Widely-followed stock picker Cathie Wood of Ark Invest, looking to bounce back as her funds continue to underperform, is using recent market volatility to buy the dip on big growth names like Tesla and Robinhood—both of which have seen shares struggle amid the wider sell-off in January.
The founder and CEO of Ark Invest purchased a total of 2.58 million shares of popular stock trading app Robinhood after the stock plunged to a record low of less than $10 per share on Friday following a dismal quarterly earnings report.
Wood purchased more than 2 million shares for her $12 billion flagship ARK Innovation ETF, with a total stake in Robinhood worth nearly $200 million, according to Morningstar data.
Robinhood is down nearly 70% since going public last year but Wood has continued to buy shares of the company since late October—when the stock plunged below its IPO price of $38 per share.
Another of Wood’s big trades in recent days: Adding to her position in Tesla for the first time since June 2021, buying roughly 55,000 shares—worth nearly $50 million—of the electric vehicle maker.
Tesla’s stock has fallen over 20% so far this year amid a wider selloff in growth and tech stocks, but Wood’s latest purchase may be a sign that she thinks shares are down to a more reasonably priced level.
Elon Musk’s electric vehicle outfit is Wood’s biggest holding in her flagship fund, making up about 8% of the ARK Innovation ETF—a position worth over $900 million, according to Morningstar data.
The Ark Invest founder also sold 70,000 shares worth of Spotify on Friday, amid the latest controversy surrounding the company. Several artists have boycotted the music streaming platform in light of false Covid-19 claims spread on Joe Rogan’s podcast. Wood still holds a sizable stake in Spotify—it is one of her flagship fund’s top ten holdings—worth almost $500 million, according to Morningstar.
Amid the wider sell-off in tech stocks, Wood told investors last week that “innovation is on sale,” though she remained unswayed by the recent market swings. “We use volatility to our advantage,” she said. “We concentrate towards our highest conviction names and that tends to work very well as we go through these corrections.”
After rising to fame in 2020, with her flagship fund surging nearly 150%, Wood’s performance has since gone downhill. The ARK Innovation fund fell 24% in 2021—losing over a fifth of its value–while the S&P 500 was up 27%. So far this year, the fund is down another 20%. With the Federal Reserve tightening its monetary policy and preparing to raise interest rates, investors have largely dumped riskier growth stocks, with shares of tech companies particularly hard-hit. The Nasdaq Composite index subsequently fell into correction territory in January, more than 10% below its record highs last November.
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The founders of Tesla, Oracle and Airbnb lost billions of dollars this week amid surging market volatility and continued pressure on tech stocks.
espite several days of declines, stock indices finished the week slightly higher, offsetting some of this month’s widespread losses. But the market’s troubles look far from over.
Many tech company CEOs and founders were unsurprisingly among the billionaires whose fortunes fell the most since the market close on Friday, January 21, according to Forbes’ calculations.
Leading the declines for the second week in a row: Tesla chief exec Elon Musk, whose fortune fell $22 billion after shares of his electric vehicle maker had yet another rough week, falling over 10%. Even though Tesla posted record profits after reporting quarterly earnings on Wednesday, investors focused on the company’s warning that supply chain issues may hurt growth in 2022.
Musk also took to Twitter on Thursday to insult President Joe Biden, apparently in response to being snubbed at a White House forum for electric vehicle makers. Still the world’s richest person, Musk now has a net worth of $222.2 billion, according to Forbes’ estimates.
Oracle cofounder Larry Ellison, meanwhile, fell from fifth to eight richest in the world over the course of the week as shares of his software giant sank more than 2%. Ellison, who owns about 35% of Oracle (and has pledged millions of his shares as collateral for loans), saw his fortune drop by $3.4 billion, to $109.2 billion, according to Forbes’ calculations. Shares of Oracle have been on a downward trajectory since last month, when the company confirmed it was planning to acquire medical records company Cerner for nearly $30 billion.
Other notable billionaires whose net worths fell this week include Airbnb CEO Brian Chesky and Roblox cofounder David Baszucki. Chesky, who cofounded the home rental company in 2008, dropped $1.1 billion to $11.3 billion, , as shares of Airbnb fell 9% this week. Meanwhile, shares of gaming company Roblox fell nearly 16% since last Friday, shaving roughly $700 million off of Baszucki’s net worth, which now stands at $3.9 billion, Forbes estimates.
Fourth quarter earnings season has so far failed to boost equities as some big name companies posted lackluster results. Combined with investor fears about the Federal Reserve’s tightening monetary policy and upcoming interest rate hikes, the stock market is now on pace for its worst month since March 2020.
As government bond yields surge, investors have continued to rotate out of riskier growth and tech stocks, many of which have been among the hardest hit in the market’s wider sell-off. The tech-heavy Nasdaq Composite, which is in correction territory after falling nearly 15% since the start of 2022, is on pace for its worst January ever—and its worst month overall since the financial crisis in October 2008
Other billionaires whose fortunes contracted this week: Coinbase CEO Brian Armstrong’s net worth dropped around $600 million to $7.3 billion, as shares of his cryptocurrency exchange fell 7.5%. Spotify cofounder Daniel Ek similarly lost around $400 million—putting his net worth at $2.9 billion—as shares of his music streaming platform fell nearly 12% since last Friday.
The fortunes of Snap cofounders Bobby Murphy and Evan Spiegel, declined by $350 million and $250 million, respectively. They’re now worth $6.4 billion and $6.2 billion, after Snap’s stock fell over 5% this week.
HERE’S HOW SOME OF THE WORLD’S RICHEST PEOPLE FARED THIS WEEK.
The net worth change is from close of markets Friday, January 21 to Friday, January 28.
Cody Wilson is hunkered down in a dimly lit warehouse behind the headquarters of Defense Distributed, the Austin, Texas company best known as the maker of the first 3D printed plastic gun. As a film crew shines a spotlight on him to record a demonstration of his new Zero Percenter desktop software, a vast library containing 11,000 books, films and 3-D printable gun blueprints appears from the blackness behind him. His new software is capable of turning a raw block of aluminum into the receiver for an AR-15 assault rifle in just three hours.
Wilson, who describes himself as a crypto-anarchist, relishes shock value. He shows his visitors a collection of hunting pelts: zebra, wolf, coyote, and deer, and then makes allusions to the perpetrators of the January 6, 2021 assault on the U.S. Capitol, which left five dead and 700 facing criminal charges. “January six was an insurrection,” says Wilson, 33. “Except on January six, it was fake horns for fake,” he adds, smiling wryly. “In mine it’s real for real.” On the shelves behind him are a mix of books ranging from the Hardy Boys, to a treatise on Nazi Doctors. A bundle of a half-dozen steel-tipped spears and a police riot shield lean against the wall behind him.
The Biden administration recently proposed new regulations defining exactly what constitutes a firearm and which specific parts are required to have ATF-issued serial numbers for tracking. If enacted, Federal Firearms licensing and serial numbers will be required on many gun components that heretofore could be bought and sold without regulation. Wilson’s new software, which he intends to release later today, is designed to circumvent those controls by converting a 1.5 inch by 8 inch block of aluminum into the essential component of a firearm using one of Defense Distributed’s $2,500 Ghost Gunner 3 desktop printers.
Dubbed the Zero Percenter, because it can turn a completely untouched piece of aluminum into a firearm, the software and a few accompanying components are Wilson’s answer to what he considers government overreach. He seems to care little about the “open source” terrorism and crime it might unleash. So-called privately made firearms or ghost guns, the type Wilson has long championed, have confounded law enforcement officials for years. According to the Bureau of Alcohol Tobacco Firearms and Explosives, from 2016 through 2020, some 23,906 suspected ghost guns were recovered from crime scenes, including 325 homicides or attempted homicides.
“There’s always going to be this mystical platonic line where a component becomes more like a gun than not a gun, and to regulate those intermediary steps of manufacture in any serious level completely disrupts modern American manufacturing, the American system,” says Wilson, dressed in black and brandishing a 24-carat gold ring, embossed with the initials DD. “They are literally trying to control the world. But as the Zero Percenter demonstrates, blocks of metal are also guns.”
Cody Wilson was born in Little Rock, Arkansas, the son of an attorney who moonlighted as a preacher and his mother, a network administrator for an insurance brokerage. In middle-school his father gave him a copy of economist Friedrich Hayak’s Road to Serfdom, about how centralized economic planning homogenizes the working class. From there he studied, Karl Marx, Vladimir Lenin and Michel Foucoult, undergoing what he calls a “self-radicalization” culminating in the discovery of Timothy May’s 1988 Crypto Anarchist Manifesto, about how cryptography can empower individual rights.
Convinced that the U.S. founding fathers had prioritized freedom above democracy, he started to experiment with what he describes as “poisoning” the electoral process, by undermining the 2012 presidential election. He filed paperwork to found a Political Action Committee with the expressed purpose of funding campaigns on behalf of poorly funded House of Representatives candidates. To “turn people completely off to the electoral and political process,” as he wrote in his 2016 book, Come and Take It. To “play by the rules, but ruin the game to show the absurdity of it all.”
Wilson’s rhetoric ranges from destructive to bizarre. “A mature reading of all the history of political science is rescuing governments from democracy, especially ours,” says Wilson, adding that he believes the founders didn’t want a democracy and hoped to avoid it. “And so in that respect,” he says. “I’m just thoroughly American in my point of view. How can we prevent democracy from happening or ruin the democracy that has broken out?”
In June 2012, after a year studying law at the University of Texas, Wilson gave up on trying to undermine the system from within after the Supreme Court upheld the Affordable Care Act, something he believes is an affront to his freedom. “I realized I had to become a pirate,” he says. “Hoist the black flag.” Four months later he founded Defense Distributed to create the first 3-D printable plastic gun, The Liberator, and give the code away.
Initially Wilson wasn’t concerned about generating revenue from the idea, but after 26 people, mostly children, were gunned down at the Sandy Hook Elementary School in December 2012, his business got an unexpected boost. While the rest of the world was in shock or mourning, gun enthusiasts flocked to his website fearing a government crackdown on firearm ownership. After the blueprints for his Liberator 3D printed gun “dropped” in May 2013 Wilson began earning about $20,000 a month from Google Ads, he says. “That’s the start of all this.”
Wilson claims he’s always has his guard up, equally concerned about legal ramifications if his products are used in a shooting and the personal concern of knowing his work was used to harm someone. But in his 2016 book, he describes a cartoon depicting a character crying out, how many more children will have to die before you support gun control? The cartoon ends with a helmeted angel and a camouflage face coming down from heaven answering: “All of them.”
Wilson’s potentially deadly innovations have faced dozens of legal battles over the years. He highlights his lawsuits against the U.S. State Department and the State of New Jersey, as the most important thanks in part to the impact they could have on his argument that his gun making code is protected as free speech. His inclusion of the code in his library is designed to demonstrate the point. Nevertheless, Wilson’s websites have been forced to close multiple times over the years following U.S. state lawsuits alleging they violate gun control regulations.
Besides his legal entanglements over his ghost guns, Wilson pled guilty to Injury to a Child in 2019 after he was was arrested for paying $500 to have sex with a 16-year old girl he met on a website called Sugardaddymeet.com. Wilson is now a registered sex offender and is serving seven years of probation. As a Texas resident, his guilty plea to a felony has so far had little effect on his firearms business, and part of his plea deal allows him to continue to own guns. “I’m on felony probation,” says Wilson. “I didn’t get prosecuted and I’m thankful for that.”
The spark that drove Wilson to create Zero Percenter was ignited soon after Biden won the election in November 2020. At about that time, gun control activist Christian Heyne of Brady United proposed that Biden and Kamala Harris use their executive power to broaden the definition of firearms to include unfinished frames—called 80 Percenters by gun rights groups. These frames or receivers need additional fabrication to be made into finished firearms, and therefore avoid serial numbers and tracking by the ATF. 80 Percenters are widely available via online dealers and are used by DIY gunsmiths to make dozens of models ranging from Glock style semi-automatic handguns to assault rifles like the AR-15.
Heyne argued that, besides evading law enforcement, ghost gun makers were effectively stealing from the legitimate firearms manufacturers in the $63 billion industry. “By shutting down this market, which is undermining the firearms industry, ultimately it allows that industry to operate as it should, with responsible gun dealers,” Heyne says.
Two mass shootings in March 2020 were apparently enough to get the Biden administration moving on Brady’s proposals. The following month the Department of Justice published a 72-page proposal for regulations that would change ATF’s definition of a firearm eliminating the loophole that has allowed the 80 Percenters to flourish. Registered serial numbers would be required on nearly every part of a gun.
Wilson believes his Zero Percenter puts the new government regulations in check mate. In addition to being made available on USB memory sticks he plans to release the file containing this software at no extra cost to paying members of Legio, a group of “supporters” he describes as a fraternity, founded in 2018. Legio members, who pay between $5 and $8 per month, are the only ones who can access Wilson’s DEFCAD, a Napster-like website hosting 16,000 files for making firearm and gun components. Besides his Ghost Gunner fabrication machines, Wilson’s Defense Distributed also sells 80% receivers on his site for between $50 for an AR-15 to $176 for one fitting a Glock made by Nevada-based Polymer80. According to Wilson, Defense Distributed generated $4 million in revenues in 2020, and is on track to bring in $5 million in 2021.
While Wilson initially hoped to release his Zero Percenter software on January 6th, to mark the one-year anniversary of the insurrection, is expected to be unveiled later today at the Hereticon “conference for thoughtcrime,” hosted by Peter Thiel’s Founders Fund.
Speaking from a firing range on the outskirts of Austin, the man who was twice named to Wired’s list of most dangerous people in the world, expects the new ATF definition of a firearm will “double or triple” the size of his company. By the ATF’s own reckoning in the proposal, the regulation will likely force many of what Wilson estimates are his “dozens” of competitors in the self-made firearms industry to become licensed manufacturers. Others will reduce the kinds of products they sell, or be put out of business. He believes Joe Biden’s new rules will pave the way for his market dominance among homemade gun enthusiasts.
“When I first started the company I felt more,” says Wilson, interrupted by a burst of gunfire a few yards away, “ I would tell my team, this is our vehicle to run into the ground, to crash into the tower. This company is a weapon.” He adds. “Now I don’t feel I can play it that way. People have families. I’m a man in my thirties. I have a bookkeeper.”
Defense Distributed uses two massive computer numerical control (CNC) machines to churn out parts for the desktop versions of his new Ghost Gunner 3 printers, already selling briskly in anticipation of Biden’s rule changes. Taking a page from Apple’s ecosystem approach, owning Wilson’s latest 3D printer is required for anyone wanting to take advantage of his Fed-evading Zero Percenter operating software.
“Only Three can do the work,” he says, noting that Defense Distributed has shipped 2,700 Ghost Gunner 3’s since last year and has 800 more on back order. While the final prices of the Zero-Percenter software kits have yet to be determined, Wilson has already made 100 of them, and is waiting to gauge demand before making more.
“This is no niche thing,” warns Wilson. “We’ve made millions and millions of dollars and been able to stay in federal court for years. We have no billionaire Adelson partner. We don’t have investors…And I’m quite a toxic personality.”
Jihan Wu gives a rare interview to discuss his latest ventures, his departure from mining giant Bitmain and the future of the crypto markets.
Cryptocurrencies were born to be volatile, says Jihan Wu, but their growth over the long term will far outweigh their price fluctuations. “Even if 95% of today’s coins lose all their value and disappear, the remaining 5% will grow massively,” he says.
Wu’s optimism is borne of his experience. He discovered bitcoin and recognized its early promise more than a decade ago, when he saw it being used to buy computer hardware and IT services in online forums like Bitcointalk.org. But to break out of its niche market and gain wider acceptance, bitcoin would need far more infrastructure to support it. So, Wu began working on a solution that would play a vital role in bitcoin’s development.
In 2013, Wu teamed up with Micree Ketuan Zhan to launch Bitmain Technologies, a supplier of specialized hardware known as mining rigs which are designed for the single task of adding transactions to bitcoin’s blockchain. The people who own the hardware earn, or mine, new bitcoins by making their processing power available to the network.
As bitcoin’s price rose over the years, Bitmain’s mining rigs became a runaway success, and it turned both Wu and Zhan into billionaires. By 2018, Bitmain had become the world’s largest supplier of cryptocurrency mining rigs with a market share of 75%, according to Frost & Sullivan. And the Beijing-based company was preparing for a multibillion-dollar public listing in Hong Kong—until bitcoin crashed, losing 70% of its value by the end of that same year.
Bitmain’s IPO became a casualty of bitcoin’s volatility and placed a heavy strain on the company’s finances. And the two cofounders were quickly thrust into a scramble for survival that later evolved into a struggle for control of the company.
Today, Wu looks back at bitcoin’s twists and turns as milestones on his entrepreneurial journey toward building one of the world’s largest crypto business empires. Bitmain has since returned to profitability and continues to dominate the global market for mining rigs in spite of China’s recent crackdown on crypto mining and trading. In response to the new restrictions, the company ceased shipments to its clients in mainland China, although overseas customers are said to be unaffected. Bitmain is also building rigs that use less energy to address regulator’s concerns, but it did not elaborate on any further measures it intends to adopt.
Wu stepped away from Bitmain at the beginning of the year to focus on his role as chairman of two spinoffs both based in Singapore—Bitdeer Technologies, a cryptocurrency mining platform that’s already announced plans to list on the Nasdaq at a $4 billion valuation, and Matrixport, a financial services firm valued at $1 billion in its latest funding round.
Matrixport’s launch in February 2019 was another demonstration of Wu’s long-term optimism for the crypto industry. Bitcoin was still in a bear market when he and his fellow cofounder John Ge Yuesheng established their firm.
“We believed that crypto and blockchain together would experience rapid growth in the future to tens of trillions of dollars,” Wu says. “And many of these new users will stay in the crypto market forever, so they’ll need advanced and sophisticated products to manage the wealth they accumulate in crypto assets.”
Their decision to push ahead looks prescient now. Since Matrixport was launched, the overall market cap of cryptocurrencies shot up to an all-time high of $3 trillion in November, according to data from CoinGecko. And the global market size of crypto users has more than doubled to 221 million people in the first half of the year, according to a report from Crypto.com.
Cryptocurrencies have been riding high this year on signs that digital assets are becoming more mainstream. El Salvador became the first country in the world to accept bitcoin as legal tender and a growing number of companies including AMC, AT&T, Mastercard, Microsoft and PayPal and are now accepting some cryptocurrencies as payments.
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Buoyed by the rising tide of the crypto market, Matrixport raised $100 million during a Series C funding round announced in August that was led by partners of Yuri Milner’s DST Global, Adrian Cheng’s C Ventures and Kuok Meng Xiong’s K3 Ventures along with other participants including Qiming Venture Partners and existing backers like IDG Capital and Dragonfly Capital.
Wu’s track record of building multiple multi-billion dollar companies is nearly unparalleled, says Adam Goldberg, cofounder of Standard Crypto, a venture fund based in San Francisco. Goldberg, who was formerly with Lightspeed Venture Partners, became an investor in Bitmain around 2017, and later joined the board of Matrixport.
“Jihan is a generational entrepreneur. He is uniquely agile, resilient, and always peeking around corners to preview the future of the crypto industry.”
Matrixport’s name alludes to its aim of becoming a gateway or portal for investors to enter a new digital realm, much like in Wu’s favorite movie The Matrix. The firm’s strategy involves offering investment products like those found on Wall Street but tailored to crypto investors.
Matrixport’s services include custody, trading, lending and structured products. Wu said they were the first to offer crypto dual currency products, which are investments that offer guaranteed yields with the payments settled in one of two possible cryptocurrencies depending on market prices at the time. The firm says it now has $10 billion in assets under management and custody and has more than $5 billion in average monthly trading volumes.
Wu’s other venture, Bitdeer, is a mining platform that currently operates five pools in the U.S. and Norway with more than 100,000 mining units under its management.
Bitdeer and Matrixport were both spun off from Bitmain as part of a settlement deal reached between Wu and Zhan after the two cofounders clashed. A nondisclosure agreement prevents Wu from speaking in detail about the terms of that deal, but he was able to discuss the circumstances that led to it with Forbes Asia for the first time.
“That was a tough period for our business and for me. And of course, the pressures of running a complex manufacturing business built up and eventually led to a falling out between us two cofounders,” Wu recalls.
Bitmain had rapidly gone from generating $2.5 billion in revenue in 2017, and a profit of $742 million in the first half of 2018, according to its prospectus filed to the Hong Kong stock exchange, to the point it was losing money and laying off swathes of staff.
The company had ventured into a number of different areas during the boom time—AI, mining pool construction, a decentralized crypto exchange, venture capital, etc.—but many of those initiatives failed to turn a profit during the bear market of 2018, which came to be known as “crypto winter,” a deep selloff followed by a long period of flat trading.
Bitmain’s two cofounders, who had previously worked together as co-CEOs, disagreed over its strategic direction and a power struggle ensued. The dispute became public at times until a deal was finally brokered at the end of last year that saw Wu step down as chairman and CEO of Bitmain, although he still retains a stake in the company. Zhan is now running Bitmain’s manufacturing operation and another mining pool called Antpool.
“The settlement agreement marks the end of the hardship. Bitmain didn’t go bankrupt, instead it’s doing really well now,” Wu says. “Bitmain’s accumulated net profit is expected to reach between $2 billion and $4 billion. It’s a company that generates very high profits.”
Wu’s path to crypto entrepreneurship began with his discovery of bitcoin when he was working as an investment analyst in Beijing. Having studied economics and psychology from Peking University, he instantly became engrossed by Satoshi Nakamoto’s idea for a decentralized digital currency.
“The white paper he [Nakamoto] published in 2008 opened up a new world and offered an opportunity for new players like us to participate.”
Wu said he immediately dropped his studies to become a certified accountant to instead focus on learning and then investing in bitcoin. After buying hundreds of coins himself in 2011, Wu invested in ASICMiner, a bitcoin mining company founded in 2012 by Jiang Xinyu, or Friedcat as he was known in various online forums. The profits Wu gained from that deal was combined with capital from a group of other investors to start Bitmain in partnership with Zhan in 2013.
Zhan was a chip designer who had been running his own business of making set-top boxes for televisions prior to teaming up with Wu. The two established Bitmain as one of the earliest manufacturers of the specialized chips used for mining cryptocurrencies known as application-specific integrated circuits, or ASICs.
Wu’s initial aim was to be a VC investor behind Bitmain, but after committing his capital, he soon realized the heavy demands of running a tech startup required him to get involved in managing the company.
In less than four years, Bitmain became the most influential company in the bitcoin economy. Bitmain’s vertical integration extended from designing the chips used in its mining rigs to assembling the hardware and selling them to customers around the world. At the same time, Bitmain was operating mining pools on contract to customers, as well as owning several of its own pools. Bitmain’s pools contributed about 37% of the aggregate processing power of the Bitcoin network by 2018.
In spite of the regulatory uncertainty that characterizes cryptocurrencies in many of the world’s largest markets, Wu believes the industry will continue to develop unique innovations because it isn’t subjected to the constraints of the traditional financial system.
“Innovations like DeFi [decentralized finance] are breathtaking” he says. “Technologies like crypto and blockchain have created a new world, allowing fintech entrepreneurs to make big achievements. Eventually, traditional financial institutions and regulators will embrace blockchain technology.”
After years spent trying to “bridge generations” by guiding brands and investors to better understand Gen Z, Islands CEO Tiffany Zhong is now trying to do the same for different waves of the internet.
“We’re building economic infrastructure for the community economy,” says Zhong, who just turned 25, says. One way to do that: bridge talent, this time, from Web2 internet companies (think the traditional giants like Facebook and Google) over to Web3’s crypto, NFT, and other creator-focused projects. “Our goal is to help get more people into Web3, because clearly it’s so nascent and early.”
Zhong’s startup Island, officially launched on Tuesday to look to do that. Islands is doing so with the backing of Reddit cofounder Alexis Ohanian, whose venture capital firm Seven Seven Six has led a $3.5 million seed round in the company.
Launched by Zhong and fellow Forbes Under 30 list alum Nikhil Srinivasan, 28, in the fall of 2020, Islands spent much of the past year building its product in (relative) quiet, hiring a fully-remote team of 10, including its Los Angeles-based founders. Zhong and Ohanian, who had become friends by discussing NFTs and Web3 over Twitter, announced a corresponding podcast, “Probably Nothing,” in October.
With Islands, they hope to provide a site that can onboard newcomers into the world of NFT art and crypto assets and communities, while simultaneously improving the experience of the initiated looking to display their digital wallets, trade assets and communicate asynchronously. “We wake up to Discord and NFT Twitter very anxious, with a ton of unread messages, and that can’t be the best way,” Ohanian toldForbesin an interview.
To solve that problem in an inclusive way, he argues, requires design choices that remind him of the early days of building Reddit’s online community – including design decisions from 2005 that Ohanian jokes still haunt him to this day. “We have yet to see a truly web3 community platform get built in this new world,” he says. “It’s not about viable products anymore, it’s about minimum viable community.”
The Web2 elder statesman turned Web3 enthusiast and investor believes Zhong and Srinivasan bring the credibility and track record to take a crack at the first solution. The duo previously founded Zebra IQ, the Gen Z consumer feedback service used in the past by Snapchat and Levi Strauss, among others, for which Zhong appeared on the Forbes Under 30 list in Marketing and Advertising for 2020. Srinavasan previously sold a startup he cofounded in 2014, Distributed Systems, to Coinbase in 2018, where he worked under former CTO and crypto influencer Balaji Srinivasan (no relation), and appeared on the Under 30 list for Enterprise Technology in 2019.
How Islands works: interested members request a user name, share an email to be notified when they’re ready to join, and the address of a digital wallet to connect at sign up. Zhong and Ohanian anticipate users joining under a mix of pseudonymous and real-name accounts and toggling between multiple wallets as necessary. Once onboarded, users will be able to trade NFTS directly within Islands, create new projects called “islands” within its Discord server, or even mint new NFT projects and share them with communities they create via “drops.” “We wanted to simplify that process and abstract away a lot of the crypto things,” Zhong says.
Users who join Islands’ Discord are asked to read and confirm participation in community guidelines, and Zhong says the startup plans to offer creators templates and suggestions for setting their own guardrails for constructive use. Zhong expects some to put decisions and rules to votes. “It’s important to build in a non-toxic way, but also give creators the ability to build the way they want,” she says.
Islands’ challenge: garner sustained interest from the decentralized, fast-moving and at times chaotic crypto and NFT community, already prone to share and discuss projects on a variety of platforms, display and discover digital assets on flourishing marketplaces like OpenSea. In circles where decentralized finance concepts, or DeFi, is all the rage, Islands is looking to centralize and aggregate. The irony isn’t lost on Zhong, who says that Islands is structured as a traditional software startup in order to have “effective product development” and ship features more quickly. Islands has no plans to issue its own tokens, its CEO says.
And if Islands can drive new users – and customers – to digital wallets and NFT marketplaces, Islands’ creators hope to receive more interest in partnership than competition. Its cofounders are betting, Zhong says, that Web3’s participants keep it a “positive-sum” playing field even as new projects pop up. “How we think about this is everyone grows together, all the islands grow together,” she adds.
Ever since Facebook’s recent name change and new focus on the ‘metaverse,’ there has been massive interest in the concept of a virtual world which could replace today’s internet—and that means a massive new opportunity for investors, according to Morgan Stanley.
Wall Street firm Morgan Stanley sees the metaverse as an $8 trillion addressable market which is likely to become the “next generation social media, streaming and gaming platform.”
“Like current digital platforms, we expect the metaverse to initially and primarily operate as an advertising and e-commerce platform for offline products/purchases,” wrote analyst Brian Nowak.
The firm’s most obvious stock pick in this space is Meta (formerly Facebook), thanks to the growth durability of its core business and strong free cash flow even as it invests billions of dollars to “build the next generation version of social networking.”
Morgan Stanley analysts also like gaming company Roblox, which it says can leverage its 47 million daily active users and “strong” monetization algorithms with the metaverse’s advertising and e-commerce opportunities.
The firm picked out several other stocks it thinks can benefit from growing adoption of the metaverse concept, including those focused on augmented reality, like Google-parent Alphabet and social media platform Snap.
It also likes Unity Software, the most widely used engine in the video game industry, which could be in a position to help with content creation for the metaverse, according to the firm.
Facebook’s rebranding to Meta last month heralded the company’s new focus on the metaverse, a vision for a virtual world accessed by headsets or smartphones where people can work, play and socialize. Though the metaverse is still largely conceptual, the possibilities are endless with the idea being that there could be many different types of virtual worlds which could revolutionize the way people interact. While Facebook is ahead of the curve in this space, several companies including Microsoft and Disney have also begun investing in the metaverse.
“We believe the Metaverse will be the successor to the mobile internet,” Facebook CEO Mark Zuckerberg said last month when he announced the company’s rebranding to Meta.
Why You Absolutely Must Invest In The Metaverse (Forbes)
Rebecca Minkoff became one of the first American fashion brands to sell NFTs when it launched its “I Love New York” line at New York Fashion Week in September. Now, that same company is using similar technology to give its sustainably minded customers access to their garments’ journeys along the supply chain. For its new RM Green(e) collection, Rebecca Minkoff—helmed by Uri Minkoff, the brother of the designer for whom the brand is named—has teamed up with Resonance, a largely bootstrapped company operating out of New York’s Chelsea Piers that offers cloud-based production alternatives for designers that want to cut back on inventory. As part of a new idea gaining traction in high fashion, no new garment is produced until it’s been purchased by the customer.
“Over the past four of five years [sustainability] has really come to the forefront,” Uri Minkoff tells Forbes about the brand’s decision to invest in a partnership with Resonance: that company is currently responsible for all RM Green(e) products, amounting to less than 5% of Rebecca Minkoff orders. “Technologies evolve. Consumer awareness evolves.” Minkoff says that, less than a year into this partnership, the fractional RM Green(e) sales result in six figures of revenue that he hopes will keep growing. He adds that the flexibility of Resonance’s platform—which uses technology to facilitate real-time ordering and relieves designers of the pressure of committing to particular styles, materials, and quantities before ascertaining how demand for certain fashions will pan out—could help facilitate that growth.
“I don’t have to cut something out if it’s still performing just because I need to make room for something else,” Minkoff says. “It doesn’t matter. I don’t have an investment in that from a production capacity until it gets ordered.”
Available only online, RM Green(e) includes tops and dresses, priced between $158 and $298, as well as $38 face mask sets. Because of this unique made-to-order production method, customers can also order extended sizes, something else that isn’t available through Rebecca Minkoff’s brick-and-mortar locations. Orders take 10 to 25 days to complete, which may seem like a lifetime in the post-pandemic world of almost-instant delivery. Patient, planet-friendly shoppers receive their new, sustainably sourced garments tagged with QR codes, which, once scanned by a phone or other device, displays the purchase’s provenance via the portal created by Resonance and named ONE.Code.
ONE.Code relies on the immutable, shared ledger of blockchain technology: the owner of a new $158 Gigi top learns that it took 1.42 yards of certified organic cotton and 21.22 gallons of water to produce (additional metrics abound). According to Resonance, that’s 1.48 fewer yards of material and 81.6% percent less water than goes into making a similar mainstream garment. For comparison, the World Wildlife Foundation estimates that making the average cotton t-shirt uses about 2,700 liters or 713.26 gallons of water.
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Resonance, founded in 2017 by Christian Gheorghe and venture capitalist and Digital Currency Group board member Lawrence Lenihan, is mainly a B2B operation, producing limited clothing lines for designers. In addition to Rebecca Minkoff, the company handles the greener operations of fashion brands including Pyer Moss and Tucker, and does whole of production for JCRT, the newest brand from former Anna Wintour darlings Jeffrey Costello and Robert Tagliapietra. In 2020, Resonance ran an accelerator program for upstart Black designers, all of whom are still using its platform, according to the company. But the startup’s consumer-facing products, such as the blockchain portal it’s built for RM Green(e), give it a way in the with the ultra-savvy new growth of shoppers, who may notice its tech enabling their favorite brands in the manner of tools furnished by payments companies like Square or Klarna: there, recognizable, though not obtrusive.
The demand for clothing made by designers who are attuned to their environmental impact is here, from both shoppers and regulators. At the ongoing COP26 summit in Glasgow, textile production, a $1.5 trillion market that makes up 1.35% of global oil production by processing more than a hundred million tons of fibers annually, came under fire. Galvanized by the nonprofit Textile Exchange, 50 fashion industry companies including legacy brands like Gap, Ralph Lauren and H&M signed a request to governments to offer tax incentives to organizations using “environmentally preferred materials.” Such materials are defined as “those from certified, verified sources that can be traced from raw material to finished product, and that are connected to data-driven environmental impact reduction” and include Resonance’s.
Whether all this makes a difference depends on whether investing in sustainable fashion will in fact become viable for the average person—a $158 tech-enabled top doesn’t exactly qualify as haute couture, but that’s not chump change either. While the advocacy of companies like H&M, whose “Conscious” line blouses run in the $20-$40, is promising, getting fast-fashion companies to reveal the details of their supply chain operations will be difficult.
“If you’re spending $250 on a shirt, you’re already into that bracket of caring about what you look like, and potentially about where your product comes from. Anyone selling a shirt for $250 can certainly engineer that product in a sustainable way,” says Gianpaolo Vignali, a fashion business professor specializing in the supply chain at the University of Manchester. While Dr. Vignali was quick to laud the opportunities represented by the Rebecca Minkoff and Resonance partnership, he expressed concern about the degree of background knowledge required for the average consumer to make sense of the information contained in the Resonance portal: brands should expect most consumers to spend 30-60 seconds engaging with product information, Dr. Vignali suspects. “Everything that goes on in the background, with blockchain for example, is fantastic. That’s great. That really just acts for auditing purposes for those that want to delve deeper,” he adds.
Gheorghe, Resonance’s CEO, was adamant that despite their lip service to sustainability, brands like H&M will continue to contribute to the problem of environmental degradation until the gamut of their supply chain activities are made transparent, and public; until that happens, consumers shopping at lower price points may be left in the dark. “To reach every customer around the world, it would take retailers like H&M choosing to stop destroying the planet with their current supply chain system and transform their business with the Resonance platform,” Gheorghe wrote in an email. Of course, Resonance is not the only company capable of providing such transparency. That bigger companies can devise their own strategies for doing so without involving Resonance at all is totally within the realm of possibility.
But for consumers who are ready to spend a bit more, and who are already read-up on fashion sustainability efforts—or those who like the cachet that investing in them holds—Rebecca Minkoff’s efforts are a compelling reason to opt for the brand over others that have not as readily invested in attempts at transparency.
“For a company like AllBirds that launches with something like this as their mission statement from the beginning—people are flocking there because from the beginning they’re identifying that brand as such,” Uri Minkoff says. Rebecca Minkoff’s customers, on the other hand, are witnessing a brand in flux, one that is straddling the line between the old guard and the new.
Stocks fell on Wednesday, with the Dow Jones Industrial Average losing over 200 points after October’s consumer price index jumped by the highest rate in 30 years, adding to investors’ fears that high inflation could derail the recent market rally.
The Dow fell 0.7%, over 200 points, while the S&P 500 declined 0.8% and the tech-heavy Nasdaq Composite lost 1.7%.
The consumer price index—a key measure of inflation—rose 6.2% in October compared to a year ago, its fastest pace of increase in 30 years, according to data from the Bureau of Labor Statistics on Wednesday.
The latest report showed that inflation isn’t slowing down: Spooked investors dumped high-flying tech stocks and sought refuge in hedges like gold and bitcoin, while Treasury yields also spiked.
Following the latest inflation data, the market is now betting that the Federal Reserve may need to raise interest rates sooner than expected, with the first rate hike expected as early as July 2022.
Shares of Big Tech stocks plunged as investors turned away from growth stocks on Wednesday: Amazon, Google-parent Alphabet and Facebook-parent Meta all fell by around 2%.
Tesla regained some of its losses this week after shares rose 4.3%, while rival electric vehicle maker Rivian saw shares surge 29% after going public at a $90 billion valuation—the biggest U.S. IPO since Facebook in 2012.
“Inflation remains stubbornly high, to the surprise of many that expected prices to come back to earth sooner,” says Ryan Detrick, chief market strategist for LPL Financial. “The truth is you can’t shut down a $20 trillion economy and not feel some bumps as it restarts, but we are hopeful the supply chain issues will resolve over the coming quarters and inflation should calm down as well.”
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“The financial markets had accepted the fact that prices would be climbing, but with every passing month inflation has only crept higher,” according to a note from Hilltop Securities on Wednesday. “Between now and year-end, demand for holiday goods will surge, while transportation-constrained supply struggles to keep up.”
This is the second down day in a row for stocks. Before Tuesday and Wednesday’s losses, the S&P 500 had notched eight consecutive days of gains—its best streak in over two years—and closed above 4,700 for the first time. Markets had gotten a boost from strong corporate earnings, but investors clearly remain fearful of high inflation, which will be exacerbated by labor shortages and supply chain issues through the end of the year. The Federal Reserve announced last week that it would begin reducing the historic level of stimulus it has been providing markets since the Covid-19 pandemic began. Fed chairman Jerome Powell said high inflation was “expected to be transitory.”
Electric Vehicle Startup Rivian Hits $90 Billion Valuation In Biggest IPO Since Facebook (Forbes)
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Mastercard has partnered with three digital asset platforms in Asia to issue payment cards that will allow consumers in the region to convert bitcoin and other cryptocurrencies into fiat currencies.
Mastercard announced on Tuesday that it’s joining hands with Hong Kong’s crypto finance firm Amber Group, Thailand’s crypto exchange Bitkub and Australia’s trading platform Coinjar. The partnership intends to introduce cryptocurrency-linked credit, debit and prepaid cards for both individuals and businesses across Asia Pacific. Cardholders will be able to instantly convert bitcoin and other digital currencies into fiat currencies, which can then be spent online or offline with any of the merchants that accept Mastercard payments.
The collaboration comes as interest in cryptocurrencies soars to an all-time high in Asia Pacific, Mastercard said in a statement. The U.S. payment behemoth discovered in its latest survey that 45% of consumers in the region are considering using the digital coins within the next year, higher than the global average of 40%.
“In collaboration with these partners that adhere to the same core principles that Mastercard does—that any digital currency must offer stability, regulatory compliance and consumer protection—Mastercard is expanding what’s possible with cryptocurrencies to give people even greater choice and flexibility in how they pay,” said Rama Sridhar, Mastercard’s executive vice president who oversees digital partnerships in Asia Pacific, in the statement.
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Mastercard is bolstering it services as its main rival Visa also seeks to grab a dominant share of the emerging cryptocurrency payment market. Last month, Mastercard announced it had teamed up with New York-listed Bakkt, a digital asset platform spun off by Intercontinental Exchange. The partnership promises to allow U.S. banks and merchants on Mastercard’s payment network to offer crypto-related services, such as providing customers with bitcoin as rewards.
In April, Mastercard joined hands with Gemini, the crypto exchange backed by the billionaire Winklevoss twins, to launch credit cards in the U.S. The move came just a month after trading platform Crypto.com announced its partnership with Visa to roll out a similar service.
Despite Robinhood facing growing skepticism from Wall Street analysts, famed stockpicker Cathie Wood of Ark Invest recently doubled down on her investment in the popular stock trading app, shares of which tumbled more than 10% on Wednesday after reporting a huge third-quarter revenue miss.
Shares of Robinhood, which went public to much fanfare in July, are down 12%—below its IPO price of $38—since reporting lackluster third-quarter earnings late on Tuesday.
Cathie Wood, the founder and CEO of $75 billion asset manager Ark Invest, purchased a total of 2.24 million shares of Robinhood in various funds on Wednesday, a position worth roughly $80 million at the time.
The innovation investor is still clearly bullish on Robinhood, buying the dip in the stock despite the company’s big revenue miss, which was in large part due to a sharp drop in crypto trading on its platform, and a slowdown in user growth.
Wood added to her position in Robinhood—she has been buying the majority of shares for her flagship fund, the ARK Innovation ETF—even as Wall Street analysts grew increasingly negative on the company following its troublesome earnings report.
Analysts across the board slashed their price targets for Robinhood on Wednesday, including those at JPMorgan, Goldman Sachs, Piper Sandler, Barclays and Deutsch Bank.
As experts point out, investors are growing increasingly concerned that without a major market event—such as the GameStop frenzy in the first quarter or Dogecoin in the second quarter—Robinhood’s trading activity and revenue will likely continue to take a hit.
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Robinhood’s earnings showed that more users left the app or sold off holdings than opened new accounts during the third-quarter, a worrying sign for a company that boasted enormous user growth in 2020 and the first half of 2021. Monthly active users dropped to 18.9 million from 21.3 million last quarter, according to Robinhood, while the number of overall funded accounts fell from 22.5 million to 22.4 million. There are certainly emerging signs that some users may be quitting the platform and moving to competitors like Fidelity of Schwab, which could account for the slowdown in account growth. In recent weeks, there have been dozens of different posts on finance Reddit forums with users posting screenshots showing that they left Robinhood for a new brokerage.
Though Wood has continued to build a position in Robinhood since it went public in July, the brokerage still accounts for just 1.33% of her flagship Ark Innovation ETF.
Despite some skepticism from Wall Street, Wood’s strategy focuses almost exclusively on investing in “disruptive innovation.” She remains especially bullish on cryptocurrencies, she told Forbes on Wednesday, firmly believing that regulation won’t hamper the innovation that is taking place. Wood also bought the dip in Twitter stock on Wednesday, adding a position worth about $60 million, as shares of the social media company fell nearly 11% after its earnings showed a slowdown in user growth.
Star Stockpicker Cathie Wood Dismisses Hyper Inflation Risk And Pitches Zoom And Invitae During Forbes’ 2021 Wealth Summit (Forbes)