The news broke earlier this morning that Zenefits CEO Parker Conrad has exited the web-based benefits and payroll provider, and COO David Sacks is taking over his role. Conrad is also stepping down as a director of the company, according to a news release by the company.
(The company also named three new directors to its board this morning: Valor Equity Partners managing partner Antonio Gracias; TPG managing partner Bill McGlashan; and PayPal co-founder Peter Thiel.)
Compliance issues that have plagued the company apparently contributed to Conrad’s exit. Zenefits has also hit significant snags, including missing revenue targets and also in its dealings with regulators, according to numerous reports.
One of the most-often quoted lines of the day came directly from a memo by Sacks that was sent to all Zenefits employees, explaining the reasons for the change in leadership:
The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong. As a result, Parker has resigned.
The company has been on HRE‘s radar for a few years now, starting with our HR Technology Columnist Bill Kutik, who first wrote about Zenefits back in November 2014, and included this interesting quote from the now-sacked Conrad:
[Conrad] Parker started Zenefits with one purpose in mind: “solving all the little headaches and annoyances that sucked up time for me at my last start-up; I get a perverse pleasure from stamping out each of these problems, one by one, for the next guy.”
Another HRE columnist, Steve Boese, wrote a short profile of the company and included Zenefits in the “Awesome New Technology” session at the 2014 HR Technology® Conference and Exposition:
Zenefits has the potential, in many ways, to significantly alter the way in which enterprise HR software is purchased and implemented.
Only time will tell whether today’s shake-up will help Zenefits unlock that potential that many industry experts — including ours — saw in them when they first launched.