'Subscription Economy'
'Subscription Economy'
Today's Daily Briefing
In recognition of CD&R's remarkably active year, the firm is honored to be nominated in five categories of the 2021 PEI Awards, including Firm of the Year EMEA and Deal of the Year EMEA (Morrisons)
Voting is open and can be found here until 11:59pm PST on Wednesday 12 January 2022, with the results announcement in March.
The World
Russia said it would not make concessions under U.S. pressure and warned that this week's talks on the Ukraine crisis might end early, while Washington said no breakthroughs were expected and progress depended on de-escalation from Moscow. Meanwhile, NATO warned Moscow to abandon its belligerent foreign policy and co-operate with the west or face a military alliance steeled for conflict, on the eve of a week of intense diplomacy aimed at averting a Russian assault on Ukraine. Jens Stoltenberg, NATO secretary-general, said they are prepared for “a new armed conflict in Europe” should negotiations fail. (Reuters, Financial Times)
A group of Russia experts urged National Security Adviser Jake Sullivan to send more arms to the Ukrainians when he spoke with them ahead of this week’s high-stakes diplomatic meetings with Russian officials. By soliciting advice from the hawkish pockets in the foreign policy establishment, including those who served under former President Trump, the Biden administration is considering all options while weighing how to discourage Russian President Vladimir Putin from invading Ukraine — and punish him if he does. (Axios)
Foreign ministers from the Gulf states will start a five-day visit to Beijing today in with energy expected to top the agenda. China is worried about supply security following the turmoil in Kazakhstan, one of its key suppliers while the members of the Gulf Cooperation Council (GCC) want to find a counterweight for their over-reliance on the U.S. and Beijing’s close ties to Iran, analysts said. (South China Morning Post)
An overwhelming majority of Americans believe the U.S. is in the grips of a full-blown mental health crisis, according to a new USA TODAY/Suffolk University poll. Nearly two years into the pandemic, which brought a rise in depression, anxiety, stress, addiction and other challenges, almost nine in ten registered voters believe there’s a "mental health crisis" in the nation, the poll found. (USA Today/Suffolk University poll)
New grassroots GOP shuns corporate America: For all the attention on boardrooms and congressional offices, the GOP's drift away from corporate America over the past year is largely a grassroots phenomenon — driven less by executives or members of Congress than the people to whom both camps must answer. Republican voters and grassroots donors are increasingly hostile to major segments of corporate America. Large drug companies are in the crosshairs of conservative vaccine skeptics. Tech giants are labeled as "woke" or politically correct censors. Issues like trade and immigration pit conservatives against Washington's business lobby. Meanwhile, companies that cut off GOP election objectors — and, more broadly, have engaged on hot-button political and social issues — are responding largely to pressure from their own employees. (Axios)
Study forecasts greater hurricane risk in Northeastern U.S.: A new study suggests that as the planet warms, the storms will become more common in mid-latitude regions — between 30 and 60 degrees latitude in both hemispheres — that include New York City and Boston as well as Beijing, Tokyo and other large cities in eastern Asia and Australia. “Places like New York, which are not in the deep tropics, have always had hurricanes, but only rarely,” said Joshua Studholme, a Yale University climate physicist and the lead author of the study, published last month in the journal Nature Geoscience. “The climatology is changing and that is likely to be a shock.” (Wall Street Journal)
Economy
The Federal Reserve is on track to raise interest rates as early as March, economists say, as strong wage growth and falling unemployment lessen analysts’ focus on monthly job creation. Figures released on Friday showed a sharp slowdown in the number of new jobs in December. But some economists nonetheless pulled forward their bets on interest rate rises, focusing instead on rising wages and a declining unemployment rate, which fell to 3.9% in December — close to the pre-pandemic level of 3.5%. Average hourly earnings rose 0.6% from the previous month, which translates to an annual gain of 4.7%. (Financial Times)
Bond selloff rattles markets: A slide in bond prices has pushed the 10-year Treasury yield to 1.769%, its highest since early 2020. (Wall Street Journal)
Wall Street’s biggest banks this month are set to report record profits for 2021 thanks to bumper investment banking fees and lower-than-expected losses on loans during the pandemic, with analysts cautioning it may take years to repeat such stellar earnings. Citigroup and JPMorgan Chase are the first big banks to post fourth-quarter results, reporting on January 14. They are followed by Goldman Sachs on January 18, and then Morgan Stanley and Bank of America on January 19. Of those, analysts forecast all but Citi will report their highest-ever full-year profits, according to estimates compiled by Bloomberg and historical earnings data from S&P Capital IQ. (Financial Times)
The U.S. is planning to hand out $10 billion to help upstart companies gain access to capital in a bid to rev up business in disadvantaged communities and spur a broader economic recovery from the pandemic. The State Small Business Credit Initiative will direct money to states, territories and tribal governments for programs that provide venture capital or encourage private lenders to issue loans to small firms. The program revives a policy put into place following the 2007-2009 recession, when banks cut back on lending to small firms. The $10 billion is more than six times as large the cost of the earlier program, in part because the administration and Congress wanted to dedicate funds to disadvantaged groups. (Wall Street Journal)
The departing Andreessen Horowitz partner Katie Haun aims to raise at least $900m for a pair of cryptocurrency investment funds, in what would be one of the largest debuts for a new venture capital firm. Haun planned to raise $300m for a fund making early investments in cryptocurrency start-ups and $600m for another fund investing in larger companies and digital tokens. Andreessen had committed $50m to the funds as an anchor investor. (Financial Times)
Andreessen Horowitz raises $9B across three funds: a $1.5B Bio Fund, a $5B Growth Fund, and a $2.5B Venture Fund. (A16Z)
PayPal confirms it is exploring launching its own stablecoin, after code in its iOS app showed it is working on a “PayPal Coin” backed by USD. (Bloomberg)
McKinsey’s top executive wants to change how the firm operates: Bob Sternfels, the consulting company’s new leader, discusses speeding up decision making, rethinking performance evaluations and avoiding future scandals. Sternfels: “As we think about helping leaders today, there are so many forces that have converged. Technology has been adopted at a rate that we’ve never seen; climate change is this generation’s leadership [challenge]; geopolitics are probably as uncertain as 1946, 1989—you pick the time. And talent markets are completely inverted; 40% of people want to change jobs. What our clients are saying is, as leaders, none of them want to miss the moment. And so my goal is how do we have the courage to help them do something they normally wouldn’t have done.” (Wall Street Journal)
Technology
Apple could reinvent money management and take on PayPal and Robinhood: Apple has the building blocks to turn the iPhone and its ecosystem into the ultimate financial management tool. So what does it need to do to truly shake up the fintech world? First, Apple needs to launch its credit card outside of the U.S. Second, Apple has a lot of work to do on Apple Card itself. Third, Apple should take a page out of the PayPal playbook and turn its Wallet app into an all-encompassing financial experience. Fourth, as part of that, I suggest Apple better pivot its Apple Cash Card into a true debit card alternative to the Apple Card and allow use outside of Apple Pay. One other idea: automatically investing the cash back from Apple Card purchases and launching a spare-change investing feature to take on Acorns and future plans from Robinhood. (Bloomberg)
Reddit’s ‘antiwork’ forum booms as millions of Americans quit jobs. Members of online community encourage each other to resign — and complain about the boss. (Financial Times, Reddit)
The subscription economy is expanding into the drive-thru lane. Subscriptions offer a source of dependable revenue, loyalty and data — the same elixir that fuels streaming services like Netflix and exercise powerhouses like Peloton. The subscription economy grew nearly sixfold from 2012 to 2021. Fast-food chain Taco Bell announced a $10-per-month subscription, Taco Lover’s Pass, for one taco per day. Fast-casual chain Sweetgreen announced a special offer: $10 per month for $3-per-order discounts. "There’s a lot of Americans eating fast food more than once a week, and if they see value in the subscription program, they will gladly subscribe," Adam Levinter, CEO of subscription consultancy Scriberbase said. Services are often betting that many subscribers won’t take advantage of what they paid for. Subscription companies call it "breakage." (Axios)
Inside cybersecurity’s white-hot 4th quarter: Last year saw an unprecedented $21.8 billion in venture capital poured into cybersecurity companies globally. Aside from setting the one-year record, 4Q21 set a new quarterly record — a new all-time high of $7.8 billion, smashing the previous record of $5.3 billion in 2Q21. To help put the quarterly numbers in perspective, keep in mind 2020 saw $8.9 billion invested in cybersecurity globally. That means the last three months of 2021 saw just about $1 billion less invested than all of the entire previous year, which was a record year before 2021. That is despite 568 fewer funding deals in those three months when compared to all of 2020. (Crunchbase)
Smart Links
GM recognizes California's authority to set vehicle emissions rules. (Reuters)
Mongolia stock market turns heads with 133% gain. (Nikkei Asia Review)
Banks are making it easier to get credit cards. (Wall Street Journal)
Your head of H.R. is now basically the school nurse. (New York Times)
The “stay interview” is the key to retention right now. (Protocol)
Rising wages and other US hiring trends to expect in 2022. (Quartz)