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Reed Smith taps its first woman global managing partner

Reed Smith, the Pittsburgh-rooted law firm that has roughly 100 lawyers in Philadelphia, has elected its first female global managing partner......»»

Category: topSource: bizjournalsJan 24th, 2023

Transcript: John Mack

     The transcript from this week’s, MiB: John Mack, Morgan Stanley CEO, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters… Read More The post Transcript: John Mack appeared first on The Big Picture.      The transcript from this week’s, MiB: John Mack, Morgan Stanley CEO, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. 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, boy, do I have an extra special guest, John Mack, legendary CEO of Morgan Stanley. Man, this is just a masterclass on leadership, on team building, on understanding a business and understanding what to do for your clients. So not only that they give you business, but they give you their loyalty and their ongoing respect. I don’t know what else to say other than my conversation with Morgan Stanley’s John Mack. I’ve been looking forward to this conversation for quite a while. As soon as I saw the book came out, I have to really get the inside dope from John. And so let’s start with the beginning. You start at Smith Barney in 1968. What was so compelling about a North Carolina kid from Duke going to Wall Street? JOHN MACK, FORMER CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD, MORGAN STANLEY: Well, it’s pretty simple. So I was on scholarship at Duke, an athletic scholarship and cracked C5 in my neck. So my scholarship was only valid for four years, and I needed one class to graduate. I had very little money, and my father had passed away when I was in college. So I needed a job. And I went down and knocked on the door at a company called First Securities of North Carolina. A guy named Bill Bonner said, look, you know, nothing about the business, I’ll put you in the back office. And you can go to your one class every day ahead, and then go on your lunch hour and come back and go to work. So it was me and nine women in the back office, and they had the old IBM computer punch cards. That’s how long ago it was. So I got a sense and a feel for the business. And I got to know a lady named Fannie Mitchell, who ran job placement for Duke University. So when people would come down and say, you know, Procter & Gamble or IBM, whoever it may be, she would say, you got to talk to this John Mack. And I think, you know, I would see her in the cafeteria and most students would ignore. I’d sit down, have a cup of coffee with her or have lunch with her. So that’s how I got involved with the securities business. And then the Smith Barney was in town and they were going to open an office in Atlanta, and they ended up hiring me to go to their Atlanta office. So I come up to New York in ’68 and I’m working at Smith Barney, and they decided because of the explosion of volume, the New York Stock Exchange stopped all new branches from opening. So I got a chance to go in the municipal bond department. That’s what I did. I was a trader-salesman, and I learned a lot about risk. And I also learned a lot about drinking at lunch, and you got to be very careful. RITHOLTZ: Going out with clients, having a couple of drinks. Hey, you come back to the desk, a little buzzed, what happens? Can you make a trading mistake that way? MACK: Well, not only you can, I did. We went down to Chez Yvonne, if you remember that years ago, down on Wall Street. U.S. Trust was my client, a guy named Jimmy Degnan. And U.S Trust was the advisor for the state employees of New York, which is a huge pension fund. RITHOLTZ: Giant. MACK: So we sat there and we drank for at least three hours. RITHOLTZ: Now, wait, are you normally a drinker during lunch, or if the client is drinking, you got to keep up? MACK: I’m a client guy. No one wants to drink alone. So if he’s drinking or she’s drinking, I’m drinking. I came back and I made a mistake. And thank God, they didn’t fire me. And over time, we eradicated that and fixed it. And then I learned be very careful when you go out to lunch on Wall Street. RITHOLTZ: So tell us a little bit about the culture on the street in the late ‘60s and early ‘70s. What was it like? MACK: It was a crazy time. The thing of politically correct didn’t exist. RITHOLTZ: To say the very least. MACK: All right. So I’m 21, 22 years old. I’m at Smith Barney. I’m a municipal trader. Then I go into the corporate bond market. And I hear about these crazy parties that Wall Street was throwing and I only went to one and left. I mean, it was basically strippers and people getting drunk. And you know, I came from a town of about 12,000 people in North Carolina, a Baptist religion, mainly. It was a new world for me, but it taught me a lot. You got to pay attention and you got to make sure that you don’t get drunk at lunch and you got to make sure you tell the truth. RITHOLTZ: Telling the truth is certainly a key part, and that’s a theme that comes up again and again in your book. We’ll get to that in a little bit. You mentioned the New York Stock Exchange didn’t allow any new branches to be open. I have a vague recollection of Wall Street being closed on Wednesdays to catch up on the paperwork. Tell us a little bit about that. MACK: That’s correct. They closed on Wednesday to catch up on the paperwork, and all the firms, whether it was, first of all, Morgan Stanley, Goldman Sachs, and Morgan Stanley at that time didn’t have a big secondary business, we had to clear up the back office. So you’d shut at noon and try to figure out the securities go to Y and these securities go to Z. RITHOLTZ: Literally paper certificates, runners up and down the street — MACK: Absolutely. Absolutely. RITHOLTZ: — and delivering. MACK: Absolutely. RITHOLTZ: Talk about, you know, ancient technology. One of the things you mentioned was that by the 1980s, there were two key forces driving changes on Wall Street; deregulation and technology. MACK: Right. Correct. RITHOLTZ: Tell us about that. MACK: Well, the markets were changing, they were global. And as they became global, and you were competing around the world, it was clear that you needed to free up our securities business to be more active on a global basis. So we got rid of a lot of regulation. We got more oversight, but not regulatory control. I mean, clearly reported to the SEC, York Stock Exchange, et cetera. But it wasn’t smothering. I mean, you know, we were not used to it. But it was the right thing for the New York Stock Exchange to do. There had to be more regulation. And you know, as I said earlier, it’s a global market, and you want to make sure that we represent in New York Stock Exchange and really America the proper way, and it worked. And the U.K. was much stricter than we were; and in Germany, they restricted than we were. And clearly, the Japanese were stricter than we were. And over time, all these different regulatory areas from around the world, came up with a conclusion that we need kind of an overall management system for risk and regulatory oversight. So if you took a big risk in China, in Japan or in Europe, you needed to roll that up, so the U.S. regulator or the U.K. regulator could see what your overall risk was. I think that was a huge and a very important move. RITHOLTZ: You spent the first part of your career primarily in fixed income. First, you mentioned municipals — MACK: Right. RITHOLTZ: — then corporate. What was the appeal of the bond side of the business? MACK: Well, originally, when I joined Smith Barney, I was going to go to Atlanta in the retail office and cover Florida and other southern states. And then I got to know a guy named George Wilder who had been in the municipal bond business, and a guy named John McDougall who was a municipal bond trader. And they convinced me, you know, I want you to stay in New York, you’re a great salesman, and you can sell and trade munis with us. And I like New York and I like the business, and I like the investment world of large pension funds, money managers and things like that. So we did a combination of things, we covered clients, and then we satisfied the desire of retail salesmen who wanted to buy munis in New York state or in California or Florida. So that’s how I got into the bond business. RITHOLTZ: What was it like trying to build a team on a bond desk that described in the book, could get a little frenetic? MACK: Yeah, it was. But you know, we built it over a long period of time, and we all grew up over that period of time. And you’ve learned that, number one, you had to be upfront. You had to focus on your clients. You couldn’t get drunk at lunch, which occasionally, we all got drunk at lunch and sometimes made a mistake. And you learn to focus on your client and you know, it became a very personal business. And you got to know who they were, you got to know their families. And I remember when I was at Smith Barney and then at F.S. Smithers, I was given the worst accounts because I went from trading to sale, so we’ll dump all these accounts on John Mack. RITHOLTZ: Give it to the kid. MACK: You got it. And there was a gentleman named Dick Vanskoy at the Mellon Bank, who managed and advised the state employees of Pennsylvania teachers and retirement funds. Huge — RITHOLTZ: That’s a big account in Pennsylvania. MACK: It was huge. RITHOLTZ: Yeah. MACK: But he was tough as nails. And you learned very quickly, that you better be on your toes when you deal with Dick. And I got to know him, he was a great mentor, taught me a lot about the business. And I spent a lot of time in Pittsburgh, even to the point that my wife and I would go out. I mean, I remember going out to Pittsburgh with these huge funds, it was probably the largest account in the country, at Mellon Bank at that time. RITHOLTZ: Really? MACK: And a guy named Jackie Kugler at Salomon Brothers, and Salomon was the dominant player in the bond market. They were the number one broker-banker for the pension funds for the state of Pennsylvania, both the teachers and the employees. And I just kept digging away, working hard at it. And over time, I became the number one dealer they dealt with. And George Polachek (ph), who came over from Ukraine after the Russians back then took over in World War II, was running it. He had been at Sun Life in Canada. And I got along with him well, and I did a lot of business with the Mellon bank, to the point I became their number one broker-dealer. And Polachek (ph) who loved martinis, walked onto the Salomon floor and screamed out to Kugler, how does it feel to be number two? That’s the environment we’re in. And I’ll tell you, I mean, I think business is personal. And we got to know the people at Mellon bank, whether it was, you know, Sally Yeh’s daughter who was in med school, or George Polachek (ph) who was going back over to Europe for a while. We really worked at getting to know people and building trust. And at the end of the day, it’s all about trust and it’s all about delivering what you say you’re going to do. And with the help of a lot of people, that’s what we did. And of course, my partner in all this was Christy Mack. And as I said earlier, my clients say, look, John, we really don’t care about you. It’s on Christy, yeah. RITHOLTZ: Your wife? MACK: Yeah. No. She was awesome, and is awesome. RITHOLTZ: So you eventually become head of the Fixed Income Department. MACK: Right. RITHOLTZ: And what was it like to go from sales and trading to managing a whole team of salespeople and traders? MACK: Well, it was very different and I learned very quickly, thank God for Dick Fisher, that you have to be more balanced and not as, I don’t know what the word is, aggressive, ruthless, uncouth, all of those words. We used to sit in clusters of four salespeople together, and we probably had five clusters. And one of my rules were that the desk can never be empty, you always need one person there. Because, you know, if no one is there and the phone rings, no one is picking it up. RITHOLTZ: Right. MACK: Occasionally, you know, no one was there. And I’d walk in and be really pissed off about it, and reach over and I would just clean the desk off on the floor. RITHOLTZ: Like, wipe everything — MACK: Everything. RITHOLTZ: — onto the floor? MACK: Right. And thank God for Dick Fisher and he said, look, John, you got the biggest gun in the firm, in that division. Your job is never use your gun. So I learned a lot from him and I calm things down. I wasn’t as aggressive, wasn’t as pushy, but I was still demanding. And look, it’s a great business with great opportunities, but you got to pay attention. You got to pay attention to the people around you. You got to pay attention to your clients. And this idea of especially at Morgan Stanley, the surest way to be fired at Morgan Stanley is the word got back, you got a client laid somewhere, you’re gone. There’s no debate, no discussion. So we really focused on trying to get close to our clients, give them what they needed, introduce them to other clients that also had similar asset management responsibilities. And Morgan Stanley at that time was really growing from a pure investment bank that covered, you know, AT&T, IBM, Southern Cal, you name it, they had it, the Government of Japan. And we really worked at imbuing that culture of first class business in a first class way into the Morgan Stanley sales and trading business. RITHOLTZ: So let’s talk a little bit about some of the things you discussed in the book. You described how different Wall Street is today from when you began. Tell us a little bit about the process of finance being institutionalized, and how the culture has changed. MACK: Well, I think the biggest change is the markets became so big and global, that Wall Street had to change. So if you go back to when I started the business, basically, your client base was here in the United States. But over time, as globalization took place, your clients would be all over the world. And people were more and more focused on what are the maximum returns we can make in investing. And it got to be a 24 hours a day trading, whether you’re in China or Japan or Europe or U.S. So you had to be on your game, and you also had to be available to do business at night. And our traders oftentimes will stay up all night to satisfy inquiries coming in from China or be there early in the morning for London. So globalization was the big change, and then technology added to it. Technology allowed people to see markets and here we are at Bloomberg, they were looking at machines. They could tell you what was going on in Hong Kong or what was going on in Europe. So the markets became 24/7. And as a result, you had the staff and in my case, the fixed income division, you needed people around the world to be able to satisfy clients who are investors, and at the same time, satisfy clients who are raising money through Morgan Stanley. So if AT&T was doing a big bond deal, we want to make sure that, you know, the Japanese, the Chinese and just go around the world, the Middle East, London and back to New York, that all of our clients got a chance to see and talk to a salesman who had information about the transaction we were doing for AT&T. So globalization was the big change. Then add to that, and here we are at Bloomberg, technology. You know, when I got in the business, there was no technology. You had a little machine that would do interest rates for you. You know, you’d put in a price and it would give you what the yield is. But now, you go into Morgan Stanley, you go into JPMorgan or Goldman, it makes no difference. Every desk has a box with data and information. And if you go back when I got in the business in early, early ‘70s, matter of fact, in the late ‘60s, that didn’t exist. I mean, people would go out for lunch, and you know, take a couple hours. You didn’t miss anything. But today, you don’t leave your desk. RITHOLTZ: Right. And I’d say the very least. So you helped to build a very special culture at Morgan Stanley. What goes into building a competitive investment bank? How do you create and sustain that culture? MACK: Well, I think by and large, people who come into the business are competitive. They want to achieve and they want to do well. What I was trying to do was to take all this, I guess courage is the wrong word, this aggressiveness, this ability to build business, and how do you make it into a one firm versus the guys in San Francisco, they get an order, don’t share it with New York. If we do it, you know, we’ll get more of a commission. So what I was trying to do when I took over the fixed income division is to create a one firm entity. I call it the one-firm firm. And I brought in a guy named Tom DeLong, who I’ve met on an airplane. So Christy and I were out in Utah, we were looking at buying a house because we started picking up skiing. And by the way, I’m a terrible skier. So I’m talking to this guy on the plane and I said to him, what do you do? And he said, I’m a professor at BYU, and I’m coming back to talk to AT&T, their management group about, you know, managing people and evaluations, et cetera. And I said, well, look, I’d like you to come in and see me when you have time. I’d like to talk to you. So Tom comes in. And by the way, now, Tom is a professor at Harvard University. So Tom comes in and he interviews my senior group. And he comes in, he said, well, here’s what people think, to get ahead at this division, they have to be your friends. RITHOLTZ: FOJ. MACK: Exactly. That’s right. And if they’re not your friend, they don’t make it. And he said, that may not be reality, but that’s what they all believe. RITHOLTZ: That’s the perception. MACK: So he said, what you should do is set up an independent group of people. Let them make a presentation to you of the talent that should be promoted. And you know, if you have a strong objection, you can say that, but by and large, you should accept what they put in front of you. So that’s exactly what they did. They took me picking who’s going to be promoted. And there was a promotion committee, and also a compensation committee. And then they would come to me and make recommendations. And so you didn’t favor one person, you had somewhere between four and eight people on these committees. And when they brought it to me, unless I had something very specific that I’d say, well, let me tell you why I disagree, I accepted the recommendation. And that move really changed the culture of the division, and it came into, you know, you don’t have to be Max’s friend (ph) or anyone else. It’s about being professional, direct and honest. And your peers would do the evaluation on how you’re doing, what you’re doing and what you should be doing. RITHOLTZ: This is the full 360 review. MACK: Exactly. RITHOLTZ: And the peers would also anonymously review their managers. MACK: Absolutely. RITHOLTZ: And what was the results from those sorts of things? MACK: Well, in some cases, we found that managers were not setting the right tone as far as being energetic and working with them. They were reluctant, oftentimes, to go out with salesmen and help them entertain with clients or spend time with clients. So it really put more pressure on managers to be involved and not just sit in an office or on a trading desk at the far end, and just, you know, take advantage of people working hard, but they’re not involved. So we got more involved. And it also got us to eliminate some of the managers. When you saw these 360 reviews and some of the data, and then you would dive into it and find out they’re right, we’re not going to have people like that at this firm. So not a lot of reduction at headcounts, but a few people we asked to leave. RITHOLTZ: And you talked about the willingness of senior management to assist with clients. You seemed to be ready to jump on a plane to go anywhere in the world, China, to Tokyo. It didn’t matter if you could help close a deal. You were there. MACK: That’s true. I mean, number one, I love the business. I mean, to go to China and build the relationships we built in China, or go to Europe, it didn’t make any difference where I went. I love the business. And you know, China was just opening up. And one of the guys who used to be at the World Bank said, you know, John, what China really needs, I think it was Ed Lim, it needs an investment bank. So we formed a small investment bank owned mainly by the Chinese, but Morgan Stanley on 30% of it. And we built a securities business with the Chinese in China. And Wang Qishan, who was the Vice Premier, he was the gentleman I worked with. And it took a lot of time, but the Chinese wanted create their own capital markets. They wanted to be independent, and they wanted the ability to go around the world and raise money, because we do in any American investment bank. And I’ll tell you one of the things that really touched me. We’re talking about China, but let’s say China Communist. We’re talking about diehard communists. Wang Qishan who was running the central bank at that time, and then he was given the responsibility by Zhu Rongji to build a securities business. And I’m working with him to do this joint venture and he flies over to New York, and we’re sitting in my office on whatever floor at Morgan Stanley. And we’re there for about an hour and a half, we’re making zero progress. We’re not getting anywhere. And I’ve been in Europe with him and talked to him over there. We were making progress there. And now here he is in New York and there’s like a big heavy stone on him. I looked at him and I finally figured out he’s a chain smoker. I said Qishan, light him up. He said, I can’t do that. I said, what do you mean you can’t do that? He said, in New York, you can’t smoke inside. I said, in my office, you can do anything you want. Light him up. And he smoked Luckys. Can you imagine smoking Luckys? He smoked Luckys, he lit up, we got the deal done. RITHOLTZ: No filter, right? MACK: No filter. We got the deal done. And I keep reflecting back, you got to pay attention to the person who’s in the room with you. RITHOLTZ: But I’m impressed that he knows the local rules and customs in New York. MACK: Yeah. Very respectful. RITHOLTZ: That’s really impressive. So you open this joint venture in China. Is Morgan Stanley the first U.S. Bank to open a joint venture in China? MACK: It was. I know the U.K. banks, Hong Kong bank out of a U.K. ownership. But we were the first bank. But you know, I’m sure JPMorgan had some kind of outlet there, but more for banking and taking deposits and doing traditional banking business. But from a trading point of view, securities business, thanks to Ed Lim, who as I said, worked at the UN said, you know, China really needs capital markets and this investment banking business. And with his help, we started a small investment bank there which continued to grow. RITHOLTZ: So not just the division in China grew, but all of Morgan Stanley grew. And eventually, you came to realize, hey, we have all this investment banking and trading experience, but we don’t have a retail force, the way somebody like Merrill Lynch does. And lo and behold, along comes Dean Witter — MACK: Right. RITHOLTZ: — potentially a great merger candidate. Tell us a little bit about why that seemed like a good idea at that time. MACK: Sure. Well, what we saw in Merrill Lynch, which traditionally had been a pure retail firm, because of their huge network, number one, they had better information not only from what’s going on in the retail market, but also from institutions. You know, if you were in Des Moines in Iowa, and you knew the local president of the First Bank of Iowa, you got better information. And if they were going to buy Treasury securities, or municipals, you got that order. So we saw that we were getting limited information. And then Sears, who had bought Dean Witter. I think it was Ed Brennan and Phil Purcell had been a management consultant I think from McKinsey, but not sure of that. And he convinced Brennan that, you know, if you really are going to be in retail, you have Sears stores everywhere. Every city of 100,000 people, there was a Sears store. And he said, you know, we ought to open up Dean Witter offices in all these Sears stores, and that’s what they did. And it grew and grew. And then they came to the point that Purcell convinced Sears, let’s spin it out and take this company public. So Morgan Stanley was chosen to be the lead underwriter on the spin-out of Dean Witter from Sears. So Dick Fisher calls me and I meet Purcell, who I liked, and I looked at their business and the information they were getting from clients versus what we were getting. And they were in every, well, how many Sears stores are there? They were everywhere. RITHOLTZ: At their peak, I think there were like 3,000 something. MACK: Yeah. So they had better information. RITHOLTZ: Yeah. MACK: So, you know, we talked and talked. And finally, we came to the conclusion on a handshake to do the deal. Sears and Dean Witter was much larger in market cap than Morgan Stanley. So it was agreed upon, and he wouldn’t do it without being the CEO. And we had a couple of dinners in New York with Dick Fisher and him, Ed Brennan. And to get the deal done, he had to be the CEO. So Fisher says to me in a private meeting in his office, I’m not going to let you do this trip or do this management training. I said, well, Dick, at that point, it’s not our firm, it’s shareholders’ firm. And for me to say that to Dick Fisher was kind of ridiculous because he was always teaching me about the business. And he was a wonderful man and a smart man. So I said, look, this is what makes sense for shareholders. I’ll take the number two job. Phil is a good guy. I’ll get along with him. And let’s do this merger. And we did. And what we also inherited when we did that merger was Discover card. RITHOLTZ: Which was also a money machine. MACK: It was a money machine. But you know, we clashed, and we clashed in the sense, like I said I think earlier, if I were out in Sacramento, seeing the state funds of California, and I had an extra hour, I would drop by, you know, the local office, the Morgan Stanley Dean Witter office, and go and talk to a salesman. And clearly, you know, salesmen who are on commission, by and large, do a good job, but always have complaints. And I heard the complaints and I came back and I talked to the manager of all retail, and I talked to Purcell. And then Purcell said to me, you know, John, you can’t do that. I said, what do you mean I can’t do that? You can’t just drop into office and talk to them. I said, well, last time I checked, you know, you’re the CEO, but I’m president of the firm. I’m in Sacramento, seeing Safeway stores, and you’re telling me I can’t go into the office and talk to them? He said, well, you know, Ed Brennan would never do that at Sears. And I said, you know, this is not serious. And so right then, we knew we had an issue. RITHOLTZ: Right. He was very risk averse and you were very hands-on. MACK: Right. RITHOLTZ: It seems like from day one, a clash of the Titans was teeing up. MACK: Yeah. But not from day one. I mean, look, they had built a great business in retail, Dean Witter. They had brokers all over the country doing business. They didn’t have an international business. I think they thought international was going to Canada. It was just two different cultures. And no one challenged or spoke up either to a guy named Jimmy who ran the retail business or, clearly, Purcell who ran both retail institution and the credit card business. And my view at Morgan Stanley and I did this with Dick Jake Fisher, and people did it with me. In my office, I don’t care what you say to me. I want to hear it and it didn’t matter whether you didn’t do that. And that was the big cultural change. RITHOLTZ: So given the sort of head to head in terms of culture, Purcell’s team, at least for a while, seem to have won. You eventually came to realize he was reducing your authority — MACK: Right. RITHOLTZ: — step by step. And at a certain point, you’re like, I don’t want to just be a figurehead. MACK: Right. RITHOLTZ: And so you resigned. MACK: Right. RITHOLTZ: Tell us what that was like too, you’d been at Morgan Stanley for quite a while. MACK: Yeah. Well, it was difficult, but I couldn’t stay there under a philosophy or a management style where you’re not allowed to go to your boss and tell them, you know, I think you’re a jerk. And I had a number of people say that to me and I didn’t get even with them. I just changed some of the things. Sometimes they were right. I wasn’t sure. It’s just two different cultures. I mean, Morgan Stanley built its business on telling clients exactly what they thought. They didn’t sugarcoat it. They didn’t try to say, you know, maybe a little this, a little that. They told the client, these are the issues. And that’s the way I grew up, and that’s the way Dick Fisher was. So as much as I tried to change, I was miserable. I couldn’t do it. And he put me in charge of the retail system, but everything was bounced through him before I could make any decisions. Look, it’s their style, it had been successful. The retail business was important to the firm. And by putting retail and institution together, we had tremendous clout. But from a managerial point of view, it’s not the culture I wanted to be in. RITHOLTZ: Let’s talk a little bit about a period where you were just bored golfing. You leave Morgan Stanley. You’re really not sure what the next chapter in your life is going to be. And then you get a phone call about the mess that was Credit Suisse. MACK: Right. RITHOLTZ: What made you attracted to coming in and trying to clean up Credit Suisse First Boston? MACK: Well, I got a call from Lionel Pincus and I assume — RITHOLTZ: From Warburg Pincus? MACK: Right. They had a big investment with the Swiss and they were not happy with what was going on. So I met with him, and I met other people in the management of Credit Suisse. And I said to Christy, I would rather do this job and regret it than not do this job and regret it. So that’s how I made the decision. RITHOLTZ: Regret minimization framework. MACK: Exactly. RITHOLTZ: A good way to think about it. We should talk more about your wife because it seems like she regularly gives you good advice and send you off to apologize for something you said. MACK: That’s true. RITHOLTZ: And you talk about that in the book. We’ll circle back to that later. So I’m amused by the headline, Wall Street Fears Big Mack Attack. What was the expectation post Morgan Stanley? What did the street think you’re going to come in and do with Credit Suisse? MACK: Well, in Morgan Stanley when I thought, especially in the fixed income division and at that time, it’s the only thing I ran, that we were too fat. You know, we need to do a reduction. So I did and — RITHOLTZ: And this isn’t just headcount. You described some pretty egregious spending — MACK: Oh, yeah. RITHOLTZ: — going on at Credit Suisse. MACK: Yeah. Well, it was totally out of control. And you know, the Swiss were kind of absentee landlords. And they were used to getting all this money in a Swiss bank account and a lot of money coming in, I assume, from other parts of the world. So it was pretty easy when I got there, that we had to do some headcount reduction. When I got there, through my bankers who had worked for me at Morgan Stanley, who were big in technology, Frank Quattrone — RITHOLTZ: Sure. Giant. MACK: — and his team. And when I saw what kind of money they were making, it was mind-boggling. So I flew out to see them and I said, look, guys, I’ll pay you a lot of money. There’s no question about that. But what you’re doing, and the amount of money you’re making now versus the rest of the firm, and using the balance sheet in the firm is unacceptable. So we’re going to have to figure out a way. I want you to make a lot of money. I think it’s a great motivator. But this is totally out of control. And I wish I could remember exactly some of the numbers, but they were numbers like I’d never seen before. RITHOLTZ: It was order of magnitudes larger than the rest of the street? MACK: It’s big. They got a piece of every deal. They did. RITHOLTZ: Personally? MACK: Personally. So you know, one of them says, you know, John, this is in our contract. But I think this compensation is way out of kilter. And just to add a little color to this, when I said to them I want to come out and I want you to come to New York, and we got to talk about these contracts. And this is after 9/11. And they say, well, we’re afraid to do that. I said, well, tell me why. Well, after 9/11, we don’t go to New York. I said, okay, pick a city, I’ll meet you in the city. So I met them in Denver. When I think about that, how absurd that is. So I flew out to Denver, and I took Steve Volk who had been at Shearman & Sterling as the lead lawyer, lead partner. He had joined me to help clean up Credit Suisse. So I sit with George Boutros, Quattrone and I think a guy named Brady, and I said, look, I want you to make a lot of money. I don’t have any issue with that. But this is craziness and I can’t do that. And they said, well, look, it may be craziness, but that’s our contract. I said, it may be your contract and I’ll see you in court and we’ll fight it out. And I gave up the contracts, but I still paid them a lot of money. But you can’t create a culture when you have one-offs doing whatever they want to do. RITHOLTZ: You described it as anyone with a personal fiefdom is a terrible idea for a firm. MACK: Absolutely. And they’re good. They were smart. You would like a room full of Frank Quattrones. But you got to be managed and you got to be a team player. RITHOLTZ: So someone said to you around this time, hey, we’ve given up a lot of money. What about you, John, what have you given up? MACK: Yeah. RITHOLTZ: And what was your response? MACK: I gave up the contract. RITHOLTZ: So you gave up about a third of your salary? MACK: Yeah, I did. RITHOLTZ: That’s a big chunk of cash. MACK: But if you’re going to ask people to give up their contract, you can’t be different than them. This term that I run from Tom DeLong, it’s a one-firm firm, we all have to be in it together. So for me to keep the contract, it’s just not the right thing to do. And also, I learned so much from Dick Fisher. I’m looking way down the road. I’m not looking about what’s going to happen next week or two weeks from now. RITHOLTZ: Well, that’s a good strategy in investing to say the very least. You wrote in the book, the Swiss and Swiss bankers were unlike any other bankers you work with in the U.K., in China, in Japan. What made the Swiss so much of a one-off? MACK: Well, they were very independent. They had a lock on certain clients, whether it was leaders out of the Middle East or oligarchs in Russia, they got a lot of money coming in because they were Swiss. They had a great franchise, and they really lived off their private banking business. And in their investment banking business, they had a guy who was very talented, very smart named Allen Wheat and they had other people that come in. But everyone was running it for their own return into their own pocket. And so when I got there, I cut commissions. I got Frank and his guys to give up some of their money. And someone said, you know, we’re cutting commissions and getting less. Will you give up your contract? And I did. So it just wasn’t being managed. And the Swiss, you know, they make a lot of money because they get money from all the places that maybe JPMorgan and others wouldn’t take. They did a lot of investing with that money. They got to carry on some of it. It’s a great system for running a very profitable business. But the world was changing, and disclosure was becoming more and more open. People want to know, you know, who has the money, where’s it going, how’s money being transferred. And we finally got that to start moving and changing in Switzerland. And I was pretty tough on them. And of course, they thought I was the most arrogant person they ever met, and I thought they were the dumbest people I’ve ever met so — RITHOLTZ: In the book, you described actually saying that to their face. MACK: I did. RITHOLTZ: Given how secretive they are and how less than team focus they were, you knew this match wasn’t going to last forever. How long did you last at Credit Suisse? MACK: I think I lasted at least two years, maybe three. RITHOLTZ: Long enough to start showing a profit in the firm. MACK: Oh, yeah. We started making money. It was great. I mean, I remember the Olayan Group out of the Middle East said to me, and they were a huge investor in Credit Suisse, John, you’ve done a great job. We’re finally making money again. But I can’t take people telling me, you know, you don’t have access for this, you don’t have access for that. My view, which drove him crazy, was to open up their vault and let the European Jews come in and say how much money Credit Suisse took when World War II started. RITHOLTZ: Right. MACK: You know, how about the paintings they had? What’s a bank doing with a Renoir in a safe? RITHOLTZ: What was the response to that? MACK: They didn’t like it. RITHOLTZ: Yeah. I can imagine. MACK: Yeah. RITHOLTZ: So you ended up leaving Credit Suisse not long after. MACK: Well, they wouldn’t renew my contract. RITHOLTZ: Right. So it wasn’t like you were out and then fired. It was after your contract ended. MACK: No, I was fired. RITHOLTZ: So non-renewal and what was the firing like? Tell us a little bit about that. Was it relatively polite and pleasant? The Swiss, they’re not quite German, they’re not quite French, their customs are a little bit different than the rest of Europe. MACK: Well, when I went to Credit Suisse, they said that I could pick someone that I liked and trusted, a friend to go on the board. And I asked a guy named Tom Bell, who’s a close friend of mine, he used to run Y&R advertising agency, and then he ran Cousins Properties in Atlanta, to go on the board. Then he called me after their meeting and said, John, be prepared, they’re going to fire you tomorrow. I said, well, thanks for heads-up. So I went in, they fired me. And I sat and I said, you know, Walter, what do you think of this? Trying to get them to talk, but they didn’t want any part of talking. And look, you know, I don’t have any issue with the firm. I guess you could say I was aggressive or obnoxious, one or the other. But we turned the place around. RITHOLTZ: Right. MACK: We started making money. But, look, I don’t think in general, we have to ask my friends and people who know me. I don’t think I’m arrogant. But clearly, I came across as arrogant know-it-all. And they shot me so, you know — RITHOLTZ: But you had done a good job there. Let’s talk a bit about Mack the Knife, right? MACK: Right. RITHOLTZ: So there’s Chainsaw Al, there’s Neutron Jack. I don’t get the sense that you were as blase about having to reduce headcounts as some other CEOs were. MACK: Yeah. RITHOLTZ: It struck me that Mack the Knife sort of rankled you a little bit, at least that’s how it comes across in the book. MACK: Yeah. I didn’t mind it. I mean, being known as Mack the Knife, it kind of built a reputation for me. I’d go to a bar somewhere, I’d go to Christmas party with a lot of Wall Street guys, and invariably, someone would be pointing and says Mack the Knife. RITHOLTZ: Right. MACK: I have an ego. I like that. I am Mack the Knife. RITHOLTZ: That’s pretty good. So now, you get fired at Credit Suisse. MACK: Yeah. RITHOLTZ: And meanwhile, Morgan Stanley run by the somewhat risk averse, Phil Purcell, starts falling behind all their competitors. MACK: Right. RITHOLTZ: And lo and behold, there is an agitation to have some change — MACK: Right. RITHOLTZ: — at Morgan Stanley Dean Witter. Tell us what happens next. MACK: Well, I’m at Pequot which is a hedge fund with — RITHOLTZ: Art Samberg. MACK: — Art Samberg and having a good time. And Morgan Stanley is falling on. And then Parker Gilbert, who had been the chairman of the firm, and I think going all the way back, his stepfather was one of the original partners. And JPMorgan spun out and started Morgans — RITHOLTZ: Wasn’t he related to Henry Morgan also? I mean — MACK: That I don’t know. I don’t think so, but I don’t know that. Charles Morgan was related to Henry Morgan, who was not on the Management Committee, but there was a relationship going all the way back to the Morgans. So Parker got together with a number of retired partners who own a tremendous amount of Morgan Stanley/Dean Witter stock now. And they went on a campaign to force personnel out, and at the end of the day, they were successful. RITHOLTZ: And you get the phone call? MACK: Yeah. RITHOLTZ: You, again, briefly thought about it. What did your wife say to you? MACK: Well, she said I had to do it. She said, John, that firm is part of you and you’ve done so much. You got to go back and do this. RITHOLTZ: So that you return. MACK: Right. RITHOLTZ: Your first day of work, you walked into the trading room to deliver just, hey, I’m back. What is that experience like? MACK: Well, I think Christy, who’s my wife, would say, other than having our kids, it was the happiest moment of her life. She would say that, John, we grew up at Morgan Stanley. We knew the culture. And to come back, and to have people just running to get to the door to welcome us in, it was emotional. I guess a lot of it is just the circumstances. They hadn’t been managed the way I think they should have been managed. They didn’t have a connection with the leadership of the firm. They had become risk averse. And it was no longer, you know, the sense of you do well, you get rewarded. So the meritocracy thing had just dissipated away. So to walk in and have people scrambling to, you know, get to see me or — RITHOLTZ: Had it felt good? MACK: Yeah, it did. It did good. And I’ll never forget when I got up into the auditorium to talk to people and I said, you know, I always wanted to see all of you again, but I never thought I would see you by coming back in here, back to Morgan Stanley and doing it. But it was a thrill. I mean, you know, you don’t get many chances to redo, or recorrect, or change what had happened and go back the way it was. And we were able to do that, and it was a high. And you know, I get Christy and hear me. To her, as I said, other than the kids, that was the highlight of our marriage. So I got to work on it and do some other things. RITHOLTZ: And I mentioned when you first came in, and I’m sure you don’t remember this, the day you were brought in, you were doing a media tour. And I have a vivid recollection of sitting in a makeup chair in the greenroom at CNBC. MACK: CNBC. RITHOLTZ: And you and some other people blow in, hi, I’m John Mack. MACK: Right. RITHOLTZ: Hi. Nice to meet you. What was that about? I asked and someone said, oh, that’s John Mack. He just came back to run Morgan Stanley. I’m like, oh, isn’t that great? And that was, I don’t know, was it ’05? It’s like 15, 17 years ago? MACK: Yeah, something like that. Yes. RITHOLTZ: Yeah. Really, really fascinating. And you very quickly rebuilt the firm’s culture. Tell us what you did to bring back the one-firm firm — MACK: Sure. RITHOLTZ: — and the meritocracy. How did you get Morgan Stanley back on the straight and narrow again? MACK: Well, number one, you had to return it to meritocracy. And we had a lot of meetings either in big groups, small groups. Christy and I, one of the things we did early on, if there was a golf outing at Morgan Stanley with clients, if you went out, it’d be all men. And occasionally, there’d be one woman who played golf. So Christy and I said, well, let’s do things. I want women to be in charge of entertaining them than doing their own golf outings. So we got David Ledbetter and his guys come in, and we did golf lessons up in Purchase, New York for our women professionals. And then we took them down to North Carolina six or seven months later, at a club we belonged to called Landfall and we had, you know, the golf teachers come up and work with them. And the beauty of it is now the women have their own golf outing women-only, which I think is terrific. So what we tried to do is pull people together and talk about how do you make this a great firm again, because the roots are there, the bones are there. And it was about reaching out and bringing people together, and working for our clients and making sure that we treated people fairly. RITHOLTZ: So there’s a quote of yours in the book that I found fascinating. You wrote, certain risk-taking behavior multiplied exponentially when investment banks were converted from partnerships to publicly traded companies. I couldn’t agree more. MACK: Right. RITHOLTZ: Tell us your thoughts. MACK: Well, the thought was when it was a partner’s money, they were much more conservative. RITHOLTZ: They were literally joint in several liabilities, literally on the hook — MACK: Absolutely. RITHOLTZ: — if the firm lost money. That’s got to focus your attention. MACK: Oh, it does. And depending on where you were, which firm, but the culture, Morgan Stanley had been a pure investment bank, and they really didn’t have sales and trading either in equities or in fixed income. But what became apparent that firms like Salomon Brothers, were making huge inroads because Jackie Kugler at Salomon could call the CFO at IBM or AT&T and say, hear what pension funds are thinking and doing with your stock. We think there’s an opportunity you could float $100 million equity deal or bond deal. They had better information. And Morgan Stanley didn’t have that sales and trading business. We were not talking to portfolio managers as traders. We were talking to them as we’re pricing AT&T at 7-1As (ph). How many do you want? That’s the way it worked. But other firms, including Goldman Sachs, they were a two-way shop. They were buying and selling debt and equities with pension funds, and get a lot of information. What were they looking for? And what were they doing? And then you take that back and you show it to New Jersey Bell Telephone or you show it to, you know, AT&T or IBM. You’re bringing that CFO or that treasurer more information, so he can figure out what’s the next move for AT&T or Southern Bell? RITHOLTZ: So was it inevitable that these firms had to go public just so they had access to those pools of capital to expand into trading and underwriting and everything else? MACK: Yeah, because at the end of the day, the risk component went up dramatically. And you know, if you go through the crisis, probably if you were not a public company, you’d have wiped out the partnership. So you needed to have a strong base of capital and selling equity, and being in the public market gave you that. It also gave you the liquidity to go in the market to raise more equity if you need it, or do a bond do. RITHOLTZ: I used to think, hey, big mistake going from partnership to public — MACK: Right. RITHOLTZ: — because of the change in risk profile. But it sort of sounds like it was inevitable that all these partnerships would eventually go public. MACK: Yeah. Well, you know, what’s interesting, if you look at Lazard, they still do business. It was truncated. It’s not what it used to be. If you’re a CFO or a CEO, you want to know what are the hedge funds doing? State of California, State of New York, big pools of money in their pension funds, what are they thinking? What do they need? You want that kind of data. You want to know what are investors looking for? And I think, you know, if you look back, and it was difficult, we went through a hard time. The Dean Witter merger really changed the firm. Now, you had unbelievable banking, with the retail. And the amount of information that you could bring to a CEO or CFO about markets and then the distribution network you now had was a huge advantage. And I think that’s one of the reasons Morgan Stanley has done so well. RITHOLTZ: Really interesting. We’ll talk about books in a little while, but you seem to throughout your book, quote Ron Chernow’s House of Morgan a lot. MACK: Right. RITHOLTZ: How helpful was that in doing your research to write this? MACK: Well, I had read the book years ago, so I didn’t do a lot of work to dig down. So I would say very little. RITHOLTZ: Oh, really? MACK: Yeah. RITHOLTZ: Because he just goes berserk on the research side. MACK: That’s right. RITHOLTZ: Everything he does is so deeply and richly researched. MACK: He was never a bond salesman like me. RITHOLTZ: Well, you were actually on the inside, so it’s a little different. One of the other things you wrote was everybody got the financial crisis wrong. And in the run-up to it, people just didn’t expect the bottom draw (ph) out that much. Tell us a little bit about what took place with Morgan Stanley, leading up to the financial crisis? MACK: Well, number one, we had too much risk. There was no question about that. But we were not alone. And we did not have a fortress balance sheet like a JPMorgan would have or even a Citibank. You know, no one knows when the bullets come in, but the bullet came and shot a lot of us. And a lot of these companies either merged or went out of business. And all I can say is thank God for the Japanese and what they did. I mean, that was the lifesaver. They got us through. RITHOLTZ: Thank you, Mitsubishi with Morgan Stanley. MACK: Yeah. And as I said to you earlier, they remembered our culture because we would always have Japanese trainees. And they stood up, and that’s what saved us. RITHOLTZ: So you tell a story in the book, you have Hank Paulson, Ben Bernanke, and Tim Geithner coming to you to say, hey, you guys have to find a merger partner. MACK: Right. RITHOLTZ: And the response is we have $180 billion in capital. This is going to be a painful period, but we’ll survive. MACK: Right. RITHOLTZ: What was their response? MACK: They didn’t care. RITHOLTZ: Didn’t care? MACK: No. RITHOLTZ: Get more capital. MACK: Absolutely. RITHOLTZ: So you reach out to Bank of Mitsubishi. MACK: Right. RITHOLTZ: And you’re waiting for the term sheet to come in. MACK: Right. RITHOLTZ: And it’s midnight, and it’s 2:00, and it’s 4:00 a.m. It’s 6:00 a.m. And then Tim Geithner calls, and then Hank Paulson calls, and then a third time, Tim Geithner calls. What happens next? MACK: Well, what happens, the check flew in to Boston, and we had to send one of our bankers up to pick up the check and fly back. So he was at home. It’s over the weekend. And he went up in his dungarees and running shoes, and picked up a check for, I don’t know, a billion some, and brought it down. I got a copy of it framed in my office back at the townhouse. The Japanese saved us. They saved us because they remember our culture. And we used to train tons of Japanese bankers at Morgan Stanley. RITHOLTZ: So you’re waiting for the final word from Bank of Mitsubishi. MACK: Right. RITHOLTZ: I think you know where I’m going. MACK: Yeah. RITHOLTZ: And now, Geithner calls for the umpteenth time and your secretary pokes her head and then says, it was the head of New York Fed — MACK: Of New York Fed. Right. RITHOLTZ: — Tim Geithner and he’s insistent. MACK: Right. RITHOLTZ: And you basically said, we’re going to figure this out ourselves. MACK: Yeah. RITHOLTZ: And you did. MACK: And we did. Yeah. RITHOLTZ: And what’s your relationship with Tim now? MACK: I liked him. RITHOLTZ: Yeah. MACK: I mean, listen, to me, I hope it’s not personal to him. And the point was I’m trying to save the firm. I can’t take all these calls when I’m talking to the Japanese. So you know, we’re under the gun. He’s a decent guy. But he had his job to do and I had my job to do. And at the end of the day, it worked. RITHOLTZ: And in fact, the Treasury Department taps Morgan Stanley to help with the AIG bailout. MACK: Yeah, they did. RITHOLTZ: So that was a good working relationship. You actually had a good relationship with Hank Paulson — MACK: Yeah. RITHOLTZ: — from when he was CEO of Goldman. MACK: Yeah, he’s the best. Well, look, he’s honest. He’s smart. He’s straightforward. He gets things done. I have a lot of respect for Hank Paulson. RITHOLTZ: Before we get to our favorite questions, there were a couple of little curveballs I wanted to throw you. There’s a story in the book, you talked about somebody who you go to, who you know is a giant Duke basketball fan. And you asked him to give up part of his bonus, as you were doing. MACK: Right. RITHOLTZ: And very begrudgingly, he did it for the team. MACK: Right. RITHOLTZ: And then you get Coach K involved. Tell us that story. It’s charming. MACK: Well, he was a huge fan of Duke and I needed him onboard with what I was trying to do. And he gave up some power and money to accommodate me. And Mike Krzyzewski is a good friend of mine, a close friend of mine. So I called Coach K and I said, Mike, do me a favor. Will you call this gentleman and just tell him how much I appreciate what he’s done and that you are happy that you helped my friend John Mack out? So Mike calls the guy and he said, look, I want to tell you what you did is really something. John Mack is, he didn’t call me an a-hole, he said John Mack is a selfish tough guy, and what you did just warmed his heart. And I want to thank you because he’s my friend. The salesman was on cloud nine. RITHOLTZ: I can imagine. And then another curveball I got to ask you — MACK: Sure. RITHOLTZ: — you once stole Barton Biggs’ car. MACK: We hid it. His car was a dump. RITHOLTZ: Right. It was a clunker. He had a broken rear window. MACK: Yeah. RITHOLTZ: He just taped it off. He didn’t even replace the window. MACK: Yeah, we hid the car and he was like — RITHOLTZ: And then you had a make-believe sheriff from North Carolina call him? MACK: Right. Yeah. RITHOLTZ: And what was his reaction? MACK: Well, he laughed at the end, but he had no idea what was going on. And Bart is a wonderful man, but he is a good guy to pull pranks on. So what I’ve learned in pulling pranks — RITHOLTZ: Of which there are numerous examples in the book. MACK: But here’s what I’ve learned, though. When the prank is on you, laugh. Because everyone is trying to get me in one way or another. RITHOLTZ: Very, very funny. So we only have a few minutes left. MACK: Sure. RITHOLTZ: Let me jump to some of my favorite questions that we ask all of our guests. Tell us about your early mentors who helped to shape your career. MACK: Number one, Dick Fisher, just hands down. He would call me and say, look, John, you got to do this. I know you’re aggressive. You’re a great salesman. You can’t manage people and try to threaten them and scare them. You got to ease up. So he did that. Also, I could go to him if I had a problem, a question. So he was without question, my best mentor. And the other person is not that she mentored me, she’s my wife. She’ll say, John, you know, you want to reach out to that person and you know their kid is sick. You got him into Children’s Hospital, the Morgan Stanley Children’s Hospital. So she’s been a wonderful partner in telling me, you know, you’re being a little too aggressive, back down. And I think she’s right, I have softened up. Yeah, I think I have softened up. And that’s another thing. Morgan Stanley got behind us and we built this Children’s Hospital, which the employees love. They go up there on the weekends, and they read stories to kids. RITHOLTZ: Wow. MACK: That’s how you build a culture, that you do things like that. And I’m trying to thank Frank Bennack who’s at Hearst Corporation. He said to me he thought that was the best sign of corporate philanthropy he’s ever seen. So if some time you’re up near New York Presbyterian Uptown, if you go into the Children’s Hospital, Morgan Stanley Children’s, you’ll see on the wall that Morgan Stanley gave a lot of money. And then you’ll see names of hedge funds and other clients, when they heard what we’re doing, they gave money. And you know, New York is huge. You got, you know, the Philadelphia Children’s Hospital. You got them in Boston. New York City didn’t have a standalone children’s hospital. And our employees will go up there now and read books to the kids on the weekend sometimes. RITHOLTZ: Wow. MACK: It is a wonderful thing we did. We’re really, really happy with it. RITHOLTZ: You should be very proud of that. You mentioned books. Let’s talk about some of your favorites and what are you reading currently. MACK: Well, actually, I just read my book again. My favorite book all-time is Gone with the Wind. Can you believe that? RITHOLTZ: That’s a big book, right? MACK: It is a big book. So I’m taking history of the south at Duke University. And one of the things you had to do, you had to read 50 pages every other day about a history or something with a sound. So I picked up Gone with the Wind. I didn’t put it down until I finished it. RITHOLTZ: Really? Wow. MACK: If you haven’t read it, you got to read it. RITHOLTZ: Seen the movie, never read the book. MACK: The book is awesome. RITHOLTZ: Really? MACK: It’s just awesome. So — RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in finance or investing? MACK: Well, number one, you have to pursue it. You got to get in the door. Hopefully, you have a background that will help you. If your education, let’s say you’re a history major, I was a history major. If your education doesn’t put you naturally into that glide path, then take courses and get into that glide path. Go to school at night, get your MBA, that helps. But more importantly, figure out how do you get to know people within that company. Make sure your job you have now, you’ve performed well in it. And get to know people in the company and get introduced by them to the head of a division or department. But you can get in it. I mean, there’s a lot of ways to get in this business. And one way of doing it, go work for JPMorgan, their asset management business. Go work for a hedge fund. Go work for a lot of people who are in the business and learn kind of the day-to-day sales and training business. And if you want to be an M&A specialist, my advice is you need to have a degree in accounting or an MBA where you can really zero in and have the training that you need to do and do that. You can do that business. If you didn’t have any experience, if they give you a chance, my point is you got to give them enough information that they want to give you a chance. And the way you do that is do extra work, or work for a hedge fund, or work for, you know, whoever it may be and you’ll get that shot. RITHOLTZ: And our last question, what do you know about the world of investing today that you wish you knew 50 years or so ago, when you were first getting started? MACK: That great companies that you invest in, you should hold. And I always was looking for the profit and I made money on it. But some of these companies, well, take Apple Computer. RITHOLTZ: Perfect example. MACK: I’ll give you a great example. My son, 11 years old, Morgan Stanley takes Apple public. I buy him a computer. He says, dad, this is a great company, I want to buy stock in it. And he’s like 11 or 12 years old, and he buys shares on it. I think that small purchase is well worth over a couple million dollars when he did. RITHOLTZ: Wow. MACK: So he understood great companies and his father did. You hold them. He’s never sold a share. RITHOLTZ: Wow. MACK: And it’s just been a home run. So I believe — RITHOLTZ: Well, dad is a trader. The son is an investor. MACK: An investor. That’s right. A smart investor. So I believe you buy great companies and hold them, and that’s what we do now. We have a family office that helps me, we work with them. And we still meet and talk to a lot of investors. RITHOLTZ: Quite fascinating. John, thank you for being so generous with your time. We have been speaking with John Mack, former CEO of Morgan Stanley, and author of the fascinating book Up Close and All In: Life and Leadership Lessons really from a Wall Street Warrior. If you enjoy this conversation, well, be sure and check out any of our previous 500 we’ve done over the past eight or nine years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcasts. Sign up for my daily reading list at ritholtz.com. Follow me on Twitter @ritholtz. Check out all of the Bloomberg podcasts on Twitter at podcasts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Justin Milner is my audio engineer. Atika Valbrun is my project manager. Sean Russo is my head of 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: John Mack appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJan 10th, 2023

14 business leaders making corporate America more inclusive in an increasingly polarized society

Despite growing challenges, leaders at Google, Yelp, Bank of America, and more are working to bring diverse voices to workplaces. Kea Taylor/Imagine Photography; Alyssa Powell/Insider Insider is proud to present its third-annual list of diversity trailblazers in corporate America.  These leaders, ranging from execs at Bank of America to Google, are advancing equity in business.  Their work is important in an increasingly politicized environment around social issues.  Being a chief diversity officer was never easy, but it seems the job has been getting more difficult over the past year. Inflation, worker shortages, and worries about potential recession are topping corporate leaders' lists of concerns. One result could be that diversity slips off the list of boardroom priorities, executives working in this area told Insider.At the same time, some conservative political leaders are waging war against what they call "woke culture" in corporate America, putting pressure on CEOs — and their staff — who advocate on issues like LGBTQ rights. Despite these and other challenges, chief diversity officers across industries in the US have been working to advance the notions of diversity, equity, and inclusion in business and society over the past year. These leaders — often women of color — are working in an environment that could become even more fractious as the country gears up for the 2024 presidential election. Insider is pleased to present its third-annual list of notable diversity officers changing their companies. Collectively, these executives are helping break barriers for an untold number of workers while also pushing their fellow corporate leaders to make their businesses more inclusive.Alan Bowser, partner and chief diversity officer at Bridgewater AssociatesBridgewater's Alan Bowser.Courtesy of BridgewaterKey accomplishments: In addition to increasing racial and gender diversity at Bridgewater Associates, the world's largest hedge fund, Bowser launched the firm's Rising Fellows program, a three-week virtual curriculum aimed at expanding access to the financial services industry for students in their first year of college. He also worked with leaders at Barnard College to create mentorship and internship opportunities to encourage more women to join the investment industry. Encouraging leadership within employee-resource groups was also a big focus for Bowser. In 2021, Bridgewater compensated 16 employees for their impact on and leadership of the company's employee-affinity networks. On average, the size of the bonus that leaders received was $8,750, a company spokesperson said. In their own words: Bowser previously told Insider that increasing diversity was part of building a true "idea meritocracy," the term Ray Dalio, the founder of Bridgewater, uses to describe an environment where people disagree thoughtfully and ultimately reach better outcomes than they could individually. "That's rooted in bringing lots of diverse perspectives together," Bowser said.Keyla Cabret-Lewis, director of diversity, equity, and inclusion at AflacAflac's Keyla Cabret-Lewis.AflacKey accomplishments: Cabret-Lewis was a key player in the insurer's $25 million investment in the Black Economic Development Fund, an investment vehicle that seeks to help close the racial-wealth gap. The fund targets Black-led financial institutions and Black-led businesses.   Cabret-Lewis also had a role in the decision by Dan Amos, the CEO of Aflac, to sign onto CEO Action for Diversity & Inclusion, a pledge started by PwC's US Chair, Tim Ryan, among others. The business chiefs who are signatories commit to advance diversity and inclusion within their companies.  In their own words: "I'm excited to see the investments we are making in our internal talent-development area come to fruition. We have expanded our inclusive efforts into the LGTBQ+ arena this year and hope to see more of that in the future."Demetris Cheatham, senior director of diversity, inclusion, belonging, and strategy at GitHubGitHub's Demetris Cheatham.GitHubKey accomplishments: Cheatham has been working to expand diversity in the world of open-source coding, data, and technology. Over the past year, Cheatham helped create All In for Students, a program that provides mentorship, training, and internship opportunities in coding to students from historically Black colleges and universities. Under the program, 30 students complete a 10-week open-source-coding training program. GitHub, which makes software-development tools, then places the students in summer internships within GitHub or at other companies including Cisco, Microsoft, Fidelity, and Intel. Cheatham also created educational materials and gathered data on harassment that occurs at computer-science conferences in order to help prevent it.In their own words: "I came from a rural area, grew up on a dirt road with no Internet access, raised by a single mom who didn't have a lot of financial resources. I went to a minority-serving institution, majored in computer science although never had access to a computer until I got there, and applied to and was accepted into the same types of diversity programs that I try to create. I know what it's like to be overlooked, overworked, and othered. And on the flip side, I know what it's like to have someone see you, believe in you, value you and your uniqueness, give you opportunities, mentor you and sponsor you."Robert Childs, executive vice president of enterprise inclusion, diversity, and business engagement at American ExpressAmerican Express' Robert Childs.American ExpressKey accomplishments: Childs helped with American Express' issuance of its first-ever ESG bond, valued at $1 billion. An ESG bond is a debt instrument that comes with environmental, social, or governance objectives, including financing environmentally friendly buildings and sustainable-energy projects. Childs also helped develop the credit-card company's "Preferred First Name" initiative for US customers, which allows them to specify a preferred name they want to use on the phone without a legal name-change process, making the customer-service experience more inclusive. In their own words: "As we look ahead, it will be important for companies to place more emphasis on how they do things in a more inclusive way versus just generating a list of what they did. I believe that's how we'll get to more meaningful and sustained change to improve our world."Eloiza Domingo, vice president of HR and chief inclusive-diversity and equity officer at AllstateAllstate's Eloiza Domingo.AllstateKey accomplishments: Under Domingo's leadership, Allstate worked with OneTen, a nonprofit that aims to help one million Black people who don't have a four-year degree attain what the group describes as well-paying jobs.Under the partnership, Allstate removed the four-year-degree requirement from dozens of job postings. In 2021, 54% of new hires did not have a college degree. In addition, the insurer increased its spending with businesses owned by people of color, women, people who identify as LGBTQ, veterans, and people with disabilities. Spending rose from $366 million in 2020 to $371 million in 2021. In their own words: "The role of the chief diversity officer is more critical now than ever. To optimize on that thought-leadership, it's critical that they are proactively pulled in and have fluid engagement with their C-level peers."Latasha Gillespie, head of global diversity, equity, and inclusion at Amazon StudiosAmazon's Latasha Gillespie.Amazon StudiosKey accomplishments: Gillespie's work focuses on making sure the content and operations at Amazon Studios — the retailer's streaming-production company behind hits like "Lord of the Rings: The Rings of Power" and "The Marvelous Mrs. Maisel" — are diverse and inclusive. Gillespie launched the studio's first inclusion policy guide and playbook, establishing rules and guidelines to make sure all content creators the platform works with continue to seek stories that amplify voices across race, ethnicity, nationality, sexual orientation, age, religion, disability — including mental health — body size, gender, gender identity, and gender expression. In addition, Gillespie also grew Amazon Studios' Howard Entertainment Program, an internship pipeline for students from Howard University, a historically Black institution, to enter the entertainment industry.In their own words: "I can't say enough about the camaraderie between the diversity, equity, inclusion, and accessibility professionals in our business. It played a major part in our decision to make the Inclusion Policy and Playbook an open-source document. I am excited to learn how other networks and studios iterate and expand on what we started."Kara Helander, managing director and chief diversity, equity, and inclusion officer at CarlyleCarlyle's Kara Helander.CarlyleKey accomplishments: Helander oversees diversity-and-inclusion efforts at Carlyle, a global investment firm with some $369 billion in assets under management and dozens of portfolio companies.In March, she started the DEI Leadership Network, a group comprised of CEOs at the firm's portfolio companies. The goal of this network is to advance diversity, equity, and inclusion. The group is slated to meet annually and develop resources on topics like unconscious bias and psychological safety. Helander also collaborated with The Milken Institute, a think tank, to launch the DEI in Asset Management Program. The initiative researches diversity in private equity and asset management, creates materials for leaders in the industry, and hosts roundtable discussions on diversity. In their own words: "Smart leaders and smart companies will not take their foot off the gas. They know that inclusive leadership is not a 'nice to have,' it is core to being a successful, modern leader and organization."Telva McGruder, chief diversity, equity, and inclusion officer at General MotorsGM's Telva McGruder.GMKey accomplishment: McGruder was instrumental in General Motors' decision to remove college-degree requirements from dozens of technical positions. In addition, McGruder was a key creator of the automaker's "work appropriately" philosophy, which gives workers remote-work flexibility so long as their duties permit. McGruder credits this policy with helping recruit and retain women, parents, and other caregivers. McGruder also helped expand funding for GM's employee-resource groups and worked with the nonprofit Human Rights Campaign to sign its public statement opposing what the group labeled anti-LGBTQ legislation.In their own words: "I am grateful to have the global platform to make inroads and drive meaningful progress toward being a truly inclusive and equitable organization and am excited to do so as we add amazing electric vehicles, delivery services, and many more product offerings to the market. This requires particular attention to the people on our teams and the communities we impact as we skillfully transition our business with equity and access in mind."Elizabeth Morrison, chief diversity, inclusion, and belonging officer at Levi Strauss & Co.Levi Strauss & Co.'s Elizabeth Morrison.Levi Strauss & Co.Key accomplishments: Under Morrison's leadership, Levi Strauss worked with leaders at Harlem's Fashion Row, a nonprofit that supports and features work by Black and Hispanic designers, to create an education-and-mentorship program for students at Clark Atlanta University, a historically Black institution. As part of the initiative, 38 students studying fashion design had mentorship meetings with Levi Strauss executives.Morrison is working to expand the partnership with the goal of having 15% of all hires come from Clark Atlanta University by 2025.Also under Morrison's leadership, the clothing company published its first diversity report in 2022. In their own words: "Diversity, equity, and inclusion has never been easy, it's historically been underfunded, underresourced, and underprioritized. While the exact conditions may have evolved, challenges are challenges, and as we've done before, we will find ways to continue to strive for equity, inclusion, and equality."Melonie Parker, chief diversity officer at GoogleGoogle's Melonie Parker.GoogleKey accomplishments: Paying particular attention to neurodiversity, Parker created a program for existing Google Cloud employees and new hires on the autism spectrum to help improve their work and onboarding experiences. She also helped develop a program for managers of employees who are on the autism spectrum; 350 managers participated.Parker, who made Insider's list for the second straight year, also led conferences and tailored mentorship programs aimed at fostering a sense of community for specific subsets of employees, including Black directors, Black men, and women at Google. Parker has also increased Google's recruiting efforts at historically Black colleges and universities and at Hispanic-serving institutions. She has been vocal about racially motivated violence in America, speaking with Insider shortly after a May shooting in Buffalo, New York, that left 10 Black people dead.  In their own words: "As a Black woman who has navigated corporate America, there were moments where I found myself shrinking in order to fit in. But I now see diversity as a superpower. My guiding purpose professionally has been to create spaces that better reflect the full diversity of the world we live in, and to lead by serving and lifting others so that diversity, equity, and inclusion are not lofty ideals, but part of the very fabric of our society." Kathy Sayko, chief diversity, equity, and inclusion officer at PGIMPGIM's Kathy Sayko.PGIMKey accomplishments: At PGIM, the asset-management arm of the insurer Prudential Financial, Sayko and her team started an initiative that directed more than $30 million in grants to support various historically Black colleges and universities.PGIM executives and recruiters also mentored dozens of students at Hampton University. Sayko is now working to create a similar partnership with Florida A&M University.In 2018, PGIM set the goal to increase the presence of people from underrepresented backgrounds in senior leadership positions by 5% over five years. The firm is on track to meet that goal in 2023. In their own words: "For me, this role is much harder work than any of my previous banking and markets jobs. But the ROI is greater," she said, referring to return on investment. Ebony Thomas, senior vice president and racial equality and economic opportunity initiatives executive at Bank of America and president of the Bank of America FoundationBank of America's Ebony Thomas.Bank of AmericaKey accomplishments: Thomas oversees Bank of America's $1.25 billion, five-year commitment to advance racial equality and economic opportunity. As part of that, she led the investment of $300 million to more than 100 private-equity funds to provide capital to diverse entrepreneurs and small-business owners.Thomas also helped develop the bank's $25 million initiative to create jobs for students at historically Black colleges and universities, Hispanic-serving institutions, and community colleges across the country.In their own words: "A new generation of talent expects organizations to use their voices and resources to maintain and advance progress — I am optimistic."Erin L. Thomas, head of diversity, inclusion, and belonging at UpworkUpwork's Erin L. Thomas.UpworkKey accomplishments: Thomas spearheaded multiple programs around the hiring, advancement, and retention of talent from underrepresented backgrounds. One of the initiatives she started is called RiseUP, a sponsorship program for directors of color. The program aims to increase these staffers' visibility within the company, the opportunities they get, and the likelihood that they'll receive a promotion.In addition, Thomas worked with the consultancy McKinsey & Company to implement the McKinsey Management Accelerator at Upwork. The monthslong program gives early-to-mid-career leaders of color management skills with the goal of helping them get promoted.  In their own words: "The economy, the spikes in hate, and the revocation of basic human rights are connected. We are operating from a place of scarcity and fear and I think we'll be here for a few years. With that, most companies will focus on short-term profitability, which DEI simply does not yield. I'm not sweepingly optimistic about DEI through 2025, but I'm confident in orgs like Upwork that strategize with a long-range view and I trust that DEI will rebound."Miriam Warren, chief diversity officer at YelpYelp's Miriam Warren.YelpKey accomplishments: Warren has been one of the most outspoken business leaders on the topic of reproductive rights in America. In April, before the draft memo of the Supreme Court's decision overturning Roe v. Wade leaked, Warren rolled out Yelp's benefit covering travel costs for employees seeking abortions. After the Supreme Court decision came down, dozens of industry leaders contacted Warren asking her for advice on how to provide travel benefits for employees seeking abortions, according to a Yelp spokesperson. In March, Warren denounced what she described as anti-trans and anti-LGBTQ bills in Florida and Texas. For a month, the company matched and then doubled donations from its employees to LGBTQ nonprofits.Warren also helped drive engagement in employee-resource groups over the last year. Yelp now has 22 such groups, comprising nearly half of its 4,400 workers. Among the groups are those for people who are neurodiverse, people of color, parents, and members of the LGBTQ community.In their own words: "The nature of diversity, inclusion, and belonging work remains as crucial as ever in the face of an increasingly and unpredictable partisan regulatory environment. It's also become increasingly clear that workers care deeply about the mission and values of their employers and will go to great lengths to seek alignment with a workplace that shares those values. This poses an unprecedented opportunity for organizations —especially fully-remote companies that can hire anywhere — to attract high-quality talent by being clear and outspoken about the causes they stand for."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 29th, 2022

Facing Demographic Doom, China"s Army Of Retirees Returns To Work In Post "Zero-Covid" Economic Wasteland

Facing Demographic Doom, China's Army Of Retirees Returns To Work In Post "Zero-Covid" Economic Wasteland The myth of the US labor shortage is about to come crashing down courtesy of the Philadelphia Fed (just as we have been warning for months), but it is about to be replaced with the stark reality of China's all too real lack of workers. Consider the following story from the SCMP: two years after Zhao Yanfang’s mandatory retirement from her blue-collar job in the canteen of a state-owned enterprise, the 52-year-old is back to work – this time at a noodle restaurant in Beijing. On a recent slow day, she taps buttons on a mobile device, inputting orders for patrons who present various coupons acquired through different channels – including the company’s own app, and food-delivery platforms – while reading off the day’s specials for dine-in customers. “It’s all for the sake of my son,” she says, explaining how the father of her twin grandchildren lost his job during the pandemic. “Were it not for supporting his family, I would never have bothered working after retirement, trying to learn this complicated ordering system. “I thought my three decades of work experience would be enough for waitressing. I didn’t expect it would be so challenging.” Zhao is among the millions of China’s retirees who have re-entered the job market or are looking to do so as the financial burden on Chinese families mounts from the government’s disruptive zero-Covid strategy that has crippled business and hammered the economy. Beijing has also been encouraging retirees to return to work as the rapidly aging country faces a long-term decline in its workforce. China’s working-age population, aged 16-64, is forecast to drop by 35 million over the next five years and to plunge by more than 60% over the next eight decades, according to a report released by the United Nations in July. At the end of 2020, there were 264 million people over the age of 60 in mainland China, and that total is projected to surge to 400 million and account for more than 30% of China’s population by 2035, according to the National Health Commission. With fewer workers contributing to the public pension system, and with a growing number of seniors to be supported, China’s urban state pension fund - similar to the US social security fund - could be out of money by 2035, according to a 2019 projection by the Chinese Academy of Sciences (also similar to the social security). One problem that looks to finally be addressed is China’s decades-long adherence to mandatory retirement ages: 60 for men, 55 for female office workers and 50 for female blue-collar workers. The ages date back to a time when life expectancy at birth in China was nearly half of what it is today, and demographic and labor experts have long argued that they need to be raised, especially for women. In February, China’s State Council confirmed that it would gradually start pushing back its long-mandated retirement ages in the coming years, in line with Beijing’s plans to better accommodate the needs of the elderly and adjust to new realities stemming from the nation’s rapidly ageing population. President Xi Jinping reiterated that sentiment in his report delivered during the 20th party congress in October, when he said China would “gradually push back the legal retirement age”. Though few details of the plan have been released, the State Council said changes would “gradually” be made during the country’s current 14th five-year plan (2021-25). Meanwhile, China's state media campaign has been promoting the value of working longer to achieve one’s career ambitions. And the government launched a special website in August to match elderly jobseekers with potential employers, with McDonald’s being among the first to recruit retirement-aged waitstaff in Beijing, with a posted salary of up to 3,500 yuan (US$488) per month for a full-time job with 40 hours a week. “Longer life expectancies, as well as fewer workers per older person, are increasing the financial burden of pension payments,” said Joseph Chamie, an international demographer and former director of the UN’s Population Division. “To offset those rising costs, as well as the declining labor forces, governments worldwide are considering raising their official age of retirement.” It's not just China that is stealthily seeking to devalue retirement age: last year, Japan approved bills requiring companies to retain their workers until they are 70 years old, effectively raising the retirement age from 65 to 70. Germany plans to increase its state pension age from 65 to 67, but not until 2031. And in France, the official age of retirement is 62 – low among the 38 member countries in the Organisation for Economic Co-operation and Development. This year, the government attempted to incentivise people to continue working until 65, but the proposal naturally set off strikes. “China’s retirement ages for men and women are relatively low compared with many other countries,” Chamie said. “Delaying retirement encourages workers to remain in the labor force. I expect that more of China’s older population will be working in the next one or two decades. Due to age-related differences in education and skills across the Chinese population, I suspect that the majority of China’s elderly in the labor force will be working in low-level manufacturing and services sectors." What a prospect: a generation of geriatric McDonalds line cooks and waiters. Remarkably, more than two-thirds of Chinese at retirement age are keen to re-enter the workforce, according to a report last month by Chinese recruitment platform 51jobs.com. It did not provide the survey size perhaps because it is as "real" as any "data" out of China. A total of 68% of older people said they had a strong desire to be employed after reaching retirement age, whether out of financial necessity or a desire to stay busy. The service and labor-intensive manufacturing sectors were the most popular areas for them to seek employment, especially among those lacking qualifications, the survey showed. Meanwhile, China’s reputation as the “factory of the world” was built largely on the backs of young migrant workers who left their rural hometowns for opportunities in bustling export hubs. However, over the last decade, the average age of migrant workers in China has increased steadily, as fewer young people enter the workforce and older workers with no pension protection are forced to continue working. China had 292 million migrant workers as of last year, according to the National Bureau of Statistics. The average age was 41.7 years, compared with 34 years in 2008. More than a quarter of all migrant workers are now over the age of 50. And more than half are over 40, compared with just over a third in 2010. Kent Huang, a second-generation businessman in Guangdong province who produces hardware and furniture for export, said there are many workers aged over 40 in factories in southern China’s Pearl River Delta. “There are about 200 workers in my factory, and 80 per cent of them are in their mid-forties or early fifties, and it’s rare to see young manufacturing workers in their twenties,” Huang said. The older workers get paid about the same as their younger peers. All are hired for piecework, not on a monthly wage, he said. When the pandemic and China’s stringent curbs have crippled global demand, they have borne the brunt. “Due to the epidemic and globally sluggish demand, workers’ income is actually much lower than last year. Many factories nearby have had to lay off workers,” Huang said. “Order volume has plummeted to less than 40 per cent of last year. Those female workers in their late 40s will be among the first required to take compulsory leave with minimum wage, which is far from enough to cover their living cost in urban areas, let alone support their families in their hometowns." Lu Zhou, an operations director at an original equipment manufacturer in Taicang in the eastern province of Jiangsu, said that for traditional manufacturing, such as shoes and garments, there can be an advantage in hiring older workers who are more likely to “cherish the job, unlike young people who jump ship very easily”. “But, of course, in those industries that are accelerating technological upgrades, older workers struggle to find a place. They generally flow into the service industry that does not require new skills, or into the low-end traditional manufacturing industry,” he said. Helen Wu, a founding partner of the Sunshine Immensity headhunting service in Beijing, said that it is rare to see people older than 50 selected for high-end positions: “In my 14-year career as a headhunter, chances of high-end positions have been few and far between for the elderly, unless they are well-connected or former senior executives,” Wu said. “While China is emphasizing ‘high-quality’ development and has reduced the importance attached to GDP growth, the job prospects for most elderly will not be very rosy in the next decade, given that competition in China’s job market is already so intense,” she said. Huang Wenzheng, a demographer who has written extensively on China’s birth rate and labour issues, said it was a harsh reality that many retirees must continue working to support their families. “However, the elderly shouldn’t be pushed to work just to increase the labour force. People live to enjoy their life, not to work for the sake of work,” Huang said and stressed the importance of boosting China’s falling fertility rate, which fell to just 1.15 last year from 2.6 in the late 1980s and remains well below the replacement level of 2.1 needed for a stable population. By comparison, the fertility rate in the United States is 1.6 births per woman, while in ageing Japan it is 1.3. “The government should increase welfare for workers and couples with children,” Huang said of Beijing. “The ageing problem can only be eased by improving couples’ willingness to give birth.” Of course, such willingness will only come if future parents are optimistic about the economic prospects both for them and their children. And that, unlike everything else in China, can not be faked which is why China is about to slip into the demographic spiral of doom. Tyler Durden Wed, 12/21/2022 - 20:40.....»»

Category: personnelSource: nytDec 21st, 2022

Futures Grind Higher With All Eyes On Red-Hot CPI

Futures Grind Higher With All Eyes On Red-Hot CPI After yesterday's last hour stock market puke prompted by a fake CPI "leak" that showed inflation rising more than double digits in June which sent spoos just over 3,800, US index futures advanced ahead of a report that will show inflation hitting a fresh four-decade high according to Bloomberg consensus which expects headline inflation to print 8.8%, ensuring another 75bps rate hike. Contracts on the S&P 500 rose 0.3% by 7:15 a.m. ET after the underlying gauge declined over the past three days. Nasdaq 100 futures were up 0.4% after the tech-heavy index shed 3% this week, reversing most of last week's gains. The dollar dropped from a 2 year high, bitcoin rose but held below $20,000 and WTI crude oil stabilized at about $96 a barrel after a tumble. Among notable pre-market movers, Twitter rose 1% after suing Elon Musk over his abandoned $44 billion takeover bid, accusing the billionaire of having buyer’s remorse after his fortune declined. Meanwhile, Atara Biotherapeutics tumbled 36% after the biotech firm gave an update on its multiple sclerosis therapy with Cowen strategists saying that the interim analysis of the ATA188 Phase 2 study was “inconclusive.” Here are other notable premarket movers: Stitch Fix (SFIX US) jumps 9.3% in premarket trading after J William Gurley, a board member and general partner at venture capital firm Benchmark, bought $5.43 million of shares in the company. Gurley’s purchase comes as the online personal-styling platform’s stock has fallen 73% this year. Atara Biotherapeutics (ATRA US) shares drop 41% in US premarket trading, after the biotech company gave an update on its multiple sclerosis therapy, with Cowen saying that the interim analysis of the Phase 2 study was “inconclusive” and Roth flagging potential “additional risks.” Humanigen (HGEN US) shares plummet as much as 76% in US premarket trading, after the biotech firm said that its Covid-19 drug trial didn’t achieve statistical significance on the primary endpoint, with Cantor Fitzgerald cutting its rating on Humanigen to neutral from overweight. Keep an eye on Apple (AAPL US) shares as Citi lowers its estimates for the company given cooling consumer spending trends amid macro woes and continued supply chain bottlenecks. Hannon Armstrong (HASI US) stocks could be active as analysts defended the climate-change investment firm after its shares slumped 19% on Tuesday. The losses followed a report from short seller Carson Block’s Muddy Waters Capital that criticized its accounting practices. Watch Alphabet (GOOGL US) stocks as Cowen trims 2022 Google Search and YouTube ad estimates, following checks that suggested that Search is seeing healthy demand but the business is decelerating, largely in line with expectations. US inflation is projected to have continued to heat up in June, hitting a fresh pandemic peak. The consumer price index probably increased 8.8% from a year earlier, marking the largest jump since 1981, as discussed some banks expected a slightly softer print although others sees headline CPI rising as much as 9.0%. The consumer-price reading will be a major decisive factor for the Fed in its upcoming meeting as it decides how much further it should tighten policy to tame soaring inflation. Its hawkish policy already stoked fears the economy is heading for a recession this year. “This is widely expected to be a really strong print,” Lauren Goodwin, economist and portfolio strategist at New York Life Investments, said on Bloomberg Television. “Even if it is not, I don’t think that changes the Fed’s perspective in a couple of weeks. We won’t have enough evidence that inflation is convincingly turning over.” Meanwhile, the International Monetary Fund cut its growth projections for the US economy and warned that a broad-based surge in inflation poses “systemic risks” to both the country and the global economy. Traders are also on tenterhooks for the latest corporate earnings getting underway this week and monitoring for a brewing energy crisis in Europe if Russia cuts off gas supplies in the fallout from its invasion of Ukraine. After today's CPI, investor focus will turn to the start of the earnings season, which kicks off tomorrow with major Wall Street banks. Meanwhile in Europe, the region’s benchmark Stoxx 600 Index fell 0.5% while the Euro Stoxx 50 slumped as much as 1.2% before roughly halving losses, amid deteriorating economic outlook. Shares of insurance companies and automakers led the drop.. FTSE 100 and FTSE MIB lag on the recovery. Autos, insurance and travel are the worst-performing sectors. Here are the biggest movers: Saipem shares tumble as much as 45%, extending Tuesday’s 49% slump, after only 70% of its EU2 billion rights offering was taken up by investors, signaling low confidence in the engineering company’s turnaround plan. Svenska Cellulosa falls as much as 4.1% and DS Smith declines 2.7% as Exane BNP downgrades its ratings on both, saying it anticipates a robust 2Q for packaging, but a correction in pulp prices. Bayer drops as much as 3% after a US appeals court reinstated a lawsuit by a Roundup herbicide user who claims the company failed to warn him of cancer risks. Galp Energia falls as much as 2.8% following its second-quarter production update, with analysts saying volumes were softer than anticipated. Vontobel declines as much as 6%, and EFG falls as much as 5.2% after Citi cut both to sell and kept a buy rating on Julius Baer, saying that it still sees good value in Swiss banks and prefers larger players to independents. Evonik falls as much as 3.9% after Barclays cut its rating to equal-weight, saying that it sees opportunities in Brenntag and Lanxess among European chemicals stocks. Orion gains as much as 7.9% after the pharmaceutical company raised its FY outlook after announcing it plans to work with MSD on developing and commercializing ODM-208, a drug for prostate cancer. Outokumpu gains as much as 6.5% after the stainless steel producer sold the majority of its Long Products business, a transaction which Jefferies and Morgan Stanley describe as positive. Hugo Boss rises as much as 3.1% as Jefferies says the company appears to be outperforming its luxury peers, and that expectations of continued growth, “comfortable” guidance and a successful rebrand are starting to move the market. Verallia gains as much as 3.3% after being initiated with a buy rating at Jefferies, which says the glass-packaging maker’s discount to peers is “unjustified.” Earlier in the session, Asian stocks advanced, led by the region’s technology shares. The MSCI Asia Pacific Index gained as much as 0.6%, halting a two-day slide that dragged the benchmark to the lowest level in two years on Tuesday. Tech names such as TSMC, JD.com and Meituan contributed the most to the rally. Information technology was the region’s best-performing sector as the Hang Seng Tech Index bounced back after its recent drops sent the measure into a technical correction.  Taiwan’s benchmark jumped nearly 3% as the government vowed to support the stock market for the first time since the early days of the pandemic. Equities posted moderate gains in South Korea and New Zealand after their central banks hiked interest rates by 50 basis points as expected. Thailand’s stock market was closed for a holiday.  “Central bankers, policy makers all over the world are gonna have to pick their spots on how much inflation they’re prepared to tolerate versus how much a growth downdraft they wanna create,” Ben Powell, chief APAC investment strategist at BlackRock Investment Institute, said in a Bloomberg TV interview. In addition to today's data on consumer prices to assess what the Federal Reserve will do next, traders are also monitoring corporate earnings results in Asia for signs of any impact from China’s lockdowns during the second quarter. Japanese stocks advanced as investors await US data that may show inflation hit a fresh four-decade high. The Topix index rose 0.3% to 1,888.85 at the 3pm close in Tokyo, while the Nikkei 225 advanced 0.5% to 26,478.77. Recruit Holdings Co. contributed the most to the Topix’s gain, increasing 2.9%. Out of 2,170 shares in the index, 1,400 rose and 633 fell, while 137 were unchanged. “Japanese stocks will have a hard time finding a sense of direction before the US CPI announcement,” said Mitsushige Akino a senior executive officer at Ichiyoshi Asset Management.  In FX, the Bloomberg Dollar Spot Index held near its highest level in more than two years and the greenback traded mixed against its Group-of-10 peers as traders awaited US inflation data later on Wednesday for clues on the Federal Reserve’s rate trajectory. JPY and SEK are the weakest performers in G-10 FX, CHF and AUD outperform. EUR/USD stalls again, declining 6 pips shy of parity before recovering slightly.  Money markets raised bets on the pace of BOE rate hikes after the UK economy grew faster than the median estimate in May to ease fears of a recession. UK GDP rose by a surprisingly robust 0.5% amid a surge in visits to doctors and holiday bookings, after an 0.2% decline in April, a figure that was revised higher. New Zealand’s dollar initially fell and then erased losses after the central bank raised interest rates by 50 basis points as economists forecast. The yen underperformed all its Group-of-10 peers amid expectations US CPI will be strong enough to keep wagers high for a continued aggressive rate-hike cycle by the Federal Reserve. Super-long sectors led drop in government bond yields after purchases by the Bank of Japan. In rates, the 10-year Treasury yield was little changed at 2.97% after falling two basis points on Tuesday. Cash TSYs are comparatively quiet ahead of today’s CPI release. German and UK curves bear-flatten, underperforming Treasuries. Peripheral spreads widen to Germany with 10y BTP/Bund back near 200bps.  Gilts and Bunds fell, underperforming Treasuries. Money markets raised bets on the pace of BOE rate hikes after the UK economy grew faster than the median estimate in May to ease fears of a recession. In commodities, crude futures advance. WTI drifts 1.1% higher to trade near $96.90. Most base metals trade in the green; LME lead rises 1.1%, outperforming peers. LME zinc lags, dropping 0.2%. Spot gold is little changed at $1,726/oz To the day ahead now, and data releases include the US CPI release for June, as well as UK monthly GDP for May and Euro Area industrial production for May. Otherwise from central banks, the Bank of Canada will be making their latest policy decision, and the Federal Reserve will release their Beige Book. Market Snapshot S&P 500 futures up 0.2% to 3,830.50 STOXX Europe 600 down 0.8% to 413.52 MXAP up 0.3% to 155.40 MXAPJ up 0.5% to 511.37 Nikkei up 0.5% to 26,478.77 Topix up 0.3% to 1,888.85 Hang Seng Index down 0.2% to 20,797.95 Shanghai Composite little changed at 3,284.29 Sensex down 0.5% to 53,636.37 Australia S&P/ASX 200 up 0.2% to 6,621.56 Kospi up 0.5% to 2,328.61 German 10Y yield little changed at 1.16% Euro little changed at $1.0038 Brent Futures up 1.1% to $100.63/bbl Gold spot up 0.0% to $1,726.85 U.S. Dollar Index little changed at 108.15 Top Overnight News from Bloomberg The planned reopening of a key Russian gas pipeline next week may be a bigger deal for the euro than the first interest-rate hike in a decade by the ECB. Both are set for July 21. While the ECB’s plans to start lifting rates have been well flagged and hence priced in by markets, there’s more doubt over whether Russia will actually restore gas flows to Europe after maintenance on the Nord Stream 1 pipeline is completed China will take advantage of the market-based adjustment mechanism of deposit rates and guide financial institutions to transmit the effect of falling deposit rates to their borrowers as part of efforts to lower real lending rates, Zou Lan, head of PBOC’s monetary policy department, says at a briefing The ECB is watching the euro-dollar exchange rate as recent lows can further stoke already record inflation, according to Governing Council member Francois Villeroy De Galhau A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly positive as the region shrugged off the weak lead from Wall St but with upside capped amid central bank rate hikes and ahead of upcoming key risk events including Chinese trade and US CPI data. ASX 200 traded indecisively as strength in tech was offset by losses in energy after the recent slump in oil prices. Nikkei 225 was underpinned by a weaker currency but with gains limited after a ramp-up in Tokyo COVID cases. Hang Seng and Shanghai Comp. gained but with the mainland choppy ahead of Chinese trade data, while Hong Kong tech stocks were bolstered after China approved 67 domestic games in July. Top Asian News China's Customs said foreign trade is expected to achieve stable growth and that trade growth in May and June reversed the declining trend, but noted that foreign trade faces instabilities and uncertain factors, according to Reuters. "Lanzhou in NW China's Gansu Province has sealed off its 4 districts for 7 days to curb the latest COVID19 flare-up which started from last Friday and has led to 143 infections as of 10 am on Wed", according to Global Times. European bourses are pressured and towards the mid-point of the morning's parameters as we await US inflation data, Euro Stoxx 50 -0.6%.  Sectors, are predominently in the red with defensively-inclined names lagging though Energy outperforms and is green amid benchmark action. Stateside, futures are modestly firmer but have been choppy with pre-CPI positioning underway; ES +0.2%. Alphabet (GOOGL) said, on July 12th, that due to the hiring progress already attained, will slow the hiring process for remainder of year, via Reuters; like all Cos, not immune to economic headwinds. Kroger (KR) is launching an annual membership, provides unlimited free deliveries on orders over USD 35 and fuel discounts of up-to USD 1/gallon alongside other savings. Top European News UK lawmakers are to push ahead with legislation to tear up the post-Brexit trade deal today, according to FT. Network Rail offered workers at two unions pay hikes in a bid to avert further crippling strikes, according to FT. Italy's Salvini says the League Party is not willing to remain in the government if the 5-Star Party quits, adding that if 5-Star does not back a Thursday confidence vote, Italy should call snap elections. Subsequently, Democratic Party is unwilling to form new governments without the 5-Star Party, according to a party source cited by Reuters. Geopolitical China's military said it monitored and drove away a US destroyer which entered the South China Sea Paracel Islands, while it added that the actions of the US military seriously violated China's sovereignty and security. Furthermore, the US military stated that USS Benfold asserted navigational rights and freedoms near the Paracel Islands consistent with international law, according to Reuters. US Navy says the Ronald Reagan Carrier Strike Group is operating in the South China Sea. Venezuela detained at least three Americans earlier this year accused of attempting to enter the country illegally, according to sources cited by Reuters. Iran Foreign Ministry spokesperson says results of the negotiations with Saudi Arabia have been promising, sides have an interest to continue talks. Subsequently, Iran President Raisi says it will not retreat from its 'rightful' stance in talks to revive the 2015 JCPOA, state TV reported. Central Banks RBNZ hiked the OCR by 50bps to 2.50%, as expected, and said it remains appropriate to continue to tighten policy, while it will tighten conditions at a pace to maintain price stability and support maximum sustainable employment. RBNZ added the Committee is resolute in its commitment to ensuring price inflation returns to the 1%-3% target range and it agreed to lift the OCR to a level where it is confident consumer price inflation will settle within the target range but added that once aggregate supply and demand are more balanced, the OCR can return to a lower and more neutral level. Furthermore, the Committee agreed to maintain the approach of briskly lifting the OCR and remained comfortable with the projected path of the OCR it outlined in May, as well as noted that there are near-term upside risks to consumer prices and also medium-term downside risks to economic activity. BoK raised its Base Rate by 50bps to 2.25%, as expected, with the decision made unanimously. BoK stated that South Korea's 2022 growth will moderate further from an earlier projection and inflation will remain high for some time, as well as noted that inflation will surpass the May forecast for the entire of 2022 and that core inflation is to be higher than 4% for a considerable period. Furthermore, BoK Governor Rhee said more policy tightening of 25bps looks appropriate going forward should current inflation continue for the time being and that it is reasonable to expect rates at 2.75%-3.00% by year-end. ECB's Villeroy says it is not the EUR that is weak but the USD that is strong. FX Greenback grinds higher ahead of US inflation data, but remains restrained, DXY back above 108.000 within 108.020-390 range. Aussie regroups alongside base metals and awaits labour report for further impetus; AUD/USD approaching 0.6800 vs sub-0.6750 low. Franc forges safe-haven gains vs Dollar and Euro, USD/CHF below 0.9800 and EUR/CHF under 0.9850. Kiwi somewhat deflated after RBNZ maintained half-point tightening pace, guidance and OCR path, NZD/USD capped into 0.6150. Sterling underpinned by above-forecast UK data and remarks from BoE Governor Bailey leaning towards bigger than 25bp hike, Cable straddling 1.1900 and EUR/GBP pivoting 100 and 200 DMAs. Loonie looking for a BoC boost via 75bp rate increase and hawkish guidance, USD/CAD towards the low end of 1.3050-00 band with 1.57bln option expiries rolling off at the round number. Yen undermined by firmer US Treasury yields pre-CPI and post-weak 10-year note the auction, USD/JPY rebounds through 137.00 again. Yuan pares some losses after China’s trade surplus tops consensus and PBoC pledges to up support for real economy; USD/CNH and USD/CNY testing bids and support on either side of 6.7200. Fixed Income Debt fades from early EU highs irrespective of risk-off sentiment as clock ticks down to key US CPI data. Bunds pull up just ahead of 153.00, Gilts into 116.00 and T-note shy of 119-00. Italian and German supply relatively well received, but impending long bond refunding comes hot on the heels of tepid demand for 10 year issuance. Commodities Crude benchmarks are bid after a concerted pick-up in the European morning that occurred without any obvious fresh fundamental driver. US Private Inventory Data (bbls): Crude +4.7mln (exp. -0.2mln), Gasoline +2.9mln (exp. -0.4mln), Distillates +3.2mln (exp. +1.6mln), Cushing +0.3mln. Libya's Government of National Unity decided to replace the NOC chairman and board, according to a government source. NOC later announced the lifting of the force majeure on exports from the Brega and Zueitina oil terminals, while it added that negotiations were conducted to allow exports from Es Sider port and resume output at the Al Waha and Mellita fields, according to Reuters. Eni (ENI IM) Chair says Italy will be able to replace 50% of Russian gas flows with other sources this winter, and 80% next winter, via Reuters citing a paper. Hungary Foreign Minister says it could purchase up to 700 MCM of gas on the market ahead of the heating season, in addition to long-term supply deal with Russia. IEA OMR: 2023 demand 101.3mln BPD, +2.1mln BPD; led by strong growth in non-OECD countries. 2022 demand cut by 200k BPD, seeing a rise of 1.7mln to 99.2mln BPD Spot gold is modestly firmer managing to capitalise on the session’s bout of USD easing, LME Copper has benefited from the generally constructive APAC tone though participants will remain cognisant of and cautious around the China-COVID situation. US Event Calendar 07:00: July MBA Mortgage Applications -1.7%, prior -5.4% 08:30: June CPI YoY, est. 8.8%, prior 8.6%; MoM, est. 1.1%, prior 1.0% 08:30: June CPI Ex Food and Energy YoY, est. 5.7%, prior 6.0%; MoM, est. 0.5%, prior 0.6% 08:30: June Real Avg Hourly Earning YoY, prior -3.0%, revised -2.9% 08:30: June Real Avg Weekly Earnings YoY, prior -3.9%, revised -4.0% 14:00: U.S. Federal Reserve Releases Beige Book 14:00: June Monthly Budget Statement, est. -$75b, prior -$174.2b DB's Jim Reid concludes the overnight wrap I’m supposed to be off for the next three days with the family but given how busy things are I’m delaying two of the days until August. However I can’t escape a Theme Park outing tomorrow so I’m still doing that. I hate Theme Parks and rollercoasters with a passion. Readers might remember the last time I went I had an argument with someone who pushed in with his whole family in the queue ahead of me. I was most disgruntled at the end of a long day and vowed never to return. However my kids love them. If it were up to me my preferences would dominate and we wouldn’t go but unfortunately my selfless wife puts our kids first. Probably a good thing!! I’ll be here now for the all important US CPI today but I’ll miss the ceremonial start of earnings season tomorrow with this week seeing a small selection of major US financials and consumer packaged goods companies reporting. My colleague Binky has just released his full preview, available here. He expects earnings to beat in the low single digits percentage region, below the long-run historical average of 5%. Earnings are likely to be 3.1% qoq along with downward revisions to forward estimates. Heading into earnings season, estimates have been revised lower for every sector but energy, which has experienced upgrades. Using a bottom-up approach, yoy EPS growth will come in at 5.7%. Heading into CPI and earnings, after markets had climbed a wall of worry since mid-June, they seem to be losing a bit of footing again over the last few days as fears of a recession dominate again, alongside fears of aggressive rate hikes by central banks, rising Covid cases in China and the prospect of Russia cutting off Europe’s gas. This gloomy backdrop saw the S&P 500 (-0.92%) lose ground for a 3rd day running, whilst those fears of weakening demand sent Brent crude oil prices back beneath $100/bbl and also led to day two of a new fresh sizeable rally in sovereign bonds. Oil is little changed in Asia trade with Brent and WTI futures almost flat at $99.76/bbl and $95.99/bbl respectively as we go to press. However, today’s main focus will almost certainly be on the US CPI release for June, which will set the stage for the Fed’s next decision in just two weeks’ time. Remember that it was last month’s much stronger-than-expected report that sparked a tumultuous market reaction that culminated in the Fed moving by 75bps at a single meeting for the first time since 1994, having previously only signalled a 50bps move. So any further surprises today could have a big impact. In terms of what to expect, our US economists are looking for an above-consensus monthly reading for both headline CPI (+1.3%) and core CPI (+0.6%), which in turn would take the year-on-year headline CPI up to its highest level since 1981, at +9.0%. Although we’re expecting another strong inflation print today, ahead of that release there were actually growing signs of respite on the inflation front thanks to further losses amongst a number of key commodities. Brent Crude (-7.11%) and WTI (-7.93%) oil prices saw substantial losses, copper prices (-4.10%) hit a 19-month low and gold (-0.46%) hit a 9-month low. Indeed, the only major exception to that pattern was the usual suspect of European natural gas (+4.92%) which just about reversed the previous day’s decline following cuts to Norwegian capacity. Our research colleagues in Frankfurt published a detailed note yesterday on the gas supply issue (link here), where they run through 3 scenarios of how things might evolve, including what happens if Russia completely turns off the gas taps to Germany after the maintenance period that would involve gas being rationed during the winter months. Although many will welcome the decline in those commodities mentioned above, the bad news is that the reason they’re declining is because of recession fears, and yesterday saw a number of additional recessionary indicators flash with growing alarm. One in particular is the 2s10s curve, which has inverted before every one of the last 10 US recessions, and remains near its most inverted of this cycle so far at -8.5bps after dipping below -12bps intraday. We would stress that while we are the yield curve’s biggest fan, it usually takes a minimum of three quarters from inversion to recession so we still think it may take a bit of time from the first inversion in March to confirm the almost inevitable recession. For the 1s10s and the 2s5s curve, it was much the same story of being the most inverted so far this cycle, and the 3m10s curve reached its flattest since November 2020. And whilst the Fed have told us to focus on their preferred near-term forward spread (18m3m minus 3m), even that closed beneath 100bps for the first time so far this year at 94bps (from a peak of 270bps in early April), so these measures are all trending in the wrong direction from a recessionary standpoint. In terms of the absolute yield moves, the risk-off tone saw them move lower on both sides of the Atlantic. 10yr Treasury yields fell -2.4bps to 2.97% albeit having being as much as -9.6bps lower intraday. There was a discrete bounce in longer-dated Treasury yields following the 2bp tail in the 10yr auction. Yields are fairly stable in Asian trading. Meanwhile in Europe, those on 10yr bunds (-11.3bps), OATs (-12.8bps) and BTPs (-9.8bps) all fell back too, as concerns about the economic situation led investors to price in a less aggressive pace of monetary tightening over the coming months, particularly from the ECB. That also meant that the Euro itself moved ever closer to parity against the US Dollar yesterday, and you had to look to 5 decimal places to see that it just avoided that milestone, with an intraday low of $1.00003 during the European morning, ending the day just a hair lower versus the dollar, down -0.03% at $1.0037. European equities staged a modest comeback from Monday’s selloff, while US equities ended lower after flirting with gains all day. The STOXX 600 gained +0.49%, with the DAX performing a touch better at +0.57%, bringing the STOXX 600 to just under flat for the week, while the DAX is still -0.84% lower on the week. The S&P 500 fell -0.92%, after trading near unchanged most of the day. Theories abounded for the late turnaround. Underlying market technicals pointed to potential algorithmic selling programs, whilst rumours spread in some circles that the CPI report was leaked and revealed a +10% print. Officials disabused us of the latter, but it nevertheless speaks to the heightened anxiety markets are trading with around inflationary data. In terms of the breakdown, energy shares (-2.03%) were the clear underperformer, but a wide-breadth of shares took a dip lower in the afternoon, sending the NASDAQ (-0.95%), FANG+ (-1.01%), and Russell 2000 (-0.22%) all lower on the day. So no clear macro driver for equities yesterday, but again, today’s CPI will be instructive about the near-term path. Overnight in Asia equity markets are trading higher after recent losses. As I type, the Hang Seng (+0.81%) is leading gains across the region with the Kospi (+0.71%), Shanghai Composite (+0.36%), CSI (+0.26%), and the Nikkei (+0.33%) all trading up. Looking ahead, equity futures in the US point to a steady start with contracts on the S&P 500 (+0.14%) and NASDAQ 100 (+0.21%) moving higher. Moving on to monetary policy action, the Bank of Korea (BOK) increased rates by 50bps, bringing the benchmark rate to 2.25% in order to help pullback inflation from a 24-yr high of 6%. The unprecedented rate hike size comes even as the central bank forecasts the country’s growth rate to lag “below the May forecast of 2.7%. Elsewhere, the Reserve Bank of New Zealand (RBNZ) in an expected move also increased its official cash rate (OCR) by 50bps for a third straight meeting to 2.5%. Staying in Asia, another risk that’s been in a few headlines again is Covid. Partly this is because of the ongoing situation in China, where a steady stream of cases have been reported over recent days. But in addition to that, the US is considering whether to expand the recommendation of the second booster to all adults in light of the BA.5 omicron variant’s spread, and White House coronavirus coordinator Ashish Jha said that these discussions “have been going on for a while”. Of particular concern to officials, the BA.5 seems to evade immunity provided from prior infections. Here in the UK, it’ll be another eventful day on the political scene as the first ballot of MPs takes place in the Conservative leadership election, which will also decide the next Prime Minister. 8 candidates will be on today’s ballot, and former Chancellor of the Exchequer Rishi Sunak is currently leading when it comes to MP’s endorsements, with yesterday seeing him gain that of Deputy PM Dominic Raab, among others. Candidates will need the support of at least 30 MPs today to progress onto the next ballot that takes place tomorrow. There wasn’t much data yesterday, but the releases we did get only added to negative sentiment. First the German ZEW survey saw the expectations reading fall to its lowest level since the sovereign debt crisis at -53.8 (vs. -40.5 expected), whilst the current situation reading fell to -45.8 (vs. -34.5 expected). Separately, the NFIB’s small business optimism index from the US fell to 89.5 (vs. 92.5 expected). To the day ahead now, and data releases include the US CPI release for June, as well as UK monthly GDP for May and Euro Area industrial production for May. Otherwise from central banks, the Bank of Canada will be making their latest policy decision, and the Federal Reserve will release their Beige Book. Tyler Durden Wed, 07/13/2022 - 07:57.....»»

Category: worldSource: nytJul 13th, 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

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

The Big Business of Being a Peloton Instructor

Peloton instructors are building empires—and making money During halftime at a Brooklyn Nets game in December, a cluster of 20- and 30-something women made a beeline for the court. John Legend and Chrissy Teigen were there, sitting in prime seats, but the couple wasn’t their target. These women were hoping to take a picture with Ally Love, the team’s in-arena host. Love, one of Peloton’s most popular instructors, flashed a smile at the group and made a gesture suggesting they could huddle in the stands as she introduced a breakdancing team. They did so dutifully. Even after the game resumed, they kept hovering around her. Love, a former dancer, was already working with both the Nets and Adidas when she joined Peloton as a cycling instructor in 2016, but since then, her opportunities have grown significantly. She has partnered with Nissan, NARS, and massage-device maker Therabody. She’s also built her own brand, and fans can purchase $25 socks or $78 sweatpants with the Love Squad logo on her website. She recently spent time in London hosting an upcoming Netflix dance competition. “I’ve opted into the slash generation,” she says, referring to the phenomenon of millennials with multiple income streams. “I can get a little impatient if I’m doing the exact same thing every day.” [time-brightcove not-tgx=”true”] Much ink has been spilled about the parasocial relationships Peloton devotees form with their instructors. Each one cultivates a certain style, whether it’s motivational mama or drill sergeant, and members gravitate to the ones whose personalities appeal to them, the ones they think could be their friends. “They’re talking to us every day, right?” says Jared Watson, a marketing professor at NYU’s Stern School of Business. “They might not hear us talk back. But it feels like we’re engaging in a relationship with them.” According to interviews with five of Peloton’s top instructors, that relationship is lucrative. Victor Llorente for TIMERobin Arzón, Peloton’s VP of Fitness Programming These instructors may film eight Peloton classes a week and spend hours planning workouts, creating playlists, and writing scripts for future sessions. But these days, that’s just the baseline. Having built considerable followings on social media, they’ve also become influencers, able to drive fans who admire their lifestyle to buy the items they’re hawking. They’re so sought-after, in fact, that some now have their own agents and earn a sizable portion of their income through endorsement deals and partnerships, appearing in traditional advertising and posting sponsored content. And they hold sway over a particularly affluent audience. Peloton charges nearly $2,000 for its newest bike—and that’s before the cost of cycling shoes, weights, and a monthly subscription for classes. The Peloton bike (or lightly fictionalized versions of it) has featured prominently on shows like Emily in Paris and Curb Your Enthusiasm as a signal of wealth and privilege. Instructors benefit from that cultural cachet. Chief content officer Jennifer Cotter, who cut her teeth managing talent at HSN (formerly known as the Home Shopping Network), was brought in three years ago to help navigate the instructors’ growing fame. “My original intent was really to reduce the friction instructors were starting to feel here,” she says, explaining that they were waiting a long time to hear back about brand partnership opportunities. The instructors’ stars have continued to rise even as Peloton’s has begun to lose some of its sheen. The company was a pandemic juggernaut, growing its revenue from $915 million in 2019 to $4 billion in 2021. But a return to gyms, product recalls, and a series of PR disasters—including episodes of And Just Like That … and Billions in which characters suffer heart attacks after riding the bike—have taken a toll. In February, Peloton announced its CEO John Foley was stepping down, and it was cutting 2,800 jobs. (No instructors were laid off.) The quarterly report released in May showed that revenue tumbled 24% compared to last year, and Peloton lost $757 million last quarter. Still, the relationship between the company and its marquee talent remains symbiotic: certain instructors might be big enough to make it on their own as influencers if they were to leave, but they would lose an unparalleled platform in terms of reach—7 million members—and a key connection point with their fans. Read More: America’s Going to the Gym Again. That’s Bad News for Peloton, But Great News for Mental Health Ask Love or her Peloton peers if changes at the company have affected their plans, and they’ll say they’re concentrating on inspiring their acolytes to climb steep hills and lift heavy weights. But as a look at their expanding portfolios makes clear, they are also capitalizing on their moment in the spotlight to establish their own mini-empires. In March 2020, Peloton shut down its New York City studio, and in April, head instructor Robin Arzón led a cycling class from her apartment. Everything about this first “live from home” session was MacGyvered: Arzón fidgeted with the music on her laptop, and Janet Jackson’s “Nasty” occasionally drowned out her aphorisms about building character in trying times. She shouted out a few usernames. “ElaineNeedsWine,” she read, laughing. “I have a feeling you might not be alone, Elaine.” Twenty-five thousand people tuned in, in no small part to get a peek at Arzón’s apartment. In recent years, Arzón, 40, has welcomed riders not only into her home but into her life. She’s shared her journey with IVF, pregnancy, and motherhood. “The frequency with which people come up to me crying, I’m still figuring out how to manage that. It’s a new, intense thing that happens every single day,” she says. “A woman announced her pregnancy to me in the bathroom of an airport in Puerto Rico. And it was because she had worked through her grief and her joy with me [on the bike]. More common than not, that’s the reaction: the physical shaking, quivering.” The instructors have worked with Peloton to figure out how to make what riders love about them marketable. Arzón, for instance, would describe herself as Type A—she loves a vision board and taught an 11-episode MasterClass course on how to manifest success. (A MasterClass spokesperson declined to comment on instructor compensation, but a 2017 Hollywood Reporter article said they are paid at least $100,000.) An experience being held hostage at gunpoint inspired Arzón to take up running and eventually pivot from a career as a corporate litigator to one in wellness. She’s now Peloton’s vice president of fitness programming. In recent years, she’s evolved her brand to center more on motherhood: She’s developed prenatal and postpartum workouts; she dots her Instagram with images of her daughter Athena, with whom she posed on the cover of Parents Latina magazine; her children’s book Strong Mama recently became a best seller; and she struck a deal with Pottery Barn Kids. Victor Llorente for TIMEAlly Love, Peloton Instructor But instructors must maintain a careful balance when showcasing their personal lives. Love, for instance, has tried to cultivate intimacy even as she draws more eyeballs to her accounts. Vogue, People, and “Page Six” breathlessly covered her five-day wedding in Mexico, which included 200 drones taking to the sky to spell Love You, but only her followers could view more personal photos from the extravaganza in her Instagram Stories. She cites her husband’s privacy concerns for this decision: “He’s my No. 1 supporter, but he didn’t sign up to be a Peloton instructor, so it’s about making sure that I protect the people I love and respect their boundaries while servicing my community so they know they have access.” Of course, gating the wedding content only drove more people to follow her account. Courtesy of Mike Lawrence The newer instructors often look to the veterans with proven social media savvy. Cotter cites a conversation between Love and fellow instructor and former makeup artist Tunde Oyeneyin as an example of how Peloton talent curate their social feeds to score endorsements. “Ally actually gave her advice that maybe you should do makeup on social media,” says Cotter. “Tunde got a Revlon deal out of that.” When Cody Rigsby, now 35, first joined Peloton, he thought perhaps imitating Arzón would be the best route to success. “It wasn’t authentic to me,” he says. “Robin is amazing at being Robin. I had to figure out who Cody was.” Rigsby, who sports a Mickey Mouse tattoo on his bicep and worships Britney Spears, studied his sessions and found riders responded to his pop culture references and self-deprecation. They loved when he opined on the texture of Cheetos. “I became sort of the opposite of an inspirational fitness trainer,” he says. Victor Llorente for TIMECody Rigsby, Peloton Instructor Rigsby now boasts 1.2 million Instagram followers, the most of any Peloton instructor. In 2021, he competed on Dancing With the Stars and made it to the finale with his partner Cheryl Burke. (A Dancing With the Stars representative said the show does not comment on contestants’ salaries, but Variety reported in 2019 that they make $125,000 during the initial weeks and earn bonuses as they progress, maxing out at $295,000.) Peloton set up a makeshift studio in its Pasadena showroom while Rigsby was in Los Angeles, and he would film classes between rehearsals and performances. His recent deals include Gatorade, Chobani, Capital One, Invisalign, Adidas, Pure Leaf, Whole Foods, Primal Kitchen, Therabody, and Degree. Eric McCandless—ABC/Getty Images Emma Lovewell, too, has seen her offers expand. She had sent out a newsletter with recipes, gift guides, and travel tips to her riders at Peloton competitor SoulCycle. But it was only after she switched to Peloton that she was able to build the business. “At SoulCycle, I was reaching 40 to 50 people a class—hundreds of people, tops, all in New York City,” says Lovewell, 34. “Peloton is just massive.” She’s also designed jeans for the brand Sene, modeled for Under Armour, and developed recipes with plant-based food company Kite Hill. Victor Llorente for TIMEEmma Lovewell, Peloton Instructor A 2020 study on the influencer market found that the most valuable level of social media influencer to corporations is the “macro-influencer” who has between 100,000 and 1 million Instagram followers. “It’s a sweet spot, because they are not super expensive yet, but they still have a sizable follower base and they’re more authentic and get more engagement,” says co-author Colin Campbell, a marketing professor at the University of San Diego’s Knauss School of Business. “Once they get bigger, they tend to become more diva-like in terms of their demands and pay.” Arturo Holmes—Getty Images Alex Toussaint, who has 571,000 Instagram followers, falls squarely into that macro-influencer category. He has deals with Puma and Hyperice, another massage-device company, and wants to model his career on athletes who tend to be selective about where they lend their names, like LeBron James and Steph Curry (who takes Toussaint’s classes). When Toussaint, 29, became a Puma global ambassador last year, he partnered with the athletics brand to invest in his foundation, Do Better, which uplifts marginalized communities. “I’ve never chased a dollar. I’ve always chased purpose,” says Toussaint. “My grandmother always told me purpose is the most powerful, and the money will follow.” Victor Llorente for TIMEAlex Toussaint, Peloton Instructor Still, more followers translate to more money. “It wouldn’t be surprising to me if instructors like Cody and Robin are getting close to $20,000 per post on average,” says Watson of NYU. Asked how much she makes from outside endorsements, Arzón is coy. “It’s more than my income at Peloton,” she says. “Let’s just say it’s a few salaries.”   Paras Griffin—Getty Images When Barry McCarthy took over as CEO in February, instructors’ outside deals—and time away from the studio—came under scrutiny. “He was like, ‘Tell me again why we let them do this?’” says Cotter. “Not everyone at the organization always understands. Why not just tell them the equivalent of ‘Shut up and dribble’? The answer is that these are professional athletes that deserve to go far in life, and Peloton is absolutely building a business off their brilliance. So why not make them feel super valued?” Read More: How ‘Subscribe to Me’ Became the Future of Work These days Peloton instructors can run potential deals by a committee and get a quick answer. Cotter even encourages new instructors to look into outside partnerships after about a year and a half. Peloton prohibits its instructors from making commercials with competitors, endorsing alcohol brands, or appearing in adult films, but almost anything else is fair game. “Did people watch Dancing With the Stars and go buy a Peloton? We’re not sure that happened, but we don’t care,” says Cotter of Rigsby’s stint on the show. “It exposed him to the masses, and that’s great value for him, which is great value for us. There’s not a direct response in our business, but it does make people at Peloton feel happy and heard and respected.” Victor Llorente for TIME The company also doesn’t dictate what instructors say on the bike. During the racial justice protests in 2020, Toussaint made an impassioned speech in a class. “For some of y’all, I’m the one person from the African-American community in your household,” he said. He shared his own stories of getting pulled over by the police on social media. “I never had to ask approval for anything,” says Toussaint. “The reason you get the job is that level of trust and authenticity.” Lovewell has similarly spoken out about anti-Asian hate during rides. The only time Cotter really pushes back against instructors is when they want to take on too much, as she worries they might dilute the trust they have built with their followers if they endorse every product. Rigsby admits his initial inclination was to sign more deals: “In retrospect, I’m glad they guided me away from certain partnerships that weren’t worth my time.” Very few instructors have left the Peloton family, in part because they’re afforded so much leeway. But this freedom isn’t the only reason they stay. A Bloomberg report from January 2021 found that senior instructors made $500,000-plus in compensation. A recent earnings report nodded to their value, noting that Peloton’s declining stock price may hamper its ability to hire and retain top-tier fitness talent who are offered shares in the company. “If they haven’t left the Peloton ecosystem, it’s almost certainly because Peloton has signed them to exclusive contracts where they’re paying them several million dollars,” Watson says. (A Peloton spokesperson said the company does not comment on employee compensation.) Instructors also know that just as Peloton’s future is uncertain, physically, they can’t do this job forever. They’re incentivized to squeeze what they can out of the gig. Toussaint, who went to military school and worked his way up from mopping floors at a cycling studio to being a fitness pro to the stars, compares the life of an instructor to that of a professional athlete. “We train. We study the tape. We produce at a high level every single day,” he says. But that intensity can take a toll. Rigsby acknowledges that his body simply cannot sustain riding the bike every day for years on end. “I grew up with a single mother who was on welfare and food stamps. We went through multiple evictions. So my relationship with money is interesting,” he says. “I recognize that notoriety and fame only lasts for so long, so I do want to capitalize on it in an authentic way and set myself up for success in the future.” Victor Llorente for TIMEClockwise from top left: Peloton instructors Cody Rigsby, Alex Toussaint, Ally Love, Robin Arzón, and Emma Lovewell in May in New York City Peloton reopened in-person classes to a small number of members on June 10, in a new Manhattan studio specifically designed to showcase its stars, with a larger floor plan and more cameras. The studio will fully reopen later this summer, and Peloton riders are already taking to social media to plan “Pelogrimages” to New York to work out with their favorite instructors. Cotter envisions a future in which instructors can play less demanding roles. “I’ve talked about it with the instructors and do want to make them feel their sense of mortality is not as imminent as they think it is. I’ve already told them, ‘You can do fewer classes. Don’t worry about it. You’re going to be here until you’re 90,’” she says. “But yes, we understand that’s why they pursue these things.” She sounds like a proud mother as she discusses the talent: she beams when she recalls Toussaint winning MVP at the NBA All-Star Celebrity Game and raves about Arzón’s books. Their successes are her successes—well, Peloton’s—even as it becomes increasingly apparent that one day they may leave the nest. “I hope they never quit,” she says. “Not on my watch.” With reporting by Nik Popli and Simmone Shah.....»»

Category: topSource: timeJun 16th, 2022

The Importance and Surge of Retail Proptech

By Nathaniel Mallon Proptech in real estate has experienced a surge over the past decade – the use of information technology has improved the ability of individuals and companies to research, buy, sell, and manage real estate across all asset classes. Within the retail sector, proptech has streamlined multiple processes... The post The Importance and Surge of Retail Proptech appeared first on Real Estate Weekly. By Nathaniel Mallon Proptech in real estate has experienced a surge over the past decade – the use of information technology has improved the ability of individuals and companies to research, buy, sell, and manage real estate across all asset classes. Within the retail sector, proptech has streamlined multiple processes for brokers, landlords, and tenants, improving businesses’ capacity to identify optimal retail spaces for their operations. With a decade of innovation in the industry, real estate proptech has seen an immense amount of development, supported by funding from venture capital firms across the globe. In this article, we will dive into the growth of the proptech industry, identify how retail proptech has improved the sector, and highlight how proptech will adapt moving forward with changing consumer demands. Innovation in the Industry Funding for proptech has remained relatively high since its inception. A report released by the Center for Real Estate Technology and Innovation (CRETI) announced that venture capital-backed proptech companies raised $19.8 billion in 2022. While numerous companies have leveraged private interest, some have made headway in the industry, transforming operations and interactions for real estate professionals across the board. Funding Billions: Opendoor and Compass Two companies have made headlines for their massive funding efforts in recent years. Opendoor, an online company that buys and sells residential real estate, and Compass, a company that supports the entire buying and selling workflow, have both surpassed the billion-dollar benchmark in funding. Launched in 2014, Opendoor has developed a program that can predict the price of a house by using technology to analyze the various factors that contribute to valuing a home. When a seller is interested, Opendoor values a home and creates a cash offer for the homeowner. Once a seller accepts the offer, Opendoor then purchases the home, completes renovations as needed, and resells the home. Opendoor has raised nearly $2 billion since its inception. Starting off strong, the platform raised $9.95 million in 2014, $400 million in 2018, and $300 million in 2019, and has continued to obtain private funding to support its growth. Trailing not far behind in funding is Compass, an advisory company that has funded $1.5 billion since 2012. Developed for tenants and realtors, Compass is a real estate technology company that provides an online platform for buying, renting, and selling real estate assets. Compass technology includes a marketing center designed to streamline functions for Compass agents, providing tenants with an improved experience. Initial momentum in proptech has been in the residential sector, which most experts attribute to the sheer velocity this asset has seen compared to others. Commercial platforms, however, are emerging and altering the environment of commercial real estate. Making Headway with Millions: Placer.ai and Reonomy Placer.ai, an analytics platform founded in 2016, uses foot traffic data to generate insights into properties. Since its inception, the company has funded $192.5 million. Placer.ai is connected to roughly 30 million devices in the United States, tracking customers’ movement. The company uses machine learning to develop analytics based on the data that can help businesses understand a specific location. The technology is primarily used by tenants, brokers, and landlords. Close behind in funding, Reonomy is one of the most utilized commercial real estate platforms today. Founded in 2013, it has gone through multiple rounds of funding, raising a total of $128.4 million thus far. Reonomy relies on big data, partnerships, and machine learning to leverage predictive algorithms, ultimately providing unparalleled access to property intelligence. Its system enables individuals, teams, and companies to unlock insights and discover new opportunities in the market. Changing the Retail Industry Dozens of other proptech companies are influencing the real estate world – many finding great momentum in their funding rounds.  ● House Canary, designed for buyers, sellers, investors, and mortgage lenders, has raised $129 million; it uses predictive algorithms to forecast future store performance. More specifically, it uses historical data and geospatial databases to identify the top market to enter. ● Localize, designed for buyers, has funded $56 million; it uses artificial intelligence (AI) consulting to find ideal locations for buyers by matching individual preferences. ● Redfin, designed for tenants and landlords, has funded $319.6 million. It uses AI consulting to estimate home values. As managing partner and active broker at Verada Retail, I constantly rely on proptech throughout my business process. Furthermore, I encourage our team to leverage the innovative technology to ensure we stay competitive in the New York City market. On a daily basis, we rely on various platforms, including Placer.ai and Reonomy. Furthermore, we rely on Esri’s ArcGis, a platform designed to help broker’s research markets, identify new opportunities for growth and expansion, and manage their investments at the market and neighborhood levels. We also rely on proptech for our marketing, content, and social media needs. One of the most transformative platforms we use includes Matterport. With this technology, we are able to create virtual walkthroughs of every property we list, allowing prospective investors and tenants to view the space from the comfort of their home or office. However, among every proptech company that has been introduced in the past decade, one similarity exists: the convergence of technology has improved the retail real estate process. Improved Client Services Simple functions have allowed brokers, agents, and landlords to improve communication, while more complex systems have offered enhanced data analytics. Pulling these resources together, brokers and agents can now improve their services to clients, using data such as foot traffic to help businesses identify the optimal site for their newest location – whether it be their first store or an expansion. Maximized Efficiency From leasing to sales, the integration of AI and predictive algorithms has streamlined the real estate transaction process. Real estate professionals can spend their time assessing data and brainstorming with clients and their team, rather than collecting data. As a result, brokers in commercial real estate can provide clients a more personalized experience and increase their efficiencies throughout the day. Business Integration and Scalability Beyond proptech for real estate, systems are being introduced to service businesses directly. For example, Oracle Retail offers a suite of cloud-based retail management solutions, designed for users looking to adopt cloud solutions, including scalability, reliability, and security. Furthermore, Oracle Retail Customer Engagement (ORCE) provides a complete set of tools to help retailers engage with their customers across all channels, while Oracle Retail Supply Chain Management (SCM) helps retailers optimize their supply chains and improve operational efficiencies and customer service. Using proprietary technology, Oracle is changing the way businesses grow, providing a simplified process toscale their operations. Brendan Tharapp, managing partner at Verada Retail, further explains that technology has transformed the firm’s ability to service its clients. Mallon elaborates, “We use proptech throughout every step of the leasing and sales process. From using foot traffic and analytics to identify possible tenant sites, to leveraging real-time listing services to market our listings, proptech has changed the way we do business.” The Future of Retail Proptech A recent report from the Center for Real Estate Technology and Innovation (CRETI) outlines the hardships that proptech may face in the future. From 2021 to 2022, proptech funding declined 38 percent. However, the future of proptech funding is simply shifting, and experts in the industry have outlined how 2023 funding and innovative proptech solutions will adapt to meet changing economic conditions. Noting the shift away from the pandemic, Paige Pitcher, head of strategic partnership at Moderne Ventures, shares, “The pandemic accelerated adoption of real estate tech, and now wage inflation and shortages are further emphasizing the need to digitize to lower operating costs and unlock new revenue opportunities.” The rise in technological adoption across all industries, including retail real estate, has been a true phenomenon, expediting the integration of proptech into daily processes. As we move forward, proptech has become part of the foundation, and new ideas are anticipated to expand available services. Jeanne Casey, global head of proptech and innovation at Nuveen, comments, “We are at an exciting inflection point for tech adoption, and I’m looking forward to seeing the proptech industry continue to mature in 2023. Although the choppy macro environment will create challenges for startups, real estate incumbents are much more open to working with new proptech companies than they were a few years ago. The startups with the strongest value propositions, focus, and discipline will emerge stronger than before. I’m excited to be a part of this next phase of the maturation of our industry.” According to some experts, those that succeed moving forward will be those that adapt to changing consumer trends. Platforms have been developed as a base, but changes must be made to ensure that values are being considered in technological adoptions of the future. Ashkán Zandieh, founder and co-chair at CRETI, concludes, “… It’s not all gloom and doom. An area that continues to gain tremendous interest is climate-related real estate technology. Across all sectors of the real estate industry, owner-operators, owner-developers, occupiers, and managers are exploring Climate Tech as companies address climate change, develop differentiated energy sources, and differentiate their assets.” It’s an exciting time in the world of business – a time when real estate and technology collide, and a future established on effective systems and improved client relations is at the forefront of design. Growth is inevitable, and only time will tell how proptech will adapt to the ever changing environment in modern society. The post The Importance and Surge of Retail Proptech appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyJan 28th, 2023

Celestica Announces Fourth Quarter 2022 Financial Results

(All amounts in U.S. dollars. Per share information based on diluted shares outstanding unless otherwise noted.) TORONTO, Jan. 25, 2023 (GLOBE NEWSWIRE) -- Celestica Inc. (TSX:CLS) (NYSE:CLS), a leader in design, manufacturing, hardware platform and supply chain solutions for the world's most innovative companies, today announced financial results for the quarter ended December 31, 2022 (Q4 2022)†. "Celestica finished with a strong fourth quarter and had an outstanding 2022, resulting in 46% year-over-year non-IFRS adjusted EPS* growth. Our ability to successfully execute on our long-term strategy has allowed us to win in markets where we see opportunity for long-term, profitable growth," said Rob Mionis, President and CEO, Celestica. "For the full year, we achieved $7.25 billion in revenue, a 29% increase over 2021 and our highest annual non-IFRS operating margin* and non-IFRS adjusted EPS* in our company's history." "We are very pleased with the strength and consistency of our financial results. This performance is made possible by the exceptional efforts of the global Celestica team, in the context of a challenging environment. As we look ahead to 2023, we expect to build on the successes of this past year, and continue to advance our long-term goals of generating revenue growth and improving our profitability." Q4 2022 Highlights Key measures: Revenue: $2.04 billion, increased 35% compared to $1.51 billion for the fourth quarter of 2021 (Q4 2021). Non-IFRS operating margin*: 5.3%, compared to 4.9% for Q4 2021. ATS segment revenue: increased 30% compared to Q4 2021; ATS segment margin was 4.4%, compared to 5.6% for Q4 2021. CCS segment revenue: increased 39% compared to Q4 2021; CCS segment margin was 5.9%, compared to 4.4% for Q4 2021. Adjusted earnings per share (EPS) (non-IFRS)*: $0.56, compared to $0.44 for Q4 2021. Adjusted return on invested capital (ROIC) (non-IFRS)*: 20.7%, compared to 16.6% for Q4 2021. Adjusted free cash flow (non-IFRS)*: $42.6 million, compared to $35.6 million for Q4 2021. IFRS financial measures (directly comparable to non-IFRS measures above): Earnings from operations as a percentage of revenue: 4.0%, compared to 3.3% for Q4 2021. EPS: $0.35, compared to $0.26 for Q4 2021. Return on invested capital (IFRS ROIC): 15.7%, compared to 11.1% for Q4 2021. Cash provided by operations: $101.3 million, compared to $65.8 million for Q4 2021. Repurchased 1.2 million subordinate voting shares (SVS) for cancellation for $12.0 million. † Celestica has two operating and reportable segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Our ATS segment consists of our ATS end market and is comprised of our Aerospace and Defense (A&D), Industrial, HealthTech and Capital Equipment businesses. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). See note 25 to our 2021 audited consolidated financial statements, included in our Annual Report on Form 20-F for the year ended December 31, 2021 (2021 20-F), available at www.sec.gov and www.sedar.com, for further detail.* Non-International Financial Reporting Standards (IFRS) financial measures (including ratios based on non-IFRS financial measures) do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar financial measures presented by other public companies that report under IFRS or U.S. generally accepted accounting principles (GAAP). See "Non-IFRS Supplementary Information" below for information on our rationale for the use of non-IFRS financial measures. See Schedule 1 for, among other items, non-IFRS financial measures included in this press release, their definitions, uses, and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures, and a description of recent modifications to: (i) the IFRS financial measures to which non-IFRS operating earnings and non-IFRS operating margin are reconciled; and (ii) the IFRS financial measure on which the measure we refer to as IFRS ROIC is based. Prior period reconciliations and calculations included herein reflect the current presentation. Schedule 1 also includes a description of the anticipated modification of specified non-IFRS financial measures (by the addition of a newly-applicable exclusion) for future periods. The most directly-comparable IFRS financial measures to non-IFRS operating margin, non-IFRS adjusted EPS, non-IFRS adjusted return on invested capital and non-IFRS adjusted free cash flow are earnings from operations as a percentage of revenue, EPS, IFRS ROIC, and cash provided by operations, respectively. First Quarter of 2023 (Q1 2023) Guidance   Q1 2023 Guidance Revenue (in billions)         $1.725 to $1.875 Non-IFRS operating margin*         5.0% at the mid-point of ourrevenue and non-IFRS adjustedEPS guidance ranges Adjusted SG&A (non-IFRS)* (in millions)         $56 to $58 Adjusted EPS (non-IFRS)*         $0.41 to $0.47 For Q1 2023, we expect a negative $0.22 to $0.28 per share (pre-tax) aggregate impact on net earnings on an IFRS basis for employee stock-based compensation (SBC) expense, amortization of intangible assets (excluding computer software), and restructuring charges; and a non-IFRS adjusted effective tax rate* of approximately 21% (which does not account for foreign exchange impacts or unanticipated tax settlements). 2023 Outlook Following our solid performance in 2022, we are pleased to reaffirm our 2023 outlook of: revenue of at least $7.5 billion; non-IFRS operating margin* of between 4.5% and 5.5%; and target non-IFRS adjusted EPS* of between $1.95 and $2.05. Achievement of the midpoint of our 2023 non-IFRS adjusted EPS* range would represent a two-year non-IFRS adjusted EPS* average annual growth rate of 24% for 2022 and 2023(1). Looking beyond 2023, our average annual non-IFRS adjusted EPS* growth objective continues be 10%+ for 2024 and 2025. Although we have incorporated the anticipated impact of supply chain constraints into the foregoing financial guidance and outlook to the best of our ability, their adverse impact (in terms of duration and severity) cannot be estimated with certainty, and may be materially in excess of our expectations. * See Schedule 1 for the definitions of these non-IFRS financial measures. We do not provide reconciliations for forward-looking non-IFRS financial measures, as we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various events that have not yet occurred, are out of our control and/or cannot be reasonably predicted, and that would impact the most directly comparable forward-looking IFRS financial measure. For these same reasons, we are unable to address the probable significance of the unavailable information. Forward-looking non-IFRS financial measures may vary materially from the corresponding IFRS financial measures. See Schedule 1 for a description of the anticipated modification of specified non-IFRS financial measures (by the addition of a newly-applicable exclusion) for future periods. (1) Further, achievement of this midpoint would represent the achievement of the 2025 non-IFRS adjusted EPS* target disclosed in our March 24, 2022 press release, putting us ahead of the trajectory set forth therein. Summary of Selected Q4 2022 Results   Q4 2022 Actual   Q4 2022 Guidance (2) Key measures:       Revenue (in billions) $ 2.04     $1.875 to $2.025 Non-IFRS operating margin*   5.3 %   5.1% at the mid-point of ourrevenue and non-IFRS adjustedEPS guidance ranges Adjusted SG&A (non-IFRS)* (in millions) $ 68.5     $64 to $66 Adjusted EPS (non-IFRS)* $ 0.56     $0.49 to $0.55         Directly comparable IFRS financial measures:       Earnings from operations as a % of revenue   4.0 %   N/A SG&A (in millions) $ 77.1     N/A EPS (1) $ 0.35     N/A             * See Schedule 1 for, among other things, the definitions of, and exclusions used to determine, these non-IFRS financial measures, a reconciliation of such non-IFRS financial measures to the most directly comparable IFRS financial measures for Q4 2022, and a description of recent modifications to the IFRS financial measures to which non-IFRS operating earnings and non-IFRS operating margin are reconciled. Schedule 1 also includes a description of the anticipated modification of specified non-IFRS financial measures (by the addition of a newly-applicable exclusion) for future periods. (1) IFRS EPS of $0.35 for Q4 2022 included an aggregate charge of $0.21 (pre-tax) per share for employee SBC expense, amortization of intangible assets (excluding computer software), and restructuring charges. See the tables in Schedule 1 and note 10 to our December 31, 2022 unaudited interim condensed consolidated financial statements (Q4 2022 Interim Financial Statements) for per-item charges. This aggregate charge was at the high end of our Q4 2022 guidance range of between $0.15 to $0.21 per share for these items. IFRS EPS for Q4 2022 included a $0.03 per share negative impact arising from taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Chinese subsidiaries (Repatriation Expense), a $0.02 per share negative impact attributable to restructuring charges, and a $0.01 per share negative taxable foreign exchange impact arising from the fluctuation of the Chinese renminbi relative to the U.S. dollar (Currency Impact). IFRS EPS of $0.26 for Q4 2021 included a $0.06 per share negative impact attributable to other charges (consisting most significantly of a $0.02 per share negative impact attributable to restructuring charges, and a $0.02 per share negative impact attributable to specified credit facility-related charges, each as described in note 10 to the Q4 2022 Interim Financial Statements), and as a result of supply chain constraints and COVID-19-related workforce expenses and constraints, an $0.08 per share negative impact attributable to estimated Constraint Costs (defined as both direct and indirect costs, including manufacturing inefficiencies related to lost revenue due to our inability to secure materials, idled labor costs, and incremental costs for labor, expedite fees and freight premiums, cleaning supplies, personal protective equipment, and/or IT-related services to support our work-from-home arrangements). IFRS EPS for Q4 2021 also included the following tax impacts: a favorable tax impact related to the geographical mix of our profits, a $0.01 per share positive impact attributable to a deferred tax recovery recorded in connection with the revaluation of certain temporary differences using the future effective tax rate of our Thailand subsidiary related to the then-forthcoming reduction of the income tax exemption rate in 2022 under an applicable tax incentive (Revaluation Impact) and a $0.02 per share negative impact arising from taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Chinese subsidiaries (Repatriation Expense), each as described in note 11 to the Q4 2022 Interim Financial Statements. (2) For Q4 2022, our revenue and non-IFRS adjusted EPS exceeded the high end of our guidance ranges, and our non-IFRS operating margin exceeded the mid-point of our revenue and non-IFRS adjusted EPS guidance ranges, driven by continued strong demand across the majority of our businesses and improved materials availability in some markets relative to expectations. Non-IFRS adjusted SG&A for Q4 2022 was higher than our guidance range due to the impact of foreign exchange. Our IFRS effective tax rate for Q4 2022 was 32%. Our non-IFRS adjusted effective tax rate for Q4 2022 was 23%, higher than our anticipated estimate of approximately 21%, mainly due to repatriation expense, partially offset by favorable jurisdictional profit mix. Summary of Selected Full Year 2022 Results 2022 was another successful year for Celestica, in which we continued to demonstrate solid performance, including the following achievements: Key measures Revenue: $7.25 billion, compared to $5.63 billion in 2021, an increase of 29%. Non-IFRS operating margin*: 4.9%, compared to 4.2% for 2021, an improvement of 70 basis points. Adjusted EPS (non-IFRS)*: $1.90, compared to $1.30 for 2021, a growth rate of 46%. Adjusted ROIC (non-IFRS)*: 17.5%, compared to 13.9% for 2021, a growth of 360 basis points. IFRS financial measures (directly comparable to non-IFRS measures above): IFRS earnings from operations as a percentage of revenue: 3.6%, compared to 3.0% for 2021, an improvement of 60 basis points. IFRS EPS(1): $1.18, compared to $0.82 per share for 2021, a growth rate of 44%. IFRS ROIC: 12.9%, compared to 10.0% for 2021, a growth of 290 basis points. (1) IFRS EPS of $1.18 for 2022 included: (i) a $0.05 per share net negative impact attributable to other charges (recoveries) (consisting most significantly of a $0.07 per share negative impact attributable to restructuring charges and a $0.01 per share negative impact attributable to Transition Costs, partially offset by a $0.03 per share positive impact attributable to Transition Recoveries (each defined in Schedule 1)); (ii) a $0.03 per share negative impact attributable to estimated Constraint Costs; (iii) a $0.03 per share negative Currency Impact; and (iv) a $0.03 per share negative Repatriation Expense, all offset in part by a $0.04 per share favorable tax impact attributable to the reversal of tax uncertainties in one of our Asian subsidiaries. See notes 10 and 11 to the Q4 2022 Interim Financial Statements. IFRS EPS of $0.82 for 2021 included a $0.25 per share negative impact attributable to Constraints Costs, an $0.08 per share negative impact attributable to net other charges (consisting most significantly of a $0.08 per share negative impact attributable to net restructuring charges and a $0.06 per share negative impact attributable to acquisition costs, offset in part by an $0.08 per share positive impact attributable to legal recoveries, as described in note 10 to the Q4 2022 Interim Financial Statements), all offset in part by an aggregate $0.09 per share positive impact attributable to approximately $11 million of government subsidies, grants and credits related to COVID-19 and $1 million of customer recoveries related to COVID-19. IFRS EPS for 2021 also included the following tax impacts: a $0.06 per share positive impact attributable to the Revaluation Impact, offset in large part by a $0.05 per share negative impact attributable to a Repatriation Expense (each as described in note 11 to the Q4 2022 Interim Financial Statements). * See Schedule 1 for, among other things, the definitions of, and exclusions used to determine, these non-IFRS financial measures, a reconciliation of such non-IFRS financial measures to the most directly comparable IFRS financial measures for 2022 and 2021, and a description of recent modifications to: (i) the IFRS financial measures to which non-IFRS operating earnings and non-IFRS operating margin are reconciled; and (ii) the IFRS financial measure on which the measure we refer to as IFRS ROIC is based. Prior period reconciliations and calculations included herein reflect the current presentation. Schedule 1 also includes a description of the anticipated modification of specified non-IFRS financial measures (by the addition of a newly-applicable exclusion) for future periods. Acceptance of Normal Course Issuer Bid On December 8, 2022, the Toronto Stock Exchange accepted our notice to launch a new NCIB (2022 NCIB). The 2022 NCIB allows us to repurchase, at our discretion, from December 13, 2022 until the earlier of December 12, 2023 or the completion of purchases thereunder, up to approximately 8.8 million SVS in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. See note 9 to the Q4 2022 Interim Financial Statements. Q4 2022 Webcast Management will host its Q4 2022 results conference call on January 26, 2023 at 8:00 a.m. Eastern Standard Time (EST). The webcast can be accessed at www.celestica.com. Non-IFRS Supplementary Information In addition to disclosing detailed operating results in accordance with IFRS, Celestica provides supplementary non-IFRS financial measures to consider in evaluating the company's operating performance. Management uses adjusted net earnings and other non-IFRS financial measures to assess operating performance and the effective use and allocation of resources; to provide more meaningful period-to-period comparisons of operating results; to enhance investors' understanding of the core operating results of Celestica's business; and to set management incentive targets. We believe investors use both IFRS and non-IFRS financial measures to assess management's past, current and future decisions associated with our priorities and our allocation of capital, as well as to analyze how our business operates in, or responds to, swings in economic cycles or to other events that impact our core operations. See Schedule 1 below. About Celestica Celestica enables the world's best brands. Through our recognized customer-centric approach, we partner with leading companies in Aerospace and Defense, Communications, Enterprise, HealthTech, Industrial, and Capital Equipment to deliver solutions for their most complex challenges. As a leader in design, manufacturing, hardware platform and supply chain solutions, Celestica brings global expertise and insight at every stage of product development - from the drawing board to full-scale production and after-market services. With talented teams across North America, Europe and Asia, we imagine, develop and deliver a better future with our customers. For more information on Celestica, visit www.celestica.com. Our securities filings can be accessed at www.sedar.com and www.sec.gov. Cautionary Note Regarding Forward-looking Statements This press release contains forward-looking statements, including, without limitation, those related to: our anticipated financial and/or operational results and outlook, including statements made, and guidance and outlook provided, under the headings "First Quarter of 2023 (Q1 2023) Guidance" and "2023 Outlook"; our credit risk; our liquidity; anticipated charges and expenses, including restructuring charges; the potential impact of tax and litigation outcomes; mandatory prepayments under our credit facility; and interest rates. Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "continues," "project," "target," "goal," "potential," "possible," "contemplate," "seek," or similar expressions, or may employ such future or conditional verbs as "may," "might," "will," "could," "should," or "would," or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, where applicable, and for forward-looking information under applicable Canadian securities laws. Forward-looking statements are provided to assist readers in understanding management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Forward-looking statements are not guarantees of future performance and are subject to risks that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including, among others, risks related to: customer and segment concentration; price, margin pressures, and other competitive factors and adverse market conditions affecting, and the highly competitive nature of, the electronics manufacturing services (EMS) industry in general and our segments in particular (including the risk that anticipated market conditions do not materialize); delays in the delivery and availability of components, services and/or materials, as well as their costs and quality; challenges of replacing revenue from completed, lost or non-renewed programs or customer disengagements; our customers' ability to compete and succeed using our products and services; changes in our mix of customers and/or the types of products or services we provide, including negative impacts of higher concentrations of lower margin programs; managing changes in customer demand; rapidly evolving and changing technologies, and changes in our customers' business or outsourcing strategies; the cyclical and volatile nature of our semiconductor business; the expansion or consolidation of our operations; the inability to maintain adequate utilization of our workforce; defects or deficiencies in our products, services or designs; volatility in the commercial aerospace industry; integrating and achieving the anticipated benefits from acquisitions and "operate-in-place" arrangements; the potential loss of PCI Private Limited (PCI) customers as a result of the recent fire at our Batam facility in Indonesia (Batam Fire); an inability to fully recover our tangible losses caused by the Batam Fire through insurance claims; compliance with customer-driven policies and standards, and third-party certification requirements; challenges associated with new customers or programs, or the provision of new services; the impact of our restructuring actions and/or productivity initiatives, including a failure to achieve anticipated benefits therefrom; negative impacts on our business resulting from our third-party indebtedness; the incurrence of future restructuring charges, impairment charges, other unrecovered write-downs of assets (including inventory) or operating losses; managing our business during uncertain market, political and economic conditions, including among others, global inflation and/or recession, and geopolitical and other risks associated with our international operations, including military actions, protectionism and reactive countermeasures, economic or other sanctions or trade barriers, including in relation to the Russia/Ukraine conflict; disruptions to our operations, or those of our customers, component suppliers and/or logistics partners, including as a result of events outside of our control (including those described in "External Factors that May Impact our Business" in Item 5 of our 2021 20-F); the scope, duration and impact of the COVID-19 pandemic and materials constraints; changes to our operating model; rising commodity, materials and component costs as well as rising labor costs and changing labor conditions; execution and/or quality issues (including our ability to successfully resolve these challenges); non-performance by counterparties; maintaining sufficient financial resources to fund currently anticipated financial actions and obligations and to pursue desirable business opportunities; negative impacts on our business resulting from any significant uses of cash, securities issuances, and/or additional increases in third-party indebtedness (including as a result of an inability to sell desired amounts under our uncommitted accounts receivable sales program or supplier financing programs); foreign currency volatility; our global operations and supply chain; competitive bid selection processes; customer relationships with emerging companies; recruiting or retaining skilled talent; our dependence on industries affected by rapid technological change; our ability to adequately protect intellectual property and confidential information; increasing taxes (including as a result of global tax reform), tax audits, and challenges of defending our tax positions; obtaining, renewing or meeting the conditions of tax incentives and credits; the management of our information technology systems, and the fact that while we have not been materially impacted by computer viruses, malware, ransomware, hacking attempts or outages, we have been (and may in the future be) the target of such events; the inability to prevent or detect all errors or fraud; the variability of revenue and operating results; unanticipated disruptions to our cash flows; compliance with applicable laws and regulations; our pension and other benefit plan obligations; changes in accounting judgments, estimates and assumptions; our ability to maintain compliance with applicable credit facility covenants; interest rate fluctuations and the discontinuation of LIBOR; our entry into a total return swap transaction; our ability to refinance our indebtedness from time to time; deterioration in financial markets or the macro-economic environment, including as a result of global inflation and/or recession; our credit rating; the interest of our controlling shareholder; current or future litigation, governmental actions, and/or changes in legislation or accounting standards; negative publicity; the impermissibility of SVS repurchases, or a determination not to repurchase SVS under any NCIB; the impact of climate change; and our ability to achieve our environmental, social and governance (ESG) initiative goals, including with respect to climate change and greenhouse gas emissions reduction. The foregoing and other material risks and uncertainties are discussed in our public filings at www.sedar.com and www.sec.gov, including in our most recent MD&A, our 2021 Annual Report on Form 20-F filed with, and subsequent reports on Form 6-K furnished to, the U.S. Securities and Exchange Commission, and as applicable, the Canadian Securities Administrators. The forward-looking statements contained in this press release are based on various assumptions, many of which involve factors that are beyond our control. Our material assumptions include: continued growth in our end markets; growth in manufacturing outsourcing from customers in diversified end markets; no significant unforeseen negative impacts to our operations; no unforeseen materials price increases, margin pressures, or other competitive factors affecting the EMS industry in general or our segments in particular, as well as those related to the following: the scope and duration of materials constraints (i.e., that they do not materially worsen) and the COVID-19 pandemic and their impact on our sites, customers and suppliers; our ability to fully recover our tangible losses caused by the Batam Fire through insurance claims; fluctuation of production schedules from our customers in terms of volume and mix of products or services; the timing and execution of, and investments associated with, ramping new business; the success of our customers' products; our ability to retain programs and customers; the stability of currency exchange rates; supplier performance and quality, pricing and terms; compliance by third parties with their contractual obligations; the costs and availability of components, materials, services, equipment, labor, energy and transportation; that our customers will retain liability for product/component tariffs and countermeasures; global tax legislation changes; our ability to keep pace with rapidly changing technological developments; the timing, execution and effect of restructuring actions; the successful resolution of quality issues that arise from time to time; the components of our leverage ratio (as defined in our credit facility); our ability to successfully diversify our customer base and develop new capabilities; the availability of capital resources for, and the permissibility under our credit facility of, repurchases of outstanding SVS under NCIBs, compliance with applicable credit facility covenants; anticipated demand levels across our businesses; the impact of anticipated market conditions on our businesses; that global inflation and/or recession will not have a material impact on our revenues or expenses; our ability to achieve the expected long-term benefits from our PCI acquisition; and our maintenance of sufficient financial resources to fund currently anticipated financial actions and obligations and to pursue desirable business opportunities. Although management believes its assumptions to be reasonable under the current circumstances, they may prove to be inaccurate, which could cause actual results to differ materially (and adversely) from those that would have been achieved had such assumptions been accurate. Forward-looking statements speak only as of the date on which they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.    All forward-looking statements attributable to us are expressly qualified by these cautionary statements. Schedule 1 Supplementary Non-IFRS Financial Measures The non-IFRS financial measures (including ratios based on non-IFRS financial measures) included in this press release are: adjusted gross profit, adjusted gross margin (adjusted gross profit as a percentage of revenue), adjusted selling, general and administrative expenses (SG&A), adjusted SG&A as a percentage of revenue, non-IFRS operating earnings (or adjusted EBIAT), non-IFRS operating margin (non-IFRS operating earnings or adjusted EBIAT as a percentage of revenue), adjusted net earnings, adjusted EPS, adjusted return on invested capital (adjusted ROIC), adjusted free cash flow, adjusted tax expense and adjusted effective tax rate. Adjusted EBIAT, adjusted ROIC, adjusted free cash flow, adjusted tax expense and adjusted effective tax rate are further described in the tables below. Prior to the second quarter of 2022 (Q2 2022), adjusted free cash flow was referred to as free cash flow, but has been renamed. Its composition remains unchanged. In addition, prior to Q2 2022, non-IFRS operating earnings (adjusted EBIAT) was reconciled to IFRS earnings before income taxes, and non-IFRS operating margin was reconciled to IFRS earnings before income taxes as a percentage of revenue, but commencing in Q2 2022, are reconciled to IFRS earnings from operations, and IFRS earnings from operations as a percentage of revenue, respectively (as the most directly comparable IFRS financial measures). This modification did not impact either resultant non-IFRS financial measure. Since non-IFRS adjusted ROIC is based on non-IFRS operating earnings, in comparing this measure to the most directly-comparable financial measure determined using IFRS measures (which we refer to as IFRS ROIC), commencing in the third quarter of 2022 (Q3 2022), our calculation of IFRS ROIC is based on IFRS earnings from operations (instead of IFRS earnings before income taxes). This modification did not impact the determination of non-IFRS adjusted ROIC. Prior period reconciliations and calculations included herein reflect the current presentation. In Q4 2022, we entered into a total return swap (TRS). Similar to employee stock-based compensation (SBC) expense, quarterly fair value adjustments of our TRS (TRS FVAs) will be classified in SG&A expenses and costs of sales in our consolidated statement of operations. The TRS FVAs will be excluded in our determination of the following non-IFRS financial measures included herein: adjusted gross profit, adjusted SG&A, non-IFRS operating earnings, non-IFRS operating margin, adjusted net earnings and adjusted EPS (for the reasons described below). However, as the impact of TRS FVAs on our Q4 2022 Interim Financial Statements was de minimis, no such exclusion was applicable to such non-IFRS financial measures in either Q4 2022 or FY 2022. In calculating our non-IFRS financial measures, management excludes the following items (where indicated): employee SBC expense, TRS FVAs, amortization of intangible assets (excluding computer software), Other Charges, net of recoveries (defined below), and specified Finance Costs (defined below) paid, all net of the associated tax adjustments (quantified in the table below), and non-core tax impacts (tax adjustments related to acquisitions, and certain other tax costs or recoveries related to restructuring actions or restructured sites). We believe the non-IFRS financial measures we present herein are useful to investors, as they enable investors to evaluate and compare our results from operations in a more consistent manner (by excluding specific items that we do not consider to be reflective of our core operations), to evaluate cash resources that we generate from our business each period, and to provide an analysis of operating results using the same measures our chief operating decision makers use to measure performance. In addition, management believes that the use of a non-IFRS adjusted tax expense and a non-IFRS adjusted effective tax rate provide improved insight into the tax effects of our core operations, and are useful to management and investors for historical comparisons and forecasting. These non-IFRS financial measures result largely from management's determination that the facts and circumstances surrounding the excluded charges or recoveries are not indicative of our core operations. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies that report under IFRS, or who report under U.S. GAAP and use non-GAAP financial measures to describe similar financial metrics. Non-IFRS financial measures are not measures of performance under IFRS and should not be considered in isolation or as a substitute for any IFRS financial measure. The most significant limitation to management's use of non-IFRS financial measures is that the charges or credits excluded from the non-IFRS financial measures are nonetheless recognized under IFRS and have an economic impact on us. Management compensates for these limitations primarily by issuing IFRS results to show a complete picture of our performance, and reconciling non-IFRS financial measures back to the most directly comparable financial measures determined under IFRS. The economic substance of these exclusions described above (where applicable to the periods presented) and management's rationale for excluding them from non-IFRS financial measures is provided below: Employee SBC expense, which represents the estimated fair value of stock options, restricted share units and performance share units granted to employees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value. In addition, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude employee SBC expense in assessing operating performance, who may have different granting patterns and types of equity awards, and who may use different valuation assumptions than we do. TRS FVAs represent mark-to-market adjustments to our TRS, as the TRS is recorded at fair value at each quarter end. We exclude the impact of these non-cash fair value adjustments (both positive and negative), as they reflect fluctuations in the market price of our SVS from period to period, and not our ongoing operating performance. In addition, we believe that excluding these non-cash adjustments permits a better comparison of our core operating results to those of our competitors. Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangible assets varies among our competitors, and we believe that excluding these charges permits a better comparison of core operating results with those of our competitors who also generally exclude amortization charges in assessing operating performance. Other Charges, net of recoveries, consist of, when applicable: Restructuring Charges, net of recoveries (defined below); Transition Costs (Recoveries) (defined below); net Impairment charges (defined below); consulting, transaction and integration costs related to potential and completed acquisitions, and charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with acquisitions, when applicable; legal settlements (recoveries); specified credit facility-related charges; and post-employment benefit plan losses. We exclude these charges, net of recoveries, because we believe that they are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of these activities or incurrence of the relevant costs. Our competitors may record similar charges at different times, and we believe these exclusions permit a better comparison of our core operating results with those of our competitors who also generally exclude these types of charges, net of recoveries, in assessing operating performance. Restructuring Charges, net of recoveries, consist of costs relating to: employee severance, lease terminations, site closings and consolidations, write-downs of owned property and equipment which are no longer used and are available for sale and reductions in infrastructure. Transition Costs consist of costs recorded in connection with: (i) the transfer of manufacturing lines from closed sites to other sites within our global network; and (ii) the sale of real properties unrelated to restructuring actions (Property Dispositions). Transition Costs in prior periods also included costs in connection with the relocation of our Toronto manufacturing operations and corporate headquarters in connection with the 2019 sale of our former Toronto real property. Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use and other costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations, transfers and dispositions. Transition Recoveries consist of any gains recorded in connection with Property Dispositions. We believe that excluding these costs and recoveries permits a better comparison of our core operating results from period-to-period, as these costs or recoveries do not reflect our ongoing operations once these specified events are complete. Impairment charges, which consist of non-cash charges against goodwill, intangible assets, property, plant and equipment, and right-of-use (ROU) assets, result primarily when the carrying value of these assets exceeds their recoverable amount. Finance Costs consist of interest expense and fees related to our credit facility (including debt issuance and related amortization costs), our interest rate swap agreements, our accounts receivable sales program and customers' supplier financing programs, and interest expense on our lease obligations, net of interest income earned. We believe that excluding Finance Costs paid (other than debt issuance costs and credit-agreement-related waiver fees paid, which are not considered part of our ongoing financing expenses) from cash provided by operations in the determination of non-IFRS adjusted free cash flow provides useful insight for assessing the performance of our core operations. Non-core tax impacts are excluded, as we believe that these costs or recoveries do not reflect core operating performance and vary significantly among those of our competitors who also generally exclude these costs or recoveries in assessing operating performance. The following table (which is unaudited) sets forth, for the periods indicated, the various non-IFRS financial measures discussed above, and a reconciliation of non-IFRS financial measures to the most directly comparable financial measures determined under IFRS (in millions, except percentages and per share amounts):   Three months ended December 31   Year ended December 31     2021       2022       2021       2022       % of revenue     % of revenue     % of revenue     % of revenue IFRS revenue $ 1,512.1       $ 2,042.6       $ 5,634.7       $ 7,250.0                             IFRS gross profit $ 142.1   9.4 %   $ 186.2   9.1 %   $ 487.0   8.6 %   $ 636.3   8.8 % Employee SBC expense   3.6         5.6         13.0         20.3     Non-IFRS adjusted gross profit $ 145.7   9.6 %   $ 191.8   9.4 %   $ 500.0   8.9 %   $ 656.6   9.1 %                         IFRS SG&A $ 65.5   4.3 %   $ 77.1   3.8 %   $ 245.1   4.3 %   $ 279.9   3.9 % Employee SBC expense   (5.6 )       (8.6 )       (20.4 )       (30.7 )   Non-IFRS adjusted SG&A $ 59.9   4.0 %   $ 68.5   3.4 %   $ 224.7   4.0 %   $ 249.2   3.4 %                         IFRS earnings from operations $ 49.9   3.3 %   $ 81.6   4.0 %   $ 167.7   3.0 %   $ 263.3   3.6 % Employee SBC expense   9.2         14.2         33.4         51.0     Amortization of intangible assets (excluding computer software)   7.8         9.2         22.5         37.0     Other Charges, net of recoveries   7.4         2.8         10.3         6.7     Non-IFRS operating earnings (adjusted EBIAT)(1) $ 74.3   4.9 %   $ 107.8   5.3 %   $ 233.9   4.2 %   $ 358.0   4.9 %                         IFRS net earnings $ 31.9   2.1 %   $ 42.4   2.1 %   $ 103.9   1.8 %   $ 145.5   2.0 % Employee SBC expense   9.2         14.2         33.4         51.0     Amortization of intangible assets (excluding computer software)   7.8         9.2         22.5         37.0     Other Charges, net of recoveries   7.4         2.8         10.3         6.7     Adjustments for taxes(2)   (1.1 )       (0.2 )       (5.8 )       (5.8 )   Non-IFRS adjusted net earnings $ 55.2       $ 68.4       $ 164.3       $ 234.4                             Diluted EPS                       Weighted average # of shares (in millions)   124.8         122.4         126.7         123.6     IFRS earnings per share $ 0.26       $ 0.35       $ 0.82       $ 1.18     Non-IFRS adjusted earnings per share $ 0.44       $ 0.56       $ 1.30       $ 1.90     # of shares outstanding at period end (in millions)   124.7         121.6         124.7         121.6                             IFRS cash provided by operations $ 65.8       $ 101.3       $ 226.8       $ 297.9     Purchase of property, plant and equipment, net of sales proceeds   (14.3 )       (32.3 )       (49.6 )       (108.9 )   Lease payments   (10.0 )       (9.9 )       (40.0 )       (46.0 )   Finance Costs paid (excluding debt issuance costs paid)   (5.9 )       (16.5 )       (22.4 )       (49.2 )   Non-IFRS adjusted free cash flow (3) $ 35.6       $ 42.6       $ 114.8       $ 93.8                             IFRS ROIC % (4)   11.1 %       15.7 %       10.0 %       12.9 %   Non-IFRS adjusted ROIC % (4)   16.6 %       20.7 %       13.9 %       17.5 %                                           (1) Management uses non-IFRS operating earnings (adjusted EBIAT) as a measure to assess performance related to our core operations. Non-IFRS operating earnings is defined as earnings from operations before employee SBC expense, TRS FVAs (defined above), amortization of intangible assets (excluding computer software), and Other Charges (recoveries) (defined above). See note 10 to our Q4 2022 Interim Financial Statements for separate quantification and discussion of the components of Other Charges (recoveries). (2) The adjustments for taxes, as applicable, represent the tax effects of our non-IFRS adjustments and non-core tax impacts (see below). The following table sets forth a reconciliation of our IFRS tax expense and IFRS effective tax rate to our non-IFRS adjusted tax expense and our non-IFRS adjusted effective tax rate for the periods indicated, in each case determined by excluding the tax benefits or costs associated with the listed items (in millions, except percentages) from our IFRS tax expense for such periods:   Three months ended December 31   Year ended December 31     2021   Effective tax rate     2022   Effective tax rate     2021   Effective tax rate     2022   Effective tax rate IFRS tax expense and IFRS effective tax rate $ 9.7   23 %   $ 19.9   32 %   $ 32.1   24 %   $ 58.1   29 %                         Tax costs (benefits) of the following items excluded from IFRS tax expense:                       Employee SBC expense   (0.1 )       (1.0 )       2.8         2.5     Amortization of intangible assets (excluding computer software)   0.5         0.7         0.5         3.0     Other Charges, net of recoveries   0.7         0.5         1.4         0.3     Non-core tax impact related to restructured sites*   —         —         1.1         —     Non-IFRS adjusted tax expense and non-IFRS adjusted effective tax rate $ 10.8   16 %   $ 20.1   23 %   $ 37.9   19 %   $ 63.9   21 %                                                 * Consists of the reversals of tax uncertainties related to one of our Asian subsidiaries that completed its liquidation and dissolution during the first quarter of 2021.                                                 (3) Management uses non-IFRS adjusted free cash flow as a measure, in addition to IFRS cash provided by (used in) operations, to assess our operational cash flow performance. We believe non-IFRS adjusted free cash flow provides another level of transparency to our liquidity. Non-IFRS adjusted free cash flow is defined as cash provided by (used in) operations after the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus equipment and property), lease payments and Finance Costs (defined above) paid (excluding any debt issuance costs and when applicable, credit facility waiver fees paid). We do not consider debt issuance costs paid (nil and $0.8 million in Q4 2022 and the full year 2022, respectively; $3.6 million in Q4 2021 and the full year 2021) or such waiver fees (when applicable) to be part of our ongoing financing expenses. As a result, these costs are excluded from total Finance Costs paid in our determination of non-IFRS adjusted free cash flow. Note, however, that non-IFRS adjusted free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures. (4) Management uses non-IFRS adjusted ROIC as a measure to assess the effectiveness of the invested capital we use to build products or provide services to our customers, by quantifying how well we generate earnings relative to the capital we have invested in our business. Non-IFRS adjusted ROIC is calculated by dividing annualized non-IFRS adjusted EBIAT by average net invested capital for the period. Net invested capital (calculated in the table below) is derived from IFRS financial measures, and is defined as total assets less: cash, ROU assets, accounts payable, accrued and other current liabilities, provisions, and income taxes payable. We use a two-point average to calculate average net invested capital for the quarter and a five-point average to calculate average net invested capital for the year. Average net invested capital for Q4 2022 is the average of net invested capital as at September 30, 2022 and December 31, 2022, and average net invested capital for the full year 2022 is the average of net invested capital as at December 31, 2021, March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022. A comparable financial measure to non-IFRS adjusted ROIC determined using IFRS measures would be calculated by dividing annualized IFRS earnings from operations by average net invested capital for the period. The following table sets forth, for the periods indicated, our calculation of IFRS ROIC % and non-IFRS adjusted ROIC % (in millions, except IFRS ROIC % and non-IFRS adjusted ROIC %).       Three months ended   Year ended       December 31   December 31         2021       2022       2021       2022                       IFRS earnings from operations   $ 49.9     $ 81.6     $ 167.7     $ 263.3   Multiplier to annualize earnings     4       4       1       1   Annualized IFRS earnings from operations   $ 199.6     $ 326.4     $ 167.7     $ 263.3                       Average net invested capital for the period   $ 1,794.9     $ 2,085.4     $ 1,682.2     $ 2,040.3                       IFRS ROIC % (1)     11.1 %     15.7 %     10.0 %     12.9 %                           Three months ended   Year ended       December 31   December 31         2021       2022       2021       2022                       Non-IFRS operating earnings (adjusted EBIAT)   $ 74.3     $ 107.8     $ 233.9     $ 358.0   Multiplier to annualize earnings     4       4       1       1   Annualized non-IFRS adjusted EBIAT   $ 297.2     $ 431.2     $ 233.9     $ 358.0                       Average net invested capital for the period   $ 1,794.9     $ 2,085.4     $ 1,682.2     $ 2,040.3                       Non-IFRS adjusted ROIC % (1)     16.6 %     20.7 %     13.9 %     17.5 %                       December 312021   March 312022   June 302022   September 30 2022   December 31 2022 Net invested capital consists of:                   Total assets $ 4,666.9     $ 4,848.0     $ 5,140.5     $ 5,347.9     $ 5,628.0   Less: cash   394.0       346.6       365.5       363.3       374.5   Less: ROU assets   113.8       109.8       133.6       128.0       138.8   Less: accounts payable, accrued and other current liabilities, provisions and income taxes payable   2,202.0       2,347.4       2,612.1       2,797.5       3,003.0   Net invested capital at period end (1) $ 1,957.1     $ 2,044.2     $ 2,029.3     $ 2,059.1     $ 2,111.7                         December 31 2020   March 31 2021   June 30 2021   September 30 2021   December 31 2021 Net invested capital consists of:                   Total assets $ 3,664.1     $ 3,553.4     $ 3,745.4     $ 4,026.1     $ 4,666.9   Less: cash   463.8       449.4       467.2       477.2       394.0   Less: ROU assets   101.0       98.4       100.5       115.4       113.8   Less: accounts payable, accrued and other current liabilities, provisions and income taxes payable   1,478.4       1,407.0       1,575.8       1,800.8       2,202.0   Net invested capital at period end (1).....»»

Category: earningsSource: benzingaJan 25th, 2023

Retail CEO crisis: why the industry"s top job is suddenly the hardest to fill

At least 10 large retail companies have lost their CEOs in recent months. Experts say its not a coincidence, but a leadership crisis in the industry. From left: The RealReal's Julie Wainwright, Bed Bath & Beyond's Mark Tritton, VF Corporation's Steve Rendle, Under Armour's Patrik Frisk, and Gap's Sonia Syngal.Oliver Douliery/Getty, Mandel Ngan/Getty, Anadolu Agency/Getty, Business Wire/AP Exchange, Andy Kropa/AP Exchange, Tyler Le/Insider At least 10 large retail companies have lost their CEOs in recent months.  The turnover has roots in the pandemic, when e-commerce boomed and supply chains were disrupted. As the pandemic winds down, and a possible recession approaches, new skills are in demand. Just over a week after Stitch Fix's CEO stepped down, Bill Gurley, a board member and famed investor, made, in his own words, an "unconventional" move.  "If you know someone who would be perfect for the $SFIX CEO opportunity, we are all ears," Gurley tweeted. "Looking for operating prowess, strong product instincts, & a strong cultural leader."  It's the surest sign yet of a crisis facing the retail industry. Gap Inc.; Bed Bath & Beyond; Under Armour; Adidas; Foot Locker; Dollar General; Kohl's; VF Corporation, the owner of Vans; Designer Brands Inc., the parent company of DSW; the luxury-consignment marketplace The RealReal; and now, the personal-styling and clothing site Stitch Fix, have recently had leadership shake-ups. And while some have successfully found new CEOs, others seem to be struggling to fill one of corporate America's most-coveted jobs.  Experts told Insider the burst of turnover traces back to the pandemic. Supply chains got snarled, shoppers stopped visiting stores, and stimulus payments spiked demand, each making it difficult to measure how business was doing. As pandemic restrictions have eased and a possible recession nears, boards of directors are getting a better look at the underlying numbers and doing some "housecleaning," but struggling to find good candidates.  "Everyone was forgiving during the pandemic, but now we're anticipating we might get into rougher waters," Felipe Caro, a professor of operations at the UCLA Anderson School of Management, told Insider. "Many boards are saying, 'Do we have the right person? We better make these changes given that things are not going to get any easier.'" The pandemic made retail a nearly impossible business Marvin Ellison, the CEO of Lowe's, got his start in retail making $4.35 an hour as a security guard at Target.David Swanson/ReutersEven in good times, retail is difficult. "The retail business is tough, largely because it is such a volatile industry," Mark Cohen, the director of retail studies at Columbia University, said. "It's an industry that trades with billions of customers and it's an industry that lives and dies on the vagaries of consumer preference and behavior." The pandemic made it nearly impossible.  Stores shut down and people stopped shopping in person. Then stimulus payments sent demand for everything from sneakers to home goods spiking while supply chains snarled. And just when supply chains started to sort themselves out, inflation hit, and shoppers started to scale back spending. Inventories ballooned.  That's also about the time boards started to realize they might need new CEOs, but there aren't many great candidates in the wings.  Retail jobs were once considered stepping stones to launch employees into a long career in the industry. Marvin Ellison, the CEO of Lowe's, got his start making $4.35 an hour as a Target security guard; Costco's chief exec W. Craig Jelinek's first job was as a food stocker at a discount department store, and he worked his way up the ranks at Costco over three decades.  Now, management training has fallen by the wayside, Catherine Lepard, the global managing partner of the executive-recruiting firm Heidrick & Struggles' retail and direct-to-consumer practice, said. Department stores, for instance, once were "theaters of management-training programs," but then they started facing stiff competition from specialty stores. "That's when they started to scramble to say, 'Oh gosh, what do we need to do to trim our costs, become more lean, become more agile, become more nimble?'" she said. "That's where we started to see less of the longer-term investment in training." That means many retailers simply don't have as many management candidates, even though CEOs of large retail companies can make tens of millions of dollars annually. That's led to some retailers hunting for CEOs outside of the retail world — Under Armour hired Stephanie Linnartz, a Marriott Hotels veteran, to lead the company, for example — while others, like Gap, still haven't filled their top job. "The reality of doing the CEO search today, and we've got a number of them underway right now, is that if you just stick to the retail sector, it's a pretty limited pool of candidates," Lepard said.  Retail CEOs need 'peripheral vision'Workers at Starbucks stores and Amazon warehouses across the country have pushed to unionize, with many calling out the pay disparity between front-line workers and top executives.Michael M. Santiago/Getty ImagesGiven the chaos of the past few years, some boards will likely opt for CEOs with excellence in basic operations.  "Some really need to go back to basics and they need somebody who can rationalize inventory decisions and just get things in order," Caro said.  Cohen, who spent two decades in executive roles, most recently as Sears Canada's CEO, said chief executives also need experience dealing with customers.  "You have to be willing to put in the face-time and elbow-grease effort to become familiar with what you're getting into at a pretty detailed level," he said. "That can take six months to a year, so you have to be careful about jumping in and starting to pull levers without really knowing what the effect will be."  Given the ongoing turbulence and unpredictability, boards also want CEOs who can see around corners.  "The table stakes for the CEO of a successful complicated retail business have fundamentally changed," John Danner, a senior fellow in the UC Berkeley Haas School of Business, told Insider.  Danner said retail CEOs today need to be innately curious and able to quickly learn new subjects, what he described as a sort of "peripheral vision." For example, two years ago, nobody needed a metaverse strategy. Now, it's another item on the CEO to-do list.  So is labor unrest. Chief executives at retailers ranging from Amazon and Target to Starbucks are working through tangles of new problems with nascent unions. Among the thorns in those discussions: the pay chasm between CEOs and retail workers.  Danner wasn't surprised that a number of companies — including Under Armour and Foot Locker, both in male-dominated sportswear — have hired female CEOs. "Really effective leaders in times of crisis are usually women and women who are terrific translators," he said. "They can translate ambitions and uncertainty into a story." "Stories are one of the best tools for how we make sense out of complexity," Danner said. "In this kind of environment there is a real premium on a CEO's ability to develop a simple, compelling, emotionally magnetic story about what they're trying to do and why. A powerful story can buy you some time." Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 23rd, 2023

Charlie Javice has been fooling the world for years, long before founding Frank or allegedly defrauding JP Morgan. Here"s why they bought it.

Investors and media billed Charlie Javice as a groundbreaking young entrepreneur, until JPMorgan Chase sued her for millions of dollars of fraud. Charlie Javice; Arif Qazi/InsiderInvestors and media billed Charlie Javice as a groundbreaking young entrepreneur, until JPMorgan Chase sued her for millions of dollars of fraud.The ambitious entrepreneur Charlie Javice had been the subject of glowing profiles in Forbes, Fast Company, Inc. Magazine, and Insider since she was barely out of high school. Her financial aid startup, Frank, was featured in the New York Times, CNBC and Wall Street Journal. She'd been featured on Forbes's 30 Under 30 list and hailed by Wharton Business School as "the voice of a microfinance generation."In the past week, all that came crashing down. Barely a year after selling Frank to JPMorgan Chase & Co. for $175 million, the bank accused the 30-year-old of fabricating almost four million client names and emails — the overwhelming majority of her company's users.Javice's lawyer called her a "whistleblower" and said JP Morgan's decision to fire and sue her was a pretext to avoid paying her. But an Insider investigation, based on a review of company documents, media appearances and interviews with 10 former mentors, employees, and others who knew Javice, suggests that she had a history of exaggerating her accomplishments.Although she positioned herself as an innovator with groundbreaking solutions to student loans and solving global poverty, Javice's greatest talent may have been in leveraging elite institutions and national news outlets to gain an ever-growing platform. As Javice accumulated accolades and media appearances, no one — including Insider — seemed to question the fundamental claims of her businesses until the day JPMorgan alleged the numbers simply didn't add up.Over and over, Javice earned plaudits in the media for projects whose impact she overstated. Glowing profiles missed inaccuracies that could have been caught with a basic fact-check, focusing instead on her youth and status as one of a small number of women startup founders. One journalist even introduced Javice, then 19, to a key Frank investor.Despite a public record that raised questions about Javice and Frank — including warnings from the Department of Education and Federal Trade Commission, and a wage theft lawsuit from Frank's cofounder — news outlets and investors kept buying into the narrative that Javice spun. In one case, Javice pivoted her entire business model without realizing her new concept was part of a heavily regulated industry that required various approvals, but framed this as a learning moment.Now JPMorgan is alleging that Javice was involved in what would be the largest exaggeration of all. By the start of 2021, Frank was claiming to have 4.25 million users, according to JPMorgan's suit. In reality, it never had more than around 250,000, the bank claims. After leaving the University of Pennsylvania's Wharton business school, Javice traded on her reputation, bolstered by glowing profiles, as a successful entrepreneur.biiIf Javice's career before the suit had positioned her to be one of the future titans of her industry, JPMorgan's allegations may have put her on the trajectory to be the next Elizabeth Holmes, Sam Bankman-Fried or Adam Neumann.Javice and two attorneys representing her did not respond to a request for comment. Javice has lodged her own lawsuit against JPMorgan, alleging that the company tanked Frank's value by treating the startup's customer base as a marketing opportunity and fired her in order to avoid having to pay a $20 million retention bonus.A deeper dive into Javice's early claims would have revealed a history of questionable statements. In a 2018 interview with Insider, Javice claimed Frank secured an average of $28,000 for its users, and was helping students get "thousands off their tuition." That figure is more than twice the average aid disbursed to college students in the 2015-2016 school year, the most recent year for which data is available.But Frank didn't have any kind of magic formula to double the amount of aid students were receiving, student-aid expert Mark Kantrowitz told Insider. All Frank was doing was making it simpler to fill out standard federal financial aid paperwork, a form called the FAFSA."Frank did nothing that would have affected the amount of aid the students would have received had they filed the FAFSA on their own," Kantrowitz said. "That would not have led to a doubling of the amount of financial aid."  When Frank was describing how much aid its users received, "it appeared that they made up figures at random," Kantrowitz said. Lofty goals and big talk Javice gained a degree of finance-world fame while still in high school as a founder of PoverUp, a small microfinance organization with huge ambitions. Her brother and co-founder Elie posted on Facebook in 2011 that its goal was to reach 100 million high school, college and graduate students worldwide.PoverUp was styled as a nonprofit that would harness small student contributions to make loans to entrepreneurs in poor countries in order to lift them out of poverty. It came with a compelling origin story, where Javice had volunteered at a refugee camp on the Thai border with Myanmar and been inspired to create the startup. (Javice was there as part of a student travel and learning experience that now costs around $6,000 per trip.)Javice's goal for PoverUp was to "save the world. Nothing less," said Howard Finkelstein, a lawyer who helped her set the company up and served on its advisory board.The startup gave Javice the first taste of a symbiotic relationship with media outlets that would carry on for more than a decade. After graduating from a private Westchester high school to attend Wharton Business School, her involvement in PoverUp garnered her a spot on Fast Company's 2011 list of 100 Most Creative People and a complimentary writeup in Forbes. PoverUp was ranked as one of the "11 coolest college startups" by Inc. Magazine, while Wharton called Javice "the voice of a microfinance generation" in a video it has since removed from YouTube.There was this air about her where she wanted everyone to know that she was an up and coming leader in the field, that she had been anointed.Soon after landing a spot on Fast Company's list, Javice appeared on a CNBC reality television special featuring anti-democratic billionaire Peter Thiel where entrepreneurs under the age of 20 vied against each other for a $100,000 Thiel Fellowship. Javice has said she was offered that grant but turned it down, but a rejection email obtained by The Daily Beast shows the then-president of the Thiel Foundation informing her that she was not selected.Javice traded on her reputation as a could-have-been Thiel Fellow and Fast Company designee throughout her time at Wharton, according to PoverUp's Tumblr and a person who knew her at Wharton."There was this air about her where she wanted everyone to know that she was an up and coming leader in the field, that she had been anointed," that person said.But there were fissures emerging between how Javice was heralded in writeups and the reality behind her businesses. Insider found no evidence that PoverUp registered as a nonprofit, and two of the three microlenders that Inc. reported were in talks to partner with PoverUp said that nothing came of the meetings. Despite Javice telling Wharton Magazine in 2013 that PoverUp raised $300,000 from friends and family, a former board member told Insider that it never disbursed a single loan. "She really didn't get much traction," said Finkelstein, the lawyer. "When she finished school, she basically gave that up."Pivoting and spinningAfter Javice graduated from Wharton in 2013, she immediately turned toward her next startup. The venture would end with a lawsuit in an Israeli court and, by Javice's own telling, her firing all her employees after losing hundreds of thousands of dollars.Javice, along with Israeli entrepreneur Adi Omesy, had initially set out to build Tapd — a company that connected young workers with job opportunities via text message, according to an archived version of Tapd's website. That idea seems to have fizzled.Do you have a tip or insight to share? Contact reporter Katherine Long via phone or the encrypted messaging app Signal (+1-206-375-9280), or at klong@insider.com. Contact reporter Jack Newsham via Signal (+1-314-971-1627), or at jnewsham@insider.com.Tapd next pivoted to building an alternative credit score for college students. That concept attracted investors, but it also failed after she said the company learned it would need to secure regulatory approvals to operate as a credit bureau. Javice had apparently sold investors on a business before she was sure how to operate it legally – a strategy almost par for the course in the startup world, where entrepreneurs often pitch themselves as "disrupting" the existing modes of doing business."Little did I know that there was this whole body of regulation," she said on a 2021 Planet Economics podcast, complying with which would cost "millions of dollars a year." "That was a no-go." On another podcast Javice recalled that by 2016 she was "$500,000 in the red" and in an interview described needing to fire "all my employees." "It was the worst thing I've ever had to do," she said in the interview with Authority Magazine, which has since deleted the article. "A lot of my employees were close friends, and still won't talk with me to this day. They didn't understand that it wasn't a personal decision."Javice's Tapd co-founder Omesy, who on LinkedIn also calls himself a co-founder of Frank, sued Javice in Israel in 2017 for unpaid wages and failing to award him 10% equity in the company. Omesy additionally claimed that his salary for one month was drawn from Javice's personal bank account.Tapd faced a judgment for about $35,000 in 2021. Omesy didn't respond to Insider's requests for an interview.While the story of Tapd seemed to be one of failure and contentious mismanagement, Javice would spin that turmoil into a story of triumph. The young founder made the crisis part of her personal success story, omitting the lawsuit and framing the layoffs as a teaching moment. Tapd would be rebranded as Frank, a new startup with a new mission and a new pitch.In a 2020 email to an online magazine about a possible feature on Javice, obtained by Insider, Frank's public relations representative described it as "miraculous" that Frank had gotten so far. "Charlie's first company fizzled after 18 months, so after losing all her investors' money, she convinced every one of them to fund her next company, Frank."A media feedback loopWhen Javice launched Frank in 2017, she came prepared with a story readymade for the ways that entrepreneurs and the outlets that cover them talk about success. Building a startup is hard, failure is almost inevitable, and real leaders learn from that adversity to find their true calling.Journalists bit, and she soon tapped into a media feedback loop. Javice was important because she appeared in major news outlets, and major news outlets covered her because she was important. Javice made the podcast circuit, speaking about "the merits of being an entrepreneur," why "rejection is a numbers game," and "Frank's journey to reach almost 10 million households." She was heralded as a "female disruptor." Insider featured her twice, in 2018 and 2021.The complications of her past leadership at PoverUp and Tapd, especially the lawsuit, never appeared. In 2019, she landed a spot on Crain's New York Business 40 Under 40 list and Forbes's 30 Under 30 — even as she continued to make inaccurate statements about the field she was supposed to be an expert in, student aid.Javice's 2018 op-ed in the New York Times had a lengthy correction appended, for instance. So did a piece in the Wall Street Journal that was built around an interview with her. In a 2019 appearance on New York's ABC news station, she claimed that college students left $40 billion in financial aid on the table every year — a number that student aid expert Kantrowitz called "bogus."In an earnings call this month, JPMorgan Chase & Co. CEO Jamie Dimon said the bank's acquisition of Frank was "a huge mistake."Jim Watson/Getty ImagesMeanwhile, a journalism connection would help her land a key investor. Dominic Chu, a reporter for CNBC, had given a teenage Javice a tour of Bloomberg's headquarters, as the PoverUp team chronicled on a Tumblr post from around 2011. Chu later introduced her to Michael Eisenberg, the founder of Israeli firm Aleph Venture Capital. Aleph, an early backer of WeWork, convinced other investors to hop on board, including Silicon Valley firm Slow Ventures, which invested $100,000 in Frank's 2017 seed round, Slow partner Sam Lessin said.Aleph "is a firm we really like and collaborate with a lot," Lessin wrote in an email. The "check was a quick angel one for us," he added, "to be supportive."Ten years later, after Frank had been acquired by JP Morgan, Eisenberg tweeted his thanks at Chu for the introduction. "Charlie Javice is one of those folks who, at the age of 20, made me think 'what have I done with my life?'" Chu responded. "Congrats to Charlie on a great entrepreneurship story...and to your team on a successful startup investment story!"Chu declined to comment on the record. Eisenberg did not respond to repeated requests for comment.In interviews, Javice continued to cast herself as a mold-breaking entrepreneur."I built a business and raised funds out of college, turning down a finance job, even though I was told I would fail because I didn't have business experience," she told Insider in 2021, in an article titled "3 leadership tactics a 28-year-old founder who's raised $20 million for her startup lives by." "My impatience to achieve my goals helped me see past that 'conventional wisdom' to take a risk that landed me where I am today."But even the account circulated by Javice's press team, that she had convinced every one of her old investors to buy in to Frank, had holes in it.At least one big-name investor described in several news accounts as a Frank backer told Insider his actual involvement was minimal. Despite being included in a list of investors that included Aleph and Marc Rowan, the chairman of Apollo Global Management, Tusk Ventures didn't actually cut a check to Frank, according to its founder Bradley Tusk."My consulting firm did a little work for Frank and got paid in equity, which is why you see us on the cap table," he said. "I only met Charlie once.""I painted a rosier picture than things truly were."At Frank, Javice admitted she sometimes painted a more positive picture of the company's health than was supported by the facts."Being a founder, I'm obviously skewed towards being overly optimistic – and sometimes that works to your advantage, sometimes it doesn't," she said on a 2021 podcast. "And there were definitely times where I painted a rosier picture than things truly were."Frank's public statements about its user base were all over the map. In April 2017, Frank's website said "thousands" of families using its service had received "$75 million in free aid." (That same website had stock images of people, including of "smiling mature woman" and "good looking cheerful manager," labeled as actual users.) In November 2018, Frank's website said it had helped 300,000 families unlock over $7 billion in aid.Frank stuck with the "over 300,000" figure for more than two years. But suddenly, in January 2021, the company began claiming that it served "over 4.25 million students," according to archived versions of its website and tweets from Frank's account referenced in JP Morgan's lawsuit. In reality, Frank only ever had about 250,000 users, according to JPMorgan's legal complaint.I cried at work a lot.Javice maintained a public persona of a savvy entrepreneur, doling out advice to would-be founders about the keys to success. Internally, she was pressuring employees to grow Frank's user base, two former employees told Insider. One recalled that Frank struggled to build name recognition through multiple rebrandings. "Figuring out how to grow was not very strong," this employee said. "There wasn't a clear direction all the time.""It was all about growth," another employee said, describing weekly meetings with Javice and then-chief growth officer Olivier Amar. The two leaders emphasized repeatedly in those meetings that "we need to follow through for the people who are investing in this." Amar told this employee that if Frank didn't meet specific user metrics, "then you're gonna lose your job." Amar did not respond to requests for comment.Both former employees said working at Frank cratered their mental health. "I cried at work a lot," one said.Meanwhile, Frank was facing scrutiny from government agencies, including the Department of Education and the FTC, over allegations that it was misrepresenting its products and relationship to the federal government, Insider has previously reported. Both agencies threatened Frank with legal action unless it changed its practices, and Frank settled with the DOE. An early Frank investor, though, later touted the company's influence with the Department of Education.Javice "made waves with the US Department of Education that resulted in key policy changes for American families," Aleph Venture Capital founder Eisenberg wrote in a blog post in 2021 celebrating Frank's acquisition. Eisenberg's Aleph Venture Capital also backed WeWork, whose founder, Adam Neumann, shown here, was ousted from the company in 2019 after revelations of mismanagement botched WeWork's IPO.Jackal Pan/Visual China Group via Getty ImagesAfter JPMorgan acquired Frank, the bank set out to turn what it thought were the startup's more than 4 million users into JPMorgan customers. Last January, JPMorgan sent a marketing email to a batch of about 400,000 Frank users."The marketing campaign was a disaster," the bank alleged in its lawsuit. About 70% of the emails bounced back, and only 103 of the email's 400,000 recipients clicked through to Frank's website. JPMorgan launched an internal investigation.The bank alleges its investigation found that Javice and Amar had hired a New York data science professor to create more than 4 million fake profiles on Frank. Javice and Amar supplemented those fake Frank profiles with email addresses purchased from data brokers, according to the bank's lawsuit.The marketing campaign was a disaster.The lawsuit is now prompting many of the same institutions that propelled Javice's rise to begin interrogating her exaggerations. Forbes published a lengthy takedown of Javice this week, though without mention that the magazine had previously included her on its 30 Under 30 list. Investors have distanced themselves or gone quiet. JPMorgan has gone from embracing Javice as a financial wunderkind to accusing her of being a serial fabulist – though the brazen nature of Javice's alleged fraud has prompted questions about why JPMorgan didn't catch on sooner. "In every aspect of her interactions with JPMC, Javice had a choice," the bank, which once touted its acquisition of the "fastest growing college financial planning platform," alleged in its lawsuit: Reveal the truth about her startup and accept that Frank was not as valuable as she claimed, or lie to inflate Frank's value."Javice chose each time to lie," it concluded.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 21st, 2023

Aimbridge Hospitality Selected to Manage White House Inn Napa Valley Under New Ownership

Aimbridge Hospitality, a leading global hospitality company, ​​has been retained to manage the White House Inn Napa Valley recently acquired by investment company Cambridge Lansdowne. Located in the popular getaway destination of downtown Napa Valley, California, the property is managed through Aimbridge Hospitality’s highly specialized Evolution Lifestyle operating division. Future... The post Aimbridge Hospitality Selected to Manage White House Inn Napa Valley Under New Ownership appeared first on Real Estate Weekly. Aimbridge Hospitality, a leading global hospitality company, ​​has been retained to manage the White House Inn Napa Valley recently acquired by investment company Cambridge Lansdowne. Located in the popular getaway destination of downtown Napa Valley, California, the property is managed through Aimbridge Hospitality’s highly specialized Evolution Lifestyle operating division. Future plans include renovations of the interior and exterior of the resort-style hotel to bring a refreshed classical look to the historic yet modern property, creating impactful guest experiences. Upon completion, the hotel will be the center for events and weddings in Downtown Napa, offering food and beverage from local purveyors and nationally renowned chefs. “White House Inn Napa Valley is a premier boutique property with great potential—an asset we are excited to add to our portfolio,” said Pedro Miranda, co-founder and managing partner of Cambridge Lansdowne. “As experienced management for this property, Aimbridge Hospitality was the natural fit to partner with as we look ahead to the future and the possibilities we can uncover with such a special property.” “The Evolution team is dedicated to operational excellence and ensuring our owners receive unparalleled services while treating guests to the best experiences in hospitality,” said Will Loughran, Divisional President, Aimbridge Evolution Lifestyle. “The White House Inn is designed as a truly unique destination, and we are proud to partner with Pedro and the team at Cambridge Lansdowne as the new owners.” Built in 1855, the White House Inn features 17 rooms with contemporary decor and stylish details, blended into the perfect environment for celebrating the special moments in life, such as friends’ getaways, downtown vacations, anniversaries or weddings. Guests can enjoy ultimate privacy and luxury at this Victorian mansion with cozy fireplaces, lush gardens and more—special elements that ensure each visitor has an unforgettable experience during their stay. The downtown inn offers an abundance of on-site services and amenities, including a private outdoor pool and hot tub, courtyard fire pit, full-service spa, guest lounge, on-site yoga, personalized concierge and Napa Valley wine tasting. Breakfast at the White House Inn involves an ensemble of small plates and homemade baked goods—a sampling of delicious savory and sweet items. The post Aimbridge Hospitality Selected to Manage White House Inn Napa Valley Under New Ownership appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyJan 19th, 2023

Executive Insights: Vacos’ Alicia Clock and Kelly Maxwell (video)

Dallas Business Journal Market President and Publisher Ollie Chandhok interviews Vaco’s Alicia Clock, partner and managing director of consulting services, and Kelly Maxwell, partner and managing director of accounting and finance/talent solutions. Vaco is a global talent solutions and business consulting firm serving businesses and job seekers across multiple industries and specialties. Learn more at vaco.com......»»

Category: topSource: bizjournalsJan 19th, 2023

Here"s what top executives at Davos are saying about a recession. Many can see silver linings.

C-suite members at companies like McKinsey, EY, and Cisco talk about economic growth, labor markets, and hiring practices at the World Economic Forum. The World Economic Forum is being held this week in Davos, Switzerland.Zheng Huansong/Getty Images. Executives at Davos weighed in on the likelihood and severity of a recession in 2023.  Most expect the US to have a shallow recession, but Europe and elsewhere could be hit harder. Most told Insider they don't expect economic growth to significantly weigh on labor markets. Executives gathered at Davos this week, with the most turbulent economic period since the global financial crisis near the top of their agendas.Insider spoke with C-suite members from groups including McKinsey, KPMG, EY, and Cisco about their outlook for the economy in 2023, and how it might affect the labor market and their businesses. Tracy Francis, McKinsey chief marketing officer"The scenario is complicated. We have an energy crisis, we have inflation, we have the specter of decoupling … but I think one of the things we are talking to clients a lot about is not talking ourselves into a recession. "An event like this has such a power to influence the level of optimism or otherwise that is out there. While we don't want to be Pollyanna about macro-economic trends, I do think there is bright sports around the world. India, Indonesia, all those kind of things that are going on that we are encouraging clients to think about, and like I said not talking ourselves into a recession."Paul Knopp, KPMG CEO"The potential recession that might occur is largely central bank-induced. I think what's really going to be worth watching is how quickly will they turn, because a central-bank-induced recession in theory would be more easily unwound than a recession that is due to fundamental things that are wrong with society and the economy."My personal view is I think that if we have a recession in the US, that there's a really good chance that could be very short and shallow. If there is one, the global picture is more complicated."Rima Qureshi, Verizon chief strategy officer"I think regardless of whether it is a recession, whether we are dealing with the inflation and how long it lasts, I think there will be a long period of uncertainty, whether it be geopolitical, economic, environmental. I think there's going to be a lot of uncertainty. "And that means it's time to really think about hunkering down and focusing on what's important, and really focusing on the fundamentals, which is what we are doing within the company."Fran Katsoudas, Cisco chief people, policy, and purpose officer"Some of the layoffs are more about cutting costs. And we've heard companies talk about the fact that perhaps during the pandemic, they over-hired. And so those layoffs are absolutely related to economic stability and growth."You have other layoffs that are actually about the transformation of companies. And I think in that situation, it is more of a skills discussion, and how do we ensure that we have what we need, as we move forward?"Andy Baldwin, EY global managing partner "The consensus view is that we appear to be moving into a recession. But I think it's important to qualify that … I think this recession is asymmetric. So yeah, we've got clearly parts of the world that are growing strongly and I think are going to continue to grow strongly, even when of the possible future recession."My own personal view is, I think we will likely see a technical recession, two quarters of negative GDP effectively, in parts of the world, most likely Europe, perhaps the US, but it doesn't feel like this is going to be a severe recession."Peggy Johnson, Magic Leap CEO "I think the economy will sustain at the level that it's at now. I don't know that it's going to get much worse, but I don't know that it's going to get much better into 2023. That's kind of my feeling."Jeff Maggioncalda, Coursera CEO"If you just read our earnings announcement and look at our results, we have seen a slowdown that occurred during 2022. Will that get worse or will that get better in 2023? We're not really super positive. Our business's three segments, historically, have been counter-cyclical."When unemployment goes up, people will get a degree because they want to be more qualified to get a more scarce job. When unemployment goes down, people are like 'I don't want to get a degree, I want to make some money'. So I think that segment will be counter-cyclical. We will do better if there's a recession – at least if there's a recession with unemployment."Becky Frankiewicz, ManpowerGroup president "There's a lot more optimism now, particularly in the labor market. So you saw the eurozone unemployment reached a historical low, the US labor market is on a 50-year low for unemployment. And so the labor markets are defying the odds of economic principles. "No one's predicting a super robust economy, but more 1% GDP growth versus negative one or 2%. And I think the labor market will probably have a very shallow impact. I think there will be impact more than we're seeing now. But I think it'll be a shallow impact."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

Exclusive: OpenAI Used Kenyan Workers on Less Than $2 Per Hour to Make ChatGPT Less Toxic

A TIME investigation reveal the poor conditions faced by the workers who made ChatGPT possible Content warning: this story contains descriptions of sexual abuse ChatGPT was hailed as one 2022’s most impressive technological innovations upon its release last November. The powerful artificial intelligence (AI) chatbot can generate text on almost any topic or theme, from a Shakespearean sonnet reimagined in the style of Megan Thee Stallion, to complex mathematical theorems described in language a 5 year old can understand. Within a week, it had more than a million users. ChatGPT’s creator, OpenAI, is now reportedly in talks with investors to raise funds at a $29 billion valuation, including a potential $10 billion investment by Microsoft. That would make OpenAI, which was founded in San Francisco in 2015 with the aim of building superintelligent machines, one of the world’s most valuable AI companies. [time-brightcove not-tgx=”true”] But the success story is not one of Silicon Valley genius alone. In its quest to make ChatGPT less toxic, OpenAI used outsourced Kenyan laborers earning less than $2 per hour, a TIME investigation has found. The work was vital for OpenAI. ChatGPT’s predecessor, GPT-3, had already shown an impressive ability to string sentences together. But it was a difficult sell, as the app was also prone to blurting out violent, sexist and racist remarks. This is because the AI had been trained on hundreds of billions of words scraped from the internet—a vast repository of human language. That huge training dataset was the reason for GPT-3’s impressive linguistic capabilities, but was also perhaps its biggest curse. Since parts of the internet are replete with toxicity and bias, there was no easy way of purging those sections of the training data. Even a team of hundreds of humans would have taken decades to trawl through the enormous dataset manually. It was only by building an additional AI-powered safety mechanism that OpenAI would be able to rein in that harm, producing a chatbot suitable for everyday use. Read More: AI Chatbots Are Getting Better. But an Interview With ChatGPT Reveals Their Limits To build that safety system, OpenAI took a leaf out of the playbook of social media companies like Facebook, who had already shown it was possible to build AIs that could detect toxic language like hate speech to help remove it from their platforms. The premise was simple: feed an AI with labeled examples of violence, hate speech, and sexual abuse, and that tool could learn to detect those forms of toxicity in the wild. That detector would be built into ChatGPT to check whether it was echoing the toxicity of its training data, and filter it out before it ever reached the user. It could also help scrub toxic text from the training datasets of future AI models. To get those labels, OpenAI sent tens of thousands of snippets of text to an outsourcing firm in Kenya, beginning in November 2021. Much of that text appeared to have been pulled from the darkest recesses of the internet. Some of it described situations in graphic detail like child sexual abuse, bestiality, murder, suicide, torture, self harm, and incest. OpenAI’s outsourcing partner in Kenya was Sama, a San Francisco-based firm that employs workers in Kenya, Uganda and India to label data for Silicon Valley clients like Google, Meta and Microsoft. Sama markets itself as an “ethical AI” company and claims to have helped lift more than 50,000 people out of poverty. Khadija Farah for TIMESama’s office in Nairobi, Kenya, on Feb. 10, 2022. The data labelers employed by Sama on behalf of OpenAI were paid a take-home wage of between around $1.32 and $2 per hour depending on seniority and performance. For this story, TIME reviewed hundreds of pages of internal Sama and OpenAI documents, including workers’ payslips, and interviewed four Sama employees who worked on the project. All the employees spoke on condition of anonymity out of concern for their livelihoods. The story of the workers who made ChatGPT possible offers a glimpse into the conditions in this little-known part of the AI industry, which nevertheless plays an essential role in the effort to make AI systems safe for public consumption. “Despite the foundational role played by these data enrichment professionals, a growing body of research reveals the precarious working conditions these workers face,” says the Partnership on AI, a coalition of AI organizations to which OpenAI belongs. “This may be the result of efforts to hide AI’s dependence on this large labor force when celebrating the efficiency gains of technology. Out of sight is also out of mind.” (OpenAI does not disclose the names of the outsourcers it partners with, and it is not clear whether OpenAI worked with other data labeling firms in addition to Sama on this project.) In a statement, an OpenAI spokesperson confirmed that Sama employees in Kenya contributed to a tool it was building to detect toxic content, which was eventually built into ChatGPT. The statement also said that this work contributed to efforts to remove toxic data from the training datasets of tools like ChatGPT. “Our mission is to ensure artificial general intelligence benefits all of humanity, and we work hard to build safe and useful AI systems that limit bias and harmful content,” the spokesperson said. “Classifying and filtering harmful [text and images] is a necessary step in minimizing the amount of violent and sexual content included in training data and creating tools that can detect harmful content.” Even as the wider tech economy slows down amid anticipation of a downturn, investors are racing to pour billions of dollars into “generative AI,” the sector of the tech industry of which OpenAI is the undisputed leader. Computer-generated text, images, video, and audio will transform the way countless industries do business, the most bullish investors believe, boosting efficiency everywhere from the creative arts, to law, to computer programming. But the working conditions of data labelers reveal a darker part of that picture: that for all its glamor, AI often relies on hidden human labor in the Global South that can often be damaging and exploitative. These invisible workers remain on the margins even as their work contributes to billion-dollar industries. Read More: AI Helped Write This Play. It May Contain Racism One Sama worker tasked with reading and labeling text for OpenAI told TIME he suffered from recurring visions after reading a graphic description of a man having sex with a dog in the presence of a young child. “That was torture,” he said. “You will read a number of statements like that all through the week. By the time it gets to Friday, you are disturbed from thinking through that picture.” The work’s traumatic nature eventually led Sama to cancel all its work for OpenAI in February 2022, eight months earlier than planned. The Sama contracts Documents reviewed by TIME show that OpenAI signed three contracts worth about $200,000 in total with Sama in late 2021 to label textual descriptions of sexual abuse, hate speech, and violence. Around three dozen workers were split into three teams, one focusing on each subject. Three employees told TIME they were expected to read and label between 150 and 250 passages of text per nine-hour shift. Those snippets could range from around 100 words to well over 1,000. All of the four employees interviewed by TIME described being mentally scarred by the work. Although they were entitled to attend sessions with “wellness” counselors, all four said these sessions were unhelpful and rare due to high demands to be more productive at work. Two said they were only given the option to attend group sessions, and one said their requests to see counselors on a one-to-one basis instead were repeatedly denied by Sama management. In a statement, a Sama spokesperson said it was “incorrect” that employees only had access to group sessions. Employees were entitled to both individual and group sessions with “professionally-trained and licensed mental health therapists,” the spokesperson said. These therapists were accessible at any time, the spokesperson added. The contracts stated that OpenAI would pay an hourly rate of $12.50 to Sama for the work, which was between six and nine times the amount Sama employees on the project were taking home per hour. Agents, the most junior data labelers who made up the majority of the three teams, were paid a basic salary of 21,000 Kenyan shillings ($170) per month, according to three Sama employees. They also received monthly bonuses worth around $70 due to the explicit nature of their work, and would receive commission for meeting key performance indicators like accuracy and speed. An agent working nine-hour shifts could expect to take home a total of at least $1.32 per hour after tax, rising to as high as $1.44 per hour if they exceeded all their targets. Quality analysts—more senior labelers whose job was to check the work of agents—could take home up to $2 per hour if they met all their targets. (There is no universal minimum wage in Kenya, but at the time these workers were employed the minimum wage for a receptionist in Nairobi was $1.52 per hour.) In a statement, a Sama spokesperson said workers were asked to label 70 text passages per nine hour shift, not up to 250, and that workers could earn between $1.46 and $3.74 per hour after taxes. The spokesperson declined to say what job roles would earn salaries toward the top of that range. “The $12.50 rate for the project covers all costs, like infrastructure expenses, and salary and benefits for the associates and their fully-dedicated quality assurance analysts and team leaders,” the spokesperson added. Read More: Fun AI Apps Are Everywhere Right Now. But a Safety ‘Reckoning’ Is Coming An OpenAI spokesperson said in a statement that the company did not issue any productivity targets, and that Sama was responsible for managing the payment and mental health provisions for employees. The spokesperson added: “we take the mental health of our employees and those of our contractors very seriously. Our previous understanding was that [at Sama] wellness programs and 1:1 counseling were offered, workers could opt out of any work without penalization, exposure to explicit content would have a limit, and sensitive information would be handled by workers who were specifically trained to do so.” In the day-to-day work of data labeling in Kenya, sometimes edge cases would pop up that showed the difficulty of teaching a machine to understand nuance. One day in early March last year, a Sama employee was at work reading an explicit story about Batman’s sidekick, Robin, being raped in a villain’s lair. (An online search for the text reveals that it originated from an online erotica site, where it is accompanied by explicit sexual imagery.) The beginning of the story makes clear that the sex is nonconsensual. But later—after a graphically detailed description of penetration—Robin begins to reciprocate. The Sama employee tasked with labeling the text appeared confused by Robin’s ambiguous consent, and asked OpenAI researchers for clarification about how to label the text, according to documents seen by TIME. Should the passage be labeled as sexual violence, she asked, or not? OpenAI’s reply, if it ever came, is not logged in the document; the company declined to comment. The Sama employee did not respond to a request for an interview. How OpenAI’s relationship with Sama collapsed In February 2022, Sama and OpenAI’s relationship briefly deepened, only to falter. That month, Sama began pilot work for a separate project for OpenAI: collecting sexual and violent images—some of them illegal under U.S. law—to deliver to OpenAI. The work of labeling images appears to be unrelated to ChatGPT. In a statement, an OpenAI spokesperson did not specify the purpose of the images the company sought from Sama, but said labeling harmful images was “a necessary step” in making its AI tools safer. (OpenAI also builds image-generation technology.) In February, according to one billing document reviewed by TIME, Sama delivered OpenAI a sample batch of 1,400 images. Some of those images were categorized as “C4”—OpenAI’s internal label denoting child sexual abuse—according to the document. Also included in the batch were “C3” images (including bestiality, rape, and sexual slavery,) and “V3” images depicting graphic detail of death, violence or serious physical injury, according to the billing document. OpenAI paid Sama a total of $787.50 for collecting the images, the document shows. Within weeks, Sama had canceled all its work for OpenAI—eight months earlier than agreed in the contracts. The outsourcing company said in a statement that its agreement to collect images for OpenAI did not include any reference to illegal content, and it was only after the work had begun that OpenAI sent “additional instructions” referring to “some illegal categories.” “The East Africa team raised concerns to our executives right away. Sama immediately ended the image classification pilot and gave notice that we would cancel all remaining [projects] with OpenAI,” a Sama spokesperson said. “The individuals working with the client did not vet the request through the proper channels. After a review of the situation, individuals were terminated and new sales vetting policies and guardrails were put in place.” In a statement, OpenAI confirmed that it had received 1,400 images from Sama that “​​included, but were not limited to, C4, C3, C2, V3, V2, and V1 images.” In a followup statement, the company said: “We engaged Sama as part of our ongoing work to create safer AI systems and prevent harmful outputs. We never intended for any content in the C4 category to be collected. This content is not needed as an input to our pretraining filters and we instruct our employees to actively avoid it. As soon as Sama told us they had attempted to collect content in this category, we clarified that there had been a miscommunication and that we didn’t want that content. And after realizing that there had been a miscommunication, we did not open or view the content in question — so we cannot confirm if it contained images in the C4 category.” Sama’s decision to end its work with OpenAI meant Sama employees no longer had to deal with disturbing text and imagery, but it also had a big impact on their livelihoods. Sama workers say that in late February 2022 they were called into a meeting with members of the company’s human resources team, where they were told the news. “We were told that they [Sama] didn’t want to expose their employees to such [dangerous] content again,” one Sama employee on the text-labeling projects said. “We replied that for us, it was a way to provide for our families.” Most of the roughly three dozen workers were moved onto other lower-paying workstreams without the $70 explicit content bonus per month; others lost their jobs. Sama delivered its last batch of labeled data to OpenAI in March, eight months before the contract was due to end. Because the contracts were canceled early, both OpenAI and Sama said the $200,000 they had previously agreed was not paid in full. OpenAI said the contracts were worth “about $150,000 over the course of the partnership.” Sama employees say they were given another reason for the cancellation of the contracts by their managers. On Feb. 14, TIME published a story titled Inside Facebook’s African Sweatshop. The investigation detailed how Sama employed content moderators for Facebook, whose jobs involved viewing images and videos of executions, rape and child abuse for as little as $1.50 per hour. Four Sama employees said they were told the investigation prompted the company’s decision to end its work for OpenAI. (Facebook says it requires its outsourcing partners to “provide industry-leading pay, benefits and support.”) Read More: Inside Facebook’s African Sweatshop Internal communications from after the Facebook story was published, reviewed by TIME, show Sama executives in San Francisco scrambling to deal with the PR fallout, including obliging one company, a subsidiary of Lufthansa, that wanted evidence of its business relationship with Sama scrubbed from the outsourcing firm’s website. In a statement to TIME, Lufthansa confirmed that this occurred, and added that its subsidiary zeroG subsequently terminated its business with Sama. On Feb. 17, three days after TIME’s investigation was published, Sama CEO Wendy Gonzalez sent a message to a group of senior executives via Slack: “We are going to be winding down the OpenAI work.” On Jan. 10 of this year, Sama went a step further, announcing it was canceling all the rest of its work with sensitive content. The firm said it would not renew its $3.9 million content moderation contract with Facebook, resulting in the loss of some 200 jobs in Nairobi. “After numerous discussions with our global team, Sama made the strategic decision to exit all [natural language processing] and content moderation work to focus on computer vision data annotation solutions,” the company said in a statement. “We have spent the past year working with clients to transition those engagements, and the exit will be complete as of March 2023.” But the need for humans to label data for AI systems remains, at least for now. “They’re impressive, but ChatGPT and other generative models are not magic – they rely on massive supply chains of human labor and scraped data, much of which is unattributed and used without consent,” Andrew Strait, an AI ethicist, recently wrote on Twitter. “These are serious, foundational problems that I do not see OpenAI addressing.” With reporting by Julia Zorthian/New York.....»»

Category: topSource: timeJan 18th, 2023

Airlines Are Terrible. Small Cities Are Still Paying Them Millions of Dollars to Stick Around

After deregulation in 1978, airlines abandoned small cities at the expense of big hubs. That's had major economic implications. For each of the past five years, Wendy Volk, a real estate agent in Cheyenne, Wyo., has raised money from local businesses, philanthropists, and government officials to pay millions to SkyWest, an airline that made $50 million last quarter. The payments are to ensure that the airline will keep running the only commercial flight out of the Cheyenne airport, which is scheduled and sold by SkyWest’s partner, United. In March of 2018, after Great Lakes Airlines filed for bankruptcy, Cheyenne became one of dozens of small American cities to lose commercial air service—in its case, for the first time in 90 years. The only way to convince an airline to serve the metro area of about 96,000 people, says Volk, a volunteer with the nonprofit Cheyenne Regional Air Focus Team (CRAFT), was to pledge a few million dollars a year, meant to offset any potential losses if the route itself wasn’t making money—which it wasn’t. [time-brightcove not-tgx=”true”] In 2018, CRAFT came to a $2.1 million agreement with SkyWest, a regional airline that operates flights for the big carriers; the parties renegotiate the deal every year and it reached $2.5 million this year. As the airline industry continues its decades-long consolidation, more cities like Cheyenne are faced with the choice of either losing air service or coming up with these payments, called “minimum revenue guarantees,” so that multibillion-dollar airlines will deign to serve their relatively smaller communities. The trend has grown over the course of the pandemic: in the last year, medium-sized metro areas like Lincoln, Neb.; Pocatello, Idaho; and Tulsa, Okla., have used federal COVID-19 relief funds to pay airlines minimum revenue guarantees. The alternative is bleak; since 2019, 14 airports in the U.S. have lost all scheduled commercial air service, according to the Regional Airline Association, which represents airlines that provide these regional flights. Many other cities have lost connections; the three biggest U.S. airlines—American, Delta, and United—have pulled out of 68 cities combined since April 2020, according to a study from the consulting firm Ailevon Pacific. Raising money to keep afloat airlines, which don’t have the best reputation these days, may seem irrational on its face, but Volk says the loss is offset by preventing the huge blow to the local economy that would ensue were air service to stop completely. When regions don’t have commercial flights, companies don’t want to locate there, people don’t want to move there, and tourists don’t want to visit, she says. “When we didn’t have reliable air service, people just thought we were the sticks,” she says. “How can you have an airport and not have air service?” How deregulation destroyed the airline industry It wasn’t always this way. Until 1978, the airlines were regulated, and a federal agency called the Civil Aeronautics Board dictated where they flew and what they could charge. The U.S. government saw airlines as an essential service, kind of like the post office, and ensured that even small communities were connected to others by air. If airlines lost money on those routes, they’d make it up on more profitable routes between big cities because of the prices set by the government. But in the late 1970s, neoliberal economists like Cornell’s Alfred Kahn began raising concerns that regulating airlines was stifling competition and increasing prices for consumers. In response, Democrats, led by Sen. Edward Kennedy, pushed for changes in the hope they would bring more affordable air travel to millions of Americans. President Jimmy Carter signed the bill deregulating airlines in 1978, phasing out the Civil Aeronautics Board and allowing airlines to decide where to fly and what to charge. Around the same time, the government also deregulated the trucking industry, intercity buses, and the railroad industry. Many of the Congresspeople who initially voted for deregulation came to hate the results—West Virginia Senator Robert Byrd said it was one of only two votes he regretted in his career. Some airline experts say that deregulation led to the worst of both worlds: a consolidated industry with few airlines and little regulation. Airlines took a no-holds barred approach to competition, trying to drive each other out of business. There were massive waves of airline bankruptcies in the 1980s, and the industry went through a wave of consolidations and mergers in the 1990s, and then again between 2007 and 2012. Read More: Business Travel’s Demise Could Have Far-Reaching Consequences Today, four airlines—American, Delta, United, and Southwest—control 80% of the market and the airline industry is smaller and more concentrated than at any time since 1914, says William McGee, a longtime Consumer Reports editor who is now a senior fellow for aviation and travel at the American Economics Liberties Project. The promise that deregulation would allow new airlines to enter the marketplace and compete has fallen flat too; until 2021, when Breeze Airways started operations, the market had gone 14 years without a new entrant, he says. “There was a promise that was made with deregulation—that the advent of wide-body, further-range aircraft was making the world smaller and all Americans had a right to it,” he says. “Well, you don’t, right now.” Just about everyone has felt the effects of deregulation in recent years. Before deregulation, airlines were required to honor each other’s tickets, so people whose flights were canceled on one airline could easily move to another, says McGee. Ticket prices were more predictable, as were air routes, so you could buy a ticket for a few months out and be reasonably sure the airline wasn’t going to change the ticket or go out of business. Anyone who has had to fly to an out-of-the-way hub to get somewhere else, or on a small prop plane to get to a mid-sized market, can thank deregulation. Airlines developed hub-and-spoke models once they weren’t mandated to fly to and from certain cities. Deregulation also dramatically increased the responsibilities of the Federal Aviation Administration, which has been underfunded and understaffed in recent years, says McGee, as was evidenced by the agency’s recent meltdown leading to thousands of flight cancellations and even more delays. ‘Red states’ have suffered the most Still, deregulation’s impact on American travelers has not been felt evenly. After deregulation, airlines dropped cities that had once served as hubs and pulled out of routes that were unprofitable. Their actions caused a ripple effect—when airlines left, business moved too, since their workers and executives couldn’t get around the country as easily. “The states that have been most harmed by deregulation, and the states that have seen the biggest private fare increases on average and the biggest reductions in service, they’re overwhelmingly red states,” McGee says. You could argue that airlines are no different from any other business, and that they shouldn’t be required to fly to markets where they lose money. But for decades, the U.S. government treated air service like a public good. When it dropped that commitment, it left the fate of small communities to the whims of a free market, says Morgan Ricks, a professor at Vanderbilt Law School. “We decided to let the private sector decide, [and] what the private sector decides is [to] only do the profitable stuff, which is largely on the seaboards.” Ricks and colleagues recently published a paper arguing that regions of the country were becoming more economically equal between 1930 and 1980, but that the wave of deregulation in transportation—airlines, railroads, interstate trucking—reversed that trend. “Where the rural states start to really fall behind coincides with this moment in the 70s and 80s that we abandoned a set of principles about broad-based access to infrastructure resources,” he says. Indeed, even before the pandemic, the U.S. was diverging economically; there were big, “superstar” cities like Austin and San Francisco that attracted big companies and high-income workers, and there were small cities and rural areas that were losing residents and businesses. The economic fate of some of the struggling cities can be tied to a decline in airline service. Memphis, Tenn., for instance, has one of the slowest-growing economies of the top 100 biggest metropolitan areas in the U.S.; its home values are less than half those of its neighbor Nashville and it is losing big companies like ServiceMaster to cities like Atlanta. Perhaps not coincidentally, the Memphis airport has also lost thousands of flights in the last two decades; in 2019, it had 18,342 flights, 73% fewer than in 2003. Delta was a hub for Northwest Airlines, which merged with Delta in 2008, and eventually removed Memphis as a hub. The connection between jobs and airline service may seem hazy in an era where so many people work remotely and business travel is on the wane. But even if most of their workers don’t travel frequently, companies want to be able to ensure that their employees and products can get to other places easily. Caterpillar moved its headquarters from Peoria, Ill., to Chicago in 2018, for example, saying it wanted to be closer to a “global transportation hub.” Chiquita Brands International moved from Cincinnati to Charlotte because of inadequate air service. The chemicals giant Albemarle moved its headquarters to Charlotte from Baton Rouge for the same reason. “Air service is one of the most critical economic development tools in the tool chest—without it, companies aren’t going to be able to recruit the work-from-home crowd,” says Jeffrey Hartz, managing director at Mead & Hunt, an air service consulting firm. “Zoom and conference calls are great, but you still need that face-to-face meeting, you still need to get to your factories, and air service is critical.” As more communities recognize the value of air service, more have started to offer minimum revenue guarantees, like Cheyenne did. Often, Hartz says, the payments are just for a few years, until the city can prove that the route will be profitable for the airline. But other times, the deals may go on in perpetuity. Of course, he says, even communities that offer airlines money to serve them don’t always get airline service. Because of a pilot shortage (arguably self-inflicted when airlines encouraged pilots to take early retirement and buyouts during the pandemic), sometimes airlines that are offered minimum revenue guarantees don’t take them. That means communities like Cheyenne are going to have to offer up even more money just to be considered. Can air travel be saved? “Going forward, all industry forecasts call for further consolidation and continually rising fares and fees, accompanied by declining service on all but the most heavily trafficked routes,” Lina Khan, the current head of the Federal Trade Commission (FTC), wrote a decade ago in a Washington Monthly essay arguing that deregulation was killing the airline system. Khan’s prediction proved right—in the last year alone, airfare prices were up 25%, the biggest jump since the Federal Reserve began tracking the index in 1989. Meanwhile, the amount of money the airlines are making per passenger mile has risen 84% since 2002. But even now, in a position of power, there’s not much she can do about it. Past calls to re-regulate the airline industry—even when coming from the former CEO of American Airlines—have led nowhere, in part because Congress has become more skeptical of the role of government in the free market in the decades since deregulation. There are other small fixes that advocates are pursuing: The FTC is now challenging a planned merger of Spirit Airlines and JetBlue under antitrust grounds. McGee, of the Economic Liberties Project, is advocating for new legislation that would eliminate a federal preemption clause in the 1978 Airline Deregulation Act that prevents states from taking action against airlines. Hartz, the consultant, says another solution could be to expand federal funding to help communities woo airlines back. In the meanwhile, communities like Cheyenne are left pining for the good old days of 50 years ago when they didn’t have to worry that airlines would leave them behind. Cheyenne had 28,467 enplanements in 1990; by 2019, it had roughly half as many. “We had air service for 90 years, and we took it for granted,” says Volk, a fifth-generation Wyoming business owner. “I didn’t realize how much it is a part of the equation, but you really need it to stay on the map.” Correction, Jan. 17 A previous version of this story misstated the location of the Pocatello metro region. Pocatello is located in Idaho, not Utah......»»

Category: topSource: timeJan 17th, 2023

VCs are investing in these hot areas of climate tech

About $64 billion flowed into these funds in the fiscal year that ended in November, more than double the previous year's total, an analysis found. Getty Tens of billions of dollars are up for grabs for startups trying to solve the climate crisis. A new era is underway following the passage of the Inflation Reduction Act last year. Regenerative agriculture, energy-analytics software, and commercial shipping are ripe for disruption. Venture-capital and private-equity funds searching for the next big climate solution raised piles of cash last year, and now it's time to spend it.About $64 billion flowed into these funds in the fiscal year that ended in November, more than double the previous year's total, an analysis by Climate Tech VC found. That means tens of billions of dollars are up for grabs for startups trying to solve the climate crisis.Several venture capitalists told Insider that a new era is underway because of the passage last year of the Inflation Reduction Act, which includes some $370 billion in federal subsidies over a decade aimed at expanding renewable energy and boosting manufacturing in the US. Industries known to be big polluters, such as agriculture, utilities, and commercial shipping, are ripe for change, the VCs said."Climate is like the internet in that it's going to disrupt every corner of the global economy," said Andrew Beebe, the managing director of Obvious Ventures, which has more than $1 billion in assets under management. "It might be like a dirty little secret in Silicon Valley that some of the best targets for venture capital are where governments will regulate the fastest."Support from policymakers can help offset rising interest rates that might make investors reluctant to back big industrial projects, said Veery Maxwell, a partner at Galvanize Climate Solutions, a global investment firm focused on climate, which declined to provide its assets under management.Maxwell added that the influx of cash was encouraging more entrepreneurs and former Big Tech employees to enter the field.One headwind is that not enough startups are outgrowing the venture phase and entering the public markets to raise capital, Maxwell said."We don't have enough of those massive success stories, from both the financial angle and impact angle," she said. "There's whole categories of companies that no one's even thinking about starting yet. We need a lot more innovation, but I am heartened that the number has gone up substantially in the last three or four years."Here are three industries where climate VCs are placing bets in 2023.Regenerative agricultureThe global food system accounts for one-third of greenhouse-gas emissions, according to UN-backed study. Maxwell said that while practices that reduce emissions on farms are well known, such as planting cover crops that help the soil store more carbon or using less fertilizer, there isn't a market that incentivizes that behavior, though some startups are trying to change that.Galvanize led a Series B funding round for the startup Regrow Ag, a technology platform that works with food companies and farmers to track their greenhouse-gas footprints and invest in practices to reduce them.Beebe told Insider that he's excited about innovations in cutting methane emissions from livestock. There are additives for the food cows eat that can reduce the amount of methane they burp by up to 90%. Methane is a far more potent greenhouse gas than carbon dioxide, so sizable reductions could be a climate win.Energy analytics for companies and consumersAs more people buy electric cars and install solar panels, and as utilities bring more renewable energy and battery storage online, tools are needed to manage how all these elements interact with the power grid. Consumers want to know the best time to charge their car or use electricity at home to avoid high rates. Utilities need to make sure there's enough electricity to go around, especially as seasons change and extreme weather events become more frequent.Meanwhile, companies and cities that are electrifying their vehicle and bus fleets need tools to manage them in an energy-efficient way.These transitions create opportunities for companies with smart analytics software, said Shawn Cherian, a partner at Energy Impact Partners, a firm with $3 billion in assets under management that raises capital from big utilities and corporations.The firm led a Series C funding round for Grid X, a startup that helps utilities design energy rates and communicate to customers how their actions will affect their bill.Commercial shippingThe European Union is cracking down on emissions from the diesel-powered cargo ships that enable our collective consumerism. Maritime shipping was exempted from the EU's carbon market, the bloc's key climate policy, but that dispensation is coming to end in 2024.Beebe said the industry isn't investing a lot in research and development, meaning there's room for new entrants to help reduce the industry's climate tab through new battery technology, lower carbon fuels, or other solutions.There are batteries that can power commercial ships, but today such batteries take up too much space to make the economics work on a trip across the ocean, Beebe said. For now, cargo ships operating under battery power are better suited for shorter voyages such as up and down the Eastern Seaboard of the US.Beebe said one startup working on electrifying those shorter trips is Fleetzero, which has developed batteries shaped like shipping containers to make it easy for cranes at ports to swap them out for freshly charged ones.Obvious Ventures didn't invest, in part because of the concern about long-haul trips, Beebe said. But Fleetzero did close a $15.5 million funding round last year.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 15th, 2023

11 podcasts that busy venture capitalists and founders say they trust right now

It's a tough market for venture capital, and investors need reliable insights to avoid making the wrong moves. Here are the podcasts they recommend. Chamath Palihapitiya cohosts the podcast "All-In."Brian Ach/Getty Images Investors at JetBlue Ventures, Mighty Capital, and other VC firms shared their favorite podcasts. They include "All-In" with Chamath Palihapitiya and "The Future of Everything" by the WSJ. Another recommendation is "Origins" by partners at the biotech VC firm Notation Capital. Global venture-capital funding in 2022 may have dipped 35% from 2021, according to a report by analytics company CB Insights, but VCs are still eager to make deals. It's a tough market right now, though, and investors need reliable insights, news, and information to spot opportunities and avoid making the wrong moves. Podcasts can help. Here are 11 great options, recommended by VCs,  founders, CEOs, and other industry insiders.1. 'The Full Ratchet' with Nick MoranSteve Taub, the managing director of investments at JetBlue Ventures, JetBlue Airways' VC firm that's invested in startups like Joby and Flyr Labs, said he likes "The Full Ratchet" because it "demystifies" the VC world. The podcast's host, Nick Moran — the founder and general partner of New Stack Ventures — has interviewed VCs and startup founders like Mark Suster, Eric Paley, and Joanne Wilson on how they build great companies."Moran often has interesting guest interviews, and I like the short 'investor stories' about lessons learned and unusual situations," Taub said. "I like that they're brief so I can listen to them when I don't have time for a full interview." 2. 'Catalyst' with Shayle Kann Taub is also a fan of "Catalyst," which interviews investors, researchers, and executives knowledgeable about the world of climate tech. While this isn't a strictly VC-focused podcast, the host, Shayle Kann, is a partner at Energy Impact Partners and leads EIP's investments at the frontier of climate tech, so the show covers timely topics in the climate-tech space.Taub told Insider he listens to "Catalyst" because the threat of climate change — and humanity's response to it — is among the defining issues of the 21st century. "It will shape almost every aspect of our society and economy, so it's creating enormous opportunities for innovation and entrepreneurs," Taub said. "I think Kann does a great job of finding people with interesting ideas in the space, and he teases out the real challenges they need to overcome to be successful, so it's not just cheerleading."3. 'The Twenty Minute VC' with Harry StebbingsAndrew Gershfeld, a partner at the Boston-based investment fund Flint Capital — whose investments include the unicorns Socure (valued at $4.5 billion) and WalkMe (valued at $2.5 billion at IPO) — is a fan of "The Twenty Minute VC" podcast. "Permanent lack of time in an investor's life makes you very picky when it comes to podcasts," he told Insider. "I find the '20VC' podcast very useful and insightful. Listening to how other VCs speak about themselves and how entrepreneurs describe the VCs they work with helped me understand how to differentiate our firm from the crowd." Gershfeld said the host, Harry Stebbings, asks high fliers from successful VC firms — including Will Quist, a partner at Slow Ventures, and Kyle Harrison, a general partner at Contrary — how they forged investment scenarios to achieve big goals and what's impacted their leadership approach. "The main thing about the VC world is building relationships, and Harry is an example of a great networker," Gershfeld said. "He's a self-made VC professional who turned from a VC fan in his teens into a full-fledged investor who manages over $140 million."4. 'All-In' with Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg Gershfeld loves the podcast "All-In" because so few podcasts cover "all major things of the week" — from economics and technology to politics and social agendas. He said the four hosts possess "unmatched experience" and knowledge about technology and the VC market. "Chamath Palihapitiya appears to be one of the few investors who has gone from VC into hedge-fund management," Gershfeld said. "Jason Calacanis has more than two decades in tech. David Sacks has over 20 unicorns in his portfolio, including Airbnb, Facebook, SpaceX, Twitter, and Uber. And David Friedberg of Climate Corporation, one of the first 1,000 employees at Google, helped run Google's AdWords and worked with Larry Page, Google's cofounder."Gershfeld favorite segments include "Reflecting on the first 100 shows," and "Softbank's $21B+ Vision Fund loss."5. 'The Future of Everything' by The Wall Street JournalThe WSJ's "The Future of Everything" podcast is the top pick of Ryan Nelson, a partner at the early-stage venture studio and VC fund Jobi and the cofounder of Jobi Brands, which has helped build celebrity brands like Courteney Cox's home-care brand Homecourt and Kate Hudson's wellness brand Inbloom. "I love this podcast for being very far-forward-looking and covering potential changes in technology that could dramatically alter our world," Nelson said. "Personally, I'm interested in how our lives and societal trends will evolve and be shaped by new inventions — or new applications of older technologies.  "I think it's worthwhile to understand what types of opportunities to be on the lookout for in the near to medium term that are in line with these longer-term movements. By the time things are very obvious and in the mainstream, it can be too late to capitalize fully on the opportunity provided." 6. 'Venture Unlocked' with Samir KajiJenny He — the founder and general partner of Position Ventures, an early-stage venture fund backed by Bain Capital Ventures and Tiger Global that's invested in Fractal, Anrok, and WorkWhile — said the Allocate CEO and founder Samir Kaji's "Venture Unlocked" podcast is "a must-listen for any emerging manager or anyone looking to get into venture capital."The podcast interviews fund managers from all walks of life to reveal their approach to venture, trends they're seeing in the market, and how they got started with their first fund, featuring interviews with established VCs as well as emerging managers on their first fund. One of He's favorite episodes is "Alex Ohanian on the new era of VC.""'Venture Unlocked' gives listeners unique access into the world of starting and scaling a venture-capital firm — as well as a rare glimpse into the LP perspective, which few people know the ins and outs of," He said. "As a first-time fund manager, it was valuable to hear from other fund managers on how they got started, as starting a fund is also a founder journey." 7. 'Capital Allocators' with Ted SeidesTed Seides, an allocator and asset-management expert, hosts "Capital Allocators — Inside the Institutional Investment Industry," which SC Moatti, the founding managing partner of the San Francisco-based VC firm Mighty Capital, a backer of Airbnb and Amplitude, said has "the most quality, in-depth discussions on how institutional investors select the VCs they invest in." "My favorite series of the show is their manager interviews, where an endowment will invite one of the venture funds they invested in — great nuggets on what makes VCs get excited about deals," Moatti added.8. 'Masters of Scale' with Reid HoffmanChenxi Wang, the founder and general partner of the Silicon Valley-based venture fund Rain Capital and a former executive at Intel and Forrester, is a fan of the "Masters of Scale" podcast, where the LinkedIn cofounder Reid Hoffman proves unconventional theories about how businesses scale and interviews top CEOs."As a general partner of a venture fund, I don't have a lot of time, but I can always learn something valuable from Reid's conversations with leaders who have scaled a massively successful business," Wang said. "In my opinion, building a successful startup is 30% about the idea and 70% about the ability to scale up the operation. Scaling a business is about building repeatable motions, establishing meaningful business metrics, and responding to evolving market conditions. The 'Masters of Scale' podcast hits on those aspects really well, and I recommend all founders listen to this podcast and make it a regular resource."9. 'What Is Money?' with Robert BreedloveNathan Montone, the cofounder and CEO of M31 Capital Management, a global investment firm focused exclusively on crypto assets and blockchain technology, and an early backer and advisor to Helium, lists "What Is Money?" with Robert Breedlove, a former hedge-fund manager and philosopher in the bitcoin space, as one of his favorite podcasts and the best starting point for anyone looking for a "first principles understanding" of monetary technologies."'What Is Money?' takes deep philosophical dives into the importance of bitcoin through historical, political, technical, and spiritual lenses," Montone said. "BTC is the single-most important asset in the world, and that podcast gets to the heart of why that is."10. 'Origins' by NotationJenny Rooke, the managing director of Genoa Ventures, a VC investing in early-stage companies like Intabio and InterVenn in the biology and tech sectors, said "Origin," a podcast created by Alex Lines and Nick Chirls, partners at the VC firm Notation Capital, is "excellent" for providing the LP perspective. "The Notation Capital hosts ask LPs the questions that are on general partners' minds, such as how LPs think about allocating to new and emerging managers, tips and guidance for communicating well with LPs, and the LP view on markets and trends that need to be reflected in a manager's evolving strategy in order to stay current and succeed," Rooke said.11. 'Built to Sell Radio' with John Warrillow"Built to Sell Radio" airs weekly and features an entrepreneur who's recently sold their business to share why they sold it, focusing on their mistakes and victories along the way."Host John Warrillow is a thought leader in his own right, focused on creating and maximizing business value on the customer side and on the exit side," SC Moatti said. "A great show to hear stories about entrepreneurs who made it all the way, with stories of entrepreneurs selling their businesses," Moatti added. "So many lessons that can be applied to early-stage startups, because at the end of the day, it doesn't matter how much money you raise, it's all about the exit and being able to land that plane."Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 15th, 2023

Goldman Sachs has started laying off over 3,000 employees globally

Investment banking giant Goldman Sachs started talking to affected staff members Wednesday, a source with knowledge of the layoffs told Insider. Goldman Sachs CEO David Solomon has warned the bank would need to be cautious ahead of a potential economic slowdown.Photo by Michael Kovac/Getty Images Goldman Sachs has started its anticipated layoffs of thousands of employees, a source told Insider. The company sent signals last month that the cuts were coming amid a decline in dealmaking.  The move precedes the industry's spring bonus season.  Goldman Sachs is following through on its reported plan to lay off thousands of employees as dealmaking slowed from 2021 when the industry staffed up to meet the demand. On Wednesday, Goldman Sachs began conversations with employees affected by layoffs, a source with knowledge of the situation told Insider. All told, the planned cuts will affect no more than 3,200 employees out of the bank's roughly 49,500 workforce, the source said. This works out to a maximum of about 6.5% of Goldman's global headcount.Goldman Sachs declined to comment on the layoffs when contacted by Insider.Goldman Sachs had previously laid off employees in its media and tech teams, among others, Insider reported in September. Goldman's consumer banking unit also faced mounting losses in 2022. Wall Street layoffs tend to be timed to precede the earnings and spring bonus season, cutting employees loose before large sums are handed out. The bank is expected to release its earnings for Q4 2022 on January 17. Wall Street cuts during downturns tend to affect highly-paid executive-level employees as well as support staff like those doing research, administrative and tech work, said Jeanne Branthover, a managing partner at recruiting firm DHR Global, who specializes in placing bankers and senior-level executives at financial services firms."A lot of these firms hired support teams for business developers and dealmakers, but things are changing rapidly," she said. Indeed, dealmaking slowed sharply in 2022.The cuts at Goldman follow tech industry layoffs that have seen engineers at Meta, Twitter, and other companies lose their jobs in recent months. A recent survey by the accounting firm PricewaterhouseCoopers highlighted how intent executives have been on cost-cutting to weather rising interest rates and the decline of dealmaking from highs in 2021. In the PwC survey in November, more than 80% of the more than 650 executives who participated said they anticipated a recession and planned to reduce their workforces. The survey report stated that there could be a circular effect to this approach when companies act similarly on a large scale, manifesting the anticipated downturn. "When companies hunker down in anticipation of an economic downturn, they conserve cash and scale back spending," the report said. "When entire industries take this approach, they can create the very situation they were hoping to avoid."Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 11th, 2023

8 hedge funds that made a killing by betting against the world economy last year as stocks and bonds plummeted

The best performing traders forecast steep interest-rate increases and bet against struggling currencies and government bonds. Hedge fund manager Crispin Odey's Europe Inc fund surged last year thanks to big bets against the pound and UK government bonds.Aaron Chown/PA Images via Getty Images Some hedge fund managers made triple-digit returns in 2022 by betting against the global economy. That outperformance came in a year when the benchmark S&P 500 plunged 19%. The best-performing traders forecast steep interest-rate increases and bet against struggling currencies and government bonds. For most investors, 2022 was a year of adversity that saw stocks, bonds and cryptocurrencies all tumble in a brutal cross-asset bear market as inflation and interest rates surged.But there are those who did exceptionally well amid the turbulence. Hedge fund managers including Said Haidar, Crispin Odey and Neal Berger seized the opportunity created by Federal Reserve's monetary tightening and soaring market volatility to deliver triple-digit returns for their investors.Global macro funds, which invest based on economic models and forecasts, tended to perform best in 2022 — in particular, those that were able to predict a global slump towards a recession.Alongside the staggering returns achieved by some global macro investors, high-profile hedge funds such as Ken Griffin's Citadel and Alan Howard's Brevan Howard achieved solid gains in a year where the benchmark S&P 500 stock market index plunged 19%.Triple-digit returnsSaid Haidar's flagship global macro Haidar Jupiter fund surged 195% last year by betting on steep interest-rate increases, according to data from Refinitiv.The Fed raised benchmark borrowing costs from near zero to around 4.5% last year in a bid to tame soaring inflation. That was the US central bank's most aggressive monetary tightening campaign since the early 1980s, and the sheer pace at which rates rose caught many investors by surprise."For the last year, investors have been prematurely anticipating an early end to central bank rate hikes, followed by rate cuts almost immediately thereafter," Haidar wrote in a letter to investors in September. "But as inflation globally has proven stickier than originally thought, central banks have become more forceful in countering this narrative."Haidar used leveraged interest rates trading to generate near-200% returns for his investors, according to Bloomberg. His fund wagered that the Fed would press ahead with jumbo rate hikes, despite markets' hope that it would pause or pivot away from its tightening campaign.Crispin Odey's Odey European Inc fund also bet on steep rates rises – and capitalized on the political and economic chaos that rocked UK markets in September and October. The fund returned 130% in 2022, per Refinitiv data.Odey's fund generated eye-popping returns shorting the British pound and long-term gilts, or UK government bonds, ahead of former prime minister Liz Truss's tax cut proposals. Truss's wildly unpopular plan led to the pound plummeting to an all-time low against the US dollar and 30-year gilt yields spiking to nearly 5%.Veteran trader Neal Berger's Contrarian Macro Fund also scored major returns with a 163% surge in 2022, according to a report from Bloomberg. Like Haidar, Berger bet that aggressive Fed rate hikes would swiftly end the era of cheap money and pop the 'everything bubble' that had caused asset prices to soar in 2021."The reason why I started the fund was that central bank flows were going to change 180 degrees. That key difference would be a headwind on all asset prices," he said in a Bloomberg interview this week. "One had to believe that the prices we saw were, to use the academic term, wackadoodle."Steadier gainsOther global macro hedge funds also finished 2022 in the green by positioning their portfolios to take advantage of the economic slowdown.While lagging behind Haidar and Odey's staggering returns, several high-profile names delivered double-digit gains for their investors in a year when the traditional 60/40 portfolio fell 21% and the average hedge fund lost 9%, according to Bloomberg.Alan Howard's hedge fund Brevan Howard was up 18% last year, per Bloomberg data. Howard's former business partner Chris Rokos left the firm to launch his own fund in 2015 – and Rokos Capital Management enjoyed a similarly strong 2022, advancing 45%.Some hedge funds also delivered returns by pursuing strategies other than global macro investing last year.Ken Griffin's flagship Citadel Wellington fund had racked up 31% gains as of November, according to Bloomberg. Investing legend Griffin tends to concentrate on actively managing a fluid portfolio of currencies, bonds, and commodities."You can come in to work one day, find that you're long on a bunch of 10-year bonds; two weeks later, you're short a bunch of 10-year bonds," he told CNBC in September.Elsewhere, flagship funds run by D.E. Shaw and Millennium Management advanced 23% and 10% in the first 11 months of the year, per Bloomberg data.Read more: 'Everything is going down': A hedge fund manager who returned 163% in 2022 says stock-market pain is only beginningRead the original article on Business Insider.....»»

Category: worldSource: nytJan 5th, 2023