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Wall Street Insider November 9

Hello readers,

SoftBank is in a "rough sea" – or at least, that's how CEO Masayoshi Son describes it.

It might be easy to say. SoftBank Group reported a $ 6.4 billion quarterly operating loss this week thanks to massive write-downs on WeWork, Uber and other investments from SoftBank and its Vision Fund.

And as we report, the factors that create this storm are not unique to the high-profile IPO implosion (and subsequent rescue) on WeWork. Just this morning, we published a deep dive from Meghan Morris to Fair, the startup of car rental that raised $ 385 million in a December Series B lead led by SoftBanks Vision Fund.

Meghan spoke to business insiders who told us how Fair's groundbreaking growth meant it lost track of millions of dollars in inventory as it burned through funding. And speaking of rough seas, insiders told that Fair's co-founder and now ex-CEO often used sailing analogies to explain his vision.

SoftBank has entered Fair with an additional $ 25 million and installed an interim CEO. Meanwhile, hundreds have laid off and are reassessing their business model.

It is worth mentioning that Fair bought Uber's money-leasing program in January when Uber was ready to go public. That brings us to another great source of pain for SoftBank.

Uber's stock hit one to two this week. On Monday, Uber reported a loss of $ 1

.1 billion in the third quarter, and its shares fell 10% the following day. On Wednesday, the start of the start-up after the IPO gave early investors and employees the opportunity to pay out, and the shares had a further 4% to mark a record low level.

Uber, CEO Dara Khosrowshahi, however, dangled the goal of the 10-year-out company that achieves profitability (star: on an adjusted EBITDA basis) by the full year 2021, and on the revenue request promised to be "disciplined and efficient" with capital. Just a few days earlier, lesser rival Lyft, founded in 2012, said it would deliver positively adjusted EBITDA by Q4 2021.

Financial discipline and sustainability are conditions that have emerged a lot this week. On Thursday, we published an internal note to the staff of WeWork from the new chairman Marcelo Claure (who is also SoftBank's CEO), presenting the college company's priorities for the next five years. No sail comparisons, but it opened with an anecdote about Claure's recent New York City Marathon race and mentioned sustainable growth twice (the word "profit" didn't show up.)

This week WeWork also gave a 49-slide investor presentation, and a "key principle" it was highlighted was to prioritize "disciplined growth with profitability."

We have already written a lot about insiders who are concerned about inflated valuation and big losses. And this week we added another voice to the mix.

Our hedge fund reporter, Bradley Saacks, attended the Greenwich Economic Forum on Tuesday, where billionaire Bridgewater founder Ray Dalio told the audience that years of ultra-low interest rates that sent investors struggling for returns have created an environment where companies "sell their dreams in instead of earnings. "

Against this backdrop, there is still plenty of VC appetite on the proptech front, where our real estate reporter, Alex Nicoll, had a busy week covering another flurry of collections at startups looking to put a technical spin on real estate .

Several links below, but one was the real estate data company Reonomy's $ 60 million Series D. SoftBank Capital had previously invested in Reonomy, but did not participate this time. The latest funding was led by SaaS specialists Georgian Partners, and other investors included venture capital arm Wells Fargo Strategic Capital and Citi Ventures.

I record two JPMorgan employment stories from Shannen Balogh. JPMorgan Commercial Bank has hired four executives away from Silicon Valley Bank for a new coverage team to manage VC relationships with mid-market bankers in groups named "technology and disruptive trading."

Meanwhile, the projects in a row have less optimism, It also seems that JPMorgan & # 39; s Consumer and Social Banking Bank is building a "recession preparedness team."

We know that there is still plenty to unpack when it comes to the online money and influence associated with SoftBank. As always, we are eager to hear your feedback on the coverage and learn what you want to see more of!

Have a great weekend,


Citi targets big markets like Seattle and Dallas as battlefields to snatch deposits from rivals like JPMorgan Chase and Bank of America

In its bid to win more consumer deposits and increase revenues in the United States, and Citigroup is targeting new territory for expansion.

In the list are cities of about a dozen states outside Cisi's current retail bank imprint, where it has large caches of credit card customers and ATMs.

Citi's push into new banking markets such as Washington, Texas and Minnesota, posted by US Consumer Bank chief Anand Selva at a financial conference on Tuesday, may include a "light physical presence" with new storefronts.


Merrill Lynch has just undergone incentives to retain clients to hire counselors. An internal memo said it would increase payout and subsidize handovers starting in 2021.

Merrill Lynch sweeps the pot for financial advisers who intend to retire over the next few years and increase incentives for remaining colleagues to pick up their clients .

The firm supports its payout ratio for senior consultants – meaning veteran advisers – regardless of production level, by up to 75 percentage points. But the updated payments to retirement counselors, which they receive for five to seven years based on how much business they have brought in, will not take effect until November 2021, which means they have to hang around for at least as long to take advantage av.

Merrill will also subsidize 20% of the costs of the hereditary advisor, which means the remaining advisor has the chance to be fully credited for revenue from her new book faster, especially if they expand the business more themselves.


Green Dot's bread-and-butter business has been undercut by VC-supported neo banks. It's all about technical partnerships with the likes of Uber to restart growth.

It seems that everyone will be banking these days, or at least doing bank-like things. These are the obvious players like challenger banks, digital asset managers and payment processors.

Then there are some less expected participants, such as the ride-hailing giant Uber or the global retail chain Walmart.

Green Dot, a bank known for its prepaid debit cards, has seen many years of businesses come under pressure and the stock has lost roughly its value this year – their executives have blamed the loss of active accounts in a rush of VC cash to digital banks. Now it's more about partnering with companies that want to offer their own banking-like services without having to be a bank.


Goldman Sachs & # 39; new CTO shares its strategy to attract outside developers to work more closely with the bank and give a glimpse into the future of how Wall Street will work [19659022] Too many Goldman Sachs key customers have been 150 years old and have been traders, portfolio managers and corporate executives. Now the company is ready to add another group to the list: developers.

At least that's how Atte Lahtiranta, the Wall Street firm's new technology manager, thinks about his new role, he said in an exclusive interview with Business Insider. Lahtiranta, introduced as the chief technology officer in September, joins the company after being shut down at Verizon's media group, Yahoo, and Nokia.

Lahtiranta said that his many years of experience with big tech taught him the importance of admiring third parties. developers. As a technology manager, he wants to encourage his engineers to make it as easy as possible for outsider developers to interact with the bank – and treat them like some of the firm's "most valued customers."


Some cannabis stocks now have green light from US wealth managers such as Morgan Stanley, Merrill Lynch and Wells Fargo. We have company policy details.

Financial advisers at some of the largest US wealth managers are slowly opening their doors to cannabis.

Management companies including Wells Fargo, Merrill Lynch and Morgan Stanley have begun allowing their customers access to some Canadian cannabis shares, Business Insider has learned. In some cases across these companies, the client must reach their advisor to ask for an investment, or the advisor must seek approval from the firm before making a recommendation.

The changes have come in recent months. Wells Fargo Advisors in August changed the way it responded to clients' cannabis investment questions, while Merrill Lynch began allowing cannabis shares with "buy" ratings after Bank of America launched research coverage for a group of cannabis companies in April.


CEO of Bank of America and Morgan Stanley see 2 ways they can succeed where others have failed to disrupt an industry dominated by NYSE and Nasdaq

CEO for a startup stock exchange struggling for regulatory approval, believes the low cost offered by the venue will help break the tight grip of big market players – and he wants the company to advocate for its members and their investors in Washington.

Jonathan Kellner, CEO of Members Exchange, told Business Insider that the startup's sales argument for the market was that its success would encourage judges to reassess their approach to market data fees and regulatory market structure issues.

The entire market, Kellner said, could benefit from further competition. This includes MemX's supporters, who are some of the biggest names in banking and high-speed trading and would certainly appreciate seeing a drop in trading and data fees.


The business of offering transparent hedge fund-like strategies is booming, even though the hedge fund industry itself is struggling

A receding tide does not sink all vessels for hedge fund-like strategies.

3.2 trillion parts of the asset management space has had six straight quarters of investor outflows, according to the latest industry data from tracker eVestment, with $ 77 billion more assets leaving the hedge fund this year than entering them. Overwhelming returns compared to the market combined with high fees have created investors in the space they once struggled to gain.

But some structures that offer hedge fund-like strategies are booming. Managed account platforms, which allow investors to set up an individualized account with a manager, continue to grow, with BNY Mellon's HedgeMark platform, where a hedge fund manager runs a pool from a third-party investor who can customize the strategy, growing assets by almost a third in the first half of this year to $ 21 billion.


Fintech and proptech news

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