Stories of rapid growth in Silicon Valley are common. But few reach the stratospheric journey of this online SMB staffing and insurance management company. Founded in 2013 by a young entrepreneur, Parker Conrad (then 33 years old), who is still considered a visionary, Zenefits, which started with 15 employees, grew to over 1,600 in 2015. With a customer portfolio of 14,000 companies, it generated sales of $65 million, after receiving $583 million from private capital, it was valued at $4,500 million.

An amazing result responding to a brilliant idea. Conrad tried to solve all the administrative problems of SMEs at a low price, which is important as these companies typically don’t have a structure to manage their labor, tax, and insurance affairs. Part of the revenue came from the commissions paid by the SMEs and another from the insurers, who paid them an annual payment for the premium received.

Zenefits best deals were those Health insurance. His system made it possible to choose the two or three best options out of thousands of possibilities, depending on age, income, etc. The growth has been so rapid that the company planned for 2015, the year in which it plans to hire 1,000 more employees, reckoned with a turnover of 100 million. But everything went wrong when Washington state authorities opened one Investigation into allegations that 83% of its insurance sales were made by unlicensed agents. A topic that was leaked from the magazine BuzzFeed and that marked the beginning of the end by creating mistrust of the company. Similar investigations followed in California and Massachusetts, forcing Conrad to leave his post in February 2016 amid the layoffs of more than 250 workers. The investigations were backed up with fines running into the millions.

It is incomprehensible to many that a “genius” like Conrad could make a mistake of such proportions. He did it knowingly. Within the company, his colleagues warned him of what might happen and he turned a deaf ear to them. A man capable of spotting radically new ideas and drafting a detailed and concise business and operational plan, Conrad was said to have no managerial skills. He was disorganized and so detail-oriented that he wanted to control everything, including payroll and vacation time for the nearly 2,000 workers.


If you are a young entrepreneur, you run the risk of making one of these five mistakes