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Demi’s Basic Business Questions: What is Clubhouse?

“What is Clubhouse?”

That’s a really good question and I can almost guarantee that most of those reading this article are wondering what ‘Clubhouse’ has to do with business. In the following article, I will explore this current phenomenon and whether it does, in fact, have anything to do with business.

Clubhouse is an invite-only social media app ,first rolled out in America. It is an audio exclusive app that has been compared to a live podcast. Users join clubs and rooms where the content is digest through spoken word and user bios. It is also currently only available on the iPhone. As a result of Clubhouse’s perceived value, some people are purchasing iPhones to gain access to, and experience the app.

It came to Ireland late last year and there was a competitive fight for invites. Americans were selling Clubhouse invites for upwards of $20, and as someone from the UK or Ireland, you had two options. The first option was to just wait patiently for more people to join the app here, beginning the process of organic invites, and simultaneously miss out on the conversations that were being discussed extensively on Twitter and described as ‘life-changing’. The second option was to purchase an invite and be one of the first Irish people on the app, getting to the knowledge hub as soon as possible. I politely decline to answer what camp I fell into. 

By my estimation, it was early-mid January when Clubhouse gifted several invites to those who were already on the app. Before long, the incentive to purchase invites decreased as more and more Irish people gained access to the app. The dynamic of Clubhouse has also very much shifted from social to business in terms of the conversations being started in Ireland.

Now the next thing to address is what Clubhouse has to do with business. Primarily influenced by the American experience, there are a lot of Clubhouse rooms based on business-centric topics. These range from business tycoons advising on how to build million-dollar businesses to media experts telling you how to harness the power of social media to maximise the profits of small business. Users are allowed to join the “stage” and ask questions to those who started. This has been one of the most attractive features of Clubhouse. Just last week, Elon Musk – the owner of Tesla – engaged in a room in Clubhouse, which as you can imagine gathered quite the audience.

People who have engaged actively with a business or through a career-focused lens have boasted that it has truly changed their overall perspective. Those hosting rooms have since discussed being approached for paid speaking engagements, people have been offered investments in their ideas and much more. The way that people view their business strategy has changed and I have been offered paid freelancing opportunities from the platform.

However, it is important to note that one builds their own Clubhouse experience. It depends on how you choose to use this app, whether it is the aspect of a social club that appeals to you or its potential as platform for personal and professional development. You can cater your experience depending on who you choose to follow ranging from career coaches, business experts, leaders in different industries to influencers, friends etc.

Thank you for reading Demi’s Basic Business Questions. If you have any Basic Business Questions that you’d like me to address – email me at dadenira@tcd.ie

Yours in Learning,

Demilade

Goodbye 9-to-5, Salesforce to offer flexible work schedules to employees

By Matthew Quick

“The 9-to-5 workday is dead.”

Coronavirus has drastically changed the way business is handled since it first began over a year ago, including the way we work.

Last Tuesday, Salesforce announced that the company will no longer expect their employees to follow the 9-to-5 work schedule that has defined the modern workplace. Instead, Salesforce will be introducing a new system in which employees can choose a more flexible working schedule that determines how often they come into the Salesforce offices.

The company has offered three separate options to employees. A flex option will see employees returning to the office one to three days a week, once it is deemed safe to do so. The company states that most Salesforce employees will work via these conditions, as 80% of those surveyed still seek a physical connection to the workplace. A fully remote and a more traditional office-based option will also be offered based upon the employee’s needs.

The changes come after the company surveyed its employees at the start of the pandemic. “We learned that nearly half of our employees want to come in only a few times per month, but also that 80% of employees want to maintain a connection to a physical space,” Brent Hyder, President of Salesforce, wrote in a blog post announcing the changes.

Hyder also wrote that offering a more flexible work schedule is aimed at increasing productivity and creating greater equality in both terms of hiring and work-life balance. “In our always-on, always-connected world, it no longer makes sense to expect employees to work an eight-hour shift and do their jobs successfully,” Hyder wrote. “Whether you have a global team to manage across time zones, a project-based role that is busier or slower depending on the season, or simply have to balance personal and professional obligations throughout the day, workers need flexibility to be successful.”

Salesforce is among a growing list of tech giants allowing their employees to have more freedom over their work schedules. Last October, tech giant Microsoft announced that the company would be embracing a more flexible workplace that would allow some employees to work from home even after coronavirus restrictions are lifted. Salesforce is also looking to update its office spaces once employees return to work. Diverting from a more traditional workplace, “community hubs” will replace desks with breakout spaces meant to foster human interaction.

Salesforce employees began working from home in early 2020 and are expected to continue working from home until at least July 31, 2021, the company stated. The latest changes being made by Salesforce and fellow tech companies indicate an evolution brought on by coronavirus. Companies and employees alike have developed different expectations from one another as a majority of the global workforce works from home.

“This isn’t just the future of work, this is the next evolution of our culture. We’re combining the strength of our values, our platform and our people to reimagine the way we work for the better — whether in-person or in the cloud,” Hyder wrote.

Disney+: Is a Netflix streaming war on the way?

The pandemic’s impact on Disney can be seen through the closing of Disneyland parks, its cruise lines, productions, and delays in its upcoming movies. It has also resulted in thousands of redundancies at Disneyland Resort, Walt Disney World, and its retail stores. For the 2020 fiscal year, Disney reported a net loss of $2.8 billion. Its profits decreased by 99% at $29 million this quarter, from $2.1 billion last year. Its costs will also increase by $1 billion this coming year due to the increased spendings on safety precautionary measures to prevent the spread of the virus as parks are slowly beginning to open again in limited capacity, such as the company’s resort in Florida. Overall, its operating income decreased by 67% to $1.3 billion, and could have been $2.6 billion higher had the effects of the pandemic not hit the company. 

Nevertheless, Disney has focused its efforts on its streaming business, Disney+, which uses a subscription model of $7 per month by itself, or $13 a month in conjunction with Hulu and ESPN+ as a package. Disney+ has acquired roughly 95 million subscribers, an increase of 9 million from just December. In fact, the streaming service in conglomeration with Hulu, Hotstar, and ESPN+, has gathered 146 million subscriptions. The company’s fast growth as individuals increasingly indulged in its services during lockdown has solidified its position as a strong Netflix competitor. This positive news of Disney’s progression sent its stock up by 3% in after-hours trading as investors “focused on the promise of streaming instead of the billions of dollars lost to the pandemic.”

The company is now being treated like a tech company as investment in its streaming business continues to rise. However, investors and analysts have raised concerns, wherein they question how the company plans to grow beyond its current “diehard fans.” As a response, Disney plans to invest in and push out more content. Streaming is a very costly business and the company requires high funding to finance new series and movies that are necessary to not only maintain its current subscriber base, but also to lure new subscribers. 

Disney’s future looks bright as it harnesses and further develops its Disney+ platform by doubling investment for its annual content to $15 billion by 2024, at which point its streaming business would begin turning over profit. 

The company forecasts 300-350 million total subscribers worldwide in its streaming services by the end of 2024. On one hand, Bob Iger, executive chairman, said Disney will focus on releasing quality content over quantity. It plans to release around 100 new titles annually across its brands, with attention to its Disney+ library. Disney has revealed its plans to release 10 Marvel series, 10 Star Wars series, and 15 Disney and Pixar series. On the other hand, as Disney competes with Netflix, there is a pressure to increase its volume of content. Netflix was able to release more than 370 shows and movies last year, which roughly equalled a new show everyday! Kareem Daniel, who is in charge of Disney’s creative content, now says Disney’s goal is to release new content to Disney Plus every week. It will be interesting to watch and analyse the strategy Disney uses to continue flourishing its streaming services this year.

To the moon… and back: the inner workings of financial markets

“Our mission is to democratize finance for all. We believe that everyone should have access to the financial markets, so we’ve built Robinhood from the ground up to make investing friendly, approachable, and understandable for newcomers and experts alike.”

            – Robinhood Markets, Inc. Mission Statement

Commission free trading is a great thing, right? Any time you can get the same service while paying less, in this case paying nothing, must be a good thing! To this question, one could debate many different perspectives. Yes, on the surface, commission free trading appears to be a clear win for investors, who benefit from lower costs. Fees, including trade commissions can dig into returns even if they are as low as €5 or €10. This eliminates a significant proportion of hard earned capital appreciation which investors desperately crave. Hence, zero commissions should always be of benefit to investment accounts.

Furthermore, digital brokers, which includes the likes of Robinhood among others, have provided transparency in financial markets which would once have been inconceivable. Trading apps now make tracking asset prices effortlessly simple in real time, allowing even the smallest of investors the opportunity to capitalise on market distortions. However, while smaller investors have rejoiced in this new found transparency, few have actually taken the time to question why and how digital brokers can offer commission free services. Robinhood’s (not-so) secret is simple: selling their order flow, and thus information about which assets are in demand, to other financial intermediaries.

The payment for its order flow model is very simple. First pioneered by financier and now convicted fraudster, Bernie Madoff, it is a way for market makers such as Citadel Securities and Virtu Financial to outsource the task of finding orders to fulfil. Market makers provide liquidity to financial markets by remaining ready to buy and sell securities at all times of the day. In order to offer free commission on trades, Robinhood sells trades to market makers such as Citadel, who pay a small fee in return, usually fractions of a cent per share. The money maker can then flip the trade by taking the other side of the order and returning the asset to the market, profiting the balance between the buy and sell price.

As J.E. Karla described, “If the service is free, you are the product. Robinhood users thought the service was accountable to them, but actually it exists to serve giant Wall Street institutions like Citadel and other market makers”. Simply put, the payment for order flow system makes a lot of money for everybody except Robinhood’s users. The system worked perfectly for Robinhood, that is until a team of amateur investors on the Reddit discussion board ‘WallStreetBets’ bid up GameStop (GME) shares over 1,700%. Some traders declared war on Wall Street hedge funds that had placed short positions against the company, most oblivious to the fact that the very institutions against which they were feuding were in fact profiting from their actions. Market makers are designed to prosper in times of uncertainty and high-volume trading. January 27th alone saw $29 billion worth of GameStop transactions.

Small investors were also mostly unknowing of the fact that share-price volatility creates a requirement for brokers, like Robinhood, to post cash with a clearing house — and meeting these demands can curb trading. A clearing house is the intermediary between buyers and sellers of financial instruments that ensure both sides honour their contractual obligations. Similar to a brokerage making a margin call to reach a maintenance margin, the National Securities Clearing Corporation (NSCC) required Robinhood to post $3 billion in cash as collateral for the risk that GameStop shares may plummet between when their shares are purchased and when they are cleared two days later.

However, Robinhood simply did not have $3 billion in capital to put down as collateral. Instead, it decided to limit GameStop trading and similar companies targeted in the Reddit movement. This left Robinhood with fewer volatile stocks on its balance sheet while also allowing earlier trades to settle, reducing the company’s overall risk exposure, and thus its collateral requirement. Crucially, this is when theories of Wall Street intervention in markets began to circulate. Many believed that Robinhood’s actions, among others, constituted proof that the capitalist economy is structured to do what is best for the business elite. Jim Chanos, famous American investment manager, summarised the events well in a recent interview with the Financial Times. He remarked that “We’re seeing a level of misunderstanding about how markets work that is being brought on by a whole new generation of investors who have never seen a bear market and somehow think that they’re being held back from their rightful place at the table by these evil hedge funds”.

When it comes to understanding the inner workings of the financial world, individual investors have always been disadvantaged in comparison to the investment powers found on Wall Street and beyond. Nevertheless, newfound transparency in the financial markets, brought about by the creation of digital brokers such as Robinhood, illustrates just how powerful retail traders can be when they rally around certain stocks. This is what happened when a team of amateur traders on a Reddit discussion board decided to wage war upon hedge funds.

Somewhat ironically, amateur traders’ misunderstanding of the extent of transparent relationships within the financial system seems to be exactly why the war appears to have been lost. Rebel investors may have succeeded in forcing short sellers to abandon their positions, but the bubble is beginning to burst, and Wall Street powers are likely making billions from new, and much higher priced short GameStop positions than ever before. To compound the irony, in order to take new short sale positions, institutions have had to borrow shares them from their actual owners, the rebel investors, most of whom won’t realise that their broker contracts allow their shares to be lent to other investors for a fee, which the trader will never see. 

Hence, traders are lending their shares to the exact institutions which will eventually bankrupt them, making Wall Street billions of dollars in the process. The recent GameStop saga is a perfect illustration that retail investors are collectively powerful enough to win the battle, but Wall Street will always win the war.

Trinity Entrepreneurial Society: Dragons’ Den Through the Years

by Daryna Kushnir and Urte Perkauskaite

The show Dragons’ Den is based on the Japanese television series ‘Manē no Tora’ (‘The Tigers of Money’). It was broadcast from 2001 to 2004. Since then, the concept of ‘Dragons’ Den’ has gained popularity in many countries. For example, in the United States the show is known as ‘Shark Tank’ and the panel of investors are known as the ‘Sharks.’

Entrepreneur Michael Cotton made history in the show as his invention – a device used to stop motorists filling up their diesel cars with petrol – received the largest investment to date, totalling £250,000. While ‘Tangle Teezer’ which did not receive investment in the show is now worth an estimated £200m.

Pitching competitions are held in many world-renowned universities. For example, the University of Oxford launched its ‘Humanities Innovation Challenge,’ where students pitch their entrepreneurial ideas and compete for a prize of £5000. Similarly, in 2020, Durham University held its fourteenth pitching competition ‘Dragons’ Den with a Difference’ with environmental sustainability as the event’s focus.

The TES Dragons’ Den has been active in Trinity’s college community for a long time, we look back on some successful and strange ideas that have gone through the competition over the years;

Equine MediRecord

A company which hails to be the first of its kind, Equine MediRecord was founded by Trinity students Pierce Dargan and Simon Hillary. The idea was first pitched at the TES Dragons’ Den competition in 2016. The equine startup went onto Launchbox and has become a successful business operating in Ireland, the UK and France.

Bounce Insights

The novel market research startup placed second in Dragons’ Den 2019, also securing a place in Launchbox. It has been operating successfully ever since. The team consisted of five Trinity undergraduates – some making sacrifices such as foregoing Erasmus to work on their idea! An interview with Charlie Butler, one of the founders is available on the TES website.

CFlood

Winner of last year’s Dragons’ Den competition, CFlood’s core product is a simple and accurate tool which visualises flood data. The company is currently looking for investors and hopes to make its product available to the market very soon. More information about their plans are available here: https://www.thinkbusiness.ie/articles/cflood-visualise-flood-data-tcd-launchbox/

Aurius

The winner of Dragons’ Den in 2017 aimed to sell hearing aids at a much more consumer-friendly price of €550. The company also secured funding at the Irelands Funds competition.

Little Farms

A startup proposing to grind up crickets into flour as a sustainable alternative to beef came close to winning Dragons’ Den back in 2016! It didn’t seem to work out, but a California company called Little Farms is doing very well with the same idea.

Despite the pandemic, the TES Dragons’ Den competition persists, taking place over Zoom this time. The society’s current ‘Incubator’ participants suggest some very promising ideas for Dragons’ Den 2021. The competition will offer more than €20,000 worth of prizes, with judges Alison Treacy, Kate Fullen and Sean Judge representing the sponsors Elkstone, Amazon Web Services and Tangent. Be sure to apply before it’s too late!

More information is available at https://www.testrinity.com/dragons-den

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