David Sacks, the newly appointed CEO of human resources software startup Zenefits, has his work cut out for him.
The PayPal and Yammer co-founder has begun trying to clean up the company's act, which includes reforming a workplace culture that has been likened to a frat-house. Last week, Sacks banned alcohol at the office, but that doesn’t seem to be the worst of it.
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Last June an employee responsible for the startup's relationship with building management sent a memo to the company's San Francisco-based workers reproaching them for having sex in the stairwells, according to an email message reviewed by the Wall Street Journal.
“It has been brought to our attention by building management and Security that the stairwells are being used inappropriately," wrote Emily Agin, the company’s director of real estate and workplace services, in a companywide note. "Cigarettes, plastic cups filled with beer, and several used condoms were found in the stairwell. Yes, you read that right. Do not use the stairwells to smoke, drink, eat, or have sex. Please respect building and company policy and use common sense ...”
Reached via email, Zenefits declined to comment on the report, but spokesman Kenneth Baer did tell Fortune that the startup is indeed undergoing a cultural transition.
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“As Zenefits’ new CEO has made clear, it is time to turn the page at Zenefits and embrace a new set of corporate values and culture," he said. "Zenefits is now focused on developing business practices that will ensure compliance with all regulatory requirements, and making certain that the company operates with integrity as its number-one value.”
Zenefits—one of Silicon Valley's hot "unicorn" tech startups with a valuation that last May reached $4.5 billion (although mutual fund investors have since marked down their shares)—has been stumbling in recent months. The company is under investigation by the California Department of Insurance for its business practices and potential compliance breaches, and its CEO and co-founder Parker Conrad recently resigned.