Philippa Kaur

THE CHANCE to take a summer holiday after the long lockdown is very appealing. So Bartleby was excited to book rooms in a pub-cum-hotel in the beautiful Yorkshire Dales in July. Not long after the booking, however, the manager called to warn that the restaurant and bar would be closed on the Wednesday night. “As you probably know”, she said, “it is impossible to find staff at the moment.”Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

“I THINK THIS will be theatrical, and we are concerned that it will be sensational,” a senior official at Japan’s Ministry of Economy, Trade and Industry (METI) warned an activist fund last year. The investors were pushing to put more outside directors on the board of Toshiba, a titan of Japanese industry. In the event, it was Toshiba’s management that caused a sensation. An independent investigation published this month alleges that the company worked with government officials to squeeze shareholders ahead of its annual meeting in 2020. The fallout from the pressure campaign has already helped fell the chief executive, Kurumatani Nobuaki, and several board members. As the 145-year-old conglomerate prepares for this year’s shareholder meeting on June 25th, its fate hangs in the balance.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

WET MARKETS in China have suffered more than most businesses in the pandemic. After one in Wuhan was blamed as the source of covid-19, officials ordered others to shut. Shoppers have been reluctant to frequent bustling outdoor stalls selling fresh meat and vegetables. Many may never reopen—not least because they are being rapidly displaced by online rivals. The value of online sales of fresh produce in China, which amounted to 293bn yuan ($45bn) in 2019, before the pandemic, may rise to 570bn yuan by the end of 2021 (see chart). That would put e-grocers’ share of fresh-food spending at 11%, double what it was before covid-19. It could hit 18% by the middle of the decade.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

Source: Business – economist.com More

MUSIC FANS have had to get used to seeing stars perform via video-link, and the same was true of the big performance held on June 22nd to decide the future of Universal Music Group. Shareholders in Vivendi, the record label’s parent company, tuned in to the annual general meeting to chorus their near-unanimous approval of a plan to spin off Universal as an independent company. The label will launch as a solo act on the Amsterdam stock exchange in September.The vote marked the end of a noisy battle for control of Universal, which accounts for 30% or so of global recorded-music sales. In January Tencent, a Chinese media and e-commerce giant, increased its stake in the label to 20%. Earlier this month it emerged that Daniel Loeb, a New York hedge-fund billionaire, had built up a stake in Vivendi. Then on June 20th Bill Ackman, a rival hedgie, announced that his special-purpose acquisition company was to buy 10% of Universal for €3.5bn ($4.2bn), the biggest SPAC deal so far (and a particularly complex one). Vivendi will itself hang on to 10% of the label; the remaining 60% of shares will be distributed among Vivendi’s existing shareholders.The enthusiasm of Universal’s fan club is explained by the recent strength of the recorded-music industry, powered by streaming. Between its lowest point in 2014 and last year, worldwide revenues rose by 54%, to $21.6bn. Some two-thirds of these revenues accrue to the three “major” record labels: Universal, Sony and Warner. Only Warner is publicly listed; its share price has risen by 16% since its own initial public offering a year ago.Universal may strike investors as more appealing still. Its back catalogue of 3m songs, by everyone from the Beatles to Lady Gaga, is twice the size of Warner’s. Its slug of the recorded-music market, which reached 31% last year, is creeping up. That scale gives it more bargaining clout with streamers like Spotify. And at 17%, its operating-profit margin is five points higher than Warner’s and rising, according to Bernstein, a broker, which expects the spun-off company’s value to rise above the €35bn implied by the Ackman deal.What of the remains of Vivendi? “Black-box governance, an uneven track record of value creation and a motley crew of assets,” sums up Matti Littunen of Bernstein. He warns of share-price volatility in September when growth investors dump Vivendi stock. Some shareholders worry that Vincent Bolloré, who controls the group via a 27% stake, may try to tighten his grip with a round of share buybacks that would increase the relative size of his holding.For Universal, the question is whether it can keep the hits coming. Growth will slow as the streaming market matures. Rich countries are already nearing saturation point. In April Spotify raised its subscription prices for the first time, but it is unclear how much higher they can go (Mr Littunen points out that the price of CDs never rose after their launch in the 1980s). Music faces competition from new audio formats, notably podcasts, whose share of total listening has grown during the pandemic. And a growing share of streaming revenues goes to self-published artists, who—like Universal—have decided that they can make a better go of it alone. More

A FEW YEARS ago SoftBank rewrote the rules of venture capital (VC). The Japanese tech conglomerate was handing out cash left and right to startup founders. Leading venture capitalists held conferences to discuss how their industry could survive the SoftBank onslaught. As some of SoftBank’s biggest investments unravelled, culminating with the collapse in September 2019 of the initial public offering (IPO) of WeWork, an office-sharing firm, Valley veterans gloated. It seemed to be just another “tourist investor”, as one VC luminary dubs those who occasionally traipse through Silicon Valley looking to pick up sexy startups.Now SoftBank is being upstaged by another brash outsider. Between January and May Tiger Global Management, a New York hedge fund that also invests in private tech firms, ploughed money into 118 startups, ten times more than it backed in the same period in 2020, according to Crunchbase, a data provider. Its portfolio now counts more than 400 firms, including several behind some of the past year’s most eye-catching IPOs, for example Coinbase, a cryptocurrency exchange, and Roblox, a video-game maker. And, as it told investors in February, it is “searching for ways to make our investment flywheel spin faster”. Its new vehicle aims to raise an additional $10bn. That may be less than SoftBank’s gargantuan $100bn Vision Fund, but it is still an awful lot by VC standards—and the New Yorker may leave a more enduring mark on Silicon Valley than its deep-pocketed Japanese rival has.Similarities between Tiger and SoftBank are easy to see. Both were backers of Alibaba, before the Chinese e-merchant went public and turned into a global giant. VC types commonly describe both firms as “aggressive”, even “crazy”. Once each identifies a target, it pounces; investment contracts are issued in days, skipping lengthy due diligence, often at valuations well above those suggested by conventional VCs. Just as SoftBank would occasionally sign ten-figure cheques when founders asked for eight or nine, Tiger Global sometimes talks entrepreneurs into taking cash when they do not need it. “Even after they have already invested they send text message after text message, asking whether they can put in more money,” says one founder recently backed by the firm.Tiger Global abhors such comparisons. And it is indeed distinct from the Japanese group in important ways. SoftBank only got into tech investing in earnest a few years ago, having started out selling software, before moving into online services and telecoms. By contrast, Tiger Global has investing pedigree in spades. It is descended from Tiger Management, a hugely successful hedge fund founded by Julian Robinson, a Wall Street giant. It has been backing tech winners for nearly 20 years, both in China and, later, in America (with investments in, among others, Facebook). Over that period its funds have generated an average internal rate of return of 26% a year, twice that of comparable VC funds. Whereas Son Masayoshi, SoftBank’s messianic boss, calls all the shots at his firm, Tiger Global is no one-man show. And its partners eschew Mr Son’s embrace of individual founders based on a gut feeling in favour of a disciplined strategy centred on collecting a basket of firms in promising markets.There is another difference. Whereas the arrival of Mr Son left denizens of Sand Hill Road in Palo Alto, where Silicon Valley VCs cluster, quaking in their Allbirds, they appear remarkably unfazed by Tiger’s presence. Despite competing with Tiger Global for early-stage investments, many VCs consider it a force for good: a source of capital that helps their portfolio companies grow faster or start projects they may otherwise have forgone. Yet even if the New York firm follows SoftBank’s trajectory and pulls back, which could happen if interest rates rise, capital grows scarcer and the tech rally fizzles, three factors that have contributed to its success are here to stay.The first is the acceleration of dealmaking. Before the covid-19 pandemic, negotiations happened mostly in person, limiting the number of encounters. Meeting on Zoom and other video-conferencing platforms takes only a few clicks, allowing both founders and investors to talk to many more potential partners. In Silicon Valley, hardly a place known for foot-dragging, the common refrain these days is that “things have never moved faster.” Keeping up with Tiger Global and its fellow New Yorkers such as Coatue Management and Insight Partners is an important reason.Second, Tiger Global has tried to be more systematic in evaluating startups. Although the firm never asks for board seats, considering it a waste of time, it knows plenty about its investments, thanks to a growing array of ever better metrics with which to judge companies’ performance. It has also created its own early-warning network to identify promising targets. If a new online service takes off in one region, for instance, it may be time to put money in a similar firm in another location. Many VC firms could learn a thing or two from this approach. “We are a bunch of horrible investors,” grimaces another veteran venture capitalist. “More than half of us don’t even return capital.” This recognition is music to the ears of their put-upon limited partners.What the hand, dare seize the fire?Tiger Global’s final impact may be the most profound. It reflects a shift the balance of power between investors and entrepreneurs. Traditionally, investors had the upper hand. Startup founders pilgrimaged to Sand Hill Road, seeking not just money but valuable advice that the best VCs would provide. Competition from Tiger Global and other tourists has forced Californian VCs to offer more generous terms, monetary and otherwise. That in turn has made entrepreneurs themselves more confident. “It’s no fun to be an investor these days,” sums up the boss of a startup preparing to go public. The question for moneymen in Silicon Valley (which remains overwhelmingly male) is less what startup to back and more whether a startup lets you invest. Quite the paw print. More

TWENTY YEARS ago Leonard Lauder, the heir to the Estée Lauder beauty empire, observed that during economic downturns consumers liked to sweeten belt-tightening with small indulgences. He called it the “lipstick effect”, after one common pick-me-up. Disappointingly for Italy’s “lipstick valley”, a part of Lombardy that, according to Cosmetica Italia, an industry group, produces 55% of the world’s eye shadows, mascaras, face powder and lipsticks, consumers mostly shunned these little luxuries amid the pandemic recession. Whether because maquillage is less meaningful on grainy Zoom calls or contoured lips invisible behind face-masks, sales of Italian makeup-makers fell by 13% last year.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

FROM CUISINE to carmaking, the Japanese way is meticulous. Yet with just over a month to go, the Tokyo Olympics remain anything but. Thanks to covid-19, and Japan’s sluggish vaccinations, it is unclear whether the games, originally due to be held last summer, will let spectators in—if, that is, the event takes place at all. Organisers insist it will. This is nerve-jangling for those hoping to peak at the right moment: the athletes, of course, but also the games’ financial muscle, its corporate sponsors. Though no backers have pulled out, some are privately calling for another delay. Asahi Shimbun, the games’ official media partner, has called the decision by the International Olympic Committee (IOC) to plough on “self-righteous”. What was supposed to be a golden opportunity to burnish brands has turned into a reputational minefield.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More