Zenefits CEO Parker Conrad
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Parker Conrad has resigned as CEO of Zenefits, following a number of regulatory compliance failures at the richly valued human resources startup, according to an email sent to employees on Monday.
David Sacks, the chief operating officer, who formerly was an executive at PayPal at Yammer, is taking over as CEO. The San Francisco-based Zenefits, which was valued at $4.5 billion in a funding round last year, is a middleman in the health insurance business.
"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," Sacks said in the email to employees. "As a result, Parker has resigned."
Last fall, BuzzFeed News broke the news that Zenefits apparently flouted insurance laws by allowing unlicensed brokers to sell health insurance. The insurance commissioner in Washington state is currently examining whether Zenefits operated there without licenses.
On Friday, in a followup report, we revealed that 83% of Zenefits' insurance deals in Washington state through August 2015 were done by employees without necessary state licenses.
In December, Zenefits hired a major auditing firm to conduct a review of the company's licensing procedures, which "we will turn over to regulators as soon as possible," Sacks said in the email.
"I will expand that effort into a top-to-bottom review to ensure appropriate and best-in-class corporate governance, compliance and accountability," he added.
"I believe that Zenefits has a great future ahead, but only if we do the right things," Sacks told employees. "We sell insurance in a highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die."
Here is the full email sent to Zenefits staff:
And here is the press release announcing the changes:
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