Zenefits facing further losses and a search for new CEO
Zenefits, the start-up health insurance broker valued at $2bn, is battling losses that are eroding cash stores and the search for a new CEO, according to confidential documents. The firm has been plagued by scandal and regulatory settlements over flouted US state insurance laws. David Sacks took over the CEO role after Parker Conrad was ousted in February. While revenues outpacing costs, and deep-pocketed investors, CNBC predicts Zenefits fiscal losses for this year may be similar the last ($204.5m). Sacks is reportedly open to working with the incoming Administration; his friend Peter Thiel is a member of Trump's transition team.
David Sacks, the CEO of Zenefits, plans to step down as head of the embattled human resources startup after less than a year on the job, he told BuzzFeed News Friday evening.

Zenefits is currently conducting a search for a new CEO and does not yet know who will take over, or when the handover will happen, Sacks said. He said he plans to stay on as CEO until that time, at which point he will take on the role of chairman, working alongside his successor.

Going forward, Sacks is open to the possibility of working in the administration of President-elect Donald Trump, even in an informal role, according to a person close to him who insisted on anonymity. Peter Thiel, the billionaire tech investor who is a member of Trump's transition team, is an old friend of Sacks' and sits on Zenefits' board. The two men, who met as students at Stanford University, once co-wrote a provocative book critiquing "multiculturalism" on college campuses and later were early executives at PayPal. (Both recently apologized for the book.)

The shakeup at Zenefits caps a turbulent year for the startup health insurance broker, which ousted its founding CEO, Parker Conrad, in February after revelations that it flouted state insurance laws. Under Sacks, Zenefits has shed hundreds of staff, struck settlements with state regulators that were investigating the company, and released a new software platform called Z2, all in an effort to remake itself.

Sacks said on Friday that he felt he had "accomplished everything I set out to accomplish," and that he had been discussing with the board for a few weeks the possibility of his stepping down as CEO.

"It's not a job I sought," said Sacks, who had been the chief operating officer before the board asked him to take the helm. "I had a responsibility to the investors and employees to guide the company through this crisis, and we've done that."

Sacks, who rose to prominence as chief operating officer of PayPal and later sold his software startup Yammer to Microsoft for over $1 billion, added, "This is the hardest thing I've done as an entrepreneur, effectively re-founding the company."

"You saw how tired I was at Z2," he said, referring to the October conference where Zenefits unveiled its new software platform. "This took everything I had."

The Wall Street Journal reported Friday that Sacks planned to join Trump’s transition team, but Sacks refuted this, and told BuzzFeed News, "I have no plans to join the transition team." A Zenefits spokesperson declined to comment on the possibility of Sacks' working in the Trump administration.

The Information earlier reported that Zenefits was searching for a candidate to possibly replace Sacks as CEO.

Even as it cleans up its legal mess, Zenefits is awash in red ink. BuzzFeed News reported on Friday that the company lost $204.5 million in its last fiscal year, on revenue of $43.5 million, though its revenue is growing and it has reduced its monthly cash burn.



Here is the full text of an email Sacks sent to his employees Friday night, which was obtained by BuzzFeed News: