One struggling billion-dollar startup is hoping its story doesn't end with a bang.
Zenefits, the high-flying human resources software startup that has been dragged down in recent weeks by compliance failures and reports of sex in the office, announced Friday that it will be laying off about 250 employees, or 17% of its staff.
The layoffs, said to be "almost entirely" in its sales division -- coincidentally, the one that was the primary target of the lecture about the sexual activity -- represent the startup's latest attempt to curb its reckless growth and equally reckless behavior.
"We are letting go of many great people today, and it is not their fault," David Sacks, the newly named CEO of Zenefits, wrote in a memo to all employees, obtained by Mashable. "It is no secret that Zenefits grew too fast, stretching both our culture and our controls."
The painful layoffs provide a cautionary tale for Silicon Valley's fixation on fast growth at all costs.
Zenefits secured a staggering $500 million in funding at a $4.5 billion in 2015 after barely two years in operation, taking full advantage of the frothy venture capital market, which has since leveled off.
Investors bet on the promise that Zenefits could streamline employee healthcare benefit management -- and apparently bought into the idea that it was growing at a rapid-fire pace. Just one problem: its fast growth was in part the result of skirting regulations on gaining proper licensing for its salespeople.
Parker Conrad, the CEO and cofounder of Zenefits, resigned earlier this month after reports surfaced of its compliance failures. Subsequent reports provided lurid details about the company's lewd party culture, including the fact that employees had to be told not to have sex in the office stairwell.
"That pride may be a little bruised lately by what has been written in the press," Sacks said at the end of his memo to employees. "But I promise you this: if we move forward and rebuild, that will not be the last word written about this company."
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