Parker Conrad steps down as Zenefits CEO
Human Resources and Insurance software startup Zenefits is now under the management of new CEO after its co-founder Parker Conrad steps down as the CEO after the company is under attack for missing its revenue projection. He was replaced by Zenefits current COO, David Sacks.
The news was confirmed by Sacks himself through an email to the employee. According to the email, "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."
The harsh statement comes because, besides missing its revenue projection, the $4.5 billion company is also currently under investigation for breaking few insurance laws and regulation according to the USA Today. Zenefits which garnered the attention by selling health insurance in a new way is now being investigated for allowing unlicensed brokers to sell health insurance in certain states.
The misconduct was reported by BuzzFeed News in their series of reports according to the New York Times. The practice had caused the company to undo lots of its sale and currently there are regulators from at least seven states is investigating the matter.
Zenefits was once considered as the fastest growing software startup by venture capitalists as the company managed to get lots of investment and able to grow up to 30 percent per month for a few consecutive months as reported by Reuters. However, its failure to meet its target revenue shows that the company is worth less than expected.
The company managed to raise more than $500 million from investors after it was founded in 2013. Besides that, it also raises another two rounds of financing from Andreessen Horowitz firm entitling the company to a unicorn status among startup.
The insurance service adopted by Zenefits has been causing lots of criticism and argument with the traditional brokers and insurance regulator. The company which only act as the middlemen between a healthcare provider and insurance company provide the business with free software and in return they took a commission fee from it.
David Sack joined Zenefits a little over a year ago after selling his own startup, Yammer to Microsoft in 2012 and had an experience working with PayPal as its CEO. Sack also had pulled in PayPal cofounder, Peter Thiel as one of the boards of directors after Conrad also resigned as the members.