Zenefits: New or Improved Yet Out of Insurance

HR and benefits startup Zenefits has announced a makeover and its exit from insurance .

But first things first, here’s a brief Zenefits’ history in under a minute . In 2013, Parker Conrad launched the startup to offer an easy-to-use free cloud service for human resources functions. Then came $2.1M in funding. Then came $15M in funding. Then came $66.5M in funding. Then came $500M in funding at a $4.5B valuation. Then came regulatory concerns over the startup’s inadequate compliance procedures. Parker resigned. Savior David Sacks stormed in with his Z2 platform strategy, a devaluation of the company to $2B, and many many settlements with insurance regulators. Then Jay Fulcher took over as CEO.

Welcome to today.

A new look:

A change in business model:

Zenefits will no longer act as an insurance broker but rather will provide software to brokerages that sell benefits to companies in exchange for a portion of the revenue these brokerage firms make. It named its first insurance partner – OneDigital. Also, its software will no longer be free; not that surprising given that in Washington it was forced to charge ‘something’ for its software to comply with the Washington state insurance law against inducements.

It’s interesting to note that Zenefits didn’t mention its recent partnership with small business insurance broker Embroker, as was announced by Embroker on June 7, 2017. This is Embroker:

Bottom Line: an easier to manage salesforce – in quantity and quality.