August 6, 2020

empowering you with insights and information from the edge of today’s headlines

Finance

There’s an app for that: If one of the largest components of your job is to schmooze your clients, what do you do in the midst of the pandemic? Create an app for that! Goldman Sachs has created an app, called Gemini, that essentially does the work of its M&A bankers. The app looks at different divisions within a firm and compares their results to those of competitors, highlighting business lines that might need to be spun-off, shutdown or sold. Goldman has put this app in the hands of some of its bankers, and will soon be testing it with clients.

There has certainly been no shortage of M&A deals during the first half of 2020 (Visa buying Plaid, Morgan Stanley buying E-Trade, Blackstone to acquire Ancestry.com). While some acquisitions have also been put on hold (notably Xerox’s takeover of HP). But if you can give your customer information and make them feel good about doing your work for you, why not? Goldman is taking a page out of IKEA’s handbook, and letting its customers build their own furniture (or create their own acquisition targets).

No word on whether the bankers will lose a seat at the table or a reduction in income, but we don’t expect that Gemini will have quite as large a bar tab.

Crypto Anonymity: One of the big selling points for Bitcoin was that it isn’t traded out of a centralized exchange, and each transaction is linked to a complicated PIN rather than a customer ID, making Bitcoin transactions anonymous. Well, creating exchanges to trade the cryptocurrency and the fact that US financial services provide access has effectively wiped out the blackout curtain.

For instance, the recent Twitter hack was conducted by several teenagers who demanded Bitcoin. How did the FBI track down the culprits within days? One of the “masterminds” used his personal driver’s license to verify his account on Coinbase, a digital currency exchange, and the Bitcoin payments were easily tracked back to his account.

Forced retirement: The Secretary of Labor, Eugene Scalia (yes, the son of that Scalia) has proposed a new rule for retirement accounts — the plans cannot choose to invest in assets because of ESG (environmental, social and governance) factors. Essentially, Scalia states that you must invest for returns (at least in your tax-advantaged retirement accounts) and not to support a social good. Scalia assumes that ESG investing automatically has a lower return than traditional investing. But mandating where investors put their savings seems the opposite of a free market.

An update: The SEC is now investigating the circumstances behind the $765M loan provided to Kodak last week, including the trading pre-announcement and Kodak’s un-embargoed disclosure of the loan to the local press. (Normally, when a public announcement is mistakenly sent out early, a company will make a formal announcement, not ask the journalist to delete a tweet. See Square’s earnings which were leaked a day early.) While the loan has yet to be closed, Kodak hasn’t issued a formal announcement (only the US Government) and it has made no filings to the SEC (normal course of business for a public company through an 8-K).

Education

PayPal has an interesting take on back to school shopping. The financial platform issued a report stating that back-to-school shopping will increase significantly this year as students prepare for the possibility of both virtual and in-person classrooms. The rationale is that not only do you have to buy a new Zoom compatible laptop and home printer but you’ll need to invest in PPE and other safety gear.

We aren’t sold on the idea, as we suspect (like us) students have resorted to wearing their cozy pants and are not gearing up to show off their fashion sense on Zoom. Also, with 30M+ people out of job, we suspect parents are focusing on buying dinner rather than backpacks.

Micro-schools: Jeff Bezos’s Day 1 Academies Fund is launching a series of pre-schools inspired by the Montessori method. The schools will launch in underserved communities and will offer full scholarships to the students. We are not sure if these will be micro-schools held in outdoor spaces, but we would contrast this to the effort by Silicon Valley entrepreneur, Jason Calacanis, who is attempting to build his own backyard school and asked for recommendations of teachers he could poach.

Technology

We’ve heard of white hat hackers, but now there is a vigilante on the hunt for cheaters in video games. We didn’t realize that gaming was such a serious sport that cheating would be so widespread. Boy, were we wrong. There is even a sub-economy for cheating: you can buy access to a variety of services that will help you to win, get better rankings or unlock special advantages within a game. Game developers have had to ban players and communities for cheating while continually embedding failsafes into their code. Since the online games are multi-player, cheating can disincentivize a competitor (who is playing fair) from returning to the game.

The gaming vigilante goes by the handle GamerDoc, and he has been acting in tandem with developers and their anti-cheat units. GamerDoc estimates that he has gotten about 50,000 cheaters banned since 2018. His mission is pure — he just “hate[s] cheaters in general.” Next time you notice that someone has a shot that is too good to be true, it probably is, and hope GamerDoc comes to the rescue.

Hearables: While Google Glass has pivoted to B2B, and Snap’s Spectacles were a fun summer spectacle (in 2016), Amazon has decided to create the Echo Frames. Rather than a screen for augmented reality, the Alexa-enabled device is meant to be used as a personal assistant. Instead of talking to your phone, now you just talk, and your glasses will control your smart home, make phone calls or play music. We’re not quite sure why you’d choose glasses over headphones. (We just got used to people talking to their invisible friends through AirPods.) Amazon’s Alexa has taken over the home, so we guess the next stop is our face.

Raising our Eyebrows: Late yesterday the US State Department announced the creation of the Clean Network program to clean “untrusted” Chinese apps and telecom companies from US digital networks. We are not completely sure of the implications and implementation of this new program, but it sounds like the US is creating its own giant firewall. Stay tuned…

Culture

Pandemic cutting into your gym time? Why not become a pro-athlete at Rock Paper Scissors. The World Rock Paper Scissors Association hosts worlds-level competitions with a mission of giving “armchair athletes the ability to not just be a fan of their favorite team but compete.” And with the US coin shortage, the competition sure beats a coin flip.

While we in the US have effectively come to the end of Netflix, Chinese movie theaters have re-opened. Without supply from Hollywood, the theaters have been showing classics. The science fiction hit (from 2014) Insterstellar ruled the box office this weekend, and may be a promising sign for Christopher Nolan’s Tenet, set to be released in September. We’d happily watch Matthew McConaughey wax poetic in Magic Mike or Dazed and Confused (or even a Lincoln commercial) if we could safely enjoy an IMAX.

— Lauren Eve Cantor

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