New Zenefits CEO has harsh words for employees: 'Our culture and tone have been inappropriate'

Zenefits

Most of the time, when a founding CEO resigns and a second-in-command takes over, the letter to employees announcing the change is bland.

Zenefits offers cloud HR management software, much of it for free.  It makes most of its money selling HR-related benefits, like insurance. It was an inventive business model that sent the company soaring, growing very fast. Investors, including Sacks — a well-known Valley angel investor — rushed to pour more than $500 million into the company in its first two years at a $4.5 billion valuation.

Sacks' letter to the troops strongly criticizes his predecessor, Conrad. In it, he explains that Conrad is leaving because of "inadequate" compliance measures. The company was facing regulatory scrutiny over accusations that it was selling insurance in some states without being properly licensed.