Zenefits announces new tech-focused CEO
Zenefits on Monday announced Jay Fulcher as the company’s new CEO and chairman. Fulcher was most recently president and CEO at online video technology products and services startup Ooyala.
Last year was a turbulent one for the tech-focused brokerage, which started with founder Parker Conrad resigning as CEO in February when it came to light that the company had an internal software program used to circumvent producer licensing requirements.
The company then announced that David Sacks, at the time chief operating officer, was going to take over as CEO — with Sacks promising to take the company in a new direction. In December 2016, Sacks announced he was stepping down as CEO and would become chairman, while leading the search for a new CEO.
In the news announced Monday, Zenefits says “Fulcher brings the ideal combination of vision, operating discipline and leadership experience to Zenefits.” His previous experience includes Agile Software Corp., where he served as president and CEO; PeopleSoft (executive vice president); and SAP (vice president). He started work on Feb. 3.
Although reports when Sacks stepped down said he would remain as Chairman, he “wanted a strong CEO first and foremost and a strong CEO frequently wants to be their own chairman — so David was happy to have Jay assume that role,” a Zenefits spokeswoman explains.
Over the course of 2016, Zenefits laid off hundreds of employees and dealt with a slew of regulatory investigations. In a December 2016 company memo, Sacks said Zenefits has settled issues with 20 states.
Sacks, who will continue to serve on Zenefit’s board of directors, says the move is the “ultimate validation for all of our hard work over the past year.”
“I feel very fortunate to be passing the reins to a seasoned leader and operator with deep experience in both HR and SaaS,” Sacks says. “Jay’s energy, experience and leadership line up perfectly with what the company needs now.”
In an email to employees, Fulcher said that “change can be difficult, and the past year has been rough. But, despite that, I am really excited about this opportunity. I joined Zenefits because I believe this company can be an innovative and disruptive force in the industry — and is poised to make a huge impact. What a rare opportunity.”
“The best days for Zenefits are ahead of us,” he continued. “Enabling small- and medium-sized businesses — the economic engine of the entire U.S. economy — to grow and succeed is a noble purpose. It should propel us every day and drive us to do our best work.”
In Fulcher’s email to employees, he said: “Zenefits is one of those rare companies with the potential to truly revolutionize an industry.”
However, Kevin Trokey, partner and coach and brokerage consultancy Q4intelligence in St. Louis, wants to know which industry.
“Sure, [Zenefits’] revenue may come from insurance commissions, but there is no doubt their DNA is purely technology — reinforced by this hire,” Trokey says. “I totally get the increasingly critical role technology is playing in the world of HR/benefits advising, but it is still a critical mistake to forget which must come first.”
A Zenefits spokeswoman says that “benefits administration is a cornerstone of the Zenefits platform and will continue to be. As CEO, Jay will continue to execute the vision and evolve the all-in-one HR platform, of which benefits administration is an integrated part.”
"Zenefits is a unique combination of technology and broker services," the spokeswoman adds.
Joe Markland, president of HR Technology Advisors says that since some of Fulcher's experience is in the HR software experience, "this is a good move for Zenefits as there is an opportunity in the small to mid-sized employer market."
"In the short-term they leverage the commission to provide discounted software into the market," he says. "Now their software needs to move to the next level and be valuable on its own. HR software can be very sticky if they get the adoption rates."
"I would imagine the focus would be on getting these adoption rates and persistency on their business," Markland adds. "If their technology is good it will be harder for customer to leave. It is stickier than base brokerage services."