Only 20 IPO companies have been founded and led by women, how to become rich, and the market outlook for 2021
What a week to start off 2021, and unfortunately, I don’t mean it in a necessarily good way. First thing when getting back to work on Monday, both Slack and Notion were down. Then everything that has been going on in Capitol Hill since Wednesday. During this time, please remember to be kind to yourselves. Breathe, hug someone you live with, call a friend or a family member, go for a walk, listen to a podcast (in this week’s newsletter I’ve included my favorite ones), do something that makes you happy every day.
In this week’s newsletter, we learn that only 20 women have founded and led their companies through an initial public listing, who the new world’s richest person is, and take a look at the market outlook for 2021. I hope you enjoy this edition of In The Money.
Only 20 women have founded and led an IPO company 🤦🏻♀️
The New York Stock Exchange was founded, in 1817. Every year hundreds of companies go public. However, during these 204 years, only 20 have been founded and led to an IPO (initial public offering) by women. Eighteen of them in the past seven years, and five of them in 2020. This while 2020 was a record year for IPOs, with 442 as of December 14, according to research by Business Insider and information provided by Nasdaq.
The fastest way to achieve gender equality is to close the entrepreneurial gap and support more female founders. That's because through the traditional corporate ladder women aren’t achieving powerful enough positions. As we saw in last week’s newsletter, only 41 out of the 500 Fortune 500 companies have a woman as CEO.
Women and minority entrepreneurs have been held back, partly because fewer than 13% of all VC investment decision-makers are women, and less than 3% of all VC money is allocated to all female-founded companies.
How to become the world’s richest person 💰
Elon Musk is now the richest person in the world with a net worth of more than $185 billion. The increase in Tesla’s share price on Thursday pushed Musk past Jeff Bezos, who had been the richest person since 2017. Bezos is currently worth about $184 billion. Musk’s rise to the top has been the fastest in history, Musk started the year 2020 worth about $27 billion, and was barely in the top 50 richest people. Elon responded to the news by tweeting “Well, back to work …”.
Circling back to the topic above, currently, the richest people on the planet, all men, are company founders – Elon Musk, Jeff Bezos of Amazon, Bill Gates of Microsoft, and so on. The only way to generate this massive amount of wealth is to start a company. Personally, I hope to see a female entrepreneur among the top richest people. I often talk about the power of role models. The realization that “if she can do it, I can do it too” is so important.
Speaking of female entrepreneurship if you are a female founder and are looking to raise funding for your startup, Female Founders is offering a three-month online accelerator program starting in April. The application is open until the 31st of January to take part in their 5th batch starting in April. The program includes 45 hours of online training with top-notch speakers and a personal mentor. Find out more and apply on their website, here.
Please note that I am part of Female Founder’s Ambassador Network. Please feel free to reach out to me if you have any questions.
The battle for audio 🔈
On December 30, 2020, Amazon announced that it acquired the podcast network Wondery – the network behind podcasts such as “Dirty John” and “Dr. Death.” In September Amazon Music added support for podcasts, including its own original shows. Amazon is relatively late to the podcast market but will now have the support of a popular podcast maker to try to catch up.
Many companies are making big bets on podcasting. Spotify has made a series of acquisitions including podcast network Gimlet, SiriusXM, and Stitcher while The New York Times acquired Serial Productions.
The latest move in the social audio space came on Monday when Twitter announced that it had acquired Breaker, a social broadcasting app. Breaker will help Twitter to work on its new audio-based networking project, Twitter Spaces. The Breaker news was followed by an announcement on Wednesday that Twitter had acquired the Icelandic creative agency, Ueno.
My favorite Investment and Business Podcasts 🎧
Speaking of podcasts, here’s a list of my personal favorite business and investing related podcasts. I’ve also included some of my favorite episodes. I would love to hear your favorite podcasts - please feel free to share in the comments or on Twitter, tag me at @marianneoster.
Invest Like The Best, Patrik O’Shaughnessy interviews inspiring people in the fields of business and investing. My favorite episodes include the ones with Cathie Wood and Lauren Taylor Wolfe.
We Study Billionaires, as the title says, the podcast hosts interview billionaires, from Warren Buffett to Howard Marks.
How I Built This, Guy Raz explores the people and stories behind the world’s best companies. My favorite episodes are with Katrina Lake, founder, and CEO of Stitch Fix, and Tobi Lutke, founder, and CEO of Shopify.
Knowledge Project, this podcast hosted by Shane Perris might is my favorite podcast. Perris interviews brilliant people to discover timeless ideas and insights. While not every episode is elated to business or investing, each episode will upgrade your thinking in one way or another. My favorite episode is with Naval Ravikant.
20 Minute VC, If you are interested in Venture Capital and entrepreneurship, then Harry Stebbing’s 20 Minute VC is a must-listen. Every episode. Period.
Can I get that with oat milk? 🥛
Oatly, the vegan milk brand is planning a 2021 initial public offering that could raise $1 billion. Oatly is backed by celebrities such as Oprah Winfrey and Natalie Portman, has hired Morgan Stanley, JPMorgan Chase, and Credit Suisse to manage the offering. According to sources, the company’s valuation will depend on the status of the economy in the face of the uncertain Covid pandemic.
Bitcoin only goes up 📈
Please don’t take the headline seriously, it comes from the meme “stonks only go up” (and yes stonks, an intentional misspelling of stocks). Anyway, we are seven days into 2021, and Bitcoin has already gained over 30% year to date. On Thursday the cryptocurrency smashed through a new record of $40,000.
Predicting the Future 🔮
While I won’t do any market predictions for the year ahead, I dug into someone that has. More specifically I’ve looked into JP Morgan’s Market Outlook for 2021. As a heads up, this section might be more technical than what I usually write, but let’s try to break it down.
First looking back, the rapid recovery from the bear market caused by Covid-19 can be explained by some technical factors. For example, since 2011, the pace of US buybacks and M&A (mergers and acquisitions) have exceeded the pace of primary and secondary US equity issuance. This results in the stock of investible public equity not growing as it normally would, and the supply constraints accelerate the market’s rise.
Second, it’s hard to escape the pervasive impact of zero interest rates. The third of all developed markets sovereign debt has yields below zero in nominal terms, while 75% has negative real yields (i.e., rates below the rate of inflation).
All this results in high equity valuations. According to JP Morgan, if you’re looking for bargains, they’re concentrated in industries heavily affected by the pandemic: energy, airlines, banks. Here’s something that I found interesting: 90% of the S&P 500 market cap is now based on intangible assets (this includes R&D, intellectual property, software, etc), which makes historical comparisons hard. For comparison, intangible asset shares were 20% in 1975. This means that the P/E ratios (see definition below) of the asset-heavy US corporate sector of the 1960s-1980s might not be the best comparison for today’s asset-light, less capital-intensive S&P 500.
With all the above in mind, the equity market increases which took place at the end of 2020 will probably limit market gains to ~10% in 2021. The overall consensus for the year is bullish.
You can read the full JP Morgan Eye On The Market Outlook 2021 report here.
Definition
P/E ratio or the price-to-earnings ratio relates a company's share price to its earnings per share. It is used to value a company. A high P/E ratio could mean that the company’s stock is over-valued, or that investors are expecting high growth rates in the future.
Woman of the Week
Jane Fraser
In February, Jane Fraser will make history as she becomes the first woman to lead a Wall Street Bank. She will succeed Mike Corbat as Citi’s Chief Executive Officer. She will be overseeing the banking behemoth with more than 200,000 employees spread across almost 100 countries and a market value of over $110 billion.
Fraser joined Citi in 2004 in the Corporate and Investment Banking division. Since then she has held significant roles within the company, most recently as CEO of Global Consumer Bank. Prior to joining Citi, Fraser was a partner at McKinsey & Co.
Born in Scotland, Fraser graduated with an M.A. in economics from Cambridge University. After graduation, she worked as an M&A analyst at Goldman Sachs, London, and then as a brokerage associate for Asesores Bursátiles, a Madrid-based securities broker. After which she enrolled at Harvard Business School, earning her MBA in 1994.
Throughout her career, she has put a lot of emphasis on her private life too. As a mother of two young children, she balanced a career as a Partner at McKinsey & Co.
“There is some crazy pressure on women, and on men, to almost be superwoman or superman, and that’s just not realistic. The advice to everyone is, you can have it all, but don’t expect to have it at exactly the same time. Your career is going to be measured in decades, and you’ll probably have many careers in your life, so make sure that you really enjoy each period of your life and make the most of it. Don’t try and achieve everything at the same time and put so much pressure on yourself”
In an interview with the Financial Times, she also said that being a woman has been helpful in her leadership style. “You are a bit different from [other] leaders, immediately you look different. She continued stating that she will use her seat as a woman to push gender diversity forward because it’s good for business and because it makes for a healthier culture.
The appointment of the first woman to lead a Wall Street bank is a huge feat for the historically heavily male-dominated banking industry.
Thank you so much for reading this week’s newsletter. I would love to hear your feedback and please share this with a few friends you think would find this interesting. Have a lovely weekend 💜