Asian Americans are the best-educated, highest-income earning, and fastest growing racial group in the United States, according to a Pew Research study. UC Berkeley graduate student activists, Emma Gee and Yuji Ichioka, first used the phrase “Asian American” in 1968 to bring together the diverse groups that fell under the Asian diaspora. The term “Asian American” encompasses over 20 ethnicities and 20 million citizens in the U.S. According to the Census Bureau, a person of Asian descent is defined as “having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, for example, Cambodia, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.” Despite the sizable subgroup differences in culture, language, and religious beliefs, Asian Americans are distinctive in comparison to U.S. adults in terms of higher college degree attainment, median annual household income, and median household wealth. And still, a wide gap exists in Corporate America: Asian American white-collar professionals are the least likely group to be promoted into management and executive positions in the United States.

Jane Hyun articulated how barriers, such as stereotypes and racism, hinder Asian Americans from ascending the corporate ladder, and coined the term, “bamboo ceiling” in her book, Breaking the Bamboo Ceiling: Career Strategies for Asians. These biases are built on structural racism, perpetuated by the “model minority” myth and stereotypical cultural differences. In particular, Hyun discussed how Eastern cultural norms focus on collectivism over individualism, with a particular respect to authority and deference to elders.

Hyun stated, “Unfortunately, this reticence gets mistaken for aloofness or arrogance or inattention, when it is usually just the Asian habit of respecting authority. We wait for our turn to speak—and often our turn just never comes.”

The difference in cultural norms, coupled with research that indicates Asian Americans are perceived as less ideal leaders has affected the group’s leadership advancement. The studies published in the Journal of Applied Psychology found that “Asians’ lack of prototypical attributes of masculinity, charisma, and tyranny” affected the group’s perception in comparison to Caucasian Americans in Western contexts. Existing leaders, subconsciously and consciously, seek cultural and personality characteristics that reflect their own styles in hiring and promotion practices. Thus, the current homogenous composition of leadership teams across industries– mostly comprised of cis white men– further exacerbates this perpetual cycle of non-promotion.

The term “model minority” has origins in the Civil Rights era, when Asian Americans were “inserted as an intermediate group between Black people and whites.” According Berkeley School of Law Professor Leti Volpp, the model minority is premised on the idea that a strong work ethic and family cohesion has led to Asian American success, without the need to rely on government welfare. In turn, the perception that Asian Americans have prosperously attained “the American Dream” as the model minority has stunted the group’s growth and contributed to the widening leadership gap across industries.

Asian Americans’ economic and educational successes have created a blind spot for promotion and attrition rates across industries like tech, business, and law. The Ascend Foundation report analyzed EEOC data on Silicon Valley’s management pipeline and found that Asian Americans are the most likely to be hired into high-tech jobs. However, they are the least likely group to be promoted in management and executive levels. In Asia Society’s Corporate Survey, 27% of participating companies had no AAPI presence in C-Suite, and a report based on data from Google, Intel, Hewlett Packard, LinkedIn, and Yahoo showed that Asians only made up 14% of executives. When further incorporating gender and race, the hurdles become steeper. Ascend’s analysis of Google’s published EEO-I reports revealed that Asian women in leadership at Google has not changed since 2015. These issues, however, are not exclusive to Silicon Valley. In law, Asian Americans have the highest attrition rates and lowest ratio of partners to associates among all racial groups. In the business arena, Asian Americans only account for 1.4% of Fortune 500 CEOs and 1.9% of corporate officers.

Although Asian Americans are not considered an underrepresented minority, making up 12% of the professional workforce, there is a discrepancy in the group’s advancement as leaders in corporate America. It is critical that companies use an intersectional lens to analyze data from diversity reports, accounting for factors such as race and gender, to create initiatives that dismantle the glass ceiling. In doing so, this requires businesses to explore dominant Western standards and attitudes that are embedded in the corporate industry– standards that have historically been deemed valuable at the expense of Asian Americans, and people of color broadly. As U.S. companies further integrate diversity and inclusion to its business models, they must institutionalize Asian American leadership to close a gap that has gone unchanged for too long. The elevator should not stop just before the upper echelons of the corporate realm for Asian Americans.

Harlem Capital, a New York City venture capital firm based in — you guessed it — Harlem, was originally founded in 2015 as an angel syndicate. However, in 2019, the VC firm raised over $40 million for its inaugural fund, with half of the fund’s individual LPs being women or people of color. Fund I has invested in 23 companies, 61% of which are led by Black or Latinx founders and 41% are led solely by women.

While the first fund remains active — with hopes to invest in five more companies — the diversity-focused venture capital firm recently announced that it raised $134 million for its second fund. Harlem Capital’s Fund II well exceeded its initial target of $100 million. This time, Harlem Capital has received investments from big names like Paypal, and continues to work on its diversity mission with 42% of Fund II’s LPs being women or people of color.

Another one of Harlem Capital’s investors is Apple, which announced back in January that it would pledge $100 million for its Racial Equity and Justice Initiative. Apple will invest $10 million with Harlem Capital over the next 20 years as well as continue to work closely with the VC firm to improve Apple’s own diversity efforts and develop an internship program with Harlem Capital.

Despite these efforts, investors and VC-backed companies are seriously lacking in terms of diversity. Crunchbase’s 2020 Diversity Report found that Black and Latinx founders received only 2.6% of all venture capital funding in 2020. Meanwhile, Fortune found that female founders received only 2.2% of all VC funding for the same year, less than they received in 2019. Harlem Capital’s Fund II is still looking to invest in businesses founded by women and people of color but much more funding is needed to actually change these low numbers. While Harlem Capital itself is led by a diverse group of investors, it shouldn’t be hard for other, less diverse VC firms to see the value in investing in underrepresented founders — or even hiring diverse investors. Until then, much of the burden to diversity the industry will fall on groups like BLCK VC and Harlem Capital.

There is a new trend in the world of finance: after crypto tokens, non-fungible tokens (NFTs) appeared in the cluster of digital assets spurred in recent years. These tokens are effectively certificates of authenticity– non-fungible- for a digital asset. The digital asset could be a photo, video or even a tweet and the token verifies its ownership on the online distributed ledger of blockchain. Everyone can see who owns the relevant digital asset in a new form of proof of title. But what is the use case of NFTs? No one knows yet as, until now, they have been catching the world’s attention for the mouth-watering prices they have garnered despite being seemingly of no value, rather for their utilitarian position in the spectrum of financial instruments.

NFTs, however, have been the perfect segue for an innovation that could change how society views equity and investment in human capital. By digitizing an un-digitizable asset in a decentralized way, NFTs seemed to open the eyes for the digitization of something unthinkable: human potential. Yes, that’s right. But before we go into that, I have to share a short story. Around four months ago, I approached a talented software engineer of a Fortune 500 company in order to create something together that would “revolutionize crowdfunding.” A way for individuals to capitalize on their potential and on their marketing prowess to raise capital for whatever they promised to do or provide value with. A real world monetizable “like” button if you will. However, his response made me re-think. He asked me, “which side of history do you want to be?” Well, back then, NFTs were not the new craze that would create a fertile ground for the monetization of human potential and social status. Now, however, others rushed in to fill the market gap that seemed rather apparent.

Enter Bitclout. This new concept was formally coined a couple of weeks ago creating a storm of reactions and has rapidly amassed $160M in market capitalization with rumors suggesting famous VC personality Chamath Palihapitiya backing the project. Bitclout aims to commoditize people by offering coins as a form of stock. Simply put, it is a new form of speculative trading of a new asset named “creator coins.” The value of the coins will fluctuate depending on the demand, as supply is regulated automatically to effectively remove it from the equation. The value of the coin will increase the more people buy it and will be reduced the more people sell it in a linear manner. Every personality that is buzzing on the news will see their price rise (Elon Musk’s coin will always seem a good “investment”).

The most important aspect of this new asset class is that it operates on a distributed ledger on a custom blockchain with its code being open-source. This means that it is fully decentralized with no management or company behind it. While this characteristic excites the imagination of retail investors who are promised a decentralized financial system where they can finally monetize themselves, it also opens Pandora’s box. The creators of Bitclout created coins for the 15,000 biggest Twitter accounts in order to kickstart the “asset catalogue” and capitalize on their brand names to advertise the concept. However, people were quick to notice that this is a lawsuit waiting to happen, as not one of these Twitter personas agreed to be made into a coin yet. The problem is, who is the defendant in this lawsuit? Who is going to be liable for damages on individuals’ misappropriation of name or likeness claims? How will an individual be removed off of the “stock market of people” if they do not wish to be commoditized? What about market manipulation (pump and dumps) and the protective role that the SEC performs in its regulatory capacity for the stock market?

Apart from the legal implications and the market risk that this new vast asset class creates, one must also consider its ethical implications. If we thought social media changed our society, the way we communicate and interact, then the monetization of people will amplify that effect by the hundreds. The difference is that unlike social media, which can be regulated and controlled, this Pandora’s box is already open and would be impossible to close. The future is exciting and lawyers and bankers alike are probably in for a wild ride but one thing that is for sure is that there are no “sides of history” when there is no defendant…

In December 2020, following the last-minute block of Ant Group’s November IPO, which was set to be the largest IPO in world history, China’s market regulator (the State Administration for Market Regulation) opened an antitrust investigation into the e-commerce giant Alibaba. This investigation reflected China’s increased scrutiny of large, deep-pocketed conglomerate corporations. But while the government is targeting conglomerates like Alibaba,  China is also making great efforts to encourage new startup growth. According to a report jointly released by China’s Development Research Center of the State Council (DRC), China’s Ministry of Finance, and the World Bank Group (WBG), the country is aiming to stimulate efficient innovation, boost productivity and build a modern economic system. These efforts to curb conglomerates while encouraging startup innovation will likely have an effect on China-based investors’ domestic and international investment theses and corresponding corporate governance activities, in particular, it will likely have great effects on the role of corporate venture capital in the international startup ecosystem.

According to the Wall Street Journal, investments by Asian VCs represented 40 percent of the record $154 billion in global venture financing in 2017 with Silicon Valley leading the field at 44 percent. It also noted that “U.S. investors now lead less than half of all venture finance, while China’s share is nearly a quarter and growing fast.” Most Chinese VCs are offshoots of China’s tech giants, including Baidu, Alibaba, and Tencent, referred to collectively as BAT. These VC market players are known as corporate venture capitalists (CVCs) – investment groups backed by large corporations. Easily identified, the venture arms of these corporate giants take on their parent company names like Baidu Ventures and Alibaba Entrepreneurs Fund, mirroring that of their American counterparts like Google Ventures (now GV), Intel Ventures, and Microsoft Ventures.

While CVCs invest in startups that traditional VCs also target, their governance structure may not reflect that of traditional VC firms. While traditional VCs report to their limited partners (LPs), CVCs may answer to executive management teams or other company departments. Reporting to a CEO rather than managing partners or LPs gives rise to many different pressures beyond traditional financial returns. That is, when a CVC invests in a startup, many times the startup will then be “invited” to join their company’s unique startup ecosystem, providing them valuable access to the company’s expertise and guidance. Thus, through CVCs’ investment, these giant technology companies can form their own “factions” of small companies domestic and abroad. Once it has joined the “faction,” each startup is only available to their Chinese tech parent’s payment and social media platforms, which hinders their long-term success, limiting them within its parent conglomerates. A significant exception to this “faction” rule is China’s most popular ride-hailing app—Didi Chuxing—which accepts both AliPay (Alibaba) and WeChat pay (Tencent). In fact, Didi Chuxing even expanded its own in-app financial services and is aiming for independence from Alibaba’s Alipay and Tencent’s WeChat Pay. Didi’s long-term success reveals how companies may find success in not being part of a corporate “faction.”

Given that the Chinese government has expressed its interest in breaking up domestic tech giants as well as enthusiasm for cultivating startups (thus promoting innovation), these CVC’s behavioral patterns, particularly the “faction” phenomenon, will also be changed. While nobody can be sure where these Chinese CVCs go, given these CVCs play a huge role in the Asian venture capital ecosystem as well as China’s goal to continue investment in startups, it’s unlikely that they will cease to exist. However, when these tech giants try to “invite” their invested startups to participate in their “clique,” stringent regulatory scrutiny, including antitrust litigation, will likely play a bigger role, leaving room for other investors and other CVCs to contribute to innovation. Thus, no matter the real concerns behind China’s current policy, it at least has one probable effect: to stimulate innovation and prevent the already giant tech companies from becoming supergiant.

Last week, the Wall Street Journal published a piece titled With Shopify, Small Businesses Strike Back at Amazon. WSJ Reporter Christopher Mims described Shopify as the emerging “third option” for retailers to use instead of “list[ing] their goods on marketplaces run by giant companies, or sell[ing] to consumers directly, hoping they’ll make more on each transaction despite fewer sales.”

Shopify is a subscription-based service that allows retailers to set up an online store and sell their products. The company’s website describes it as a “commerce platform that offers a way to quickly launch your dream business and start selling to your customers.” It’s possible that you’ve bought products online not realizing that the retailer is using Shopify’s platform. For online merchants, that is part of the appeal: it gives them access to cloud-based e-commerce tools while letting them maintain control of their branding and customer relationships, which is very much in contrast to the experience of selling through Amazon.

As Shopify grows, it has begun competing more directly with Amazon. According to the WSJ, Shopify is building its own network of fulfillment warehouses, intended to rival Amazon’s sprawling logistics operation. Shopify has also taken a few shots at Amazon on Twitter as well, poking fun at how the company treats third-party merchants (“Corporate meme warfare has commenced,” declared Bloomberg columnist Tae Kim in response to the tweet). The competition between the two companies was further highlighted last month when Amazon acquired Selz, a startup that mirrors Shopify’s service by helping merchants set up their own online retail experience.

Ironically, Shopify’s escalating competition with Amazon could be in Amazon’s self-interest in a different domain: Shopify’s growth offers Amazon a strong data point to show antitrust regulators that it isn’t an e-commerce monopoly.

Over the last few years, Amazon has faced scrutiny from antitrust regulators in the US and the EU. Last week, President Biden appointed Columbia Law Professor Lina Khan to the Federal Trade Commission. Khan is best known for being an outspoken critic of Amazon’s alleged market dominance. Her widely circulated 2017 paper “Amazon’s Antitrust Paradox” argued that US antitrust law needs to evolve to better address competitive harms caused by Amazon’s market power. Biden also recently appointed Tim Wu, another antitrust scholar who has been critical of large tech companies, to the White House’s National Economic Council.

While Biden’s appointments indicate that Amazon could be in the regulatory crosshairs of the FTC, Shopify’s accelerating growth during the pandemic raises questions about the strength of Amazon’s alleged monopoly. In 2020, Shopify’s revenue grew 86 percent to $2.9 billion. Although that is only a fraction of Amazon’s online retail revenue (which is still by far the largest), it demonstrates that Amazon’s power in the e-commerce space might not be as durable as critics claim. In October, the House Judiciary Subcommittee on Antitrust released its report on competition in digital markets, which Lina Khan co-authored. The subcommittee’s final report argued that Amazon “has monopoly power over many small- and medium-sized businesses that do not have a viable alternative to Amazon for reaching online consumers.” Shopify – a viable alternative and arguably the biggest threat to Amazon’s power in the online retail space – was only mentioned once in the 450-page report.

As Shopify takes market share from Amazon with its tools now being used by over 500,000 e-commerce businesses in 175 countries, it could be indirectly making an argument that Amazon might not be the dominant monopolist that critics claim it is. Before making any definitive determination on that, we’ll have to wait to see what Amazon does with its newly acquired Selz platform.

Congress passed the $1.9 trillion Covid-19 stimulus bill on Wednesday in a 220-to-211 vote, which is projected to boost the U.S. economy and extend financial relief to many Americans. President Biden signed the bill on Thursday as part of his American Rescue Plan of 2021, an expansive and sweeping economic recovery plan that will likely create significant and long-lasting economic and political implications.

In particular, the bill includes funding for COVID- 19 vaccine distribution and expands child tax credits for lower-income families. The biggest provisions of the package include $1,400 direct payments for taxpayers who earn less than $75,000 per year or couples who earn less than $150,000, and expanded federal unemployment benefits of $300 per week through September.

The massive fiscal stimulus package is expected to boost U.S. employment, reduce poverty, and pick up inflation. In particular, the stimulus bill is intended to target American economic inequality, and economists have maintained that increased government spending can help lessen inequality by creating a more even and quick economic recovery. Columbia University researchers have estimated that the support for low-income families could cut the poverty rate from 12.3 to 8.3 percent.

Economists have also predicted that the U.S. GDP will grow 5.95%, which would be the fastest U.S. economic growth since 1983. In fact, the Organization for Economic Cooperation and Development has maintained that the latest stimulus package, coupled with increased and faster vaccinations, could drive the U.S. GDP up by 6.5% in 2021. In effect, the U.S. economic growth could drive demand up for goods from U.S. trading partners, although it may also have the potential of taking capital away from emerging markets where economic recoveries may take longer.

There have also been concerns that the stimulus could create a spike in inflation and eventually heightened interest rates. In addition to risk of inflation, the growing debt burden is also a concern, as the series of relief bills has increased the publicly held federal debt level by nearly $4.5 trillion over the last year. As of March 1, the debt in the United States is the highest it has been since after World War II, and is roughly the size of the nation’s entire economic output at $21.9 trillion. Republicans criticized the legislation as excessive spending, and have cautioned against the nation’s debt burden that arises from the bill.

Although issues relating to inflation, debt, and spending have warranted concerns, the bill’s potential to create employment, reduce poverty, and quicken economic recovery may outweigh these negatives. Regardless of the uncertainty in the horizon, the bill will likely have broad-reaching and massive market impacts on U.S. economic growth, and may even set the foundation for long-term expansions that could alter the landscape of U.S. policies regarding child care costs and poverty. Whether considered pioneering or reckless, Biden’s bill will likely make its mark as historic and unprecedented spending in U.S. history.

Since last March, most major companies such as Salesforce have switched to a remote work model. This surge in employees working from home, driven by safety concerns during the pandemic, emptied previously clogged city streets of traffic and boosted the usage of cloud tools such as Zoom videoconferencing, Google Docs’s suite of productivity tools, and massive web storage platforms as Microsoft’s Azure databases. However, even though the pandemic now seems to be subsiding with vaccinations surging in the United States, access to shots open to all Americans by May 1, and President Biden recently promising a return to near-normal by July 4, some semblance of remote work looks to be a permanent feature of many private companies for a long time to come. In this article, we will explore the benefits and drawbacks of remote work policies, how companies can appropriately balance the flexibility of virtual work with the community of office spaces post-pandemic, and the long-term impacts of this shift on the legal industry and urban environments.

To start, working from home’s benefits have been extolled by companies and organizations such as Nationwide Insurance, Google, and even the NFL. They cite increased worker productivity— as employees are able to take breaks for exercise and food at their convenience and perform tasks around the clock, instead of being limited to the traditional 9-5pm timeframe. Individuals working remotely can also operate from anywhere in the world. This eliminates the need for sprawling office space, complicated technical equipment and network setups, and rideshare services and transit benefits that many companies previously gave to employees. All of these items are incredibly expensive for companies to set up, so their obviation by remote work allows many private entities to increase revenue. The fact that remote workers are not limited by geographic considerations also enables companies to draw from a far larger pool of talent. It eliminates moving costs and headaches for these prospective employees as well, enabling them to spend time in their preferred communities and with their families. This often increases happiness— which in turn boosts productivity. And another benefit: housing is often cheaper outside major metropolitan regions like Silicon Valley and New York— enabling workers to reduce housing costs while keeping large salaries.

However, working from home also has its drawbacks. While some companies cite flexibility as a benefit, many employees and firms have argued that the lack of a separating line between work and home actually decreases productivity, as it removes a firm separation between work and personal life. Employees may find themselves unable to focus due to the presence of other family members, child care considerations, or the stress brought on by self-isolation. Virtual meetings may also decrease the sense of community that employees working in-person have. The inability to hold natural side conversations within virtual meeting rooms, and the less personal nature of virtual after-work activities such as pub and movie nights may decrease the strength of personal bonds among employees. This could ultimately result in employees leaving companies sooner, thereby increasing the subsequent cost of needing to retrain and rehire workers. Issues with technology and a lesser ability to hold nuanced conversations over social media platforms may also affect a company’s ability to adequately interface with clients and employees— another factor that could decrease revenue and profitability in the long run.

As some semblance of normal life gradually resumes across the United States, companies are likely to take a hybrid approach. This will involve the option to work completely remotely for many employees who have already made moves to other regions. Even if offices reopen, many local employees will likely have the permanent flexibility to work from home when they would like to. This may accelerate a pre-pandemic trend of reconfiguring traditional office spaces lined with cubicles into more communal work hubs. With employees not needing an assigned desk since they are technically free to operate from anywhere, offices can be set up more like college campuses— with open tables and expansive meeting rooms for collaboration (likely equipped with large flat-panel screens for remote employees to join conversations), auditoriums and forums for presentations, and libraries for more private and quiet workspaces.

In the legal world, more court hearings may continue to be held completely or partially over videoconference, enabling people and entities to seek representation from a greater pool of attorneys across the country. This would also have the effect of broadening the convenience and availability considerations of forum non conveniens motions and venue when judges decide whether to transfer or dismiss cases. For associate attorneys working for large law firms in major markets, long hours may continue to be a fixture of life— but where those hours are worked (from home or the office) will likely be far more flexible.

Lastly, the effect of greater remote work flexibility on urban environments would be enormous. With fewer people taking commutes, roads are likely to have less traffic. Fewer pollutants are likely to be emitted, enabling normally smog-ridden cities like Los Angeles to have cleaner air. Moreover, public transit systems— many of which were strained to peak capacity prior to the pandemic— will be able to better accommodate passengers without the need for massive new fleets of vehicles due to lower overall ridership. And lastly, due to the decrease in traffic, city streets which became pedestrian-only to accommodate greater outdoor dining and activities in the pandemic may be permanently closed off to cars. This would greatly increase walkable urban space available to all people, upping mental and physical health for all.

Working from home may have been seen as a temporary necessity early on during the pandemic. But now that it has been a fixture of life that employees and employers alike have gotten used to over this past year, options for remote work may continue to stick around permanently after offices reopen. Finding and striking that appropriate balance between the flexibility of virtual work and the community of offices will be the key for companies throughout the world as the pandemic gradually comes to a close over the months ahead.

What do you get when you combine pop culture’s new favorite buzzword with celebrity endorsements? SPACs. The use of special purpose acquisition companies has been on the rise for several months, but now that celebrities are involved, the SEC is finally paying attention. On Wednesday, the SEC issued an alert warning against investment decisions based solely on celebrity endorsement. Yesterday, an advisory committee to the commission hosted a meeting focused on investor risks and the adequacy of current protections. Today, the SPAC boom continues and its longevity remains unclear.

In its investor alert on Wednesday, the SEC warned that SPACs come with distinct risks from traditional IPOs, emphasizing that SPAC participation is a risky investment that should not be taken lightly. The commission showed specific concern with the lure of celebrity endorsements and pushed investors to conduct their own research rather than relying on the word of celebrities—this emphasized the need for greater disclosures. Following the alert, an advisory committee discussed other associated risks and a potential need for heightened regulation.

At the meeting, expert panelists fielded questions, primarily concerning the risks and rewards of the SPAC surge, and how they should be treated going forward. The chair of the commission, Allison Herren Lee, voiced her skepticism, stating “[SPACs’] performance doesn’t match the hype.”  Lee alluded to a need for greater regulatory measures and growing regulator concerns: “we’re seeing more and more evidence on the risk side of the equation for SPACs.”

Others, however, expressed fear of enhanced regulation: “well-intentioned increased regulatory obligations around SPACs could make them less cost-effective,” and “telling investors they cannot make decisions for themselves only supports their suspicions that capital markets are for the wealthy.” SPACs are praised for “democratizing markets,” allowing otherwise unavailable access to high-growth companies for retail investors. Thus, a “tight iron grip” from regulators may “lock people out of being able to participate in the upside.”

The advisory committee meeting made one thing clear: the SEC is looking at SPACs. The committee did not agree on a concrete plan of action, but the SEC is “taking a hard look at the disclosures and other structural issues surrounding SPACs.”

Are there already enough guardrails in place to prevent a SPAC-instigated disaster? Some argue there are, others are not so optimistic, and the SEC cannot seem to decide…yet.

Have you ever wanted a nice winter coat that was outside of your price range? You could put it on a credit card, but that would demolish your budget for the month. You could purchase it through a layaway program, but that means you will have to wait to get that warm, fashionable look. Or, you could use the rapidly growing Buy Now, Pay Later (BNPL) plan to get the best of both options.

Like layaway, BNPL enables consumers to pay in small monthly installments, but it is unique in that consumers get to bring home the item immediately. Consumers are able to just walk away with their purchase because BNPL services, like Klarna, Affirm, and Afterpay, pay the retailer for the item upfront and then recoup those funds when the installments get paid off. Most of the income for these companies is derived from processing fees that merchants pay, which can be double or triple what retailers pay to credit card processors, and a smaller portion of the income comes from late fees paid by consumers.

Last year, BNPL services grew by as much as 200% and management consultants Oliver Wyman estimate BNPL firms facilitated between $20 billion-$25 billion in transactions in the U.S. alone. In just the first nine months of 2020, the four big providers – Klarna, Affirm, Afterpay, and PayPal’s Pay in 4 – saw a more than 50% increase in payment volumes, but collectively these firms handle a meager portion of global e-commerce spending. With so much room for these companies to grow and reach more consumers, it is no surprise that Bank of America predicts that such services could have an annual value of $1 trillion by 2025.

Retailers such as Walmart, Macy’s Inc. and Sephora have incorporated BNPL into their payment options to adjust to the growth of online shopping due to the pandemic and also to capture younger shoppers who tend not to use credit cards. Pandemic-related retail sale declines have been somewhat offset by the income from store-branded credit card fees. For Macy’s, credit card income from store and co-branded cards is expected to account for almost all of its operating income in the current fiscal year, even though Macy’s signed up fewer store-branded credit card customers in 2020 because of temporary store closures. But to attract new customers, Macy’s tapped Klarna to create a host of BNPL shoppers that it hopes will eventually move over to store-branded credit cards. The experience seems to be a positive one for Macy’s as 40% of the shoppers using Klarna are new to Macy’s and 45% are under forty years old.

Historically, BNPL services were used to spread out the cost of large purchases, but in the past year more customers have used the service for items costing $500 or less. Currently, fashion and beauty product purchases make up about 70% of pay-later transactions, and the most frequent holiday purchases by U.S. users of Afterpay included thermal clothes from Old Navy and Crocs clogs. This purchase pattern seems to fall in line with the prevalence of young users trying to find ways to make purchases without racking up credit card debt on top of student loans. But Alan McIntyre, the head of Accenture’s global banking practice, also has concerns that around 40% of people using BNPL are doing so because they could not get access to traditional credit for whatever reason.

Although the BNPL companies claim their services cause less financial damage than credit cards, there are growing concerns about the harm these relatively unregulated services can cause. The criteria to sign up for a BNPL service is quite lax. All that is required is for the user to be eighteen years or older and to have a credit or debit card as a backstop for their payments. Only a handful of companies choose to take the extra step of running a credit check before allowing access to the service. The simple sign-up, easy checkout process, and delayed payment format contribute to the convenience of BNPL, but they also create a service that encourages impulse buying. Racking up charges with these services can turn disastrous quickly once a person starts missing installments because services like Afterpay and Klarna keep adding on late fees and some companies like Affirm charge a non-compounding interest rate of 30% (much higher than the average credit card interest rate of 16.43%). According to a report from Credit Karma, nearly 40% of U.S. consumers who used BNPL have missed more than one payment and 72% of those saw their credit score decline.

As a result, regulators in Britain and Australia have started to consider tightening rules around the industry to approximate those of banks. The British Financial Conduct Authority (FCA) recently proposed that providers need to undertake affordability checks before lending and ensure customers are treated fairly, especially those who struggle with repayments. Some companies, such as Klarna, have been receptive to such regulation while others, like Laybuy, want to maintain the status quo for fear that the innovation and simplicity of the service will be tarnished. What is unclear at the moment is how such fintech services fit into the U.S. regulation scheme since the companies do not have bank charters, some do not charge interest, and lending laws vary by state. With expectations that Biden’s Consumer Financial Protection Bureau will be aggressive, experts believe that the sector will come under more scrutiny in the near future. And while the regulatory future of BNPL services is uncertain, there is no doubt great growth potential for these companies as more in-person shopping goes online.

“Going green” has officially permeated the automobile industry – and there’s no sign of the environmentally-conscious trend slowing down anytime soon. Within this industry dominated by the internal combustion engine, Tesla has been heralded as the leader of electric cars. However, General Motor’s (“GM”) recent announcement—stating they will cease production and sales of all gas-powered cars by 2035—has begged the question: is the auto industry permanently shifting to an electric-first approach? Tesla’s reign at the top of the electric vehicle industry will not go unchallenged and GM’s announcement may be one of many vehicle manufacturers to follow suit. 

Worldwide electric vehicle sales have continuously trended upward over the last decade – an intriguing statistic automobile makers have watched closely. Perennial vehicle manufacturers like Volkswagen Group—which includes subsidiaries Porsche, Bugatti, and Lamborghini—have tremendously revamped their business models to incorporate the demand for electric vehicles. Volkswagen alone has pledged to spend $34 billion over the next five years to make an electric or hybrid version of every single vehicle they produce, and by 2030 they are aiming to have electric vehicles comprise 40% of their global sales. In an even more drastic measure, Volvo announced that they plan to convert their entire lineup to electric vehicles by 2030 and will no longer sell any vehicles with internal combustion engines. Moves like these are attempts to capture the shifting automobile market in which energy vehicles have grown from a 2.5% market share in 2019 to a 3.2% market share in 2020. 

The recent news of these drastic shifts has been symbiotic with a swim-or-sink mentality that has gained widespread traction in the automobile industry – especially in the last few months. In February alone, Ford announced that their entire European passenger vehicle lineup would have a completely all-electric offering by 2020. Further, Tata Motors entity Jaguar Land Rover announced that the Jaguar brand would be all-electric from 2025 onwards. The push for electric vehicles did not stop there. GM took advantage of their newly revamped business model and captured Super Bowl LV watchers’ attention by utilizing Will Ferrell in a commercial premised on challenging Norway’s current feat of selling more electric vehicles per capita than the United States. This is a trend we are likely to see continue as experts predict that by the year 2040 more than half of all passenger vehicles sold on the market will be electric. 

Even with the electric vehicle transition’s environmental benefits, this swift change will not occur without some negative consequences, specifically in the United States automobile industry. Automobile unions are concerned that the simpler electric vehicle powertrains may render their services obsolete. Those concerns are exemplified by the fact that the Chevrolet Bolt’s e-motor has only three moving parts compared to internal combustion engines that can have more than 110. Additionally, lithium-ion batteries required to power electric vehicles could be produced mainly in factories outside the country. According to a statement made by the United States Secretary of Energy, Jennifer Granholm, in her confirmation hearing, 107 of the 142 lithium-ion battery mega-factories under construction are located in China, while only nine are in the United States. 

Despite these downfalls, the automobile industry appears to be zeroed in on the electric vehicle business model. Vehicle manufacturers continue to announce their shift away from the internal combustion engine making it more likely that the longstanding commercial production of those engines that began in 1886 may finally be coming to an end. But regardless of whether one is excited or concerned about this transition, combustion engine trucks and cars will likely continue to remain on the road for at least a few more decades.