Merry Christmas and Happy New Year

Skyrocketing venture capital investments can also cause sleepless nights: a story of Uber, rising public ire, and the man trying to keep it all together

Venture capital fund Benchmark made an investment years ago in a startup that was disrupting the taxi industry. The name of the company was Uber and the investment was made at a $50 million valuation. Softbank - of Sprint fame - is currently undercutting recent funding valuations by offering to buy out a number of initial investors in Uber at a valuation of $48 BILLION. You can do the math. Benchmark made a fortune and is currently holding about $8 billion in Uber stock. And this is after the scandals that engulfed the company.

Bill Gurley is the man behind Benchmark's move into Uber, amid many other successful ventures. But Uber has far outperformed its other investments with massive, outsized, unrealized gains out of a fund that was initially "only" $425 million. Throughout 2017, Uber has gone through cataclysmic change, from the ousting of allegedly badly-behaved CEO Travis Kalanick to a complete overhaul of the company's bro culture.

Although investors may have dispassionately read disturbing headlines about the situation at Uber, Bill Gurley made the difficult decision to terminate the former CEO, hire his replacement, and work on repairing Uber's reputation. All the while, investors' calculus for evaluating Uber was shifting. Although the process was difficult, Softbank's current interest in Uber may be concrete evidence that he may just have been successful.

Read about Bill Gurley's year: https://www.cnbc.com/2017/12/14/bill-gurley-2017-profile-uber-stitchfix-snap.html

Congressional GOP tax bills cover plenty of ground

Congressional tax bills will have a direct impact on business profitability and potential business plans. Large tax credits that businesses are currently holding could become worthless (think Citigroup talking about taking a potential $20 billion writedown in deferred tax assets, repatriation of oversees profits). Amid the swirling last-minute negotiations currently on-going to reconcile the Senate and House tax bills, the main details of WHAT is being discussed is getting lost in the noise.

Below are some highlights from the Senate tax bill.

• Corporate tax rate. Tax rate from 35% to 20%. Repatriation of oversees cash at 14-14.5%.
• Individual tax brackets. Seven brackets with lower rates across all through 2026.
• State and Local tax deductions. Eliminated.
• Alternative Minimum Tax. Threshold raised.
• Standard Deduction and Child Tax Credit. Raised, but personal exemption eliminated.
• Most other deductions eliminated
• Graduate student tuition waiver and loan deduction unchanged
• Small business taxes reduced. Pass-through companies rates lower for companies with less than $250,000 in revenue.
• Individual Health Insurance Mandate. Eliminated

For more details, see
https://www.washingtonpost.com/news/wonk/wp/2017/11/30/what-is-in-the-senates-massive-tax-bill-and-what-could-change/? 


Several key differences between the Senate and House tax bills are

• Alternative minimum tax (AMT). The Senate wants a corporate AMT for more revenue; House eliminates both corporate and personal AMT
• Itemized deductions. The House eliminates most deductions; Senate does the opposite.
• Education (graduate student tuition waver, student loan interest deduction): House eliminates both deductions while the Senate keeps them. For The Ignorant Investor, this is a sticking point. Having been a graduate student himself, the author recommends that the US attempt to keep education as competitively priced as possible. It's already too expensive. Current graduate student deductions have no meaningful effect on debt or revenue and the advantages that international students studying in the United States bring to the United States for higher education is invaluable (many of these students return to their home countries to take positions of prominence in society).
• Individual income tax. Minor variations in the number and taxation of brackets.
• Estate Tax. House bill eliminates; Senate bill raises exemption level.
• Tax-Exempt Groups engaging in political activity. House eliminates; Senate keeps it.

For more details, see
https://www.nytimes.com/2017/12/06/business/house-senate-tax-bill-differences.html