Empowering women could add $20 trillion to global GDP, a $69 million NFT, and Bumble beats Wall Street forecasts
Welcome to Nº 15 of In The Money, your weekly newsletter on keeping up with all things finance, tech, and startups. As always, this week’s newsletter is filled with all the financy things. Among other things, empowering women could add $20 Trillion to global GDP, the most innovative companies in the world, Roblox IPO, and Bumble beats Wall Street expectations. We also continue covering NFTs, as this week a digital piece of art was sold for $69 million, in a first-of-its-kind auction on Christie’s. The NFT joined auction pieces such as the only known portrait of Shakespeare created during his lifetime to the last-discovered painting by Leonardo da Vinci. This and many other things. I hope you enjoy this edition.
Fearless Woman 💸
It is four years since Fearless Girl, a bronze statue (which is also pictured on the header of the ITM newsletter) commissioned by asset management group State Street Global Advisors, was first erected in New York to promote the cause of women in business and finance. But the defiant girl created by sculptor Kristen Visbal, standing opposite the New York Stock Exchange still has a long way to go to accomplish her mission.
According to Fearless Woman: Financial Literacy and Stock Market Participation, a new academic paper published on Monday a shortfall of confidence accounts for a third of women’s lower levels of financial literacy relative to men. The research experiment showed that women tend to disproportionately respond “do not know” to questions measuring financial knowledge, but when that response option is unavailable, they often choose the correct answer. “Many women think they don’t know. But when you force them to give an answer, they often actually do know,” said Annamaria Lusardi, one of the paper authors, in an interview with the Financial Times.
You can read the full paper here. The above research and its findings are part of the reason for me starting In The Money. The purpose of this newsletter is to make learning about finance while keeping up with the markets easy and fun. Therefore, I try my best to explain financial terms as they occur in the news sections throughout ITM. As always, I would love feedback, comments, or ideas on how to improve ITM from you. You can find my contact details at the bottom of this newsletter.
Want to add $20 trillion to global GDP? Empower women 👩💼
GDP or the gross domestic production is the total monetary or market value of all the finished goods and services produced within a country during a specific time period. It functions as a comprehensive scorecard of a given country’s economic health.
The study is just the latest evidence underscoring that closing labor-market gender gaps is crucial for the economy as it recovers from the pandemic and beyond. According to the study, policy changes that result in more women entering the workforce, such that bolster female access to secondary education, child care, and flexible work arrangements, have the potential to “light a fire” under global growth over the next three decades. The study examined 36 developed and emerging economies.
Globally, 58.4% of women between the ages of 25 to 64 work, compared with 92.1% of men. In the US, while women helped propel the world’s largest economy out of the last recession, this time around they are falling behind. Economists have called this the country’s first female recession. A surge of women in the US have left the workforce this past year. 1.4 million mothers remained out of the workforce in January 2021. Glimpses of hope in February’s job report showed participation among prime-aged women improving slightly, though still worse than pre-pandemic levels. India had the lowest female participation rate among countries analyzed, at 16.6%. Closing the gender gap could add more than 30% to India’s GDP by 2050.
Women in Japan 🇯🇵
Japan has seen a remarkable increase in women’s participation in the workforce, actually surpassing the US and Europe in terms of percentage. However, there’s still a glass ceiling for women in leadership roles, says Kathy Matsui, a former vice-chair and strategist at Goldman Sachs Japan. Matsui coined the term “womenomics” in 1999, which became a key pillar of former Prime Minister Shinzo Abe’s economic reforms aimed at boosting the country’s economy by bringing women into the workforce.
″Since we broached the topic of womenomics 22 years ago, for instance, the percentage of Japanese women who can work (and) were actually working outside the home used to be one of the lowest in the G-7,” said Matsui in an interview on CNBC. But that trend has reversed. Before the coronavirus pandemic, the percentage of Japanese women working was close to 72%. That’s compared to about 67% in the US and 63% in Europe.
“But where that ceiling really affects Japan is that there’s still a dearth of women in a leadership position. For instance, the female manager ratio is still stuck at around 15%. And the percentage of female board directors still in the single-digit territory — less than half of what we see elsewhere in the developed world,” she said.
“There’s no such thing as a glass ceiling; it’s just a thick layer of men”
Women occupied less than 8% of management positions in corporate Japan, according to a Nikkei report released last year. This is far less than the goal set by the Japanese government aimed to have women make up 30% of management posts by 2020.
Google to empower women and girls 👩💻
On International Women’s Day, Google announced grants worth $25 million fund works of nonprofits and social enterprises that are committed to empowering women and girls. The Impact Challenge is aimed at addressing systemic barriers and inequities so that women have access to economic equality, opportunity to build financial independence, and pursue entrepreneurism, said Google CEO Sundar Pichai at a virtual event. The company will accept applications from teams worldwide until April 9.
Google also announced that it is going to invest an additional $1 million to help underserved women in India. Although India is the world’s second-largest internet market, women make up only a small percentage of online users in the country.
Gender diversity made the vaccine possible 🧬
The co-founder and chief medical officer of BioNTech, Özlem Türeci has credited its speed at producing a viable vaccine to the fact its workforce is more than 50% female. The Pfizer/BioNTech vaccine was the first to be approved in the UK. Türeci said it was the company’s gender-balanced workforce that “made the impossible possible”. BioNTech created a jab in just 11 months.
Speaking on International Women’s Day, Özlem Türeci said that the fact women are under-represented in decision-making roles in medicine is destroying value for stakeholders. Türeci told a World Health Organization (WHO) briefing that the lack of gender equality in the industry is “obvious every day”, and added: “The higher the ranks, the more value-destroying the lost opportunity of mobilizing precious talent.” According to WHO data, women make up 70% of the global health and care workforce, but just 25% of decision-making roles. At BioNTech, women make up 54% of the total workforce and 45% of top management.
Most innovative companies 🏆
Speaking of BioNTech, the company was listed at the top together with Moderna on Fast Company’s annual list of the Most Innovative Companies. Last year ended the business as usual, and companies around the globe, in every industry, have spent the past 12 months confronting both practical and existential challenges. Some failed, many simply survived. A select few flourished, remaking their businesses and illuminating the way forward for others.
From the biotech firms behind the first vaccines (Pfizer-BioNTech and Moderna) to a real estate developer creating high-quality affordable housing (Stablegold Hospitality), the Most Innovative Companies address a society remade by the pandemic. Many pioneered business models that are now accelerating: Peloton, for example, is a riding at-home fitness in new directions. Others are taking us to entirely different places, whether it’s space (SpaceX) or the backwoods (Hipcamp). Read the complete list of the companies that rose above, along with the business trends they’re advancing here.
Unicorn Starling 🦄
Starling Bank, the digital-only challenger bank in the UK, announced on Monday that it has raised £272 million ($376 million) in a new investment round. The round led by Fidelity Investments, values Starling at £1.1 billion ($1.5 billion), lifting it to the ranks of Europe’s unicorn companies (a unicorn is a term used for privately-held firms valued at $1 billion or more).
“Digital banking has reached a tipping point. Customers now expect a fairer, smarter, and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services.” Anne Boden, Starling’s CEO (you can read more about Boden in this week’s ITM feature of her as Woman of the Week). The company will use the new funding to expand into Europe, and for anticipated mergers and acquisitions. Last year the company restarted talks to secure a banking license in Ireland, after having put international expansion plans on hold due to the pandemic. Furthermore, Boden denied a report claiming that JPMorgan and Barclays had shown an interest in buying the start-up. She has previously indicated that Starling would seek an IPO.
Founded in 2014 by Boden, a former banking executive, Starling is one of Europe’s most prominent digital banks. It has attracted 2 million users and accounts for 5% of the UK’s small business banking market, with 300,000 small business clients.
Still recruiting mostly men for top jobs 🤦♀️
The world’s biggest companies are still recruiting far more men than women for top jobs. This despite long-running campaigns by shareholders, policymakers, and other stakeholders to improve gender diversity at all levels. In the past two years, a quarter of the largest 500 companies have named a new CEO or executive chair, but only one in ten of those appointed were women. In total, just 5 % of top jobs at the biggest companies are held by women. Big companies that have recently named women as CEO include UK insurer Aviva, which appointed Amanda Blanc; the US’s United Parcel Service, with Carol Tome; and Helena Helmersson at fashion retailer H&M.
“I cannot believe that anyone could look out there and see that we have 95% of the world’s best companies run by men and think they are all the best people for the job,” said Ann Cairns, global chair of the 30% Club, a global campaign trying to increase gender diversity at board and senior management levels.
Women’s sports NFTs, a $69 million auction, and the first tweet is for sale 🖼
In last week’s ITM we tried to demystify NFTs. The hype around these non-fungible tokens has been real and the latest high-profile name to support them was investor Alexis Ohanian, co-founder of Reddit and husband to tennis legend Serena Williams. In a tweet, on Sunday he wrote: “I’ve invested big in women’s sports, but the rise of NFTs and trading card boom is going to be HUGE for women’s sports.” “Save this tweet,” he said, noting that women investing in the market for NFTs will change the game, as the user experience and interface for the platforms improve over time. Also, when the market gets more efficient and liquid.
In February, an NFT highlight clip showing a LeBron James dunk sold for more than $200,000. The collectibles have so far been centered mostly around men’s sports, but Ohanian predicts the NFT market for women’s sports collectibles will be even larger. “These markets are male-dominated right now. Women are undervalued, just as they are in other markets, despite actually having much more influence on dollars,” Ohanian tweeted. He also pointed out that women control a greater portion of consumer spending than men.
In other NFT news, Twitter CEO, Jack Dorsey is selling his first-ever tweet as an NFT. On Tuesday he said he’ll donate the profits to charity. The highest offer, as of Tuesday morning, was at $2.5 million. The auction is open until March 21st if you are interested. You can bid and follow the highest bid here. And the creator of the Nyan Cat (a meme that sold for approximately $600,000), Chris Torres, has organized a collection of meme originators into a two-week-long auction of their works.
On Thursday, the artist Mike Winkelmann known as Beeple (mentioned in the previous edition of ITM) sold an artwork called “Everydays – The First 5000 Days” for $69 million, in a first of its kind auction at Christie’s. Christie’s, the 255-year-old auction house has sold some of the most famous paintings in history, from the only known portrait of Shakespeare created during his lifetime to the last-discovered painting by Leonardo da Vinci. Until October, Beeple had ever sold a print for $100. The sale at Christie’s positions him “among the top three most valuable living artists,” according to the auction house.
Women in Finance 🏦
Women are also achieving greater prominence and power in finance. Last week we kicked off the Women’s History Month with Jane Fraser (you can read the feature of Fraser as Woman of the Week in a previous ITM) taking over as the CEO of Citigroup, becoming the first woman to lead a major Wall Street bank. In last week’s ITM we also reported that Thasunda Brown Duckett, a JPMorgan Chase executive, was named CEO of TIAA, the $1.3 trillion-in-assets financial-services firm.
Fraser and Duckett are just two of the highly accomplished, path-breaking women named to Barron’s annual list of the 100 Most Influential Women in US Finance. You can read the full list and be inspired here.
Goldman to invest $10 billion in Black women 💸
Goldman Sachs announced on Wednesday an initiative called “One Million Black Women” by which it will invest $10 billion to support Black women over the next 10 years. The focus areas being healthcare, job creation, and education. In addition to the $10 billion, Goldman will set aside $100 million over the next decade for philanthropic ventures focused on African-American women.
Citing research, the bank said that reducing the earnings gap for Black women could create between 1.2 million and 1.7 million jobs in the US, boosting annual GDP (see definition of GDP in a previous story in this edition) by $300-400 million. Last year, Goldman created a $10 million fund to promote racial equity and said it had invested around $200 million over the decade to organizations dedicated to serving communities of color. Rosalind Brewer, CEO of Walgreens Boots Alliance (who just became the first Black woman currently leading a Fortune 500 company, which you can read more about it in a previous edition of ITM), and Lisa Jackson, vice president of environment, policy, and social initiatives at Apple, will sit on the advisory council of the new project.
Just do diversity 👟
Following other public companies (ITM has previously covered announcements from the likes of Google, Twitter, and McDonald’s), Nike has laid out a five-year roadmap to creating a more diverse and inclusive workforce, the company announced Thursday. It will also tie executive compensation to the company making progress in deepening diversity and inclusion throughout its workforce, protecting the planet, and advancing ethical manufacturing. Compensation would be tied to the company hitting its 2025 goals.
In outlining the progress made so far, the sneaker maker said it has increased the representation of women globally to 49.5%, from 48% in 2015. Representation of racial and ethnic minorities, at the vice president level in the US, increased to 29% last year, from 15.9% in 2015. It also highlighted the fact that its 2020 intern class was its most diverse ever, with 55% of its 310 interns being women, and 49% representing racial and ethnic minorities. By 2025 it aims to achieve 50% representation of women in its global corporate workforce and 45% representation of women in leadership positions (VP level and above). It is also targeting 35% representation of racial and ethnic minorities in its US workforce by then.
Plus 100 Million 🎬
On Tuesday Disney CEO Bob Chapek revealed that the company’s streaming service, Disney+ has topped 100 million global subscribers in just 16 months since its launch. The streaming service has released a number of popular TV series since its launch, including two seasons of “The Mandalorian” and its first Marvel series, “WandaVision.” Both have been top-viewed content.
Bumble beats Wall Street forecasts 💪
Bumble, the online dating company founded by Whitney Wolfe that went public in February this year (read the ITM edition that celebrated this female-founded and led IPO) released its first quarterly report as a public company on Wednesday. The company reported $165.6 million in revenue, beating Wall Street forecasts. It nearly broke even in its first quarterly report after going public in February. Bumble’s shares rose more than 6% in extended trading. Bumble also posted strong growth in revenue and subscribers, a boost by the global pandemic that drove daters online. But the company also said it expects pent up demand from people who had been avoiding dating in person due to the pandemic
Here’s what Bumble reported for its last quarter, compared with what Wall Street analysts were expecting:
Loss per share: 1 cent vs. an expected loss of 13 cents per share.
Revenue: $165.6 million vs. expected revenue of $163.3 million.
Roblox’s IPO pop 🎮
Roblox, the kids gaming platform that surged in popularity during the pandemic, soared also in its market debut on the New York Stock Exchange under the ticker RBLX on Wednesday. Roblox went public through a direct listing. Other tech companies such as Spotify, Slack, and Palantir have chosen to go public through a direct listing instead of a traditional IPO. In a direct listing, unlike in a traditional IPO, no new shares are created, only existing, outstanding shares are sold with no underwriters (read investment banks) involved. This also allows existing shareholders to sell immediately, without being subject to a lockup period.
Shares began trading at $64.50, a 43% increase from a private financing round in January when the company sold shares for $45. The stock closed the day at $69.50, which gave the company a market cap of $38.26 billion. A company’s market capitalization is the share price times the fully diluted shares outstanding. Essentially the market capitalization (or short market cap) refers to how much the company is valued by the stock market.
The gaming company’s founder and CEO David Baszucki’s stake in the company is worth $4.6 billion after the company’s stock market debut on Wednesday. If you want to understand more about Roblox, I highly recommend reading this post on Ben Thompson’s Stratechery.
This week in the stock market 📉📈
What’s up with the stock market? Looks like it cannot make up its mind, up or down? A couple of weeks ago we looked at the relationship between market and economic cycles. Let’s recap what has happened this week.
The week started off with tech-stocks sliding into correction territory (a correction is usually referred to as a decline of 10% or more in the price of a security from its most recent peak). The tech-heavy Nasdaq Composite finished the Monday trading session 10.5% below the record it notched in mid-February. In the previous edition of ITM referred above, we discussed the reason for the fall is investors fearing inflation. Inflation is a decrease in the purchasing power of money, which is reflected in a general increase in the prices of goods and services. That is, with inflation, with the same amount of money you are able to purchase fewer units of goods and services.
With the tech-stock sell-off on Monday, Cathie Wood (who we have covered many times in ITM, here the feature of her as Woman of the Week), founder and CEO of Ark Investment Management, flagship fund Ark Innovation was down more than 30% from its most recent high. The ETF (exchange-traded fund) closed down 5.8% on Monday. In an interview on CNBC, she said that she is not worried about the recent drop in her funds and that the bull market is simply broadening out to include more strategies like value (Warren Buffett is a value investor). She added that over time her disruptive strategy will pay off and that she is capitalizing on the sell-off (read buying stocks).
Tuesday was a stark contrast to the previous trading day. While tech shares were among the worst performers on Wall Street on Monday, on Tuesday they snapped back. The Nasdaq Composite climbed 3.7% to post its best day since November, as bond yields stabilized. For example, Tesla surged 19.6% for its biggest one-day gain since February 2020. Cathie Wood recouped some of the recent sharp losses. Ark Innovation (ARKK) climbed more than 10% on Tuesday.
On Wednesday the House Democrats passed a $1.9 trillion coronavirus stimulus bill sending it to President Joe Biden, who is expected to sign it into law on Friday. After the news, the Dow Jones Industrial Average soared more than 400 points to a record. On the other side of the Atlantic, European stocks also hit a new one-year high on Thursday as worries about a spike in inflation eased. The pan-European STOXX 600 index rose 0.3%. The Eurozone stocks gained 0.4% to trade at their highest level in over 13 years. As stocks, Eurozone government bonds (see definition of a bond below) also gained in price. The yield on Germany’s 10-year government bond fell 0.02 percentage points to minus 0.34%. Bond yields move in the opposite direction of prices. The moves came after the ECB (European Central Bank) said it would speed up its sovereign debt purchases under its €1.9 Trillion pandemic emergency purchase programme.
On Thursday US stocks advanced with the Dow and S&P 500 each reaching record highs after President Joe Biden signed into law the $1.9 trillion stimulus package. The S&P 500 added more than 1% reaching both a record intraday and closing high. The Nasdaq outperformed as tech stocks surged, the index climbing 2.5%. Despite the record high, futures contracts tied to the major US stock indexes traded lower early Friday.
Definition
Bonds are fixed-income instruments that represent a loan made by an investor to a borrower, typically a corporate or a government. Fixed income securities are debt instruments that pay a fixed amount of interest (in the form of coupon payments) to the investors. The interest payments are typically made semiannually, and the principal invested is returned to the investor at maturity. Bonds are the most common form of fixed-income securities. Governments and corporations use bonds in order to borrow money. Governments need to fund roads, schools, or other infrastructure. Similarly, corporations borrow to grow their business, to buy property and equipment, to undertake profitable projects, for research and development, or to hire employees. Many corporate and government bonds are publicly traded. Others are traded only over-the-counter (OTC) or privately between the borrower and lender.
Two features of a bond, credit quality and time to maturity, are the determinants of a bond's coupon rate (how much interest it pays). If the issuer has a poor credit rating, the risk of default is greater, as such these bonds pay more interest. Bonds that have a very long maturity date also usually pay a higher interest rate. This higher compensation is because the bondholder is more exposed to interest rate and inflation risks for a longer period. Credit ratings for a company and its bonds are generated by credit rating agencies like Standard and Poor’s or Moody’s. The highest quality bonds are called “investment grade” and include debt issued by the US government and very stable companies. Bonds that are not considered investment grade, but are not in default, are called “high yield” or “junk” bonds. These bonds have a higher risk of default therefore investors demand a higher coupon payment to compensate them for the risk.
Woman of the Week
Anne Boden
Anne Boden is the founder and CEO of Starling Bank, the UK-based mobile-only bank. In 2018, she received an MBE for services to financial technology.
Boden was born in Bon-y-maen a suburb of Swansea, UK, and graduated from Swansea University in 1981 with a degree in Chemistry and Computer Sciences. After graduating, she had intended to go into IT but, as a backup plan, applied for a job as a graduate trainee with Lloyds Banking Group. She began her career at Lloyds, after which she worked at Standard Chartered Bank, UBS, and as Chief Information Officer at AON Corporation. Later, Boden joined ABN AMRO and RBS, as Head of EMEA and as head of Global Transaction Banking. She ran a payments business across 34 countries. While working at Standard Chartered, Boden earned her MBA from Middlesex University in 1990. Later in 2011 she served on the Board of Governors of Middlesex University and was awarded an honorary doctorate degree in July 2018. In 2012 she joined Allied Irish Banks as Chief Operating Officer to help turn around the bank after the financial crisis of 2008.
As a computer scientist by training, Boden saw earlier than others in the industry the potential for digital technology to revolutionize the way people and small businesses do banking. So, in 2014, Boden founded her online banking business, originally named Possible Financial Services, with the tagline "Bank Possible". The objective was to create an entirely online bank that gave easier feedback to customers. The company rebranded as Starling in 2016 and received its UK banking license. The Telegraph described the company as "the Amazon of banking”.
“When things get tough just keep on going because if you keep on going, you get a better chance of getting there. Most obstacles you can actually overcome, but you won’t if you just stop. So be ambitious go for the big goal and try and change something that’s really meaningful.”
Today Starling is one of Europe’s most prominent digital banks. It has attracted 2 million users and accounts for 5% of the UK’s small business banking market, with 300,000 small business clients.
In 2020 Boden became a member of the board of the trade association for the UK's banks and financial services companies, UK Finance. She is also an advisor to the UK government’s Board of Trade.
Thank you so much for reading this week’s newsletter. I would love to hear your feedback and please share this with a few friends you think would find this interesting. Have a lovely weekend 💜
I’m Marianne, an early-stage VC based in Stockholm. You can reach me by replying to this email, or find me on Twitter or LinkedIn.