One year ago, to the day, Lehman Brothers Holdings Inc. fell with a crash that reverberated across the world, putting at stake the careers of thousands of employees. Twelve months on, we track how life has changed for some of those employees.
Optimistic: After losing his job at Lehman, Shobhit Gupta teamed up with a friend to launch Twish--an education venture.
Here are their stories:
Shobhit Gupta, 26, joined Lehman Brothers’ London office on graduating from the Indian Institute of Management (IIM), Bangalore, in 2007. He started hearing rumours about the company being in trouble as soon as he started work. They didn’t worry him—he was happy with his job, he had his own trading book in his first year itself, his desk was profitable and he was certain that even if something drastic happened, someone would rescue Lehman. Also, he was due to get a big bonus—partly paid in cash and partly in stocks of Lehman in December 2008. So, he clung on to his job.
By September, things had deteriorated significantly. Work came to a halt and the stock price of the company was in single digits. “Through September, all that people did was track the stock price of the company throughout the day,” he says. A significant part of the remuneration package of investment banking staff was in stock options and employees had large sums of money riding on Lehman equity.
On 13 September, there was concern about the future of Lehman, but the overwhelming buzz was that negotiations were on with the Fed in the US and something would work out. Gupta left office early that Friday evening and his boss told him to relax since something was certain to be worked out by Monday. He spent the weekend glued to the news on TV. On Sunday evening, news broke that there would be no rescue for Lehman Brothers and that the company was filing for Chapter 11 in the US. Gupta was shocked. “There was panic all around. Some people went to office at midnight on Sunday to take their stuff,” he says.
Monday morning was a blur for Gupta. The trading systems were locked, the management called a meeting, but it was clear that no one really had any idea of what was going to happen. “My boss came to me and said it’s time to start calling the headhunters,” he says. The email system was still working and people started transferring files. The volume was so high that the mail server crashed. Gupta got on the phone with headhunters and placement consultants.
Over the next few weeks, senior executives started meeting other banks and negotiating employment deals. “On my own, with just one year of experience, I knew I stood no chance. So, I held on to my boss and he met a lot of people to try and get us jobs,” he says. By the last week of September, nothing had materialized. Every day they swung from hope to panic to hope again.
PricewaterhouseCoopers, managing the bankruptcy, announced that by September-end employees would be fired and they were asked to remove personal belongings.
The last day of September they spent collecting Lehman memorabilia from the office. People were crying and hugging each other and everyone was taking pictures. At 4.55pm, emails popped into their inboxes—they were fired. Gupta spent the next few days at home, discussing prospects with headhunters, talking to his boss, exchanging the latest takeover rumour with colleagues. “I was hopeful. The Nomura deal was looking very strong. But in the first weekend of October, they announced that my department would not be bought. I was spinning, my boss said he didn’t know what to do. He asked whether I would be willing to work for a broker, which was non-intellectual work. But I was ready to do even that. As things turned out, even they were on a hiring freeze,” he says.
By the end of October, Gupta had lost all hope. London was frozen. Everyone was firing, no one was hiring and the London market had thousands of resumes floating around for zero jobs. Gupta spoke to a few investment banks in Mumbai who asked him to come and meet them. He travelled to the city in early November to do that but by then the crisis had reached Indian shores, and banks froze recruitment.
Gupta spent November and December sunk deep in frustration. “I lay awake at night wondering if I would ever get a job,” he says. He had a mortgage to pay and a steady stream of income was important. He had only two options—to keep trying for a job or start something on his own.
He surfed the Internet and came across a Boston-based start-up that was looking to set up an equity research team in India. “I signed up because I needed the money.”
In February, he met a friend who had quit his job at McKinsey in Brussels and was launching a start-up in India. Gupta joined him and together they launched Twish—an education venture that helps bridge the gap between concepts taught in colleges and their application in industry.
Gupta’s income has shrunk by about 70%. “I am a forced entrepreneur, but I am enjoying it,” he says. For the last three months, with the early successes of Twish, Gupta has been in an optimistic frame of mind.
Would he go back if he was offered a fat pay packet and his old life? Gupta pauses to think. “Maybe not,” he says, “I’ll take stock in another year and then decide.”
Ajith Nair (name changed) lived the Indian version of the Lehman dream. After a couple of years of with domestic insurance companies, he joined Lehman Brothers in 2005 as an analyst in the mortgage capital division. Things were great for two years. He enjoyed his work, the company was a fabulous employer and Nair had no reason to complain about his professional life.
Tough going: An employee carries a box as she walks away from the Lehman Brothers office in London on 15 September 2008. Andrew Winning / Reuters
The Indian operation of Lehman was so far away from its Wall Street core that few of the minor tremors rocking the company were felt here; Nair was blissfully unaware of any trouble within the company. All the processes were working fine.
On 15 September, Lehman filed for bankruptcy and without warning, Nair’s world collapsed around him. “Everyone was shocked. Suddenly, there was no work in any of the processes. Only our team, operations, had any work. There was so much tension and insecurity, it was really bad,” he says.
The management addressed the teams, but even they seemed unaware of what was going to happen. That, Nair says, was the scary part—that the people who you assumed would know what was happening were admitting that they were as clueless as you were.”
By September-end, sharp anxiety had turned into dull apprehension. Employees came in, killed time and then went home. Nair waited with his colleagues to hear snatches of conversations about some potential deals being struck in London or New York. Around the same time, his father developed medical complications and was frequently hospitalized. “It was such a terrible period,” he says, “I was running between office and hospital. It was also a huge strain financially.”
Still, Nair gives credit to Lehman for clearing his father’s medical bills even in September, the month it filed for bankruptcy.
By November, there was some clarity about the future—the Nomura acquisition was announced and employees were issued letters saying they had been transferred.
“November and December were reasonably good months. The uncertainty was sort of over. However, there was always a concern that Nomura, being a much smaller organization than Lehman, would eventually have to lay off some employees,” Nair says.
In December, the company had said no one would be fired, but by the end of January it started firing people quietly. “When that started, everyone was shocked. The atmosphere in the office was awful,” he says.
In September, they had all been united as crisis struck. But in January, it was every man for himself. Rumours vitiated the environment, suspicion and fear reigned. “From February to April, the entire mood of the company changed—people did not speak, everyone looked serious and everyday we went to office not knowing what was going to happen,” he says.
Nair felt the heat particularly badly. His father’s health was continuing to take an emotional and financial toll. The buzz was that the company was laying off experienced people like him. He thought of applying for other jobs a couple of times, but did not follow through because of his father’s condition and his optimism that if he stayed on, his growth prospects with Nomura would be good.
In June, he was called in for a meeting on the sixth floor from his eight floor desk. He walked in and waiting for him were two managers and one executive from human resources. “They said they were laying me off and quoted the few off days I had taken to tend to my father as an excuse. I tried to reason with them but soon realized that the decision was not going to change,” he recalls.
They took away his access card and told him his personal effects would be couriered home. “They did not even let me go up to say bye to my colleagues of four years,” Nair says bitterly.
After four days of anger and disappointment, he started looking for jobs. But no one was hiring. In the three months since his layoff, Nair has soldiered his way unsuccessfully through several interviews. He’s over-qualified and over-experienced for call centre jobs.
When it comes to sales jobs, he’s told that as a finance specialist he was only considering sales as a desperate option and would quit as soon as the market improved.
“I am 30 years old. I have eight years of work experience. I thought by March 2009, I would get married. But here I am, unemployed and with no hopes of getting a job soon. My money will last another month and after that I have no idea what I’ll do,” he says bleakly.
“I never thought things would come to this,” he says. “But despite everything I would still say Lehman was the best experience of my life.”
This sentiment is echoed from London to Mumbai. The people who are laid off feel disappointment and worse, but the real sadness is the loss of Lehman, which for many has been their best experience.
Nitin Gupta was the kind of person you read about in newspaper stories about IIM campus recruitments. He did his summer placement with Lehman Brothers in London, came back with a pre-placement offer and could not wait to go back and start his new life. He joined the asset-backed securities desk, the most glamorous, best-paid place in Lehman in 2006, the desk where mortgage securities were traded and the clear leader in sub-prime-related securities. It was a fantastic first-year for him and he made a great bonus.
The brighter side: Nitin Gupta started discount coupon portal Khojguru.com. Ramesh Pathania / Mint
By April 2007, things were beginning to get a bit rocky. But Gupta and his team knew that there would be a panic every couple of years and then things would settle. In May 2008, he moved to India, as an employee of Lehman UK, in order to set up the interest rate desk here. The news from London was cyclical—some weeks there was good news, on others, things looked bleak. Despite the mutterings in the market, it was business as usual in Lehman. Even as late as August 2008, Gupta’s desk was hiring senior people.
Gupta was paid in cash and stock. On top of this, he consistently invested in Lehman stock. When the share started falling, Gupta bought more. In the second week of September, the price had crashed to single digits. He bought more stock everyday. On Friday, 12 September, it was down to $2 (Rs97.4).
Gupta knew there was a risk that the Fed would force a sale and his investments would take time to recover. That was a risk he was willing to take and so he put everything he had in the stock. On Monday morning, he woke up to a phone call from a friend in Singapore. Lehman had filed for bankruptcy, the caller informed. Gupta saw his entire investment of hundreds of thousands of dollars vanish.
His response was not the one of a young man who has seen his earnings go up in smoke. First he decided what to wear to work—formals or casual? He chose formals and went in to clear his desk. While those with families and mortgages walked around with stunned, vacant expressions, Gupta and his friends decided to go out for a long lunch.
He came back and weighed his options. He had been toying with the idea of launching his own venture for some time and was investing to raise funds for it. Since his desk was profitable, he was in for a guaranteed bonus for that year, up until 15 September. “It was a lot of money to lose. I felt terrible for at least a week,” he says. Just a week? “Well, I was 25 and I knew I’d make enough money in the future,” he says.
After that one week, he got down to the business of starting his venture. In October, he pulled together a few friends and ran a pilot for a local search portal.
In December, they incorporated the company and Khojguru.com was born. “It’s a discount coupon portal. You can sign up and get discounts in various establishments—restaurants, lifestyle clinics and retail outlets. The site is doing very well and now we are getting calls from people in other cities such as Bangalore and Hyderabad asking when we would be launching there,” he says.
All of this would have been easier if he hadn’t lost all his money. Yet, Gupta chooses to look on the bright side. His sudden unemployment had been the perfect spur. “In hindsight, perhaps, it all happened for a reason,” he says.