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These are the 19 Airbnb execs rebuilding the company for growth and an IPO amid the biggest travel industry crisis in decades

Fri, 06/26/2020 - 10:52am  |  Clusterstock

  • 2020 should have been a celebratory year for Airbnb, a time when founder CEO Brian Chesky took the company public in one of the biggest tech IPOs of the decade.
  • Instead COVID-19 hit and devastated the travel industry and Airbnb was forced to trim about 25% of its workforce and bench some of its more ambitious moonshot plans.
  • As the world begins to ease travel restrictions, Airbnb is expected to eventually bounce back to its former glory, if it can execute well.
  • It is up to these 19 Airbnb executives working under Chesky to make that happen.
  • Visit Business Insider's homepage for more stories.

2020 should have been a crowning year for Airbnb founder CEO Brian Chesky, who was expecting to steer his home-sharing company through one of the biggest tech IPOs of the decade. Instead COVID-19 hit, cratering the travel industry and Airbnb's business.

Chesky was forced to lay off 25% of the company in May, and to suspend ambitious expansion plans in sectors like transportation.

As Airbnb hunkers down and adapts to the pandemic, it has shifted its focus to offering longer-term rentals outside of its traditional stronghold in cities, and says that the strategy is working. When the world is ready to travel at normal levels again, Airbnb will have to continue to offer lodging options that cater to the new, post-coronavirus reality. 

Chesky has a lot to think about and to plan for as he prepares Airbnb for its next chapter. Fortunately he's got help. 

These are the top executives that Chesky is leaning on as Airbnb rebuilds for the future.   

Are you an Airbnb insider with insight to share? Contact Julie Bort via email at or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188.  

NOW READ: Former Pinterest employees describe a traumatic workplace where managers humiliate employees until they cry, Black people feel alienated, and the toxic culture 'eats away at your soul'

Nathan Blecharczyk, cofounder, chief strategy officer

Nathan Blecharczyk is one of Airbnb's three cofounders. His original role was chief technology officer and he built the original engineering org, the data science, and performance marketing teams.

In the scrappy earlier days he was literally writing code, he said in an interview in 2015, but eventually his role as of today grew into looking at the bigger picture, the intersection of tech and strategy, such as developing payments, trust and safety systems and accountability systems. 

Joe Gebbia, cofounder, head of Samara design studio

Joe Gebbia is one of the three cofounders.

As the now-famous story goes: he and Brian Chesky met in college earning their degrees in design. After college they moved to San Francisco and, in an effort to raise money, they bought a bunch of air mattresses and rented them out to attendees of a design conference. The idea for Airbnb was born.

Gebbia is passionate about design and was Airbnb's original chief product officer. 

Today he's running Samara, Airbnb's experimental product design team, a sort of Google X for Airbnb, where they work on potential new products. While other R&D areas faced deep cuts during the layoffs, Gebbia and team are apparently soldering on at Samara, working on projects ranging from architectural designs for homes purpose built for sharing, to urban planning. 



Dave Stephenson, CFO

Dave Stephenson joined Airbnb in 2018 after a long career at Amazon where he rose to become CFO of its massive ecommerce consumer organization.

He landed at Airbnb after a nearly year-long search when the previous CFO left.

When Stephenson took the job, Airbnb looked like it was b-lining for an IPO. Instead, COVD-19 hit and his financial team had to whip together a pair of 1 billion dollar, mostly debt deals to bolster its balance sheet.

Stephenson remains on the hook for navigating the company to an eventual IPO, implementing the fiscal discipline that public companies must master, even though revenues were harpooned to the point that the company had to shed about 25% of its employees.

Ari Balogh, CTO

Aristotle "Ari" Balogh was another big Airbnb hire in the run-up to the planned IPO, joining from Google in December 2018. At Google, Balogh oversaw the engineering teams responsible for Google's all-important search — some of the biggest, most reliable infrastructure in the world.

His mission at Airbnb is to add more AI and personalization, improving Airbnb's payments tech, tax collection, fraud detection in over 190 countries, and exploring new areas, like augmented/virtual reality.

Balogh's team will also have to handle the growing cloud and data center infrastructure needs as Airbnb's business picks up following the pandemic.




Alex Schleifer, chief design officer

Airbnb founders were designers by training, so design has always been hugely important to the company

In 2015, Airbnb hired Alex Schleifer, who started a digital design firm as a teenager, grew it into a business acquired by Say Media in 2011 and then founded UX Magazine.

Since the COVID-19 crash, he and his team have been working like mad. They oversaw a major remix of Airbnb's app to put COVID-19 info front-and-center as well as, online "experiences," and a product that emphasized long-term stays over short-term stays.

"Our team mapped it out in under three weeks," he told TechCrunch, adding that changing the design involves hundreds of people from operations to engineering. "Everything we need to do needs to be done in 60 languages."

As travel opens up again, the app's design, and his teams, will have to flex again.

Greg Greeley, President of Homes

Greg Greeley is the president of Airbnb's crown jewel, the unit called "Homes" which comprises the more more than 7 million host listings in 100,000 cities throughout the world.

He's the head of the the service most people think of when they use Airbnb to rent a room, condo or home.

Greeley oversees the myriad programs that support hosts and guests, for example the Super Host Relief fund, cleaning protocols, compliance tools, cancellation policies, as well as programs that will stimulate bookings as travel opens, including the Go Near marketing campaign for staycationers and Monthly stays for longer term, sublet-like travelers.

He also announced that the company was donating $500,000 ($250,000 each) to the NAACP and the Black Lives Matter Global Network, as well as matching employee donations of up to $1,000 to civil rights organizations.

Greeley is another exec taken from Amazon, where he spent 18 years, helping the ecommerce giant build everything from its international expansion to its Prime service.

Joe Zadeh, chief stakeholder officer

Joe "Joebot" Zadeh, Airbnb's 9th employee, began when the company was still working out of a San Francisco apartment. He was a software engineer first and then ran the product teams.

In January, 2018, CEO Brian Chesky penned a letter describing his vision for a 21st century company. In it he vowed to serve all "stakeholders" such as the communities impacted by Airbnb hosts.

It has now become Zadeh's job to see that all stakeholders are cared for in everything the company does. How is this different from the CEO's job, or the chief strategy officer's job?

Zadeh is operational, rather than visionary. His small team oversees the nitty-gritty tactical decisions for stakeholders across the company's various projects.

The company also vowed back then to issue an Annual Stakeholder Report, but given everything else that's transpired since, such a report hasn't yet materialized. 

Beth Axelrod, VP of Employee Experience

Beth Axelrod, who joined Airbnb in 2017 after a decade at eBay, helped Airbnb do the impossible: Conduct a massive layoff and be applauded for how humane it was.

And now, as parts of the economy re-open and Airbnb show signs of growing again, she'll have to strike a delicate balance, carefully rehiring while keeping budgets in check.

Axelrod has a boatload of credentials in her field as well, like board positions at recruiting and investment firms, degrees from Wharton and Yale.

She even penned a book in 2001 called the "War for Talent," based on research she worked on while at consulting firm McKinsey, which predicted the attitude that underpins much of Silicon Valley's hiring practices.



Catherine Powell, head of Experiences

Catherine Powell was poached from Disney's parks division at the start of 2020 to run Airbnb's "Experiences" which became an important lifeline for the company during the worst of the COVID-19 quarantine.

Experiences, which is one of CEO Brian Chesky's pet projects, lets travellers book diverse activities in more than 1,000 cities like cooking classes and encounters with animals, often offered by the hosts. It's a massive undertaking that involves local Airbnb managers.

When the pandemic hit, Powell had to shut down in-person experiences and quickly roll-out virtual ones instead, betting that such online experiences would prove entertaining to a bored public trapped indoors and lamenting cancelled vacation plans.

Notably, Experiences was not one of Airbnb's "moonshot" businesses that were severely trimmed or eliminated during the layoffs. As the worldwide economy reopens, Experiences will have to maintain its momentum and pay for itself.


Tara Bunch, global head of operations

Despite the pandemic's drain on Airbnb's revenues, the company made an important new executive hire in May: Tara Bunch.

Bunch had been named to Business Insider's 2016 list of the Most Powerful Female Engineers for her role running AppleCare, Apple's technical-service and support organization. She had been at this Apple role since 2012 after a multi-decade career at HP, and had turned AppleCare into the envy of the customer support world, for its high satisfaction ratings.

Airbnb has nabbed her to run its customer service, Trust and Safety, and Payments teams. This is a global team covering 220 countries and payments in 63 currencies.

It will be her job, particularly with Trust and Safety, to assure a skittish public that using an Airbnb is safe as travel resumes, and to smooth away the kinds of customer service issues that are bound to crop up.

Clara Liang, VP & general manager for commercial and geographical operations

As part of the restructuring that took place when Airbnb slashed one-quarter of its workforce, Clara Liang took on a much bigger role at the company.

She's now running Airbnb's sales and business development worldwide. That means that managers of country regions, including the Americas (Jordi Torres), EMEA (Jeroen Merchiers) and APAC (Kum Hong Siew) report to her.

She's been at Airbnb since 2016, after a long career at IBM. Prior to her current, expanded role, she was the General Manager for Airbnb's Lux, Professional Hosting and Long Term Stays, which were three areas inside Airbnb that took big hits because of the pandemic.

Liang has been handed the enormous task of ensuring that business, especially internationally, comes back strong for the company. There's a lot of lost ground to recover: World travel was down 97% in April, according to World Tourism Organization.

Jeroen Merchiers, regional director of EMEA

Jeroen Merchiers has been with Airbnb for seven years, working his way up from running Airbnb's Spain and Portugal operations to become the head of all of Europe, Middle East and Africa.

Even before COVID-19 crashed the travel industry, Airbnb had its fair share of issues in the EMEA region. For instance, a year ago, ten European tourist cities in Europe jointly asked the European Union to help them regulate Airbnb, complaining that short-term rentals were reducing housing supply and driving up rents.

But with COVID-19, suddenly it is the hosts who are hurting as tourism has dried up.

Merchiers' domain includes some of the largest tourist destinations in the world, and he faces a juggling act of international pandemic requirements and politics as he prepares Airbnb for the moment when travel resumes.

Kum Hong Siew, regional director of APAC

Kum Hong Siew runs Airbnb's Asia Pacific unit, reporting to geographical operations VP Clara Liang.

He's another exec with a long tenure at Airbnb, nearly 8 years, working his way up from a staffer in the legal department.

The APAC region is loaded with major international tourist destinations in China, Japan, and Australia, as well as being a magnet for business travel — all of which got smashed during COVID-19. It was an especially stinging turn of events given that the Asia unit had expected to see a windfall from the 2020 Olympics in Japan (the games have been delayed until 2021).

Asia has been suffering from the pandemic the longest and has been the slowest to open to international travelers, although Airbnb has apparently done well as locals travel within their regions. Japan, for instance, has offered subsidiaries to spur domestic travel and loosened restrictions to other countries in the region. 



Aoife McArdle, global head of Airbnb Olympics

In November, 2019, Airbnb and The International Olympic Committee (IOC) signed a sweeping nine-year, five-games partnership valued at $500 million.

The deal falls under Aoife McArdle's leadership and it involved ramping up hosts in Olympic cities, managing millions of accommodations for athletes and tourists, and creating experiences with athletes that gives athletes revenue streams, such as training or sightseeing with them.

The 2020 Olympics should have been a crown jewel for Airbnb this year. It was expected to bring 40 million visitors to Japan. Even though the pandemic means there will be no Olympics this summer, Airbnb did not dismantle McArdle's Olympics team during the company's recent layoffs. McArdle publicly reassured everyone, "Our commitment to the Olympic movement and the partnership will continue."

And with the games now delayed until 2021, they could be the springboard for Airbnb's return to its former revenue and growth trajectory.


Vlad Loktev, vice president of core hosts

Vlad Loktev has been with Airbnb for nearly 8 years, rising up from the product side of the house.

He previously led the team that created Airbnb Plus, where homes meet design and amenities standards via in-person inspections.

Just before the pandemic hit, the then-VP of hosts went on leave and never came back when she took a job as a CEO of a startup.

Loktev was promoted to this highly-visible role. His new role started with a crisis when COVID-19 struck, and CEO Brian Chesky allowed all guests to cancel reservations for full refunds irregardless of the hosts policies on the matter. Hosts were furious and panicked over their lost incomes.

Loktev is now tasked with guiding hosts into the post COVID-19 world, providing them with tools for everything they need from info on cleaning protocols to how to market their properties to local staycationers.

Margaret Richardson, Vice President, Trust

If there's one word that best describes what Airbnb needs to swim through this economic crisis to safety, it's this: trust. And that's Margaret Richardson's whole job.

She's a lawyer who cut her teeth in the US Justice Department under Eric Holder when he was Attorney General, moving with him to the Covington & Burling law firm after he left office.

She leapt to Airbnb about four years ago, moving into global policy. She now leads the global team that creates policies and works with the product teams to enforce them.

Her task in these turbulent times is enormous, encompassing the need for health and safety policies that vary by locale, online and offline safety, fraud prevention, global law enforcement partnerships, as well as dealing with investigations, and crises.

Vanja Josifovski, CTO, Homes

In March, 2019, Vanja Josifovski left his job as Pinterest's CFO to become the top technologist for Airbnb's Homes unit.

While he is not the top CFO of the whole company, he is in charge of the technical side of Homes, Airbnb's bread-and-butter unit, where Airbnb generates most of its revenue.

Josifovski's mission is to bring together the engineering that supports 7 million host listings in 100,000 cities, along with new projects like injecting various systems with artificial intelligence, machine learning and data science.

As the world reopens for travel, this is the unit that Airbnb is banking on to revive first. 

Ellie Mertz, VP of finance

Ellie Mertz has been with Airbnb for over seven years and for most of 2018, she was the company's interim CFO. This after the previous CFO quit but and before Chesky hired Stephenson to take on the now-delayed IPO.

Instead of an IPO, Airbnb and its employees saw the travel industry implode. 

To stay afloat, the company negotiated two new, mostly debt financing deals totaling over $2 billion. The second one includes a hefty 7.5% interest over five years, plus other fees.

Now the company must manage its finances to perfection, from forecasting to analysis, until travel resumes and home rental bookings pick up. This will be Mertz's big task.

She's got deep roots in internet tech finance. Before joining Airbnb, Mertz spent seven years at video streaming powerhouse Netflix, where she rose to become VP of finance and investor relations.

Melissa Thomas Hunt, head of diversity

About a year ago, Airbnb hired Melissa Thomas-Hunt to be its head of diversity, poaching her from academia where she had been Vice Provost of Vanderbilt University.

Airbnb was first called out over diversity issues on its platform in 2016, when people of color complained of being turned down by hosts.

In addition, like other tech companies, Airbnb's employee base has remained largely white. As of the end of 2018, the latest data available, the company was 48% white, 38% Asian, 8% Latinx and 3.5% Black.

Earlier this month, in the wake of civil unrest, Airbnb promised to increase its diversity hiring and said managers will be handed diversity hiring and retention goals as the company rebuilds.

It will be up to Thomas-Hunt to lead these efforts.

Disneyland is delaying its reopening — here's how much workers are paid at America's amusement parks

Fri, 06/26/2020 - 10:41am  |  Clusterstock

Disney announced that it's delaying its planned July 17 reopening of its Disneyland and Disney California Adventure parks in California to an unnamed date. The parks closed in March to help mitigate the spread of the novel coronavirus.

The company issued a statement on Wednesday about the decision to delay the reopening, as previously reported by Insider's Kirsten Acuna.

"The State of California has now indicated that it will not issue theme park reopening guidelines until sometime after July 4," Disney Parks said in the statement. "Given the time required for us to bring thousands of cast members back to work and restart our business, we have no choice but to delay the reopening of our theme parks and resort hotels until we receive approval from government officials."

The delayed reopening is due to a recent increase in coronavirus cases and concerns expressed by the theme park's employees, according to the Los Angeles Times.

Downtown Disney, the shopping and restaurants district adjaccent to the theme parks, is still planned to reopen on July 9.

Disney World in Florida is still planning to gradually reopen with its previously announced reopening dates. The resort will first reopen the Magic Kingdom and Animal Kingdom on July 11, followed by Epcot and Hollywood Studios on July 15. 

After concerns over the coronavirus pandemic increased, Disney resorts and Universal Studios locations have been temporarily closed to protect guests and workers. Disney World had to furlough 43,000 of its employees starting from April 19, but these employees still have health benefits.

The salaries of amusement park workers vary widely. The Bureau of Labor Statistics' Occupational Employment Statistics program offers data on employment and wages across different occupations and industries.

According to that report, the amusement parks and arcades industry employed about 217,160 people in May 2019, the most recent period for which data is available. Jobs in the industry tend to be lower paying than average. The median annual wage in the amusement parks and arcades industry was $24,610, far below the median across all industries of $39,810.

Here are all the occupations with at least 1,000 employees in the amusement parks and arcades industry, ranked from lowest to highest median annual wage, along with the number of people employed in each.

SEE ALSO: The 40 highest-paying jobs you can get without a bachelor's degree

26. Waiters and waitresses make an annual salary of $19,650.

Total employed in the US: 3,030

What they do, according to O*NET: Waiters and waitresses take orders from customers and serve food and drinks at restaurants or cafes.

25. Bartenders make an annual salary of $19,880.

Total employed in the US: 1,200

What they do, according to O*NET: Bartenders mix and serve drinks to patrons, directly or through waitstaff.

24. Lifeguards, ski patrol, and other recreational protective service workers make an annual salary of $20,880.

Total employed in the US: 8,750

What they do, according to O*NET: Lifeguards, ski patrol, and other recreational protective service workers make sure people are safe in amusement parks, whether they're in the pool or on the slopes.

23. Recreation workers make an annual salary of $21,890.

Total employed in the US: 2,410

What they do, according to O*NET: Recreation workers organize and promote activities, including arts and crafts, sports, games, music, and other social activities.

21. Fast food and counter attendants make an annual salary of $22,460.

Total employed in the US: 19,460

What they do, according to O*NET: Counter attendants serve food to customers from counters or steam tables. This job category includes cafe servers, cafeteria workers, and snack bar attendants.

21. Amusement and recreation attendants make an annual salary of $22,770.

Total employed in the US: 52,320

What they do, according to O*NET: Amusement and recreation attendants operate amusement concessions, kiosks, or rides, and maintain amusement park supplies and equipment.

20. Parking attendants make an annual salary of $23,580.

Total employed in the US: 1,110

What they do, according to O*NET: Parking attendants park vehicles or issue tickets for customers in a parking lot or garage

19. Cashiers make an annual salary of $23,630.

Total employed in the US: 10,190

What they do, according to O*NET: Cashiers handle customers' money using cash registers or scanners. 

18. Ushers, lobby attendants, and ticket takers make an annual salary of $24,020.

Total employed in the US: 1,7000

What they do, according to O*NET: Ushers, lobby attendants, and ticket takers help customers attending events or lining up for rides. 

17. Janitors and cleaners make an annual salary of $24,350.

Total employed in the US: 6,650

What they do, according to O*NET: Janitors and cleaners keep buildings clean and orderly using equipment ranging from brooms and mops to carpet cleaners and floor waxers.

16. Retail salespersons make an annual salary of $24,630.

Total employed in the US: 8,170

What they do, according to O*NET: Retail salespersons sell merchandise at kiosks, stalls, or shops.

15. Hotel, motel, and resort desk clerks make an annual salary of $24,750.

Total employed in the US: 1,350

What they do, according to O*NET: Hotel, motel, and resort desk clerks accommodate hotel, motel, and resort patrons by registering and assigning rooms to guests, issuing room keys or cards, transmitting and receiving messages, keeping records of occupied rooms and guests' accounts, making and confirming reservations, and presenting statements to and collecting payments from departing guests.

14. Tour and travel guides make an annual salary of $25,040.

Total employed in the US: 1,540

What they do, according to O*NET: Tour and travel guides escort people on sightseeing tours, giving facts and explaining their significance. 

13. Restaurant, lounge, and coffee shop hosts and hostesses make an annual salary of $26,060.

Total employed in the US: 1,700

What they do, according to O*NET: Host and hostesses welcome patrons, seat them at tables or in lounge, and help ensure quality of facilities and service.

12. Restaurant cooks make an annual salary of $27,370.

Total employed in the US: 3,350

What they do, according to O*NET: Restaurant cooks prepare, season, and cook dishes.

11. Landscaping and groundskeeping workers make an annual salary of $28,060.

Total employed in the US: 2,130

What they do, according to O*NET: Landscaping and groundskeeping workers take care of lawns, plants, and trees. Their duties include sod laying, mowing, trimming, planting, and watering, along with keeping the area free of general trash and debris.

10. Customer service representatives make an annual salary of $28,150.

Total employed in the US: 3,110

What they do, according to O*NET: Customer service representatives assist customers with questions or complaints, either in person or over the phone.

9. Security guards make an annual salary of $28,800.

Total employed in the US: 5,500

What they do, according to O*NET: Security guards monitor premises to prevent people from breaking the rules.

8. Laborers and freight movers make an annual salary of $28,890.

Total employed in the US: 1,310

What they do, according to O*NET: Laborers perform any sort of general labor, including moving freight or boxes.

7. Maintenance and repair workers make an annual salary of $35,810.

Total employed in the US: 3,650

What they do, according to O*NET: Maintenance and repair workers make sure mechanical equipment is running smoothly. This includes pipe fitting, boiler repairs, welding, carpentry, and other general building repairs.

6. First-line supervisors of food preparation and serving workers make an annual salary of $36,970.

Total employed in the US: 1,970

What they do, according to O*NET: First-line supervisors of food preparation and serving workers coordinate workers to ensure efficient customer service.

5. First-line supervisors of personal service and entertainment and recreation workers make an annual salary of $38,190.

Total employed in the US: 4,600

What they do, according to O*NET: First-line supervisors of personal service workers coordinate personal service workers like make-up artists, caddies, or maids.

4. First-line supervisors of retail sales workers make an annual salary of $38,190.

Total employed in the US: 1,060

What they do, according to O*NET: First-line supervisors of retail sales workers directly supervise and coordinate activities of retail sales workers in an establishment or department.

3. Food service managers make an annual salary of $54,390.

Total employed in the US: 1,000

What they do, according to O*NET: Food service managers workers plan, direct, or coordinate activities of an organization or department that serves food and beverages.

2. General and operations managers make an annual salary of $69,670.

Total employed in the US: 1,800

What they do, according to O*NET: General and operations managers oversee other workers in a variety of tasks, whether they're administrative tasks or manual labor.

1. All other personal service managers not otherwise categorized make an annual salary of $79,280.

Total employed in the US: 1,340

What they do, according to O*NET: Managers supervise amusement park employees in general.

Goldman Sachs and Wells Fargo tumble after the Fed caps dividends and bans buybacks

Fri, 06/26/2020 - 10:22am  |  Clusterstock

  • Bank stocks tumbled on Friday after the Federal Reserve capped dividends and banned stock buybacks until at least the end of the third quarter.
  • Goldman Sachs and Wells Fargo were down more than 5%, while Bank of America, JPMorgan, and Citibank slid between 3.9% and 4.4%.
  • The Fed rolled out the restrictions to preserve the banks' capital in case the coronavirus pandemic worsens.
  • Visit Business Insider's homepage for more stories.

Bank stocks slumped on Friday after the Federal Reserve announced fresh restrictions on dividends and share buybacks on Thursday.

Goldman Sachs and Wells Fargo were down between 5% and 6.5% as of 10:18 a.m. ET. Bank of America and JPMorganCitigroup also dropped about 4%, while Morgan Stanley shares fell 3.2%. The S&P 500 was down 1.5%.

The Fed banned banks from repurchasing shares until at least the end of next quarter, and capped third-quarter dividends at the amount paid out in the second quarter. It also introduced a formula for dividend payouts based on banks' income.

Read more: A high-growth fund manager is tripling her peers' returns in 2020 while targeting nontech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

The central bank rolled out the limits after its annual stress test found some banks would approach their minimum capital requirements if the coronavirus pandemic worsens. It will also require banks to resubmit and update their capital plans later this year to reflect current stresses.

America's biggest banks have already suspended buybacks since March, and limits on their dividend payments have been a hot topic in recent weeks, meaning the Fed's moves weren't a complete surprise.

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

However, investors such as Warren Buffett are still unlikely to welcome slimmer dividends and delayed buybacks.

Buffett's Berkshire Hathaway conglomerate counts Bank of America, Wells Fargo, and JPMorgan among its 10 largest holdings, and still owns a $300 million stake in Goldman Sachs after selling most of the position in the first quarter.

Join the conversation about this story »

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Leaked email reveals SoftBank-backed Oyo is slashing most US staff. Read the full message laying out details on stock options and the hotel startup's 2021 outlook.

Fri, 06/26/2020 - 10:18am  |  Clusterstock

  • SoftBank-backed budget hotel company Oyo will lay off most of its US staff, per a leaked email sent to employees Wednesday night. 
  • The employees will have the option to buy Oyo stock, though one employee said he doesn't know anyone planning to take that offer. 
  • Oyo has raised more than $3 billion in capital, though the last fundraise included $700 million from its young chief executive, Ritesh Agarwal.
  • Sign up here for our Wall Street Insider newsletter.

Oyo, the hotel chain backed by SoftBank, is planning to lay off a "large majority" of its US staff, the company told employees in an email on Wednesday night. 

Chief Operating Officer Abhinav Sinha, who copied CEO Ritesh Agarwal on the email, said US occupancy is back up to about 30% after the travel industry was walloped by the coronavirus pandemic. He said full recovery won't come for at least a year, so the company won't bring back most of the employees it furloughed in May.

Sinha declined to comment.

Employees received the email on Wednesday night but have not yet been informed if they'll be part of the cuts, said one current employee early Thursday evening. The employee, who is not authorized to speak to the media, said staff have not been told how many people in total will be cut. 

See more: A $10 billion SoftBank-backed startup quietly fired 110 people based on their performance. Some fired workers say it was basically impossible to close sales in the middle of a pandemic.

Those on furlough have been receiving 15% of their salary, and Oyo tried to block at least one employee from applying for unemployment, said the employee source. 

Employees who will be laid off can buy stock options in a new $18 million pool. The current employee said he did not know of any colleagues who planned to buy stock, an unusual program for laid-off staff. 

"Everybody I talked to laughed and said, 'are you f--king kidding me? Why the hell would I want to invest in this company? You tell me you're being "generous' with 15% a week and then you want me to give you money?' Hell no," he said. 

Oyo has been laying off staff globally throughout the year, including before the pandemic, as it's struggled to find a path to profitability after rapid expansion.

The budget hotel company has raised more than $3 billion in capital, though the last fundraise included $700 million from its CEO. He bought back shares from existing investors Lightspeed Venture Partners and Sequoia Capital, as part of a deal that raised Oyo's valuation to $10 billion. SoftBank has been pumping money into the company since 2015.

Read the email:

Dear OYOpreneur,

Hope you and your family are staying safe. We are very glad that our team has not seen any new COVID positive cases over the last 2+ months. However, the threat of this pandemic is far from over, so I hope you are all taking necessary precautions to keep out of harm's way.  The health of each OYOpreneur is of paramount importance and OYO stands committed to offering all the support that may be needed from our side.

 A key message on recovery

A little over two months ago, OYO had to unfortunately put many of our fellow OYOpreneurs on a furlough due to the impact of COVID-19 on our business. I have been in touch personally with many impacted OYOpreneurs during this period, and I have tried to share an honest perspective on how recovery in the business looks like. 

The US business is showing positive signs of recovery and our occupancy is now touching 30% levels. We have benefitted from our exposure to tier 2 and tier 3 markets, and from our commitment to the economy segment which has proven to be more resilient in this crisis. That said, US revenue is still 25% below the Jan levels, which for a high growth geography does set us back significantly.

More importantly, our global business is today operating at ~30% of pre-COVID revenue levels, with India finally starting to move up in occupancy from lows of 6-7% in the beginning of June. While we still remain optimistic about our long term recovery and our prospects in each geography, it is also very clear to us now that the path to full recovery for OYO global will last well into the second half of 2021.

Given the above realities, I do want to transparently share that OYO US will not be in a position to create opportunities for a large majority of the OYOpreneurs currently on furlough. This means it is likely that we will have to part ways with many OYOpreneurs when this period of furlough ends. In this note, I wish to share a little detail regarding how we got here, as well as announce that, for all employees currently on furlough, OYO is (1) providing each of you with a stock ownership opportunity; and (2) retaining an outplacement assistance firm, whose services will be available to you immediately. Any employee who OYO cannot return to work from the furlough will be eligible for extended health care and other separation support, which will be shared at the time each impacted individual is notified.

 Going back to Q1 2020

OYO US went through a tough restructuring exercise in Jan'20, which was needed to put us on a sustainable path balancing the need for growth, profitability, and process and tech excellence. I am really proud of the way this team rebounded from the tough decisions in Jan. Each one of you rose to the new challenge to ensure partners' relationships were deepened,  new sales programs were launched, revenue capabilities were enhanced and focus on building a strong culture took centre stage. We also started a renewed focus on our margins and almost doubled our contribution margin during this time period. 

In March 2020, Covid-19 swiftly and unexpectedly upended our world and our industry. Over the month of March, I explained during our town halls and leadership sessions the deep impact of Covid-19 on our business and the steps we were planning to take to ensure our long-term success and sustenance. Ritesh made sure he was the first one to get impacted by forgoing 100% of his salary for 2020, and I took a 40% cut on my pay. We reduced marketing spends by more than 80%, cut down capex, G&A, and several growth budgets including all M&A. However, the impact of the crisis was so sudden and so deep that these measures were not enough. Unfortunately, we had to implement furloughs and pay cuts. For our employees on furlough, however, we provided a modest 15% salary and continued benefits, which we believe are extremely important during this pandemic.  

I know that all of you joined OYO for our mission, for creating a difference, for having an impact - I am truly sorry that not all of us have been able to continue on this path. We were left with very little choice to ensure that we could survive the crisis. Our effort was focused on keeping as many OYOpreneurs engaged full time as possible, while giving us a fighting chance to recover from this crisis on the other hand.  

I am very grateful for the maturity with which you all handled this decision. I am also very grateful for how many of you wrote saying to me sharing your acknowledgement of the situation the company was facing. I will forever be grateful to you for understanding this situation and giving the company the runway required to work towards recovery.

While it was a very difficult decision for us to make, I would like to emphasize that it was not in any way a reflection of the work that you did or your performance. It is just a reflection of new realities of the market and the new realities for OYO globally in the midst of the pandemic.

We knew this crisis was real and could take time, but we were hopeful that we could leverage our global resources to re-engage after the furlough. However, the reality is, the impact on our business has been deeper, and the recovery has been slower than what we had anticipated.

Announcement of Stock Ownership Opportunity

I am indebted to the passion and love for OYO each one of you has shown even during these difficult times. I would like to recognize your contributions and this love and passion for OYO by giving you the opportunity to become a co-owner and shareholder of the company. I would like to inform you that each and every impacted OYOpreneur who is on a furlough will be eligible for stock options in OYO as part of a new ESOP program; a global pool of ~$18M has been created which will be used for this allocation. Details on your specific grants and applicable conditions will be shared on email before the end of the furlough.

In addition to above, we also understand that some of you may already have stock options. For those employees, the ownership opportunity will include a waiver of the employment requirement for your next vesting marker (i.e., one-year cliff for employees with less than 1 year tenure; next quarterly vesting for employees with more than 1 year tenure). 

This is the first time in the history of the company that such a large part of the organization is being offered stock ownership. This is a small token of gratitude from us for your contribution in building this company and for your unwavering support to us in good as well as bad times. 

Support for future career opportunities

We are partnering with a world renowned external agency, Lee Hecht Harrison (LHH), to assist all OYOpreneurs who are on a furlough in their search for other opportunities. LHH will be providing you access to active jobs, getting you noticed with recruiters and hiring managers, as well as supplying you with techniques to land an ideal position, faster. LHH is a division of The Adecco Group – the world's leading HR solutions partner with 51 years of experience. LHH's 2,200 coaches and colleagues work with more than 7,800 organizations in 66 countries around the world and 350,000+ candidates per year.  LHH provides many benefits, including a Career Resource Network, proprietary job posting database, career coaching, professional resume and social media review, online workshops, and more.  LHH's covered services will be available to you, beginning immediately and the costs will be borne by OYO. We strongly encourage you to use these services.

 LHH will conduct virtual information sessions on 25th, 26th ,29th and 30th of June which will help you understand the scope of their services. You can start to avail these services anytime between Monday, June 29 and Friday, July 31. And these services will be available to you for a period of four months from the day you activate the service. Please refer to the attachments for more details about the program and how to get started.

Leveraging our investors network

We are also actively working with our investors to identify opportunities in their portfolio companies, and help OYOpreneurs with alternate career opportunities in those companies. We have already reached out to a few OYOpreneurs basis profiles and needs as shared by the investors. We will make this more structured and will be reaching out with further details here soon.

Before I close I would like to say thank you. I am privileged to have worked with all of you. Thank you for helping the company get where it is today and for being an integral part of our company. Thank you for coming to OYO!

 Please remember to use the OYO's Employee Assistance Program, which offers free confidential access to professional counselors and other supports. Details of this program are attached. 

If you have any other questions, please reach out to me or to the Human Resources at [REDACTED].



Get in touch! Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

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NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly

Former employees say BTIG, a Wall Street firm backed by Goldman Sachs and Blackstone, had a toxic party culture that was stuck in the '80s

Fri, 06/26/2020 - 9:34am  |  Clusterstock

  • The financial-services industry has tried to clean up its image in recent years, but shades of an earlier era on Wall Street have lingered at the firm BTIG, a Business Insider investigation has found.
  • Interviews with more than half a dozen former BTIG employees, and a review of court records and Equal Employment Opportunity Commission documents, reveal allegations of a boys'-club culture, excessive drinking at company events, and sexual banter at least into 2019.
  • An investigator with the EEOC contacted at least two former BTIG employees within the past 18 months seeking information about allegations of sexual harassment at the firm.
  • In an ongoing lawsuit filed in 2019, one former employee alleged that an executive in the firm's San Francisco office directed BTIG staff to screen out job candidates that "looked black," and to avoid female job applicants since it was "too risky to hire a woman." The executive apparently remained at BTIG until June of this year, when Business Insider inquired about the lawsuit. BTIG says he is no longer with the firm.
  • BTIG said: "We are proud of the firm we have built and are committed to continually improving it," adding that "allegations of inappropriate behavior are investigated and appropriate disciplinary action is taken consistent with company policy and in accordance with applicable laws." The company also said it "strongly rejects the claims that are currently the subject of litigation."
  • Visit Business Insider's homepage for more stories.

In December, the financial-services firm BTIG made a surprise announcement: The company would no longer serve alcohol at its winter holiday party, which had gained a reputation on Wall Street as an annual anything-goes affair.

Instead, the company said, it would opt for healthier alternatives such as smoothies and fruit-infused water, offering activities like yoga and bootcamp-style workouts.

"I'm sore, just in a different way," a BTIG employee joked to Reuters at the time. "My head doesn't hurt; my body hurts."

As a new generation of finance professionals enters the workforce, the financial industry has struggled to convince the public that it now embraces groups that Wall Street has long excluded. For BTIG, rebranding its holiday party with a more wholesome touch — it had been a raucous, lavish event for employees and clients held at swanky New York nightclubs like Catch and Provocateur — was an attempt to do just that.

But as the firm, which is privately held with main offices in New York and San Francisco, attempts to tweak its image outwardly, some of the old Wall Street ways persisted internally in recent years, Business Insider has learned.

Interviews with more than half a dozen employees who left the firm within the past six years, as well as a review of court records and documents from the Equal Employment Opportunity Commission, revealed allegations of a boys'-club culture marked by conduct that some described as inappropriate workplace behavior, excessive drinking at company events, and sexual banter.

In an ongoing lawsuit in California, one former employee alleged an executive in the firm's San Francisco office directed BTIG staff to screen out job candidates that "looked black" or "sounded black," and to avoid female job applicants since it was "too risky to hire a woman."

The executive, Gene Ramirez, appears to have continued in his role at BTIG for a year after the complaint was filed, until after Business Insider made inquiries this month. BTIG now says he is no longer with the firm.

An investigator for the EEOC contacted at least two former BTIG employees in the past 18 months seeking information about allegations of sexual harassment involving the financial-services firm, according to documents reviewed by Business Insider.

Likewise, Business Insider has learned that a California employment law firm reached out to former employees more than a year ago in an apparent effort to sign up clients to bring a civil-rights claim against the company. The law firm did not file any claims against BTIG.

"When I got that letter in the mail, there was a part of me that was glad in the sense that people actually came forward, and something was filed and [there] were hopefully steps made in the right direction to stop a lot of the behavior that was going on," one former BTIG employee, who left the firm in 2018 after several years of employment and received a mailed inquiry from the EEOC, told Business Insider.

In a statement a BTIG spokesperson said:

"We are proud of the firm we have built and are committed to continually improving it. There is more work to be done across the financial services industry and at our firm to address representation at all levels. We are committed to creating a diverse and inclusive environment and recognize that we can do more, and we are doing more, to achieve these goals. To that end, we have taken a number of steps recently, including offering internships, providing early career opportunities, and forming an Inclusive Action Council, to build a more gender and racially diverse talent pipeline.

"It is extremely troubling to us to hear that anonymous former employees described inappropriate behavior during their time at BTIG. BTIG has clear anti-discrimination, anti-harassment, and non-retaliation policies in place. We condemn racial, prejudicial or sexist comments of any kind. While we do not comment on specific personnel matters, allegations of inappropriate behavior are investigated and appropriate disciplinary action is taken consistent with company policy and in accordance with applicable laws. BTIG strongly rejects the claims that are currently the subject of litigation. We are confident the claims lack merit and will be resolved accordingly."

'It felt like old-school Wall Street'

BTIG was formed in 2005 out of a merger between the firms Baypoint Trading, founded by Scott Kovalik, and Bass Trading, founded by Steven Starker.

Kovalik, now BTIG's chief executive, and Starker, whose title at the firm is cofounder, both started on Wall Street in 1987, Kovalik at the storied investment bank Salomon Brothers — "home to the famously rapacious and churlish," The Wall Street Journal once wrote — and Starker at Spear, Leeds & Kellogg, the once powerful trading shop Goldman Sachs bought in 2000.

Today, BTIG has some 3,000 institutional and corporate clients with 600 employees in 18 offices. Goldman Sachs and Blackstone, the private-equity giant, are among the firm's investors.

A spokesperson for Blackstone described its funds' stake in BTIG as relatively small, adding that Blackstone is not a controlling investor. A spokesperson for Goldman Sachs declined to comment.

Several former employees said the brokerage firm had few female traders. Unlike some other Wall Street firms, which have taken steps to change their ways in the wake of the #MeToo movement, BTIG seemed mired in the past, these former employees say.

Three former employees who left the company within the past three years told Business Insider the firm reminded them of trading floors of the 1980s.

The human-resources department was toothless and rarely called on to intervene on behalf of staffers, even in cases when employees raised complaints directly to senior leaders, two people said.

"What you have at BTIG is a bunch of vultures trying to steal each other's lunch money and very much a bully culture, and that bully culture came from the top," a former employee in the firm's San Francisco office who left the company within the past three years said, adding that the company's "dinosaur business model" — trading stocks, bonds, and other securities for clients, even as fees from making trades have plummeted — contributed to the high-stress environment.

"It felt like old-school Wall Street to a certain extent," another former employee who left in 2018 told Business Insider. "For a lot of women, it wasn't the most comfortable environment. We liked to have fun, it was a party culture ... Since we are privately owned, we can get away with stuff that other firms can't get away with. The very senior people — they're the ones who are creating this culture."

Taking out female recruits to 'see how well they could hold their alcohol'

The former employee who left the firm's San Francisco office in the past three years said that within his group women were rarely hired. Between roughly 2014 and 2018, just two of about 40 interns brought on were women, the person said.

"It was like walking into a time warp," that person said about the company's culture. "That whole place, it's bizarre. I would say it was certainly gender very non-diverse," adding: "I don't think there was a single LGBTQ, non-binary person in that entire firm."

A former employee in New York who left the company in 2014 said many of the firm's receptionists were "young, cute girls in tight clothing."

Another former employee in New York who was at the company through 2018 said that after a female staffer was hired, workers circulated a poll about which male would be the first to approach the "beautiful" new arrival.

"It wasn't every single person there, but there were a few key people who made it extremely toxic, which is sort of the reason I left," said a former employee who worked at BTIG until 2017.

In a statement, the BTIG spokesperson pointed to several senior female executive at the firm, including its chief operating officer, head of human resources, and head of global trading operations, adding that the firm's "receptionists in New York and San Francisco are professional, respected employees who have been working at the firm for several years and employed in the business world for 20+ years each."

Between 2014 and 2018 — the period during which the former employee in the San Francisco office said his group hired just two female interns out of 40 — the company as a whole hired 21 female interns out of 188, or 11%, the spokeswoman said. In San Francisco, the spokeswoman said, the firm hired six female interns out of a total of 37. Interns usually rotate throughout different departments during their internships.

The spokesperson also said "BTIG has LGBTQ+ employees," but declined to identify any or say whether the company has an affinity group for LGBTQ+ employees. Overall, the spokesperson said, BTIG has "more than 54 women in client facing (trading/sales) roles," though she declined to say how many men were employed in comparable roles.

One former employee who worked in New York recalled that, sometime between 2011 and 2013, the firm was staffing up its capital introduction team, which is tasked with building relationships with hedge funds and investors.

Peter Tarrant, the head of business development and capital introduction, and Jennifer Bloom, a managing director and cohead of US capital introduction, took out prospective female recruits "to see how well they could hold their alcohol," this former employee said.

Neither Bloom nor Tarrant responded to requests for comment.

That person added that staffers would often gossip about Starker's lavish lifestyle. "Steven Starker was the main partner in New York City and he was a character," this person said. "He made at least $100 million dollars."

In 2016 he listed for sale a $16.8 million house in Purchase, New York, complete with a pool, turf soccer field, tennis court, basketball court, batting cage, and chipping green, according to The Wall Street Journal. He told the paper he'd looked at 36 houses before settling on the property.

A year earlier, billionaire equity and investment fund manager Antony Ressler's group, which includes Starker, purchased the Atlanta Hawks franchise for $850 million.

'A lawsuit waiting to happen'

Four former employees who all left the firm within the past six years said that BTIG lacked diversity during their time there, though one said there was a "dearth of Black people in our industry as a whole, so that's always a problem in finance."

The person at BTIG until 2017 said: "It was not an objective to have a diverse population, and they did not seek out to elevate women or support women, or even people of color. It was not that kind of culture, and it was not that kind of firm," adding: "It was not a productive environment for women or people of color."

"You walked in there, and it was a very white firm, and I was, like, 'Oh my gosh, what era did this come out of?'" she said.

The former employee who left the firm's San Francisco office within the past three years described a workplace-sensitivity training session led by an outside consultant that took place four or five years ago.

During the session, one employee directed a racial slur at another employee in an attempt at humor, the former staffer recalled.

"You are all a lawsuit waiting to happen," the facilitator told the group.

In its statement, BTIG said the company regularly provides "workplace sensitivity and sexual harassment training sessions" but is "not aware of any incident from 4-5 years ago in which anything inappropriate occurred during any such session that was not part of the course and instructor program."

'Too much dirt to keep it clean'

One former employee who worked in New York until 2018 cited what she described as unprofessional conduct from coworkers, including flirtatious behavior, office romances, and risqué dancing at company events.

She believed that some female employees at BTIG who dated coworkers were singled out for special treatment. Some women "dated to get to the top to be favorable," the person told Business Insider.

The same former employee said she saw a white employee call an African American employee "stupid" in front of colleagues. The insulted employee told her, she said, that when he reported the incident to his manager, the manager took no action and simply told him to go to HR.

"Not everyone at the company was horrible," the former employee said. "There were some genuinely good people and good workers, but unfortunately there was too much dirt to keep it clean. My experience was not a great one, and I'm sure people probably felt the same way. It's a very high-pressure environment, and you can't work under those amounts of stress."

'Not your typical holiday party'

While alcohol is no longer served at BTIG's winter holiday party, sources who attended the holiday bash before 2019 described a club-like atmosphere that included provocative dancing, unlimited booze, and, one attendee said, caged women as entertainment one year. Through an attorney, BTIG denied that there were ever caged women at its parties.

"At the Christmas party, the first rule is you can't talk about the Christmas party," the former employee who was at the New York office until 2014 told Business Insider. "It was at a club, there were dancers, everybody had a good time."

A former employee at the company from 2014 until 2018 described scant food, free-flowing alcohol, and senior managers roaming the dance floor. Later in the evening, it was common for clients to come and join in, this person added.

"When I got there I was thinking more of a corporate kind of event, but some girls would dress in really provocative attire like see-through dresses, tight skirts, club-wear basically, and not a corporate environment," said another former employee about the 2017 bash. She said she felt uncomfortable at the event.

The former employee added: "You had people in each other's faces, you had people dancing kind of really, really close and provocative. It was just not your typical holiday party. It was more like what you would expect if going to a club."

When asked why BTIG discontinued alcohol in 2019, the firm told Business Insider: "For BTIG's 2019 holiday party in New York, the firm choose to take advantage of some entertainment space at its new building. The party was consistent with events the firm held in other locations previously, focusing on wellness, social team-building and inclusivity."

Charity Day

The holiday party wasn't the only thing BTIG has changed about itself in recent years. The company also cancelled its long-standing annual Charity Day event for two years in a row, a fund-raising drive that in previous years drew supermodels, elite athletes, and politicians to the BTIG offices to raise money for charity.

The last event, carried by CNBC and covered by Business Insider, was held in 2018.

In past years, models including Petra Němcová, Molly Sims, and Chrissy Teigen, and politicians such as Mike Bloomberg and Bill Clinton, have walked the trading floor, posing for photos with BTIG leaders. There have also been appearances from Miss Teen USA, Miss USA, and Miss Universe winners. In photos, Starker can be seen posing with famous women, including Kristin Davis, Bridget Moynahan, Nicky Hilton Rothschild, and Jenny McCarthy.

The event has generated more than $50 million for "hundreds" of charitable organizations, according to the firm's website.

"We started BTIG Charity Day in 2004, when the firm had less than 20 employees. From that first year on it has been the one day a year where all of our employees look forward to coming together to give back to others in need," Starker told Forbes in a 2016 interview. "The celebrities that participate in BTIG Charity Day are truly incredible, and on BTIG Charity Day we see them as an extension of our team. Their response is remarkable, and they often return year after year."

But BTIG appears to have thought better of the optics of bringing celebrities and models onto the trading floor, some of them scantily clad, to cavort with BTIG employees. Although BTIG declined to say whether the event has been permanently cancelled, it said the 2019 Charity Day was "originally postponed due to the New York office moving to a new location" and never rescheduled, and that the 2020 Charity Day "was postponed due to Covid-19, and at this time it seems unlikely to be rescheduled in 2020."

A person familiar with the event said the 2020 Charity Day had been considered unlikely to occur this year even before the novel coronavirus upended the events industry.

Business Insider spoke with some sources who recounted glowing experiences at BTIG. Two former employees who worked in the San Francisco office emphasized that they had ample room to move up in the company, with valuable mentorship opportunities.

"There are more women on that trading floor than I see in a lot of other places, to be fair," a former employee from the New York office said. She said that while BTIG was a very old-school firm, its treatment of women didn't rise to the level of harassment.

"[The women] could hold their own, and they had to," she said. "They had to fight."

An EEOC investigation

But that fighting may have been what drew the attention of the Equal Employment Opportunity Commission, according to documents reviewed by Business Insider.

An EEOC investigator sent notices to at least two former BTIG employees in March 2019, seeking information about the company's environment. The letters said that the agency was "conducting an investigation into sexual harassment allegations involving BTIG, LLC" and the recipients "may have information" about the investigation.

Both former employees who received those letters said that they subsequently attempted to contact the EEOC investigator to provide information, but that neither the investigator nor anyone else from the agency returned their calls.

"I called and never heard back from the investigator — and I tried calling a couple times since," one former employee said. "So I don't know what the status of that is."

The investigator who sent the letters retired from the agency because of illness two months after sending them, two sources with knowledge of the EEOC's New York office told Business Insider. He has since died.

It appears that when the investigator retired, the agency's investigation into BTIG went on ice.

"Under federal law, possible charges (complaints) made to the EEOC are strictly confidential, and we are prohibited from commenting on them, furnishing any information on them, or even confirming or denying the existence of such a charge," a spokesperson for the EEOC said.

Gillian Thomas, senior staff attorney at the ACLU Women's Rights Project, told Business Insider that with the increased workload in the past couple of years because of the #MeToo movement and chronic funding and staffing problems, it's possible an EEOC investigation might fall through the cracks.

"For the agency to be able to fulfill its statutory mandate as the federal entity charged with enforcing our nation's antidiscrimination laws, it needs to have sufficient resources and personnel to follow up when people are willing to come forward and tell their stories," Thomas said. "We need to be sure the agency has the resources so those kinds of voices can be heard."

Joshua Parkhurst, an employment lawyer in New York, agreed.

"They don't have the ability to comprehensively investigate all the charges that they investigate, and it's a problem," he said.

A California law firm looked for claims of 'alleged sexual harassment'

Charon Law, a law firm in Redwood City, California, also contacted two former BTIG employees about "alleged sexual harassment" at the firm in early 2019, according to correspondence reviewed by Business Insider.

"You may have the right to recover damages for alleged sexual harassment if you worked at any time as an employee, contractor or vendor for BTIG," Perry Segal, Charon's lead attorney, wrote in a letter sent via a LinkedIn message and email to the two former employees in March 2019.

The letter did not contain any detailed allegations of misconduct, and Business Insider could not determine whether Charon Law had a basis for telling potential clients that they could recover damages from BTIG.

A former employee who received Segal's email told Business Insider that she replied to the inquiry and was told his firm was pursuing an investigation into the company.

But BTIG took a proactive approach to heading off that effort, Business Insider has learned.

Charon Law, which is affiliated with New York employment law firm Leeds Brown Law, agreed to stop its inquiries in May 2019, after BTIG's general counsel, Steve Druskin, sent a cease-and-desist demand to Leeds Brown. Segal did not respond to requests for comment.

Jeffrey Brown, a partner with Leeds Brown, said in a phone call that he did not recall receiving any letter from BTIG and declined to answer further questions. Neither Charon Law nor Leeds Brown ever brought a lawsuit against BTIG.

BTIG has taken a similarly aggressive approach to journalists looking into its culture and workplace. In the course of reporting this story, Business Insider received multiple letters from the law firm Clare Locke LLP on behalf of BTIG, which accused reporters of making "false and damaging written and oral statements" while seeking information about BTIG, and threatening to sue Business Insider for defamation and potentially damaging the firm's relationships with clients.

'Too risky to hire a woman'

Charon Law agreed to stop investigating BTIG, but the firm continues to face legal trouble in California.

According to a suit filed by a Matthew McLeod, a former investment banker in BTIG's San Francisco office, managing director Gene Ramirez subjected coworkers to anti-Semitic, sexist, and racist comments about clients, colleagues, and prospective hires.

Among the allegations in the complaint, filed in San Francisco Superior Court in June 2019:

  • The complaint accuses Ramirez of making anti-Semitic comments regarding a key client during a conference call hosted by BTIG. The complaint alleges Ramirez put the speaker phone on mute and yelled, "DANIEL? DAA-ANIEL? THIS IS BETSY COHEN! DO YOU HAVE ANY GEFILTE FISH DAAANIEL? I LOOVE ME SOME MATZAH BALL SOUP… DANIEL!"
  • The complaint says Ramirez directed BTIG staff to screen out female job applicants because he thought it was "too risky to hire a woman" and "we don't need a lawsuit."
  • It says Ramirez referred to another BTIG managing director, who is African American, as an "Oreo."
  • It says Ramirez directed BTIG staff to screen out candidate résumés that "looked black" based on names and affiliations, or candidates that "sounded black" on the phone.
  • "BTIG has deployed unlawful business practices," the complaint says, "including, but not limited to: allowing its executives to use different purported titles when dealing with different potential or actual clients; having unlicensed personnel conduct investment banking business; and failing to maintain adequate information barriers relating to confidential client and transaction information."

When McLeod raised concerns directly to BTIG's chief executive, Kovalik, and chief operating officer Matthew Clark, in May 2018, the company did not investigate the issue, according to the complaint.

Instead, McLeod said, in a meeting related to the allegations against Ramirez, Kovalik asked, "So what's this about [Ramirez] saying bad stuff about Jewish people?"

While Clark told McLeod he would provide the complaint and related documentary evidence to human resources to investigate, McLeod says that never occurred. When McLeod followed up directly with human resources in June 2018 to inquire about the status of the complaint, he says, he discovered that neither Clark nor Kovalik ever reported the problem.

Later, McLeod's complaint says, Clark texted him that it was "inappropriate for you to reach out to HR." In a meeting in the following months, Clark also told McLeod that he had made things "socially awkward" with Ramirez and "caused a lot of tension around here."

"We all recognize that no organization is going to be perfect, and things are going to come up from time to time," Seth Rafkin, McLeod's attorney, told Business Insider. "But I think generally laws like the California Fair Employment and Housing Act exist to try to provide that foundation for a fair workplace."

"That objective really can only be furthered if people feel like they can raise issues, and that when there are issues, they'll be acted on."

McLeod said he was ultimately terminated in retaliation for complaining about Ramirez, even though he never received a negative performance review during his four years at the company.

When Business Insider inquired late this month about McLeod's accusations against Ramirez, the company said "Mr. Ramirez is not a current employee of BTIG." However, Ramirez was still listed on BTIG's website as a managing director until shortly after this story was published. As recently as late May — nearly a year after McLeod filed his complaint and three weeks before Business Insider asked BTIG about the case — his headshot was featured on a massive promotional image on the outside of the Nasdaq MarketSite in Times Square to coincide with a virtual conference where he spoke. He was identified as a BTIG executive.

BTIG said in its statement that it terminated McLeod "for performance reasons" and that it "is confident that it will show that there is no merit to any of McLeod's claims." It said that McLeod's complaints about Ramirez were investigated "with department supervisors and HR involved," and that "Scott Kovalik was not part of that investigation and denies being involved in any conversation with McLeod in connection with his complaint."

In response to McLeod's complaint, BTIG requested the case go to arbitration. A judge partially granted that request in September 2019, but found that one of McLeod's claims — that he was fired in retaliation for reporting discrimination in violation of the California Fair Employment and Housing Act — could proceed in open court.

BTIG is appealing that ruling.

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NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly

Mastercard's US switched volume posted positive growth in June

Fri, 06/26/2020 - 9:23am  |  Clusterstock

The card network's US switched volume grew 3% year-over-year (YoY) in the week ending June 14 and 5% YoY in the week ending June 21, marking a major recovery from the negative growth it posted in several previous weeks thanks to the coronavirus pandemic, per a press release.

And Mastercard's switched volume outside the US fell just 5% YoY in the week ending June 21, a serious improvement from its 19% YoY drop in the week ending May 7, meaning this bounce-back isn't isolated to the US market. This points toward a global increase in spending, since Mastercard accounted for 24.5% of global card brand purchases in 2018, per The Nilson Report.

The relaxing of social distancing requirements is a key factor in Mastercard's recovery, so its performance should improve as more businesses reopen, while an uptick in coronavirus cases could negate its progress. States throughout the US are enabling retailers, restaurants, and personal service providers to reopen, creating more opportunities for consumers to make purchases and potentially giving more workers wages to spend.

As states and countries around the world reopen, more industries, including travel, could start to bring in more volume, boosting Mastercard's volume and overall global spending. But with cases spiking in several US states, it's possible spending's recovery will be reversed if governments choose to close down industries again and if retailers follow Apple's lead by reclosing some stores.

As spending picks back up, merchants will likely debut promotions to make up for lost sales and boost customer loyalty to drive consistent revenue in uncertain times.

  • Consumers appear to have an appetite for sales holidays as spending recovers, so merchants may create new events in the coming months to rack up sales. Alibaba and both posted huge sales numbers for the 618 sales event in China, which runs from June 1-18, and merchants can try to drive sales themselves by offering their own discounts and promotions as part of an existing or new event. Amazon is already trying this tactic with its new Big Style Sale, showing how merchants can potentially highlight a specific category with their sales — in this case, apparel — though merchants can run broader promotions if that better fits their offerings and needs.
  • Merchants should be looking to incentivize consumers to sign up for subscriptions and loyalty programs as spending picks up to drive revenue in the future. If consumers are part of a loyalty program, they may be more likely to shop with a merchant going forward because they'll have access to perks like discounts. And if they're paying for a subscription, merchants can consistently bring in revenue from customers. These tactics should help position merchants to weather any future dips in spending, so vendors will likely look to incentivize consumers to sign up for loyalty programs and subscriptions — like Panera Bread is doing by offering its paid coffee subscription for free this summer to members of its loyalty program.

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The head of billionaire Steve Cohen's Cubist unit is heading to Izzy Englander's Millennium

Thu, 06/25/2020 - 10:34pm  |  Clusterstock

  • Ross Garon, the leader of Steve Cohen's quants, is joining Izzy Englander's Millennium, sources tell Business Insider.
  • Cohen told Point72 staff in March that Garon would be retiring from the firm in the coming months.
  • Garon is close with Millennium co-CIO Bobby Jain, sources say. 
  • Visit Business Insider's homepage for more stories.

Steve Cohen's quant leader is joining one of Point72's biggest competitors, according to sources. 

Ross Garon, the head of the firm's quant unit, Cubist, is set to join Izzy Englander's Millennium, sources tell Business Insider.

Cohen told staff in a memo in early March that Garon would be retiring from the firm in the coming months. The memo stated that Garon would assist in finding his replacement. 

Point72, Millennium and Garon did not respond to requests for comment. 

It's not clear yet what Garon's position at Millennium will be; sources say one of the draws for Garon to join was his relationship with Millennium co-CIO Bobby Jain, who has known Garon since high school. 

Read more: Izzy Englander just landed a quant team that was managing hundreds of millions for billionaire Michael Platt

Prior to joining Cohen's firm in 2009, Garon worked for D.E. Shaw, one of the other prestige quant hedge funds in the industry, and founded his own fund, Tykhe Capital, which was named after the Greek god of fortune. 

This is not the first time a former top quant of Cohen's has joined forces with Englander. Neil Chriss, who left Point72's predecessor in 2009 to start Hutchin Hill, received backing from Millennium to start another quant fund in 2017. 

Quant talent, despite computer-driven funds including Cubist getting slammed earlier this year, is still one of the most sought-after pools of investors in the industry. WorldQuant, which manages money for Millennium, recently added Goldman's former top quant Gary Chropuvka to be its president

For the year through April, both Millennium and Point72 were positive, beating the average hedge fund. Izzy Englander's firm had made 3.6%, while Steve Cohen's manager had made 1.7%, according to Bloomberg

Read more:

SEE ALSO: $7 billion hedge fund WorldQuant is bringing on the former top quant at Goldman to help create the 'future of quantitative investing'

SEE ALSO: Izzy Englander just landed a quant team that was managing hundreds of millions for billionaire Michael Platt

SEE ALSO: The chief data officer at $6 billion hedge fund Balyasny explains how to merge quantitative and fundamental trading strategies — and the importance of 'translators' to bridge the gap

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NOW WATCH: How waste is dealt with on the world's largest cruise ship

Holland America hit with lawsuit over deadly COVID-19 outbreak onboard MS Zaandam

Thu, 06/25/2020 - 7:34pm  |  Clusterstock

  • Passengers stricken with COVID-19 onboard Holland America's MS Zaandam have filed suit against the cruise line.
  • The lawsuit alleges Holland America did not take proper precautions when it came to protecting passengers from the coronavirus.
  • "This cruise was a life-threatening nightmare," Lieff Cabraser partner Kenny Byrd said in a statement, saying that Holland America failed to act "even as the virus spread through the passengers and crew."
  • Visit Business Insider's homepage for more stories.

The Holland America Line has been hit with a lawsuit over the fatal outbreak of COVID-19 onboard the MS Zaandam in March.

The filing from Lieff Cabraser Heimann & Bernstein LLP, Tousley Brain Stephens PLLC and Barrett Johnston Martin & Garrison, LLC indicates that the plaintiffs are seeking to make the suit a federal class-action injury lawsuit against both Holland America and its parent company Carnival Corporation. The group of law firms filed the suit in Washington state "on behalf of cruise ship passengers who traveled on the MS Zaandam in March 2020 and were negligently exposed" to coronavirus, according to a statement sent to Business Insider.

"Our response throughout this process has put the safety and well-being of our guests and crew as the top priority, and has been informed by guidance by leading government agencies, including US Centers for Disease Control and the World Health Organization, as well as the evolving understanding from the medical community on best protocols," a Holland America spokesperson said in a statement sent to Business Insider. "Holland America Line does not comment on pending litigation."

Along with the Diamond Princess and the Grand Princess, the Zaandam was one of the most high profile cruise ships to experience a deadly outbreak of COVID-19 at sea.

The Zaandam first cast off from Buenos Aires, Argentina, on March 7. Four days later, the World Health Organization designated the coronavirus a "pandemic." Before its cancellation a little over a week into its itinerary, the cruise included stops in Montevideo, Uruguay, and the Falkland Islands. The ship was slated to conclude its voyage in San Antonio, Chile on March 21. Many passengers on board had signed up for back-to-back cruises, and the next leg would ultimately see them conclude their journey in Fort Lauderdale on April 7.

But the cruise came to an end after South American governments began shutting the ship out due to coronavirus concerns. On March 22, the ship's captain ordered passengers to stay in their cabins after crew and guests alike began experiencing COVID-19 symptoms.

The ship was eventually allowed to pass through the Panama Canal and dock in Fort Lauderdale. A total of four passengers died during the cruise, although it was not confirmed whether or not each death occurred due to the virus. The South Florida Sun-Sentinel reported that a crew member died in a hospital in Florida after testing positive for COVID-19.

The lawsuit specifically alleged that Holland America's failure to take action when faced with the risks posed by COVID-19.  It cites the line's decision to continue sailing ships long after the World Health Organization declared the coronavirus a "global health emergency" on January 30, as well as after fatal outbreaks onboard the Diamond Princess and the Grand Princess.

"As plaintiffs understand the facts, Holland America and Carnival did not take any measures different from their typical preparations for a voyage, and made no COVID-19-specific efforts to prevent or contain contagion at the time of initial embarkation," the statement said.

The lawsuit specifically focuses on plaintiff Carl Zehner, a resident of Tennessee and Zaandam passenger who tested positive for COVID-19. Trapped aboard the ship with his spouse Leonard Lindsay, Zehner was shuttled off to a number of different hospitals in Florida and put on a ventilator. 

In its statement regarding the suit, the coalition of law firms said that Zehner has not yet totally recovered from the ordeal.

"This cruise was a life-threatening nightmare," Lieff Cabraser partner Kenny Byrd said in a statement. "Despite knowing of the risk and dangers of COVID-19 exposure on its ships, Holland America and Carnival put no meaningful screening or preventative measures in place on the cruises prior to departure and negligently continued to encourage guests to gather and mingle even as the virus spread through the passengers and crew."

SEE ALSO: Inside the deadly voyage of 2 Holland America cruises stricken with coronavirus and stranded at sea for weeks with hundreds of sick passengers

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NOW WATCH: Flight attendants explain how COVID-19 has affected their jobs

WeWork is grappling with a fresh setback after the pandemic emptied offices. Here's the latest on job cuts and executive departures.

Thu, 06/25/2020 - 5:48pm  |  Clusterstock

  • WeWork pulled its IPO in 2019 after mulling a massive valuation cut to drum up investor interest, and cofounder Adam Neumann was ousted as CEO and chairman.
  • Real-estate veteran Sandeep Mathrani started as CEO in February.
  • In April, investor SoftBank backed out of its plan to buy $3 billion worth of WeWork shares, including nearly $1 billion from Neumann.
  • WeWork's US head of real estate has departed. And IBM is leaving a big WeWork office it rents in New York City.
  • You can read our stories by subscribing to BI Prime.

Here's everything we know about what's going on inside WeWork:

Latest news Fresh layoffs  Coronavirus hits coworking

Have a WeWork tip? Contact reporter Meghan Morris via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

Lawsuits and investigations Executive changes under CEO Sandeep Mathrani Plotting a path forward SoftBank bailout Fallout after the failed IPO Neumann's exit Tanking valuation  Financials, business history, and real estate Coworking rivals Road to the failed IPO Neumann's leadership SoftBank's role

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NOW WATCH: Here's what it's like to travel during the coronavirus outbreak

Fed suspends share buybacks and limits dividends for big banks after stress test results

Thu, 06/25/2020 - 5:10pm  |  Clusterstock

  • The Federal Reserve on Thursday imposed new restrictions on the US banking system after its annual stress test showed that some banks may approach minimum capital levels under certain coronavirus pandemic scenarios. 
  • Banks will be required to suspend share repurchases for the third quarter of the year, the central bank said in a statement. 
  • In addition, the board is also capping dividend payments and requiring large banks to re-submit and update capital plans later in the year to reflect current stresses.
  • Read more on Business Insider.

The Federal Reserve imposed new restrictions on the US banking system Thursday after its annual stress test showed that some banks would approach minimum capital levels under certain coronavirus pandemic scenarios. 

"For the third quarter of this year, the Board is requiring large banks to preserve capital by suspending share repurchases, capping dividend payments, and allowing dividends according to a formula based on recent income," the Federal Reserve said in a statement. 

In addition, the regulator is also requiring banks to re-evaluate their longer-term capital plans, it said. It's the first time since the financial crisis that the Federal Reserve has put new restrictions on the US banking system. 

In the Fed's sensitivity analysis, loan losses for 34 banks could be as much as $700 billion under hypothetical downside scenarios in which unemployment remains high and the US economy doesn't swiftly bounce bank from the pandemic recession.

Under harsher scenarios, "most firms remain well capitalized but several would approach minimum capital levels," the Fed said. 

The new restrictions come in light of these results. "The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said in statement, adding, "the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks."

Read more: A high-growth fund manager is tripling her peers' returns in 2020 while targeting non-tech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

The Fed said that all large banks will be required to re-submit and update capital plans later in the year to reflect current stresses. This will help firms "re-assess their capital needs and maintain strong capital planning practices during this period of uncertainty," according to the central bank. 

Going forward, the board will conduct additional analysis on a quarterly basis to determine if adjustments to the response are appropriate. 

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NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence

Meet Spin: A new US live-commerce startup partnering with influencers and retailers to bring window shopping to your phone

Thu, 06/25/2020 - 4:38pm  |  Clusterstock

  • Spin Live, an app where retailers and influencers can live stream videos to shoppers, just launched in the US.
  • Live commerce has taken off in China, where users can follow brands and influencers, watch product videos, and click-to-buy in-app.
  • Live commerce combines entertainment with shopping, engaging users through video and enabling seamless check-outs.
  • Sign up here for our Wall Street Insider newsletter.

Live commerce, where brands and influencers stream videos to shoppers, has taken off in China, helping to generate billions in sales. 

Now a startup is hoping to help bring the burgeoning trend to the US.

Spin Live is a live-commerce marketplace where brands and influencers can sign up to stream live video and sell directly to users. Retailers can host live streams themselves, or set up offers for Spin's network of influencers who can stream to their followers.

And instead of redirecting users to online stores, Spin brings the entire shopping experience in-app, with check-outs embedded on the platform. Spin charges retailers a 4% fee on each sale, and influencers can earn upwards of 8% on sales made via streams hosted by them.

The startup, which officially launched Thursday, is backed by MSA Capital, Rock River Capital, and New Capital Fund. To be sure, it's early days for the app, which has over 50 influencers signed up, in addition to retailers like Fason de Viv, a marketplace for independent brands, and makeup company Girlactik.

"No one's taken, in the US, the live-video concept and optimized it for shopping, much like it is in China," Brian Wiegand, cofounder and CEO of Spin, told Business Insider.

"Being a startup, we have an opportunity to jump out ahead of a lot of the other live options that aren't offering the integrated payments," he added.

Live commerce combines advertising with entertainment

On social media platforms today, advertising is auxiliary to the user experience. Ads show up every few posts in a feed, or as a video that the user has to watch before they see the content they're looking for. But with live commerce, the video itself is both entertainment for the users and a sales tool.

Read more: Social media influencers are driving billions in sales in China with live-streamed commerce. An a16z partner explains why the US could be next, and the companies positioned to take advantage.

Live commerce engages the users with interactive chats, leaderboards, and the ability to click-to-buy in-app. And the seamless check-out experience, where users can buy without leaving the video, is key.

"The content is the ad, versus all the other kinds of advertising on Instagram, which are interruptive," Wiegand said.

"It allows brands and influencers to get into a more authentic type of a conversation with their customers, versus just interrupted advertising," he added.

Retailers can leverage their brick-and-mortar footprint with live commerce

In the US, in-person shopping is still alive and well. In 2019, e-commerce only accounted for around 10% of total retail sales.

But the coronavirus pandemic has shuttered brick-and-mortar stores. And as economies reopen, retailers are looking for more ways to make use of their physical footprints. On Spin, retailers can sign up to live stream to users from their stores.

"It's a new channel that is a combination of in-store and e-commerce, which I think takes the best of both and creates this new opportunity for retailers to engage," Wiegand said.

And for users, live commerce is meant to mimic the experience of window shopping.

"When you're going down Rodeo Drive, that's a fun and entertaining experience where you're discovering, and you may not know what you're going to end up buying," he said. "That's what we're trying to get after."

Read more: Retail will need to be reinvented after the pandemic. PayPal cofounder Max Levchin lays out the future of brick-and-mortar, and the 'software fight' that will go on behind the scenes

Live commerce is the latest evolution of shopping

The basic concepts around live commerce aren't new. QVC and HSN have proven that US shoppers are interested in video-based shopping. But these new versions of live commerce, like Alibaba's Taobao live, offer a more streamlined experience, with check-outs embedded in the app.

From apparel to cosmetics to produce, retailers and influencers in China have used live commerce to reach consumers outside of traditional advertising.

During e-commerce giant Alibaba's Singles Day — China's equivalent to Black Friday and Cyber Monday— last year, its live-commerce unit Taobao Live recorded $2.85 billion in sales, about 7% of its total $38.3 billion in sales.

Platforms like Instagram, TikTok, and YouTube have amassed huge audiences, and brands and influencers alike have found ways to monetize their followings through sponsored posts and advertising. Live commerce offers a more interactive way for retailers to reach shoppers.

The trend has begun to pick up in the US from established players, where at least one incumbent has dabbled in live commerce. Amazon launched a live streaming platform in February last year. The Amazon Live website features scheduled live content in categories like beauty, fitness, and food. 

Read more:

SEE ALSO: Social media influencers are driving billions in sales in China with live-streamed commerce. An a16z partner explains why the US could be next, and the companies positioned to take advantage.

SEE ALSO: SARS created the perfect storm that changed how China shopped forever. The coronavirus could do the same for the US.

Join the conversation about this story »

NOW WATCH: We tested a machine that brews beer at the push of a button

WeWork is ditching a major Manhattan office, and it's the first big step in a turnaround that's put its entire real-estate portfolio under review

Thu, 06/25/2020 - 4:10pm  |  Clusterstock

  • WeWork is cutting ties with a 115,000 square foot Manhattan location it leased almost two years and that it was set to occupy before the end of the year. 
  • The struggling coworking company has been in talks to renegotiate its rents and potentially dispose of locations for months, but this is the first major location shed so far by the firm. 
  • The deal could be an ominous sign that WeWork is readying to finally cull its vast portfolio in a way that could sink the office market with large blocks of vacant space. 
  • Sign up here for our Wall Street Insider newsletter.

WeWork won't move into a large New York City office it leased nearly two years ago at 149 Madison Avenue and that it was scheduled to occupy before the end of the year, multiple sources with direct knowledge of the space confirmed.

The lease, for the Midtown South building's entire 115,000 square feet, could cost the struggling coworking giant millions of dollars to sever ties with, sources said.

Both a spokeswoman for WeWork and a spokesman for Columbia Property Trust, the owner of 149 Madison Ave., declined to comment.

Two leasing executives told Business Insider that Columbia Property Trust had begun in recent days making it known to the city's office leasing industry that the space is available to other takers and that WeWork will not take possession of the office.

Read More: WeWork's US head of real estate is leaving the coworking giant as the firm works through a major turnaround attempt.

WeWork has been in negotiations with building owners for months to reduce the rent it pays at locations, or even cut ties with spaces altogether, as it grapples with the aftereffects of the coronavirus crisis, which has sapped demand for offices and prevented tenants from occupying the workplace.

IBM, for instance, will vacate a roughly 70,000 square foot space it has leased for the past three years from WeWork at 88 University Place in Manhattan sometime after Labor Day.

The computing firm previously told Business Insider that the decision to leave was not prompted by the Covid-19 pandemic. Still, its exit highlights the vulnerability of the flexible-workspace business model during periods of economic strain, where tenants have the leeway to abandon space even as providers such as WeWork remain on the hook for long term leasing commitments.

WeWork's decision to exit 149 Madison Ave. marks one of the first major US spaces to be shed outright by the coworking company and a potentially ominous sign it could be close to culling other locations within its sprawling office footprint.

The company had grown in recent years into New York City's largest office tenant and a dominant occupier in other leading office markets across the country, including San Francisco. If it casts spaces on the market, those availabilities could add to a growing inventory of vacancies that could rapidly sink occupancy and rental rates, causing market conditions to deteriorate for landlords.

Read More: IBM is ditching a big WeWork office in NYC, revealing the risks of the popular flex-space model as the pandemic prompts Blue Chip companies to rethink real estate.

The space at 149 Madison Ave. was a prime target for a disposition by WeWork, sources say.

WeWork would have had to lavish millions of dollars outfitting the building's interiors to create the hip, amenity-filled offices the brand was known for. Such an investment no longer makes sense as the company has sought to cut costs and as the office market faces a potentially prolonged slowdown that might make the payback on such an outlay unachievable in the near term.

"They're trying to meet the twin demands right now of rightsizing their business and containing their spend on operations locations and capital expenditures," said Jamie Hodari, the CEO of Industrious, a flexible-workspace firm that has appeared to better weather the downturn because it has focused on profit-sharing agreements with landlords and rather than committing to leases. "So it makes sense that where there's a lot of cap expenditures, those would be the first deals on the chopping block."

In a public filing, Columbia Property Trust had recently disclosed that it had reserved $15.9 million as part of WeWork's deal to occupy 149 Madison Ave. Some or all of that outlay would likely come as a contribution to the cost of building out the interior spaces and potentially making other building improvements at the location - a disclosure that provides a glimpse of how costly it can be to prepare spaces both for tenant occupancy.  

Other flexible workspace firms have also struggled. As Business Insider previously reported, Knotel, a workspace firm that once had ambitions to challenge WeWork's dramatic growth, lost $49 million in the first quarter of 2020 and had $238 million of liabilities against current assets and owed payments of $110 million.

Read more: As WeWork and its rivals stumble, 18 million square feet of space in NYC is at risk. Here's how that could intensify a real-estate market downturn.

Have a tip? Contact Daniel Geiger at or via encrypted messaging app Signal at +1 (646) 352-2884, or Twitter DM at @dangeiger79. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: IBM is ditching a big WeWork office in NYC, revealing the risks of the popular flex-space model as the pandemic prompts Blue Chip companies to rethink real estate

SEE ALSO: WeWork's US head of real estate is leaving the coworking giant as the firm works through a major turnaround attempt

SEE ALSO: WeWork is rolling out global layoffs over Zoom and has kicked off talks to slash jobs in the UK as the coworking giant struggles to cope with coronavirus fallout

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NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid

Bank stocks surge after regulators ease financial crisis-era Volcker Rule (JPM, GS, BAC, C, WFC)

Thu, 06/25/2020 - 4:10pm  |  Clusterstock

  • Bank stocks surged on Thursday after financial regulators announced they would ease the financial crisis-era Volcker Rule.
  • The Volcker Rule generally prohibited banks from engaging in proprietary trading and from having certain relationships with hedge funds and private equity funds.
  • The rule change will provide banks greater flexibility in sponsoring funds that provide loans to companies, allowing investments in qualifying venture capital funds.
  • JPMorgan, Bank of America, Goldman Sachs, Citigroup, and Wells Fargo all traded up more than 3% on the news.
  • Visit Business Insider's homepage for more stories.

Bank stocks surged as much as 3% on Thursday after federal regulators rolled back the Volcker Rule, a financial crisis-era rule that restricted banks from operating proprietary trading units and from acquiring or retaining ownership stakes in hedge funds or private equity funds.

The Federal Deposit Insurance Corporation, Federal Reserve Board of Governors, Office of the
Comptroller of the Currency, Securities and Exchange Commission, and Commodity Futures Trading
Commission issued a final rule on Thursday "to modify and clarify the covered fund provisions" of the rule, according to the news release.

The rule change, according to the regulators, will do three things:

Read moreMorgan Stanley handpicks 10 stocks to buy now for the richest profits as travel and outdoor activities transform in the post-pandemic world

1. Facilitate capital formation by providing banking entities greater flexibility in sponsoring funds that provide loans to companies so banks can allocate resources to a more diverse array of long-term investments.

2. Protect safety, soundness and financial stability by not allowing banks to engage in any activity that is not currently permissible if conducted on their balance sheets.

3. Provide greater clarity and certainty about what activities are permitted, which will improve supervision and implementation of the Volcker Rule. 

According to Bloomberg, the rule change will free up as much as $40 billion for the banks.

In a statement on the rule change, Rob Nichols, president and CEO of the American Bankers Association said, "We welcome the measured steps taken today by the FDIC, which will allow banks to further support the economy at this challenging time for the nation."

Shares of JPMorgan, Bank of America, Goldman Sachs, Citigroup, and Wells Fargo all traded up more than 3% on the news in Thursday afternoon trades.

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NOW WATCH: Why electric planes haven't taken off yet

Dow climbs 300 points in volatile trading as investors weigh virus impact on economic reopening

Thu, 06/25/2020 - 4:08pm  |  Clusterstock

  • US stocks gained on Thursday as investors weighed the effect of surging coronavirus cases on economic-reopening efforts.
  • Bank stocks led a midday reversal into positive territory after the Federal Deposit Insurance Corporation rolled back post-financial-crisis rules.
  • Meanwhile, states such as Texas, Florida, and Arizona have seen spikes in COVID-19 cases, spurring concerns of a slower-than-expected economic reopening.
  • US weekly jobless claims totaled 1.5 million in the week that ended on Saturday, roughly in line with the previous week and slightly above economists' forecasts.
  • Read more on Business Insider.

US stocks closed higher on Thursday, capping a volatile trading session that saw investors weigh spiking coronavirus cases against a rollback of banking regulations.

Bank stocks led a midday reversal into positive territory after the Federal Deposit Insurance Corporation approved changes to the Volcker rule that would make it easier for banks to invest in funds such as venture capital.

Meanwhile, coronavirus cases have spiked in states such as Texas, Florida, Arizona, and California, threatening to slow economic-reopening efforts across the US. Global cases of COVID-19 are also on the rise.

"Whether we're seeing a second wave or just a continuation of the first wave, the outbreak may reverse actions taken by governments to re-open their economies, hence curbing hopes of a smooth recovery," said Hussein Sayed, the chief market strategist at FXTM.

US weekly jobless claims totaled 1.5 million in the week that ended on Saturday, roughly in line with the previous week and slightly above economists' forecasts. It was the second week in a row that weekly claims came in higher than forecasts.

Here's where US indexes stood at the 4 p.m. ET market close on Thursday:

Read more: From a late-night infomercial to a 1,040-unit empire worth $188 million: Here's how Jacob Blackett perfected his real-estate-investing strategy after losing $70,000 on his first deals

Shares of Wirecard fell 75% after the German payments company filed for insolvency, the latest in the fintech's $2 billion accounting-scandal saga.

Oil prices gained along with equities. West Texas Intermediate crude rose as much as 3%, to $39.15 per barrel. Brent crude, the international benchmark, gained 2.9%, to $41.46 per barrel, at intraday highs.

The so-called reopening trade suffered on fears of surging coronavirus cases, with shares of cruise lines and airlines falling throughout the choppy trading session.

Read more: A high-growth fund manager is tripling her peers' returns in 2020 while targeting nontech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

Apple on Wednesday announced that it would close more of its stores in the Houston area following a spike in cases. Additionally, Disney said it would delay the opening of its parks in California beyond July 17.

Texas Gov. Greg Abbott on Thursday paused the state's reopening plan to help contain a recent spike in coronavirus cases and hospitalizations. Texas was one of the first states to begin to reopen from lockdowns in early May.

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

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NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America

Visa is pledging to help 50 million small businesses worldwide recover financially from the COVID-19 pandemic. These programs will help make it possible.

Thu, 06/25/2020 - 3:30pm  |  Clusterstock

Around the world, individuals and businesses are experiencing real hardship as a result of the economic challenges presented by the COVID-19 pandemic. Organizations like Visa, with scale, resources, expertise and infrastructure, can and should play an important role as everyone adapts to these challenges.

At the heart of the current economic crisis1 are the millions of small and microbusinesses that account for more than 90% of global businesses and half of global employment. The economy will not bounce back until small businesses do.  In the aftermath of the pandemic, 43% of small business owners say they only have money to last six months2 and less than half have any online business. Digital commerce has skyrocketed overnight. It's vital for small businesses to adopt a digital-first approach as they rebuild.

Visa is taking action – committing to elevate 50 million small businesses worldwide with locally designed programs and solutions to help SMBs to drive efficiency and sales through acceptance of digital payments, building online businesses, and transforming back office operations.

"We are putting our network to work to help 50 million businesses not only survive, but also to thrive, along with the communities they serve," says Suzan Kereere, head of global merchant sales and acquiring, Visa.

Through a series of new initiatives, Visa is leveraging its network to help the world adapt, rebuild, and get back to business, focusing on four key areas:

Empowering digital-first businesses

New online resource centers localized for more than 20 countries provide tools, partner offers, and information on how to start, run, and grow digital-first small businesses. In Latin America, we launched the fourth edition of the Visa Everywhere Initiative with a challenge of reactivating small businesses through innovative digital solutions. In the US, we are expanding our partnership with IFundWomen providing grants and digital training to US-based Black women-owned small businesses.

Encouraging digital payments

Deploying easy-to-adopt touchless payment technology — rapidly, and at scale — is critical for faster, more secure commerce. Tap-to-pay stands alongside facemasks, hand sanitizer and glass screens as a new part of the safe shopping experience. Visa is working with its partners to increase locations where consumers can tap their contactless card or mobile phone. Starting in July, Visa street teams will visit merchants to provide "back to business" kits with new point-of-sale materials, branding, educational resources, and special offers. The program will kick off in the 50 largest US cities and expand globally, including Italy and South Africa.

Incentivizing neighborhood support

Visa partnerships encourage consumers to shop local. The Visa Back to Business Project — an online tool that connects local residents with open businesses — is live in New Zealand, Australia and the US, and further expanding globally. In Europe, the Middle East, and Africa, Visa has launched small-business initiatives to encourage consumers to support small businesses. Visa is teaming up with eCommerce platforms like Shopify, and restaurant delivery companies like  Deliveroo, to reward consumers for spending their money locally.

Developing positioning and policy

The new Visa Economic Empowerment Institute will tap Visa experts and partner with leading organizations on policy topics that include pandemic challenges to small businesses and economic and societal issues such as closing racial and gender opportunity gaps.

These initiatives follow a global commitment from the Visa Foundation to provide $210 million in COVID-19 relief funding to address the longer-term needs of the small and microbusiness community over the next five years.

Learn more about Visa's initiatives to help small businesses.

This post was created by Visa with Insider Studios.

[1] SMB Group's study: "Impact of COVID-19 on Small and Medium Businesses," April 2020
[2] U.S. Chamber of Commerce & MetLife Special Report on Coronavirus and Small Business, April 3, 2020


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Spotify surges 9% after Goldman sets Street-high price target on podcast potential (SPOT)

Thu, 06/25/2020 - 3:10pm  |  Clusterstock

  • Spotify surged as much as 9% on Thursday after Goldman Sachs raised its price target from $205 to a Street-high of $280 on the potential podcasts can have on Spotify's business.
  • "Exclusive podcast deals, acquisitions, and new podcast monetization functionality" will help Spotify drive share gains of the global podcast audience and serve as a differentiator to attract music subscribers to the company, Goldman said in the note.
  • The firm believes recent moves by Spotify set the company up for a favorable risk/reward profile as it signs exclusive deals with Joe Rogan and Kim Kardashian West.
  • Visit Business Insider's homepage for more stories.

Spotify surged as much as 9% to an all-time-high on Thursday after Goldman Sachs published a note on the company and raised its price target from $205 to a Street-high $280, representing potential upside of 21% from Wednesday's closing price.

Goldman said that Spotify's recent acquisition of exclusive podcast deals with heavyweights like Joe Rogan and Kim Kardashian West should "drive share gains of the global podcast audience, advance the development of Spotify's audio advertising technology platform, help reverse declining average revenue per user trends, and serve as a differentiator to drive music subscribers to Spotify," according to the note.

Goldman acknowledged that there are considerable risks to Spotify's strategy of acquiring high-profile exclusive podcasts, but given the nature of the underdeveloped podcast market, the risk-reward profile for investors who own Spotify is favorable.

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In addition to acquiring Joe Rogan's podcast, which has around 9 million YouTube subscribers, and striking a deal with Kim Kardashian West for an exclusive criminal justice podcast, Spotify has inked several podcast-related deals including The Ringer, Anchor, and Gimlet Media.

Goldman said that Spotify's podcast strategy "may take years to generate meaningful financial returns."

Still, the firm raised its second quarter monthly-active-user growth estimates to 19 million, adding that Sensor Tower aggregate app downloads for the period suggest around 18 million new monthly active users.

Read more: A high-growth fund manager is tripling her peers' returns in 2020 while targeting nontech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

Goldman raised its 2020 to 2022 revenue and adjusted Ebitda estimates by 3% and 5%, respectively.

Downside risks to Spotify include competition, supplier concentration, and unfavorable label re-negotiations, according to Goldman.

Spotify surged as much as 9% to $264.87 in Thursday trades, and is up more than 75% year-to-date.

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Job losses are 4 times worse for the lowest-paid workers so far in the coronavirus pandemic, study shows

Thu, 06/25/2020 - 2:49pm  |  Clusterstock

  • More than 35% of all workers in the lowest wage group lost a job through mid-April compared to 9% of workers in the highest-earning group, economists led by Tomaz Cajner of the Federal Reserve Board wrote in a recent paper.
  • Employment declines were also four percentage points lower for women than men, the study showed. 
  • The study confirms that the weight of the coronavirus pandemic is falling hardest on those least able to bear it.
  • Visit Business Insider's homepage for more stories.

Coronavirus-related job losses in the US are thus far four times worse for the lowest-paid workers, according to a recent study prepared for the Brookings Papers on Economic Activity. 

More than 35% of all workers in the lowest quintile of wage earners were laid off through mid-April, compared to only 9% of all workers in the highest quintile, economists led by Tomaz Cajner of the Federal Reserve Board wrote in a recent paper.

"The employment losses during the Pandemic Recession are disproportionately concentrated among lower wage workers," the economists wrote. 

Even as the US economy reopens and some people are able to return to work, the gap between the lowest and highest paid workers persists, according to the study. 

"By mid-May, employment for workers in the bottom quintile was still depressed by 30 percent," the economists wrote, adding "only about 5 percent of these top earning workers remain out of work through mid-May." Job losses for women were about four percentage points higher than they were for men, according to the report. 

Read more: A high-growth fund manager is tripling her peers' returns in 2020 while targeting non-tech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

The study confirms fears that the weight of the coronavirus pandemic and the ensuing recession has fallen on those most vulnerable, or as Federal Reserve Chairman Jerome Powell said, those "least able to bear its burdens." It also underscores the notion that the pandemic is exacerbating inequality in the US. 

Some of the gap between low and high wage earners and employment may be attributed to business size and industry — early coronavirus layoffs were concentrated in low-pay industries such as retail, restaurants, and leisure services.

Still, the study concluded that only a "small amount" of the differences between low and high wage earners in the early stages of the pandemic can be attributed to variations in industry, business size, and age. 

The economists used administrative data from ADP to measure the detailed changes in the US labor market during the first few months of the pandemic recession. 

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A high-growth fund manager is tripling her peers' returns in 2020 while targeting nontech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

Thu, 06/25/2020 - 1:31pm  |  Clusterstock

As Big Tech has come to dominate Wall Street and the world, the idea of innovation has come to feel synonymous with the technology companies themselves and with the kind of returns investors crave.

But the truth is more complicated, and Prabha Ram is proof. As a mutual-fund manager, she looks for companies that have developed a new way of doing things that they can turn into a vital, profitable edge.

"Our focus has been on a small number of dynamic-growth names where the growth, we believe, can be sustainable over long periods of time, and the growth is led by innovation," she said.

She's had enormous success in finding those companies. As comanager of the American Century Focused Dynamic Growth Fund, Ram had returned 28.8% to investors this year as of Tuesday. That's more than triple the 8.8% return of the typical growth fund, and it's more than double the fund's benchmark, the Russell 1000 Growth Index.

The fund has been a mainstay near the top of Kiplinger's annual return rankings throughout Ram's four years of management.

A focus on digital strategy

Ram mentioned a years-old inspiration in her work: a 2011 essay by the famed venture-capital investor Marc Andreessen on "why software is eating the world." She said his prediction came true, and it's informed her investments.

"In other words, software was not just for software companies, but pretty much every industry has to have a digital strategy in place," she said. "I cannot believe it's been that many years already since he wrote that, but it's actually playing out."

While her portfolio includes the kinds of tech companies you'd expect, Ram also told Business Insider about a handful of surprising innovators in other areas.

One of her largest positions is in Boston Beer, and it's been a big winner, with a 51% return over the past year. She and her comanagers have continued pouring money into the stock in 2020.

"This is a company that took on the big players and led through innovation," Ram said. "They created the category of craft beer, which is all the rage right now. ... Then from there, they moved on to hard tea and now hard seltzer."

Each of those categories has been a winner, and she said some of the credit goes to Boston Beer's innovative marketing strategies. Combined, that's sent the stock up 300% in the past three years.

Burritos aren't considered high-tech either, but she said Chipotle Mexican Grill has been a laudable innovator as well, and it's helped the stock recover from a series of food-safety crises from 2015 to 2018 — sending the stock 150% higher over the past three years.

She said much of the credit goes to CEO Brian Niccol.

"He came from Taco Bell and created this whole new digital strategy, not just the digital ordering but the back end that goes with it: a second line just for digital ordering and something called Chipotlanes," Ram said. "So if you were driving to pick up, it only took you 12 seconds, having ordered the food ahead of time."

With companies like Nike and Constellation Brands dotting the portfolio, Ram added that a company that changes the way an industry works could innovate even if the public isn't seeing it. The key is that these businesses add value for their customers by making them more efficient or profitable.

"There are a lot of examples of companies that are not necessarily tech but are using tech to transform what are — for lack of a better word, old-school industries," she said.

Another one of those is Cognex, a manufacturing-technology company she doubled her position in during the first quarter. 

"What they've done is created machine vision," she said. "Everything from the hardware, which is just a little camera, to the software, the trend along with machine intelligence has automated a lot of things that required a lot of precision."

In a somewhat more traditional look at technology, she added that robotic-surgery-device company Intuitive Surgical and online education company Chegg made the cut for similar reasons, as they both take an existing idea, improve efficiency, and make it work better.

Ram said that before investing in a company, she'll talk to experts in its industry to make sure that the products and services it's developed are going to be useful to its customers because that's the only thing that will lead to wide adoption. 

"Innovation for the sake of innovation is not going to cut it because then it's not sustainable," she said.

Read more:

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Wall Street firm says Apple could surge another 18% — and even be the first company to hit a $2 trillion market value next year (AAPL)

Thu, 06/25/2020 - 12:47pm  |  Clusterstock

  • Wedbush on Wednesday increased its Apple price target to $425 from $375, citing a demand snapback and the upcoming 5G cycle.
  • That implies that Apple stock could surge another 18% from where it traded at Wednesday's close.
  • Shares of Apple dipped slightly in early trading on Thursday.
  • "We believe during 2021 Apple has strong potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years," the Wedbush analyst Daniel Ives said in a note.
  • Watch Apple trade live on Markets Insider.
  • Read more on Business Insider.

Apple is poised to surge and may even hit a major market-capitalization milestone in the next year, according to Wedbush.

On Wednesday, the firm upgraded its Apple price target to $425 from $375, citing a demand snapback and the 5G cycle. That implies an 18% jump from where shares of the technology company closed on Wednesday.

"We believe during 2021 Apple has strong potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years," the Wedbush analyst Daniel Ives said in a note.

Apple's market cap was about $1.5 trillion on Thursday.

Wedbush maintained its outperform rating on Apple and raised its bull case to $500 per share. Shares of Apple dipped slightly in early trading on Thursday.

There are signs of a "continued demand snapback" in China, setting the stage for a "massive pent up iPhone 12 cycle heading into the Fall in this key region as well as globally," the note said.

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This is important as China is a key region for Apple; Wedbush estimated that it would represent roughly 20% of iPhone upgrades in the coming year.

In addition, Ives said, "the supply chain getting back to normalization ahead of expectations has been impressive and now ultimately puts Cook & Co. back in the drivers seat to launch this 5G cycle in its typical mid-late September timeframe."

The firm estimated that roughly 350 million of Apple's 950 million iPhones worldwide are in an upgrade window, which remains the linchpin of the "longer-term bullish thesis and 5G super cycle for Cupertino over the next 12 to 18 months," the note said.

Apple has gained roughly 23% this year.

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

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