David Sacks, the CEO of troubled startup Zenefits thinks it’s unfair that the press has been lumping it into the same category as troubled startup Theranos.
He went on a whole Twitter rant about it on Friday, linking to this story in the LA Times about how startups that claim to be “disruptive” are often mostly hype.
The reporter, Michael Hiltzikin, starts with Theranos, which has become the poster child for highly funded, highly valued startups that have run afoul.
Hiltzikin points out the company’s run-in with regulators who have questioned the accuracy of its one-drop-of-blood blood testing technology. (Theranos has recalled the test results from its blood machines, the Wall Street Journal recently reported.)
The reporter then notes that Zenefits is another high-flying startup that ran afoul of regulators, who have been investigating the company for selling insurance without a licence.
In Zenefits case, its CEO resigned over the matter, and the company than revealed details of how that CEO created a program that may have let employees skirt the law when studying for their licenses.
Sacks basically accused the reporter of being “lazy.”
He then went on to insist that Zenefits problems, which the company first acknowledged four months ago, should be considered ancient history.The tweet storm comes a few weeks after Sacks posted a blog with an update about the company.
It documented all the ways he changed the company since he took over as CEO on February 8, when founder Parker Conrad resigned. (Sacks had been with the company as COO since December 2014.)
Here’s his whole rant:
Unlike others, we have fixed our licensing issues. These are historical issues, not current ones. Today we are operating in compliance.
Unlike others, we self-reported these historical licensing issues to regulators. We’ve been open and transparent about past failings. Today we are operating in compliance.
Unlike others, we reconstituted our board of directors to provide proper oversight and corporate governance.
Unlike others, we have stood up a robust compliance organisation to prevent these issues from happening again.
Unlike others, we proactively commissioned a Big Four accounting firm to audit our licensing and shared the result with regulators.
Unlike others, we have made compliance a central part of our culture, values and expertise moving forward.
Most of all, we have a real product that works for many thousands of small businesses who express appreciation and gratitude.
As a result, our customer base (over 20,000) is sticking with us and ARR remains over $60M.
In summary, Zenefits today is a different company that has addressed its historical issues and is looking to the future.
To his credit, it is hard to clean up a troubled company with more than 1,000 employees whose products are used by 20,000 customers — and do it in the public eye.
On the other hand, Zenefits’ problems were not exactly the messenger’s fault and it might take more than a couple of months to prove itself a comeback story.
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