First female co-founded IPO, Wall Street CEOs are questioned on diversity, and a climate proxy fight
Welcome to Nº 26 of In The Money, your weekly newsletter on keeping up with all things finance, tech, and startups. As always, this week’s newsletter is filled with all the financy things. Wall Street CEOs testify on Capitol Hill on matters including diversity. US largest oil company lost a climate proxy fight. Apple’s three-week Epic battle comes to closing. Vimeo is spun out from ICA, with Vimeo CEO, Anjali Sud leading the company to its public market debut. The first female co-founded company went public. Facebook and Instagram introduced the option to hide likes, Virgin Galactic is a step closer to space tourism, and meme stocks soar again. This and much more. I hope you enjoy this edition.
First female co-founded IPO 🔔
Heather Hasson and Trina Spear rang the opening bell on Thursday morning as their company, FIGS, began trading on the New York Stock Exchange. The milestone was notable for more than just the company itself, namely, Hasson and Spear's market debut is likely the first IPO led by two female co-founders. While we’ve seen several public market 'firsts' over the past few years, from Stitch Fix founder Katrina Lake's IPO to 31-year-old Bumble founder Whitney Wolfe Herd's mantle as the youngest woman to take a company public, those have largely been achieved by solo female founders or women who are part of mixed-gender founding teams. FIGS is a healthcare apparel company that was founded in 2013. The direct-to-consumer (D2C) sells uniforms and other accessories to healthcare workers, such as nurses, doctors, and medical students. As a supplier of healthcare workers’ apparel, Figs grew revenue 138% year-over-year in 2020 during the pandemic. The two founders, Hasson and Spear, are also co-CEOs. For FIGS, being the first has special meaning because its customer base is largely made up of women, 83% of FIGS customers are women. Health care is also one of the fastest-growing professions for women. Next, the company is eyeing international growth as medical apparel is a $79 billion market globally. On its public market debut, investors cheered the company, as the stock opened Thursday 28.6% above the initial public offering price. Overnight the IPO had been priced at $22 a share. The stock's first trade was at $28.30, which valued the company at $4.57 billion. A total of 26.39 shares were offered in the IPO, with 4.64 million shares offered by the company as it raised $1.02 billion.
Wall Street CEOs questioned on diversity 🏦
Two years ago, Wall Street CEOs appeared before the House Financial Services Committee and got called out by Representative Al Green from Texas. “The eye would perceive that the seven of you have something in common,” Green said to the CEOs of Citigroup, JPMorgan Chase, Morgan Stanley, Bank of America, State Street Corp, Bank of New York Mellon, and Goldman Sachs. “You appear to be white men.” Green continued and asked if any of the executives thought a woman or person of color would succeed them as CEO. None of them said yes. Fast forward two years, on Wednesday, six Wall Street CEOs appeared before the Senate Banking Committee. This time, new Citigroup CEO Jane Fraser was among them. The hearing took place virtually, so the visual was not as powerful, nonetheless, Fraser’s presence disrupted what had been a homogeneous lineup. Fraser took over as Citigroup CEO earlier this year, becoming the first woman to lead a major Wall Street bank. In her prepared testimony, Fraser said: “I am proud to be the first woman to run a global financial institution.” Still, the lineup of top bank CEOs remains majority male and all white. With the hearing coming one year and one day after the murder of George Floyd, the executives were grilled on racial justice and diversity, in addition to issues like voting rules and climate change. Each CEO acknowledged ongoing efforts to diversify their employee ranks. Still, Senator Sherrod Brown said he was unsatisfied with the progress banks have made and returned to the question of succession planning that Green had raised. He asked Morgan Stanley’s CEO, James Gorman why he’d admitted in the past that a woman or person of color was unlikely to lead the bank in the next decade. “Don’t you have a responsibility to do something about that?” Brown asked. Upon which Gorman answered: “Absolutely. I was asked the question and I answered it truthfully.” He continued to say that his answer reflected the bank’s leadership and then mentioned some of the women who now hold senior roles. Yet when Gorman unveiled a lineup of possible successors last week, it mostly white and male. Brown then asked if any of the women Gorman mentioned could be CEO. “I think there’s a distinct possibility, but I can’t guarantee it,” he said, and that the bank was “built over many decades and it takes time for talent to rise to the top.” Another exchange from Wednesday’s hearing came between Senator Elizabeth Warren, and JPMorgan’s CEO, Jamie Dimon. Warren accused JPMorgan Chase, and the other consumer banks, of not doing enough to communicate to its clients about the relaxation of certain overdraft fee rules during the coronavirus outbreak.
Bank needs to appoint women to 50% senior positions 👩💼
A Financial Times calculation shows that the German banking giant, Deutsche Bank will have to appoint women to about 50% of vacant senior management positions to meet its new 2025 gender target. Last week the bank promised to raise the share of women among its roughly 600 most senior executives to at least 30% by 2025, up from 24% now. However, only a limited number of these positions become vacant per year, so this target can only be met if the bank chooses female candidates in at least every other senior hire and promotion. “Greater diversity among senior executives is a business necessity for us. This will make us stronger as there is plenty of evidence that more diverse teams achieve better results and adjust faster to a changing environment,” Deutsche’s global head of human resources Michael Ilgner told the Financial Times. Ilgner further said: “We will of course choose the candidate who is best suited for a position. We don’t want to make any compromise on quality.” The self-imposed quota is more stringent than the requirements under German law. Since 2016, 30% of supervisory board seats must be held by women, a rule that Deutsche complies with. Earlier this year, also new legal requirements that listed companies have at least one female management board member came into force. Deutsche has also announced targets to increase the share of female staff in middle management, which accounts for managing director, director, and vice-president roles, from 29% now to 35% by 2025. The announced measures include linking the pay of Deutsche’s senior managers to meeting those goals. Deutsche’s gender quota is pretty much in line with its peers. Goldman Sachs has a target to increase the share of female vice-presidents to 40% by 2025, while HSBC has targeted 35% of “senior leadership roles” to be held by women. On the other hand, Credit Suisse and Bank of America have not published gender equality targets.
White male businesses are now a minority 💼
In the US, white men now make up the minority of business owners. A shift that has been driven by fast growth in women- and LatinX-owned businesses. The 12.5 million white male business owners comprise about 41% of the 30.5 million total owners of small businesses in the US. At the same time, there are about 11.6 million women-owned businesses (of which approximately 65% are white-woman-owned) and 6.5 million businesses are owned by men of color. For decades, the number of women-owned businesses has been growing rapidly, as more women entered the workforce. In 2018-2019, women started more than 1,800 businesses a day. Since 2015, women-owned businesses have grown at twice the rate of the overall population, and women of color have been starting businesses at 4.5 times the rate of the overall population. LatinX owned businesses have been growing at a rate of two-to-four times the rate of the overall population in the past five years.
An Epic closing 👾
The three weeks-long antitrust trial between Apple and Epic Games culminated on Monday, with Epic Games calling Apple an "overlord" and Apple suggesting Epic is paving the way for a "scary" future for iOS customers. In a matter of weeks, Judge Yvonne Gonzalez Rogers is set to decide an outcome that could reshape how digital app stores work or uphold Apple's prime position in its app ecosystem. Wrapping up the three-week trial, which saw top executives including Apple CEO Tim Cook and Epic CEO Tim Sweeney called in for questioning, Gonzalez Rogers said she will strive to issue an opinion by mid-August. Epic has argued Apple's ecosystem makes it impossible to download apps from anywhere but Apple's own app store, making Apple a monopoly. Epic claims, that the alleged monopoly creates opportunities for Apple to impose restrictive terms on iOS app makers, such as requiring a 30% cut of all in-app sales of digital goods and services. Last summer, Fortnite was kicked out of the App Store for disregarding Apple's rules on digital payments by directing players to its own, outside system. On Monday, Epic pleaded with Gonzalez Rogers for an order banning Apple from implementing some of its policies and forcing Apple to allow third-party app stores to compete with its own proprietary app store. By contrast, Apple has urged Gonzalez Rogers to consider the company's App Store as part of a competitive market for video game sales. A procession of prominent executives, culminating with Cook on Friday, argued that Apple's platform rules protect users and provide security and privacy. And on Monday, Apple lawyers said that giving Epic what it wants would be unjustified and unprecedented. The crux of the case is about market definition. Since Epic’s games are played on many non-Apple devices, its complaint about Apple as a monopolist is not that clear-cut. The Apple-Epic case could be seen as a rehearsal for future antitrust cases, even if the judge rules in Apple’s favor. On the other hand, if the judge finds it for Epic, it would probably not force immediate changes to the $100 billion market for iPhone apps, since any ruling is set to be tied up in appeals for years. Regardless, the testimony of the past weeks is likely to be featured in court battles to come.
Amazon’s second-largest acquisition 💰
In last week’s edition of ITM, you could read that Amazon was reportedly purchasing MGM. This Wednesday, Amazon said it will acquire MGM Studios for $8.45 billion. The deal is the second-largest acquisition in Amazon’s history, after its $13.7 billion purchase of Whole Foods in 2017. Amazon hopes to leverage MGM’s storied filmmaking history and wide-ranging catalog of over 4,000 films and 17,000 TV shows to help bolster Amazon Studios, its film, and TV division. Shares of Amazon barely moved on the announcement. The deal emphasizes Amazon’s eagerness to spend money to remain competitive in the crowded streaming market. Amazon, Netflix, Disney, and other video streaming services have been looking to strengthen their content libraries to win over subscribers, committing billions toward licensing content and developing original programming. Simultaneously, media juggernauts have undergone further consolidation to achieve greater scale to take on the likes of Amazon and Netflix. Also, last week’s announcement of Discovery’s $43 billion deal to merge with WarnerMedia after a spinoff from AT&T (which you can also read about in last week’s ITM), is the latest sign of that.
Hide your likes 👍
This week Facebook began to publicly roll out the option to hide Likes on posts across both Facebook and Instagram, following earlier tests beginning in 2019. The project has been in development for years, but has been deprioritized due to the COVID-19 pandemic and the response work required on Facebook’s part, the company says. The idea to hide Like counts on Facebook’s social networks was originally focused on depressurizing the experience for users. Often, users faced anxiety and embarrassment around their posts if they didn’t receive enough likes to be considered “popular.” This problem was particularly difficult for younger users who highly value what peers think of them. As a result of this pressure to perform, some users craved a “Like-free” safer space. That, in turn, gave rise to new social networking and photo-sharing apps such as Minutiae, Vero, and, now, newcomers like Dispo and the newly viral Poparazzi. Also, this week, Instagram announced the addition of a new feature to help connect online shoppers to product drops. Drops, which are a newer e-commerce trend, help sellers create buzz for forthcoming products in the days leading up to their availability. Now, drops will have their own destination inside the Instagram app at the top of the Shop tab, where consumers can discover, browse and shop all the latest product launches as well as view upcoming launches.
Anjali Sud takes Vimeo public 📹
On Tuesday Vimeo opened for trading as an independent company, as IAC completed the spinoff of the cloud-based video software tools company to its shareholders. In the listing, IAC shareholders received 1.6235 Vimeo shares for each IAC share they own. IAC no longer holds any Vimeo shares. On a fully diluted basis, Vimeo has 186 million shares outstanding. Fully diluted shares are essentially the total number of common shares of a company that will be outstanding and available to trade after all possible sources of conversion, such as convertible bonds and employee stock options, are exercised. While full dilution may not occur all at once, it indicates how many shares might be outstanding in the future, based on the company’s current policy regarding conversions. IAC acquired Vimeo in 2006 as part of its purchase of Connected Ventures. At the time IAC acquired Connected Ventures, Vimeo was viewed as an afterthought. The press release announcing the 2006 deal didn’t even mention Vimeo. Now, Vimeo was the 11th public company to be spun out of IAC. Upon its public listing, Vimeo’s stock took a tumble from where it was trading in limited “when-issued” trading over the last week. On Tuesday morning, the stock was at $43.13, after trading as high as $47.69. In when-issued trading, the stock on Monday had closed at $52.08. Vimeo reported revenue of $89.4 million, up 57% from the previous year, for the March quarter. Gross margin expanded to 72%, from 68%. Vimeo had a net profit in the quarter of $3.3 million, versus a loss of $20.3 million a year earlier. EBITDA, or adjusted earnings before taxes, interest, depreciation, and amortization, was $1.3 million, versus a loss of $12 million a year earlier. Vimeo is a video streaming platform with over 200 million users. It was founded in 2004 by Jake Lodwick and Zach Klein. Vimeo's current CEO, Anjali Sud, took over in 2017. Sud was born in Detroit to Indian parents who had immigrated to the US. She graduated from the Wharton School of the University of Pennsylvania in 2005, with a B.Sc. in Finance and Management. She received her MBA from Harvard in 2011.
“As a woman, a mother, and a tech CEO, I’m unique in the software world”
Sakura 💎
At the same time as NFTs (or non-fungible tokens) are selling at $69 million at auction houses, at Christie’s in Hong Kong, a purple-pink diamond set a new record as the largest ever to be auctioned, selling for $29.3 million. According to the auction house, Christie’s which organized the sale, “The Sakura,” (the Japanese word for cherry blossom), is a 15.8-carat purple-pink diamond set on a platinum and gold ring. Christie’s said, “The Sakura” was bought by an Asian private buyer but couldn’t offer any more details. “The Sakura” beat a previous record set by “The Spirit of the Rose,” a 14.8-carat purple-pink diamond which was sold for over $27 million at an auction organized by Sotheby’s in Geneva in November 2020. So, would you prefer to purchase an NFT or a diamond?
Snowflake leaves California ❄️
The latest tech company to leave California is Snowflake, the cloud data analytics vendor that held the biggest US software IPO ever last year. In its earnings press release on Wednesday, Snowflake’s dateline showed up as “No-Headquarters/BOZEMAN, Mont.” As recently as May 3rd, when the company announced the date of its first-quarter earnings report, that same line said “SAN MATEO, Calif.” Snowflake’s latest SEC filing showed an address in Bozeman for its executive office, which the company explained why in a footnote: “We are a Delaware corporation with a globally distributed workforce and no corporate headquarters. Under the Securities and Exchange Commission’s rules, we are required to designate a ‘principal executive office.’ For purposes of this report, we have designated our office in Bozeman, Montana as our principal executive office, as that is where our Chief Executive Officer and Chief Financial Officer are based.” Snowflake will still have a large operation in Silicon Valley. The company even recently went through a massive redesign of its San Mateo office to prepare for the eventual return of employees. The company’s move to withdraw its corporate headquarters from California follows a trend that started in the midst of the pandemic last year. Palantir moved to Colorado. Oracle and Hewlett Packard Enterprise left for Texas. Numerous companies have consolidated their offices and pulled out of Bay Area leases, giving their employees the option to work from wherever they want. At the same time, on Wednesday, reported earnings. Snowflake shares fell as much as 8% in extended trading on Wednesday after the company barely met analysts’ expectations for product revenue, the company’s main source of total revenue, for the full fiscal year.
Here’s how the company did:
Earnings per share (EPS): Loss of $0.70 per share
Revenue: $228.9 million, vs. $212.9 million expected by analysts
Revenue grew 110% year-over-year (YoY) in the fiscal first quarter, which ended on April 30. In the previous quarter revenue increased by 117%. The company’s net loss bloated to $203.2 million from $93.6 million.
NVIDIA’s crypto mining processors 🤑
When the cryptocurrency prices spiked in February, Nvidia released new processors specifically for mining crypto. On Wednesday, the company provided an update on how its cryptocurrency, or CMP, cards are doing. In its fiscal first quarter, Nvidia booked $155 million in revenue from CMP cards and expected sales of $400 million in the current quarter. Still, gaming processors, Nvidia’s original and core business, are its most important business category, generating $2.76 billion in revenue, representing an increase of 106% from last year. The reason Nvidia is now focusing on crypto chips is to save the supply of graphics processing units, or GPUs, for gamers. While GPUs can be used for mining, the CMP chips can’t be used for gaming, and it’s easier for Nvidia to manufacture the CMP chips. While the company’s core gaming market is the largest it’s ever been, it can’t risk missing out because crypto miners keep buying cards meant for gamers. “The gaming industry is really large, and what’s really exciting on top of that is that gaming is no longer just gaming. It’s infused into sports, e-sports. It’s infused into art. It’s infused into social. And so, gaming has such a large cultural impact now. It’s the largest form of entertainment, and I think the experience we’re going through is going to last a while,” Nvidia CEO Jensen Huang said. Nvidia also reported first-quarter results for its fiscal 2022, which ended May 2nd. Earnings and sales both beat Wall Street expectations, with sales growing 84% compared with last year.
Here’s how the chipmaker did, versus estimates:
Revenue: $5.66 billion versus $5.41 billion estimated
Earnings: $3.66, adjusted, versus $3.28 per share estimated
Big oil loses climate proxy fight ♻️
On Wednesday, big oil was dealt a stunning defeat when shareholders of Exxon Mobil elected at least two board candidates nominated by activist investors (see definition below) who pledged to steer the company toward cleaner energy and away from oil and gas. The campaign against US largest oil company was led by a tiny hedge. The success could force the energy industry to finally confront climate change. Analysts could not recall any other occasion when Exxon management had lost a vote against company-picked directors. The victory of the hedge fund, Engine No. 1, is the culmination of years of efforts by activists to force the oil giant to change its environmental policies. Some big pension funds, including the New York State Common Retirement Fund and the California Public Employees’ Retirement System, joined Engine No. 1, which owns 0.02% of Exxon’s stock, and began its campaign last December. Engine No. 1’s two nominees who were declared winners were Gregory Goff, former chief executive of Andeavor, a refiner, and Kaisa Hietala, an environmental scientist, and a former executive at Neste, a Finnish energy company that produces biofuels.
But how can a tiny hedge fund that owns 0.02% of the shares have such an influence? Let’s look at some definitions. An activist investor is an individual or group that buys a significant stake in a public company in order to influence how the company is run, such as by obtaining seats on its board of directors. Companies that are mismanaged, have excessive costs, could be run more profitably if taken private, or have other problems the activist investor believes they can fix are often targets for activist investors. A shareholder activist is a shareholder of the company who attempts to use their rights as a shareholder of a publicly traded corporation to bring about change within or for the corporation. These changes span a vast range, from environmental concerns to governance, profit distribution, and the internal culture and business model. Typically, shareholder activists buy up a minority stake in a company and, subsequently, employ a variety of tactics, from media pressure to litigation threats, to force a conversation and bring about change. And finally, a proxy fight refers to the act of a group of shareholders joining forces attempting to gather enough shareholder proxy votes to win a corporate vote. Exxon was the first activist campaign for Engine No. 1, the hedge fund which was founded last year by the energy and tech investor Chris James. Its head of active engagement is Charlie Penner, a veteran hedge fund executive who previously helped lead campaigns against companies like Apple. Engine No. 1 began agitating against the oil giant in December, calling on the company to diversify away from fossil fuels and reduce its carbon emissions. But it had already begun work on the campaign last March, by courting large investors like public pension funds that held far larger stakes in Exxon and thus had more sway. That’s how it parlayed a stake of just 0.02% into seats on the oil giant’s board. Exxon’s shares rose 1.2% on the day. The Exxon vote on Wednesday came after a Dutch court ordered Royal Dutch Shell to accelerate its emissions cuts. Also, investors in Chevron defied management on a major climate vote, which approved a measure for the company to set targets on the emissions from the products it sells for the first time. The actions show the increasing pressure on international oil companies to respond more aggressively to climate change.
Space tourism is soon a reality 🚀
On Saturday, Virgin Galactic took a step closer to completing the development of its space tourism system when it successfully completed its first spaceflight in more than two years. The company’s spacecraft, named VSS Unity, was carried up to an altitude of about 44,000 feet by a carrier aircraft called VMS Eve. The aircraft then released the spacecraft, which fired its rocket engine and accelerated to more than three times the speed of sound. Unity returned through the atmosphere in a glide and landed back at the runway of Spaceport America in New Mexico where it took off from earlier. Virgin Galactic’s spacecraft Unity is designed to hold up to six passengers along with two pilots. Currently, the company has about 600 reservations for tickets on future flights, sold at prices between $200,000 and $250,000 each. The spaceflight is the company’s first since February 2019, its first in New Mexico, and its third to date. The spaceflight is one of four remaining for Virgin Galactic to finish the development of its SpaceShipTwo rocket system. The second spaceflight test will carry four passengers to test the spacecraft’s cabin, while the third test is planned to fly Virgin founder Sir Richard Branson. Following the successful spaceflight test, Virgin Galactic shares jumped in trading on Monday. Shares of Virgin Galactic jumped about 15% in early trading from its previous close of $21.07. The stock also erased its year-to-date loss, having earlier this month dropped more than 30% for the year after previous setbacks.
Meme stocks, here we go again 🎮
Just when you thought the GameStop mania was a tale from the past, meme stocks came back with a double-digit rally this week. On Wednesday, shares of GameStop soared another 15.8%, pushing its gains this week to 37%. Another Reddit target, AMC Entertainment, rallied 19.2%. Shares of AMC Entertainment soared again as much as 47% in trading on Thursday. Other popular meme stocks BlackBerry and Bed Bath & Beyond rallied 9.9% and 11.6%, respectively on Wednesday. GameStop became the center of attention and sent shock waves across Wall Street in January when a band of retail investors coordinated trades on Reddit’s WallStreetBets forum and managed to create a massive short squeeze, inflicting huge pain for short selling hedge funds. Back then, the day traders targeted stocks with elevated levels of short interest. When these stocks then suddenly turned higher in price, short-sellers were forced to buy back borrowed shares to close out their short position and cut losses. The forced buying from short sellers then fueled the rally even further. A short squeeze could be at play again for GameStop, although not in the same magnitude as before. The recent rally in GameStop’s stock has pushed mark-to-market losses for short sellers to more than $6.7 billion this year, according to S3 Partners data. Still, GameStop and AMC each have more than 20% of their float shares sold short, compared with an average of 5% short interest in a typical US stock, according to the data.
This week in the stock market 🎢
The week began with the major averages rising on Monday. The rise was led by tech stocks and companies that benefit from a strong reopening from the pandemic. The Dow rose 186 points, helped by gains in Microsoft, Salesforce, and Cisco. The S&P 500 climbed 1%., while Nasdaq was the relative outperformer, jumping 1.4% as Facebook, Amazon, Apple, Netflix, and Alphabet posted gains. On Tuesday we also saw European stocks advancing higher. The pan-European Stoxx 600 climbed 0.3% by mid-afternoon, with tech stocks adding 1.6% to lead gains. Germany’s DAX was the standout performer among major markets, jumping out to an all-time high. Across the Atlantic, in the US, the market struggled to find direction Tuesday. Stocks edged higher early in the session, but eventually closed lower. The S&P 500 dipped 0.2% as the energy sector lagged. Nasdaq closed flat while the Dow dipped or 0.2%. However, airline, cruise line, and homebuilder stocks outperformed. United Airlines jumped 1.5% after the carrier said domestic leisure fairs topped 2019 levels this month amid the reopening. Royal Caribbean and Norwegian Cruise Line shares each rose about 3.6%. Wednesday was again a relatively quiet session on Wall Street. The S&P 500 gained 0.2%, the Dow finished little changed, while the tech-heavy Nasdaq Composite gained 0.6%. On Thursday, the Dow Jones Industrial Average climbed 141.59 points, while the S&P 500 edged 0.1% higher, and Nasdaq closed flat. Amid continued optimism about the recovery economy, shares of Boeing gained nearly 4%. Also, first-time jobless claims fell to a new pandemic low of 406,000, according to Labor Department data, which contributed to investor optimism. As a result, today, Friday, European markets advanced to notch record highs as global stocks took heart from the strong economic data out of the US.
Plus ➕
Bye-bye: Amazon CEO Jeff Bezos will step down on July 5, which marks 27 years to the day Amazon was incorporated. Bezos is turning the helm over to cloud-computing boss Andy Jassy
Augmented: Snap acquired augmented reality (AR) startup WaveOptics to provide tech for, Spectacles, its AR glasses for over $500 million in a cash-and-stock deal
Flex: Airbnb announced more than 100 new changes and updates to its platform with a focus on flexibility, ahead of a widely anticipated boost in travel
SPAC: Fintech startup and investing app Acorns is going public through a SPAC. The deal values the company at $2.2 billion
In other fintech news: Klarna, the Swedish buy-now-pay-later company, is close to securing a new funding round led by Softbank at a valuation of more than $40 billion
Logistics: Shares of JD Logistics, the logistics arm of Chinese e-commerce giant JD com soared more than 18% on Friday as the company debuted on the Hong Kong Stock Exchange
Oops: Twitter appears to have mistakenly confirmed its plans to launch a new subscription tier. Under In-App Purchases, there's now a "Twitter Blue" option that's priced at $2.99, though the feature does not appear to be live in the iOS app at this time.
Woman of the week
Indra Nooyi
Indra Nooyi is the former chairperson and chief executive of PepsiCo.
Nooyi was born in Madras, Tamil Nadu, India. She received bachelor's degrees in physics, chemistry, and mathematics from Madras Christian College of the University of Madras in 1974, and a Post Graduate Programme Diploma from Indian Institute of Management Calcutta in 1976. In 1978, Nooyi was admitted to Yale School of Management, and moved to the US, where she earned a Master's degree in Public and Private Management in 1980. Nooyi began her career in India, where she held product manager positions at Johnson & Johnson and textile firm Mettur Beardsell. While attending Yale School of Management, she completed a summer internship with Booz Allen Hamilton. Upon graduating, in 1980, Nooyi joined the Boston Consulting Group (BCG) as a strategy consultant. Thereafter she worked at Motorola as Vice President and Director of Corporate Strategy and Planning, which was followed by a stint at Asea Brown Boveri. In 1994, Nooyi joined PepsiCo and was named CEO in 2006, replacing Steven Reinemund, becoming the fifth CEO in PepsiCo's 44-year history. Prior to becoming CEO, Nooyi served as President and Chief Financial Officer, in 2001, when she was also named to PepsiCo's Board of Directors. Nooyi was also Senior Vice President, and Chief Financial Officer of PepsiCo, and served as PepsiCo's Senior Vice President, Corporate Strategy and Development, and as PepsiCo's Senior Vice President, Strategic Planning.
I grew up in a Hindu household but went to a Roman Catholic school. I grew up with a mother who said, 'I'll arrange a marriage for you at 18,' but she also said that we could achieve anything we put our minds to an encourage us to dream of becoming prime minister or president.
Nooyi has directed the company's global strategy for more than a decade and led PepsiCo's restructuring, including the 1997 divestiture of Tricon, now known as Yum! Brands. Tricon included companies like Pizza Hut, KFC, and Taco Bell under its umbrella. The financial gains from this spinoff allowed the company to increase the pace of its share buyback strategy, thereby giving it more leverage to pursue future acquisitions without as much shareholder backlash. Nooyi also took the lead in the acquisition of Tropicana in 1998, and the merger with Quaker Oats Company, which also brought Gatorade to PepsiCo’s product portfolio in 2001. The $3.3 billion acquisition of Tropicana initially faced opposition from other PepsiCo executives and Wall Street critics. However, acquiring Tropicana allowed PepsiCo to gain a competitive edge; Tropicana at the time captured 44% of the chilled orange juice segment, the fastest-growing segment of the juice market. The Quaker Oats Company's ownership of Gatorade was a positive strategic move for PepsiCo since Gatorade was responsible for 80% of sports drink sales at the time. Similarly, to the Tropicana acquisition, this strategic move gave PepsiCo leverage against Coca-Cola, owner of Powerade, second in the sports drink segment.
“I am a mother first, then a CEO, and then a wife”
Nooyi's strategic redirection of PepsiCo, called Performance with a Purpose, has been largely successful. It involved creating long-term growth while leaving a positive impact on society and the environment. In 2015, Nooyi removed aspartame from Diet Pepsi, furthering the shift towards healthier foods, despite the lack of evidence of aspartame's harmful effects. In 2020, the company operated US facilities using 100% renewable electricity. The third component of Performance with a Purpose involved creating a culture where workers were encouraged to stay with the company. As one example, Nooyi wrote to the parents of her leadership team and visited their homes to create a personal connection. On August 6, 2018, Nooyi stepped down as CEO and was replaced by Ramon Laguarta, a 22-year veteran of PepsiCo. Nooyi continued to serve as the chairman of the company until early 2019. During her 12-year tenure as CEO, the company's sales grew by 80%.
Nooyi has consistently ranked among the world's most powerful women. In 2015, she was ranked as the 2nd most powerful woman on the Fortune list. In 2017, she was ranked 2nd on the Forbes list of The Most Powerful Women in Business.
Thank you so much for reading In The Money. I would love to hear your feedback and please share this with a few friends you think would find this interesting. Have a lovely weekend 💜
I’m Marianne, an early-stage VC based in Stockholm. You can reach me by replying to this email, or find me on Twitter or LinkedIn.