The Revolutions in the Business World: Musk, Big-Tech, Robinhood, Public Companies and Credit Schemes

In the 13th Century the word was first noted to describe the movement of celestial bodies originating from France. In 1450 for the first time, it was used in the context of a change in the social order and status. REVOLUTION. It’s been used in various contexts since then from upending the social order in France to changing the way someone can trade directly through an app. Somehow in a faster world and in an internet driven world the speed and frequency of revolutions is also increasing, driven by the power to change the world from the bed and not literally go out into the roads. Not all revolutions are good after all. Last week we discussed how Egypt a decade after the world’s first social media led revolution is struggling to come in terms to its situation. But these revolutions happening especially in business and technology are making our lives a little different everyday and laying the future way beyond what we can see.

So today we talk of revolutions and revolutionaries. Of the big and bigger picture, of the perspectives that are being sold to us and of the ones that we should ourselves develop. Every revolution has a good marketing team these days. Reality and Perception might be difficult to separate. So today before revolutions we first start with the biggest revolutionary of the modern age, the man literally trying to save humanity as he says. From there we move to the Data revolution and the associated privacy debate. Who is right? Apple or Facebook, your call to make. Then we move on to how Robinhood found itself in a grilled sandwich between Wall Street overlords and millennial revolutionaries. It, like in all instances in history sided with the overlords. Nothing changes about human nature. We move on to an even more interesting topic of the logic of stock traded companies and does it even make sense to have them anymore. Why do they need to exist? We end with a fascinating article on how a new breed of companies are coming up that promise to finance everything you buy, even your grocery. The “Buy Now, pay later” revolution is certainly fascinating but I don’t think I will be joining in.

Let’s start.

1. Does the world need an innovator, a magician of science, a saviour of mankind. Someone to polarise and someone who is aiming literally for the stars. A crucial part of this newsletter has been to dig out the best profiles there are on the internet. And here’s one more for you. Elon Musk for the first 4 months of 2020 and for a couple of years before that was the “saviour of mankind”. He was building electric cars, going out on Solar power and well was sending actual people to space. He had in a sense proved that he could make the biggest leap possible in the modern age, that he could go from a tweet to reality and make stuff happen. Then he for some reason decided that COVID was overrated and was not dangerous and we went from being compared to Steve to now being compared to Donald. Then he proved that he could scale Tesla up and became the richest man in the world. A man building reality in the world of clicks is a rare man to be, but he is at the moment, the most famous innovator in the world. Whether genuine or not, whether likeable or not, whether socially correct or not, I will leave it up to your judgement, but I agree with the article when it says that his achievement might be the one which no one else could achieve, the ability to give a damn about what other people think.

A man changing the real world in the age of clicks 

2. The Tech war of 2020 was the US Congress vs Big Tech. The Tech war of 2021 is about to be Apple vs Facebook. Preamble is simple. Currently apps and websites can track your movements even when not using the app. Apple is now adding a pop-up where users would be asked whether they want to give permission to Facebook to track them. Such information is crucial to Facebook as it uses these metrics to show ads to its users in the most relevant and targeted way. This could result in losses in millions of dollars for Facebook in terms of ad spend, at least in the short run.  Facebook is standing up to be the warrior of the small businesses, Apple the warrior of Privacy and data safety. I somehow side with Apple. But to be honest, our perceptions in a battle of such huge companies only prove one thing. It proves who has the better PR and marketing department. Nothing more. But I will still try to construct an argument here. Apple, I think for a long time has cared about Privacy and therefore its actions have a history of consistency. What surely helps them make this decision is that they earn nothing from advertising revenue. They earn purely from in-app purchases, so the commerce makes it easy for them to take this step. Facebook’s argument of helping small businesses does have sense to it, but maybe people’s privacy in the current age stands taller. Your decision to take.

The Battle of Morals in Tech : Facebook vs. Apple

3. I restrain from writing about the most watched news of the week. Primarily because there is already so much noise about it. But I wrote about Robinhood a few months back and its relationship with Wall Street. You could sense it coming. So apologies to add to the glass of murky news. There was something strange about the way they grew. The last week as you would have heard was all about the common-man investor taking on Wall Street. You would think that with the young millennials forming a bulk of their customers (and because of their name), Robinhood would have at least not interfered in the finance revolution. But like in the age old war movies, Wall Street proved that Robinhood was working only for them all along. Do read the earlier article if you don’t have reference. This is the one article you need to read this week. It is sad that the “disrupters” of Wall Street  after the extravagant valuation and growth forgot about the disruption and sided with the status quo.  The story otherwise too is  extremely fascinating. The fact that in an emergency they could raise a billion dollars in one day shows that the word billion is becoming too commonplace now.

Robinhood: Caught in the Crossfire between the Gods and Common Humans

4. So much has been said and written about trading and public stocks and companies listed on the stock exchange. But why are companies traded on the exchange? What is the point of the public listed companies? Roughly a 100 years back it made sense, when pension funds invested in them, when companies only used to aim for long term growth that would require planning into decades and when workers referred to manual labour. It was a model where a company would slowly increase the value of shareholders and provide significantly incremental value over time. In today’s day and age most company executives think of their welfare before that of their shareholders or the company itself. Most banks which fail or make gross errors and are punished by regulators have in a previous or upcoming quarter given significant bonuses to their CEO’s. In Fact many companies which shutdown in the financial aftermath of 2008-09, had actually given out major payouts to executives at about the same time. Executives do not look at long term growth of the company and look at immediate results. This harms, owners, shareholders. So maybe a century old model needs to change. Maybe publicly traded ownership is the way to go. Dell did wonders when it took itself out of the public markets. The idea is revolutionary, but the future before it happens always is.

The Age of Publicly Listed Companies might be over

5. Post the financial crisis, even credit card obsessed USA realised that maxed out credit was a bad idea and the number of new users signing up for cards fell by more than half. The world over, credit cards seemed like a bad idea. Strong villains have a tendency to come back in new outfits. The age of buy now, pay later is becoming increasingly popular across the world. The consumer addiction of taking something home from a store and not having to pay anything for it right then is a high that would become addictive too soon. In many shapes and forms you can also see it appearing across many different counties. A fascinating article about how a bunch of companies now make people buy even bed sheets on credit.

This is the “new” Credit Card

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