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Someone you probably have never heard of has managed to scare virtually all of corporate America — and Wall Street is creating a new cottage industry around the fear.
Robby Starbuck, a former music television director, has turned his social media account into a weapon against corporate D.E.I. efforts, whipping up frenzy, threatening boycotts and flooding companies with negative media mentions over their diversity, equity and inclusion efforts. Tractor Supply pared back from its D.E.I. initiative in June after Starbuck tweeted that it was “time to expose” the home improvement chain. John Deere followed suit in July and Harley Davidson in August, both times following public pressure from Starbuck.
Now, Wall Street law firms and communications outfits are building businesses around preparing companies for a Starbuck offense. The methods mirror how they would prepare for a cybersecurity attack: conducting vulnerability assessments, compiling research reports and writing plans for what to do if Starbuck comes calling.
The furious scrutiny gets at the heart of a question facing corporate America: After many companies adopted and heralded their efforts to improve diversity, equity and inclusion — often citing studies showing benefits for business — they’re now grappling with how to handle a backlash when both customers and executives are split over the policies.
Their investors are not in agreement either: The New York City comptroller’s office, which oversees the powerful New York State employees’ pension fund, is already threatening lawsuits if executives concede too much.
“As a company, you might be between a rock and a hard place,” said Kai Liekefett, who co-chairs the corporate defense practice at the law firm Sidley Austin. “You have an anti-D.E.I. activist clashing with a D.E.I. activist. And you are just basically just a battleground for the culture wars that are playing out in corporate America.”
Corporate America’s break-the-glass planning for a Starbuck attack comes as it faces a surging blowback to the D.E.I. practices it rushed to implement in 2020. The Supreme Court ruling ending affirmative action in U.S. schools last year opened up companies to litigation over D.E.I. programs. Customer revolts over diversity issues, like the boycott of Anheuser-Busch InBev over an ad campaign featuring a transgender influencer, lost the company a billion in sales. And a tense, deadlocked presidential election has further politicized the matter across the country.
Starbuck is “in a position where he can ride that wave,” Jason Schwarz, an employment lawyer at the law firm Gibson Dunn, said. He added that he’s had conversations with about 50 major companies about restructuring their diversity programs or communicating about them differently in order to avoid lawsuits, but few clients have aimed to scrap these efforts entirely.
The Starbuck defense playbook starts with stealth mode. Executives are telling employees not to look at Starbuck’s profile on LinkedIn, which could attract his attention. (Starbuck told DealBook an “onslaught” of Lowe’s employees looking at his profile initially drew his attention to the home goods retailer; it later became one of his targets.)
Communications and consulting firms trawl through any content that companies have on their website, annual report or elsewhere that might expose them to a potential attack from Starbuck. (Words like “diversity” and any public association with the Human Rights Campaign, an L.G.B.T.Q. advocacy group, are a particular red flag.)
Those considering dialing back some D.E.I. initiatives are also talking with unions, suppliers and others to understand the extent of potential financial repercussions. Will their liberal customers or suppliers boycott? Will their employees revolt? For many, these conversations started prior to Starbuck’s campaigns.
Starbuck himself seems amused at the effort. “If these companies really want to know how to be in a position where they can be sort of corporately neutral and stay away from the ire of conservative consumers, feel free to just drop me a line,” he told DealBook. “You don’t pay $1 million to a terrible consulting firm.”
He says many attempts to escape his attention, like deleting language from websites, are fruitless. “We have enough material to honestly go for years if necessary,” he said.
However companies ultimately handle their response to the pushback over D.E.I., it is causing a moment of reckoning within corporate offices. An examination of D.E.I. efforts forces executives to consider whether they have followed through on promises they may have made several years ago. The next question is whether they still want to.
If executives are “learning for the first time about some various initiatives somewhere within the company,” that’s the first issue, said Brian Bartlett, a strategist at the communications firm Kekst CNC. The second is if those initiatives are not in line with company priorities. “That is problematic,” he said.
Some executives say that changing how they talk or write about their D.E.I. efforts — the most common remedy — does not change the work that is going on behind the scenes. But for diversity experts, that maneuver naturally gives rise to different concerns: How do you hold your leadership accountable to something that is not written? And are companies at risk of simply listening to the whims of those provoking the day’s online outrage?
Starbuck’s audience is particular. Communications firm FGS Global found in its internal research that 17 percent of the “news-attentive” Americans it polled over age 45 have heard of him, while 38 percent of those under 45 have. It is also not clear how many of his 670,000 followers on X, and 350,000 Instagram followers, are actually bots.
“This very small minority of individuals have this outsized voice,” Porter Braswell, the founder of 2045 Studio, a membership network for professionals of color, told DealBook. “It’s forced all of us in the industry to start to have way more of a conviction around the importance of working together, so that we talk more about what’s actually happening on the front lines.”
For the cottage industry advising companies, any swing back in the pendulum may simply mean more fees and PowerPoint presentations. What that means for executives behind the scenes is up to them.
“The forces in this country politicized the issue,” Liekefett said. “Well, don’t talk about it, but still do it right.”
— Lauren Hirsch
IN CASE YOU MISSED IT
Nvidia overtook Apple as the world’s most valuable public company. The chip maker’s market valuation briefly hit $3.53 trillion yesterday on the back of soaring demand for its artificial intelligence chips. Nvidia’s surge came as the Nasdaq hit a record high.
Donald Trump and Vice President Kamala Harris are in a dead heat in the popular vote. The final New York Times/Siena opinion poll before Election Day shows that the candidates both at 48 percent. It is the latest poll to show that the race remains tight but could be discouraging for Harris: In recent elections, Democrats have led in the popular vote even when they lost the electoral college.
Lina Khan’s F.T.C. scores a big win as a judge blocks a luxury industry deal. A federal judge blocked Tapestry’s $8.5 billion acquisition of Capri Holdings, a deal that would have combined the parent groups of Coach, Kate Spade and Michael Kors. The ruling is another win for the agency under Khan, who has pursued an aggressive agenda and used the courts to test the boundaries of antitrust law.
Baseball is set up to score a commercial home run
Major League Baseball and its broadcast partner Fox Sports couldn’t be set up better for this year’s World Series. The New York Yankees play in the largest television market and the Los Angeles Dodgers play in the second largest. And the teams include some of baseball’s biggest stars, like the Dodgers’ Shohei Ohtani and the Yankees’ Aaron Judge.
“If I’m Rob Manfred, this is my dream scenario,” said Rich Greenfield, a co-founder and media analyst at the research firm LightShed Partners, referring to the league’s commissioner.
Ticket prices for the games are already among the most expensive ever. Now, the question is what the best possible commercial success for the World Series looks like in the new world of media.
Expectations for viewership aren’t what they used to be. Dodgers and Yankees matchups in the past have delivered enormous television audiences, including the first and third largest.
But that was before the rise of streaming and the fragmentation of media. The most viewed World Series, in 1978, delivered more than 44 million viewers on average. “There was nothing else to watch,” said Greenfield, noting that if this year’s World Series clocks 15 million viewers in a game, it would be “a grand slam.”
But today’s smaller audiences aren’t necessarily less valuable. “It’s still watched more than almost anything else,” said Patrick Crakes, a former Fox Sports executive who now works as an independent consultant. Broadcasters make about a third of their money from ads and the rest on fees they charge distributors.
Last year, the league changed some rules, like adding a pitch clock to make the game move along quicker and be more competitive with other programming.
This World Series may be the most lucrative in the modern era of media. Even in 2016, when the Cubs captured their first World Series win since 1908 and drew an average of 23 million viewers in the process, “the media environment was not as crowded as it is today,” said John Kosner, a former ESPN executive who is now an independent consultant.
The World Series has been in a ratings slump, with the last four years sinking to historic lows. Defining the best-case scenario for the World Series could factor into future media deals, which typically come with a five- to 10-year commitment and take into account the spread of potential outcomes.
Even for deals that don’t include the World Series, the potential excitement and star power of a hit championship matchup would be a boon for the M.L.B. The next big factor for its media deals is ESPN’s option to get out of its contract, which it could use by the end of next season.
How Halloween became a major shopping season
The Halloween business has boomed, with expectations for spending growing to $11.6 billion this year from about $5.2 billion in inflation-adjusted terms in 2005, according to a survey by the National Retail Federation. Retailers are taking note, broadening their holiday themed product lines and putting them on shelves earlier.
Bill Boltz, the head of merchandising at Lowes, called the Halloween season “bigger than ever before” on the company’s second-quarter earnings call.
Why is spooky spending on the rise?
Halloween isn’t just for kids anymore. The holiday was once focused mostly on taking children trick-or-treating. Now, more adults have gotten involved as sharing images of costumes and decorations on social media has taken off, Katherine Cullen, who leads research at the N.R.F., told DealBook.
Spending on decorations ticked up during the pandemic, as people sought a way to celebrate when precautions shut down many Halloween parties and trick-or-treating. Consumers have kept up the trend, and decoration spending remains elevated.
Customers are shopping earlier than ever. About half of consumers in the N.R.F. survey said they started shopping for Halloween before October, compared with about 30 percent in 2014. Amy Sullivan, the C.E.O. of Kirkland’s Home, said on a recent earnings call about Halloween products: “We definitely brought it in about a week early this year. I would say there’s opportunity to maybe even accelerate that further as we move into future years.”
Gifting holidays are still bigger. Halloween is now the ninth biggest spending season for retailers, trailing holidays including Easter and Mother’s Day. “Considering that Halloween doesn’t involve gift-giving,” Cullen said, “it is very impressive.”
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