May 28, 2020

Remote-work pay cuts could get complicated

May 28, 2020
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What would Thomas Edison think? Yesterday, General Electric said it’s selling its lightbulb business to Savant Systems, a smart-home company. GE had taken a dim view of its bulb biz — it’s been trying to sell for years. But GE’s bulbs have a bright history. In 1935, they lit the first-ever Major League Baseball night game.

Can you guess which teams played and who won? Find the answer at the end of this email.

The trim is in

Facebook’s remote-work pay cuts are going to get complicated

You may have heard about the big catch in Mark Zuckerberg’s remote-work announcement last week: Facebook employees who move away from Silicon Valley might be in for a salary cut. 

The company will adjust its pay according to an employee’s new hometown.

After all, $10 in Rock Springs, Wyoming will get you a few more drip coffees than $10 in West Hollywood.

Sound tricky? It is

There’s some precedent for Facebook’s approach. Take the minimum wage: In general, companies only have to pay the minimum wage where an employee works — so your accountant in Iowa City is paid the local minimum, not NYC’s.

But TechCrunch outlined a few potential problems with the “pay the local rate” model. A city’s cost of living can fluctuate quickly — as any Miami resident will tell you — and keeping up is not easy.

Let’s say you’re a company based in Chicago with a huge remote workforce. You could:

  1. Base salaries on your HQ’s location. Everyone gets paid Chicago rates no matter where they live.
  2. Localize the salaries. This is Facebook’s approach: Adjust employee pay according to the local cost of living.
  3. Use national averages. Pay everyone according to a country’s trends, regardless of where they live. 

There are loopholes in all of these approaches. WordPress’s parent company, Automattic, doesn’t factor in location when it pays its global workforce — but with national currencies in constant flux, it’s tough to get the equivalencies right.

Just a little off the top, please

Tech workers might be able to stomach a small loss if it means fulfilling their dreams of strapping on a cowboy hat and becoming a ranch hand. According to one poll, 35% of Bay Area tech workers said they’d move out even with a salary reduction.

But there are limits: Of the workers OK with a pay cut, only 6 percent said they’d accept a reduction above 30 percent.

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TLDR: 10 Quick Takes to Catch You Up

Today, Instagram brings revenue sharing to its content creators, the Magic Kingdom casts a reopening spell, and NASA and SpaceX will try, try again.

1️⃣  Instagram will start showing ads on its IGTV app, and plans to split the revenue with its content creators — so influencers, go get that bread.

2️⃣  Leaders of the European Union proposed an $825B coronavirus relief package that would nudge the EU closer to a federation supported financially by Brussels.

3️⃣   Execs at Walt Disney World Resort unveiled a plan to reopen their Orlando theme parks, starting with the Magic Kingdom and the Animal Kingdom on July 11.

4️⃣ Elsewhere in reopenings: LA schools released guidelines that emphasize health over socialization. Pour one out for recess and snack time.

5️⃣  Walmart teamed up with ThredUp, which means the online market for secondhand fashion is HeatingUp.

6️⃣  Ford has a plan to kill coronavirus in police cruisers — it’s sorta like turning the backseat into an oven.

7️⃣  Tuesday Morning, the discount goods chain, is the latest domino to fall in retail. It filed for bankruptcy protection on… Wednesday. 

8️⃣  A group of whistleblowers says Facebook hasn’t told investors enough about illegal activity on its platforms — like the sale of opioids.

9️⃣  Another bright spot from New Zealand: A hospital there discharged the country’s last coronavirus patient.

🔟  The NASA/SpaceX launch — Wednesday’s equivalent of must-see TV — was called off due to bad weather. But don’t trash that space suit, because they’ll try again Saturday.

Mixed messages?

The stock market is sporting some rose-colored glasses

Here’s a headline you might not expect to see amid the worst unemployment crisis in our history: The NASDAQ is pretty close to its all-time high. 

That might seem like a fluke, but there’s a long history of investors breaking out a “glass half full” mentality in “glass very empty” times.

A Marker analysis found that in the 5 years after a peak in unemployment, S&P 500 stocks gain 72%. But after an unemployment low point — a sign of a strong economy — they only grow about 25.3%.

Uh, does the stock market know we’re in a pandemic?

Some of the numbers are a little baffling

  • On a per-share basis, companies on the S&P 500 lost 13% in overall profits in Q1.
  • But in that same period, S&P 500 stocks jumped 30%. 

Or take this: In normal times, when a company has an earnings shortfall, it can expect to lose 3% of its value. But right now, with companies reporting basically unprecedented losses? Their shares are only down 1% on average. 

Then there’s the unsettling dissonance between the market and most people’s reality. Investors look really out of touch right now, and it has some writers asking why we rely so much on the market.

So what has stocks riding so high?

One theory: Investors already expected huge losses — remember March, when we had one of the steepest market drops ever? 

Markets try to predict the future — they’re not necessarily looking at the current moment. 

But there’s another power player steering the ship: The Fed. The agency slashed interest rates and bond yields at the right time, and it has kept markets humming despite… y’know… *gestures at the world* 

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Home Away From Home

People want to escape, and rental companies are listening

Animal Crossing marathons, celebrity golf, TikTok’s entire reason for being – the dystopia we live in has given rise to an industry of escapism.

Vacation-rental companies — decimated by the demise of travel — are trying to cash in. Among their strategies: Turn the 3-night stay into a 3-month stay — or a 3-hour stay.

Bury your head in the (literal) sand

Why quarantine in the ‘burbs when you could live out your Outer Banks fantasy? 

With most travel still restricted, longer stays in North Carolina’s Outer Banks and the New England coast are on the rise. These cushy corona cribs offer guests a chance to weather the storm in style (and get a tan). See you soon, John B.

Historically, the average Airbnb stay in major US cities is less than a week. But Airbnb and other companies have reported a significant increase in 1 to 6 month rentals, with some hosts fully transitioning to long-term bookings.

Housing experts believe the emphasis on extended rentals could be permanent, as remote work unshackles more employees from their offices.

The classic pantry hiding spot gets an upgrade

For those of you who are stuck at home with no long-term getaway on the horizon: The startup Globe is taking the opposite approach and renting out space by the hour. 

Many Airbnb hosts transferred listings to Globe after non-essential travel was canceled, turning their spaces into temporary offices instead of overnight lodging.

Founded in June 2019, Globe prospered after lockdowns went into effect. More than 100k people are on the guest waitlist, and 20k of them joined over the last ~2 months.

But the boom times may be short lived: According to TechCrunch, San Francisco sent Globe a letter last week saying the business appeared to violate the city’s shelter-in-place order.

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The Hustle Says

Mom, I just want to rank higher on Google. Us too, Charlie. Us too. That’s why we’re bringing in SEO expert Nat Eliason to talk about strategies that actually work. Join us tomorrow at 12PM PT.

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Has the plant-based craze hit pet food? Looks like it! Mark Cuban and Peter Thiel have invested in plant-based dog food company Wild Earth, and tens of thousands of people are already feeding it to their pups.*

*This is a sponsored post.

Office Space

Gather ’round the virtual watercooler…

…because you may be able to visit the best parts of your workplace right from your couch. Companies are rolling out virtual office environments to bring their socially distanced troops together.

Dilbert, meet The Sims

The file-transfer service WeTransfer opened a virtual replica of its Dutch HQ, and employees use it for in-person meetings and happy hours (because it’s always 5 o’clock somewhere, even in virtual reality).

A London firm called Teooh specializes in building venues where virtual gatherings take place — giving office workers the same thrill (OK, maybe that’s pushing it) that video gamers have enjoyed for years.

The valley of the virtual office is uncanny

And depending on the platform, the experience may or may not imitate real life. As Fast Company noted: Private talks on Teooh involve only the participants — so no eavesdropping on your bosses.

The office may be virtual, but the org chart is still very much intact: Sine Wave Entertainment’s own virtual space features a boardroom that senior members can lock.

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Hustle Slack

If you’ve ever struggled with peanut butter on your phone screen, our Cayla Sher is here for ya.

Our Katy Huff put it best: “2020 is getting cream cheese in your Enter button.”

Snippets

🔥 Inside Reddit’s moderation war.

🐄 How yogurt conquered the dairy aisle.

🍫 Behold: the vending machine made entirely out of cardboard.

👀 A clampdown by Texas Instruments divided calculator enthusiasts — and their complaints are multiplying.

👑 We always knew it would come to this: In Germany, Burger King customers get to sport their own social-distancing crowns.

⚾️ Your trivia answer: The Cincinnati Reds beat the Philadelphia Phillies 2-1 at Crosley Field.

Jake Kassen grew MVMT from $0 to $100M in 5 years — without VCs. How did this watch brand go from bootstrapped-via-Indiegogo to a $100M exit? Was paying Kylie Jenner $150k for an Instagram post worth it? Tune in for a wild story, insane growth hacks, and thoughts on the future of D2C.

🎧 Listen to Exit Strategy here: Apple / Spotify / Castro 🎧

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