When Zenefits secured $500 million in funding last year, vendors lined up to drink from the champagne fountain. Most were charmed (with palms extended). But not The Starr Conspiracy. See this article from our own Steve Smith posted in May 2015 eerily predicting the events of Q1 2016: “5 Reasons Zenefits Will Be the Biggest Bust in SaaS History.“
We take no pleasure in the Zenefits meltdown. In fact, many of our analysts believe that recent events may even save Zenefits and put the company on the right course. As one of our analysts emailed to me, “The adults are in charge now. I wouldn’t count Zenefits out by a long shot.”
I hope that’s true.
In the meantime, I think this is an important referendum on the role of analysts in our market segment. We aren’t supposed to be cheerleaders. We’re supposed to be investigative journalists (like William Alden). No one expects every analyst to be right every time (we are wrong a lot), but we need to hold analysts accountable and to a higher standard than investment evangelists. A few hard questions posed by smart people would have revealed to everyone else what Steve saw. But stacks of cash make for a great pair of rose-colored glasses!
We are in the unique position at The Starr Conspiracy of being on the hook for turning our analysis into action — in the form of in-market strategies. We take our research and analysis very seriously because we know it can be the difference between the success or failure of the very real advertising campaigns, go-to-market strategies, and acquisitions we are quarterbacking for our clients (millions of dollars and tons of jobs are at stake).
The time has come to ask hard questions about the traditional analyst model. We have a tremendous opportunity to change the world with great HCM technology. Our work as an industry is too important to risk on rushed assessments and pay-for-play. Zenefits caused some real damage to the credibility of both our industry and industry analysts. Don’t worry — we will all recover. But it didn’t have to be this way.
If only the watchdogs had been watching instead of eating steak.