Unicorn Startups: The Rules Don’t Apply to Us

By , May 9, 2016

Excellent article about a “unicorn” startup: “Zenefits Was the Perfect Startup. Then It Self-DisruptedWhat happened when an HR firm had some epic HR problems” (http://www.bloomberg.com/features/2016-zenefits/) in Bloomberg, by Claire Suddath and Eric Newcomer.

Like some other “unicorns” in recent years, Zenefits decided that the rules didn’t apply to its company: in this case, state-by-state licensing requirements when selling insurance, and the training and compliance requirements for such sales.

In other cases, Uber ignored laws regulating taxis and limosines, and AirBNB unilaterally declared itself immune from state and local laws regarding hotels and property rentals.  Nearly all unicorns (and many smaller startups) believe they are magically exempt from employment laws, including wage & hour rules.

Yes, it’s possible to disrupt an entrenched industry by simply ignoring all applicable legal restrictions.  But then, the company’s grand dream is likely to be disrupted by regulatory investigations and lawsuits — and in some cases, by simple failure to competently deliver the promised services.

At least the current generation of startups mostly don’t share the magical belief that was common in the earlier dot-com (dot-bomb) era: “the economics of businesses don’t apply to our unique company.”

Leave a Reply


OfficeFolders theme by Themocracy