The startup that told employees to stop having inappropriate sex lays off 17% of staff
One struggling billion-dollar startup is hoping its story doesn't end with a bang.
Zenefits, the high-flying human resources software startup that has been dragged down in recent weeks by compliance failures and reports of sex in the office, announced Friday that it will be laying off about 250 employees, or 17% of its staff.
The layoffs, said to be "almost entirely" in its sales division -- coincidentally, the one that was the primary target of the lecture about the sexual activity -- represent the startup's latest attempt to curb its reckless growth and equally reckless behavior.
You May Also Like
"We are letting go of many great people today, and it is not their fault," David Sacks, the newly named CEO of Zenefits, wrote in a memo to all employees, obtained by Mashable. "It is no secret that Zenefits grew too fast, stretching both our culture and our controls."
The painful layoffs provide a cautionary tale for Silicon Valley's fixation on fast growth at all costs.
Zenefits secured a staggering $500 million in funding at a $4.5 billion in 2015 after barely two years in operation, taking full advantage of the frothy venture capital market, which has since leveled off.
Investors bet on the promise that Zenefits could streamline employee healthcare benefit management -- and apparently bought into the idea that it was growing at a rapid-fire pace. Just one problem: its fast growth was in part the result of skirting regulations on gaining proper licensing for its salespeople.
Parker Conrad, the CEO and cofounder of Zenefits, resigned earlier this month after reports surfaced of its compliance failures. Subsequent reports provided lurid details about the company's lewd party culture, including the fact that employees had to be told not to have sex in the office stairwell.
"That pride may be a little bruised lately by what has been written in the press," Sacks said at the end of his memo to employees. "But I promise you this: if we move forward and rebuild, that will not be the last word written about this company."
Have something to add to this story? Share it in the comments.
Seth Fiegerman was a Senior Business Reporter at Mashable, where he covered startups, marketing and the latest consumer tech trends. He joined Mashable in August 2012 and is based in New York.Before joining Mashable, Seth covered all things Apple as a reporter at Silicon Alley Insider, the tech section of Business Insider. He has also worked as a staff writer at TheStreet.com and as an editor at Playboy Magazine. His work has appeared in Newsweek, NPR, Kiplinger, Portfolio and The Huffington Post.Seth received his Bachelor of Arts from New York University, where he majored in journalism and philosophy.In his spare time, Seth enjoys bike riding around Brooklyn and writing really bad folk songs.
