Tag: Business and finance

LONG hours have been the bane of the legal profession for ages; few of them involve thrilling courtroom antics. As a junior corporate lawyer at Davis Polk & Wardwell, a law firm in New York, John Bick remembers spending most of his waking hours poring over contracts looking for clauses that could complicate or kill off a deal. Even once he became a partner he still had to pitch in on due diligence for large transactions. In 2015 nearly a third of British lawyers were looking to leave the profession, according to the job searches of more than 1,000 of them by Life Productions, a career-change consultancy, perhaps because of the drudgery.

Such dissatisfaction may recede in future. Now on his firm’s management committee, Mr Bick is drafting in artificial intelligence (AI) to do the gruntwork—like many others at top law firms in New York and London. The shift could transform lawyers’ work and slash costs for clients.

Prestigious firms make their money by throwing large…Continue reading

IF A girl in a poor country goes to school, she will probably have a more comfortable life than if she stays at home. She will be less likely to marry while still a child, and therefore less likely to die in childbirth. So, not surprisingly, there is an Indian charity that tries to get girls into school and ensure they learn something, and there are Western philanthropists willing to pay for its work. What is noteworthy is how they have gone about this transaction.

On July 13th the Brookings Institution, a think-tank, presents the results of the world’s first large development-impact bond, which paid for girls’ education in the northern Indian state of Rajasthan. In this novel way of funding charitable work, a financial institution gives money to a charity, which tries to achieve various specified outcomes. If a neutral arbiter rules that it has succeeded, a donor or philanthropist repays the investor, plus a bonus. If it fails, the investor loses some or all of its money.

This is…Continue reading

Stretch targets

BOSS wanted for firm with tarnished reputation in troubled industry. On the face of it, the vacancy to become chief executive of Lululemon doesn’t ooze appeal. It is a clothing company, an industry that has been battered in recent years. And its previous two bosses have both left under a cloud.

In February its chief executive, Laurent Potdevin, resigned for conduct that the firm said fell short of its standards on integrity and showing respect for all employees. Industry observers considered his sudden departure to fit into a succession of corporate resignations sparked by the #MeToo movement against impropriety in the workplace. Mr Potdevin’s exit came three years after Lululemon’s founder, Chip Wilson, left the firm after more than a decade running it. Mr Wilson won notoriety for his on-air proclamation in 2013, after the company had to recall nearly a fifth of its yoga pants for being too sheer, that some women’s bodies “just don’t…Continue reading

IN THE sixth episode of “The Apprentice”, a reality-television show first broadcast in 2004, Donald Trump, as always, fired a contestant vying for a job in his company. She was, he said, the worst negotiator. And she had failed to fight back when belittled by her teammate. The episode was entitled “Tit For Tat”.

That same principle of reciprocity guides Mr Trump’s trade policy as president. And it is animating his tariff war with China. On July 6th America imposed 25% duties on Chinese imports worth about $34bn. (Another $16bn-worth will be hit in due course.) China responded by slapping tariffs on a similar amount of American goods (including a cargo of soyabeans aboard the Peak Pegasus that arrived at the port of Dalian mere hours later).

The two sides disagree, however, about which is tit and which tat. China believes it is responding dollar-for-dollar to American aggression. But America too believes it is retaliating: punishing China for trade and…Continue reading

WITH his flowing locks and hip clothes Adam Neumann, co-founder and chief executive of WeWork, looks less like a property baron than the frontman of a rock group. He speaks expansively on the subjects of character, destiny and God. His four-year-old daughter wanders through his office during an interview with The Economist. Yet Mr Neumann, a veteran of the Israeli navy, also has a reputation for being an intense and demanding businessman. Both sides to his character come together in WeWork. Mr Neumann thinks of his property startup as a profit-making version of Israel’s famed communal farms—a sort of “capitalist kibbutz”.

Shaking up the market for commercial offices globally is the firm’s mission. WeWork’s “co-working” offices, in more than 250 locations and over 70 cities worldwide, are a blend of small private spaces and large public areas designed to encourage a sense of community among its users. The firm rents huge chunks of space from landlords, kits them…Continue reading

A FORESTED village in Jharkhand state, eastern India, Narotoli is home mainly to adherents of Sarna, a nature-worshipping tribal religion. In more ways than one, it has long been off-grid. Drive past a police checkpoint a few miles away and you are in territory loyal to “the guys”, a euphemism for Maoist guerrillas. That makes Narotoli more marginalised than most places. A few months ago it became one of the last in India to benefit from a push by Narendra Modi, the prime minister, to supply electricity to all the country’s villages. But the power lines are so “reliably unreliable”, says an Indian executive, that they might as well be washing lines.

Two years before the grid arrived, however, Mlinda, a social enterprise, had set up a “mini-grid”, a bank of batteries charged by solar panels and hooked up to homes, to guarantee round-the-clock power independent of the national network. Mini-grids are different from the rooftop solar panels and batteries (sometimes linked up in…Continue reading

There goes $242m

EVEN by the standards of Hollywood, it sounds an unlikely pitch—an app that offers almost unlimited access to cinemas for $10 a month. The service, called MoviePass, pays cinemas full price for nearly every ticket that filmgoers use. By design, it loses more money the more people use it. The ending seems to be predictable. But might it have a twist?

MoviePass has burned far more cash even than its executives anticipated since introducing the unlimited plan in August last year. It has attracted more than 3m subscribers and will lose “at least” $45m this month, according to a filing to the Securities & Exchange Commission on July 10th by Helios & Matheson, a data firm which bought a majority stake in MoviePass last year and now owns 92% of it. Helios & Matheson reported it had lost $242m in the nine months to June 30th and that its monthly losses would increase as the service becomes more popular. The firm wants to issue more shares and…Continue reading

THE Advanced Manufacturing Research Centre (AMRC) in South Yorkshire, England, looks like the very model of a modern industrial site—bright, shiny, airy and clean. In June 1984 it was the site of a traumatic moment in British history—the Battle of Orgreave, when picketing miners clashed with police as they tried to stop lorries collecting supplies from a coking plant. The incident symbolised Britain’s post-war record of industrial decline and bitter strikes.

The old coking plant is long gone. In its place is a promising attempt to create jobs for a new generation of workers, and to tackle an ancient and ridiculous British class divide. An important part of this divide is that universities have long been seen as a place for academic subjects, calling for essays and equations. People who got their hands dirty making stuff did not go to college. But as of last autumn apprentices at the AMRC have been able to study for degree courses. When they graduate they will have an engineering degree from…Continue reading

DEAR chief executive. First, congratulations. You have decided to float your firm’s shares on the stockmarket. After years of toil behind the scenes, it’s time for the big stage. You probably feel pretty good right now, especially after those insightful bankers from Goldman Sachs said that your firm is one of the most impressive that they have ever seen in their careers and that they are generously going to give you a discount on their normal fee and charge you only 4% of the IPO proceeds. Unfortunately, though, things will now get much worse before they get better. An IPO is like having children: months of waiting, an agonising delivery and afterwards your world is never the same again.

At least you are not alone. American IPO volumes are at their highest level for three years. In New York Dropbox and Spotify recently listed. Even Michael Dell, who took his computer firm private in 2013 and grumbles about the myopia of stockmarkets, is taking his firm public again, through a merger. In China a…Continue reading

ECONOMISTS think prices, like spilt ketchup, are sticky. They move only slowly as firms digest economic conditions. Financial markets are an exception. Computerised trading by thousands of participants means prices, especially of currencies, can move in a McFlurry.

Since The Economist last updated the Big Mac index (BMI), our lighthearted guide to currency valuation, burger prices have remained constant in 19 of 44 countries. But every currency has shifted in value (see chart 1). Our index uses a nugget of economic wisdom called purchasing-power parity: currencies should adjust until goods cost the same everywhere. If, once converted into dollars, Big Mac prices vary, one or other currency looks dear. Big movements in exchange rates, without similarly supersized shifts in burger prices, can send a currency up or down the index.

That explains why the Argentine peso has been the biggest mover since January. Then, it looked 25% undervalued compared with the dollar; today, that has swelled to 51%. The peso tumbled…Continue reading