How Zenefits, Uber Abandoned Core Values and Took Shortcuts

This is the inaugural edition of our Benevolent Disruptor series.  In the coming weeks we will focus on how technology companies can drive change and challenge convention while upholding their core values and ethical business practices.

Steven Buccini provides insight into how company culture and questionable business practices factor into recent turbulence at Zenefits, an all-in-one HR platform that automates corporate payroll, benefits, and compliance functions through an online platform.  Zenefits has recently come under fire for failing to adequately prepare its insurance brokers to ethically and effectively fulfill their core responsibilities.  

Recently, there has been a lot of discussion about the tool Zenefits built to speed up the licensing process for insurance brokers. In many states, an individual needs to acquire a license to many kinds of insurance, including health insurance. In California, where Zenefits is based, they must pass a licensing exam. Before they can sit the test they need to complete a mandatory 20 or 40 hours of product training and a 12 hour code of ethics course. This can be done in person or online. Zenefits built a computer program to make it look like people were sitting at the computer paying attention to the course when in reality their employees were busy working on other tasks.

Let’s look at how Zenefits got themselves into this mess:

  1. Prioritize growth over all else by setting a crazy, unattainable revenue target.
  2. Realize completing the broker test, which takes a minimum of 52 hours, makes ramping up a sales staff take much longer than normal.
  3. Discount the value of the broker test by congratulating people for getting as close as possible to the minimum score while still passing.
  4. Further trivialize the importance of the broker test by building software to circumvent the regulations.
  5. Eventually, the broker license gets cheapened so much that you let salespeople sell insurance without bothering to get the license.
  6. You get investigated by the government.

Zenefits knowingly broke the rules, got caught red-handed, and now must face the consequences. I, however, am sympathetic towards the rank-and-file employees at Zenefits. Many of them are doing good work, completely isolated from these teams and issues, yet now are implicated by association. I feel this way because I experienced an extremely similar situation about a year and a half ago.

I was working as a software engineering intern at Uber at the time, and things were pretty crazy. Shortly after I joined, Uber raised $1.2 billion dollars. This made them worth more than Whole Foods, the Gap, and a plethora of other household names. The company had expanded rapidly so friends and family from back home finally had the chance to use the service. Every week during the All-Hands meeting, we’d see double-digit growth around the world. I felt like I had just hopped on a freight train which had built up so much speed that it could obliterate any obstacle in its path.

At the time, one of my former teachers was organizing a conference on ethics for his high school and had asked me to talk about ethics in the digital age, focusing on what constitutes “appropriate use” of personal data. I readily agreed; I truly believe that we, as engineers, we have a responsibility to be advocates for our users’ privacy.

During the question and answer phase, one of the students asked me about Uber’s own data collection and protection policies. I responded truthfully, acknowledging that Uber does collect sensitive data but it is used solely for legitimate business purposes, such as tracking your route for fare calculation. And when I said that, I wasn’t just giving the party line. I truly did mean it.

Several months later, BuzzFeed reported on just how accessible all of this information was to employees. Customer service tools had been used to track passengers without a legitimate business need. This news was devastating to me. I had put my credibility on the line by defending the company in front of a roomful of people. Now the dirty laundry was being hung out to dry and somewhere in North Carolina there was a classroom full of high schoolers who thought I was a liar. The irony of this happening at an ethics conference was not lost on me.

Not only that, but I prided myself on my integrity when it came to user privacy and data collection. I considered myself an advocate when it came to these issues. Yet, I knew that the tools mentioned in the Buzzfeed report were readily accessible, even by employees who had no legitimate business need to use them. And still, I did nothing. I thought people wouldn’t abuse it. Besides, I was just an intern in a company of over 1000 people. Who would have listened to my fears about possible abuse when I had no concrete examples of abuse to support my case? Why upset the gravy train when there was no visible problem?

Perhaps the reason I’m so fascinated by the Zenefits case is because the similarities between the Uber of mid-2014 and Zenefits of today are uncanny. Both companies were growing at rates previously unheard of in their respective industries. Prior to these incidents, both companies had been darlings of both tech and mainstream media. Both companies had a culture characterized by heavy drinking and machismo. Employees at both companies had a vested interest in the continued growth of their company, as a large part of their compensation was tied up in ownership of the company. These factors, combined with the chaotic nature of every hyper-growth startup, tend to muddy the waters enough to cause employees to dismiss their concerns. After all, you never think you’re a bad person. You’re just trying to do your job as quickly as possible so you don’t get fired.

That’s a good goal, but my recommendation is to be selfish. These scenarios tend reflect poorly on all employees at these companies, whether or not they were personally involved in the offense. It’s incredibly hard to fix a reputation, especially in a place that values brand names as highly as Silicon Valley does. So, don’t dilly-dally. If you see something, say something. If your concerns fail to bring about change (or, at the very least, start a dialouge about the situation), consider whether or not you would like to continue working at a company that is operating on a different set of values as you are.

Uber and Zenefits both took shortcuts. To hide lack of progress. To prioritize other aspects of the business. To preserve exponential growth. In each case, it caught up with them in the end. You don’t need shortcuts to succeed as a technology company. Apple’s legacy rests in its steadfast refusal to take shortcuts when designing its products. Google did quite well for itself while abiding by its motto of “Don’t be evil.” Zappos is known to go over the top when it comes to pleasing customers. There are a lot of companies in the Valley. Choose one that puts its customers before growth, profit, and other metrics.

You can read more on Steven's website here.