It takes years to build a reputation and only moments to destroy it. Amidst an unprecedented (ugh – not that word again!) trading surge, the Robinhood CEO had an impossible tension to navigate. How to address big-picture business concerns, while appeasing the interests of investors and company employees.
I’m sorry to say that employees got picked last.
Robinhood CEO experiences employee backlash.
Employees Feeling Disenfranchised
According to its website, Robinhood’s mission is “democratize finance for all.” But the decision was made this past week to restrict transactions on highly volatile stocks (do I even need to tell you which?). And team members were left wondering if they had been lied to.
“In the knowledge economy, employees espouse the brand values as much as their title or their paycheck,” says leadership expert, Robert Glazer, of Acceleration Partners. “One wrong move is often met with grace. But wrong moves compounded with poor communication can cause a revolt and an employee backlash”
Robinhood apologized to its one thousand employees by issuing a $40 DoorDash credit. This gesture occurred after the company secured an additional billion dollars to cover margins. A necessary operational response? Absolutely. But not the message they were looking to send internally.
“The recipients were patronized,” says John Ruhlin, author of GIFT∙OLOGY, a playbook for B2B gifting. “Everyone on the planet is watching your every move. And the best you can come up with is a $40 gift card? This adds insult to injury.”
Foundations of Employee Gifting
In Robinhood’s defense, most business leaders are horrific gift-givers. One recent study documents how givers and recipients place different value judgments on the same gift. The disconnect can be so massive that, according to another study, the wrong gift does more to hurt than help.
Ruhlin says he’s seen it happen. “Loyalty is fickle because feelings are fickle. We have clients that come to us and say: ‘we tried gifting, we messed it up, can you salvage this?’ Fortunately the answer is almost always yes.”
So what should Robinhood’s CEO have done? And how can you successfully execute strategic gifting in your organization? The following tips will help.
Choose your words carefully
The most important part of an apology is to mean it. Jonathan Bernstein, founder of Bernstein Crisis Management and author of ‘10 Steps of Crisis Communication,’ suggests leading with empathy. “Your messaging must make it clear you have compassion – stakeholders must understand your message the way it was meant to be understood.” In other words: you must genuinely care.
Proper wordsmithing is crucial even when you’re not apologizing. Would you rather eat something 95% lean or 5% fat? If your goal is sincerity, avoid clichés and corporate platitudes.
Good leaders communicate from the heart. Not through the lens of legal permissibility or marketing spin.
Get them what they want
While this might be blasphemous to some, these five studies make a convincing argument to involve the recipient in gift selection. Monika Kochhar is the co-founder of SmartGift, a platform that enables business leaders to connect with others in a virtual world.
“Modern day technology allows us to re-imagine the traditional gifting experience. Instead of saying, ‘here – I got this for you,’ we can now say ‘I got this for you – which color, what size, and where do you want it shipped?’” SmartGift uses artificial intelligence to help match recipients with the right item at a pre-determined price point.
No more ‘one size fits all.’ Something Robinhood employees (and critics) might have appreciated.
Spend the right amount
So how much should Robinhood have spent on their gift? Both Ruhlin and Kochhar cited similar numbers from their client experiences. “Our biggest successes are practical luxuries, in the $100-$300 range. It’s high enough to afford quality, but not so low to appear stingy.”
Kochhar suggests not obsessing over price-tags. “Employee gifting is an investment. Leaders don’t audit the salaried costs of two hour Zoom calls. Yet we’re going to pinch nickels with appreciation? Double standards do not serve us.”
It’s not about you.
The fastest way to devalue a gift and turn it into an advertisement is by putting your company’s name on it (this StoryBrand podcast explains it nicely). Over the years, I have received a thrift store’s worth of logo-covered tote bags, clothing, and water bottles. All have been donated, trashed, or relegated to the garage.
Robinhood might not have done this explicitly. But the immediacy of their gesture suggests more of a reactionary appeasement than genuine remorse. You wouldn’t give your spouse a gift with your name on it. Don’t do it for your employees or clients. And never make your gifts about the optics.
The right perspective. Always.
Leaders like Gary Vaynerchuk encourage leaders to play the long game – both with gifting and decision-making. While I am empathetic to the chaos surrounding Robinhood’s CEO this past week, this saga feels less like a passing tabloid headline and more like THE BIG SHORT. Or at least an extended 30-for-30 episode.
Unlike certain investment strategies, there’s no benefit to volatile reputations. In today’s media-crazed environment, brands explode (or implode) when the CEO makes the right moves. Our opportunity as leaders is to build reputations out of stone, not plastic. When we execute strategic gifting the right way, we create an environment of stability and confidence. And a brand to match.
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!