Zenefits was a highly touted workplace benefits startup that got into huge trouble when a Buzzfeed investigation (of all things), found that one of its execs had gamed a state insurance agent exam (I think that's what it was), so their staff could essentially cheat and obtain certifications faster.

The exec in charge was fired, and a lot of their key staff had already jumped ship by then.

I think the pattern was worse than a few rogue employees, and it cost the CEO his job.

Indeed, the fake cert thing was foundational to their business model.

Zenefits is an example of a surefire unicorn that made too many mistakes and lost most of its value very quickly.

The key points are:

1. Startup valuations are highly volatile. There were plenty of startups that were valued above the billion dollar levels, then sold for 8 or even 7 figures.

2. While profitable established companies can also go south, such companies pay you in cash and liquid RSUs, so if they spiral down you just switch to a better performing company. Getting most of your pay in illiquid options means you risk losing multiple years of earnings in the best part of your career.

Specifically, tons of talented people took a job in Zenefits based on the assumption that their illiquid shares will be worth six-seven figures, and likely will never see anything close to that in real money. Same thing wouldn't happen for those paid in liquid assets.