3D Map: The U.S. Cities With the Highest Economic Output


This post is by Iman Ghosh from Visual Capitalist

3D Map: The U.S. Cities With the Highest Economic Output

3D Map: The U.S. Cities With the Highest Economic Output

At over $21 trillion, the U.S. holds the title of the world’s largest economy—accounting for almost a quarter of the global GDP total. However, the fact is that a few select cities are responsible for a large share of the country’s total economic output.

This unique 3D map from HowMuch puts into perspective the city corridors which contribute the most to the American economy at large.

Top 10 Metros by Economic Output

The visualization pulls the latest data from the U.S. Bureau of Economic Analysis (BEA, 2018), and ranks the top 10 metro area economies in the country.

One thing is immediately clear—the New York metro area dwarfs all other metro area by a large margin. This cluster, which includes Newark and Jersey City, is bigger than the metro areas surrounding Los Angeles and Chicago combined.

Rank Metro Area State codes GDP (2018)
#1 New York-Newark-Jersey City NY-NJ-PA  $1.77T
#2 Los Angeles-Long Beach-Anaheim CA $1.05T
#3 Chicago-Naperville-Elgin IL-IN-WI $0.69T
#4 San Francisco-Oakland-Berkeley CA $0.55T
#5 Washington-Arlington-Alexandria DC-VA-MD-WV $0.54T
#6 Dallas-Fort Worth-Arlington TX $0.51T
#7 Houston-The Woodlands-Sugar Land TX $0.48T
#8 Boston-Cambridge-Newton MA-NH $0.46T
#9 Philadelphia-Camden-Wilmington  PA-NJ-DE-MD $0.44T
#10 Atlanta-Sandy Springs-Alpharetta GA $0.40T
Total GDP $6.90T

Coming in fourth place is San Francisco on the West Coast, with $549 billion in total economic output each year. Meanwhile in the South, the Dallas metroplex brings in $478 billion, placing it sixth in the ranks.

It’s worth noting that using individual metro areas is one way to view things, but geographers also think of urban life in broader terms as well. Given the proximity of cities in the Northeast, places like Boston, NYC, and Washington, D.C. are sometimes grouped into a single megaregion. When viewed this way, the corridor is actually the world’s largest in economic terms.

U.S. States: Sum of Its Parts

Zooming out beyond just these massive cities demonstrates the combined might of the U.S. in another unique way. Tallying all the urban and rural areas, every state economy can be compared to the size of entire countries.

US States and Country Comparison by GDP 2018

According to the American Enterprise Institute, the state of California brings in a GDP that rivals the United Kingdom in its entirety.

By this same measure, Texas competes with Canada in terms of pure economic output, despite a total land area that’s 15 times less that of the Great White North.

With COVID-19 continuing to impact parts of the global economy disproportionately, how will these kinds of economic comparisons hold up in the future?

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Fighting the Climate Crisis is the Most Pro-Progress Program


This post is by Continuations by Albert Wenger from Continuations by Albert Wenger

There are still people out there who seem to believe that fighting the climate crisis is somehow in opposition to progress. That it will hold the economy back. The exact opposite is the case. Fighting the climate crisis is the most pro-progress program we can embark on.

Driving an EV is a superior experience to driving a car with an internal combustion engine. I say this as someone who has driven a great many high end German cars.

Using modern heat pumps combined with solar can save many households in the US one to two thousand dollars a year compared to their existing solutions. Also, with the right setup your house or community will no longer be dependent on some big utility company.

Indoor farming when done right produces intensely flavorful salads, tomatoes and other vegetables year-round. Unlike the stuff that was harvested pre-maturely, so that it could be trucked all the way across the continent.

All of the above also has the potential to create a large number of interesting new jobs, much of it in local employment (eg solar and heat pump installation).

The case against this rests on flawed assumptions about cost and feasibility. Never mind that it of course completely ignores the extreme cost of not acting which will ultimately be the death of millions if not billions of people.

Oh, and before someone objects with “but what about the global South,” suggesting that this somehow would prevent progress from occurring in poor countries, it is even more true there. For example, would you rather create heat and light at night by burning fuels such as wood or kerosene in your abode inhaling smoke that causes deadly lung disease? Or would you prefer a solar panel plus battery? Of course the latter is far superior and constitutes massive progress. The same goes for mobility and internet access. Electrification are making these more accessible everywhere and solar is leading the way for that.

And yes, it is utterly affordable already today because of the extraordinary progress that’s been made with solar and batteries as can be seen in these two charts

A decarbonized world will be an amazing world and one we should work towards at full speed. I consider this the ultimate win-win: avoid extinction and make progress.

Shapes of Recovery: When Will the Global Economy Bounce Back?


This post is by Iman Ghosh from Visual Capitalist

Shape of Economic Recovery

The Shape of Economic Recovery, According to CEOs

Is the glass half full, or half empty?

Whenever the economy is put through the ringer, levels of optimism and pessimism about its potential recovery can vary greatly. The current state mid-pandemic is no exception.

This graphic first details the various shapes that economic recovery can take, and what they mean. We then dive into which of the four scenarios are perceived the most likely to occur, based on predictions made by CEOs from around the world.

The ABCs of Economic Recovery

Economic recovery comes in four distinct shapes—L, U, W, and V. Here’s what each of these are characterized by, and how long they typically last.

  • L-shape
    This scenario exhibits a sharp decline in the economy, followed by a slow recovery period. It’s often punctuated by persistent unemployment, taking several years to recoup back to previous levels.
  • U-shape
    Also referred to as the “Nike Swoosh” recovery, in this scenario the economy stagnates for a few quarters and up to two years, before experiencing a relatively healthy rise back to its previous peak.
  • W-shape
    This scenario offers a tempting promise of recovery, dips back into a sharp decline, and then finally enters the full recovery period of up to two years. This is also known as a “double-dip recession“, similar to what was seen in the early 1980s.
  • V-shape
    In this best-case scenario, the sharp decline in the economy is quickly and immediately followed by a rapid recovery back to its previous peak in less than a year, bolstered especially by economic measures and strong consumer spending.

Another scenario not covered here is the Z-shape, defined by a boom after pent-up demand. However, it doesn’t quite make the cut for the present pandemic situation, as it’s considered even more optimistic than a V-shaped recovery.

Depending on who you ask, the sentiments about a post-pandemic recovery differ greatly. So which of these potential scenarios are we really dealing with?

How CEOs Think The Economy Could Recover

The think tank The Conference Board surveyed over 600 CEOs worldwide, to uncover how they feel about the likelihood of each recovery shape playing out in the near future.

The average CEO felt that economic recovery will follow a U-shaped trajectory (42%), eventually exhibiting a slow recovery coming out of Q3 of 2020—a moderately optimistic view.

However, geography seems to play a part in these CEO estimates of how rapidly things might revert back to “normal”. Over half of European CEOs (55%) project a U-shaped recovery, which is significantly higher than the global average. This could be because recent COVID-19 hotspots have mostly shifted to other areas outside of the continent, such as the U.S., India, and Brazil.

Here’s how responses vary by region:

Region L-shape U-shape W-shape V-shape
Global (N=606) 32% 42% 16% 11%
U.S. (N=103) 26% 42% 23% 9%
Europe (N=110) 29% 55% 12% 4%
China (N=122) 25% 43% 11% 21%
Japan (N=95) 49% 26% 23% 1%
Gulf Region (N=16) 57% 26% 17%

In the U.S. and Japan, 23% of CEOs expect a second contraction to occur, meaning that economic activity could undergo a W-shape recovery. Both countries have experienced quite the hit, but there are stark differences in their resultant unemployment rates—15% at its peak in the U.S., but a mere 2.6% in Japan.

In China, 21% of CEOs—or one in five—anticipate a quick, V-shaped recovery. This is the most optimistic outlook of any region, and with good reason. Although economic growth contracted by 6.8% in the first quarter, China has bounced back to a 3.2% growth rate in the second quarter.

Finally, Gulf Region CEOs feel the most pessimistic about potential economic recovery. In the face of an oil shock, 57% predict the economy will see an L-shaped recovery that could result in depression-style stagnation in years to come.

The Economic Recovery, According to Risk Analysts

At the end of the day, CEO opinions are all over the map on the potential shape of the economic recovery—and this variance likely stems from geography, cultural biases, and of course the status of their own individual countries and industries.

Despite this, portions of all cohorts saw some possibility of an extended and drawn-out recovery. Earlier in the year, risk analysts surveyed by the World Economic Forum had similar thoughts, projecting a prolonged recession as the top risk of the post-COVID fallout.

It remains to be seen whether this will ultimately indeed be the trajectory we’re in store for.

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Here’s What Happens Every Minute on the Internet in 2020


This post is by Aran Ali from Visual Capitalist

What Happens Every Minute on the Internet in 2020

What Happens Every Minute on the Internet in 2020

In 2020, an unfathomable amount of digital activity is occurring at any given moment. This ongoing explosion in activity is the aggregate output of 4.5 billion internet users today, a number that’s projected to increase even further in coming years.

This powerful visual from Domo helps capture what happens each minute in today’s hyper-connected internet era, and it’s actually the eighth edition produced since the year 2012.

What can we learn from the evolution of what happens in an internet minute?

How Times Have Changed

Over its relatively short history, the internet has been a catalyst for both the rise and demise of new companies and platforms.

By looking at which brands have appeared in the graphic in earlier years, we can roughly chart the prominence of certain tech segments, as well as observe brands with the most staying power.

Data never sleeps over the years

As you can see above, platforms like Tumblr, Flickr, and Foursquare showed some promise, but eventually got omitted from the graphic as they dropped off in relevance.

Meanwhile, tech companies like Facebook, Amazon, and Google have had impressive staying power, evolving to become some of the biggest companies in the world. In the process, they’ve caught up to longer-standing titans like Apple and Microsoft at the top of the food chain.

The New “New Thing”

Not surprisingly, much of the internet landscape looks different in 2020. Here are a few of the digital hot spots today.

Cash Transfers
Nearly $240,000 worth of transactions occur on Venmo per minute. This has served as a catalyst for parent company PayPal, which evolved along successfully with fintech trends. PayPal’s stock now trades at near all-time highs.

E-Commerce
Even before COVID-19 resulted in shuttered storefronts and surging online orders, e-commerce was a booming industry. It’s now estimated that $1 million is now spent per minute online. Amazon ships an astounding 6,659 packages every minute to keep up with this demand.

Collaboration Tools
In a predominantly remote-working environment, tools like Zoom and Microsoft Teams host 208,333 and 52,083 users each minute respectively. Particularly in the pandemic era, it seems that this trend is here to stay.

Accelerated Turnover

The accelerated world we are in today means that many companies do not sustain a competitive advantage for as long. Social media companies have dwindled as observed above, and this is similarly reflected in the average lifespan of an S&P 500 company.

A typical company’s tenure on the S&P 500 is expected to shrink rapidly in the next few years:

  • 1964: 33 years
  • 2016: 24 years
  • 2027E: 12 years

Companies are shaving anywhere between 15-20 years off those highs, with estimates of further declines. This metric symbolizes the rapid evolution of the business landscape.

What Lies Ahead

It’s seemingly easy to forget mankind is still very early in the developments when it comes to the internet. But in this short period, its rise to prominence and the broad digitization of the world has left us with a very eventful timeline.

If the last decade serves as a reference point, one can expect further and intensifying competition among tech companies. After all, the reward—winning in today’s digital economy—reaps much greater value.

All signs point to internet activity advancing to further heights, if not because of 5G and its associated breakthroughs, then perhaps due to the steady rise in people gaining internet access.

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The $88 Trillion World Economy in One Chart


This post is curated by Keith Teare. It was written by Iman Ghosh. The original is [linked here]

World Economy 2019 $88 Trillion

The $88 Trillion World Economy in One Chart

The global economy can seem like an abstract concept, yet it influences our everyday lives in both obvious and subtle ways. Nowhere is this clearer than in the current economic state amid the throes of the pandemic.

This voronoi-style visualization from HowMuch relies on gross domestic product (GDP) data from the World Bank to paint a picture of the global economy—which crested $87.8 trillion in 2019.

Editor’s note: Annual data on economic output is a lagging indicator, and is released the following year by organizations such as the World Bank. The figures in this diagram provide a snapshot of the global economy in 2019, but do not necessarily represent the impact of recent developments such as COVID-19.

Top 10 Countries by GDP (2019)

In the one-year period since the last release of official data in 2018, the global economy grew approximately $2 trillion in size—or about 2.3%.

The United States continues to have the top GDP, accounting for nearly one-quarter of the world economy. China also continued to grow its share of global GDP, going from 15.9% to 16.3%.

Rank Country GDP % of Global GDP
#1 🇺🇸 U.S. $21.4T 24.4%
#2 🇨🇳 China $14.3T 16.3%
#3 🇯🇵 Japan $5.1T 5.8%
#4 🇩🇪 Germany $3.9T 4.4%
#5 🇮🇳 India $2.9T 3.3%
#6 🇬🇧 UK $2.8T 3.2%
#7 🇫🇷 France $2.7T 3.1%
#8 🇮🇹 Italy $2.0T 2.3%
#9 🇧🇷 Brazil $1.8T 2.1%
#10 🇨🇦 Canada $1.7T 2.0%
Top 10 Countries $58.7 trillion 66.9%

In recent years, the Indian economy has continued to have an upward trajectory—now pulling ahead of both the UK and France—to become one of the world’s top five economies.

In aggregate, these top 10 countries combine for over two-thirds of total global GDP.

2020 Economic Contractions

So far this year, multiple countries have experienced temporary economic contractions, including many of the top 10 countries listed above.

The following interactive chart from Our World in Data helps to give us some perspective on this turbulence, comparing Q2 economic figures against those from the same quarter last year.

One of the hardest hit economies has been Peru. The Latin American country, which is about the 50th largest in terms of GDP globally, saw its economy contract by 30.2% in Q2 despite efforts to curb the virus early.

Spain and the UK are also feeling the impact, posting quarterly GDP numbers that are 22.1% and 21.7% smaller respectively.

Meanwhile, Taiwan and South Korea are two countries that may have done the best at weathering the COVID-19 storm. Both saw minuscule contractions in a quarter where the global economy seemed to grind to a halt.

Projections Going Forward

According to the World Bank, the global economy could ultimately shrink 5.2% in 2020—the deepest cut since WWII.

See below for World Bank projections on GDP in 2020 for when the dust settles, as well as the subsequent potential for recovery in 2021.

Country/ Region / Economy Type 2020 Growth Projection 2021E Rebound Forecast
United States -6.1% 4.0%
Euro Area -9.1% 4.5%
Advanced economies -7.0% 3.9%
Emerging economies -2.5% 4.6%
East Asia and Pacific -0.5% 6.6%
Europe and Central Asia -4.7% 3.6%
Latin America and the Caribbean -7.2% 2.8%
Middle East and North Africa -4.2% 2.3%
South Asia -2.7% 2.8%
Sub-Saharan Africa -2.8% 3.1%
Global Growth -5.2% 4.2%

Source: World Bank Global Economic Prospects, released June 2020

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The $88 Trillion World Economy in One Chart


This post is by Iman Ghosh from Visual Capitalist

World Economy 2019 $88 Trillion

The $88 Trillion World Economy in One Chart

The global economy can seem like an abstract concept, yet it influences our everyday lives in both obvious and subtle ways. Nowhere is this clearer than in the current economic state amid the throes of the pandemic.

This voronoi-style visualization from HowMuch relies on gross domestic product (GDP) data from the World Bank to paint a picture of the global economy—which crested $87.8 trillion in 2019.

Editor’s note: Annual data on economic output is a lagging indicator, and is released the following year by organizations such as the World Bank. The figures in this diagram provide a snapshot of the global economy in 2019, but do not necessarily represent the impact of recent developments such as COVID-19.

Top 10 Countries by GDP (2019)

In the one-year period since the last release of official data in 2018, the global economy grew approximately $2 trillion in size—or about 2.3%.

The United States continues to have the top GDP, accounting for nearly one-quarter of the world economy. China also continued to grow its share of global GDP, going from 15.9% to 16.3%.

Rank Country GDP % of Global GDP
#1 🇺🇸 U.S. $21.4T 24.4%
#2 🇨🇳 China $14.3T 16.3%
#3 🇯🇵 Japan $5.1T 5.8%
#4 🇩🇪 Germany $3.9T 4.4%
#5 🇮🇳 India $2.9T 3.3%
#6 🇬🇧 UK $2.8T 3.2%
#7 🇫🇷 France $2.7T 3.1%
#8 🇮🇹 Italy $2.0T 2.3%
#9 🇧🇷 Brazil $1.8T 2.1%
#10 🇨🇦 Canada $1.7T 2.0%
Top 10 Countries $58.7 trillion 66.9%

In recent years, the Indian economy has continued to have an upward trajectory—now pulling ahead of both the UK and France—to become one of the world’s top five economies.

In aggregate, these top 10 countries combine for over two-thirds of total global GDP.

2020 Economic Contractions

So far this year, multiple countries have experienced temporary economic contractions, including many of the top 10 countries listed above.

The following interactive chart from Our World in Data helps to give us some perspective on this turbulence, comparing Q2 economic figures against those from the same quarter last year.

One of the hardest hit economies has been Peru. The Latin American country, which is about the 50th largest in terms of GDP globally, saw its economy contract by 30.2% in Q2 despite efforts to curb the virus early.

Spain and the UK are also feeling the impact, posting quarterly GDP numbers that are 22.1% and 21.7% smaller respectively.

Meanwhile, Taiwan and South Korea are two countries that may have done the best at weathering the COVID-19 storm. Both saw minuscule contractions in a quarter where the global economy seemed to grind to a halt.

Projections Going Forward

According to the World Bank, the global economy could ultimately shrink 5.2% in 2020—the deepest cut since WWII.

See below for World Bank projections on GDP in 2020 for when the dust settles, as well as the subsequent potential for recovery in 2021.

Country/ Region / Economy Type 2020 Growth Projection 2021E Rebound Forecast
United States -6.1% 4.0%
Euro Area -9.1% 4.5%
Advanced economies -7.0% 3.9%
Emerging economies -2.5% 4.6%
East Asia and Pacific -0.5% 6.6%
Europe and Central Asia -4.7% 3.6%
Latin America and the Caribbean -7.2% 2.8%
Middle East and North Africa -4.2% 2.3%
South Asia -2.7% 2.8%
Sub-Saharan Africa -2.8% 3.1%
Global Growth -5.2% 4.2%

Source: World Bank Global Economic Prospects, released June 2020

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Animated Map: The Comparative Might of Continents


This post is by Iman Ghosh from Visual Capitalist

Animated Map: The Comparative Might of Continents

We’ve come quite a long way since the time of Pangea. Today, the world’s continents are home to over 7.8 billion people, and each one is unique in its own way.

This video from the data visualization tool Vizzu compares the surface area, population, and GDP of the continents—all in terms of their contribution to the world’s total. Let’s dive further into the results of each category.

Click through to source to see the country breakdowns. Antarctica has been excluded from these calculations.

Surface Area: Does Size Matter?

When it comes to sheer land mass, Asia emerges on top with over one-third of the global surface area. On that front, it certainly has a little help from the combined forces of Russia and China, even as the former overlaps Eastern Europe as well.

Rank Region Share of Global Surface Area Largest Country
#1 Asia 36.5% 🇷🇺 Russia
#2 Africa 22.3% 🇩🇿 Algeria
#3 North America 17.1% 🇨🇦 Canada
#4 South America 13.2% 🇧🇷 Brazil
#5 Oceania 6.4% 🇦🇺 Australia
#6 Europe 4.6% 🇷🇺 Russia

Africa comes in second, but doesn’t lag behind by much. A stone’s throw from Europe, Algeria is the largest country on the continent—and the 10th largest in the world.

Failing to grasp the true size of Africa is a common mental mistake, as many maps systematically underestimate its scale. The continent could easily fit the entirety of China, India, the U.S., and multiple European countries within its borders.

Population: Packing People Together

Another way to look at things is in terms of the number of inhabitants in each region. Asia is once again on top, with almost two-thirds of the world squeezed onto the continent.

Rank Region Share of Global Population Most Populous Country
#1 Asia 61.8% 🇨🇳 China
#2 Africa 16.1% 🇳🇬 Nigeria
#3 Europe 8.2% 🇷🇺 Russia
#4 North America 7.7% 🇺🇸 U.S.
#5 South America 5.6% 🇧🇷 Brazil
#6 Oceania 0.5% 🇦🇺 Australia

Asia’s lead in population is impressive, but it’s a margin that is unlikely to last forever.

By the year 2100—new estimates show the populations India and China could start to dip. Meanwhile Nigeria, which is already Africa’s most populous continent with near 196 million people, could potentially quadruple in numbers in the same time frame.

In this metric, Europe also rises to third place. This is thanks again to the approximately 146 million people within Russia. However, if only the countries located completely within the continent are considered, Germany’s population of nearly 84 million would win out.

GDP: Emerging Wealth Overtakes

Finally, economic output—measured in terms of Gross Domestic Product (GDP)—is the most common way to assess the relative prosperity of countries and continents.

At this, the U.S. dominates with $21.4T according to the World Bank, though it swaps places with China which boasts $23.5T when adjusted for purchasing power parity (PPP).

Rank Region Share of Global GDP Richest Country (both nominal and PPP)
#1 Asia 36.9% 🇨🇳 China
#2 North America 28.9% 🇺🇸 U.S.
#3 Europe 23.9% 🇩🇪 Germany
#4 South America 5.1% 🇧🇷 Brazil
#5 Africa 3.1% 🇳🇬 Nigeria
#6 Oceania 2.1% 🇦🇺 Australia

Source: World Bank for both GDP Nominal and PPP, 2019.

Global wealth share drops sharply between Europe and South America, though it’s worth noting that rising inequality is also hidden under the surface within many high-income regions.

In terms of overall GDP, the Asian continent makes up the lion’s share. Asia is also home to many of the world’s emerging markets—which means there may be an even more pronounced shift of wealth towards the East in coming decades.

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The Decline Of Upward Mobility In One Chart


This post is by Marcus Lu from Visual Capitalist

The Decline of Upward Mobility

The Decline Of Upward Mobility In One Chart

For decades, a majority of Americans have been able to climb the economic ladder by earning higher incomes than their parents. These improving conditions are known as upward mobility, and form an important part of the American Dream.

However, each consecutive generation is finding it harder to make this ascent. In this graphic, we illustrate the decline in upward mobility over five decades using data from Opportunity Insights.

Understanding The Chart

This graphic plots the probability that a 30-year-old American has to outearn their parents (vertical axis) depending on their parent’s income percentile (horizontal axis). The 1st percentile represents America’s lowest earners, while the 99th percentile the richest.

As we move from left to right on the chart, the portion of people who outearn their parents takes a steep decline. This suggests that people born into upper class families are less likely to outearn their parents, regardless of generation.

The key takeaway, though, is that the starting point of this downward trend has shifted to the left. In other words, fewer people in the lower- and middle-classes are climbing the economic ladder.

Decade Born Chance of Outearning Parents (Bottom Percentile) Chance of Outearning Parents (50th Percentile) Chance of Outearning Parents (Top Income Percentile) 
1940 95% 93% 41%
1950 90% 81% 15%
1960 86% 62% 7%
1970 90% 59% 16%
1980 79% 45% 8%

Declines can be seen across the board, but those growing up in the middle-class (50th percentile) have taken the largest hit. Within this bracket, individuals born in 1980 have only a 45% chance of outearning their parents at age 30, compared to 93% for those born in 1940.

Stagnating Wage Growth a Culprit

One factor behind America’s deteriorating upward mobility is the sluggish pace at which wages have grown. For example, the average hourly wage in 1964, when converted to 2018 dollars, is $20.27. Compare this to $22.65, the average hourly wage in 2018. That represents a mere 11.7% increase over a span of 54 years.

However, this may not be as bad as it sounds. While the prices of some goods and services have risen over time, others have actually become more affordable. Since January 1998, for example, the prices of electronic goods such as TVs and cellphones have actually decreased. In this way, individuals today are more prosperous than previous generations.

This benefit is likely outweighed by relative increases in other services, though. Whereas inflation since January 1998 totaled 58.8%, the costs of health and education services increased by more than 160% over the same time frame.

Income Distribution

While wages have been stagnant as a whole, it doesn’t paint the full picture. Another factor to consider is America’s changing income distribution.

Income Class 1970 Share of U.S. Aggregate Income 2018 Share of U.S. Aggregate Income
Upper  28% 48%
Middle 62% 43%
Lower  10% 9%

Source: Pew Research Center

Like the data on upward mobility, the middle class takes the largest hit here, with its share of U.S. aggregate income falling by 19 percentage points. Over the same time frame, the upper class was able to increase its share of total income by 20 percentage points.

Is It All Bad News?

Americans are less likely to earn more than their parents, but this doesn’t mean that upward mobility has completely disappeared—it’s just becoming less accessible. Below, we illustrate the changes in size for different income classes from 1967 to 2016.

The upper middle class has grown significantly, from 6% of the population in 1967 to 33% in 2016. At the same time, the middle class shrank from 47% to 36% and the lower middle class shrank from 31% to 16%.

The data suggests that some middle class Americans are still managing to pull themselves up into the next income bracket—it’s just not an effect that was as broad-based as it’s been in the past.

Does The American Dream Still Exist?

The American Dream is the belief that upward mobility is attainable for everyone through their own actions. This implies that growth will be continuous and widespread, two factors that have seemingly deteriorated in recent decades.

Researchers believe there are numerous complex reasons behind America’s stagnating wages. A decline in union membership, for example, could be eroding employees’ collective bargaining power. Other factors such as technological change may also apply downwards pressure on the wages of less educated workers.

Income inequality, on the other hand, is clearly shown by the data. We can also refer to the Gini-coefficient, a statistical measure of economic inequality. It ranges between 0 and 1, with 0 representing perfect equality and 1 representing perfect inequality (one person holds all the income). The U.S. currently has a Gini-coefficient of 0.434, the highest of any G7 country.

Long story short, the American Dream is still alive—it’s just becoming harder to come by.

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Funding for mental health-focused startups rises in 2020


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Turning away from the public markets, IPOs, SPACs and Palantir for a moment, would you like to talk about startups again? I would.

This morning, I pored over venture capital funding patterns for wellness-focused startups. Broadly, according to a new report, these startups raised less money in the first half of 2020 than they did in the first two quarters of 2019. Deal volume fell from nearly 600 in H1 2019 to just under 500 in H1 2020, and dollars invested slipped from $6.1 billion to $4.6 billion in the same timeframe.

But, if we peer a bit deeper and look at the subcategories of wellness startups, interesting hotspots become clear.


The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Inside the subcategories of wellness startups that CB Insights dug through while compiling the dataset, some, like fitness tech and sleep tech, saw fewer deals and dollars than they did in the first half of 2019. But one particular varietal is doing very well this year: mental health-focused companies.

The strong venture results that these startups have recorded in 2020 are not entirely due to a pandemic, a recession and political unrest that’s causing more anguish than usual, though I’d be surprised if those factors didn’t provide a tailwind of sorts.

Stepping back a few quarters, there’s a bit more to the business side of mental health startups that I want to unpack.

This morning, let’s remind ourselves about how startups like Calm and Headspace proved that their market was large and lucrative, review the venture capital data and see if the pattern of strong investment in the space is continuing in the current quarter.

We should see another unicorn or two out of the group, we reckon, before the eventual tech downturn. So let’s work to understand where the category is today.

The Stocks to Rule them All: Big Tech’s Might in Five Charts


This post is by Aran Ali from Visual Capitalist

Techs market dominance in 5 charts

The Stocks to Rule them All: Big Tech’s Might in Five Charts

American’s tech giants have caught the public’s attention as of late.

Four of the Big Five recently appeared in front of U.S. Congress to discuss their anti-competitive business practices and privacy concerns.

Yet business is booming. Compared to the traditional economy, Big Tech operates within an intangible realm of business. This enables them to move faster, cheaper, and more profitably—with business models that possess widespread scale via the internet.

The above five charts are a reflection of Big Tech’s momentum and the significant role they have played in the swift and vigorous market recovery. Let’s take a closer look at the data.

Company Market Capitalization (In Billions) Weighting in the S&P 500 Index
Apple $1,930 7.1%
Microsoft $1,590 5.9%
Amazon $1,590 5.9%
Alphabet $1,030 3.8%
Facebook $742 2.7%
Total $6,883 25.41%
S&P 500 $27,050 100%

Not All Stocks Are Created Equal

Of the 505 stocks that make up the S&P 500 Index, only about a third have experienced positive returns year-to-date (YTD), with the remaining stocks in the red.

Despite the majority of companies underperforming, the S&P 500 has generated a positive year-to-date return. This is due to the fact that companies are weighted according to market capitalization. For example, the Big Five now represent 25% of the index, despite being just five of the 505 stocks listed.

Big Tech’s dominance is being driven by ballooning market valuations. For instance, Apple reached the $1 trillion valuation in August 2018, and now the company is awfully close to topping the $2 trillion mark after just two years. This is just one of many examples that illustrate the growing power of Big Tech.

Pandemic Proof?

The five Big Tech companies are also seeing business as usual, with revenues in the first half of the year growing steadily compared to the first half of 2019.

Company YTD Price Returns Revenue Growth (H1 2020 vs. 2019)
Apple 52% 6%
Microsoft 31% 14%
Amazon 68% 34%
Facebook 24% 14%
Alphabet 11% 6%
S&P 500 4.5%

Their respective stock prices have followed suit, adding to the divergence between the performance of tech and the overall S&P 500 Index.

The equal-weighted S&P 500 Index provides diversification, but it has underperformed recently. Year-to-date, the equal-weighted index is down -3.5% relative to the positive 4.5% seen for the S&P 500, a spread of 8%. The combination of Big Tech’s outperformance and large weighting is likely behind the index staying afloat.

Dissecting the Disconnect

You may notice the phrase “stock market disconnect” reverberating recently, reflecting consumer views on the state of financial markets and their relationship with the economy, or lack thereof. While the economy combats record levels of unemployment and a plethora of bankruptcies, major American indexes edge closer to record highs.

This disconnect can be explained by the market capitalization weighted qualities of these indexes as well as the geographic source of company revenues in the S&P 500.

The most visible businesses to the everyday individual represent a small and vulnerable basket of companies that account for a undersized component of the stock market. No matter how clobbered they get, their effects on the market as a whole are miniscule.

A Global Footprint

In the era of globalization, American companies are more diversified than ever. Their revenue streams carry a greater global presence, meaning domestic revenues in the United States are less crucial than in times past. For example, the S&P 500’s foreign revenue exposure stands at 42.9% in 2018 and these figures are even higher for Big Tech stocks.

Revenues Recognized Outside of North America/America  
Apple 55%
Microsoft 41%
Amazon 31%
Alphabet 51%
Facebook 54%
Average 46%

Big Tech has outdone itself by virtually any measure.

They’ve shown their capacity to translate headwinds to tailwinds, even under challenging economic circumstances. Going forward, estimates by analysts on Wall Street suggest that even more growth for these companies could be on the horizon.

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Airbnb’s IPO Prospects, By the Numbers


This post is curated by Keith Teare. It was written by Marker Editors. The original is [linked here]

Number of the Day

The pandemic-induced recession has not affected companies’ ability to raise funds from the public markets. Will Airbnb be next?

Number of the Day: $64,000,000,000
Photo illustration, source: Johannes Eisele/AFP/Getty Images

$64 billion: That’s how much initial public offerings listed on U.S. exchanges have raised in 2020, according to Dealogic, a market analytics firm. This surprisingly high figure has likely influenced favorite will-it-or-won’t-it-go-public unicorn, Airbnb. Reports say the home-share platform will file to IPO this month. At the start of 2020, Airbnb was perhaps the most-scrutinized candidate for a public offering, but it was one of many. When a wave of lockdowns shuttered the economy in March, that market froze in place — but, surprisingly, not for long.

As the stock exchanges have recovered, the IPO market has been on fire — a rush of public offerings has already added up to a bigger IPO haul in 2020 than in any year since 2014, according to Dealogic data provided to Marker. And it’s only August!

No wonder Airbnb — which has lately seen a resurgence, seeing on July 8 its first $1 million-booking day since early March, according to the Wall Street Journal— might be anxious to make its shares available to an investing public that’s apparently in a surprisingly upbeat mood.

Bottom line: Airbnb would love a vacation from bleak economic realities as much as the rest of us would.


Airbnb’s IPO Prospects, By the Numbers was originally published in Marker on Medium, where people are continuing the conversation by highlighting and responding to this story.

Marxism Remains a Dangerous Idea


This post is curated by Keith Teare. It was written by Continuations by Albert Wenger. The original is [linked here]

I have been meaning to write a blog post about Marxism following an exchange in the comments to one of my posts about Trump’s dictatorial tendencies. Essentially the thrust of the comment was that Marxism is a bigger threat in the US today than fascism. I disagree with this assertion, but I do think that the extremes to which we have taken capitalism have opened the door for a resurgence of beliefs that it needs to be toppled entirely rather than shrunken dramatically, as I propose in The World After Capital.

I want to start by pointing out a few things that should be obvious but maybe aren’t. First, there is a huge body of Marxist thinking that has evolved over more than a century and entire books have been written about narrow subfields, such as say Marxist critiques of modern cinema. I find it somewhat comical to think that anyone would find this a threat — it is a valid mode of criticism, which one can debate on its merits, but which in no way is going to give rise to a revolution. When people say that the liberal arts are overrun with Marxist thinking, it is useful to keep this in mind.

Second, there are policies, such as the Green New Deal or Single Payer Healthcare that I disagree with for a variety of reasons (mostly related to their approaches to labor and innovation) but which are not Marxist per se. Applying the Marxist label to them is often an attempt to smear them and avoid a debate on the merits. Canada and the UK have national health systems and last I checked neither of them is a Marxist country. Here it is worth keeping in mind that healthcare is but one sector of the economy and we have other heavily regulated or government owned sectors (e.g. water and sewage).

So the central idea that matters and is worth discussing is that of class struggle between labor and capital that can ultimately get resolved only through worker control of the means of production (and by extension the abolishment of capitalists). The first thing to note is that Marx was perceptive and right in understanding that there is a conflict here — that the interests of those providing labor often diverge from the interest of those providing capital. The second thing to note is that this conflict lay somewhat dormant for many decades as capitalism produced material progress that was widely shared. And the third thing to note is that with the advent of digital technology, the role of capital has changed (again this is the central theme of my book The World After Capital).

What then is wrong with the Marxist idea? The key problem is one of scale. It is entirely possible to have small worker owned companies and there are tons of successful examples for that. The question is how do you do implement worker ownership for something that requires thousands or tens of thousands of people, such as say a car company? Or at even bigger scale, how does worker ownership apply to the economy as a whole? One very quickly runs into governance issues which defy easy solution. That has been the key source of the problems with the attempted implementations of the Marxist model. So far the result has inevitably been a bureaucracy that wields great power and becomes deeply entrenched often abusing the very workers it was meant to represent. This is especially true in the model of Marxism where the means of production are owned outright by the state as a proxy for workers (the idea being that the state *IS* the workers, but the state inevitably winds up being its own entity).

Now I should be quick to point out that the same governance problem also exists in capitalism, but in theory bureaucratic excess is checked there by the functioning of markets. I say in theory, because in practice, especially over the last few decades of the rise of managerial capitalism combined with ever more concentrated markets and regulatory capture, the bureaucratic hierarchy has in fact become largely unaccountable (as have large concentrations of financial capital). We see this is in many forms including the extraordinary rise of managerial compensation as well as various abuses of market power.

So where does all of this leave us? I believe that the idea that all means of production should be owned by the state is a genuinely dangerous one due to the power that it vests in what becomes an unaccountable bureaucracy.  The ideas that we have well-functioning capitalism today or for that matter that capitalism can solve all problems are, however, equally dangerous. As long as we promote these (which unfortunately most of the political establishment in the US does, including much of the Democratic Party) we will have more and more people flocking back to ideas, such as Marxism, which argue that we should overthrow capitalism entirely.

My book The World After Capital, is an explicit attempt to point to an alternative path. A path in which over time capitalist activity will shrink as a part of human affairs, much as agriculture has gone from being the defining aspect of societies to being one of many endeavors.

Marxism Remains a Dangerous Idea


This post is by Continuations by Albert Wenger from Continuations by Albert Wenger

I have been meaning to write a blog post about Marxism following an exchange in the comments to one of my posts about Trump’s dictatorial tendencies. Essentially the thrust of the comment was that Marxism is a bigger threat in the US today than fascism. I disagree with this assertion, but I do think that the extremes to which we have taken capitalism have opened the door for a resurgence of beliefs that it needs to be toppled entirely rather than shrunken dramatically, as I propose in The World After Capital.

I want to start by pointing out a few things that should be obvious but maybe aren’t. First, there is a huge body of Marxist thinking that has evolved over more than a century and entire books have been written about narrow subfields, such as say Marxist critiques of modern cinema. I find it somewhat comical to think that anyone would find this a threat — it is a valid mode of criticism, which one can debate on its merits, but which in no way is going to give rise to a revolution. When people say that the liberal arts are overrun with Marxist thinking, it is useful to keep this in mind.

Second, there are policies, such as the Green New Deal or Single Payer Healthcare that I disagree with for a variety of reasons (mostly related to their approaches to labor and innovation) but which are not Marxist per se. Applying the Marxist label to them is often an attempt to smear them and avoid a debate on the merits. Canada and the UK have national health systems and last I checked neither of them is a Marxist country. Here it is worth keeping in mind that healthcare is but one sector of the economy and we have other heavily regulated or government owned sectors (e.g. water and sewage).

So the central idea that matters and is worth discussing is that of class struggle between labor and capital that can ultimately get resolved only through worker control of the means of production (and by extension the abolishment of capitalists). The first thing to note is that Marx was perceptive and right in understanding that there is a conflict here — that the interests of those providing labor often diverge from the interest of those providing capital. The second thing to note is that this conflict lay somewhat dormant for many decades as capitalism produced material progress that was widely shared. And the third thing to note is that with the advent of digital technology, the role of capital has changed (again this is the central theme of my book The World After Capital).

What then is wrong with the Marxist idea? The key problem is one of scale. It is entirely possible to have small worker owned companies and there are tons of successful examples for that. The question is how do you do implement worker ownership for something that requires thousands or tens of thousands of people, such as say a car company? Or at even bigger scale, how does worker ownership apply to the economy as a whole? One very quickly runs into governance issues which defy easy solution. That has been the key source of the problems with the attempted implementations of the Marxist model. So far the result has inevitably been a bureaucracy that wields great power and becomes deeply entrenched often abusing the very workers it was meant to represent. This is especially true in the model of Marxism where the means of production are owned outright by the state as a proxy for workers (the idea being that the state *IS* the workers, but the state inevitably winds up being its own entity).

Now I should be quick to point out that the same governance problem also exists in capitalism, but in theory bureaucratic excess is checked there by the functioning of markets. I say in theory, because in practice, especially over the last few decades of the rise of managerial capitalism combined with ever more concentrated markets and regulatory capture, the bureaucratic hierarchy has in fact become largely unaccountable (as have large concentrations of financial capital). We see this is in many forms including the extraordinary rise of managerial compensation as well as various abuses of market power.

So where does all of this leave us? I believe that the idea that all means of production should be owned by the state is a genuinely dangerous one due to the power that it vests in what becomes an unaccountable bureaucracy.  The ideas that we have well-functioning capitalism today or for that matter that capitalism can solve all problems are, however, equally dangerous. As long as we promote these (which unfortunately most of the political establishment in the US does, including much of the Democratic Party) we will have more and more people flocking back to ideas, such as Marxism, which argue that we should overthrow capitalism entirely.

My book The World After Capital, is an explicit attempt to point to an alternative path. A path in which over time capitalist activity will shrink as a part of human affairs, much as agriculture has gone from being the defining aspect of societies to being one of many endeavors.

From Bean to Brew: The Coffee Supply Chain


This post is by Omri Wallach from Visual Capitalist

View a more detailed version of this graphic

Coffee Supply Chain

What Does The Coffee Supply Chain Look Like?

View a more detailed version of the above graphic by clicking here

There’s a good chance your day started with a cappuccino, or a cold brew, and you aren’t alone. In fact, coffee is one of the most consumed drinks on the planet, and it’s also one of the most traded commodities.

According to the National Coffee Association, more than 150 million people drink coffee on a daily basis in the U.S. alone. Globally, consumption is estimated at over 2.25 billion cups per day.

But before it gets to your morning cup, coffee beans travel through a complex global supply chain. Today’s illustration from Dan Zettwoch breaks down this journey into 10 distinct steps.

Coffee From Plant to Factory

There are two types of tropical plants that produce coffee, both preferring high altitudes and with production primarily based in South America, Asia, and Africa.

  • Coffea arabica is the more plentiful bean, with a more complex flavor and less caffeine. It’s used in most specialty and “high quality” drinks as Arabica coffee.
  • Coffea canephora, meanwhile, has stronger and more bitter flavors. It’s also easier to grow, and is most frequently used in espressos and instant blends as Robusta coffee.

However, both types of beans undergo the same journey:

  1. Growing
    Plants take anywhere from 4-7 years to produce their first harvest, and grow fruit for around 25 years.
  2. Picking
    The fruit of the coffea plant is the coffee berry, containing two beans within. Ripened berries are harvested either by hand or machine.
  3. Processing
    Coffee berries are then processed either in a traditional “dry” method using the sun or “wet” method using water and machinery. This removes the outer fruit encasing the sought-after green beans.
  4. Milling
    The green coffee beans are hulled, cleaned, sorted, and (optionally) graded.

From Factory to Transport

Once the coffee berry is stripped down to green beans, it’s shipped from producing countries through a global supply network.

Green coffee beans are exported and shipped around the world. In 2018 alone, 7.2 million tonnes of green coffee beans were exported, valued at $19.2 billion.

Arriving primarily in the U.S. and Europe, the beans are now prepared for consumption:

  1. Roasting
    Green beans are industrially roasted, becoming darker, oilier, and tasty. Different temperatures and heat duration impact the final color and flavor, with some preferring light roasts to dark roasts.
  2. Packaging
    Any imperfect or somehow ruined beans are discarded, and the remaining roasted beans are packaged together by type.
  3. Shipping
    Roasted beans are shipped both domestically and internationally. Bulk shipments go to retailers, coffee shops, and in some cases, direct to consumer.

Straight to Your Cup

Roasted coffee beans are almost ready for consumption, and by this stage the remaining steps can happen anywhere.

For example, many factories don’t ship roasted beans until they grind it themselves. Meanwhile, cafes will grind their own beans on-site before preparing drinks. The rapid growth of coffee chains made Starbucks the second-highest-earning U.S. fast food venue.

Regardless of where it happens, the final steps bring coffee straight to your cup:

  1. Grinding
    Roasted beans are ground up in order to better extract their flavors, either by machine or by hand. The preferred fineness depends on the darkness of the roast and the brewing method.
  2. Brewing
    Water is added to the coffee grounds in a variety of methods. Some involve water being passed or pressured through the grounds (espresso, drip) while others mix the water and grounds (French press, Turkish coffee).
  3. Drinking
    Liquid coffee is ready to be enjoyed! One average cup takes 70 roasted beans to make.

The world’s choice of caffeine pick-me-up is made possible by this structured and complex supply chain. Coffee isn’t just a drink, after all, it’s a business.

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How the S&P 500 Performed During Major Market Crashes


This post is by Dorothy Neufeld from Visual Capitalist

How the S&P 500 Performed During Major Market Crashes

How the S&P 500 Performed During Major Market Crashes

Like spectacular market peaks, market crashes have been a persistent feature of the S&P 500 throughout time.

Still, the forces underpinning each rise and fall are often less clear. Take the COVID-19 crash, for example. Despite lagging economic growth and historic unemployment levels, the S&P 500 bounced back 47% in just five months, in a stunning reversal.

Drawing data from Macrotrends, the above infographic compares six historic market crashes—examining the length of their recoveries and the contextual factors influencing their durations.

The Big Picture

How does the current COVID-19 crash of 2020 stack up against previous market crashes?

Title Start — End Date Duration (Trading Days) % Drop
Black Tuesday / Great Crash* Sep 16, 1929 — Sept 22, 1954 300 months (7,256 days) -86%
Nixon Shock / OPEC Oil Embargo Jan 11, 1973 — Jul 17, 1980 90 months (1,899 days) -48%
Black Monday** Oct 13, 1987 — May 15, 1989 19 months (402 days) -29%
Dot Com Bubble Mar 24, 2000 — May 30, 2007 86 months (1,808 days) -49%
Global Financial Crisis Oct 9, 2007 — Mar 28, 2013 65 months (1,379 days) -57%
COVID-19 Crash*** Feb 19, 2020 — Ongoing 5 months+ (117+ days) -34%

Price returns, based on nominal prices
*Black Tuesday occurred about a month after the market peak on Oct 29, 1929
**The market hit a peak on Oct 13th, prior to Black Monday on Oct 19,1987
***As of market close Aug 4, 2020

By far, the longest recovery of this list followed the devastation of Black Tuesday, while the shortest was Black Monday of 1987—where it took 19 months for the market to fully recover.

Let’s take a closer look at each market crash to navigate the economic climate at the time.

After the Fall

What were some factors that can help provide context into the crash?

1929: Black Tuesday / Great Crash

Following Black Tuesday in 1929, the U.S. stock market took 7,256 days—equal to about 25 years—to fully recover from peak to peak. In response to the market crisis, a coalition of banks bought blocks of shares, but with negligible effects. In turn, investors fled the market.

Meanwhile, the Federal Reserve Board rose the discount lending rate to 6%. As a result, borrowing costs climbed for consumers, businesses, and the central banks themselves. The tightening of rates led to unintended consequences, with the economy capitulating into the Great Depression. Of course, factors that contributed to its prolonged recovery have been debated, but these are just a few of the actions that had implications at the time.

1973: Nixon Shock / OPEC Oil Embargo

The Nixon Shock corresponded with a series of economic measures in response to high inflation. Soaring inflation devastated stocks, consuming real returns on capital. Around the same time, the oil embargo also occurred, with OPEC member countries halting oil exports to the U.S. and its allies, causing a severe spike in oil prices. It took seven years for the S&P 500 to return to its previous peak.

1987: Black Monday

While the exact cause of the 1987 crash has been debated, key factors include both the advent of computerized trading systems and overvalued markets.

To curtail the impact of the crash, former Federal Reserve chairman Alan Greenspan aggressively slashed interest rates, repeatedly promising to take great lengths to stabilize the market. The S&P took under two years to recover.

2000: Dot Com Bubble

To curb the stratospheric rise of U.S. tech stocks, the Federal Reserve raised interest rates five times in eight months, sending the markets into a tailspin. Virtually $5 trillion in market value evaporated.

However, a number of well-known companies survived, including eBay and Amazon. At the time, Amazon’s stock price cratered from $107 to $11 while eBay lost 75% of its market value. Meanwhile, a number of Dot Com flops included Pets.com, WorldCom, and FreeInternet.com.

2007: Global Financial Crisis

Relaxed credit policies, the proliferation of subprime mortgages, credit default swaps, and commercial mortgage-backed securities were all factors behind the market turmoil of 2007. As banks carved out risky loans packaged in opaque tranches of debt, risk in the market accelerated.

Similar to 1987, the Federal Reserve initiated a number of rescue actions. Interest rates were brought down to historical levels and $498 billion in bailouts were injected into the financial system. Crisis-related bailouts extended to Fannie Mae and Freddie Mac, the Troubled Asset Relief Program (TARP), the Federal Housing Administration, and others.

2020: COVID-19 Crash

In 2020, historic fiscal stimulus measures along with trillions in Fed financing have factored heavily in its swift reversal. The result has been one of the steepest rallies in S&P 500 history.

At the same time, the economy is mirroring Great Depression-level unemployment numbers, reaching 14.7% in April 2020. In short, this starkly exposes the sharp disconnect between the markets and broader economy.

Bearing Witness

History offers many lessons, and in this case, a view into the shape of a post-coronavirus market recovery.

Although the stock market is likely rallying off Fed liquidity, investor optimism, and the promise of potential vaccines, it’s interesting to note that the trajectory of this crash in some ways resembles the initial rebound shown during the Great Depression—which means we may not be out of the woods quite yet.

As the S&P 500 edges 2% shy of its February peak, could the market post a hastened recovery—or is a protracted downturn in the cards?

This graphic has been inspired by this Reddit post.

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Charts: The Economic Impact of COVID-19 in the U.S. So Far


This post is by Nick Routley from Visual Capitalist

Charts: The Economic Impact of COVID-19 in the U.S. So Far

Charts: The Economic Impact of COVID-19 in the U.S. So Far

In the second quarter of 2020, the U.S. recorded its steepest drop in economic output on record.

As COVID-19 continues to spread around the country leaving economic upheaval in its wake, many economic indicators are trending in undesirable ways. The graphic above is a snapshot of the overall health of the economy at this pivotal moment in time.

The Big Picture

To put this quarter’s 9.5% drop into perspective, it helps to look back in history. Since record keeping began in 1947, quarterly GDP had never exceeded even a 3% drop (non-annualized). Here are just a few of the problems currently plaguing the economy:

Employment: Well over 50 million people are still out of the workforce as businesses shutter permanently and restrictions continue in many parts of the country. New unemployment claims have now exceeded 1 million for 19 consecutive weeks.

Consumer Spending: This makes up more than two-thirds of the U.S. economy, and it sank by the sharpest rate in April—declining by 12.6%. The weekly payments of $600 provided through the CARES Act helped bolster household income, partially offsetting steeper losses. However, the payments expired July 31, and may not be renewed as an initiative.

Monetary Policy: Trillions of dollars have been borrowed to counter the crisis, money supply (M2) has rapidly risen, and central bank balance sheets are shattering records. Despite the injection of money into the system, inflation has dropped to almost zero–well below the Fed’s ideal 2% rate–signalling deflationary pressure on the economy.

Bright Spots

Despite the significant challenges facing the American economy, there are some areas that are showing signs of recovery.

S&P 500: The flagship index is the most prominent positive, recording its best quarter in over two decades. Reaching a high-water mark in June, the index shot up over 25% over the second quarter. Federal stimulus packages stoked optimism in the markets, with the Fed at one point purchasing $41 billion in financial assets daily.

Purchasing Managers’ Index (PMI): Widely seen as a leading business indicator, the PMI is also rebounding. Manufacturing output stabilized as production facilities slowly reopened. As a result, an expansionary manufacturing cycle is anticipated to begin.

covid-19 pmi rebound

Big Tech: Business is booming for Big Tech in the latest quarter. Amazon’s earnings doubled compared to last year, while both Facebook and Apple witnessed double-digit earnings jumps. The shift to remote work has figured prominently in this rise.

What’s Next?

Bright spots aside, COVID-19 is set to become America’s third most common cause of death (after accidents). With an infection curve that remains stubbornly unflattened, it isn’t just the public that’s at risk–the economy may find itself on life support as well.

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Why the Day One IPO ‘Pop’ Is Overhyped


This post is curated by Keith Teare. It was written by Tanay Jaipuria. The original is [linked here]

The current class of 2020 IPOs make a strong case for more direct listings

A double exposed image with a stock market concept, showing stacks of coins, hands tapping a smartphone, and a trading graph.
Image: Busakorn Pongparnit/Moment/Getty Images

After a delayed start, the IPO market is heating up again as companies look to resume going public. This recent spate of IPOs — Agora, Vroom, ZoomInfo, and Lemonade — has resurfaced the familiar occurrence of the “IPO pop,” where companies’ initial share prices see large increases relative to their original IPO price on the first day of trading. The recent class of 2020 IPOs has seen its stock price go up, sometimes by multiples, in the first few days of trading.

This pop is often billed as a positive trend and a marker of a successful public debut because of the jump in shares, which increases the company’s overall market cap value. But these IPO pops can actually shortchange companies of capital and result in dilution, reducing each share’s intrinsic value. Here’s what the IPO process looks like and what the 2020 data of the current round of IPOs tells us about whether these pops are in fact a net positive for the company or more of an overhyped trend.

The IPO process at a glance

Companies choose to go public for a multitude of reasons, including:

  • raising capital (though this is arguably a less important factor for companies that can access the capital available in private markets)
  • offering liquidity for earlier-stage investors and early employees and/or founders
  • gaining more credibility with potential future employees and/or customers
  • instituting discipline throughout the organization, since going public creates more transparency and accountability with quarterly earnings

When a company plans to go public, it hires bankers who serve as intermediaries. The bankers help craft the S-1 prospectus for the company, which narrates the company’s story and informs the public about the future prospects of the company from its current business model, competitive landscape, and pricing methodology. The S-1 form, which is filed with the SEC, includes an initial pricing range for the stock and an initial volume of stock the company intends to sell, or capital it plans to raise in the offering.

The bankers then run a marketing process known as the roadshow, where they pitch institutional investors (for example, hedge funds, pensions, and endowments) on the company, its prospects, and other selling points for why they should invest in the company as it goes public. During this process, they’re typically gauging investor demand as well as gaining additional business intelligence on the IPO price that other prospective investors would be willing to pay.

Of the 61 IPOs to debut in the U.S. stock exchange in 2020, the median company that went public saw a “pop” of 20% on the first day.

After the roadshow wraps, bankers typically work with the company to update the number of shares offered and the listing price. With IPOs, companies are selling new shares to these institutional investors — shares which they ideally want the investors to continue to hold onto over time. Additionally, IPOs typically have a 90- or 180-day lockup period, where insiders cannot sell shares, and so the number of shares available for trading is typically a small fraction of the overall outstanding shares.

The New Rules of the IPO

The IPO pop

Historically, IPOs tend to pop on the first day of trading, meaning that they are underpriced relative to what the market is willing to pay. The data for 2020 helps support this trend: Of the 61 IPOs to debut in the U.S. stock exchange in 2020, the median company that went public saw a pop of 20% on the first day. Only 25% of companies ended the day trading lower than their IPO price. Meanwhile, 28% of companies ended the day trading more than 50% higher than their IPO price. Put another way, if you had bought $1,000 worth of each of the 61 companies at their IPO price, your $61,000 investment would be up 29% after just one day of trading in each of the IPOs.

Note that the number of shares being traded at any point on day one of the IPO is often only a small fraction of the outstanding shares because of the lockup period, so a small pop might be considered normal given the (limited) supply and demand. However, some IPOs register a much larger pop in share price, both before and after the lockup expires relative to the original IPO price, indicating a general trend in underpricing.

If a company that went public was priced “perfectly” from the start (a somewhat unrealistic expectation), it would end the day within a few percentage points of the original IPO price. If the closing price was a lot higher, then the company was diluted (sold more shares than it needed to), more than it should have been or raised less money than it could have otherwise since it issues shares to investors in the IPO at less than what the market valued the company’s shares.

An IPO in 2020 shortchanged the median company of $44 million, or $110 million, on average.

For example, say a company sold 5 million shares to institutional investors at $20 per share, raising $100 million in its IPO and then ended the day trading at $30 per share (seeing a 50% pop). This means the company effectively lost out on $50 million, which is the additional money it would have received had the IPO been priced at $30 per share from the beginning.

In aggregate, the 61 companies that went public in 2020 so far raised $6.7 billion less than they would have been able to if their IPOs were priced at what the market valued the company. Put another way, an IPO in 2020 shortchanged a company of $44 million (the median value) or $110 million on average, with some companies like Royalty Pharma, ZoomInfo, Vroom, and Agora especially losing out.

Recent IPOs in depth

To bring this to light, we can look at a few recent examples of high-growth tech companies, which have all popped over a whopping 100%.

Vroom, the used car marketplace, priced its IPO at $22 a share offering a block of 21.3 million shares. It closed at $47.90 a share on the first day of trading, a one-day return of 118%. The company raised $468 million through its offering. Had it sold its shares at $40, it would have been able to raise an additional $380 million, and still provided a “pop” to IPO investors.

Agora, an API-powered company for voice and real-time video communication, priced its IPO at $20 a share offering a block of 17.5 million shares. It closed on its first day at $50.50, seeing a pop of 153%. The company raised $350 million through its offering but could have raised double that amount by pricing its share at $40. IPO investors are still up over 100% a few weeks into trading.

Lemonade, a full-stack digital insurance startup, priced its IPO at $29 per share offering a block of 11 million shares. It closed at the end of day one at $69.41, a pop of 139%. The company raised $319 million through its offering, but had it priced at say $58 a share, it could have raised another $319 million (and investors could have still gotten a 20% pop). Currently, the stock trades at ~$78, meaning that IPO investors have made a return of almost 175% in a few weeks.

Why do banks underprice IPOs?

Banks tend to underprice IPOs for strategic interests and incentives. Note that the three key stakeholders involved in going public are the companies, bankers, and institutional investors. The institutional investors want to make a return on their investment, so their goal is to get the stock as cheaply as possible. Bankers have to please both the company and the institutional investors and as a result have a delicate balancing act to juggle if the two stakeholders’ interests differ. Companies also have competing interests: On one hand, they want to raise as much money as possible while minimizing dilution. But on the other hand, they care about the long-term success of the company (including factors like the long-term stock price and its market cap).

Given these sets of interests, there are three main reasons why IPOs tend to pop. Banks take many companies public and often return to the same institutional investors again and again (the typical institutional to retail split of an IPO is 90/10). Meanwhile, a company usually only goes public once. Therefore, while banks and institutional investors play this game repeatedly, most companies only play it once. With banks having to appease both sides, it’s not crazy to think they choose to satisfy the party with whom they have a long-term ongoing relationship.

In addition, as mentioned above, companies themselves have interests that are at odds with one another. Underpricing an IPO may indeed be the better move for them in the long term if it leads to satisfied investors who continue to hold onto the stock and buy into the company story. In return, the company gets some of the momentum benefits of a strong IPO. Or at least that is what banks will try to convince companies. Also, it’s important to note that while a company issues 15% to 20% new shares in the IPO, the rest is owned by founders, employees, and existing company investors. So all things equal, a company would rather start trading at a lower price and rise higher (with the remaining 80% of shares appreciating) than start very high and drop to below what they might have been with a lower opening price.

Lastly, I think the media plays a role in perpetuating the hype. An IPO with a big pop is portrayed as a marker of success, whereas one without a pronounced pop is seen as an anticlimactic public entry (although in reality, the company got a better deal in the latter case). This increases some of the momentum and reputational benefits that a company might get from underpricing an IPO and provides further ammunition to banks to sell companies on underpricing (for example, “Hey, you saw what happened to Facebook right? Let’s not be greedy with the IPO price…”).

The case for more direct listings

The rest of 2020 promises to be a busy period for more IPO hopefuls with companies like Airbnb, Doordash, Asana, Robinhood, and Palantir all expected to go public over the next 12 months. But considering their strong performance as high-growth tech companies, coupled with the fact that these companies will likely face underpricing similar to the current class of IPOs, one wonders whether they will choose to go the traditional route.

The End of the IPO as We Know It

Slack and Spotify both famously went public in April 2019 and April 2018, respectively, with a direct listing — an alternative to the traditional IPO, where no new shares are issued but instead existing shares are sold to the public. Direct listings typically have lower fees, no lockup periods, and are priced algorithmically on the stock exchange (similar to how every stock trades day in and day out).

Two big drawbacks have been noted about direct listings: First, that you can’t raise new capital while going through one, and second, without the traditional roadshows and price stabilization functions of banks, it may only be an option for household name companies with strong brand equity.

But given the more than adequate supply of capital available in private markets and an ongoing proposal by the NYSE to allow companies to raise additional capital in direct listings, the first drawback may not pose too much of a concern for most companies moving forward into the future. The second issue of general lack of brand awareness, however, may prove to be more difficult to overcome. But for a portion of companies that enjoy high growth and some level of recognition with loyal or niche customers, the direct listing may offer a preferred alternative to going public (and provide liquidity for investors) without unnecessarily diluting the company or selling equity at a price lower than the market will bear.

A version of this piece was originally published on Tanay.substack.com.


Why the Day One IPO ‘Pop’ Is Overhyped was originally published in Marker on Medium, where people are continuing the conversation by highlighting and responding to this story.

Is your net worth too closely tied to your company’s success?


This post is by Walter Thompson from Fundings & Exits – TechCrunch

Now that I’ve offered an overview to help you think through where concentrated stock sits in your overall plan, let’s take a closer look at why selling can be challenging for some.

In the following section, I reveal the facts of the concentrated stock “get rich” myths that reside in the minds of many first-time concentrated stock owners, and I show why it is prudent to consider greater diversification.

Keep reading to learn more about the benefits of diversification, discover how much company stock is likely too much to hold, and the options you have when it comes to diversifying strategically.

Dangers of concentration

There are several hard facts to keep in mind in contemplating maintaining a concentrated position:

  1. It’s stating the obvious, but not all stocks are AAPL or AMZN. Hendrik Bessembinder published research that found the best performing 4% of listed companies explained the returns for the entire U.S. stock market since 1926. The remaining 96% of stocks collectively matched the performance of U.S. Treasury bills. Since 1926, 58% of stocks have failed to beat one-month Treasury bills over their lifetimes. Forty percent of all Russell 3000 (an index of the 3000 largest publicly traded companies in the U.S.) have lost at least 70% of their value from their peak since 1980.
  2. Despite all this, broad-based equities have returned 9%+ a year, beating most other asset classes, ultimately due to the top 4% of stocks. Although there is no guarantee anyone can single out any of the top 4% going forward, diversification will guarantee you will own the top 4%.
  3. Even if the concentrated stock you own will be another AAPL/AMZN, both stocks have experienced declines of 90%+ at some point throughout their lifetimes. Most investors would not be able to have conviction and stay invested, especially if that concentrated stock was driving the majority of their portfolio returns and net worth. Sometimes catastrophic declines are a function of the industry or existential threats that have little to do with the company itself. Other times, it has everything to do with the company and nothing to do with external factors.

The odds of any new IPO being among the top 4% is just slightly better than hitting your lucky number on the roulette wheel. But is your investment portfolio success and the odds of achieving your long-term financial goals something you want to spin the wheel on?

Benefits of diversification

Excess volatility can harm returns. Note the example below that shows the comparison between a low-volatility diversified portfolio versus a high-volatility concentrated portfolio. Despite the same simple average return, the low-volatility portfolio below materially outperforms the high-volatility portfolio.

Image Credits: Peyton Carr

Beyond the math, unexpected spikes in volatility can cause significant price declines. Volatility increases the chances that an investor reacts emotionally and makes a poor investment decision. I’ll cover the behavioral finance aspect of this later. Lowering your portfolio volatility can be as simple as increasing your portfolio diversification.

The Russell 3000, an index representing the 3,000 largest U.S.-based publicly traded companies, has lower volatility when compared against 95%+ of all single stocks. So, how much return do you give up for having lower volatility?

According to Northern Trust Research, the 5.96% annualized average return of the Russell 3000 is 0.73% more than the 5.23% return of the median stock. Additionally, owning the Russell 3000, rather than a single stock, eliminates the likelihood of catastrophic loss scenarios — more than 20% of shares averaged a loss of more than 10% per year over a 20-year time frame.

If this establishes that the avoidance of overly concentrated portfolios is important, how much stock is too much? And at what price should you sell?

How much of your company’s stock is too much?

We consider any stock position or exposure greater than 10% of a portfolio to be a concentrated position. There is no hard number, but the appropriate level of concentration is dependent on several factors, such as your liquidity needs, overall portfolio value, the appetite for risk and the longer-term financial plan. However, above 10% and the returns and volatility of that single position can begin to dominate the portfolio, exposing you to high degrees of portfolio volatility.

The company “stock” in your portfolio often is only a fraction of your overall financial exposure to your company. Think about your other sources of possible exposure such as restricted stock, RSUs, options, employee stock purchase programs, 401k, other equity compensation plans, as well as your current and future salary stream tied to the company’s success. In most cases, the prudent path to achieving your financial goals involves a well-diversified portfolio.

What’s stopping you?

Facts aside, maintaining a concentrated position in your company stock is far more tempting than taking a more measured approach. Token examples like Zuckerberg and Bezos tend to outshine the dull rationale of reality, and it’s hard to argue against the possibility of becoming fabulously wealthy by betting on yourself. In other words, your emotions can get the best of you.

But your goals — not your emotions — should be driving your investment strategy and decisions regarding your stock. Your investment portfolio and the company stock(s) within it should be used as tools to achieve those goals.

So first, we’ll take a deep dive into the behavioral psychology that influences our decision-making.

Despite all the evidence, sometimes that little voice remains.

I want to hold the stock.

Why is it so hard to shake? This is a natural human tendency. I get it. We have a strong impetus to rationalize our biases and not believe we are vulnerable to being influenced by them.

Becoming attached to your company is common, since after all, that stock has made you, or has the potential of making you wealthy. More often than not, selling and diversifying is the tough, but more rational decision.

Numerous studies have furnished insights into the correlation between investing and psychology. Many unrecognized psychological barriers and behavioral biases can influence you to hold concentrated stock even when the data shows that you should not.

Understanding these biases can be helpful when deciding what to do with your stock. These behavioral biases are hard to spot and even harder to overcome. However, awareness is the first step. Here are a few more common behavioral biases, see if any apply to you:

Familiarity bias: Familiarity is likely why so many founders are willing to hold concentrated positions in their own company’s stock. It is easy to confuse the familiarity with your own company with the safety in the stock. In the stock market, familiarity and safety are not always related. A great (safe) company sometimes can have a dangerously overvalued stock price, and terrible companies sometimes have terrifically undervalued stock prices. It’s not just about the quality of the company but the relationship between the quality of a company and its stock price that dictates whether a stock is likely to perform well in the future.

Another way this manifests is when a founder has less experience with stock market investing and has only owned their company stock. They may think the market has more risk than their company when in actuality, it is usually safer than holding just their individual position.

Overconfidence: Every investor is exhibiting overconfidence when they hold an overly concentrated position in an individual stock. Founders are likely to believe in their company; after all, it already achieved enough success to IPO. This confidence can be misplaced in the stock. Founders often are reluctant to sell their stock if it has been going up since they believe it will continue to go up. If the stock has sold off, the opposite is true, and they are convinced it will recover. Often, it is challenging for founders to be objective when they are so close to the company. They commonly believe that they have unique information and know the “true” value of the stock.

Anchoring: Some investors will anchor their beliefs to something they experienced in the past. If the price of the concentrated stock is down, investors may anchor their belief that the stock is worth its recent previous higher value and be unwilling to sell. This previous value of the stock is not an indicator of its real value. The real value is the current price where buyers and sellers exchange the stock while incorporating all presently available information.

Endowment effect: Many investors tend to place a higher value on an asset they currently own than if they did not own it at all. It makes it harder to sell. An excellent way to check for the endowment effect is to ask yourself: “If I did not own these shares, would I purchase them today at this price?” If you are not willing to purchase the shares at this price today, it likely means you are only holding onto the shares because of the endowment effect.

A fun spin on this is to look into the IKEA effect study, which demonstrates that people assign more value to something that they made than it is potentially worth.

When framed this way, investors can make more intentional decisions on whether to continue holding concentrated stock or selling. At times, these biases are hard to spot, which is why having a second person, a co-pilot, or an advisor, is helpful.

Take control

Congratulations to those of you with a concentrated stock position in your company; it is hard-earned and likely represents a material wealth. Understand, there is no “right” answer when it comes to managing concentrated stock. Each situation is unique, so it is essential to speak with a professional about options specific to your situation.

It starts with having a financial plan, complete with specific investment goals that you want to achieve. Once you have a clear picture of what you want to accomplish, you can look at the facts in a new light and gain a deeper appreciation for the dangers of holding a concentrated position in company stock versus the benefits of diversification, considering all of the implications and opportunities involved in rational decision-making and investment behavior.

What are my choices if I want to diversify?

Most individuals understand they can simply and directly sell their equity, but there are a variety of other strategies. Some of these opportunities may be far better at minimizing taxes or better at achieving the desired risk or return profile. Some might wonder what the best timing is to sell. I will cover these topics in the final article of the series.

How to approach your IPO stock


This post is by Walter Thompson from Fundings & Exits – TechCrunch

Companies like Uber, Lyft, Beyond Meat, Peloton, Slack, Zoom and Pinterest all made public market debuts in 2019, creating wealth and liquidity for many of the 2019 IPO class of founders.

This year, stockholders have seen anxiety-inducing volatility in their holdings, leading many to realize that they need to rethink their approach to their concentrated post-IPO stock position.

In this guide, I’ll walk through a framework of how to think about post-IPO or concentrated stock holdings objectively. While this is written specific to public company stock, many of the same fundamental concepts apply to private stock and the decision whether or not to sell. Some risks should be understood if you are relying on one stock to achieve all of your financial goals since that subjects you to having “too many eggs in one basket.” Many shareholders in the 2019 IPO class have experienced this risk over the last few months and are reevaluating their situations.

Nevertheless, following my advice may be challenging since we all have heard of someone who made it big by swinging for the fences. The key is understanding the true success rate and risks involved with this approach; it is all too common to hear others share their standout victories, while more common failures are rarely mentioned.

What do I do now?

Usually, I advocate for reducing concentrated positions in IPO stock upon lockup expiration, or via scheduled selling for more significant positions; however, for those that have not sold, it is clear that the unexpected macroeconomic downturn has materially increased the volatility of some high-valuation company share prices. If you find yourself in this position here are a few items to consider:

  1. What is your time horizon? Are your investments intended for the long term or the short term?
  2. What are your liquidity needs? Do you need to raise cash to pay for taxes or upcoming expenses? Do you need cash in the upcoming 1-2 years?
  3. What other assets do you have?
  4. How does this impact your financial plan? Can you tolerate possible further declines?

It is not comfortable to be in this position, and decisions at this juncture can be critical in achieving long-term goals. I suggest you find an advisor to talk to if you are unsure what the best choice is. Below we review some considerations that can help build more confidence in your decision.

What’s the plan?

The decision of what to do with your stock should start at a higher level. Where does this stock fit into your investment strategy, and where does your investment strategy fit into achieving your long-term goals?

Your goals should drive your investment strategy, and your investment strategy should drive the decisions regarding your stock, not the other way around. With the proper goals set, you can use the investment portfolio, and the company stock(s) within it, as tools to achieve your goals.

For example, a goal could be to work ten more years, then partially retire and do some consulting. Defining goals helps you make objective decisions on how to best manage concentrated stock positions. There is a trade-off between maximizing the potential return in your investment portfolio, by maximizing risk with concentrated portfolios, and minimizing the risk of a catastrophic loss, by having a well-diversified portfolio. This decision is unique to each individual. The best way to maximize the odds of achieving your goals is different from the best route to maximizing your portfolio’s return possibilities.

FOMO

In these discussions, there is always an immense fear of missing out. What if this stock becomes a multibagger over time? It’s easy to look to the Zuckerbergs and Bezos of the world, who have amassed great wealth through holding concentrated stock, and think that holding a concentrated stock for the long term is the way to go.

There is also no doubt some public stocks have been runaway financial home runs, like investing in Apple or Amazon. If you had invested in those stocks since the beginning, you could have earned a 40,000% or 100,000% return. However, a rational, evidence-based decision process presents a very different picture. A statistical analysis on how IPOs and concentrated portfolios have fared in the past is covered in part two of this three-part series.

Concentration involves risks you may not have considered. In part two, I will walk you through critical considerations when maintaining a high concentration of company stock and things to consider from a big-picture perspective. I also dive into the benefits of diversification, taking it beyond the basics to show you the advantages of having a more balanced portfolio.

Effx raises $3.9M for its DevOps monitoring platform


This post is by Frederic Lardinois from Fundings & Exits – TechCrunch

Effx, a startup that aims to give developers better insights into their microservice architectures, today announced that it has raised a $3.9 million funding round led by Kleiner Perkins and Cowboy Ventures. Other investors and angels in this round include Tokyo Black, Essence VC Fund, Jason Warner, Michael Stoppelman, Vijay Pandurangan and Miles Grimshaw.

The company’s founder and CEO, Joey Parsons, was an early employee at Rackspace and then first went to Flipboard and then Airbnb a few years ago, where he built out the company’s site reliability team.

“When I first joined Airbnb, it’s the middle of 2015, it’s already a unicorn, already a well-known entity in the industry, but they had nobody there that was really looking after cloud infrastructure and reliability there […],” he told me. The original Airbnb platform was built on Ruby on Rails and wasn’t able to scale to the demands of the growing platform anymore. “Myself and a lot of people that were really smarter than me from the team there got together and we decided at that point, ‘okay, let’s let’s break apart this monolith or monorail that we call it and break it up into microservices.’ ”

Image Credits: Effx

But microservices obviously come with their own challenges — they constantly change, after all, and those changes are reflected in different UIs — and that’s essentially where the idea for Effx came from. The idea behind the product is to give engineers a single pane of glass to get all of the information they need about the microservices that have been deployed across their organization.

Effx founder and CEO Joey Parsons

At Airbnb, Parsons’ team built out a small metastore to track what each service did, who owned it, what language it was written in and whether it was in scope for PCI or GDPR, for example. After leaving Airbnb, Parsons went to Kleiner as an entrepreneur in residence and started to work on building out this idea of bringing to more companies some of the ideas of what the team built at Airbnb. He raised a small amount of money from Kleiner to hire the initial engineering team in 2019 and then started testing the product with a first set of pilot customers earlier this year.

In its early iterations, the product relied on engineers writing YAML files, which the product could then consume, but few engineers love writing YAML files and the value in a tool like this comes from being able to automate a lot of this work. So the team built out integrations with common service orchestration platforms, including Kubernetes, but also AWS Lambda and ECS.

“What we’ve found is that most companies that have been moving towards microservices are using some combination of those platforms — maybe one, maybe two, maybe all three — to orchestrate things,” Parsons explained. “So we built really heavy integrations into those platforms to where in Kubernetes we can drop a client in there, it automatically discovers all your services, populates as much as it can into the catalog from that and then does the same thing for an AWS Lambda or ECS perspective where we consume data from those platforms and pull data in.”

Image Credits: Effx

As Parsons noted, the value here isn’t just in getting that single pane of glass, but once you have all of this information and these services’ dependencies and combine it with your CI/CD data, it also becomes a new tool for troubleshooting as it helps you see which services changed before something broke. To even better enable this, teams can add links to their runbooks, documentation and version control tools too.

Parsons tells me that the team is currently in the process of closing more pilots and hiring more engineers as it works to build out its service, add more integrations and find new ways to help its customers make use of all the data it gathers.

“As the future of what we’re building comes more into fruition, the most important thing for us right now is to really deliver on the value that our existing product delivers to our end users as a platform to build more business,” Parsons explained. “I think that in the long run, the power of this feed and getting the data that’s behind it ends up being a really interesting mode for us simply because there’s a lot of great insights that you can build for organizations based on like the patterns and the cadence of information that shows up in this feed, to help teams really understand why there’s that incident that happens every Tuesday at midnight UTC.”