How a former Lehman Brothers banker turned the tables and built a pandemic-proof business
- By 6122ee467d22433199917c7d
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- 11 Jul, 2022
Declan Ee always knew he wanted to run his own business.
But when he graduated from University College London in 2006, he saw his peers applying for jobs at investment banks and decided to give it a try.
His first gig? Lehman Brothers.
“I liked seeing how businesses worked on a global scale. So that was very interesting.”
But the 2008 collapse of Lehman Brothers not only roiled global markets, it was a shake-up for Ee too.
“I was in the subprime mortgage division. I dodged reporters while walking to Lehman in Canary Wharf. It made me double down on leaving banking at some point.”
Furniture for urban millennials
It all started when Ee came back to Singapore 11 years ago and was furnishing his marital home.
His good friend and co-founder Fred Ji was also looking for affordable modern furnishing.
“We shared a bond in that … [the process was] frustrating. We want to get the nice pieces but they are so inaccessible.”
That is due to things like the price point and managing multiple lead-times of furniture, he explained.
That’s when they had the idea of selling affordable, designer furniture to “urban millennials” between 25 to 45 years old.
“This age group, you go through a lot of change. You leave school, you start building your career, you get married, you have a kid … We add stuff to our homes,” the president of Castlery told CNBC Make It.
Ee wanted to provide options to young adults who want to have an “inspiring space” and “something more than Ikea,” — without breaking the bank.
In 2013, Ee and Ji went digital-first with Castlery, allowing consumers to view a virtual studio and purchase furniture online — a disruptor in the traditional furniture industry.
“When customers started to shop online for furniture, they realized that, ‘I don’t need to go to 25 furniture stores anymore.’ The next time they need to buy something, they will do it online again.”
Learning from ‘blow-ups’
Ee’s experience in investment banking, where he “saw many blow-ups,” has taught him a thing or two about running his own business.
When it came to financing Castlery, Ee was determined to not go down the “venture capital route” too early for his start-up.
“With the VC game, you want to mock up your valuation every 18 months. And when we started, I knew that we had to spend time learning the business,” he said.
Having no experience in the furniture retail business, Ee estimated he needed six to seven years to master the ropes, which is as long as the “fund life” of VCs.
“Straightaway, there’s a conflict … that’s why stress happens — you don’t have clarity of thought, because you have to scale at all cost.”
Instead, Castlery’s initial investments came from family members and other entrepreneurs who have exited their businesses.
“At the core, it’s about building a good foundation and a strong business that gives value to your target customers. That will always translate no matter what, whether you want to sell or list your company,” Ee said.
Pandemic-accelerated growth
When the pandemic hit in 2020, Castlery had just begun expansion into the U.S. market, apart from its presence in Singapore and Australia.
“I thought, wow, this is really not meant to be. I was really stressed because our most profitable country was Singapore and there was the circuit breaker too.” He was referring to partial lockdowns in 2020, designed to break the chain of infection.
But his stress turned to surprise as he saw a surge in e-commerce, with nationwide lockdowns pushing shoppers to rely on internet retailers for their consumer needs.
We were growing so fast, our faces were turning green.
And as millions of employees were shut out of their offices and required to work from home, the “meaning of home” also changed, Ee observed.
“It’s not just a place you come back to [after work]. You are doing your work, you’re pursuing your passions, you have your kids. How you furnish your home matters because you’re spending much more time there.”
With more people looking to upgrade their space, Castlery’s growth “accelerated,” said Ee.
“We were growing so fast, our faces were turning green.”
According to Castlery, the company grew “six times” during the pandemic, making over $100 million in the most recent financial year ending March 2022, and was profitable in 2020.
However, with or without the pandemic, Ee believes that Castlery’s biggest selling point is the design and functionality of its products.
“I speak to customers from the U.S. every month and they are like, ‘We love your washable range of sofas!’ I thought, ‘Okay, it’s a thing?’”
“I guess being Asians, we are quite practical,” he said.
Ee added: “They would explain that in the U.S., you won’t have this option at this price point.” According to him, his furniture is “20% to 30%” cheaper than similar pieces in the market.
Each collection is assigned a buyer, an engineer and a planner — this trio runs a well-oiled machine to ensure products go to market in a timely and cost-efficient manner.
That is achieved through a “rigorous process refined over the years,” said Ee.
“Each collection is assigned a buyer, an engineer and a planner — this trio runs a well-oiled machine to ensure products go to market in a timely and cost-efficient manner.”
He added: ”[The] buyer finds the best in class manufacturers to work with. Engineers redesign inefficient processes while a planner works to source materials at the best possible price point.”
Savannah Britt owes about $27,000 on loans she took out to attend college at Rutgers University, a debt she was hoping to see reduced by President Joe Biden’s student loan forgiveness efforts.
Her payments are currently on hold while courts untangle challenges to the loan forgiveness program. But as the weeks tick down on Biden’s time in office, she could soon face a monthly payment of up to $250.
“With this new administration , the dream is gone. It’s shot,” said Britt, 30, who runs her own communications agency. “I was hopeful before Tuesday. I was waiting out the process. Even my mom has a loan that she took out to support me. She owes about $18,000, and she was in the process of it being forgiven, but it’s at a standstill.”
President-elect Donald Trump
and his fellow Republicans have criticized Biden’s loan forgiveness efforts, and lawsuits by GOP-led states have held up plans for widespread debt cancellation. Trump has not said what he would do on loan forgiveness, leaving millions of borrowers facing uncertainty over their personal finances.
The economy
was an important issue in the election, helping to propel Trump to victory. But for borrowers, concerns about their finances extend beyond inflation to include their student debt, said Persis Yu, managing counsel for the Student Borrower Protection Center.
“That’s a big part of what is making life unaffordable for them is this burden of expenses that they can’t seem to get out from under,” Yu said.
Student loan cancellation was not a focus of the campaign for either Trump or Vice President Kamala Harris , who steered clear of the issue at her political events. The issue came up just once in the September presidential debate, when Trump hammered Harris and Biden for failing to deliver their promise of widespread forgiveness. Trump called it a “total catastrophe” that “taunted young people.”
Biden promised the student loan cancellation program during his run for the presidency. From its launch, Biden’s loan forgiveness faced relentless pushback from opponents who said it heaped advantage on elites and came at the expense of those who repaid their loans or did not attend college.
Biden’s first plan to cancel up to $20,000 for millions of people was blocked by the Supreme Court last year. A second, narrower plan has been halted by a federal judge after Republican-led states sued. A separate policy intended to lower loan payments for struggling borrowers has been paused by a judge, also after Republican-controlled states challenged it.
Overall, Biden’s efforts were relatively unpopular, even among those with student loans. Three in 10 U.S. adults said they approved of how Biden had handled student loan debt, according to a poll this spring from the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research . Four in 10 disapproved. The others were neutral or didn’t know enough to say.
Project 2025, the blueprint for a hard-right turn in American government that aligns with some Trump priorities , calls for getting the federal government out of the student loan business and doing away with repayment plans that pre-date the Biden administration.
Even without directly addressing student loans, Trump has made promises that would affect them. He has pledged to eliminate the U.S. Department of Education, which manages the $1.6 trillion federal student loan portfolio. It’s unclear which entity would take that responsibility if the department were eliminated, which would require approval from Congress.Yu noted the Biden administration managed to cancel student loans for about 5 million borrowers , even though the signature forgiveness effort has been blocked. The administration did it by leaning into loan cancellation programs already in effect. For example, an existing student loan forgiveness program for public service workers has granted relief to more than 1 million Americans, up from just 7,000 who were approved before it was updated by the Biden administration two years ago.
“A lot of the cancellation that we saw in the last couple of years was because the Biden administration was committed to making the programs that are actually enshrined in law work for people,” Yu said.
The challenge of repaying the $23,000 she has borrowed to study education policy at Columbia University weighs on 23-year-old Zaakirah Rahman, but she said she did not see an alternative to pursing an advanced degree.
“It feels like the threshold for things is getting higher and suddenly getting a bachelor’s degree isn’t enough,” she said. “It’s expensive. It’s super expensive. But it seems like you don’t really have a choice.”
Sabrina Calazans, 27, owes about $30,000 on federal student loans from her college days at Arcadia University in Pennsylvania. Her payments also have been on hold, but she could soon face a monthly payment of over $300.
“As a first-generation American, I live at home with my family, I contribute to our household finances, and that payment is a lot for me and so many others like me,” said Calazans, who is originally from Brazil.
In her role as managing director for Student Debt Crisis Center, Calazans said she has been telling people to stay up to date on developments by using the loan simulator on the Federal Student Aid website and reading updated information on forgiveness qualifications and repayment programs.
“There’s a lot of confusion about student loans,” Calazans said, and not just among young people. “We’re seeing a lot of parents take out more debt for their children to be able to go to school. We’re seeing older folks go back to school and having to take out loans as well.”
SOURCE: AP NEWS
U.S. stocks are rallying Tuesday as voters head to the polls on the last day of the presidential election and as more data piles up showing the economy remains solid.
The S&P 500 was up 1.2% in afternoon trading, rising closer to its record set last month . The Dow Jones Industrial Average was up 431 points, or 1%, as of 12:50 p.m. Eastern time, while the Nasdaq composite was 1.5% higher.
Treasury yields also rallied after a report showed growth for retailers, transportation companies and other businesses in the U.S. services industries accelerated last month. That was despite economists’ expectations for a slowdown, and the Institute for Supply Management said it was the strongest growth since July 2022.
The strong data offered more hope that the U.S. economy will remain solid
and avoid a long-feared recession
following the worst inflation in generations
.
Excitement about the artificial-intelligence boom also helped lift the stock market, as it has for much of the last year. Software company Palantir Technologies jumped 23% after delivering bigger profit and revenue than analysts expected for the latest quarter. It’s an industry known for thinking and talking big, and CEO Alexander Karp said, “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down.”
It helped offset a 6.3% drop for NXP Semiconductors. The Dutch company fell to one of the largest losses in the S&P 500 after warning that weakness it saw in the industrial and other markets during the latest quarter is spreading to Europe and the Americas.
The market’s main event, though, is the election, even if the result may not be known for days, weeks or months as officials count all the votes. Such uncertainty could upset markets, along with an upcoming meeting by the Federal Reserve on interest rates later this week. The widespread expectation is for it to cut its main interest rate for a second straight time, as it widens its focus to keeping the job market solid in addition to getting inflation under control.
Despite all the uncertainty heading into the final day of voting, many professional investors suggest keeping the focus on the long term and what corporate profits will do over the next few years and a decade. The broad U.S. stock market has historically tended to rise regardless of which party wins the White House, even if each party’s policies help and hurt different industries’ profits underneath the surface.
Since 1945, the S&P 500 has risen in 73% of the years where a Democrat was president and 70% of the years when a Republican was the nation’s chief executive, according to Sam Stovall, chief investment strategist at CFRA.
The U.S. stock market has tended to rise more in magnitude when Democrats have been president, in part because a loss under George W. Bush’s term hurt the Republican’s average. Bush took over as the dot-com bubble was deflating and exited office when the 2008 global financial crisis and Great Recession were devastating markets.
The S&P 500 ended up rising 69.6% from that Election Day in 2020 through Monday, following President Joe Biden’s win. It set its latest all-time high on Oct. 18, as the U.S. economy bounced back from the COVID-19 pandemic and managed to avoid a recession despite a jump in inflation.
In the prior four years, the S&P 500 rose 57.5% from Election Day 2016 through Election Day 2020, in part because of cuts to tax rates signed by Trump.
Investors have already made moves in anticipation of a win by either Trump or Vice President Kamala Harris. The value of the Mexican peso might fall if Trump’s tariffs on Mexico come to fruition, for example.
But Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, suggests not getting caught up in the pre-election moves, or even those immediately after the polls close, “which we believe will face inevitable tempering, if not outright reversals, either before or after Inauguration Day.”
In the bond market, the yield on the 10-year Treasury rose to 4.34% following Tuesday morning’s strong report on U.S services businesses from 4.29% late Monday.
In stock markets abroad, indexes were mixed in Europe and Asia. The moves were mostly modest outside of jumps of 2.3% in Shanghai and 2.1% in Hong Kong.
Some manufacturers and retailers are urging President Joe Biden to invoke a 1947 law as a way to suspend a strike by 45,000 dockworkers that has shut down 36 U.S. ports from Maine to Texas.
At issue is Section 206 of the Labor Management Relations Act of 1947, better known as the Taft-Hartley Act. The law authorizes a president to seek a court order for an 80-day cooling-off period for companies and unions to try to resolve their differences.
Biden has said, though, that he won’t intervene in the strike.
Taft-Hartley was meant to curb the power of unions
The law was introduced by two Republicans — Sen. Robert Taft of Ohio and Rep. Fred Hartley Jr. of New Jersey — in the aftermath of World War II. It followed a series of strikes in 1945 and 1946 by workers who demanded better pay and working conditions after the privations of wartime.
President Harry Truman opposed Taft-Hartley, but his veto was overridden by Congress.
In addition to authorizing a president to intervene in strikes, the law banned “closed shops,” which require employers to hire only union workers. The ban allowed workers to refuse to join a union.
Taft-Hartley also barred “secondary boycotts,’' thereby making it illegal for unions to pressure neutral companies to stop doing business with an employer that was targeted in a strike.
It also required union leaders to sign affidavits declaring that they did not support the Communist Party.
Presidents can target a strike that may “imperil the national health and safety”
The president can appoint a board of inquiry to review and write a report on the labor dispute — and then direct the attorney general to ask a federal court to suspend a strike by workers or a lockout by management.
If the court issues an injunction, an 80-day cooling-off period would begin. During this period, management and unions must ”make every effort to adjust and settle their differences.’'
Still, the law cannot actually force union members to accept a contract offer.
Presidents have invoked Taft-Hartley 37 times in labor disputes
According to the Congressional Research Service, about half the time that presidents have invoked Section 206 of Taft-Hartley, the parties worked out their differences. But nine times, according to the research service, the workers went ahead with a strike.
President George W. Bush invoked Taft-Hartley in 2002 after 29 West Coast ports locked out members of the International Longshore and Warehouse Union in a standoff. (The two sides ended up reaching a contract.)
Biden has said he won’t use Taft-Hartley to intervene
Despite lobbying by the National Association of Manufacturers and the National Retail Federation, the president has maintained that he has no plans to try to suspend the dockworkers’ strike against ports on the East and Gulf coasts.
On Wednesday, before leaving Joint Base Andrews for an air tour of North Carolina to see the devastation from Hurricane Helene, Biden said the port strike was hampering efforts to provide emergency items for the relief effort.
“This natural disaster is incredibly consequential,” the president said. “The last thing we need on top of that is a man-made disaster — what’s going on at the ports.”
Biden noted that the companies that control East and Gulf coast ports have made huge profits since the pandemic.
“It’s time for them to sit at the table and get this strike done,” he said.
Though many ports are publicly owned, private companies often run operations that load and unload cargo.
William Brucher, a labor relations expert at Rutgers University, notes that Taft-Hartley injunctions are “widely despised, if not universally despised, by labor unions in the United States.”
And Vice President Kamala Harris is relying on support from organized labor in her presidential campaign against Donald Trump.
If the longshoremen’s strike drags on long enough and causes shortages that antagonize American consumers, pressure could grow on Biden to change course and intervene. But experts like Brucher suggest that most voters have already made up their minds and that the election outcome is “really more about turnout” now.
Which means, Brucher said, that “Democrats really can’t afford to alienate organized labor.”
