MONDAY APOLOGIES: Musk v. Pelosi, Rio Tinto's radioactive capsule, Ticketmaster v. Taytay, PagerDuty v. MLK, Spotify's Ek v. himself. Plus NERD ALERT: corporate fraud is everywhere

Live from the ESG Shake Shack, it’s an I-barely-mention-Musk Monday edition of Business Pants. Joined as always by our Lord of the BS, Matt Moscardi, I’m going to keep talking…. In today’s ESG-encrusted mildew stain called January 30, 2023: Sexy Apologies, anti-CEO pop music, and sleazy academic papers!

DAMION1

1. Apologies

1. Elon Musk Finally Apologizes For Creepy Conspiracy Theory About Paul Pelosi Attack

2. Rio Tinto apologizes for losing radioactive capsule in Australia

1. Mining giant Rio Tinto has apologized for losing a tiny radioactive capsule that went missing as it was being transported across Western Australia.

2. An emergency hunt for the device, which is about the size of a pea, is underway along the 1,400km (870 mile) route.

3. The capsule contains a small quantity of radioactive Caesium-137, which could cause serious illness to anyone who comes into contact with it.

4. That could include skin damage, burns, or radiation sickness.

5. Emergency services are searching for the device using radiation detectors and other specialized equipment, and say the chances of finding the tiny device are "pretty good".

6. Simon Trott, Rio Tinto’s iron ore chief executive, said in a statement issued Monday, “We are taking this incident very seriously. We recognize this is clearly very concerning and are sorry for the alarm it has caused in the Western Australian community.”

3. Ticketmaster CEO apologizes for Taylor Swift concert ticket debacle, blames bots and cyberattack

4. PagerDuty CEO quotes Martin Luther King Jr in layoff email, faces flak

1. "All time classic bad layoff announcement: CEO of PagerDuty opens with "Hi Dutonians," takes 370 words to get to the layoffs bit, continues for another *1250 words*, and ends with "..something Martin Luther King said..." tweeted Tom Gara, a technology communications manager at Meta.

2. The CEO of a San Francisco-based tech company has issued an apology after quoting civil rights champion Martin Luther King Jr. in an email announcing layoffs, which was massively trolled online.

3. In the 1,700-word email sent last week, PagerDuty CEO Jennifer Tejada said that she was slashing 7% of its employees, while simultaneously announcing promotions for a few executives.

4. Shared on the company website, too, Tejada added that the moment reminded her of Martin Luther King Jr.'s quote that "the ultimate measure of a [leader] is not where [they] stand in the moments of comfort and convenience, but where [they] stand in times of challenge and controversy."

5. The Apology:

1. Team,

2. This has been a difficult week for our company. For those of you who were not able to attend our town hall discussion today, I wanted to share what we discussed. The way I communicated layoffs distracted from our number one priority: showing care for the employees we laid off, and demonstrating the grace, respect, and appreciation they and all of you deserve.

3. There are a number of things I would do differently if I could. The quote I included from Dr. Martin Luther King, Jr. was inappropriate and insensitive. I should have been more upfront about the layoffs in the email, more thoughtful about my tone, and more concise. I am sorry.

6. The original letter: (1671 words; Gettysburg Address 272; took her 367 words to get to the layoffs)

1. Dutonians, 

2. Part of our mission at PagerDuty is to help businesses “anticipate the unexpected in an unpredictable world.” Over the last year, the macro environment shifted rapidly, with growth contracting in Q1 and Q2 yet expanding in Q3. Inflation and geopolitical concerns caused the US Federal Reserve to hike interest rates, while the jobs market overall remained strong and the unemployment rate remained low. Macro signals remain mixed and uncertain as we head into a new fiscal year. 

3. Our $38 billion TAM of over 75 million potential users remains large, our Operations Cloud platform mission critical for our customers, and our competitive advantages deep, but we are not immune to macro volatility, nor can we predict when the economy will improve.

4. While demand for our products and services remains stable and our strategy to help our customers transform their operations remains relevant and intact, it is taking longer to convert than prior years. Macro uncertainty and volatility has led our customers – businesses across segments and regions – to scrutinize and slow investments in order to preserve business outcomes and protect shareholder returns, while improving their operational resilience.  

5. For the last two years we have undertaken proactive initiatives to scale efficiently, accelerating this program last summer by standardizing our go-to-market motion globally, reducing layers, improving spans of control, reducing discretionary spend and standing up teams in cost-effective, high-talent locations. 

6. The reality of today’s volatile economy requires additional transformation. Despite executing well over the last eight quarters, sustaining high growth and dramatically improving operating margins, there is more to do to secure PagerDuty’s future. To weather today’s economic uncertainty and succeed over the long term, we must generate more cash flow and increase our operating margins in the near term. Doing so enables us to sustainably fund the priorities and commitments our customers count on us for: resilience and security at scale, and an easy-to-use, low-cost-to-own, high-ROI Operations Cloud. 

7. Today’s actions 

8. After considering a range of approaches for strengthening the company as we move forward, we are further refining our operating model as we work to increase our capacity while improving our cost structure, focusing our efforts, and improving our return on investments. 

9. Additional refinements we are implementing today include: 

10. Eliminating roughly 7% of roles globally, the vast majority of which are in North America, primarily in our go-to-market and G&A organizations;

11. Reducing discretionary spend;

12. Negotiating more favorable commercial agreements with key vendors;

13. Rationalizing our real estate footprint to reflect the realities of our distributed-by-design hybrid work model.

14. Like most technology companies, our most significant investment is our workforce. These decisions were carefully considered and are necessary to set PagerDuty up for long term success, especially in the context of ongoing uncertainty. That said, these changes are also very difficult. They will be painful for those Dutonians impacted, their loved ones and their teammates, because every PagerDuty employee is an important, valuable part of our community.

15. As these changes impact the heart of our organization, our people, we worked to ensure fair and equitable, principled decisions by focusing on a value-centered and business-based set of principles. Decisions were predicated on business rationale that included, for example, protecting investments in top product development priorities like our new Incident Workflows, self service and product-led growth (PLG), and continued AIOps and Automation enhancements, improving spans of control and streamlining management layers, expanding teams and roles in Santiago and Lisbon, and addressing our enterprise opportunity with a hybrid strategic and high-velocity GTM motion that continues to improve our productivity.  

16. I regard Dutonians as more than employees; they are accomplished, deeply talented individuals who #BringThemselves and drive the innovation and culture behind our products and services to deliver experiences that delight our customers. I appreciate each and every Dutonian’s contribution to PagerDuty. It is my expectation that we show all of our colleagues the grace, respect, and dignity they have earned. As someone who has worked in this industry for decades, I have experienced this before and it is never easy, and I also know from experience that while we may not work together in the short term, our relationships and this community live beyond our tenure at PagerDuty. 

17. Honoring and supporting our people

18. We are committed to supporting impacted Dutonians through this transition. In doing so, we ensured our colleagues receive severance with an average of 11 weeks pay, with additional severance based on tenure (or we followed local laws as required). Impacted employees, who are currently enrolled in our plans, are being offered extended healthcare coverage for themselves and dependents for a minimum of three to four months (depending on carrier requirements by location), and all employees will be provided career transition support from Randstad RiseSmart. All notifications for impacted employees are expected to be completed today and tomorrow. 

19. We are confident that these changes sufficiently improve our operational resilience such that we do not anticipate further actions outside of the regular course of business.

20. Looking forward to the future 

21. I’m excited to appoint Jeremy Kmet SVP, North America Sales, to Senior Vice President of Global Field Operations, effective February 1, 2023 reporting to me. Jeremy assumes expanded responsibility for our global Sales, Partner and Sales Strategy & Operations organization. Jill Brennan, Natalie Fair, Josh Thacker, Julia Fare, Tim Chinchen and their teams will report to Jeremy beginning February 1. For customer and business continuity, and efficiency, we are not backfilling the SVP, Americas role at this time. 

22. We are well positioned to succeed with Jeremy leading our go-to-market (GTM) organization, going from strength to strength. As our most tenured and highest performing GTM leader, he is credited with designing and scaling the land-and-expand motion – especially in the upper mid-market and enterprise segments – underpinning PagerDuty’s efficient growth and setting our performance pace, especially in the past two years as we accelerated our growth and profitability. 

23. With this promotion, Jeremy’s role expands from the Americas, approximately 75% of annual recurring revenue, to our global sales theaters, channels and operations teams. Jeremy has deep domain experience, customer relationships and product expertise. He brings a breadth of expertise – from selling to the world’s largest enterprises to building a high-velocity mid-market motion here at PagerDuty. Given his track record and demonstrated deep commitment to our customers, our people, and our values, our board of directors and our leadership team have great confidence in Jeremy to lead the Global Field Operations organization.  

24. Dave Justice, Chief Revenue Officer, is leaving PagerDuty to pursue other opportunities after the completion of FY23. Dave has been a valued partner to me and the executive team over the last three years. We thank him for his leadership in championing our customers, and for his many contributions to PagerDuty. Please join me in wishing Dave all the best in his future endeavors. 

25. This leadership transition creates an opportunity for us to evolve our customer experience in ways that encourage a faster Operations Cloud adoption and value realization, through both product-led and sales-led growth. The strength of the partnership between our customer support, success and services team and sales teams creates a foundation for us to build on, more tightly integrating the voice of the customer into product design and experience, blazing the product-led “Path to Platform” for our Operations Cloud by connecting these teams with our product teams. 

26. With that goal in mind, we are realigning the Customer Success Group (CSG) organization with the Product Development team. Manjula Talreja, our Chief Customer Officer, will report to Sean Scott our Chief Product Development Officer. Manjula will stay closely aligned across the company as a part of both the GTM Leadership and Executive Leadership Teams, and continue to extend the teams’ impact on our business by more tightly integrating the voice of the customer into product design and experience.

27. I am excited to connect Customer Success to our product strategy, and likewise drive a deeper connection between product management and our customers’ platform engagement and post-sale experience. The organizational design of Sales, CSG and the rest of the company beyond the changes noted above remains in place. We are confident we have the right team and a strong platform to achieve our bold mission. 

28. Taking additional steps to improve our own operational resilience will shore up our ability to achieve our long-term goals – achieving $1B in revenue, sustaining profitable growth and working towards the rule of 40 – by expanding our leadership in digital operations through adoption of the Operations Cloud which benefits our customers, our shareholders and all our stakeholders. 

29. We are reinforcing our strengths, ensuring capacity to increase innovation and growth, and delivering on our commitment to operate as a profitable, durable growth company, with a platform and team our customers trust and can depend on for years to come. We expect to finish the year strong – in fact, we have reaffirmed our guidance for FY23 today – and those results, combined with the refinements outlined above, put PagerDuty in a position of strength to successfully execute on our platform strategy regardless of what the market and the macroenvironment bring. 

30. None of this would be possible without you, our leadership, and our board — thank you for your grit and resilience, your commitment to our customers and your support of our values and people. I am reminded in moments like this, of something Martin Luther King said, that “the ultimate measure of a [leader] is not where [they] stand in the moments of comfort and convenience, but where [they] stand in times of challenge and controversy.”  PagerDuty is a leader that stands behind its customers, its values, and our vision — for an equitable world where we transform critical work so all teams can delight their customers and build trust. 

1. This is what the company actually does:

1. (We’re revolutionizing operations. PagerDuty is transforming critical work for modern business. Our powerful and unique platform makes sure you can take the right action, when seconds matter. From developers and reliability engineers to customer success, security and the C-suite, we empower teams with the time and efficiency to build the future.)

31. What’s next 

32. Please join us later today for a Town Hall at 1:30 pm PST / 4:30 pm EST where we’ll discuss these changes further and have an opportunity for Q&A. Once all notifications are completed (targeting end of day Wednesday PST), you will receive an email from your ELT member outlining any specific changes within your functional area.  

33. Jenn

5. Spotify's CEO sent a memo announcing layoffs. It also contained 'a powerful example of toxic positivity.'

1. In the memo, which was published on Spotify's website last week Ek said: “In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.”

2. Ek also wrote about forthcoming changes in the C-suite, then said: "Personally, these changes will allow me to get back to the part where I do my best work — spending more time working on the future of Spotify — and I can't wait to share more about all the things we have coming."

3. His excitement seemed discordant with the announcement that came a few paragraphs later: "We've made the difficult but necessary decision to reduce our number of employees."

2. And finally, Indie Supergroup Who Is She? Dropped As Seattle Kraken House Band After Dissing Jeff Bezos In Amazon Arena

1. Seattle supergroup Who Is She? — aka members of Tacocat, Chastity Belt, and Lisa Prank — have been disinvited from their gig as “house band” at Seattle Kraken games taking place over the weekend.

2. On Wednesday, the group played in between periods at Climate Pledge Arena (as planned) during an ice hockey match between the Kraken and Vancouver Canucks. They played a version of Le Tigre’s “My My Metrocard” with the lyrics changed to “My My Orca Card.”

1. Orca Card is Seattle’s version of ew York City’s Metrocard

2. Play Song

3. “Oh no, Jeffrey Bezos/ He’s such, a total jerk/ Shut down, all the bookstores/ Billionaires do not work,” the new lyrics went. (The 1999 original takes aim at Rudy Giuliani — still holds up.)

4. Bezos is the CEO of Amazon, and Amazon has the naming rights at Climate Pledge Arena. “In an unfortunate turn of events, apparently we are not welcome back at Jeff Bezos’ Climate Pledge Arena for tonight and tomorrow’s hockey games,” Who Is She? tweeted on Friday. “Glad we got to play our take on this @letigreworld song, we had a blast. Sorry to anyone who was hoping to see us play. Go Kraken!”

5. As for a closer timeline of events, Who Is She? were reportedly uninvited when Kraken told them “leadership decided you’re not a good fit for hockey,” the band tells Stereogum. 

MATT1

Nerd Alert!

I’ve been sitting on this one since I love it so much and it’s so simple.

Authors are Alexander Dyck, Adair Morse, and Luigi Zingales

Published Jan 5, 2023

Title implies it all:

How pervasive is corporate fraud?

• Our evidence suggests that in normal times only one-third of corporate frauds are detected. 

• We estimate that on average 10% of large publicly traded firms are committing securities fraud every year

• We estimate that corporate fraud destroys 1.6% of equity value each year, equal to $830 billion in 2021

Defines fraud as: financial misrepresentation exposed by auditors (class actions), financial misrepresentation that leads to SEC enforcement, restatements, and SEC section 10b-5 fraud cases.

Focus period is old - pre Arthur Anderson (1997-2000) and post Arthur Anderson (2000-2005)