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28 February 2017 | Issue 5
Market corner

by Ghillie Little
ghillie@sbc.london
Outperformer
The power of P2P lending
Peer-to-peer lender Funding Circle thought Brexit would mean curtains for the firm and they have been pleasantly surprised. Funding has been pouring into the firm, originating more than 530 million pounds in loans during the second half of 2016. This 50% jump from the same time period last year has made the company profitable for the first time ever. TBD on how long the run will last. As it stands the UK continues to be Europes largest P2P lending sector with no signs of slowing down.

Neutral
Music to investors' ears
Music platform SoundCloud Ltd boldly goes where no on-demand music service has gone before and has cut subscription prices in an effort to convert more users into paying customers. Not only is SoundCloud competing with the likes of Spotify and Pandora but the playing field now includes tech giants such as Apple, Amazon and Google who are dipping their toes in a space where they can easily absorb the royalty costs that smaller providers can't. The cheaper option combined with a stronger focus on advertising revenue is definitely a step in the right direction as the space continues to become increasingly competitive.

Underperformer
Auditing the auditor
Big four PwC comes under fire with an inquiry into its audit of business tech firm Redcentric. The Financial Reporting Council (FRC) is looking into four other cases involving PwC. After several high-profile accounting malpractice cases have made headlines over the past few years, the auditing world is coming under heightened scrutiny. PwC is not alone. 
 
FinWatch
Good things come to those who wait
Move aside SnapChat - Aramco is expected to be the biggest IPO the world has ever seen. Whether overvalued or not, this is an IPO to watch. 

Notable Headline


Mashable

...three cheers for Annie.

Reputation

A lot of cooks in the kitchen...
Another mega-merger involving the UK has hit rough waters. The London Stock Exchange and Deutsche Börse have been teasing us with a £21bn merger for quite some time now and a tease is all it may turn out to be. The EU Commissioner for Competition Margrethe Vestager has thrown a spanner in the works demanding that LSE divest its stake in the Italian income trading platform MTS, indicating "overlaps between the merging parties".

Whether the block is a blessing in disguise, the unexpected demand does not bode well for the merger and begs the question - how do those who are pro-business navigate these uncertain times? Brexit has created a business environment with a lot more cooks in the kitchen. We greatly adimre LSE's stance of "business as usual". The company remains strong and in steady hands and will continue to be so.

"It takes 20 years to build a reputation and five minutes to ruin it"
...said Warren Buffett. It's that time of year when he bestows his annual wisdom on us all and we either lap it up with "that makes so much sense" enthusiasm or nod politely thinking "tell me something I don't know" and continue on. Whichever camp you reside in, one cannot deny the reputation that Buffett has built and maintained over the years is both impressive and affective. The 'keep it simple', 'tell it to me straight', 'no fluff' attitude may seems like a no brainer but I would argue he has it down to a fine art . There is a lot more going on than it appears, he is a great example of the balance one needs in the world of public relations. Keep it up Buffett. 
 
All eyes on Uber
We don't look to write about Uber each week, but the company can't seem to stay out of the news. We have seen waves of negative publicity hit Uber from all sides. Most recently, a Google lawsuit and injunction over trade secrets and stolen intellectual property as well as a sexual harassment and unprofessional business practice scandals. There's a fine line between challenging the mold in the name of innovative breakthroughs, and crossing the legal line. I'd say hiring Eric Holder is the way to go. It isn't going to lead to overnight redemption, but it is a move in the right direction. The resignation of SVP Amit Singhal drew further attention. Whether or not he is the sacrificial lamb, Uber needs to clean house and has a long way to go.

Forgivable f*ck up


And the Oscar goes to...

...PwC for redefining the art of a plot twist.
As far as accounting blunders go - worse things have happened. After 83 years on the job, we can let this one slide. 
Corridors of power

by Nicholas Brown
nicholas@sbc.london
Macron: do no wrong
In what may be a glimmer of light in the murky swamp otherwise known as modern European politics, independent French presidential candidate Emmanuel Macron is starting to look like a present day caped crusader. His rival’s ‘legal troubles’ (AKA alleged nepotism) is proving to be almost a godsend for his political team as he continues to narrow the gap with fiery National Front leader, Marine Le Pen. François Fillon, in what could almost be called masochism, seems determined to jump onto his own political sword as his internal policy of family employment continues to haunt him. According to a recent Odoxa poll, Macron would now defeat Le Pen by a margin of 61 percent to 39 in the run-off ballot, compared with 57.5 percent to 42.5 for Fillon. Although of course, it ain’t over yet... Two months to go.

The latest from the Coiffured-in-Chief
He Who Shall Be Obeyed and the finely tuned machine behind him (nothing to see there), is set to make his first address to Congress Tuesday night. In what is sure to be the best speech ever (really big, really terrific), expected announcements look set to be really amazing: lots of jobs, lots of walls, and...drumroll... lots of military spending. Repealing Obamacare is also set to be on the menu, although what it will be replaced with is anyone’s guess at this point, maybe something funded by lower taxes? They’re terrific. Gotta have them.
 
Major intervention
In a blast from the past, the gentleman sandwiched between the louder voices of Maggie and Tony, has burst back onto the scene. In a warning to Mrs Red-White-and-Blue-Brexit, otherwise known as the UK’s current Prime Minister, Major believes that floating off into the Atlantic towards prosperity and freedom away from all those Johnny Foreigners with their non-bendy bananas may not be the dream that has been promised by the UK’s no.1 Game of Thrones fan, otherwise known as Michael Gove. Principally, Sir John has warned that Brexit is an “historic mistake” and warned May that she must not create “unreal and over-optimistic” expectations about leaving the EU, especially in regard to the future of the NHS and the welfare state.

Who's having a worse week than you?


Claudio Ranieri...

His dreams may have died but the future remains bright for the former Leicester Manager.

Silicon passage


by Louis Rynsard
louis@sbc.london
It's coming home, it's coming home, it's coming, Google's coming home
Thought you were safe huh? You knew you needed Google for your searches, your calendar, your emails and your maps, but never did you think it would be there, in your house, listening to you. All. The. Time. Well, think again! Google Home is launching in the UK this June.
 
Can Alexa’s sweet, soothing and sexy (if you’re into that kind of thing) voice hold the market now that Google is creeping up your bannister, and can actually have conversations with you? Sales figures from the US imply consumers prefer Amazon to Google. But, with Home’s access to Google search and the company’s track record in giving you what you want, in a way you want, this fight is far from over.

Show me the money!
Blackberry, the previous King of Mobile, has announced that it’s back babydoll! And with Nokia making a comeback, the tech world is getting all excited and the hype is rising. Yet, how many times has this happened? Something cool and new (or nostalgic) is announced... we lose our collective sh*t... and then it never turns a profit.

The simple truth is converting tech hype into real money needs something to be more than cool. It needs to answer a question and make things work better. Great innovations fulfil a need we didn’t know we have (think Facebook or Apple) and work out how to make money in doing so. Tech needs to fulfil real needs, not just be cool (though please do keep getting me excited, techies). Watch out, just because something is cool, doesn’t mean it will make investors any money (looking at you,Twitter)!

Handling expectations
Speaking of everyone losing their sh*t Alphabet-owned Boston Dynamics today released a video of their new robot, Handle! At an impressive 6’6 and with the ability to move with speed, ability and over rough terrain this is shaping up to be a real look into the future. Or in the words of the company’s own CEO “a nightmare-inducing robot.”

But before everyone runs for the bunker don’t worry, it's still a prototype – apocalypse not quite yet. However, on a serious note, we are fast approaching a world where robots can do basically everything we can think of. The impact of this on jobs and society cannot be overstated.

Hero of the week


Pancake day!!!

...because no one knows how it started but it's the best excuse to head home early. 

C-suite steer


by Lief Anya Schneider
lief@sbc.london
There cannot be a crisis next week. My schedule is already full.
… so, famously, said Henry Kissinger. A man who was, in fact, permanently prepared for crisis.

It is human to believe it will never happen. No leader wants a crisis. We all think it can’t happen to us. Which, of course, is not true. The story of not preparing for a crisis is, one of “Oh why has this happened, if only we had...” It’s Blanche in Whatever Happened to Baby Jane: “You wouldn't be able to do these awful things to me if I weren't still in this chair,” they moan to the media. And the media echoes Jane’s wry riposte: “But you are, Blanche! You are in that chair!”  

No one wants a crisis à la Wells Fargo’s corrupting incentive scheme, or Samsung’s exploding phones or one the countless data breaches in a host of organisations. Or the “big cringe” crisis – the “you had one job” PwC partner with the wrong envelope. No one can seriously say the company will immediately lose business. But, because of poor public relations handling, it will stick. And stick. And stick. Mark my words “doing a PwC” will enter the lexicon.

Public relations practitioners are forever writing tedious preachy lists on how to deal with a crisis, yours truly may have been guilty of this. Who needs them? So, in the spirit of difference, Dear Reader, here’s how to make a reputation crisis worse and maximize it as much as possible:
  1. Don’t have a crisis plan mapped. It’ll all work out on the day. No doubt. For you were born with the knowledge of how to handle a braying mass of media door-stepping and goading you. Everywhere you go. For a week. Non-stop.
  2. Don’t empower anyone to react quickly in a crisis situation. Trust no one but, at the same time, freeze and do nothing yourself.
  3. Shrug it off. Tell the public to grow up and get over their busybody condemnation.
  4. Bring up other people’s mistakes. Throw your employees under the bus, don’t take personal responsibility.
  5. Dither. Keep on giving conflicting messages.
  6. Don’t worry about context. Just “be yourself”. Don’t worry about media training, or getting in ‘expensive’ consultants to develop a plan or support. Stakeholders, regulators and employees will always just love and forgive you, just like Mummy.
  7. Don’t do much to communicate with your stakeholders in the meantime. Don’t waste time sharing thinking with the wider world. Don’t build a reputation for your firm. Just concentrate on the business day-to-day. Be a company so boring, or so unknown, that the only time you get invited to anything glamourous it is to administer, say, the Oscars voting. And then be so grateful for the opportunity, you mess it up.
  8. And do not forget the most important thing: lie, lie, lie! No one ever gets caught out, just ask the nice, totally still employed people at Enron. 
I was at a certain restaurant near the Albert Bridge (you may know it) one Friday evening a few weeks ago. A lovely group of about ten friends nearby – thirty-somethings, professional, good-humoured, nice to each other. At one point, all glasses were filled and a pleasant chap stood up and raised his. “To freedom,” he said in a loud, sonorous, happy voice. “To my escape from PwC. I hereby swear that I will never work in that hideous prison again.”
 
Now, if you do know that restaurant, you’ll know – that’s really bad PR.
Poem of the week
Nothing scary this week but beware

Picked by Lief Anya Schneider
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