🌮 “Perk-cession” problems

Farewell, unlimited kombucha tap… and free post-meeting Pilates. As corporations prioritize cost cuts, cushy employee perks that’ve long been used to attract talent are vanishing faster than tortillas at a build-your-own-taco happy hour. From Silicon Valley’s tech titans to Wall Street’s banking walruses, the “perk-cession” has arrived, The Wall Street Journal reports.

• Companies are slashing benefits like barista-brewed coffee, fitness classes, pet insurance, extra PTO days, and catered meals.

• Some examples: Meta ended free laundry and dry cleaning, Salesforce canceled its wellness retreat, and Goldman Sachs nixed free cabs to the office.

• Not just the fun stuff… About half of US companies plan to cut benefits like parental leave, childcare subsidies, and adoption programs, a new survey suggested.

Hard fork… The perk-cession comes after mass layoffs at companies that are scaling back after hyper growth during the pandemic. Meta, famous for its cushy office perks, slashed 11K employees in the biggest layoff of the year so far. Beyond tech, banks like Goldman and Citi and manufacturers like GM and Ford have announced reductions.

• But the US job market is historically hot: In January there were nearly two open roles for each available worker, and unemployment was just 3.4%.

• Unbalanced: But that’s largely thanks to the hospitality industry (think: hotels, restaurants), which became the US’s fastest-growing employer.

THE TAKEAWAY

Perk-cession is a symptom… of the efficiency bug. Instead of growth at all costs, the focus for many companies is now profit at less cost — which means “efficiency” is key. And ping-pong tables don’t exactly scream efficiency. Disappearing perks and layoffs are just a few symptoms of the profit focus, which could translate to better returns for investors. Meta shares popped after Zuck announced 2023 was the company’s “year of efficiency.”

Roadblock ahead… Uber is reportedly considering spinning off its freight division as the trucking industry hits some bumps. The ride-hailing leader launched Uber Freight in 2017, connecting semitruck drivers with companies that make high-volume deliveries (think: a truck full of Pepsi). Last quarter, Freight’s sales grew 43% to $1.5B, and made up nearly a fifth of Uber’s total revenue. But in January Uber Freight said it would cut 3% of its workforce as trucking cools.

• Initial Truck Offering? Uber is said to be thinking of spinning off Freight as a separate publicly traded company, or just selling it altogether. But it’s TBD if either will happen.

Slowing the (freight) train… During the pandemic, trucking was essential in delivering tons of backlogged goods across the nation. But as supply chains start to balance out, so has demand. Last quarter truckload freight deliveries fell 7%, the biggest drop since 2020. Now analysts say shippers will have to charge even less to stay competitive, which could eat into profits.

• Delivery doldrums: UPS warned its annual sales could fall for the first time since 2009, and rival FedEx saw its quarterly profits dip.

• Oh ship: Global shipping demand has also dropped from pandemic highs. It now costs less than $1.5K to ship a container from China to LA vs. $15K a year ago.

THE TAKEAWAY

Sometimes you can do more with less… Ditching Freight could help Uber focus on its core ride-hail and food-delivery businesses, both of which saw record growth last quarter. While offering different services can be helpful, Uber may’ve realized it was diversified enough when its food-delivery biz helped offset a major ride-hail downturn during lockdowns.

💰 Costly… Crypto mega bank Silvergate said it would shut down after being forced to sell assets at a loss to cover a rush of withdrawals post-FTX. The closure of crypto’s go-to bank could make it harder for industry players to move $$.

📜 Policy… CFTC Chair Rostin Behnam said that ethereum and stablecoins are commodities — aka: should be regulated by his agency. Note: SEC Chair Gary Gensler likely disagrees. He's argued that all crypto (except bitcoin) may actually be a security.

🌶️ Spicy… Yuga Lab's bitcoin NFT (aka: ordinal) auction brought in $16.5M. But the creator of ordinals blasted the process — which required that bidders send their BTC to Yuga — suggesting it could be abused by scammers.

What else we’re Snackin’

• UKant: US and EU travelers will soon need to get pre-authorization to enter the UK. The stricter controls, which start next year, are meant to boost border security but could hurt tourism in hubs like London.

• GMoney: GM said it’ll offer buyouts to most of its 58K salaried employees. The Chevy-making car giant said the buyouts would help it avoid "involuntary actions" (read: layoffs) as it works to cut $2B in costs.

• Taxy: President Biden's proposed budget seeks to cut the US deficit by $3T over 10 years, largely by hiking taxes on corporations and the wealthy (think: people earning $400K+). It’s unlikely to be embraced by the GOP-controlled House.

• Walgones: California, which this week pledged not to do business with Walgreens, said it would end a $54M contract with the chain. The move comes after Walgreens said it wouldn’t sell the abortion pill in 20 states.

• Mozart: Apple said it’s launching an app focused on classical music this month that will be free to Apple Music subscribers. The Beethoven bet could be a bid to eat away Spotify's lead.

Snack Fact of the Day

Friday

• February jobs report

Authors of this Snacks own bitcoin and ethereum and shares: of Apple, GM, and Uber

ID: 2785067