Criticizing unicorns? Check. Highlighting humanoid and smart contract advancements? Check and check. An obscure quote from a 1950’s French film director? Bien sûr. Welcome to edition 99. This week:
- Slack’s recent raise is nothing to celebrate
- Sophia the humanoid will likely wow the crowd at UBS’s conference
- Smart contract progress amidst a Bitcoin beat-down
- Cybersecurity talent considerations, the finance world’s little-known sage
- Someone should hand CFTC’s Giancarlo some fintech experiment cash
- Finns are friendly, but they aren’t procreating: economists are scared
- Comings and Goings: CleanCapital’s Jurgen Altziebler, LendUp’s Jotaka Eaddy
- Company of Note: RavenPack
Giving Slack a little flak for being an IPO slacker.
Every time someone signs up to The FR, a notification hits one of our Slack channels. We love that and we love Slack. It’s a great collaboration tool, and unless you work on a rival product from Atlassian, Facebook or Microsoft, you or someone you know probably thinks so too. Plus, its co-founder and CEO has a cool-sounding name: Stewart Butterfield. Putting all that aside, we hate to see a company with huge momentum (annual recurring revenue of $200 million and two million paid users) take an extra $250 million of SoftBank cheddar (at a $5.1 billion valuation) and follow the well-worn path of staying private indefinitely. We get it. Venture dollars are flowing, it’s a hassle to do a regular way IPO, and once you’re public, investors want to you to be a true unicorn that offers fabulous growth and sparkly consistency. Otherwise, you get put in the Snap penalty box for being overvalued on IPO day. But here’s the rub: thanks to the terms that often accompany unicorn private rounds, incentives and valuations get warped, which in turn can lead to problems down the road. That’s because things usually don’t unwarp themselves with the passage of time, as growth rates inevitably slow with size. To be fair, it’s not all doom and gloom in the IPO market this year, and we expect to see MongoDB, which has made public its plans to go public this week, do well. But our message to the uni-procrastinators (and their venture backers) is this: stocks are at all-time highs, volatility is low and lazy, and equity supply is shrinking at a rapid pace. Or to put it another way courtesy of an Old Milwaukee advertisement and a George Jones album, it doesn’t get any better than this.
Desperately seeking Sophia.
For those who can’t attend UBS’s upcoming technology conference in Hong Kong, we’re happy to feature a recent demonstration video featuring Sophia, the humanoid robot from Hanson Robotics who’s almost certain to woo UBS’s guests. After all, she’s wowed audiences on “The Tonight Show” and at SXSW with her wry humor, a sometimes lovely British accent and her Audrey Hepburn resemblance. A less charming matter that needs immediate attention is AI ethics guidelines. Specifically, when a US government-funded study wants to research human beings, institutional review boards (IRBs) must first bless the study. However, when AI-based experiments are conducted, no such ethical review applies. That’s because the rules governing these studies were designed decades ago. So while it’s fun/scary to think about what Sophia will be like at UBS’s 2022 event, we’d suggest that you take note of another Sophia, Sophia Chen, who wrote a great article for Wired on AI research regulation.
Smart contracts advance amidst Bitcoin invective.
This week, Ray Dalio entered the global public square over Bitcoin when he called Bitcoin “a bubble.” James Mackintosh, a Wall Street Journal senior columnist, joined the naysayers by stating that Bitcoin is “probably worth zero.” Jamie Dimon, meanwhile, tripled down on his previous comments that Bitcoin is worthless. But amid this rising march of skepticism over cryptocurrency’s reigning monarch, blockchain progress continues. A few noteworthy developments: 1) the announcement of Sierra Leone’s ambitious plan to partner with RippleNami in a bid to transform the entire nation into a “smart contract country” (see below); 2) AXA’s beta roll-out of Fizzy, which provides insurance for delayed flights thanks to self-executing smart contracts triggered by pre-set parameters; and most importantly, 3) Pythagoras Pizza laid out plans for a tokenized pizza profit-sharing mechanism by issuing (what else?) a white paper.
Cybersecurity talent war seems almost certain.
Hackers have run the table as of late. The Equifax situation continues to reveal new and depressing details, and the SEC’s Edgar system was on the receiving end of a major breach that looks to be the result of multiple critical vulnerabilities. The irony in the SEC hacking is that in 2014, it issued an edict, Reg SCI, that stated that financial services firms had to a) harden their infrastructure and b) promptly tell the SEC if they got hacked anyway. All of this embarrassment, hypocrisy and (justifiable) fear in the air suggests to us that cybersecurity-related investment is in for the mother of all booms. That in turn means that the war for talented cybersecurity professionals is also likely to rise.
An all-points bulletin to every fintech accelerator head.
Make the pilgrimage to Lev Alburt’s apartment on East 83rd Street near Carl Schurz Park. Respectfully tell him that March 5, 1953 (Joseph Stalin’s death) was the best day of your uncle’s life too. Also convey to this legendary chess teacher that your primary goal is to better understand the “beautiful combinations” possible in chess. At that point, carefully but clearly suggest that while Stephen Friedman, Carl Icahn and Doug Hirsch represent great financial innovators of today, your accelerator aspires to build tomorrow’s leading financial revolutionists. Then ask him to be a mentor for your program.
Give the CFTC dough to take on Sandbox Nation.
Why is the chairman of the CFTC, the most forward-thinking modernizer in US financial regulation today, still “working on obtaining the funding to participate in blockchain experiments”? Isn’t there a pork barrel project somewhere, a federally funded barbeque sauce museum or something, that can be cut so that the US can close the gap with Sandbox Nation countries like the UK and Singapore?
No Scandinavian envy here.
It recent years, much of the US media has developed a hard case of Nordic envy, especially when it comes to macroeconomic issues. Norway’s wealth, Sweden’s budget surplus, Denmark’s digital government initiatives... the list goes on and on. The US, of course, is a huge, diverse country, which is why comparing it to our smaller, more homogenous friends really doesn’t cut the sinappi. But that’s not to say that we can’t learn from our Viking brethren. Check out the piece below, which discusses Finland’s alarmingly low fertility rate and the economic challenges it poses. After you do, you’ll find yourself asking, “How can we be less like Finland?”
COMINGS AND GOINGS
CleanCapital’s Jurgen Altziebler, LendUp’s Jotaka Eaddy
This week, solar platform CleanCapital announced that Jurgen Altziebler has joined the company to lead creative direction of its energy finance platform. Look for lots of clean lines in its UI/UX design. Also, LendUp, a leading technology and education provider for socially responsible lending, announced that Jotaka Eaddy would assume an expanded role within the company to reinforce its commitment to social impact and financial inclusion.
COMPANY OF NOTE
Before quantitative trading became a dominant style, New York and Marbella-based RavenPack was working with emerging quant hedge fund and bank traders to provide them with a platform to transform unstructured data into actionable insights. Led by CEO Armando Gonzalez, the company, which was founded in 2003 and recently backed by Draper Esprit, is once again seeking to demonstrate leadership with its push into so-called ‘quantamental’ trading. This trading style, which fuses fundamental analysis with a systematic approach, has continued to attract converts including Blackrock, Third Point and Blue Mountain. In response to the rising demand, earlier this year, RavenPack launched a data and visualization platform that was geared to a broader set of investors than its previous offering. That platform was strengthened this past week when the company released new enhancements to increase its user friendliness. “Professionals beyond hard-core data scientists are now working to quantify everything from news to press releases,” Gonzalez told The FR’s Gregg Schoenberg. “We want to make it as simple as possible for this wider audience to use our technology.”
QUOTE OF THE WEEK
“I prefer to be busy all day long, and when you work for someone else, you're not busy enough.”
~ François Truffaut