This election has had a lot of vitriol. As a counter reaction to the politically correct culture, Trump has tweeted statements which were outside of the norm. It’s tough to say whether his opponents were actually offended or if they chose to be offended because they disagreed with his polices. Either way, this campaign has been divisive to the country. The markets loved that it ended peacefully as Trump called President Obama a good man and he praised Clinton for her lifetime of public service.
While the country attempts to heal from the political wounds, the CEO of GrubHub didn’t get the memo. You can tell by the tone of his email to his employees that he was a huge Hillary supporter and despised Donald Trump. I have the email listed below. The email shows that the CEO of GubHub, Matt Maloney, doesn’t know any Trump supporters at all because he only focuses on the rhetoric of Trump and not his pro-growth policies. The email reads like a frantic statement he would send to a friend, not to his own employees which may support Trump.
Now we have seen the backlash GrubHub has gotten with many Twitter users posting that they will be boycotting GrubHub. The stock has fallen about 9% since this email went viral. The stock probably would have moved higher along with the overall market if this email didn’t get sent, so even more shareholder money was lost as a result of this episode.
The email wouldn’t have been as bad if he didn’t include the part where he said those who disagree with his statement could resign. He meant to say those who disagree with having an inclusive workforce should resign, but it was misconstrued to say Trump supporters should resign. The reason this happened is because Trump supporters were called deplorables by Hillary Clinton on the campaign trail. If Matt would have given this email to anyone who was a Trump supporter, he would have learned how this email would have been received. Such a simple measure could have avoided this whole mess.
This email should have been a boiler plate email to workers. It should have stated GrubHub stands by its policies of inclusion, no matter who is president. There’s no need to describe President Trump in this way. It’s in GrubHub’s best interest to work with any administration regardless of the CEO’s personal opinions. Even if Trump lost by a lot, it still is a bad idea to get into the political waters because he still has Trump supporters working for him. It’s such an obvious thing to point out, but he missed that concept. He later apologized for the email, but it is too late as some conservatives think he will be firing Trump supporters even though he won’t be.
The correct way to make a statement is what Mark Zuckerberg did when those questioned how Peter Theil could be on Facebook’s board of directors given his support for Trump. Instead of inciting people by insulting Trump, he calmly explained the reasons why someone may support Trump. The message is Facebook can accept diversity of political opinion while maintaining its core values of equality and inclusiveness.
This will now become an important change in the culture that business leaders need to understand. There is a separation between company culture and the statements companies make to the public. Firms like to celebrate inclusivity within their businesses, but now firms have to be careful not to offend those with more conservative leaning backgrounds in their public statements. Donald Trump is not a one off change; he represents a change in the culture of America, so firms have to understand this new culture and act accordingly.
As an investor, this needs to be something on your radar screen. You can’t predict an event like the one at GrubHub, but if you have knowledge that this is a new trend emerging, you can look for clues about how various companies are handling public relations. Damage to a company’s brand for political reasons can be similar to what has happened to Chipotle which had problems caused by the various health scares at its restaurants.
For GrubHub stock itself, it’s a risky proposition in the near term, but I expect most of the damage has already been reflected in the stock. The problem is a new headline can always come out which puts the company in new hot waters. When you buy GrubHub for the long-run you are betting on Matt not making any new mistakes. It’s ironic because in the statement he talked about forcing those with different beliefs than him to quit, but if he has another faux pas like this, it could be his job that’s lost. Another point worth making is I highly doubt that the company will get in any legal trouble for firing employees for having differing political beliefs because the company has already said this is not its policy. In fact, I would expect the company to go out of its way not to have the appearance of purposely firing conservatives given the situation which is in play now.
Conclusion
We’ve seen in the past few years companies get in trouble for being politically incorrect, but now some companies will become more likely to get in trouble for offending conservatives because they feel they have new power after this election. I’m not one to be in favor of an outrage culture which starts boycotts against companies which said something wrong, but it doesn’t matter what I think. Companies need to be more careful in their public statements about offending this new swath of people who Trump would call the ‘silent majority.
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