Jessica Guynn

USA TODAY

SAN FRANCISCO — Zenefits CEO David Sacks is stepping down amid speculation that he has been tapped by billionaire technology investor Peter Thiel to assist president-elect Donald Trump.

In a memo to Zenefits staff, Sacks said late Friday he would become chairman of Zenefits and lead a search for a new CEO.

"The chairman role will allow me to focus on what I do best — product and strategy — while working with a great operator who can help build our small business pipeline. I feel it is best to be public about this search so that we can attract the best candidates," Sacks wrote.

The Wall Street Journalreported late Friday that people familiar with the matter said Sacks would help Thiel, one of Trump's few Silicon Valley supporters, with the transition.

Zenefits spokeswoman Jessica Hoffman denied Sacks would assist the Trump transition team. Thiel, through a spokesman, declined to comment.

"If true, it would be great for America," said venture capitalist Keith Rabois, a former colleague at PayPal of both Thiel and Sacks. "David understands both policy and building an effective team so he would be an excellent addition."

Thiel has not taken a formal role during the transition but has spent weeks advising the Trump team. He's expected to play a key role in representing the interests of the tech industry on regulatory and policy matters in Washington, along with a small group of conservatives from his circle.

Sacks, who took over troubled human resources software maker Zenefits less than a year ago, is a high-profile member of Thiel's circle. Friends since college, both are former PayPal executives who struck gold in 2002 when they sold the digital payments company to eBay for $1.5 billion.

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Sacks has a prodigious track record in Silicon Valley though he took time out after PayPal to move to Hollywood to become a movie producer, securing the rights to "Thank You for Smoking," Jason Reitman's adaptation of Christopher Buckley's novel.

Returning to Silicon Valley in the middle of the social media boom, he started a social network for families called Geni.com, but soon began to fear it could not survive in Facebook's lengthening shadow. So instead Sacks placed his bets on an internal communication system Geni.com created to help employees share information. In 2008, Sacks spun it out as a new venture called Yammer. One of its backers was Thiel. Sacks sold Yammer to Microsoft for $1.2 billion in 2012.

A year ago, Sacks joined Zenefits as its chief operating officer. Last February, Sacks took the helm of Zenefits from Parker Conrad, who resigned as CEO for what the company called "inadequate compliance procedures and internal controls."

Zenefits makes human resources software for small businesses and makes money by selling those businesses health insurance. In February, the start-up's founding CEO Parker Conrad stepped down after BuzzFeed News reported it had flouted state insurance laws. This week California insurance regulators levied a $7 million fine for violations that included allowing unlicensed employees to sell insurance in the state. BuzzFeed on Friday reported that Zenefits lost $204.5 million in its last fiscal year, which ran through the end of January, on revenue of $43.5 million.

"This week, we successfully resolved the issues that gave rise to the crisis, signing a deal with our lead regulator, the California Department of Insurance (CDI). We’ve also settled with 19 other states, including Washington," Sacks told employees in the memo.

With the turnaround "complete," Sacks said he was planning for Zenefits' "next phase."

Born in Cape Town, South Africa, Sacks immigrated with his family to the United States when he was 5. He majored in economics at Stanford and succeeded Thiel as editor of the Stanford Review, the conservative libertarian newspaper Thiel founded.

After graduating from University of Chicago Law School, Sacks spent a summer in L.A. to break into the entertainment business. When his entertainment dreams didn't pan out, Sacks took a gig at McKinsey & Co. as a management consultant. Less than a year later, Thiel recruited him to PayPal. Sacks eventually became PayPal's chief operating officer.