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Happy Saturday,
It is the fourth of July weekend and I am in Atlanta for a family reunion. I am enjoying the south for the first summer holiday, but you know I had to get out Volume 30 of the Stretch Four Insights Newsletter.
This I will highlight news across my expertise in technology, tax, and accounting. I started another newsletter for my NBA business commentary and links.
Happy fourth of July to everyone here, and I hope you all are well and safe on the first summer holiday of the year.
Let’s dive in.
Stretch Four launches the Business of the NBA Newsletter
I am testing out a new format and dropping a newsletter on the business of the NBA. Check out the first weekly edition here. I will focus solely on the business of the NBA. I will be providing research-backed content on salary cap news, trades, team ownership, and team-building dynamics. I will plan to do long-form pieces, weekly recaps, and maybe occasionally a podcast or video.
As always send me feedback at matt@stretchfour.co.
General Tech News
Arlan Hamilton signs off on tech and moves on to become a full-time influencer
Arlan Hamilton was one of the first people I was introduced to back in 2016 when I wanted to get into tech. I was introduced to her by Joelle Emerson the wife of Box CEO Aaron Levie. This introduction was pretty straightforward. I met Joelle at a conference at Wharton. I asked her if she had any recommendations on people I should talk to about my then startup called GradX. I think I was introduced to Arlan because she was black and I was black. This was one of my first lessons on how Silicon Valley works. There are well-networked and powerful people who typically keep a low profile but have a set quota of outsiders they associate with. In this case, I knew Arlan was an outsider who have found her way inside the ethos of Silicon Valley by being a friend of Joelle. At that time she was just starting an investment fund focused on underrepresented founders.
Fast forward seven years and this week Hamilton officially announced that she is downsizing her Backstage Capital team to three people including herself and that she is stepping away from the business to work on other things.
This seems like the end of a run for Arlan as an investor. Although Arlan’s Backstage blueprint made 200 investments the real win for Arlan was how she leveraged her approach of what I would say call the black woman that demands attention to build a huge brand into the ability to charge upwards of $50,000 to speak, author a bestselling book, grow a large social media following, and as she announced on her podcast she plans to launch a TV show.
So while her investing business reached $20 million AUM, from heavy hitters like Marc Andreeson and Mark Cuban, she is no longer making new investments following on investing in her current portfolio companies she successfully established her personal brand and has a strong differentiation from others.
The numbers however never made real sense for her venture fund, and I am not particularly surprised that Backstage Capital never moved into escape velocity as a venture fund focused on underrepresented founders. The tweet asks some interesting questions about economics quite well. I think we are moving into a different time in a venture where funds are not rewarded for how many companies they invest in but only the returns.
Links and Articles
Energy-hungry data centers are quietly moving into cities
Every time I hear of the company called Equinix I get it confused with my gym Equinox. This read from MIT finally helped me understand the difference. Ironically both are real estate businesses and Equinix is the largest owner of colocation data centers with 10.9% of the world market. This article shed light on how fast the internet depends on data centers in cities, not rural areas. It is fascinating to see how this market has grown over the past few years and will continue to grow.
Mastercard Launches Its First Ever Music Album: Priceless®
The creator economy continues to expand. I found this piece to be interesting because a brand is actually releasing a music album. Anything that combines ways for creators to help large enterprises become more relevant is interesting to me. I expect to see more brands do things like this to better engage their users.
Finance, Tax, and Accounting News
Out-of-State Rental Applications Rose 42% During Pandemic: TransUnion
As revitalization is happening in cities post-COVID, we are seeing an uptick in out-of-state rental applications according to this report by TransUnion. As interest rates continue to rise for mortgages more and more people are having to rent.
Ernst & Young to Pay $100 Million Fine After Auditors Cheated on Ethics Exams
The SEC made a statement with the largest fine ever issued against an audit firm. EY has continued to have issues with audit cheating which from my perspective will continue to be a thing. In the audit business, companies are paying for the services and leadership will always push the firms to fudge the numbers. I do not think this is the end of these issues and we will likely see more of these ethics exams being violated with so many stocks failing to deliver after a record year last year from IPOs to SPACs.
Crypto Tax Cheats Likely to Get Relief as US Crackdown Hits Snag
The IRS wants to standardize crypto reporting but these plans are continually getting pushed back. Unpaid crypto liabilities cause crypto losses and we will see an epic amount of this in the tax year 2022. Meanwhile, major exchanges like Coinbase which are already experiencing layoffs as their stock has continually dropped this year have said the company needs two years to comply with the IRS laws. In summary, for the small number of people making money on crypto right now, you do not have to worry about the IRS in the short term.
Tweet of the Week:
That’s all for this week’s newsletter.
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Until next time, have a great week.
Email feedback to me at matt@stretchfour.co.