Category Archives: Business

FinTech by the Numbers

Where do the Unicorns Play? Where the bulk of high value unicorns based?

First of all, what are Unicorns: a) they are startup firms that have revenue of $1 billion dollars or more, b) they are privately held.

When we think of startups (in particular unicorns), we in the West tend to think of Silicon Valley is the epicenter with New York then maybe London, Berlin etc etc as hubs. There are many more locations where startups sprout obviously but Silicon Valley has the gravitational pull. Why would I start a scaling business in the advertising space anywhere but New York for example? However, when you look at the list of startups that meet the two criteria above, you start to wonder if you should have been born in China!

  1. Uber $68B
  2. Ant Financial $60B
  3. Didi Chuxing $50B
  4. Xiaomi $46B
  5. AirBNB $29B
  6. SpaceX $20B
  7. WeWork $20B
  8. Palantir $20B
  9. Com $19B
  10. China Internet $18B

China is a new epicentre. Certainly The Economist & the Wall Street Journal has emphasized China’s rise. Note that this list above was generated in February 2017. It encompasses all kinds of startups but looking at the numbers most of the “startups” are Chinese based. The issue here is that there are great startups all over the world, from Kenya to Moscow, but without the scale of a 350 million person, relatively homogeneous state (language-wise) or a 1.3 billion person, emerging uni-lingual state (Cantonese is being phased out!); you’re startup is unlikely to get unicorn status.

So, it actually obvious on the one hand, yes, the US and China are large countries. So therefore their startups raise more capital, see here: The data tells is that unicorns are investment magnets.

  • Top 5                    $257 B
  • Next 5                  $  97 B
  • Top 10                  $354 B
  • 48% of total valuations

Evaluating further, the top value unicorns are in the following countries, according to CBI:

Top 10                  Next 10

U.S.                       5                                           4

China                    5                                           3

India                     0                                           2

Sweden                0                                           1

Sweden’s sole contribution is Spotify by the way. Of course, it’s not just size, it’s culture, it’s infrastructure and it’s the people that are attracted to where there is money to develop innovative solutions in a serious manner.

Take a look at this list below:

  1. ANT Financial $60.0B
  2. Lufax $18.5B
  3. Stripe $ 2B
  4. ZhongAn $1B
  5. JD Finance $  1 B
  6. SoFi $4.3B
  7. Credit Karma $3.6B
  8. Greensky $3.6B
  9. Oscar Health $2.7B
  10. Adyen $2.4B

Note that these companies are in fact financial payments services that have been spun off from the likes of TenCent (media) and Alibaba (e-commerce); ie. China’s emerging giants.

 

Welcome the 1980s again

The 80s saw the emergence of the Leveraged Buy Outs from folks like (Kohlberg Kravis Roberts & Co) KKR’s Henry R. Kravis when he was worked to take over RJR Nabisco from the formidable F.Ross Johnson from the University of Toronto. Today, we see a resurgence in acquisitions. This is particularly pronounced in the consumer goods segment. The big 6 consumer package goods brands are buying up any new brand names that emerge in the digital age. For example, Unilever bought the following firms in 2016:

  • Pukka Herbs
  • Hourglass
  • AdeS
  • Living Proof
  • Seventh Generation
  • Dollar Shave Club

Meanwhile, Nestle just bought Blue Bottle. With Kraft and Heinz merging, they are trying to drive efficiency.

FinTech in America: Protecting the Banks

Why does US/Canada have a smaller FinTech footprint than China? Well China’s government wants disruption, while the US and Canada have entrenched interests in their institutions; see Canada for a corporatist example. The established players own the market place of innovation.  The US has a few large players but the established players still rule the roost.

American/Canadians banks as more risk averse: One phenomenon is that Canadian banks are hiring at a lower rate even thought the economy is in an upturn. Usually, as the economy improves banks hire more staff. However, since the credit crunch, things have changed. Banks in Canada are highly regulated to begin with and they are highly protected, they also anticipate a significant increase in competition from FinTech. Management knows that the gravy train has dissipated and disruption may be coming soon. In addition, bank management wants to be on the winning side rather than the ones rearranging the deck chairs on a sinking ship of traditional banking.

Of the top 5 discussion items of any major Canadian bank’s board of directors, you have 1) Risk Management (exposure to losses), 2) Cost drivers in the bank, 3) Expansion out of Canada, 4) Succession planning (employee retention), 5) What’s going on in FinTech? So as a result in the last 5 years, each of the major banks in Canada have created innovation labs designed to snatch up talent in the Toronto area. In the process, they may be inadvertently be binding good people into pointless “me too” initiatives. A lot of that talent in these hubs may simply be an insurance policy in the event that disruption does occur; management can legitimately point to the fact that we did in fact have a strategy on the table. Optics over substance is a theme in Canada. Better to run a pilot to say we did something then take the risk and follow through on that pilot project. We’re risk averse, protected by regulations that prevent American banks from amalgamating and scaling within Canada.

More to comes as we investigate FinTech further.

Mass Shootings in the United States: The Virality of Shooter-Based Notoriety

PROPOSAL: A publication ban on the perpetrator of mass murders….

A post-life portrait of the suicidal killer is quite possibly what many mass murder shooters are seeking. The motivations may vary (rage against the self and others or a malfunctioning cerebrum) but the medium of fame is uniform. A mass shooter in the United States is typically a dejected, mentally unstable person who is seeking a suicide path. The fact that fire arms are relatively easy to access in most US states makes their suicidal goal potentially viral at a minimal cost. Of course, this is not what these killers are thinking about consciously but its an empirical fact that a fire arm that costs $350 can be used in order to generate media attention that would normally cost >50 million dollars of paid advertising. Suddenly the suicide is can be viral and newsworthy. Their story can be told.

The white elephant in the living room is that evil shooters get fame; to become an nihilistic pinup, an anti-hero with a kill count. It’s a subconscious realisation that the next shooter recognises as the media explores each killer in the wake of tragedy mostly to explain why but also in tandem with an effort to generate page views and drive traffic to their sponsors. In competition with other media sources, the clickbait becomes a canvas to tell a life story. The story of the kid gone wrong gets told in the wake of perverted evil. Some people might even sympathize with them and just a few too many will dream of a similar suicide. Mass shootings offer the shooter the criminal opportunity to end their life while drawing national and international attention. Fame by Public Suicide. Global attention is showered on the individual in order to learn more about their troubled life. What was the motivation? Partly, viral fame. The chance to prove he or she was alive.

Activism has to start with a corporate ban on display advertising that is featured on click-bait shock & massacre content pages. We inadvertently feed the troll when the small percentage of the viewing audience also feels that inspirational glow around having your picture featured in the newspapers around the world. The causal mechanism is evident or at least there is a strong correlation. Regardless of the current legislation at the federal level in the US, there are multiple-counter arguments to banning sales of handguns or more timidly restricting access to fire arms. There are already free moving handguns for every American citizen at present. The emphasis on the assailants motivation IS a strong motivation for the crime.

Why We Aren’t Getting Super HD on Netflix

Netflix Logo Not PixelatedNetflix video resolution can sometimes be really pixelated & low quality compared to Hulu so I wanted to find out exactly why. With your big screen TVs in homes everywhere, you might be watching House of Cards season 2 but it may not be as crisp as you had hoped. You might find yourself thinking: “Why does Netflix look so bad on my TV?”. Even when the show is supposed to be in “SuperHD” (which equals 1080p) you may be staring at standard quality. And if you are trying to watch old episodes of say…..StarTrek Next Generation then you are likely going to see pixelated faces as well. So how do we get Super HD on Netflix and higher quality resolution on retro TV shows of yesteryear?

Kevin Spacey Pixelated Images

The SHORT answer is you CAN’T do much to fix this pixelation problem other then wait for Netflix to boost its delivery quality over time. Millions of people share this network problem but don’t have an avenue to complain to Netflix OR are too used to low quality streaming via the black market of online streaming to really care. Old-school business thinking would say that if customers aren’t complaining there isn’t a problem but Netflix knows its unique selling proposition is tied to delivery & quality. So, apparently you can’t get top quality because Netflix is structured to deliver bandwidth through it’s network based on demand for a given show AND based on the amount of viewers that are using the Netflix network. In other words, because there are about 1000+ watching the same episode of Star Trek, Netflix does not allocate that much definition to ensuring the quality of a low-demand show is high.

Deanna Troi Pixelate Images

Netflix would much rather allocate definition HD to their high demand shows first and then trickle down through their inventory of shows. The problem for top demand shows is that Netflix starts streaming sooner than top quality can be played because the company wants to be fast and deliver images at a reasonably high level as quickly as possible so that impatient users don’t get upset with the user experience. Then coupled with this quick delivery, the bandwidth (demand within the Netflix network) gets crowded by too many users and so full-resolution streaming is not possible. So if you’re staying in on a Saturday night, you’ve picked the wrong time to watch Netflix because so is everyone else and that means lower quality HD.

Netflix Network TreeIn sum, the most important factor to EXPLAIN WHY YOU CAN’T GET WHAT YOU WANT IS:

1) the time of day that you are using Netflix and whether that time of day is peak or prime for a high volume of viewers. When you are watching a show at peak hours you are sharing with a giant network that is ‘rationing’ bandwidth. In other words, Netflix is a net neutral system where everyone has equal access. Netflix is charging the same rate across the board and delivering a rationed system to the masses, so much for capitalism. On top of this network, Netflix is playing a game where they are trying to get the highest quality services across the network. Netflix is responsible for around 33% of all internet traffic in the US and Canada for hard-wired Internet connections, so their system is robust to say the least.

2)  your device or television is only a minor factor in quality (assuming your have a decent TV or computer built in the last 3 years). Folks online have written about A/B testing the quality of their 2 modern TVs side by side to determine MegaBitsPerSecond averages which range from 40 to 60. So the devices themselves aren’t really the significant factor in the quality of images on your TV screen.

Netflix Crappy Options

The Long-Term Reality>>>> Netflix didn’t have the ability to stream into homes until the mid-2000s so we can expect the resolution to gradually improve as the technology to deliver and received that data accelerates. Open Connect is their current solution to this data bandwidth conundrum. Open Connect would allow Internet Service Providers (ISP) to directly divert traffic through other infrastructure provided by competing ISPs in order to get data from A to B to C. This system allows users to view decent quality rather quickly. However, this Open Connect system is not being applied very much by the existing ISP providers who really don’t want to help each-other out that much except with price setting OR sharing cellphone towers for coverage. So given that networks are sharing some information, you can expect more ISPs to join Open Connect should customer demand push for it. As Netflix delivers UltraHD in 2014, expectations will continue to grow amongst consumers and Netflix will try to avoid lagging behind for fear that Apple or other competitors will swoop in and take some of their impressive market-share.

How the Stock Market Works | The Cartoon


The stock of a corporation is partitioned into shares, the total of which are stated at the time of business formation. Additional shares may subsequently be authorized by the existing shareholders and issued by the company. In some jurisdictions, each share of stock has a certain declared par value, which is a nominal accounting value used to represent the equity on the balance sheet of the corporation. In other jurisdictions, however, shares of stock may be issued without associated par value.

Shares represent a fraction of ownership in a business. A business may declare different types (classes) of shares, each having distinctive ownership rules, privileges, or share values. Ownership of shares may be documented by issuance of a stock certificate. A stock certificate is a legal document that specifies the amount of shares owned by the shareholder, and other specifics of the shares, such as the par value, if any, or the class of the shares.

In the United Kingdom, Republic of Ireland, South Africa, and Australia, stock can also refer to completely different financial instruments such as government bonds or, less commonly, to all kinds of marketable securities.

http://en.wikipedia.org/wiki/Stock

In finance, investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price. It generally does not include deposits with a bank or similar institution. The term investment is usually used when referring to a long-term outlook. This is the opposite of trading or speculation, which are short-term practices involving a much higher degree of risk. Financial assets take many forms and can range from the ultra safe low return government bonds to much higher risk higher reward international stocks. A good investment strategy will diversify the portfolio according to the specified needs. The most famous and successful investor of all time is Warren Buffett. In March 2013 Forbes magazine had Warren Buffett ranked as number 2 in their Forbes 400 list. Buffett has advised in numerous articles and interviews that a good investment strategy is long term and choosing the right assets to invest in requires due diligence. Edward O. Thorp was a very successful hedge fund manager in the 1970s and 1980s that spoke of a similar approach. Another thing they both have in common is a similar approach to managing investment money. No matter how successful the fundamental pick is, without a proper money management strategy, full potential of the asset can’t be reached. Both investors have been shown to use principles from the Kelly criterion for money management. Numerous interactive calculators which use the kelly criterion can be found online.

http://en.wikipedia.org/wiki/Investment

A stockbroker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. Stockbrokers are known by numerous professional designations, depending on the license they hold, the type of securities they sell, or the services they provide. In the United States, a stockbroker must pass both the Series 7 and Series 63 and or Series 66 exams in order to be licensed. In most English speaking venues, the two word term stock broker, like stock brokerage, normally applies to the brokerage firm, rather than to the individual.

While the term “stockbroker” is still in use, more common terms are “broker”, “financial advisor”, “registered rep.” or simply “rep.” — the latter being abbreviations of the official Financial Industry Regulatory Authority (FINRA) designation “Registered Representative,” obtained by passing the FINRA General Securities Representative Exam (also known as the “Series 7 exam”) and being employed (“associated with”) a registered broker-dealer, also called a brokerage firm or (in the case of some larger money center broker/dealers) a “wirehouse”, typically a FINRA member firm.[7] Other FINRA licenses or series exams exist. Although individuals holding some of those licenses, such as the “Series 6”, cannot be called stockbrokers since they are prohibited from selling stock and are not trained or licensed in the full array of capabilities of a Series 7 stockbroker (see list of securities examinations). Selling variable products such as a variable annuity contract or variable universal life insurance policy typically require the broker to also have one or another state insurance department licenses.