
Zenefits cuts nearly 50% of workforce - elsewhen
http://www.businessinsider.com/zenefits-layoffs-cut-nearly-500-employees-full-email-2017-2
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StClaire
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
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.

~~~
Gibbon1
I reminds me before the 2001 crash I remember at the height reading a 3 inch
long story in the WSJ mentioning that a business school professor did
background checks on a 100 tech startups. Found 1/3 of them had CEO/COO/CFO's
or board members that had been prosecuted previously for securities fraud.

~~~
brilliantcode
Perhaps it's the same guys from 2001 pumping and dumping but have found a
clever way to avoid the SEC by keeping a private equity market that only VC's
have access to so they can play hot potatoes until a unicorn IPOs

~~~
Gibbon1
Oh that's a really good suspicion.

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tarr11
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.

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edawerd
Shoot me an email -- I can see if we can get you on our 2-Day ACH program for
running payroll

~~~
sahaskatta
I'd be interested in this too. How do I contact you?

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edawerd
Contact info is in my profile. Thanks, looking forward to hearing from you!

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temp246810
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.

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JonFish85
> 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.

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Xyik
can you explain a bit about how preferred shares wipe out employee options?
thats only in the scenario the company exits for far fewer than its current
valuation?

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svachalek
1\. Usually debts are paid off first, then preferred shareholders get their
money back, before regular shareholders get a chance to sell. I got a 1099 for
$0.00 one year thanks to this!

2\. When new shares are issued, usually preferred shareholders get shares for
free to maintain their percentage in the company. Other existing shareholders
do not, of course.

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65827
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
> is so destructive in this town

Destructive to whom?

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Analemma_
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.

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pliny
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
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
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.

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SmellTheGlove
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.

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makecheck
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.

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harryh
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.

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

/b

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

~~~
EnFinlay
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/So...](https://ca.indeed.com/cmp/Zenefits-
Development,-Inc./jobs/Software-Engineer-3efabcfeb10e24de?q=zenefits)

~~~
ohstopitu
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.

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jonknee
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.

~~~
EnFinlay
Exactly. Most developer jobs pay slightly over half the quoted amount.

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ganfortran
Karma

