Zenefits Inc., an HR automation company known for spooking other benefits and payroll services companies, has replaced its chief executive officer.

Parker Conrad, the company’s co-founder, is out. David Sacks, a former PayPal executive, is in.

Sacks immediately hired a former federal prosecutor, Josh Stein, to be Zenefits’ chief compliance officer.

“The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong,” Sacks wrote in an email to Zenefits employees. “As a result, Parker has resigned.”

Sacks told employees that Stein is “already in communication with regulators to advise and update them of our compliance issues.”

“Our culture and tone have been inappropriate for a highly regulated company,” Sacks wrote. “Zenefits’ company values were forged at a time when the emphasis was on discovering a new market, and the company did that brilliantly. Now we have moved into a new phase of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders.”

Zenefits also announced the addition of three well-known investors to its board:

  • Antonio Gracias, founder and managing partner of Valor Equity Partners.

  • Bill McGlashan, founder and managing partner of TPG Growth.

  • Peter Thiel, co-founder of PayPal and of Founders Fund.

Zenefits — a venture-backed, privately held company — saw its market value rise to $4.5 billion last spring. The company then ran into problems in November, when revenue fell short of investor expectations.

See also:

Zenefits hits a rough patch

Zenefits unleashes more disruption

 

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