Dive Brief:
- Zenefits CEO Parker Conrad resigned Monday over regulatory compliance issues uncovered in late 2015, Bloomberg reported. David Sacks, current COO and a former Microsoft Corp. exec, will take his place.
- In November 2015, BuzzFeed News reported that the company had apparently broken insurance laws by allowing unlicensed brokers to sell insurance products. That lead to "at least one regulatory inquiry" into the workings at Zenefits.
- Zenefits made its name by offering free HR services in a software-as-a-service format to small and medium sized businesses, though it largely made money by selling health insurance to its customers.
Dive Insight:
In a followup released on Friday, BuzzFeed discovered that over 80% of Zenefits insurance deals in Washington state through at least August 2015 were sold by brokers without licenses.
Monday heralded a large leadership shift at the firm. Along with Conrad's departure, the company appointed three new board members, including Peter Thiel, co-founder of PayPal. In a memo, new CEO Sacks added that Joshua Stein, the vice president of legal at the company, will oversee the continued review into its licensing processes.
Zenefits was already facing shaky ground in November 2015 for struggling to meet its revenue goals. At its height last year, investors valued the company at $4.5B. Between Aug. 1 and Sept. 30 of 2015, valuation dropped to $2.34B – a 48% decrease.
