and 300 total billion dollar "unicorns" at this point. So far as I've seen the last two years, the Zenefits companies are still rare. The money parade doesn't end until the Fed pulls the plug on hyper low interest rates. It started there and it ends there, as it did the prior two easy money periods of time (late 1990s and mid 2000s). Until then, the trillions in cash sloshing around will keep seeking better returns via various forms of higher risk speculation.
ganfortran 10y ago
Karma
crestedtazo 10y ago
Very well played, good sir. I can't believe how long I laughed at this. All the upvotes to you! You are truly a gentleman and a scholar. If this was reddit, I would buy you some reddit gold! edit: Can someone explain why they disagree with what I am saying instead of just downvoting? You are violating HN guildelines.
- minimaxir 10y ago
  You are getting downvoted because it is a Reddit-esque comment that adds nothing to the discussion, which actually does violate the guidelines.
- vxNsr 10y ago
  This hn not reddit. We don't have long pun threads. We don't really acknowledge the voting system bec it's not about karma but rather about surfacing the best discussion. Your comment looks like it's almost exactly copied from a reddit thread if you just replace "if this was reddit" with "if I wasn't poor"
- sctb 10y ago
  We detached this subthread from https://news.ycombinator.com/item?id=13609626 https://news.ycombinator.com/item?id=13609626 and marked it off-topic.
makecheck 10y ago
At some point, mass layoffs just scream “management screw-ups” and there should be major legal consequences for doing so. Otherwise, layoffs become an easy crutch for money-grabbing executives to screw over innocent workers without really punishing poor decision-making. For instance, if the total layoffs per year exceed some amount (say 25% of the workforce, which still seems absurd), the company should automatically have to pay a fine, such as 5% of the total salaries that were “saved”. In addition, they should be required by law to give a one-year severance per employee in that situation. Management screw-ups need to come at a damned high price so that this becomes a rarity.
- harryh 10y ago
  There are laws like this in places other than the US. They mostly make it so that companies hire full time employees at a much slower rate because they are afraid of the consequences of firing people. You end up with a two tier system of real employees and a sea of contractors. It's important to really think through what the actual results of a proposed policy will be. Unintended consequences abound.
- laser 10y ago
  What if the macro-economic situation changed? A competitor got a strong edge in a winner-take all market? A break-through technology emerged? One of an infinite number of unforeseeable circumstances arose that required a greater than 25% workforce cut independent of any careless management? Requiring a year's severance for every employee cut in such drastic scenarios could easily make many companies insolvent.
- danpalmer 10y ago
  In the U.K. if you make someone redundant (i.e. Restructuring, not firing for performance/misconduct) then you cannot rehire for that role for 6 months minimum. Also if you make more than a certain number of staff redundant (I believe something like 20-25% of your workforce) then the government gets to audit you to see if it was business malpractice that caused the need for the redundancies.
SmellTheGlove 10y ago
Well, that might tell me a bit about why I wasn't getting calls - I actually wanted to work there! I've spent 12+ years in the insurance industry all with large market leaders, and I think it'd be fun to do something disruptive - you know, just not illegal.
battlebot 10y ago
Zenefits is handling my COBRA stuff while I'm between gigs. It was a disaster and they don't even have a phone number to call. I had to work some serious back channels to get them to fix the problem. They mainly just blamed it on the insurance company, but I am skeptical since I was able to call the insurance company and talk to live humans who insisted that the information was just never sent over to them. Beyond that, Zenefits requires automatic withdrawals from your checking account, a practice I am strongly opposed to.
briankwest 10y ago
Signed up for our company to see what it was all about, They wouldn't stop calling, now maybe they will stop. /b

187 points by elsewhen 10y ago

65827 10y ago

The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Why? I get how capital and return on investment work, but maybe it's time for a different model.

mbesto 10y ago
> is so destructive in this town Destructive to whom?
- ryoshu 10y ago
  The people who get hired then laid off.
  - deleted 10y ago
    [deleted]
- Analemma_ 10y ago
  One answer: destructive to other businesses that can't compete with VC-backed price dumping. A good recent example was wash.io: they undercut and drove out a bunch of laundromats in San Francisco, and then, just to put the cherry on the stupidity cake, they went out of business themselves, so now there are a whole bunch of people in SF that can't do laundry. There was an extensive Twitter debate about this that I would link to, but it appears to have all been deleted.
  - pliny 10y ago
    Where did all the washing machines go? Did they destroy them? If all those places sold their washing machines when they went out of business then the capacity for doing laundry was conserved.
    - untog 10y ago
      Come on. You can't just conjour up a laundrette like you spin up an AWS instance. You need to find real estate, employees, equipment. All of those will have been redistributed when the business shut down and any new proprietor will have to start all over from scratch.
      - djrogers 10y ago
        I think the GPs point was that presumably the equipment and real estate still existed at some point after wash.io shut down. They could have been sold off as businesses rather than simply being dumped through an auction house, but it sounds like that's not what happened.
    - dragonwriter 10y ago
      > Where did all the washing machines go? Presumably, to places where a VC backed startup hadn't destroyed the laundromat industry. San Francisco is not a closed economy.
    - karthikb 10y ago
      Knowing how high-cycle industrial equipment goes, probably scrapped.
    - vkou 10y ago
      > Where did all the washing machines go? Probably to community theaters (Or hotels, or the equivalents thereof) in Pittsburgh, who picked them up for a discount at a liquidation auction. Great news for out-of-state community theater, bad news if you need your laundry done in California. Either that, or they went straight to the junkyard. Move fast and break things.
  - GVIrish 10y ago
    That sounds like a good subject for a long blog post or article in the SF Chronicle.
- staticautomatic 10y ago
  To the companies at issue and their employees, obviously.
idiot_stick 10y ago
>The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Silicon Valley is the only town I know where a thing like "profitability" is seen as a weird number. Maybe I'm missing your point, but these jobs wouldn't exist if it wasn't for endless VC capital and ridiculous valuations, so I'm not sure the net effect is leaving these former employees "worse off". >but maybe it's time for a different model. Be self-sustaining or go under; why should it be any other way?
- staticautomatic 10y ago
  An angel investor recently responded to my pitch materials by scolding me for saying that our unit economics were strong enough to make most of our revenue profit (which is true). He said it "wasn't smart" and that other investors would question whether I'd thought through our business model. Months later, I am still at a loss for words.
  - pault 10y ago
    Maybe he was implying that it should be reinvested in growth?
    - staticautomatic 10y ago
      He claimed that costs would outstrip our margins as we grew. I have to assume he just thinks this is how startups work, because most of the costs he specifically brought up don't actually exist in our market/business model. In any event, if you have an instinctively negative and suspicious reaction to profitability, then as a business person, I want nothing to do with you.
      - rhizome 10y ago
        "Nobody ever lost a funding round for using Heroku."
ryanSrich 10y ago
The fetishization of startups and venture capital is to blame. There's no concept of creating a sustainable business when you take someone else's money. Investors need 1000x + returns on investments because that's how it works. 1000 startups they invest in fail so 1 has to pull the weight of the others. This model is broken for sure, but I don't know what they cure is.
- tabeth 10y ago
  The cure is simple. Stop being greedy?
  - pfarnsworth 10y ago
    Silicon Valley is the greediest place on Earth. That's why we're all so "successful". If making more money, either because we want all the nicest things, or because we just want to keep our heads above water, weren't on the top of our minds, no one would be working as hard as we do.
    - user5994461 10y ago
      It's not a valid explanation when you see the usual equities and salaries people get at startup nowadays.
    - phil21 10y ago
      The funny thing is - this wasn't the case even 20 years ago. Silicon Valley was still a place you went primarily to work on cool stuff, secondarily to hopefully get lucky and build a company worth a shitload of money. You went there to change the world and work with the best, money was a decent side benefit but not required. Most took a pay cut (after cola) to move there and work on these awesome computer things everyone was talking about. Now it's 100% about the money - just look at what is being funded. Almost no real "tech" companies - just a bunch of folks writing slightly different variations on how to sell ads. I have to try to keep a straight face when I have some obviously-way-more-talented-than-me engineer telling me about some silly worthless app they are working on. It obviously does not move humanity forward or progress the art of their profession in any way - it's just a lottery ticket people have deluded themselves into thinking they are "making the world a better place". The change in tech startups has been extremely sad for me to watch. What used to be inspiring is essentially now one step removed from fraudulent. This take is not completely fair - there are a lot of startups also doing interesting things - but it's closer to reality than not - and nothing like what you envisioned as a "startup" even just before the dot com era.
jrs235 10y ago
Software developers are hopefully socking away a lot of their income while the days of great pay are here rather than spending it. When the housing bubble burst around 2008 many real estate agents found themselves in trouble because rather than saving while the going was good they were spending it on new cars, new larger house, nice vacations. Edit: this isn't to say we are in a bubble that will burst, its to say that eventually developer pay will come down (as supply catches up)
- throwawaydbfif 10y ago
  Eh, developer pay and engineering in general has been a high paying field for eons. It takes a lot of specialized knowledge to do and that's only becoming more of the case as the industry further specializes and expands. It's like how there used to be one kind of doctor and now there's hundreds of specialties. The only ones hurt will be generalists. It's not like you can pull a guy off the street and have him do 90% of dev jobs. The number of people capable of doing the job well will mean it always pays fairly well. Real estate on the other hand can be done by anyone with some charisma and decent reading/writing ability which is probably about 50% of the population. These are the niches where high paying jobs don't last. Look what happened with Uber recently, once the job seekers catch on to an easy source of high income it's a few years or less before that income dwindles from excess supply
brilliantcode 10y ago
People also declared profits were sooo yesterday... in 1999.
hkmurakami 10y ago
Fund sizes raised basically dictate the exit outcomes needed to satisfy LPs. Raising from small funds ameleriorates this somewhat, but that isn't the sexy thing to do so people seem to rarely do it.
gnopgnip 10y ago
If you have a sustainable business you can get a loan instead of giving away equity. The problem is that you have to consider what your competition is doing. If you can take out a loan for $200k and grow by 15% a year your lunch will get eaten by the startup that gets $10m in funding. But generally a startup will only get funding if there is potential for the investor to get a great return on their large investment, so many ideas are not competing with startups.
alistproducer2 10y ago
This may seem off topic but bare with me for a sec. I've been shopping for a house and have started to learn about how real estate transactions work. One of the things I was surprised to discover was the amount of selling costs produced by middlemen (9-12%). Given the pricing of homes, this is far from an insignificant cost. From my calc considering current interest rates, the breakeven time for reselling a home at the price you bought it, is ~ 7 years. Sell before that and you have to jack up the sale price to try not to lose a sizable chunk of change. As I buyer I'm constantly reminded that they are free to me, but as they say "there's no such thing as a free lunch." These costs are just passed on to the buy via a higher price; hence the [now] fallacious "home prices always rise." If the cost of housing rises with each transaction, then it seems logical that the economy must grow to support higher wages to support higher costs of living, right? This got me wondering how much of the necessity for growth is a by-product of unnecessary middlemen taking cuts of various commodities?
- alaskamiller 10y ago
  All the time on everything. That's how a sustaining economy works. Every one gets a piece by inserting themselves in the pie. But the same time the idea is that everyone in the chain is delivering value or else they wouldn't be there because someone else will provide something better by ruthlessly removing said intermediary out when it is no longer efficient. If you have a better way of selling houses between people without the need for that 9-12% you would be doing it now or you would have done it by now. Literally the definition of a founder. You find opportunities to exploit.
  - alistproducer2 10y ago
    From the sellers side, the agent makes sense. Although I would argue a flat or time based fee is more appropriate than a percentage of sale price. The buying agent delivers relatively little value once the purchase agreement has been signed so I would argue they are essentially rent seekers.
- nradov 10y ago
  That's not how markets work. Clearing prices are set by supply and demand, not by the seller's costs.
Florin_Andrei 10y ago
> We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Why? Because money is god round these parts.
harryh 10y ago
They don't think it be like it is, but it do.
jonathanmarcus 10y ago
Bryce Roberts from OATV is trying to offer an alternative path via his http://indie.vc http://indie.vc program.

kristineberth 10y ago

Bummer, they were on a hiring rampage here in Vancouver last year.

snegu 10y ago
According to the article, they are planning to hire more engineers in Vancouver (along with Bangalore).
joeax 10y ago
Sometimes I feel that a well-publicized hiring binge usually precipitates a layoff. I've seen it happen enough times that it makes me skeptical when I hear terms like "explosive growth". Over the years I've had recruiters from Theranos to DraftKings contact me, both with the spiel of "unlimited growth", and we all know how those went. :/
EnFinlay 10y ago
Looks like they still are [1]. But the salary seems unbelievably high for the experience levels they're asking for. [1] https://ca.indeed.com/cmp/Zenefits-Development,-Inc./jobs/Software-Engineer-3efabcfeb10e24de?q=zenefits https://ca.indeed.com/cmp/Zenefits-Development,-Inc./jobs/So...
- ohstopitu 10y ago
  But I was under the impression that Vancover was incredibly expensive. Your take home pay at the end of the year would be 88k - 116k (if those numbers are to be believed). After accounting for rent and other expenses, I feel like that's average at best.
  - jonknee 10y ago
    It is, but Vancouver is also well known for not paying well. It's expensive because of a real estate bubble, not because it is overflowing with high paying jobs.
    - 10y ago

temp246810 10y ago

I worked at Zenefits for a year. Was employee ~600. This move was much needed 1 year ago - just an awful place to work all around. Most of the raelly good people I met there have left - the people I know that stayed either had golden hand cuffs or weren't the high achieving type, to put it nicely.

JonFish85 10y ago
> golden hand cuffs Those aren't really worth much anymore -- once you hit a bump in the road, employee options are the first things to be wiped out. If investors received a larger share as has been reported, it's in preferred shares, which probably wipes out the employee options.
- jhpankow 10y ago
  That's why I called mine bronze handcuffs.
  - mi100hael 10y ago
    Sounds like plastic zip ties might be more appropriate at this point.
    - bredren 10y ago
      These work in a riot.
- temp246810 10y ago
  As much as I want to shit on Zenefits I think they actually doubled up employee options as well. Sacks was pretty good about handling that situation. Still agree with your overall point though - it's going to be a long, long time before those shares are worth anything.
  - JonFish85 10y ago
    If everyone gets 2x shares/options, there's no change in ownership -- someone lost out, otherwise they wouldn't do it. And preferred shares are tickets for the front of the line, and quite possibly with onerous terms that aren't public (whether it's a multiplier, or something else). Between a lowered valuation and more shares given to investors and the burden of a high valuation..... things don't look bright for the future of Zenefits, and especially not their employees.

tarr11 10y ago

Sachs is right that the SMB market is very cost sensitive. We use both Zenefits and Gusto (mainly because of legacy issues - neither offered both benefits + payroll when we started) Zenefits manages our health insurance and onboarding, and Gusto does payroll. We don't pay Zenefits directly. With this layoff, there's about zero chance I would consider switching to their payroll service (even though it's about 20% cheaper than Gusto) Gusto has a really solid UI. However, their problems are that unlike ADP, they require a long lead time (5 days I think?) for payroll. They also don't differentiate between part time and full time staff which makes this prohibitive if you use a lot of part time staff with few hours. Neither service provides a "full stop" HR solution - we have to use WhenIWork for timesheets and scheduling, and Workable for an ATS. I could justify their pricing if this was all rolled in. Gusto recently doubled their prices so we are looking at OnPay which is about 1/3rd the price of either Gusto or Zenefits for payroll.

edawerd 10y ago
Shoot me an email -- I can see if we can get you on our 2-Day ACH program for running payroll
- tarr11 10y ago
  Thanks, just sent you an email.
  - edawerd 10y ago
    BTW, we also do health insurance and on-boarding, and there lot's of benefits to it being under the same roof as payroll. Feel free to reach out if you're interested in moving those over to Gusto!
- sahaskatta 10y ago
  I'd be interested in this too. How do I contact you?
  - edawerd 10y ago

StClaire 10y ago

I first heard of Zenefits when the CEO withdrew a job offer for someone who asked (anonymously) on Quora if they should accept an offer from Uber or Zenefits. The CEO didn't want anyone who wasn't all in for Zenefits "world changing" product. Since then: that CEO got busted for writing a chrome plug-in to help people get around California's webinar requirement to get a license to sell insurance. And the new CEO—the old COO—sent out a memo that sex in the staircases and alcohol in the office are not OK. And he had to give away a huge portion of equity to early investors who accused the old CEO of turning Zenefits into a criminal enterprise for using unlicensed brokers to sell insurance. This news does not surprise me.

brilliantcode 10y ago
Usually right before a major market correction, at the peak of a bubble, unsavory, downright illegal and deceptive elements are introduced because of the monetary incentive. I'm looking at the headlines and thinking whether the clock has begun ticking.
- joeax 10y ago
  There was a thread a few days ago called "Who's Firing?" that seemed like kind of a spoof. Suddenly it seems more relevant.
- driverdan 10y ago
  It has nothing to do with bubbles. They started doing it years ago to grow faster. There are some good articles about what happened.
- mathattack 10y ago
  "Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett
- adventured 10y ago
  Weak correlation. The bad actions at Zenefits were going on several years ago. The same was true of Theranos, their ill behavior goes back nearly to the beginning of the company. There may be somewhere between 250 and 300 total billion dollar "unicorns" at this point. So far as I've seen the last two years, the Zenefits companies are still rare. The money parade doesn't end until the Fed pulls the plug on hyper low interest rates. It started there and it ends there, as it did the prior two easy money periods of time (late 1990s and mid 2000s). Until then, the trillions in cash sloshing around will keep seeking better returns via various forms of higher risk speculation.

ganfortran 10y ago

Karma

crestedtazo 10y ago

Very well played, good sir. I can't believe how long I laughed at this. All the upvotes to you! You are truly a gentleman and a scholar. If this was reddit, I would buy you some reddit gold! edit: Can someone explain why they disagree with what I am saying instead of just downvoting? You are violating HN guildelines.

minimaxir 10y ago
You are getting downvoted because it is a Reddit-esque comment that adds nothing to the discussion, which actually does violate the guidelines.
vxNsr 10y ago
This hn not reddit. We don't have long pun threads. We don't really acknowledge the voting system bec it's not about karma but rather about surfacing the best discussion. Your comment looks like it's almost exactly copied from a reddit thread if you just replace "if this was reddit" with "if I wasn't poor"
sctb 10y ago
We detached this subthread from https://news.ycombinator.com/item?id=13609626 https://news.ycombinator.com/item?id=13609626 and marked it off-topic.

makecheck 10y ago

At some point, mass layoffs just scream “management screw-ups” and there should be major legal consequences for doing so. Otherwise, layoffs become an easy crutch for money-grabbing executives to screw over innocent workers without really punishing poor decision-making. For instance, if the total layoffs per year exceed some amount (say 25% of the workforce, which still seems absurd), the company should automatically have to pay a fine, such as 5% of the total salaries that were “saved”. In addition, they should be required by law to give a one-year severance per employee in that situation. Management screw-ups need to come at a damned high price so that this becomes a rarity.

harryh 10y ago
There are laws like this in places other than the US. They mostly make it so that companies hire full time employees at a much slower rate because they are afraid of the consequences of firing people. You end up with a two tier system of real employees and a sea of contractors. It's important to really think through what the actual results of a proposed policy will be. Unintended consequences abound.
laser 10y ago
What if the macro-economic situation changed? A competitor got a strong edge in a winner-take all market? A break-through technology emerged? One of an infinite number of unforeseeable circumstances arose that required a greater than 25% workforce cut independent of any careless management? Requiring a year's severance for every employee cut in such drastic scenarios could easily make many companies insolvent.
danpalmer 10y ago
In the U.K. if you make someone redundant (i.e. Restructuring, not firing for performance/misconduct) then you cannot rehire for that role for 6 months minimum. Also if you make more than a certain number of staff redundant (I believe something like 20-25% of your workforce) then the government gets to audit you to see if it was business malpractice that caused the need for the redundancies.

SmellTheGlove 10y ago

Well, that might tell me a bit about why I wasn't getting calls - I actually wanted to work there! I've spent 12+ years in the insurance industry all with large market leaders, and I think it'd be fun to do something disruptive - you know, just not illegal.

battlebot 10y ago

Zenefits is handling my COBRA stuff while I'm between gigs. It was a disaster and they don't even have a phone number to call. I had to work some serious back channels to get them to fix the problem. They mainly just blamed it on the insurance company, but I am skeptical since I was able to call the insurance company and talk to live humans who insisted that the information was just never sent over to them. Beyond that, Zenefits requires automatic withdrawals from your checking account, a practice I am strongly opposed to.

briankwest 10y ago

Signed up for our company to see what it was all about, They wouldn't stop calling, now maybe they will stop. /b