Zenefits Was the Perfect Startup. Then It Self-Disrupted

Zenefits was everything Silicon Valley venture capitalists love. And then it self-disrupted.

- Claire Suddath and Eric Newcomer

David Sacks walked into Dolores Park Café in San Francisco to talk to Lars Dalgaard, a venture capitalist, about what he should do with his life. Or rather, his money. Sacks, who is 43 and has thick gray hair and blue, protruding eyes, made his first fortune as an early executive at PayPal, then a second as the co-founder of Yammer, a social network for businesses, which he sold to Microsoft in 2012 for $1.2 billion. He played in poker tournaments, produced the film Thank You for Smoking, and became an early investor in Uber and SpaceX. But by the fall of 2014, he was sick of jumping from hobby to hobby. He wanted in on a startup again.

Sacks and Dalgaard were business acquaintances—Dalgaard, a general partner at Andreessen Horowitz, had once tried to buy Yammer for $300 million. After the requisite industry gossip, they got down to business. Dalgaard urged Sacks to take a look at Zenefits, a new company in which Andreessen Horowitz had recently invested.