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   Strategies & Market TrendsThe Financial Collapse of 2001 Unwinding


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To: John Vosilla who wrote (10254)1/25/2023 2:31:17 AM
From: elmatador
1 Recommendation   of 13068
 
Employees need to understand that this is not the end. It is not even the beginning of the the end. This is the end of the beginning.

“How are we supposed to ever feel safe again?” the employee wondered. His comments were reported by Insider.

People are seeking safety in an unsafe world.

'Speculation about a potential recession has plagued much of 2022, and is now seen as all but inevitable in 2023." Time Magazine

"Big Tech layoffs are not as big as they appear at first glance" While 12,000 is a lot of workers losing their jobs, it is still less than the net number of hires Alphabet made in just the third quarter of last year, which totaled 12,765." Dow Jones.

"Importantly, these figures don’t include the downstream layoffs, such as advertising agencies laying off staff as ad spend reduces, or manufacturers downsizing as tech product orders shrink – or even potential layoffs yet to come." The Conversation

The yeallow line shows how much lower it must go to reach pre-Covid levels.


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To: DinoNavarre who wrote (10124)1/25/2023 6:17:11 AM
From: elmatador
1 Recommendation   of 13068
 
BREAKING: The Biggest Corporate Fraud In History? The World's Third Richest Man, Gautam Adani's Adani Group Plunges After Short Seller Hindenburg Alleges Fraud ??

Gautam Adani has amassed a net worth of $120 billion, adding over $100 billion in just the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.

Who is Hinderburg?
They are an investment research firm that is a very reputable short-seller. They have called out companies such as Nikola Motor Company, Lordstown Motors Corporation, Clover Health, Kandi and Tecnoglass among others.

Hinderburg has revealed the findings of a 2-year investigation, that presents evidence that the $218 billion Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis, owing to sky-high valuations.”

These are pretty big claims and shares have dropped hard on this report, let's see how this develops.

Scathing.


https://www.linkedin.com/posts/activity-7023957944639610880-niTh?utm_source=share&utm_medium=member_desktop

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From: elmatador1/25/2023 6:21:29 AM
1 Recommendation   of 13068
 
Adani Group shares tumble as short seller Hindenburg alleges fraud

The Adani Group is India’s second-largest conglomerate, and saw its share valuations skyrocket over the past few years, valuing the firm at about $218 billion. This made its founder and Chairman, Gautam Adani, the third-richest man in the world, with a personal valuation of $120B.

Losses in the Adani firms appeared to have spilled over into broader Indian markets on Wednesday, with the Nifty 50 and BSE Sensex 30 indexes falling 0.7% and 0.5%, respectively.


Stock Markets 6 hours ago (Jan 24, 2023 11:38PM ET

By Ambar Warrick

Investing.com -- Shares of the seven publicly listed firms under the Adani Group tumbled on Wednesday after short seller Hindenburg Research said it had taken positions against the firms, alleging that the company had likely engaged in fraud, and that it was significantly overvalued.

Adani Enterprises Ltd (NS: ADEL), Adani Total Gas Ltd (NS: ADAG), and Adani Green Energy Ltd (NS: ADNA) fell between 1.9% and 3%, while Adani Wilmar Ltd (NS: ADAW), Adani Power Ltd (NS: ADAN), and Adani Transmission Ltd (NS: ADAI) fell between 3% and 4%.

Adani Ports and Special Economic Zone Ltd (NS: APSE) was the worst performer in the lot, down nearly 5% in early trade.

Hindenburg said in a report that it had taken a short position in the group through its U.S.-traded bonds and Indian-listed derivatives.

The short seller said that it sees an 85% downside from current valuations for the seven firms, based solely on their fundamentals. Hindenburg said that multiple firms under Adani were highly leveraged in comparison to their peers, and that the situation was worsening due to negative free cash flows.

The short seller also alleged that the firm “engaged in a brazen stock manipulation and accounting fraud scheme” in pushing up its valuations, and also accused the firm of engaging in money laundering.

Hindenburg is a U.S.-based activist short seller that had famously alleged foul play and taken positions in Clover Health (NASDAQ: CLOV) and Nikola (NASDAQ: NKLA), the latter of which attracted a high-profile inquiry by the U.S. Securities and Exchange Commission.

Concerns over Adani’s debt position came to the fore in 2022 after the release of a CreditSights report that described the group as largely overleveraged - an allegation that the firm has repeatedly denied.

According to CreditSights, which is part of the Fitch Group, Adani Group’s total gross debt in the financial year to March 31, 2022, jumped 40% to INR2.2 trillion ($1 = INR81.553).

The Adani Group is India’s second-largest conglomerate, and saw its share valuations skyrocket over the past few years, valuing the firm at about $218 billion. This made its founder and Chairman, Gautam Adani, the third-richest man in the world, with a personal valuation of $120B.

Losses in the Adani firms appeared to have spilled over into broader Indian markets on Wednesday, with the Nifty 50 and BSE Sensex 30 indexes falling 0.7% and 0.5%, respectively.

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From: elmatador1/25/2023 10:57:55 AM
   of 13068
 
Chris Hohn wants to see job cuts of 150,000 jobs, at 20%, not 6%. Hohn controls approximately $20 billion in various companies, and between $6 billion and $7 billion of Alphabet, in particular. This gives him “a lot of sway, a lot of power” over Google, Joseph Carlson said on Jan. 23.

Written by Kelly Teal January 24, 2023

Activist Investor Out for Blood at Google, Wants 138K More Layoffs


Chris Hohn wants to see job cuts at 20%, not 6%.

TCI’s Chris Holm

Tech’s high-flying days are over, and nowhere is that more apparent than at 24-year-old Google, once among the most coveted of places to work. After doubling its headcount in five years, Google now is shedding 12,000 jobs — the largest number in its history. Yet that figure could jump as high as 150,000 if activist investor Chris Hohn gets his way.

That’s going to raise eyebrows.

YouTuber Joseph Carlson

“If you’re a Google employee, there’s no one in the world you hate right now more than Chris Hohn,” said Joseph Carlson, host of The Joseph Carlson Show, which provides guidance on stock purchases, on YouTube.

Hohn controls approximately $20 billion in various companies, and between $6 billion and $7 billion of Alphabet, in particular. This gives him “a lot of sway, a lot of power” over Google, Carlson said on Jan. 23.

On Jan. 20, the day Alphabet, parent company of Google, announced its first wave of layoffs, Hohn sent a letter to CEO Sundar Pichai. He called the 12,000 job cuts “a step in the right direction.”

But they are not enough, Hohn said.

“Ultimately management will need to go further,” Hohn wrote.

He wants Alphabet to cut 150,000 jobs, or 20% of its total workforce.

What Is Activist Investor Hohn Thinking?Defending his position, Hohn noted a couple of key items.

First, he pointed out that Alphabet doubled its employee count in the last five years. Within that window, the company hired 30,000 new people in the first nine months of 2022. Hohn then told Pichai that Alphabet needs to axe more workers, to the tune of a total headcount reduction of 20%. That would equate to about 150,000 jobs and put Alphabet’s employee rolls close to where they stood at the end of 2021.

Hohn then went after Google’s compensation. He said Alphabet’s median salary comes out to $300,000, with the average falling “much higher.” Carlson agreed, noting that many employees make at least $500,000 and even up to $1 million per year with bonuses and stocks. Forty percent of Google’s free cash flow goes into stock compensation, Carlson pointed out. That’s a huge figure, he said, especially considering that competitor Apple, which has slimmer margins and more device and supply chain considerations, runs more efficiently.

Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact.
All in all, it seems the tech sector’s unbridled approach to hiring and compensation are coming to a close. Consider the activist investor activity over at Salesforce, where layoffs are happening, as well as the job losses at other tech-centric (though not all channel-centric) firms including Microsoft, Spotify and Meta.

Carlson, for his part, lays the blame for widespread cuts at the feet of over-eager executives.

“I wish these companies took a more disciplined approach to iteratively and slowly and in a measured way hiring employees instead of hiring 30,000 in less than a year,” Carlson said. “It’s a very undisciplined way to grow a company and we’re seeing the pain being felt by peoples’ lives being upended now.”

What’s Happening at Google Cloud?Some of those layoffs are impacting Google Cloud. While many of the losses are showing in Google’s strategy, recruiting and sales departments, reports are circulating indicating that staff in the cloud division also are affected. Google has viewed its cloud group as a key growth driver, investing heavily in sales, technology and partner programs. (It still remains unprofitable, though.) Yet even as Google Cloud sees some involuntary staff attrition, its CEO, Thomas Kurian, is talking about additions.

Google Cloud’s Thomas Kurian

“We will continue to expand our global Cloud region footprint and invest for growth by expanding our go-to-market organization in both sales and services teams across all our geographies and industries, including public sector,” Kurian wrote in a memo cited by Business Insider. “In addition, our technical infrastructure teams will continue to deliver the critical systems and services that keep Google’s products running smoothly.”

Let’s Examine This ‘Psychological Safety’ QuestionOne of the most surprising aspects of the Google layoffs is the level of shock employees are expressing. In an all-hands meeting on Jan. 23, one employee asked, “How can we reestablish psychological safety for Googlers after these layoffs?” Another questioned, “How are we supposed to ever feel safe again?” (Both comments come via Business Insider.)

Google’s Philipp Schindler

Philipp Schindler, chief business officer at Google, had this to say, per Business Insider: “If you interpret psychological safety as removing all uncertainty, we can’t do this.”

It may seem cold to point out but investors are not concerned with “psychological safety,” and it’s odd that staff would think otherwise. Corporations exist to make money — and publicly held corporations remain at the mercy of Wall Street and its whims and demands. Fair or not, if a company is not producing as shareholders like or expect, layoffs ensue. Investors do not care one whit about employees’ psychological safety, and looking to a money-hungry entity for assurances in that regard will only result in disappointment.



Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.

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To: Elroy Jetson who wrote (10247)1/26/2023 12:13:55 AM
From: elmatador
   of 13068
 
For Tech Companies, Years of Easy Money Yield to Hard Times
Rock-bottom rates were the secret engine fueling $1 billion start-ups and virtual attempts to conquer the physical world. But in 2023, reality bites.


By David Streitfeld

David Streitfeld has written about technology and its effects for more than 20 years.

Published Jan. 23, 2023Updated Jan. 24, 2023


Eighteen months ago, the online used car retailer Carvana had such great prospects that it was worth $80 billion. Now it is valued at less than $1.5 billion, a 98 percent plunge, and is struggling to survive.


Many other tech companies are also seeing their fortunes reverse and their dreams dim. They are shedding employees, cutting back, watching their financial valuations shrivel — even as the larger economy chugs along with a low unemployment rate and a 3.2 percent annualized growth rate in the third quarter.

One largely unacknowledged explanation: An unprecedented era of rock-bottom interest rates has abruptly ended. Money is no longer virtually free.

For over a decade, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received a nod in less heady times. Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.

It was a boom that seemed as if it would never end. Tech piled up victories, and its competitors wilted. Carvana built dozens of flashy car “vending machines” across the country, marketed itself relentlessly and offered very attractive prices for trade-ins.

“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”

Cheap money funded many of the acquisitions that substitute for organic growth in tech. Two years ago, as the pandemic raged and many office workers were confined to their homes, Salesforce bought the office communications tool Slack for $28 billion, a sum that some analysts thought was too high. Salesforce borrowed $10 billion to do the deal. This month, it said it was cutting 8,000 people, about 10 percent of its staff, many of them at Slack.

Even the biggest tech companies are affected. Amazon was willing to lose money for years to acquire new customers. It is taking a different approach these days, laying off 18,000 office workers and shuttering operations that are not financially viable.

Carvana, like many start-ups, pulled a page out of Amazon’s old playbook, trying to get big fast. Used cars, it believed, were a highly fragmented market ripe for reinvention, just the way taxis, bookstores and hotels had been. It strove to outdistance any competition.

The company, based in Tempe, Ariz., wanted to replace traditional dealers with, Carvana said grandly, “technology and exceptional customer service.” In what seemed to symbolize the death of the old way of doing things, it paid $22 million for a six-acre site in San Diego that a Mazda dealer had occupied since 1965.

Where traditional dealerships were literally flat, Carvana built multistory car vending machines that became memorable local landmarks. Customers picked up their cars at these towers, which now total 33. A corporate video of the building of one vending machine has over four million views on YouTube.

In the third quarter of 2021, Carvana delivered 110,000 cars to customers, up 74 percent from 2020. The goal: two million cars a year, which would make it by far the largest used car retailer.



An eye-catching Carvana car vending machine in Uniondale, N.Y.Credit...Tony Cenicola/The New York Times

Then, even more quickly than the company grew, it fell apart. When used car sales rose more than 25 percent in the first year of the pandemic, that created a supply problem: Carvana needed many more vehicles. It acquired a car auction company for $2.2 billion and took on even more debt at a premium interest rate. And it paid customers handsomely for cars.

But as the pandemic waned and interest rates began to rise, sales slowed. Carvana, which declined to comment for this article, did a round of layoffs in May and another in November. Its chief executive, Ernie Garcia, blamed the higher cost of financing, saying, “We failed to accurately predict how all this will play out.”

Some competitors are even worse off. Vroom, a Houston company, has seen its stock fall to $1 from $65 in mid-2020. Over the past year, it has dismissed half of its employees.

“High rates are painful for almost everyone, but they are particularly painful for Silicon Valley,” said Kairong Xiao, an associate professor of finance at Columbia Business School. “I expect more layoffs and investment cuts unless the Fed reverses its tightening.”

At the moment, there is little likelihood of that. The market expects two more rate increases by the Federal Reserve this year, to at least 5 percent.

In real estate, that is trouble for anyone expecting a quick recovery. Low rates not only pushed up house prices but also made it irresistible for companies such as Zillow as well as Redfin, Opendoor Technologies and others, to get into a business that used to be considered slightly disreputable: flipping houses.

In 2019, Zillow estimated it would soon have revenue of $20 billion from selling 5,000 houses a month. That thrilled investors, who pushed the publicly traded Seattle company to a $45 billion valuation and created a hiring boom that raised the number of employees to 8,000.

Zillow’s notion was to use artificial intelligence software to make a chaotic real estate market more efficient, predictable and profitable. This was the sort of innovation that the venture capitalist Marc Andreessen talked about in 2011 when he said digital insurgents would take over entire industries. “Software is eating the world,” he wrote.

In June 2021, Zillow owned 50 homes in California’s capital, Sacramento. Five months later, it had 400. One was an unremarkable four-bedroom, three-bath house in the northwest corner of the city. Built in 2001, it is convenient to several parks and the airport. Zillow paid $700,000 for it.

Zillow put the house on the market for months, but no one wanted it, even at $625,000. Last fall, after it had unceremoniously exited the flipping market, Zillow unloaded the house for $355,000. Low rates had made it seem possible that Zillow could shoot for the moon, but even they could not make it a success.

Ryan Lundquist, a Sacramento appraiser who followed the house’s history closely on his blog, said Zillow realized real estate was fragmented but perhaps did not quite appreciate that houses were labor-intensive, deeply personal, one-to-one transactions.

“This idea of being able to come in and change the game completely — that’s really difficult to do, and most of the time you don’t,” he said.

Zillow’s market value has now shrunk to $10 billion, and its employee count to around 5,500 after two rounds of layoffs. It declined to comment.

The dream of market domination through software dies hard, however. Zillow recently made a deal with Opendoor, an online real estate company in San Francisco that buys and sells residential properties and has also been ravaged by the downturn. Under the agreement, sellers on Zillow’s platform can request to have Opendoor make offers on their homes. Zillow said sellers would “save themselves the stress and uncertainty of a traditional sale process.”

That partnership might explain why the buyer of that four-bedroom Sacramento house, one of the last in Zillow’s portfolio, was none other than Opendoor. It made some modest improvements and put the house on the market for $632,000, nearly twice what it had paid. A deal is pending.

“If it were really this easy, everyone would be a flipper,” Mr. Lundquist said.

Image

An Amazon bookstore in Seattle in 2016. The store is now permanently closed.Credit...Kyle Johnson for The New York Times

The easy money era had been well established when Amazon decided it had mastered e-commerce enough to take on the physical world. Its plans to expand into bookstores was a rumor for years and finally happened in 2015. The media went wild. According to one well-circulated story, the retailer planned to open as many as 400 bookstores.

The company’s idea was that the stores would function as extensions of its online operation. Reader reviews would guide the potential buyer. Titles were displayed face out, so there were only 6,000 of them. The stores were showrooms for Amazon’s electronics.

Being a showroom for the internet is expensive. Amazon had to hire booksellers and lease storefronts in popular areas. And letting enthusiastic reviews be one of the selection criteria meant stocking self-published titles, some of which were pumped up with reviews by the authors’ friends. These were not books that readers wanted.

Amazon likes to try new things, and that costs money. It took on another $10 billion of long-term debt in the first nine months of the year at a higher rate of interest than it was paying two years ago. This month, it said it was borrowing $8 billion more. Its stock market valuation has shrunk by about a trillion dollars.

The retailer closed 68 stores last March, including not only bookstores but also pop-ups and so-called four-star stores. It continues to operate its Whole Foods grocery subsidiary, which has 500 U.S. locations, and other food stores. Amazon said in a statement that it was “committed to building great, long-term physical retail experiences and technologies.”

Traditional book selling, where expectations are modest, may have an easier path now. Barnes & Noble, the bricks-and-mortar chain recently deemed all but dead, has moved into two former Amazon locations in Massachusetts, putting about 20,000 titles into each. The chain said the stores were doing “very well.” It is scouting other former Amazon locations.

“Amazon did a very different bookstore than we’re doing,” said Janine Flanigan, Barnes & Noble’s director of store planning and design. “Our focus is books.”

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To: robert b furman who wrote (10196)1/26/2023 12:17:09 AM
From: elmatador
   of 13068
 
Hi Bob 18 ago, the online used car retailer Carvana had such great prospects that it was worth $80 billion. Now it is valued at less than $1.5 billion, a 98 percent plunge, and is struggling to survive.


It was a boom that seemed as if it would never end. Tech piled up victories, and its competitors wilted. Carvana built dozens of flashy car “vending machines” across the country, marketed itself relentlessly and offered very attractive prices for trade-ins.


Carvana, like many start-ups, pulled a page out of Amazon’s old playbook, trying to get big fast. Used cars, it believed, were a highly fragmented market ripe for reinvention, just the way taxis, bookstores and hotels had been. It strove to outdistance any competition.

The company, based in Tempe, Ariz., wanted to replace traditional dealers with, Carvana said grandly, “technology and exceptional customer service.” In what seemed to symbolize the death of the old way of doing things, it paid $22 million for a six-acre site in San Diego that a Mazda dealer had occupied since 1965.

Where traditional dealerships were literally flat, Carvana built multistory car vending machines that became memorable local landmarks. Customers picked up their cars at these towers, which now total 33. A corporate video of the building of one vending machine has over four million views on YouTube.

In the third quarter of 2021, Carvana delivered 110,000 cars to customers, up 74 percent from 2020. The goal: two million cars a year, which would make it by far the largest used car retailer.



An eye-catching Carvana car vending machine in Uniondale, N.Y.Credit...Tony Cenicola/The New York Times

Then, even more quickly than the company grew, it fell apart. When used car sales rose more than 25 percent in the first year of the pandemic, that created a supply problem: Carvana needed many more vehicles. It acquired a car auction company for $2.2 billion and took on even more debt at a premium interest rate. And it paid customers handsomely for cars.

But as the pandemic waned and interest rates began to rise, sales slowed. Carvana, which declined to comment for this article, did a round of layoffs in May and another in November. Its chief executive, Ernie Garcia, blamed the higher cost of financing, saying, “We failed to accurately predict how all this will play out.”

Some competitors are even worse off. Vroom, a Houston company, has seen its stock fall to $1 from $65 in mid-2020. Over the past year, it has dismissed half of its employees.



https://www.siliconinvestor.com/readmsg.aspx?msgid=34167972






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From: elmatador1/26/2023 3:06:57 AM
   of 13068
 
South Korea vows support for exporters as economy shrinks

By Jihoon Lee and Choonsik Yoo

Summary
  • Q4 2022 GDP falls 0.4% vs 0.3% fall in Reuters poll forecast
  • GDP falls for first time since Q2 2020, led by fall in exports
  • Finance minister vows strong support to exportersMarket prices in end of central bank tightening

SEOUL, Jan 26 (Reuters) - South Korea's government promised strong support for exporters after the country posted on Thursday its first economic contraction in 2/1-2 years, due mainly to a crash in exports, and faced a possibility it was in recession.

Playing down the economic slowdown as part of a global trend and saying a return to growth in the current quarter "is possible", Finance Minister Choo Kyung-ho pledged prompt support measures for exporters, such as tax breaks and administrative help.

Central bank estimates showed gross domestic product (GDP) shrank 0.4% in the October-December period from the previous quarter. Economists in a Reuters poll had expected a 0.3% fall.

"The government will focus policy resources on reactivating exports and investment, such as pushing ahead with deregulation efforts and offering tax and financial support," Choo said at a meeting of officials that was open to reporters.

Leading the first GDP decline since the second quarter of 2020 were losses of 5.8% in exports and 0.4% in private consumption, whereas government spending posted a sharp 3.2% increase, according to the central bank's estimates, which were seasonally adjusted.

There are signs of continued weakness in the first quarter. A slump in the property market has deepened and exports per working day were 8.8% lower in January 1-20 than a year earlier.

Economists usually define a recession as two or more successive quarters of contraction. If first-quarter GDP is eventually reported as falling, a South Korean recession will be judged to have begun almost four months ago. The economy was last in recession in the first half of 2020.

Bank of Korea Governor Rhee Chang-yong said on Jan. 13 it was too early to judge whether the country was falling into recession. "We are on the borderline and should take a look at more data to provide details in February," he said then.

Markets showed a muted reaction to Thursday's GDP data, since it was close to expectations.

Still, the result cemented the market's view that the central bank's Jan. 13 interest rate rise had marked the end of a 17-month tightening cycle and that the Bank of Korea would even be pressured to start cutting its policy rate this year.

"Effects from China's reopening (from COVID-related curbs) will help but exports won't turn around immediately due to weakness in other major economies," said Park Sang-woo, economist at DB Financial Investment.

Park expected GDP to contract further in the current quarter or, at best, to hold steady.

The central bank estimated that in 2022 the full-year value of the economy, Asia's fourth-largest, had been 2.6% larger than in 2021, when it showed growth of 4.1%. The average growth in full-year GDP for 2017 to 2021 was 2.3% a year.

Reporting by Jihoon Lee and Choonsik Yoo; Editing by Bradley Perrett

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To: Elroy Jetson who wrote (10247)1/26/2023 6:01:22 AM
From: elmatador
   of 13068
 
Why tech companies fire overnight by email and block access? Microsoft says services have recovered after widespread outage
bbc.com

To avoid outages in their services. This outage came less than a week after Microsoft announced 10,000 job cuts.

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From: elmatador1/27/2023 11:31:34 AM
   of 13068
 
Charlie Javice has been fooling the world for years, long before founding Frank or allegedly defrauding JP Morgan. Here's why they bought it.

A deeper dive into Javice's early claims would have revealed a history of questionable statements.

In a 2018 interview with Insider, Javice claimed Frank secured an average of $28,000 for its users, and was helping students get "thousands off their tuition."


That figure is more than twice the average aid disbursed to college students in the 2015-2016 school year, the most recent year for which data is available.

KATHERINE LONG JACK NEWSHAM

January 22, 2023 8:32 PM

Investors and media billed Charlie Javice as a groundbreaking young entrepreneur, until JPMorgan Chase sued her for millions of dollars of fraud.


Charlie Javice; Arif Qazi/Insider

The ambitious entrepreneur Charlie Javice had been the subject of glowing profiles in Forbes, Fast Company, Inc. Magazine, and Insider since she was barely out of high school. (ELMAT: Looks like a Greta Thumberg of the financial world)
Her financial aid startup, Frank, was featured in the New York Times, CNBC and Wall Street Journal. She'd been featured on Forbes's 30 Under 30 list and hailed by Wharton Business School as "the voice of a microfinance generation."

In the past week, all that came crashing down. Barely a year after selling Frank to JPMorgan Chase & Co. for $175 million, the bank accused the 30-year-old of fabricating almost four million client names and emails — the overwhelming majority of her company's users.

Javice's lawyer called her a "whistleblower" and said JP Morgan's decision to fire and sue her was a pretext to avoid paying her. But an Insider investigation, based on a review of company documents, media appearances and interviews with 10 former mentors, employees, and others who knew Javice, suggests that she had a history of exaggerating her accomplishments.

Although she positioned herself as an innovator with groundbreaking solutions to student loans and solving global poverty, Javice's greatest talent may have been in leveraging elite institutions and national news outlets to gain an ever-growing platform.

As Javice accumulated accolades and media appearances, no one — including Insider — seemed to question the fundamental claims of her businesses until the day JPMorgan alleged the numbers simply didn't add up.

Over and over, Javice earned plaudits in the media for projects whose impact she overstated. Glowing profiles missed inaccuracies that could have been caught with a basic fact-check, focusing instead on her youth and status as one of a small number of women startup founders. One journalist even introduced Javice, then 19, to a key Frank investor.

Despite a public record that raised questions about Javice and Frank — including warnings from the Department of Education and Federal Trade Commission, and a wage theft lawsuit from Frank's cofounder — news outlets and investors kept buying into the narrative that Javice spun. In one case, Javice pivoted her entire business model without realizing her new concept was part of a heavily regulated industry that required various approvals, but framed this as a learning moment.

Now JPMorgan is alleging that Javice was involved in what would be the largest exaggeration of all. By the start of 2021, Frank was claiming to have 4.25 million users, according to JPMorgan's suit. In reality, it never had more than around 250,000, the bank claims.

After leaving the University of Pennsylvania's Wharton business school, Javice traded on her reputation, bolstered by glowing profiles, as a successful entrepreneur.bii

If Javice's career before the suit had positioned her to be one of the future titans of her industry, JPMorgan's allegations may have put her on the trajectory to be the next Elizabeth Holmes or Sam Bankman-Fried.

Javice and two attorneys representing her did not respond to a request for comment.

Javice has lodged her own lawsuit against JPMorgan, alleging that the company tanked Frank's value by treating the startup's customer base as a marketing opportunity and fired her in order to avoid having to pay a $20 million retention bonus.

A deeper dive into Javice's early claims would have revealed a history of questionable statements. In a 2018 interview with Insider, Javice claimed Frank secured an average of $28,000 for its users, and was helping students get "thousands off their tuition." That figure is more than twice the average aid disbursed to college students in the 2015-2016 school year, the most recent year for which data is available.

But Frank didn't have any kind of magic formula to double the amount of aid students were receiving, student-aid expert Mark Kantrowitz told Insider. All Frank was doing was making it simpler to fill out standard federal financial aid paperwork, a form called the FAFSA.

"Frank did nothing that would have affected the amount of aid the students would have received had they filed the FAFSA on their own," Kantrowitz said. "That would not have led to a doubling of the amount of financial aid."

When Frank was describing how much aid its users received, "it appeared that they made up figures at random," Kantrowitz said.

Lofty goals and big talk
Javice gained a degree of finance-world fame while still in high school as a founder of PoverUp, a small microfinance organization with huge ambitions. Her brother and co-founder Elie posted on Facebook in 2011 that its goal was to reach 100 million high school, college and graduate students worldwide.

PoverUp was styled as a nonprofit that would harness small student contributions to make loans to entrepreneurs in poor countries in order to lift them out of poverty. It came with a compelling origin story, where Javice had volunteered at a refugee camp on the Thai border with Myanmar and been inspired to create the startup. (Javice was there as part of a student travel and learning experience that now costs around $6,000 per trip.)

Javice's goal for PoverUp was to "save the world. Nothing less," (ELMAT: Itold you Greta clone!) said Howard Finkelstein, a lawyer who helped her set the company up and served on its advisory board.

The startup gave Javice the first taste of a symbiotic relationship with media outlets that would carry on for more than a decade. After graduating from a private Westchester high school to attend Wharton Business School, her involvement in PoverUp garnered her a spot on Fast Company's 2011 list of 100 Most Creative People and a complimentary writeup in Forbes. PoverUp was ranked as one of the 11 coolest college startups by Inc. Magazine, while Wharton called Javice the voice of a microfinance generation in a video it has since removed from YouTube.

There was this air about her where she wanted everyone to know that she was an up and coming leader in the field, that she had been anointed.

Soon after landing a spot on Fast Company's list, Javice appeared on a CNBC reality television special featuring anti-democratic billionaire Peter Thiel where entrepreneurs under the age of 20 vied against each other for a $100,000 Thiel Fellowship. Javice has said she was offered that grant but turned it down, but a rejection email obtained by The Daily Beast shows the then-president of the Thiel Foundation informing her that she was not selected.

Javice traded on her reputation as a could-have-been Thiel Fellow and Fast Company designee throughout her time at Wharton, according to PoverUp's Tumblr and a person who knew her at Wharton.

"There was this air about her where she wanted everyone to know that she was an up and coming leader in the field, that she had been anointed," that person said.

But there were fissures emerging between how Javice was heralded in writeups and the reality behind her businesses. Insider found no evidence that PoverUp registered as a nonprofit, and two of the three microlenders that Inc. reported were in talks to partner with PoverUp said that nothing came of the meetings. Despite Javice telling Wharton Magazine in 2013 that PoverUp raised $300,000 from friends and family, a former board member told Insider that it never disbursed a single loan.

"She really didn't get much traction," said Finkelstein, the lawyer. "When she finished school, she basically gave that up."

Pivoting and spinning
After Javice graduated from Wharton in 2013, she immediately turned toward her next startup. The venture would end with a lawsuit in an Israeli court and, by Javice's own telling, her firing all her employees after losing hundreds of thousands of dollars.

Javice, along with Israeli entrepreneur Adi Omesy, had initially set out to build Tapd — a company that connected young workers with job opportunities via text message, according to an archived version of Tapd's website. That idea seems to have fizzled.

Tapd next pivoted to building an alternative credit score for college students. That concept attracted investors, but it also failed after she said the company learned it would need to secure regulatory approvals to operate as a credit bureau. Javice had apparently sold investors on a business before she was sure how to operate it legally – a strategy almost par for the course in the startup world, where entrepreneurs often pitch themselves as "disrupting" the existing modes of doing business.

"Little did I know that there was this whole body of regulation," she said on a 2021 Planet Economics podcast, complying with which would cost "millions of dollars a year."

"That was a no-go." On another podcast Javice recalled that by 2016 she was "$500,000 in the red" and in an interview described needing to fire "all my employees."

"It was the worst thing I've ever had to do," she said in the interview with Authority Magazine, which has since deleted the article. "A lot of my employees were close friends, and still won't talk with me to this day. They didn't understand that it wasn't a personal decision."

Javice's Tapd co-founder Omesy, who on LinkedIn also calls himself a co-founder of Frank, sued Javice in Israel in 2017 for unpaid wages and failing to award him 10% equity in the company. Omesy additionally claimed that his salary for one month was drawn from Javice's personal bank account.

Tapd faced a judgment for about $35,000 in 2021. Omesy didn't respond to Insider's requests for an interview.

While the story of Tapd seemed to be one of failure and contentious mismanagement, Javice would spin that turmoil into a story of triumph. The young founder made the crisis part of her personal success story, omitting the lawsuit and framing the layoffs as a teaching moment. Tapd would be rebranded as Frank, a new startup with a new mission and a new pitch.

In a 2020 email to an online magazine about a possible feature on Javice, obtained by Insider, Frank's public relations representative described it as "miraculous" that Frank had gotten so far. "Charlie's first company fizzled after 18 months, so after losing all her investors' money, she convinced every one of them to fund her next company, Frank."

A media feedback loop
When Javice launched Frank in 2017, she came prepared with a story readymade for the ways that entrepreneurs and the outlets that cover them talk about success. Building a startup is hard, failure is almost inevitable, and real leaders learn from that adversity to find their true calling.

Journalists bit, and she soon tapped into a media feedback loop. Javice was important because she appeared in major news outlets, and major news outlets covered her because she was important. Javice made the podcast circuit, speaking about " the merits of being an entrepreneur," why " rejection is a numbers game," and " Frank's journey to reach almost 10 million households." She was heralded as a "female disruptor." Insider featured her twice, in 2018 and 2021.

The complications of her past leadership at PoverUp and Tapd, especially the lawsuit, never appeared. In 2019, she landed a spot on Crain's New York Business 40 Under 40 list and Forbes's 30 Under 30 — even as she continued to make inaccurate statements about the field she was supposed to be an expert in, student aid.

Javice's 2018 op-ed in the New York Times had a lengthy correction appended, for instance. So did a piece in the Wall Street Journal that was built around an interview with her. In a 2019 appearance on New York's ABC news station, she claimed that college students left $40 billion in financial aid on the table every year — a number that student aid expert Kantrowitz called "bogus."

In an earnings call this month, JPMorgan Chase & Co. CEO Jamie Dimon said the bank's acquisition of Frank was "a huge mistake."Jim Watson/Getty Images

Meanwhile, a journalism connection would help her land a key investor. Dominic Chu, a reporter for CNBC, had given a teenage Javice a tour of Bloomberg's headquarters, as the PoverUp team chronicled on a Tumblr post from around 2011. Chu later introduced her to Michael Eisenberg, the founder of Israeli firm Aleph Venture Capital.

Aleph, an early backer of WeWork, convinced other investors to hop on board, including Silicon Valley firm Slow Ventures, which invested $100,000 in Frank's 2017 seed round, Slow partner Sam Lessin said.

Aleph "is a firm we really like and collaborate with a lot," Lessin wrote in an email. The "check was a quick angel one for us," he added, "to be supportive."

Ten years later, after Frank had been acquired by JP Morgan, Eisenberg tweeted his thanks at Chu for the introduction. Charlie Javice is one of those folks who, at the age of 20, made me think 'what have I done with my life?' Chu responded. Congrats to Charlie on a great entrepreneurship story...and to your team on a successful startup investment story!

Chu declined to comment on the record. Eisenberg did not respond to repeated requests for comment.

In interviews, Javice continued to cast herself as a mold-breaking entrepreneur.

"I built a business and raised funds out of college, turning down a finance job, even though I was told I would fail because I didn't have business experience," she told Insider in 2021, in an article titled "3 leadership tactics a 28-year-old founder who's raised $20 million for her startup lives by." "My impatience to achieve my goals helped me see past that 'conventional wisdom' to take a risk that landed me where I am today."

But even the account circulated by Javice's press team, that she had convinced every one of her old investors to buy in to Frank, had holes in it.

At least one big-name investor described in several news accounts as a Frank backer told Insider his actual involvement was minimal. Despite being included in a list of investors that included Aleph and Marc Rowan, the chairman of Apollo Global Management, Tusk Ventures didn't actually cut a check to Frank, according to its founder Bradley Tusk.

"My consulting firm did a little work for Frank and got paid in equity, which is why you see us on the cap table," he said. "I only met Charlie once."

"I painted a rosier picture than things truly were."
At Frank, Javice admitted she sometimes painted a more positive picture of the company's health than was supported by the facts.

"Being a founder, I'm obviously skewed towards being overly optimistic – and sometimes that works to your advantage, sometimes it doesn't," she said on a 2021 podcast. "And there were definitely times where I painted a rosier picture than things truly were."

Frank's public statements about its user base were all over the map. In April 2017, Frank's website said "thousands" of families using its service had received "$75 million in free aid." (That same website had stock images of people, including of " smiling mature woman and good looking cheerful manager, labeled as actual users.) In November 2018, Frank's website said it had helped 300,000 families unlock over $7 billion in aid.

Frank stuck with the "over 300,000" figure for more than two years. But suddenly, in January 2021, the company began claiming that it served "over 4.25 million students," according to archived versions of its website and tweets from Frank's account referenced in JP Morgan's lawsuit.

In reality, Frank only ever had about 250,000 users, according to JPMorgan's legal complaint.

I cried at work a lot.

Javice maintained a public persona of a savvy entrepreneur, doling out advice to would-be founders about the keys to success. Internally, she was pressuring employees to grow Frank's user base, two former employees told Insider.

One recalled that Frank struggled to build name recognition through multiple rebrandings. "Figuring out how to grow was not very strong," this employee said. "There wasn't a clear direction all the time."

"It was all about growth," another employee said, describing weekly meetings with Javice and then-chief growth officer Olivier Amar. The two leaders emphasized repeatedly in those meetings that "we need to follow through for the people who are investing in this." Amar told this employee that if Frank didn't meet specific user metrics, "then you're gonna lose your job." Amar did not respond to requests for comment.

Both former employees said working at Frank cratered their mental health.

"I cried at work a lot," one said.

Meanwhile, Frank was facing scrutiny from government agencies, including the Department of Education and the FTC, over allegations that it was misrepresenting its products and relationship to the federal government, Insider has previously reported. Both agencies threatened Frank with legal action unless it changed its practices, and Frank settled with the DOE.

An early Frank investor, though, later touted the company's influence with the Department of Education.

Javice "made waves with the US Department of Education that resulted in key policy changes for American families," Aleph Venture Capital founder Eisenberg wrote in a blog post in 2021 celebrating Frank's acquisition.

Eisenberg's Aleph Venture Capital also backed WeWork, whose founder, Adam Neumann, shown here, was ousted from the company in 2019 after revelations of mismanagement botched WeWork's IPO.Jackal Pan/Visual China Group via Getty Images

After JPMorgan acquired Frank, the bank set out to turn what it thought were the startup's more than 4 million users into JPMorgan customers. Last January, JPMorgan sent a marketing email to a batch of about 400,000 Frank users.

"The marketing campaign was a disaster," the bank alleged in its lawsuit. About 70% of the emails bounced back, and only 103 of the email's 400,000 recipients clicked through to Frank's website. JPMorgan launched an internal investigation.

The bank alleges its investigation found that Javice and Amar had hired a New York data science professor to create more than 4 million fake profiles on Frank. Javice and Amar supplemented those fake Frank profiles with email addresses purchased from data brokers, according to the bank's lawsuit.

The marketing campaign was a disaster.

The lawsuit is now prompting many of the same institutions that propelled Javice's rise to begin interrogating her exaggerations. Forbes published a lengthy takedown of Javice this week, initially without mention that the magazine had previously included her on its 30 Under 30 list. (Forbes updated the story after publication to add the disclosure, which had been included in its earlier coverage of the JPMorgan lawsuit). Investors have distanced themselves or gone quiet. JPMorgan has gone from embracing Javice as a financial wunderkind to accusing her of being a serial fabulist – though the brazen nature of Javice's alleged fraud has prompted questions about why JPMorgan didn't catch on sooner.

"In every aspect of her interactions with JPMC, Javice had a choice," the bank, which once touted its acquisition of the "fastest growing college financial planning platform," alleged in its lawsuit: Reveal the truth about her startup and accept that Frank was not as valuable as she claimed, or lie to inflate Frank's value.

"Javice chose each time to lie," it concluded.

Clarification: This story has been updated to reflect the fact that Forbes added disclosure of Javice's placement on its 2019 "30 Under 30" list to a story containing critical reporting on her.

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From: Elroy Jetson1/27/2023 2:20:49 PM
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UK auto and truck production declined 10% to 775,000 over 2022 - the lowest level since 1956.

UK vehicle production has declined every year since the UK voted to leave the EU.


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