Zenefits Chief Quitting and Is Said to Consider Trump Transition Team


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David O. Sacks, the chief executive of Zenefits, said little about why he was changing roles beyond saying that Zenefits was in a good position.

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Peter DaSilva for The New York Times

SAN FRANCISCO — Zenefits, a once highflying human resources software start-up that defined Silicon Valley’s recent technology boom, has been trying to recover its footing after being rocked by scandal over its business practices earlier this year.

Now David O. Sacks, the chief executive of Zenefits and the tech veteran who was charged with rejuvenating the embattled company, plans to leave his position. Mr. Sacks said that he would become Zenefits’s chairman and that the company was starting a search for a new chief executive.

“It’s time to find the next leader,” said Mr. Sacks in an interview. “We’re looking for an experienced operator to partner with me and take the company to the next level.”

Mr. Sacks said little about why he was changing roles beyond saying that Zenefits was in a good position, but a person briefed on the situation, who asked for anonymity because the process is confidential, said the executive had had discussions about helping President-elect Donald J. Trump’s transition team. Mr. Sacks previously worked with Peter Thiel, the billionaire technology investor who is a member of Mr. Trump’s transition team.

“Thiel is an old friend of mine,” Mr. Sacks said in the interview, adding that he has not had “formal talks with the transition team.” Mr. Sacks declined to comment on whether he had had informal talks with the Trump transition team.

The Information reported earlier on Friday that Mr. Sacks was considering stepping aside as chief executive; The Wall Street Journal said on Friday that Mr. Sacks is expected to join Mr. Trump’s transition team.

The last 12 months have been a roller coaster for Zenefits employees and investors. Founded in 2013, Zenefits made waves in Silicon Valley by shaking up the staid industry of human resources software and services. Under its founder, Parker Conrad, Zenefits produced web-based software for small and medium-size businesses to manage their human resources operations.

Venture capitalists took a liking to Mr. Conrad and the company. At one point, venture capitalists called Zenefits one of the fastest-growing start-ups they had ever seen and valued the company at $4 billion.

But what shot up so quickly came down just as fast.

Mr. Conrad was ousted from Zenefits this year after BuzzFeed News discovered that the company had allowed unlicensed brokers to sell health insurance to customers, and that some employees in the company had used a software program to game state insurance licensing tests. Zenefits and its investors were criticized for emphasizing superfast growth over sustainable business practices. Mr. Sacks, who had earlier joined Zenefits as chief operating officer, was appointed chief executive in February.

Since then, Mr. Sacks, who was also an early investor in Zenefits, has been trying to turn the company around. Its valuation was cut in half, to roughly $2 billion. But Mr. Sacks has restructured the company, closed offices and laid off employees to cut spending. Zenefits also initiated a series of settlements with states over its practices. In October, Mr. Sacks unveiled a redesign of Zenefits’s software.

“This will be the month where we close the chapter on all that stuff, we move past it and we launch the future of the company,” Mr. Sacks told The New York Times before introducing the software.

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