Dive Brief:
- Former benefits superstar Zenefits continued is downward spiral after laying off 106 workers, 9% of its workforce, on Tuesday, according to media reports.
- Since founder and ex-CEO Parker Conrad was forced out in early 2016, it marks the second round of layoffs, the first being 250 employees let go soon after Conrad left. Apart from sales and operations job losses announced Tuesday, Zenefits' Arizona sales office will close, leaving only operations employees, Forbes reports.
- Current CEO David Zacks, in an email to employees posted by Business Insider, spelled out a reorganization plan and offered all other employees who came to Zenefits prior to Conrad’s departure a voluntary two-month severance package.
Dive Insight:
Once touted as a surefire startup success, Zenefits, a cloud-based insurance benefits broker of sorts, will undergo a reorganization within operations, according to the Zacks email.
And Zenefits COO Abhijeet Dived, who sent a separate workforce-wide email, said the company is too siloed, weighed down by being too complex. Now, it will have an opportunity to "create a more customer-centric way of operating."
“I recognize that the new Zenefits may be a very different company than the one many of you joined,” Sacks wrote in his email. “And if you are not motivated by our mission to make entrepreneurship easier, or if you do not agree with the new company values, or if your role has changed in ways that you cannot support, then you can take The Offer.”
It's not all bad news. Sacks' email said Zenefits has over 20,000 remaining customers and annual recurring revenue is still more than $60 million – generated via sales to small business. Startups, take heed.
