Over the years, the traditional method of doing business has been design, advertise, and hopefully sell your product. Recently, some brands are turning towards a new marketing strategy, experience marketing, by focusing on providing a stellar brand experience to customers instead of sticking to what is traditional. Brand experience, simply put, is a complete bundle of perceptions, emotions, and consequently behavioral responses that a consumer will be having as a reaction to brand related stimuli. It is how a brand’s identity, design, packaging, and its communications resonate among its customer base and form a brand personality. A positive or a negative brand experience, customers may have with the brand is associated with the brand’s identity, directly affecting its customer satisfaction and customer loyalty. Therefore, customer experience management is key. I would like to convey an insight into the brand experience that Tesla Motors is providing to its customers in relation to its tangible products and services as well as its customer relations, marketing communications, and overall the exceptional parts of its business strategy that I believe is significant in the brand’s prosperity. California based Tesla Motors Inc., a high-end automaker along with a unique set of energy solutions, is definitely noteworthy when it comes to a full-on brand experience. I was on my way to a dinner when I first noticed the Tesla Store & Gallery on P.C. Hooftstraat and I would describe my five-second experience with the brand as exclusive, modern, and enticing. This is the first impression, the first step of the brand experience.  What the brand related stimuli – in this case seeing the showroom – made me feel or react as a consumer. A complementing part of the brand experience is when customers are exposed to brand’s advertising and  its marketing communications, including word of mouth as well as the content on the brand’s own web site. In the contemporary times, we are continually bombarded with notifications on about anything and everything. Therefore, it is imperative that a brand sticks out from the crowd and that it stands for a distinct set of values. Tesla, for instance, aims to associate its brand with positive connotations of environmental responsibility, innovation, and especially with its CEO, Elon Musk. It is pretty unusual for a CEO to be this closely tied to the image of the company he works for. Nevertheless, this is working perfectly for Tesla, every tweet and every Instagram post from Elon Musk is a free-of-charge valuable marketing communication. As an engineer and a successful entrepreneur, Elon Musk, to some extent, represents the Tesla’s potential customer segment (at least until they design a more affordable car). Thus, it provides a perception for its targeted customers, “Tesla is what a successful business man/woman like you should be driving”. Moving onto the tangibles, the actual consumption experience, Tesla’s unique products and services are naturally the most substantial part of the brand experience. Tesla is the first, and currently the only company to commercially produce a “federally-compliant highway-capable electric vehicle”. The latest Model S has outperformed its competition both in speed, durability and sustainability. Unlike any other car that you would consider buying, a Tesla is likely to be a one-time purchase – since the car works on purely electricity provided for free with the Superchargers (Tesla charging stations) that are steadily increasing in size and spread. Tesla Rangers are offering their services in Tesla stores for any problem you may face with their products post-purchase. Again, uniquely, Tesla cars are only available for sale in Tesla stores which are their own retail locations while many brands are making use of independent retailers. This is most likely to ensure that the customers’ brand experience goes as smoothly as possible without interference from uncontrolled variables such as how Retailer X presents their vehicles. Only trained personnel are in contact with the Tesla customer both pre- and post-purchase. Tesla has intentionally departed from the traditional way of business in automotive industry and made a set of decisions that have made their products, services, and overall their brand experience a unique one. By choosing to use their own sales & services network over franchising their sales, it seems that they aim to provide a better experience for customer and incorporate the customer feedback more quickly into their product development & manufacturing process to improve the whole brand experience further. I believe Tesla is one of the companies that took the saying “if you do not have a competitive advantage, do not compete” quite seriously. They chose to stand out from their competitors through their products, their marketing strategy and focus on the customers’ experience. Every successful business is a lesson to learn, so it is now up to the current and future competitors of Tesla to come up with creative ideas that will top the Tesla experience. Personally, it is now definitely in my bucket list to go in ta Tesla store somewhere in the (hopefully near) future to book a test drive.

Imagine this; you are a high school student in the US. You go to school, just like every day, but all of a sudden you realize that this won’t be like normal. A troubled former student with a AR-15 semi-automatic rifle has entered the school building and started shooting. Before the police is able to stop him, he manages to kill 17 of your fellow students. Obviously, the media starts flooding in and you decide to act as a spokesperson for your classmates, since you’re good with words and have experience being on camera. You give multiple interviews, and as the anger over the lack of American gun control grows, you start leading a movement to stop these shootings once and for all. You and your classmates go to Washington DC to demand stricter gun laws. You give even more interviews and become a known face to the general public. But as you become better known, you also start to get the attention from people who don’t like your message of gun restrictions. As the videos of you mount up on the internet, some people discover footage of you practicing lines before an interview or find footage of people in other crisis situations who look strikingly like you. Your intentions start getting questioned. Are you who you say you are? And once these people are convinced you’re not, they’ll ask who is organizing these lies and who you are working for? Are you paid by the FBI, Antifa or George Soros? This happened to 17-year-old Stoneman Douglas High School student David Hogg. After his media appearances he was labelled a ‘crisis actor’. This means he is hired to spread a certain political message, using a tragedy like a school shooting. Some would even go as far as to claim that the tragedy did not even take place. The proposed motives for setting up such a fake shooting are diverse and outclass each other in absurdness. The alleged organizers range from the anti-gun lobby setting it all up to the Jewish-led world government, trying to subject everyone to authoritarian communism. This Vice documentary depicts the harassment the survivors have to withstand, and also covers Hogg’s experience. These conspiracy theories are an increasingly more common phenomenon on primarily the right in the US. During the last presidential elections, the Democratic party was stoked with absurd theories that seriously harmed its candidate, Hillary Clinton. She was accused of murdering one of her staff members, Seth Rich, because he supposedly would be involved with the leaked DNC emails. Another conspiracy, Pizzagate, claimed that Hillary Clinton ran a child prostitution network from a pizza restaurant in Washington DC. Ridiculous as that may sound, a 28-year old man found in convincing enough to enter one of the accused restaurants with a gun to investigate for himself. Popular talk-radio host Alex Jones, who is part of the extreme right media outlet Infowars, is one of the primary spreaders of these theories. He is the guy best known for his angry outbursts and the infamous quote ‘They put chemicals in the water that turn the fricking frogs gay’. Although his extreme and often ridiculous views are often deemed hilarious, the implications of the views he spreads are far from that. A video about David Hogg called ‘David Hogg Can’t Remember His Lines in TV Interview’ reached number one on the YouTube trending page before being removed by YouTube because it violated harassment policies. As a result of Jones and others spreading these theories, Hogg and other vocal survivors of the shooting have been receiving threats. Pizzagate was also pushed by Jones’ channel, which reaffirms that spreading such theories can have serious consequences. The movement Hogg and his schoolmates have started In favor of gun control is openly being associated with an organized attempt to abolish the Second Amendment and to ban guns (gun policies are the subject of a very heated debate in the US, as described by Maria in this article.) Often, the push for gun control is associated with authoritarianism, as shown in the image above from Alex Jones’ YouTube channel. Arguing that dictators always disarm their population, these school children are framed as enemies of American liberties. A very effective way of not only debunking the arguments of these pro-gun control students, but also deeming them very dangerous, framing them as a threat. Often, the push for gun control is associated with Hungarian-American investor George Soros. He is a major donor to the democratic party, pro-immigration organizations and left-leaning thinktanks. His political affiliations and billions in wealth make him a favorite target of the extreme right, and his name seems to be what ties most of the large conspiracies together. This was also seen in the recent Hungarian elections, where Soros was painted as an enemy of the Hungarian people by prime minister Viktor Orban. Soros is also a favorite target of Alex Jones and the American far right. It probably not a coincidence that Soros is also Jewish, which gives the extreme right media the opportunity to use him as a dog-whistle for an anti-Semitic message. Although this message is rarely spoken out openly, a mere glimpse in the comment section of these videos is enough to see the message has landed (for instance, look for comments mentioning names or organisations like this: ((((George Soros)))), this means that a link between bad actions and Jews is made silently). In the world of conspiracy theories, the fear for another Hitler is perfectly compatible with anti-Semitism. Screenshot from the Infowars website. Meanwhile David Hogg seems to hold up pretty well against all the allegations made against him. He directly confronts those who spread fake news about him and is still very active in the gun-control movement. For this, he has become widely admired. Fortunately, there are a lot more Americans that support the message of these students than who believe the conspiracies. But still, these developments are troubling. The effect conspiracies and fake news in general have is that they create noise which blocks out the truth further and further. As Dutch columnist Bas Heijne said: ‘If only you lie enough, even the truth is easily deemed a lie.’ As information is trusted less and less, it’s easier to discard news that doesn’t fit your world view. The conspiracies surrounding the Stoneman Douglas High School shooting once again show people are more and more willing to believe absurd claims when they fit their narrative. And it shows the effectiveness of fake news and how hard it is to stop it, certainly now that information can spread easily and freely through social media. Any disproving information is deemed to come from the indoctrinating side. It is therefore crucial that the mainstream media refrains from partiality and maintains or regains its position as an unbiased and trustworthy supplier of the truth. Only when the sources of information are known and checked, it becomes impossible to spread fake news, since you’ll be held accountable for them.

Food (and land) security has become a major issue in the last years. The United Nations Food and Agriculture Organization (FAO) estimates that one in nine people are chronically undernourished. With the world’s population expected to increase up to 9-11 billion by 2050, an urgent question has risen: how will we feed ourselves in the 21st century? Current situation I ask myself how have we arrived to this situation. We must first consider the economic forces that ultimately cause an unfair allocation of resources. Approximately 1/3 of the food produced in the world for human consumption (around 1.3 billion tonnes) is wasted every year. This food wastage is not only responsible for notable economic losses, but also for severe damages to our environment. However, even if we could equalise the allocation of these wasted resource all around the world, we would probably have to overcome a bigger issue: land availability. The Earth has only a limited area of viable agricultural land; how this land is used is central to our ability to feed the world. Of the world’s approximately five billion hectares of agricultural land, 68% is used for livestock. Also, consuming animal products is incredibly resource-intensive (most of the protein from vegetable feed is used for the animal’s bodily functions), and farming uses about 70% of the planet’s accessible freshwater. In 2009, the United Nations Environment Program affirmed that impacts from agriculture were expected to rise due to population growth. A substantial reduction of these impacts, they said, would only be possible with a substantial worldwide diet change, away from animal products. Alternatives to meat production The Food and Agriculture Organization of the United Nations (FAO) estimates that the demand for meat will increase by more than two-thirds in the next 40 years. Because of the rising concerns about the negative effects of animal-based food consumption, several alternatives and measures have been discussed to face the issue. The most popular shift away from consumption of meat is veganism, an extreme form of vegetarianism defined as: “Veganism is a philosophy and way of living which seeks to exclude all forms of exploitation of, and cruelty to, animals for food, clothing or any other purpose; and by extension, promotes the development and use of animal-free alternatives for the benefit of humans, animals and the environment.” This way of living and eating is carving a niche in the market of developed countries, with an increasing popularity and acceptance, especially in Western societies. However, not everyone is willing switch completely from a meat-based diet, and therefore some other alternatives have to be researched. Cultured meat is one of the most discussed alternatives. Cultured Beef is created by painlessly harvesting muscle cells from a living cow. Cells are multiplied in a laboratory to create muscle tissue, which is the main component of the meat we eat. It is biologically exactly the same as the meat tissue that comes from a cow. The benefits? Cultured Beef could use as much as 99% less space than what is needed for current livestock farming methods, and greenhouse gas emissions and other environmental impacts would be lower. A second measure proposed has been the taxation of meat. Cigarettes, alcohol, and gasoline; many of these products are taxed through the so called “sin taxes” to balance out the health or environmental costs they cause. According to some analysts, “sin taxes” on meat seem inevitable to reduce its impact on climate change and human health, and they estimate that some form of meat tax will potentially emerge within 5 to 10 years. In fact, meat taxes have already been discussed in parliaments in Germany, Denmark and Sweden. Also, China’s government cut its recommended maximum meat consumption by 45% in 2016. One variable of these meat taxes would be some form of emission tax. Presently, the global livestock industry causes around 15% of all global greenhouse gas emissions, especially CO2 and methane (this last one is one of the most polluting greenhouse gases), which given the scope of the industry, has a considerable impact on the environment. Would these excise taxes help cover the health and environmental costs resulting from animal farming? Maybe they would. For example, in 2014, Berkeley, California, passed a soda tax. Researchers of the tax found that just one year after the tax started, sales of sugar-sweetened drinks fell by nearly 10 percent, while sales of water increased by about 16 percent. If set high enough, taxes could become powerful monetary disincentives to consume meat (or at least to consume it less often). Challenges Nevertheless, all big changes come with a price. These kind of measures, if successfully implemented, would have an important impact in the economy and society. Either way, a worldwide diet change away from animal products represents major challenges: First of all, meat is an important part of history, tradition and cultural identity in almost every part of the world. Meat is a symbol of wealth and richness. In poverty periods, you would only consume animal food if you have enough resources to first feed those animals. Especially in developing countries where meat may be considered a luxury food, a dietary change away from meat consumption should not be expected any time soon. Second, around 1/3 of the total world’s land is composed of arid and semi-arid rangeland that can only support animal agriculture. For example, it has been attempted to convert some parts of the Sahara Desert from livestock pasture to croplands in the past, with no success; these attempts have resulted in reinforced desertification and loss of productivity. Thus, without livestock, life in certain environments would likely become impossible for some people, especially nomadic groups. It is difficult to know the economic costs and benefits of a shift away from meat consumption; some hypothesise significantly lower prices in corn and other grains. Also, there would be a need for jobs readjustments, since people working on the meat industry would have to be reallocated. In any case, we should be aware of the cost of what we eat. The rate at which we consume animal-based products today has a very damaging impact on our environment. I myself wold not go vegan right now, but I think a more conscious choice of our food is necessary to help sustaining our environment.

Punitive work has ancient origins, in both America and Europe, it was first instituted as a form of corporal punishment. And although the 13th amendment of the U.S. Constitution explicitly forbids slavery and any kind of involuntary servitude, an exception was specially made for criminals. This has allowed private institutions to profit from the punishment of others, a circumstance that can easily be described as a moral hazard. The problem with prison labor is that it takes advantage of the vulnerability of inmates. In the United States, Prison labor is legally required, and workers can earn as little as $0.12 per hour of labor if they work for a government-run prison industry, or around $6 if they work for a private organization instead, and although the second option is far better than the first one, both are still lower than the federal minimum wage of $7.25. Thus, allowing some of the biggest private companies in the country such as Starbucks, Victoria Secret and Microsoft to enjoy an extremely cheap workforce. Besides being unfairly rewarded for their jobs, prisoners also have no bargaining power, which means that they can be easily exploited. In fact, there are cases where prisoners have filed lawsuits against their employers because allegedly they were sent to solitary confinement after they complained about their working conditions. In addition, inmates are also very dependent on their contractors, as Pierre Sleiman, the owner of a T-shirt company currently employing prison workers, puts it: “If I lay them off for a week, I don’t have to worry about someone else coming and saying, ‘come work for me’”. This issue does not end there; manufacturers are not the only ones taking advantage of this situation, private prisons also profit from the work of their inmates by keeping a part of their salaries. They even advertise themselves and their inmates as the perfect source for a readily available and reliable workforce given that their workers “won’t have any issue commuting to work or waiting for the nanny to arrive in the morning”. This has allowed them to become a billion-dollar industry, which is now spending a great amount of their profits lobbying in favor of measures such as mandatory minimum sentences and immigrant detection. These measures not only make sure that they keep their cells remain filled up, but also, contributes to the growth of America’s gigantic prison population which currently constitutes for about a quarter of all the prisoners in the world. Ideally, prisons should provide inmates the possibility to occupy their time in a meaningful way. This is a very important aspect of the social function that prisons are meant to fulfill, given that the ability to acquire a skill during this time could lead to an effective resocialization of the individual after its release. After all, it is true that inmates who work are less likely to go back to prison after their release. However, the range of jobs being offered is currently driven by a desire for cheap labor, which means that it mainly offers participants unskilled tasks that do little to prepare them for their professional future and are unlikely to improve their job prospects. It is in the best interest of society to have prisons that actually offer inmate rehabilitation programs that improve the prospects of the convict, instead of taking advantage of their situation. As said by supreme court justice Thurgood Marshall “When prison gates slam behind an inmate, he does not lose his human quality… his yearning for self-respect does not end, nor his quest for self-realization concluded. If anything, the need for identity and self-respect are more compelling in the dehumanizing prison environment.”

Facebook, Cambridge Analytica, Russia, US elections – all of these have lately been connected by one word – scandal. More specifically, data privacy scandal. The news about Facebook is not getting any better. Last Tuesday, Facebook’s chief executive, Mark Zuckerberg, was scheduled to testify before two congressional committees amid the growing objections over the company’s data collection practices. Zuckerberg admitted that his company could not prevent a leak of “the most valuable asset that they have” – users’ data. For example, information about the likes using which, according to some psychologists, it is easy to compose a portrait of a person’s personality and give advertisers more opportunities for micro-aggregating ads. This is exactly what happened in the case of Cambridge Analytica. The company received data of tens of millions of Facebook users fraudulently: it was claimed that they are collected exclusively for academic purposes. According to Zuckerberg (this is confirmed by journalistic investigations), Facebook noticed the abuses by Cambridge Analytica back in 2015 and demanded the company to remove all the data obtained in this way. The company agreed, but in fact, did not delete anything. At the same time, Facebook never checked whether they did or not. Zuckerberg acknowledges this as the key mistake of the social network. I watched the entirety of Zuckerberg’s testimony on Capitol Hill in Washington and I could not form an opinion on this case. Still can’t. Am I to stop using Facebook? Meaning stop using Instagram and WhatsApp – both of which are owned by Facebook? Shall I be worried or shall I just accept the fact that ones I have connected my life with Facebook – it knows everything about me? Does Facebook CEO’s testimony was as much about personal technology as it was a political theatre. It seemed as if 40 senators who have joined to ask Zuckerberg questions, we’re not even sure how Facebook works in the first place. We could make fun of them, but I believe, that not many of us, who actively use Facebook, are actually aware of how much data Facebook collects and what is it being used for. And Mark, being a technical genius, was able to easily find his way out of any question from the Member of Congress just by throwing some technical terms out there. Who has access to the information that I post on Facebook? On the question about data privacy Zuckerberg gave generic assurances: “We have never sold our users’ data”, which is clearly not the case, otherwise he would not be giving testimony in the first place. Whenever he was questioned why Facebook collects so much data, he slipped out by saying that every Facebook user can have control over which personal information can be seen by whom. True, whenever we make a post on Facebook we can set our audience – just friends or everyone, but Facebook still gets access to all of your information, so it doesn’t change much in term of data privacy. Being an active Facebook user myself (who is not these days?) I am aware of cookies and that the information that I post can be used for a targeted ad, etc. The question is – how much of our data Facebook is collecting on its own? Yes, we are given a privilege to choose our audience, however, beyond this, Facebook is able to track your location as well as see which websites you are using. I have to confess to my first “Facebook is watching you”experience, I was slightly alerted. I am sure all of you can share this strange feeling. Let’s say you go on skyscanner.net to book a flight for your holidays to Rome. This exact minute you go on Facebook to check a message from your friend – and WOW – you already have ads that offer you the cheapest apartment in Rome, cheapest rental car company, cheapest sightseeing tours. I am used to it now, but a year or two ago, I felt rather uncomfortable. But then I realized that I cannot do much about it. Data privacy is not to be fought for by individuals – it’s to be regulated on a national and international level. The question I am left with after Zuckerberg’s testimony is: if Facebooks wants us to be in control of our data, why doesn’t it put a button on our page which says “stop tracking me” (I would even pay Facebook for this). In reality, this would be too harmful to Facebook’s business. There was one question during the testimony that dug into the core of the matter: “Would you be willing to change your business model in the interest of protecting individual privacy?”. Facebook CEO’s answer was: “I am not sure what that means” Are you not, Mr. Zuckerberg?

I have been actively involved in student politics at the Faculty of Economics and Business for 2 years now, beginning in March 2015. Over the years, I have had different colleagues. I have had to work with members from other faculties, collaborate with them on projects, share insights and strategize about what is best for students. I have seen the work ethics of different people and have learnt lessons along the way. However, if there is one thing that I have learnt, it is that joining student politics is a thoroughly unique experience, and the people you meet along the way leave an imprint on you. Now that elections for the Faculty Student Council (FSR) and Central Student Council (CSR) are coming up, allow me to give you a quick glimpse at what my life was like in the FSR FEB, over the last two years. The FSR FEB is the Student Council of the Faculty of Economics and Business. We are 11 people, including one secretary and 10 elected members. The council has two committees, namely, Education and Research (E&R) and Organization and Media (O&M). There are different positions, which are Chair, Vice-Chair, CSR representative, E&R chair, O&M chair and general members. All the chairs make up the Daily Board, which is basically a sub-committee within the council. The function of the Daily Board is to ensure that the council functions properly, and where the chairs can address issues. General members can also bring up issues and problems at the Daily Board meetings, so that the chairs can figure out a way to address the problem. Moving onto the committee, the Education and Research is concerned with improving and initiating projects regarding the betterment of educational quality. Although this is a broad umbrella, the portfolio of files is very specific and change from each council year to another. 2017-18 saw the initiation of files such as the Minor in Sustainability and Economics and Blended Learning. I personally am working on the Minor in Economic Sustainability, so allow me to explain it in a bit more detail. Climate change, and unsustainable use of resources have become critical issues, that the world collectively faces. And its correlation with economic theories such as growth and industrialization are of paramount importance. As students of economics, it is important to understand the consequences of unsustainable growth, and what threshold levels are to be attained so that future generations can also make use of resources. Most importantly, it is also important to understand how to reverse the effects of our economic activity, in term of de-growth and sustainability. To this extent, the Faculty Student Council of Economics and Business (FSR FEB) has come up with a proposal for minor in Sustainability and Economics, which we strongly believe will benefit the faculties involved and the students taking part in it. We engaged in discussions with professors from the Faculty of Science (FNWI), Faculty of Social and Behavioural Sciences (FMG) and Faculty of Economics and Business (FEB) to create a minor. The courses in the proposed minor already exist, and do not require additional personnel to be executed. The minor will be spread out throughout the year, thus allowing students enough time to understand the subjects and intricacies. Moreover, because it is an interdisciplinary minor which combines subjects from different fields, students gain a holistic overview of sustainability and economics, and are enabled to draw linkages between the two concepts, which is a favorable middle ground for all faculties. This fosters interfaculty co-operation, and would result in a nuanced program. Some of the best universities globally focus on sustainable economics, equipping students to work in this field and help make a change in the world. If FEB is to retain its respected position as an innovative and progressive university, then it must adapt to the changing times and deal with the latest issues in the science of economics. The proposed minor in  Sustainability and Economics does exactly that. It is a win-win situation for the students, for the teachers, and for the faculties involved, by promoting a healthy exchange of knowledge and ideas, and creating students who aim for a sustainable world. We strongly believe that it can be easily implemented, and it will be extremely beneficial for all parties involved, given that there are absolutely no costs in implementing this minor. So we hope to get your support on this issue! I would be personally more than happy to also tell you about the other files, but this is one of the pivotal files I am working on. On behalf of the council, please feel free to drop by at E0.06 for a chat with us (or me more specifically, if you have good taste)!

Yakuza, the Japanese mafia, is as far away as it gets from tattooed samurais that fight each other with katanas. The organization is more likely to resemble a very successful corporation that in 2015 had an estimated revenue of $80 Billion dollars. Unlike most organized crime groups, the yakuza is legal. (or at least, sort of legal). They are legally permitted to have a company that unites them. Thus, it is not unusual to see building placards with their name when walking around in Tokyo. With centuries of history and an idol-like image in the media, yakuza members are clearly capable business man. They put the accent on the “organized” in “organized crime” and some of their lessons could be more helpful than one might think. Therefore, I will look at three things that the Japanese Mafia has got right when it comes to running a successful business. 1. Team-work and mutual respect Yamaguchi-Gumi is one of the biggest gangs in Japan. Controlling over 2500 businesses and getting the majority of their revenue from manipulation and protection, the organization hierarchical structure is very similar to that of a big corporation. The main difference is the accent put on respect and relations. It is said that new members are welcomed into the group as they are a family. They are trusted and provided with both financial and emotional support. Initiations ceremonies are built to gain the trust of the recruit. All codes of conduct are thoroughly respected by each members, no matter the rank, which often builds a sense of individual responsibility among the individuals. Respect and orderliness are extremely important and valuable. The cultural heritage they carry is also an important factor when it comes to the building of loyalty within their community. After the 2011 earthquake that hit Japan, the organization has helped with the rebuilding process and provided important funds. This unveiled a feeling of solidarity and the important media image that the mafia has among the population. However, this achievement did not last as long as planned. As a result of multiple homicides and gang wars, the public seems to have recently moved away from the romanticized picture of the yakuza. Nonetheless, their commitment to respecting the rules and the loyalty built within the gang is an aspect that can be implemented outside of the mafia lifestyle. 2. Good incentives The origins of the yakuza are not clearly known. They are believed to have appeared in the 17th century Japan from either masterless samurais or misfit pedlars and gamblers. Nevertheless, none of those people were considered particularly well off. Today, the so-called “street soldiers” do not differ much, but they have the opportunity to aspire to be respected in their community, when all their lives were most likely lived in mistrust and poverty. The financial benefits and the sense of family are attractive to many. On the other hand, punishment is taken seriously by the gangs. A common tradition is having to chop off your pinky and ring finger when you have to apologize for your mistake. The dreadful practice’s origins are underlines in mastering the sword. In order to have full control over the weapon a lot of strength is needed in the last two fingers. Today, the tradition is still respected and one could guess members are trying to not make any mistakes. While, I do not think anybody should ever consider physical punishment, beyond the cruelty there is another lesson to be learned. Mistakes only pave the ground for success and failure can sometimes only make you more determined. After all, many of the most successful gang members often find themselves lacking the fifth finger. 3. Know your competition Meetings between enemy yakuza gangs are often held in bathhouses. The reason for that is quite self-explanatory; you are naked. Tattoos are an important symbol for members. They often represent an event that happened in their lives and character traits portrayed in the style of Japanese myth. In the bathhouse, you can read your enemies skin as their tattoos are, in effect, a reflection of themselves. Furthermore, to keep things practical it is hard to hide weapons when you are naked. Similar to Michael E. Porters view, the strategy based on thoroughly knowing your competition is likely to work in your favor and shape your business strategy. The Yakuza understand that in order to advance, your enemies need to be a big part of your plan. Getting to know them up close and personal could save you of later trouble. All in all, it is important to not forget that yakuza members are promoters of illicit activities that harm many people, gang members or not. Low ranks are still highly persecuted and have the highest death rates. The life they live is often described by running away and modesty. However, some of their rituals have a deeper meaning.A big part of their activity is based on the image they project and the fear and respect they impose, rather than on actual violence. The control they have is often superficial and kept afloat by centuries of history and tradition. Looking past the obvious, some of the principles that guide their lifestyle could be implemented in our day to day routine. After all, they seem quite obvious, but they are easier said than done.

There is no doubt that we are constantly being surrounded by articles that emphasizes how polarized the income distribution of the world as it is now. Just last week, a report released by a group of politicians, business leaders and trade unions warned us that about two-third of global wealth would be possessed by just 1 percent of individuals in 2030. In January, before the annually-held economic conference in Davos, a group of researchers released on increasing global inequality that raised even more eyebrows: 42 richest individuals in the entire world are holding as much wealth as the bottom 3.7 billion individuals. And yes, while it is extremely important to recognize the importance of increasing global inequality, are we over-emphasizing the severity of theproblem? The overview of inequality Before 1970, income inequality in the world was mostly driven by cross-country inequality due to centuries of colonization by the Europeans and its offshoots. After the conclusion of World War II, income inequality between countries narrowed modestly while domestic income inequality decreased due to the work of reconstruction after the war. However, after 1970, the global income inequality has mostly been caused by within-country inequality – many developing economies are rapidly catching up to the standard of living of the Western society. The Gini coefficient measure is the most widely-used measure of income inequality. The construction of the Gini formula is extremely straightforward and easy to undertsand. At each cummulative income share, the corresponding population share will be determined based on the collected data, and the calculation will proceed from there. The Gini coefficient ranges from 0 to 1, in which 0 implies perfect equality and 1 describes perfect inequality (i.e. all income is concentrated on one individual). Right now, the global Gini coefficient is around 0.64, which implies that there is still a lot of income inequality. However, if we compare this number to what was the case at the beginning of this century (2003: 0.68), in an overall sense, we have indeed made some progress in tackling this problem. Macro studies In the renowned work of Thomas Piketty, he measured that income inequality has increased dramatically over the years, with the increasing share of the 10% wealthiest increasing from just more than 30 percent in 1960 to almost 50 percent fifty years later. However, another research proposed by Gerald Auten and David Splinter only measured that the increasing share of income to the wealthiest individuals is only increasing modestly, and it is not significant as closely as the figures that were posted by Piketty and his colleagues. As you might have guessed, the difference in the results is due to the methodologies that different authors use. Auten and Splinter argued that the tax-based measure that Piketty and his colleagues use is highly biased. This method that they use could overestimate the inequality measure significantly. Piketty also measures the capital gains of individuals, which is probably the main reason that is attributed to the increase of income inequality. When some of the causes of biases and government transfers are accounted for in the measurement, the after-tax income share of wealth of the top 10% is virtually insignificant. However, we can see that there is limited public (and maybe academic) attention to this research. It might be the case that the work of Piketty and his colleagues are more highly touted in the public only because of the significance in the results. Micro findings In terms of relative importance, the United States is probably where income inequality is the most debated economic and societal issues. Its domestic income equality progress is behind 70% countries all over the world. To understand the severity of income inequality in the US, the top 1% percent of individuals own 22% percent of the country’s wealth, while the top 0.01% owns 5%. The ratio between the income of the 10% wealthiest individuals compared to 10% of the poorest individuals in the United States is 18.5. To put it in perspective, that of the Netherlands is considerably lower, at 9.2. However, the implication is that income inequality cannot be put in the same token as fairness, as economist Angus Deaton argues. The “fair” aspect of inequality is instinctively the motivation for the economy to move forward, with the increasing influence of globalization and the emergence of new technology which aids productivity level. However, sources of unfairness of income equality must be addressed. While inequality can be justified somewhat, Deaton also tackles at the flaws of the US domestic policy itself to allow the inequality to be ridiculously excessive in the economy. The unfair practice of healthcare financing, (too low) minimum wage, and labor contracts reform are the driving causes of increasing income inequality. Because of these policies, the wages of the bottom-end individuals are kept constantly low for many years, while the average prices of products and services increase. His view also echoes on the Nobel-prize winning economist Joseph Stiglitz, that inequality is not due to capitalism but the policies that are built around it. The key takeaway here, that is, inequality does need to exist in our society, but whether the extent to which inequality is justified. Of course, it is extremely difficult to evaluate if that is the case. The end is, if there is any unjustified inequality, as long as that contributes to the overall welfare of the society (by taxes and/or income transfers), income inequality should not be what we should be too concerned about. However, there is still a slight tendency towards wealth being increasingly more concentrated towards the group of richest individuals, even when we take account of after-tax income. I do not yet have a concrete answer to the question about whether we should be scared of the problem. Although income inequality can be measured quantitatively through income measures, there is not yet a consensus between academics and politicians of how to understand income inequality and how it is directly related to our society. Having seen how income inequality has changed in recent years, it would be down to the economic policies that will effectively address the issue.

It is commonly believed that markets enhance efficiency. Markets prioritize companies that make bigger profits and to keep your profits high, you have to keep your costs low. As wasted resources add to cost, but not to the value of the final product, a profit maximizing firm will minimize waste. Problems may occur when resources are not appropriately priced, but once these market distortions are priced in, firms will be properly incentivized again. Once properly incentivized, the market will reward the most efficient, waste minimizing firm. As far as productive processes are concerned, this story may well hold up. Companies however have every incentive to maximize the waste produced by households. Every item that a household throws away has to be replaced and that is good for business. Thus, the smaller the life span of consumer products is, the bigger the potential sales volume. Companies have several techniques to enhance the production of household waste and boost their profits. Depending on their product, they can either limit the physical or technical life span or create hypes and fashions. Physical life spans are typically actively limited in consumer products in which further innovation is incremental at best, such as light bulbs and washing machines. It is technically possible to make a light bulb that lasts a life-time. They aren’t produced, though. If they were, it would put all bulb manufacturers out of business. As every business is smart enough to understand this, they will not even go there. Similarly, washing machines lasting 25 years could easily be made. Yet, the ones on sale last no more than 15 at maximum. This almost doubles the sales of their producers. It also doubles household waste and the strain on the environment. Food waste is also great news for business. Sometimes packaging will make it very hard to consume all of its contents. A more effective (and more frequently used) way to make people throw out perfectly good food, however, is manipulation of the expiration date. It is usually safe to consume eggs and canned foods well past their sell-by-date. Tea and coffee also do not stale as quickly as the packaging tells you. Yet, the sell-by date will entice many (and I am no exception) to throw such food away prematurely and replace it by ‘fresh’ new products. The technical life span is limited when further innovation happens often and fast. The textbook example here is the mobile phone. When new innovations are possible, they are only incrementally integrated in the new phone. If a manufacturer can at some point enhance the phone’s processor speed, its camera and its memory, he is unlikely to implement these changes all at the same time. It is much more profitable to implement and market each change in turn. Thus, consumers buy a ‘new faster’ phone first. Next, a phone ‘with the speed you are used to but with a much better camera.’ A while later, the enhanced memory ‘allows you to store everything always.’ A consumer that wants to keep up with those innovations has now trashed two phones and bought three. Fashion will also increase household waste and thus company sales. Personally, I do not have a gene for fashion (and people frequently tell me it shows). People that do, feel physically uncomfortable wearing something that is ‘soooo last season’ and they just ‘have to go shopping’ to get their ‘fix.’ The overtones of addiction in this last sentence are no coincidence. Fashion-sensitive people frequently describe themselves as shopaholics. Let’s face it: spreading addiction makes perfect business sense. An addict is a very loyal customer after all. If spreading addiction is the goal, you will have to start at as young an age as is legally allowed. Toy producers know this. Classic toys, like wooden blocks and old-fashioned Lego, last a life-time and thus make poor business sense. Modern toys (and modern Lego is no exception) therefore usually perform some kind of trick, like repeating what you say to it. Or they showcase some fancy light and/or sound effect. These tricks and effects make the toy irresistible to kids so they will nag for it till their parents cave. After having seen the one trick their new toy is capable of thirty times, kids are bored with it and never look at the toy again. In a maximum of three months it will be relocated to a landfill. The next one-trick pony will be advertised and the cycle begins anew. Thus the pattern is trained in at an early age: happiness can be bought and if you get bored, it is time to go shopping for your next fix. Firms using those techniques are not evil. They are not conspiring against our ability for true fulfillment or the environment. They are simply responding to incentives. Thomas Rau (in Tegenlicht and Room for Discussion) proposes a radical shift in thinking to change these incentives. Why, he wonders, do we try to solve our problems and run our businesses on the basis of buying and selling? What would happen if we focused on performing services for each other instead? This would radically transform the business model of most producers. Imagine what would happen if instead of buying a washing machine, I rent the washing service. In that case, the washing-machine-manufacturer-turned-service-provider will have every incentive to keep his machine running at as small a unit cost as possible. That is, s/he will make a durable machine that takes little resources to produce and little energy and water to run. Similarly, fashion producers may revamp themselves into service providers that make you look sharp (sounds fancy? At least one company already does this). Toy producers could reinvent themselves as providers of fun and learning services instead of dealers in boredom and addiction. The single most important obstacle is likely cultural: many people associate property with status. So, they will not want to hire their fashion. Instead they want to show people around in their walk-in closet. This problem may be real in fashion, but is unlikely to exist when it comes to washing or lighting services. In addition, not having to worry about the washing machine breaking down in the midst of financial troubles will be a huge advantage of renting services rather than owning a machine. Where cultural obstacles do persist, the government can always step in and simply forbid people to own e.g. toys. This sounds paternalistic, but it is quite likely that our kids will adjust quickly and feel more satisfied and less restless to boot. There is nothing wrong with a government taking measures to prevent addiction from spreading.

In this year, democracy will once again be challenged in Latin America. Six different countries will hold presidential elections, and more than ten will celebrate parliamentary ones. The latter will have macroeconomic consequences for the development of the region. Investors expect a massive shift in financial markets…again. Political transitions are considered large economic drivers in Latin America. These transitions can go from one regime extreme to the other in a matter of months. Due to the heterogeneity of the main political parties, the countries suffer major changes in their social structure within a short time frame. These ups and downs have improved economic growth in some countries; but they have also driven major economies to the verge of collapse. Mexico in the 1990s is a good example. It was considered a major investment destination due to its heavy economic potential and the recent opening of its markets following the NAFTA agreements. But in March 1994, the assassination of the then favourite presidential candidate Luis Donaldo Colosio, triggered a total loss of trust in Mexican markets, yielding huge outflows of funds. The resulting crisis, known as The Tequila Effect (for common reasons), had significant consequences for its neighbouring economies, culminating in a bailout package coordinated by the United States and the International Monetary Fund. President Bill Clinton pursued congressional approval for a $50 billion bailout deal, that aimed to decrease the immigration rates at the southern border and to boost investors’ confidence in the country. The crisis left a deep scar in the history of Mexico’s economy, but its trigger gave rise to the question; Is Mexico really a democracy? According to the Mexican National Electorate Institute, 42% of citizens do not trust authorities, and more than half believe elections are a mere protocol, with no political gains. Mexico is only one example of a Latin American country that has almost given up on democracy. Less than one third of Colombians consider their country a democratic state. More than 55% of Brazilians believe they would not mind having a non-democratic state as long as it solved problems. Paraguay, although finally achieving democracy after the fallout of dictator Alfredo Stroessner in 1989, now believes at a 50% level that undemocratic governments have been better than their counterparts.The list goes on and on, and after more than 150 years of independence, Latin America seems to not be able to adapt to any political order. Chile has suffered the fist of extreme capitalism, ending up in the disappearance of thousand of civilians. “Communism” in Cuba, has resulted in economic embargos that have halted internal development. “Socialism” is now raising inflation rates above five-digit percentage levels in Venezuela. As for some begin to wonder: Is it time for Latin America to begin developing its own economic and political order instead of following Western ideals? It seems that the answer lies in the upcoming elections, when major political shifts, along with an antagonism from the current US president Donald J. Trump, will merge to realise what society is demanding now. In the case of Colombia, Peace Nobel prizewinner Juan Manuel Santos has been president of the country for eight years already, making him unable to run again. His main inheritance to Colombia was the signing of the peace agreements between the government and the Revolutionary Armed Forces of Colombia (FARC), who have threatened national peace for over fifty years. These agreements however, turned the FARC organisation into a political party, and they have already selected their main candidate. Although national statistics show that FARC do not show a significant percentage of followers, it is forecasted to increase its influence. This could have severe consequences in the near future of Colombian democracy due to the extremism of their ideals. Brazil, the largest economy in the region will celebrate elections on October 7th. Brazil has recently been infested by huge corruption scandals. Going from an impeachment of their last elected president Dilma Rousseff in 2016, to the current most famous corruptive organisation. Odebrecht Organisation is a Brazilian conglomerate consisting of diversified businesses; however, in 2017 it was charged with heavy cases of corruption not only in Brazil, but also in the whole Latin America. Among its corruptive operations are the illegal payments made to various presidential campaigns. It is also involved in venues constructed for the 2016 Olympics, the 2014 World Cup and more than one dam and airport terminal in the region. Its influence culminated in the resignation of the last elected president of Peru, Pedro Pablo Kuczynski (PPK), once again turning one of the steadiest economies in Latin America, into a political crisis. The Brazilian society must now swallow its pride and try to go to the polls on October 7th. The outcome of the upcoming election will heavily depend on the judicial future of former president Lula da Silva. Lula created a period of constant economic growth and his social policies have helped millions of people out of poverty. However, his legacy took a big hit when various corruption allegations emerged against his leftist Workers’ Party. He is currently leading at the polls, but if the court of justice upholds him unanimously, he will be disqualified from aspiring to elective office. Without Lula, however, the electoral competition will have a more even outcome Cuba this year is the keystone of democracy. It will hold presidential elections in April and will be the first time in over 60 years that the presidential chair is not occupied by a member of the Castro family. Current vice President Miguel Diaz Canel is considered the favourite for the role. Appointed in the Communist Party (the only party allowed in Cuba), Canel follows a history of closeness with Fidel and Raul Castro, a good reason to believe that little to nothing will be the change affecting the Cuban society. Furthermore, Raul Castro is to remain in power by occupying the role of the head of the Communist Party. Hence ensuring the values of the revolution are not faded away, and establishing a good remainder that the Castro family will not be soon forgotten. Mexico is no exception to this electoral trend. July 1st will be the date when Mexicans will go to the polls to elect their new president. A country that ever since its independence, has never elected a left-wing party for its presidential mandate, is beginning to believe it may be time for Mexicans to try some of that leftist taste. Andres Manuel Lopez Obrador, a left-winger, is the favourite candidate to win the upcoming elections. If he doesn’t, however, he will have lost three consecutive times as a presidential candidate. That’s right, a third time runner is the favourite to lead the country. Many political advisors wonder if the presence of a leftist will yield detrimental economic consequences similar to those of Venezuela when Hugo Chavez raised to power. The Mexican peso is already fluctuating according to this political pattern. It shows appreciation relative to the USD when Lopez Obrador goes down a few points, and depreciation when he manages to increase his popularity rates again. The presence of a leftist in a neighbouring country is nowhere close to what the US needs. A country that has long antagonised with leftist regimes cannot allow a radical change of administration in its southern border. Therefore there is speculation about US intervention in Mexican elections. Similar to that of Russia in the US ballots. It is with no doubt an important year for democracy in Latin America, and whether or not the ballots reflect the people’s needs, it is essential that the new administrations work from and for the people. Due to the critical levels of corruption that have filled citizens with discontent and regret, politicians must now avoid bribery scandals at all costs.

Today’s article is by our guest writer Ozanay Bozkaya. He’s a second year student at McGill. While mainly interested in history, politics, and international relations, he also closely follows technological developments. As the title suggests, we live in an era of limitless possibilities… and YES, it does include ‘printing’ your very own ‘currency’ with no legal consequences. At least for now, that is. A dark screen with green code reflects on to the man’s face, his hands fly across the keyboard as sweat drips down his forehead. We all know a movie scene where the hacker furiously breaches multiple computer systems with dizzying button mashes. In a way, these people exist in real life as well (though minus the reflective screen and overly dramatic tension), hacking into business and government systems, much like the recent Bundestag hack, which was revealed on March 1st. In light of this, it is important to ask why cyber-attacks matter, and what the rising trend tells us. Cyber-attacks constitute the fifth dimension of warfare as defined by U.S. military doctrine. They are the sum of all computer systems-related attacks designed to control, malfunction or destroy various systems, and can hit literally any computer system in the world – even ones not connected to the internet – avoiding reliable detection. Generally, they are a potent tool in the hands of individuals or crime rings and are even utilized by powerful state actors. They come in vastly different scale and form, ranging from a ‘dirty’ USB stick designed to introduce malware to a personal computer, to a ‘worm’ the size of Stuxnet, which almost shut down the Iranian nuclear program. The Bundestag hack very aptly demonstrates the danger of cyber-attacks to all organizations, especially governments and financial institutions. In light of the confrontation between Russia and the ‘West,’ it is safe to say that cyber-attacks are now the norm instead of a rarity. Just recently, there was a Distributed Denial of Service (DDoS) that targeted Dutch banks ABN Amro and ING, as well as the Dutch Revenue Service and the Dutch Central Bank.  So, the increase in attacks and hacks are not only just some problem between government sponsored hackers, it’s a very personal problem if it means the average Joe loses their assets. But, where do these attacks originate from? The real problem with cyber-attacks is just that. It’s never an easy task to determine the origin of the attacks, let alone discovering and then prosecuting those behind them. Frequently, cyber-attacks are blamed on Russian hacker groups like Cozy Bear or Snake, or Chinese groups like APT3. The US government, in particular, has claimed that such groups also frequently receive state backing through shadowy channels. Yet these groups are not the only threat. Though obviously on a much smaller scale, there are also individual hackers, hacking away for more personal reasons, such as ego. The real danger comes from a combination of both. Systems designed to only fight one or the other will inevitably let something slip through the cracks. In the past year alone, there have been several major attacks: WannaCry, NotPetya, the Ethereum hack, the Equifax breach are but a few. WannaCry and NotPetya were largely ransomware attacks which encrypt the hard drive data of the computer, then require some form of payment, usually cryptocurrency, in order to regain access to the files. These spread far and wide, affecting computers in banks, universities and airports, among other places. The Ethereum hack, though not as widespread and well-known as the other hacks, involved the heist of over $35 million in cryptocurrency from the Ethereum app platform. The Equifax breach took the cases to a more serious level, exposing 147.9 million users’ data in the US, which included information such as Social Security Numbers, birth dates, addresses and even driver license numbers. It is a chilling thought that major corporations can sometimes fall prey to such attacks. Moreover, while the great majority of hacks currently target user or organization data, a new kind of attacks have also recently emerged. One of these is the attack on a Saudi petrochemical plant that investigators say was “meant to sabotage the firm’s operations and trigger an explosion.” The same kind of destructive tendency can also be seen with the ongoing effort to hack into U.S. infrastructure systems such as power plants and water systems, which the Department of Homeland Security attributes to Russian networks. In theory, since a great part of the international financial system is also built on digitization, any hacker able to breach the London Stock Exchange or Euronext Stock Exchange could decide to tank the price of a stock by altering the details. Such actions could wipe out millions of euros in value, all with the push buttons. The Bundestag hack, along with other hacks of its kind, such as ongoing attacks on government services of Estonia, also point to the reality that Europe is also directly a target of such activities. These attacks also have a political dimension. A breach designed to infiltrate the foreign ministry of a country, as in the case of the Bundestag hack, would yield information regarding diplomatic capacity. Here, an apt comparison would be where you know exactly what lie a friend will tell you to avoid going out with you on Saturday evening. The power that that information gives may not make much a difference at your personal scale, but it can make the world when Russia, say, knows exactly how far the German government is willing to go in pushing or enforcing sanctions. The value of that information cannot really be overstated. It’s like playing chess against somebody when you know every single move they will make ahead of time. In a sense, humanity has gone full circle; where once, during the Cold War, it was a matter of the person next to you being a double-agent for the Soviets, or vice-versa, it is now the computer you use that threatens to become a tool for the opponent or competitor. Even as cyber-attacks grow common however, governments and organizations have begun to take measures. On the one hand, this has led to the growth of an interesting sector, which is known as ‘white-hat hacking,’ otherwise known as penetration testing. The idea here is that actors in this sector sign contracts with various organizations to actively attempt to hack into their systems. This way, by attempting to penetrate the security of an organization, white-hat hackers provide valuable information on the security flaws within a system. The target organization can then use this knowledge to improve and further protect its computer systems. On the other hand, many governments now allocate sizeable budgets to IT security. The Dutch government, for example, allocated about 0.0005 of Gross Domestic Product (GDP) in 2014, but has increased this amount to 0.005 of GDP as of 2018. Yet these increases still do not seem to match the losses incurred from cybercrime. A report by the Hague Center for Strategic Studies put the total annual government spending on cyber-security in 2015 at about €30 million, a number that it claims falls short of what it should be spending. Accordingly, the HCSS suggested that 1.5% of Dutch GDP was lost to cybercrime, in addition to €10 billion value lost by cyber-risks. Cyber-attacks have grown in number and scale around the world, threatening a variety of computer systems in different ways: in order to extract data, destroy or disrupt systems, or to extract material payment. They have a material cost, as well as psychological effect, burdening society further. The Bundestag hack is just a stark reminder that the computer systems on which modern society depends are vulnerable to outside influence.

The fact that Spotify, the leader of music-streaming services market, is going public via direct listing, has attracted an overwhelming amount of media attention. The event is going to take place on the 3rd of April. Mass media often hype news regarding major initial public offerings (IPOs), but it seems that there remains a lot of confusion regarding IPOs for non-finance practitioners. Thus, this article aims to give you comprehensive yet straightforward explanations of the IPOs market and procedure, and why it is crucial. Before that, let’s go back to the Spotify IPO first. The Swedish venture decided to pursue direct listing to list its shares, instead of going for the “traditional” IPO method because the management believes that it is better for Spotify. One of the apparent difference between direct listing and traditional IPO is that no underwriter is in the presence (i.e., the process does not involve investment bankers). But why is it so unconventional that only a very few numbers of ventures go public using direct listing? And what impacts will it have if the Spotify IPO turns out to be a success? First thing first, what is an IPO? IPO stands for initial public offering, and it refers to the event when a company raises its capital from the stock exchange for the very first time. The dominant way of an IPO involves the assistance of underwriting firms (i.e., the investment banks) to facilitate the startup go through the somewhat complicated process including planning, meeting compliance requirements, allocating, pricing, roadshowing, to eventually become a public traded firm. Theoretically, although the underwriting service demands a large sum of commission fees, it seems reasonable to utilize the services. The underwriters are supposed to benefit the issuer by working closely with the issuing body to determine the best initial offering price, in some case buys them from the issuer, and sells them to investors via the underwriter’s distribution network (e.g., institutional investors). However, there are several consistent IPOs phenomenon found by many researchers illustrating that going public would mainly negatively impact the equity issuer, which is the startup. First of all, plenty research has demonstrated that the issuer “left the money on the table,” which refers to the situation that the closing price of the first trading day of the IPO share has increased substantially compared to its issue price. This is the infamous phenomenon called IPOs underpricing. Secondly, since market timing is proven to be significantly influential on the success of an IPO, the valuation of IPOs stocks tend to be biased (usually inflated). This results in another well-known phenomenon called IPOs underperformance (in the long run). That is, only a very few IPOs firm remain its share price level at its IPOs listing prices, say, three years after the IPO takes place. With the direct listing, although for the issuer it poses higher risks and volatility compared to traditional IPO, directing listing allows Spotify to shows that it is transparent. And, it will let the market decides how much it’s worth—without the distortion of share price caused by stabilization and allocation of shares in traditional IPOs. Main reasons Spotify choose the direct listing On top of the transparency of the IPO process and market-driven pricing of the shares, there are three other main reasons why Spotify makes this major decision. The first one is that direct listing is cheaper compared to IPOs. For example, Snap Inc. spent roughly $100m on the underwriting services for its IPOs. Spotify, on the other hand, does not need to spend this substantial amount of fee, and it hires three investment banks as its financial advisors for $35m. However, as mentioned before, in order to save this money, Spotify also runs higher risks of the instability of its share price after going public. The second reason explains why Spotify is confident about its decision: it has faith in its brand and power in the industry. Not every venture is suitable to go public using direct listing. In fact, Spotify is the very few startups that have ever done this, and it has the highest capitalization and business size among the others that choose to go public via the direct listing (in February 2018 it is valued at $19.7bn according to the Financial Times). Since direct listing does not involve the phase of roadshowing as in the traditional IPOs, Spotify’s share is more vulnerable to volatility comparing to the deals that are proceeded by underwriters potentially due to the lack of publicity. The third reason, as the CEO of Spotify mentioned in the investor day 2018 earlier in March, Spotify currently does not need any additional cash; “We are well capitalized, with €1.5bn in cash and zero debt. There is no reason to dilute our existing shareholders to raise the money we don’t need.”. What does it mean if Spotify direct listing is successful? The success of this event will potentially invite more ventures to opt for direct listing, especially for the companies that have similar characteristics with Spotify—such as with globally renowned brands and a sustainable and scalable business model. Direct listing has multiple benefits for certain types of business, as mentioned above. In short, direct listing is much cheaper in terms of the expense as well as the time. On top of that, a direct listing will not involve issuing new shares. Therefore, it will not cause share delusion (i.e., the control and ownership over the company will not be diluted). Furthermore, its process is much more transparent comparing to the traditional IPOs; As the usual IPOs route consisted of a series of closed-door meetings, roadshows for a privileged group of investors, mostly the institutional investors, in which the process itself is far from transparent. If the positive effects of direct listing outweigh the drawbacks—why wasting money hiring underwriters? If you want to read more about the dynamic of IPOs Earlier in 2018, I finalized my bachelor’s thesis on the topic of IPOs and venture capitalists in the technology industry. In the thesis, I explored plenty models of the role of venture capitalists during the process of going public of startups as well as the impacts of market timing on the long run performances of IPOs stocks. Check it out (click HERE) if you are as passionate about the research on IPOs as I do!