FiscalNote, a Washington, D.C.-based tech firm, laid off 30 staffers today at CQ Roll Call, a news organization that has long been a staple of reporting in the nation’s capital.
Three staffers with knowledge of the layoffs told Adweek the layoffs came mostly from the editorial department. The sources spoke on the condition of anonymity for fear of professional retribution.
FiscalNote acquired CQ Roll Call from The Economist Group for $180 million in 2018. At the time of its acquisition, CQ Roll Call was profitable but had also seen a string of high-profile firings under The Economist Group’s ownership.
As Washington Business Journal recently reported, the company has struggled financially since early last year. FiscalNote CEO Tim Hwang told WBJ at the time that “the company is on track to bring in $100 million in 2020 revenue and turn a profit,” but would not respond to the publication’s repeated questions about whether the company was planning layoffs.
“It is FiscalNote policy to not comment on individual employments,” FiscalNote spokesperson Lindsay Hand told Adweek on Friday.
At the time of publication, Roll Call’s website listed 141 staffers, 55 of whom work in the news division while others are spread out in units dedicated to investigative reporting, legislative analysis, multimedia and data, regulatory and legal products, news production, advertising and CQ’s print magazine. Later on Thursday, the online masthead was updated with the names of 16 editorial staffers removed. The three-person investigative staff was eliminated as well as the print magazine staff (with an exception being that one staffer was moved to a different division).
Staffers said that layoffs targeted the multimedia, data and investigative teams along with the print magazine. “I think the investigative team is completely gone [and the magazine] team has only one person left,” one source said.
Several of the fired employees announced the news on Twitter. “I was cut today from @cq @rollcall @FiscalNote along with more than a dozen others today,” said Randy Leonard, a data and graphics editor. “Terrible times. Hire me.” Podcast producer Micaela J. Rodríguez, investigative reporter Joshua Eaton, data reporter Sara Wise, multimedia reporter Nathan Ouellette and magazine deputy editor Jonathan Miller also tweeted that they were laid off.
While the COVID-19 pandemic has decimated the economy in recent weeks and media companies have announced layoffs and across-the-board pay cuts, it seems FiscalNote’s woes preceded the coronavirus-related downturn. Sources said that publisher Joshua Resnik told staffers in a meeting in early March that he could not promise there would not be “head count reductions.”
Due to the COVID-19 outbreak, staffers at CQ Roll Call are working remotely and managers broke the news to fired employees over videoconference, sources said. Employees were locked out of the company Slack right after they were fired. Sources noted that fired employees are awaiting severance information, but strongly suspected that it would be attached to a confidentiality agreement.
On Twitter, there was an outpouring of condolences. Earlier this week, Gary Harki, an investigative reporter for the Virginian-Pilot, summed up the media environment bluntly in a tweet: “Journalism is now sitting in your house working feverishly on the bleakest of stories while waiting to see if you’re laid off or furloughed.”
Editor’s Note: This story has been updated with information about masthead changes, a statement from FiscalNote and to include details from the email Hwang sent staff at the company Thursday afternoon. The full text of the email appears below.
As many of you know, we have been carefully reviewing and reconciling all expenses at FiscalNote over the last several months while more recently monitoring the impact of the COVID-19 pandemic on employees and clients. Earlier today, we finalized the worst part of this process by eliminating 30 roles in the company — roughly 6.3% of our global workforce of 475 — to ensure we have the right roles and skills to meet the changing demands of our clients. We are making these changes today to ensure a more durable organization by defending against stronger macroeconomic winds that may prevail in light of the coronavirus and by pulling back in non-core and duplicate areas that don’t support the changing needs of our clients.
The first part of this email provides transparency as to how we came to this decision, and the second part will update you to the state of the business in this unprecedented environment and how it impacts you.
Eliminating roles is a particularly difficult decision to make in normal times, but this one became increasingly painful as the COVID-19 pandemic hurtled toward our communities. Our leadership team closely evaluated all vendor and ancillary costs, while also rethinking and retooling hiring plans. We grew headcount by more than 30% in the past year — more in some areas than is now sustainable under the new economic conditions. Not only did we cancel a number of openings and eliminate certain backfills, but we also hired internally to fill any gaps when and where it made sense.
Our goal was to minimize the scope of employee impact as much as feasibly possible and use elminations as a last resort. We did this not only as stewards of a business and its workforce, but also as people who worry deeply about the impact of this crisis across the world. Unfortunately, it wasn’t enough. And each day we delayed taking this painful action was another day in which we failed to best position FiscalNote to ensure our own durability through this evolving health and macroeconomic crisis.
Before I go into more detail, I want to make two things very clear:
As of today, there are no further role eliminations planned. While we hope this will continue to be the case, we are actively monitoring the macroeconomic environment for potential client impact and will be straightforward about how this crisis affects our business.
We are taking extensive measures to assist employees directly impacted, including offering severance packages and fully funded healthcare coverage. As co-founders, Gerald Yao and I are taking a 50% salary cut to personally assist in supporting up to six months of fully funded healthcare coverage for those whose roles were eliminated during these extraordinary circumstances. Our People Team will also provide guidance toward public assistance and will continue to be a resource to these individuals well beyond today. Although it never feels like enough can be done to soften the blow of these transitions, we are doing our best to treat those affected with deserved dignity and respect.
The individuals impacted today have relentlessly dedicated their professional selves to better connecting our clients and readers to their governments, and should be applauded for their contributions. They’ve crafted brilliant content, developed game-changing code, mentored employees past and present — I cannot thank them enough for the impact they’ve had.
However, I’m also reminded of my responsibility as a leader of FiscalNote — in particular, my stewardship of all our employees and 4,000+ paying clients, all of whom we care about deeply. By continuing to invest and grow in areas that align with our clients’ evolving needs, and reorienting staffing away from areas that do not, we best position FiscalNote to help during this crisis and thrive in the future. In contemplating these decisions, I kept finding myself thinking back to my obligation to the hundreds of employees and thousands of clients in the FiscalNote family. Through that lens is how we make tough decisions like these.
The Macroeconomic Crisis
During our March 4th All Hands, I laid out our 2020 corporate goals for sustainable growth. In the four weeks since, the global economy has been rocked by the COVID-19 pandemic, generating massive uncertainty in households, businesses, and the broader capital markets. While we are most concerned about the human toll and the tremendous impact on our families and friends, we also need to critically assess how this affects our company.
Fundamentally, in order to build a durable, client-centric organization and batten down the hatches in these choppy economic waters, we made the decision to be more cautious with our expense planning to account for more aggressive downside scenarios and (b) reorient staffing to be more streamlined, while aligning more closely with the changing needs of our clients.
Several days after we moved the company all remote, I pulled together our global management team and explained some initial observations we were seeing in the company. Although we aren’t immune to this macroeconomic turmoil, we are seeing positive signs, including early evidence of increased sales interest in FiscalNote products as clients seek guidance in addressing COVID-related and other issues. For many companies and organizations, staying on top of updates coming out of Congress, the White House, the EU, and the regulatory agencies are of existential importance, making our content and products even more mission critical and a must-have. Additionally, old-line industries are shifting to cloud-based, agile applications and more heavily leveraging technology to cut costs. Because governments at the state, local, federal and multi-national level are shifting so rapidly, we are seeing product usage increase as well on a year-over-year basis.
For instance in advocacy, we have seen historically unprecedented and record numbers of campaigns and product usage as clients attempt to amplify their voices to policymakers. In Marketing, we are seeing 200-300% of forecasts in levels of interest at the top of our funnels. It’s clear that our solutions are mission critical for organizations to effectively navigate this crisis, and as such, we’ve redirected many of our teams to ensure clients receive the critical information they need right now.
The fruits of your labor are clear — we have received an outpouring of thanks from clients overwhelmed by the chaos inflicted by COVID-19.
Additionally, our recurring revenue business model positions us favorably relative to many organizations our size. The below statistics make me cautiously optimistic about FiscalNote’s durability through this crisis:
Public sector/government clients comprise more than a quarter of our revenue (with 100%+ historical net retention figures even through economic downturns) and stable revenue streams
47%+ of our customers are in multi-year contracts
Net retention rates climbed to 98% in fourth quarter 2019, the highest in history
12%+ increases in our average contract values (ACVs) for Q42019
This positive news is compounded by our relatively strong cash position and balance sheet, which will both serve as a last defense and buffer if we encounter the strong winds of a more steeply declining economy. While the company is today in a financially strong position, we need to be proactive in defending against potential downside risks in the future.
The Downside and Unknowns
With the positive indicators, there are counterbalancing ones as well. We ourselves have been rapidly responding to the changing health data that forced us to close our offices in Asia, Europe, and the United States, restrict travel, and deploy seemingly daily updates from our crisis response taskforce.
I have been speaking with a number of clients who are adjusting to a new remote-work reality and a myriad of evolving personal and professional challenges. Clients in certain segments appear to be preparing for significant business impact that may result in bankruptcy, minimized vendor expenditures, and/or reduced work forces should the economy continue to slide. The last two weeks have seen some of the worst capital markets in American history and volatility at levels unseen since 1929 and 2008. Financial distress and lack of access to capital will significantly affect a portion of our clients, large and small, who are unable to maintain their cash positions or stem the tide of significant job losses. I don’t have much to add to the narrative here, but I only say this to highlight the seriousness of the economic situation from an organizational perspective and that we are living through historic times.
We will inevitably see some revenue exposure as some clients prepare for these downsides. Places we anticipate our own exposure include:
Oil & gas and hospitality & travel sectors (<4% of revenue);
Businesses associated with advertising, events, or media (<5% of revenue);
Our own media/content-oriented revenue will come in lower than original estimates;
Non-profit/trade association sector constitutes a large portion of our advocacy business.
Though for now we have not seen a significant immediate impact on our business, we continue to monitor our exposure areas. We fundamentally believe, though, that leveraging our products and services will enable organizations to stave off existential threats by more quickly and effectively reacting to bailouts, economic assistance, etc. offered right now across the globe.
In short: despite the increasing needs for our products, question marks remain around a number of sectors and client segments. We may see increased growth in the top line and higher ACVs in certain sectors, but increased churn in other sectors as opposing trends. While we are fortunate to be sheltered from the sudden and dramatic shifts in revenue faced by our B2C peers (many of whom are facing dramatically reduced business seemingly overnight) and while we do expect the remote work era and need for government information to be benefits for FiscalNote in the long term, how our short-term business trajectory is shaped by this crisis is hard to predict. Theoretical questions may become reality — what happens if this public health and economic crisis continues or even worsens in 6 months, 12 months, 18 months? What if 10% of our clients go out of business? 20%? 40%?
Truthfully, we are trying our best to not only make sense of what is going on, but also take appropriate action to shore up long-term company durability. Despite some of the positive trends in revenue and a strong cash position, the financially prudent thing to do is factor in downside scenarios much more aggressively and pull back in relevant non-core areas. We cannot afford losses that eat into these defenses without putting the broader organization at higher risk. Ensuring we are not forced to make dramatic changes in the mid-term is of utmost importance. As such, I have directed our finance teams to be much more stringent about resource allocation and budgeting as we prioritize maintaining our options as a company.
What this means for all of you
First off — I want to reiterate that we do not anticipate making further eliminations of roles at this time. We do not see any evidence or data to do so in our business. We are also not making any changes at this time to core benefits such as flexible time off/sick leave, 18-week paid parental leave, and healthcare coverage.
Second — because I don’t want to bury this piece of information — we, like many companies, have decided to limit and defer compensation increases this year in case we find ourselves guarding against deeper macroeconomic downturns on the horizon, thus allowing us to hopefully prevent more drastic changes or reductions in the future. This — in concert with tighter resource allocation and budgeting — will be crucial to protecting our greater employee base if downside scenarios present themselves.
The needs of our clients will change and we will need to adapt to meet those demands. As a result of the decisions today, we have pulled back in non-core editorial coverage areas such as our print magazine, investigations group, and certain multimedia roles, as well as a number of other areas across the company that will simplify our operating ability and allow us to be nimble to client needs. In this increasingly remote world, we are focusing more intensely in core areas of product and content, as well as strengthening our client-facing roles to develop deeper and more meaningful relationships. It’s important to note that while we have eliminated specific roles, we are still hiring in a number of strategic areas on many of our teams.
Ultimately, the best way to combat this potential downturn is to maintain focus on developing, creating, and selling our content, products, and services in a manner that irrefutably demonstrates our mission-critical value to the market. If you are feeling anxious or unsure about where to direct your energies during this crisis, the work we are doing is a great place to start. My own time and attention has been on how best we can position FiscalNote to help. Our teams have continued to do tremendous work — I’m particularly proud of the speed with which we collaborated and pulled together our Coronavirus Resource Center the past few weeks. We’ve already seen over 10,000 unique pageviews, 16,000+ podcast downloads, 2,500+ webinar registrants, and 2-3x open/click rates on newsletters and Resource Center email marketing. It’s a tremendous example of the quality of our team and the value we bring to our clients.
At this moment, we’re seeing our products used in incredibly meaningful ways:
Pharmaceutical companies and research institutions are using FiscalNote to accelerate the development and distribution of critical medical devices, as well as potential medications and vaccines against COVID-19
Many front-line medical organizations are organizing their access to federal resources on our CQ and FiscalNote platforms
Pharmacies are relying on FiscalNote and CQ for guidance on where and how they are allowed to operate
A number of nonprofits are leveraging VoterVoice, Knowlegis, and FiscalNote to provide a critical voice to their members to advocate for the unprecedented challenges they face
News organizations rely on our data and CQ Roll Call content to report on policymakers on the Hill, at the White House, and around the world, and the critical decisions that impact all of us
Government agencies are using FiscalNote to coordinate response and resources, including several public health agencies, which are actively using our products to monitor changing health legislation
Our clients are relying on us more than ever before, and the strength of our response will reverberate well beyond this crisis.
As a CEO, I am duty bound to transparently convey my thoughts on the company’s standing. I can honestly say that I’m incredibly proud of all we do at FiscalNote. We create a product that continues to be more useful in this time of uncertainty. We have leaders across the company (not just in our executive ranks, but all of you) who continue to step up and operate energetically and capably at a time of unprecedented need. We are fortunate to have a strong balance sheet and cash position to weather the storm. We continue to make improvements to our product and our data quality every day. We are blessed to operate with a shared sense of purpose in impacting thousands of critical organizations. We are in a position to emerge from this stronger than ever before.
Thank you for the trust and understanding you have given all of us as leaders at FiscalNote. These won’t be easy times — so please, most importantly, take care of yourselves and your families, and don’t hesitate to lean on each other when you need it. Your health and security is our number one priority. If you need flexibility or personal time, take it. Be responsible to your teams, but remember, this is a marathon not a sprint. We’ve got good people, and that gives me mountains of confidence for the road ahead. If you need anything from us, don’t hold back.
We will send an invitation for a special Global All Hands tomorrow (4/3) to talk more in depth about the decisions made and our posture in this ever-changing environment. Feel free to submit any questions ahead of time or simply ask during the meeting.
Never hesitate to reach out with questions. I’m always happy to set up a time to chat.