Photo: Ziga Plahutar/Getty Images/iStockphoto
If President Biden’s massive and hugely ambitious infrastructure plan passes, it will touch every corner of the economy. On the latest episode of the Pivot podcast, Kara Swisher and Scott Galloway discuss how, beyond sprucing up some of the country’s moribund public spaces, it would help a wide swath of Americans who have often been given short shrift by government policy in recent years.
Kara Swisher: This week, President Biden detailed his $2 trillion infrastructure plan. How many zeros is that? That’s bigger than the entire federal government budget. He calls it a once-in-a-generation investment, the largest since World War II, since we built the highway system and since the Space Race. It will require 15 years of higher taxes on corporations, raising their rates from 21 percent to 28 percent. He’s giving $50 billion to boost the domestic chip industry, a big boost to electric cars. He promises faster internet and better transit, with electric charging stations — a different energy future.
The second part of the plan invests in human infrastructure: aid to the poor, paid leave, help with child care. The plan also includes the Right to Organize Act to counter right-to-work laws. There’s also train stuff that Amtrak wants. This is long overdue. And let me just say, I did an interview with Mariana Mazzucato, who talked about the idea of government doing these important moon shots in areas like climate change or infrastructure. This is big.
Scott Galloway: I think this is wonderful. We are the apex species. The business model of our species responsible for our success is capitalism, and the ballast and the success of capitalism is a robust middle class. And slowly but surely, Kara, slowly but surely, we have increased social-security taxes and payroll taxes and individual income taxes and we have reduced corporate income taxes to the point where only $1 in $12 versus $1 in $2 of receipts from the government come from corporate taxes versus individual income taxes. So, essentially, what we’ve said is, “Corporations, you pay less, and individuals, you pay more.” And we continued one of the most dangerous trends in our society, where we’ve decided we don’t like people, but we love corporations. And what happens?
When the Trump Tax Cuts went through in 2017, I was on a board of a media company and a board of a retailer, both multibillion-dollar companies, and all of a sudden in a board meeting, we’re like, “Oh my gosh, what’s this earnings and cash flow surprise? It’s advantageous tax cuts.” And what did we do with that money? Did we hire more people? Did we invest in factories? No, we used it for share buybacks or cash on our balance sheet, which does what? It juices the stock price. And by the way, who owns 90 percent of stocks by dollar volume? The top one percent. So all we have done with increasing the tax liabilities of individuals as a percentage of our government — and by the way, as a percentage of total tax receipts, individual taxes have not gone up — we’ve just funded it with taxes on your daughter from when she’s old enough to be a taxpayer — we’ve racked up massive debt. We have said, “We want the top one percent or shareholders to work less and spend more time with their families, such that the middle-class and future generations can spend less time with their families.” It is criminal what’s gone on here.
Swisher: This is the kind of big thinking, the big LBJ, Great Society, FDR thinking — I like it. He went for broke. Interestingly, Alexandria Ocasio-Cortez was talking about the things they need even more, but this was as much as the Biden administration said it was going to be, which it never is.
Galloway: It’ll get clipped back. He’s starting big.
Swisher: It’ll get clipped back, but he didn’t back down first. People were, I think, surprised by the breadth of this. Go for it. And what was really interesting was how it’s going to be paid for. I think there’s nobody against taxing corporations, even though they lobby us. But I think it’s a great thing for him. It puts money in lots of really interesting places. It has an innovative element, $50 billion to boost the domestic chip industry, cars, better trains, human infrastructure, the idea of paid leave, and help with child care. We should have full child care. That’s set in stone. That should be something we should do, but whatever, we hate children and women in this country, in a lot of ways.
Galloway: Yeah. So, again, infrastructure, what is infrastructure? Infrastructure is an investment in the middle class, because when the J train is only running every two hours instead of every 15 minutes from Brooklyn into the city, who gets hurt? The assistant or the secretary. The executive gets to take an Uber or has a driver. So infrastructure is an investment in the middle class. It’s also an investment in brand-building. I remember the first time I went to China, I flew into the new Hong Kong Airport, and then I went to the Shanghai Airport and I’m like, “Jesus, these people take themselves very seriously.” And then I fly into JFK and I think, Jesus Christ, are there chickens and goats running around here?
Swisher: It’s true.
Galloway: You go, “Okay, what happened?”
Swisher: Oh my God, you’re right.
Galloway: What happened to us and the infrastructure?
Swisher: Same thing with train stations. They’re making a big deal about this new New York one. I’m like, “Penn Station has been a pit my entire life,” and now that they have a train station that reaches basic levels with Europe, they’re going, “Yay!” Basic — not even as nice as Europe’s ones, still. Truly pathetic.
Galloway: Penn Station is supposedly one of the great architectural crimes in history. Supposedly, it was beautiful and then they tore it down to make this just disgusting architectural eyesore.
Swisher: It’s not even charming in its grossness. Some things that are old and broken down are charming.
Galloway: Are you talking about me again? Are you talking about me again? Do you know I do CrossFit? I do CrossFit.
Swisher: Penn Station is the worst place on Earth.
Swisher: I’m surprised I’m not dead, having been in there 900 times. Anyway, sorry. Keep going. I had a little side train rant there.
Galloway: Yeah, anyone who’s been to Europe loves trains, even though they make no economic sense whatsoever. But look, infrastructure is an investment in the country and it’s an investment in the middle class, because the people who really need roads and public transportation are the middle class.
Swisher: And internet access.
Galloway: And oh my gosh, broadband. I think a bridge too far here is they’re now claiming that social programs that feel very UBI-like are infrastructure investments.
But I love this, and the swing back to protecting and loving Americans as opposed to American corporations is long overdue.
Pivot is produced by Rebecca Sananes.
This transcript has been edited for length and clarity.
A16z in talks to back CoinSwitch Kuber in first India investment – TechCrunch
A16z is inching closer to making its first investment in a startup in India, the world’s second largest internet market that has produced over two dozen unicorns this year.
The Menlo Park-headquartered firm is in final stages of conversations to invest in Indian crypto trading startup CoinSwitch Kuber, three sources familiar with the matter told TechCrunch. The proposed deal values the Bangalore-based firm at $1.9 billion, two sources said. Coinbase is also investing in the new round, one of the sources said.
CoinSwitch Kuber was valued at over $500 million in a round in April this year when it raised $25 million from Tiger Global. If the deal with A16z materializes, it will be CoinSwitch Kuber’s third financing round this year.
TechCrunch reported last week that CoinSwitch Kuber was in talks to raise its Series C funding at up to $2 billion valuation. The report, which didn’t identify a lead investor, noted that the Indian startup had engaged with Andreessen Horowitz and Coinbase in recent weeks.
Usual caveats apply: terms of the proposed deal may change or the talks may not result in a deal. The author reported some details about the deal on Wednesday.
The startup declined to comment. Coinbase and A16z as well as existing investors Tiger Global and Sequoia Capital India did not respond to requests for comment.
The investment talks come at a time when CoinSwitch Kuber has more than doubled its user base in recent months — even as local authorities push back against crypto assets. Its eponymous app had over 10 million users in India last month, up from about 4 million in April this year, the startup said in a newspaper advertisement over the weekend.
A handful of crypto startups in India have demonstrated fast-pace growth in recent years — while impressively keeping their CAC very low — as millions of millennials in the South Asian nation kickstart their investment journeys. Several funds including those with big presence in India such as Accel, Lightspeed, WEH and Kalaari recently began working on their thesis to back crypto startups, TechCrunch reported earlier.
B Capital backed CoinDCX, a rival of CoinSwitch Kuber that has amassed 3.5 million users, last month in a $90 million round that valued CoinDCX at about $1.1 billion.
Policymakers in India have been debating on the status of digital currencies in the South Asian market for several years. India’s central bank, Reserve Bank of India, has expressed concerns about private virtual currencies though it is planning to run trial programs of its first digital currency as soon as December.
About 27 Indian startups have become a unicorn this year, up from 11 last year, as several high-profile investors — and global peers of Andreessen Horowitz — such as Tiger Global and Coatue have increased the pace of their investments in the South Asian market. Apna announced earlier on Thursday that it had raised $100 million in a round led by Tiger Global at $1.1 billion valuation, becoming the youngest Indian firm to attain the unicorn status.
Groww, an investment app for millennials, is in talks to raise a new financing round that would value it at $3 billion, TechCrunch reported on Wednesday. The startup has engaged with Coatue in recent days, the report said.
Why Canadians are still struggling to understand investment fees – The Globe and Mail
Financial advisory fees remain a confusing subject to the vast majority of Canadian investors despite a decades-long effort by the investment industry and its regulators to provide greater clarity and transparency. That means financial advisors remain in the ideal position to help close that comprehension gap.
According to the results of a survey the Mutual Fund Dealers Association of Canada (MFDA) released in June as part of a more expansive research report, fewer than one in five Canadian investors could identify correctly what types of costs are included in current fee summaries.
“The challenge we have today is that most investors don’t get a full picture of all the fees,” says Jean-Paul Bureaud, executive director of the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada), “they only get a partial picture and they might not appreciate that it’s a partial picture.”
Advisors can clarify that to clients relatively easily by making clear that current fee summaries only include the fees for advice and trailing commissions on mutual funds, he says, and that other costs – such as fund management fees and operational costs – also apply.
Advisors can also ensure investors understand as much as possible by avoiding “using all kinds of fancy terms for all the different types of fees,” Mr. Bureaud says.
In fact, the MFDA’s report states, “Even experienced investors struggle to understand key terms and how their choices influence the type and amount of fees they pay.”
That means even when dealing with sophisticated clients, advisors should not assume “MER” is universally understood to stand for management expense ratio, or what it means. Breaking down jargon such as “trailing commissions” in simple terms – perhaps as an annual fee the advisor receives each year a client holds a particular investment – will also help avoid misunderstandings.
Instead of simply noting what fees are or are not included in existing disclosures, the MFDA report urges advisors to get as close to total cost reporting as possible.
London-based global firm The Behavioural Insights Team ran an experiment on behalf of the MFDA testing four formats of expanded cost reporting. Three of them specified investment fund charges while the fourth, known as the “control” option, included only a disclosure that other charges, such as fund management and operation costs, applied.
Only 23 per cent of investors exposed to the control option were able to identify their total cost of investing correctly, while between 54 per cent and 70 per cent of investors exposed to the other three options were able to do so.
Karen McGuinness, the MFDA’s senior vice president of member regulation and compliance, says part of the reason the experiment succeeded was a focus on using plain language.
“When we did the format, initially, we were using industry terminology because it was just second nature to us, but we brought in the behavioural research firm and they were the ones who said we need to set up this information in a way that’s more easily digestible for the average retail investor,” Ms. McGuinness says.
Nevertheless, the MFDA report warns that dealers and advisors shouldn’t assume sharing more cost information will always lead to better comprehension among clients as they will eventually hit a point of diminishing returns.
Rather, the report recommends they should “eliminate any information presented in the fee summary that is unlikely to be useful to investors. People have limited attention [and] this is especially significant when information is complex.”
To establish a baseline for how much any given client already understands – and therefore how much education advisors should attempt to provide – regulators have developed a number of quick and straightforward tools for that purpose.
For example, the B.C. Securities Commission runs the InvestRight website that includes fee calculators and a short quiz designed to gauge investors’ overall comprehension of investment fees.
“It only takes about five minutes to answer the questions, and a lot of people would be surprised at what they learn,” says FAIR Canada’s Mr. Bureaud.
The Ontario Securities Commission (OSC) operates a similar website – GetSmarterAboutMoney – that offers even more comprehensive tools and resources.
Meanwhile, regulators are working on a new set of disclosure rules to replace the second phase of the customer relationship model (CRM2) that has been in place since 2016. The goal of what’s being called CRM3 is to provide what the MFDA’s Ms. McGuinness calls “total cost reporting,” as it should get disclosures as close as possible to breaking down all the fees investors pay and not just those their advisor receives.
Although there’s no timeline for when CRM3 will be complete, Greg Pollock, president and chief executive of Advocis, says advisors will need to be more transparent with their clients on fees before the current bull market goes bust.
“Investors tend to look at the bottom line, and if they see that year-over-year returns are looking pretty good, they don’t get too focused on the fees simply because they’re satisfied with the overall performance,” he says. “But it does raise the question of what happens in a bear market when performance suffers. That really gets people’s attention.”
As RedBird Capital Eyes SpringHill Investment, LeBron James Continues March Toward Billionaire Status – Forbes
The private equity firm is expected to take a significant minority stake that will likely value the company at between $650 million and $750 million.
LeBron James is one step closer to cashing in on his entertainment business in a deal that would still leave the NBA superstar short of becoming basketball’s second billionaire.
People familiar with the matter say that private equity firm RedBird Capital is in advanced discussions to make a strategic investment in James’ SpringHill Co., an entertainment company that has been the subject of deal rumors since July. The amount of the possible deal, which was first reported by Sportico, could not be determined, although the investment is likely to be done at a valuation of $650 million to $750 million.
The infusion of capital would represent a massive win for James, who continues to expand his off-the-court interests. The 36-year-old Los Angeles Lakers superstar came in as the fifth-highest-paid athlete on the planet on this year’s Forbes list, with earnings of $96.5 million over 12 months. Only Conor McGregor and Roger Federer posted off-the-field totals higher than James’ $65 million. Prior to the SpringHill deal, Forbes estimated James’ net worth to be roughly $850 million. James is the largest single shareholder in SpringHill. Forbes recently valued his stake—believed not to exceed 50%—at approximately $300 million.
James and his childhood friend, Maverick Carter, together built the SpringHill Co., the diversified media company behind the new Space Jam movie, the HBO documentary What’s My Name: Muhammad Ali and unscripted series including the NBC competition show The Wall. The company, named for the apartment complex where James grew up, was founded in 2020 and also includes media platform Uninterrupted, which produces the HBO talk show The Shop, and a marketing agency, the Robot Company, which counts JPMorgan Chase, Beats by Dre and Sprite as clients.
James is chasing Michael Jordan, the only billionaire to have emerged from the sport, although he reached that status after his playing days were over.
RedBird was founded by Gerry Cardinale, a former Goldman Sachs partner with deep ties to Hollywood and the world of professional sports. He has been assembling an expansive portfolio of assets, taking a minority stake earlier this year in Wasserman, a sports marketing and talent agency, and investing $275 million into David Ellison’s Skydance Media, the studio behind the Oscar-winning movie Parasite. It also bought, sold and re-acquired a stake in the YES Network.
The potential SpringHill deal isn’t the first time Cardinale and James have crossed paths. Months ago, RedBird purchased a 10% stake in Fenway Sports Group, which owns a bevy of sports assets including Liverpool FC and the Boston Red Sox. James bought 2% of Liverpool in 2011 and exchanged his stake to grab a reported 1% investment in FSG earlier this year.
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