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TriNet Zenefits

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YourPeople, Inc.
TriNet Zenefits
Company typeSubsidiary
IndustryHuman resource management
FoundedFebruary 18, 2013; 11 years ago (2013-02-18)
Founders
Headquarters
San Francisco, California
,
United States
Area served
United States
Key people
Jay Fulcher (CEO)
RevenueIncrease US$43.5 million (2016)[1]
Number of employees
500 (2019)[2]
ParentTriNet
Websitewww.zenefits.com

TriNet Zenefits (legally known as YourPeople, Inc. and previously known as Zenefits) is a technology company based in San Francisco that offers cloud-based software as a service to companies for managing their human resources, with a particular focus on helping them with payroll and health insurance coverage.[3][4][2] The company was founded in 2013.[5]

History

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Zenefits was started by Parker Conrad and Laks Srini to help startups and small businesses find insurance quotes and manage employee benefits in one place. It officially launched on February 18, 2013.[6]

In January 2014, the company announced the addition of commuter spending, flexible spending, and 401(k) support, to replace functions usually handled by companies' human resources departments.[7] In July, the company announced support for stock options in its cloud HR platform.[8]

On April 21, 2015, TechCrunch reported that Zenefits raised somewhere between $300 million and $500 million at a valuation worth $3 billion, and possibly as high as $4 billion.[9][10] On May 6, the round was reported to have closed with $500 million raised from investors including Fidelity Management, TPG, and Comcast Ventures at a valuation of $4.5 billion.[11][12][13] In November, Forbes ran an article on the company defending it against the claim it was in a unicorn bubble.[14]

Compliance issues

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In 2016 an internal legal investigation at Zenefits found the company's licensing was out of compliance and that Conrad had created a browser extension to skirt training requirements for selling insurance in California.[15] After self-reporting these issues, Zenefits hired an independent third party to do an internal audit of its licensing controls and sent the report to all 50 states.[16] The California Department of Insurance as well as the Massachusetts Division of Insurance began investigations of their own based on Zenefits' report.[17][18] Parker Conrad resigned as CEO and director in February and COO David O. Sacks was named as his replacement.[19]

Workplace culture

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Shortly after becoming CEO, Sacks issued a memo to employees in which he banned the consumption of alcohol in the Zenefits offices. "We operate in a highly regulated industry," he wrote, "and it's important to set the right tone in the office. The new policy helps to achieve this and communicate that we are committed to operating with integrity."[20] Days later, The Wall Street Journal dug up an old Zenefits facilities memo from a year previous telling employees that "Cigarettes, plastic cups filled with beer, and several used condoms" had been found in the stairwell of the building. Zenefits was quick to point out that they share this stairwell with dozens of other businesses.[21] When asked about the incident at TechCrunch Disrupt SF, Sacks said, "A lot of the stuff was obviously the media getting carried away. That was not something that happened. That story — there was no truth to it at all."[22] On February 26, 2016, Zenefits laid off 250 people, about 17 percent of its employees.[23] In June the company laid off another 9 percent (106 additional people).[24]

Regulatory settlements and fines

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In July, Zenefits reached its first state regulatory settlement with Tennessee for $62,500,[25] four months after the company's initial self-reporting of compliance issues to the states in which they had been operating. Settlements with additional states followed.[26][27][28][29] On November 28, Zenefits was fined $7 million by California's insurance regulator for allegedly disobeying insurance laws.[30]

Transformation and further layoffs

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On February 3, 2017, Jay Fulcher was appointed as new CEO and Chairman.[31] On February 9, Zenefits announced it would be laying off 45% of its workforce as a way to "move toward an operating model that is sustainable and better reflects the needs of our current business" as noted by Fulcher in a memo sent to employees.[32][33] In September, the company changed its business model from an insurance broker to a SaaS software platform for brokers, offering HR, payroll, benefits and wellness applications to small businesses and insurance brokers. It also announced it was partnering with Atlanta-based broker OneDigital to begin to offer broker partner-based regional support.[34] OneDigital became the first member of Zenefits' new Broker Partner Program.[35]

In October 2018, the company began offering a well-being product in conjunction with American businesswoman Arianna Huffington's wellness company Thrive Global.[36]

In April 2020, Zenefits laid off 15% of its staff due to the COVID-19 pandemic.[37] In August, the company added collaboration tools People Hub and Employee Engagement Surveys to assist managers with managing remote workforces during the Coronavirus.[38]

In January 2021, the company launched a healthcare plan shopping feature on its platform.[39]

Decline and acquisition

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In March 2021, the company entered a financing agreement with private equity firm Francisco Partners that gave the firm control of the company. Forbes reported that the company's value had declined significantly by that time.[40]

Forbes reported that the company's value had declined substantially since its 2013 valuation.[40]

In February 2022, Zenefits was acquired by Francisco Partners-owned TriNet and was renamed to TriNet Zenefits.[41]

Services

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Zenefits offers a platform for small and mid-sized businesses to administer and manage benefits; HR functions such as time tracking, onboarding and employee record keeping; payroll; performance and well-being.[42][2] The company also offers users access to human resource and payroll advisors.[43]

The platform includes collaboration tools to assist managers with managing newly remote or hybrid workforces. Its People Hub integrates various messaging, collaboration, and interaction features inside Zenefits. Its Employee Engagement Surveys help track company morale and show how motivated employees are in their jobs.[38] The platform also includes an online healthcare plan shopping feature, as well as a cash price insurance model offered by partner Sidecar Health.[39]

Financials

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Zenefits has been valued as high as $4.5 billion; it has received $583 million in venture-capital funding from investors such as Andreessen Horowitz, Brendan F. Wallace, Venrock, TPG, I.V.P., and Fidelity.[21]

Locations

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Zenefits is headquartered in San Francisco.[44]

References

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  1. ^ Alden, William (December 2, 2016). "Zenefits Lost $200 Million Last Year". CNBC. Retrieved January 24, 2017.
  2. ^ a b c "How Zenefits recovered from scandal in insurance business". SF Chronicle. November 2, 2019. Retrieved January 28, 2021.
  3. ^ Manjoo, Farhad (September 21, 2014). "Zenefits' Leader Is Rattling an Industry, So Why Is He Stressed Out?". The New York Times. Retrieved January 21, 2015.
  4. ^ Lynley, Matthew (May 1, 2013). "Zenefits Tries to Take the Pain Out of Human Resources". Wall Street Journal. Retrieved January 21, 2015.
  5. ^ Manjoo, Farhad (October 12, 2016). "Zenefits, a Rocket That Fell to Earth, Tries to Launch Again". The New York Times. Retrieved November 18, 2016.
  6. ^ Empson, Rip (February 18, 2013). "Y Combinator-Backed Zenefits Gives Small Businesses A One-Stop Shop For Finding And Managing Employee Benefits". TechCrunch. Retrieved January 20, 2015.
  7. ^ Empson, Rip (January 10, 2014). "Fast-Growing Zenefits Adds Commuter Benefits, Flexible Spending And 401(k) Support As It Moves To Take Over Startup HR". TechCrunch. Retrieved January 20, 2015.
  8. ^ Lawler, Ryan (July 25, 2014). "Zenefits Adds Stock Options To Its Cloud HR Platform". TechCrunch. Retrieved January 21, 2015.
  9. ^ Lawler, Ryan; Wilhelm, Alex; Lynley, Matthew (April 21, 2015). "Cloud HR Startup Zenefits Is Looking To Raise A Giant New Round Of Funding". TechCrunch. Retrieved April 22, 2015.
  10. ^ Schubarth, Cromwell (April 22, 2015). "Zenefits is latest 'private IPO' in works, seen seeking $300M-$500M". Silicon Valley Business Journal. Retrieved April 22, 2015.
  11. ^ Keohane, Dennis (May 6, 2015). "Zenefits raises $500 million for its HR software and insurance hybrid, beating off new customers 'with a stick'". PandoDaily. Retrieved May 6, 2015.
  12. ^ MacMillan, Douglas (May 6, 2015). "Zenefits Is Tagged With a $4.5 Billion Valuation After Just Two Years". Digits (blog). Dow Jones & Company. Retrieved May 6, 2015.
  13. ^ Baumgartner, Jeff (May 29, 2015). "Comcast Ventures Is Friends with Zenefits". Multichannel News. New York City: NewBay Media. Retrieved May 29, 2015.
  14. ^ "What Bubble? The Unicorn Boom Has Just Begun". Forbes. October 14, 2015. Retrieved January 28, 2021.
  15. ^ Alden, Will (February 11, 2016). "Zenefits Software Helped Brokers Cheat On Licensing Process". BuzzFeed. Retrieved November 28, 2016.
  16. ^ O'Brien, Sara Ashley (February 8, 2016). "Zenefits CEO steps down over compliance issues". Cnnmoney. Retrieved November 28, 2016.
  17. ^ Suddath, Claire; Newcomer, Eric (9 May 2016). "Zenefits Was the Perfect Startup. Then It Self-Disrupted". Bloomberg Businessweek. No. 9 May 2016. Retrieved 16 May 2016.
  18. ^ Fernandes, Deirdre. "Mass. insurance regulator investigates benefits software firm". The Boston Globe. No. 9 Mar 2016. Retrieved 16 May 2016.
  19. ^ Solomon, Brian (February 8, 2016). "Zenefits CEO Parker Conrad Resigns Amid Scandal". Forbes. Retrieved May 16, 2016.
  20. ^ Bort, Julie (February 19, 2016) "Zenefits' new CEO just banned employees from drinking alcohol at the office." Business Insider. (Retrieved 6-17-2016).
  21. ^ a b Kossof, Maya (June 14, 2016). "Months After Banning Sex in the Stairwells, Zenefits Lays Off Another 106 Employees". Vanity Fair. Retrieved December 6, 2016.
  22. ^ Kendall, Marisa (September 13, 2016). "Moving beyond 'sex in the stairwells': Zenefits CEO spills about cleaning up the company". Retrieved December 6, 2016.
  23. ^ Lynley, Matthew (16 February 2016) "Zenefits Is Laying Off Roughly 250 Employees." TechCrunch. (Retrieved 6-14-2016).
  24. ^ Lynley, Matthew (16 June 2016) "Zenefits is laying off another 106 people and offering others a buyout." TechCrunch. (Retrieved 6-14-2016).
  25. ^ "TDCI Levies $62,500 Fine Against Zenefits". July 25, 2016. Retrieved November 18, 2016.
  26. ^ Dave, Paresh (November 28, 2016). "Employee benefits start-up Zenefits is fined $3.5 million for licensing violations". Los Angeles Times. Retrieved December 6, 2016.
  27. ^ Alden, William (October 7, 2016). "Zenefits Settles Insurance Investigation In Washington State". BuzzFeed. Retrieved November 28, 2016.
  28. ^ Rauber, Chris (September 13, 2016). "Zenefits settles with five more states over broker licensing snafus". Retrieved November 18, 2016.
  29. ^ "Texas Department of Insurance fines Zenefits $550,000". 2016-10-14. Retrieved November 18, 2016.
  30. ^ "Zenefits hit with $7 million fine by California insurance regulator". Reuters. November 28, 2016. Retrieved January 28, 2021.
  31. ^ "Zenefits Names Tech Industry Vet as New CEO". Fortune. 2016-02-06. Retrieved January 28, 2021.
  32. ^ "Troubled startup Zenefits just laid off almost half its staff — here's the full email sent to employees". Business Insider. February 9, 2017. Retrieved January 28, 2021.
  33. ^ "Zenefits is laying off 45% of its workforce". TechCrunch. February 9, 2017. Retrieved January 28, 2021.
  34. ^ "Zenefits tries a rebrand and hands off insurance brokerage". Techcrunch. September 21, 2017. Retrieved January 28, 2021.
  35. ^ "Zenefits' big switch: From fighting brokers to serving them". San Francisco Business Times. September 9, 2017. Retrieved January 28, 2021.
  36. ^ "Arianna Huffington's Thrive Global is teaming up with Zenefits". Techcrunch. October 18, 2018. Retrieved January 28, 2021.
  37. ^ "Zenefits cuts its workforce by double digits". San Francisco Business Times. April 4, 2020. Retrieved January 28, 2021.
  38. ^ a b "Zenefits Delivers New Tools for Managing a Remote Workforce". PC Magazine. August 4, 2020. Retrieved January 28, 2021.
  39. ^ a b "Zenefits Launches Online Health Insurance Shopping for Small Businesses". Small Biz Trends. January 1, 2021. Retrieved January 28, 2021.
  40. ^ a b Feldman, Amy. "Zenefits, Once Worth $4.5 Billion, Does Deal With Private-Equity Firm That Gives It Control". Forbes. Retrieved 2022-12-16.
  41. ^ "TriNet Completes Acquisition of Zenefits". Zenefits (Press release). Retrieved 2022-04-25.
  42. ^ Empson, Rip (February 18, 2013). "Y Combinator-Backed Zenefits Gives Small Businesses A One-Stop Shop For Finding And Managing Employee Benefits". Retrieved January 28, 2021.
  43. ^ "Zenefits Review". PC Magazine. January 13, 2020. Retrieved January 28, 2021.
  44. ^ "Contact us". Zenefits. Retrieved December 16, 2022.
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