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Finance firm Aspiration says its products can 'change climate change'

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9/17/2021 11:09:00 PM

SCOTT GALLOWAY : Finance firm Aspiration claims its products 'can change climate change .' FYI: They make debit cards. (via profgalloway)

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clarifies that to qualify as a member, one need only have signed the company's terms and conditions at some point (which requires only clicking a box when you sign up for the company's email list). That means less than a fifth of Aspiration's"members" actually use its product.

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Scott GallowayThe media loves the hype, and the firm's ability to generate press is a tangible competence that should reduce marketing spend. Fast Company called it a"world-changing app." It was named in Certified B Corporation's"Best for the World" list four years in a row. It made Inc.'s"25 Most Disruptive Companies."

Yogababble: ESG editionYogababbleanalysis to their investor documents. In our experience, there's an inverse correlation between the level of BS in a company's materials and its stock return post-IPO. Aspiration's mission statement:"Aspiration is in the business of sustainability — our mission is to empower people and businesses to do well and to do good."

We don't have a prospectus for Aspiration yet, but a Yogababble assessment of its investor presentation reveals the following:"Sustainability/sustainable" appears 30 times, while"profit" appears 11. Excluding mentions in footnotes,"climate" appears 10 times, while"debit" (the company's actual product) appears only four times. The company promotes its AIM score but never explains how it works. It does, however, describe it as"a Fitbit for sustainability."

EBITDAMSmearing more Vaseline on the lens of the actual business fundamentals, Aspiration turns to creative accounting. Specifically, it leans heavily on a profitability measure called EBITDAM. EBITDA is the familiar"earnings before interest, taxes, depreciation, and amortization." It's a measure of how profitable a company's core operations are before the vagaries of capital structure, tax strategy, and accounting charges. EBITDAM excludes all those things … and then also excludes marketing spend.

In very small doses, this is not crazy. Debit card customers tend to be loyal — Aspiration claims more than 90% customer retention. So the idea is that marketing is mainly for acquiring new customers, and if you want to see how the business performs on its existing customer base, you should exclude those costs.

But Aspiration attempts to elevate EBITDAM far beyond its station. In an introductory"Aspiration at a Glance" slide, it claims to be"Cash Flow Positive," and then in smaller type"Before Marketing Expense," and then, in an even smaller footnote to that smaller type, identifies this as EBITDAM. Which is nothing like a measure of cash flow. Over in reality, the company's operations burned $34 million in 2020, and they're projected to burn $133 million in 2021. In the rest of the deck, Aspiration refers to its"EBITDAM profitability this quarter" and then uses EBITDAM throughout its financial analysis. Which is rich for a company whose entire (projected) profit model is dependent on explosive customer acquisition, which (to date) has been really, really expensive.

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How expensive? The company spent $22 million on marketing in 2020, roughly 50% more than the revenue it generated that year. This year it plans on spending $149 million on marketing, 52% more than expected revenue. Compared to comparable firms, Aspiration's marketing spend as a share of total revenue is stunning:

Scott GallowaySPACtacularWhat could greenwashing garner its backers? Potentially a $2.3 billion public market capitalization, should the anticipated SPAC go through. Read more: Business Insider »

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Nancy Pelosi says Republican Party has been 'hijacked by a cult'In a wide-ranging speech, the House speaker also attacked China's human rights record, but said Beijing and Washington must come together on climate change . Why didn’t Nancy Pelosi bring up her conversations and evidence of a thwarted nuclear attack that she and General Milley conspired to avoid during the impeachment process? We can't even get our own shit together, we can call China out when the US is no longer spewing pollution into the atmosphere.

Can Homeowners In The U.S. Afford Climate Change?Miami Beach homeowner Curt Dyer estimates he is spending about $250,000 out of pocket to elevate his house 3-4 feet to escape flooding. Watch his story in our new documentary, 'America's Climate Crisis: Living in Harm's Way.' So, he's building an island? What about the infrastructure that will be underwater? A smart person would move away from the coast. So…. Move if you can’t afford to protect your property.