It was a week of stakeouts. But while most of the media was focused on the comings and goings of special counsel Mueller in Washington, our attention was on the St. Regis in New York where Lyft held its IPO roadshow stop. You can see our paparazzi photos here.
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In other news, JPMorgan said this week that its investment bank would be scrapping its annual college-campus visits for recruiting. Instead, the bank will ask its next generation of workers to apply by submitting video interviews and taking online behavioural-science tests. It’s a change intended to widen the funnel for intern candidates at a time when Wall Street is grappling with how to recruit and retain more diverse workers.
College career events have long been how investment banks recruit for interns and analysts, using the events to meet candidates and develop a pipeline of young talent. But over the years JPMorgan has found that by recruiting only at elite universities such as Harvard and UPenn, it wasn’t getting as diverse a candidate pool as it wanted. It makes a lot of sense. The way the traditional recruiting model works is that a group of alumni from, say, Cornell, go back to Ithaca and interview students. It’s where “unconscious bias” slips into the interview process. By nature, humans are drawn to others who are like them. It could mean screening candidates who don’t live in the “right” neighbourhood or have foreign-sounding names, and instead hiring those who were in your fraternity or played club soccer.
By avoiding campus visits, JPMorgan is hoping to eliminate some of this bias and instead focus on finding candidates with the right set of attributes that will make them successful at the bank – characteristics like grit and curiosity – that won’t necessarily show up on a résumé.
JPMorgan isn’t alone. A few years ago UBS rolled out an algorithm to help with its candidate screening alongside human reviewers. Goldman uses personality tests and software to mine résumés for attributes such as teamwork, integrity, and judgment as a way to find candidates who may not attend Ivy League schools.
For the banks it’s definitely a step in the right direction. While I don’t believe these types of tests will stop the legions of Wharton students who have been training to be bankers since they were in diapers from joining Wall Street, it should open up new opportunities to supersmart finance majors from, say, Ohio State, who maybe never dreamed before about working at JPMorgan or Goldman.
Data is making it easier, and cheaper, to make smart hiring decisions. Particularly in a world where Wall Street is struggling to compete with Silicon Valley, hedge funds, and private equity for top talent, banks would be wise to use whatever means they can to cast a wider net for job candidates.
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Thanks for reading! Olivia
American auto delinquencies are piling up, revealing the pains of the millions left behind by the US economic recovery
Ten years into a bull market, Americans are getting jittery about when the music will stop and the next recession will tear through the economy. While bad economic omens are being spotted in a variety of places, last month it was a spike in auto delinquencies that spooked market participants.
The Federal Reserve reported the number of borrowers with auto loans more than 90 days delinquent shot up by 1.5 million in the fourth quarter, reaching a total of 7 million – the highest mark ever in absolute numbers, though not as a percentage of the auto-loan market, which has ballooned over the past seven years.
The surge in auto defaults has been a source of both confusion and consternation. The Fed called the development surprising and Goldman Sachs analysts referred to it as “something of a puzzle,” given the broader economic and labour-market strength, and the lack of distress in other consumer credit products, such as mortgages and credit cards.
A leaked memo shows a shakeup is underway in Bank of America’s sales and trading division, as a star sales exec is switching roles and another is leaving the firm
There’s been a shakeup in Bank of America Merrill Lynch’s fixed income, currencies, and commodities division, as a star sales exec is shifting into trading and another business head is moving on.
Karen Fang, the head of sales and structuring for FICC in the Americas, is leaving her post for a senior role in trading, according to an internal memo seen by Business Insider.
Fang, who joined in 2010 from Goldman Sachs, where she was a managing director, was previously the head of cross-asset strategies and solutions and is considered a star in the firm’s FICC division. It’s unclear what’s driving the change from sales to trading. Gerry Walker, the global head of credit and special-situation sales, will take over Fang’s role as head of FICC sales in the Americas.
Nearly 400 money managers and Wall Street bankers crowded into the penthouse ballroom of New York’s St. Regis hotel on Thursday to hear the cofounders of the ride-hailing giant Lyft make a sales pitch for what’s expected to be the largest initial public offering in several years.
After a brief presentation, Lyft founders John Zimmer and Logan Green, as well as Brian Roberts, the company’s chief financial officer, took turns answering questions about the company’s business, its mounting losses, and the fierce competition it’s facing from Uber.
Lyft emphasised it would not engage in a price war with Uber by lowering the rates it charges consumers to use its ride-hailing service, several people who attended the meeting told Business Insider. But it said that it could easily lose the market share it has gained in the US over the past two years if Uber decides to “compete hard” on price.
Lyft plans to raise $US2 billion in a highly anticipated stock-market debut in the coming weeks that will value the seven-year-old company at $US20 billion.
The company’s IPO is expected to be closely followed by one from Uber, which could be valued at as much as $US120 billion. The rich valuations reflect investors’ heady expectations for the new breed of transportation companies, which have recently branched out from cars to scooters and bikes.
The $US43 billion combination of FIS and Worldpay could trigger a wave of M&A. Here are the deals that could be next.
Like middle schoolers at their first dance, fintech companies and payment processors are quickly pairing off in hopes of not being left alone in a space that’s rapidly evolving.
Fidelity National Information Services and Worldpay on Monday became the second duo to take the plunge, announcing a deal valued at $US43 billion. FIS and Worldpay were preceded by rivals Fiserv and First Data, which announced a $US22 billion deal in January.
Wall Street analysts have largely viewed the latest acquisition as a natural progression.
“If you look at it, FIS is one of the biggest competitors to Fiserv. Worldpay is one of the biggest competitors to First Data,” Larry Berlin, a senior vice president who specialises in research at the venture-capital firm First Analysis, said. “If the first one made sense, then the second one makes sense. And there is always a chance that another one makes sense.”
A do-good investing firm founded by Warren Buffett’s grandson and a former Gates Foundation exec just raised its first funding round from the world’s richest families
Some of the world’s wealthiest investors are buying into the idea that capitalism will change the world for good, and they don’t have to lose money in the process.
i(x), a firm focused on impact investing launched in 2016 by Buffett’s grandson Howard Buffett and Trevor Neilson, has lined up almost $US15 million of Series A financing from 35 family offices, Business Insider has learned. The funding round, which values i(x) at $US71.5 million, will allow the company to seed new investment platforms and businesses, including food and agriculture, Neilson said.
Despite i(x)’s explicit focus on doing good, Neilson said the firm does not sacrifice returns. The company is set up similar to Berkshire Hathaway, with capital that can create and invest in companies for the long term, rather than a private-equity fund that’s forced to sell companies at the end of the fund’s life. The family offices can also invest alongside the firm in individual investments.
Quote of the week:
“I am concerned anytime that new entrants into aviation particularly carrying packages or goods enter a market where their background has been essentially trying to cut costs to make money. Cutting costs in aviation causes deaths and accidents,” Jim Hall, who led the National Transportation Safety Board from 1994 to 2001, told Business Insider, referring to Amazon. An Amazon Air plane called CustomAir Obsession crashed on February 23, killing all three people on board. The cause of the crash remains unknown. In conversations with Business Insider before the crash, several pilots who fly planes for Amazon Air said they thought an accident was inevitable.
Wall Street move of the week:
- The Wall Street strategist who called the last stock plunge says investors are foolishly ignoring one thriving corner of the market
- 4 portfolio managers have exited asset-management giant Nuveen after their funds took a hit in 2018
- As asset-management growth grinds to a halt, firms have to get creative. Here are the 3 avenues that analysts say will best boost revenue.
In tech news:
- Buzzy AI software startup UiPath in talks to raise a mega funding round at a possible $US7 billion valuation
- A ‘warrior’s warrior’: Why insiders say the first-time CFO running Lyft’s $US20 billion IPO is the perfect fit
- How Airtable raised $US160 million last year – and got a valuation of about $US1 billion – without a pitch deck
Other good stories from around the newsroom:
- The Stanford professor who rejected one of Elizabeth Holmes’ early ideas explains what it was like to watch the rise and fall of Theranos
- An Uber Eats executive reveals the company’s surprising strategy for moving beyond taxi rides
- Some of the world’s wealthiest investors are buying into the idea that capitalism will change the world for good, and they don’t have to lose money in the process
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