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After Zenefits, Will VCs Rein in Their Unicorns?

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Re: After Zenefits, Will VCs Rein in Their Unicorns?

#61

Post by pj_mukh »

skewart wrote: post #51
pj_mukh wrote: post #34

Earlier quoted context omitted.

If everyone agrees it is a "silly" requirement (especially because it was circumvented so "easily"), why are we so mad at Zenefits? We certainly don't want giant companies influencing policy changes (though, that happens frequently). I think a good indicator of whether a policy can justifiably be circumvented is if it actually hurt anybody. Has the "macro" hurt anybody yet? The articles have been vague.

The problem is that they were getting the advantages of being licensed while not actually following proper procedure for licensing. They were effectively lying to everyone. Sure, it's a pretty harmless lie, but I can see how people in the industry would be pissed. Lyft and Uber skirt similar kinds of regulation but they're completely up front about it. They don't pretend that their drivers are licensed or claim any b…

Hmm? I'm not sure I care if the "industry" is pissed if said industry accepts regulations that we all agree are silly

P.S: I'm totally for sensible regulations. However, sensible regulations usually require wide amounts of nepotism, cronyism and backstabbing to break. If a regulation is important enough that people could be hurt by it, then it should not be circumventable by a web script.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#62

Post by skewart »

A number of commenters here have compared Zenefits' questionable compliance with Uber, Lyft, and Airbnb. What Zenefits was doing is fundamentally different, and much more problematic.

Lyft and Uber skirt similar kinds of seemingly useless regulation but they're completely up front about it. They don't pretend that their drivers are licensed or get any benefit from having licensed drivers in any way. They're simply offering a different product than what taxis offer - getting a ride with a random unlicensed stranger.

Lyft, Uber, and Airbnb are betting that reputation systems (ratings, reviews, etc.) will provide assurance for consumers just as well if not better than government regulation. So far the market is showing they just might be right.

Zenefits seems to have been driven by a similar cultural distaste for onerous and probably out-dated regulation - who can blame them? But instead of letting the market decide how valuable that regulation actually is they simply cut corners when they hoped no one would find out.

That deceptiveness, more so than the regulation dodging itself, is ultimately really bad for a B2B business.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#64

Post by pj_mukh »

timv wrote: post #58
pj_mukh wrote: post #34

Earlier quoted context omitted.

If everyone agrees it is a "silly" requirement (especially because it was circumvented so "easily"), why are we so mad at Zenefits? We certainly don't want giant companies influencing policy changes (though, that happens frequently). I think a good indicator of whether a policy can justifiably be circumvented is if it actually hurt anybody. Has the "macro" hurt anybody yet? The articles have been vague.

Has the "macro" hurt anybody yet? The employees who used it and then signed a false declaration are at risk of jail. That was their choice, but they were seemingly under pressure from their CEO, so it seems fairly evident (to me) that Parker created a real problem for his team, even if the customers are OK. [Edit: Removed out-of-place "committed"]

I still don't see how the macro allowed them to do anything different from just scrolling to the end of a list of terms and conditions. AFAIK, they still had to pass an exam?

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#65

Post by throwaway28715 »

phibit wrote: post #26
JonFish85 wrote: post #18

Considering Airbnb and Uber, two of the largest and considered most-successful startups are carefully dodging the law, the upside is worth the risk. I disagree with it, but I think VCs don't care much about following legal frameworks until it's too late.

Does anyone have any more information about the "52 hour online training program" that "the Macro" allowed them to skip? If that training program is any bit as useless as "online driving school", I can sort of understand how the Macro came to be...

> If that training program is any bit as useless as "online driving school", I can sort of understand how the Macro came to be...

One of my proudest hacker moments* a while back was taking online defensive driving school (to have a speeding ticket excused) and figuring out what to type into the Javascript console to make the 'next' button clickable before the timer on the page ran out. (This technique would have been subverted had there been any server-side checks whatsoever, but nope...they completely entrusted the client to keep the time. I suppose they don't have much of an incentive to make it any more difficult given that the government probably doesn't have a very rigorous accreditation process for these courses.) That cut whatever was left of the required 6 hours down to about 20 minutes. I guess I'm an unethical monster that should never be allowed to run a company. :\

*I know, it's pretty lame in comparison to, say, figuring out how to jailbreak an iPhone, but I'd be lying if I said I wasn't proud.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#66

Post by jbooth »

sandworm101 wrote: post #59
twright0 wrote: post #52

Earlier quoted context omitted.

> Successful startups all, and I mean ALL, have serious compliance issues. This feels like a very hyperbolic claim. There are definitely high-profile examples of startups that had compliance issues and are struggling to bring them under control or remain in arguably grey areas (Zenefits is an example of the former, Airbnb the latter). But it's hard to imagine that it's a truly universal problem; many startups are in…

A successful startup is one that has grown rapidly in recent years. No growth = not successful, and not recent = not a startup. Any tech company that grows quickly starts bumping up against any number of compliance issues, both legal (ie HIPAA) and private (ie PCI). Today's growth curves don't keep pace with many of these regulations. As you expand laterally into new markets you constantly run into new obligations. A…

All that being said, when your frickin business is selling HR stuff, you should be on top of compliance. Jesus.

They had people selling health insurance without a license. This isn't just a failure to sit through the "don't bribe foreign officials" training.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#67

Post by delazeur »

twright0 wrote: post #52
sandworm101 wrote: post #40

Earlier quoted context omitted.

Successful startups all, and I mean ALL, have serious compliance issues. They probably do not not realize their problems. Some actively try to avoid knowing, such as by shunning legal advice that may inform them of inconvenient obligations. Part of the going public and/or being bought out process involves measuring the rate of non-compliance. A unicorn wants to go public, but that means first getting your compliance…

> Successful startups all, and I mean ALL, have serious compliance issues. This feels like a very hyperbolic claim. There are definitely high-profile examples of startups that had compliance issues and are struggling to bring them under control or remain in arguably grey areas (Zenefits is an example of the former, Airbnb the latter). But it's hard to imagine that it's a truly universal problem; many startups are in…

I imagine just about every company, startup or not, has compliance issues; it's just a matter of degree. (Then again, I am an environmental compliance consultant, so there's some selection bias in which companies I interact with.)

The qualifiers in "successful startup" and "serious compliance issues" make it hard to say whether the statement is objectively true or not, but I see two factors that probably exacerbate the problem for startups: regulations designed by established companies to thwart upstart competitors, and the "disrupt"/"move fast and break things" attitude that doesn't mesh well with red tape.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#68

Post by delazeur »

pj_mukh wrote: post #34
phibit wrote: post #26

Earlier quoted context omitted.

Does anyone have any more information about the "52 hour online training program" that "the Macro" allowed them to skip? If that training program is any bit as useless as "online driving school", I can sort of understand how the Macro came to be...

If everyone agrees it is a "silly" requirement (especially because it was circumvented so "easily"), why are we so mad at Zenefits? We certainly don't want giant companies influencing policy changes (though, that happens frequently). I think a good indicator of whether a policy can justifiably be circumvented is if it actually hurt anybody. Has the "macro" hurt anybody yet? The articles have been vague.

The solution to silly regulations is to change them, not to ignore them or subvert them. Think what a can of worms would be opened if regulatory compliance was contingent on some ephemeral, arbitrary, socially defined notion of "silliness."

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#69

Post by stonedge »

pj_mukh wrote: post #64
timv wrote: post #58

Earlier quoted context omitted.

Has the "macro" hurt anybody yet? The employees who used it and then signed a false declaration are at risk of jail. That was their choice, but they were seemingly under pressure from their CEO, so it seems fairly evident (to me) that Parker created a real problem for his team, even if the customers are OK. [Edit: Removed out-of-place "committed"]

I still don't see how the macro allowed them to do anything different from just scrolling to the end of a list of terms and conditions. AFAIK, they still had to pass an exam?

Some of the compliance training I've had to take didn't have an exam. But the software tracked how quickly you went through the training. If you went through too quickly, you didn't get credit.

Re: After Zenefits, Will VCs Rein in Their Unicorns?

#70

Post by pj_mukh »

delazeur wrote: post #68
pj_mukh wrote: post #34

Earlier quoted context omitted.

If everyone agrees it is a "silly" requirement (especially because it was circumvented so "easily"), why are we so mad at Zenefits? We certainly don't want giant companies influencing policy changes (though, that happens frequently). I think a good indicator of whether a policy can justifiably be circumvented is if it actually hurt anybody. Has the "macro" hurt anybody yet? The articles have been vague.

The solution to silly regulations is to change them, not to ignore them or subvert them. Think what a can of worms would be opened if regulatory compliance was contingent on some ephemeral, arbitrary, socially defined notion of "silliness."

Nope. I don't want monied corporations anywhere near my regulations. Let's just have the pertinent regulatory agencies realize that making someone stare at a screen for 'X' minutes doesn't make a training program. You are asking for someone to side step that stuff.

I would actually rather have companies like Zenefits sidestep regulations like that to show the regulators where they screwed up than Zenefits pump money into skeevy Lobby groups.

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