Zenefits has been a fascinating startup to watch over the past few years. Since its founding in 2013, the human resources (HR) tech company has racked up more than $580 million in venture capital (VC) funding and a valuation that once hit $4.5 billion. The software startup’s rapid success didn’t stem from launching a new social network or the next game-changing, on-demand economy application, but rather, success came because its software is disrupting and reinventing markets such as HR management and benefits administration (BA). No one would exactly call benefits, HR, and payroll sexy, but they’re a core part of every business.
At the same time, we’ve seen Zenefits serve as a Silicon Valley cautionary tale. It’s what happens when a startup that’s swimming in VC money and backed by king-making seed accelerator Y-Combinator catapults to hyper-success and profitability before the company and culture are prepared to handle it.
Today the company is starting a new chapter at its inaugural user conference with the unveiling of Z2, a completely redesigned all-in-one HR platform. Z2 comes with a sleek new aesthetic throughout the user experience (UX), and packs a ton of new functionality and services for small to midsize businesses (SMBs). The platform houses a new HR App Directory, launching with 17 partner integrations, an open third-party app developer platform, mobile apps and HR Advisor, a new HR-as-a-Service (HRaaS) app for SMB owners and HR administrators. Zenefits is also rolling out a new benefits shopping and enrollment marketplace that’s modeled to feel like an e-commerce experience.
Z2 also includes the wide release of Zenefits Payroll in California as the company officially enters the payroll arena with a new product within its HR Information System (HRIS) suite. Zenefits Payroll costs $35 per month plus $5 per month per employee. According to Kevin Young, Director of Communications at Zenefits, Zenefits Payroll is on its way to several more states as well, though with no defined timetable.
Z2 represents a new phase for Zenefits across the board. In totality, the announcements make the company’s ambitions very clear: to become the automated platform on which every HR function runs and to which every related business app connects under the surface.
Why Zenefits Needed a Rebrand
All features and functionality aside for a moment, Z2 is also a concerted and much-needed rebrand for Zenefits. From mid-2015 through early 2016, the startup was hit with a litany of controversy and scandals from which it’s finally emerging with its core business and customer base largely intact.
Last year, stories began to surface of the startup’s heavy drinking, lax workplace, and party culture. Zenefits then came under fire for regulatory and compliance regulations violations, with an investigation revealing that co-founder and former CEO Parker Conrad wrote a program called Macro that let employees skirt required insurance broker training. Conrad resigned in February 2016 along with several other executives. He was replaced by then-Chief Operating Officer David Sacks—who the investigation found to have no knowledge of Macro. Sacks is a Silicon Valley veteran of companies including PayPal and Yammer who joined the startup in 2014. The executive shuffle was even loosely parodied on this past season of HBO’s Silicon Valley.
When Sacks took over, he promptly banned alcohol in the office and laid off 250 employees (or approx. 17 percent of its workforce). This included the entire enterprise sales division as the company refocused squarely on SMBs. “It is no secret that Zenefits grew too fast, stretching both our culture and our controls,” Sacks wrote in his internal memo to staff in late February. “This reduction enables us to refocus our strategy, rebuild in line with our new company values, and grow in a controlled way that will be strategic for our business and beneficial for our customers.”
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SOURCE: PC Mag
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