In a leaked memo from Crux Informatics, the data startup backed by Two Sigma, Goldman Sachs, and Citi threatens legal action if its former employees talk to journalists
Crux Informatics, which raised tens of millions from Goldman Sachs, Two Sigma, and Citi, has overhauled its executive and technology teams since it was founded in last 2017, as outlined in a recent article by Business Insider. After the article ran, Crux sent a memo to former Crux employees who had signed severance agreements telling them that the startup "will not hesitate to enforce its legal remedies" if former employees share non-public information or disparage the company. Binding non-disclosure agreements from former employers have been under pressure thanks to #MeToo scandals. California introduced a law in November of 2018 that banned settlement agreements from disallowing people from speaking out about harassment or discrimination. Visit Business Insider's homepage for more stories.
Former employees of Crux Informatics received a stern warning on Valentine's Day. The startup backed by Goldman Sachs, Two Sigma, and Citi sent a memo on Friday stating that former employees who had signed severance agreements could be sued by the data company if they were found to be speaking with journalists or making online comments about the company. The memo, which was viewed by Business Insider, was sent by the firm's CFO Marie Sonde following a story written by Business Insider on the firm's changes to its executive and technology teams, including the closure of its San Francisco office, over the last 18 months. The memo notes that Business Insider did not publish "confidential" information in its story, but that "they made it clear that former employees of Crux had divulged to them information that Crux would consider to be confidential." The firm did not disclose in the memo what query from Business Insider this was related to and declined our requests to comment. "Crux is taking this opportunity to remind you of your obligations to Crux as spelled out in your recently executed Severance Agreement and Release. This includes your obligation of confidentiality with respect to the disclosure of all nonpublic information concerning Crux and its clients as well as your obligation not to make any false, disparaging, derogatory or defamatory statements online or otherwise," the memo reads. "Relaying non-public information or making disparaging comments, even anonymously, is a breach of those agreements and obligations and Crux will not hesitate to enforce its legal remedies if it becomes aware of such a breach." A broader push against non-disclosure agreements and settlement arrangements that limit a former employee's ability to speak publicly has grown, mainly as a result of the #MeToo movement. California passed a bill in November 2018 that does not allow settlement agreements to limit a person's ability to speak out against past harassment or discrimination. Crux's memo stated that the Business Insider story was "instigated by former Crux employees," which is inaccurate. The firm did not respond to request for comment as to why this was included in the memo. The memo told former employees approached by journalists, consultants, and analysts to direct them to the firm's head of marketing Pablo Cerrilla. SEE ALSO: Two Sigma, Goldman, and Citi invested $41 million in data startup Crux Informatics. But the past 12 months has seen the startup churn through execs as it looks to solve Wall Street's data woes. SEE ALSO: The alt-data industry is having growing pains after its sudden glow up — and insiders are looking at new pricing models and unlikely customers Join the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.
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A memo from Airbnb's CEO announcing huge staff cuts is a case study in how leaders can conduct layoffs in a compassionate way
Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian...Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian Chesky's memo to the company shows respect and compassion for all employees affected. It's a model for how leaders should conduct layoffs. The memo explains how management decided which positions to cut, what will happen to remaining employees, and the level of job support that departing employees will receive. Click here for more BI Prime stories. On Tuesday, Airbnb CEO Brian Chesky announced to employees that the company is laying off 1,900 employees. That's about 25% of its staff. In the last few months, Business Insider's Troy Wolverton reported, the company has laid off most of its contractors, postponed its summer internships, and slowed its hiring process. Layoffs are not a great experience for anyone, and especially not for the people losing their jobs. But Chesky's memo to employees is a prime example of how to do layoffs right, in a way that's respectful, compassionate, and pragmatic. It's rare to find such an example these days. As Business Insider previously reported, startups including the scooter-maker Bird, the employment marketplace ZipRecruiter, and the women's coworking space The Wing have recently conducted layoffs via massive Zoom calls. Some employees at these companies said they were caught off guard and confused about what was happening. Chesky, perhaps taking a hint from widespread indignation at the idea of layoffs via videoconference, did things differently. His memo to employees followed, almost to a tee, the advice that HR experts have previously shared with Business Insider around conducting layoffs. You can read the full text of the memo here. Here's exactly what Chesky's memo did right. It outlined the decision process for cutting positions In the memo, Chesky was transparent about Airbnb's financial decline. "Airbnb's business has been hit hard," he wrote, "with revenue this year forecasted to be less than half of what we earned in 2019." (The company's 2019 revenue was $4.8 billion, Wolverton reported.) To help alleviate some of the financial burden, Chesky said Airbnb is "reducing the size of our workforce around a more focused business strategy," specifically the business of helping people rent out their homes and find homes to rent. The company is "pausing" its investments in areas like transportation and hotels, Chesky added. That means staff who worked in those areas will likely be let go. Chesky listed as one of his "guiding principles" in conducting the layoffs the desire to "map all reductions to our future business strategy and the capabilities we will need." Elaine Varelas, managing partner at career-management firm Keystone Partners, previously told me that executives doing layoffs should let the business' strategic direction and financial situation guide them. "The positions are what's eliminated," she said, and not the people. It made a justifiable argument for why certain employees will be let go Chesky went one step further, outlining how management reviewed each employee's skill set and considered "how well those skills matched our future business needs." Some employees whose teams were not eliminated will be asked to assume new roles, Chesky wrote. Again, Chesky made it clear that these layoffs are about positions and skills, which are more easily quantifiable and justifiable than how much the CEO likes someone. As Buffer CEO Joel Gascoigne (who conducted layoffs a few years ago) previously told me, it's important to identify how and why positions will be eliminated. Otherwise, executives are vulnerable to subjectivity seeping in — and to employees accusing them of making biased decisions. To that end, Chesky also listed as one of his guiding principles the desire to "be unwavering in our commitment to diversity." It explained why information about staff cuts was kept confidential until now Chesky noted in the memo that management opted to "wait to communicate any decisions until all details are landed" because "transparency of only partial information can make matters worse." This decision to keep news of the impending layoffs private was wise. Varelas told me that a common mistake she sees is not keeping information about layoffs confidential until you're ready to make the announcement. That can lead to rumors — and terror — spreading throughout the staff. It prepared affected employees for one-on-one meetings with their supervisors In contrast to the startup execs that conducted layoffs via a mass Zoom call, Chesky wrote in the memo that the employees who were getting laid off would have one-on-one meetings with a senior leader in their department. Yair Riemer, president of career transition services at CareerArc, previously told me that a one-and-done videoconference isn't the right way to announce layoffs, as efficient as it may seem. Similarly, Varelas said leaders should have one-on-one meetings with everyone who's let go, giving those employees time to process the news and ask questions. It addressed the employees who will be staying on, too Chesky dedicated a few lines of the memo to the Airbnb employees whose positions were not cut: "One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb's story." He also wrote that some employees would receive emails about their new roles at the organization, in line with the restructuring, as well as invitations to discuss their new role with a manager. Riemer said it's important to explain to remaining employees how the layoffs are going to affect the organization. The result? "You end up losing that talent anyway," Riemer said. "They're going to start thinking about moving to competitors. They're going to start getting poached. They're going to start losing faith and confidence in your leadership." It treated departing employees with respect and compassion The most important piece of Chesky's memo is that it acknowledged what a disruptive life event layoffs can be. Employees may not know where their next paycheck is coming from, or whether they can afford their next visit to a doctor. In the current economic environment, they may not be certain they can find another job. Varelas previously told me that respect for employees is key. No one should be "treated suddenly like they're a criminal," she said, or even like someone who hasn't worked hard to help the company grow. Chesky outlined what will happen to employees' benefits after they leave. Specifically, employees in the US will receive at least 14 weeks of severance pay, with additional severance pay available depending on employees' tenure at the company. Employees in the US will also receive 12 months of health insurance coverage beyond their departure date. (In all other countries, health insurance extends until the end of 2020.) Most notably, Chesky wrote that Airbnb has dropped the one-year cliff on equity for everyone the company has hired in the past year. That means they don't have to wait one year, as they typically would, for their stock options to vest. All employees have the chance to become shareholders in the company on May 25, Chesky wrote. It outlined the support employees would receive around career development Departing employees will receive relatively substantial support as they look for a new job, according to Chesky's memo. That support includes an alumni placement team, made up of some Airbnb recruiters who help find departing employees their next role at another company. Those employees also have access to a company that specializes in career transition and job placement services. And they're allowed to keep their company laptop, which Chesky said is an important tool in finding a new job. These provisions for employees are important not solely because they're the right thing to do, ethically speaking. The business case for taking care of employees after layoffs is that they're more inclined to stay loyal to the company. "This is the moment where brands are built or brands are dented," Riemer said. If the company mishandles layoffs, Riemer added, "it absolutely will impact recruitment and talent because the world is small." When former employees, say, write reviews on Glassdoor, they won't say terrible things that will dissuade prospective hires from applying if they were shown compassion. And should Airbnb ever want to hire these folks back, they'll remember how respectfully they were treated at this time. It will make a big difference.SEE ALSO: The startup founder's guide to letting people go efficiently and compassionately, if you have no other choice in a time of crisis Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
Amazon employees say they used data from third-party sellers to help the company make its own competing products (AMZN)
In a story Thursday from the Wall Street Journal, Amazon employees said they accessed data from...In a story Thursday from the Wall Street Journal, Amazon employees said they accessed data from third-party sellers to make competing products under the company's private labels. The data employees accessed reportedly allowed Amazon to single out which products had the best earning potential, how to price their private-label products, and what product features they should copy. Amazon has long insisted it doesn't use sellers' data, a claim it's reiterated in testimony to Congress in response to multiple antitrust probes. Visit Business Insider's homepage for more stories. Amazon employees say they have used data from third-party sellers to inform their production of competing products, bucking the company's long-standing claims to Congress and regulators that it doesn't. More than 20 former Amazon employees said they had collected and accessed individual sellers' information to figure out which products they should make under its private labels, according to a report from the Wall Street Journal. One Amazon employee said it was "standard operating procedure" for workers to pull non-public data that could give the company insight on how to price items and which ones would give them the highest earning potential. These claims are in direct contrast with what Amazon has long insisted. Amazon has consistently denied it engages in the practice of collecting data from third-party sellers, even in response to criticism from politicians and investigations from antitrust regulators. In a hearing in front of Congress in July 2019, an Amazon executive denied that the company used seller data to help favor its own products on the platform. In response to the story in the WSJ, Amazon told Business Insider the company has launched an internal investigation into the claims. "We strictly prohibit our employees from using non-public, seller-specific data to determine which private label products to launch," an Amazon spokesperson told Business Insider. "While we don't believe these claims are accurate, we take these allegations very seriously and have launched an internal investigation." Amazon has responded to past criticism by emphasizing that its private-label brands make up only 1% of sales on the platform. However, former executives told the WSJ that they were told Amazon's private-label brands should make up 10% of retail sales by 2022. Amazon's private-label business includes more than 45 brands, including AmazonBasics, Amazon Collection, and Amazon Essentials. Currently, Amazon is fielding antitrust probes over its use of data not only from the Department of Justice and the Federal Trade Commission, but also from the European Union's competition commissioner. Amazon dominates the e-commerce marketplace, and accounted for nearly 40% of online sales in the US in 2019, according to eMarketer. Disclosure: eMarketer is owned by Axel Springer, the owner of Business Insider.SEE ALSO: Selena Gomez filed a $10 million lawsuit claiming a gaming company used her likeness without her consent Join the conversation about this story » NOW WATCH: Pathologists debunk 13 coronavirus myths
Oyo, the former 'jewel' in SoftBank's startup portfolio, quietly fired 110 people based on their performance. Some fired workers say it was basically impossible to close sales, and the company is only offering severance if they agree to not speak out.
SoftBank-backed Oyo fired 110 employees in the US citing their performance on April 1, Business Insider...SoftBank-backed Oyo fired 110 employees in the US citing their performance on April 1, Business Insider has confirmed. The company also put thousands more employees on paid leave to cut costs this week. Some of those fired employees said they never had conversations about their performance with a manager before their sudden termination, leading them to question the reason. Employees who currently or used to work at Oyo said sales had essentially become impossible amid the coronavirus and after negative articles damaged the company's reputation with hotels. Oyo said the firings were based on performance in the first 90 days of their employment, and were unrelated to the recent furloughs. People who were fired are being asked to sign separation agreements that will pay them severance if they agree not sue the company in a class-action lawsuit or speak publicly about their employment. Visit Business Insider's homepage for more stories. The former "jewel" of SoftBank's startup portfolio has had another shakeup. One week before its reported furloughs, Oyo quietly fired 110 employees in the US, saying they were being terminated based on performance, Business Insider has confirmed. Employees said those people affected were not on performance improvement plans before their firing, which made them question the reason for their sudden removal. "They were saying, 'This is not a layoff. You are being terminated for performance,'" said an employee who was fired over the phone on April 1. Oyo confirmed the firings in an email, saying that the reductions were based on employees' ability to close a sale in their first 90 days of employment, and were not related to the recent furloughs. Still, people who currently or used to work at Oyo are arguing that the firings were part of a cost-cutting strategy as the startups rides out the coronavirus pandemic. The company's salesforce has struggled to make deals since before the outbreak because of its reputation in the hotel industry, multiple sources said. Some employees who were fired said they should have been laid off instead. "Your sources seem unreliable as the details are incorrect," an Oyo spokesperson said in an email on Friday. "Specific to this instance, these terminations were performance-based, where sales team members, who generally had not made a single sale since December 9th of last year at least, including some who had not made a sale for more than 180 days, were impacted." Eight employees spoke to Business Insider on condition of anonymity because some signed nondisclosure agreements, and others were not authorized to speak publicly on Oyo. They said that the last round of layoffs in the US, which Business Insider first reported in January, created a firestorm for Oyo. The startup sells to mostly independent motels and puts up money to redecorate and make sure the internet works, for a percentage on every reservation. The layoffs added to growing signs of trouble at Oyo, shaking its credibility with hotel owners and making it harder to close deals, according to some employees who were spared in January. "It was a huge PR nightmare. They lost credibility with the owners," said one former employee. She said that any more news stories about "Oyo not being able to make it in America" would put the company out of business. "They can't survive having another media story," said another source. The Economic Times, a daily newspaper in India, first reported the firings at Oyo on Thursday. Oyo is slashing costs The big news out of Oyo this week was that the budget hotel chain was placing thousands of employees on paid leave for at least two months. The goal, said Oyo's founder and chief executive Ritesh Agarwal in a video message, is to cut costs now so it can put people back to work after the travel industry recovers from the economic shutdown. Those employees on furlough will earn 15% of their salary before taxes and deductions, and receive health benefits, according to a document sent to current employees on Thursday, which was seen by Business Insider. In the video message, which has since been posted on YouTube, Agarwal said the company would avoid layoffs. "This situation of COVID-19 comes at a very unique time for Oyo. This is right after we had a sizable restructuring of our company in January of this year," Agarwal said. "Due to that, I want to clarify for all of you that we intend to do no or negligible layoffs as a part of cost restructuring across the world." Oyo's chief executive will also not take a salary for the rest of the year. Other executives are following suit, Oyo said. The coronavirus pandemic has made closing sales a struggle, some former employees said Based in India, Oyo has raised $3.1 billion in equity from SoftBank, Sequoia Capital, and Lightspeed Ventures on the promise of rapid growth. After taking over more than 23,000 properties around the world, the company opened its first office in Texas in early 2019 with the goal of duplicating its success in the US. Oyo hired a salesforce of hundreds to bring US motels onto its platform. "The rough idea was, if we signed 'X' amount of hotels with 150 sales people, let's quadruple the number of sales people and we'll quadruple the number of hotels, which was a spectacular failure," said a former employee who left the company earlier this year. "I think they way over-committed to what they were capable of," he said. Some of the employees who were fired on April 1 were told that they had not made a sale in their first 60 days of employment, which was grounds for termination. Those workers did not contest what their supervisors said. The task was near-impossible, they said. Employees said that the startup had difficulty signing on hotels because of its reputation. A business development manager would walk onto a property and ask to speak to an owner, who had one of two reactions, they said. "One was, 'Yeah, I know who Oyo is. Not interested. Get out.' Response two was, 'Who's Oyo?'" a current employee said. A hotel owner who searched Oyo on the internet would find "nothing but negative articles," including a report in The New York Times detailing its questionable business practices, said the employee, who is being furloughed. In India, some hotel owners said that after they spent money to renovate their rooms to match Oyo's branding, they never received reimbursements they had been promised, the Times reported. The startup also changed the terms it could offer hotel owners because of the coronavirus pandemic's effect on its business, according to current and former employees. They said Oyo used to give $1,500 per room on average for improvements, and has since lowered its capital expenditure to $300 a room. Revenue has dropped 50% to 60% since the outbreak, according to the startup. In recent months, the company also suspended payouts to hotels if they do not reach a certain number of bookings, known as a minimum guarantee payment. Still, Oyo increased its percentage cut on room reservations by several points, employees said. "Nothing as far as the value of what we were offering increased," said a former employee who was fired last week. In a written statement, Oyo said that the salespeople who were fired had not made a sale in their first 90 days of employment, not 60 days. Most of those individuals started around the winter holidays, before the first cases of the novel coronavirus were confirmed in Wuhan, China. The virus wasn't declared a pandemic until early March. Some people had not made a sale in six months, an Oyo spokesperson said. The decision to fire people was based on their performance even before the outbreak worsened, according to Oyo. "Performance management actions are periodic actions," they said. "There is clear communication to the sales team about the expectation to sign their first deal within 60 days, and disciplinary actions, including termination, after 90 days." 'The document they sent me was hush money,' an employee said Oyo fired mostly business development managers across 32 states and Washington, DC, according to a separation and release agreement that was obtained by Business Insider. Now, those employees are being asked to sign separation agreements that will pay them one to two weeks salary if they agree not sue the company in a class-action lawsuit or speak out against Oyo, according to multiple sources and a copy of one of the agreements viewed by Business Insider. "The document they sent me was hush money," said one former Oyo employee, who said he was fired for not closing a sale in his first 60 days of employment. Oyo is not required to pay severance to employees who are fired for cause. "The company, however, went out of its way to provide a modest severance package," an Oyo spokesperson said. "Also, recognizing the difficult timing of this action, Oyo has ensured that employees who rely on its benefits plans will continue to have coverage in both April and May." The company said it will cover 100% of the insurance premiums in May. Do you work at Oyo and want to share your story? Contact this reporter via encrypted messaging app Signal at +1 (603) 913-3085 using a nonwork phone, email at email@example.com, or Twitter DM at @meliarobin.SEE ALSO: Andreessen Horowitz-backed Wonderschool just laid off 75% of staff on a Zoom call, telling employees the coronavirus could dry up any more funding for 2 years Join the conversation about this story » NOW WATCH: What could be the fastest way to end the coronavirus crisis?