Troubled startup Zenefits might have lost its biggest customer — another startup

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Fast-growing, but troubled startup Zenefits may have more issues under its hood than the sudden resignation of its outspoken founder CEO, the problems with its culture, missed internal revenue targets, and potentially huge problems with regulators.

It may also have issues with its product.

The day after Zenefits shocked the tech world when it announced its CEO Parker Conrad was suddenly resigning, Buzzfeed reports that its biggest customer, Jet, left the product.

Zenefits offers cloud HR software designed for small businesses and gives much of it away for free, making money by selling insurance and other HR products. Zenefits grew so fast that in its first two years, VCs poured more than $500 million into the company at a $4.5 billion valuation.

Jet is another fast-growing startup, which launched in the summer and now has 1,000 employees, Buzzfeed reports. 

As Jet grew, it had difficulties working with the Zenefits software doing everything from creating organizational charts to gathering health-related data on employees, unnamed sources told Buzzfeed's William Alden and Sapna Maheshwari.

So last week Jet reportedly decided to ditch Zenefits and move to something else, these people said.

Jet declined to confirm or comment on this report.

But, if it's true, it looks like Sacks has even more issues on his hands. Ensuring that Zenefits customers will stick around as they grow. 

Sacks also hinted about this in his email, too, saying, "Now we have moved into a new phase of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders." 

The fact that Jet — a highly speculative startup itself — was Zenefits' biggest customer is also noteworthy. Jet has taken in almost $600 million in venture money since it was founded in 2014, as it attempts to take on Amazon with lower prices on selected products. In October, it abandoned its original business model of charging subscriptions (like Costco), and in November it was reportedly close to running out of cash before it raised a massive second round. 

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