The World’s Newest Call Center Billionaire

Meet the world’s newest call center billionaire. Laurent Junique is quite the globe-trotter: He’s a French citizen, his company is based in Singapore and he just listed that company, TDCX Inc., on the New York Stock Exchange last week.

Junique, TDCX’s 55-year-old founder and CEO, also just joined the billionaire ranks: Junique’s 87% stake in the firm is now worth $3 billion, thanks to a 34% rise in TDCX shares since the IPO on October 1—an offering that raised nearly $350 million for the company.

Started in 1995 in Singapore as Teledirect, an outsourced call center that handled calls, emails and faxes for a variety of clients, the company rebranded as TDCX in 2019 to reflect its expansion into a range of services including content moderation, marketing and e-commerce support. (CX is short for “customer experience” in the customer service industry.)

TDCX reported a $64 million net profit on $323 million sales in 2020, an improvement from the $54 million profit and $242 million in revenues it recorded in 2019. That growth came in part due to greater use of the services that TDCX offers, including tools that help companies improve the performance of employees working from home. Still, TDCX is highly dependent on two clients—Facebook and Airbnb—which collectively accounted for 62% of sales in 2020.

“Our successful listing reflects the world-class company that we have built and our position as the go-to partner for transformative digital customer experience services,” Junique said in a statement on the day of the IPO. “We are grateful for the support of our clients, many of whom are global technology companies that are fuelling the growth of the digital economy.”

Junique is the second call center billionaire that Forbes has tracked. The first, Kenneth Tuchman, founded Englewood, Colorado-based TTEC Holdings (formerly called TeleTech), in 1982; at nearly $2 billion, the firm had about six times the revenues of TDCX last year. Tuchman first became a billionaire in 2007. Several Indian billionaires, including HCL Technologies cofounder Shiv Nadar and Wipro’s former chairman Azim Premji, offer call centers as some of the services their firms provide.

Junique will maintain an iron grip on TDCX as a public company, controlling all of the firm’s Class B shares, which make up more than 86% of the firm’s equity and represent 98.5% of voting power. He owns those shares through Transformative Investments Pte Ltd, a company based in the Cayman Islands that is entirely owned—according to public filings with the Securities and Exchange Commission—by a trust established for the benefit of Junique and his family. While its headquarters are in Singapore, TDCX has also been incorporated in the Cayman Islands since April 2020; prior to the IPO, the firm was controlled by Junique through a Caymans-based holding company. A spokesperson for TDCX declined to comment.

Before launching TDCX as a 29-year-old in 1995, the French native cut his teeth studying advertising at the École Supérieure de Publicité in Paris and business administration at the nearby École Supérieure Internationale d’Administration des Entreprises, graduating in 1989. After a two-year stint at consumer goods giant Unilever, Junique—who had reportedly been cooking up business ideas since he was a child, including a glass recycling proposal he came up with at age 13—decided he wanted a more international career, but struggled to find a gig as a young graduate with little experience.

Armed with a suitcase and just enough cash to get by, he decamped to Singapore in 1995 to try his luck on the other side of the planet. Singapore offered a strategic location as a modern, English-speaking city at the heart of fast-growing Southeast Asia, and Junique started a call center called Teledirect aimed at businesses looking to cut costs and outsource customer service. Soon enough, Junique scored the firm’s first big client, an American credit card firm based in Singapore.

Two years later, in 1997, Junique sold a 40% stake in Teledirect to London-based advertising giant WPP for an undisclosed amount. Since then, TDCX expanded beyond call centers and now has offices in 11 countries across three continents, including locations in China, Japan and India. In 2018, Junique bought back WPP’s 40% stake in the call center business for about $28 million. Three years of growth later, the company now has a market capitalization of $3.5 billion.

With 2020 marking a record year for TDCX, Junique is hoping that the Covid-induced transition away from offices has made the firm’s products more necessary for its clients. “As consumers live more and more of their lives online, the expectation for things to be done simply, conveniently and on-demand will only increase,” Junique said in a statement.

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I’m a Staff Writer on the Wealth team at Forbes, covering billionaires and their wealth. My reporting has led me to an S&P 500 tech firm in the plains of Oklahoma; a

Source: The World’s Newest Call Center Billionaire

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Related Contents:

“BBC Three – The Call Centre, Series 1”. Bbc.co.uk. 2013-12-10. Retrieved 2017-12-10.

The Market Is Right To Be Spooked By Rising Bond Yields

Nobody likes dropping cash, however Tuesday’s stock-price fall worries me greater than the headline of a 2% fall within the S&P 500 ought to. In itself, 2% is not any biggie: three days this yr had larger falls, and on common we now have had seven worse days a yr since 1964.

What bothers me is that the rise in bond yields that triggered the autumn was actually fairly small, and there may simply be much more to return. The ten-year Treasury yield rose solely 0.05 share level, taking it above 1.5%, and the 30-year rose barely extra to only above 2%. If that is the type of response we should always anticipate, then get out your tin hat. Yields must rise 4 occasions as a lot simply to get again to the place they had been in March.

Why, you would possibly fairly ask, are shares abruptly spooked by bond yields? Within the increase as much as March, shares and yields marched increased collectively, and for the previous 20 years increased yields have typically been higher for shares. The distinction is that investors see the central banks turning hawkish, whilst financial development slows, as a result of they will’t ignore excessive inflation.

As  Pascal Blanqué,chief funding officer at French fund supervisor Amundi, places it, the worry is of an increase in charges pushed by inflation alone pushing central banks to behave, somewhat than an increase in charges pushed by financial development pushing central banks round. That is the mind-set that dominated funding till the late Nineteen Nineties. If it sticks, it marks a profound change.

In the long term, it could imply bonds would not present a cushion when inventory costs drop, making portfolios extra unstable. Within the quick time period, if the sharp rise in yields since the Federal Reserve meeting last week is the beginning of a development, then shares are in bother. On the flip aspect, if yields come again down, it is perhaps good for shares—because it was on Friday—somewhat than unhealthy, as has often been the case for a few many years.

To see the risk, suppose again to the spring, when yields had been marching increased. The outlook for inflation is about the identical (buyers are pricing it as excessive however short-term). The outlook for financial development is worse, which gives much less help for shares typically. However central banks have shifted stance from super-easy for just about perpetually to start out speaking about tightening.

That is the improper type of rise in bond yields. When yields had been rising as much as their March excessive of 1.75% for the 10-year Treasury, shares had been on a tear as a result of yields had been being pushed up by the prospect of upper financial development, and so stronger income. Overwhelmed-up worth shares and economically-sensitive sectors soared, whereas Huge Tech and different development shares, plus the dependable earners generally known as high quality shares, went sideways. After March, falling yields boosted development and high quality shares once more, whereas worth and cyclical went sideways.

This time, shares are reacting as they do when yields rise as a consequence of a central financial institution hawkish shift. Huge Tech, other growth stocks and quality suffered the most, as their excessive valuations make them reliant on projected earnings far sooner or later; increased yields make these future earnings much less enticing in contrast with proudly owning tremendous secure bonds. However with out the prospect of upper financial development to spice up earnings, low cost worth and cyclical shares additionally fell when yields rose, albeit by lower than development and high quality.

There’s enormous uncertainty in regards to the potential financial outcomes, so we shouldn’t simply assume that this week’s buying and selling sample will proceed. On the plus aspect, increased capital spending and the pandemic-driven adoption of know-how would possibly enhance productiveness greater than employee shortages push up labor prices. This could damp inflation and speed up development.

A retreat of Covid-19 might ease pressure on manufacturing and change spending again to companies. On the down aspect, hovering power prices and better costs from widespread provide bottlenecks would possibly hit households and weaken the financial system additional, whilst inflation stays excessive—the dreaded stagflation state of affairs.

We ought to be even much less assured about how central banks will react. I see twin triggers for the market’s reassessment. First, Fed coverage makers upped their “dot plot” predictions for rates of interest subsequent yr and the yr after, together with inflation. Second, the Financial institution of England, faced with an energy price crunch and higher-than-forecast inflation, warned of a potential price rise earlier than the tip of this yr. A slew of emerging-market central banks additionally raised charges, as did oil-producer Norway.

If the financial system reacts badly to increased yields, although, the Fed and Financial institution of England would possibly properly shift again to uber-dovishness. The withdrawal of emergency authorities spending measures in a lot of the world may also give the doves a brand new cause to maintain charges low.

Lastly, there’s uncertainty in regards to the market response itself. Possibly Tuesday’s bond strikes had been exacerbated by a mixture of momentum promoting and yields (which transfer in the other way to costs) rising above the brink of 1.5% on the 10-year and a pair of% on the 30-year. It may not be a coincidence that shares did properly on Friday as soon as the 10-year dropped again under 1.5%.

SHARE YOUR THOUGHTS

How involved are you in regards to the late September stock-price fall? Weigh in under. Spherical numbers shouldn’t matter, however typically do, whereas momentum is short-term. Tuesday’s transfer wasn’t pushed by an occasion on the day, so maybe the brand new narrative of hawkishness received stick. In spite of everything, it shouldn’t be that massive a deal to withdraw some financial help when inflation is greater than double the goal and coverage has by no means been simpler.

Given Huge Tech’s outsize share of the general market, buyers within the S&P 500 should be satisfied that if bond yields are going to maintain rising, it is going to be for the great cause of an accelerating financial system, not the unhealthy cause of sticky inflation pushing central banks to behave.

By: james.mackintosh@wsj.com

Source: The Market Is Right to Be Spooked by Rising Bond Yields – WSJ

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Bull Markets Usually Don’t End With a Bang

Unlike bear market lows, which tend to be short and sharp, bullish stock market highs tend to occur gradually over time as a sector or investment style first peaks and declines. , then another.

This means that investors should not manage their equity portfolios assuming that there will be a specific day before which it would make sense to be 100% invested and then be in cash. Even if the precise timing of the stock market wasn’t incredibly difficult, it would still make more sense to gradually build up cash as individual positions hit their targets.

Of course, there is no way to know whether the current stock market – which abruptly retreated from record highs in late September, ahead of Friday’s rally to begin October – has entered such a protracted peak process. But the bull market will end someday, if it hasn’t already, and it’s important to review the characteristics of past highs so that you don’t manage your portfolio on the assumption that you will be able to peak in real time.

A recent illustration that not all sectors and styles are reaching their bullish highs at the same time appeared at the top of the internet stock bubble in early 2000. Although the S&P 500 and Nasdaq Composite indexes did reach their bullish highs in March 2000, value stocks – and small cap value stocks, in particular – continued to rise. The S&P 500 at its October 2002 bear market low was 49% lower than its March 2000 high, and the Nasdaq Composite was 78% lower, but the average value of small-cap stocks was 2% higher than what it was in March 2000, according to data from Dartmouth professor Kenneth French.

Although this is only an example, it is not unique. Consider what I found while analyzing the 30 bull market highs since the mid-1920s that appear in the timeline maintained by Ned Davis Research. In each case, I determined the dates on which various sectors of the market reached their particular bullish highs: the large, mid and small cap sectors, as well as the styles of value, growth and mix, as measured by the market. share price. -accounting reports. On average over the 30 bull market highs, there was a 225-day gap between the first date one of these sectors peaked and the last. It’s been over seven months.

There are exceptions, especially when an external event causes the market to collapse and virtually all sectors fall in unison. The stock market crash of 1987, as well as the declines following the terrorist attacks of September 11 and the pandemic lockdowns of March 2020, are good examples of this. But in most cases, it is more accurate to view a bullish top as a process rather than a one-time event.

Another reason to view market highs as a process is that, the day major stock indices such as the S&P 500 hit their bullish highs, you will have any idea that a bear market is imminent. . Instead, you’ll likely be caught up in the exuberance of the moment. Only with hindsight will it become clear that a bear market was starting.

This exuberance leads investors to be too heavily invested in stocks during the later stages of the bull markets. Believing that the exact day of the peak has not yet been reached, they hold on to their stock positions for too long. Viewing market highs as a process can counterbalance this exuberance, as it causes investors to focus on their individual positions rather than on the market as a monolithic whole.

Many resist this advice because their memories play tricks on them, leading them to believe that it is possible to spot a bullish top the moment it occurs. This is certainly not the case, according to my company’s daily monitoring of advice from stock timers – advisers who tell clients how much of their investment portfolios should be in stocks and cash. Over the past four decades in which the S&P 500 peaked in the bull market, the average level of exposure to equities recommended by these timers was 65.7%. This is a higher level of exposure than 95% of all other days over the past 40 years.

On the days when the S&P 500 hit its lowest bear market level, by contrast, the average exposure level recommended by stock timers was only 5%. Remember October 2007. Even though the S&P 500 was on the verge of entering a 57% 16-month decline, hardly any of the 100 or so stock stopwatches my company monitors were considering anything. the type.

This failure was true even for market timers with the best long-term records entering that month. One of the long-term top performers at the time was telling clients that a bear market was such a distant possibility it wasn’t even on his radar screen. Another went from full investment to 25% margin – borrowing to invest even more in stocks – the day before the exact day of the S&P 500 bull market high.

If these market professionals with good, long-term track records weren’t able to anticipate the onset of one of the most serious bear markets in U.S. history, you’re kidding yourself if you think that you can always do better. You are more likely to be successful by viewing the end of a bull market and the start of a bear market as a process rather than a one-time event.

By: Mark Hulbert

Mr. Hulbert is a columnist whose Hulbert Ratings follows news bulletins about investments that pay a fixed fee to be audited. He can be contacted at reports@wsj.com.

Source: Bull Markets Usually Don’t End With a Bang – WSJ

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SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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The Securities and Exchange Commission has stopped accepting registrations for the issuance of securities by China-based companies until it outlines the risks posed by such investments, Reuters reported Friday, marking the agency’s first set of action after mounting government interference in China this month erased billions of dollars in market value from recently listed DiDi Global and other China-based companies.

Key Facts

The SEC has said it won’t accept new registrations until it has released specific guidance on how companies should disclose the risks posed by China-based investments, unnamed sources familiar with the matter told Reuters. There are reportedly no such IPOs in the works, but it’s unclear how long the guidance may take to develop.

The reported decision comes after SEC commissioner Allison Lee on Tuesday said Chinese companies listed in the U.S. should disclose the risks of Chinese government interference to investors as part of their required reporting disclosures.

Similarly, a group of five GOP Senators on Wednesday urged SEC Chair Gary Gensler to “demand immediate and robust action” addressing a recent crackdown by Beijing officials on Chinese companies listed on U.S. stock exchanges. The SEC did not immediately respond to Forbes’ request for comment.

Key Background

In a matter of days, China introduced regulatory actions targeting both ride-hailing app DiDi and the nation’s education companies—harsh measures showing investors how risky investing in the market can be, Tom Essaye, author of the Sevens Report wrote in a Tuesday note. Days after DiDi’s massive U.S. IPO, the Cyberspace Administration of China ordered app stores to remove the ride-hailer from their platforms, claiming it “severely violat[ed] regulations around the collection of personal data.

” DiDi stock has plunged nearly 50% since the action, wiping out nearly $50 billion in market value in less than one month. Then, in a weekend order earlier this month, China’s education ministry barred “capitalized operations” among “online training institutions,” saying such companies can no longer turn a profit or raise money in the public markets and triggering a selloff in the space that erased nearly half the market value of many education firms.

Crucial Quote

“Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” notes Essaye.

Surprising Fact

The Nasdaq Golden Dragon China index, which tracks Chinese companies trading in the United States, is down 12% this week and nearly 34% over the past six months.

Big Number

$12.8 billion. That’s how much Chinese listings in the United States have raised so far this year, according to Refinitiv data cited by Reuters. Genser said that he was concerned U.S. investors frequently don’t understand the structure of the companies whose shares they are buying.

In cases where China forbids foreign ownership, “many China-based operating companies are structured as Variable Interest Entities (VIEs). In such an arrangement, a China-based operating company typically establishes an offshore shell company in another jurisdiction, such as the Cayman Islands,” Gensler said.

The Chinese government has taken action against U.S.-listed Alibaba  (BABA) – Get Report and Didi Global  (DIDI) – Get Report in recent months. Days after Didi executed its IPO earlier in July, China forbade the ride-hailing titan from signing up new users.

Further Reading

Exclusive-U.S. regulator freezes Chinese company IPOs over risk disclosures -sources (Reuters)

US-Listed Chinese Tech Stocks Erase Nearly $150 Billion In Market Value This Week As China Stokes Regulatory Fears (Forbes)

The move comes as the SEC works on new guidelines for disclosing to investors the risk of continued regulatory crackdowns by China’s government, knowledgeable sources told Reuters. In a statement Friday, SEC Chairman Gary Gensler said “I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective.”

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com. And follow me on Twitter @Jon_Ponciano

Source: SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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Critics:

The Wall Street Journal reported Thursday that Didi is contemplating going private to soothe Chinese regulators and make whole investors who have suffered losses as Didi’s shares declined since the IPO. Didi called The Journal’s report “not true.”

In any case, SEC commissioner Allison Lee said Tuesday that as part of their reporting chores, U.S.-listed Chinese companies must tell investors the risks of Chinese government interference in their activity, according to Reuters.

U.S. listings of Chinese stocks have jumped to a record $12.8 billion so far this year, according to Refinitiv. The market’s repeated surges to record highs have attracted Chinese companies. But the move against Didi has slowed things down.

Shares of Chinese companies listed in the U.S. tumbled late last week and early this week amid fears about the government crackdowns.Didi fell 30% from July 21 to July 27. It recently traded at $10.14, up 3%, but has dropped 28% since its IPO. Alibaba recently traded at $194.31, down 2%, and has slumped 15% in the last month.

Amazon Stock Loses $130 Billion In Market Value After $885 Million Fine And Disappointing Earnings Report

Shares of Amazon fell as much as 8% Friday after the e-commerce juggernaut disclosed a massive fine from European regulators for allegedly breaking regional privacy laws and posted second-quarter earnings results that failed to meet Wall Street expectations, putting the longtime market leader on track for its worst day in more than a year.

Key Facts

As of 11:15 a.m. EDT, Amazon stock has plunged 7% Friday to about $3,349.50, pushing the firm’s market capitalization down below $1.7 trillion and wiping out nearly $130 billion from a closing level above $1.8 trillion Thursday.

Ushering in the massive losses, Amazon posted second-quarter revenue after Thursday’s market close of $113.1 billion—up 27% year over year, but falling short of average analyst expectations totaling $115 billion.

Despite soaring more than 48%, net income of more than $7.7 billion also fell slightly short of estimates, which called for about $7.8 billion.

The stark decline also comes after Amazon disclosed a $885 million (746 million euros) fine, levied on July 16, by the Luxembourg National Commission for Data Protection, which claims Amazon’s processing of personal data did not comply with European regulations.

In the filing, Amazon, which in a statement asserts no data breach has occurred, said it believes the watchdog’s decision is “without merit” and that it intends to appeal the ruling and defend itself “vigorously” in the matter.

Amazon’s Friday plunge puts it on track for its worst one-day decline since the height of pandemic uncertainty tanked the broader market in March 2020.

Crucial Quote

“Consumers’ online shopping levels are returning to more normal levels as they shift some spending to other entertainment sources and offline shopping,” Morningstar analyst Dan Romanoff said in a Friday note. “Meanwhile, the company continues to add capacity [and costs] at a breakneck pace in order to meet customer demand and one day delivery,” Romanoff added, pointing out Amazon has already nearly doubled its footprint during the last 18 months.

Surprising Fact

Shares of Amazon are now down more than 10% from a record closing high of $3,719 earlier this month.

Tangent

Amazon far underperformed the broader market Friday. The Dow Jones Industrial Average, which doesn’t include Amazon, ticked down just 0.2%, while the S&P 500, which counts the retail giant as its third-largest component, fell 0.4%.

Chief Critic

“Maintaining the security of our customers’ information and their trust are top priorities. There has been no data breach, and no customer data has been exposed to any third party. These facts are undisputed,” Amazon said in a statement Friday. “The decision relating to how we show customers relevant advertising relies on subjective and untested interpretations of European privacy law, and the proposed fine is entirely out of proportion with even that interpretation.”

Further Reading

Amazon hit with $886m fine for alleged data breach (BBC)

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com. And follow me on Twitter @Jon_Ponciano

Source: Amazon Stock Loses $130 Billion In Market Value After $885 Million Fine And Disappointing Earnings Report

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Critics:

With technology stocks garnering renewed scrutiny, it’s helpful to take a look back at one company that has weathered some of the most severe market downturns and serious doubts from Wall Street: Amazon. Betting on the online bookstore wasn’t always a sure thing. Amazon’s journey from tiny garage start-up to one of the most valuable companies in the world has paid off for investors, but shareholders needed a strong stomach.“Earth’s Biggest Bookstore”

In the early 1990s, Jeff Bezos walked away from a Wall Street career with an outlandish idea to sell books on the World Wide Web. In 1994, he launched Amazon.com. “I found this fact on a website that the web was growing at 2,300 percent per year,” Bezos told CNBC in a 2001 interview about his early foray into book selling. “The idea that sort of entranced me was this idea of building a bookstore online.”

The site experienced growth quickly, going public three years later with $16 million in revenue and 180,000 customers spanning more than 100 countries (according to its SEC filing). But even as the site began growing, many investors had their doubts about Amazon, instead favoring brick-and-mortar book-selling giant Barnes & Noble.

At an early meeting between Barnes & Noble Chairman Leonard Riggio and Bezos, Riggio reportedly told Bezos he would “crush” Amazon. Barnes & Noble dwarfed the young start-up. The traditional bookseller had hundreds of stores and more than $2 billion in revenue. It was also tapping into major Silicon Valley talent to built its own sleek new website.

On top of that, it was suing Amazon over the start-up’s claim to be “Earth’s Biggest Bookstore.” But for those who took a chance and bought Amazon stock at the initial public offering, their investment has returned a compound annual growth rate of 38 percent since the IPO – outperforming the S&P 500 which had a total return of 10 percent annually over the same period.

Tech stocks have been under renewed pressure in recent weeks as the markets have experienced volatility. From September to November, Amazon stock lost a quarter of its value as the wider tech sector took major hits. Some analysts say it’s a good time to buy in. Others say Amazon’s growth rate has hit a ceiling as the company enters maturity.

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Bank Of America Listed Among Heavyweights Invested In $300 Million Blockchain Funding Round

On Thursday trading

Originally announced in April, the bank joins other well-known investors such as PayPal PYPL -2.1%, crypto derivatives exchange FTX, and Coinbase. The round was led by Oak HC/FT and gives Paxos a $2.4 billion dollar valuation, with it having raised $540 million across multiple rounds of funding.

This investment comes to light after the May 2021 announcement that Bank of America joined the Paxos Settlement Service, which allows for same-day settlement of stock trades. Other partners on the network include Credit Suisse and Japanese bank Nomura Holdings.

In announcing the new investors Paxos CEO Charles Cascarilla noted, “We’re at the beginning of a technological transformation where new market infrastructure is needed to replatform the global financial system. Paxos uses innovative technology to build the regulated infrastructure that will facilitate an open, accessible and digital economy. We’re defining this space and are excited to grow our enterprise solutions beside these market leaders.”

Additionally, Bank of America appears to be warming up to digital assets and cryptocurrencies. The bank created a research team in July to analyze the emerging asset class and its various applications. On July 16th it was reported that the bank would allow bitcoin futures trading for select clients.

By taking this step, it appears that Bank of America is following the lead of its fellow financial services brethren, who are increasingly engaging with the space, often in response to consumer demand. Bank of America is following the lead of its fellow financial services brethren, who are increasingly engaging with the space, often in response to consumer demand.

State Street STT -0.8% recently created an entire digital assets division, and in an interview with Forbes Jenn Tribush, Senior Senior Vice President & Global Head of Alternatives Product Solutions said, “We’re going to bridge between the innovation that’s happening within the digital world with solving the need for clients to be able to operate in this new paradigm so for me it’s incredibly important to have this level of focus within a dedicated division.”

Source: Bank Of America Listed Among Heavyweights Invested In $300 Million Blockchain Funding Round

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Critics:

Paxos – a provider of blockchain infrastructure – said Bank of America, crypto exchange FTX, Founders Fund and Coinbase Ventures were among a heavyweight list of investors in its $300 million Series D funding round, the firm disclosed on Thursday.

Oak HC/FT led the funding round, which the nine-year-old company announced in late April at a valuation of $2.4 billion. The round also included PayPal Ventures and Mithril Capital, among others. The firm has raised more than $540 million over multiple funding rounds.

The company noted that Bank of America joined the Paxos Settlement Service earlier this year. The platform uses blockchain technology to achieve same-day settlement of stock trades. Paxos started providing infrastructure for PayPal’s crypto service last year, which has extended to PayPal’s Venmo payments app. Credit Suisse, fintech Revolut and Societe Generale are among other customers.

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The Shareholders Are Not The Owners Of A Corporation

The contention that the shareholders own companies is based, at best, on lack of understanding of the law, of business, and of history. At worst, it is driven by greed, power, and the desire to protect a business governance that has devastated much of America for some 40 years.

Why, you might ask, is the issue of who owns the corporation so vitally important? Because at the heart of the debate between two versions of capitalism lies controversy. One side feels a deep need to protect the interests of the shareholder first and foremost. The other side feels the pain that comes from de-prioritizing the other stakeholders in a corporation – including its employees, customers, and the community in which it lives.

In truth, the shareholder almost certainly will do as well with either version of capitalism. Change is always hard and threatening to those wanting to protect the status quo even if it won’t cost them a thing. But I contend there is a problem with the status quo, with the current version of capitalism, which serves the shareholders well, but has proven to be catastrophic for the vast majority of the American people and detrimental to American competitiveness on the global stage, particularly in our economic rivalry with China.

Further, it is now proving to be a major threat to our democracy. Thus, a change away from shareholder primacy capitalism must be made decisively and with utmost urgency. The defense of the status quo—shareholder primacy governance—rests increasingly on the rationale that the shareholders are the true owners of the corporation and therefore have the right to demand whatever is in their best interest.

But before we blindly adhere to that idea, it is vital we examine these versions of capitalism, the experience the nation has had with each; and why the issue of corporate ownership becomes an important – if not central — consideration.

Capitalism And Its Multiple Versions Of Governance

The ferocious debate in the U.S. today is really between two forms of capitalism. Not of capitalism itself which continues to be the most powerful economic engine ever created by humankind. Capitalism by itself with access to needed resources, including capital, labor, and a sustainable supply chain and embracing the principles of prudent risk taking, wise apportionment of incentives and rewards, and a commitment to practical long-term investment—acts like a brilliant inanimate engine.

It has no ethical or moral components. And that’s why the governance, the rules of engagement, become so very critical. Vitally, governance identifies the beneficiary of this amazing capitalist engine. In China, the capitalism engine is working brilliantly given what China intended. And there, the major beneficiary of much of the value creation goes to the Communist government. In some Nordic European nations, capitalism rewards both shareholders and, through taxes, government projects which provide citizens with some combination of free education and/or free healthcare. Much of Europe, through taxes, has a very elaborate societal safety net. But the engine is still primarily free enterprise capitalism.

Shareholder Primacy Capitalism

In the United States, the governance for the last 40 years has been clearly committed to give the shareholder priority over any other company stakeholders. This is the concept of shareholder primacy every CEO and board director knows: The purpose of business is to maximize short-term shareholder value. Recently, it has been contended that this is fair and just because the shareholders own the company.

The other stakeholders, for the last four decades, became secondary: the customers, the workers, the corporation itself, the vendors, community, the planet. Even in this system, the capitalist engine worked magnificently. As intended, it drove short-term shareholder value to unimaginable wealth and prosperity. The other stakeholders became deprived and exploited. And the guardians of this governance became the financial community which enforced the system with aggressive brutality.

The CEOs and others in the C-suite of top corporations became corrupted by equally unimaginable compensation, as long as they delivered on this shareholder demand. And if they couldn’t or didn’t do it, they were summarily dismissed. If and when the CEOs and boards of directors tried to deviate from this strict behavior, the company was punished by the financial community which has the power to drive down the company’s price in the stock market.

Before the pandemic, Bank of America downgraded Chipotle’s stock because an analyst decided the company was paying its workers too much. As a result, the company’s price declined by 3%. When American Airlines announced pay raises for its pilots and flight attendants, Wall Street punished the company by dropping its stock price 5%. The message sent to the market was clear — workers were to be squeezed and the benefits belong to shareholders. So, for 40 years workers’ wages have been relatively flat sitting at, or often below, inflation.

Lastly, in the past decade, shareholder primacy expanded the intensity of activists who acted like terrorists, blackmailing and terrorizing CEOs and corporate boards alike. Historically, activists have served the business community well. Often, they worked with management to help increase value creation. Occasionally, they did take over the company with intention to hold the stock and capitalize on the inherent, but previously underperforming, value creation.

But this new group of activists employ a different strategy. They take over the company, take out the cash, cut R&D, fire as many people as possible and in the shortest possible time, flipping the company after taking it public or selling the corpse to a strategic buyer. All in the name of maximizing short-term value. Of late, they don’t even have to take over the company. They buy in to the target company and threaten to run their standard play if the company will not “voluntarily” provide that extra short-term value at the expense of all the other stakeholders.

Another brutal tactic to drive shareholder value is the tax efficient practice of stock buybacks. Trillions of dollars have been created to benefit current shareholders in the stock market by reducing the number of available shares. This artificially increased the value of the remaining shares, without creating organic value to the enterprise. This is financial engineering at its best. (Prior to 1982, stock buybacks were illegal and were considered stock manipulation.)

Before the pandemic, 54% of business’ operating profits went to shareholders through stock buybacks and an additional 37% were distributed in dividends. Some 90% of American businesses’ operating profits ended up with shareholders. As a result, 25% of Americans by income, almost all shareholders, came to own close to 98% of the value of the stock market.

In the first four months of 2021, the stock buybacks practice continued and recorded the highest levels in 20 years. And what a negative impact this extraordinary use of operating profits turns out to be. Workers are grossly underpaid. And corporations that used to lead the way by investments in R&D and basic research were starved by this choice. America used to be the leader in technology, transportation, semiconductors, computers, medical science and more.

For example, America invented synthetic biology but now we trail Chinese scientists. And where are we on 5G technology? In a recent interview, Intel CEO Pat Gelsinger cried out, “Our competition is out to eat our lunch. And if we don’t fight for it, every single frickin’ day, we are at risk of losing it.” Government investment support continues to be anemic as well. Simply put, business must step up. Because right now we’re setting stock buyback records. We are world champions at this, indeed.

But the most cruelly treated victims of shareholder primacy were the workers. Their unfair, unjust, and unreasonable wages created a catastrophic microeconomic disaster. It affected families; it created an unequal quality of education which placed American kids at the bottom half of the developed world. It also catapulted America as the most unequal nation with the most immobile society among peer nations. Just one more fact.

Prior to the pandemic, some 60% of American homes had to borrow money most months to put food on the table, or to pay to keep from losing the roof over their heads. So, this is the fallout from the shareholder primacy system. A perverse version of capitalism that the shareholder community today is fighting to protect. And it’s finding some allies in Congress as well, who are the recipients of huge contributions to their reelection campaigns.

Another serious impact of four decades of shareholder primacy is our democratic way of life. The affected Americans are losing hope in our government’s ability to be fair and just. Populist forces have exploited this group and authoritarian forms of government sprang forth in various parts of the world in the last 40 years (Turkey, Hungary, Poland). The same movement has been active and threatening our democratic institutions here in the United States.

This unjust version of capitalism is the driving force that created our vast socio-economic inequality here at home. It must be noted that the most egregiously affected and deprived groups in our society have been the black and brown communities as the Covid-19 pandemic so tragically demonstrated.

But if the shareholders do not own a public corporation, how can one continue to defend such a flawed and damaging form of capitalism? And this is why the question of who owns the corporation becomes an important part of why a better, more just, more balanced form of capitalism is absolutely America’s best choice moving forward.

So, Who Really Owns The Corporation?

Simply and clearly, the corporation owns its own assets. In the simplest terms, a private company became a public company when the original owners gave up ownership. In turn, they received a stock certificate outlining certain rights to profits and other privileges. What they got, again, was a stock certificate not a certificate of ownership. The word “ownership” does not appear in that document.

Additionally, while the shareholders are entitled to a portion of profits, as shareholders, they are no longer exposed to liabilities of the companies in which they hold shares. They are granted, in essence, total immunity! Furthermore, the shareholders can come into a stock whenever they want, and leave when they want (with very, very few exceptions). In today’s world, the stock owner may be a machine and shares may be held in a timeframe of milliseconds.

To me, these facts are ample and logical evidence that preclude a shareholder from being a true owner. Do you know any business “owner” large or small who assumes no risk or liability?  I highly doubt it. Legally, there is no evidence that stakeholders are owners. No law – absolutely none— can be found which states that shareholders own the corporation.

In her 2012 book The Shareholder Value Myth, Lynn Stout, who taught at Cornell University Law School, successfully argued that shareholders don’t own the company – this was the foundational insight of that book. The lie being purveyed was that the law required companies to serve shareholders with as much profit as quickly as possible. She was quick to dispel the notion, citing three core reasons:

  • Directors of public companies aren’t required by law to maximize shareholder value. Companies are formed to conduct legal activities, that’s all, and profit is not a mandatory requirement, though profitability is always an advantage.
  • Directors of a company have full control of it. Shareholders have no legal right to govern the activity of a company for their own benefit. Directors can decide to reduce, not increase share price, if they believe it’s in the best interest of the company itself.
  • Shareholder primacy, where short-term profits are the primary goal, often leads to tragic consequences for the common good.

How prescient Stout’s comments turned out to be.

For those desiring a more in-depth explanation, one can find it in the words of Marty Lipton, arguably one of the most respected iconic stewards of American corporate law. When participating in a roundtable discussion hosted by the American Enterprise Institute, Lipton concludes that the shareholder fundamentally does not own the corporation. In his own words, “I don’t view the shareholders as outright owners of the corporation in a way one would own a house or a car.

They’re investors in the corporation and own the equity, and they are thus important constituents, but they are not the owners of the corporation as a whole. And for that reason the company should not be run solely in the interest of the shareholders.” He adds, “corporations can only exist within the overall umbrella of government and society.” His dispassionate rigor and logic are most convincing.

The full roundtable transcript for those interested is here. Then there’s an “agency” ownership argument. Joseph Bower and Lynn Paine laid that argument to rest in a seminal piece in the Harvard Business Review in 2017. Conclusively, the shareholders are owners of stock in the corporation. They are not the owners of a corporation’s assets. There can be no further, reasonable argument.

The Best Path Forward For Business: Stakeholder Capitalism

Multi-Stakeholder Capitalism was the capitalist governance that started the modern capitalism era in America in 1945. It lasted for some 40 years. During this period, America became the most dominant economic and military nation in the world. In addition, America’s middle class grew to remarkable size and wealth. This group became the world’s largest economic market.

Remarkably, in this 40-year period, the middle class’s value grew more than twice the rate of America’s top one percent (by income). It was a period when most all segments in America saw significant economic progress (a tragic exception was most of the African American community). Business clearly understood the power and meaning of this multi-stakeholder capitalism.

The Johnson & Johnson Credo brilliantly encapsulated this business responsibility in a truly authentic document of historic importance. Thus, multi-stakeholder capitalism is not an experiment. It is a remarkable 40-year demonstration period in our business history. Moving from history to present day relevance, JUST Capital has become the leading not-for-profit organization promoting the adoption of stakeholder capitalism.

(As a disclosure, I serve as a director of JUST Capital.) It ranks the largest 1,000 corporations in America on a “justness” criterion — as defined by the American people via polling —a surrogate for the principles of stakeholder capitalism. The findings are dramatic. Many of the most “just” companies also deliver the greatest return to the shareholders. As I noted earlier, stakeholder capitalism works superbly well in producing long-term shareholder value. Think about it. Workers now receive a proper living wage.

They produce incremental value for the corporation, motivated by sharing in the incremental value they create. The key is that incremental value is now produced. Next, corporations invest more in R&D and Basic Research to compete with China and other nations. The planet will become more livable by their ESG commitments. All these activities in a synergistic and symbiotic way produce that greater long-term value for shareholders. This is what Milton Friedman truly advocated.

It turns out that shareholder primacy and its devastating consequences promptly belong in the dustbin of history. Freed of the false myth of corporate ownership and it’s dangerous governance, stakeholder capitalism opens the door to the entrepreneurial power of a truly free version of capitalism that can lift all boats and create inclusive prosperity for all Americans.

In the end, stakeholder capitalism is one of the essential pillars of a sustainable democracy and the journey to create an equal opportunity for all future generations. That vision is worth the battles we must fight today. So, onwards.

Follow me on Twitter or LinkedIn. Check out my website.

Peter Georgescu is the Chairman Emeritus of Young & Rubicam Inc., a network of preeminent commercial communications companies dedicated to helping clients build their businesses through the power of brands. I served as the company’s Chairman and CEO from 1994 until January 2000. For my contributions to the marketing industry I have been inducted into the Advertising Hall of Fame. I immigrated to the United States from Romania in 1954. I graduated from Exeter Academy, received my B.A. with cum laude honors from Princeton and earned an MBA from the Stanford Business School. In 2006, I published my first book The Source of Success, asserting that personal values and creativity are the leading drivers of business success in the 21st Century. My second book, The Constant Choice, was published in January 2013. My latest book is Capitalists Arise! which deals with the consequences of income inequality and how business must begin to help solve the problem

Source: The Shareholders Are Not The Owners Of A Corporation

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References:

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Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

Binance Chief Executive Officer Zhao Changpeng Interview

Tokenized stocks, or digital assets pegged to the price of company shares, are no longer available for purchase on Binance.com. Offerings had included Tesla, Apple, and Coinbase shares, which Binance claims were fully backed through shares held by its partner, German-based investment firm CM-Equity AG.

Support for stock tokens was first made available on Binance.com in April, 2021, which was enabled through a partnership with Digital Assets AG, a firm focused on issuing tokenized financial products.

“Today, we are announcing that we will be winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings,” the announcement reads.

Although the exact reason for the about-face is unclear, Binance’s reversal on tokenized stocks comes as financial regulators around the world are putting pressure on the firm. Officials in Germany, Thailand, Japan, Canada, and the United Kingdom have all issued warnings about the exchange over recent months, the firm has been dropped by the payments processor Clear Junction, and certain banking relationships in Europe and around the world are coming into question.

More broadly, it raises doubts about Binance’s hyper growth strategy of rapidly launching new products around the world such as debit cards and derivatives products.

Users currently holding stock tokens have 90 days to sell their shares. Clients in the European Economic Area and Switzerland have the option to transfer their holdings to a new digital asset platform from CM-Equity AG. After October 14, 2021 they will not be able to manually sell or close their positions on the Binance site.

Follow me on Twitter or LinkedIn. Check out my website.

Source: Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

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Critics:

Binance will list MicroStrategy, Microsoft and Apple, providing Binance users with exposure via the tokenization of equities. The tokens are expected to be denominated in the exchange’s stablecoin, BUSD.

The move means Binance users will be able to qualify for economic returns on the underlying shares, which will include potential dividends. The tokens also allow Binance customers to purchase as little as one-hundredth of a regular stock using BUSD.

Binance’s stock tokens are tokenized equities that can be traded on traditional stock exchanges. Each tokenized stock represents one ordinary share of the stock and is backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany, according to the post.

Two stock tokens have begun trading on Binance including electric vehicle maker Tesla and cryptocurrency exchange Coinbase. Those listings are already ruffling the feathers of regulators who say the exchange has not acquired the necessary license to begin marketing equities to the public.

Cryptocurrency exchange Binance is allowing its users to buy fractions of companies’ shares with a new tokenized stock trading service, starting with Tesla.

  • The crypto exchange announced Monday the launch of Binance Stock Tokens, zero-commission digital tokens that qualify holders for returns including dividends.
  • As of 1:35 p.m. UTC (9:35 a.m. ET) April 12, users will be able to buy fractions of actual Tesla shares, which trade at $677 a share at the time of writing.
  • Users will be able to purchase as little as one-hundredth of a Tesla share, with prices settled in Binance USD (BUSD).
  • The exchange’s native crypto Binance Coin (BNB) has surged more than 25% in the last 24 hours, reaching an all-time high of $637.44. It is priced at $590.51 at press time. It’s not immediately clear what is driving the price of the coin.
  • It’s not the first tokenized stock play in crypto land: Terra Labs’ Mirror Protocol went live in December.
  • But where Mirror uses synthetic stocks (or tokenized representations of actual equities), the Binance product is “backed by a depository portfolio of underlying securities” managed by an investment firm in Germany.

See also: Binance Faces CFTC Probe Over US Customers Trading Derivatives: Report

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Last August, Alex Hernandez found herself in the market for a new piece of furniture. Holed up in her Miami studio apartment, the 31-year-old executive assistant had grown weary of her “cheap and basic-looking” Ikea couch. She shopped around online and found a new one she liked — but it was a designer brand that was out of her price range.

So she opted for a makeover instead. She spiced things up with a set of mid-century modern legs ($70) and a new cover ($120) from an Ikea customization website. The project cost Hernandez about one-tenth of the designer version she’d had her eye on and it saved an old piece of furniture from the landfill.

This type of upcycling, called Ikea hacking, has been on the rise during the pandemic. And for companies that sell custom Ikea-friendly fixtures — legs, couch covers, knobs, and cabinet doors — business is booming.

What the heck is Ikea hacking?

Ikea has achieved the kind of scale and brand recognition that most companies can only dream of. With ~$44B in annual revenue, 445 retail stores, and 217k employees, the Sweden-based company is the world’s largest home furnishings retailer, enjoying a stranglehold on the ready-to-assemble furniture market.

In many countries, 50%+ of the population owns at least one Ikea product. In a way, Ikea is kind of like the Bitcoin of furniture: the company uses universal designs, meaning its hardware and measurements are uniform across most of the developed world.

And folks who want to add some pizzazz to their mass-produced Billy bookcases and Kallax shelf units have no shortage of customization options to choose from online. Broadly, Ikea hacking is any form of upgrading, customizing, repurposing, or personalizing a piece of stock Ikea furniture.

The movement gained steam in the mid-2000s, when popular DIY blogs like Ikea Hackers and Instructables began offering up easy, affordable tweaks to popular items like Billy bookcases and Kallax shelf units. At first, Ikea wasn’t a fan of people customizing its furniture and even sent Ikea Hackers a cease and desist. But since then, the company has embraced its hackers.

And over the past decade, this once small and wacky community has burgeoned into a full-fledged industry. Nearly every social media platform abounds with Ikea hacking content:

  • TikTok: 64m views on #ikeahacks videos
  • Instagram: 500k posts tagged with #Ikeahack
  • Facebook: hundreds of Ikea hacking groups with more than 1m collective members
  • YouTube: thousands of Ikea hack videos with 100m+ views
  • Pinterest: an endless scroll of DIY Ikea projects
  • Reddit: r/Ikeahacks boasts 76k subscribers and has grown 400% in the past 5 years

Within this broader ecosystem, certain Ikea products have earned a cult following in niche communities. Plant enthusiasts use Fabrikör cabinets to make their own indoor greenhouses. Photographers convert Schottis shades into DIY lightboxes. Parents transform Flisat tables into sensory stations for toddlers. Some have even crafted sex toys out of Ikea shoe trees and milk frothers.

In a survey of 1,206 readers of The Hustle, half of all respondents said they had heard of the concept of Ikea hacking — and 43% said they’d engaged in the practice at some point. In our survey, readers had no shortage of their own creative new uses for old Ikea furniture:

  • Jordan Elgie (musician, Ontario) turned an Ikea shelf into an electric guitar pedalboard.
  • Peter Sanderson (sales director, Rhode Island) converted an Ikea headboard into a dog gate for his Rottweiler puppy.
  • Randy Hees (museum director, Colorado) built a floor-to-ceiling library using 26 Ikea bookcases.
  • Rick Moore (film technician, Vancouver) transformed an Ikea butcher block cart into a wine rack.
  • Laurel Choate (literary agent, New York) made a kitchen island out of Ikea shelves, legs, and a countertop.

During the pandemic, an increase in remote work and time spent at home has led to a DIY remodel boom — and a surge in Ikea hacks. Among our respondents, 69% said they had bought new furniture during the pandemic, and 38% said they had updated an existing piece of furniture.

“We disassembled a cheap Ikea table, painted it a new color, and bought new legs to make it more mid-century modern,” says Zoë Kronovet, a digital marketing manager in North Carolina. “We also bought a $300 velvet midnight-blue cover for a basic Ikea couch to give it a new life.”

Like Kronovet, the majority of Ikea hackers stick to simple aesthetic changes: new knobs on a dresser, a new set of legs on a table, or new cabinet doors — little touches to shake things up. And they have no shortage of options to choose from.

The Ikea hacking industry

When on the hunt to revamp old Ikea wares, prospective customers often turn to a cottage industry of e-commerce startups — mostly female-owned — that specialize in Ikea customization:

  • Semihandmade, Reform: customization options for Ikea kitchens
  • Superfront, Norse Interiors: legs, hardware, and cabinet doors for an array of best-selling Ikea products
  • Prettypegs: legs for Ikea sofas, tables, and consoles
  • Kokeena: doors and casework for Ikea cabinets
  • Panyl: vinyl wraps for Ikea furniture
  • Bemz: covers for Ikea couches and chairs

On Etsy, you’ll find dozens of smaller companies hawking handmade legs, brass knobs, shelf inserts, and sofa covers specifically crafted to fit Ikea furniture lines.

Monica Born quit her copywriting gig 10 years ago to found Superfront with her husband Mick, after noticing that many of her friends in Sweden were commissioning their own pricey Ikea replacement doors from local carpenters.

In Sweden, where 90% of residents own Ikea furniture, she sensed an opportunity to streamline and normalize the customization process.Today, the business offers cabinet doors, handles, and legs compatible with Ikea’s 4 best-selling furniture lines.

Born says the company is on track to hit ~$8m in annual sales this year — a 50% bump from last year. “It’s becoming more and more [common] to tell your dinner guests that you repurposed something,” she says. “It’s cool to say, ‘We thought it was crazy to throw away that piece of Ikea furniture so we redesigned it instead.’”

Jana Kagin left a career in psychology to launch the Stockholm-based Ikea customizer Prettypegs in 2012. “Ikea is such a huge part of Sweden’s DNA — it’s in our breast milk,” she says. “But a lot of people want to differentiate from the mass-produced. We offer a more affordable option by pairing DIY with high-end design.”

As an example, she cites a customer who was able to reconstruct a $1.5k West Elm console for $288 using a set of Prettypegs legs ($60), knobs ($28), and a bit of DIY handiwork.

Demand is so high, she says, that it’s been hard to keep items in stock. “When we first started, we thought, ‘It’s just furniture legs, it’s not rocket science!’ But everything becomes rocket science as a business scales,” she says. “Logistics, hardware, packaging, lacquer, paint — there are so many moving parts that have strained supply chains right now.”

While many of these companies are based in Sweden, some entrepreneurs have found success focusing on the US market. Lotta Lundaas, the founder of Norse Interiors, based in New York City, says her company is on track to hit $1m in sales just 3 years after launching — a 3x increase year-over-year.

Lundaas leveraged her background as an online marketer to identify which Ikea products to offer custom cabinet doors for, reverse engineering the company’s best sellers by looking at search volume data.

The Copenhagen-based startup Reform has taken a different route. Launched in 2014 with the aim of customizing Ikea kitchen cabinets, the company has since moved into offering its own product lines. But it has trouble keeping its prices appealing to the Ikea demographic.

“It’s hard to match Ikea’s economies of scale,” says Scott Bird, the company’s managing director. “They sell some of their products at a price that’s lower than what we can even source them for.”

But these economies of scale come with a price.

An antidote to ‘fast furniture’

Beyond design, Ikea hacking aims to tackle a larger problem: the scourge of so-called “fast furniture.”

In the 1950s, furniture was seen as a generational investment that would last decades. Today, the average couch lasts just 6 years. Each year, Americans discard 20m tons of furniture — a figure that has doubled in the last decade.

Ikea — a company that uses 1% of the world’s entire wood supply and has encouraged customers to frequently replace furniture in the past  — is at the center of this problem.

Part of the stated mission of Ikea hacking, and the upcycling movement at large, is to extend the lifespan of furniture.

In its own independent research, Prettypegs found that a simple design change could result in a person keeping a piece of furniture 20% longer. The company estimates that it has helped customers hold on to 19k pieces of Ikea furniture, saving 179 tons of CO2 emissions.

Consumers are increasingly concerned about the environmental impact of their purchases: In our survey, 60% of respondents said eco-friendliness is an important consideration when buying home furnishings.

A report by the Retail Industry Leaders Association found that:

  • 93% of global consumers expect the brands they use to address and consider environmental issues
  • American consumers will spend up to 20% more on products that are environmentally friendly.

For its part, Ikea has announced buy-back programs and plans to be “climate positive” by 2030. But for consumers who already have a house full of Ikea furniture, a little redesigning and repurposing may be the greenest course of action.

“We’re all in the business of making Ikea products last longer,” says Cagin, of Prettypegs. “We want to turn fast furniture into slow furniture.”

 By: Zachary Crockett @zzcrockett

Source: The thriving business of ‘Ikea hacking’

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Critics:

IKEA is a conglomerate that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories, among other goods and home services. Founded in Sweden in 1943 by 17-year-old Ingvar Kamprad, IKEA has been the world’s largest furniture retailer since 2008. The brand used by the group is an acronym that consists of the founder’s initials, and those of Elmtaryd, the family farm where he was born, and the nearby village Agunnaryd (his hometown in Småland, southern Sweden).

The group is known for its modernist designs for various types of appliances and furniture, and its interior design work is often associated with an eco-friendly simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development that has allowed IKEA to annually lower its prices by an average of two to three percent.

INGKA Holding B.V., based in the Netherlands, owns the IKEA Group, which takes care of the centers, retails, customer fulfillment, and all the other services related to IKEA products. The IKEA brand is owned and managed by Inter IKEA Systems B.V., based in the Netherlands, owned by Inter IKEA Holding B.V. Inter IKEA Holding is also in charge of design, manufacturing and supply of IKEA products.

References

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