Zenefits cuts nearly 50% of workforce

There was a thread a few days ago called "Who's Firing?" that seemed like kind of a spoof. Suddenly it seems more relevant.

It has nothing to do with bubbles. They started doing it years ago to grow faster. There are some good articles about what happened.

"Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett

Weak correlation. The bad actions at Zenefits were going on several years ago. The same was true of Theranos, their ill behavior goes back nearly to the beginning of the company.

There may be somewhere between 250 and 300 total billion dollar "unicorns" at this point. So far as I've seen the last two years, the Zenefits companies are still rare.

The money parade doesn't end until the Fed pulls the plug on hyper low interest rates. It started there and it ends there, as it did the prior two easy money periods of time (late 1990s and mid 2000s). Until then, the trillions in cash sloshing around will keep seeking better returns via various forms of higher risk speculation.

There's a profit incentive at all stages of growth and economic strength.

I reminds me before the 2001 crash I remember at the height reading a 3 inch long story in the WSJ mentioning that a business school professor did background checks on a 100 tech startups. Found 1/3 of them had CEO/COO/CFO's or board members that had been prosecuted previously for securities fraud.

Since the sort of dip last year it seems the clock is ticking. Look at unicorns that were about to IPOnin Q1. AppDynamics got bought by Cisco, other moved their plan to somewhen 2018 IPO. You read about more lay-offs then in previous times. Something is going on, maybe a deflation or a slower beginning of a bubble burst.

I'm of two minds about that. On the one hand, that's bad for the obvious reasons that I don't need to repeat.

OTOH, most of these training videos exist for stupid reasons. They don't make brokers any better at navigating ethical dilemmas -- as the content is usually 100% obvious -- nor make them any more predisposed to be ethical. And they training videos did that, and they do actually watch them, said brokers don't remember any of it two days later.

The training, and its mandate, basically exist to protect someone else from liability: "see, we told them you can't lie to potential customers, not our problem!" And that, in turn, probably exists only because we tolerated that defense:

"Yeah, I [did obviously unethical practice] ... but no one never told me I couldn't!"

So we all go through the motions of watching a mandatory training video that tells us nothing we didn't already know and won't remember anyway.

  I know I wouldn't want to work somewhere that frowned upon 
  getting drunk at the office and having sex with my co-
  workers in the office stairwells.

Truly, what is the point of working there if you can't have workplace 'friends with zenefits'.

I think the idea is that you don't want to work at a place where that memo is needed in the first place.

Urban Dictionary

Friends with Zenefits: Two co-workers who have a sexual relationship in the office without being emotionally involved or committed to each other. The sexual encounters only occur at the office during working hours.

Thanks, just sent you an email.

I'd be interested in this too. How do I contact you?

I've used ADP for years and I have never successfully logged in without resetting my password, even when my password is correct because it is saved in my password manager or written down. I don't log in that often, so I'd like to think they are periodically resetting passwords for "security". But I don't think that is what's happening. :(

It's $$$$$

heh, Workday is big boy status and convoluted go thru a 3rd-party to acquire the software method.

That's why I called mine bronze handcuffs.

As much as I want to shit on Zenefits I think they actually doubled up employee options as well.

Sacks was pretty good about handling that situation.

Still agree with your overall point though - it's going to be a long, long time before those shares are worth anything.

can you explain a bit about how preferred shares wipe out employee options? thats only in the scenario the company exits for far fewer than its current valuation?

The people who get hired then laid off.

One answer: destructive to other businesses that can't compete with VC-backed price dumping. A good recent example was wash.io: they undercut and drove out a bunch of laundromats in San Francisco, and then, just to put the cherry on the stupidity cake, they went out of business themselves, so now there are a whole bunch of people in SF that can't do laundry. There was an extensive Twitter debate about this that I would link to, but it appears to have all been deleted.

To the companies at issue and their employees, obviously.

An angel investor recently responded to my pitch materials by scolding me for saying that our unit economics were strong enough to make most of our revenue profit (which is true). He said it "wasn't smart" and that other investors would question whether I'd thought through our business model. Months later, I am still at a loss for words.

Just playing devil's advocate here, I think the whole venture capital/startup ecosystem is really broken. But: imagine for a second that you have a really good business model. It will be profitable beyond a certain scale. You don't have the capital on hand to grow it to that scale yourself while eating the losses. What's a guy to do? Meanwhile, some other guy has a lot of money and is always thinking about how he could be making even more money. He can bankroll you until you hit the sustainability threshold and become profitable, in return for a share of profits, or stock, or something similar. A return on investment, essentially. If you don't have a system like this, only existing big players can sink the capital into ventures like this, where they require a large scale before returning profits. And large companies are pretty risk averse in general, so that's not a great solution either.

The issues is that the VC wants to see growth, since growth means you're edging closer to profitability. They'll continue to give you more and more cash if you need it, as long as you look promising. This creates the incentive for you, as the startup, to make it look like you're growing, in return for more VC cash. Regardless of actual growth numbers. Growth "hacking" is a result of the incentive structure. But the system exists because there are business models that cannot be self-sustaining from day 0 that, nonetheless, could possibly be a very good investment for a VC to make if it grows large enough.

The cure is simple. Stop being greedy?

Not that it is a good idea, but I wonder what would happen if a version of "basic income" for VCs was created, the difference being that no exit or return is needed.

Eh, developer pay and engineering in general has been a high paying field for eons. It takes a lot of specialized knowledge to do and that's only becoming more of the case as the industry further specializes and expands. It's like how there used to be one kind of doctor and now there's hundreds of specialties.

The only ones hurt will be generalists. It's not like you can pull a guy off the street and have him do 90% of dev jobs. The number of people capable of doing the job well will mean it always pays fairly well.

Real estate on the other hand can be done by anyone with some charisma and decent reading/writing ability which is probably about 50% of the population. These are the niches where high paying jobs don't last. Look what happened with Uber recently, once the job seekers catch on to an easy source of high income it's a few years or less before that income dwindles from excess supply

All the time on everything. That's how a sustaining economy works. Every one gets a piece by inserting themselves in the pie.

But the same time the idea is that everyone in the chain is delivering value or else they wouldn't be there because someone else will provide something better by ruthlessly removing said intermediary out when it is no longer efficient.

If you have a better way of selling houses between people without the need for that 9-12% you would be doing it now or you would have done it by now.

Literally the definition of a founder. You find opportunities to exploit.

That's not how markets work. Clearing prices are set by supply and demand, not by the seller's costs.

But I was under the impression that Vancover was incredibly expensive.

Your take home pay at the end of the year would be 88k - 116k (if those numbers are to be believed). After accounting for rent and other expenses, I feel like that's average at best.

Looks like they have an awesome location right on Homer in Yaletown, although it doesn't seem like the office will fit more than 50 people give or take.

Anyone know how large they're expanding into Vancouver?