Following the Money
“The End of Wall Street as They Knew It,” proclaims the headline on the cover story of New York magazine this week, an epic account of the woes of post-crash bankers. The masters of the universe have had their bonuses slashed, the story says, due to the suffering economy and the provisions of the Dodd-Frank financial reform legislation. The industry also cut 200,000 jobs. Where’s a young, mathematically inclined valedictorian to turn?
“If you’re a smart Ph.D from MIT, you’d never go to Wall Street now,” one hedge fund executive told the magazine. “You’d go to Silicon Valley. There’s at least a propsect for a huge gain. You’d have the potential to be the next Mark Zuckerberg. It looks like he has a lot more fun.”
Dear Startup Abbey
One of the reason that Bernie Madoff was able to stay undetected for so long was that he could alternately charm and intimidate the young SEC staffers sent to investigate his firm. In the wake of that scandal, reports The Wall Street Journal, the SEC has developed a computer system that analyzes performance from thousands of hedge funds and looks for unusually good performance year-over-year that, like Mr. Madoff, seems too good to be true.
As Betabeat has been pointing out, Occupy Wall Street presents sort of a gray area for Startupland. Sure, both parties waive their anti-corporate banner proudly and the rhetoric of disruption can be used interchangeably. But bootstrapped, self-interested Ayn Rand-o-philes and Zuccotti Park’s concern with economic inequality don’t necessarily see eye-to-eye.
Thankfully higher authorities have decided to weigh in on one problematic area. In fact, the entire Ethicist column in this weekend’s New York Times magazine is devoted to it.
Tech Bubble Watch
Amazon.com’s quarterly results are out, and OMFG THEY POSTED A PROFIT DECREASE! Why? Because they priced that fancy new Kindle Fire thing on the cheap, is why. People are freaking out, an analyst gave them a “sell” rating, and their shares are dropping. Are people overreacting?
Made In China
If you followed the downward trend of tech stocks like LinkedIn, Pandora, and Zillow in the media yesterday, chances are, at some point, you had to avert your eyes. USA Today uses no less than four foreboding verbs to describe how all three newly-public tech companies performed Monday after the S&P demoted America’s credit rating down to AA+:
“Shares of professional social network LinkedIn plunged 17%, to $75.47. Internet radio company Pandora tumbled 8% to $12.49. Real estate website Zillow crumbled 7% to $26.09. That came as the Dow skidded 635 points.”
Based on just that day of trading, Geoff Yang, a partner a Redpoint Ventures, told the paper, “The sound you just heard was the IPO window slamming shut.”
Investment in information technology (read: data centers and developer salaries) fell hard in 2008 and 2009 but is trending back up in a big way, according to a new forecast by London-based global market research agency Ovum. “Spending on IT by the financial markets industry will hit almost $90 billion by 2015, driven by strong growth in Asia-Pacific and a bounce-back in the hedge funds sector,” according to a press release.
Ladies and gentleman, we have a third new Bitcoin exchange. “Bitcoin exchanges popping up like daisies!” says the Bitcoin Money blog. About a month after Mt. Gox was hacked and Tradehill.com hit the web, a former Citigroup vice president now based in Canada and China is launching Ruxum Exchange in invite-only beta. The site emphasizes usability and its “Wall Street-level security,” according to TechCrunch, and accepts USD, EUR, GBP and JPY with more currencies to come. The site’s security is rigorously audited by a third party, according to Ruxum, and it has back-up databases in two separate physical locations and has developed procedures to deal with breaches. Otherwise its security measures are pretty standard: encrypted passwords and data connection, requiring strong passwords, and so on. “These are people who don’t fuck around,” observed one Reddit user.
White Collar Capital
New York City-based Felix Investments is suing SecondMarket in the New York Supreme Court over a $2,475,000 deal for Facebook shares that never came to fruition. Felix began investing in Facebook back in 2009 through two funds named Facie Libre 1 and Facie Libre II–meaning face book in Latin–and did a brisk business with SecondMarket. Dealbook’s Evelyn Rusli recently described Felix investors as “not part of Silicon Valley’s elite” and “more comfortable navigating the narrow streets of Lower Manhattan than on tree-lined Sand Hill Road in Menlo Park.” The suit is over a deal in January 2010 to buy 75,000 shares from Karl Voskuil, a Facebook software engineer, at $33 per share.
Tech Bubble Watch
The way that brokers communicate with the public is closely monitored in an effort to prevent scams, false advertising and misleading advice.
It’s the reason why, even as their customers flocked to services like Twitter and Facebook, the big banks banned their brokers from using these services for work.
But Morgan Stanley, the largest U.S, retail brokerage with 17,800 advisers, now plans to allow its staff limited access to both Twitter and LinkedIn, which just completed a very successful IPO, on which Morgan Stanley was a lead underwriter.
As the first social network to hit the public markets, aside from the Facebook of China that is, LinkedIn has created a unique sort of buzz.
It’s a trending topic on Twitter right now, which means a firehose of attention, both professional and amateur, is being directed at #LNKD.