August 2016

In the spring of 2012, around the time that Facebook purchased Instagram for roughly $1 billion, I was teaching an M&A class.

At the time, I had difficulty explaining why Facebook would pay that amount of money for a company that was not only not profitable, but also had no revenue. I spoke as someone trained to use multiples EBITDA and as someone who did not (and still does not) have an Instagram account.

Now, over four years later, Forbes estimates Instagram’s value at $25billion to $50billion. That valuation still requires some creativity, as Instagram had sales of “only” $630 million in 2015. Instagram, however, has added roughly 100 million new users in the last 9 months and is projected to have revenue of $1.5billion this year. While there is reason to be wary of projections, the projected sales for Instagram in 2018 is an impressive $5billion.

This drives home that valuation is as much art as science, and the conventional valuation methods will not work well for every company. In that deal, I imagine Instagram’s technology, brand, and the user base were all large value drivers. With the benefit of hindsight, Instagram is looking like a good acquisition for Facebook, even if the current projections end

From an e-mail I received:

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The University of Richmond School of Law seeks to fill two entry-level tenure-track positions for the 2017-2018 academic year, including one in corporate/transactional law.  Candidates should have outstanding academic credentials and show superb promise for top-notch scholarship and teaching.  The University of Richmond, an equal opportunity employer, is committed to developing a diverse workforce and student body and to supporting an inclusive campus community.  Applications from candidates who will contribute to these goals are strongly encouraged. 

Inquiries and requests for additional information may be directed to Professor Jessica Erickson, Chair of Faculty Appointments, at lawfacultyapp@richmond.edu. 

Today marked the end of the 2016 conference of the Southeastern Association of Law Schools (SEALS).  My discussion session on small business finance capped off the Workshop on Business Law, a series of business law programs at the conference, and closed out the conference itself just after Noon.  It was great to share programs, at various points in the conference, with co-bloggers Josh Fershee, Ann Lipton, Haskell Murray, and Marcia Narine.

Here is a list of the three business law programs in the Workshop on Business Law from this year’s conference:

  • Discussion Group: Sustainability & Sustainable Business
  • Discussion Group: Perspectives on the Future of White-Collar Crime
  • Discussion Group: The Legal Aspects of Small Business Finance in the Crowdfunding Era

Other business law programs included several of the new scholar paper panels, the annual “Supreme Court Update” on “Business, Administrative, Securities, Tax, and Employment Issues,” a discussion group focusing on “Big Data: Big Opportunities in Business and Government, and Big Challenges in Law and Ethics,” and a discussion group in the SEALS “Works-in-Progress Series” that featured papers by veteran scholars on topics ranging from international food labeling regulation, to self-interest in financial regulation, to developing a better understanding of informational intermediaries…

I am not the first to notice that law professors, and academics generally, have their own jargon and favorite buzzwords.  Some websites do a nice job of highlighting (or mocking) many of the odds turns of phrase many of us use.  Lawyers in the practicing bar do this, too, of course, and other professionals, especially business people (see, e.g., Dilbert) and public relations professionals.

I try not to be too jargon-y, but I have caught myself more than a few times.  I am big on “incentivize,” for example.   After attending a great SEALS Conference (likely more on that to come), I came away with a bunch of new ideas, a few new friends, and some hope for future collaboration.  I also came away noticing that, sometimes, as a group, “we talk funny.”  On that front, two words keep coming to my mind: “unpack” and “normative.”

So, when did we all “need” to start “unpacking” arguments?

This seemed like a relatively recent phenomenon to me, so I checked.  A Westlaw search of “adv: unpack! /3 argument” reveals 140 uses in Secondary Sources.  The first such reference appears in a 1982 law review article: Michael Moore, Moral Reality, 1982 Wis.

Do you value diversity? At California Western School of Law, we pride ourselves on the diversity of our student body.  This year, around 50% of our incoming students are from diverse cultural and ethnic backgrounds.  We are committed to having a faculty that reflects our student body and our community. 

Do you want to influence legal education at an established but innovative law school?  California Western recently celebrated its 90th anniversary – but we have never been stale or ordinary.  We were on the forefront of innovative, experiential education three decades ago.  As a result, our graduates have a reputation for being uniquely practice-ready.  California Western continues to rethink the status quo in legal education – balancing a rigorous practical education with cutting edge scholarship and community service. 

Who are you?  We are seeking candidates with an entrepreneurial spirit who are eager to put their own stamp on a law school with an expanding faculty and many growth opportunities.

What do you want to teach?  We can prioritize your teaching preferences regardless of subject matter. 

Where do you want to live?  California Western is in downtown San Diego, California, literally overlooking the Pacific Ocean.  A city of breathtaking beauty, we…

A couple of times here at BLPB, we’ve talked about whether consumers will reward companies for ethical conduct (or punish them for unethical conduct).  Marcia in particular has expressed doubts that consumers genuinely do express their preferences with their dollars.
 
Well, it’s something of a sui generis situation, but we have one new datapoint: Trump’s properties (or rather, the properties that license his name) appear to be suffering as a result of his presidential campaign.  Foursquare has the numbers, and they show, among other things, that women in particular – who dislike Trump more than men – are steering clear.  Anecdotal evidence suggests that some travel agents and meeting planners have been explicitly instructed by their clients to book anything but Trump.
 
I don’t know if there are broader lessons here, but it seems if consumers have enough political objections to a company, they will indeed vote with their feet.

I arrived at the SEALS conference yesterday afternoon, and a majority of the blog’s co-editor professors are here.
At 3pm (until 6pm) Josh, Ann, Joan, Marcia and I (among others) will be taking part in the discussion group on sustainability and sustainable business.
If you are here, come join us at 3pm.

Greetings from SEALS in lovely Amelia Island. On Wednesday I presented on a proposed bilateral investment treaty between the US and Cuba, and tomorrow I am part of a discussion group on Sustainable Business. I will focus on the roles and responsibilities of corporate sponsors of the Rio Olympics. According to the official Olympics website, “[m]ore than just providing products and services for the event, [the sponsors] ensure that sport always comes first and that the whole world is inspired alongside us.”

Sponsors can spend up to $200 million for the privilege to inspire us. For many sponsors, the chance to have over a billion people watch their commercials and logos appear repeatedly over a period of a few weeks on television is worth the tens of millions of dollars. They often invest in slick YouTube campaigns that show their real or imagined connections to young athletes finally achieving their lifelong dream of bringing home the gold for their country. Apparently, 54% of consumers surveyed felt more positive about Nike after the company sponsored the Olympics based on how it chose to advertise. Many companies use these kinds of sponsorships as part of their corporate social responsibility initiatives. Dow…

The Federal Reserve Board announced its enforcement actions against Goldman Sachs from 2012-2014 events where a Goldman Sachs banker, a former NY Fed employee, received confidential documents from a NY Fed employee.  The individuals involved plead guilty to the resulting charges and Goldman Sachs paid fines in New York.  The Federal Reserve Board took separate actions this week based upon evidence that the banker “repeatedly obtained, used and disseminated [confidential supervisory information or CSI] … including CSI concerning financial institutions’ confidential CAMELS ratings, non-public enforcement actions, and confidential documents prepared by banking regulators.”  Even though Goldman Sachs terminated the banker involved and reported the matter to authorities, apparently the misconduct was sustained over a long-enough period of time and used to “solicit business” in a way that compelled Federal Reserve Board Action.

The Fed’s release and copies of the orders are available here.  The sanctions against Goldman Sachs include the monetary fine as well a requirement to ‘Within 90 days of this Order, …submit to the Board of Governors an acceptable written plan, and timeline for implementation, to enhance the effectiveness of the internal controls and compliance functions regarding the identification, monitoring, and control of confidential supervisory information.”

Financial press coverage…