The hits keep on coming for Silicon Valley start-up Zenefits. First came the leadership shake-ups. Then came the partying allegations. Now, it’s learned Zenefits is laying off 1/6 of it’s entire work force. The reason: ‘to refocus’.
The once 4.5 billion dollar company is now struggling to make any revenue or any profit. One investor marked down share value. New COO David Sacks is on the a crusade to get Zenefits back on the right track. First, he banned alcohol and sex on the stairwells. Now, he’s letting go of 250 workers. According to Sacks’ own statement, sales and recruitment departments will be the hardest hit by these layoffs. He believes this move will grow the business in ways that will benefit and attract customers. In the email, Sacks says the layoff decision was the most difficult decision of his career, but this is what it takes for Zenefits to get better. He insists the layoffs were not because of poor performance, but admits the company grew too fast and culture got way out of control. The email talks about failed tech comebacks Sacks witnessed because of obsolete technology. He doesn’t want Zenefits to join the dubious club. He promises, and with confidence, Zenefits will overcome the recent struggles.
In this case, a ‘refocus’ is what Zenefits need. First there were questionable ethics as employees were taught shady ways to sell insurance. That led to the downfall and removal of their own former CEO and founder. You know things are bad when the founder and CEO of a company are asked to leave the very company they built. Then came stories of wild partying and an inappropriate work culture, such as condoms, beer cans and cigarettes found on the stairwell. I can see why small businesses (their main clientele) are weary of a company like this. Zenefits needs to be turned inside out, then start over from scratch. I’m sorry for the layoffs and wish those affected well in their future endeavors. But in Zenefits’ case, this is a necessary pain. Do you think the layoffs were needed to refocus?