First CEO Parker Conrad resigned. Next Buzzfeed revealed brokers at the company were faking their qualifications and executives were fired. Then the new CEO, David Sacks, had to tell staff to stop drinking at the office and the Wall Street Journal reported the company had been struggling with staff having sex at the office.
Now, insurance brokerage startup Zenefits is laying off 250 employees, or 17 percent of its workforce. Sacks says the cuts are not for performance reasons.
"It is no secret that Zenefits grew too fast, stretching both our culture and our controls. This reduction enables us to refocus our strategy, rebuild in line with our new company values, and grow in a controlled way that will be strategic for our business and beneficial for our customers," wrote Sacks in an email he sent to employees, published online by Business Insider.
He characterized the layoffs as a "reduction in force," "meaning that we are not cutting these jobs for performance reasons."
The company is offering those laid off three months of severance pay, the option to continue their health insurance six months, "and transition assistance to help them find and move on to their next job."
Sacks, who served as Zenefits' COO prior to stepping up as CEO, said he was confident the company has a future. The former COO of PayPal and founder of workplace collaboration tool Yammer, which ultimately sold to Microsoft, said he thinks Zenefits will fall outside the narrative of failed tech company turnarounds.
"During my years in Silicon Valley, I've seen a number of attempted tech turn-arounds. Frankly, they don't have a very good track record. But that's because those companies had become obsolete technologies; they had lost their product-market fit. That is not Zenefits. Zenefits has made mistakes but it never lost its product-market fit," he said.