(Roughly) Daily

Posts Tagged ‘private equity

“If Ancestry or its businesses are acquired… we will share your Personal Information with the acquiring or receiving entity”*…

If you’ve never before considered how valuable an asset your DNA might be, you are far behind. Some of the biggest direct-to-consumer DNA sequencing companies are busy monetizing their large-scale genomics databases, with hopes to shape the burgeoning DNA economy and reap its rewards. And if you spit in a cup for one of these companies, your DNA might already be under the corporate control of some of the richest firms on Wall Street.

With their purchase of Ancestry.com late last year, the private equity firm Blackstone now owns the DNA data of 18 million people. And Blackstone is currently ramping up efforts to monetize the data amassed among the companies it owns. But experts say Wall Street firms’ interest in genomics poses new and unforeseen threats, and risks sowing distrust among DNA donors. Without trust, could we miss out on the genome’s real value?

Since the global financial crisis of 2008, private equity firms—which buy up and reshape diverse private companies—have quietly overtaken traditional investment banks like Goldman Sachs as the “dominant players in the financial world,” according to the Financial Times. It’s been a rough tenure so far. While private equity mega-deal hits have made billions for investors, often the companies acquired pay the price, as with high-profile flops including mismanaged music group EMI and bankrupt retailer Toys R Us. The industry has become “the poster child for financial firms that suck value out of the economy,” said U.S. Senator Elizabeth Warren, while introducing an act to Congress aimed at reining in private equity “vampires.

In December the biggest, most dominant private equity company of them all, the Blackstone Group, Inc., which boasts half a trillion dollars in assets under management, made a dramatic entry into the genomics space when it bought a controlling stake in Ancestry.com as part of the deal that valued the genealogy and gene testing company at $4.7 billion. And with that one stroke of the pen, the firm acquired the largest trove of DNA data assembled by any consumer gene tester. If your own DNA sequence is included in this collection, it exists on servers somewhere along with the genomes of 18 million people from at least 30 countries.

Announcing the deal, David Kestnbaum, a senior managing director at Blackstone said he foresees Ancestry growing by “investing behind further data, functionality, and product development.” At the same time, many privacy-concerned watchers had the same question: How does Blackstone aim to monetize Ancestry’s massive database, which includes users’ most sensitive genomic data and family histories?

Those lingering worries were ignited in the final days of 2020 by revelations buried in U.S. Securities and Exchange Commission (SEC) filings, and unearthed by Bloomberg, that showed Blackstone will begin to “package and sell data” from the companies it acquires as a fresh revenue stream. 

For any entrepreneur or investor in the genomics space who knows the industry needs investment to realize its dramatic potential, the question is vexed. Are deals that bring sensitive data under the control of private equity mega-funds a much-needed path to realizing the industry’s goals? Or do they threaten to derail the rapid progress that consumer gene science is making?…

A Wall Street giant’s big bet on Ancestry.com drives home the financial realities– and the privacy challenges– facing the consumer genomic revolution: “Is Your DNA Data Safe in Blackstone’s Hands?

* from Ancestry.com’s EULA, September 23, 2020 (between Blackstone announcing its plan to buy and the deal completing)

###

As we appraise the personal, we might send carefully-deduced birthday greetings to Samuel “Sam” Loyd; he was born on this date in 1841. A chess player, chess composer, puzzle author, and recreational mathematician, he was a member of the Chess Hall of Fame (for both his play and for his exercises, or “problems”). He gained broader posthumous fame when his son published a collection of his mathematical and logic puzzles, Cyclopedia of 5000 Puzzles after his father’s death.  As readers can see here and here, his puzzles still delight.

Loyd’s most famous puzzle was the 14-15 Puzzle, which he produced in 1878. His original authorship is debated; but in any case, his version created a craze that swept America to such an extent that employers put up notices prohibiting playing the puzzle during office hours.

 source

Written by LW

January 31, 2021 at 1:01 am

“Neoliberalization has meant, in short, the financialization of everything”*…

 

Succession

 

Investing and deal-making occupy an outsized role in popular depictions of “business” like HBO’s Succession and Showtime’s Billions. They also occupy an outsized share of our elite: Over the last five years, the nation’s top business schools have sent nearly thirty percent of their graduating classes into finance.

But the buying and selling of companies, the mergers and divestments, the hedging and leveraging, are not themselves valuable activity. They invent, create, build, and provide nothing. Their claim to value is purely derivative—by improving the allocation of capital and configuration of assets, they are supposed to make everyone operating in the real economy more productive. The practitioners are rewarded richly for their effort.

Does this work, or are the efforts largely wasted? One might default to the assumption that an industry attracting so much talent and generating so much profit must be creating enormous value. But the elaborate financial engineering of the 2000s, which attempted an alchemy-like conversion of high-risk loans into rock-solid assets, and then placed highly leveraged bets against their performance, led to the collapse of some established Wall Street institutions, massive bailouts for others, and a global economic meltdown. Mergers and acquisitions, meanwhile, appear largely to be exercises in wheel-spinning: “M&A is a mug’s game,” explains Roger Martin in the Harvard Business Review, “in which typically 70%–90% of acquisitions are abysmal failures.”…

Hedge funds and venture capital funds appear to badly underperform simple public market indexes, while buyout funds have performed roughly at par over the past decade. Of course, some funds deliver outsized returns in a given timeframe; even a random distribution has a right tail. And there are managers whose strong and consistent track records suggest the creation of real value.

In other words, most fund managers are generating the results that one might expect from an elaborate game of chance—placing bets in the market with odds similar to a coin flip. With enough people playing, some will always find themselves on winning streaks and claim the Midas touch, at least until the coin’s next flip. Except under these rules of “heads I win, tails you lose,” they collect their fees regardless…

In the U.S., finance, insurance and real estate (FIRE) sector now accounts for 20 percent of GDP– compared with only 10 percent in 1947.  The thorough and thoughtful analysis– and critique–  of the frothier components of that sector excerpted above is noteworthy, beyond its quality, for it’s origin; it is an early product of a new conservative think tank, American Compass.

Read it in full: “Coin-Flip Capitalism: A Primer.”

Pair with “What Kind of Country Do We Want?“, a resonant essay from the amazing Marilynne Robinson.

(image above: source)

* “Neoliberalization has meant, in short, the financialization of everything. There was unquestionably a power shift away from production to the world of finance… Neoliberalization has not been very effective in revitalizing global capital accumulation, but it has succeeded remarkably well in restoring, or in some instances (as in Russia and China) creating, the power of an economic elite. The theoretical utopianism of neoliberal argument has, I conclude, primarily worked as a system of justification and legitimation for whatever needed to be done to achieve this goal.”  — David Harvey, A Brief History of Neoliberalism

###

As we look beyond price to value, we might recall that it was on this date in 1936 that Alan Turing submitted his paper, “On Computable Numbers” for publication; its full title was “On Computable Numbers, with an Application to the Entscheidungsproblem.”  In answer to Hibert’s and Ackermann’s 1928 challenge, Turing demonstrated that some purely mathematical yes-no questions can never be answered by computation; more technically, that some decision problems are “undecidable” in the sense that there is no single algorithm that infallibly gives a correct “yes” or “no” answer to each instance of the problem.  In Turing’s own words: “…what I shall prove is quite different from the well-known results of Gödel … I shall now show that there is no general method which tells whether a given formula U is provable in K.”

Turing followed this proof with two others, both of which rely on the first. And all rely on his development of type-writer-like “computing machines” that obey a simple set of rules and his subsequent development of a “universal computing machine”– the “Turing Machine,” a key inspiration (to von Neumann and others) for the development of the digital computer.

220px-Alan_Turing_Aged_16 source

 

%d bloggers like this: