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The inside story of Zenefits - Business Insider
LIES, BOOZE, AND BILLIONS: How one of the fastest-growing startups in Silicon Valley history raised $580 million then spiraled out of control
Everyone stopped working. Office cabinets were opened, and giant bottles of Fireball whisky, tequila, and scotch appeared.
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The cause for celebration on this day was the close of a "700-life deal," which was 300 "lives" over the previous record, according to a former employee who was there.
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Cofounder and then-CEO Parker Conrad and his right-hand man, vice president of sales Sam Blond, tossed back shots with the team.
A big land mine for Zenefits had to do with employees who allegedly weren't properly licensed to sell insurance. And the licensing issue was something "everyone knew about," one former salesperson said.
"Most of us had never been in the insurance industry," this former salesperson said. "We were all software salespeople in the San Francisco Bay Area. I got the job and didn't even find out I had to get a license until they told me in an email later."
The company told some new, unlicensed hires that, because Conrad was licensed in all 50 states, "we didn't have to be licensed — we were acting under his umbrella license," this person said.
Or, if a manager with a license was sitting in on calls, "that was good enough."
Zenefits liked to promote from within, but many of its workers were very young and had no experience managing, selling enterprise software, or selling insurance.
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Worse, the Zenefits software "wasn't enterprise-ready" with the kind of security and features that more expensive enterprise HR software offers.
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Salespeople at Zenefits were taught to tell prospective customers that the company's product was an automated system, former employees said.
But the former salespeople say they later learned that wasn't 100% true.
"It doesn't do what we sold it to do," a former salesperson said.
At one point, a public fight broke out between Zenefits and the payroll giant ADP in which ADP balked at the methods Zenefits was using to access payroll information for the companies' joint customers. Zenefits countered by saying it was behaving just as bookkeepers have behaved forever.
On top of that, salespeople were told to urge their clients to sign contracts quickly to avoid a $10,000 broker implementation fee that would go into effect at the end of the month.
"We never ever charged anyone the fee— all this was a lie we told to everyone," the former salesperson says.