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Part of the problem with the “who’s gonna stop me?” attitude of Startuplandia is when companies try to move into heavily regulated industries. Leaders they can just ignore decades of entrenched bureaucracy and regulation simply because they’ve got a high valuation.
Employee management cloud software company Zenefits (which has raised $500M in 2 years at a $4.5B valuation) hit the fan earlier today when their CEO Parker Conrad resigned over compliance issues:
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.
In December, we hired a Big Four auditing firm to conduct an independent third-party review of our licensing procedures that we will turn over to regulators as soon as possible.
Our culture and tone have been inappropriate for a highly regulated company.
Effective immediately, this company’s values are: #1 Operate with integrity. #2 Put the customer first. #3 Make this a great place to work for employees.
They literally have to call out integrity.