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☎️ Burner phone blues

Good Monday afternoon. A quick heads up: if you hate IPOs skip over the first half of this email.
In today’s issue:
  • The ultimate IPO cheat sheet.
  • Small businesses battle big insurers.
  • Apple’s batterygate scandal.
  • A burner phone faux pas.

Reindeers, out. Unicorns, in.
With the tragicomic US election behind us, four unicorns filed to go public last week in a pre-Christmas rush to IPO. Here’s what you need to know about each of them.
1) Airbnb is the comeback kid of tech. Although its stats aren’t the prettiest – it lost $700 million this year and is debt of $2 billion – it bounced back from the pandemic with a profit in Q3. Airbnb’s IPO is coming at the perfect time:
  • Vaccine = increased international travel. Good news for Airbnb.
  • No vaccine = increased domestic travel. Good news for Airbnb.  
2) Affirm is a fintech company that lets people buy stuff in installments. The pandemic boosted e-commerce, making buy now, pay later platforms like Affirm the belle of this year’s fintech ball. And the stats prove it. Affirm’s revenue increased by 93 per cent in 2020. But:
  • Affirm’s a little clingy. It relies on Peloton for 30% of its revenue and - although they have a 3 year agreement - a potensh 2023 break-up has investors sweating. 
3) Roblox played the pandemic like a fiddle. With kids stuck at home, the tween gaming platform grew to 31 million daily users while sales soared by 91 per cent in Q3. But peel away the all-star stats and you’re left with a few risks:
  • Roblox’s success hinges on its ability to “provide a safe online environment” for kids. It’s struggled with this before.
  • Kids are the one thing markets hate: fickle. New games like Among Us could eat into Roblox’s hype.
4) Wish is an e-commerce marketplace in a love/hate relationship with the pandemic. The e-commerce boom is good for sales, but coronavirus wreaked havoc on Wish’s manufacturing and supply chains: its revenue dropped 8 per cent in Q1. Although Wish’s revenue has since recouped, it has another problem:
  • Most of its merchants are in China, and current US/China tensions are bad for biz.
Silicon Valley is on Santa’s nice list this year. Despite the grab bag of risks each unicorn is carrying around, this winter’s IPO season has investors gearing up for a great Christmas.
Caution: tech IPOs are religiously overhyped. Uber and Lyft were two of 2019’s largest IPOs, but they also saw some of the poorest returns.
A Tale of Eight Insurers
Last week, the UK Supreme Court heard a landmark case against insurers for refusing coronavirus payouts.
Once upon a time, a deadly virus swept the land and Boris Johnson ordered a national lockdown. Thousands of small businesses closed overnight and filed for business interruption insurance - a policy that replaces lost income in the event of unexpected peril.
But insurers refused to empty their wallets. They argued their insurance policies weren’t supposed to cover such unprecedented lockdowns.
The knight in shining armor. With businesses hemorrhaging money, the Financial Conduct Authority swooped in to compile a test case against eight insurers in the High Court. The court ruled in favor of the FCA in September.
Happily ever after? Not quite. Hopes of quick payouts were dashed when six insurers filed a leapfrog appeal to the Supreme Court. The SC is expected to hand down its decision in the coming weeks.
Insurance can be exciting. If upheld, the appeal would:
  • Affect 400k policyholders and cost £1bn.
  • Be a PR disaster for insurers, who’ve been called “morally contestable.”
  • Not be a win for all businesses. Some insurers aren’t party to the proceedings and many policy wordings weren’t discussed in court.
Too little, too late? 75% of small businesses predict closing by 2021 if their revenues slump any further.
Zoom out. Australia ruled against insurers in a similar case last week.
Apple has agreed to pay $113 million to settle consumer fraud investigations.
Classic autumn traditions: cozy sweaters, pumpkin spice lattes, Apple releasing a new iPhone, your old iPhone suddenly giving out. 
Turns out it’s not a coincidence. In 2017, Apple admitted iOS updates were intentionally slowing down old iPhones to cover up battery issues. Aka batterygate.
Three years later… the tech giant’s still on the hook. 34 states recently investigated Apple for duping people into buying new phones when their old ones could’ve been revived with a battery replacement.  
To make the embarrassing saga go away, Apple has agreed to settle the investigation and be more transparent about battery usage in the future.
$113 million sounds like a lot. But Apple’s currently sitting on $191 billion in cash.
What might actually cost the tech giant is its sinking (syncing?) reputation. Batterygate has ramped up regulatory scrutiny into Apple, and the phone manufacturer’s shenanigans aren’t doing much to help Big Tech revamp its bad boy image.  
In other tech news…
  • Big Tech suited up for another Senate hearing. It went surprisingly well.
  • Tech giants are threatening to pull out of Pakistan over new restrictive tech laws.
Sarkozy and The No Good, Very Bad Burner Phone
Image: Giphy
Image: Giphy
Nicolas Sarkozy, former French President, made history today after appearing in a Parisian court to face corruption charges.
Sacré bleu. In 2014, investigators seized Sarkozy’s diaries to investigate claims he accepted illicit payments from L’Oreal heiress Liliane Bettencourt for his presidential campaign. Sarkozy has been accused of bribing a judge to leak confidential info on the investigation in return for a cushy job in Monaco.
New phone, who dis… The case rests on a wiretapped burner phone Sarkozy bought under the alias ‘Paul Bismuth’ to communicate with the judge. Sarkozy denies any wrongdoing, calling the Bismuth accusations “an insult to my intelligence.”
Like mentor, like mentee. This is the first time a French head of state has faced corruption charges – although Sarkozy’s predecessor and mentor Jacques Chirac was convicted of embezzlement in 2011.
Burned by a burner. Other than the 10-year sentence Sarkozy faces, the trial is a humiliating footnote to a political career tainted by legal woes.
  • Sarkozy has also been accused of receiving illicit campaign funding from Gaddafi and will appear in court next year on charges he overspent on his 2012 re-election bid.
The irony: Sarkozy is a lawyer.
  • Elizabeth Holmes wants to block jurors from hearing about her luxurious lifestyle as Theranos CEO.
  • Purdue Pharma pleads guilty to three counts of criminal wrongdoing for manufacturing highly addictive opioid medications.
  • Beam Financial, a San Francisco savings app, is sued for ignoring customer withdrawal requests.
  • EU is in deadlock. Poland and Hungary have vetoed a pandemic stimulus due to ‘rule of law’ requirements.
  • Disney is refusing to pay royalties to Star Wars novelist Alan Foster.
  • Ralph Lauren model accuses the brand of elaborate fraud in $20 million lawsuit.
  • The Vatican launches an investigation after the Pope’s IG account ‘liked’ a photo of a Brazilian model.
Workflow software company Onit has acquired legal AI startup McCarthyFinch to beef up its legal workflow offerings.
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Legit. | Legal News @anniamirza

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