Show Me the Money

Created by Tiffany Stone
Created by Tiffany Stone

Alternative lending involves various types of loans available to consumers and business owners outside of a traditional bank loan.  Alternative lending includes crowdfunding (rewards and equity-based), peer-to-peer lending (interest-based, asset-based, consumer, small business) and other non-bank financial firms.

I’ve shared below my comparison of a few major online alternative lenders, including Lending Club, Prosper, Earnest, LendUp, Sofi, Upstart, OnDeck, Kabbage, Borro and Wonga.

Alternative Lending Comparison Slide 1 - Tiffany Stone Alternative Lending Comparison Slide 2 - Tiffany Stone Alternative Lending Comparison Slide 3 - Tiffany Stone Alternative Lending Comparison Slide 4 - Tiffany Stone Alternative Lending Comparison Slide 5 - Tiffany Stone Alternative Lending Comparison Slide 6 - Tiffany Stone

DevOps Market Map

I’ve put together a basic DevOps Market Map.  Check it out, would love suggestions/feedback!

What is DevOps?

Development + Operations

DevOps is a software development method that aims to increase communication, collaboration and integration between software developers and IT operations through automation of the change, configuration and release processes, an extension of Agile Development – releasing updates to product early and often (“perpetual beta”).

* DevOps requires not only the appropriate tools but also a change in organization and culture.

DevOps Lifecycle:

  1. Check in code
  2. Pull code changes for build
  3. Run tests (Continuous Integration server to generate builds & arrange releases): Unit tests, integration test, user acceptance test
  4. Store artifacts and build repository (repository for storing artifacts, results & releases)
  5. Deploy and release (release automation product to deploy apps)
  6. Configure environment
  7. Update databases
  8. Update apps
  9. Push to users – who receive tested app updates frequently and without interruption
  10. Application & Network Performance Monitoring (preventive safeguard)
  11. Do it Again!
DevOps Market Map by Tiffany Stone
DevOps Market Map by Tiffany Stone

Never Enough Time

Currently, I see many calendars and apps that are either focused on one aspect of the calendar (e.g. iCal and Sunrise for calendar integration and Doodle and Flock for scheduling) or a certain individual (e.g. Tempo for networkers).  And other calendars, that aim to be multi-purpose, offer too many features that in theory would tremendously enhance the planning experience but realistically do not align with user behavior (e.g. To-Do recommendations based on location).  Where I believe many calendars fail is their lack of simplification and integration of their features to reduce mental energy and user action.  The challenge is also to maintain functionality and avoid a foreign UX that risks engagement.

I think Magneto has impressive core features that are addressing some of the missing tools and scheduling experiences on many other calendar apps.  These features are focused on simplifying key issues with scheduling and task / event creation.  While the purpose of these features is nothing new, the features themselves provide enhanced solutions to old problems.  For example, the browser add-on significantly reduces the manual inputs involved in adding an event or task to your calendar by extracting information from your current webpage or email regarding an event or meeting and adding it to your calendar (below is a snapshot).  The created event can be shared across your personal and professional calendars through Magneto.  Magneto’s browser add-on automates date, time, participants and location input entries.  In comparison, Gmail calendar is limited to adding events from Gmail to only the Gmail calendar and requires exporting events onto its calendar from all other sites such as Facebook.

What I like most about Magneto is their attempt to resolve meeting scheduling by providing the capability to  schedule meetings without numerous email exchanges and view availability on both my personal and work calendars while scheduling.  However, this is also the feature I struggled most to understand and use.  Sharing my calendar via an email invite was simple but the time-proposing and event scheduling process that followed was confusing.  The experience was not as intuitive as I would have liked it to be (another calendar problem: functional but hard to use).  Those on the receiving end of my scheduling invite also had some difficulties navigating the tools.  I think improved guidance during the time-selection process between individuals is the missing piece, suggesting that there is too much unnatural form of input and needs to be a more intuitive user interface.

Overall, I think Magneto has differentiated itself as a strong calendar system with its features but I think it still falls short of replacing individuals’ primary use of Gmail, Outlook and other Calendars because while its features are useful and address the main issues with calendar management and scheduling, they are difficult to learn to use.

A Love Letter to Medium

We live to tell stories.  I believe the most effective way to communicate is through stories.  Medium didn’t change or innovate storytelling but improved the experience of sharing stories.  What most people didn’t realize was that discovering a story is as rewarding as hearing or reading it (and in some cases even more satisfying).  The stories range from travel experiences to life lessons to entrepreneurship to love.  They are real and allow us to feel connected and relate to someone across the country or world.

As a result of an increasingly mobile and web dominated world, consumer products have reduced storytelling to pictures, short videos and limited texts.  Medium, in contrast, embraces the written story and has simplified its design to be consistent across all stories (some may even say there is absence of design).  That such a platform has been able to attract over 13 million unique monthly users in less than 2 years is truly incredible.  Additionally, users are increasingly encouraged to write their stories on Medium knowing that there is a growing reader base actively searching for stories.  As a blogger, I understand the importance of where to share my writing as I value a platform that would increase the number of my readers.

Content is king.  Medium must host genuine stories and maintain a non-exclusive environment while also manage the quality of the writing.  This sounds like a catch-22!  Medium acquired MATTER last year to support high-quality journalism and already has a number of paid editors contributing content.  The costs of bringing on writers to produce quality content will naturally require the company to explore monetization options.  And investors will want to see eventual revenue streams as well.  Much like Facebook, it risks losing users by charging them for content (the difficulty of starting as a free service).  However, with bitcoin, it is possible for micro-transactions and therefore there is potential for a profitable pay-per-article structure for stories written by paid celebrity writers.

There are also other revenue options such as charging brands or professional outlets to create their own collections (e.g. Refinery 29’s collection on medium) and additional charges to promote its collection/content.  Companies and organizations can also utilize medium to launch story campaigns or create collections that are comprised of content generated by its customers/members, where individuals’ experiences with using a product/service or involvement with an organization are shared (The ESPN stories campaign on Medium is a good example of how user-generated story submissions can be done).  So companies like lyft or bevel or non-profit organizations could allow its users/members to write about their experience meeting their lyft driver or how a gift from bevel helped a boy realize he was growing up or maybe a girl’s recent trip to Asia with a medical group to provide small villages access to healthcare.

In my opinion, these collections of stories are more powerful than any ad/marketing campaign and are difficult to collect without something like medium (e.g. the idea of user submissions via email is yucky) – Medium makes it easy for the user to write directly on Medium and submit to a collection.  Embedded in these stories for companies are also feedbacks on the products/services, and inspiration for readers to use the product or service.  And for organizations, it helps reveal the impact of its programs at the individual level and encourages others to join the cause.  We’ve already seen this being done with pictures as companies utilize Instagram to share their customers’ experience (check out lyft’s Instagram or lululemon’s #thesweatlife gallery); individuals are able to upload a photo and tag the brand and companies are able to collect them and share them with the larger community, and this is all being done in one place.

Medium is still very young but it’s already proven its ability to influence the act and consumption of storytelling.

The Risks and Benefits of Foreign IPOs in the U.S.

I’ve been curious as to what risks or benefits an influx of foreign IPOs means for U.S. markets and companies.  Chinese IPOs have been a major focus this year as a number of Chinese companies, including Alibaba, Weibo, iQiyi.com and JD.com, are expected to list in the U.S. again this year since the delisting of 20 Chinese companies in 2011 and fears around accounting fraud and country risk.  In the past two years, only 11 Chinese companies have listed on U.S. exchanges.  Foreign companies see the opportunity to obtain access to a more liquid U.S. market by listing in the U.S. and are able to do so without having turned a profit.  Additionally, there is strong interest in the dual-class ownership structure allowed in the U.S., which enables a company to issue more than one class of shares with different voting rights.  As such, ownership in the company may be the same for individuals but the voting rights would be uneven, typically granting more voting rights to the management team (e.g. Google and Facebook structures).

My initial thoughts were that there could be a long-term negative impact from the growing number of foreign IPOs in the US because of the looser corporate-governance standards to list and post-IPO underperformance as a result of country risk and pre-IPO overvaluations fueled by increased investor risk tolerance and information asymmetry.  My research has both confirmed these concerns/risks and also suggested a more positive outcome.

Below is a summary of my research.

Shrinking stock market

Since 1990, the US stock market has been shrinking in number of publicly listed companies, from a peak of 8823 in 1997 down to ~5000 in 2012 (see chart below).  There is fear that a continued shrinking stock market would limit the number of companies that investors could buy shares in, impacting the value of the stock market and inflating stock prices.  This phenomenon could also cause investors to increase their investment activity abroad on foreign stock exchanges, decreasing trade volume in U.S. exchanges.  Foreign IPOs would help increase the supply of equities on U.S. stock exchanges and bring in more foreign investors, helping boost the U.S. IPO market (liquidity, encourage domestic ipo activity, increase ipo fee activity, etc.).

Number of listed companies on US exchanges

Data on Initial Public Offerings: Foreign IPOs in the U.S., 1988-2012 here.

Transparency

Country risk and asymmetric information along with fears of financial fraud are the main investor concerns for foreign companies.  Studies have revealed that foreign IPOs on average underprice more than matched domestic IPOs and this can be attributed to the above listed uncertainties.  Underpricing occurs when the offer price of an IPO is set at a significant discount to its first-day close price.  Recall the Baidu IPO which was offered at $27 per share and closed at $122.5 on the first day of trading, giving a first-day return of 353.85%.  Based on a study conducted on Chinese firms in the U.S. between 1993 – 2010, it was found that these firms generally underperform the benchmark and industry peers in the post-IPO period of 3 years.  There is a general belief that IPO firms typically experience a significant underperformance relative to their benchmarks in the subsequent 3 to 5 years after issuance.  This suggests that asymmetric information is both driving down initial pricing and causing underpricing.

Delistings

Transparency has been a top priority with a number of firms having delisted due to discovered accounting fraud.  Other reasons include stock underperformance below the exchange performance requirements or failure to comply with financial reporting requirements.  As mentioned above, there were a number of Chinese firms that delisted in 2011 because of financial fraud.  Delisting of companies not only increases distrust of foreign firms, but also results in investor losses as ownership of stock in the company doesn’t change while stock prices further decline as a result of the delisting.  Additionally, delisting would exacerbate the already shrinking stock market by reducing the supply of equities and increasing the perceived risk of listing on that exchange by future potential issuers.

Fear of a repeat of the 2011 Chinese firm delistings and lingering fears of financial fraud has resulted in an increased emphasis of transparency by foreign firms and compliance to U.S. financial reporting standards.  Strict enforcement of rules to improve transparency and compliance to these standards by foreign firms would help create a healthy IPO market and encourage more foreign firms to list on U.S. exchanges.

Ownership Structures

Investors are also cautious of complex ownership structures that allow management to retain more voting rights and allow for too much decision-making power.  These structures are difficult to understand and hinder communication of decisions between the shareholders and management (even more opaque with foreign firms).  The long-term performance of firms with these structures will depend on the success of management’s decision-making abilities to ensure trust among its shareholders, but changes in management will also create instant concern of future decisions among shareholders.  The long term implications of these structures are uncertain but some studies have shown that ownership arrangements like dual-class structures have not historically performed better than arrangements where voting rights are equal for all shares (Paul Gompers, Joy Ishii and Andrew Metrick conducted a study of American firms with different ownership structures between1994 to 2002).

 

I think increased foreign listings on U.S. exchanges are a positive sign for the U.S. as foreign companies identify a healthy and trustworthy market in the U.S., but whether the long-term effects are positive or negative will rely on transparency and the long-term performance of these foreign companies.