• Alumni

Activity Feed

I really like this concept (specifically in emerging markets and microfinance context) given it’s ease of use and that it could help capable entrepreneurs who might otherwise be neglected by financiers get their businesses off the ground. However, like AJ, I am skeptical that social media connections and engagements alone are sufficient to merit any significant amount of financing. It is heartening to know that there have been no defaults thus far, but this is also a new concept and global markets have been relatively benign and supportive of new businesses. During market downturns, operations, cash flows, and overall business acumen are much more important in determining if a business can withstand the shock. For this reason, I think this information should be used in conjunction with other more traditional credit measures to get a more comprehensive picture of the financial health and potential for the companies seeking financing.

To echo some of the other replies here, this is one of those really tricky areas where the value to the businesses who use Euclid is very clear, but the value to the customers who are being tracked is completely unclear. It is one thing if people are giving up some of their privacy in return for a greater benefit – the classic example being those individuals who are comfortable with the government gathering phone and email data with the purpose of enhancing national security and safety for all. However, in this case consumers are being very closely tracked – largely without their awareness – for the purposes of providing data to companies that will ultimately be used to squeeze more money out of the consumer and enhance the profitability of the store. I don’t know many people who would opt-in to being tracked if the ultimate outcome is to exploit themselves. I am also not sure that with all of the cyber warfare that goes on today that Euclid asserting that they “anonymize” the data does enough to ensure that consumers information is protected. I think in the long run Euclid is going to need to seriously consider how they can provide a true benefit to the end consumer if people are to agree to be tracked by their software.

On November 20, 2016, LST commented on Marks & Spencer: Innovating an old fogey :

While it’s certainly “better late than never” when it comes to digitization, I wonder if simply enhancing their online capabilities and in store shopping experience is going to be enough to fuel the turnaround M&S needs. From your article, it seems as if M&S has a slew of issues it needs to address: from identifying a target market, to having merchandise that resonates with consumers, to better executing its digitally sourced operations. It’s unclear to me if closing some storefronts and adding some kiosks and virtual stylists is going to be enough. Digital enhancements certainly provide opportunities for traditional brick and mortar retailers to better compete in today’s marketplace, but those enhancements need to be implemented in tandem with a strong existing business model, not just as an add on and afterthought.

Really enjoyed reading this piece Viktoria! While it’s pretty incredible what they can do with wearable technology, like Orianne, I wonder whether there is truly a place for this off of the runways or long term. The first wave of wearable technology (fitbits, etc.) filled a true void and provided valuable information that encouraged people to have a healthier lifestyle. As a result, these trends have stuck and continue to grow. When it comes to the more high fashion side of things, I struggle to see what the value to the customer is. For example, with Ringly and the Jaqurd jacket – we already have access to our phones and smart watches – why would we also need access on our jacket and fingers, especially if the quality of the information is so eroded (changing color to tell me I have a text message is not that helpful)? And as Orianne mentioned, the color changing dress is impressive and entertaining during a fashion show, but not practical in a day to day context. While certainly this technology is fun and cool to talk about, I see it as being a cheapened version of technology we already have, so I struggle to see where the long term sustainability is in these business models. I guess with fashion you never know though!

While I am a strong believer in the benefits of quant investing and believe that Quantopian’s mission is a noble one, I am highly skeptical that the current business and operating model described here will deliver value to investors in the long run. As with any investment approach, quant investing has its benefits and drawbacks. On the benefit side, well executed quant strategies can provide better diversification, much more effective risk management, avoid behavioral biases, and (for managers that invest in their trading platforms) provide best in class execution. On the drawbacks side, a quant investor definitionally lacks the ability to engage with management and incorporate more qualitative inputs. Most notably, quant strategies are often criticized for being “data-mined” or engineered to have amazing results on historical data with no economic intuition for various data patterns to proceed into the future.

While Quantopian’s model does bring “fresh ideas,” it aso removes many of the advantages and exacerbates the disadvantages of quant investing. Not being able to net out trades (being long apple in one place and short in another as the article describes) is a HUGE cost to investors. Moreover, not being able to see the underlying model components and how that interacts with other parts of the model makes sophisticated risk management programs and diversification standards incredibly difficult to implement. Thoughtful algorithmic trading is also difficult if you don’t have a sense of the urgency to trade or the time horizon for the “alpha” to materialize. Lastly, the method by which they ask their users to create strategies is very suspect. 14 years of data (what is provided to users to build their strategies on) is a nanosecond in the realm of empirical data and doesn’t even encompass most types of economic conditions to evaluate the strategy. Further, not being able to ascertain whether the strategy has an economic basis (i.e. is there a reasonable story for why the premiums being captured in the backtested model should continue in the future) leaves very little ability to safeguard against data mining.

These are all great ideas, but focusing on sustainability in the automotive industry (particularly in the U.S.) seems like a bit of a prisoners dilemma. The industry is already highly competitive, with much of the competition coming from international automakers with lower cost bases. There are already some viable options in the U.S. market (electric, hybrid), but the mass of consumers who are price sensitive won’t even consider those options. It’s a difficult position for U.S. automakers who have to invest the money to innovate and add features to their products that will necessarily raise the price of their products and make them less competitive at least in the short term. As we have seen with VW, these tensions have already led to automakers trying to skirt the issue rather than address it head on.

In order for Ford to truly put its weight behind green innovation without falling behind their competitors they need to level the playing field. This would be a radical move, but Ford could consider creating a Kyoto-like consortium with other automakers who all agree to binding measures to reduce their environmental impact. They could then lobby the government to impose taxes and fees on foreign manufacturers who don’t abide to the same standards. In this way, they could work to reduce some of the disincentives to innovate in this area and the auto industry could truly be a leader in solving the GHG problem that in many ways they were the greatest contributor to.

On November 5, 2016, LST commented on Can Bank of America make Green Bonds the New Black? :

I think that this is a commendable move by Bank of America, but as a former employee of the company, I seriously question the sustainability of their sustainability efforts. Banks are highly pro-cyclical businesses and generally feel the impacts of market turns earlier and more sharply than most institutions. It’s been a great few years in the markets which have allowed them to focus on things aside from their bottom line, but unless they can demonstrate that this is materially impactful to their profitability, I bet that it will be the first program to get cut when markets sour.

In theory this seems like a great solution to a tough problem, but I wonder if there could be new consequences from shifting to biofuels? I imagine that it would take vast amounts of acreage committed to growing the plants used in the biofuels in order to have enough raw materials to supply the entire aviation industry. I grew up in an agricultural area and know that when yields are a concern there is a lot of pressure to use fertilizers and pesticides to enhance those yields, which have their own negative impact on the ecosystem. While aiming to design planes that can run 100% on biofuels would be a huge success, I think equal focus (likely from Boeing’s providers vs. the company itself) needs to be put on how those biofuels can be produced en masse without introducing additional issues.

On November 5, 2016, LST commented on Boston Steps Up Fight Against Climate Change :

I think it’s great that Boston is spending so much effort on reducing emissions, but it seems like most of their efforts to date have been aimed at patching existing issues vs. thinking about how to change behavior and potentially eradicate/reduce these issues in future generations. What are they doing to partner with schools to ensure that young people who do not yet have energy and lifestyle habits engrained in them learn about global warming and the best-practice behaviors? What are they doing to incentivize individuals to act more environmentally conscious in their day to day lives? This seems like a hole in their plan that needs to be addressed if they are going to reduce their emissions by 25% or even more.

I think it’s great that Evian is starting to think more closely about its impact on the environment and the extent to which it can mitigate that impact – but I wonder if the steps outlined above are sufficient. For example – only using 25% recycled materials in its bottles is much lower than I’d expect. If this is due to cost issues with conversion from old bottles to new bottles, maybe they should be investing in developing a recycling solution that is time and cost efficient. Moreover, how much impact are these plant based bottles going to make? Certainly they will reduce the amount of oil used in production, but will this do anything to reduce the second externality of bottles polluting our lands and oceans? Will they be more recycle friendly?

I think evian could also be taking a broader look at how they can change customer behavior. People like drinking bottled water because they perceive it to be clean. But, with more and more people using re-usable bottles, people are being forced to use tap water if they want to be environmentally friendly. This could be an opportunity for evian to partner with coffee shops, lunch establishements, dining restaurants, etc. to promote use of their re-usable “water cooler” type of jugs rather than water bottles for those patrons that have their own drinking containers but want purified water. In this way, evian could be a leader in a “clean water, clean earth” movement and continue to generate revenue amidst the changing landscape of consumer behavior.