Tinder's bad match

MARKETS

  • Markets: The Dow snapped a four-day losing streak as investors got a little less worried about the Turkish economic crisis (more on that in a sec).
  • Economy: U.S. household debt climbed to $13.3 trillion in Q2, about $618 billion higher than the most recent peak in 2008. It's also up $454 billion from a year ago.

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HEALTHCARE

Oscar Gets an Alphabet-Sized Boost

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Josh Kushner won't be called Jared's little brother for long. Oscar, the health insurance startup he co-founded six years ago, just struck a major deal with Alphabet (+0.76%).

Google's parent will invest ~$375 million in Oscar (which has been valued at $3.2 billion). Yes, it's already been invested in Oscar for three years now. But with this new deal...

  • Alphabet will own ~10% of Oscar. Plus, early Googler/former YouTube CEO Salar Kamangar will join Oscar's board.

Oscar will use the money to invest in differentiation (aka hire more data scientists, designers, and clinicians), and launch new product lines (like Medicare Advantage).

Why Oscar?

As Wired writes, Oscar is trying to do to healthcare what Uber did to taxis--use smart digital tech to make getting healthcare faster and easier.

  • What makes it different: Enrolling in a basic Oscar plan takes less time than watching an episode of Silicon Valley. And doctors? They get more flexible payment models, too.

The main goal for Google's investment: Facilitate Oscar's bid to "think about healthcare in a different way," per Oscar CEO Mario Schlosser.

What needs fixing?

The U.S. spends roughly 20% of its GDP on healthcare, while other wealthy nations spend half that, Schlosser said (FYI, the Centers for Medicare and Medicaid Services said the U.S. spending on health was 17.9% of GDP in 2016). Oscar's answer? Make pricing clearer for patients and deploy a new (smaller) network model.

Oscar also advocates for more investment in data infrastructure that moves beyond just payments systems. It hopes to effectively separate the good doctors with good patient outcomes from the network doctors who charge a lot more for worse outcomes.

Who's doing the fixing?

Silicon Valley's interest in healthcare has grown fast. And Alphabet's not alone...

  • Amazon, Microsoft, IBM, Salesforce, and Alphabet just said they're "jointly committed" to making it easier to share health info electronically.
  • Apple's exploring new chips to better track health data in its devices (like Apple Watch), per new job listings.

Bottom line: Big tech views traditional healthcare as confusing, broken, and backwards. It wants to fix it with easy-to-use apps, insightful user data, and streamlined costs.

COURTROOM

Tinder Co-Founders and Early Employees Sue IAC and Match Group

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Lawsuit, 1 day old

New York State Supreme Court.

About Lawsuit

I am seeking...$2 billion in damages from Tinder's parent company IAC (-0.63%) and its subsidiary Match Group (-3.08%), which I allege "undermined" the app's valuation in order to pay far less in stock options to early employees.

The plaintiffs? Ten of those employees, which include three co-founders and several current execs.

The quotes that say the most about me:

  • "Through deception, bullying, and outright lies, IAC/Match stole billions of dollars from the Tinder employees"--The plantiffs' lawyers.
  • "IAC/Match's misconduct allegedly included: concocting false financial information, hiding truthful projections of continued rapid growth and delaying the launch of transformative new products such as Tinder Gold."--Also the lawyers.
  • "IAC/Match cooked the books to manufacture a fake lowball valuation...and pocketed billions of dollars that they were contractually obligated to pay Tinder employees."--The lawyers, again.

You should know I'm not universally beloved. IAC and Match Group called me "meritless" and concluded, "sour grapes alone do not a lawsuit make."

INTERNATIONAL

Erdogan Pledges to Boycott U.S. Electronics

Turkish President Recep Tayyip Erdogan continued to escalate tensions with the U.S. by attacking the one thing many Americans can't live without: The Bachelor rose ceremonies the iPhone.

In a speech, Erdogan said Turkey (pop. ~80 million) would boycott U.S. electronics, and instead rely on its own economic muscle. Per the NYT, he said:

  • "Every product that we buy in foreign currency from outside, we will produce them here and sell abroad."
  • "If they have the iPhone, there is Samsung," as well as Turkey's own phone brands.

Now, we're short on details about when this boycott would actually go into effect. But one thing's remained clear throughout Turkey's recent economic troubles: Erdogan isn't bowing to international pressure.

Some good news? The Turkish lira recovered after a massive weekend sell-off...and so did a few other emerging markets currencies.

INVESTING

We Know What Buffett Did This Summer

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Thanks to a quarterly SEC filing, we know all the stocks Warren Buffett's Berkshire Hathaway (+0.32%) bulked up on (and dumped) in Q2. Wait, what were you thinking?

  • Buffett increased his stake in Apple by 5% (he's the company's second-biggest shareholder now). He also increased holdings in Goldman Sachs, Delta, Southwest, and Teva--after doubling his stake back in Q1.
  • He cut his holdings in Phillips 66, Wells Fargo, Charter Communications, American Airlines, and United.

Bottom line: Buffett's Berkshire Hathaway stayed true to some of his favorite industries: airlines and banking. Sprinkle a little Apple in there and you've got a Q2 bonanza for Berkshire (which has a $180 billion stock portfolio).

TRAVEL

Resting Up After That Vacation in Iceland?

You're not alone...
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Via the IMF

The number of foreign overnight visitors has surged 440% from 2008-2017, hitting 2.2 million last year.
The population of Iceland is ~340,000.

FOOD & BEVERAGE

Coca-Cola's Playing the Long Game in Sports Drinks

In its latest bid to dethrone PepsiCo-owned Gatorade, Coca-Cola (+0.13%) is buying a stake in BodyArmor, an upstart pitching a healthier alternative to old-school sports drinks.

  • BodyArmor's backed by a whole roster of star athletes including Kobe Bryant, Skylar Diggins-Smith, and Mike Trout (as both spokespeople and investors).

The play by play: Financial details weren't disclosed, but...Coke will become BodyArmor's second-largest stakeholder. It could also eventually take full ownership of BodyArmor.

So why strike a deal, especially since Coke already owns Gatorade competitor Powerade?

  • Gatorade boasts ~75% of the $8 billion U.S. sports drink industry (but momentum's slowed).
  • BodyArmor captures ~6% of the market...plus it's on track for $400 million in revenue this year (inching toward a $1 billion-$2 billion valuation).

As BodyArmor co-founder Mike Repole put it, "Gatorade is Blockbuster Video and BodyArmor is Netflix." Good luck!

WHAT ELSE IS BREWING

  • Home Depot (-0.54%) kicked off "retail earnings week" in style, trouncing expectations as customers spent more on home improvements in Q2.
  • Uber has tapped Matt Olsen, a former general counsel of the NSA, to lead its security team.
  • Kroger (+2.35%) will partner with Alibaba to sell some of its natural and organic private label products online in China.
  • New York Media, the owner of New York magazine, is considering strategic options, including a potential sale.

BREAKROOM

BREW JAMS
Yes, crypto has been getting crushed recently. But here's something that may cheer you up: billionaire VC (and bitcoin bull) Tim Draper released a track called "Bitcoin Hustle." Is it...good? No. But it's hilarious. Give it a listen.

GUESS THE LOGO (HISTORICAL EDITION)
In 1916, this was the logo for which company? And yes, the company's still around.
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(Answer located at bottom of newsletter)

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Breakroom Answers


CFA Question
A) Declining bank reserves and economic activity

Guess The Logo
UPS

Comments (1)

Aug 15, 2018
Comment

What concert costs 45 cents? 50 Cent feat. Nickelback.