Retail giant spent $3.3 billion for Jet.com, then had to cope
with its happy hour
By Sarah Nassauer and Brian Baskin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the US print
edition of The Wall Street Journal (June 26, 2017).
Hoboken, N.J. -- Soon after Wal-Mart Stores Inc. bought Jet.com
Inc., employees at the e-commerce startup learned how dry life
under the retail behemoth could be.
That's because Wal-Mart took away all the office booze.
Last September, a few weeks after the $3.3 billion acquisition,
staffers gathered in Jet's purple-themed headquarters, with
sweeping views of Manhattan, to hear the rumors confirmed: Wal-Mart
doesn't allow office drinking.
The startup's regular Thursday evening happy hour would have to
be moved out of the office to the Wicked Wolf Tavern and other
local bars. Casual deskside drinking had to go.
"People were not thrilled," says Liza Landsman, a Jet executive
who in 2015 helped launch the website, which sells everything from
detergent to designer purses, and is now president.
Jet employees were accustomed to the perks and quirks of a
startup that raised more than $500 million from investors. They had
the requisite pool table, cold-brew coffee on tap and conference
rooms named after comic-book locations.
While those things stayed, an array of liquor in an office
kitchen cupboard marked "Bar" didn't. Some Jet employees squirreled
away a few bottles before an outside company packed up the
contraband, says one former employee.
"I would not say it's a party culture, but not the opposite of
that," says another former Jet employee.
In fact, Wal-Mart had made a major concession to Jet's thousands
of employees by allowing Jet to pay for an off-site happy hour.
There are no champagne toasts at Wal-Mart headquarters in
Bentonville, Ark., thanks to a cocktail of conservative culture and
a strict low-cost ethos.
Benton County, where the company has been based since Sam Walton
opened his first store in 1950, prohibited the sale of alcohol
until 2012. Wal-Mart generally doesn't allow employees to expense
alcohol during work outings, let alone drink in the office.
"People don't really talk about drinking at work because you
don't want to have that reputation," says Bo Yarbrough, a former
recruiting manager at Wal-Mart. Increasingly, employees gather at
the growing number of local bars for weekday happy hour after work,
"but you wouldn't want to put that kind of thing on a work
calendar," says Mr. Yarbrough, who left the retailer last
summer.
Jet is based in Hoboken, a city where some locals brag about the
high number of bars per capita. Jet founder Marc Lore, a New York
native, is a wine aficionado and owner of a small vineyard in
California's Napa Valley. Lore Vineyard's 2013 Cabernet Sauvignon
earned a coveted 97 points from the Robert Parker Wine Advocate for
its "fabulous intensity and loads of blackberry," though recent
vintages aren't sold to the public.
Wal-Mart's absorption of Jet is part of its intensifying battle
with Amazon.com Inc. After buying the company, Wal-Mart put Mr.
Lore in charge of its U.S. e-commerce business and swallowed
several other online startups, including San Francisco's ModCloth,
which sells women's apparel, and Michigan's Moosejaw, an outdoors
specialist. This month, it paid $310 million for New York
City-based Bonobos Inc., another apparel seller.
Mr. Lore and Wal-Mart CEO Doug McMillon discussed the potential
culture clash in meetings before the Jet acquisition, including
what to do with the startup's office drinking, says Ms. Landsman,
Jet's president. The executives invented the off-site happy hour
compromise to preserve "key touchstones in the culture" that made
Jet's entrepreneurial talent valuable to Wal-Mart in the first
place, she says.
Several months ago, Mr. McMillon asked Jet executives whether
the retail giant was "hugging" Jet too tightly or not enough, she
said. Jet executives said things were largely going well but many
employees had stopped coming to happy hour after it was moved
outside the office.
"One of the huge advantages of the office was the ability to
float in and out," mingling, then going back to work at your desk,
says Jack Hanlon, a Jet vice president.
Wal-Mart reversed course. In recent weeks Jet brought back
Thursday night happy hour in the office -- generally beer, wine and
food. "It's a pretty big signal from Wal-Mart that they were able
to be flexible," says Mr. Hanlon.
The change is permeating the empire. Wal-Mart had wine and beer
at a tailgate for its e-commerce team in San Bruno, Calif., when it
hosted its annual day at a San Francisco Giants game in May. It is
also allowing other startups it has acquired to host a weekly
office happy hour -- pending approval from a Wal-Mart executive
vice president.
The employees at Madison Heights, Mich.-based Moosejaw, which
Wal-Mart bought in February, never lost access to the "4 p.m. beer
fridge" and keg, unlocked for one hour on Thursdays. "It helped
that our beer fridge had always been run responsibly," with a
two-beer maximum, Moosejaw CEO Eoin Comerford said.
Mr. Lore spoke to Bonobos staff in New York the day of the
acquisition and cited Wal-Mart's newfound flexibility on office
drinking as an example of how hard it will work to protect culture,
said a Wal-Mart spokesman.
There are other aspects of Wal-Mart's traditional habits that
still raise eyebrows among Jet staffers. For example, Wal-Mart
asked Jet employees to be mindful of swearing in the office.
"That did not last," said Jeannie Slivensky, a marketing manager
at Jet. "This is New York."
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Brian
Baskin at brian.baskin@wsj.com
(END) Dow Jones Newswires
June 26, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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