Zenefits today is laying off another 9% of its staff — or 106 additional people — and offering its existing employees a buyout offer as it continues its transition following former CEO Parker Conrad stepping down amid a ton of turmoil.
The news was in a memo issued by David Sacks to the company’s employees, which was first reported by BuzzFeed. In February, the company said it was laying off 250 employees, largely concentrated in its sales division. This time around, the layoffs are in conjunction with the closure of the company’s sales office in Arizona and including other operations people, Sacks said in the memo.
Perhaps the more interesting news is an offer to buy out existing employees with a two-month severance package ominously named “The Offer.” The goal of “The Offer” seems to be to reset the company’s culture and bring it in line with a more focused startup. Zenefits employees have two days to decide whether to accept the offer. Sacks pulled no punches in his explanation for the move: “If you can’t get excited about [the new Zenefits], then frankly we need you to make space for someone who will.”
“As you consider your options over the next two days, please know that the company isn’t making The Offer because we don’t want you,” Sacks said in the memo. “We do want you, but we want the best of you. We want you winning core value awards. We want you prototyping a great idea at Hackday. We want you staying late to help out on a project. We want you busting ass on Z2. The next few months are going to be an exciting time at Zenefits and we want everyone participating in that.”
Zenefits is still reeling from regulatory issues across multiple markets — including the company allowing unlicensed brokers to sell health insurance, and also 80 percent of the company’s deals in Washington being done by unlicensed brokers, according to a BuzzFeed report. All this resulted in Conrad stepping down after growing the company to a $4.5 billion valuation — seemingly at great cost as Zenefits is now forced to go through a massive transition under Sacks.
Zenefits offers small- and medium-sized business simpler human resource management tools, and also payroll services. The company offers its software for free and makes money through commissions.
Sacks joined Zenefits in December 2014, and since taking over as CEO has promptly started clearing house in order to set the company on a different direction. That’s involved a suite of new executives and, of course, layoffs.