New York City - 11/18/2020 — I QUESTION MYSELF why the US election campaign in Austria - occasionally also on TV - is perceived as "boring". It is certainly a partly extremely dirty campaign, and above all, it is an unimaginably unfairly conducted debate for Austria. Trump in particular often wields a more than sharp blade, even in personal matters. Not even in the "best" times of Austrian populists would it have been conceivable that competitors would have been defamed as criminals without further proof. Donald Trump about Joe Biden: "He committed crimes", his family had "become rich while America was robbed". This is Trump's recipe from his brutally populist television show, "The Apprentice", which was broadcast by NBC from 2004 to 2017. The show was about choosing a suitable candidate for a one-year contract worth $250,000 in one of Trump's companies. Two teams are assigned a task, the results of which are compared at the end. Trump then fired one member of the losing team with the words "You're fired!. As election day gets closer, it becomes more and more possible that this time Trump himself will be fired. Whereby some - especially European - attacks against him are going nowhere. The painter Gottfried Helnwein rightly pointed out in the ORF program "The American Nightmare" that Trump himself is not an ideologue, not a convinced racist, and certainly not a Nazi, but that for him only one value counts: "Money" for him personally. In Europe I know only one politician of this caliber: Silvio Berlusconi. All the more dangerous that in the event of a defeat - especially a narrow one - he will pull out all the legal tricks, even at the price of a veritable constitutional crisis and a month-long political "lockdown", even worse than in 2000 after the tug of war between Bush and Gore. Also because the US Constitution, which was passed by 13 individual states in 1787, is only partially suitable for the current situation with 50 individual states.

The biggest, perhaps only plus for Donald Trump is - at least until all the consequences of the pandemic strike through - the good situation of the US economy. In recent weeks, there have been numerous interesting IPOs of larger US companies, especially in the tech sector, strategically before the US election. The mysterious tech giant Palantir with its interesting CEO Alex Karp has been on the stock markets since the end of September, and the project management tool Asana, which was created by Facebook co-founder Dustin Moskovitz, and the highly rated and disruptive insurance tech Lemonade are now also "public". What is noticeable here is that they have all decided against a traditional IPO by way of an Initial Public Offering (IPO), but prefer the direct listing option. They dare an IPO without relying on large investment banks. Originally, they followed the principle that only the existing shares of the company are admitted to trading on the stock exchange, so no additional capital flows in, and there is no pre-defined starting price. Courageous, smart, a new trend. However, a recent change in the rules of the stock exchange now even allows companies to issue new shares and thereby raise capital (so-called direct floor listings). Companies such as Spotify or Slack have already decided to go down this route, and Airbnb is currently considered a prominent next candidate. What is also striking, however, is that these companies have generally never made a profit - or at least not a significant one. Creative valuations in the billions are offset by operating losses of hundreds of millions, and fundamental economic principles seem to be called into question. So it seems unreasonable to question this principle in a continental European manner. Can a company that makes no profit really be worth anything? But why are more and more companies opting for the direct listing option? And why do almost all of these supposedly successful companies not make profits?

In my Stanford Finance class, I learned that in times of cheap money and low interest rates, the capital collection effect of an IPO is becoming less and less of a priority, but that flexibility and cost efficiency are becoming increasingly important - the cost of a classic IPO is no longer in proportion to the output generated by it. I also learned: "The value of fresh capital is increasingly fading into the background in our increasingly digitalized economy. While many classic industries have traditionally been very capital-intensive, this is less and less the case with tech companies. They also want to remain more flexible when going public and save themselves expensive intermediaries". In addition, these companies would live very much from the expectations placed in them, namely that they would eventually achieve a monopoly position. "So are profits a relic of the 20th century?", I asked provocatively. A professor once said:  "Certainly not, but the need to be in the black has simply taken a back seat in times of cheap money. Companies like Tesla or Uber are also prime examples where valuations in the billions are offset by manageable profits or even losses. After all, Tesla ("Bitcoin on wheels") is already valued much higher than all traditional car manufacturers combined, and that with drastic losses in 2019 and a forecast small profit for this year. The Californian travel agent and cab provocateur Uber is similarly valued. These developments are all understandable from an "Art of Dealmaking" perspective: For a good dealmaker, it is the end goal that is relevant, not the medium-term development. Particularly in the USA and especially in Silicon Valley, people think very long-term. Those who only hedge their bets in the short term usually lose out.

Incidentally, Trump is always blamed for the latter: The ban of the popular TikTok app could prove to be a mistake, innovation always wins in the end.

(from: trend.PREMIUM, 44/2020, 144/145) 

About Robin Lumsden: Robin Lumsden is an Austrian attorney and entrepreneur based in Austria and California. After a career as professional tennis player (having played in Wimbledon), he became a Special Forces Officer in the Austrian army. Thereafter, he studied law at the University of Vienna (2003) and the prestigious University of California Berkeley (2005) and passed the bar exam both in Austria and New York. In 2010, former Austrian president Heinz Fischer appointed Lumsden as honorary consul of Jamaica in Austria. In 2013, he founded the law firm Lumsden & Partners with offices in Vienna, New York and Silicon Valley, where he studied from 2017 to 2019 at Stanford University to obtain an MBA degree. His mentors include former US Secretary of State and Stanford Professor Condoleezza Rice, political scientist Francis Fukuyama, long-time Google CEO Eric Schmidt and Arnold Schwarzenegger's former cabinet chief David Crane. In 2014, he was appointed by then foreign minister Sebastian Kurz to act as integration ambassador, acting as a role model for young immigrants. Between 2015 and 2019, Lumsden successfully defended the airport of Vienna in the course of a USD 168 million litigation in New York. (Web: www.lumsden.at)

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