Zenefits, which made money by acting as a health-insurance brokerage firm for its customers, raised $500 million at a $4 billion valuation only two years after founding. Zenefits employees cheating on the state’s online broker license course led to the CEO’s departure.
Zenefits was a company consumed by impossible growth expectations to grow into its high valuation. Zenefits began hiring people who had little experience with software sales in a highly regulated industry. To increase revenue, the company moved beyond small businesses to customers with hundreds of employees — and the software struggled to keep up. Instead of pausing to fix bugs, Zenefits simply hired more employees to fill in where the software failed, including repurposing product managers for manual data entry.
There was a laxity about rules and decorum. Zenefits offered beer kegs in its offices, and people freely imbibed during the workday.