7/25/2019 Zenefits Email to Employees

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Email sent to Zenefits employees from David Sacks

8 February 2016

All

By now all of you have heard the news that Parker has resigned as CEO. I know that this will come as a

shock. Parker was not only the founder of this company but also its driving force until this day. I know it

will take time for people to absorb and process this news, and it will raise many questions about the

company.

I believe that Zenefits has a great future ahead, but only if we do the right things. We sell insurance in a

highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like

oxygen. Without it, we die.

The fact is that many of our internal processes, controls, and actions around compliance have been

inadequate, and some decisions have just been plain wrong. As a result, Parker has resigned.

In order for us to move forward as a company, we cannot seek to hide or downplay the problem. Wemust admit it and remediate it as soon as possible. In December, we hired a Big Four auditing firm to

conduct an independent thirdparty review of our licensing procedures that we will turn over to

regulators as soon as possible. I will expand that effort into a toptobottom review to ensure

appropriate and bestinclass corporate governance, compliance and accountability.

I am also appointing Josh Stein as our Chief Compliance Officer. I know that he will bring the same rigor

to this job as his did in his previous experience as a federal prosecutor. Josh is already in communication

with regulators to advise and update them of our compliance issues.

These steps are a start to fixing the problem, but they are not enough. We must admit that the problem

goes much deeper than just process. Our culture and tone have been inappropriate for a highlyregulated company. Zenefits company values were forged at a time when the emphasis was on

discovering a new market, and the company did that brilliantly. Now we have moved into a new phase

of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders.

As an entrepreneur myself, I know that Zenefits can never lose its innovativeness and willingness to

experiment. But at the same time, I believe a new set of values are necessary to take us to the next

level.

Effective immediately, this companys values are:

#1 Operate with integrity.

#2 Put the customer first.

#3 Make this a great place to work for employees.

In order to be a great company, integrity must be at the core of what we do. We must have integrity in

our business practices, compliance obligations and internal processes. We must have integrity in our

product. We must have integrity in our data and infrastructure. And we must have integrity in the way

we treat each other.

7/25/2019 Zenefits Email to Employees

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We must also put customer success at the heart of what we do. Everything we do should further the

goal of earning and extending our customers trust. We want customers for life, and if we cant

reasonably expect to make a customer successful, we shouldnt sign them in the first place.

Finally, we must make this a great place to work for employees, because were all in this together, and if

we're not enjoying ourselves, whats the point? This is not to say that there wont be major challenges

and tough days ahead, but that must be balanced with a feeling of fun, fellowship, and espritdecorps. I

want all of us to feel excited to come into work every day. We all have a role in that, but Im going to try

my best to do my part.

Im making my first actions as CEO about culture and values because I believe these things are

fundamental to a company's success and who we are and want to be. I want to push down decision

making ability into the company. Culture and values enable us to do that by ensuring that everyone is

aligned around the right goals.

Once were aligned as a team around core values, the next thing were going to do is sharpen our

strategic focus. When you raise $500 million and have a vision as big as Zenefits, its tempting to think

you can do everything at once. But no matter your size or resources, companies execute better whenthey ruthlessly prioritize and sequence their efforts. For us, that means hyperfocusing on the small

business market where we have productmarket fit. This is a great market for us because (1) its huge

(with many million small businesses in the US); (2) its greenfield" (meaning that its underserved by

technologyin fact an Excel spreadsheet is often the main competitor); and (3) the free aspect of our

product is extremely compelling.

There is one other critical thing that I want to do, and that is make Zenefits a purposedriven

company. Im glad that Zenefits is one of the fastestgrowing business software companies, but thats

not our mission. It alone doesnt fill my life with any meaning, and I doubt it does yours.

However, Zenefits does serve an important purpose in the world, by making the lives of small businessowners so much easier. We further the dreams of anyone who wants to start a new company. We help

them achieve something larger than themselves, by making it easier to hire, onboard and manage

employees. By doing that, Zenefits makes entrepreneurship more accessible to everyone. I believe this is

a very powerful and real mission in the world, and personally Im proud to be part of it.

There are very few startups that ever get to this level of scale and importance. I believe Zenefits has a

great opportunity, vision, and future if we can align it to the right execution.

As a friend once told me, "successful companies have multiple founding moments. This is one of them.

This is a founding moment. You are all cofounders in this new path forward. I know how much hard

work everyone has put into this company and that we will all come together on this journey.

This is Day 1.

David