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First Mover Americas: It’s Ugly in Crypto With $200M of Margin Calls, Founders Selling Homes and Comparisons to 2008

The latest price moves in bitcoin ($BTC) and crypto markets in context, for July 1, 2022......»»

Category: forexSource: coindeskJul 1st, 2022

The Next Chapter For Rowan Street

Rowan Street Capital commentary for the month of July 2022. Dear Partners, This year we celebrated 7 years since the founding of Rowan Street Capital. In our 2020 year-end letter we shared our story with you and the evolution of our investment approach. Investing is a journey filled with many ups and downs and countless […] Rowan Street Capital commentary for the month of July 2022. Dear Partners, This year we celebrated 7 years since the founding of Rowan Street Capital. In our 2020 year-end letter we shared our story with you and the evolution of our investment approach. Investing is a journey filled with many ups and downs and countless lessons. As they say, investing cannot be taught, it has to be experienced. On Wall Street and in today’s world of information overload, you are constantly bombarded with new ideas that constantly appear “sexier” than what you already know well or the stock is going up much faster than the stocks in your portfolio. If you really think about it, you only need a few best ideas, few extraordinary businesses in your life. The key is to stick with them as long as they remain extraordinary. This is truly the path to extraordinary wealth! And no one knows this better than Charlie — below is one of my favorite videos of him where he explains this simple concept: if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more The difficult part here, of course, is saying NO to almost all other ideas because they distract from your best ideas and detract from your process of compounding. Here too, though, there is quite a balancing act. You want to be able to say NO in order to keep your focus on your best ideas, but at the same time you want to be open-minded to learning about new businesses and developments and expanding that circle of competence over time. Unfortunately, this simple realization came to me after many years of investing. About five years ago, we decided to refocus our efforts into just owning a few extraordinary businesses that are run by talented, passionate and honest managers, who are also business owners. Just like rare diamonds or truly special and unique pieces of art, extraordinary businesses and management teams are very rare, and once you find them and understand their magic, you tend to hold on to them. Selling one just because it doubled in price over the course of a year or two does not make much sense; neither does it make sense to sell just because the stock price is dropping. First, you have to pay the capital gains tax. Second, the likelihood of finding another gem that is as good as the one you already own, and finding one that is selling for a reasonable price (true gems are never without a huge fan base) is relatively low. Third, we found that it takes quite a bit of time to truly get to know the management and understand “the magic” of the company. Getting to know companies is very similar to getting to know people. They may give you a great first impression, but it takes a while before you get to know the true person deep down inside. It is very rare to like something just as much or even more after you have owned it for 3 years. That’s why we always say that conviction is a lot like love and trust, it can only be built over time. Which pond do we fish in for extraordinary businesses? We found that they can be absolutely anywhere, in any industry, geographical location and come in any size. What we discovered in our 20+ years of investing, is that extraordinary businesses are always built by extraordinary people. These people are super rare! They possess special qualities, personality traits and a winner‘s mentality. They are passionate entrepreneurs that are absolutely obsessive in their belief and their devotion to their vision for the company that they are building, and they are constantly building and evolving, they never rest on their laurels. Let me give you a few examples. A couple of years ago, I read a book called “The Airbnb Story”. Here are a two quotes from this great book that help illustrate what I’m talking about: Brian Chesky’s (Founder/CEO) fanatical belief in and devotion to what he sees as Airbnb’s higher purpose seem to be the things that drive him more than anything else. He believes in home sharing “down to his toes” and he talks about the company’s mission, “belonging anywhere,” relentlessly, not as a CEO talking up the tagline that sells the product his company makes, but as the reason he was truly put on this earth! Really, honestly. I have seen so many different founders—literally, thousands. And I can tell the opportunists from the believers. It’s way beyond money or even fame for him. For that reason, Chesky may not be cut out for just any CEO role. He’s the kind of leader who leads people to do things that he himself believes in. You could not hire him as the CEO of some random company. Warren Buffett sensed this, too. “He feels it all the way through. I think he would be doing what he’s doing if he didn’t get paid a dime for it.” This kind of mentality and passion drives a unique and special energy, which is contagious. It turns employees into believers and attracts the right people, talents and resources into the company. It instills the certain kind of a “winners DNA” that runs deep in the company's founding roots. This stuff is very intangible and a lot of times you cannot see this in a company's financials or by running a screen on your Bloomberg terminal. Humans have a tendency to want to quantify everything that is meaningful. But so much of whats meaningful is based on human spirit and is unquantifiable. That is why long-term investing is more of an Art rather than Science. Let me give you another example. The mentality of a passionate Founder/CEO drives a completely different thought process and decision-making that makes all the difference. This is a quote by Brian Armstrong, Founder and CEO of Coinbase: “I can speak with some authority and say we are not going to do that because this is not why I started the company — I don't have to give any other justification. Rather than the professional CEO that comes in that is accountable to Wall Street and quarterly earnings may start thinking about the company differently. One of the most scarce things in companies today is risk tolerance. For example, take Tesla vs. Waymo. Tesla launched self-driving cars while Google didn’t. The reason is the founder-CEO (Elon Musk) said that I care enough about the mission that we are ready and we are gonna go for it. Whether a professional CEO is thinking about his/her career trajectory, the founder CEO doesn’t care about the next job and only cares about the mission.” The following quote is from one of my favorite books “100 Baggers” written Christopher Meyer, which drives the same point home: “People (owner-operators) running these companies are in control, so when we experience a drawdown like 2008, that’s precisely when they are going to deploy cash because opportunities are so rich and thats when you want to be spending money. Compare this behavior to agent-operated companies. They loathe spending cash or taking on debt in a highly volatile environment. An agent-operator is so fearful about how that will be perceived by the public and the board and how it may impact his/her career prospects. If you study all the great Founders/CEOs like Steve Jobs, Bill Gates, Mark Zuckerberg, Elon Musk, Warren Buffet, Larry Ellison, Brian Chesky, Reed Hastings, Marc Banioff, Jim Walton and Phil Knight, just to name a few, you will find many similarities in how they ran their businesses and in how they make decisions. What also distinguishes them is they remained majority shareholders (owners) of their companies throughout their careers. While every single founder listed above has experienced their company stock dropping 50% and much more on several occasions, they continued to hold on to every single share — that is what true business owners do, they continue to own and compound their wealth over time. In contrast to agent-operators (hired CEOs) that usually own less that 1% of company stock and consistently sell for “financial planning“ purposes. One question that we always get… Since 2017, you have been heavily invested in digital platforms and in growth-oriented innovative and disruptive firms. At the same time, you look for durable competitive advantages in companies and are looking to own them for the next 5-10+ years. Technology is a rapidly evolving space and it's very hard to predict who gets disrupted, who survives and who gets to be the winner. Why not stay with the safer, predictable companies like you did in the early days? Well, the world has changed quite a bit from the one 50-60 years ago when Warren Buffett was starting to build his empire. The enduring moats of the 20th century were the widely-known brands like Coca-Cola, American Express, See’s Candies, Wrigley’s or low-cost producers like Geico, Walmart, Costco. These businesses were highly predictable. Like Warren Buffett once said: “The internet is not going to change how people chew gum.” Well, who could have predicted that the internet disrupted traditional retailing and drove exponential growth in e-commerce, which hugely affected the traffic in the check-out lines where most chewing gum sales occurred. We live in the 21st century of disruptive innovation and digital transformation. Change is the driving force for creative destruction and value creation! Thus, we need to spend more and more time understanding change and the people behind it rather than trying to find businesses that are unlikely to change over the next 5-10+ years. We also believe that the very definition of technology and the “tech sector” as Wall Street likes to coin it does not make sense anymore. Every single industry out there is being disrupted and if you are not a technologically-focused company, you are guaranteed to be out of business sooner or later. The pandemic of 2020-21 actually was a preview of what’s coming. Traditionally “safe” dividends and predictable “earnings” are no longer safe and predictable! Amazon (NASDAQ:AMZN) disrupted the traditional retail model (was not profitable until 2016 because it heavily reinvested its gross profits into widening its economic moat) Netflix (NASDAQ:NFLX) disrupted Hollywood, Cable TV and movie theatres (cash flow negative until 2020; reinvested $92 billion over past 10 yrs into content) Google (NASDAQ:GOOG) and Facebook (NASDAQ:META) disrupted the advertising industry, traditional media (newspapers, TV) Airbnb (NASDAQ:ABNB) disrupted the hotel and hospitality industry Spotify (NYSE:SPOT) disrupted the music industry and brought it back to life via streaming Tesla (NASDAQ:TSLA) disrupted the auto and transportation industry Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) disrupted the traditional taxi industry Apple (NASDAQ:AAPL) disrupted everything (the way we spend our time, conduct business, travel, communicate) Zoom (NASDAQ:ZM), Slack (NYSE:CRM) and Snowflake (NYSE:SNOW) disrupting the way we work These are just a few examples of many disruptions going on right now. We cannot stop them, we can only embrace them, study them and be a part of them! Who We Are It is common knowledge that the average return in the U.S. equity asset category over the last century has been in the neighborhood of 9-10%. It just so happens that this figure correlates with the rate of return on the owner’s capital of the typical U.S. company. We posited from this observation that our return on an asset would therefore approximate the return on the owner’s capital, absent any distributions, and assuming a constant valuation. And since our stated goal is to compound our partners' capital at double-digit returns over time, we needed to identify this group of superior businesses, which earn double-digit rates of return on their owner’s capital. We have identified that investing in a few “extraordinary” businesses, as we define them, is the BEST way to achieve our goal. And to tie this back to our earlier discussion, extraordinary businesses are always built by extraordinary, passionate and almost fanatical people. These people are winners, missionaries and exhibit true passion for their vision of what they are building, and they believe in that with every cell in their body. Over many years, as we refined our investment philosophy, we found that our sole focus should be on identifying and partnering with these visionary CEOs and best entrepreneurs in the world, preferably in the earlier-to-mid stages of their careers. We are not venture investors and never just bet on pure ideas and vision. We like to bet on entrepreneurs that have already proven their abilities to execute against all odds. We like to see evidence of the strong competitive advantages forming. We focus all our efforts and energy on winners — companies that either are already #1 or have strong potential in becoming #1 in their respective industries. We found that this particular style and approach to investing fits who we are the best, and thus will create the most value for our investors over time. The process of identifying these requires intense multi-year research effort that dives deep into the DNA and the culture of the company, understanding the roots of the Founder/CEO, their motivations and mentality and the true source of their drive. These things are very intangible, but we believe they tell us the story that no financial statements could. By any means, this doesn’t mean that we don’t pay attention to numbers. We definitely do, but numbers to us are simply a longer-term confirmation that our original thesis is correct and that the management is executing against their strategy, and are in-fact, doing exactly what they promised. The next Chapter for Rowan Street To summarize, over the next 10+ years we will focus every bit of our time and energy on being true long-term business partners with the most extraordinary entrepreneurs in the world, who have already proven their ability to execute against their vision and strategy. We have been transitioning the Rowan portfolio to this strategy over the past 4 years. In our top 4 positions in the fund (Spotify, Meta, Trade Desk, Topicus) we have identified these “extraordinary” businesses that we talked about, and we believe they are run by some of the most passionate and missionary Founder CEOs in the world: Daniel Ek, Spotify (NYSE:SPOT) Founder and CEO Visionary entrepreneur who set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry. He beat Apple, Amazon, Pandora to become the largest music streaming platform. Daniel owns 17% of the company, and his co-founder Martin Lorentzon owns 11%. When Spotify went public in 2018, they were a music-streaming company, but they have evolved dramatically over the last four years. Daniel Ek’s ambitions did not stop at music, as Spotify is focused on building the global audio infrastructure of the Internet. They are continuing to expand and build on the strong foundation in music, applying their learnings and leveraging their leading 420 million user base to move into new verticals like podcasting and audiobooks, ultimately broadening their value proposition. As a result, they are building a more resilient business. For example, in three years, Spotify has gone from basically zero to being the market leader in podcasting — a business that we believe will enable a large influx of high-margin revenue through advertising and direct monetization. Just as video content is a trillion-dollar opportunity, we view audio through a similar lens. Spotify has the potential to become the Google of audio. We believe Spotify is one of the most relevant digital platforms in existence today, as it has transformed itself to a fully-fledged platform where artists and creators can create, engage, and earn. A platform fueled by subscription, advertising and creator service models, applied to music, podcasts, audiobooks and more. At a current market value of just $20 billion, we think Wall Street is not appreciating the true long-term potential of the Spotify Machine. Mark Zuckerberg, Founder and CEO of Meta (NASDAQ:META) Mark does not need an introduction. We started buying Facebook shares back in 2018 when the stock was very depressed as Facebook was dealing with a long ‘dirty-laundry’ list of challenges. We were convinced that Facebook remains an extraordinary business with incredible moat (2.9B users), and they still have tons of opportunities to profitably reinvest their capital. We have been very impressed with how Zuck & Co. handled a long list of challenges over the past few years and managed to keep growing and innovating! There are not many CEOs in the world that are more committed to the long term vision of his company than Zuck. We encourage you to read his recent Founders Letter where Mark has outlined his vision (next chapter for the internet and next chapter for his company) — its hugely inspiring. Jeff Green, Founder/CEO of Trade Desk (NASDAQ:TTD) Jeff has been on a mission to make data-driven advertising as ubiquitous as electronic trading in equities ever since he founded the Trade Desk in 2009. Since day one, his goal was to create a platform where advertisers could value media inventory through data-driven decisions. With the ability to buy and sell advertising inventory electronically or programmatically, advertisers could use data to make better decisions on what, when, and whom to show an ad impression. Jeff owns 10% of the company. Jeff has built Trade Desk into a leader in ad tech, with a record of $6.2 billion spend on the platform in 2021, up 6x since 2016. Revenues are estimated to hit $1.6 billion in 2022, up almost 8x since 2016. Total Specific Solutions (TSS) was an operating group of Constellation Software (CSU:TSX) that was spun out in early-2020. Mark Leonard started Constellation Software (CSU) in 1995. Since then, he’s been on a 27-year acquisition bender of vertical market software (VMS) companies. Today, CSU is a collection of independently managed VMS businesses across dozens of verticals: hospitality, education, healthcare, banking, marine management, libraries, transportation, publishing, utilities, logistics, construction, retail… and the list goes on. Mark Leonard is one of the best compounders of capital in history. CSU stock is up 10,168% since it went public in 2006, which translates to 34% annual return. There are few public equities that can match this track record. The newly formed entity is called Topicus (CVE: TOI), which trades on the Canadian exchange. Topicus, operating in European markets, is effectively a carbon copy of CSU, with a nearly identical decentralized organizational structure, decentralized M&A process, sticky customers, and strong reputation as a perpetual owner of VMS businesses. Even the board of directors has meaningful overlap. In summary, all four entrepreneurs we discussed above have proven their ability to execute against all odds and they have built exceptional companies that are the leaders in their respective industries. Given a long-term investment horizon that we employ, we believe these leaders will continue to create significant shareholder value, and we expect to see significant appreciation in their stock prices over the next 3-5 years. New Position We have taken advantage of the recent downturn in the market to add another position to the fund that is consistent with our goal of partnering with the world’s most extraordinary businesses and entrepreneurs. Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify — a platform that made it easy for anyone to open up an online store. Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just lightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Markeat is oferring us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO Why? Just like the entrepreneurs that we look to partner with, we are deeply passionate about what we do and where we are looking to take Rowan Street over the next 10-20 years. Building a fund like Rowan Street has been my dream ever since I read “The Warren Buffett Way” by Robert Hagstrom back when I was still in college. I believe with every cell in my body that the past 7 years since we started the fund has been a set-up for what’s coming. The experience and the lessons we had learned have given us a laser sharp focus. We know exactly where we are looking to “steer this ship.” This is not just a job to us. This is our life’s purpose — doing what we do at Rowan Street gets us out of bed in the morning. Our goal is to be the best, to establish one of the best and longest track records in the 21st century. And this journey and the achievement of this very audacious goal will not be possible without the trust of our like-minded and patient partners. This ties back to our original vision, which we outlined in our very first letter: “Our vision is to build something special at Rowan Street Capital, LLC where our partners can visualize themselves as part owners of a business they expect to stay with for a long time, just like they would if they owned a rental property or a farm in partnership with members of their family. The goal is to build a portfolio of great companies that will compound our partners’ family wealth at double digit rates of return over a long-term holding period.“ Power of Compounding vs. Human Nature John Maynard Keynes laid out his understanding of the quirky, contrarian nature of investing: “It’s the one sphere of life and activity where victory, security and success is always to the minority, and never to the majority. When you find everyone agreeing with you, change your mind. When I can persuade the board of my insurance company to buy a share, that, I am learning from experience, is the right moment for selling it.” As we write this letter today, the world is full of fear. Investor sentiment is extremely bearish fueled by the endless macroeconomic worries of rapidly rising inflation, increasing interest rates, the “looming recession”, the war, etc. This is in contrast to just 12 months ago, when the world was full of greed and speculative gambling behavior. Just a year ago, everyone was desperately trying to get rid of cash. That was the number one enemy and it was burning a hole in everyone’s pockets. The conventional wisdom was that inflation was going to destroy your cash and you have to desperately deploy your cash into any other asset (stocks, real estate, crypto) no matter what the asking price was. “Just get rid of it!” Now that the irrational, “bubble-like” valuations have come down significantly for almost all asset classes, having cash on the sidelines to take advantage of the newly created opportunities doesn’t seem so bad. Now, conventional wisdom is to sell your rapidly declining stocks and go to cash because that is the “prudent” thing to do in order to protect yourself and your net worth. Well, the conventional wisdom is long on convention and short on wisdom. Past couple of years have given us a perfect example of why more investors do not reap the benefits of compounding. The reason has surprisingly little to do with recessions, depressions, wars, financial crises, political crises, rising interest rates, inflation, stagflation, a global pandemic, or most adverse macroeconomic events. It is not adverse macro events that derail compounding, it is investors’ reactions to them. Majority of investors spend a lot of their time and energy on what we believe to be counterproductive behavior: trying to time the market (trying to sell before the next recession, trying to buy just before the next bull market), “repositioning” portfolios based on what is supposed to do better in the new paradigm (e.g. sell tech and buy energy and commodities), dumping stocks during a downturn, which deprives oneself of the means to eventually recover. This is precisely why compounding over the long term is so challenging and rare: it demands rational, grounded behavior that runs counter to human nature. Well, this is not our game to play! We believe that long-term wealth creation is about investing in great businesses with great people and compounding capital over the long term. So, despite wars, pandemics, recessions, inflations, etc…, it’s those investors that just continue to buy and own great businesses that generate excellent returns. We believe the proven secret to successful investing is simple: stay invested in great businesses and do not get too excited or fearful about the market gyrations that happen every day, and just keep with it. ”To make money in stocks you must have the vision to see them, the courage to buy them, and the patience to hold them. Patience is the rarest of the three.” — Thomas Phelps We have observed that all returns in life, whether its investing and wealth, health, relationships, or knowledge, come from compound interest. Thus, we believe in playing the long-term game with long-term people — this is where the Rowan Street train is going. We truly appreciate all of you that are on board, that trust us, and believe in our vision, and we hope that this ride will create plenty of wealth and satisfaction for all our partners! Office in New York City On a separate note, I have recently relocated to New York City. Joe is still based in Bellevue, WA. We have not opened an office here yet, but something we are considering down the line. Please feel free to reach out if you are visiting NYC this summer. Would be happy to grab a coffee or lunch. Best regards, Alex and Joe Updated on Jul 7, 2022, 9:11 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 7th, 2022

First-Half FUBAR: Stocks Worst In 60 Years, Bonds & Bitcoin Worst Ever

First-Half FUBAR: Stocks Worst In 60 Years, Bonds & Bitcoin Worst Ever It appears the world's investors were 'over-stuffed' full of liquidity just as 2021 ended... ...which meant the first half of 2022 was a bloodbath for most. Stocks were clubbed like a baby seal, bonds were battered, there was carnage in crypto as the dollar soared and gold was steady... S&P was down 21.01% in 1970 H1, we are currently down 21.22% H1... so, according to Bloomberg data, this would be worst since 1962... 60 years ago Nasdaq Composite is down 30% to start the year - that is the worst start to a year ever, worse than the H1 2002 collapse. Year-to-date, US stocks have been hammered lower with 3 small BTFD efforts... Only the energy sector is green year-to-date with Consumer Discretionary the worst horse in the glue factory... Source: Bloomberg Of course, the ugly quarter has prompted many calls for a rebound based on history... the question is - how many of those times saw stagflationary pressures as large as the current quagmire... This series goes back to 1946. (via @bespokeinvest) $SPX pic.twitter.com/0BQVK3BxSM — Carl Quintanilla (@carlquintanilla) June 30, 2022 The US economy saw false hopes of recovery in Q1 of 2022, only to have that slapped in the face of optimists in Q2 as May and June saw macro data collapse... Source: Bloomberg US Treasuries suffered their worst first half of a year ever... The Short-end of the curve was the hardest hit, with 2Y rising 220bps in H1 and 30Y up 123bps... Source: Bloomberg For a different perspective on this shift, here is the before and after of the US yield curve... Source: Bloomberg The credit side of the bond market was also a bloodbath with HYG suffering its worst H1 losses ever... Commodities, broadly speaking, were up 18% in the first half of 2022 (but we note they were up 22% in the first half of 2021 - which is weird because we are pretty sure that Putin didn't invade Ukraine in 2021). Oil prices soared 40% in the first half of 2022, but that is less than the surge to start 2021... Crypto was carnage as Bitcoin fell 59% in the first half of the year - that is the worst start to a year ever for the crypto currency (worse than the 57.99% drop in 2017). Ethereum was worse, falling 72% YTD... Source: Bloomberg The Dollar soared in the first half of the year, up almost 10% - its biggest start to a year since 2010... So having got all that off our chest, let's focus back in on this week... Stocks rollercoastered today, weakness overnight and then dumping early on in the cash session led to a bid into and across the European close which managed to get the majors back to unchanged on the day... only to see selling return in the afternoon Interestingly, today's dead-cat-bounce managed to get stocks up to last Friday's cash open level before stocks went panic-bid into OpEx... Credit markets are breaking bad and signaling significantly more pain ahead for stocks... Source: Bloomberg Treasuries were bid today with the short-end outperforming (5Y -14bps, 30Y -9bps) and the belly continues to outperform strongly into the quarter-end... Source: Bloomberg This pushed the 10Y Yield back below 3.00%, back below the CPI-spike lows on June 10th... Source: Bloomberg Global inflation expectations are starting to really tumble with US 10Y Breakevens at their lowest since Sept 2021. Japanese inflation expectations have fallen the least... Source: Bloomberg Rate-hike expectations fell further today and subsequent rate-cut expectations rose as recession fears rise... Source: Bloomberg And stagflation is here... Source: Bloomberg The Dollar had a big month, quarter, and half; surging back to near COVID safe-haven spike highs... Source: Bloomberg On the day, the dollar was lower but still up on the week (and notably higher since CPI on June 10th) Source: Bloomberg Bitcoin fell back below $19,000 and then hovered around there today... Source: Bloomberg Commodities crashed today, falling down towards pre-Putin levels... Source: Bloomberg US Nat Gas tumbled further today on another bigger than expected storage build, plunging to 3-month lows... Notably this smashed US NatGas below WTI (on an oil barrel equivalent basis) and the widened the spread to EU NatGas dramatically... Source: Bloomberg Oil suffered its first monthly decline since November... Gold extended the week's losses back down towards $1800 with every bounce getting monkeyhammered to a new low... Finally, we note that global equity and debt capital markets lost a stunning $31 trillion in the first half of the year... Source: Bloomberg ...a record by a massive margin... Source: Bloomberg And that was triggered by just $1 trillion drop in global central bank balance sheets... Source: Bloomberg The Biden Bloodbath! And it could get worse... ⚠️ What's the opposite of "animal spirits"? Confidence indicators across major economies are pointing to a synchronised global downturn... and one that's potentially as a big as the GFC $SPX $USD pic.twitter.com/oheqtm9zlH — Viraj Patel (@VPatelFX) June 30, 2022   Tyler Durden Thu, 06/30/2022 - 16:00.....»»

Category: blogSource: zerohedgeJun 30th, 2022

Futures Slide Amid Renewed Recession Fears After China Doubles Down On "Covid Zero"

Futures Slide Amid Renewed Recession Fears After China Doubles Down On "Covid Zero" One day after futures ramped overnight (if only to crater during the regular session) on hopes China was easing its highly politicized  Zero Covid policy after it cut the time of quarantine lockdowns, this morning futures slumped early on after China's President Xi Jinping made clear that Covid Zero isn't going anywhere and remains the most “economic and effective” policy for China during a symbolic visit to the virus ground zero in Wuhan, in which he cast the strategy as proof of the superiority of the country’s political system. That coupled with renewed recession worries (market is again pricing in a rate cut in Q1 2023) even as monetary policy tightens in much of the world to fight supply-side inflation, sent US futures and global markets lower. S&P futures dropped 0.2% and Nasdaq 100 futures were down 0.4% after the underlying index slumped on 3.1% on Tuesday. The dollar was steady after rising the most in over a week while WTI crude climbed above $112 a barrel, set for a fourth session of gains. In cryptocurrencies, Bitcoin dipped below the closely watched $20,000 level on news crypto hedge fund 3 Arrows Capital was ordered to liquidate. The Nasdaq's Tuesday’s slump added to what was already one of the worst years in terms of big daily selloffs in US stocks. The S&P 500 Index has fallen 2% or more on 14 occasions, putting 2022 in the top 10 list, according to Bloomberg data. Not helping the tech sector, on Wednesday morning JPMorgan cut its earnings estimates across the sector, especially for companies exposed to online advertising, citing macroeconomic pressures, forex and company-specific dynamics. One of the chief drivers for overnight weakness, China's Xi said during a trip Tuesday to Wuhan where the virus first emerged in late 2019 that relaxing Covid controls would risk too many lives in the world’s most populous country. China would rather endure some temporary impact on economic development than let the virus hurt people’s safety and health, he said, in remarks reported Wednesday by state media. As a result, China’s CSI 300 Index extended loss to 1.4% after the headline, while the yuan drops as much as 0.2% to trade 6.7132 against the dollar in the offshore market. Among key premarket movers, Tesla slipped in US premarket trading. The electric-vehicle maker laid off hundreds of workers on its Autopilot team as it shuttered a California facility, according to people familiar with the matter. Carnival slumped as Morgan Stanley analysts warned that the London and New York-listed cruise vacation company’s shares could lose all their value in the event of another demand shock. Pinterest gained 3.7% as the company’s co- founder and CEO Ben Silbermann quit and handed the reins to Google and PayPal veteran Bill Ready in a sign the social-media company will focus more on e-commerce. Also, despite the pervasive weakness, the Energy Select Sector SPDR Fund ETF (XLE) rebounded off key support (50% Fibonacci) relative to the SPDR S&P 500 ETF (SPY). That said, energy was alone and most other notable movers were down in the premarket: Carnival (CCL US) shares fall 8% premarket as Morgan Stanley analysts warned that the cruise vacation firm’s shares could lose all their value in the event of another demand shock. Nio (NIO US) shares drop 8.2% after short-seller Grizzly Research published a report on Tuesday alleging that the electric carmaker used battery sales to a related party to inflate revenue and boost net income margins. The company rejected the claims. Upstart Holdings (UPST US) shares slump about 9% after Morgan Stanley downgraded the consumer finance company to underweight from equal-weight amid rising cyclical headwinds. Ormat Technologies (ORA US) rallies as much as 5% after the renewable energy company is set to be included in the S&P Midcap 400 Index. 2U (TWOU US) shares rise 16% premarket. Indian online-education provider Byju’s has offered to buy the company in a cash deal that values the US-listed edtech firm at more than $1 billion, a person familiar with the matter said. Watch Amazon (AMZN US) shares as Redburn initiated coverage of the stock with a buy recommendation and set a Street-high price target, saying “there is a clear path toward a $3 trillion value for AWS alone.” Shares in data center REITs could be active later in the trading session after short-seller Jim Chanos said in an FT interview that he’s betting against “legacy” data centers. Watch Digital Realty (DLR US) and Equinix (EQIX US), as well as data center operators Cyxtera Technologies (CYXT US) and Iron Mountain (IRM US) Investors are growing increasingly skeptical that the Fed can avoid a bruising economic downturn amid sharp interest-rate hikes. Evaporating consumer confidence is feeding into concerns that the US might tip into a recession. Naturally, Fed officials sought to play down recession risk. New York Fed President John Williams and San Francisco’s Mary Daly both acknowledged they had to cool inflation, but insisted that a soft landing was still possible. “It seems the market is in this tug of war between on the one hand the hope that we are close to the peak in inflation and rates, and on the other hand the challenge of a slowing economy and potential recession,” Emmanuel Cau, head of European equity strategy at Barclays Bank Plc, said in an interview with Bloomberg TV. “Central banks are walking a very tight line and to a certain extent dictate the mood in the markets.” European equities snapped three days of gains, trading poorly but off worst levels with sentiment also hurt by China remaining committed to its zero-Covid approach. Spanish inflation unexpectedly surged to a record, dashing hopes that inflation in the euro zone’s fourth-biggest economy had peaked, and emboldening European Central Bank policy makers pushing for big increases in interest rates. The ECB should consider raising interest rates by twice the planned amount next month if the inflation outlook deteriorates, according to Governing Council member Gediminas Simkus, as calls not to exclude an outsized initial move grow. German benchmark bonds rose, while 10-year Treasury yields slipped to 3.16%. DAX lags, dropping as much as 1.8%. Real estate, autos and miners are the worst performing sectors. In notable moves in European stocks, Hennes & Mauritz (H&M) gained after the Swedish low-cost retailer’s earnings beat analyst estimates. Just Eat Takeaway.com NV tumbled to a record low after Berenberg analysts rated the stock sell, saying the food delivery firm’s UK business will remain under pressure. Here are some of the biggest European movers today: Just Eat Takeaway shares plunge as much as 21% after Berenberg initiated coverage with a sell rating, saying the firm’s UK business will remain under pressure and a sale of its Grubhub unit is unlikely to satisfy the bulls. Carnival stocks slumped over 12% in London as Morgan Stanley analysts warned that the cruise vacation firm’s shares could lose all their value in the event of another demand shock. Pearson drops as much as 6.1% after the education company was cut to sell at UBS, which reduced forecasts to reflect a weak outlook for 2022 college enrollments. Grifols shares plunge as much as 13% on a media report the Spanish plasma firm is weighing a capital raise of as much as EU2b to cut its debt. Diageo shares fall after downgrades for the spirits group from Deutsche Bank and Kepler Cheuvreux, while Pernod Ricard also dips on a rating cut from the latter. Diageo declines as much as 4.2%, Pernod Ricard -3.7% Fluidra shares fall as much as 8.4% after Santander cut its rating on the Spanish swimming pools company. The bank’s analyst Alejandro Conde cut the recommendation to neutral from outperform. H&M shares rise as much as 6.8% after the Swedish apparel retailer reported 2Q earnings that beat estimates. Jefferies said the margin beat in particular was reassuring, while Morgan Stanley said it was a “positive surprise” overall. Ipsen shares rise as much as 3.1% after UBS analyst Michael Leuchten said that accepting palovarotene refiling priority review should be a net present value and confidence boost. Asian stocks fell, halting a four-day gain, as renewed angst over the outlook for global economic growth and inflation help drive a selloff across most of the region’s equity markets. The MSCI Asia Pacific Index dropped as much as 1.5%, led by consumer discretionary and information sectors. Chinese equities in particular took a hit, as the CSI 300 Index fell 1.5% Wednesday after Xi Jinping reiterated his firm stance on Covid zero. Tech-heavy indexes in markets such as South Korea and Taiwan took the brunt of Wednesday’s drop amid lingering concerns that monetary tightening in much of the world to fight inflation will cause an economic slowdown. While Federal Reserve members have played down the risk of a US recession, gloomy data such as US consumer confidence have damped investor sentiment. “Volatility is going to be the enduring feature of the market, I suspect, for the next couple of quarters at least until we get a firm sense that peak inflation has passed,” John Woods, Credit Suisse Group AG’s Asia-Pacific chief investment officer, said in an interview with Bloomberg TV. “Markets, I think, have aggressively priced in quite a serious or steep recession.”  China’s four-day winning streak came to a halt, putting its advance toward a bull market on hold.  “We will continue to see a risk of targeted lockdowns, and that spoils the initial euphoria seen in the markets from the announcement on relaxation of quarantine requirements,” said Charu Chanana, market strategist at Saxo Capital Markets. “Still, economic growth will likely be prioritized as this is a politically important year for China.”  Japanese equities decline as investors digested data that showed a drop in US consumer confidence over inflation worries and increased concerns of an economic downturn.  The Topix Index fell 0.7% to 1,893.57 in Tokyo on Wednesday, while the Nikkei declined 0.9% to 26,804.60. Toyota Motor Corp. contributed the most to the Topix’s decline, decreasing 1.8%. Out of 2,170 shares in the index, 1,114 fell, 984 rose and 72 were unchanged. “There are concerns about stagflation,” said Hideyuki Suzuki a general manager at SBI Securities. “The consumer sentiment from the University of Michigan, which provides one of the fastest data points, has already shown poor figures.” Stocks in India tracked their Asian peers lower as brent rose to the highest level in two weeks, while high inflation and slowing global growth continued to dampen risk-appetite for global equities. The S&P BSE Sensex fell 0.3% to 53,026.97 in Mumbai, while the NSE Nifty 50 Index declined by an equal measure. Both gauges have lost more than 4% in June and are set for their third consecutive month of declines. The main indexes have dropped for all but one month this year. Twelve of the 19 sub-sector gauges compiled by BSE Ltd. eased, led by banking companies while power producers were the top performers.   Investors will also be watching the expiry of monthly derivative contracts on Thursday, which may lead to some volatility in the markets.  Hindustan Unilever was the biggest contributor to the Sensex’s decline, decreasing 3.5%. Out of 30 shares in the Sensex, 10 rose and 20 fell. The Bloomberg Dollar Spot Index inched up modestly as the greenback traded mixed against its Group-of-10 peers; the Swiss franc led gains while Antipodean currencies were the worst performers and the euro traded in a narrow range around $1.05. The relative cost to own optionality in the euro heading into the July meetings of the ECB and the Federal Reserve was too low for investors to ignore and has become less and less underpriced. The yen strengthened and US and Japanese bond yields fell. In rates, fixed income has a choppy start. Bund futures initially surged just shy of 200 ticks on a soft regional German CPI print before fading the entire move over the course of the morning as Spanish data hit the tape, delivering a surprise record 10% reading for June and more hawkish ECB comments crossed the wires. Treasuries and gilts followed with curves eventually fading a bull-steepening move. Long-end gilts underperform, cheapening ~4bps near 2.75%. Peripheral spreads are tighter to core.  Treasuries are slightly higher as US trading day begins, off the session lows reached as bund futures jumped after the first monthly drop since November in a German regional CPI gauge. Yields are lower across the curve, by 1bp-2bp for tenors out to the 10-year with long-end yields little changed; 10-year declined as much as 5.3bp vs as much as 8.2bp for German 10- year, which remains lower by ~3bp. Focal points for the US session include a final revision of 1Q GDP, comments by Fed Chair Powell, and anticipation of quarter-end flows favoring bonds. Quarter-end is anticipated to cause rebalancing flows into bonds; Wells Fargo estimated that $5b will be added to bonds, with most of the flows occurring Wednesday and Thursday. In commodities, crude futures advance. WTI drifts 0.3% higher to trade near $112.13. Base metals are mixed; LME tin falls 5.6% while LME zinc gains 0.4%. Spot gold falls roughly $5 to trade near $1,815/oz Looking ahead, the highlight will be the panel at the ECB Forum that includes Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey. We’ll also be hearing from ECB Vice President de Guindos, the ECB’s Schnabel, the Fed’s Mester and Bullard, and the BoE’s Dhingra. On the data side, releases include German CPI for June, Euro Area money supply for May, and the final Euro Area consumer confidence reading for June. From the US, we’ll also get the third reading of Q1 GDP. Market Snapshot S&P 500 futures little changed at 3,829.00 STOXX Europe 600 down 0.8% to 412.69 MXAP down 1.3% to 159.96 MXAPJ down 1.6% to 531.04 Nikkei down 0.9% to 26,804.60 Topix down 0.7% to 1,893.57 Hang Seng Index down 1.9% to 21,996.89 Shanghai Composite down 1.4% to 3,361.52 Sensex little changed at 53,204.17 Australia S&P/ASX 200 down 0.9% to 6,700.23 Kospi down 1.8% to 2,377.99 German 10Y yield little changed at 1.59% Euro little changed at $1.0510 Brent Futures down 0.4% to $117.46/bbl Gold spot down 0.2% to $1,816.09 U.S. Dollar Index little changed at 104.55 Top Overnight News from Bloomberg The Fed’s Loretta Mester said she wants to see the benchmark lending rate reach 3% to 3.5% this year and “a little bit above 4% next year” to rein in price pressures even if that tips the economy into a recession The ECB should consider raising interest rates by twice the planned amount next month if the inflation outlook deteriorates, according to Governing Council member Gediminas Simkus, as calls not to exclude an outsized initial move grow ECB has “ample room” to hike in 25bps-50bps steps to “whatever rate we think, we consider reasonable,” Governing Council member Robert Holzmann said in interview with CNBC Swedish consumers are gloomier than they have been since the mid-1990s, as prices surge on everything from fuel to food and furniture China’s President Xi Jinping declared Covid Zero the most “economic and effective” policy for the nation, during a symbolic visit to Wuhan in which he cast the strategy as proof of the superiority of the country’s political system NATO moved one step closer to bolstering its eastern front with Russia after Turkey dropped its opposition to Swedish and Finnish bids to join the military alliance A more detailed look at markets courtesy of Newsquawk Asia-Pac stocks were pressured amid headwinds from the US where disappointing Consumer Confidence data added to the growth concerns. ASX 200 failed to benefit from better than expected Retail Sales and was dragged lower by weakness in miners and tech. Nikkei 225 fell beneath the 27,000 level as industries remained pressured by the ongoing power crunch. Hang Seng and Shanghai Comp. conformed to the negative picture in the region although losses in the mainland were initially stemmed after China cut its quarantine requirements which the National Health Commission caveated was not a relaxation but an optimization to make it more scientific and precise. Top Asian News Chinese President Xi said China's COVID prevention control and strategy is correct and effective and must stick with it, via state media. Shanghai will gradually reopen museums and scenic sports from July 1st, state media reports. US Deputy Commerce Secretary Graves said the US will take a balanced approach on Chinese tariffs and that a clear response on China tariffs is coming soon, according to Bloomberg. China State Council's Taiwan Affairs Office said it firmly opposes the US signing any agreement that has sovereign connotations with Taiwan, according to Global Times. BoJ Governor Kuroda said Japanese Core CPI reached 2.1% in April and May which is almost fully due to international energy prices and Japan's economy has not been affected much by the global inflationary trend so monetary policy will stay accommodative, according to Reuters. Japanese govt to issue power supply shortage warning for a fourth consecutive day on Thursday, according to a statement. European bourses are on the backfoot as the region plays catch-up to the losses on Wall Street yesterday. Sectors are mostly lower (ex-Energy) with a defensive tilt as Healthcare, Consumer Products, Food & Beverages, and Utilities are more cushioned than their cyclical peers. Stateside, US equity futures trade on either side of the unchanged mark with no stand-out performers thus far, with the contracts awaiting the next catalyst. Top European News UK expects defence spending to reach 2.3% of GDP and said PM Johnson will announce new military commitments to NATO, according to Reuters. UK Weighs Capping Maximum Stake in Online Casinos at £5 Europe Is the Only Region Where Earnings Estimates Are Rising European Gas Prices Rise as Supply Risks Add to Storage Concerns Gold Steady as Traders Weigh Fed Comments on US Recession Risks Choppy Start for Euro-Area Bonds on Mixed Inflation FX Dollar mostly bid otherwise as rebalancing demand underpins - DXY pivots 104.500 within 104.700-350 confines. Franc outperforms on rate and risk considerations - Usd/Chf breaches 0.9550 and Eur/Chf approaches parity. Euro erratic in line with conflicting inflation data - Eur/Usd rotates around 1.0500. Aussie and Kiwi undermined by downturn in sentiment - Aud/Usd loses 0.6900+ status, Nzd/Usd wanes from just over 0.6250. Yen rangy following firmer than forecast Japanese retail sales and BoJ Governor Kuroda reaffirming intent to remain accommodative - Usd/Jpy straddles 136.00. Nokkie welcomes oil worker wage agreement with unions to avert strike action, but Sekkie hampered by softer Swedish macro releases pre-Riksbank policy call tomorrow - Eur/Nok probes 10.3000, Eur/Sek hovers around 10.6800. Rand rattled by decline in Gold and ongoing SA power supply problems, but Rouble rallies irrespective of CBR and Russian Economy Ministry divergence over deflation. Central Banks ECB's Lane said there are two-way inflation risks: "on the one side, there could be forces that keep inflation higher than expected for longer. On the other side, we do have the risk of a slowdown in the economy, which would reduce inflationary pressure", via ECB. ECB's Holzmann said "We will have to make an assessment where the economic development is going and where inflation stands and afterwards there’s ample room to hike in 0.25 and 0.5 levels to whatever rate we think, we consider reasonable" via CNBC. ECB's Simkus said if data worsens, then he wants a 50bps July hike as an option, 50bps hike is very likely in September; ECB's fragmentation tool should serve as a deterrent, via Bloomberg. ECB's Herodotou said EZ inflation will peak this year, via CNBC. ECB's Wunsch said government aid may spell more rate hikes, via Bloomberg; 150bps of hikes by March 2023 is reasonable ECB is said to be weighting whether or not they should announce the size and duration of their upcoming bond-buying scheme, according to Reuters sources. Fed's Mester (2022, 2024 voter) said on a path towards restrictive interest rates; July debate between 50bps and 75bps hike, via CNBC. Mester said if inflation expectations become unanchored, monetary policy would have to act more forcefully; current inflation situation is a very challenging one, via Reuters. SARB Governor said a 50bps hike is "not off the table", Via Bloomberg CBR Governor said she does not see risks of deflation; sees room to cut rates; sticking to policy of floating RUB exchange rate. PBoC will step up implementation of prudent monetary policy, will keep liquidity reasonably ample. Fixed Income Bunds unwind all and a bit more of their hefty post-NRW CPI gains as other German states show smaller inflation slowdowns and Spanish HICP soars. Gilts suffer more pronounced fall from grace in relative terms and US Treasuries slip from overnight peaks in sympathy. UK debt and STIRs also await testimony from MPC member elect to see if newbie leans dovish, hawkish or middle of the road 10 year benchmarks settle off worst levels within 147.37-145.14, 112.66-11.85 and 117-12+/116-27 respective ranges awaiting comments from ECB, Fed and BoE heads at Sintra Forum. Commodities WTI and Brent front-month futures traded with no firm direction in early European hours before picking up modestly in recent trade. US Private Inventory (bbls): Crude -3.8mln (exp. -0.6mln), Cushing -0.7mln, Distillate +2.6mln (exp. -0.2mln) and Gasoline +2.9mln (exp. -0.1mln). Norway's Industri Energi and SAFE labour unions agreed a wage deal for oil drilling workers and will not go on strike, according to Reuters. OPEC to start today at 12:00BST/07:00EDT; JMMC on Thursday at 12:00BST/07:00EDT followed by OPEC+ at 12:30BST/07:30EDT, via EnergyIntel. Libya's NOC suspends oil exports from Es Sider port. Spot gold is under some mild pressure as the Buck and Bond yields picked up, with the yellow metal back to near-two-week lows Base metals are mixed but off best levels after President Xi reaffirmed China's COVID stance – LME copper fell back under USD 8,500/t US Event Calendar 07:00: June MBA Mortgage Applications, prior 4.2% 08:30: 1Q PCE Core QoQ, est. 5.1%, prior 5.1% 08:30: 1Q GDP Price Index, est. 8.1%, prior 8.1% 08:30: 1Q Personal Consumption, est. 3.1%, prior 3.1% 08:30: 1Q GDP Annualized QoQ, est. -1.5%, prior -1.5% Central Banks 09:00: Powell Takes Part in Panel Discussion at ECB Forum in Sintra 09:00: Lagarde, Powell, Bailey, Carstens Speak in Sintra 11:30: Fed’s Mester Speaks on Panel at ECB Forum in Sintra 13:05: Fed’s Bullard Makes Introductory Remarks DB's Jim Reid concludes the overnight wrap I'm finishing this off in a taxi on the way to the Eurostar this morning and I made the mistake of telling the driver I was slightly pressed for time. He seems to be taking the racing line everywhere and my motion sickness is kicking in. A little like this car journey, it's been another volatile 24 hours in markets, with a succession of weak data releases raising further questions about how close the US and Europe might be to a recession. That saw equities give up their initial gains to post a decent decline on the day, whilst there was little respite from central bankers either, with sovereign bonds selling off further as multiple speakers doubled down on their hawkish rhetoric. That comes ahead of another eventful day ahead on the calendar, with investors primarily focused on a panel featuring Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey, as well as the flash German CPI print for June, who are the first G7 economy to release their inflation print for the month, which will provide some further clues on how fast central banks will need to move on rate hikes. Just as we go to print the NRW region of Germany has seen CPI print at 7.5% YoY, way below last month's 8.1%. This region is around a quarter of GDP so it could imply the national numbers will be notably softer when we get them later. The energy tax cuts were always going to come through in June so some respite was always possible but at first glance this seems materially below what might have been expected. This comes after a significant sovereign bond selloff in Europe once again yesterday as President Lagarde reiterated the central bank’s determination to bring down inflation, and described inflation pressures that were “broadening and intensifying”. And although Lagarde stuck to the existing script about the ECB raising rates by 25bps at the next meeting, we also heard from Latvia’s Kazaks who said that “front-loading the increase would be a reasonable choice” in the event that the situation with inflation or inflation expectations deteriorates. Lagarde did nod to this in part, saying that if the ECB was “to see higher inflation threatening to de-anchor inflation expectations, or signs of a more permanent loss of economic potential that limits resources availability, we would need to withdraw accommodation more promptly to stamp out the risk of a self-fulfilling spiral.” Separately on fragmentation, Lagarde said that they could “use flexibility in reinvesting redemptions” from PEPP starting July 1 in order to deal with the issue. For now, overnight index swaps are only pricing in a +31.3bps move in July from the ECB, so still closer to 25 than 50 for the time being. Meanwhile the rate priced in by year-end rose also by +7.9bps as investors interpreted the comments in a hawkish light. That supported a further rise in yields, with those on 10yr bunds up another +8.1bps yesterday, following on from their +10.7bps move in the previous session. That’s now almost reversed the -21.9ps move over the previous week, which itself was the third-largest weekly decline in bund yields for a decade, and brought the 10yr yield back up to 1.63%, so not far off its multi-year high of 1.77% seen last week. A similar pattern was seen elsewhere, with 10yr yields on 10yr OATs (+9.6bps), BTPs (+4.2bps) and gilts (+7.2bps) all moving higher too. Things turned near the European close with some poor US data releases piling on to some lacklustre confidence figures in Europe. Earlier in the day the GfK consumer confidence reading from Germany fell to -27.4 (vs. -27.3 expected), taking it to another record low. Separately in France, consumer confidence fell to 82 on the INSEE’s measure (vs. 84 expected), which we haven’t seen since 2013. Then in the US, the Conference Board’s measure fell to 98.7 (vs. 100.0 expected), which is the lowest since February 2021. The Conference Board’s one-year ahead inflation expectations hit a record high of 8.0%, surpassing the June 2008 record of 7.7%, adding to the pessimism. Along with waning confidence, the Richmond Fed’s Manufacturing Index registered a -19, its lowest since the peak onset of the pandemic, versus expectations of -7 and a prior of -9, showing that production data has weakened as well. This put a serious damper on risk sentiment which drove Treasury yields and equities lower intraday during the New York session. 10yr Treasury yields ended down -2.8bps after trading as much as +5.5bps higher during the European session. They are down another -4bps this morning. Concerningly as well, there was a fresh flattening in the Fed’s preferred yield curve indicator (which is 18m3m – 3m), which came down another -9.1bps to 165bps, which is the flattest its been since early March. With that succession of bad news helping to dampen risk appetite, US equities gave up their opening gains to leave the S&P 500 down -2.01% on the day. Tech stocks saw the worst losses, with the NASDAQ (-2.98%) and the FANG+ (-3.74%) seeing even larger declines. And whilst there was a stronger performance in Europe, the STOXX 600 ended the day up just +0.27%, having been as high as +0.95% in the couple of hours before the close. We didn’t hear so much from the Fed ahead of Chair Powell’s appearance today, although New York Fed President Williams said that at the upcoming July meeting “I think 50 to 75 is clearly going to be the debate”. Markets are continuing to price something in between the two, although since the last Fed meeting futures have been consistently closer to 75 than 50, with 69.0 bps right now. Those sharp losses in US equities are echoing across Asia this morning. The Hang Seng (-1.86%) is leading the losses followed by the Kospi (-1.82%), the Nikkei (-1.07%) and the ASX 200 (-1.06%). Over in mainland China, the Shanghai Composite (-0.77%) and the CSI (-0.80%) are slightly out-performing after yesterday’s surprise move by China to slash the quarantine period for inbound travellers (more on this below). Looking ahead, US stock index futures point to a positive opening with contracts on the S&P 500 (+0.18%) and NASDAQ 100 (+0.19%) mildly higher. Earlier today, data released showed that Japan’s retail sales advanced for the third consecutive month in May (+3.6% y/y) but lower than the consensus of +4.0%, but with the previous month's data revised up to +3.1% (vs +2.9% preliminary). Meanwhile, South Korea’s consumer sentiment index (CSI) fell sharply to 96.4 in June (vs 102.6 in May), sliding below the long-term average of 100 for the first time since Feb 2021. Separately, Australia’s retail sales put in another strong performance as it climbed +0.9% m/m in May, surpassing analyst estimates of a +0.4% increase. Oil has fallen back slightly overnight after three sessions of gains with Brent futures down -0.84% at $116.99 and WTI futures (-0.64%) at $111.04/bbl as I type. Just after we went to press yesterday, it was also announced that China would be shortening the required quarantine period for inbound travellers to one week from two. So although China is still very-much committed to a Covid-zero strategy for the time being, this step towards loosening rather than tightening restrictions is an interesting development that helped support Chinese equities in yesterday’s session towards the close which filtered through into early northern hemisphere risk performance. In terms of other data yesterday, there were signs that US house price growth might finally be slowing somewhat, with the S&P CoreLogic Case-Shiller index up by +20.4% in April, which is down slightly from the +20.6% gain in March. So still a long way from an absolute decline, but that marks a reversal in the trend after the previous 4 months of rises in the year-on-year measure. To the day ahead now, and the highlight will likely be the panel at the ECB Forum that includes Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey. We’ll also be hearing from ECB Vice President de Guindos, the ECB’s Schnabel, the Fed’s Mester and Bullard, and the BoE’s Dhingra. On the data side, releases include German CPI for June, Euro Area money supply for May, and the final Euro Area consumer confidence reading for June. From the US, we’ll also get the third reading of Q1 GDP. Tyler Durden Wed, 06/29/2022 - 08:00.....»»

Category: smallbizSource: nytJun 29th, 2022

Black Bear Value Partners 1Q22 Commentary

Black Bear Value Partners commentary for the first quarter ended March 31, 2022. “A nickel ain’t worth a dime anymore.” – Yogi Berra To My Partners and Friends: Black Bear Value Fund, LP (the “Fund”) returned +1.6% in March and +1.9% YTD. The S&P 500 returned +3.7% in March and -4.6% YTD. The HFRI Index […] Black Bear Value Partners commentary for the first quarter ended March 31, 2022. “A nickel ain’t worth a dime anymore.” – Yogi Berra To My Partners and Friends: Black Bear Value Fund, LP (the “Fund”) returned +1.6% in March and +1.9% YTD. The S&P 500 returned +3.7% in March and -4.6% YTD. The HFRI Index returned +0.2% in March and -2.6% YTD. We do not seek to mimic the returns of the S&P 500 and there will be variances in our performance. Note: 2022 returns reflect our reduced 10% incentive fee. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2021 hedge fund letters, conferences and more Note: Additional historical performance can be found on our tear-sheet. I write to you amidst a volatile market with a good dose of geopolitical and global economic uncertainty. While Black Bear is up on the year, I want to caution everyone that in this environment, markets can act irrationally, and I would not expect our partnership to always be immune. That said, as I will discuss below, we are positioned to do well in this environment both in terms of the investments we have and our ability to deploy capital when others are retreating. From time to time I am asked the following question: “What’s the market telling you?” It can be disappointing or even offensive when I say, “seems like more sellers than buyers” or “the market tells me people haven’t changed too much.” Stocks SHOULD be viewed as proportional shares of businesses no different than the dentist down the street or your local bank. However, due to the auction-driven stock market, stocks serve as an extension of people’s emotions which can be quite volatile. On their own, stocks wouldn’t do anything…PEOPLE do things and people can be extreme in their opinions and behaviors. As a result, stocks just tell me how people may be feeling in the moment independent of the business. This is the opportunity for the fundamental investor. Often when people get scared, they sell to avoid future mark to market losses independent of business fundamentals. We are invested based on what the business is telling us…not the stock…and utilize opportune discounts in the market to our advantage. Brief Discussion on Homebuilding/Housing Frequently people seem intent on fighting yesterday’s battles. Housing led the last multi-year downdraft causing many today to try and paint parallels. The valuations in homebuilding and homebuilding-adjacent businesses are extremely cheap and incorporate a lot of bad news. This theme is a meaningful portion of our portfolio. While mortgages are more expensive today than they were 3 months ago, they are still cheap in absolute and historical terms. While higher mortgages rate reduce affordability increased wages can help mitigate that issue. Underwriting standards have improved since the financial crisis. In fact, it isn’t that easy to get a mortgage with all your documentation in order. The industry is healthier both in terms of operating efficiencies/scale and healthy balance sheets. If business slows down, it will not be 2008 redux. Right now, there is 1.7 months of supply of existing homes. That is not a lot. People have a choice to rent or buy. Current rental vacancies are ~5.6% which matches the multi-decade lows and contrasts with ~10% vacancies in the lead up to the GFC. Additionally, the 0.9% homeowner vacancy rate ties the lowest level on record and is below the 1.6% long-term average and peak of 2.9% in 2008 (Thanks to the team at Credit Suisse for this info.) Home prices are up because people need places to live and we have had chronic underbuilding for a decade. We need more homes, and we need them in the locations people are moving. National averages are not helpful as we own a builder in specific areas of the country. Additionally, averages obfuscate the economics to each mover. For example…homes in Florida may be more expensive relative to past homes in Florida…but not to homes in New York/New Jersey/Connecticut. Affordability is relative. Inflation/Credit Shorts/Pricing Power As a reminder we are short ~ 57% of the fund in various credit instruments. The investment is predominantly but not solely in options so 57% of our portfolio is not at risk. With inflation rearing its head and proving not to be a temporary guest, the cost of money, AKA interest rates, has become an en vogue discussion topic. Is inflation transitory? No clue. But you generally do not roll back wages when you have increased them. Some of the inflation will remain here and set a new baseline for the future. As supply chains normalize inflationary pressures should decrease. However, the world is one big chain reaction and if wheat is not flowing from Ukraine and natural gas/oil is not flowing from Russia to the EU, the dominoes can hit in unpredictable ways both in magnitude and duration. While credit instruments have widened it still does not make sense that a fair price for credit is in the low-mid single digits. Additionally, there seems to be a big push domestically for increased compensation for labor. This will hurt operating margins for many companies and impair their credit profile. In a less accommodating interest rate environment we may see something that we have not in a while…companies defaulting! People are accepting a lousy return considering inflation and default risks. The real return of these investments is negative. As a result, we remain short credit instruments that range from US Junk to Investment Grade to Emerging Markets. I am still dubious that ETF’s can orderly handle a massive sell-off in credit. If the government had not stepped into the market in March 2020 these instruments would have had liquidity issues. We own businesses that have pricing power and limited/no dependance on the need for external funding. This is important because as input and wage costs pressure profitability of many companies, our businesses should be able to weather the storm and capitalize thru both organic market share gains and/or acquisitions of companies that may not have had a healthy balance sheet or operating structure. In a vertical market, where money losing companies can seize on the markets imagination and raise endless funds, the staid and true businesses seem a lot less interesting. Times may be changing and those businesses that can endure will benefit those who own them. Top 5 Businesses We Own Asbury Automotive Group Asbury Automotive Group, Inc. (NYSE:ABG) has many similar qualities to AutoNation, Inc. (NYSE:AN), which we held for the last 5+ years. I don’t typically discuss portfolio activity but given the long-holding and likely questions, I figured I’d address the change in our holdings here. While I admire the AutoNation business there has been a management change and an accompanying change in strategic and capital allocation priorities. It was painful to sell the business as it had been one of our core investments and I believed they were on a great track. Management’s strategy may wind up being successful, but it is different than what I underwrote and as a result a change was needed for our portfolio. I express my thanks to the team at AutoNation as our Partnership has benefited from your stewardship. Asbury had been in the portfolio before. Entering COVID, I decided to concentrate our auto dealer investments into AutoNation. ABG is run by highly capable management who have made 2 accretive and sizeable acquisitions in the past 18 months. The fundamentals of both businesses are similar though there are some differences of note. First a couple negatives. AutoNation has a name brand, whereas Asbury does not. While it’s hard to value what a brand is worth there is value attached to the AutoNation name that we will not have at a corporate level with Asbury. However, at the dealership/consumer level I am not sure there is much of a difference. Second, Asbury has a fair amount of debt (2.8x proforma for acquisitions). I would expect this number to decline both as the operating business performs and debt is reduced. One of the positives of Asbury is their recent acquisition of the Larry H. Miller Group. Typically, most auto dealers receive a commission when a service or warranty plan is sold with the purchase of the vehicle. The Miller Group has built an internal business that operates those plans which are both high margin (20+%) and sticky throughout the lifetime of a customer. As ABG rolls these plans out to their existing dealerships there is an opportunity for meaningful increases in cashflow for every customer transaction. Inventories for cars remain tight and the unit profitability is still unusually high. I underwrite the business on a “steady-state” basis removing the benefits from reduced inventory. Two changes from this pandemic will likely remain in the industry. First, OEM’s and dealers have historically been in a PUSH model where OEM’s send lots of inventory that sits on dealers’ lots. Both have witnessed that with reduced inventory, everyone wins (well maybe not the customer as much.) Working capital needed for inventory is lower and returns on capital and absolute profitability have increased dramatically. It stands to reason that dealer lots will not be stuck with 60-90 days of inventory when supply chains normalize. Second, as digital business continues to grow, the need for headcount at the dealership declines. Most dealerships have managed to grow their businesses without much growth in employees. This operating leverage should continue to increase as dealerships become more fulfillment centers than showrooms/selling spaces. ABG should be able to generate steady-state free-cash per share of $20-$30 implying we own the business at a 12-20% free-cash flow yield on quarter-end pricing. We should do well with or without much growth in the business. Berkshire Hathaway Below is the rough Berkshire Hathaway Inc. (NYSE:BRK.A) on-a-napkin valuation I like to do periodically. Recently BRK acquired Alleghany for $11.6BB. I assume a reduction in cash for this amount and an increase of $550MM in operating income. I do not give benefit to the increased float nor any synergies. Again, this is a rough exercise to sanity check our assumptions. Cash of ~$103,000 per class A Share (vs. $104k 1 year ago) Down/Base/Up marks cash at book value to an 8% premium (vs. to 10% a year ago) Investments based on December prices ~$248,000 per class A share (vs. $194k a year ago) Presume a range of stock prices that result in: Down = $149,000 per class A share (-40%- assumes portfolio is overpriced) Base = $211,000 per class A share (-15% - assumes portfolio is overpriced) Up = $285,000 per class A share (+15%) Operating businesses that should generate ~$17,000 of pre-tax income per Class A share (vs. $15k) Down = 9x = $153,000 per share – equates to ~8% FCF yield Base = 12x = $204,000 – equates to ~6% FCF yield Up = 12x = $204,000 – equates to ~6% FCF yield Overall (vs. $529,000 at quarter end) Down = $413,000 (-28%) Base = $526,000 (fairly priced) Up = $600,000 (13% underpriced) Going forward I expect Berkshire to compound at good, not great returns. The likely question is why own it at all if we expect modest returns… BRK is a collection of high-quality businesses, excellent management, and a good amount of optionality in their cash position. If the cash were to be deployed accretively the true value would be greater than an 8% premium (as mentioned above). The combination of a pie that is growing, an increasing share of said pie due to stock buybacks, upside optionality from cash and a tight range of likely business outcomes that span a variety of economic futures gives me comfort in continuing to own Berkshire. Builders FirstSource Builders FirstSource, Inc. (NYSE:BLDR) is a supplier and manufacturer of building materials for professional homebuilders, subcontractors, remodelers, and consumers. Their products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows and custom millwork. The fundamental discussion about homebuilders applies to BLDR. As more homes are built across the country, there will be an increased need for scaled sourcing of products to homebuilders. There is a large amount of fragmentation in the supply chain which provides BLDR a long runway for acquisitions and realistic synergies. The management team has been using their prodigious free cash flow to both acquire new businesses and buy in their stock. While I historically always liked their business, their historic high-debt levels gave me pause. They have right sized their balance sheet and are taking a very thoughtful view on capital allocation on behalf of shareholders. BLDR should be able to generate $7-$10 a share in cash in the medium term with significant upside if they can scale through acquisition and/or further penetrate existing markets. We own it at a 11-15% free-cash flow yield so little growth is needed for us to compound value at high rates. Green Brick Partners Green Brick Partners Inc (NYSE:GRBK) is a residential land developer and homebuilder. Most of their operations are in Texas, Georgia, and Florida. GRBK was formerly a private partnership between Jim Brickman and entities related to Greenlight Capital (managed by David Einhorn). David is currently the Chairman of the Board. As discussed earlier, there is a long-term fundamental supply/demand imbalance in housing inventory. This is a direct result of underproduction of new homes amid a challenging mortgage financing environment over the last 10+ years since the Great Financial Crisis. Looking forward we should have increased housing demand from millennials as they enter the family-phase of life and desire more space. It is rare to be able to partner with an excellent operator and an excellent capital allocator. As evidenced by our investment in AutoNation, when you marry those 2 concepts you can wind up with a wonderful result. GRBK has been reinvesting their cashflow in additional lots/land inventory. This masks the earnings power of the company. The company is valued somewhere between 5-8x steady-state earnings and potentially even cheaper than that. I tend to be more conservative given the potential for rate rises and inflationary increases in development costs. We have high-quality stewards at both the operating and Board level. Texas Pacific Land Texas Pacific Land Corp (NYSE:TPL) had fallen out of our top 5 in our past letter due to the increase in value of other investments and a modest reduction in our holdings. Additionally, I was cautious as there were some corporate governance issues to be addressed. We appreciate and express our thanks to management as well as some of our fellow shareholders for resolving one of the matters and having the unqualified Board Member exit the Board of Directors. As a reminder, TPL is a royalty company with 100% of their acreage located in the Texas Permian Basin. In a nutshell they make money when drilling activity occurs but DO NOT have the capital needs as they simply provide access to land. The incremental amount of work on TPL’s part is minimal as the extraction and movement of the oil/natural gas is undertaken by others. They are merely a toll collector with Returns on Capital of 80+%. In an inflationary environment, businesses that have lower capital intensity both in capital assets and people stand to benefit. In other words, if oil goes up a lot, the incremental cost to TPL is close to 0 so it’s all incremental profit. This is a business that should benefit in a massive way if we have energy inflation. In the meantime, we likely own it at a 3-4% free cash flow yield with massive upside. Ukraine Part of this job is constantly reading the news and staying abreast of both national and world events. Every day I read the tragic stories about the unneeded bloodshed in Ukraine. As hard as it might be for us all to read it, it’s important to bury our nose in it and consider how we would feel if it was our family and friends. It is in that light that I decided to donate our February management fees to various Ukrainian efforts to help children. I would implore you to not ignore bad news. During our good days we need to remain sober and empathize with those less fortunate. Thank you to our partners who have both contributed thru their management fees and on their own to these causes. I hope that as our business grows, we can collectively do more. Fund Updates As the Fund has grown, we have had to make additional filings with various regulatory agencies. During Q1 we filed with the SEC to become an exempt reporting advisor. 2021 K-1’s should have been received. If you are not in receipt, please let me know. This was a higher-tax year than the previous 4. It seemed like there was a possibility for higher capital-gain rates in 2022 so I made the determination to realize some gains in 2021. Our portfolio and business structure are set up to thrive in rocky waters. I am finding high-quality/inexpensive businesses to own and feel that we have some downside insurance protection from our equity and credit shorts. We will not chase or use our imagination when investing our capital. If we can stay sane when others are acting reckless, we can protect capital during tough times and take advantage of dislocations. Over the last 5-10 years there has been a lot of foolishness and creative investing which provides us a competitive advantage over the coming years. Thank you for your trust and support. Black Bear Value Partners, LP Adam@BlackBearFund.Com www.blackbearfund.com Updated on Apr 8, 2022, 12:30 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkApr 8th, 2022

YouTube is facing a reckoning. Insiders explain how CEO Susan Wojcicki skirted scrutiny for years and why that could be about to change.

This edition of Insider Weekly: Insiders say a reckoning is coming to YouTube, people are worried about Zillow, and the top TV streamers. Welcome back to Insider Weekly! I'm Matt Turner, co-editor-in-chief of business at Insider.YouTube is a $1 trillion tech giant you likely rarely think about. That's deliberate.The video giant, part of the tech behemoth Alphabet, has a global audience that watches more than 1 billion hours' worth of videos every day. In the first half of this year, it booked $13 billion in revenue. As a standalone company, it would be worth $1 trillion, according to one analyst. And yet, while Jeff Bezos, Mark Zuckerberg, and the Alphabet boss Sundar Pichai have faced grillings on Capitol Hill, the YouTube chief Susan Wojcicki has kept herself and her media empire out of the spotlight. In their story this week, Hugh Langley and Rob Price talked to insiders about how YouTube really operates, how Wojcicki has been able to skirt scrutiny, and whether it can last. Read on to get the inside story on their reporting.Also in this week's newsletter:More and more Gen Zers want to work remotely. But that means they have to learn how to become adults over Zoom. The TV-streaming era is upon us, and television players want to sell their shows to the biggest platforms. Netflix isn't their No. 1 pick.People are worrying about Zillow. These home listings help explain why.Let me know what you think of all our stories at mturner@insider.comSubscribe to Insider for access to all our investigations and features. New to the newsletter? Sign up here. Download our app for news on the go - click here for iOS and here for Android.How YouTube has avoided the scrutiny facing Facebook The Google exec Philipp Schindler said the "shift to online video and streaming" was key to the firm's success Sean Gallup/Getty Images Hugh Langley and Rob Price take us behind the scenes of their reporting on how Susan Wojcicki built YouTube into a juggernaut.What prompted you to start looking into YouTube at this moment in Big Tech? Rob: YouTube is fascinating because it has 2 billion users, but it's often left out of the conversation around social media and Big Tech entirely. Almost uniquely of major tech leaders, CEO Susan Wojcicki has never testified before Congress. We wanted to understand how she's managed that and how YouTube really makes decisions.How did you two tackle reporting on this story together? Hugh: We started by sketching out the general contours of the story and the questions we wanted answered. We then spoke to dozens of people - employees, creators, external stakeholders. The reporting was always evolving, but we had a lot of communication through the process - and a lot of spreadsheets.What was one of the most surprising things you uncovered in your reporting? Rob: One thing that really struck me is how much of YouTube's essential infrastructure for making decisions on policy came into being relatively late in its existence. It was only in 2017 - after a major advertiser boycott - that it launched its internal policy council for making decisions about controversial content, as well as an internal blacklist of terrorist groups and other dangerous individuals.What should readers take away from this report? Hugh: One big takeaway is the tricky balancing act Susan is pulling off. The other is YouTube's reach. We all know that billions of people use YouTube, but it also has an outsized influence on other platforms such as Facebook. That makes stamping out harmful content an even bigger responsibility.Read the full report: YouTube CEO Susan Wojcicki built a $1 trillion video empire by skirting scrutiny and not acting like Facebook.For more on YouTube: Leaked org charts reveal the 49 most important people at YouTube who run the $1 trillion Google-owned video platformGrowing up (on Zoom) RichVintage/Getty Images The pandemic has pushed office life out the door, and Gen Zers are ready to work remotely forever. But a great deal of how people grow, mature, and learn to deal with interpersonal challenges has historically happened in the workplace. As our senior correspondent Rebecca Knight reports, young people will now have to learn how to become adults over Zoom. People used to grow up on the job. Here's what happens now. TV players want to sell their shows to streaming giants Apple; Disney+; Netflix; Hulu; Amazon; HBO; Insider The launch of new streaming services has shaken up Hollywood's hierarchy of top TV buyers. According to entertainment-industry insiders, HBO is the creative holy grail for pros - surpassing Netflix and others as the most desired TV-show landing spot.Creators who sell to HBO know they'll get a promotional and awards push, though Apple TV+ does have the draw of A-list stars. Disney, Netflix, and Hulu have their own attributes, too. 18 TV players reveal where they want to sell their shows - and why.Zillow is stirring up worry Rafael Henrique/SOPA Images/LightRocket via Getty Images Zillow has paused homebuying for the rest of the year, leading some to speculate about its algorithm. Insider dug into fewer than 100 listings and found 30 homes Zillow was selling for less than it paid. Zillow's losses highlight the razor-thin margin for error in an environment in which real-estate prices grew at levels unseen since the run-up to the 2008 financial crisis before cooling down.These five homes it purchased explain what's happening.More of this week's top reads:Black founders and execs in Silicon Valley are investing in themselves to create change and diversify the startup landscape. Rolling Stone's new editor-in-chief aims to revamp the storied publication. But first, he'll have to address its diversity issues. Blackstone has a secret weapon to scout for hot tech deals: its own engineers. Crypto seems like nonsense. But lots of people keep getting rich from it. So am I the dumb one?Pete Buttigieg's 2020 donors have their eyes set on 2024. They're prepping for a post-Biden era campaign against VP Harris.There's been a turning point in the Elizabeth Holmes trial. The prosecution produced a smoking gun. Sponsored event invite: We are in the midst of the Great Resignation. Join us November 4 at 12 p.m. ET. for a virtual event presented by Facebook Workplace to learn about building effective hybrid cultures, workflow transformation, and more. Register here.Compiled with help from Phil Rosen.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 24th, 2021

Transcript: Soraya Darabi

     The transcript from this week’s, MiB: Soraya Darabi, TMV, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This… Read More The post Transcript: Soraya Darabi appeared first on The Big Picture.      The transcript from this week’s, MiB: Soraya Darabi, TMV, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest. Her name is Soraya Darabi. She is a venture capital and impact investor who has an absolutely fascinating background working for, first with the New York Times Social Media Group then with a startup that eventually gets purchased by OpenTable, and then becoming a venture investor that focuses on women and people of color-led startups which is not merely a way to, quote-unquote, “do good” but it’s a broad area that is wildly underserved by the venture community and therefore is very inefficient. Meaning, there’s a lot of upside in this. You can both do well and do good by investing in these areas. I found this to be absolutely fascinating and I think you will also, if you’re at all interested in entrepreneurship, social media startups, deal flow, how funds identify who they want to invest in, what it’s like to actually experience an exit as an entrepreneur, I think you’ll find this to be quite fascinating. So with no further ado, my conversation with TMV’s Soraya Darabi. VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. My special guest this week is Soraya Darabi. She is the Co-Founder and General Partner of TMV, a venture capital firm that has had a number of that exits despite being relatively young, 65 percent of TMV’s startups are led by women or people of color. Previously, she was the cofounder of Foodspotting, an app named App of the Year by Apple and Wire that was eventually purchased by OpenTable. Soraya Darabi, welcome to Bloomberg. SORAYA DARABI; GENERAL PARTNER & FOUNDER; TMV: My goodness, Barry, thank you for having me. RITHOLTZ: I’ve been looking forward to this conversation since our previous discussion. We were on a Zoom call with a number of people discussing blockchain and crypto when it was really quite fascinating and I thought you had such an unusual and interesting background, I thought you would make a perfect guest for the show. Let’s start with your Manager of Digital Partnerships and Social Media at the “New York Times” when social media was really just ramping up. Tell us about what that was like. Tell us what you did in the late aughts at The Times. DARABI: Absolutely. I was fresh faced out of a university. I had recently graduated with mostly a journalism concentration from Georgetown and did a small stint in Condé Nast right around the time they acquired Reddit for what will soon be nothing because Reddit’s expecting to IPO at around 15 billion. And that experience at Reddit really offered me a deep understanding of convergence, what was happening to digital media properties as they partnered for the first time when nascent but scaling social media platforms. And so the “New York Times” generously offered me a role that was originally called manager of buzz marketing. I think that’s what they called social media in 2006 and then that eventually evolved into manager of digital partnerships and social media which, in essence, meant that we were aiming to be the first media property in the world to partner with companies that are household names today but back in the they were fairly unbalanced to Facebook and Twitters, of course, but also platforms that really took off for a while and then plateaued potentially. The Tumblers of the world. And it was responsibility to understand how we could effectively generate an understanding of the burgeoning demographics of this platform and how we could potentially bring income into The Times for working with them, but more importantly have a journalist that could authentically represent themselves on new media. And so, that was a really wonderful role to have directly out of University and then introduce me to folks with whom I still work today. DARABI: That’s quite interesting. So when you’re looking at a lot of these companies, you mentioned Facebook and Twitter and Tumbler, how do you know if something’s going to be a Facebook or a MySpace, so Twitter or a Tumbler, what’s going to survive or not, when you’re cutting deals with these companies on behalf of The Times, are you thinking in terms of hey, who’s going to stick around, wasn’t that much earlier that the dot-com implosion took place prior to you starting with The Times? DARABI: It’s true, although I don’t remember the dot-com implosion. So, maybe that naivete helped because all I had was enthusiasm, unbridled enthusiasm for these new companies and I operated then and now still with a beta approach to business. Testing out new platforms and trying to track the data, what’s scaling, what velocity is this platform scaling and can we hitch a ride on the rochet ship if they will so allow. But a lot of our partnerships then and now, as an investor, are predicated upon relationships. And so, as most, I think terrific investors that I listen to, who I listen to in your show, at least, will talk to you about the importance of believing and the founder and the founder’s vision and that was the case back then and remains the case today. RITHOLTZ: So, when you were at The Times, your tenure there very much overlapped the great financial crisis. You’re looking at social media, how did that manifest the world of social media when it looked like the world of finance was imploding at that time? DARABI: Well, it was a very interesting time. I remember having, quite literally, 30-second meetings with Sorkin as he would run upstairs to my floor, in the eighth floor, to talk about a deal book app that we wanted to launch and then he’d ran back down to his desk to do much more important work, I think, and — between the financial crisis to the world. So, 30-second meetings aside, it was considered to be, in some ways, a great awakening for the Web 2.0 era as the economy was bottoming out, like a recession, it also offered a really interesting opportunity for entrepreneurs, many of whom had just been laid off or we’re looking at this as a sizeable moment to begin to work on a side hustle or a life pursuit. And so, there’s — it’s unsettling, of course, any recession or any great awakening, but lemonade-lemons, when the opening door closing, there was a — there was a true opportunity as well for social media founders, founders focusing on convergence in any industry, really, many of which are predicated in New York. But again, tinkering on an idea that could ultimately become quite powerful because if you’re in the earliest stage of the riskiest asset class, big venture, there’s always going to be seed funding for a great founder with a great idea. And so, I think some of the smartest people I’d ever met in my life, I met at the onset of the aftermath of that particular era in time. RITHOLTZ: So you mentioned side hustle. Let’s talk a little bit about Foodspotting which is described as a visual geolocal guide to dishes instead of restaurants which sounds appealing to me. And it was named App of the Year by both Apple and Wired. How do you go from working at a giant organization like The Times to a startup with you and a cofounder and a handful of other coders working with you? DARABI: Well, five to six nights a week after my day job at the “New York Times,” I would go to networking events with technologists and entrepreneurs after hours. I saw that a priority to be able to partner from the earliest infancy with interesting companies for that media entity. I need to at least know who these founders were in New York and Silicon Valley. And so, without a true agenda other than keen curiosity to learn what this business were all about, I would go to New York tech meetup which Scott Heiferman of meetup.com who’s now in charge LP in my fund would create. And back then, the New York Tech Meetup was fewer than 40 people. I believe it’s been the tens of thousands now. RITHOLTZ: Wow, that’s … DARABI: In New York City alone. And so, it was there that I met some really brilliant people. And in particular, a gentleman my age who’s building a cloud-computing company that was essentially arbitraging AWS to repopulate consumer-facing cloud data services for enterprises, B2B2C play. And we all thought it would be Dropbox. The company ultimately wasn’t, but I will tell you the people with whom I worked with that startup because I left the “New York Times” to join that startup, to this day remain some of the most successful people in Silicon Valley and Alley. And actually, one of those persons is a partner at our firm now, Darshan. He was the cofounder of that particular company which is called drop.io. but I stayed there very quickly. I was there for about six months. But at that startup, I observed how a young person my age could build a business, raise VC, he was the son of a VC and so he was exceptionally attuned to the changing landscape of venture and how to position the company so that it would be attractive to the RREs of the world and then the DFJs. And I … RITHOLTZ: Define those for us. RREs and BFJs. DARABI: Sorry. Still, today, very relevant and very successful venture capital firms. And in particular, they were backing a lot of the most interesting ideas in Web 2.0 era when I joined this particular startup in 2010. Well, that startup was acquired by Facebook and I often say, no, thanks to me. But the mafia that left that particular startup continues to this day to coinvest with one another and help one another’s ideas to exceed. And it was there that I began to build the confidence, I think, that I really needed to explore my own entrepreneurial ideas or to help accelerate ideas. And Foodspotting was a company that I was advising while at that particular startup, that was really taking off. This was in the early days of when Instagram was still in beta and we observed that the most commonly posted photos on Instagram were of food. And so, by following that lead, we basically built an app as well that activity that continues to take place every single day. I still see food photos on Twitter every time I open up my stream. And decided to match that with an algorithm that showed folks wherever they were in the world, say in Greece, that might want spanakopita or if I’m in Japan, Okinawa, we help people to discover not just the Michelin-rated restaurants or the most popular local hunt in New York but rather what’s the dish that they should be ordering. And then the app was extremely good was populating beautiful photos of that particular dish and then mirroring them with accredited reviews from the Zagats of the world but also popular celebrity shots like Marcus Samuelsson in New York. And that’s why we took off because it was a cult-beloved app of its time back when there were only three geolocation apps in the iTunes apparently store. It was we and Twitter and Foursquare. So, there was a first-mover advantage. Looking back in hindsight, I think we sold that company too soon. OpenTable bought the business. A year and a half later, Priceline bought OpenTable. Both were generous liquidity events for the founders that enabled us to become angel investors. But sometimes I wish that that app still existed today because I could see it being still incredibly handy in my day-to-day life. RITHOLTZ: To say the least. So did you have to raise money for Foodspotting or did you just bootstrapped it and how did that experience compare with what that exit was like? DARABI: We did. We raised from tremendous investors like Aydin Senkut of Felicis Ventures whom I think of as being one of the best angel investors of the world. He was on the board. But we didn’t raise that much capital before the business is ultimately sold and what I learned in some of those early conversations, I would say, that may have ultimately led to LOIs and term sheets was that so much of M&As about wining and dining and as a young person, particularly for me, you and I discussed before the show, Barry, we’re both from New York, I’m not from a business-oriented family to say the least. My mom’s an academic, my father was a cab driver in New York City. And so, there are certain elements of this game, raising venture and ultimately trying to exit your company, that you don’t learn from a business book. And I think navigating that as a young person was complicated if I had to speak economically. RITHOLTZ: Quite fascinating. What is purposeful change? DARABI: Well, the world purpose, I suppose, especially in the VC game could come across as somewhat of a cliché. But we try to be as specific as possible when we allude to the impact that our investment could potentially make. And so, specifically, we invest in five verticals at our early stage New York City-based venture fund. We invest in what we call the care economy, just companies making all forms of care, elder care to pet care to health care, more accessible and equitable. We invest in financial inclusion. So this is a spin on fintech. These are companies enabling wealth creation, education, and most importantly literacy for all, that I think is really important to democratization of finance. We invest in the future of work which are companies creating better outcomes for workers and employees alike. We invest in the future of work which are companies creating better outcomes for workers and employers alike. We invest in purpose as it pertains to transportation. So, not immediately intuitive but companies creating transparency and efficiency around global supply chain and mobility. I’m going to talk about why we pick that category in a bit. And sustainability. So, tech-enabled sustainable solutions. These are companies optimizing for sustainability from process to product. With these five verticals combined, we have a subspecies which is that diverse founders and diverse employee bases and diverse cap table. It is not charity, it’s simply good for business. And so, in addition to being hyper specific about the impact in which we invest, we also make it a priority and a mandate at our firm to invest in the way the world truly look. And when we say that on our website, we link to census data. And so, we invest in man and women equally. We invest in diverse founders, almost all of the time. And we track this with data and precious to make sure that our investments reflect not just one zip code in California but rather America at large. RITHOLTZ: And you have described this as non-obvious founders. Tell us a little bit about that phrase. DARABI: Well, not obvious is a term you hear a lot when you go out to Silicon Valley. And I don’t know, I think it was coined by a well-known early PayPal employee turned billionaire turned investor who actually have a conference centered around non-obvious ideas. And I love the phrase. I love thinking about investment PC that are contrary because we have a contrary point of view, contrarian point of view, you often have outlier results because if you’re right, you’re taking the risk and your capturing the reward. When you’re investing in non-obvious founders, it should be that is the exact same outcome. And so, it almost sort of befuddled me as a person with a hard to pronounce name in Silicon Valley, why it was that we’re an industry that prides itself on investing in innovation and groundbreaking ideas and the next frontier of X, Y, and Z and yet all of those founders in which we were investing, collectively, tended to kind of look the same. They were coming from the same schools and the same types of families. And so, to me, there was nothing innovative at all about backing that Wharton, PSB, HBS guy who is second or third-generation finance. And what really excites me about venture is capturing a moment in time that’s young but also the energy is palpable around not only the idea in which the founder is building but the categories of which they’re tackling and that sounded big. I’ll be a little bit more speficic. And so, at TMV, we tried to see things before they’re even coming around the bend. For instance, we were early investors in a company called Cityblock Health which is offering best in class health care specifically for low income Americans. So they focus on the most vulnerable population which are underserved with health care and they’re offering them best in class health care access at affordable pricing because it’s predominantly covered through a payer relationship. And this company is so powerful to us for three reasons because it’s not simply offering health care to the elite. It’s democratizing access to care which I think is absolutely necessary in term out for success of any kind. We thought this was profoundly interesting because the population which they serve is also incredibly diverse. And so when you look at that investment over, say, a comparable company, I won’t name names, that offers for-profit health care, out-of-pocket, you can see why this is an opportunity that excites us as impact investors but we don’t see the diversity of the team it’s impact. We actually see that as their unfair advantage because they are accessing a population authentically that others might ignore. RITHOLTZ: Let me see if I understand this correctly. When you talk about non-obvious find — founders and spaces like this, what I’m hearing from you is you’re looking at areas where the market has been very inefficient with how it allocates capital … DARABI: Yes. RITHOLTZ: … that these areas are just overlooked and ignored, hey, if you want to go on to silicon valley and compete with everybody else and pay up for what looks like the same old startup, maybe it will successful and maybe it won’t, that’s hypercompetitive and hyper efficient, these are areas that are just overlooked and there is — this is more than just do-goodery for lack of a better word. There are genuine economic opportunities here with lots of potential upside. DARABI: Absolutely. So, my business partner and I, she and I found each other 20 years ago as undergrads at Georgetown but we went in to business after she was successful and being one of the only women in the world to take a shipping business public with her family, and we got together and we said we have a really unique access, she and I. And the first SPV that we collaborated on back in 2016 was a young business at the time, started by two women, that was focused on medical apparel predominantly for nurses. Now it’s nurses and doctors. And they were offering a solution to make medical apparel, so scrubs, more comfortable and more fashionable for nurses. I happen to have nurses and doctors in my family so doing due diligence for this business is relatively simple. I called my aunt who’s a nurse practitioner, a nurse her life, and she said, absolutely. When you’re working in a uniform at the hospital, you want something comfortable with extra pockets that makes you look and feel good. The VCs that they spoke to at the time, and they’ve been very public about this, in the beginning, anyway, were less excited because they correlated this particular business for the fashion company. But if you look back at our original memo which I saved, it says, FIGS, now public on the New York Stock Exchange is a utility business. It’s a uniform company that can verticalize beyond just medical apparel. And so, we helped value that company at 15 million back in 2016. And this year, in 2021, they went public at a $7 billion market cap. RITHOLTZ: Wow. DARABI: And so, what is particularly exciting for us going back to that conversation on non-obvious founders is that particular business, FIGS, was the first company in history to have two female co-founders go public. And when we think of success at TMV, we don’t just think about financial success and IRR and cash on cash return for our LPs, of course we think about that. But we also think who are we cheerleading and with whom do we want to go into business. I went to the story on the other side of the fence that we want to help and we measure non-obvious not just based on gender or race because I think that’s a little too precise in some ways. Sometimes, for us non-obvious, is around geography, I would say. I’m calling you from Athens, as you know, and in Greece, yesterday, I got together with a fund manager. I’m lucky enough to be an LP in her fund and she was talking about the average size of a seed round in Silicon Valley these days, hovering around 30 million. And I was scratching my head because at our fund, TMV, we don’t see that. We’re investing in Baltimore, Maryland, and in Austin, Texas and the average price for us to invest in the seed round is closer to 5 million or 6 million. And so, we actually can capture larger ownership of the pie early on and then develop a very close-knit relationship with these founders but might not be as networked in the Valley where there’s 30 VC funds to everyone that exist in Austin, Texas. RITHOLTZ: Right. DARABI: And so, yes, I think you’re right to say that it’s about inefficiencies in market but also just around — about being persistent and looking where others are not. RITHOLTZ: That’s quite intriguing. Your team is female-led. You have a portfolio of companies that’s about 65 percent women and people of color. Tell us how you go about finding these non-obvious startups? DARABI: It’s a good question. TMV celebrates its five-year anniversary this year. So the way we go about funding companies now is a bit different than the way we began five years ago. Now, it’s systematic. We collectively, as a partnership, there are many of us take over 50 calls a month with Tier 1 venture capital firms that have known us for a while like the work that we do, believe in our value-add because the partnership comprised of four more operators. So, we really roll up our sleeves to help. And when you’ve invested at this firms, enough time, they will write to you and say I found a company that’s a little too early for us, for XYZ reason, but it resonates and I think it might be for you. So we found some of our best deals that way. But other times, we found our deal flow through building our own communities. And so, when I first started visit as an EM, an emerging manager of a VC firm. And roughly 30 percent of LP capital goes to EM each year but that’s sort of an outsized percentage because when you think about the w-fix-solve (ph) addition capital, taking 1.3 billion of that pie, then you recognize the definition of emerging manager might need to change a bit. So, when I was starting as an EM, I recognize that the landscape wasn’t necessarily leveled. If you weren’t, what’s called the spinout, somebody that has spent a few years at a traditional established blue-chip firm, then it’s harder to develop and cultivate relationships with institutional LPs who will give you a shot even though the data absolutely points to there being a real opportunity in capturing lightning in a bottle if you find a right EM with the right idea in the right market conditions which is certainly what we’re in right now. And so, I decided to start a network specifically tailored around helping women fund managers, connecting one another and it began as a WhatsApp group and a weekly Google Meet that has now blown into something that requires a lot of dedicated time. And so we’re hiring an executive director for this group. They’re called Transact Global, 250 women ex-fund managers globally, from Hong Kong, to Luxembourg, to Venezuela, Canada, Nigeria, you name it. There are women fund managers in our group and we have one of the most active deal flow channels in the world. And so two of our TMV deals over the last year, a fintech combatting student debt and helping young Americans save for retirement at the same time, as an example, came from this WhatsApp deal flow channel. So, I think creating the community, being the change, so to speak, has been incredibly effective for us a proprietary deal flow mechanism. And then last but not least, I think that having some sort of media presence really has helped. And so, I’ve hosted a podcast and I’ve worked on building up what I think to be a fairly organic Twitter following over the years and we surprise ourselves by getting some really exceptional founders cold pitching us on LinkedIn and on Twitter because we make ourselves available as next gen EMs. So, that’s a sort of long-winded answer to your question. But it’s not the traditional means by any means. RITHOLTZ: To say the least. Are you — the companies you’re investing in, are they — and I’ll try and keep this simple for people who are not all that well-versed in the world of venture, is it seed stage, is it the A round, the B round? How far into their growth process do you put money in? DARABI: So it is a predominantly seed fund. We call our investments core investments. So, these are checks that average, 1 and 1.5 million. So for about 1.25 million, on average, we’re capturing 10-15% of a cap payable. And in this area, that’s called a seed round. It will probably be called a Series A 10 years ago. RITHOLTZ: Right. DARABI: And then we follow on through the Series A and it max around, I think, our pro rata at the B. So, our goal via Series B is to have, on average, 10% by the cap. And then we give ourselves a little bit of wiggle room with our modeling. We take mars and moonshot investments with smaller checks so we call these initial interest checks. And initial interest means I’m interested but your idea is still audacious, they won’t prove itself out for three or four years or to be very honest, we weren’t the first to get into this cap or you’re picking Sequoia over us, so we understand but let’s see if we can just promise you a bit of value add to edge our way into your business. RITHOLTZ: Right. DARABI: And oftentimes, when you speak as a former founder yourself with a high level of compassion and you promise with integrity that you’re going to work very hard for that company, they will increase the size of their round and they will carve out space for you. And so, we do those types of investments rarely, 10 times, in any given portfolio. But what’s interesting in looking back at some of our outliers from found one, it came from those initial interest checks. So that’s our model in a nutshell. We’re pretty transparent about it. What we like about this model is that it doesn’t make us tigers, we’re off the board by the B, so we’re still owning enough of the cap table to be a meaningful presence in the founder’s lives and in their business and it allows us to feel like we’re not spraying and praying. RITHOLTZ: Spraying and praying is an amusing term but I’m kind of intrigued by the fact that we use to call it smart money but you’re really describing it as value-added capital when a founder takes money from TMV, they’re getting more than just a check, they’re getting the involvement from entrepreneurs who have been through the process from startup to capital raise to exit, tell us a li bit about how that works its way into the deals you end up doing, who you look at, and what the sort of deal flow you see is like. DARABI: Well, years ago, I had the pleasure of meeting a world-class advertiser and I was at his incredibly fancy office down in Wall Street, his ad agency. And he described to me with pride how he basically bartered his marketing services for one percent of a unicorn. And he was sort of showing off of it about how, from very little time and effort, a few months, he walked away with a relatively large portion of a business. And I thought, yes, that’s clever. But for the founder, they gave up too much of their business too soon. RITHOLTZ: Right. DARABI: And I came up with an idea that I floated by Marina back in the day where our original for TMV Fund I began with the slide marketing as the future of venture and venture is the future of marketing. Meaning, it’s a VC fund where the position itself more like an ad agency but rather than charging for its services, it’s go-to-market services. You offer them free of charge but then you were paid in equity and you could quantify the value that you were offering to these businesses. And back then, people laughed us even though all around New York City, ad agencies were really doing incredible work and benefiting from the startups in that ecosystem. And so, we sort of changed the positioning a bit. And now, we say to our LPs and to our founders, your both clients of our firm. So, we do think of ourselves as an agency. But one set of our marketplace, you have LPs and what they want is crystal clear. The value that they derive from us is through a community and connectivity and co-investment and that’s it. It’s pretty kind of dry. Call me up once a year where you have an exceptional opportunity. Let me invest alongside you. Invite me to dinners four times a year, give me some information and a point of view that I can’t get elsewhere. Thank you for your time. And I love that. It’s a great relationship to have with incredibly smart people. It’s cut and dry but it’s so different. What founders want is something more like family. They want a VC on their board that they can turn to during critical moments. Two a.m. on a Saturday is not an uncommon time for me to get a text message from a founder saying what do I do. So what they want is more like 24/7 services for a period of time. And they want to know when that relationship should start and finish. So it’s sort of the Montessori approach to venture. We’re going to tell them what we’re going to tell them. Tell them what they’re telling them. Tell them what we told them. We say to founders with a reverse pitch deck. So we pitch them as they’re pitching us. Here’s what we promise to deliver for you for the first — each of the 24 months of your infancy and then we promise you we’ll mostly get lost. You can come back to use when your business is growing if you want to do it tender and we’ll operate an SPV for you for you or if you simply want advice, we’re never going to ignore you but our specialty, our black belt, if you will, Barry, is in those first 24 months of your business, that go-to-market. And so, we staffed up TMV to include, well, it’s punching above our weight but the cofounder of an exceptionally successful consumer marketing business, a gross marketer, a recruiter who helps one of our portfolio companies hire 40 of their earliest employees. We have a PR woman. You’ve met Viyash (ph), she’s exceptional with whom, I don’t know, how we would function sometimes because she’s constantly writing and re-editing press releases for the founders with which we work. And then Anna, our copywriter who came from IAC and Sean, our creative director, used to be the design director for Rolling Stone, and I can go on and on. So, some firms called us a platform team but we call it the go-to-market team. And then we promise a set number of hours for ever company that we invest into. RITHOLTZ: That’s … DARABI: And then the results — go ahead. RITHOLTZ: No, that’s just — I’m completely fascinated by that. But I have to ask maybe this is an obvious question or maybe it’s not, so you — you sound very much like a non-traditional venture capital firm. DARABI: Yes. RITHOLTZ: Who are your limited partners, who are your clients, and what motivates them to be involved with TMV because it sounds so different than what has been a pretty standard model in the world of venture, one that’s been tremendous successful for the top-tier firms? DARABI: Our LP set is crafted with intention. And so, 50% of our investors are institutional. This concludes institutional-sized family offices and family offices in a multibillions. We work with three major banks, Fortune 500 banks. We work with a couple of corporate Fortune 500 as investors or LPs and a couple of fund to funds. So that’s really run of the mill. But 50 percent of our investors and that’s why I’m in Athens today are family offices, global family offices, that I think are reinventing with ventures like, to look like in the future because wealth has never been greater globally. There’s a trillion dollars of assets that are passing to the hands of one generation to the next and what’s super interesting to me, as a woman, is that historically, a lot of that asset transferred was from father to son, but actually, for the first time in history, over 50 percent, so 51% of those asset inheritors are actually women. And so, as my business partner could tell because she herself is a next gen, in prior generations, women were encouraged to go into the philanthropic or nonprofit side of the family business … RITHOLTZ: Right. DARABI: And the sons were expected to take over the business or the family office and all of that is completely turned around in the last 10 years. And so, my anchor investor is actually a young woman. She’s under the age of 35. There’s a little bit of our firm that’s in the rocks because we’re not playing by the same rules that the establishment has played by. But certainly, we’re posturing ourselves to be able to grow in to a blue-chip firm which is why we want to maintain that balance, so 50 percent institutional and 50 percent, I would call it bespoke capital. And so, the LPs that are bespoke, we work at an Australian family office and Venezuelan family office and the Chilean family office and the Mexican family office and so on. For those family offices, we come to them, we invite them to events in New York City, we give them personalized introductions to our founders and we get on the phone with them. Whenever they’d like, we host Zooms. We call them the future of everything series. They can learn from us. And we get to know them as human beings and I think that there’s a reason why two thirds of our Fund I LPs converted over into Fund II because they like that level of access, it’s what the modern LP is really looking for. RITHOLTZ: Let’s talk a little bit about some of the areas that you find intriguing. What sectors are really capturing your attention these days? What are you most excited about? DARABI: Well, Barry, I’m most excited about five categories for which we’ve been investing for quite some time, but they’re really being accelerated due to the 2020 pandemic and a looming recession. And so, we’re particularly fascinated by not just health care investing as has been called in the past but rather the care economy. I’m not a huge fan of the term femtech, it always sounds like fembot to me. But care as it pertains to women alone is a multitrillion dollar opportunity. And so, when we think of the care economy, we think of health care, pet care, elder care, community care, personal care as it pertains to young people, old people, men, women, children, we bifurcate and we look for interesting opportunities that don’t exist because they’ve been undercapitalized, undervalued for so long. Case in point, we were early investors Kindbody, a reproductive health care company focused on women who want to preserve their fertility because if you look at 2010 census data, you can see that the data has been there for some time that women, in particular, were delaying marriage and childbirth and there are a lot of world-famous economists who will tell you this, the global population will decline because we’re aging and we’re not necessarily having as many children as we would have in the past plus it’s expensive. And so, we saw that as investors as a really interesting opportunity and jumped on the chance to ask Gina Bartasi who’s incredible when she came to us with a way to make fertility preservation plus expenses. So she followed the B2C playbook and she started with the mobile clinic that helps women freeze their eggs extensively. That company has gone on to raise hundreds — pardon me — and that company is now valued in the hundreds of million and for us, it was as simple as following our intuition as women fund managers, we know what our peers are thinking about because we talk to them all the time and I think the fact that we’re bringing a new perspective to venture means that we’re also bringing a new perspective to what has previously been called femtech. We invest in financial inclusion. Everyone in the world that’s investing fintech, the self-directed financial mobile apps are always going to be capitalized especially in a post Robin Hood era but we’re specifically interested in the democratization of access to financial information and we’re specifically interested in student debt and alleviating student debt in America because not only is it going to be one of the greatest challenges our generation will have to overcome, but it’s also prohibiting us from living out the American dream, $1.7 trillion of student debt in America that needs to be alleviated. And then we’re interested in the future of work, and long have been, that certainly was very much accelerated during the pandemic but we’ve been investing in the 1099 and remote work for quite some time. And so, really proud to have been the first check into a company called Bravely which is an HR chatbot that helps employees inside of a company chat a anonymously with HR representatives outside of that company, that’s 1099. That issue is like DEI, an inclusion and upward mobility and culture setting and what to do when you’re all of a sudden working for home. So that’s an example of a future of work business. And then in the tech-enabled sustainable solutions category, it’s a mouthful, let’s call that sustainability, we are proud to have been early investors of a company called Ridwell, out of Seattle Washington, focused on not just private — privatized recycling but upcycling and reconnaissance. Where are our things going when we recycle them? For me, it always been a pretty big question. And so, Ridwell allows you to re and upcycle things that are hard to get rid of out of your home like children’s eyeglasses and paints and battery, single-use plastic. And it shows you where those things are going which I think is super cool and there’s good reason why it has one of the highest NPS scores, Net Promoter Scores, of any company I’ve ever worked with. People are craving this kind of modern solution. And last but not least, we invest in transportation and part because of the unfair advantage my partner, Marina, brings to TMV as she comes from a maritime family. And so, we can pile it, transportation technology, within her own ecosystem. That’s pretty great. But also, because we’re just fascinated by the fact that 90 percent of the world commodities move on ship and the biggest contributor to emissions in the world outside of corporate is coming from transportation. SO, if we can sort of figure out this industry, we can solve a lot of the problems that our generation are inheriting. Now, these categories might sound massive and we do consider ourselves a generalist firm but we stick to five-course sectors that we truly believe in and we give ourselves room to kick out a sector or to add a new one with any given new fund. For the most part, we haven’t needed to because this remain the categories that are not only most appealing to us as investors but I think paramount to our generation. RITHOLTZ: That’s really intriguing. Give us an example of moonshot or what you called earlier, a Mars shot technology or a company that can really be a gamechanger but may not pay off for quite a while. DARABI: We’ve just backed a company that is focusing on food science. Gosh, I can’t give away too much because they haven’t truly launched in the U.S. But maybe I’ll kind of allude to it. They use crushed produce, like, crush potato skins to make plastic but biodegrades. And so, it’s a Mars shot because it’s a materials business and it’s a food science business rolled off into both the CPG business and an enterprise business. This particular material can wrap itself around industrial pellets. Even though it’s audacious, it’s not really a Mars shot when you think about the way the world is headed. Everybody wants to figure out how do we consume less plastic and recycle plastic better. And so, if there are new materials out there that will not only disintegrate but also, in some ways, feed the environment, it will be a no-brainer and then if you add to the equation the fact that it could be maybe not less expensive but of comparable pricing to the alternative, I can’t think of a company in the world that wouldn’t switch to this solution. RITHOLTZ: Right. So this is plastic that you don’t throw away. You just toss in the garden and it becomes compost? DARABI: Yes, exactly. Exactly. It should help your garden grow. So, yes, so that’s what I would call a Mars shot in some ways. But in other ways, it’s just common sense, right? RITHOLTZ: So let’s talk a little bit about your investment vehicles. You guys run, I want to make sure I get this right, two funds and three vehicles, is that right? DARABI: We have two funds. They’re both considered micro funds because they’re both under 100 million and then we operate in parallel for SPVs that are relatively evergreen and they serve as opportunistic investments to continue to double down on our winners. RITHOLTZ: SPV is special purpose investment … DARABI: Vehicles. Yes. RITHOLTZ: Right. DARABI: And the PE world, they’re called sidecars. RITHOLTZ: That’s really interesting. So how do these gets structured? Does everything look very similar when you have a fund? How quickly do you deploy the capital and typically how long you locked for or investors locked up for? DARABI: Well investors are usually in private equity are VC funds locked up for 10 years. That’s not usual. We have shown liquidity faster, certainly, for Fund I. It’s well in the black and it’s only five years old less, four and a half years old. So, how do we make money? We charge standard fees, 2 on 20 is the rubric of it, we operate by. And then lesser fees for sidecars or direct investments. So that’s kind of how we stay on business. When you think about an emerging manager starting their first fund, management fees are certainly not so we can live a lavish rock and roll life on a $10 million fund with a two percent management fee, we’re talking about 200K for the entire business to operate. RITHOLTZ: Wow. DARABI: So Marina and I, not only anchored our first fund with their own capital but we didn’t pay ourselves for four years. It’s not glamorous. I mean, there’s some friends of mine that thing the venture capital life is glam and it is if you’re on Sand Hill Road. But if you’re an EM, it’s a lot more like a startup where you’re burning the midnight oil, you are bartering favors with your friends, and you are begging the smartest people you know to take a chance on you to invite you on to their cap table. But it somehow works out because we do put in that extra effort, I think, the metrics, certainly for Fund I have shown us that we’re in this for the long haul now. RITHOLTZ: So your fund 1 and Fund 2, are there any plans of launching Fund III? DARABI: Yes. I think that given the proof points between Fund I and Fund II and a conversation that my partner and I recently had, five years out, are we in this? Do we love this? We do. OK. This is our life’s work. So you can see larger and more demonstrable sized funds but not in an outsized way, not just because we can raise more capital now but because we want to build out a partnership and the kind of culture that we always dreamed of working for back when we were employees, so we have a very diverse set of colleagues with whom we couldn’t operate and we’ll be adding to the partnership in the next two or three years which is really exciting to say. So, yes, the TMV will be around for a while. RITHOLTZ: That’s really interesting. I want to ask you the question I ask any venture capitalist that I interview. Tell us about your best and worst investments and what did you pass on that perhaps you wish you didn’t? DARABI: Gosh. The FOMO list is so long and so embarrassing. Let me start with what I passed on that I regret. Well, I don’t know she really would have invited me to invest, but certainly, I had a wonderful conversation a peer from high school, Katrina Lake, when she was in beta mode for Stitch Fix. I think she was still at HBS at the time or had just recently graduated from Harvard. When Katrina and I had coffee in Minneapolis were we went to high school and she was telling me about the Netflix for clothing that she was building and certainly I regret not really picking up on the clues that she was offering in that conversation. Stitch Fix had an incredible IPO and I’m a proud shareholder today. And similarly, when my friend for starting Cloudflare which luckily they did bring me in to pre-IPO and I’m grateful for that, but when they were starting Cloudflare, I really should have jumped on that moment or when my buddy Ryan Graves whom I still chat with pretty frequently was starting out Uber in beta with Travis and Garrett, that’s another opportunity that I definitely missed. I was in Ireland when the Series A term sheet assigned. So there’s such a long laundry list of namedropped, namedropped, missed, missed, missed. But in terms of what I’m proud of, I’d say far more. I don’t like Sophie’s Choice. I don’t like to cherry pick the certain investments to just brag about them. But we’ve talked about someone to call today, I’d rather kind of shine a light — look at my track record, right? There’s a large realized IRR that I’m very proud of. But more on the opportunity of the companies that we more recently backed that prevent damages (ph) of CRM for oncology patient that help them navigate through the most strenuous time of their life. And by doing so, get better access to health care. And we get to wrote that check a couple of months ago. But already, it’s becoming a company that I couldn’t be more excited about because if they execute the way I think Shirley and Victor will, that has the power to help so many people in a profound way, not just in the Silicon Valley cliché way of this could change the world but this could actually help people receive better care. So, yes, I’m proud of having been an early investor in the Caspers of the world. Certainly, we’re all getting better sleep. There’s no shame there. But I’m really excited now today at investing in financial inclusion in the care economy and so on. RITHOLTZ: And let’s talk a little bit about impactful companies. Is there any different when you’re making a seed stage investment in a potentially impactful company versus traditional startup investing? DARABI: Well, pre-seed and seed investing isn’t a science and it’s certainly not a science that anyone has perfected. There are people who are incredibly good at it because they have a combination of luck and access. But if you’re a disciplined investor in any asset class and I talk to my friends who run hedge funds and work for hedge funds about 10 bets that they take a day and I think that’s a lot trickier than what I do because our do due diligence process, on average, takes an entire quarter of the year. We’re not making that many investments each year. So even though it sounds sort of fruity, when you look at a Y Combinator Demo Day, Y Comb is the biggest accelerator in Silicon Valley and they produce over 300 companies, three or four times a year. When you look at the outsized valuations coming out of Y Comb, it’s easy to think that starting company is as simple as sort of downloading a company in a Box Excel and running with it. But from where we sit, we’re scorching the earth for really compelling ideas in areas that have yet to converge and we’re looking for businesses that may have never pitched the VC before. Maybe they’re not even seeking capital. Maybe it’s a company that isn’t so interested in raising a penny eventually because they don’t need to. They’re profitable from day one. Those are the companies that we find most exciting because as former operators, we know how to appeal to them and then we also know how to work with them. RITHOLTZ: That’s really interesting. Before I get to my favorite question, let me just throw you’re a curveball, tell me a little bit about Business Schooled, the podcast you hosted for quite a while. DARABI: So, Synchrony, Sync, came to me a few years ago with a very compelling and exciting opportunity to host a podcast with them that allowed me a fortunate opportunity to travel the country and I went to just under a dozen cities to meet with founders who have persevered past their startup phase. And what I loved about the concept of business school is that the cities that I hosted were really focused on founders who didn’t have access to VC capital, they put money on credit card. So I took SBA loans or asked friends and family to give them starter capital and then they made their business work through trying times and when you pass the five-year mark for any business, I’m passing it right now for TMV, there’s a moment of reflection where you can say, wow, I did it. it’s incredibly difficult to be a startup founder, more than 60 percent of companies fail and probably for good reason. And so, yes, I hosted business school, Seasons 2 and 3 and potentially there will be more seasons and I’m very proud of the fact that at one point we cracked the top 20 business podcasts and people seem to be really entertained through these conversations with insightful founders who are vulnerable with me about what it was like to build their business and I like to think they were vulnerable because I have a good amount of compassion for the experience of being founder and also because I’m a New Yorker and I just like to talk. RITHOLTZ: You’re also a founder so there’s going to be some empathy that’s genuine. You went through what they’re going through. DARABI: Exactly. Exactly. And so, what you do, Barry, is quite similar. You’re — you host an exceptionally successful business podcast and you’re also an allocator. You know that it’s interesting to do both because I think that being an investor is a lot like being a journalist. In both professions, you won’t succeed unless you are constantly curious and if you are having conversations to listen more than you speak. DARABI: Well, I’ll let you in on a little secret since it’s so late in the podcast and fewer people will be hearing this, the people I invite on the show are essentially just conversations I want to have. If other people come along and listen, that’s fantastic. But honestly, it’s for an audience of one, namely me, the reason I wanted to have you on is because I’m intrigued by the world of venture and alternatives and impact. I think it’s safe to say that a lot of people have been somewhat disappointed in the results of ESG investing and impact investing that for — it’s captured a lot more mindshare than it has captured capital although we’re seeing signs that’s starting to shift. But then the real question becomes, all right, so I’m investing less in oil companies and more in other companies that just happen to consume fossil fuels, what’s the genuine impact of my ESG investing? It feels like it’s sort of de minimis whereas what you do really feels like it has a major impact for people who are interested in having their capital make a positive difference. DARABI: Thank you for saying that. And I will return the compliment by saying that I really enjoyed getting to know you on our one key economist Zoom and I think that you’re right. I think that ESG investing, certainly in the public markets has had diminished returns historically because the definition has been so bizarre and so all over the place. RITHOLTZ: Right. DARABI: And I read incredible books from people like Antony Bugg-Levine who helps coin the term the Rockefeller Foundation, who originally coined the term you read about, mortgage, IRR and IRS plus measurement and it’s so hard to have just standardization of what it means to be an impact investor and so it can be bothered but we bother. Rather, we kind of come up with our own subjective point of view of the world and we say what does impact mean to us? Certainly, it means not investing in sin stocks but then those sin stocks have to begin somewhere, has to begin with an idea that somebody had once upon a time. And so, whether we are investing in the way the world should look from our perspective. And with that in mind, it doesn’t have to be impact by your grandpa’s VC, it can be impact from modern generation but simply things that behave differently. Some folks with their dollars. People often say, well, my ESG portfolio is underperforming. But then if you dig in to the specifics, are you investing in Tesla? It’s not a pretty good year. Did you back Beyond Meat? Had a great year. And so, when you kind of redefine the public market not by a sleeve and a bank’s version of a portfolio, but rather by company that you think are making demonstrable change in the world, then you can walk away, realizing had I only invested in these companies that are purpose driven, I would have had outsized returns and that’s what we’re trying to deliver on at TMV. That’s the promise. RITHOLTZ: Really, really very, very intriguing. I know I only have you for a few minutes so let’s jump to my favorite questions that I ask all of our guests starting with tell us what you’re streaming these days. Give us your favorite, Netflix, Amazon Prime, or any podcast that are keeping you entertained during the pandemic. DARABI: Well, my family has been binging on 100 Foot Wave on HBO Max which is the story of big wave surfer Garrett McNamara who is constantly surfing the world’s largest waves and I’m fascinated by people who have a mission that’s sort of bigger than success or fame but they’re driven by something and part of that something is curiosity and part of it is insanity. And so not only is it visually stunning to kind of watch these big wave surfers in Portugal, but it’s also a mind trip. What motivates them to get out of bed every day and potentially risk their lives doing something so dangerous and so bananas but also at the same time so brave and heroic. So, highly recommend. I am listening to too many podcasts. I listen to, I don’t know, a stream of things. I’m a Kara Swisher fan, Ezra Klein fan, so they’re both part of the “New York Times” these days. And of course, your podcast, Barry. RITHOLTZ: Well, thank you so much. Well, thank you so much. Let’s talk a little bit about who your early mentors were and who helped shape you career? DARABI: It’s going to sound ungrateful but I don’t think, in like a post lean in definition of the word, I ever truly had a mentor or a sponsor. Now, having said that, I’ve had people who really looked at for me and been incredibly gracious with their time and capital. And so, I would absolutely like to acknowledge that first and foremost. I think about how generous Adam Grant has been with his time and his investments for TMV in Fund I and Fund II and he’s a best-selling author and worked on highest-rated business school professor. So shout out to Adam, if he’s listening or Beth Comstock, the former Vice Chair of GE who has been instrumental in my career for about a decade and a half now. And she is also really leaning in to the TMV portfolio and has become a patient of Parsley Health, an early investment of ours and also an official adviser to the business. So, people like Adam and Beth certainly come to mind. But I don’t know, I just — I’m not sure mentors really exist outside of corporate America anymore and part of the reason why we started Transact Global is to kind of foster the concept of the peer mentor, people who are going through the same thing as you at the same time and allowing that hive mentality with an abundance mentality to catalyze people to kind of go further and faster. RITHOLTZ: Let’s talk about some of your favorite books and what you might reading right now. DARABI: OK, so in the biz book world, because I know your listeners as craving, I’m a big fan of “Negotiation Genius.” I took a crash course with one of the authors, Max Bazerman at the Kennedy School and it was illuminating. I mean, he’s one of the most captivating professors I’ve ever had the pleasure of hearing lecture and this book has really helped me understand the concept of the ZOPA, the Zone of Possible Agreement, and how to really negotiate well. And then for Adam whom I just referenced, of all of his incredible books, my favorite is Give and Take because I try to operate with that approach of business. Give more than you take and maybe in the short term, you’ll feel depleted but in the long term, karma pays off. But mostly, Barry, I read fiction. I think the most interesting people in the world or at least the most entertaining at dinner parties are all avoid readers of fiction and history. So I recently reread, for instance, all of my favorite short stories from college, from Dostoyevsky’s “A Gentle Creature” to “Drown” Junot Diaz. “Passing” by Nella Larsen, “The Diamond as Big as the Ritz” by Fitzgerald. Those are some of my very favorite stories of all time. And my retirement dream is to write a book of short stories. RITHOLTZ: Really, really quite intriguing. Are they all available in a single collection or these just, going back to your favorites and just plowing through them for fun? DARABI: Those are just going back to my favorites. I try to re-read “Passing” every few years which is somehow seems to be more and more relevant as I get older and Junot Diaz has become so incredibly famous when I first read “Drown” about 20 years ago which is an original collection of short stories that broadened my perspective of why it’s important to think about a broader definition of America, I guess. And, yes, no, that’s just — that was just sort of off the top of my head as the offering of a few stories that I really love, no collection. RITHOLTZ: That’s a good collection. And we’re down to our final two questions. What sort of advice would you give to a recent college grad who was interested in a career in either venture capital or entrepreneurship? DARABI: Venture capital or entrepreneurship. Well, I would say, learn as early as possible how to trust your gut. So, this could mean a myriad of things. As an entrepreneur, it could mean under the halo effect of an institution, university or high school or maybe having a comfortable day job, tinker with ideas, get feedback on that idea, don’t be afraid of looking or sounding dumb and build that peer network that I described. People who are rooting you on and are also insatiably curious about wonky things. And I would say that for venture capital, similar play on the same theme, but whether it’s putting small amounts of money into new concept, blockchain investing, or whether it’s meeting with entrepreneurs and saying maybe I only have $3,000 save up but I believe in you enough to bet amongst friends in Brooklyn on your concept if you’ll have me as an investor. So, play with your own money because what it’s really teaching you in return is how to follow instincts and to base pattern recognition off your own judgement. And if you do that early on, overtime, these all become datapoints that you can point to and these are lessons that you can glean while not taking the risk of portfolio management. So, I guess the real advice to your listeners is more action, please. RITHOLTZ: Really very, very intriguing. And our final question, what do you know about the world of venture investing today that you wish you knew 15 or 20 years ago when you first getting started? DARABI: Twenty years ago, I was a bit of a Pollyanna and I thought every wonderful idea that simply is built by smart people and has timed the market correctly will work out. And I will say that I’m slightly more jaded today because of the capital structure that is systematically allowing the biggest firms in the world to kind of eat up a generous portion of, let’s call it the LP pie, which leaves less capital available to the young upstart VC firms, and of course I’m biased because I run one, that are taking outsized risks on those non-obvious ideas that we referenced. And so, what I wish for the future is that institutional capital kind of reprioritizes what it’s looking for. And in addition to having a bottom line of reliable and demonstrable return on any given investment, there are new standards put into play saying we want to make sure that a portion of our portfolio goes to diverse managers. Because in turn, we recognize that they are three times more likely to invest in diverse founders or we believe in impact investing can be broader than the ESG definitely of a decade ago, so we’re coming up with our own way to measure on sustainability or what impact means to us. And if they go through those exercises which I know is hard because, certainly, I’m not trying to add work to anyone’s plate, I do think that the results will more than make up for it. RITHOLTZ: Quite intriguing. Thank you, Soraya, for being so generous with your time. We have been speaking with Soraya Darabi who is the Co-Founder and General Partner at TMV Investments. If you enjoy this conversation, well, be sure and check out any of the prior 376 conversations we’ve had before. You can find those at iTunes or Spotify, wherever you buy your favorite podcast. We love your comments, feedback, and suggestions. Write to us at MIB podcast@bloomberg.net. You can sign up for my daily reads at ritholtz.com. Check out my weekly column at bloomberg.com/opinion. Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack team that helps me put these conversations together each week. Tim Harrow is my audio engineer. Paris Walt (ph) is my producer. Atika Valbrun is our project manager, Michael Batnick is my head of research. I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.   ~~~     The post Transcript: Soraya Darabi appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureOct 20th, 2021

When There’s Talk of Gun Control, Gunmakers Play the Jobs Card. They’re Often Bluffing

Gunmakers are convincing elected officials they have to choose between gun-control laws and manufacturing jobs and benefiting richly. At first he thought it was an umbrella. But when the shotgun that was pointed at John Seymour went off, hitting him in the back and the wrist, he thought he was going to die in his own barbershop. He fell to the floor and played dead as the gunman shot three of his customers, killing two of them. Then the gunman, a former customer, killed two men in a nearby oil-change shop and holed up in an abandoned restaurant, where he later died in a shootout with police. Nearly 10 years later, Seymour thinks constantly about the shooting. “To this day, anything goes, Bang bang! and I jump. What do you expect? I had a guy die on top of me at my barbershop,” says Seymour, 76, who is known locally as John the barber. “​​We never thought we’d be a mass-murder part of the country.” [time-brightcove not-tgx=”true”] But like just about everyone else in Ilion, N.Y, a small town in New York’s Herkimer County about 80 miles northwest of Albany, Seymour has a soft spot for Remington Arms, the gun manufacturer that has been located here since Eliphalet Remington started making firearms in 1816. Remington’s imposing redbrick factory looms over Main Street. Walk around downtown, past the vape shops, the peeling multifamily homes, and the Remington Federal Credit Union, and you can hear the clinking of steel being cut as the factory churns out orders. Jason Koxvold for TIMEJohn Seymour in his barber shop where he survived a mass shooting nearly a decade ago. People here don’t talk about how Remington’s version of an AR-15—made in Ilion—was used in the Sandy Hook Elementary School shooting less than 200 miles away, or that the company filed for bankruptcy twice between 2018 and 2020, because of financial engineering by the private equity firm that bought the company in 2007. They also don’t talk about how the company regularly threatens to leave New York and move somewhere cheaper, or periodically lays off hundreds of workers, leaving some in limbo for months or years. What they do talk about is Remington’s proud history of making arms for America when the country needed them the most, like during World Wars I and II—when workers had to carpool to the factory because the parking lot couldn’t fit everyone’s cars—and the affinity they have for a company that employed most of their fathers, and their father’s fathers. “They help the little village of Ilion and its 7,500 people,” says Seymour, who when he isn’t plying his trade as a barber moonlights as a wedding and event singer. His father worked at Remington for 43 years, beginning in 1932, and Seymour’s brother and brother-in-law also worked there. “They pay taxes on that building, and we give them a little break on everything.” Remington, on the other hand, has not been very kind to the village of Ilion in recent years. After decades of threatening to relocate to the South, where gun laws are friendlier and labor is cheaper, the company went so far as to move two lines of manufacturing to Alabama in 2014, after that state offered nearly $70 million and factory space rent-free. That endeavor ultimately failed, leaving the Alabama factory shuttered, and some of the equipment moved back to Ilion. When the Remington Outdoor Company filed for bankruptcy in 2020, it owed hundreds of thousands of dollars to local suppliers and utility providers, including the local shoe store, the hardware store, and Ilion’s treasurer, police department, water commission, and the roughly 609 workers it had abruptly laid off without the health care benefits or severance pay promised in their contract. Despite these slights, many Ilion residents remain unfailingly loyal to the company. “I would say that we bleed green—Remington green,” says Frank “Rusty” Brown, who has worked at the factory since 1995 and was one of the workers who protested outside the factory in 40-degree weather in October 2020, after Remington filed for bankruptcy and fired all its Ilion manufacturing workers. “This is our living; it’s how our parents made a living. I’m dedicated to the place.” Remington’s Ilion and Tennessee properties, as well as its long-gun, shotgun, and pistols businesses, were bought out of bankruptcy in 2020 by a company called the Roundhill Group LLC, which now operates Remington through a holding company called RemArms. Roundhill appears to have been created solely to purchase Remington’s assets from its bankruptcy proceedings; Richmond Italia, a paintball entrepreneur who is one of Roundhill’s two partners, said in court filings that he was approached by Ken D’Arcy, a professional race-car driver and manufacturing executive who was appointed CEO of Remington in 2019. D’Arcy suggested that Italia buy Remington’s firearms assets. (The two men knew each other because they had both served as CEOs and then sat on the board of GI Sportz, a paintball company that filed for bankruptcy in October 2020, shortly after Roundhill purchased Remington.) In November 2021, D’Arcy, who is still CEO of Remington, announced that RemArms was moving to LaGrange, Ga. Ilion officials scurried to give RemArms incentives to stay, offering a 50% discount on property taxes, but Remington seemed uninterested in negotiating. Some residents began to imagine a town without Remington; others, like Brown, remained skeptical that the factory would shut down. After all, RemArms had started calling workers like him who’d been laid off in 2020 back to the factory in April 2021 to restart manufacturing, and the company is now negotiating with the United Mine Workers of America, the union representing workers when Remington filed for bankruptcy, to ink a new contract for Ilion. The Roundhill Group did not respond to calls and emails seeking comment for this story. “Remington has been going to move elsewhere since my parents worked there,” says Brown, whose wife, two daughters, and son-in-law still work at the plant. “You hear it so many times over the years, you become numb to it.” Jason Koxvold for TIMEFrank “Rusty” Brown has worked at the Remington Arms factory since 1995. Remington’s hot-and-cold relationship with Ilion is not a rare case among American gunmakers. It may seem reasonable to assume, in light of recent state laws and lawsuits filed against them, that gun companies are under siege, their bottom lines threatened by regulations and shifting public attitudes toward firearms. But today more than ever, gun manufacturers like Remington (now RemArms), Smith & Wesson, and Colt are pulling the strings, convincing elected officials they have to choose between gun-control laws and manufacturing jobs. States in the South and West are offering millions in incentives to gun companies and loosening laws around gun ownership to show their fealty to gun culture, even as gunmakers have raked in $3 billion in profits since the pandemic began. Profits for gunmakers have been strong for the last decade, with both Smith & Wesson and Sturm Ruger & Co., the country’s two biggest gunmakers, surpassing $100 million in profit every year. That’s putting pressure on states like New York to loosen recently passed gun-control laws, to convince manufacturers to stay—even though often those manufacturers are just adding new locations in other states and not actually leaving their original homes. The gunmakers’ leverage makes sense in a country where manufacturing is still seen as the backbone of the country, even though jobs in the sector make up less than 10% of U.S. employment, down from one-quarter of employment half a century ago. Politicians and voters on the right and left often romanticize factory jobs that make products marketed as all-American, such as trucks, tractors, and guns, particularly if they’re set to remain on American soil. (In the case of guns, many buyers don’t want something manufactured in a foreign country where safety standards are perceived to be lower). As America has become more polarized, gun manufacturers have been able to orchestrate complicated political theater, threatening to move factories—and jobs—when gun-control legislation is passed in certain states. They are garnering millions of dollars in incentives from states and local economic development boards rolling out the red carpet to demonstrate their gun-friendly credentials. Despite evidence that giving incentives to factories isn’t a cost-effective way to create jobs, and often they actually lose money—as in the case of electronics maker Foxconn’s deal in Wisconsin—states know that attracting manufacturers is popular with voters. Remington is a master at this game. In 1995, the company announced that it was moving its headquarters to North Carolina, receiving $150,000 from the state to do so. In the end, no manufacturing jobs were moved to the state. Then, after private equity firm Cerberus Capital Management purchased Remington in 2007 and rumors swirled that manufacturing would be moved overseas to save money, the State of New York gave Remington $3 million to expand its Ilion plant, and then $2.5 million more in 2010 to add 100 jobs. Just three years later, in 2013, New York passed sweeping gun-control legislation the SAFE Act, which banned some assault-style weapons, began requiring background checks for nearly all gun sales, and prohibited people who’d committed certain offenses from possessing guns. Ilion politicians used the law’s passage to criticize state Democrats for driving Remington away, and indeed, Remington soon announced that it was being courted by five other states. Six elected officials from the Ilion area pledged assistance should Remington build a new manufacturing plant in the area, warning in a public letter that “the clock is ticking on an inevitable exit by Remington from the state.” Read more: How Gunmakers May Benefit From Mass Shootings In 2014, Remington announced it was moving two production lines to Huntsville, Ala., a decision the company’s CEO George Kollitides blamed on New York gun laws, citing “Alabama’s rich tradition of defending freedom,” as a “major deciding factor” in the move. At the time, a company spokesperson said the move was “a strategic business decision” to consolidate plants. But while the announcement provided a platform for conservatives to lambast New York’s gun laws, the Ilion plant continued to operate with around 1,300 employees. The jobs that moved to Alabama were from other Remington plants in conservative states like Montana, Utah, and North Carolina. Alabama’s play for Remington did not look so smart by 2020, when Remington filed for bankruptcy and owed $12.5 million to Huntsville, because it had not met the hiring numbers it had agreed to in its $70 million incentive deal with the city. The company appeared to be drawing from the same playbook when it announced it was moving its headquarters to LaGrange in 2021. “The decision to locate in Georgia is very simple: the state of Georgia is not only a business-friendly state; it’s a firearms-friendly state,” RemArms CEO Ken D’Arcy said at the time. RemArms secured $6 million in incentives from Georgia, and pledged to build a $100 million research and development center in LaGrange. According to T. Scott Malone, president of the Development Authority of LaGrange, RemArms has set up shop in an 80,000-sq.-ft. temporary facility, and recently started producing its first guns. RemArms specifically attributed its decision to move to a New York law passed in 2021 that would bypass blanket immunity provided to gunmakers under federal law, and make it easier to bring civil lawsuits against gun companies. “Unfortunately, if a law like that is passed in New York State, we would have to reconsider our options for the future and our plans to expand our New York operations,” Italia, the managing partner for Roundhill Group said in an email to Utica’s Times Telegram in July 2021. But the law applies to all gunmakers that sell guns in New York, which would include RemArms wherever it has its plants. But despite all the headlines, the company has told New York stakeholders that it now has no plans to close the Ilion facility. “Nobody’s moving to Georgia—in fact, they’re adding employees here,” says John Piseck, CEO of the Herkimer County Industrial Development Agency, a public-benefit corporation that can offer tax breaks to local businesses. RemArms has called back nearly all of the 609 workers Remington laid off when it filed for bankruptcy in 2020, according to Jamie Rudwall, president of the United Mine Workers of America. He notes that only 300 have actually returned, the rest having either found new jobs or retrained for new careers. Business is good. Because gun sales are soaring in the U.S., and manufacturers need to expand operations to keep up with demand, gunmakers can combine business decisions with lobbying, announcing that they’re opening a new factory in Georgia or North Carolina to meet demand while complaining about gun-control laws elsewhere. Retailers performed 21 million background checks associated with the sale of a firearm in 2020, a 62% increase from 2019, and twice as many as 2010, according to data from the National Instant Criminal Background Check System (NICS) that is used as a rough proxy for gun sales. The figures don’t include background checks for other purposes, like concealed carry permits. For workers like Brown, the constant push and pull is more of a nuisance than a threat to their livelihoods. Brown—whose wife, two daughters, and soon-to-be son-in-law work at the Ilion plant—says the company should know by now that it won’t find workers anywhere as skilled, dedicated, or patient with the company as those in Ilion. “It’s always, ‘We’re going to move to where there’s cheaper labor. We’re going to move to where there’s this law or that law.’ After so many years, you become immune to it,” Brown says. “And then to see them fail miserably in Alabama, it’s like, ‘I told you so.’ ” To this day, both Georgia and New York officials are still pulling for RemArms to bring some more good news to their communities, even though RemArms’ future looks a little shaky. Tax collectors in Alabama are already trying to foreclose on some of Roundhill’s recently purchased assets because they weren’t removed from the state in a timely fashion, according to bankruptcy documents. The firearms economy When Brown was growing up, there were lots of manufacturing jobs in upstate New York, but Remington was the place he wanted to be. “It was so hard to get in there, because it was the greatest job ever,” he says. Both his parents had worked there, so he knew: health care didn’t cost anything; he got a pension and a good wage; and he didn’t have to bother with college. By the time he was laid off in 2020, he was making $26.87 an hour—more if he worked nights or overtime. Brown is one of thousands of people in the U.S. Northeast who make a living manufacturing firearms. The area around western Massachusetts and Connecticut, nicknamed Gun Valley, has been a gunmaking hub since George Washington set up an armory in Springfield, Mass., in the late 18th century to keep weapons out of reach of the British Navy. In 1986, 47% of guns manufactured in the U.S. were made in Connecticut, 24% in Massachusetts, and 12% in New York, according to Jürgen Brauer, the chief economist with nonpartisan research group Small Arms Analytics, who analyzed historical data from the Bureau of Alcohol, Tobacco, and Firearms (ATF). But in recent years, amid rising political polarization, states in the South and West, desperate to attract jobs in the aftermath of the Great Recession, have attempted to lure manufacturers from Gun Valley. Their pitch: gun companies should move to places where people like guns. The sunset of the federal assault-weapons ban in 2004, and subsequent attempts by states to pass laws either loosening or tightening rules on gun ownership, signaled where gunmakers would be welcome. Some states even started to designate official state guns alongside their state flowers and fish. “We’re all here to show our support for the Second Amendment to our neighbors and communities,” Nebraska Governor Pete Ricketts said earlier this year, onstage with five other governors at the trade show of the National Sports Shooting Foundation (NSSF), which now spends more on lobbying than the National Rifle Association. (Around 10,000 guns were made in Nebraska in 2020, less than 1% of all guns made in the U.S.) Jason Koxvold for TIMEJamie Rudwall, president of the United Mine Workers of America. “There’s a trend of companies that have picked up and moved, and it’s really been accelerating as of late,“ says Mark Oliva, managing director of public affairs at the NSSF. The NSSF keeps a running list of gunmakers that it says have migrated from the Northeast to the South, including Kimber, Sturm Ruger & Co., and Beretta. But the NSSF’s list is misleading. Though some gunmakers have picked up and moved their factories south from states like Connecticut, the far more common occurrence is that they move only their headquarters to Southern states, but keep manufacturing in the state in which that factory already exists. Such a move can secure juicy incentives such as tax breaks and free facilities, and generate headlines about liberal states losing manufacturing, while sparing gunmakers the hassle of moving millions of dollars of equipment and hiring and training new workers. Indeed, most of the companies on the NSSF’s list of “gun industry migration” still have manufacturing in the northeast. The devil is in the details. According to Brauer’s analysis of ATF data, by 2020 just 1.42% of guns were made in Connecticut, and less than 1% in New York, while states like Georgia, North Carolina, and South Carolina accounted for 9%, 6%, and 5%, of firearm manufacturing, respectively. The two top states for gunmaking in 2020, according to the data, were Missouri and New Hampshire. However, those figures only show where guns are distributed, rather than manufactured, deceptively counting Smith & Wesson—the biggest producer of guns in 2020—as a Missouri company, even though its guns in 2020 were made in Massachusetts, not Missouri. The company generated headlines in 2017 when it announced it was moving to Missouri, receiving a 50% tax break over 10 years. But at the time, it only moved about 20 jobs from its Massachusetts headquarters. The data shows that Massachusetts made 21% of all firearms in 2015 and just 0.49% in 2020—but that’s because Smith & Wesson established a distribution center in Missouri, not because it moved its manufacturing, Small Arms Analytics’ Brauer says. And in October 2021, Smith & Wesson said it would be relocating its headquarters to Tennessee from Springfield, Mass., its home for 165 years, after a bill was introduced in the Massachusetts legislature that would have banned the manufacture of assault weapons for civilian use. (The bill has gone nowhere.) At the time, Smith & Wesson said it decided to move because “We are under attack.” What it did not make clear was that its manufacturing operations—accounting for about 1,000 jobs—would stay in Springfield, and that what it was moving to Tennessee was assembly and distribution of firearms. One-quarter of the jobs being moved to Tennessee are currently located in Missouri and Connecticut, not Massachusetts. The Missouri warehouse the company had received an incentive for just a few years before would be closed, Smith & Wesson said. The company received $9 million from the state of Tennessee and made a deal with the local economic development agency that gives it a 60% tax break for seven years. Its CEO, Mark Smith, thanked Tennessee’s governor and legislature for their “unwavering support of the 2nd Amendment and for creating a welcoming, business friendly environment.” Smith & Wesson did not respond to requests for comment for this story. Gunmakers are increasingly turning to this playbook. Kahr Arms, which said it was moving out of New York in 2013 because of “stricter gun control,” moved its headquarters to Pennsylvania, which also has relatively strict gun-control laws, and kept its manufacturing in Massachusetts. Meanwhile, Colt, which threatened to move after Connecticut considered gun control laws in 2008 and passed them in 2013, decided to remain and then received a $10 million loan from the state of Connecticut in 2017. Colt made 158,501 guns in Connecticut 2020 and was recently bought by Czech company Česká zbrojovka Group (CZG), which itself received incentives in 2019, including 73 acres of free land by the state of Arkansas to build a gunmaking plant there. That Little Rock, Ark. plant has been put on hold, and the company says it has no plans to move Colt out of state. “Once situated in one state, it is exceedingly rare for a firearms manufacturer to move its entire operation to another state,” says Brauer. His research has found that gunmakers that say they’re leaving a Northeast state because of its gun-control policies usually keep a substantial presence there, and that they leave not because of the political climate but because they can find nonunionized, lower-paid workers in the South—and get millions of dollars in incentives. In 2010, for example, Olin Corp., owner of a Winchester ammunition factory, moved 1,000 jobs from Illinois to Mississippi after union workers in Illinois rejected a contract that would have reduced their pay. And a Remington executive told the New York Times in 2019 that in Ilion, the union “had them by the balls,” one reason the company moved some operations to Alabama from New York. Oliva, of the National Sports Shooting Foundation, says that moving operations is not a decision gunmakers take lightly, but that Smith & Wesson and other companies have to consider “the survival of a business” when states like Massachusetts talk of banning the manufacturing of some assault weapons to anyone but police and the military. The companies keep some manufacturing in the places where they were founded, out of loyalty to workers, he says, but “it is clear that many of these manufacturers are expanding to other states which are more friendly business environments and more friendly to gun rights.” For RemArms worker Brown, one of the ironies of the company’s indicating it will move to a state friendlier to gun owners is that Ilion is a place where people love guns. Ilion residents will offer to show strangers their gun collections, or wax lyrical about their favorite hunting rifle. Ask them about gun-control legislation, and they’ll blame Democrats, or politicians in Albany, for punishing the law-abiding citizens who want to own guns to hunt or to protect themselves. (Herkimer County voted for Donald Trump over Joe Biden in 2020 by a 2-to-1 margin.) Even “barber John” Seymour—still widely recognized locally as a mass-shooting survivor—is skeptical about the effectiveness of gun-control laws. “It’s tough for me to see the stuff that goes on in places like Uvalde,” he says. “But that guy would have gotten a gun no matter what—he was on a mission.” He points to the difficulties of assessing someone’s mental health when deciding whether they should be allowed to purchase a gun. In Seymour’s own case, the man who shot him, Kurt Myers, was mostly known locally as a loner who kept to himself, but authorities never found a motive for why he’d shot six people. It’s laws like New York’s SAFE Act that have most riled people in Ilion. “The climate changes when you say, ‘Big bad Remington is making this big mean gun in the middle of our state,’ ” says Rudwall, the union rep. “Look at the comments these politicians made: they demonize the tool, not the dude that did it.” When Remington threatens to leave, locals often blame state politicians for driving gunmakers out of the state. New York Republican Congresswoman Claudia Tenney has seized on that sentiment, campaigning to overturn the SAFE Act, lambasting former New York Governor Andrew Cuomo for what she has called “failed economic and anti–Second Amendment policies in New York,” and using her positions on guns to shore up her connection with Donald Trump. At a fundraiser Trump held for Tenney in 2018, he warned attendees: “They want to end your Second Amendment and they’re putting a big move on it … Cuomo wants to end your Second Amendment more than anybody.” In 2020, when Remington filed for bankruptcy, Tenney said she’d contacted President Trump and would get the factory reopened, and that it would “eventually employ a workforce significantly larger than the plant’s previous head count.” (It’s unclear whether Trump intervened.) A week later, Tenney was re-elected in one of the most expensive House races in the country, by 109 votes. Jason Koxvold for TIMERemington Arms has told New York stakeholders that it now has no plans to close the Ilion facility. Gunmakers’ threats to leave states in the Northeast have helped to stoke fear among some employees. As soon as renderings of the LaGrange RemArms headquarters started showing up online, Brown says his daughters and other workers on the factory floor began to express concern that they would lose their jobs. The pictures emerged just as the union was in the middle of negotiations with RemArms over wages and benefits, and people around the plant started hinting that the union should take whatever deal it could, says union representative Rudwall. Negotiations are still ongoing. “My daughter says, ‘Daddy, look at this brand-new facility, they’re not going to stay here,’ ” Brown says. “So when Jamie [Rudwall] comes back with a contract, whether they like it or not, they say, ‘Yes,’ because we want to keep working.” There are other jobs in Ilion; in this economy, there are other jobs just about anywhere. They’re just not manufacturing jobs. The county’s largest employer is now Tractor Supply, which is a distribution center. Verizon has a presence in the area, and Amazon is opening a warehouse nearby too. But some of the laid-off Remington workers who missed their chance to go back to the factory say they’d go back if given the opportunity. Allen Harrington worked at the Remington factory in Ilion for eight years. In October 2020, a few months after Remington filed for bankruptcy, the company laid off nearly all of its Ilion workers. Harrington was on the factory floor at the time, until a supervisor came in and said they had to shut everything down, and that everyone was terminated, and that health care, severance, and other benefits would be gone at the end of the month. Harrington eventually found a job making $13 an hour in a warehouse, down from the $25 he had made at Remington. He kicks himself for not going back to school after being laid off, but he felt too old—and he felt sure that the factory would re-open and he could work in manufacturing again. It’s hard to let go. “I loved that job,” Harrington says. “I know it’s uncertain there, but I’d go back in a heartbeat.”.....»»

Category: topSource: time14 hr. 56 min. ago

The 9 Best Businesses To Start Over 60

For those with the itch, starting a business over the age of 60 is entirely doable. Age can give many advantages, including experience and wisdom. Here are 9 retirement business ideas to put that experience to good use. Consulting Consulting is a favorite business activity among retired seniors.  For starters, consulting is perfect for crafting […] For those with the itch, starting a business over the age of 60 is entirely doable. Age can give many advantages, including experience and wisdom. Here are 9 retirement business ideas to put that experience to good use. Consulting Consulting is a favorite business activity among retired seniors.  For starters, consulting is perfect for crafting your own hours and rates. After decades of developing expertise in a career, why not put that to good use? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Marc Wolfsfeld is a semi-retired IT consultant in West Jordan, Utah. After years of working in his business full-time, he decided to cut back operations instead of completely retiring. Mr. Wolfsfeld explained, “I work very part-time hours, but I’m always on call for my clients. If they need software updates or there’s a network problem, I’m there in a heartbeat. It gives me the opportunity to stay active and make extra income without much stress.” He isn’t alone in his desire for flexible working hours. According to labor statistics by the American Economic Journal, 60% of not working Americans in their 60s or 70s would return to work if they had a more flexible schedule. Consulting offers an opportunity to do just that. Consulting is a natural opportunity for many knowledge workers. Retired professionals in finance, law, business management, HR, marketing, and medicine all have many doors open to them in this regard. Make and Sell Crafts Retirees often take up a hobby to fill the time and quickly find that it’s a great way to make extra money. The craft business is a perfect example. The rise of Etsy has shown that handmade crafts can be big business. Many types of crafts sell well, including: Home decor Jewelry Art Toys Dolls Embroidery and quilts Usually, the cost of the materials is quite low, which makes for a nice profit margin on the products sold. The main investment is the time, creativity, and expertise in making them. If you’re already a crafty person, this can be an ideal small business. Items can be sold at a farmer’s market, flea market, festival, or small shop. If you feel comfortable selling online, you can open an Etsy shop or sell on Facebook Marketplace or Craigslist.  You can advertise your business through word of mouth at events or through social media.  You don’t need a website or a graphic designer to have an effective internet presence. This is because social networks like Instagram and Pinterest enable you to draw a lot of attention to visually appealing products like arts and crafts.  Craftwork isn’t limited to artsy crafts.  The same business idea applies to any type of artisanship: woodwork, metal work, clothing design, baking cakes, or anything else that can be made from home.  Robert Mauk is a retired teacher in Modesto, California, who does woodworking.  Mr. Mauk commented, “Too many of my fellow retired teachers don’t remain active during retirement, and as a result, the quality of their lives often quickly declines, and I am not comfortable not being productive and creative.” “I always liked working with wood as a medium for my artwork, through craft and furniture. I worked with my Dad at a young age, and I think that sparked my interest in working with wood,” he continued.  “I have stopped working on major kitchen and bathroom remodeling jobs. I now concentrate on wood sculpture, wood turning, and furniture projects so that there is no climbing in attics and down into crawl spaces.” Dog Walking  Dog walking is the perfect small business idea for animal lovers. Pet ownership has increased over the past decade, and it’s expected to increase even more. Analysts at Morgan Stanley expect the pet industry to almost triple in size over the next decade.  That means there is a bigger demand for animal-related products and services, including dog grooming, doggy daycare, and dog walking.  Dog walking is a great way to get outside and exercise. However, if the business expands, hiring younger workers to do the legwork is also an option.  According to TimeToPet.com, dog walkers typically charge between $19 and $29 for a 30-minute dog walk. If you walk multiple dogs at the same time, the money made per hour goes up substantially. Of course, the rate varies based on the location and other factors. As mentioned before, other related services include dog daycare and dog grooming. If you like taking care of animals, there are a few different directions you can take the business. Keep in mind that you don’t just have to do customer service with the animals, but with their owners, too.  Grow and Sell Plants Gardening has long been a favorite retirement hobby. Why not grow your love of plants into extra income? Growing plants from seeds is difficult for many people. That’s why they’re willing to pay for already-grown plants.  This includes flowers, bushes, shrubs, trees, garden starts, vines, potted plants, wall plants, patio plants – you name it.  If you’re comfortable with strangers coming to your home, it can be a 100% home-based business. You can grow the plants in pots in your backyard, greenhouse, or patio, and sell them directly to the public. Or, if you’d rather not, lease a shop or open an online business. It may not seem like a lucrative business idea, but a visit to your local nursery should dissuade you of that notion. Small plants commonly sell for $20-100, and your costs are limited to water, dirt, and some pots. Many gardeners make extra cash by selling their excess produce and flowers. It’s a great way to grow from hobbyist to entrepreneur.  Invest in Real Estate Real estate investment is a capital-intensive business, but it can also be a steady source of cash flow.  It helps to have good credit and some capital in this industry, but you don’t have to be rich to get started.  The median retirement savings for people between the ages of 55 and 64 is $107,000, which isn’t nearly enough to retire. But it’s usually enough to put a down payment on a modest investment property.  There are a few different types of residential investing: Buying, fixing, and flipping houses Rental investing Short-term rental investing Fixing and flipping houses requires more work than renting out houses, but you also make more money in the short term.  Short-term rental investing can be done through sites like Airbnb and Vrbo. In effect, you can run a bed and breakfast from any house that you own. The great thing about this is that you can get started with the house that you’re already living in by renting out rooms or the basement. Many retirees consider downsizing after their children grow up and leave the nest. Instead of downsizing, renting out the extra space as a short-term or long-term rental may be a quick way to start producing income.  Open a Franchise Franchises have been popular with small business owners for a long time. There are good reasons for this. There’s no way around it: starting a business is hard. In addition to the work and capital you need to put up, you need to know what you are doing. That’s where franchising comes in. In exchange for paying an upfront franchise fee and recurring royalties, you get step-by-step guidance on how to start a business. The best franchises have well-known brands and national marketing that bring in customers automatically.  If you buy into a franchise, you don’t have to come up with a business plan or worry about supply chain logistics. The best franchises have employee training resources on everything from customer support to handling finances. One of the most famous franchise restaurant chains in the United States was started by an older entrepreneur: none other than Colonel Sanders.  Harlin Sanders started the Kentucky Fried Chicken franchise when he was in his 60s and worked in some facets of the restaurant business until his death at age 90.  Though he churned through or failed at many different jobs and careers in his long life, he realized that he had an amazing fried chicken recipe worth sharing with the world. His restaurants and his accompanying franchise business made him quite wealthy by the end of his life. Today, KFC is a brand with a worldwide presence.  Buying into a well-established franchise probably won’t lead to worldwide success, but it can be a steady business venture for the right person.  Beyond restaurants, franchises exist in many different industries, including: Convenience stores like 7-11 Hardware stores like Ace Hardware Hotels like Marriott International Fitness gyms like Planet Fitness Franchises aren’t cheap. In addition to paying hefty startup fees, there are usually capital costs such as buying equipment, hiring employees, and leasing space.  Franchise startup costs average $150,000, but much of that cost can be covered through a business loan or financing of some sort. The day-to-day operations of most well-run franchises can be done by a manager. Once the business is up and running, the business owner usually doesn’t need to put in many hours to keep it going.  Offer Move Management Services RetiredBrains surveyed their readers about what businesses they had started in retirement, and some variation of “Move Manager” came up more than once.  This is a service that involves helping people move. The physical lifting work is still done by a moving company, but the move manager organizes the process.  According to these service providers, downsizing seniors and overwhelmed young families need help managing the details of the moving process, and they’re willing to pay for it. This often involves cleaning out garages, packing, labeling, organizing, and planning the various pieces of the move. Part of this could involve senior relocation services, which help seniors find a trustworthy and affordable retirement home.  Many houses are filled with old possessions and unused things. A big part of the move management service involves selling, throwing away, or donating unwanted items.  Once the client is in their new home, unpacking and organizing everything requires work as well.  Academic Tutoring Tutoring is a great business for people that love children and teens. Retired school teachers find that tutoring is a great way to bring in income during retirement, without the stresses of classroom management and school administration.  According to Tutors.com, average prices for tutoring vary quite a bit. They can range from $25 to $80 per hour, depending on the location, type of tutoring, and other factors. Traditionally, private tutors typically visit students in their homes or other places of their parents’ choosing. However, online tutoring has become more popular in recent years and tutoring centers are another option.  Test preparation for the SAT and other standardized tests is a particular area of high demand, which can command higher rates for tutors well versed in it. Get Paid to Write Writing is a paid activity that can be done well at any age. There are a variety of ways to get paid as a writer. Business ideas for writing include: Freelance work for publications and companies Self-publishing a book Blogging Ghostwriting on behalf of others Technical writing Copywriting Gerri Detweiler of Sarasota, Florida, worked for many years as a writer, speaker, and educator in the credit industry. She decided to transition from full-time, in-house work to freelance writing and consulting.  Mrs. Detweiler has published books and is also working on an online course.  Mrs. Detweiler shared, “I recently became self-employed again after more than a decade in full-time roles. While I’ve enjoyed working with colleagues in those jobs, I appreciate the flexibility of working for myself. Freelancing has allowed me to travel and work around the US as well as internationally.  “I’m heading to Greece in December 2022 for an extended period of time and this work allows me to do that without worrying too much about office hours and time zone differences. “Writing, in particular, allows for a great deal of flexibility. It also allows me to delve into topics that are interesting but that I otherwise might not have the time to study. For example, this year I wrote about crypto credit cards, and I enjoyed researching that space. “I’m also interested in remote work and am starting to write about that as well. As long as I remain curious I’ll continue to write, even if it’s just for myself!” Conclusion The average human lifespan is longer than ever before. Rather than retire early, many Baby Boomers are choosing a middle path of part-time work and part-time play.  Entrepreneurship isn’t easy, but it has its perks. A flexible, fulfilling business may be the perfect vehicle for such a lifestyle. Article by Garit Boothe, Due About the Author Garit Boothe is a financial blogger and entrepreneur. He studied economics at The George Washington University in Washington, DC, for one year before dropping out to be a missionary in Argentina. After coming home to the United States, he worked in a variety of jobs, side hustles, and businesses until landing in digital marketing. He currently runs a digital marketing agency focusing on fintech companies and writes for his personal finance blog. Updated on Aug 3, 2022, 3:27 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkAug 3rd, 2022

MDC Beats on Q2 Earnings & Revenue, Gives Solid Q3 Guidance

MDC's second-quarter results benefit from strong margins, backed by higher pricing. M.D.C. Holdings, Inc.’s MDC shares dropped 0.66% on Jul 28 despite reporting strong second-quarter 2022 results. Earnings and revenues topped their respective Zacks Consensus Estimate and rose year over year, owing to strong pricing trends in many markets served. Also, its build-to-order strategy and a limited speculative inventory added to the positive.However, it noted that the company experienced a noticeable decline in sales activity in the second quarter due to a rapid rise in mortgage rates and reduced consumer confidence. The trend is likely to continue in the rest of 2022.MDC's executive chairman, Larry A. Mizel, said, "We experienced a year-over-year decline in net orders during the quarter, driven by a slowdown in demand, an uptick in cancellations and difficult order comparisons from the prior year period. The sharp increase in interest rates combined with a more uncertain economic outlook has taken a toll on consumer confidence, which is reflected in our net orders in the quarter. We believe these headwinds may persist for at least the remainder of the year and we are actively adjusting our operations to reflect this new reality."Earnings & Revenue DiscussionThe company reported quarterly earnings of $2.59 per share, which surpassed the consensus estimate of $2.43 by 6.6% and grew 23% from the year-ago figure of $2.11. The upside was owing to higher home sale revenues and housing gross margin.M.D.C. Holdings, Inc. Price, Consensus and EPS Surprise  M.D.C. Holdings, Inc. price-consensus-eps-surprise-chart | M.D.C. Holdings, Inc. Quote Total revenues (including Home sale revenues and Financial Services revenues) of $1.49 billion topped the consensus mark of $1.43 billion by 4% and increased 6.1% on a year-over-year basis, backed by solid pricing.Segment DetailsHomebuilding: Home sale revenues of $1.45 billion increased 6% from the prior-year period’s levels, backed by solid pricing. Units delivered were down 7% from the year-ago level to 2,536 homes. New home deliveries were down in West and Mountain, while East grew a notable 47%. The average selling price or ASP rose 14% from a year ago to $572,000, backed by growth across the regions served.Net new orders fell 29% from the prior-year quarter to 2,237 homes. The value of net orders also declined 40% from the year-ago quarter’s levels to $882.1 million, despite a 16% higher ASP of net orders. Cancellations, as a percentage of beginning backlog, increased 400 basis points to 9.7% from 5.7%Quarter-end backlog totaled 7,426 homes, down 3% from a year ago. Potential housing revenues from backlog rose 8% from the prior-year period’s levels to $4.44 billion on a 12% higher ASP of homes in backlog.Housing gross margin registered an improvement of 370 basis points (bps) year over year to 26.8%. Selling, general and administrative expenses — as a percentage of housing revenues — improved 20 bps from the year-ago figure to 9.2%.Financial Services revenues rose 8.7% year over year to $36.2 million.Financial PositionMDC had cash and cash equivalents of $475.3 million in the Homebuilding segment and $115 million in the Financial Services unit as of Jun 30, 2022. This compares favorably with 2021-end numbers of $12.8 million and $104.8 million, respectively. It had total liquidity of $1.74 billion and no senior note maturities due until 2030.Inventories rose to $4.1 billion from $3.76 billion at the 2021-end. Lots controlled of 33,130 at Jun 30 was down 4% year-over-yearNet cash provided by operations was $53 million for the second quarter compared with $70 million a year ago.GuidanceFor third-quarter 2022, the company expects home deliveries of between 2,200 and 2,500 units. This indicates a rise from 2,419 units reported in third-quarter 2021 (considering the mid-point of the guidance). The average selling price is likely to be within $580,000-$590,000, indicating a significant rise from $519,900 reported a year ago. Housing gross margin (assuming no impairments and warranty adjustments) is anticipated between 24.5% and 25.5%, suggesting growth from 23.5% reported in the prior-year period.For 2022, it expects home deliveries between 10,500 and 11,000 units, implying an increase from 9,982 units in 2021.Zacks RankMDC currently carries a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.United Rentals, Inc. URI posted better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues and stronger pricing boosted profit.URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the year.Martin Marietta Materials, Inc. MLM reported impressive second-quarter 2022 results. Earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by improved pricing across businesses and higher demand.Despite increased inflationary pressure from rising input costs and a challenging macroeconomic and geopolitical environment, solid execution of its strategic business plan and resilient aggregates-led business drove the result.Masco Corporation MAS reported results for second-quarter 2022, with earnings and revenues missing the Zacks Consensus Estimate after beating it in the preceding quarter.Masco’s top line increased, whereas the bottom line remained flat year over year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Masco Corporation (MAS): Free Stock Analysis Report Martin Marietta Materials, Inc. (MLM): Free Stock Analysis Report United Rentals, Inc. (URI): Free Stock Analysis Report M.D.C. Holdings, Inc. (MDC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 1st, 2022

The Trajectory Of The Strengthening Of The U.S. Dollar – Commentary

Ongoing inflation in the US has caused the Federal Reserve to raise the rate of interest of the US federal fund. An FX trader and crypto analyst weighs in on the trajectory of the strengthening of the U.S. dollar, revealing long term trends. The Strengthening Of The U.S. Dollar Krisztian Gatonyi, FX trader and senior […] Ongoing inflation in the US has caused the Federal Reserve to raise the rate of interest of the US federal fund. An FX trader and crypto analyst weighs in on the trajectory of the strengthening of the U.S. dollar, revealing long term trends. The Strengthening Of The U.S. Dollar Krisztian Gatonyi, FX trader and senior analyst at international broker comparison site BrokerChooser shared his thoughts on U.S. dollar strengthening: “As a result of the ongoing inflationary pressures, the Fed’s tightening policy has had a major role in strengthening the U.S. dollar to historical levels. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   U.S. consumer prices were up 9.1% year on year in June, the largest increase in 40 years. The Federal Reserve is trying to suppress inflation by raising the interest rates, which can lift Treasury yields further, making the dollar more attractive. On the other hand, increasing interest rates sharply might lead to a recession. Major flows of money have come into the U.S. during recent global economic uncertainty, driving up the value of the dollar. This has made imports cheaper for the U.S., but made U.S. exports more expensive and less competitive on world markets. I think inflation will force the Fed to keep raising interest rates, further strengthening the U.S. dollar after already significant gains against major currencies in the past year. The following trends have emerged in a 1-year interval in these dollar currency pairs: EURUSD decreased by 14% NZDUSD decreased by 10% GBPUSD decreased by 12% AUDUSD decreased by 6% USDCAD increased by 2% USDCHF increased by 6% USDCNH increased by by 5% USDJPY increased by 26% Among others, the U.S. dollar hit a 24-year high against the Japanese Yen around 139, and a 20-year high against the Euro around parity. Long Term Trends Of EURUSD The forex market often exhibits fractal-like movements, therefore trends should be analyzed over various time frames in order to have a clear picture. If we examine dollar strengthening in the case of EURUSD - the most traded currency pair - first we should “zoom out” and check the main trend over a longer period of time. Since 2008, the main trend of EURUSD is decreasing, as the selling side has dominated. Every uptrend during this period was merely a counter-trend. These counter-trends - where the dollar was weakening - lasted generally 1-2 years before the main trend resumed. A correction started after the cross went below parity, but this might be ended shortly by the Federal Reserve's upcoming interest rate increase. The daily volatility of EURUSD is almost double compared to the end of 2021. Therefore, position sizes for FX traders should be half of last year’s in order to keep risk percentages on the same level. The daily volatility is now around 86 pips per day. EURUSD volatility could increase around the following 10 upcoming economic data releases: Federal Funds Rate Advance GDP q/q (U.S.) ISM Manufacturing PMI (U.S.) ISM Services PMI (U.S.) Non-Farm Employment Change (U.S.) Unemployment rate (U.S.) CPI m/m (U.S.) PPI m/m (U.S.) Retail Sales m/m (U.S.) German Flash Manufacturing PMI (EU) I believe that in the next few months, EURUSD could be heading toward 0.96 if the Federal Reserve continues to raise interest rates.” Updated on Jul 29, 2022, 3:49 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 29th, 2022

Transcript: Graham Weaver

     The transcript from this week’s, MiB: Graham Weaver, Alpine Investors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business… Read More The post Transcript: Graham Weaver appeared first on The Big Picture.      The transcript from this week’s, MiB: Graham Weaver, Alpine Investors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest. Graham Weaver is the founder and partner at Alpine Investors, a private equity firm, focusing on software and services. Graham has a really interesting background, both engineering at Princeton and essentially launching a PE firm while he was a graduate student at Stanford. Everybody knows the story about Michael Dell launching a computer business out of his dorm room in Texas. This could be the first PE firm I’m familiar with, that got started in a dorm room. What makes Graham so interesting is while everybody else in the world of private equity is focused on the analytics and crunching numbers and creating econometric models that will tell you where to invest, I think they’ve found a very different model that has been extremely successful for them, where the key focus is on talent. How do we find the best talent, put them in place running our investment companies and allow them to generate the sort of returns that you don’t really generate by just looking at a model? I found our conversation absolutely fascinating and I think you will also. With no further ado, my discussion with Alpine Investors’ Graham Weaver. Let’s jump right into this, starting with your background. When I hear someone has an engineering degree, I tend to think of venture capital, not private equity. Tell us a little bit how you went the PE route instead of the VC route. GRAHAM WEAVER, FOUNDER AND CEO, ALPINE INVESTORS: Well, I actually started in private equity right out of undergrad. I really didn’t know the difference between private equity or consulting, or anything. I had zero knowledge of that. And I was fortunate to end up in Morgan Stanley’s private equity group, I loved it and I’ve kind of been at it ever since. RITHOLTZ: Really interesting. So is it from Princeton to Morgan Stanley, and then Stanford, or am I getting the order right? WEAVER: Yeah. When I was at Princeton then I went to Morgan Stanley in their private equity, then I worked at a firm called American Securities for a couple years, and then went to went to business school after that. RITHOLTZ: And somewhere in the middle of this, there’s a pig farm in Missouri that I am having a hard time figuring out what a pig farm has to do with private equity. WEAVER: So the very first deal I worked on, so I come out of school, I’m wearing my Cross pen and my lapel, and I’m like wearing a tie and — RITHOLTZ: All buttoned down. WEAVER: Exactly. And I think I’m a big shot being on Wall Street, and I get shipped out to this pig farm in Missouri which was a deal Morgan Stanley had invested in. They’ve invested a total of a billion, almost a billion dollars of debt and equity, and then suffice to say was not going well. So not that I was going to go save it as a 22-year-old analyst, but I’ve got shipped out. I lived in a CFO’s basement for about five months, and we did everything we could, but it turned out not to be a great investment. RITHOLTZ: So there’s not big money in pigs? WEAVER: Well, it turns out hog prices are wildly cyclical. And you know, there’s the expression, how does a six-foot man drowned in a river that averages five feet? You know, it’s because there’s parts of the river that are deeper. Well, you know, we build our whole model on hog prices being $47 and when we then — RITHOLTZ: And that’s what they average, right? WEAVER: That’s what they average. RITHOLTZ: But that doesn’t tell you how much they swing up and down. WEAVER: It turns out — yeah, they went to $18 and we had $700 million of debt, and that didn’t — RITHOLTZ: $18? WEAVER: That didn’t go well. So yeah. RITHOLTZ: That’s the old joke. It’s not the price, it’s the volatility. WEAVER: Yeah, it was rough. But it was a — that was my introduction to the glamorous business of private equity. RITHOLTZ: And you didn’t turn around and say, “I want nothing to do with this?” WEAVER: I had the time of my life. RITHOLTZ: Really? WEAVER: It was so fun. RITHOLTZ: How was — how was sleeping in the CFO’s basement — was his house on the pig farm? WEAVER: It was. Yeah, it was. The whole entire town smelled like a pig farm and everyone — RITHOLTZ: Which was not especially delightful? WEAVER: It’s not. No, it turns out. And pretty much everyone in the town worked and had some affiliation with the pig farm. The CFO was also a Morgan Stanley guy, and he was probably 27. So neither of us had any idea — RITHOLTZ: So many years, years of experience over you? WEAVER: Yeah, yeah. Exactly. Neither of us had any clue what we were doing. But it really wouldn’t have mattered when your revenue gets cut by like 80%, there’s just not a lot you’re going to do to turn that around. RITHOLTZ: So there’s a cliche about tech firms being started in dorm rooms. How does a private equity firm start in a dorm room? WEAVER: So I show up at Stanford, and I’m in my first week of class. And then similar as today, you have to take these core classes in your first year, which are just not that — you know, they’re just fundamental. They’re not that exciting. So the first class I sit down, and there’s this 25-year-old who’s never worked a day in his life. He’s a PhD student. He’s never taught before, and he’s kind of just reciting out of this strategy book. And I just thought to myself, oh, my God, what have I signed up for? So I had this idea that I was going to go try to buy a business. And I had — you know, in your first three years as an analyst, you basically build a financial model. But I had the confidence of someone I thought I was much more — much better than I was. So I convinced an owner — I started cold calling companies in a sector that I had looked at previously, and I convinced this owner to sell me his business, and then I had to go raise the money, most of which was debt and the little bit of equity that was needed. I financed with credit cards. So that was literally how I started, not your typical private equity founding story. RITHOLTZ: How did that initial PE transaction work out? WEAVER: I did a total of three labeled deals with some add-ons, lost money on one, made money on — or lost a little bit of money on — loss — made a little bit of money on the second one. And then the third one was a total homerun, which actually just sold this year, 20 years later. So that that one turned out well. RITHOLTZ: 20 years? That’s impressive. That’s not the typical private equity holding period. WEAVER: Yeah, well, it was just me. I was the — it was just my — RITHOLTZ: So you could afford to be patient. WEAVER: And it was awesome. It was great. That one — RITHOLTZ: What space was that at? WEAVER: It was the — we had these companies that made these little labels that went on products, like for example in Trader Joe’s private labels things, we made all those labels. It’s a totally unsexy business. RITHOLTZ: Right. WEAVER: But it was very consistent and — RITHOLTZ: And it’s profitable. WEAVER: It was really profitable. And no one wakes up and says, “You know, I’m going to be a hero because I’m going to save half a cent on my label.” So it tends to kind of like just clip along like a bond. RITHOLTZ: Right. WEAVER: So it turned out — it turned out well, but I mean, I had absolutely no idea what I was doing. And so I made every mistake you can imagine. RITHOLTZ: And it still worked out. When you launched in 2001, you started with $50 million, $55 million, something like that? WEAVER: Yeah. RITHOLTZ: And now it’s up to $8 billion close to eight funds. WEAVER: Yeah. RITHOLTZ: And your most recent fund just closed about $2 billion, more or less? WEAVER: Yeah, about 2.4. Yeah. RITHOLTZ: All right. So that’s real money, 2.4. Obviously, you’re doing something right. The track record has to be attractive. Is it the same investors rolling over, or new and different investors? Who is the clientele for this? WEAVER: In the very early days, it was a number of individuals because no institution was going to back — RITHOLTZ: Right. Well, you have to have a certain track record, be around for certain length of period, be able to check all of their due diligence boxes, and that takes time and money. WEAVER: Yeah. And I checked zero of those boxes. RITHOLTZ: Right. Dorm room, check. What else? What else we got? WEAVER: Yeah. Track record. RITHOLTZ: How old is he? 22? WEAVER: No. RITHOLTZ: Sure. Let’s write him a big check. WEAVER: Exactly. I checked no boxes. And that took me like almost a year to figure out. I went to all these institutions and I never got past the first meeting anywhere. And then I found a number — really two individuals who, thank God, I still owe everything to these two. One, I don’t know if I can — RITHOLTZ: Sure. You can say whatever you like. WEAVER: So, one was Tom Steyer, who ran for president. RITHOLTZ: Oh, sure. WEAVER: He was one of the early ones. And then Doug Martin from the Stephens family. And they were just the two best investors you could ever have. They were supportive. And most importantly, they were supportive after Fund I which was not a good fund. So that’s the reason we’re still in business today. RITHOLTZ: Why not good fund, just performance wise, or was it — because when you launch in ’01, we’re still in the early days of a massive downfall in technology, media, Internet straight across the board. Not — you know, it’s not — unless it’s a distressed fund, that’s not the ideal time to launch. WEAVER: Yeah. I would love to say that it was the market, but it wasn’t. It was self-inflicted. RITHOLTZ: Yeah. WEAVER: It was me making a lot of dumb mistakes, being overconfident, you know, and just investing in companies that looked great in the spreadsheet and didn’t — what looks great in the spreadsheet is low purchase price and a lot of leverage. That looks — always looks good in a spreadsheet, but the — RITHOLTZ: Leverage is the problem. WEAVER: The qualitative — yeah, the leverage is the problem and the qualitative things about is it a quality business? Those things you can’t model in a spreadsheet. And so, I just made a lot of dumb mistakes. And actually the whole fund, overall, lost money. I would highly, Barry, not recommend having your first fund when you launched and lose money. It was a — RITHOLTZ: Probably not the best long-term strategy? WEAVER: Yeah. It was anchored around our neck for pretty much a decade. RITHOLTZ: So that raises the question, if the first fund was a bit of a stiff, how did you raise money for the second fund? WEAVER: Well, thankfully, we were — I really communicated a lot with Doug and Tom, and they understood. They could see us getting better. You know, they could see us making a lot of improvements, fixing a lot of the things that we got wrong. And both of them were pretty seasoned investors, both of them had had mistakes they’ve made before. And so they, you know, thank God, were really supportive. And then it wasn’t like immediately we started knocking out of the park either, but we started getting better and better. And then really around the time of the recession was when we really completely transformed and became kind of the business that we are today. RITHOLTZ: And it’s a little bit of a cliche, they’re not so much investing in a fund as they’re investing in you as the manager. Obviously, they saw something that was, “Hey, needs a little seasoning, but there’s a lot of potential here.” WEAVER: Yeah. They saw someone who was willing to literally run through walls and run through a burning building to make it work, and I almost literally did. I mean, it was that — we were — and not just me, but our whole team was really committed to try and make it work, and I think they saw that. RITHOLTZ: Quite interesting. (COMMERCIAL BREAK) RITHOLTZ: I have to talk a little bit about your growth rate. You began with $54 million. All-in, you’re $8 billion in assets totally. Obviously, a lot of that is not just growth, but new investors coming along. But still that’s a — as a PE company, Alpine has really seen quite a corporate growth trajectory. Tell us what led to this success rate. WEAVER: Yeah. So when the recession hit, we were in — we were not well positioned. We didn’t — RITHOLTZ: Now, when you say recession — WEAVER: Yeah. RITHOLTZ: — because some of our audience is, you know, older than 25, I’m assuming you mean, ’08. ’09, the financial crisis? WEAVER: ’08. ‘0. RITHOLTZ: Okay. WEAVER: Yes. RITHOLTZ: Not the one in 2020. WEAVER: Right. RITHOLTZ: And not the one that maybe happened sometime in 2022 and certainly not 2000. WEAVER: That’s right. RITHOLTZ: So the great financial crisis — WEAVER: So great financial crisis happens. We were — we invested the last dollar from our third fund two weeks before — two weeks before Lehman Brothers blew up. RITHOLTZ: Wow. WEAVER: And so we were out of money and we had — it took us forever to raise the next fund. But that period, where we didn’t have any money, turned out to be the most important period for us. RITHOLTZ: Why? WEAVER: Because we started deciding we were going to look at our own business, you know, kind of like rather than working in the business, we’re going to start working on our business. So I hired an executive coach — RITHOLTZ: Really? WEAVER: — and he helped — he really helped me kind of redefine the business that I truly was in, which I’ll come back to. We hired a consulting and coaching firm for our whole organization. And so, we really started doing some soul-searching for lack of a better word. And then — and from that, we really, you know, changed our strategy and developed kind of a new playbook. RITHOLTZ: So let me interrupt you there because that you raise something that I’m fascinated by. So first, what leads you to say, “We need a pro to come in and show us how to do this?” And second, how do you even go about finding an executive coach? That sounds like, man, that’s a consulting field fraught with, you know, let’s be polite and just say high risks. WEAVER: Yeah. It’s a great question. And I am a huge fan of executive coaching. I’ve had a coach since 2009. RITHOLTZ: Wow. WEAVER: I talk to a coach every week or every other week since ’09. RITHOLTZ: No kidding? WEAVER: And we, at Alpine, have 23 coaches that are part of our — they’re 1099 folks, but they’re part of our ecosystem that’s available to our people at Alpine and our executive. So I’m just a huge fan of coaching. And basically what I love about coaching is you create space away from the busyness of the day to day. You ask yourself a bunch of really important questions. You know, what do I want? What success look like? What do I want in — what does a five-year plan look like? And you actually have to really burn some energy and some thinking time, thinking about those answers, which are really hard answers, which most of us never spend time thinking about. RITHOLTZ: Was it just in the midst of the crash and recession that you said, “Hey, maybe we just need a little help. We’re not — we don’t have the professional background to run the business. We know the investing side, but the business side is something very different.” How did you get to that — WEAVER: Yeah, 100%. I mean, I think one of the benefits of phase planning in your first fund is that you get some humility. RITHOLTZ: Right. WEAVER: And you — I’ve always just been open to learning from people that are smarter and better than I am. And so, coaching was an exercise — back then in 2009, it was not very well known and it was definitely an exercise in humility of saying, “I think I need some help.” RITHOLTZ: That’s the old joke. Experience is what you get when you don’t get what you want, right? WEAVER: Yeah. Exactly. Yeah. RITHOLTZ: So once you make the decision, “Hey, we want to bring in a professional to show us ways to improve our business methods,” how does one go about finding a business coach? WEAVER: So I had an introduction from a friend and then we had a number of lunches, and his business wasn’t going well in ’09 either, as you could imagine, so — RITHOLTZ: Well, who’s on — and other than people doing distressed debt investing, whose business was going great in ’08? WEAVER: Yeah. Exactly. Nobody. So — RITHOLTZ: Then in short sellers, everybody else was in trouble. WEAVER: So we had this awesome conversation. I can still — it’s one of these conversations you can still remember where you are and what you — you know, exactly the moment. So we had — this is actually after I brought him on. We have this awesome conversation where I said, “Hey, I have to” — his name is JP Flaum, and I said, “Hey, I have to cancel our coaching engagement. I’m just too busy,” which was like we’ve already decided ahead of time that that was no go. I had to stick with the — we made an agreement. RITHOLTZ: Right. WEAVER: So he texts back immediately says, “No, we’re having it.” So I get on the phone, he says, “Well, what’s — you know what’s so crazy that you’re so stressed?” I said, “Oh, my God, JP, you know, I got to fly to Dallas and fix this. And then I got to — you know, we got to deal we’re about to lose and then we lost a huge customer in Chicago. And then I got to go to D.C.” and then, you know I’m going on and on. And he said, “Okay, well, let’s kind of slow down and chill out. Let’s talk about Dallas. What’s going on there?” “Well, we — you know, we just missed our bank projections a second time,” and I’m going on and on. And he starts saying, “Well, tell me about the CEO in Dallas.” I’m like, “What does that have to do with anything? You know, we’re in the middle of the Great Recession,” like, blah, blah, blah. You know, it’s not — you know, it’s the markets or whatever. Anyway, it comes to points, he says — well, eventually, he says, “Well, how would you — how would you rate that CEO, you know, A, B, C?” I was like, “Oh, he’s probably a B.” He said, “Well, Graham, in one of our engagements, you said you wanted to build the greatest private equity firm of all time. Are you going to — are you going to do that with a B CEO?” And I just — it like hit me between the eyes. And then he asked me another question, he said, “And Graham, if you’re someone who keeps a B CEO” — RITHOLTZ: What does that make you? WEAVER: — “how would you rate yourself as a CEO?” RITHOLTZ: Right. WEAVER: and I just — like, it stopped me dead in my tracks. And that was really this light bulb that went off, that ended up having us — having me realize I’m actually in the talent business. That’s the fundamental business that I’m really in. And that was like ’09 that we came to that realization, and then started completely redesigning our firm to like build our companies around talent, build our firm around talent, build our investment strategy around talent. So that was just a huge turning point. RITHOLTZ: So let’s talk about that because all of your investments eventually get a CEO that’s been trained at Alpine and has the benefit of all of this coaching, all of this training, all of this expertise. It’s not that you’re just looking for attractive balance sheets, it’s where can we put someone in charge to move the needle by taking our expertise and applying it to this business model. Is that what you mean by when you say, you’re in the talent business? WEAVER: Yeah. I think that’s what I mean. There are two parts of it. One is our investment strategy, which is what you described the others, how we run our own firm. But sticking with what you were talking about, Barry, the investment strategy, we found that the single most important investment decision we make is the management team. And it’s more important than the price we pay. It’s more important than the leverage levels. It’s more important than the prior growth rate. And so, we just said, “Well, if that’s really the most correlated, most effective, or most important criteria, you know, let’s make sure we get that right. And so let’s actually kind of build our own CEOs and put our own CEOs in so that we can make sure that we’re getting a world-class person to run each one of our companies.” RITHOLTZ: So in some ways, this is almost parallel in the public markets to activist investing, where they identify a very attractive business that isn’t quite living up to potential, right? WEAVER: Yeah. RITHOLTZ: And they say, “Hey, with a few management changes, we can turn this into a really good business.” On the private equity side, I’m assuming the conversation is something like, “We want to either buy 30%, 40% of your business or your entire business. But regardless, we want one of our professionals to come in and manage it.” WEAVER: Yeah, that’s right. A lot of the companies we’re buying don’t have management. You know, it might be a corporate carve-out. It might be a management team that wants to retire, or exit. And that’s great. So there’s never any conflict. We’re totally transparent. We’re not doing hostile deals, nothing like that. It’s always the transaction that the seller wants to do is they want to retire. So it’s always very friendly. But we — there aren’t a lot of private equity firms that want to go through the process of changing management because it’s very, very hard to do. RITHOLTZ: And that’s the value add that you guys bring. WEAVER: That’s a big part of it. Yeah. RITHOLTZ: Yeah. That’s really quite fascinating. So there’s a quote of yours I have to lead with, which I find really intriguing quote, “People create returns, not deals, not price.” That’s a huge statement, considering most of the analyst community, especially private equity, is so analytical and modern driven. You’re saying this is a people business. WEAVER: Yeah, 100%, Barry. I think that if you want to do something different than people, you have to have some fundamental belief that’s different than what other people believe. And our belief is that returns come from people. They come from talent. And I think maybe one of the reasons why people shy away from that is it’s hard to analyze, it doesn’t fit in a spreadsheet, and it’s incredibly hard to manage. It’s a lot easier to manage the hard numbers, the financial statements and things than it is to, you know, really manage a team of people. RITHOLTZ: So we were talking earlier that you appoint the CEO at these purchased businesses that you’ve trained yourself. Tell us a little bit about what that in-house training looks like. WEAVER: So a lot of the CEOs we’re hiring, we’re bringing right out of MBA programs, and they have five years of experience typically before they go into business school. And that could be anything, that could be they’re in the military. They could have been in consulting firm. They could have been in investment banking. And we have success with any of those — any and all those backgrounds. So — and they’ve just been in two years of business school, so we don’t want to put them back in business school. But what we’re really teaching them, the fundamental thing we’re teaching them is how to hire, how to build their team, how to set a vision, how to create priorities, how to get everyone in their organization excited and aligned behind what they’re trying to do. Those are things that not a lot of business schools teach. It’s one of the things I try to teach in my class, but it’s something that we bring in — it’s the biggest thing we bring in that training program that we do. RITHOLTZ: Hiring has been described as the most difficult aspect of building a company versus everything else. WEAVER: 100%. RITHOLTZ: How do you teach good hiring? WEAVER: You can actually, to some extent, make hiring a science. And the simple — I could talk for you — I could talk for three hours about this, but I’ll try to do it in about two minutes, which is you build a scorecard for what you want that role — in that role, a specific list of outcomes you want that role to do. And then as you’re assessing a candidate, you’re looking for very specific evidence that they’re going to be able to perform against that scorecard. And you have two things, you’re looking for attributes and experience. Those are the two different parts of the interview process. RITHOLTZ: But we all know what experience is. Define what attributes mean. WEAVER: So attribute is about who somebody is versus what they’ve done. So an example for us, when we’re hiring young people to become CEOs, we’re looking at, you know, do they have a will to win? Do they have emotional intelligence and self-awareness that they can get along with people? And then did they have grit? Can they — are they going to be able to see things through after getting kicked in the teeth, because they’re going to get kicked in the teeth. So those are the three attributes that we’re looking for. Those are wildly more important than experience, because they’ll get experienced quickly. And you can teach experience, you can’t teach those three things. You can’t teach, you know, the will to win. They’re kind of coming to us with that or not. RITHOLTZ: That’s an — that’s an intrinsic aspect of the personality. You either have it or you don’t. There’s no way you’re going to learn that. WEAVER: Not in a period of time, or we don’t know how to teach it if it is writable. RITHOLTZ: Right. WEAVER: Yeah. RITHOLTZ: Really, really interesting. So you mentioned your class, let’s talk about the management course that seems to be related to that, CEOs-in-Training. Tell us about that. WEAVER: Yeah. So the CEO-in-Training is the — that’s the name for the people that we’re hiring. Did you want to talk about that, or the class itself? RITHOLTZ: Both, either/or. WEAVER: Okay. All right. So the CEO-in-Training is the name we give to those people we’re hiring right out of business school. We’re giving them that experience — training that I mentioned, and then we’re putting them right in. A lot of them are CEOs on day one of add-on acquisitions, and they get the reins and they’re — you know, they’re off to the races. And you know, there aren’t a lot of positions out of business school that you can become a CEO within — you know, right when you graduate. So we’re — we’ve designed that and it’s been — it’s been a homerun. We — I underestimated how amazing these students would do and the roles that they’ve done. And it’s been fantastic. RITHOLTZ: Do you end up hiring people right out of your classes or — WEAVER: Yeah. I mean, I don’t — RITHOLTZ: So this is really devious recruitment. WEAVER: I don’t interview anybody from Stanford, period. I don’t even know if they applied. I keep a wall between — RITHOLTZ: Right. WEAVER: — you know, my teaching and recruiting. But I will say probably teaching there has helped the Alpine brand. RITHOLTZ: Sure. WEAVER: And helped me — and more importantly, helped me understand what students are capable of, which is a lot, and what they want, which is they want to be the boss right away. And I think — so it’s helped — it helped me learn a little bit more about how to build a program that the students want to actually do. RITHOLTZ: So one of the things the CIT program does is to try and increase underrepresented individuals in PE. Tell us a little bit about what diversity does for your business. WEAVER: Yeah. Well, it’s awesome what we can do. If you — the great thing about hiring for attributes over experience is that we can actually have a huge impact on diversity. So for example, if I said we’re hiring a CEO to run a healthcare software business and our criteria is they have to have done it for 20 years. RITHOLTZ: Right. WEAVER: Then I’m — that battle has been won or lost 20 years ago. RITHOLTZ: Right. WEAVER: Yeah. I could hire someone who’s a diverse candidate from one of my competitors, but I haven’t really created any value. If I hire someone right out of business school, let’s just use women as an example and that woman wouldn’t have necessarily seen a path to become a CEO, and I can provide her a clear path, then I can actually increase the number of women that become CEOs, which is exactly what we’ve done. We have over 50% of our CEOs-in-Training that we’ve hired have been women. About 30% to 35% have been underrepresented minorities. And so we have — we can have a — we can really move the dial on creating more diversity in CEO ranks. RITHOLTZ: That’s really kind of interesting. Let’s talk a little bit about software and services, why focus on those areas in particular? WEAVER: So one of the things that we figured out, which probably took us way too long to figure out, is if you buy recurring revenue, there’s just a lot fewer things that go wrong. So we’re not unique in focusing on recurring revenue, but that we turn the dial in around that Great Recession time, and decided that was all we were going to do. RITHOLTZ: And so it’s less focused on winning that one big sale and it’s more about building a business that has a fairly steady revenue stream? WEAVER: That’s right. And then if you marry that with what I was saying before, about putting young people to run them, recurring revenue is really helpful because in the first year, they have a big learning curve. And you — RITHOLTZ: Right. WEAVER: You know, they — we need them to have a little bit of a cushion for them to get up to speed. So recurring revenue helps a ton because it does take a little while to learn how to be a CEO. RITHOLTZ: That’s really interesting. Software obviously has been really hot over the past couple of years. Any chance that that changes or slows down, or is software just the driver of the future? WEAVER: I mean, I think software is the driver of the future. And I think anything, even the driver of the future can get overpriced. RITHOLTZ: Sure. WEAVER: And you can overpay for any asset. And I think in the last few years, you know, people have gotten a little ahead of themselves with some of the multiples that were paid. But I don’t think that changes fundamentally that I think software — you know, software is here for a long time and it’s got a lot of really exciting trends. (COMMERCIAL BREAK) RITHOLTZ: I’m going to ask you a question. I’m going to have you put this back earlier in the hiring discussion because I missed something and I want to come back to it. You’ve discussed episodic versus programmatic hiring. Explain the difference between the two. WEAVER: Yeah, great question. So I might have made up those two terms, but — RITHOLTZ: Well, that’s why it jumped out at me. I don’t know what either those things are. I have to ask that question. WEAVER: I think I did make them up, but — so episodic hiring is what everyone does. Okay. We need a — RITHOLTZ: We have an opening. WEAVER: Yeah. RITHOLTZ: Fill this — go to LinkedIn — WEAVER: Exactly. RITHOLTZ: — put out an ad, get me somebody here. WEAVER: Exactly. Or yeah, we’ll hire Russell Reynolds to get us a CFO, whatever. That’s how everyone hires. That is two problems — well, a number of problems. One is it’s slow, and two is it’s expensive. And three is it actually doesn’t even work that well. Like, the hit rate is pretty low. The hit rate across the board in hiring statistically is about 50%, but that’s measured as are they still there in three years? Not this they — were they successful? So it’s even worse than that. So that’s the problem with episodic hiring. So programmatic hiring is you’re going to hire the same role a lot, and so how do you make that more of a program? So for example, you know, we’re hiring 17 people from business schools that start next month, or we’re hiring 27 undergrads to be interns who will matriculate into full time roles. And so, there’s a group of people that are graduating. You can kind of have a class of folks. You can give them way more training. You can build a whole program using the — to use the programmatic term around that, and it’s just a lot more effective. That’s two roles that we do at Alpine, the CEOs-in-Training and then the analysts. But then in our companies, you know, in some cases, that’s engineers, technicians, where that’s their recurring hire that they’re doing. And we’re helping them build programs to start with people who don’t know how to do those functions, and bring them up, you know, through training to learn those. RITHOLTZ: Really quite interesting. WEAVER: And you can scale — you can just scale a lot better, and you have a way higher hit rate doing that. RITHOLTZ: So you’re constantly maintaining a pool of either potential hires or actual employees that you’re waiting to promote? WEAVER: Absolutely. Yeah. RITHOLTZ: Before we get into the current market environment for private equity, I have to circle back to you teaching at Stanford, at the graduate school, tell us a little bit about the courses you teach and what students learn. WEAVER: So I teach two courses there. I teach — they’re both — they’re both basically similar. One is for first years, and one is for second years, but they’re both centered around entrepreneurship. And the idea of the courses is that there’s lots of classes on analysis and accounting and finance; and there aren’t a lot of classes around how to actually manage people, lead people. And I’m talking the nitty-gritty stuff of literally like what to say, if you have to fire someone. My students have to rule — my students will say, “Oh, I would just fire that person.” I said, “Okay, great. I’ll be them and you tell me.” RITHOLTZ: Right. Fire me. WEAVER: Fire me, and then they have to do it and they realize — RITHOLTZ: It’s harder than it looks. WEAVER: It’s a lot harder than it looks. So they’ll say — RITHOLTZ: That’s why people just cheat and send email. He’s so mortified. WEAVER: Yeah. That would not be something we teach. We do not — we not teach people to send an email. RITHOLTZ: So tell us about the role-playing. What does that — WEAVER: So we — so the student will actually play the protagonist in the case, and I’ll play the antagonist for lack of a better word of the other characters. And then they’ll fire me, or they’ll have to demote me, or they’ll have to tell me that they no longer want to be my partner, or whatever the situation is that they’re trying to get through. And then we’ll play around with it. And they’ll realize, you know, some things they do right, some things they do poorly. And then the entrepreneur about whom we’ve written the case is in the class, and so then they’ll chime in and say, “Well, wow, this is — you did this this way, this is why I didn’t do that,” or “I wish I would have done it that way. Instead, I did this.” So it’s a really — it’s a really, really fun class. It’s — and it’s something that they don’t get anywhere else where they actually have to kind of implement the stuff they’re talking about. RITHOLTZ: So aside from firing, what else do you teach them? WEAVER: So everything, we actually teach a lot on hiring. We have whole modules and playbooks and videos and things I’ve made and we do a class on that, which is really important. We talk about complex partnership issues, things with your board. They have to sell stuff. They have to fundraise, how to make an offense and defense deck to sell — to sell something, you know, a whole list of basically things that entrepreneurs are going to have to face in their life. RITHOLTZ: Really intriguing. I have to imagine having been a graduate student at Stanford, it’s deeply satisfying teaching there. WEAVER: It’s a blast. I started off as a case guest, where they wrote a case about me buying stuff in my dorm room, and I was a case guest and I kept — I would come home all energized. And it was my favorite day of the year. And then when the — Irv Grousbeck, who wrote the case about me, who’s a legend at Stanford, when he — he called me one day and said, “Hey, you know, I’m going to stop teaching this class, would you want to teach in?” And my first response was, “No, I have a job, you know, and I can’t,” but I didn’t say that. I said, “Hey, I’ll think about it.” And then, thankfully, everyone I was around was like, “Graham, you have to do this. And it’s your favorite thing you do.” And we figured out a way to make it work. So it’s a blast. RITHOLTZ: That sounds like — that sounds like it’s a lot of fun. WEAVER: One more thing I would just add is what I realized after a few years is I’ll teach students all about entrepreneurship, and we have this great class. And then they go take a job, you know, in consulting or investment banking; they never become entrepreneurs, even though that was what they wrote their essay about and that was what they’re excited about. So I added to the class a whole part on, okay, wait a second, what is it you really want to do with your life? You know, what’s holding you back? How’d you make a plan to go do that? What are your limiting beliefs? What are the things — what are your fears? So we have a whole thread, probably 25% of the class is on those things because I’m like what’s the point of teaching people to be entrepreneurs if they don’t become entrepreneurs? RITHOLTZ: Right. WEAVER: So I’ve invested a lot into, like, personal growth. And that’s a really, really fun part of us, too. RITHOLTZ: Are any of those skill sets transferable to consultants who arguably — WEAVER: Oh, 100%, a 100%. RITHOLTZ: — they’ll be working with other entrepreneurs and maybe haven’t been exposed? WEAVER: Yeah, a 100%. It wasn’t so much that I have anything against consulting, it was just that the student at the beginning of the class said, “My goal is to do X, and then they don’t do X.” That was all. RITHOLTZ: So tell us a little bit about your approach, what’s your process like to finding a potential acquisition target. And since we look at both private and public markets, what do you think of in terms of valuation? How do you come up with a number? WEAVER: Yeah. Yeah, great questions. We have a large team that looks for potential companies. We have actually 52 people at Alpine and in our portfolio companies that are looking for deals. RITHOLTZ: 52? WEAVER: 52. RITHOLTZ: So that’s a lot of people. WEAVER: Yeah. RITHOLTZ: How big is the firm overall? WEAVER: Overall, if you include the CEOs-in-Training and we have — RITHOLTZ: And your 1099 consultants. WEAVER: We probably have roughly 200. RITHOLTZ: All right, so that’s a — WEAVER: Yeah. RITHOLTZ: That’s a decent size. WEAVER: The 52 also includes a number of people that are working at the company who’s doing sourcing, but they’re doing the same thing. They’re calling companies, looking for investments. So we have 52 people looking for deals, and then a lot of those conversations are directly with founders. And what we’re trying to do is figure out — the way we think about it is we can pay a price, that we can hit our target returns, which I can’t talk about on, you know — RITHOLTZ: Right. WEAVER: But if we can hit our target — RITHOLTZ: We all have compliance departments. WEAVER: So we can pay a price so we could hit our target returns with like a 70% base case. And then we need there to be a lot more upside to that than downside. So we want there to be like a case where we could hit many multiples of our target returns. And so based on that, we kind of back into a price. And then where we get in trouble or where things get turned down at Investment Committee is when everything in the world has to go perfectly to hit that target. RITHOLTZ: Right. WEAVER: Because I’ve been in this business for 28 years, and when you start pricing in perfection, that’s a time when you realize you’re overpaying. RITHOLTZ: Right. WEAVER: So that’s — it’s that 70% probability and less a margin of safety thing that you really — as someone who’s like a little bit more senior at our firm, I have to bring that to the discussions. RITHOLTZ: Yeah. That perfect 10 stuck at landing, those are the outliers. You certainly can’t rely on that. WEAVER: Exactly. You can’t underwrite to that, for sure. RITHOLTZ: Yeah. So when you look at this macro environment, it seems to be pretty supportive of economic expansion generally. How closely do you pay attention to things like, hey, the Fed is raising rates pretty rapidly, maybe they’re going to cause a recession next year? WEAVER: We pay attention to it to some extent. If you go back to the ’08 crisis — RITHOLTZ: Now, that’s a recession. WEAVER: Yeah. And we’re just in a very different position. I think we’re way underbuilt on housing. So you know, I don’t see — RITHOLTZ: Wildly. WEAVER: Wildly underbuilt on housing, so I don’t see — you know, I don’t see things happen — you know, crashing there. I think we have — the consumer isn’t as leveraged as they were back in 2008. Businesses aren’t as leveraged as they were. I just think it’s a lot healthier. On the flip side, we also don’t have — the Fed can’t print money like they did in ’08 because of inflation. But I think, generally, it just feels like we’re a lot healthier than we were back then. RITHOLTZ: Right. You’re singing my song. I’m in the exact same place. I’m kind of perplexed by all the recession chatter. I mean, what are we? 27, 28 million new jobs in this year? That’s not what you usually see. Although, to be fair, some past recessions, we were creating jobs right until the moment it stopped and the bottom dropped out. But you know, it really depends on how aggressive the powers that you’re going to get about inflation. So here’s the question related to that in ’08, ’09, let’s say the naysayers are right and the end of this year or 2023, we see something more than just a mild shallow recession, we see a real recession. How does that affect the companies you look at? And do you start doing, for lack of a better phrase, distressed private equity investing? WEAVER: You know, I think that what we’ve been trying to do over the last 14 years is underwrite companies that would do well in a recession. So hopefully, we’re going to — our company is going to hold up well in that time. In terms of what we look for, it does open up the door when — you know, when there is a recession, there’s a lot more different things that are for sale at different prices. And I think one of the great assets is if you have a whole team of managers that you can put in to run distressed things, you have a lot of options open to what you can look at. So there — you know, there will be a lot more interesting things to do with, you know, if that happens. Certainly, we don’t wish that on the economy. RITHOLTZ: On anybody else. And then, finally, I have to ask about the way you score software companies and services companies, you use a metric. I really am not familiar with eNPS. Can you tell us a little bit about that? WEAVER: Yeah. So I think in general, that there are leading indicators and lagging indicators. Lagging indicator is revenue EBITDA. Those are lagging indicators. But yet, a lot of managers, they try to manage to lagging indicators. It’s like — and that’s just not very effective. So what we try to do is develop what are the leading indicators that are going to predict success. And the number one most important leading indicator, you’re not going to be surprised to hear me say, is talent. So if you tell me, “I’m on the board of your business, and we’re starting to build the world-class management team, I can tell you in two years, we’ll have a homerun investment.” So one of those leading — two of those leading indicators related to talent are employee net promoter score, which is the eNPS. RITHOLTZ: Meaning how employees rate their employee? WEAVER: Exactly. Yeah. Would they — would they recommend this company to a friend? And we measure that every quarter for every one of our companies. We measure it at Alpine. We measure it for a whole bunch of different groups within Alpine. And then retention is the other big one. So if we can be managing those and getting those right, those are leading indicators that are going to help us set up, you know, the revenue EBITDA that come later. And those are hard things to manage. Getting those metrics right takes a lot of work. That’s actually where I spend most of my time at Alpine, believe it or not, is making sure that we’re creating an environment where the best people want to be and stay. And most people again in the finance world, they don’t think about kind of squishy, soft metrics like that, but they should be. RITHOLTZ: Well, because they have a really outsized impact on the performance of a company. WEAVER: Absolutely. That’s my view is they have — they have the biggest impact. RITHOLTZ: And my last question before I get to our favorite questions we ask all our guests, so a little bit of a curveball, you are a captain on a national championship rowing team. WEAVER: I was. Yeah. RITHOLTZ: Tell us about that. WEAVER: So — RITHOLTZ: You look like you row. WEAVER: So I came to college not even knowing anything about rowing. I didn’t even know that the boats went backwards till I got in a boat. RITHOLTZ: Well, it’s not that they’re going backwards. It’s just that you’re facing backwards. WEAVER: Exactly. Yeah. I didn’t even know that. So I started as a novice, I walked on the team. And it seemed like everyone else on the team had rowed before, so I was horrible, absolutely horrible. I got cut, and then just kept kind of — and so there’s a funny story where the coach says, “Okay, these are the people who are going to boats. The rest of you are, quote, “land warriors.” And you’re a land warrior means you go on the rowing machines. And so that night when he kind of posted the boats and I wasn’t in the boat, he said, “All right.” So I did this calculus, and I’m like, okay, well, gosh, all the land warriors are going to show up before class. You know, classes — first class is at 9:00. So they’re going to show up at 8:00, but — so I got to show up at 7:00. No, no, no, everyone is going to think that, so I’ll show up at 6:00. So I show up the next morning, zero people. And one of the guys is like, “Hey, idiot, land warrior is another way to say you got cut.” But I still stayed as a land warrior, and kept getting better at — getting my Erg times better and better over time. And it was one of the greatest things I ever did. I had a great time and — RITHOLTZ: And when were they national champions? WEAVER: My senior year, I was — RITHOLTZ: So by then, you’re on the team? WEAVER: By my — yeah, by my senior year, I was pulling one of the best Erg times in the nation at the rowing machine — RITHOLTZ: Erg time? WEAVER: On the concept to rowing machine like you see in the gym, they actually have a standard test, which is 2000 meters which you submit, you know, nationally. And by my senior year, I had one of and maybe a few times the number one Erg time in the country, and I was elected captain by my teammates of our team. And then that year, we were supposed to have a rebuilding year because we lost all these seniors and we actually won the whole thing. RITHOLTZ: That’s amazing. WEAVER: So it was awesome. RITHOLTZ: Wow. That’s really amazing. (COMMERCIAL BREAK) RITHOLTZ: Let’s jump to our favorite questions that we ask all of our guests, starting with what kept you entertained during the pandemic lockdown? Tell us what you were streaming. WEAVER: I went on this whole Buddhist thing during the pandemic and I started reading a lot about Buddhism and streaming Buddhism, and it was — it was amazing. RITHOLTZ: Meditating or — WEAVER: Meditating and just kind of learning about Buddhism, and you know, why we all suffer and how to — you know, how all these thoughts we have in our head, our own imagination. And I went on this whole kick during the pandemic, which was phenomenal. I highly recommend it. And basically, the concept is that your reality is going through a filter. And everything that’s happened externally, you’re telling yourself a story about what that means, and whether that’s good, or whether that’s bad. And that that’s really — your reality isn’t what’s happening, it’s the story you’re telling yourself and that you have complete control over that story. RITHOLTZ: Right. That’s the classic narrative fallacy. WEAVER: Yeah, that’s the narrative fallacy. And that’s kind of the fundamental premise of Buddhism, which is your suffering is coming, not from what’s happening, but the story you’re telling yourself. So I went on this long, you know, meditating and reading, and kind of journaling about that. And that was — that was a lot of fun. RITHOLTZ: So the — we had this old joke about, we had a softball team here over in Central Park and we had the Buddhists playing the stoics and the game never finished. Everybody just sat down instead of having a long conversation. But I’m right there with you. You mentioned your — two of your mentors, who were some of your earliest investors. Are there anybody else you want to mention as mentors? The professor at Stanford you referred to also. WEAVER: Yeah. I’ll — both of those, Tom Steyer. Doug Martin and Irv Grousbeck were super important in my life. I’ll talk about Irv. He is probably if you had — there’s probably literally, Barry, a hundred people you could have on this podcast that would list Irv as one of their most important people. RITHOLTZ: Really? WEAVER: Yeah. RITHOLTZ: Wow. WEAVER: He a professor at Stanford and just, you know, makes time for folks. He built an incredible business. And he just has this, you know, unwavering moral code. He was an early investor. He’s the one who asked me to teach at Stanford. And I just — I just find the way he set up his life and his — just the way he treats other people, you’re always the most important person in the world when you’re with him. And so, I’ve definitely learned a lot from him. RITHOLTZ: Really interesting. Let’s talk about books. What are some of your favorites and what are you reading currently? WEAVER: I — it’s funny, I ended up rereading like the same 10 books. In terms of my favorites, I read — I have some I read currently too, but “Good to Great,” Warren Buffett’s Biography “Snowball,” Steve Jobs biography by Isaacson, Walt Disney’s biography by Neal Gabler, “Switch” by Dan and Chip Heath, “Made to Stick” by Dan and Chip Heath, Buffett’s annual letters. Like, those are like — I reread those and every time I reread them, I get kind of reenergized. And we’ve modeled a lot of our business and a lot of my life around some of the things I learned in some of those books. And a lot of those required reading and help. RITHOLTZ: I can imagine. What are you reading currently? WEAVER: And right now, I started getting on this Brene Brown kick. I don’t know if you’ve read some of her stuff, but “The Gifts of Imperfection” I’m reading right now, which is just phenomenal. She is — I actually downloaded it on Audible so I get to hear her talk about it. But she has just this incredible way of talking about things that other people don’t talk about, like shame and how to — how to deal with the things you’re not good at, and how to be intellectually honest and admit when you don’t know things. And she’s — I love her work. RITHOLTZ: What’s the title of the book you’re reading currently? WEAVER: “The Gift of Imperfection.” RITHOLTZ: It sounds really — WEAVER: Yeah, it’s phenomenal. It’s phenomenal. RITHOLTZ: Before I forget, just as an aside and you could edit this out. So I went to law school with a guy named Lawrence Cunningham, who was the first person who recognized, hey, all these letters from Warren Buffett, they’re really fascinating, deep stuff. He bound them. WEAVER: Yeah. I bought that book. I own that book. RITHOLTZ: That book has been like a perennial bestseller. WEAVER: Yeah. RITHOLTZ: And it’s — you know, the old joke about the two economists walking down the street. One says, “Is that a $100 bill on the floor?” And the other says, “No, if it was a $100 bill, someone would have picked it up.” It’s the same theme with that. WEAVER: He picked it up. Yeah. RITHOLTZ: These have been around for literally — WEAVER: Yeah. RITHOLTZ: I mean, I think he first started in like ‘90 or ‘92, something like that. And Buffett had been around for 30 years by then already, or 25 years, nobody had thought of doing that. WEAVER: And you know what, like, it doesn’t matter if it’s crypto or software valuations or the Internet. The stuff Buffett writes about is still the right stuff. RITHOLTZ: Fundamental common sense, block and tackling. WEAVER: You’re going to discount the cash flows back and decide what you can pay. You’re going to put a premium on the discount rate if the stuff is a lot more uncertain. It’s this — it is exactly the right formula today and it was 50 years ago, and it will be 50 years from now. And anytime that there’s something new, where people says this time, it’s different, you should be really skeptical. RITHOLTZ: Always. All right. Our final two questions, what sort of advice would you give to a recent college or business school graduate interested in a career in private equity? WEAVER: Well, I’ll start with the first part, just general advice, and then I’ll go the private equity. But, you know, as you can imagine, I actually give this advice all the time teaching. But the first thing that I think a lot of people graduating don’t ask is like, what they — what do I want? What is five years from now, 10 years from now, if I could — if I knew I wasn’t going to fail, what would I want to do with my life? And they can start with that question. And then start working backwards from that about what job you should take now and next year and five years from now. Instead, a lot of people just think, “Oh, these firms are interviewing on campus, and I’ll go here, I’ll go here.” And that’s okay. But if you know where you want to be 10 years from now, it will inform which firm you go to work and what skills you’re trying to acquire. So I think — I think that would be my advice is like, in 10 years, you will — you can do almost anything you set your mind to and so give yourself permission to really answer that question, what do I want to do in 10 years? RITHOLTZ: Why does it matter if you quote, “know you wouldn’t fail?” WEAVER: Yeah. RITHOLTZ: Just to open the set of possibilities or — WEAVER: Because — yeah, I always frame it as if you knew you wouldn’t fail, what would you do? Because without that, people already jumped to, “I can’t do this,” like subconsciously in the mind. RITHOLTZ: Fear of failure, is that big really? WEAVER: Fear of failure is so powerful. RITHOLTZ: Even amongst really high performing talent — WEAVER: I think it’s even — RITHOLTZ: I mean, Stanford graduate students, I have to think that’s the cream of the crop out there. WEAVER: In some ways, it’s almost more prevalent because they have had so much success, and they don’t — you know, they have this incredible track record. But I would say the number one thing that Stanford Business School students or really just about anyone in the world, it’s the same thing, which is their subconscious mind defaults to fear and fear of failure. RITHOLTZ: That’s fascinating because when I have discussions like this with colleagues or friends in Europe, the thing — or even Asia, the thing that makes United States so unique in the developed economy world is that failure isn’t a scarlet letter, especially in Silicon Valley. It’s almost a badge of honor. Look at all the VCs that list all, “Hey, we missed Apple and Cisco. We invested money in Pets.com. Look how terrible we are, except for our 40% compounded returns.” It’s a badge of honor to say, “We tried this face planted, brush yourself off and moved on.” WEAVER: But when you’re starting out your career and you don’t have anything to fall back on, and you haven’t yet had the success that you can look back, it’s really scary for people. And the thing that they miss is they underestimate what they could really do in 10 years and they underestimate themselves. They forgot what got them in that seat at Stanford Business School. RITHOLTZ: Sure. WEAVER: And they compare themselves to, you know, their roommate or their classmate or something. RITHOLTZ: So the other half of the question is advice about private equity. WEAVER: Yeah. I would say — I would say if someone is interested in a career in private equity, I would — I would say all private equity is not created equal. And there are — literally, like probably a thousand different models, and figure out, you know, go talk to a bunch of companies that are doing private equity in a whole bunch of different ways, and figure out what resonates with you and your interests and your superpowers, and where are you going to line up because it’s, it’s a very diverse industry. And you know, there are some firms that are making their money based on, you know, hardcore fundamental analysis. You know, we’re making our money on talent. There’s others that are, you know, doing cost cutting. There’s a whole bunch of different ways and one or more of those is going to line up a lot better with what you’re excited about. RITHOLTZ: And our final question, what do you know about the world of software services in private equity today that you wish you knew 28 years or so ago, when you were first getting started? WEAVER: Well, two things. The first thing is I wish I knew that it was going to work out fine. So I was so stressed and I put so much pressure on myself, that I wish — if I could go back and tell myself anything, it would be like, “Hey, Graham, you know, it’s going to be okay,” because I went through a lot. RITHOLTZ: That’s a really — that’s a really interesting answer because, you know, we just don’t realize how much we freak ourselves out and very often, unnecessarily. What’s the second thing? WEAVER: The second thing would be I would — if I could have realized earlier on just how important the world of talent is, and how that was really the thing that drove performance because that that would have saved me a decade. RITHOLTZ: It sounds really like you’ve honed in on exactly what makes your business work and really quite fascinating. Graham, thank you for being so generous with your time. We have been speaking with Graham Weaver, founder and partner at Alpine Investors. If you enjoyed this conversation, well, be sure to check out any of our previous 400 discussions that we’ve had over the past eight and a half years. You can find those at iTunes, Spotify, wherever you feed your podcast fix. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reading list @ritholtz.com You can follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Robert Bragg is my audio engineer. Atika Valbrun is my project manager. Sean Russo runs all of our research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Graham Weaver appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJul 26th, 2022

Why the Jan. 6 Committee is Interviewing Overstock’s Former CEO, Patrick Byrne

Patrick Byrne, Overstock's former CEO, has a long history of supporting incredulous theories, and was at a key White House meeting in December 2020. Patrick Byrne, the founder of the online home goods store Overstock.com, has made strange headlines for decades: for dating a Russian spy; for mocking business rivals with Star Wars-based insults; for putting all his money into crypto and precious metals. This month, Byrne is back in the news cycle, as the latest larger-than-life character in the ongoing saga of the Capital riot investigation. Byrne was one of President Trump’s most prominent corporate allies during his final days in the Oval Office, spreading conspiracy theories about election fraud to the public. In December 2020, Byrne came to the White House and participated in a pivotal meeting with Trump’s inner circle about ways in which the President might contest the election. On Friday, the House select committee will meet with Byrne privately to ask him about that night and its potential links to the insurrection. [time-brightcove not-tgx=”true”] These developments have led some social media users to call for a boycott of Overstock. In turn, the company has emphatically distanced itself from him, repeatedly emphasizing that he resigned from the company in 2019 and has no remaining shares. Here’s what to know about the polarizing former CEO. Byrne has a long history of supporting dubious theories. In 1999, Byrne founded Overstock.com and wielded his firebrand leadership style to help it grow into a retail giant. Byrne ferociously defended his company from rivals and skeptics: In the mid-00s, he filed several lawsuits accusing hedge funds of conspiring to bring down the company through naked short selling of shares, a largely illegal form of stock manipulation. While many people dismissed his claims as ludicrous at the time, the 2007 financial crash revealed that short selling was, in fact, a common practice used by powerful firms to sway the market. The S.E.C. banned naked shorting, and Overstock won millions in settlements from its lawsuits, including against Goldman Sachs and Merrill Lynch. Byrne’s victories in his fight against Wall Street seemed to have emboldened him into believing other bold theories. He filled his website, Deep Capture, with stories about mafia plots designed on his life. He alleged that Obama officials had attempted to set up a sting in 2016 against Hillary Clinton in order to control her while in office. He bought a ranch in the Rockies and turned it into a doomsday hideaway complete with weapons stockpiles and food that would last for years, telling the New Yorker that it would be a “place to go when zombies walk the earth.” And in 2014, Overstock became the first major retailer to accept bitcoin for purchases. In 2015, Byrne began dating a Russian woman named Maria Butina, who would later be arrested and spend more than a year in prison for conspiring to act as a foreign agent. (Officials say she spent the year before the 2016 election trying to befriend powerful conservatives.) In their relationship, it was unclear who was the mark and who was the con: Byrne, for his part, has said that he consistently reported Butina’s suspicious activities to the F.B.I. Around the time that their relationship became public in 2019, Byrne resigned as the head of Overstock. While some of Byrne’s ideas and actions might have seemed outlandish to his colleagues and friends, his successful lone-wolf crusade against Wall Street years earlier had won him the respect and trust of many. In December 2020, Warren Buffett, Byrne’s former mentor, called him “very intelligent and patriotic” in a statement to the New Yorker. In the same article, Jonathan Johnson, who succeeded Byrne as the C.E.O. of Overstock, said of Byrne and his conspiracy theories about the deep state: “From 2005 to 2008, he was made to look crazy, and in 2008 he was vindicated…I don’t know all the facts on this, as I did with the Wall Street stuff. But I do know Patrick, and it won’t surprise me at all if he is vindicated again.” (In a statement to TIME this week, an Overstock representative responded to a query regarding Johnson’s quote, saying, “Jonathan has had no contact with Patrick since well before the article you link was published. Clearly a lot has happened since 2020. Therefore, he cannot reaffirm his comment or comment further on this situation.”) Byrne becomes involved in Trump’s efforts to retain the presidency. In 2020, during the coronavirus outbreak, Byrne began giving anti-vaccine speeches and spreading misinformation about COVID-19 on websites and via social media. Following the presidential election, he appeared on podcasts and YouTube channels devoted to pro-Trump conspiracy theories. He also financed a film called The Deep Rig, which promoted false claims about the 2020 election. Byrne’s unsupported claims that Dominion’s voting machines were rigged led to the company filing a lawsuit against him, seeking $1.7 billion in damages. On Dec. 18, as Trump and his team debated how to handle the upcoming transfer of power, Byrne was able to finagle his way into the White House and win the president’s ear. He argued that Trump should not concede until more investigations into voter fraud were completed. Byrne documented the tense, hours-long meeting in an extensive blog post on Deep Capture. He wrote that he entered the White House thanks to being in the same party as General Michael Flynn, and that he directly advised Trump extensively. Byrne quotes Trump as saying, “Knowing I was cheated, that they rigged this election? How can I just walk away from that?” It’s unclear how much of Byrne’s version is true, but other sources have confirmed that he was there, including former White House counsel Pat Cipollone. In a videotaped interview aired Tuesday during the hearing, Cipollone speaks dismissively of Byrne coming to the White House with Flynn and the lawyer Sidney Powell, saying: “First of all, the Overstock person — I didn’t even know who this guy was…I don’t think any of these people were providing the president with good advice. I didn’t understand how they had gotten in.” The White House aide Cassidy Hutchinson, who was recently interviewed by the committee, described the Oval Office as being “UNHINGED” in a text message that night to another staffer. She wrote that alcohol was flowing freely among staffers, and the next morning, wrote: “Get this — the CEO of Overstock.com was also here!!!!! Dream team!!!!” This week, representative Bennie Thompson, the committee’s chairman, told the New York Times that Byrne had agreed to come in for a transcribed interview. “We’re looking forward to that. He was one of the people in the White House late night talking about the stop-the-steal rally and other things,” Thompson said. Overstock distances itself. Following Cipollone’s description of Byrne as “the Overstock person,” he has often been characterized first by his affiliation to the company online. The link has led some people to say that they would cancel their subscriptions to the company. pic.twitter.com/R8vdyY3top — Overstock (@Overstock) July 13, 2022 In response, the company has gone to great lengths to make clear that Byrne is no longer part of the organization. “Overstock has no association or affiliation with Patrick Byrne and has not for almost three years,” the company wrote on Twitter. “His personal and political beliefs and actions are his own… We help our customers furnish their dream homes.” The company Twitter account has sent out over 70 tweets since Wednesday declaring that Byrne has no involvement with the company and no financial stake. “Overstock has had outreach from some concerned individuals, largely in response to misinformation from some news outlets providing confusion about our current CEO vs our former CEO,” an Overstock representative wrote in an email to TIME. “Since Patrick Byrne has no current association or affiliation with Overstock – and hasn’t since 2019, over a full year before the 2020 election – our only involvement in this conversation is correcting false statements about our business.”.....»»

Category: topSource: timeJul 15th, 2022

Don"t Blame The Weather For Texas Power Shortages

Don't Blame The Weather For Texas Power Shortages By John Kemp, senior energy analyst at Reuters Since the start of May, the Electric Reliability Council of Texas (ERCOT) has twice appealed to homes and businesses to limit consumption at peak times to avert power shortages and rolling blackouts. ERCOT has issued conservation alerts more than four dozen times since 2008, most recently on July 10, when it appealed to customers to reduce consumption between 2pm and 8pm local time on July 11. ERCOT control center State officials tend to blame the problem on extreme weather but the fragile condition of the electricity network has been caused by a failure to connect enough reliable generation to cope with booming demand growth. Most of the increase in electric load has been driven by rapid growth in the state’s population and economy over the last 20 years rather than weather-related problems. The state’s resident population increased to 29.5 million in mid-2021 from 21.3 million in mid-2001, according to estimates prepared by the U.S. Census Bureau. Retail electricity sales to residences, commercial properties, industrial sites and transport providers have surged to 427 billion kilowatt-hours in 2021 from 318 billion in 2001. Compound annual growth in electricity sales (1.48%) has been almost the same as the compound growth in the state’s population (1.64%). Population and economic growth accounts for nearly all load growth; unusually cold winters or hot summers account for only a small share of variability. Repeated power crises and calls for conservation show how growth in dependable generation has failed to keep pace with growth in load leading to an erosion of generation margins. The problem is compounded by the isolated nature of the state’s grid, which has very few links to neighbouring states, and is therefore unable to spread the normal variation of generation and load over a wider area. FAIR WEATHER SYSTEM The inadequate generation margin is masked when weather conditions are mild and close to long-term averages (in the same way a poorly capitalised bank’s problems are hidden when the economy is booming). But when temperatures become unusually cold or hot for the time of year, the extra pressure pushes the system to the brink of failure (in the same way thinly capitalised banks fail when the business cycle turns down). In winter, the problem centres on the inadequate weatherisation of generating units and the fuel supply system, which can cause supposedly reliable generation to fail to start when it is most needed. In summer, there is insufficient surge generation capacity and insufficient flexibility in demand to ensure the system can be safely balanced whenever temperatures spike. The problem is not the weather but the system design itself, insufficient capacity to match load growth, and failure to operate the network within conservative limits. The possible insufficiency of ERCOT’s generation margin this summer was identified by regulators in a review two months ago (“Summer reliability assessment”, North American Electric Reliability Corporation, May 18). To a large extent, the problem has reflected a long-term political choice to operate an energy-only rather than a capacity market in the state to keep costs down. The energy-only market provides cheaper electricity on average but at the cost of recurrent shortages leading to appeals for conservation and sometimes blackouts. ERCOT has come to rely on conservation alerts as a normal operating procedure rather than exceptional emergency measure. Periodic conservation appeals and the risk of occasional blackouts have been the price for keeping generating capacity lean and costs down; conservation appeals have become a feature rather than a bug. Tyler Durden Thu, 07/14/2022 - 19:00.....»»

Category: dealsSource: nytJul 14th, 2022

California"s Energy War On The Poor

California's Energy War On The Poor Authored by Robert Bryce via Quiellette.com, California continues to implement policies on energy, housing, and transportation that are anti-poor and anti-working class... A few years ago, author and demographer Joel Kotkin declared that “California is a great state in which to be rich.” Of course, it’s good to be rich anywhere. But California—the province that for decades has led the United States in cultural issues like fashion, gay rights, and entertainment—has devolved into a state where the American dream is being strangled by a phalanx of energy and climate regulations that are imposing huge regressive taxes on the poor and middle class. And worse yet, the state’s vast bureaucracy is imposing yet more regulations that will further tighten the financial noose on Californians. Before going further, it’s essential to put California into context. While the state is known for posh spots like Beverly Hills, Marin County, and Silicon Valley, the Golden State has the highest poverty rate in America. Indeed, the poverty figures in the state can only be described as shocking. A 2021 report by the Public Policy Institute of California found that “More than a third of Californians are living in or near poverty. Nearly one in six (16.4 percent) Californians were not in poverty but lived fairly close to the poverty line … All told, more than a third (34.0 percent) of state residents were poor or near-poor in 2019.” Los Angeles, the state’s biggest city, and a magnet for generations of immigrants has one of the highest poverty rates among America’s biggest cities. California also has the largest Latino population in America. About 15 million Latinos live in the Golden State and they account for about 40 percent of its population. But the PPIC report also found that more than Latinos account for nearly 52 percent “of poor Californians but only 39.7 percent of the state population.” Despite these numbers, California policymakers continue to implement policies on energy, housing, and transportation that are driving up the cost of living and deepening the state’s poverty problem. In April, the state’s Air Resources Board released a plan that will ban the sale of automobiles with internal combustion engines by 2035. The plan was cheered by a lawyer at the Center for Biological Diversity who said it was essential to “free our streets from tailpipe pollution as fast as possible.” Sierra Club demonstration in California, 2004, Alamy In May, the Los Angeles City Council banned the use of natural gas appliances and heaters in new homes and businesses. By doing so, according to the Sierra Club, the city became the 57th municipality in the state to ban the fuel. The vote, said council member Nithya Raman, puts the city “in line with climate leaders across the country.” That climate leadership comes at a high cost to consumers. Why? On an energy-equivalent basis, electricity costs four times as much as natural gas. On July 1st, motorists in the state began paying an additional three-cent-per-gallon tax on gasoline, a move that will make California’s motor fuel even more expensive. In late June, motorists in the state were paying an average of $6.30 per gallon for gasoline, which is roughly 29 percent more than motorists in the rest of the US. Perhaps the most obvious casualty of California’s climate policies is the state’s tattered electric grid. Blackouts in the state have become so common, particularly in the Bay Area, that media outlets have largely quit reporting on them. Nearly every day, maps of Pacific Gas & Electric’s service territory show outages across wide swaths of central California. The state’s increased blackouts are coinciding with skyrocketing electricity prices. And those skyrocketing electricity prices are coinciding with the implementation of some of America’s most-aggressive renewable-energy mandates. In 2008, Governor Arnold Schwarzenegger signed an executive order that required the state’s utilities to obtain a third of the electricity they sell from renewables by 2020. In 2015, Governor Jerry Brown signed a law that boosted the mandate to 5o percent by 2030. In 2018, California lawmakers imposed yet another mandate that requires the state’s electric utilities to procure at least 60 percent of their electricity from renewables by 2030 and to be producing 100 percent “zero-carbon” electricity by 2045. What has happened since The Terminator signed that executive order? Between 2008 and 2021, the all-sector price of electricity in California increased five times faster than rates in the rest of the continental United States. Last year alone, the all-sector price of electricity in California jumped by 9.8 percent to 19.8 cents per kilowatt-hour. Residential prices increased even more, jumping by 11.7 percent to an average of 22.8 cents per kilowatt-hour. California residential users are now paying about 66 percent more for electricity than homeowners in the rest of the US. The state also faces a chronic shortage of affordable housing. Despite the shortage, home prices are being driven up by a myriad of mandates including the requirement that new homes have solar panels on their roofs. Since 2020, single-family homes and multi-family buildings up to three stories high in California must be topped with solar panels. In January 2023, that mandate will expand to include commercial buildings, including hotels, offices, retail and grocery stores, restaurants, and schools. It will also require panels to be put atop civic buildings, including theaters, auditoriums, and convention facilities. All of these mandates amount to what land-use and civil-rights lawyer Jennifer Hernandez calls “Green Jim Crow.” In an essay published last year by the Breakthrough Institute, Hernandez wrote that her home state: leads the world in renewable energy and electric vehicle ownership. But its industrial and manufacturing sectors have been decimated … Its climate accomplishments are illusory, a product of deindustrialization, high energy costs, and, more recently and improbably, depopulation. Inequality has hit record levels, and housing segregation has returned to a degree not seen since the early 1960s. Hernandez is the lead lawyer for The Two Hundred, a group of Latino leaders who have sued the state of California over its climate, housing, and transportation policies. In 2019, she and The Two Hundred filed a 250-page civil rights lawsuit that claims “Entrenched special interest groups, including environmentalists, block meaningful housing policy reforms” and that the state’s housing crisis is “deepening an already severe civil rights crisis.” Hernandez also points out that many of the regulations The Two Hundred is fighting were never directly authorized by the state legislature. There is no shortage of irony here. California is one of the most liberal states in America. In the 2020 presidential race, Joe Biden thrashed Donald Trump in California by a margin of nearly two to one, taking 63 percent of the vote. Although Trump lost California to Biden, the state is key for presidential hopefuls. That helps explain why Governor Gavin Newsom, a Democrat, has already begun positioning himself for a White House bid in 2024. The California Senate has been controlled by the Democratic party since 1970. The lower house, the Assembly, has also been controlled by Democrats since the 1970s, except for two years in the mid-1990s. The Democratic Party has long considered itself the party of the working class and minorities. Nearly half of Latinos consider themselves Democrats while only about 23 percent identify as Republicans. But Latinos in California are not prospering under Democratic control. Quite the opposite. According to the report issued by the PPIC last year: More than one in five (21.4%) Latinos lived in poverty, compared to 17.4% of African Americans, 14.5% of Asian Americans/Pacific Islanders, and 12.1% of whites. Though the Latino poverty rate has fallen from 30.9% in 2011, Latinos remain disproportionately poor—comprising 51.6% of poor Californians but only 39.7% of the state population. There are also big disparities in homeownership. In 2018, the homeownership rate among California Latinos was about 44 percent. Among whites, that rate is about 63 percent. Robert Apodaca, the executive director for The Two Hundred, and a long-time activist, told me that a myriad of pending regulations will exacerbate the state’s affordability crisis. He pointed to the state’s decarbonization efforts, which include a ban on the sale of cars powered by internal combustion engines that begins in 2035. The push for the electrification of transportation will require the installation of about 1.2 million new EV charging stations by 2030, according to the California Energy Commission. The cost of those stations will, of course, be borne by ratepayers. Furthermore, running all cars and trucks in the state on electricity will increase electricity demand by 25 percent, in a state that is already experiencing regular blackouts. Apodaca said the 100 percent zero-carbon electricity mandate and an economy-wide goal of carbon neutrality by 2045, will also increase costs. In February, the California Public Utilities Commission unanimously approved a scheme that aims to add more than 25 gigawatts of renewables and 15 gigawatts of batteries to the state's electric grid by 2032 at an estimated cost of $49.3 billion. Also in February, the California Independent System Operator released a draft plan to upgrade the state's transmission grid at a cost of some $30.5 billion. The combined cost of those two schemes is about $80 billion. Dividing that sum among 39 million residents works out to about $2,050 for every Californian. But the final price will almost certainly be far higher than $80 billion. Big public works projects routinely exceed initial estimates; California's beleaguered high-speed rail project was expected to cost $42 billion when it was launched in 2008. The latest cost estimate is $105 billion. Any effort to overhaul the state’s electric grid will require huge amounts of complex machinery, including generators, solar panels, transformers, and switch gear. It will also require vast amounts of land, steel, concrete, and tanker loads of industrial commodities at the same time that prices for everything from zinc and lithium to nickel and aluminum are soaring. The renewable-electricity push will force prices upward at a time when California is in the midst of an energy-affordability crisis. In January, electricity rates for customers of Pacific Gas & Electric, the biggest utility in the state, went up by eight percent. In March, PG&E customers were hit by another nine percent rate hike. Consumers served by San Diego Gas & Electric are also seeing big increases, with electricity price increases of nearly eight percent this year. Furthermore, PG&E is seeking rate big rate increases from 2023 to 2026 to pay for a variety of programs including burying thousands of miles of power lines. Electricity prices are soaring at a time when many consumers simply can't afford to pay. In March, more than a quarter of residential customers in San Diego County were behind on their utility payments. These soaring costs shouldn’t be surprising. Like what has occurred in Australia and Germany, the imposition of renewable-energy mandates in California has corresponded with dramatic increases in electricity prices. Of course, that’s not what we are told by climate activists like Bill McKibben who never tire of claiming that wind and solar are cheaper than traditional forms of electricity production. But a 2019 study done by academics at the University of Chicago found that renewable-energy mandates cause prices to go up, not down. Photo by Venti Views on Unsplash The report, by Michael Greenstone and Ishan Nath, said renewables “raise electricity prices more than previously thought” due to “hidden costs that have typically been ignored.” They also found that the mandates “come at a high cost to consumers and are inefficient in reducing carbon emissions.” Greenstone and Nath said “the intermittent nature of renewables means that back-up capacity must be added” and that “by mandating an increase in renewable power, baseload generation is prematurely displaced, and some of the cost is passed to consumers.” It continued, saying that renewable-energy mandates lead to lead to “substantial increases in electricity prices that mirror the program’s increasing stringency over time.” Of course, none of this fits the convenient narrative that California is leading the way on climate change. Nevertheless, the hard reality is that California’s climate policies and renewable-energy mandates are immiserating vast segments of the state’s population. In a July 1st telephone interview, Apodaca said the state’s climate policies are hard to fight because California is “being governed by the administrative state, the regulators.” He continued, saying “The legislature hasn’t mandated most of these climate rules. There is no legislative mandate for the majority of the regulations that the Air Resources Board and other agencies are creating. The agencies have gone too far. But they aren’t held accountable.” What has happened in California is a warning for the rest of the United States and the rest of the world. Kotkin, who I quoted at the top of this piece, has become one of the loudest and most-frequent critics of California’s decline. In April, citing a report he co-wrote (with Marshall Toplansky and three others) for Chapman University, Kotkin declared that California is in the midst of an “existential crisis, losing both its middle-aged and middle class, while its poor population faces dimming prospects. Despite the state’s myriad advantages, research shows it [is] plagued by economic immobility and inequality, crushing housing and energy costs, and a failing education system. Worse than just a case of progressive policies creating regressive outcomes, it appears California is descending into something resembling modern-day feudalism, with the poor and weak trapped by policies subsidized by taxes paid by the rich and powerful.” Given the state’s many problems, residents are reacting with what has been dubbed the “California Exodus.” Last year, for the first time in its 171-year history, California lost a seat in the US House of Representatives. Meanwhile, Texas gained two seats and Florida gained one. A few months ago, U-Haul, the company that rents moving trucks, issued a press release that said its California locations experienced the biggest loss of one-way truck rentals in 2021. The top destination for those soon-to-be-ex Californians? Texas. (I can verify this, as it seems everyone from California is moving to Austin.) Furthermore, since 2018, about 300 companies have moved their headquarters out of California. Among the more notable corporate departures: Tesla and Oracle, both of which moved their headquarters to Austin. The punchline here is obvious: For decades, regulators and politicians in California—a state that is a pillar of the Democratic Party as well as the home of US vice president Kamala Harris and the home of America’s biggest climate-activist group, the Sierra Club—have been implementing a skein of policies, nearly all of them tied to energy and climate, that are blatantly anti-poor and anti-working class. Yes, California is a fine place to be rich. But Californians who aren’t rich have seen enough. And now they are voting with their feet and with whatever U-Haul truck they can find.   * * * Join the newsletter to receive the latest updates in your inbox. Tyler Durden Wed, 07/13/2022 - 17:40.....»»

Category: worldSource: nytJul 13th, 2022

Tesla just celebrated its 12th year as a public company. Here are the most important moments in its history.

Take a tour through Tesla's history from Silicon Valley startup to the world's most valuable car company. Tesla Model 3.Tesla On June 29, 2022, Tesla celebrated its 12th anniversary as a public company.  Tesla closed out its first day of trading in 2010 with a market cap of $2.22 billion. It's now worth roughly $700 billion.  The company put electric cars on the map.  On June 29, Tesla celebrated its 12 year as a public company. Since its IPO in 2010, Elon Musk's electric-car company has contented with high highs and low lows. And through all the twists and turns, Tesla managed to put electric vehicles on the map and become the most valuable car company on the planet. Tesla's journey from fledgling startup to EV juggernaut hasn't always been smooth sailing. While the company has notched plenty of achievements, it's also experienced its fair share of setbacks. Here's a breakdown of the company's most defining moments since its founding. July 2003: Tesla Motors is founded by a group of Silicon Valley engineers.Martin Eberhard, co-founder of former CEO of Tesla Motors, poses next to an electric motor.Paul Sakuma/ AP PhotoWhile Elon Musk, Tesla's current CEO, has led Tesla for the majority of its existence, he wasn't always at the helm of the company. Tesla, named after the famous physicist Nikola Tesla, was incorporated in 2003 by two engineers, Martin Eberhard and Marc Tarpenning. Later co-founders included JB Straubel, Ian Wright, and Musk. Eberhard served as CEO until August 2007, and left the company shortly thereafter. February 2004: Elon Musk invests.Musk in 2006.Joanne Ho-Young Lee/MediaNews Group/The Mercury News via Getty ImagesMusk led the company's Series A funding round in 2004, contributing $6.5 million and joining Tesla's board as chairman. August 2006: Musk reveals Tesla's Master Plan.Musk.Thomson ReutersIn 2006, Musk published a blog post entitled "The Secret Tesla Motors Master Plan (just between you and me)" in which he laid out Tesla's long-term mission: to help transition the world away from fossil fuels and toward clean energy. "Some readers may not be aware of the fact that our long term plan is to build a wide range of models, including affordably priced family cars. This is because the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution." November 2007: Ze'ev Drori named CEO.Ze'ev Drori.Robert Galbraith/ReutersTesla announced Drori would take the helm at Tesla at the end of November. An Israeli engineer and tech veteran, Drori was tasked with bringing Tesla's first car, the Roadster, to market by the first quarter of 2008.  February 2008: Tesla's first Roadster is delivered.The Tesla Roadster.TeslaDrori managed to bring the Roadster into production on time and the first vehicle was delivered to Musk, who was serving as the company's chairman at the time. To celebrate the occasion, Musk jumped in the Roadster and led four other prototype Roadsters packed with engineers down Highway 101 and University Avenue in Palo Alto, California.  March 2008: The company begins regular production of the Roadster.Tesla RoadsterScott Olson/Getty ImagesBy mid-March, the company had met its goal of getting regular production of the Roadster up and running. At the time, Drori referred to the event as a "milestone for the company and a watershed for the new era of electric vehicles." Tesla produced the Roadster, which priced at $109,000, until January 2012 and in total sold 2,450 of them.October 2008: Musk assumes title of CEO.REUTERS/Noah BergerBy October, Tesla was feeling pressure created by the financial crisis. "The global financial system has gone through the worst crisis since the Great Depression, and the effects are only beginning to wind their way through every facet of the economy. It's not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks, and this is true for Silicon Valley as well," Musk said at the time.Musk announced he would be taking over the company and that there would be layoffs. He also pushed the launch date of the Model S sedan, Tesla's next vehicle, from 2010 to mid-2011.  November 2008: Tesla secures $40 million in financing and avoids bankruptcy.Elon Musk, CEO of Tesla Motors, listens as Governor Brian Sandoval of Nevada speaks during a press conference at the Nevada State Capitol, September 4, 2014 in Carson City, Nevada.Max Whittaker/Getty ImagesBy November 2008, the company's financial situation had worsened and Tesla was on the brink of bankruptcy. To help restore Tesla's coffers and speed up Roadster production, the company's board of directors approved $40 million in convertible debt financing."Even then, we only narrowly survived...We actually closed the financing round on Christmas Eve 2008. It was the last hour of the last day that it was possible," Musk said in 2015.    March 2009: Tesla unveils a prototype of its second car, the Model S sedan.Elon Musk and Tesla designer Franz von Holzhausen at the Tesla Model S media launch in Hawthorne.Fred Prouser/ReutersTesla unveiled its second car, the Model S, in March 2009 in Hawthorne, California at the SpaceX headquarters.  By May 12, 2009, Tesla had already surpassed 1,000 reservations for the Model S.   May 2009: Mercedes-maker Daimler takes a 10% stake in Tesla for $50 million.Elon Musk and Daimler Board Member Thomas Weber talk about the deal on Fox Business news.YouTube/Every Elon Musk VideoThe $40 million in financing helped get Tesla through its darkest hour, but the company needed more resources to further develop its battery technology. Tesla and Daimler had already been in partnership for about a year working on an electric Smartcar. But by May, Daimler made a long-term bet on Tesla by taking a 10 percent stake in the company. The two companies agreed to work together on developing battery and electric drive systems.In June 2009, Tesla also received a $465 million loan from the Department of Energy, which it repaid by May 2013.   June 2010: Tesla goes public.CEO of Tesla Motors Elon Musk waves after ringing the opening bell at the NASDAQ market in celebration of his company's initial public offering in New York June 29, 2010.REUTERS/Brendan McDermidTesla offered 13.3 million shares at $17 per share. The company raised $226.1 million. Shares closed at $23.89, valuing Tesla at $2.2 billion. October 2, 2011: Elon Musk reveals Model S beta.REUTERS/Stephen Lam In late 2011, Tesla showed off a near-production version of the Model S to about 3,000 early reservation holders. Musk revealed that the vehicle would get 320 miles per charge and go from 0 to 60 mph in 4.5 seconds. "The oil companies said electric cars can't work, but the truth is, they don't want them to work. But here it is. They would say this car is the equivalent of a unicorn. Well, tonight you had the opportunity to ride a unicorn," Musk said at the event.February 2012: Tesla reveals the Model X SUV.Alex Davies / Business InsiderJust a few months later, Musk unveiled a prototype of the Model X, the company's first SUV. The vehicle's most novel feature was its falcon-wing doors. By February 2012, the company had amassed advance sales of more than $40 million. At the time of its reveal, Tesla aimed to have the Model X in production by 2014. However, it wouldn't actually enter production until the end of 2015.   June 2012: Tesla begins delivery of Model S.Tesla Chief Executive Office Elon Musk celebrates at his company's factory in Fremont, California, June 22, 2012, as the car company began delivering its Model S electric sedan.ASSOCIATED PRESSIn a major milestone, Tesla started delivering the Model S to customers in June 2012.September 2014: Tesla decides to expand out of California with a second factory in Nevada.Tesla MotorsTesla announced its plans to build its giant battery factory, dubbed the Gigafactory, in February 2014 and ultimately decided to built it in Sparks, Nevada. The original site was 1,000 acres, but in June 2015 the company purchased an additional 1,864 acres of adjacent land.April 2015: Tesla reveals the Powerwall, a giant rechargeable battery for your home, and its Powerpack, a battery for commercial use.Tesla's newest product "Powerwall" is unveiled on stage in Hawthorne, Calif., Thursday, April 30, 2015. Tesla CEO Elon Musk is trying to steer his electric car company's battery technology into homes and businesses as part of an elaborate plan to reshape the power grid with millions of small power plants made of solar panels on roofs and batteries in garages.AP Photo/Ringo H.W. ChiuTesla made a big push into energy when it unveiled the Powerpack and Powerwall at an event in Hawthorne, California in 2015.Musk said that batteries were the "missing piece" of Tesla's business model and claimed that 160 million Powerpacks could power the United States.The company followed up in a statement on its website declaring that "Tesla is not just an automotive company it's an energy innovation company."September 2015: Model X deliveries begin.Tesla CEO Elon Musk speaks during an event to launch the new Tesla Model X Crossover SUV on September 29, 2015 in Fremont, California.Justin Sullivan/Getty ImagesTesla had originally planned to launch its Model X SUV in late 2013 or early 2014, but production delays forced the company to push back deliveries by almost two years. The vehicle's highly-specialized features, like its signature doors made it complicated to manufacture on a mass scale.     October 14, 2015: Tesla launches Autopilot to customers.YouTube/TeslaTesla began rolling a software update that activated its new advance driver-assistance system, Autopilot. Since late 2014, Tesla had included the necessary radar, camera, and ultrasonic sensors to make Autopilot work. With Autopilot switched on, a Model S could automatically stay centered in its lane and brake and accelerate to keep up with traffic. These remain the basic functions of Autopilot.  March 2016: Tesla unveils the Model 3, its first mass-market car.TeslaMusk unveiled the much-anticipated Model 3 on March 31, 2016. He announced that the car would get 215 miles or more per charge and go from 0-60 mph in less than six seconds. Tesla planed a starting price of $35,000, though that price point was never widely available. May 2016: A man is killed while using Tesla Autopilot in his Model S.National Transportation Safety BoardThe first fatal Autopilot accident occurred in May 2016, but word didn't get out about the incident until more than a month later. On June 30, government regulators revealed they were looking into a tie between the fatal accident and Tesla's Autopilot feature. Tesla issued a statement calling the incident a "tragic loss."According to Tesla's statement, the Model S was driving down a divided highway when a tractor-trailer cut across the highway perpendicular to the vehicle. "Neither Autopilot nor the driver noticed the white side of the tractor-trailer against a brightly lit sky, so the brake was not applied. The high ride height of the trailer combined with its positioning across the road and the extremely rare circumstances of the impact caused the Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S," Tesla said.   June 2016: Tesla announces plans to purchase Solar City for $2.6 billion.APThe company made a $2.6 billion bid to acquire SolarCity, a solar installation company run by Musk's cousin. Not surprisingly, the deal was controversial from the start, primarily because SolarCity was about $3 billion in debt and the deal was seen as a bailout. Further complicating the matter, Musk was also the chairman of the company.  July 2016: Elon Musk reveals Tesla Masterplan Part Deux.ReutersIn 2016, Musk revealed the second part of his company's "master plan," which outlined four key goals: 1. Develop "stunning" solar roofs that seamlessly integrate with Tesla's battery storage.2. Roll out more affordable vehicles "to address all major segments."3. Advance its self-driving technology so that it is "ten times safer" than manual driving. 4. Roll out a car-sharing program that enables Tesla owners to make money by renting out their autonomous car. Over the years, Musk has repeatedly touted Tesla's plans for self-driving vehicles that can earn their owners passive income. But this robotaxi vision is still a long way off. November 2016: Tesla buys a German engineering company to help it push further into automation.YouTube/iPhone-FanMusk made it clear in early 2016 that automation was the future for Tesla. During a shareholder meeting in June, Musk said that he saw a huge opportunity in "building the machine that makes the machine." So it wasn't all that surprising when Tesla announced it was buying Grohmann Engineering, a German firm that specializes in designing systems for manufacturing automation.  November 2016: Tesla officially gets into the solar business.Elon Musk, Chairman of SolarCity and CEO of Tesla Motors, speaks at SolarCity's Inside Energy Summit in Midtown, New York.Thomson ReutersTesla closed its deal with SolarCity in November 2016.Some Tesla shareholders alleged that the deal amounted to a bailout that unfairly enriched Musk's family, sparking off a lengthy legal battle. Musk won the case in April.     February 2017: Tesla rebrands.APIn 2017, the automaker dropped the "motors" from its name in a move meant to reflect the fact that Tesla no longer just sold cars.  July 2017: Tesla launches the Model 3.Tesla Model 3.TeslaTesla launched the Model 3 in July 2017.  The first cars went to Musk and Tesla employees. Getting the Model 3 — a more affordable, mass-produced vehicle — to market was crucial for Tesla to grow its reach to become profitable. What ensued was months of "production hell," as Tesla ramped up production to thousands of cars per week. November 12017: Tesla unveils the Semi conceptTeslaAt an event at Tesla's Hawthorne, California, facility, the automaker showed off its Semi truck concept. With a center-mounted seat, the Semi promised a range of 500 miles and a 400-mile range after 30 minutes of charging. Musk even claimed it would have self-driving capabilities.The Semi has been delayed multiple times, but Tesla now says it will go into production in 2023. November 2017: Tesla unveils the Roadster conceptTeslaAt the Tesla Semi's unveiling, the company took the opportunity to tease another future product: the Roadster. Tesla claimed the $200,000 sports car would hit 60 mph in just 1.9 seconds. After delays, it's set to go into production in 2023. February 2018: Musk's Tesla Roadster goes to space.SpaceX via Getty ImagesIn February 2018, the rocket company SpaceX, another Musk venture, launched its founder's Tesla Roadster into orbit during a test launch of its Falcon Heavy rocket. A dummy dubbed "Starman," wearing a SpaceX spacesuit, was strapped into the driver's seat.  The car is currently orbiting the Sun.  August 2018: Musk tweets that he is "considering taking Tesla private at $420" a share.AP PhotoHe also said that he'd "secured" funding. The tweet would kick off an SEC investigation into Musk's tweeting habit. September 2018: The SEC charges Musk with making "false and misleading statements" about taking Tesla private.Brendan Smialowski/AFP via Getty ImagesThe agency accused Musk of misleading the public, claiming that he knew he didn't have a deal to take Tesla private. Eventually, the two settled. Musk had to step down as the chairman of Tesla's board of directors. Both he and Tesla were fined $20 million. The agreement stipulated that, going forward, Tesla lawyers needed to approve any of Musk's tweets containing material information about the company. March 2019: Tesla unveils the Model Y, its fourth vehicle.Tesla's Model Y.Tesla Motors/Handout via ReutersIn March 2019, Tesla revealed its fourth vehicle to date. Tesla said the Model Y would be able to travel 300 miles on a charge and seat seven people. October 2019: Tesla starts production at its new Shanghai factory.A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in ShanghaiReutersTesla became the first western automaker to own a factory in China without a joint venture. The factory, located in Shanghai, would help Tesla better supply the world's largest car market with its most popular vehicle, the Model 3. November 2019: Tesla unveils the Cybertruck pickup.FILE PHOTO: News: Tesla CybertruckReutersMusk unveiled the Cybertruck at an event on November 21, 2019. Tesla said the radically designed truck would be able to tow 14,000 pounds and travel 500 miles on a single charge.All did not go off without a hitch, though, as a demonstration meant to show the strength of the "armored" glass used in the truck left two huge cracks in it. The Cybertruck was supposed to be on sale already. Now Tesla says it'll hit streets in 2023. It's been beat to market by electric pickups from Ford, General Motors, and Rivian Automotive. March 2020: Tesla starts delivering the Model Y.Tesla Model Y/TeslaTesla started delivering the Model Y SUV to customers just as the global pandemic hit the US. June 2020: The Tesla Model S becomes the first EV to get a 400-mile range rating by the EPATeslaThe Tesla Model S Long Range Plus achieved an EPA-rated range of 402 miles, making it the first EV to do so. The company achieved this through cutting down on weight and maximizing regenerative braking.The Model S has since been beat by the Air, a sedan from the California startup Lucid Motors. But the Model S is still one of the longest-range electric cars you can buy today. July 2020: Tesla says it's turned a profit for four quarters in a row for the first time.Elon Musk.Alexi Rosenfeld / Contributor / gettyAfter burning through cash for years, Tesla hit its stride and started turning a consistent profit. The feat teed it up for being added to the S&P 500 index later that year. December 2020: Tesla builds 500,000 cars in a year.Tesla Model Y vehicles.Visual China Group / GettyTesla delivered 499,550 vehicles in 2020, just shy of its goal of half a million units. February 2021: Tesla spends $1.5 billion on bitcoin.Bitcoin tumbled to well below $20,000 over the weekend, before rebounding somewhat on Monday.Anadolu Agency/Getty ImagesAmid a cryptocurrency gold rush, Tesla announced it had bought $1.5 billion worth of bitcoin in January of 2021. It said it planned to accept the currency as a payment for Tesla cars, but that didn't last long. The value of bitcoin has plummeted in recent months, meaning Tesla's crypto bet is likely under water. June 2021: Tesla starts delivering the Model S Plaid, its fastest car ever.Tesla Model S Plaid.TeslaTesla announced the Model S Plaid at an even in September 2020, and started shipping it to customers in June 2021. Tesla's most powerful and fastest vehicle ever, the Plaid has three motors that propel it to 60 mph in a claimed 1.99 seconds. It now costs $135,990. October 2021: Tesla becomes a $1 trillion company.Tesla's share price soared to new heights in 2021.NDZ/Star Max / Contributor via GettyTesla's share price skyrocketed for the better part of 2020 and 2021 as the company proved its profitability and grew sales. In October 2021, as its share price crested $1,000, Tesla's market cap surged past $1 trillion. It joined powerhouses like Apple, Alphabet, Amazon, and Microsoft. December 2021: Tesla moves its headquarters to Texas.Tesla Giga Texas manufacturing facility during the "Cyber Rodeo" grand opening party on April 7, 2022 in Austin, Texas.SUZANNE CORDEIRO/AFP via Getty ImagesAfter announcing the move in October, Tesla officially moved its headquarters out of Silicon Valley to Austin, Texas in December. Musk also moved to Texas, where SpaceX's launch site is. March 2022: Tesla opens its third car factory near Berlin.One of the first Tesla Model Y SUVs leaves the assembly line at Tesla's Berlin factory.picture alliance / ContributorAfter months of bureaucratic delays and environmental protests, Tesla kicked off production at its new factory near Berlin in March. Tesla is building Model Y SUVs there for the European market. April 2022: Tesla opens Austin, Texas, Gigafactory.CEO of Tesla Motors Elon Musk speaks at the Tesla Giga Texas manufacturing "Cyber Rodeo" grand opening party on April 7, 2022 in Austin, Texas.SUZANNE CORDEIRO/AFP via Getty ImagesMere weeks after opening its third vehicle plant in Germany, Tesla opened a fourth, marking the occasion with a "Cyber Rodeo" party. The company makes the Model Y there. It also plans to eventually build the Cybertruck pickup at the sprawling facility. June 2022: Tesla moves to cut 10% of salaried staffA Tesla Model 3.David Zalubowski/APAmid a broader economic downturn, Musk outlined plans to cut 10% of Tesla's salaried staff in June. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 11th, 2022

We"ve got nearly 50 pitch decks that helped fintechs disrupting trading, investing, and banking raise millions in funding

Looking for examples of real fintech pitch decks? Check out pitch decks that Qolo, Lance, and other startups used to raise money from VCs. Check out these pitch decks for examples of fintech founders sold their vision.Yulia Reznikov/Getty Images Insider has been tracking the next wave of hot new startups that are blending finance and tech.  Check out these pitch decks to see how fintech founders sold their vision. See more stories on Insider's business page. Fintech funding has been on a tear.In 2021, fintech funding hit a record $132 billion globally, according to CB Insights, more than double 2020's mark.Insider has been tracking the next wave of hot new startups that are blending finance and tech. Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You'll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding. New twists on digital bankingZach Bruhnke, cofounder and CEO of HMBradleyHMBradleyConsumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime, N26, and Varo have benefited from. The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model. "Our thesis going in was that we don't swipe our debit cards all that often, and we don't think the customer base that we're focusing on does either," Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. "A lot of our customer base uses credit cards on a daily basis."Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.Notably, the rate tiers are dependent on the percentage of savings, not the net amount. "We'll pay you more when you save more of what comes in," Bruhnke said. "We didn't want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us."Check out the 14-page pitch deck fintech HMBradley, a neobank offering interest rates as high as 3%, used to raise an $18.25 million Series APersonal finance is only a text awayYinon Ravid, the chief executive and cofounder of Albert.AlbertThe COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert's savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company. Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It's looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that's a pay-what-you-can model, between $4 and $14 a month. And Albert's now banking on a new tool to bring together its investing, savings, and budgeting tools.Fintech Albert used this 10-page pitch deck to raise a $100 million Series C from General Atlantic and CapitalG 'A bank for immigrants'Priyank Singh and Rohit Mittal are the cofounders of Stilt.StiltRohit Mittal remembers the difficulties he faced when he first arrived in the United States a decade ago as a master's student at Columbia University.As an immigrant from India, Mittal had no credit score in the US and had difficulty integrating into the financial system. Mittal even struggled to get approved to rent an apartment and couch-surfed until he found a roommate willing to offer him space in his apartment in the New York neighborhood Morningside Heights.That roommate was Priyank Singh, who would go on to become Mittal's cofounder when the two started Stilt, a financial-technology company designed to address the problems Mittal faced when he arrived in the US.Stilt, which calls itself "a bank for immigrants," does not require a social security number or credit history to access its offerings, including unsecured personal loans.Instead of relying on traditional metrics like a credit score, Stilt uses data such as education and employment to predict an individual's future income stability and cash flow before issuing a loan. Stilt has seen its loan volume grow by 500% in the past 12 months, and the startup has loaned to immigrants from 160 countries since its launch. Here are the 15 slides Stilt, which calls itself 'a bank for immigrants,' used to raise a $14 million Series AAn IRA for alternativesHenry Yoshida is the co-founder and CEO of retirement fintech startup Rocket Dollar.Rocket DollarFintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.Park West Asset Management led the round, with participation from investors including Hyphen Capital, which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken's venture arm. Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs' investment management division for an estimated $20 million.Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.Here's the 34-page pitch deck a fintech that helps users invest their retirement savings in crypto and real estate assets used to nab $8 millionA trading app for activismAntoine Argouges, CEO and founder of TulipshareTulipshareAn up-and-coming fintech is taking aim at some of the world's largest corporations by empowering retail investors to push for social and environmental change by pooling their shareholder rights.London-based Tulipshare lets individuals in the UK invest as little as one pound in publicly-traded company stocks. The upstart combines individuals' shareholder rights with other like-minded investors to advocate for environmental, social, and corporate governance change at firms like JPMorgan, Apple, and Amazon.The goal is to achieve a higher number of shares to maximize the number of votes that can be submitted at shareholder meetings. Already a regulated broker-dealer in the UK, Tulipshare recently applied for registration as a broker-dealer in the US. "If you ask your friends and family if they've ever voted on shareholder resolutions, the answer will probably be close to zero," CEO and founder Antoine Argouges told Insider. "I started Tulipshare to utilize shareholder rights to bring about positive corporate change that has an impact on people's lives and our planet — what's more powerful than money to change the system we live in?"Check out the 14-page pitch deck from Tulipshare, a trading app that lets users pool their shareholder votes for activism campaignsDigital tools for independent financial advisorsJason Wenk, founder and CEO of AltruistAltruistJason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he's running a company that is hoping to broaden access to financial advice for less-wealthy individuals. The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup's total funding to just under $67 million.Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an "all-in-one" platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. Here's the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and InsightRethinking debt collection Jason Saltzman, founder and CEO of ReliefReliefFor lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.  Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures. Relief's fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed roundHelping small banks lendTKCollateralEdgeFor large corporations with a track record of tapping the credit markets, taking out debt is a well-structured and clear process handled by the nation's biggest investment banks and teams of accountants. But smaller, middle-market companies — typically those with annual revenues ranging up to $1 billion — are typically served by regional and community banks that don't always have the capacity to adequately measure the risk of loans or price them competitively. Per the National Center for the Middle Market, 200,000 companies fall into this range, accounting for roughly 33% of US private sector GDP and employment.Dallas-based fintech CollateralEdge works with these banks — typically those with between $1 billion and $50 billion in assets — to help analyze and price slices of commercial and industrial loans that previously might have gone unserved by smaller lenders.On October 20th, CollateralEdge announced a $3.5 million seed round led by Dallas venture fund Perot Jain with participation from Kneeland Youngblood (a founder of the healthcare-focused private-equity firm Pharos Capital) and other individual investors.Here's the 10-page deck CollateralEdge, a fintech streamlining how small banks lend to businesses, used to raise a $3.5 million seed roundA new way to assess creditworthinessPinwheel founders Curtis Lee, Kurt Lin, and Anish Basu.PinwheelGrowing up, Kurt Lin never saw his father get frustrated. A "traditional, stoic figure," Lin said his father immigrated to the United States in the 1970s. Becoming part of the financial system proved even more difficult than assimilating into a new culture.Lin recalled visiting bank after bank with his father as a child, watching as his father's applications for a mortgage were denied due to his lack of credit history. "That was the first time in my life I really saw him crack," Lin told Insider. "The system doesn't work for a lot of people — including my dad," he added. Lin would find a solution to his father's problem years later while working with Anish Basu, and Curtis Lee on an automated health savings account. The trio realized the payroll data integrations they were working on could be the basis of a product that would help lenders work with consumers without strong credit histories."That's when the lightbulb hit," said Lin, Pinwheel's CEO.In 2018, Lin, Basu, and Lee founded Pinwheel, an application-programming interface that shares payroll data to help both fintechs and traditional lenders serve consumers with limited or poor credit, who have historically struggled to access financial products. Here's the 9-page deck that Pinwheel, a fintech helping lenders tap into payroll data to serve consumers with little to no credit, used to raise a $50 million Series BAn alternative auto lenderTricolorAn alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds. Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income. Half of Tricolor's customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households. "For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle," Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.An auto lender that caters to underbanked Hispanics used this 25-page deck to raise $90 million from BlackRock investors A new way to access credit The TomoCredit teamTomoCreditKristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history. Kim, who came to the US from South Korea, couldn't initially get access to credit despite having a job in investment banking after graduating college. "I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything," Kim told Insider. "Many young professionals like me, we deserve an opportunity to be considered but just because we didn't have a Fico, we weren't given a chance to even apply," she added.Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.TomoCredit, a fintech that lends to thin- and no-credit borrowers, used this 17-page pitch deck to raise its $10 million Series AHelping streamline how debts are repaidMethod Financial cofounders Jose Bethancourt and Marco del Carmen.Method FinancialWhen Jose Bethancourt graduated from the University of Texas at Austin in May 2019, he faced the same question that confronts over 43 million Americans: How would he repay his student loans?The problem led Bethancourt on a nearly two-year journey that culminated in the creation of a startup aimed at making it easier for consumers to more seamlessly pay off all kinds of debt.  Initially, Bethancourt and fellow UT grad Marco del Carmen built GradJoy, an app that helped users better understand how to manage student loan repayment and other financial habits. GradJoy was accepted into Y Combinator in the summer of 2019. But the duo quickly realized the real benefit to users would be helping them move money to make payments instead of simply offering recommendations."When we started GradJoy, we thought, 'Oh, we'll just give advice — we don't think people are comfortable with us touching their student loans,' and then we realized that people were saying, 'Hey, just move the money — if you think I should pay extra, then I'll pay extra.' So that's kind of the movement that we've seen, just, everybody's more comfortable with fintechs doing what's best for them," Bethancourt told Insider. Here is the 11-slide pitch deck Method Financial, a Y Combinator-backed fintech making debt repayment easier, used to raise $2.5 million in pre-seed fundingQuantum computing made easyQC Ware CEO Matt Johnson.QC WareEven though banks and hedge funds are still several years out from adding quantum computing to their tech arsenals, that hasn't stopped Wall Street giants from investing time and money into the emerging technology class. And momentum for QC Ware, a startup looking to cut the time and resources it takes to use quantum computing, is accelerating. The fintech secured a $25 million Series B on September 29 co-led by Koch Disruptive Technologies and Covestro with participation from D.E. Shaw, Citi, and Samsung Ventures.QC Ware, founded in 2014, builds quantum algorithms for the likes of Goldman Sachs (which led the fintech's Series A), Airbus, and BMW Group. The algorithms, which are effectively code bases that include quantum processing elements, can run on any of the four main public-cloud providers.Quantum computing allows companies to do complex calculations faster than traditional computers by using a form of physics that runs on quantum bits as opposed to the traditional 1s and 0s that computers use. This is especially helpful in banking for risk analytics or algorithmic trading, where executing calculations milliseconds faster than the competition can give firms a leg up. Here's the 20-page deck QC Ware, a fintech making quantum computing more accessible, used to raised its $25 million Series BAnalyzing financial contractsEric Chang and Alex Schumacher, co-founders of ClairaClairaIt was a match made in heaven — at least the Wall Street type.Joseph Squeri, a former CIO at Citadel and Barclays, had always struggled with the digitization of financial documents. When he was tapped by Brady Dougan, the former chief executive of Credit Suisse, to build out an all-digital investment bank in Exos, Squeri spent the first year getting let down by more than a dozen tools that lacked a depth in financial legal documents. His solution came in the form of Alex Schumacher and Eric Chang who had the tech and financial expertise, respectively, to build the tool he needed.Schumacher is an expert in natural-language processing and natural-language understanding, having specialized in turning unstructured text into useful business information.Chang spent a decade as a trader and investment strategist at Goldman Sachs, BlackRock, and AQR. He developed a familiarity with the kinds of financial documents Squeri wanted to digitize, such as the terms and conditions information from SEC filings and publicly traded securities and transactions, like municipal bonds and collateralized loan obligations (CLOs). The three converged at Exos, Squeri as its COO and CTO, Schumacher as the lead data scientist, and Chang as head of tech and strategy. See the 14-page pitch deck that sold Citi on Claira, a startup using AI to help firms read through financial contracts in a fraction of the timeSimplifying quant modelsKirat Singh and Mark Higgins, Beacon's cofounders.BeaconA fintech that helps financial institutions use quantitative models to streamline their businesses and improve risk management is catching the attention, and capital, of some of the country's biggest investment managers.Beacon Platform, founded in 2014, is a fintech that builds applications and tools to help banks, asset managers, and trading firms quickly integrate quantitative models that can help with analyzing risk, ensuring compliance, and improving operational efficiency. The company raised its Series C on Wednesday, scoring a $56 million investment led by Warburg Pincus with support from Blackstone Innovations Investments, PIMCO, and Global Atlantic. Blackstone, PIMCO, and Global Atlantic are also users of Beacon's tech, as are the Commonwealth Bank of Australia and Shell New Energies, a division of Royal Dutch Shell, among others.The fintech provides a shortcut for firms looking to use quantitative modelling and data science across various aspects of their businesses, a process that can often take considerable resources if done solo.Here's the 20-page pitch deck Beacon, a fintech helping Wall Street better analyze risk and data, used to raise $56 million from Warburg Pincus, Blackstone, and PIMCOSussing out bad actorsFrom left to right: Cofounders CTO David Movshovitz, CEO Doron Hendler, and chief architect Adi DeGaniRevealSecurityAn encounter with an impersonation hacker led Doron Hendler to found RevealSecurity, a Tel Aviv-based cybersecurity startup that monitors for insider threats.Two years ago, a woman impersonating an insurance-agency representative called Hendler and convinced him that he made a mistake with his recent health insurance policy upgrade. She got him to share his login information for his insurer's website, even getting him to give the one-time passcode sent to his phone. Once the hacker got what she needed, she disconnected the call, prompting Hendler to call back. When no one picked up the phone, he realized he had been conned.He immediately called his insurance company to check on his account. Nothing seemed out of place to the representative. But Hendler, who was previously a vice president of a software company, suspected something intangible could have been collected, so he reset his credentials."The chief of information security, who was on the call, he asked me, 'So, how do you want me to identify you? You gave your credentials; you gave your ID; you gave the one time password. How the hell can I identify that it's not you?' And I told him, 'But I never behave like this,'" Hendler recalled of the conversation.RevealSecurity, a Tel Aviv-based cyber startup that tracks user behavior for abnormalities, used this 27-page deck to raise its Series AA new data feed for bond tradingMark Lennihan/APFor years, the only way investors could figure out the going price of a corporate bond was calling up a dealer on the phone. The rise of electronic trading has streamlined that process, but data can still be hard to come by sometimes. A startup founded by a former Goldman Sachs exec has big plans to change that. BondCliQ is a fintech that provides a data feed of pre-trade pricing quotes for the corporate bond market. Founded by Chris White, the creator of Goldman Sachs' defunct corporate-bond-trading system, BondCliQ strives to bring transparency to a market that has traditionally kept such data close to the vest. Banks, which typically serve as the dealers of corporate bonds, have historically kept pre-trade quotes hidden from other dealers to maintain a competitive advantage.But tech advancements and the rise of electronic marketplaces have shifted power dynamics into the hands of buy-side firms, like hedge funds and asset managers. The investors are now able to get a fuller picture of the market by aggregating price quotes directly from dealers or via vendors.Here's the 9-page pitch deck that BondCliQ, a fintech looking to bring more data and transparency to bond trading, used to raise its Series AFraud prevention for lenders and insurersFiordaliso/Getty ImagesOnboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.But preventing fraud is also a priority, and that's where Neuro-ID comes in. The startup analyzes what it calls "digital body language," or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It's built for banks, lenders, insurers, and e-commerce players."The train has left the station for digital transformation, but there's a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy," Neuro-ID CEO Jack Alton told Insider.Founded in 2014, the startup's pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless. In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.Here's the 11-slide pitch deck a startup that analyzes consumers' digital behavior to fight fraud used to raise a $7 million Series AAI-powered tools to spot phony online reviews FakespotMarketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.That's where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart."There are promotional reviews written by humans and bot-generated reviews written by robots or review farms," Fakespot founder and CEO Saoud Khalifah told Insider. "Our AI system has been built to detect both categories with very high accuracy."Fakespot's AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series AHelping fintechs manage dataProper Finance co-founders Travis Gibson (left) and Kyle MaloneyProper FinanceAs the flow of data becomes evermore crucial for fintechs, from the strappy startup to the established powerhouse, a thorny issue in the back office is becoming increasingly complex.Even though fintechs are known for their sleek front ends, the back end is often quite the opposite. Behind that streamlined interface can be a mosaic of different partner integrations — be it with banks, payments players and networks, or software vendors — with a channel of data running between them. Two people who know that better than the average are Kyle Maloney and Travis Gibson, two former employees of Marqeta, a fintech that provides other fintechs with payments processing and card issuance. "Take an established neobank for example. They'll likely have one or two card issuers, two to three bank partners, ACH processing for direct deposits and payouts, mobile check deposits, peer-to-peer payments, and lending," Gibson told Insider. Here's the 12-page pitch deck a startup helping fintechs manage their data used to score a $4.3 million seed from investors like Redpoint Ventures and Y CombinatorE-commerce focused business bankingMichael Rangel, cofounder and CEO, and Tyler McIntyre, cofounder and CTO of Novo.Kristelle Boulos PhotographyBusiness banking is a hot market in fintech. And it seems investors can't get enough.Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami. Here's the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series AShopify for embedded financeProductfy CEO and founder, Duy VoProductfyProductfy is looking to break into embedded finance by becoming the Shopify of back-end banking services.Embedded finance — integrating banking services in non-financial settings — has taken hold in the e-commerce world. But Productfy is going after a different kind of customer in churches, universities, and nonprofits.The San Jose, Calif.-based upstart aims to help non-finance companies offer their own banking products. Productfy can help customers launch finance features in as little as a week and without additional engineering resources or background knowledge of banking compliance or legal requirements, Productfy founder and CEO Duy Vo told Insider. "You don't need an engineer to stand up Shopify, right? You can be someone who's just creating art and you can use Shopify to build your own online store," Vo said, adding that Productfy is looking to take that user experience and replicate it for banking services.Here's the 15-page pitch deck Productfy, a fintech looking to be the Shopify of embedded finance, used to nab a $16 million Series ADeploying algorithms and automation to small-business financingJustin Straight and Bernard Worthy, LoanWell co-foundersLoanWellBernard Worthy and Justin Straight, the founders of LoanWell, want to break down barriers to financing for small and medium-size businesses — and they've got algorithms and automation in their tech arsenals that they hope will do it.Worthy, the company's CEO, and Straight, its chief operating and financial officer, are powering community-focused lenders to fill a gap in the SMB financing world by boosting access to loans under $100,000. And the upstart is known for catching the attention, and dollars, of mission-driven investors. LoanWell closed a $3 million seed financing round in December led by Impact America Fund with participation from SoftBank's SB Opportunity Fund and Collab Capital.LoanWell automates the financing process — from underwriting and origination, to money movement and servicing — which shaves down an up-to-90-day process to 30 days or even same-day with some LoanWell lenders, Worthy said. SMBs rely on these loans to process quickly after two years of financial uncertainty. But the pandemic illustrated how time-consuming and expensive SMB financing can be, highlighted by efforts like the federal government's Paycheck Protection Program.Community banks, once the lifeline to capital for many local businesses, continue to shutter. And demands for smaller loan amounts remain largely unmet. More than half of business-loan applicants sought $100,000 or less, according to 2018 data from the Federal Reserve. But the average small-business bank loan was closer to six times that amount, according to the latest data from a now discontinued Federal Reserve survey.Here's the 14-page pitch deck LoanWell used to raise $3 million from investors like SoftBank.Branded cards for SMBsJennifer Glaspie-Lundstrom is the cofounder and CEO of Tandym.TandymJennifer Glaspie-Lundstrom is no stranger to the private-label credit-card business. As a former Capital One exec, she worked in both the card giant's co-brand partnerships division and its tech organization during her seven years at the company.Now, Glaspie-Lundstrom is hoping to use that experience to innovate a sector that was initially created in malls decades ago.Glaspie-Lundstrom is the cofounder and CEO of Tandym, which offers private-label digital credit cards to merchants. Store and private-label credit cards aren't a new concept, but Tandym is targeting small- and medium-sized merchants with less than $1 billion in annual revenue. Glaspie-Lundstrom said that group often struggles to offer private-label credit due to the expense of working with legacy players."What you have is this example of a very valuable product type that merchants love and their customers love, but a huge, untapped market that has heretofore been unserved, and so that's what we're doing with Tandym," Glaspi-Lundstrom told Insider.A former Capital One exec used this deck to raise $60 million for a startup helping SMBs launch their own branded credit cardsCatering to 'micro businesses'Stefanie Sample is the founder and CEO of FundidFundidStartups aiming to simplify the often-complex world of corporate cards have boomed in recent years.Business-finance management startup Brex was last valued at $12.3 billion after raising $300 million last year. Startup card provider Ramp announced an $8.1 billion valuation in March after growing its revenue nearly 10x in 2021. Divvy, a small business card provider, was acquired by Bill.com in May 2021 for approximately $2.5 billion.But despite how hot the market has gotten, Stefanie Sample said she ended up working in the space by accident. Sample is the founder and CEO of Fundid, a new fintech that provides credit and lending products to small businesses.This May, Fundid announced a $3.25 million seed round led by Nevcaut Ventures. Additional investors include the Artemis Fund and Builders and Backers. The funding announcement capped off the company's first year: Sample introduced the Fundid concept in April 2021, launched its website in May, and began raising capital in August."I never meant to do Fundid," Sample told Insider. "I never meant to do something that was venture-backed."Read the 12-page deck used by Fundid, a fintech offering credit and lending tools for 'micro businesses'Embedded payments for SMBsThe Highnote teamHighnoteBranded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty. The rise of embedded payments, or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards. The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.Here's the 12-page deck Highnote, a startup helping SMBs embed payments, used to raise $54 million in seed and Series A fundingSpeeding up loans for government contractors OppZo cofounders Warren Reed and Randy GarrettOppZoThe massive market for federal government contracts approached $700 billion in 2020, and it's likely to grow as spending accelerates amid an ongoing push for investment in the nation's infrastructure. Many of those dollars flow to small-and-medium sized businesses, even though larger corporations are awarded the bulk of contracts by volume. Of the roughly $680 billion in federal contracts awarded in 2020, roughly a quarter, according to federal guidelines, or some $146 billion that year, went to smaller businesses.But peeking under the hood of the procurement process, the cofounders of OppZo — Randy Garrett and Warren Reed — saw an opportunity to streamline how smaller-sized businesses can leverage those contracts to tap in to capital.  Securing a deal is "a government contractor's best day and their worst day," as Garrett, OppZo's president, likes to put it."At that point they need to pay vendors and hire folks to start the contract. And they may not get their first contract payment from the government for as long as 120 days," Reed, the startup's CEO,  told Insider. Check out the 12-page pitch deck OppZo, a fintech that has figured out how to speed up loans to small government contractors, used to raise $260 million in equity and debtHelping small businesses manage their taxesComplYant's founder Shiloh Jackson wants to help people be present in their bookkeeping.ComplYantAfter 14 years in tax accounting, Shiloh Johnson had formed a core philosophy around corporate accounting: everyone deserves to understand their business's money and business owners need to be present in their bookkeeping process.She wanted to help small businesses understand "this is why you need to do what you're doing and why you have to change the way you think about tax and be present in your bookkeeping process," she told Insider. The Los Angeles native wanted small businesses to not only understand business tax no matter their size but also to find the tools they needed to prepare their taxes in one spot. So Johnson developed a software platform that provides just that.The 13-page pitch deck ComplYant used to nab $4 million that details the tax startup's plan to be Turbotax, Quickbooks, and Xero rolled into one for small business ownersAutomating accounting ops for SMBsDecimal CEO Matt Tait.DecimalSmall- and medium-sized businesses can rely on any number of payroll, expense management, bill pay, and corporate-card startups promising to automate parts of their financial workflow. Smaller firms have adopted this corporate-financial software en masse, boosting growth throughout the pandemic for relatively new entrants like Ramp and massive, industry stalwarts like Intuit. But it's no easy task to connect all of those tools into one, seamless process. And while accounting operations might be far from where many startup founders want to focus their time, having efficient back-end finances does mean time — and capital — freed up to spend elsewhere. For Decimal CEO Matt Tait, there's ample opportunity in "the boring stuff you have to do to survive as a company," he told Insider. Launched in 2020, Decimal provides a back-end tech layer that small- and medium-sized businesses can use to integrate their accounting and business-management software tools in one place.On Wednesday, Decimal announced a $9 million seed fundraising round led by Minneapolis-based Arthur Ventures, alongside Service Providers Capital and other angel investors. See the 13-page pitch deck for Decimal, a startup automating accounting ops for small businessesInvoice financing for SMBsStacey Abrams and Lara Hodgson, Now co-foundersNowAbout a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain — but not in the traditional sense.Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business' cap, there was a hang-up."It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors," Hodgson told Insider. "Waiting to get paid was constraining our ability to grow."While it's not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession. Abrams and Hodgson couldn't secure a line of credit or use financing tools like factoring to solve their problem. The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.  "Why are we the ones borrowing money, when in fact we're the lender here because every time you send an invoice to a customer, you've essentially extended a free loan to that customer by letting them pay later," Hodgson said. "And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods," she added.Check out the 7-page deck that Now, Stacey Abrams' fintech that wants to help small businesses 'grow fearlessly', used to raise $29 millionCheckout made easyRyan Breslow.Ryan BreslowAmazon has long dominated e-commerce with its one-click checkout flows, offering easier ways for consumers to shop online than its small-business competitors.Bolt gives small merchants tools to offer the same easy checkouts so they can compete with the likes of Amazon.The startup raised its $393 million Series D to continue adding its one-click checkout feature to merchants' own websites in October.Bolt markets to merchants themselves. But a big part of Bolt's pitch is its growing network of consumers — currently over 5.6 million — that use its features across multiple Bolt merchant customers. Roughly 5% of Bolt's transactions were network-driven in May, meaning users that signed up for a Bolt account on another retailer's website used it elsewhere. The network effects were even more pronounced in verticals like furniture, where 49% of transactions were driven by the Bolt network."The network effect is now unleashed with Bolt in full fury, and that triggered the raise," Bolt's founder and CEO Ryan Breslow told Insider.Here's the 12-page deck that one-click checkout Bolt used to outline its network of 5.6 million consumers and raise its Series DPayments infrastructure for fintechsQolo CEO and co-founder Patricia MontesiQoloThree years ago, Patricia Montesi realized there was a disconnect in the payments world. "A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren't able to," Montesi, CEO and co-founder of Qolo, told Insider.Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments. "The way people were getting around that was that they were creating this spider web of fintech," she said, adding that "at the end of it all, they had this mess of suppliers and integrations and bank accounts."The 20-year payments veteran rounded up a group of three other co-founders — who together had more than a century of combined industry experience — to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.Here's the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series ABetter use of payroll dataAtomic's Head of Markets, Lindsay DavisAtomicEmployees at companies large and small know the importance — and limitations — of how firms manage their payrolls. A new crop of startups are building the API pipes that connect companies and their employees to offer a greater level of visibility and flexibility when it comes to payroll data and employee verification. On Thursday, one of those names, Atomic, announced a $40 million Series B fundraising round co-led by Mercato Partners and Greylock, alongside Core Innovation Capital, Portage, and ATX Capital. The round follows Atomic's Series A round announced in October, when the startup raised a $22 million Series A from investors including Core Innovation Capital, Portage, and Greylock.Payroll startup Atomic just raised a $40 million Series B. Here's an internal deck detailing the fintech's approach to the red-hot payments space.Saving on vendor invoicesHoward Katzenberg, Glean's CEO and cofounderGleanWhen it comes to high-flying tech startups, headlines and investors typically tend to focus on industry "disruption" and the total addressable market a company is hoping to reach. Expense cutting as a way to boost growth typically isn't part of the conversation early on, and finance teams are viewed as cost centers relative to sales teams. But one fast-growing area of business payments has turned its focus to managing those costs. Startups like Ramp and established names like Bill.com have made their name offering automated expense-management systems. Now, one new fintech competitor, Glean, is looking to take that further by offering both automated payment services and tailored line-item accounts-payable insights driven by machine-learning models. Glean's CFO and founder, Howard Katzenberg, told Insider that the genesis of Glean was driven by his own personal experience managing the finance teams of startups, including mortgage lender Better.com, which Katzenberg left in 2019, and online small-business lender OnDeck. "As a CFO of high-growth companies, I spent a lot of time focused on revenue and I had amazing dashboards in real time where I could see what is going on top of the funnel, what's going on with conversion rates, what's going on in terms of pricing and attrition," Katzenberg told Insider. See the 15-slide pitch deck Glean, a startup using machine learning to find savings in vendor invoices, used to raise $10.8 million in seed fundingReal-estate management made easyAgora founders Noam Kahan, CTO, Bar Mor, CEO, and Lior Dolinski, CPOAgoraFor alternative asset managers of any type, the operations underpinning sales and investor communications are a crucial but often overlooked part of the business. Fund managers love to make bets on markets, not coordinate hundreds of wire transfers to clients each quarter or organize customer-relationship-management databases.Within the $10.6 trillion global market for professionally managed real-estate investing, that's where Tel Aviv and New York-based startup Agora hopes to make its mark.Founded in 2019, Agora offers a set of back-office, investor relations, and sales software tools that real-estate investment managers can plug into their workflows. On Wednesday, Agora announced a $9 million seed round, led by Israel-based venture firm Aleph, with participation from River Park Ventures and Maccabee Ventures. The funding comes on the heels of an October 2020 pre-seed fund raise worth $890,000, in which Maccabee also participated.Here's the 15-slide pitch deck that Agora, a startup helping real-estate investors manage communications and sales with their clients, used to raise a $9 million seed roundAccess to commercial real-estate investing LEX Markets cofounders and co-CEOs Drew Sterrett and Jesse Daugherty.LEX MarketsDrew Sterrett was structuring real-estate deals while working in private equity when he realized the inefficiencies that existed in the market. Only high-net worth individuals or accredited investors could participate in commercial real-estate deals. If they ever wanted to leave a partnership or sell their stake in a property, it was difficult to find another investor to replace them. Owners also struggled to sell minority stakes in their properties and didn't have many good options to recapitalize an asset if necessary.In short, the market had a high barrier to entry despite the fact it didn't always have enough participants to get deals done quickly. "Most investors don't have access to high-quality commercial real-estate investments. How do we have the oldest and largest asset class in the world and one of the largest wealth creators with no public and liquid market?" Sterrett told Insider. "It sort of seems like a no-brainer, and that this should have existed 50 or 60 years ago."This 15-page pitch deck helped LEX Markets, a startup making investing in commercial real estate more accessible, raise $15 millionInsurance goes digitalJamie Hale, CEO and cofounder of LadderLadderFintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market. And while verticals like auto, homeowner's, and renter's insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market. Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion, compared to $144 billion for auto policies and $97 billion for homeowner's insurance.Here's the 12-page deck that Ladder, a startup disrupting the 'crown jewel' of the insurance market, used to nab $100 millionData science for commercial insuranceTanner Hackett, founder and CEO of CounterpartCounterpartThere's been no shortage of funds flowing into insurance-technology companies over the past few years. Private-market funding to insurtechs soared to $15.4 billion in 2021, a 90% increase compared to 2020. Some of the most well-known consumer insurtech names — from Oscar (which focuses on health insurance) to Metromile (which focuses on auto) — launched on the public markets last year, only to fall over time or be acquired as investors questioned the sustainability of their business models. In the commercial arena, however, the head of one insurtech company thinks there is still room to grow — especially for those catering to small businesses operating in an entirely new, pandemic-defined environment. "The bigger opportunity is in commercial lines," Tanner Hackett, the CEO of management liability insurer Counterpart, told Insider."Everywhere I poke, I'm like, 'Oh my goodness, we're still in 1.0, and all the other businesses I've built were on version three.' Insurance is still in 1.0, still managing from spreadsheets and PDFs," added Hackett, who also previously co-founded Button, which focuses on mobile marketing. See the 8-page pitch deck Counterpart, a startup disrupting commercial insurance with data science, used to raise a $30 million Series BSmarter insurance for multifamily propertiesItai Ben-Zaken, cofounder and CEO of Honeycomb.HoneycombA veteran of the online-insurance world is looking to revolutionize the way the industry prices risk for commercial properties with the help of artificial intelligence.Insurance companies typically send inspectors to properties before issuing policies to better understand how the building is maintained and identify potential risks or issues with it. It's a process that can be time-consuming, expensive, and inefficient, making it hard to justify for smaller commercial properties, like apartment and condo buildings.Insurtech Honeycomb is looking to fix that by using AI to analyze a combination of third-party data and photos submitted by customers through the startup's app to quickly identify any potential risks at a property and more accurately price policies."That whole physical inspection thing had really good things in it, but it wasn't really something that is scalable and, it's also expensive," Itai Ben-Zaken, Honeycomb's cofounder and CEO, told Insider. "The best way to see a property right now is Google street view. Google street view is usually two years old."Here's the 10-page Series A pitch deck used by Honeycomb, a startup that wants to revolutionize the $26 billion market for multifamily property insuranceHelping freelancers with their taxesJaideep Singh is the CEO and co-founder of FlyFin, an AI-driven tax preparation software program for freelancers.FlyFinSome people, particularly those with families or freelancing businesses, spend days searching for receipts for tax season, making tax preparation a time consuming and, at times, taxing experience. That's why in 2020 Jaideep Singh founded FlyFin, an artificial-intelligence tax preparation program for freelancers that helps people, as he puts it, "fly through their finances." FlyFin is set up to connect to a person's bank accounts, allowing the AI program to help users monitor for certain expenses that can be claimed on their taxes like business expenditures, the interest on mortgages, property taxes, or whatever else that might apply. "For most individuals, people have expenses distributed over multiple financial institutions. So we built an AI platform that is able to look at expenses, understand the individual, understand your profession, understand the freelance population at large, and start the categorization," Singh told Insider.Check out the 7-page pitch deck a startup helping freelancers manage their taxes used to nab $8 million in fundingDigital banking for freelancersJGalione/Getty ImagesLance is a new digital bank hoping to simplify the life of those workers by offering what it calls an "active" approach to business banking. "We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it," Lance cofounder and CEO Oona Rokyta told Insider. Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that's connected to automated tax withholdings.In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.Here's the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including BarclaysSoftware for managing freelancersWorksome cofounder and CEO Morten Petersen.WorksomeThe way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risør.Here's the 21-slide pitch deck used by a startup that helps firms like Carlsberg and Deloitte manage freelancersPayments and operations support HoneyBook cofounders Dror Shimoni, Oz Alon, and Naama Alon.HoneyBookWhile countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork. HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup's startup investment arm that also backs fintech robo-advisor Betterment, participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company's fundraising total to $227 million to date.Here's the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger GlobalPay-as-you-go compliance for banks, fintechs, and crypto startupsNeepa Patel, Themis' founder and CEOThemisWhen Themis founder and CEO Neepa Patel set out to build a new compliance tool for banks, fintech startups, and crypto companies, she tapped into her own experience managing risk at some of the nation's biggest financial firms. Having worked as a bank regulator at the Office of the Comptroller of the Currency and in compliance at Morgan Stanley, Deutsche Bank, and the enterprise blockchain company R3, Patel was well-placed to assess the shortcomings in financial compliance software. But Patel, who left the corporate world to begin work on Themis in 2020, drew on more than just her own experience and frustrations to build the startup."It's not just me building a tool based on my personal pain points. I reached out to regulators. I reached out to bank compliance officers and members in the fintech community just to make sure that we're building it exactly how they do their work," Patel told Insider. "That was the biggest problem: No one built a tool that was reflective of how people do their work."Check out the 9-page pitch deck Themis, which offers pay-as-you-go compliance for banks, fintechs, and crypto startups, used to raise $9 million in seed fundingConnecting startups and investorsHum Capital cofounder and CEO Blair SilverbergHum CapitalBlair Silverberg is no stranger to fundraising.For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups."I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they're meeting a ton of investors, and the investors are all asking the same questions," Silverberg told Insider. He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech. This 11-page pitch deck helped Hum Capital, a fintech using AI to match investors with startups, raise a $9 million Series A.Helping LatAm startups get up to speedKamino cofounders Gut Fragoso, Rodrigo Perenha, Benjamin Gleason, and Gonzalo ParejoKaminoThere's more venture capital flowing into Latin America than ever before, but getting the funds in founders' hands is not exactly a simple process.In 2021, investors funneled $15.3 billion into Latin American companies, more than tripling the previous record of $4.9 billion in 2019. Fintech and e-commerce sectors drove funding, accounting for 39% and 25% of total funding, respectively.  However, for many startup founders in the region who have successfully sold their ideas and gotten investors on board, there's a patchwork of corporate structuring that's needed to access the funds, according to Benjamin Gleason, who was the chief financial officer at Groupon LatAm prior to cofounding Brazil-based fintech Kamino.It's a process Gleason and his three fellow Kamino cofounders have been through before as entrepreneurs and startup execs themselves. Most often, startups have to set up offshore financial accounts outside of Brazil, which "entails creating a Cayman [Islands] holding company, a Delaware LLC, and then connecting it to a local entity here and also opening US bank accounts for the Cayman entity, which is not trivial from a KYC perspective," said Gleason, who founded open-banking fintech Guiabolso in Sao Paulo. His partner, Gonzalo Parejo, experienced the same toils when he founded insurtech Bidu."Pretty much any international investor will usually ask for that," Gleason said, adding that investors typically cite liability issues."It's just a massive amount of bureaucracy, complexity, a lot of time from the founders. All of this just to get the money from the investor that wants to give them the money," he added.Here's the 8-page pitch deck Kamino, a fintech helping LatAm startups with everything from financing to corporate credit cards, used to raise a $6.1M pre-seed roundThe back-end tech for beautyDanielle Cohen-Shohet, CEO and founder of GlossGeniusGlossGeniusDanielle Cohen-Shohet might have started as a Goldman Sachs investment analyst, but at her core she was always a coder.After about three years at Goldman Sachs, Cohen-Shohet left the world of traditional finance to code her way into starting her own company in 2016. "There was a period of time where I did nothing, but eat, sleep, and code for a few weeks," Cohen-Shohet told Insider. Her technical edge and knowledge of the point-of-sale payment space led her to launch a software company focused on providing behind-the-scenes tech for beauty and wellness small businesses.Cohen-Shohet launched GlossGenius in 2017 to provide payments tech for hair stylists, nail technicians, blow-out bars, and other small businesses in the space.Here's the 11-page deck GlossGenius, a startup that provides back-end tech for the beauty industry, used to raise $16 millionRead the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 11th, 2022

WD-40 Company Reports Third Quarter 2022 Financial Results

~ Management updates fiscal year 2022 guidance ~ SAN DIEGO, July 7, 2022 /PRNewswire/ -- WD-40 Company (NASDAQ:WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its third fiscal quarter ended May 31, 2022. Third Fiscal Quarter Financial Highlights Total net sales for the third quarter were $123.7 million, a decrease of 9 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $388.4 million, an increase of 4 percent compared to the prior year fiscal period. Translation of the Company's foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and year-to-date. On a constant currency basis, total net sales would have been $127.8 million for the third quarter and $390.0 million year-to-date. Net income for the third quarter was $14.5 million, a decrease of 31 percent compared to the prior year fiscal quarter. Year-to-date net income was $52.5 million, a decrease of 15 percent from the prior year fiscal period. Diluted earnings per share were $1.07 in the third quarter, compared to $1.52 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $3.82 compared to $4.48 for the prior year fiscal period. Gross margin was 47.7 percent in the third quarter compared to 53.1 percent in the prior year fiscal quarter. Year-to-date gross margin was 49.7 percent compared to 54.9 percent in the prior year fiscal period. Selling, general and administrative expenses were down 12 percent in the third quarter to $33.6 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were down 2 percent to $106.9 million compared to the prior year fiscal period. Advertising and sales promotion expenses were down 9 percent in the third quarter to $6.0 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were down 2 percent to $17.2 million compared to the prior year fiscal period. "In the third quarter we were up against very strong sales comparisons and had to manage through several global disruptions that negatively impacted our current quarter sales results," said Garry Ridge, WD-40 Company's chairman and chief executive officer. "In addition, we are operating in a challenging macroeconomic environment which has continued to deteriorate our gross margin. Although we remain committed to managing our business  to restore gross margin to our target of 55 percent over the longer-term, we continue to experience short-term margin pressures due to inflation." "In times like these I like to remind stakeholders to see the forest through the trees.  We continue to be a business with a very strong moat, diversified across many trade channels and countries around the world.  We have a strong balance sheet, generate steady cash flows, and continue to return capital to our investors though regular dividends.  In addition, the WD-40® Brand is strong and robust brands like ours are great assets in turbulent times. Most critical of all, we have passionate and committed employees who are dedicated to our Company's purpose." "As we look to the remainder of the fiscal year, despite the global disruptions we've experienced, we continue to believe we are positioned to achieve sales growth for the full fiscal year which will represent a record sales result for our Company," Ridge concluded. Net Sales by Segment (in thousands): Three Months Ended May 31, Nine Months Ended May 31, 2022 2021 Change 2022 2021 Change Americas $ 61,453 $ 60,046 2 % $ 172,238 $ 160,390 7 % EMEA 49,450 58,587 (16) % 161,068 163,150 (1) % Asia-Pacific 12,764 17,772 (28) % 55,093 49,329 12 % Total $ 123,667 $ 136,405 (9) % $ 388,399 $ 372,869 4 % Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 50 percent; for EMEA, 40 percent; and for Asia-Pacific, 10 percent.    Net sales in the Americas increased 2 percent in the third quarter due primarily to higher sales of maintenance products in the Canada and Latin America markets which increased 23 percent and 10 percent, respectively. Higher sales of maintenance products in Canada were primarily due to increased promotional activities and a higher level of demand for our products in the industrial channel. Higher sales of maintenance products in Latin America were primarily driven by strong sales of WD-40 Multi-Use Product in Mexico due to the continued momentum from the shift in the Mexico market from a distributor model to the direct model that we made in late fiscal year 2020. In addition, price increases that went into effect earlier this fiscal year had a positive impact on sales in the region. In the United States, sales remained relatively constant period over period.    Net sales in EMEA decreased 16 percent in the third quarter due primarily to lower sales of maintenance products in both the EMEA direct and distributor markets, which decreased 13 percent and 21 percent, respectively. The decrease in maintenance product sales in the EMEA direct markets was primarily due to the impact of foreign currency exchange rates and reduced demand for our products compared to the prior period. Renovation trends associated with the pandemic resulted in particularly strong demand in the third quarter of fiscal year 2021 in many regions of EMEA. The decrease in maintenance product sales in the EMEA distributor markets was primarily attributable to the Company's suspension of sales in Russia due to the ongoing impacts of the Russian military action in Ukraine. On a constant currency basis EMEA sales for the third quarter would have decreased by 9 percent compared to the prior year fiscal quarter.   Net sales in Asia-Pacific decreased 28 percent in the third quarter due primarily to lower sales of maintenance products in the Asia-Pacific distributor markets and China, which decreased 56 percent and 25 percent, respectively. Products for our Asia-Pacific distributor and Chinese markets are sourced from a third-party manufacturer located in Shanghai, China. Both markets were negatively impacted by the Company's inability to ship products due to the severe lockdown measures instituted in Shanghai as a result of a surge in COVID-19 cases in the region. Net sales in Australia increased 4 percent in the third quarter primarily due to the ongoing growth of the base business, increased promotional activities and the impact of price increases. Changes in foreign currency exchange rates had an unfavorable impact on sales for the Asia-Pacific segment. On a constant currency basis, Asia-Pacific sales would have decreased by 26 percent compared to the prior year fiscal quarter. Net Sales by Product Group (in thousands): Three Months Ended May 31, Nine Months Ended May 31, 2022 2021 Change 2022 2021 Change Maintenance products $ 115,494 $ 127,374 (9) % $ 363,425 $ 344,446 6 % Homecare and cleaning products 8,173 9,031 (10) % 24,974 28,423 (12) % Total $ 123,667 $ 136,405 (9) % $ 388,399 $ 372,869 4 % Net sales of maintenance products, which are considered the primary growth focus for the Company, decreased 9 percent in the third quarter when compared to the prior year fiscal quarter. These sales decreases were primarily attributable to lower sales of maintenance products in the Company's China and Asia-Pacific distributor markets due to lockdown measures in Shanghai related to the COVID-19 pandemic that severely limited our ability to ship product in the region. Also contributing to the decline was the Company's suspension of sales in Russia due to the ongoing impacts of the Russian military action in Ukraine. Finally, sales were lower in the Company's EMEA direct markets due to reduced demand and changing foreign currency exchange rates compared to the prior year period.    Net sales of homecare and cleaning products decreased 10 percent in the third quarter when compared to the prior year fiscal quarter. The homecare and cleaning products, particularly those in the United States, are considered harvest brands providing healthy profits to the Company and are becoming a smaller part of the business as net sales of maintenance products grow, reflecting the execution of the Company's strategic initiatives. Dividend and Share Repurchase Update As previously announced on June 21, 2022, WD-40 Company's board of directors declared a regular quarterly dividend of $0.78 per share payable on July 29, 2022 to stockholders of record at the close of business on July 15, 2022. On October 12, 2021, the Company's board of directors approved a share repurchase plan that became effective on November 1, 2021. Under the plan the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2023. The timing and amount of repurchases will be based on terms and conditions acceptable to the Company and in compliance with applicable laws and regulations. During the period from March 1, 2022 through May 31, 2022, the Company repurchased 23,200 shares of its common stock at a total cost of $4.2 million, leaving $52.6 million available for the repurchase of common stock under this plan. Updated Fiscal Year 2022 Guidance The Company updated its guidance for fiscal year ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaJul 7th, 2022

"I"m A Fan Of Gold" - Seth Klarman Supports "Prudent" Positioning As Goldman Hikes Precious Metal Price Target

"I'm A Fan Of Gold" - Seth Klarman Supports 'Prudent' Positioning As Goldman Hikes Precious Metal Price Target Gold broke down this morning below $1800, losing its modest gains for the year (but still outperforming bonds, stocks, and crypto YTD). This move comes amid geopolitical chaos, monetary policy uncertainty (rate-cut expectations soaring), and recession fears growing. Nevertheless, Baupost's Seth Klarman said in his latest note to investors that: "I'm a fan of gold. I think gold's valuable in a crisis." And we suspect few believe we are not in crisis currently. So why has gold been hammered, and what happens next? Goldman's Mikhail Sprogis and his commodities research team believe a 'wealth shock' has subdued Gold's rally and raised their target price for the precious metal to $2500. While it is tempting to blame gold’s recent weakness on a lack of investment demand due to higher US rates, we view gold’s sell-off this quarter as in line with a weaker CNY and primarily reflecting the impact of lockdowns on the Chinese economy. There is little doubt to us that Chinese lockdowns had a large impact on spot gold demand in China, with gold jewelry sales falling by 30% YoY in April. The re-introduction of Chinese lockdowns represented a significant hit to the Chinese economy and the PBOC allowed for some CNY depreciation to ease financial conditions. As the CNY dropped, gold followed it lower. The positive news is that lockdowns are easing in China... This is not surprising since we find that, historically, the CNY has the largest impact on gold among major currencies... This negative Wealth effect for gold was amplified by a liquidation of short-term-oriented futures and ETF positions,which are very sensitive to trends in the dollar. In turn, the gold real rates correlation remains broken as higher real rates now go hand-in-hand with greater ‘Fear’ of a DM recession which is, on net, positive for gold investment demand, in our view. Reversal of the Wealth shock will allow focus to shift back to Fear and geopolitical drivers: We believe that the Wealth shock to gold will reverse as China is gradually coming out of lockdowns with growth set to receive a boost from policy support.  In addition, an increasing lack of confidence in a US soft landing should boost Fear demand for gold. Any transparency on Russian gold purchases should raise the market’s conviction on an upcoming structural geopolitical boost to CB gold demand. In essence, we believe the bullish gold case was merely delayed rather than derailed. Due to little structural change to our model inputs, we keep our gold price upside but delay the price path. Finally, we see gold ETF purchases resuming now that the speculative part of the positioning has been cleaned up. The risk to this view would be a continuation of the wealth/liquidity shock until its magnitude matches March 2020 or October 2008. This could lead to a temporary fall in the gold price as market participants cut all positions to increase their dollar liquidity and meet margin calls. We revise our 3, 6 and 12m targets to $2,100/2,300 and $2,500/toz, from $2,300/2,500 and $2,500/toz. Finally we circle back to Seth Klarman's insights: "If the world turns to hell, the war expands and gets worse, God forbid a nuclear weapon is used, I think people are going to say: 'How do I know what anything's worth anymore? I'm going to make sure I have some gold because I don't want to not have money at a time of desperation.' It may never come to that, but I think it's prudent to have a little bit of your portfolio in gold." "The market has come to believe in an omniscient Federal Reserve, and it's no such thing. These guys don't really know what they're doing in any deep way. It's a giant financial experiment, and we're at the mercy of their experiment that maybe is right now in the process of going wrong, so God help us." God help us, indeed!   Tyler Durden Fri, 07/01/2022 - 13:28.....»»

Category: worldSource: nytJul 1st, 2022

These 46 pitch decks helped fintechs disrupting trading, investing, and banking raise millions in funding

Looking for examples of real fintech pitch decks? Check out pitch decks that Qolo, Lance, and other startups used to raise money from VCs. Check out these pitch decks for examples of fintech founders sold their vision.Yulia Reznikov/Getty Images Insider has been tracking the next wave of hot new startups that are blending finance and tech.  Check out these pitch decks to see how fintech founders sold their vision. See more stories on Insider's business page. Fintech funding has been on a tear.In 2021, fintech funding hit a record $132 billion globally, according to CB Insights, more than double 2020's mark.Insider has been tracking the next wave of hot new startups that are blending finance and tech. Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You'll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding. New twists on digital bankingZach Bruhnke, cofounder and CEO of HMBradleyHMBradleyConsumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime, N26, and Varo have benefited from. The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model. "Our thesis going in was that we don't swipe our debit cards all that often, and we don't think the customer base that we're focusing on does either," Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. "A lot of our customer base uses credit cards on a daily basis."Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.Notably, the rate tiers are dependent on the percentage of savings, not the net amount. "We'll pay you more when you save more of what comes in," Bruhnke said. "We didn't want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us."Check out the 14-page pitch deck fintech HMBradley, a neobank offering interest rates as high as 3%, used to raise an $18.25 million Series APersonal finance is only a text awayYinon Ravid, the chief executive and cofounder of Albert.AlbertThe COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert's savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company. Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It's looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that's a pay-what-you-can model, between $4 and $14 a month. And Albert's now banking on a new tool to bring together its investing, savings, and budgeting tools.Fintech Albert used this 10-page pitch deck to raise a $100 million Series C from General Atlantic and CapitalG 'A bank for immigrants'Priyank Singh and Rohit Mittal are the cofounders of Stilt.StiltRohit Mittal remembers the difficulties he faced when he first arrived in the United States a decade ago as a master's student at Columbia University.As an immigrant from India, Mittal had no credit score in the US and had difficulty integrating into the financial system. Mittal even struggled to get approved to rent an apartment and couch-surfed until he found a roommate willing to offer him space in his apartment in the New York neighborhood Morningside Heights.That roommate was Priyank Singh, who would go on to become Mittal's cofounder when the two started Stilt, a financial-technology company designed to address the problems Mittal faced when he arrived in the US.Stilt, which calls itself "a bank for immigrants," does not require a social security number or credit history to access its offerings, including unsecured personal loans.Instead of relying on traditional metrics like a credit score, Stilt uses data such as education and employment to predict an individual's future income stability and cash flow before issuing a loan. Stilt has seen its loan volume grow by 500% in the past 12 months, and the startup has loaned to immigrants from 160 countries since its launch. Here are the 15 slides Stilt, which calls itself 'a bank for immigrants,' used to raise a $14 million Series AAn IRA for alternativesHenry Yoshida is the co-founder and CEO of retirement fintech startup Rocket Dollar.Rocket DollarFintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.Park West Asset Management led the round, with participation from investors including Hyphen Capital, which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken's venture arm. Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs' investment management division for an estimated $20 million.Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.Here's the 34-page pitch deck a fintech that helps users invest their retirement savings in crypto and real estate assets used to nab $8 millionA trading app for activismAntoine Argouges, CEO and founder of TulipshareTulipshareAn up-and-coming fintech is taking aim at some of the world's largest corporations by empowering retail investors to push for social and environmental change by pooling their shareholder rights.London-based Tulipshare lets individuals in the UK invest as little as one pound in publicly-traded company stocks. The upstart combines individuals' shareholder rights with other like-minded investors to advocate for environmental, social, and corporate governance change at firms like JPMorgan, Apple, and Amazon.The goal is to achieve a higher number of shares to maximize the number of votes that can be submitted at shareholder meetings. Already a regulated broker-dealer in the UK, Tulipshare recently applied for registration as a broker-dealer in the US. "If you ask your friends and family if they've ever voted on shareholder resolutions, the answer will probably be close to zero," CEO and founder Antoine Argouges told Insider. "I started Tulipshare to utilize shareholder rights to bring about positive corporate change that has an impact on people's lives and our planet — what's more powerful than money to change the system we live in?"Check out the 14-page pitch deck from Tulipshare, a trading app that lets users pool their shareholder votes for activism campaignsDigital tools for independent financial advisorsJason Wenk, founder and CEO of AltruistAltruistJason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he's running a company that is hoping to broaden access to financial advice for less-wealthy individuals. The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup's total funding to just under $67 million.Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an "all-in-one" platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. Here's the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and InsightRethinking debt collection Jason Saltzman, founder and CEO of ReliefReliefFor lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.  Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures. Relief's fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed roundHelping small banks lendTKCollateralEdgeFor large corporations with a track record of tapping the credit markets, taking out debt is a well-structured and clear process handled by the nation's biggest investment banks and teams of accountants. But smaller, middle-market companies — typically those with annual revenues ranging up to $1 billion — are typically served by regional and community banks that don't always have the capacity to adequately measure the risk of loans or price them competitively. Per the National Center for the Middle Market, 200,000 companies fall into this range, accounting for roughly 33% of US private sector GDP and employment.Dallas-based fintech CollateralEdge works with these banks — typically those with between $1 billion and $50 billion in assets — to help analyze and price slices of commercial and industrial loans that previously might have gone unserved by smaller lenders.On October 20th, CollateralEdge announced a $3.5 million seed round led by Dallas venture fund Perot Jain with participation from Kneeland Youngblood (a founder of the healthcare-focused private-equity firm Pharos Capital) and other individual investors.Here's the 10-page deck CollateralEdge, a fintech streamlining how small banks lend to businesses, used to raise a $3.5 million seed roundA new way to assess creditworthinessPinwheel founders Curtis Lee, Kurt Lin, and Anish Basu.PinwheelGrowing up, Kurt Lin never saw his father get frustrated. A "traditional, stoic figure," Lin said his father immigrated to the United States in the 1970s. Becoming part of the financial system proved even more difficult than assimilating into a new culture.Lin recalled visiting bank after bank with his father as a child, watching as his father's applications for a mortgage were denied due to his lack of credit history. "That was the first time in my life I really saw him crack," Lin told Insider. "The system doesn't work for a lot of people — including my dad," he added. Lin would find a solution to his father's problem years later while working with Anish Basu, and Curtis Lee on an automated health savings account. The trio realized the payroll data integrations they were working on could be the basis of a product that would help lenders work with consumers without strong credit histories."That's when the lightbulb hit," said Lin, Pinwheel's CEO.In 2018, Lin, Basu, and Lee founded Pinwheel, an application-programming interface that shares payroll data to help both fintechs and traditional lenders serve consumers with limited or poor credit, who have historically struggled to access financial products. Here's the 9-page deck that Pinwheel, a fintech helping lenders tap into payroll data to serve consumers with little to no credit, used to raise a $50 million Series BAn alternative auto lenderTricolorAn alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds. Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income. Half of Tricolor's customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households. "For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle," Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.An auto lender that caters to underbanked Hispanics used this 25-page deck to raise $90 million from BlackRock investors A new way to access credit The TomoCredit teamTomoCreditKristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history. Kim, who came to the US from South Korea, couldn't initially get access to credit despite having a job in investment banking after graduating college. "I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything," Kim told Insider. "Many young professionals like me, we deserve an opportunity to be considered but just because we didn't have a Fico, we weren't given a chance to even apply," she added.Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.TomoCredit, a fintech that lends to thin- and no-credit borrowers, used this 17-page pitch deck to raise its $10 million Series AHelping streamline how debts are repaidMethod Financial cofounders Jose Bethancourt and Marco del Carmen.Method FinancialWhen Jose Bethancourt graduated from the University of Texas at Austin in May 2019, he faced the same question that confronts over 43 million Americans: How would he repay his student loans?The problem led Bethancourt on a nearly two-year journey that culminated in the creation of a startup aimed at making it easier for consumers to more seamlessly pay off all kinds of debt.  Initially, Bethancourt and fellow UT grad Marco del Carmen built GradJoy, an app that helped users better understand how to manage student loan repayment and other financial habits. GradJoy was accepted into Y Combinator in the summer of 2019. But the duo quickly realized the real benefit to users would be helping them move money to make payments instead of simply offering recommendations."When we started GradJoy, we thought, 'Oh, we'll just give advice — we don't think people are comfortable with us touching their student loans,' and then we realized that people were saying, 'Hey, just move the money — if you think I should pay extra, then I'll pay extra.' So that's kind of the movement that we've seen, just, everybody's more comfortable with fintechs doing what's best for them," Bethancourt told Insider. Here is the 11-slide pitch deck Method Financial, a Y Combinator-backed fintech making debt repayment easier, used to raise $2.5 million in pre-seed fundingQuantum computing made easyQC Ware CEO Matt Johnson.QC WareEven though banks and hedge funds are still several years out from adding quantum computing to their tech arsenals, that hasn't stopped Wall Street giants from investing time and money into the emerging technology class. And momentum for QC Ware, a startup looking to cut the time and resources it takes to use quantum computing, is accelerating. The fintech secured a $25 million Series B on September 29 co-led by Koch Disruptive Technologies and Covestro with participation from D.E. Shaw, Citi, and Samsung Ventures.QC Ware, founded in 2014, builds quantum algorithms for the likes of Goldman Sachs (which led the fintech's Series A), Airbus, and BMW Group. The algorithms, which are effectively code bases that include quantum processing elements, can run on any of the four main public-cloud providers.Quantum computing allows companies to do complex calculations faster than traditional computers by using a form of physics that runs on quantum bits as opposed to the traditional 1s and 0s that computers use. This is especially helpful in banking for risk analytics or algorithmic trading, where executing calculations milliseconds faster than the competition can give firms a leg up. Here's the 20-page deck QC Ware, a fintech making quantum computing more accessible, used to raised its $25 million Series BSimplifying quant modelsKirat Singh and Mark Higgins, Beacon's cofounders.BeaconA fintech that helps financial institutions use quantitative models to streamline their businesses and improve risk management is catching the attention, and capital, of some of the country's biggest investment managers.Beacon Platform, founded in 2014, is a fintech that builds applications and tools to help banks, asset managers, and trading firms quickly integrate quantitative models that can help with analyzing risk, ensuring compliance, and improving operational efficiency. The company raised its Series C on Wednesday, scoring a $56 million investment led by Warburg Pincus with support from Blackstone Innovations Investments, PIMCO, and Global Atlantic. Blackstone, PIMCO, and Global Atlantic are also users of Beacon's tech, as are the Commonwealth Bank of Australia and Shell New Energies, a division of Royal Dutch Shell, among others.The fintech provides a shortcut for firms looking to use quantitative modelling and data science across various aspects of their businesses, a process that can often take considerable resources if done solo.Here's the 20-page pitch deck Beacon, a fintech helping Wall Street better analyze risk and data, used to raise $56 million from Warburg Pincus, Blackstone, and PIMCOSussing out bad actorsFrom left to right: Cofounders CTO David Movshovitz, CEO Doron Hendler, and chief architect Adi DeGaniRevealSecurityAn encounter with an impersonation hacker led Doron Hendler to found RevealSecurity, a Tel Aviv-based cybersecurity startup that monitors for insider threats.Two years ago, a woman impersonating an insurance-agency representative called Hendler and convinced him that he made a mistake with his recent health insurance policy upgrade. She got him to share his login information for his insurer's website, even getting him to give the one-time passcode sent to his phone. Once the hacker got what she needed, she disconnected the call, prompting Hendler to call back. When no one picked up the phone, he realized he had been conned.He immediately called his insurance company to check on his account. Nothing seemed out of place to the representative. But Hendler, who was previously a vice president of a software company, suspected something intangible could have been collected, so he reset his credentials."The chief of information security, who was on the call, he asked me, 'So, how do you want me to identify you? You gave your credentials; you gave your ID; you gave the one time password. How the hell can I identify that it's not you?' And I told him, 'But I never behave like this,'" Hendler recalled of the conversation.RevealSecurity, a Tel Aviv-based cyber startup that tracks user behavior for abnormalities, used this 27-page deck to raise its Series AA new data feed for bond tradingMark Lennihan/APFor years, the only way investors could figure out the going price of a corporate bond was calling up a dealer on the phone. The rise of electronic trading has streamlined that process, but data can still be hard to come by sometimes. A startup founded by a former Goldman Sachs exec has big plans to change that. BondCliQ is a fintech that provides a data feed of pre-trade pricing quotes for the corporate bond market. Founded by Chris White, the creator of Goldman Sachs' defunct corporate-bond-trading system, BondCliQ strives to bring transparency to a market that has traditionally kept such data close to the vest. Banks, which typically serve as the dealers of corporate bonds, have historically kept pre-trade quotes hidden from other dealers to maintain a competitive advantage.But tech advancements and the rise of electronic marketplaces have shifted power dynamics into the hands of buy-side firms, like hedge funds and asset managers. The investors are now able to get a fuller picture of the market by aggregating price quotes directly from dealers or via vendors.Here's the 9-page pitch deck that BondCliQ, a fintech looking to bring more data and transparency to bond trading, used to raise its Series AFraud prevention for lenders and insurersFiordaliso/Getty ImagesOnboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.But preventing fraud is also a priority, and that's where Neuro-ID comes in. The startup analyzes what it calls "digital body language," or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It's built for banks, lenders, insurers, and e-commerce players."The train has left the station for digital transformation, but there's a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy," Neuro-ID CEO Jack Alton told Insider.Founded in 2014, the startup's pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless. In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.Here's the 11-slide pitch deck a startup that analyzes consumers' digital behavior to fight fraud used to raise a $7 million Series AAI-powered tools to spot phony online reviews FakespotMarketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.That's where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart."There are promotional reviews written by humans and bot-generated reviews written by robots or review farms," Fakespot founder and CEO Saoud Khalifah told Insider. "Our AI system has been built to detect both categories with very high accuracy."Fakespot's AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series AHelping fintechs manage dataProper Finance co-founders Travis Gibson (left) and Kyle MaloneyProper FinanceAs the flow of data becomes evermore crucial for fintechs, from the strappy startup to the established powerhouse, a thorny issue in the back office is becoming increasingly complex.Even though fintechs are known for their sleek front ends, the back end is often quite the opposite. Behind that streamlined interface can be a mosaic of different partner integrations — be it with banks, payments players and networks, or software vendors — with a channel of data running between them. Two people who know that better than the average are Kyle Maloney and Travis Gibson, two former employees of Marqeta, a fintech that provides other fintechs with payments processing and card issuance. "Take an established neobank for example. They'll likely have one or two card issuers, two to three bank partners, ACH processing for direct deposits and payouts, mobile check deposits, peer-to-peer payments, and lending," Gibson told Insider. Here's the 12-page pitch deck a startup helping fintechs manage their data used to score a $4.3 million seed from investors like Redpoint Ventures and Y CombinatorE-commerce focused business bankingMichael Rangel, cofounder and CEO, and Tyler McIntyre, cofounder and CTO of Novo.Kristelle Boulos PhotographyBusiness banking is a hot market in fintech. And it seems investors can't get enough.Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami. Here's the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series AShopify for embedded financeProductfy CEO and founder, Duy VoProductfyProductfy is looking to break into embedded finance by becoming the Shopify of back-end banking services.Embedded finance — integrating banking services in non-financial settings — has taken hold in the e-commerce world. But Productfy is going after a different kind of customer in churches, universities, and nonprofits.The San Jose, Calif.-based upstart aims to help non-finance companies offer their own banking products. Productfy can help customers launch finance features in as little as a week and without additional engineering resources or background knowledge of banking compliance or legal requirements, Productfy founder and CEO Duy Vo told Insider. "You don't need an engineer to stand up Shopify, right? You can be someone who's just creating art and you can use Shopify to build your own online store," Vo said, adding that Productfy is looking to take that user experience and replicate it for banking services.Here's the 15-page pitch deck Productfy, a fintech looking to be the Shopify of embedded finance, used to nab a $16 million Series ADeploying algorithms and automation to small-business financingJustin Straight and Bernard Worthy, LoanWell co-foundersLoanWellBernard Worthy and Justin Straight, the founders of LoanWell, want to break down barriers to financing for small and medium-size businesses — and they've got algorithms and automation in their tech arsenals that they hope will do it.Worthy, the company's CEO, and Straight, its chief operating and financial officer, are powering community-focused lenders to fill a gap in the SMB financing world by boosting access to loans under $100,000. And the upstart is known for catching the attention, and dollars, of mission-driven investors. LoanWell closed a $3 million seed financing round in December led by Impact America Fund with participation from SoftBank's SB Opportunity Fund and Collab Capital.LoanWell automates the financing process — from underwriting and origination, to money movement and servicing — which shaves down an up-to-90-day process to 30 days or even same-day with some LoanWell lenders, Worthy said. SMBs rely on these loans to process quickly after two years of financial uncertainty. But the pandemic illustrated how time-consuming and expensive SMB financing can be, highlighted by efforts like the federal government's Paycheck Protection Program.Community banks, once the lifeline to capital for many local businesses, continue to shutter. And demands for smaller loan amounts remain largely unmet. More than half of business-loan applicants sought $100,000 or less, according to 2018 data from the Federal Reserve. But the average small-business bank loan was closer to six times that amount, according to the latest data from a now discontinued Federal Reserve survey.Here's the 14-page pitch deck LoanWell used to raise $3 million from investors like SoftBank.Branded cards for SMBsJennifer Glaspie-Lundstrom is the cofounder and CEO of Tandym.TandymJennifer Glaspie-Lundstrom is no stranger to the private-label credit-card business. As a former Capital One exec, she worked in both the card giant's co-brand partnerships division and its tech organization during her seven years at the company.Now, Glaspie-Lundstrom is hoping to use that experience to innovate a sector that was initially created in malls decades ago.Glaspie-Lundstrom is the cofounder and CEO of Tandym, which offers private-label digital credit cards to merchants. Store and private-label credit cards aren't a new concept, but Tandym is targeting small- and medium-sized merchants with less than $1 billion in annual revenue. Glaspie-Lundstrom said that group often struggles to offer private-label credit due to the expense of working with legacy players."What you have is this example of a very valuable product type that merchants love and their customers love, but a huge, untapped market that has heretofore been unserved, and so that's what we're doing with Tandym," Glaspi-Lundstrom told Insider.A former Capital One exec used this deck to raise $60 million for a startup helping SMBs launch their own branded credit cardsCatering to 'micro businesses'Stefanie Sample is the founder and CEO of FundidFundidStartups aiming to simplify the often-complex world of corporate cards have boomed in recent years.Business-finance management startup Brex was last valued at $12.3 billion after raising $300 million last year. Startup card provider Ramp announced an $8.1 billion valuation in March after growing its revenue nearly 10x in 2021. Divvy, a small business card provider, was acquired by Bill.com in May 2021 for approximately $2.5 billion.But despite how hot the market has gotten, Stefanie Sample said she ended up working in the space by accident. Sample is the founder and CEO of Fundid, a new fintech that provides credit and lending products to small businesses.This May, Fundid announced a $3.25 million seed round led by Nevcaut Ventures. Additional investors include the Artemis Fund and Builders and Backers. The funding announcement capped off the company's first year: Sample introduced the Fundid concept in April 2021, launched its website in May, and began raising capital in August."I never meant to do Fundid," Sample told Insider. "I never meant to do something that was venture-backed."Read the 12-page deck used by Fundid, a fintech offering credit and lending tools for 'micro businesses'Embedded payments for SMBsThe Highnote teamHighnoteBranded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty. The rise of embedded payments, or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards. The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.Here's the 12-page deck Highnote, a startup helping SMBs embed payments, used to raise $54 million in seed and Series A fundingSpeeding up loans for government contractors OppZo cofounders Warren Reed and Randy GarrettOppZoThe massive market for federal government contracts approached $700 billion in 2020, and it's likely to grow as spending accelerates amid an ongoing push for investment in the nation's infrastructure. Many of those dollars flow to small-and-medium sized businesses, even though larger corporations are awarded the bulk of contracts by volume. Of the roughly $680 billion in federal contracts awarded in 2020, roughly a quarter, according to federal guidelines, or some $146 billion that year, went to smaller businesses.But peeking under the hood of the procurement process, the cofounders of OppZo — Randy Garrett and Warren Reed — saw an opportunity to streamline how smaller-sized businesses can leverage those contracts to tap in to capital.  Securing a deal is "a government contractor's best day and their worst day," as Garrett, OppZo's president, likes to put it."At that point they need to pay vendors and hire folks to start the contract. And they may not get their first contract payment from the government for as long as 120 days," Reed, the startup's CEO,  told Insider. Check out the 12-page pitch deck OppZo, a fintech that has figured out how to speed up loans to small government contractors, used to raise $260 million in equity and debtHelping small businesses manage their taxesComplYant's founder Shiloh Jackson wants to help people be present in their bookkeeping.ComplYantAfter 14 years in tax accounting, Shiloh Johnson had formed a core philosophy around corporate accounting: everyone deserves to understand their business's money and business owners need to be present in their bookkeeping process.She wanted to help small businesses understand "this is why you need to do what you're doing and why you have to change the way you think about tax and be present in your bookkeeping process," she told Insider. The Los Angeles native wanted small businesses to not only understand business tax no matter their size but also to find the tools they needed to prepare their taxes in one spot. So Johnson developed a software platform that provides just that.The 13-page pitch deck ComplYant used to nab $4 million that details the tax startup's plan to be Turbotax, Quickbooks, and Xero rolled into one for small business ownersAutomating accounting ops for SMBsDecimal CEO Matt Tait.DecimalSmall- and medium-sized businesses can rely on any number of payroll, expense management, bill pay, and corporate-card startups promising to automate parts of their financial workflow. Smaller firms have adopted this corporate-financial software en masse, boosting growth throughout the pandemic for relatively new entrants like Ramp and massive, industry stalwarts like Intuit. But it's no easy task to connect all of those tools into one, seamless process. And while accounting operations might be far from where many startup founders want to focus their time, having efficient back-end finances does mean time — and capital — freed up to spend elsewhere. For Decimal CEO Matt Tait, there's ample opportunity in "the boring stuff you have to do to survive as a company," he told Insider. Launched in 2020, Decimal provides a back-end tech layer that small- and medium-sized businesses can use to integrate their accounting and business-management software tools in one place.On Wednesday, Decimal announced a $9 million seed fundraising round led by Minneapolis-based Arthur Ventures, alongside Service Providers Capital and other angel investors. See the 13-page pitch deck for Decimal, a startup automating accounting ops for small businessesInvoice financing for SMBsStacey Abrams and Lara Hodgson, Now co-foundersNowAbout a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain — but not in the traditional sense.Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business' cap, there was a hang-up."It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors," Hodgson told Insider. "Waiting to get paid was constraining our ability to grow."While it's not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession. Abrams and Hodgson couldn't secure a line of credit or use financing tools like factoring to solve their problem. The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.  "Why are we the ones borrowing money, when in fact we're the lender here because every time you send an invoice to a customer, you've essentially extended a free loan to that customer by letting them pay later," Hodgson said. "And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods," she added.Check out the 7-page deck that Now, Stacey Abrams' fintech that wants to help small businesses 'grow fearlessly', used to raise $29 millionCheckout made easyRyan Breslow.Ryan BreslowAmazon has long dominated e-commerce with its one-click checkout flows, offering easier ways for consumers to shop online than its small-business competitors.Bolt gives small merchants tools to offer the same easy checkouts so they can compete with the likes of Amazon.The startup raised its $393 million Series D to continue adding its one-click checkout feature to merchants' own websites in October.Bolt markets to merchants themselves. But a big part of Bolt's pitch is its growing network of consumers — currently over 5.6 million — that use its features across multiple Bolt merchant customers. Roughly 5% of Bolt's transactions were network-driven in May, meaning users that signed up for a Bolt account on another retailer's website used it elsewhere. The network effects were even more pronounced in verticals like furniture, where 49% of transactions were driven by the Bolt network."The network effect is now unleashed with Bolt in full fury, and that triggered the raise," Bolt's founder and CEO Ryan Breslow told Insider.Here's the 12-page deck that one-click checkout Bolt used to outline its network of 5.6 million consumers and raise its Series DPayments infrastructure for fintechsQolo CEO and co-founder Patricia MontesiQoloThree years ago, Patricia Montesi realized there was a disconnect in the payments world. "A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren't able to," Montesi, CEO and co-founder of Qolo, told Insider.Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments. "The way people were getting around that was that they were creating this spider web of fintech," she said, adding that "at the end of it all, they had this mess of suppliers and integrations and bank accounts."The 20-year payments veteran rounded up a group of three other co-founders — who together had more than a century of combined industry experience — to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.Here's the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series ABetter use of payroll dataAtomic's Head of Markets, Lindsay DavisAtomicEmployees at companies large and small know the importance — and limitations — of how firms manage their payrolls. A new crop of startups are building the API pipes that connect companies and their employees to offer a greater level of visibility and flexibility when it comes to payroll data and employee verification. On Thursday, one of those names, Atomic, announced a $40 million Series B fundraising round co-led by Mercato Partners and Greylock, alongside Core Innovation Capital, Portage, and ATX Capital. The round follows Atomic's Series A round announced in October, when the startup raised a $22 million Series A from investors including Core Innovation Capital, Portage, and Greylock.Payroll startup Atomic just raised a $40 million Series B. Here's an internal deck detailing the fintech's approach to the red-hot payments space.Saving on vendor invoicesHoward Katzenberg, Glean's CEO and cofounderGleanWhen it comes to high-flying tech startups, headlines and investors typically tend to focus on industry "disruption" and the total addressable market a company is hoping to reach. Expense cutting as a way to boost growth typically isn't part of the conversation early on, and finance teams are viewed as cost centers relative to sales teams. But one fast-growing area of business payments has turned its focus to managing those costs. Startups like Ramp and established names like Bill.com have made their name offering automated expense-management systems. Now, one new fintech competitor, Glean, is looking to take that further by offering both automated payment services and tailored line-item accounts-payable insights driven by machine-learning models. Glean's CFO and founder, Howard Katzenberg, told Insider that the genesis of Glean was driven by his own personal experience managing the finance teams of startups, including mortgage lender Better.com, which Katzenberg left in 2019, and online small-business lender OnDeck. "As a CFO of high-growth companies, I spent a lot of time focused on revenue and I had amazing dashboards in real time where I could see what is going on top of the funnel, what's going on with conversion rates, what's going on in terms of pricing and attrition," Katzenberg told Insider. See the 15-slide pitch deck Glean, a startup using machine learning to find savings in vendor invoices, used to raise $10.8 million in seed fundingReal-estate management made easyAgora founders Noam Kahan, CTO, Bar Mor, CEO, and Lior Dolinski, CPOAgoraFor alternative asset managers of any type, the operations underpinning sales and investor communications are a crucial but often overlooked part of the business. Fund managers love to make bets on markets, not coordinate hundreds of wire transfers to clients each quarter or organize customer-relationship-management databases.Within the $10.6 trillion global market for professionally managed real-estate investing, that's where Tel Aviv and New York-based startup Agora hopes to make its mark.Founded in 2019, Agora offers a set of back-office, investor relations, and sales software tools that real-estate investment managers can plug into their workflows. On Wednesday, Agora announced a $9 million seed round, led by Israel-based venture firm Aleph, with participation from River Park Ventures and Maccabee Ventures. The funding comes on the heels of an October 2020 pre-seed fund raise worth $890,000, in which Maccabee also participated.Here's the 15-slide pitch deck that Agora, a startup helping real-estate investors manage communications and sales with their clients, used to raise a $9 million seed roundAccess to commercial real-estate investing LEX Markets cofounders and co-CEOs Drew Sterrett and Jesse Daugherty.LEX MarketsDrew Sterrett was structuring real-estate deals while working in private equity when he realized the inefficiencies that existed in the market. Only high-net worth individuals or accredited investors could participate in commercial real-estate deals. If they ever wanted to leave a partnership or sell their stake in a property, it was difficult to find another investor to replace them. Owners also struggled to sell minority stakes in their properties and didn't have many good options to recapitalize an asset if necessary.In short, the market had a high barrier to entry despite the fact it didn't always have enough participants to get deals done quickly. "Most investors don't have access to high-quality commercial real-estate investments. How do we have the oldest and largest asset class in the world and one of the largest wealth creators with no public and liquid market?" Sterrett told Insider. "It sort of seems like a no-brainer, and that this should have existed 50 or 60 years ago."This 15-page pitch deck helped LEX Markets, a startup making investing in commercial real estate more accessible, raise $15 millionInsurance goes digitalJamie Hale, CEO and cofounder of LadderLadderFintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market. And while verticals like auto, homeowner's, and renter's insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market. Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion, compared to $144 billion for auto policies and $97 billion for homeowner's insurance.Here's the 12-page deck that Ladder, a startup disrupting the 'crown jewel' of the insurance market, used to nab $100 millionData science for commercial insuranceTanner Hackett, founder and CEO of CounterpartCounterpartThere's been no shortage of funds flowing into insurance-technology companies over the past few years. Private-market funding to insurtechs soared to $15.4 billion in 2021, a 90% increase compared to 2020. Some of the most well-known consumer insurtech names — from Oscar (which focuses on health insurance) to Metromile (which focuses on auto) — launched on the public markets last year, only to fall over time or be acquired as investors questioned the sustainability of their business models. In the commercial arena, however, the head of one insurtech company thinks there is still room to grow — especially for those catering to small businesses operating in an entirely new, pandemic-defined environment. "The bigger opportunity is in commercial lines," Tanner Hackett, the CEO of management liability insurer Counterpart, told Insider."Everywhere I poke, I'm like, 'Oh my goodness, we're still in 1.0, and all the other businesses I've built were on version three.' Insurance is still in 1.0, still managing from spreadsheets and PDFs," added Hackett, who also previously co-founded Button, which focuses on mobile marketing. See the 8-page pitch deck Counterpart, a startup disrupting commercial insurance with data science, used to raise a $30 million Series BSmarter insurance for multifamily propertiesItai Ben-Zaken, cofounder and CEO of Honeycomb.HoneycombA veteran of the online-insurance world is looking to revolutionize the way the industry prices risk for commercial properties with the help of artificial intelligence.Insurance companies typically send inspectors to properties before issuing policies to better understand how the building is maintained and identify potential risks or issues with it. It's a process that can be time-consuming, expensive, and inefficient, making it hard to justify for smaller commercial properties, like apartment and condo buildings.Insurtech Honeycomb is looking to fix that by using AI to analyze a combination of third-party data and photos submitted by customers through the startup's app to quickly identify any potential risks at a property and more accurately price policies."That whole physical inspection thing had really good things in it, but it wasn't really something that is scalable and, it's also expensive," Itai Ben-Zaken, Honeycomb's cofounder and CEO, told Insider. "The best way to see a property right now is Google street view. Google street view is usually two years old."Here's the 10-page Series A pitch deck used by Honeycomb, a startup that wants to revolutionize the $26 billion market for multifamily property insuranceHelping freelancers with their taxesJaideep Singh is the CEO and co-founder of FlyFin, an AI-driven tax preparation software program for freelancers.FlyFinSome people, particularly those with families or freelancing businesses, spend days searching for receipts for tax season, making tax preparation a time consuming and, at times, taxing experience. That's why in 2020 Jaideep Singh founded FlyFin, an artificial-intelligence tax preparation program for freelancers that helps people, as he puts it, "fly through their finances." FlyFin is set up to connect to a person's bank accounts, allowing the AI program to help users monitor for certain expenses that can be claimed on their taxes like business expenditures, the interest on mortgages, property taxes, or whatever else that might apply. "For most individuals, people have expenses distributed over multiple financial institutions. So we built an AI platform that is able to look at expenses, understand the individual, understand your profession, understand the freelance population at large, and start the categorization," Singh told Insider.Check out the 7-page pitch deck a startup helping freelancers manage their taxes used to nab $8 million in fundingDigital banking for freelancersJGalione/Getty ImagesLance is a new digital bank hoping to simplify the life of those workers by offering what it calls an "active" approach to business banking. "We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it," Lance cofounder and CEO Oona Rokyta told Insider. Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that's connected to automated tax withholdings.In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.Here's the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including BarclaysSoftware for managing freelancersWorksome cofounder and CEO Morten Petersen.WorksomeThe way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risør.Here's the 21-slide pitch deck used by a startup that helps firms like Carlsberg and Deloitte manage freelancersPayments and operations support HoneyBook cofounders Dror Shimoni, Oz Alon, and Naama Alon.HoneyBookWhile countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork. HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup's startup investment arm that also backs fintech robo-advisor Betterment, participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company's fundraising total to $227 million to date.Here's the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger GlobalPay-as-you-go compliance for banks, fintechs, and crypto startupsNeepa Patel, Themis' founder and CEOThemisWhen Themis founder and CEO Neepa Patel set out to build a new compliance tool for banks, fintech startups, and crypto companies, she tapped into her own experience managing risk at some of the nation's biggest financial firms. Having worked as a bank regulator at the Office of the Comptroller of the Currency and in compliance at Morgan Stanley, Deutsche Bank, and the enterprise blockchain company R3, Patel was well-placed to assess the shortcomings in financial compliance software. But Patel, who left the corporate world to begin work on Themis in 2020, drew on more than just her own experience and frustrations to build the startup."It's not just me building a tool based on my personal pain points. I reached out to regulators. I reached out to bank compliance officers and members in the fintech community just to make sure that we're building it exactly how they do their work," Patel told Insider. "That was the biggest problem: No one built a tool that was reflective of how people do their work."Check out the 9-page pitch deck Themis, which offers pay-as-you-go compliance for banks, fintechs, and crypto startups, used to raise $9 million in seed fundingConnecting startups and investorsHum Capital cofounder and CEO Blair SilverbergHum CapitalBlair Silverberg is no stranger to fundraising.For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups."I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they're meeting a ton of investors, and the investors are all asking the same questions," Silverberg told Insider. He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech. This 11-page pitch deck helped Hum Capital, a fintech using AI to match investors with startups, raise a $9 million Series A.Helping LatAm startups get up to speedKamino cofounders Gut Fragoso, Rodrigo Perenha, Benjamin Gleason, and Gonzalo ParejoKaminoThere's more venture capital flowing into Latin America than ever before, but getting the funds in founders' hands is not exactly a simple process.In 2021, investors funneled $15.3 billion into Latin American companies, more than tripling the previous record of $4.9 billion in 2019. Fintech and e-commerce sectors drove funding, accounting for 39% and 25% of total funding, respectively.  However, for many startup founders in the region who have successfully sold their ideas and gotten investors on board, there's a patchwork of corporate structuring that's needed to access the funds, according to Benjamin Gleason, who was the chief financial officer at Groupon LatAm prior to cofounding Brazil-based fintech Kamino.It's a process Gleason and his three fellow Kamino cofounders have been through before as entrepreneurs and startup execs themselves. Most often, startups have to set up offshore financial accounts outside of Brazil, which "entails creating a Cayman [Islands] holding company, a Delaware LLC, and then connecting it to a local entity here and also opening US bank accounts for the Cayman entity, which is not trivial from a KYC perspective," said Gleason, who founded open-banking fintech Guiabolso in Sao Paulo. His partner, Gonzalo Parejo, experienced the same toils when he founded insurtech Bidu."Pretty much any international investor will usually ask for that," Gleason said, adding that investors typically cite liability issues."It's just a massive amount of bureaucracy, complexity, a lot of time from the founders. All of this just to get the money from the investor that wants to give them the money," he added.Here's the 8-page pitch deck Kamino, a fintech helping LatAm startups with everything from financing to corporate credit cards, used to raise a $6.1M pre-seed roundThe back-end tech for beautyDanielle Cohen-Shohet, CEO and founder of GlossGeniusGlossGeniusDanielle Cohen-Shohet might have started as a Goldman Sachs investment analyst, but at her core she was always a coder.After about three years at Goldman Sachs, Cohen-Shohet left the world of traditional finance to code her way into starting her own company in 2016. "There was a period of time where I did nothing, but eat, sleep, and code for a few weeks," Cohen-Shohet told Insider. Her technical edge and knowledge of the point-of-sale payment space led her to launch a software company focused on providing behind-the-scenes tech for beauty and wellness small businesses.Cohen-Shohet launched GlossGenius in 2017 to provide payments tech for hair stylists, nail technicians, blow-out bars, and other small businesses in the space.Here's the 11-page deck GlossGenius, a startup that provides back-end tech for the beauty industry, used to raise $16 millionRead the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 30th, 2022

Stocks, Cryptos Tumble To Close Out Catastrophic First-Half

Stocks, Cryptos Tumble To Close Out Catastrophic First-Half It was supposed to be a 7% ramp into month-end on billions in pension fund residual buying. Instead, it ended up being more or less the opposite, with crypto-led liquidations dragging futures and global markets lower, and extending Wednesday losses after central bankers issued warnings on inflation and fueled concern that aggressive policy will end with a hard-landing recession, which increasingly more now see as being 2022 business, an outcome that now appears assured especially after yesterday's disastrous guidance cut from RH, the second in three weeks! Recession fears and inflation woes may be prolonged by today's PCE deflator report. The consumer price gauge favored by the Fed may have picked up to 6.4% last month from 6.3%. Personal income growth probably edged up but Bloomberg Economics highlights an anticipated decline in real personal spending as a major worry. Meanwhile, China’s economy showed further signs of improvement in June with a strong pickup in services and construction, even if the latest Chinese PMI print came slightly below expectations. Also overnight, Russia said it withdrew troops from Ukraine’s Snake Island in the Black Sea after Ukraine said its forces drove Russian troops from the area. In any case, with zero demand from pensions so far (even though the continued selling in stocks and buying in bonds will only make the imabalnce bigger), overnight Nasdaq 100 contracts dropped 1.8% while S&P 500 futures declined 1.3%, and cryptos crumbled, with bitcoin dragged back below $19000 and Ether on the verge of sliding below $1000. The tech-heavy gauge managed to end Wednesday’s trading slightly higher, while the S&P 500 fell for a third straight day. In Europe, the Stoxx Europe 600 Index slid 1.9%. Treasuries gained, the dollar was steady and gold declined and crude oil futures edged lower again. Which brings us to the last trading day of a quarter for the history books: the S&P 500 is set for its biggest 1H decline since 1970 and the Nasdaq 100 since 2002, the height of the dot.com bust. The Stoxx 600 is set for the worst 1H since 2008, the height of the GFC.  Traders have ramped up bets that the global economy will buckle under central bank tightening campaigns -- and that policy makers will eventually backpedal. The bond market shifted to price in a half-point rate cut in the Federal Reserve’s benchmark rate at some point in 2023. On Wednesday, during the annual ECB annual forum, Fed Chair Jerome Powell and his counterparts in Europe and the UK warned inflation is going to be longer lasting. A view that central banks need to act fast on rates because they misjudged inflation has roiled markets this year, with global stocks about to close out their worst quarter since the three months ended March 2020. “Markets are worried about growth as central bankers continue to emphasize that bringing down inflation is their overriding objective, and that it may take time to bring inflation down,” said Esty Dwek, chief investment officer at Flowbank SA. “We still haven’t seen total capitulation in markets, so further downside is possible.” Meanwhile, the cost of insuring European junk bonds against default crossed 600 basis points for the first time in two years on Thursday. And speaking of Europe, stocks are also down over 2% in early trading, with all sectors in the red. DAX and CAC underperform at the margin with autos, consumer discretionary and banking sectors the weakest within the Stoxx 600.  Here are some of the biggest European movers today: Uniper shares slump as much as 23% after the German utility withdrew its outlook and said it was discussing a possible bailout from the German government following Russia’s move to curb natural gas deliveries. SAP sinks as much as 6.5% after Exane BNP Paribas downgraded stock to neutral from outperform, saying it sees risks on demand side in the near term as software spending decisions come under increased scrutiny. Sanofi shares decline as much as 4.5% after the French drugmaker said the FDA placed late-stage clinical trials of tolebrutinib on partial hold in US because of concerns about liver injuries. European semiconductor stocks fell, following peers in the US and Asia lower amid growing concerns that the industry might face a downturn soon as chip stockpiles build. ASML drops as much as 3.4%, Infineon -4.1%, STMicro -3.1% Norsk Hydro shares slide as much as 6% amid metals decline and as DNB cuts the stock to sell from hold, citing concerns about rising aluminum supply. Stainless steel stocks in Europe fall, with Morgan Stanley saying the settlement on the latest ferrochrome benchmark missed its expectations. Outokumpu shares down as much as 6.6%, Aperam -7.2%, Acerinox -4% Saab shares jump as much as 8.4%, after getting an order worth SEK7.3b from the Swedish Defence Materiel Administration for GlobalEye Airborne Early Warning and Control aircraft. Orsted shares rise as much as 2.5%, before paring some of the gains. HSBC raises to buy from hold, saying any further downside for the wind farm operator looks limited. Bunzl shares rise as much as 2.6% after the specialist distribution company said it now expects very good revenue growth in 2022. Grifols shares rise as much as 7.8% after slumping on Wednesday, as the company says that the board isn’t analyzing any capital increase “for the time being.” Earlier in the session, Asian stocks fell for a second day as tech-heavy indexes in Taiwan and South Korea continued to get pummeled amid concerns over the potential for aggressive monetary tightening in the US to rein in inflation.  The MSCI Asia Pacific Index declined as much as 1.2%, dragged down by technology shares including TSMC, Alibaba and Tencent. Taiwan slid more than 2%, while gauges in Japan, South Korea, Australia dropped more than 1%.  Stocks in mainland China rose more than 1% after the economy showed further signs of improvement in June with a strong pickup in services and construction as Covid outbreaks and restrictions were gradually eased. Traders are also watching Chinese President Xi Jinping’s trip to Hong Kong, his first time outside of the mainland since 2020.  Asian stocks are struggling to recover from a May low as the threat of higher US rates outweighs China’s emergence from strict Covid lockdowns and its pledge of stimulus measures. While mainland Chinese stocks led gains globally this month, the rest of the markets in the region -- especially those heavy with technology stocks and exporters -- saw hefty outflows of foreign funds.  “Investors continue to assess recession and also inflation risks,” Marcella Chow, JPMorgan Asset Management’s global market strategist, said in an interview with Bloomberg TV. “This tightening path has actually increased the chance of a slower economic growth going forward and probably has brought forward the recession risks.” Asian stocks are set to post a more than 12% loss this quarter, the worst since the one ended March 2020 during the pandemic-induced global market rout. Japanese stocks declined after the release of China’s data on manufacturing and non-manufacturing PMIs that showed slower than expected improvements.  The Topix Index fell 1.2% to 1,870.82 as of market close Tokyo time, while the Nikkei declined 1.5% to 26,393.04. Sony Group contributed the most to the Topix Index decline, falling 3.4%. Out of 2,170 shares in the index, 531 rose and 1,574 fell, while 65 were unchanged. “Although China is recovering from a lockdown, business sentiment in the manufacturing industry is deteriorating around the world,” said Tomo Kinoshita, global market strategist at Invesco Asset Management China’s Economy Shows Signs of Improvement as Covid Eases. Indian stock indexes posted their biggest quarterly loss since March 2020 as the global equity market stays rattled by high inflation and a weakening outlook for economic growth.  The S&P BSE Sensex ended little changed at 53,018.94 in Mumbai on Thursday, while the NSE Nifty 50 Index dropped 0.1%. The gauges shed more than 9% each in the June quarter, their biggest drop since the outbreak of pandemic shook the global markets in March 2020. The main indexes have fallen for all but one month this year as surging cost pressures forced India’s central bank to raise rates twice and tighten liquidity conditions. The selloff is also partly driven by record foreign outflows of more than $28b this year.  Despite the turmoil in global markets, Indian stocks have underperformed most Asian peers, partly helped by inflows from local institutions, which made net purchases of more than $30b of local stocks. “Investors worry that the latest show of central bank determination to tame inflation will slow economies rapidly,” HDFC Securities analyst Deepak Jasani wrote in a note.  Fourteen of the 19 sector sub-gauges compiled by BSE Ltd. fell Thursday, with metal stocks leading the plunge. The expiry of monthly derivative contracts also weighed on markets. For the June quarter, metal stocks were the worst performers, dropping 31% while information technology gauge fell 22%. Automakers led the three advancing sectors with 11.3% gain. Australian stocks also tumbled, with the S&P/ASX 200 index falling 2% to close at 6,568.10, weighed down by losses in mining, utilities and energy stocks.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 10,868.70 In rates, treasuries advanced, led by the belly of the curve. German bonds surged, led by the short-end and outperforming Treasuries. US yields richer by as much as 5.4bp across front-end and belly of the curve which outperforms, steepening 2s10s, 5s30s by 2bp and 2.8bp; wider bull-steepening move in progress for German curve with yields richer by up to 13.5bp across front-end with 2s10s wider by 3.5bp on the day. US 10-year yields around 3.055%, richer by 3.5bp. Money markets aggressively trimmed ECB tightening bets on relief that French June inflation didn’t come in above the median estimate. Bonds also benefitted from haven buying as stocks slide. Month-end extension flows may continue to support long-end of the Treasuries curve. bunds outperform by 7bp in the sector. IG issuance slate empty so far; Celanese Corp. pushed back plans to issue in euros and dollars, most likely to next week, after deals struggled earlier this week. Focal points of US session include PCE deflator and MNI Chicago PMI.  In FX, the Bloomberg Dollar Spot Index was steady as the greenback traded mixed against its Group-of-10 peers. The yen advanced and Antipodean currencies were steady against the greenback. French inflation quickened to the fastest since the euro was introduced. Steeper increases in energy and food costs drove consumer-price growth to 6.5% in June from 5.8% in May . Sweden’s krona swung to a loss. It briefly advanced earlier after the Riksbank raised its policy rate by 50bps, as expected, signaled faster rate hikes and a quicker trimming of the balance sheet. The pound rose, snapping three days of losses against the dollar. UK household incomes are on their longest downward trend on record, as the nation’s cost of living crisis saps the spending power of British households. Separate figures showed that the current-account deficit widened sharply to £51.7 billion ($63 billion) in the first quarter. The yen rose and the Japan’s bonds inched up. The BOJ kept the amount and frequencies of planned bond purchases unchanged in the July-September period. The Australian dollar reversed a loss after data showed China’s official manufacturing purchasing managers index rose above 50 for the first time since February in a sign of improvement in the world’s second largest economy. Bitcoin is on track for its worst quarter in more than a decade, as more hawkish central banks and a string of high-profile crypto blowups hammer sentiment. The 58% drawdown in the biggest cryptocurrency is the largest since the third quarter of 2011, when Bitcoin was still in its infancy, data compiled by Bloomberg show. In commodities, WTI trades a narrow range, holding below $110. Brent trades either side of $116. Most base metals trade in the red; LME zinc falls 3.1%, underperforming peers. Spot gold falls roughly $3 to trade near $1,814/oz. Bitcoin slumps over 6% before finding support near $19,000. Looking to the day ahead now, data releases include German retail sales for May and unemployment for June, French CPI for June, the Euro Area unemployment rate for May, Canadian GDP for April, whilst the US has personal income and personal spending for May, the weekly initial jobless claims, and the MNI Chicago PMI for June. Market Snapshot S&P 500 futures down 1.2% to 3,775.75 STOXX Europe 600 down 1.8% to 406.18 MXAP down 1.0% to 158.01 MXAPJ down 1.1% to 524.78 Nikkei down 1.5% to 26,393.04 Topix down 1.2% to 1,870.82 Hang Seng Index down 0.6% to 21,859.79 Shanghai Composite up 1.1% to 3,398.62 Sensex up 0.2% to 53,136.59 Australia S&P/ASX 200 down 2.0% to 6,568.06 Kospi down 1.9% to 2,332.64 Gold spot down 0.2% to $1,814.91 US Dollar Index little changed at 105.04 German 10Y yield little changed at 1.42% Euro little changed at $1.0443 Brent Futures down 0.4% to $115.85/bbl Top Overnight News from Bloomberg The surge in the dollar has set Asian currencies on course for their worst quarter since the 1997 financial crisis and created a dilemma for central bankers French Finance Minister Bruno Le Maire said the EU can deliver the global minimum corporate tax with or without the support of Hungary, circumventing Budapest’s veto earlier this month just as the bloc was on the brink of a agreement German unemployment unexpectedly rose, snapping 15 straight months of decline as refugees from the war in Ukraine were included in those searching for work The SNB bought foreign exchange worth 5.7 billion francs ($5.96 billion) in the first quarter of 2022 as the franc sharply appreciated against the euro and briefly touched parity in March The ECB plans to ask the region’s lenders to factor in the economic hit of a potential cut off of Russian gas when considering payouts to shareholders European stocks were poised for their biggest drop in any half-year period since 2008, as investors focused on the prospects for economic slowdown and stubbornly high inflation in the region New Zealand will enter a recession next year that could be deeper than expected, Bank of New Zealand economists said after a survey showed business sentiment continues to slump A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were varied at month-end amid a slew of data releases including mixed Chinese PMIs. ASX 200 was dragged lower by weakness in energy, miners and the top-weighted financials sector. Nikkei 225 declined after disappointing Industrial Production data and with Tokyo raising its virus infection level. Hang Seng and Shanghai Comp. were somewhat mixed with Hong Kong indecisive and the mainland underpinned after the latest Chinese PMI data in which Manufacturing PMI printed below estimates but Non-Manufacturing PMI firmly surpassed forecasts and along with Composite PMI, all returned to expansion territory. Top Asian News NATO Secretary General Stoltenberg said China's growing assertiveness has consequences for the security of allies, while he added China is not our adversary, but we must be clear-eyed about the serious challenges it presents. US blacklisted 5 Chinese firms for allegedly helping Russia in which Connec Electronic, King Pai Technology, Sinno Electronics, Winnine Electronic and World Jetta Logistics were added to the entity list which restricts access to US technology, according to WSJ. Japan's government cut its assessment of industrial production and noted that production is weakening, while it stated that Japan's motor vehicle production declined 8% M/M and that industrial production likely saw the largest impact of Shanghai's COVID-19 lockdown in May, according to Reuters. Tokyo metropolitan government will reportedly increase COVID infections level to the second-highest, according to FNN. It’s been a downbeat session for global equities thus far as sentiment deteriorates further. European bourses are lower across the board, with losses extending during early European hours. European sectors are all in the red but portray a clear defensive bias. Stateside, US equity futures have succumbed to the glum mood, with the NQ narrowly underperforming. Top European News Riksbank hiked its Rate by 50bps to 0.75% as expected, and said the rate will be raised further and it will be close to 2% at the start of 2023. Bank said the balance sheet its to shrink faster than previously flagged, and suggested that policy rate will increase faster if needed. Click here for details. Riksbank's Ingves said inflation over forecast probably not enough for Riksbank to hold extra policy meeting in summer. Ingves added that if the situation requires a 75bps hike, then Riksbank will carry out a 75bps hike. Orsted Gains as HSBC Upgrades With Shares Seen ‘Good Value’ Aston Martin Extends Losses as Carmaker Reportedly Seeking Funds Climate Litigants Look Beyond Big Oil for Their Day in Court Ukraine Latest: Putin Warns NATO on Moving Military to Nordics FX DXY extends on gains above 105.00, but could see more upside on safe haven demand and residual rebalancing flows over fixes - EUR/USD inches towards 1.0400 to the downside. Yen regroups as yields drop and risk sentiment deteriorates to compound corrective price action. Franc unwinds some of its recent outperformance and Loonie lose traction from oil ahead of Canadian GDP. Swedish Crown unable to take advantage of hawkish Riksbank hike in face of risk aversion - Eur/Sek stuck in a rut close to 10.7000. Pound finds some underlying bids into 1.2100 and Kiwi at 0.6200, while Aussie holds above 0.6850 with encouragement from China’s services PMI that also propped the Yuan. Fixed Income Bonds on bull run into month, quarter and half year end - Bunds top 148.00 at best, Gilts approach 113.50 and 10 year T-note just a tick away from 118-00. Debt in demand on safe haven grounds rather than duration as curves steepen on less hawkish/more dovish market pricing. Italian supply comfortably covered to keep BTP futures propped ahead of US PCE data and yet another speech from ECB President Lagarde. Commodities WTI and Brent front-month futures are resilient to the broader risk downturn, and firmer Dollar as OPEC+ member members gear up for what is expected to be a smooth meeting. Spot gold is uneventful but dipped under yesterday's low, with potential support at the 15th June low at USD 1,806.59/oz. Base metals are softer across the board amid the broader risk profile. Dalian and Singapore iron ore futures were on track for quarterly losses. Ship with 7,000 tonnes of grain leaves Ukraine port, according to pro-Russia officials cited by AFP. US Event Calendar 08:30: June Initial Jobless Claims, est. 229,000, prior 229,000 08:30: June Continuing Claims, est. 1.32m, prior 1.32m 08:30: May Personal Income, est. 0.5%, prior 0.4% 08:30: May Personal Spending, est. 0.4%, prior 0.9% 08:30: May Real Personal Spending, est. -0.3%, prior 0.7% 08:30: May PCE Deflator MoM, est. 0.7%, prior 0.2% 08:30: May PCE Deflator YoY, est. 6.4%, prior 6.3% 08:30: May PCE Core Deflator YoY, est. 4.8%, prior 4.9% 08:30: May PCE Core Deflator MoM, est. 0.4%, prior 0.3% 09:45: June MNI Chicago PMI, est. 58.0, prior 60.3 DB's Jim Reid concludes the overnight wrap We’ve just released the results of our monthly EMR survey that we conducted at the start of the week. It makes for some interesting reading, and we’re now at the point where 90% of respondents are expecting a US recession by end-2023, which is up from just 35% in our December survey. That echoes our own economists’ view that we’re going to get a recession in H2 2023, and just shows how sentiment has shifted since the start of the year as central banks have begun hiking rates. When it comes to people’s views on where markets are headed next, most are expecting many of the themes from H1 to continue, with a 72% majority thinking that the S&P 500 is more likely to fall to 3,300 rather than rally to 4,500 from current levels, whilst 60% think that Treasury yields will hit 5% first rather than 1%. Click here to see the full results. When it comes to negative sentiment we’ll have to see what today brings us as we round out the first half of the year, but if everything remains unchanged today we’re currently set to end H1 with the S&P 500 off to its worst H1 since 1970 in total return terms. And there’s been little respite from bonds either, with US Treasuries now down by -9.79% since the start of the year, so it’s been bad news for traditional 60/40 type portfolios. Ultimately, a large reason for that has been investors’ fears that ongoing rate hikes to deal with inflation will end up leading to a recession, and yesterday saw a continuation of that theme, with Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey all reiterating their intentions in a panel at the ECB’s Forum to return inflation back to target. In terms of that panel, there weren’t any major headlines on policy we weren’t already aware of, although there was a collective acknowledgement of the risk that inflation could become entrenched over time and the need to deal with that. Fed Chair Powell described the US economy as in “strong shape”, but one that ultimately requires much tighter financial conditions to bring inflation back to target. Year-end fed funds expectations remained steady in response, down just -0.7bps to 3.45%. However, further out the curve the simmering slower growth narrative continued to grip markets and sent 10yr Treasury yields -8.2bps lower to 3.09%, and the 2s10s another -1.1bps flatter to 4.7bps. In line with a tighter Fed policy path and slower growth, 10yr breakevens drove the move in nominal yields, falling -8.2bps to 2.39%, their lowest levels since January, having entirely erased the gains seen after Russia’s invasion of Ukraine, when it peaked above 3% at one point in April. Along with 2s10s flattening, the Fed’s preferred measure of the near-term risk of recession, the forward spread (the 18m3m – 3m), similarly flattened by -5.7bps, hitting its lowest level in nearly four months at 154bps. And thismorning there’s only been a partial reversal of these trends, with 10yr Treasury yields (+1.3bps) edging back up to 3.10% as we go to press. Over in equities, the S&P 500 bounced around but finished off of its intraday lows with just a -0.07% decline, again with the macro view likely skewed by quarter-end rebalancing of portfolios. The NASDAQ was similarly little changed on the day, falling a mere -0.03%. In terms of the ECB, President Lagarde said on that same panel that she didn’t think “we are going back to that environment of low inflation” that was present before the pandemic. But when it came to the actual data yesterday there was a pretty divergent picture. On the one hand, Spain’s CPI for June surprised significantly on the upside, with the annual inflation rising to +10.0% (vs. +8.7% expected) on the EU’s harmonised measure. But on the other, the report from Germany then surprised some way beneath expectations, coming in at +8.2% on the EU-harmonised measure (vs. +8.8% expected). So mixed messages ahead of the flash CPI print for the entire Euro Area tomorrow. As in the US, there was a significant rally in European sovereign bonds, with yields on 10yr bunds (-10.7bps), OATs (-10.7bps) and BTPs (-16.0bps) all moving lower on the day. Equities also lost significant ground amidst the risk-off tone, and the STOXX 600 shed -0.67% as it caught up with the US losses from the previous session. That risk-off tone was witnessed in credit as well, where iTraxx Crossover widened +21.5bps to a post-pandemic high. At the same time, there were further concerns in Europe on the energy side, with natural gas futures up by +8.06% to a three-month high of €139 per megawatt-hour, which follows a reduction in capacity yesterday at Norway’s Martin Linge field because of a compressor failure. Whilst monetary policy has been the main focus for markets lately, we did get some headlines on the fiscal side yesterday too, with a report from Bloomberg that Senate Democrats were working on an economic package that had smaller tax increases in order to reach a deal with moderate Democratic senator Joe Manchin. For reference, the Democrats only have a majority in the split 50-50 senate thanks to Vice President Harris’ tie-breaking vote, so they need every Democrat Senator on board in order to pass legislation. According to the report, the plan would be worth around $1 trillion, with half allocated to new spending, and the other half cutting the deficit by $500bn over the next decade. Overnight in Asia we’ve seen a mixed market performance overnight. Most indices are trading lower, including the Nikkei (-1.45%) and the Kospi (-0.81%), but Chinese equities have put in a stronger performance after an improvement in China’s PMIs in June, and the CSI 300 (+1.62%) and the Shanghai Comp (+1.31%) have both risen. That came as manufacturing activity expanded for the first time in four months, with the PMI up to 50.2 in June (vs. 50.5 expected) from 49.6 in May. At the same time, the non-manufacturing climbed to 54.7 points in June, up from 47.8 in May, which also marked the first time it’d been above the 50 mark since February. Nevertheless, that positivity among Chinese equities are proving the exception, with equity futures in the US and Europe pointing lower, with those on the S&P 500 (-0.28%) looking forward to a 4th consecutive daily decline as concerns about a recession persist. When it came to other data yesterday, the third estimate of US GDP for Q1 saw growth revised down to an annualised contraction of -1.6% (vs. -1.5% second estimate). Separately, the Euro Area’s M3 money supply grew by +5.6% year-on-year in May (vs. +5.8% expected), which is the slowest pace since February 2020. To the day ahead now, data releases include German retail sales for May and unemployment for June, French CPI for June, the Euro Area unemployment rate for May, Canadian GDP for April, whilst the US has personal income and personal spending for May, the weekly initial jobless claims, and the MNI Chicago PMI for June. Tyler Durden Thu, 06/30/2022 - 07:58.....»»

Category: blogSource: zerohedgeJun 30th, 2022