Security Staff Acquisition & Development

Zenefits 2016 Layoffs Round 2: 106 Job Cuts, 9% of Staff

David Sacks
David Sacks

Zenefits, a unicorn that cut 17 percent of its staff in February, is having more layoffs. The latest round involves 106 job cuts -- which represents 9 percent of staff, according to multiple reports.

Zenefits promotes online HR software, managing payroll updates, health insurance administration, compliance and more. The company was once a Silicon Valley darling. But a compliance scandal prompted co-founder Parker Conrad to resign in February 2016. Replacement CEO David Sacks immediately cut 250 jobs. Now he's heading back to the chopping block, eliminating another 106 positions, according to Business Insider.

Sacks attempted to rally employees around several milestones, including a core focus on the small business market and an improved product roadmap, the media site reported.

The big challenge: Growing top-line revenue while abandoning enterprise customers and expanding the SMB customer base. While SMB revenues are growing, top-line revenues are essentially flat at $60 million (annual recurring revenues or ARR) because of the enterprise shut-down.

Unicorns -- startups with valuations at $1 billion or more -- were once the envy of Silicon Valley and entrepreneurs worldwide. But in recent months, Unicorns have been viewed with healthy skepticism -- forcing many businesses to adjust their financial models. Dropbox, for instance, has been pushing toward a 'post-unicorn era' because the scorecard has changed and investors now demand cash flow positive companies, according to Bloomberg.

Some unicorns focused on profitability from the get-go. Datto, for instance, is a profitable unicorn that's now extending beyond business continuity to focus on networking as well. Datto will promote that strategy to MSPs during DattoCon16 next week in Tennessee.

Meanwhile, some unicorns remain under pressure -- particularly Zenefits. The company raised $500 million at a $4.5 billion valuation in May 2015. Fast forward to about March 2016, and Zenefits' valuation was down to about $1.575 billion. That still qualifies as a unicorn -- but not a very healthy one...

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.