SUMMER 2016 www.theifj.com
ROLLING IN GREEN Rolling in Green
A New Byzantine Business
Snap to the Future
How U.S. Consumers are Giving Specialty Tea a Chai
Christian Tourism in the Late Roman Empire
The not so Disappearing Effect on Social Media
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INTERCOLLEGIATE FINANCE JOURNAL
TABLE OF CONTENTS
MARKETS 4
lot twist P A New Trend in the Bookselling Markets Lorraine Salim
6 Rolling in Green How U.S. Consumers are Giving Specialty Tea a Chai Michael Golz 7 Hurricane Hunting: Flying into Danger An Unexpected use for Drones in the Field of Atmospheric Research Benjamin Winston
POLITICAL ECONOMY
8 A New Byzantine Business Christian Tourism in the Late Roman Empire Matthew Janigan 9 A Wager Against Poverty The Politics and EconomicsBehind Minimum Wages Michael Janigan 10 Oil Industry Faces Downturn Has Oil Reached its low? Gianna Jasinki
PERSONAL FINANCE
12 Savings for Rainy Days: Making a Splash in the Millennial Market The Growth of Mobile-Friendly Savings Plat forms for the Workforce of the Future Calvin Chu 14 Subscribe and Savor Dinner Delivered to your Doorstep Arthur Tran
CAREERS 24 The Value of Speaking Another Tongue How Much is Learning a Language Worth? Calvin Chu 26
Smith-Tuck: A Business Bootcamp just for Women Why Companies should Em Katharine Jessiman-Ketcham
15 Overworked and Underpaid The Woes of Being an Overtiem and Underwhelmed Millenial Worker Ryan Ma
STARTUPS & TECHNOLO-
18 Tech Bubble Bursting: Apple Quit it with the “S” Apple as an Indicator of Technology Dheeraj Namburu 20 Class of 2021, Rejoice: College Admissions Process to Expedited A Satirical Expose on the Explosive Technology About to Hit the Admissions’ Game Tiffany Chen 22
nap to the Future S The not so Disappearing Effect on Social Media Waylon Jin
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blog.theifj.com Creating and Sustaining Unprecedented Financial Practices, For the Love of Music Passion vs. Paycheck -Cassidy Wald Amazon Retail Stores: Could they Crash and Burn? -Cyrus Maden An Unexpected Recession: Predicting Recession without a Qield Curve Inversion -Scott Theer Fishing for Opportunity: Utilizing Economics to Prevent Fisheries Crime -Cyrus Maden
MARKETS
Plot Twist
A NEW TREND IN THE BOOKSELLING MARKETS by Lorraine Salim
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ith the rise of increasingly sophisticated e-book technology, it is not unreasonable to think that the sales of print book is in decline. Paper is losing supporters due to increasing awareness of environmental causes, especially the issue of deforestation. Paper’s competitor, the e-book, can store hundreds of books at once, making it easier to carry, less bulky, and lightweight. Most e-books contain functions to edit font, highlight, write notes, and immediately share the information with other people or other devices. Indeed, e-books seem to have all of the features that are appealing in this age of information sharing. Printed books, on the other hand, look old-fashioned and might soon be replaced by this newer technology. Can paper books have a future at all?
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AMAZON AND THE DECLINE OF YOUR CORNER BOOKSTORE The current book market is nowhere close to that from the one two decades ago. When Amazon.com opened its first online bookstore in 1995, it shook the foundation of the whole bookselling industry, whose key players include publishers, bookstores, and readers. With the rise of internet, readers supportively welcomed this new trend of bookselling and Amazon’s revenue multiplied to $15.7 million in 1996, and skyrocketed to $147.7 million just after two years of its opening. Amazon quickly gained leadership in the book market, and in 2007 it made a major breakthrough by introducing e-reading device: Amazon Kindle. The two other players - publishers
and bookstores - could only marvel at its incredible growth. They had to adapt quickly, or else they would be out of competition. Following Amazon’s arrival on the scene, online shopping and e-books became the norm for book shoppers. Bookstore was one of the segments that were hurt the most by this major change. One after another, bookstores were closing down in the last decade, including Borders, a major bookstore chain, was liquidated in 2011. The primary reason for Border’s demise was that their book sales were not enough to cover up the high cost of leases. Amazon and other online retailers’ low prices had forced bookstores to cut down profit margin in order to stay competitive in the market. Unlike their online
ROLLING IN GREEN How U.S. Consumers are Giving Specialty Tea a Chai, Michael Golz 6
IMAGE: PUBLICO.PT
competitors, physical stores had higher total costs in terms of the fixed costs (buildings, rents, leases) and direct labors. Thus, even after they cut prices, most of the time online retailers still had the price advantage; as a result, buyers ended up choosing online stores based on the price merits. The comparative advantage of online bookstore was amplified by the high sales of e-books, which were typically cheaper than paper books. Altogether, low margin and low market attractiveness of print book retailers resulted in borderline profits or losses that made it hard for them to survive. At this point, how could bookstores survive this miserable era? ADAPTATION IS THE KEY Nevertheless, this bleak, despondent decade for booksellers seems to have passed. The current data suggests that bookstores are on the rise and paper books are coming back again. For those bookstores that made it, what were their key strategies to survive the seemingly-hopeless “book crisis”? Any industry is bound to undergo
transformations, and the bookselling industry is no different. When such a drastic change occurs, adaptation is the key to survive. Those who are alert and quick to adapt will survive, while those who fall behind the trend will be filtered out of the competition. This is especially true in retails/consumer good industry where there are a large number of players and price is one of the most important determinants for consumers. This creates a harsh competitive market that mostly favors those who can provide the same goods with the lowest price possible, which, in this case, favors big online retailers such as Amazon. Thus, how could bookstores adapt to this more competitive environment? One strategy involves opening up online store service in addition to the physical ones. Barnes & Noble, one of the few bookstore chains that have survived until now, implemented this idea very early. It began selling books online in the late 1980s through a third party retailer service, and it first launched its website in 1997, probably following the quick rise of Amazon. This strategy of opening up both physical and online stores has also been adapted by other retail industry that has suffered from the rise of online shopping, such as Macy’s. Another strategy involves creating partnerships with other retailers and industries to target more customers and enhance their experience in the bookstores. Barnes & Noble’s partnered with universities to sell college merchandises and books in order to attract college students. Partnering with cafés, such as Starbucks, has also been the trends since it gives people a place to relax, chat, and talk about books. Moreover, bookstore chains have been implementing loyalty programs, which give rewards and special promotions to its members. This membership program serves to prevent loyal customers from buying books in other bookstore chains. The ability to adapt quickly and efficiently to major trends is the key to survive in the bookselling industry. In order to survive harsh competition and technology change, one has to be flexible enough to consistently undergo transformations according to the market’s demands. For those who are too late to catch up, they will be out of the competition.
HURRICANE HUNTING: FLYING INTO DANGER An Unexpected Use for Drones in the Field of Atmospheric Research, Benjamin Winston 7
losing popularity. According to Nielsen BookScan, 571 million paper books have been sold in the United States by early December 2015, a significant 12 million increase from the 2014 sales. 2015 is the second consecutive year in which paper books are on the top of the market again, following a plunge in 2013 where only 500 million books are sold. The consequence of this victory is also evident in an increase of independent bookstores. Based on the survey by American Booksellers Association, there are 1,712 member independent bookstores in 2,227 locations in 2015, a rise from 1,410 in 1,660 locations in 2010. Conversely, sales of e-book fell by 10 percent in the first five months of 2015, according to the Association of American Publishers. E-books’ market share also dropped to 24.9 percent (of publisher revenues) from a peak of 26.5 percent in 2014. This plunge might be explained by the rise of e-book prices in 2015, coupled by the trend of readers going back to physical books. Regardless of the reasons, the market research data suggests that paper books are winning in its race against e-books... for now. NOT DEAD YET In November 2015, Amazon opened its first physical bookstore in the University Village mall in Seattle, and it is planning to expand to around 300-400 physical stores in the US. Ironically, Amazon, the main culprit that have crippled numerous bookstores, is now entering that same industry it was hurting decades ago. Probably Amazon has realized that the trend is now changing again to favor a hybrid of physical and online stores; thus, they too have to adapt in order to stay within the competition. Therefore, it seems that books and bookstores are not dying; they still have great expectations in the future.
BACK TO BASICS Fortunately for those avid book supporters, there is a plot twist. Against all odds, recent facts show that printed books are on the rise again, while e-books are 5
INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
Rolling in Green HOW U.S. CONSUMERS ARE GIVING SPECIALTY TEA A CHAI by Michael Golz
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ozeman, Montana, an epicenter of outdoor adventure tourism nestled in the Northern Rocky Mountains, has experienced substantial growth in the last two decades. Along main street, everything from ski shops to rough-and-tumble cowboy bars can be found. Somewhat out of place, however, it’s Townshend’s Tea, which opened in April 2014. There, a gram of Gyokuro, one of the highest quality green teas in the world, sells for $13 USD. While surprising, such exotic varieties and high prices are not so anomalous nowadays, which begs the question, what has been happening in the U.S. tea market while we weren’t watching the kettle? A FAR CRY FROM DA HONG PAO Though the original British colonies in the New World brought along England’s tea habits, ever since the Tea Act of 1773 and the Boston Tea Party, the U.S. has not been a target market for specialty blends. Branded unpatriotic, tea of all sorts fell out of favor with Americans for many decades. When the market did re-emerge, it was emphatically unexciting. After acquiring the Lipton tea brand from the original founder in 1938, Unilever dominated the scene for most of the 20th century. Abandoning the rich history and variety of tea culture, Unilever flooded the market with ready-to-drink teas such as Lipton Yellow Label. Respect for the traditional methods of artisanal tea production was far
from widespread in the U.S. during Unilever’s reign. Whereas many of the fine Asian varieties, like the famous Tieguanyin and Da Hong Pao teas, have been cultivated for centuries with quality in mind, commercialized high volume black tea constituted most U.S. tea consumption during the mid-20th century. The beverage of choice was typically bottled iced tea. THANKS, TRICKY DICK Unilever’s hold on the market was somewhat interrupted in 1971, when President Richard Nixon’s efforts to reopen ties with China paid off, and the People’s Republic lifted its ban on exports to the United States. Starved of fine teas since the 1920s, American consumers were able to begin experimenting with new varieties, leading to two decades of slight growth in the market. It wasn’t until the 1990s that the tea market finally began to boil over. Between 1993 and 2008, the market for specialty teas more than quadrupled. Growth has persisted in recent years, spurred along by trends in personal health and wellness. Somewhat disabused of the negative consequences of mass commercialization of tea, many modern U.S. consumers now seek out fine teas for their excellent fla-
Growth is concentrated among those companies committed to spreading an appreciation for the traditional practices of tea cultivation
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vor and demonstrable health benefits. CAUTION: CONTENTS MAY BE HOT The market for specialty teas is piping hot. In 2012, Starbucks acquired Teavana for $620 billion in hopes of becoming a market leader in what it saw as one of the next big trends in the food and beverage industry. While Unilever’s brands continue to command the highest sales at nearly 18% of the market, the heightened pace of globalization and persistence of the health food and wellness movements promise to drive demand for fine teas. Prospects for the future are exciting: in 2015 alone, the market for herbal, specialty, and traditional teas experienced growth between 10 and 13%. With tea sales predicted to grow nearly 20% by 2020, the market continues to steam ahead. High growth investments certainly exist in this revitalized industry as the driving forces show no signs of receding. Perhaps most excitingly, growth is concentrated among those companies committed to spreading an appreciation for the traditional practices of tea cultivation. In 2014 Peet’s Coffee and Tea purchased Mighty Leaf Tea, a tea manufacturer and distributor, to step up its presence in the premium market. Mighty Leaf is known for its high-end teas and has many certified organic offerings. It is one of many companies responding to a powerful new trend: instead of generic yellow label teas, consumers are demanding exquisite flavors and unadulterated nutrients in a return to the tea culture of antiquity. This promises a proliferation of opportunities for entrepreneurs and industry giants alike.
MARKETS
Hurricane Hunting: Flying Into Danger AN UNEXPECTED USE FOR DRONES IN THE FIELD OF ATMOSPHERIC RESEARCH by Benjamin Winston
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rom launching Hellfire missiles to photographing enemy terrain, drones are revolutionizing the U.S. military. Drones, which are unmanned aerial vehicles, garner great acclaim for their effectiveness but also significant criticism for their potential security threats and ethical issues. As drone technology evolves, individuals continue to find new uses for the device, ranging from filming skiing events at the 2014 Winter Olympics in Sochi to surveying communities for local law enforcement. However, drones may soon find a new unexpected niche: hurricane research. A DEADLY FORCE Scientists still struggle to understand how hurricanes are formed and are eager to understand the formation of storms and to improve their techniques of measuring the strength of these storms. Current technology for monitoring hurricanes is lacking. Satellites are useful for monitoring surface conditions including atmospheric pressure and precipitation, but poor resolutions produce inaccurate results. Dropwindsondes, sensors at-
Scientists are looking to put drones to use to uncover the remaining mysteries of trouble in the eye of a storm while keeping pilots safe and mankind protected. tached to parachutes and dropped into hurricanes, measuring “air temperature, dewpoint, atmospheric pressure, and use the GPS positioning to detect horizontal and vertical winds.” However, these sensors do little to provide insight into hurricanes’ surface conditions. There has yet to be one technology that can “do it all” and the National Oceanic and Atmospheric Association (NOAA) is in need of an alternative. RESHAPING RESEARCH Their solution? Flying low-cost drones into the heart of hurricanes. The Raytheon Coyote and Piasecki Whimbrel, the two major drones the NOAA will add to their fleet of hurricane-hunting planes, can withstand intense winds, fly for over an hour, and transmit data back to scientists via radio communication. Official use of these drones, however, will not begin until development and lab testing are complete. Meanwhile, the unmanned Global Hawk drone, used in partnership with NASA, is already being deployed by the NOAA to study hurricane development and progress. Scott Braun, director of NASA’s Global Hawk mission, realizes the overarching effects of using drone technology in hurricane research. He explains, “If we can improve forecasts, we can save money and lives.”
NEW SLEUTHS The Coyote drone marks a shift in data collection that will revolutionize hurricane models and storm intensity forecasts. The Coyote, which has flown as low as 400 feet during Hurricane Edouard in 2014, provides more precise and accurate data taken over 90 minute time periods for scientists to use in models. Like most drones in this century, it is deployed from a hurricane hunter plane. Unlike most drones, however, it is biodegradable; after taking measurements of wind, temperature and moisture close to sea surface, it decomposes in the ocean. Outside the NOAA, researchers at the University of Florida are using six inch-long drones to report on hurricane temperature, pressure, humidity and location. This type of drone, similar to the Raytheon Coyote and the Piasecki Whimbrel, is resilient to heavy winds and uses little energy. They can be launched from manned aircrafts to relay information back. With the pace of technology accelerating ever more rapidly, the ability to keep pilots safe and society protected is now easier than ever. It is becoming more and more common for scientists to use drones to uncover the remaining mysteries of trouble in the eye of storms.
IMAGE: NASA.GOV
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POLITICAL ECONOMY
A New Byzantine Business CHRISTIAN TOURISM IN THE LATE ROMAN EMPIRE by Matthew Janigan
IMAGE: YTIMG.COM
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olitics in the Roman Empire was drastically different from politics today—not just in the hierarchy of power, but also in the influence of religion. Nowadays, we are accustomed to the notion of separation of church in state. The Roman Empire willingly combined the two. Until the 4th century, paganism was the dominant religion. Emperors were deified as living gods, and temples were built throughout the empire to worship different Greek and Roman gods. Offering sacrifices and worship to these gods was seen as necessary for being a good Roman citizen. In the early 4th century, Constantine conquered and became a powerful emperor. Of special importance is that Constantine converted to Christianity. After centuries of persecution, 8
Christians could now worship with more freedom and fewer threats. Even though Christians wouldn’t become a majority in the empire until the 5th and 6th centuries—when the empire started to fracture into the western Roman Empire and eastern Byzantine Empire—Constantine’s rule changed the broader religious and economic structure of the empire.
visit some physical place. At least part of this was practical. Many important Christian places—places where Jesus or the Apostles travelled and preached, or even places from the Old Testament of the Christian Bible—were owned by Pagans or Jews. There was no point in visiting a place where Jesus preached if all that place had now was a Pagan temple.
PLACES AND PILGRIMS
But Constantine changed this dynamic. As a Christian, he wanted to spread Christianity; as an emperor, he had the means to do so. Shortly after coming to power, Constantine commissioned the building of grand churches. Furthermore, he started to claim certain sites as Christian. Almost overnight, the notion of place became important to Christians.
Since the beginning of Christianity in the early first century, pilgrimage was not important. Nowhere in the scriptures were there commands to visit certain religiously important places. While Pagans and Jews made pilgrimages, to Christians it was more important to make a spiritual “pilgrimage” than to
A WAGER AGAINST POVERTY The Politics and Economics Behind Minimum Wages, Michael Janigan 9
While not all Christians supported pilgrimages—some even argued bitterly against them on practical and religious grounds—one can’t underestimate the profound impact this religiously motivated tourism must have had throughout the empire. ROAMING EMPIRE The fourth century was a turbulent time for the Roman Empire. As Christianity was rapidly expanding, there were internal tensions that had broad repercussions throughout the empire. Aside from theological disputes, there was a growing number of charismatic Christian leaders who operated separately from the established Church structure in which a bishop had power. These charismatic leaders—oftentimes monks who practiced extreme asceticism—weren’t elected officials, but were widely admired by Christians. These new leaders, like Symeon the Stylite, drew large crowds. Within a short amount of time, a tourism industry sprung up around these sites. As with any pilgrimage, travel was necessary, which meant people required guides to actually get them to where they wanted to be. And once they were at the site, they’d often want to bring something back with them, so people would buy small, cheap vessels to carry back a memento from the site, such as dirt or holy oil. BYZANTINE BUSINESS When combined, the newfound importance of scriptural places and the growing appeal of charismatic monks led to a booming tourist industry in the late Roman Empire. While not all Christians supported pilgrimages—some even argued bitterly against them on practical and religious grounds—one can’t underestimate the profound impact this religiously motivated tourism must have had throughout the empire. Perhaps most fascinating are the similarities between tourism of late antiquity and of today. Travel today is much safer, more comfortable, and more convenient, but for many it still requires much planning and effort. More interesting is the notion of bringing something back as a souvenir. While small dirt or oil filled clay vessels are in form far different from selfies or tacky t-shirts, there’s still some humor
in realizing that even 16 centuries ago, people were intent on bringing something back to remember the trip. Of course, pilgrimage differs from regular travel in that it’s religiously motivated. One makes a pilgrimage to seek a blessing or to pray at a certain site, perhaps in addition to the singular interest in travel. And to be sure, mementos from religious sites were treated differently than souvenirs from regular travel—those containers of dirt and oil were not just decorations, but were used to cure all sorts of ailments. Still, despite differences between pilgrimages and travel in late antiquity, tourism in the Roman Empire grew without discriminating among the motivations.
A Wager Against Poverty
THE POLITICS AND ECONOMICS BEHIND MINIMUM WAGES by Michael Janigan
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hat is the appropriate level of the minimum wage? There is no straightforward answer to this question, and it is extremely difficult to figure out. It’s a topic that has been known as classic debate in economics for years, creating a sharp divide between many of the world’s best thinkers. Furthermore, the politics of the situation adds yet another level of complexity to the quandary. At the very least, for the overwhelming majority of citizens and politicians in the United States, there is an agreement that there should be a federal and state mandated minimum wage; even if it does create some market inefficiencies, there are certainly minimum ethical and social standards
OIL INDUSTRY FACES DOWNTURN Has Oil Reached its Low?, Gianna Jasinki 10
that are clearly more important than the economics of the situation. The purpose of the minimum wage is to keep workers out of a situation where they cannot survive off of their income. The level of benefit, however, and who receives these benefits are constantly disputed. With the recent passage of minimum wage laws in California and New York, the debate has rekindled, igniting both criticism and support. LEADING THE WAY FOR PAY In the beginning of April 2016, the governors of two of the most populated states in the United States, California and New York, signed legislation to increase their hourly minimum wages from $10 and $9, respectively, to $15. In an effort to avoid such a drastic shock to its economy, California has set the standard of slowly raising the wage level to its eventual goal of $15 by 2022. Likewise, New York has elected to pursue a similar process, raising the hourly wage to $15 for New York City by 2018 and the suburbs by 2021, while raising it to $12.50 for the rest of upstate New York also by 2021. With these two states successfully reaching consensus to pass these bills, it would not be surprising if many other states followed in their footsteps. President Obama and many Democratic Congressmen support a $10.10 minimum wage, but the Republican Congressmen, holding a significant congressional majority, fiercely oppose any such changes at the federal level, thus forcing any feasible changes to be achieved state by state. In New Jersey, Democratic lawmakers believe that the California/New York model is a viable option, but NJ Governor Chris Christie has vowed to veto any such bill. Other places like Washington D.C., Connecticut, and Massachusetts are all interested in engaging in these efforts as well. WHAT GOES AROUND COMES AROUND The main reasoning behind these increases in minimum wages is to support those individuals/families that live in poverty and struggle to provide based on their current low income. This rationale, however, is disputed because it is not clear that raising minimum wages will effectively help those in poverty. Economist David Neumark undertook a study for the San Francisco Federal Reserve and found that a raise in a minimum wage would actually not be beneficial to those in poverty. He claims, “if wages were simply raised to $10.10 per hour...with no changes to 9
INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
Oil Industry Faces Downturn HAS OIL REACHED ITS LOW? by Gianna Jasinki
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IMAGE:DREAMSTIME.COM
the number of jobs or hours, only 18 percent of the total increase in incomes would go to workers in families living in poverty. Thirty-two percent of the benefits would flow to families living in the top half of the income distribution.” Further, Neumark points to statistics he has found that in 57 percent of poor families, no one has a job and that, in general, workers have low incomes because they work lower hours. Finally, opponents make the case that this increase will lead to more expensive low-income goods, and thus hurt those that it is supposed to benefit. For example, with an increase in wages, Walmart will be forced to raise its prices and hurt its customers (who typically are lower-income individuals). MO’ MONEY, LESS PROBLEMS On the other hand, proponents argue that these negative impacts are less than the benefits that would be provided. Michael Reich, an economic professor from UC Berkeley, claims that a raise in minimum wage will have little to no effect on jobs. He explains, “[ the negative effects] would be more than offset by increases in consumer purchasing power [the ability of consumers to buy goods and services given their level of income]. That all results in a very small effect on the economy.” This 10
point raised by Reich directly contradicts Neumark’s take on the situation, effectively demonstrating just how contentious this issue is. Moreover, other advocates claim that raises in wages will actually help business, leading to greater labor productivity, less turnover, and more consumer spending. MIRROR, MIRROR ON THE WALL… Who’s the truest of them all? Over the next five years, the answer to the question may become more clear. As economists study the effects of these minimum wages in New York and California, there may be more evidence pointing one way or the other. The increase will directly affect about 6.5 million Californians who currently earn under $15 an hour, so it will be important to discover how these laws will impact them. At the same time, the indirect effects on businesses and employment will be vital to determine the greater economic implications. The minimum wage debate is sure to remain a hotly disputed subject for quite some time to come, but hopefully California and New York can offer more concrete information to digest and aid politicians in making more informed decisions.
he oil industry is in its deepest downturn since the 1990s. Earnings are down for companies, investments in exploration and production have been cut, and an estimated 250,000 workers in the oil industry have lost their jobs. Although global oil production has been put on pause, its decline seems imminent. Prices recovered a few times in 2016, but the cost of a barrel of oil has already sunk this year to levels not seen since 2003. As oil and gasoline prices remain at multi-year lows, the duplicitous impact of lower oil prices on the US economy continues to become ever more mottled. Cheap oil is great for consumers, but its dramatic downfall continues to alarm investors who fear that it signals that something isn’t quite right about the health of the broader economy. PRICES DROWN AS OIL GOES DOWN Think supply and demand. United States domestic production has nearly doubled over the last several years, pushing out oil imports that need to find another home. Producers are forced to drop prices as Saudi, Nigerian, and Algerian oil that once was sold in the United States is suddenly competing for Asian markets. Canadian and Iraqi oil production and exports are rising year after. Even the Russians manage to keep pumping. As a result of this, there is no supply discipline at a time when global demand appears to be dropping. After the Organization of Petroleum Exporting Countries (OPEC) met in December, they decided to keep oil production at its current levels despite the recent drop in oil prices. Although there were signs that an emergency OPEC meeting was going to happen, no agreement was reached. This meeting gave many hope that OPEC would cut production.
POLITICAL ECONOMY
WILL OIL PRODUCTION BE PUT ON PAUSE? On March 17th, 2016, oil prices closed above $40 for the first time since December 3rd, most likely attributed to talk about an output freeze deal that would happen this month. In April, OPEC kingpin Saudi Arabia and non-OPEC producers led by Russia will meet, increasing the likelihood of the first global supply deal in 15 years. Since OPEC has introduced the idea of a production freeze, oil prices have surged more than 50 percent from 12-year lows. An oil production freeze is clearly necessary. The major hold-up to this freeze agreement has been getting Iran on board. Iran continues to refuse to curb its production, at least until it has risen back to the level before international nuclear-related sanctions were imposed in 2012. After the sanctions were lifted in February, Iran has already increased its production from 187,000 barrels per day to 3.13 million barrels per day. It plans to push to 4 million barrels per day as soon as infrastructure repairs will allow. WHY THE FREEZE WON’T BE ENOUGH Production limitations by Russia, Saudi Arabia and others are not likely to close the supply-demand gap in the short term. Global oil storage inventories accumulated during the current glut are at record levels. These provide a buffer against
Cheap oil is great for consumers, but its dramatic downfall continues to alarm investors who fear that it signals that something isn’t quite right about the health of the broader economy.
contractions or reversals of the gap between supply and demand. While US crude production has begun to decline slightly from its mid-2015 high and drilling rig counts have dropped in response to low prices, this could reverse if the price of oil were to rebound. Because the market for oil is global, modest construction of supply by one producer can easily be replaced by increases from other producers, often at a small marginal cost. The world would continue to amass huge volumes of unwanted crude, adding to the already record inventories. Although this freeze output could become the first step in the right direction to balance the market, it is likely that not all major producers will agree to abide by it.
suffering. Oil prices are not likely to recover anytime soon as oil production is not declining fast enough in the US and other countries. However, there are some signs that supply and demand, and price, could find some balance by the end of 2016. Oil markets bounced back more than 40 percent since hitting a low of $26.21 in early February. Some analysts have predicted that the slump in oil prices is unlikely to break until interest rates start to rise. However, most analysts predict that oil prices will rebound in late 2016 or 2017.
IT GETS BETTER… RIGHT? Consumers are clearly the winners in this case. While individuals have enjoyed lower gas, diesel, heating oil, and natural gas prices, producers are
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PERSONAL FINANCE
IMAGE: MOBIERS.WORDPRESS.COM
SAVINGS FOR RAINY DAYS: MAKING A SPLASH IN THE MILLENNIAL MARKET THE GROWTH OF MOBILE-FRIENDLY SAVINGS PLATFORMS FOR THE WORKFORCE OF THE FUTURE by Calvin Chu
T
he wise Ben Franklin once said, “a penny saved is a penny earned.” The oft-repeated quote is hammered into young minds who grew up during the Great Recession of 2008. The recession, caused by out-of-control spending that led to loan default woes and home foreclosures, is poignant in the minds of the younger generation. However, a new wave of savings tools — designed to address the need to save in the millennial market - is taking the Internet by storm.
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MONEY DOESN’T GROW ON TREES, BUT IT DOES GROW ON ACORNS Of all the savings tools out on the market, one stands head and shoulders above the rest: Acorns. Acorns is an incremental-investment platform that allows young users to save small amounts of money — be it some change after an everyday purchase or a regularly scheduled deposit. The money is used to
invest in a diverse portfolio that allows users to control the risk-return balance of their investment, teaching them to set aside money to fuel their accounts’ growth. The service allows individuals to invest in a money market — in essence a savings fund tied to the performance of the stock market. With a slick website layout and clean mobile app design, the platform does its best to make itself attractive to the millennial target user. A similar service in this field is Aspi-
SUBSCRIBE AND SAVOR Dinner delivered to your doorstep Arthur Tran 14
ration, which also offers investment in specific funds, as well as a simple checking account that boasts a 0.25 Annual Percentage Yield (APY) for amounts under $2,500, and one percent for amounts over $2,500. Both dwarfing the Online banking services are growing, and a fully online branch can still provide value to the millennial market, something that some brick-and-mortar locations are unable to offer without a convenient online service.
OLD MONEY VERSUS NEW MONEY SAVINGS Savings services and tools like these aren’t the first ones to jump on the bandwagon. Ally Bank was one of the pioneers in the field, and has offered industry-leading rates for many years now. They are an attractive option if users are looking for a proven, sustainable change. In addition to offering a solid one percent APY, they also do not sacrifice in
OVERWORKED AND UNDERPAID The woes of being an overtime and underwhelmed millennial worker Ryan Ma 15
the user experience, providing a pleasing interface on both desktop and mobile platforms. One downside is that users are limited to only six transactions per statement cycle, offering less than optimal liquidity for users. Even so, this limited liquidity is a characteristic of savings accounts that can help users actually keep the money in their savings, rather than dipping into the put-away funds.
A new wave of savings tools — designed to address the need to save in the millennial market — is taking the internet by storm 13
INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
Capital One offers its own 0.75 percent savings service, which allows users to put money in specific accounts that are labeled by what one is looking to save up for, be it a car or a TV. However, if users deposit $5,000 or more, they may be able to get an instant reward that amounts to roughly one percent of the deposit, which helps draw users to its service.
SUBSCRIBE AND SAVOR
DINNER DELIVERED TO YOUR DOORSTEP by Arthur Tran DO-IT-YOURSELF DINNER
Online banking services are growing, and a fully online branch can still provide value to the millennial market, something that some brickand-mortar locations are unable to offer without a convenient online service
GOODBYE I-BANKING, HELLO E-BANKING Overall, the online banking market is attracting increased investment; even traditional banks are advertising their mobile presence to build customer loyalty with this younger demographic. Convenient features such as taking pictures of checks to deposit them and quick, easy transactions help build up customer retention rates. On Facebook, ads by Acorns and Aspiration flood user news feeds, demonstrating the strong desire to quickly acquire market share. As young people become more aware of the different savings and investment options available to them, the business of these services can only compound exponentially.
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M .CO CK O IST
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here are few things more comforting than a fresh home-cooked dinner. But let’s face it: few people have the time to find a recipe, go grocery shopping, prepare the ingredients, and do the cooking. At the same time, today’s health-conscious and financially prudent consumers are avoiding restaurants and fast food establishments. The solution: ready-to-cook dinner kits. How does a meal kit work? In-house culinary teams plan out a week’s worth of meals in advance, with multiple options offered each day. The company sources, pre-measures, and packages all the necessary ingredients and then delivers it, on ice, to your doorstep. Follow the enclosed recipe, and voila — dinner is served.
child-friendly options. Picky children? No problem — rather than boeuf bourguignon or seafood paella, the little ones can enjoy shepherd’s pie or cauliflower macaroni and cheese. THYME IS MONEY Blue Apron’s COO envisions meal kits eventually entering the mainstream, claiming that “everybody who wants to cook is our customer.” But getting there won’t be easy — many hurdles still remain, the most glaring being price. The average American family of three spends $151 on groceries for an entire week, which is approximately $21 per day. In comparison, Blue Apron, the most affordable meal kit option, would cost that same family $30 per day or $210 per week. Din, one of the more premium services, would cost $45 daily or $315 weekly. (Note that the figures for Blue Apron and Din include only dinner meals; breakfast and lunch are not included.) For upper-middle-class families, meal deliveries could be a viable option compared to shopping at Whole Foods or dining at fast casual establishments. However, for most consumers, a $10-15 dinner every day can be unaffordable, even when taking into account the add-
A SWEDISH IMPORT Sweden — home to fast fashion, do-ityourself furniture, and music streaming apps — can also lay claim to being the birthplace of the meal kit. A relatively novel concept, the meal kit was pioneered by Kicki Theander, a mother of three who noticed families struggling with meal planning and cooking. In 2007, Theander launched a grocery delivery service called Middagsfrid, which proved to be a success both domestically and throughout Europe. Today, despite having a population of under 10 million, Sweden has at least 10 competing meal kit companies . GIVE ME A PIZZA THAT The trend reached American shores in 2012, led by three major startups — Blue Apron, HelloFresh, and Plated. Millennials, particularly those dwelling in urban areas where busy lifestyles and a lack of cars make grocery shopping a hassle, were early adopters of meal kit subscriptions. Fueled by such success, startups have since built upon this niche in the market and expanded their consumer base. Deliveries to the suburbs are up, and increased demand from families has prompted companies to curate
By combining convenience, healthiness, and affordability, meal kits can change the way we think about cooking
ed convenience and reduced preparation time. Meal delivery startups will eventually need to reduce prices, but for now they are focused on establishing a loyal clientele by emphasizing quality and efficiency. Maintaining strict control of the supply chain enables them to purchase in bulk and source only the freshest ingredients, thereby cutting down on food waste while simultaneously appealing to customers’ consciousness. Sophisticated data analytics allow companies to carefully craft meals according to customer demand as well as seasonal crop availability and price.
PERSONAL FINANCE
INTERCOLLEGIATE FINANCE JOURNAL • SPRING 2015
average Ame rican family o f3 $151/week , $21/day
the most affo rdable meal kit option $210/week, $30/day
A PRETTY BIG DILL
FOOD FOR THOUGHT
Based on current trends, analysts predict meal kit delivery services to become a $5 billion industry within the next decade. Indeed, investors have been pouring money into startups such as Blue Apron (valued at $2 billion) and HelloFresh (valued at $3 billion). The two, along with a myriad of other competitors, have raised hundreds of millions of dollars in venture capital. But how many people actually subscribe to these meal services? According to data from 2015, Blue Apron boasts 5 million deliveries each month, which represents a ten-fold increase from 2013. HelloFresh is not far behind with 4 million monthly transactions. The landscape is filled with competitors, each offering something special, whether it be vegan meals, locally sourced ingredients, or authentic restaurant recipes. Differentiation will be critical in order for firms to distinguish themselves and attract a loyal following.
In theory, meal kits seem like an intriguing choice for busy consumers or food enthusiasts who want to experience the thrill of cooking. But how well do they actually stack up? Last summer, California-based startup Din offered users a free trial of their service. Din’s major selling point is the ability to recreate dishes straight off the menus of partner restaurants in under 30 minutes. The experience was admittedly very fun, and the dinner quite tasty, but the recipe was difficult to follow and ultimately took much longer than the promised half-hour. The pre-portioned and individually packaged ingredients were convenient, but the amount of plastic waste generated seemed excessive. The verdict: a pleasant experience, although probably not one to be done daily. Consumers are increasingly turning to online grocery shopping, which
presents an incredible opportunity for growth in the meal kit business. Though the market is still in its early stages, conditions appear promising for the future. By combining convenience, healthiness, and affordability, meal kits can change the way we think about cooking. And that’s something all college students can appreciate.
Overworked and Underpaid
THE WOES OF BEING AN OVERTIME AND UNDERWHELMED MILLENNIAL WORKER by Ryan Ma
T
alia Jane, a former employee of Yelp, was terminated just a few hours after writing an open letter to her CEO about her low pay. However, the most surprising aspect of the situation may be how the Internet reacted to her letter.
IMAGE: NATIONALGEOGRAPHIC.COM
Jane was employed by Eat24, Yelp’s delivery app. Even at the beginning of her job, Jane could barely afford to purchase basic necessities with the salary she was given. The only way she could buy the six-dollar train ticket to work was through a donation from a bystander who had overheard her dilemma one day. 15
INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
Underpaid and overqualified millennials are forced to take piddling salaries, which ultimately leave them with low median and ending salaries
The letter stirred up sympathy in her online audience, but many, even other millennials, were quick to criticize Jane. Some deemed Jane “entitled” while others stated that Jane never should have taken such a low paying job. Regardless of how she was criticized, Jane took heat for trying to live independently. STORY OF THE UNDERDOG Jane, a college graduate with a degree in English Literature, took a job that paid just under $20,000 per
year. Although this is below the average entry-level salary of $32,200 for graduates holding degrees in English Literature, Jane is not the only millennial struggling to make ends meet. In addition to paying rent, groceries, utility bills, and insurance, over 71 percent of recent graduates are also responsible for paying student loans, according to CNN. College tuition costs have increased between 300 to 400 percent over the past 40 years, not adjusted for inflation, according to the College Board. In addition, college tuition continuously rises at a rate higher than that of inflation, proving that a college education in the 21st century is indeed more expensive than in the mid-20th century. After college, many graduates accept entry-level jobs with salaries far below the median in the United States, but hope for fast advancement accompanied with raises and bonuses. Unfortunately, due to the state of the economy, promotions today tend to be less frequent and salary freezes keep employees stagnant, despite inflation. In turn, millennials simply cannot afford to live independently. According to a Time study in 2014, “43 percent of young men were living at home, which is the highest rate since 1940.” This, however, is not due to a lack of qualification or education. Currently, the median entry salary is $3,472 less than
college tuition have increased 300% - 400% over the past 40 years
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that of 2000, and is equivalent to that of 1980. With mounds of student loans in addition to inflation and a high cost of living, millennials have it particularly rough. The addition of low entry wages only increases the hardship. ENDURING EFFECTS Final salaries are heavily dependent on entry-level salaries. Millennials are currently searching for jobs in a market with low salaries and nonexistent opportunities for raises. Due to the state of the economy, overqualified millennials are forced to take undercompensating jobs. Unfortunately, these new hires may now be stuck in an inescapable hole. Because of low entry wages, millennials may never be able to fully maximize their salaries. Although it is easy for adults and the elderly to point fingers, it is hard to develop an argument against millennials; student debt is currently at a record high of $35,000 per graduate, compared to $10,000 in 1993. Wage growth is virtually stagnant and the cost of living is increasing exponentially year after year. SLIPPERY SLOPES Unfortunately, such conditions have a lasting effect on companies and businesses as well. Because of the conditions outlined previously, money matters to millennials. According to INC., 29 percent of millennials say that a higher salary is the biggest contributor to loyalty to a company; this entices companies to offer new perks and initiatives such as paid leave, health insurance, and relocation reimbursement in order to keep millennials from taking their talents elsewhere. Overall, low entry wages are detrimental to the entire economy and population. Underpaid and overqualified millennials are forced to take piddling salaries, which ultimately leave them with low median and ending salaries. Thus, more and more graduates are stuck living with mom and dad, taking prospective homeowners out of the housing market. As for businesses, the turnover rate has increased and millennials have become more loyal to companies with higher salaries and increased opportunities for advancement. Millennials have undeservingly been deemed an entitled and pampered generation, when in fact, they are overworking against the odds of success.
PERSONAL FINANCE
29% over 71% of recent graduates are responsible for paying student loans 71%
IMAGE: FLICKR.COM
$
NOW 1993
Student Debt Then and Now
0
$10,000/graduate $35,000/graduate 5000 10000 15000 20000 25000 30000 35000
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STARTUPS & TECHNOLOGY
Tech Bubble Bursting: App APPLE AS AN INDICATOR OF TECHNOLOGY
by Dheeraj Namburu
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Class of 2021, Rejoice: College Admissions Process to be Expedited A SATIRICAL EXPOSE ON THE EXPLOSIVE TECHNOLOGY ABOUT TO HIT THE ADMISSIONS’ GAME Tiffany Chen 20
Snap to the Future THE NOT-SO DISAPPEARING EFFECT ON SOCIAL MEDIA Waylon Jin 22
ple Quit it with the “S” THE FANG GROUP AND THE STOCK MARKET
TECH INDUSTRY SHRIVELING UP
A
s the tech-heavy NASDAQ index plummeted 10 percent in early January of 2016, sources such as CNNMoney began to report on a “shriveling” up of the monolithic technology sector. This tumble was precipitated by
Venture capital funds are drying out as investors realize unicorn-startups may grow immensely but fail to post quarterly profit. tech giants like Apple posting their lowest year-over-year growth, a measly 2.2 percent. The so-called FANG (Facebook, Amazon, Netflix and Google) group’s collective stock price shrunk an average of 15 percent in February. While technology stocks dropped, so did the overall market, which leaves one to wonder whether the technology sector is actually failing. The NASDAQ, as of the beginning of April, is still down 3.1% for 2016, despite the mid-Feburary rally in stock indexes following the recovery in oil prices. Venture capital funds are drying out as investors realize unicorn-startups may grow immensely but fail to post quarterly profit. APPLE’S PLUNGING PROFITS Product lifecycles and release structures reveal the true reason for falling profit shares. Apple, as a case study, derives 19
INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
most of its revenue and profits from its iPhone sales with approximately 60 percent of all Apple revenue being generated by the iPhone. Since the inception of the product, the iPhone has used a formulaic product release cycle. Apple’s tick-tock release cycle where a iPhone with a new design follows an iPhone with upgraded internals. This cycle creates a consistent revenue model, redesigned iPhones yields higher revenue relative to years where the iPhone’s internal components are upgraded. Since the iPhone’s components were upgraded this year, Apple’s drop in revenue sends massive ripples throughout the industry. Therefore, the tech sector’s drop may not be indicative of a bust but rather a natural outcome of a predetermined product release cycle. Customers also tend to purchase phones every two years due to phone contract cycles and customers gravitate towards a new design. This bias is noticeable as Apple sales tend to grow less during their “S” years, when compared to their newly designed phone release as a BGR report indicates. The iPhone has also saturated the smartphone market, thus rapid growth in the mobile phone industry is unlikely. EVERYONE WANTS A BITE...BUT NOT ALL THE TIME
Intel, like Apple, advised investors that 2016 may be a year of minimal growth, due in part to weakening PC sales. Just like Apple, Intel relies on a two-year product release cycle, a tick-tock release, where a tick represents an improvement in chip size and a tock year represents a change in microarchitecture, the design of the chip. Both represent improvements in efficiency but improvements in chip size generally yield better results. In 2016, Intel did the unthinkable and had two tock years in a row, thereby decreasing customers outlook on improvements to processing speed. This lack of product development justifies a year’s wait before upgrading their computer chips. This negative outlook on a marginally better computer chip for this year drove Intel’s stock and outlook down. This pattern can be generalized to many other technology companies. Netflix, for example, didn’t reinstate its contract with Epix this year, thus losing blockbuster films like “The Hunger Games” for streaming. Shrinking product offerings results in Netflix losing its appeal to their customers.
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FANG’S PERFORMANCE IN 2015 AND 2016 2015
139%
140% 122%
2016
50% 40%
45% 33%
30% 20% 10% 0% -10%
-6%
-6.4%
-5.8%
Netflix
-12%
Amazon
IT’S NOT ALL GLOOM AND DOOM
In contrast to the lack of new product development at other tech companies, companies like Google with brand new phones and products, posted a higher than expected earnings. Alphabet, Google’s new parent company, has streamlined its business this year by reorganizing internal company structure and rolling back development. While product lifecycles are partially to blame, overall economic growth has been stunted due to historically low oil prices. This, along with decreased demand have caused many major technology companies to flat-line in 2015. However, this upcoming year should see the release of several new products along with commitments by big tech companies into releasing new consumer technologies. Therefore, any claims of the technology companies flat lining seems to be a one-time occurrence and not at all indicative of a weakening technology sector.
Any claims of the technology companies flat lining seems to be a one-time occurrence and not at all indicative of a weakening technology sector.
Class of 2021, Rejoice: College Admissions Process to be Expedited A SATIRICAL EXPOSÉ ON THE EXPLOSIVE TECHNOLOGY ABOUT TO HIT THE ADMISSIONS’ GAME
by Tiffany Chen In the wake of college admission decisions for the class of 2020, elite universities including schools in the Ivy League, Stanford, and MIT have announced that beginning with the next application cycle, admissions officers will adopt a new technological tool to expedite the applicant evaluation process.
STARTUPS & TECHNOLOGY
Once a cursory review is made, the admissions officer accepts or rejects the applicant with a swipe right or left respectively. A PROSPECTIVE APPLICATION D-Date, the newly released mobile-app brainchild of mid 20-year-old white men in Silicon Valley, is facing a high acceptance rate among top-tier colleges. “Historically, our admissions officers have spent far too long reading through applications”, said an Ivy League university president who requested anonymity. “Sometimes they fight to accept a candidate when other officers think he or she should be rejected. “Too much is left to human judgment and discretion. “With a decreasing administrative
budget and an increasing number of candidates every year, it’s impractical to read every application thoroughly. D-Date will shorten the decision process from eight minutes to two — maybe two minutes and thirty seconds in the worst case — per application.”
MEET THE APPLICANTS Upon opening D-Date on their smartphones, officers are presented with the profile of a single student. A candidate’s profile is populated with information pulled from the Common Application: race, socioeco-
Tinder is superficial. D-Date is holistic
nomic background, high school, GPA, intended major, and full name are listed underneath the potential admittee’s SAT (or ACT) score, bolded in large, red, blinking text at the top of the screen. Tapping once on the applicant’s profile also brings up a list of buzz-phrases in the applicant’s supplementary essays. Notable ones include: extremely smart, high school valedictorian, perfection-driven, and son/daughter-of[insert donor or famous person’s name here]. Once a cursory review is made, the admissions officer accepts or rejects the applicant with a swipe right or left respectively.
SWIPING RIGHT REACHES A NEW HEIGHT When asked to compare D-Date to similar quick-decision mobile apps like Tinder, a Harvard admissions officer who requested anonymity explained, “Are [D-Date and Tinder] the same? Maybe on the surface. “The key difference between the two, however, is the quality of the decision being made. Tinder is superficial. D-Date is holistic. We never look at
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INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
only an applicant’s SAT score or only an applicant’s extracurricular activities. We always look at both. “…Heck, we never even know what the applicant looks like!” Other admissions officers whose universities have also incorporated D-Date into the evaluation process expressed similar sentiments. In the past, reading an application and making a decision required careful annotation of a candidate’s supplementary essays and transcript. Now, with the D-Date, the same decision is reached by reviewing a candidate’s profile in half the time -and with less than half the effort. LESS WAIT TIME AND MORE FACE TIME If an admissions officer were to ever eet an applicant face-to-face, the availability of D-Date as a mobile app also allows students to be admitted (or rejected) right on the spot. “Fewer and fewer alumni volunteer to interview potential students because there is a lot of frustration when students whom they rank highly don’t end up getting accepted,” said a Princeton admissions officer. “To make up for that, the university is considering having admissions officers conduct interviews. If that’s the case, it’ll be a lot easier for me to not have to try to remember a student’s name 24 hours after we’ve talked.” The officer refused to comment on whether a candidate would receive immediate feedback on his or her status following such an interview and immediate evaluation. BUT WAIT, WHAT ABOUT WAITLISTING? Of particular significance is the lack of an option to “waitlist” a candidate in addition to “accept” or “reject” one. In response, the admissions officer shrugged his shoulders and admitted, “The waitlist button was there at first — b ut we contacted D-Date’s software engineers and requested that they remove it. We’re quite positive that any student we accept will enroll as a freshman for the next academic year. “We’re pretty selective, which means we’re very desirable. Why wouldn’t they want to come?” Mr. Richard Brownson (he prefers to go by Rich or Dick), the founder of D-Date and a Brown alum, confessed, had he applied to Brown this year instead of ten years ago, he probably would not have stood out in the current applicant pool. “D-Date is to help admission officers
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save time without doing any less holistic a job than they had already been doing,” he said. “In the future though, maybe we can outcompete the Common Application and have students as users as well. Students would swipe right for the universities they want to attend.” “Think of the number of colleges everyone could apply to then!
Snap to the Future THE NOT-SO DISAPPEARING EFFECT ON SOCIAL MEDIA
viewed per day, roughly the same number of video views Facebook has per day. Spiegel has created a platform that targets a large user base of predominantly teens and millennials. Snapchat appeals to social media users in today’s world because it satisfies consumers’ desire for on the go products and provides instant gratification. As Spiegel put it at the AXS Partner Summit, it’s the age of the“More-Personal Computer”: media consumers are experience-driven and seek to share them through online outlets. Social media platforms are continually seeking ways to make online communication instant and more realistic.
AN ADVERTISER’S DREAM Designed to further enhance communication, Snapchat is part of a cohort of other startups backed by the investments of speculative venture capitalists. Companies
by Waylon Jin
LET’S CHAT ABOUT SNAPCHAT Backed by innovative business strategies, Snapchat is an application that allows individuals to send videos and pictures that disappear within a few seconds of being opened. While it may seem that the large social media networks such as Facebook and Twitter have become monopolies in the digital world, companies like Snapchat have gained popularity faster than anyone can imagine. With over $1.4 billion raised in total, Snapchat has cornered its market with teens and college students. Attributed to its effective use of mass marketing, Snapchat dominates over its fellow tech startups. Through its addictive content, such as Campus Story and geotags, and unique interface, Snapchat is poised to change the world of social media advertising. And with companies like Fidelity Investments investing $175 million in funding, a plethora of funding is allowing Snapchat to grow and focus on making an even more polished brand.
A SNAP IN TIME Started in the summer of 2011 as an app called Pictaboo (always wonder where that ghost came from?), Snapchat’s initial growth was slow. After a summer of working on improving the app and changing the name of the app to Snapchat, the company had grown from 127 users to 100,000 users. Snapchat released its video sharing capabilities in December 2012. Flash forward to March 2016, when Snapchat CEO Evan Spiegel reported that 8 billion videos are
Snapchat discover brands pay
$20,000 per thousand views
IMAGE: TAHIRNEWS.COM
STARTUPS & TECHNOLOGY
like Facebook and Snapchat were initially designed to help people stay connected to others, but they have since expanded their business. Along with these forms of communication, social advertising is expanding the way companies promote their brands and generate revenue. Snapchat may seem like it can’t make money from offering an entirely free service to users, but it generates a large portion of its profits from advertising through Snapchat Discover. Snapchat Discover is an effort to move beyond just messaging to
including Live Stories. Stories are backed by about 20 large brands, like CNN, People, and ESPN. These brands will pay $20,000 per thousand views. With CPM (cost per thousand views) of ad time twice what an ad for Facebook and Instagram goes for, Snapchat shows their effective advertising is only beginning to draw the attention of world renown brands. With people and companies responding well to the effects of advertising, Snapchat seeks to make a larger impact. In mid-February, Viacom, an American mass
media company, has extended a deal with Snapchat to sell more advertising. Drawing on the popularity of filter usage, Snapchat recently bought Bitmoji for $100 million in the hopes that users will like the idea of customizable cartoon avatars. Snapchat is making an economic impact by shifting the effects of marketing and advertising on partnerships and targeting younger audiences. At this point, correlating social media with the nature of markets is just the beginning.
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CAREERS
The Value of Speaking
HOW MUCH IS LEARNING A LANGUAGE WORTH? by Calvin Chu
PORTUGUESE (203M)
HINDI (260M)
TURKISH (70.8M)
LAHNDA (82.7M)
BENGALI (193M)
FRENCH (75M)
ENGLISH (335M)
SPANISH (414M)
JAPANESE (122M)
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TELEGU (74M)
MANDA (1.19 MA
(
ARABIC (237M) GERMAN (78.3M)
RUSSIAN (167M)
Smith-Tuck: A Business Bootcamp Just for Women BRIDGING YOUR FUTURE IN BUSINESS Katharine Jessiman-Ketcham 26
g Another Tongue
ARINE 97B) ANDARINE
(1.197B)
THE WORLD’S MOST POPULAR LANGUAGES
LANGUAGE: A LUCRATIVE SKILL At the bottom of many resumĂŠs, students are now listing their language proficiencies as a marketable skill. In a day and age where businesses interact across the world, the ability to communicate with others who speak other languages opens the door for many economic opportunities.
According to researchers, speaking another language can increase employee salaries by an average of 2%. However, this increase in wage may actually underrepresent the value offered to employers.
KOREAN (77.2)
Language
Furthermore, learning multiple languages is associated with higher test scores and better performance in school. According to researchers, speaking another language can increase employee salaries by an average of 2 percent. However, this increase in wage may actually underrepresent the value offered to employers.
(Number of Speakers)
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INTERCOLLEGIATE FINANCE JOURNAL • SUMMER 2016
SHARP MINDS, NOT SHARP TONGUES Speaking multiple languages often indicates stronger cognitive skills, suggesting that multilingual employees are better equipped to interpret information to make sound decisions. Moreover, they may be better problem solvers, as they were presented with more opportunities to mediate between multiple sides and coming up with cross-discipline solutions. Additionally, multilingual individuals are better equipped to multitask, as their brain is already able to process two complex languages at the same time, so two tasks at the same time may seem like a relative piece of cake. Another benefit is that multilingual people have had past experiences in mediating cross-cultural concerns, which in turn help them to identify issues earlier on in order to avoid potential conflicts and dangers. When learning a foreign language, speakers often also become more aware of parts of speech, tenses, syntactic phenomena, and other elements of language that help them better understand their own native language better. This can be useful for writers, creative designers, and other job positions that require a mastery of the English language to optimize one’s impact.
LANGUAGES: SOUND DECISION MAKING According to a study done at the University of Chicago, individuals that are presented with financial decisions in Spanish are more apt to choose rewards that maximize long-term gain, compared to English-only speakers. Researchers posited that this performance can be attributed to a degree of separation from the emotional biases that come from one’s native language. In acquiring a new tongue, speakers must cognitively grapple with ideas while removed from some native subjectivity, leading to more clear-minded decision-making. This kind of rational financial decision-making reaps benefits in the workplace, particularly in financial settings. As more and more students look to go into these fields, a language, though arguably not directly applicable on trading floors and office cubicles, still provides a boost in productivity and efficiency in completing workplace tasks. Perhaps employers looking for treasurers should look for polyglots.
OPPORTUNITIES FOR STUDENTS As colleges roll out more study abroad and language immersion programs, college students should certainly explore their options to gain exposure to new languages
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and cultures. Businesses are rolling out internships abroad as well, so students could even be paid to go abroad. Furthermore, some foreign governments (particularly China) actively recruit English speakers to teach their students English, and in return provide an immersive experience in their own tongue. In essence, these countries acknowledge that language is essentially an exchangeable commodity; you share yours with me, and I’ll share mine with you. Overall, by valuing the acquisition of additional languages, employers and employees alike can say “Hola” to new opportunities!
In acquiring a new tongue, speakers must cognitively grapple with ideas while removed from some native subjectivity, leading to more clear-minded decision-making.
Smith-Tuck: A Business Bootcamp just for Women
BRIDGING YOUR FUTURE IN BUSINESS by Katharine Jessiman-Ketcham Sponsored by Tuck Business School
In the perennial search for a summer internship or job after graduation, Liberal Arts students often feel at a disadvantage to the Wharton- and Ross- undergrads of the world, who have spent their college careers preparing for a job in Business or Finance. With the popular Tuck Business Bridge Program, though, students with liberal arts, sciences, and engineering backgrounds can gain a 3-week education in business skills, allowing them to acclimate quickly and confidently to the business world either during summer internships or after graduation. And now, Tuck Bridge has designed a new program just for women. The Smith-Tuck Business Bridge Program, a collaboration between the Tuck School of Business and Smith College, had its inaugural year summer 2015. Alex Corindia, Marketing and Communications Manager, says, “it is very similar to our traditional Bridge offering here at Tuck: we use the same curriculum and professors, but it is delivered on the Smith College campus, which adds considerable value.” Specifically, the partnership with Smith College, the largest women’s liberal arts college in the U.S., allows Tuck to provide a program specifically tailored for future female leaders in business. Corindia adds, “our students come in with almost no knowledge of business and come out of it with a solid foundation, even presenting a full corporate valuation in front of executives on the final day.” The IFJ sat down with Carrie, an upbeat and driven junior studying Economics at Bowdoin College, to learn about her time at Smith-Tuck.
AN ANTIDOTE TO THE BOYS CLUB Familiar with the regular Tuck Bridge program from friends at school, who told her it was a good way to leverage a liberal arts education, Carrie chose Smith-Tuck for the all-female classroom experience. The Finance Society at school was welcoming, but Carrie felt awkward; “[it] seemed like a boys club...I felt like everyone in it had always known what they wanted to do and exactly what sector of finance they wanted to work in.”
CAREERS
Realizing that finance was an accessible career path as a liberal arts major was invaluable
of focusing on a unique company that sought to balance social good with economic profit.” Carrie adds, “The company only went public last year, so focusing on a recent IPO was really challenging and engaging.”
CONFIDENCE IS KEY Spending her freshman and sophomore summers working at a non-profit, Carrie wasn’t sure what she wanted to do within the field of finance - or even if finance was the right career path for her. She also liked that Smith-Tuck was right at the beginning of the summer, so she could start an internship immediately after classes ended.
THE LOWDOWN FROM A NATIVE Since everyone in the program is a liberal arts student, the first part of the program is spent as an introduction to a broad range of skills: modules in business communications, corporate finance, financial accounting, managerial economics, marketing and spreadsheet modeling. Workshops and career exposure are offered during lunch. At any point, participants can work closely with the career development staff at
Smith on resume building and networking tips. Carrie sums it up: “You [can] seek out opportunities as you [want].” In the second and third week, Carrie embarked on her culminating project of the program: a DCF analysis. Working in a group with four other girls, Carrie explains, “You spend a lot of time with the group you do the presentation with. The program actually assigns you a study room and you work there together, doing all of your homework together throughout the entire three weeks and staying there until 11 every night - it’s a real bonding experience... by the time you’re working on the DCF, you’ve established a leadership role in the group and everyone knows each other’s strengths and weaknesses.” Each group gets to choose the company they do the DCF of and Carrie’s group chose Etsy: “[We] liked the idea
When asked what her three takeaways were from the summer, Carrie listed confidence, career guidance, and networking. Being “a liberal arts kid”, Carrie was nervous about entering business and finance. Smith-Tuck gave her the foundations she needed to feel confident in her ability to do the job just as well as anyone else. Networking opportunities throughout the program with students and alumnae from Tuck Business School also helped Carrie discern whether or not finance was the field for her. Carrie says that Tuck goes beyond classroom material. For instance, they offer a public speaking class that gave her the confidence to be able to stand up and defend her DCF at the end of the program. Even more, realizing that finance was an accessible career path as a liberal arts major was invaluable.
TO THE RECRUITMENT PROCESS...AND BEYOND!
IMAGE: PIXABAY. COM
Doing Smith-Tuck shows very clearly that you’ve made the investment in yourself and your career.
As she talks about the internship she has lined up for this summer on an equity trading floor in Boston, Carrie expresses how interviewers appreciate that she has been proactive and has clearly demonstrated her interest in finance. “Doing Smith-Tuck shows very clearly that you’ve made the investment in yourself and your career.” To be able to go into interviews and “own it” (her experience) is something she would never have been able to do without Smith-Tuck -- she adds, “I would have been terrified without Tuck”. Being able to stand and defend her DCF was empowering. In an internship interview, she was asked why she thought oil would stay low and Carrie gave her whole case. The interviewer then asked, “now tell me why it will do the opposite” -- without the experience of having to defend her DCF and her projections and standing her ground, Carrie feels she wouldn’t have had the courage to do that. Interested in learning more? Go to bridge.tuck.dartmouth.edu
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IFJ ICON: JULIAN KELLY