July 21, 2021 Sign Up

by Overheard on Wall Street

"A company shouldn’t get addicted to being shiny, because shiny doesn’t last." — Jeff Bezos

Good morning! Congratulations to Milwaukee Bucks on winning their first NBA title since 1971. Yesterday, Jeff Bezos & Co also completed their Blue Origin flight to the edge of space. In a press conference following the 11-minute flight, Bezos announced that he's giving $100 million each to CNN contributor, Van Jones and chef, Jose Andrews, who are free to do "what they want" with the money, tied to a philanthropic initiative called the Courage and Civility Award.

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1. Story of the Day: 72 Hours to Master the Job?

Mary Erdoes, CEO of JPMorgan's asset management business, produced one of the most controversial statements of the summer in an interview with David Rubenstein on Bloomberg. She declared that there is a need for junior bankers to work 12-hour days, 6-days a week to master the job faster.

She invoked the concept of taking 10,000 hours to learn a skill to an elite level. She claimed that with having an 8-hour day job, 5-days a week, it would take 5 years to have a base level mastery, while the 72-hour weeks, cuts you down to two and a half years before you become a master in something.

The statement comes at an interesting time, as Wall Street's grueling hours have come into spotlight in this pandemic. In response to junior bankers concerns about deteriorating mental and physical health, many banks (including JPMorgan) have pledged higher pay, bonuses and other perks for junior bankers.

Short Squeez Takeaway: While there might some truth to Mary Erdoes' statement, it's telling to analyze what exactly junior bankers are doing when they are working these long hours. A lot of the job consists of menial tasks such as moving around logos, making mindless text edits and excel charts. Countless times junior bankers are asked to wait around for their seniors' comments. It then begs the question what is the exact "skill" that is being mastered? (other than a high level of patience) It is not like these young analysts are performing surgeries or building skyscrapers...

2. Markets Rundown

• US markets clawed back the lion's share of their previous day's losses as stocks battled back after one of the steepest declines in months on Monday

Movers & Shakers

• (+) HCA Healthcare ($HCA) +14% after better than expected Q2 earnings and raising of full year guidance.
• (+) Silvergate Capital ($SI) +14% after reporting stellar Q2 earnings.
• (–) Glaukos ($GKOS) -15% after Wells Fargo analyst Larry Biegelsen downgraded the stock to underweight from equal weight.

3. Top Reads

4. Book of the Day: Super Founders: What Data Reveals About Billion-Dollar Startups

Ali Tamaseb has spent thousands of hours manually amassing what may be the largest dataset ever collected on startups and what he found looked far different than expected.

For example, most unicorn founders had no industry experience and over half had strong competitors when starting - being first to market with an idea does not actually matter.

The book includes exclusive interviews with the founders/investors of Zoom, Instacart, PayPal, Nest, Github, Flatiron Health, Kite Pharma, Facebook, Stripe, Airbnb, as well as previously untold stories about the early days of ByteDance (TikTok), WhatsApp, Dropbox, Discord, DiDi, Flipkart, Instagram, Careem, Peloton, and SpaceX.

Super Founders is an actionable guide for entrepreneurs, investors, and anyone interested in what makes a startup successful.

Source: Publisher

5. Daily Visual: Average Pre-Money Valuation by Round (2020 vs 1Q21)

Source: AngelList

6.  Daily Acumen: Becoming a Unicorn

AngelList analyzed over 2,600 seed-stage startup investments made on AngelList dating back to 2013 to determine the likelihood of any startup achieving unicorn status today. A unicorn being a privately held startup company with a value of over $1 billion.

According to AngelList data, a venture-backed seed-stage startup has an estimated 1 in 40 shot, or 2.5% chance, of becoming a unicorn today.

The data suggests that the probability of ANY seed-stage startup becoming a unicorn has more than doubled since 2018. This increase coincides with rising early-stage valuations and markup rates on AngelList.

There are a several reasons this might be happening. For one, valuations continue to climb. In 1Q21, seed round valuations on AngelList were up 9%, compared to 2020. Series A valuations were up 80%, and Series B valuations were up 48%.

Another factor could be the increase in startup success rates. The first quarter of 2021 was the “best quarter ever” for early-stage startups in terms of rates of markups and positive exits. Just over 85% of the events reported by startups on AngelList during that period were positive ones, an increase of 5% from just one quarter before.

Source: AngelList

7. Memes of the Day

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