They say 35 year old Parker Conrad's approach was "ready, fire, aim". Now, as Conrad resigned from position of Zenefits CEO, this Silicon Valley motto is less than sexy. The news of his resignation was due to inadequate compliance procedures and lack of internal processes' which are necessary for an insurance based startup. Incorporated as YourPeople Inc., the company grew feverishly and at all costs to meet heady expectations. By last fall, Zenefits had about 1,600 employees and had raised over $500 million from investors including venture-capital firm Andreessen Horowitz and Fidelity Investments. So how is it possible that a very regulated industry lets a startup reach such growth without having clear compliance embedded within the core from day one? And as a company reaches this size and magnitude, is it all the CEO's fault? Insuretech startups beware and be prepared.
In a strongly worded letter to employees announcing Mr. Conrad’s departure, Mr. Sacks criticized the culture and business practices created by his predecessor. “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,” Mr. Sacks said in the letter. “As a result, Parker has resigned.”