- REUTERS/Beck Diefenbach
It’s been a rough nine months for troubled startup Zenefits and CEO David Sacks, the Silicon Valley entrepreneur who took over in February.
But on Tuesday, the company will host its first ever customer conference and launch the new version of its product, known internally as “Z2,” in a bid to finally move beyond its checkered past.
And Sacks, seizing on the symbolism of the moment, will mark the company’s turning of a new leaf with the changing of his wardrobe.
In 2015, Zenefits was a skyrocketing startup that came out of nowhere with its HR software, which was free to businesses who bought insurance from it.
But Zenefits’ hyper-growth was so poorly managed that the company spiraled out of control. It got reputation for a party culture. It missed sales projections. It admitted it was selling insurance without proper licensing in multiple states and in February, founder CEO Parker Conrad was forced to resign.
Sacks, an investor and the company’s COO, took over as CEO.
Since then Sacks has arguably done something that has never been done before: fixing the company’s problems very publicly, talking openly about everything from banning alcohol in the workplace to cutting a new deal with investors that slashed the company’s valuation in half. It also self reported everything to regulators.
Back in good graces
The turning point, at which Sacks knew his plan of attack was right, came in July, he told Business Insider in an interview.
That’s when the Tennessee insurance commissioner announced it was fining the company $62,50o and “put out their own press release saying the new management of Zenefits had righted the ship,” he said. “We didn’t necessary expect to get praised by a regulator.”
In fact, the press release said. “Under the company’s past leadership, compliance with insurance laws and regulations was almost an afterthought … Fortunately, new company leadership has demonstrated a dedication to righting the ship.”
In tech-startup style, Zenefits had also built an app to deal with its compliance issues using Salesforce’s cloud.
Earlier this month, thanks to that app which Zenefits had turned into a product, Sacks was invited to be part of the keynote at Salesforce’s huge conference, Dreamforce. (The app was built on Salesforce’s cloud.)
Dreamforce is a tech conference spectacle run by its Valley A-lister CEO Marc Benioff. To be showcased there was to be once again in the good graces of the Silicon Valley elite.
Sacks described it as “another important moment for the team” and told us, “I took them out to dinner that night.”
— Zenefits (@Zenefits) October 6, 2016
A T-shirt and a vow
He had also set employees to work on the next version of the product, called Z2 and in putting together the company’s first-ever customer conference, also called Z2, both of which are launching on Tuesday.
He donned a T-shirt that said “Z2” wearing it every workday, everywhere for months (even when speaking at conferences).
“I vowed to wear this shirt every day until Z2. After Z2, I’ll have to get a new shirt. But I have more than one, ” he told Business Insider.
When his Z2 conference finally comes and goes, he’ll change his shirt, he told us.
“The new shirt will be whatever the new goal is after Z2, but I can’t reveal that yet.”