Tag Archive: IPO


“This on-demand or so-called gig economy is creating exciting opportunities and unleashing innovation, but it’s also raising hard questions about workplace protections and what a good job will look like in the future.” – Hillary Clinton, July 13, 2015

“Big government liberals fundamentally can’t embrace digital innovation because it threatens the way they govern. They see car-sharing services as a threat to the local government taxi cab cartels. They see food trucks and Airbnb as a threat to urban planning and the tax and fee racket that they’ve imposed on brick and mortar restaurants and hotels.” – Jeb Bush, July 16, 2015 jebuber

How come one of the hottest IPO candidates, $50 billion estimated market-value Uber, has suddenly become a political piñata?

Maybe we should give privately held “unicorn” Uber a break? The company has not even commenced its roadshow to sell shares of Uber to the public, and yet it is caught in the middle of partisan crossfire.

Hillary didn’t even mention Uber and its $1 billion in annual revenues by name; she didn’t need too. Three days later, Jeb purposefully rode Uber around San Francisco to check out start-up Thumbtack, an on-demand provider via mobile technology for those looking for professionals from interior designers to dog walkers. Don’t worry: Jeb will not carry San Francisco, if he is the Republican nominee.uberphones

As The Economist described the issue here is the on-demand economy matching people with money and no time with people with time and no money. This is also a question of consumer choice between a cab and a private driver at a similar or even lower price. This is a question of deciding between a relatively expensive restaurant or a line of tempting food trucks (e.g., downtown Portland, Oregon), each specializing a particular cuisine for a reduced price. This is also the question of whether to stay in a standard hotel or motel or accessing Airbnb to find a guest room.

For the service provider, she or he can do the work they want, when they want to do it. The on-demand economy allows them to monetize an unused/underused asset (i.e., car, extra room, cooking talent). Does the on-demand economy make music for everyone? No, but conceivably it works for students wanting to supplement their income, young mothers needing a part-time job or the semi-retired wanting to re-engage in the marketplace and make some legal tender on the side.

The unifying characteristic of the on-demand economy is the ubiquitous smart phone used by 2 billion around the globe now, and expected to reach 4 billion users by the end of this decade or a brilliant device for more than half of the planet.

Translated: Potential customers with smart phones summon on-demand service they want, when they want it. They need a ride; they contact Uber or Lyft or Sidecar. Uber, a 2009 privately held start-up (now in 53 countries around the world), does the rest. Want a doctor within two hours, click on Medicast. Need a lawyer? Axiom is at your service. How about a contractor for a remodel? The Handy app is easy to find.

Uber: Net Plus or Net Minus? 

“Uber, a perfect example of how a disruptive technology can improve a formerly noncompetitive market, serves a real need in cities where taxis have taken advantage of riders for years.” – Washington Post lead editorial, July 20, 2015cabdriver

“Bashing Uber has become an industry in its own right; in some circles, though, applying its business model to any other service imaginable is even more popular.” – The Economist, There’s an app for that, January 3, 2015

Despite the positive features of this winning destructive technology, there are those in Washington D.C. and other bastions of the static quo that are threatened. According to The Economist, the number of temporary workers has doubled from 1.0 million to 2.0 million in the past 15 years, while private sector union membership has plunged from 12 percent in 1990 to about 6 percent now.

And there lies the rub for Hillary. Unions for obvious reasons are not thrilled with Uber and its on-demand economy, business-model followers. At the same time, Uber and its ilk appeal to Millennials, who realize the old rules don’t apply. They instinctively know this by examining the literally millions of desultory SOL Baby Boomers, who cannot or will not think out of the box.

The business model of the rust-belt factory with its long-term employment followed by a guaranteed company pension is broken. There is a life-and-death struggle underway between education and technology. What is needed to compete in the 21st Century economy is educational know-how/smarts to keep up and make technology your friend.

There are those who have services to provide and skills to offer and they use mobile technology to participate in the on-demand economy. There are an equal amount of consumers who want alternatives. On-demand companies do not offer perfection, but they do provide choices.

One of the two major parties will be pro-choice when it comes to destructive technologies, exploring and opening up new employment opportunities, particularly those with a young outlook on life. The other will look to the power of Big Brother to fight-off the relentless power of ones and zeroes of binary code.

When it comes to relentless destructive technologies: You can run, but you can’t hide.

https://www.linkedin.com/pulse/disrupting-washington-unleash-innovators-jeb-bush

http://www.washingtonpost.com/politics/clinton-calls-for-growth-and-fairness-economy-vows-wall-street-crackdown/2015/07/13/15d42d18-296b-11e5-a5ea-cf74396e59ec_story.html

http://www.washingtonpost.com/opinions/the-uber-debate/2015/07/19/8f2623ba-2cae-11e5-a250-42bd812efc09_story.html?wpisrc=nl_opinions&wpmm=1

http://www.washingtonpost.com/blogs/plum-line/wp/2015/07/17/jeb-bush-wants-to-be-the-uber-candidate-heres-the-problem-with-that/

http://www.nytimes.com/2015/07/10/business/an-uber-ipo-looms-and-suddenly-bankers-are-using-uber-coincidence.html?_r=0

https://almostdailybrett.wordpress.com/2015/07/06/the-worst-generation/

http://www.politico.com/agenda/story/2015/07/uber-vs-laws-000172?hp=b1_c1

http://www.wsj.com/articles/uber-1-progressives-0-1437607639

 

 

 

 

 

 

 

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“Sometimes the most obvious question is the question. In Enron’s case: How do you make money?” — Fortune Magazine Reporter Bethany McLean.

bethany-mcleanx140

The simple answer was Enron wasn’t making money; the company was losing money hand-over-fist.

Enron was hiding these massive losses from regulators, investors, suppliers, partners and most of all, its own massively investing-in-Enron-stock employees.

Still investors poured billions into Enron simply because the stock was going up big time. The majority had no idea about how Enron made money in its energy, bandwidth and weather (go figure) trading schemes and didn’t seem to care because the stock was skyrocketing. As Martha would say: “It (was) a good thing.” Yep, a good thing until the house of cards came tumbling down in a 2001 bankruptcy filing, crashing and burning.

What was that about how does a company makes money?

As we head into the next round of hysteria as yet a third social media provider goes IPO (Initial Public Offering), this one, Twitter, under the ticker, TWTR, one needs to contemplate Bethany McLean’s most obvious of all questions.

twitterjackdorsey

How does Twitter make money?

How does LinkedIn make money?

How does Facebook make money?

How does J.C. Penne’ make money? Hint: It doesn’t.

This simple question needs to be posed to and answered by all publicly traded companies, whether they play in the new economy or the old economy.

The need to quickly, credibility and confidently answer this question, preferably in a brief elevator pitch, solidifies the need for well-trained and highly skilled corporate public relations, investor relations, crisis communications, brand and reputation management practitioners.

Teaching upper-division public relations courses, I would flash images of corporate logos up on the screen and ask students how Company A or Company B makes money.

In our quick media world — whether by conventional or digital means — the millennial digital native generation, more than any other that preceded it, has been bombarded incessantly on all sides by brands.

After initial hesitations, the students were quickly and enthusiastically recalling what the brand means in term of how a company makes money, and even “positioning” companies in their respective market spaces (e.g., BMW vs. VW: Nordstrom vs. Macy’s; Southwest vs. United). Starbucks and McDonald’s both sell upscale coffee. They now both offer drive-through windows. They are the same. Right? Wrong.

As mentioned before in Almost DailyBrett, LinkedIn and Facebook are both social media outlets. To Wall Street they couldn’t be more different.

LinkedIn debuted at $45 in 2011 and now trades at $245.13.linkedin_logo_11

Facebook went public at $38 in 2012 and now trades at $51.01.

zuckerberg

LinkedIn has been able to easily answer the how it makes money question (e.g., monetizes social media) by pointing to “connections,” premium services, advertising and the fact that LinkedIn is the choice for recruiters, job hunters, network builders and those seeking business leads.

Facebook is finally starting to gain traction in the market after its disastrous NASDAQ IPO. The company has been plagued by how do “friends” correlate with the legal tender?

Will 140-character per tweet Twitter be the next LinkedIn, the next Facebook or just maybe the first Twitter in the eyes of Wall Street investors?

A CNBC report this week pointed to Twitter’s relationship with the hard-to-get National Football League and CBS in which video supplied by both will be available for tweets. Wall Street may very well see a ka-ching correlation with this deal.

The deal and others, plus the recently announced Twitter S-1 (e.g., company prospectus) may have a direct bearing on what will be the pricing and Wall Street response to the much-anticipated IPO.

As more companies pursue the IPO route, minus the ones that opt to rebuild in privacy (e.g., Dell), that means even more opportunities for skilled-and-trained corporate public relations, investor relations, crisis communications, brand-and-management protection pros.

Conservatively, there are more than 5,100 publicly traded companies on the two major exchanges, the NYSE Euronext and NASDAQ. There are thousands more on overseas exchange, such as Japan’s Nikkei, Hong Kong’s Hang Sang, Britain’s “Footsie” or FTSE, France’s CAC-40 and Germany’s DAX.

Each of these companies, most definitely those in America, has reporting requirements on an annualized and quarterly basis. The Securities Exchange Commission (SEC) mandates 10-Q quarterly earnings reports; 10-K annual reports to shareholders; 8-K unscheduled “material” information disclosure announcements; S-4 additional share purchases, an annual meeting with shareholders, and of course, an S-1 filing of a privately held company prospectus prior to an IPO.

All of these filings require on-target prose, delivered conventionally and digitally, employing text, audio and video. Who are these message builders? Who will train them? And where can they be found?

As long as a publicly traded company is in business, it must report. It must communicate. It has absolutely no choice.

Quite clearly, the demand for these highly skilled corporate PR and investor relations practitioners outstrips the supply. Maybe that’s why they are compensated at a PR segment high average of $117,233 annually.

Sounds like an upwards-to-the-right market for qualitative-and-quantitative PR/IR types.

Full-Disclosure Note: The editor of Almost DailyBrett at various times owned shares of both LinkedIn and Facebook, only to subsequently sell the stocks. He fully anticipates as a mere retail investor being a late arrival to the upcoming Twitter IPO, if only to follow TWTR on a daily basis…Thank God he never bought into Enron.

http://www.linkedin.com/today/post/article/20131003191330-270738-with-twitter-s-ipo-5-key-things-you-need-to-understand-about-the-social-ad-revolution

http://www.forbes.com/sites/tomiogeron/2013/10/03/twitter-reveals-long-awaited-ipo-plans-253m-revenue-in-first-half-of-2013/

http://dealbook.nytimes.com/2013/10/03/twitter-discloses-its-i-p-o-plans/?_r=0

One team is winning and the other is losing.

The respective IPO dates of two rival social media platforms are only separated by one year and one day, but the reception by Wall Street investors could not have been more different.

As a result I completely unfriended Facebook today, selling my remaining shares of “FB,” while maintaining and considering adding to my position in LinkedIn. The LinkedIn connection has been slightly lucrative, thank you very much.

According to the Wall Street analysts, the heavy sell off in Facebook is attributable to the company not presenting a convincing argument during Thursday’s conference call on how it well monetize mobile platforms. Closer to the heart of the matter: Facebook is not providing guidance to investors going forward, making it difficult for buy-and-sell side analysts to build their financial models.

From this humble perspective, it seems something more basic is coming into play: Schadenfreude.

There are a growing number of people, who resent Mark Zuckerberg, his hoodie, the “Social Network” and his billions. Can we simply chalk it all up to old-fashioned jealousy of those who achieve? As the leader of the free world recently said, “You didn’t build that.” Au contraire.

zuckerberghoodie

As many of us know, it all started in Harvard’s Suite H-33, Kirkland House (Isn’t Harvard private? Do the public roads leading up to the campus negate all student and faculty accomplishments?). Zuckerberg is an entrepreneur with a dream that succeeded beyond his fondest dreams as 900 million subscribe to Facebook. And with this success came private equity, in fact too much private equity. Zuckerberg was essentially forced by SEC rules to go public. It may have been the world’s first kicking-and-screaming IPO.

During the investor tour leading up to Facebook’s May 18 (NASDAQ: FB) public offering, there were complaints that Zuckerberg sported his trademark hoodie rather than standard-issue Brooks Brothers suit with the Thomas Pink shirt and cuff links. Has this man no decency?

And just yesterday Maria Bartiromo and the other talking heads on CNBC were conjecturing whether Zuckerberg would even show up for his company’s first-ever investor conference call. Maybe analyst calls are not cool enough for the 29-year-old founder and chief executive of the world’s largest social media platform. Zuckerberg showed up, but the stock still closed today at $23.70, miles below its $38 IPO price. One analyst has set an 18-month $40 price target. I will hold off in placing an order.

Contrast the disastrous performance of the Facebook IPO with a similar public offering a year earlier by LinkedIn. The latter came with virtually no investor frenzy, but the results are impressive.

LinkedIn (NYSE: LNKD) went public on May 19, 2011, debuting at $45, quickly jumping to $85 and closing today at $103.42. Not bad.

One key differentiator between LinkedIn and Facebook is the former is targeted almost exclusively toward business. Need to find a job? Open and populate a LinkedIn profile. Be sure to include the details of your resume (curriculum vitae), your academic background, your recommendations, your PowerPoints, your blog and even your mug shot. This URL is one-stop shopping for recruiters.

linkedin

Want to research a recruiter, a hiring manager, a business partner, a customer, just simply head to the LinkedIn search engine. In a few key strokes, you know where she or he went to college; how long she or he has held the present position and where she or he has been before. This site is a great way to do your homework and to be prepared.

Another key differentiator is your “connections,” their connections and the connections of their connections. Who do you know? How important are your connections? What do your connections say about your readiness for a job, particularly a rain-making position that benefits from a deep roll-a-dex?

Almost DailyBrett opines that “connections” are more important in the eyes of Wall Street than “friends” and “likes.” Sure, Zuckerberg has access to the living patterns of almost one-seventh of the planet and $50 billion in market capitalization. LinkedIn only has a mere 161 million subscribers and only $10 billion in market cap…and yet Wall Street better understands the LinkedIn business model. Facebook in contrast offers friends and FUD (Fear Uncertainty and Doubt).

Most of all there is no uncertainty whether LinkedIn co-founder Reid Hoffman will participate in his company’s conference calls. Thumbs up.

http://finance.yahoo.com/news/does-wall-street-hate-facebook-192938528.html

http://online.wsj.com/article/SB10000872396390443931404577551344018773450.html

Barf!

Or how about: “Let’s just be friends?”

Kiss of death.

What did Billy Crystal say to Meg Ryan in When Harry Met Sally?

whenharrymetsally

Men and women can’t be friends because…

“…The sex part always gets in the way…”

And “…The friendship is ultimately doomed and that is the end of the story.”

Let’s come back to this contentious topic in just a smidge.

Recently, Almost DailyBrett took direct aim at the knuckle-dragging gender (“Men and Their Schlanges”) written before the revelations (no pun intended) about Rep. Anthony Weiner’s digitized wiener or in his case, weiner. The honorable congressman’s antics via social media served as an amplification of the points made in this humble blog, questioning whether men are actually as so many contend, slaves to their anatomy. Are we victims, cowards or both? Has the word “accountability” lost all of its meaning in this modern-day society?

Whattyathink Anthony? AH-Nold? Tiger? Bill? Al? Eliot? Dominique? John?…

As an equal opportunity social critic, Almost DailyBrett is now raising a few provocative (and maybe foolhardy) questions about the PR employed by the fairer gender. This blog discussed how women have effectively taken over the public relations profession (“PR’s Endangered Species”) and as a whole do a great job at softening images and are legendary with their eye for detail and creativity.

Then why is there not more creativity as it applies to romantic exit strategies, bidding adieu, adios, auf wiedersehen, sayonara to an unwanted male-of-the-species? Whatever happened to the carefully crafted and heartfelt “Dr. John” letter? Or maybe the even-more sophisticated face-to-face breakup?

In business the term “exit strategy” refers to the choices that lie before the management of start-ups: Pursue an Initial Public Offering (IPO); seek a larger company eager to make an acquisition or merger; or stay the course as a privately held company. So why don’t women have a similar array of options other than…

“It’s not you; it’s me” and “Let’s just be friends?”

Yes, there may be other termination phrases, but these two seem to be overly prevalent at this particular point in time. And sometimes they are even texted or e-mailed…which makes them even sweeter.

Let’s review: “It’s not you, it’s me.” Give me a break. If a man hears that phrase, he (in most cases) is smart enough to very well know it’s all about him. Yes, some of us may have been born at night, but we weren’t all born last night.

And “let’s just be friends?” If a male has been dating you, do you think he has been going through this exercise just so you can be pals?

And let’s say, he goes along with this swell idea…and then he secures a new girlfriend. Do you think she is going to want him to hang around his “friend,” who used to be his ex? (“Gee dear, why are you so upset? She’s just my friend…Well yes…We went out for six months…And ya, ya, we did sleep together…but there is nothing between us now…Oops, I shouldn’t have said it that way…”).

whenharrymetsally1

Back to the 1989 wisdom of Billy Crystal as Harry Burns and Meg Ryan as Sally Albright:

Harry Burns: You realize of course that we could never be friends.
Sally Albright: Why not?
Harry Burns: What I’m saying is – and this is not a come-on in any way, shape or form – is that men and women can’t be friends because the sex part always gets in the way.
Sally Albright: That’s not true. I have a number of men friends and there is no sex involved.
Harry Burns: No you don’t.
Sally Albright: Yes I do.
Harry Burns: No you don’t.
Sally Albright: Yes I do.
Harry Burns: You only think you do.
Sally Albright: You say I’m having sex with these men without my knowledge?
Harry Burns: No, what I’m saying is they all WANT to have sex with you.
Sally Albright: They do not.
Harry Burns: Do too.
Sally Albright: They do not.
Harry Burns: Do too.
Sally Albright: How do you know?
Harry Burns: Because no man can be friends with a woman that he finds attractive. He always wants to have sex with her.
Sally Albright: So, you’re saying that a man can be friends with a woman he finds unattractive?
Harry Burns: No. You pretty much want to nail ’em too.
Sally Albright: What if THEY don’t want to have sex with YOU?
Harry Burns: Doesn’t matter because the sex thing is already out there so the friendship is ultimately doomed and that is the end of the story.
Sally Albright: Well, I guess we’re not going to be friends then.
Harry Burns: I guess not.
Sally Albright: That’s too bad. You were the only person I knew in New York.

Now let’s suppose that Harry Burns is right that men and women really can’t be friends because of the “sex part.” If that is indeed the case, then why do women propose to a soon-to-be-ex or someone-with-no-chance that they should just settle on friendship? Is it because it sounds nice, a kind of warm-and-fuzzy coup de grace?

Maybe that is just the point. Many have lamented about the loss of civility in society, and quite possibly women are trying to take the sting out of these messages instead of just being straight forward. Personally, I respect stand-up men and stand-up women. I suspect that many others do as well.

Of course, there is something to be said for friends with “benefits.” Check out the trailer.

https://almostdailybrett.wordpress.com/2011/05/21/men-and-their-schlanges/

https://almostdailybrett.wordpress.com/2011/05/01/pr%e2%80%99s-endangered-species/

 

Ten years ago, a friend of mine was getting his knickers in a twist about a hugely successful, $101 billion energy-trading company from Houston, Texas that had just completed a takeover of his firm, a Pacific Northwest public utility.

He told me that these Texans were so friggin’ smart, in fact they were “The Smartest Guys in the Room” – I believe their names were Ken, Andrew, and Jeffrey – and that I needed to buy stock in their company pronto.

So I did some homework. And even more homework. And still some more homework…And I just couldn’t for the life of me figure out how this company made money. And the more I read, the more dazed and confused I became. Why would anyone pay gobs of money to this company to broker energy deals…sounds like a very expensive middle man?

Out of frustration because of my lack of business acumen, I didn’t invest a dime in this company. I think it was called…Enron (NYSE: ENE).

Which brings me to Somali Pirates and the question of whether there should be an IPO (Initial Public Offering) for their business?

somali

A cursory check on the CNBC website indicates that no NYSE-member company has the ticker symbol, PRT, or Pirate, and no NASDAQ-member has the ticker symbol, PIRS, for Pirates.

More importantly Somali Pirates has a “devastatingly effective business model,” according to the most recent edition of The Economist. The UN estimates that the annual cost of piracy lies somewhere between $5 billion and $7 billion (top line?). The Economist reported that Somali Pirate “earnings” (bottom line?) reached $238 million. To top it off, the pirates are now accepting ransom payments via electronic funds transfer.

“Great Investor” Peter Lynch has repeatedly stated that the difference between investing and gambling is that investors need to clearly understand a company’s business model and why they are buying shares. CNBC’s Jim “Mad Money” Cramer has repeatedly reminds his viewers that share prices are a leading indicator of the anticipated direction of a stock and that he is not interested in a stock’s past, only its future.

If you take both Lynch and Cramer at face value, and many other Wall Street talking heads, then you have to be excited about investing in Somali Pirates. We can all figure out how they make money (e.g. seize shipping, demand ransom, receive revenues either in cold, hard cash or via EFT). Got it. Wish that Enron was that clear…or maybe not.

Better yet, they are a minority-run-and-operated business. Do you think they would receive preferential treatment from the federal government?

What are the COGS (Cost of Goods Sold) on the financial statement for Somali Pirates? Mostly speed boats, AK-47s, rocket-propelled grenade launchers and scaling ladders. They have reduced these costs somewhat by using “mother ships,” often captured deep-sea fishing vessels that they use as floating bases for their fast skiffs. Even though there are no hard-and-fast COGS numbers, there is every indication that the gross margin for Somali Pirates is expanding, not contracting (WallStreetease…).

What about personnel costs? Somali Pirates hail from the ultimate low-cost state (or more accurately, no state), Somalia. They don’t need to outsource to India. Let’s see that means that we can enter almost zero next to the line on the financial statement for SG&A (selling, general and administrative), unless you consider demanding ransoms to be “selling.”

How about R&D? The response by naval forces in the region about the size of Western Europe poses a risk to the business model of Somali Pirates, forcing them to operate further and further away from Somalia. Obviously some more work needs to go into supply over such long distances. And apparently they have not been successful catching up to ships making 18 knots or more…Sounds like they need to invest in competitive research focused on speed-boat technology.

Okay, so now we should have an operating income figure. Which brings us to taxes? What taxes? How about GAAP reporting? What’s Generally Accepted Accounting Principles to a bunch of pirates?

And finally, what about the threats to the business model of Somali Pirates? And will they prefer, similar to Facebook, to remain private…at least for the time being? There is a very real possibility that there will never be an IPO for Somali Pirates.

Maybe Goldman Sachs will just set up a hedge fund and invite wealthy investors to take their own stakes in privately held Somali Pirates. Besides who needs the headaches associated with quarterly earnings reports, pre-announcements, chairman’s letters, annual meetings of shareholders, SEC enforcement and the prospect of corporate raiders?

Think of it this way, if Wall Street-types could embrace Enron with irrational exuberance, then what’s to stop them from investing in a bunch of pirates?

http://en.wikipedia.org/wiki/Enron:_The_Smartest_Guys_in_the_Room

http://www.investopedia.com/university/greatest/peterlynch.asp

http://www.cramers-mad-money.com/

http://www.economist.com/node/21015664

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