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Uber, Lyft And Top VCs Are Pouring Billions Into ‘Micromobility’—Here’s Why

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Nowadays, to Uber somewhere has pretty much become a verb in the English language. But less than 10 years ago, no one even knew what Uber was. And Uber is rumored to be worth $120B on the public markets, should they IPO in the near future.

This might be the reason investors are flocking to bike – and scooter-sharing startups in the so-called “micromobility space.” And at sky high, unicorn-level valuations.

What’s Micromobility?

Micromobility’s an industry tackling “last-mile transportation.” Or in other words, basically that sweet spot between too far to walk, but too short to Uber.

On the heels of the booming ride-sharing industry, new modes of transportations are shooting up. Right now, there are more than 20M dockless bikes in China, electric scooters in Silicon Valley and dockless e-bikes in DC.

Who are the players?

There are four players in the micromobility space: China-based bike-sharing platforms Ofo and Hellobike, and Bird Rides and Lime, US-based scooter-sharing services. Hellobike, Rides are Lime all attained unicorn status in 2018.

If you can’t beat ’em, join ’em…

At least before they start to beat you. Which is what happened when the arrogant Blockbuster had the chance to own Netflix but instead laughed them out of the room. Or when Uber themselves ate market shares from an ancient, archaic taxi industry.

(On a very serious note, this competition has gotten ugly. NYC cab drivers have been killing themselves, all the while protesting Uber. Although, to be fair, Uber’s been striking deals with taxis in big metros like Moscow to offer their rides through the app.)

But it would appear the ride-sharing giants have taken lessons from these experiences.

In July, Lime just secured a whopping $335M in a Series C funding round led by Google, top VCs and Uber, ironically. Lime declined to reveal their valuation, but Bloomberg reported it at $1.1B. (#Unicorn status, baby.)

That deal in particular indicates the overall bullishness of the micromobility industry, particularly on behalf of the ride-hailing giants. Uber reportedly got in the Lime deal not just for the ROI, but also to start offering scooter rentals through the Uber app itself.

Lyft’s gettin’ it in, too

Lyft, on the other hand, went direct-to-consumer, bypassing a startup to just offering electric scooters directly. Just last month, Lyft rolled out its pilot project in Denver and have since rolled out in Santa Monica and Washington DC.

“Fili-bust a move around DC on a scooter,” Lyft says on their page. (How cute. DC, politics, filibustering? Get it? Ha. Ha.)

Scooter

 

Even though Lyft is getting (and becoming) the direct plug to customers, the Lime deal puts Uber ahead in this game. They’re currently the most downloaded transportation app in the US, by a wide margin at that.

For their part, Lyft says they’ll be working closely with the cities to help them roll out  in new markets—including monitoring the Denver rollout closely for any and all negative repercussions.

“This is a new thing,” Caroline Samponaro, head of bike, scooter, and pedestrian policy at Lyft, told The Verge. “They will raise a lot of questions. So we’re going to be very hands-on.”

Regulations? Lobbying?

But here’s where it gets tricky. Uber’s had a lot of issues in certain markets, mainly due to regulations. (Which is why being hands-on may be way to go.)

Uber was forced—or elected, depending on who you ask—to leave Denmark, after “failing to persuade the government to change the law on taxis to accommodate its business model,” CNN reported last year.

And there’s still a lot of lobbying to be done. Despite its massive market, micromobility still hasn’t made it to NYC yet. But that doesn’t seem to worry investors too much.

And let’s face it: before Uber was Uber, Uber had to figure out how to get Uber approved.

Here’s a chart of the investment landscape for bike and scooter unicorns.

 

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The Most Hyped Startup Is Now Worth $45B

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Co-working rental startup WeWork has secured an additional $3B in funding from SoftBank, at a valuation worth nearly $45B. In a surprising move, SoftBank’s latest investment will more than double the startup’s valuation from the $20B figure it clinched during its last financing round.

The valuation will also drive a global co-working behemoth, bigger than Airbnb, PWC, SpaceX, or Ford Motor, making it the second most-valuable startup in the United States after Uber.

The capital injection comes at a time when WeWork’s losses are on a steady climb, recently ballooning to $2B on an annual basis. The investment from SoftBank, the startup’s largest investor, will also increase its cash pile and commitments to almost $6.4B.

Critics, however, claim that the valuation is highly inflated compared to other real estate players in the market, and remarked the startup might face an issue if their earnings fail to justify the excessive valuation.

Despite the possibility of headwinds in the short-term, WeWork’s vice-chairman Michael Gross was positive on the company’s long-term growth.

“Our view is that there is tremendous wind at our back — we are the only serious global player out there,” he said. “Our growth is actually accelerating as our product offering continues to go deeper and reach not just small-sized companies but Fortune 500 companies and everything in between.”

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The Rise Of Algorithmic Trading: How Manned Trading Desks Are Seeing Their Demise

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One of the last human points of resistance to the algorithmic take-over of professional trading can be found in the fixed-income trading desk.

The deft relationship business is known for having participants with Ivy League pedigrees and a lacrosse playing background, a data point that a machine learning algorithm recently used when making hiring recommendations.

With an algorithmic transition, profit margins are being squeezed as human relationships are becoming less important. Benchmarking the transition are new hiring mandates at some of the largest banks, a recent Greenwich Associates report pointed out.

Relationships and fundamental market understanding are less important, the report noted, and algorithmic experience and data science skills are now in demand.

In this emerging environment, what are best practices for an integration framework?

When combining fundamental investment thinking with quantitative thinking unique conflicts often arise. Fundamental, discretionary fund managers often creatively connect non-correlated dots and sometimes challenge consensus thinking.

Quantitative logic, on the other hand, is often driven by if-then Boolean logic at its core and looks for mathematical consensus to guide decisions. Mixing these two disciplines can be like expecting oil and water to enjoy each other’s company.

“Relationships and balance sheet still matter, of course,” Greenwich Associates Managing Director Kevin McPartland wrote in a report title that highlights a dichotomy, “Trust and Data Drive Fixed-Income Dealer Growth.”

Trust is a human concept and data is often associated with empirical, mathematically discovered understanding is the point where a melding of the minds might occur.

The integration of the two highlights the new path forward. “But the ability to manage both in a more quantitatively driven way can mean the difference between profit growth and a year-on-year decline,” McPartland observed.

Technology is increasingly becoming an important feature on bond trading desks, particularly for sell-side banks. Fully 91% of bulge bracket banks said automating parts of the trading process was one of their “top technology priorities for 2018,” the Greenwich Associates report pointed out.

Only 44% of middle market participants, meanwhile, felt the same. This group was having slightly more difficulty “complying with new/changing regulations” and was more focused on improving client management tools and data.

Knowing what technology to integrate so as to deliver a near-term positive return on investment while positioning the firm for a longer-term shift in intelligent automation can prove challenging and, itself, might have variables that don’t easily fit into a math formula.

“Assessing the process of tech integration is always a challenge because no technology is perfect, but it is often much better than human performance,” said Evan Schnidman, CEO and Co-Founder, Prattle, a firm that uses machine learning techniques to analyze human speech patterns to provide a market edge.

Electronic equities trading has proven to be highly reliable, but very rare missteps can have catastrophic cascading effects. With bond trading, and any other technology-driven process in financial services, it is vital to build appropriate circuit breakers and human checkpoints. Simply, technology is a valuable tool, but humans still need to be in the loop.”

When integrating technology into a bond trading workflow it is important to set proper expectations that can be measured on a project plan timeline.

Often times expecting the unexpected is a discretionary skill that requires understanding technology’s limits.

“The best practice in tech integration is to remember that technology will not solve all of your problems, but it may be able to streamline the human workflow and optimize decision making,” Schnidman said. “If institutions keep that in mind, they are likely to adopt technology more readily, thereby making each additional innovation less jarring from a tech integration standpoint.”

With technological change coming at an increasingly rapid pace, the imperative is in understand what aspects of human trading can be modeled and what should remain discretionary.

“Instead of fully relying on quantitative approach at the beginning, it is a good starting point to integrate the output of quants and AI models in the human decision making process of position taking and dealing,” said Tsuyoshi Yokokawa, founder and CEO of San Francisco based Alpaca Markets, a firm that in parts helps integrate quantitative trading models into fundamental trading methodologies.

As the last refuge of human-based trading turns algorithmic, the processes and methodologies that drive these projects are likely to determine success or failure to a large degree.

In bond trading, the sell side is taking a different approach to that of the middle market.

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Alibaba’s Singles Day Records $31B Sales, Trumps Amazon’s Biggest Day

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Chinese tech and e-commerce behemoth, Alibaba, saw its one-day shopping event draw sales worth over $31B, setting a new record for the company. Labelled as its Singles Day event, the day records sales that’s bigger than Black Friday and Cyber Monday combined.

The record sales in under 24 hours dwarfs the $4B in sales Alibaba’s rival Amazon garnered during its Prime Day sale earlier this year.

Here’s why Alibaba’s CEO believes the sale is a huge winner for the company.

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