Shein 2024 IPO & Business Model Strategy

Hello and welcome back to The Deal Room and this deep dive on Shein, the globally renowned and highly influential B2C e-commerce platform that has, in Steven's words, redefined the landscape of fashion retail. Because I know you're a big consumer of their brand, Steven. We'll get into this. But we're going to talk about in this episode the history of the company, Lots of interesting facts around its business model, some issues and challenges it might be facing at the moment. And all of this in the context, of course, of news only within the last week or so that they are gearing up, setting up for an IPO in London. And boy, does London need those IPOs at the moment. But this, in fact, by company valuation, coming in at around $50 billion would be— I think it's right, it's the biggest I think that the London Stock Exchange would have ever have seen. So we'll dive into that as well because there's banks like Goldman's, JPMS, they're all advising on this deal because this would be the big one as far as the year is concerned in London. Before we begin, I just want to say that if you're up for a laugh and you want to listen to me basically riding a bike for the entirety of the Global Markets episode on the podcast this week. Then why am I gonna be doing that? It is, it might, might think that's a bit strange. Maybe he's some sort of fitness junkie. That's definitely not the case. I'm doing it because this week myself, Stephen, the wider team at Amplify Me, even some of the community members, we are all going to be participating in a charity event to raise funds for Great Ormond Street Children's Hospital in London. What this actually is, in summary, is we are going to be virtually supporting world record holder and twice cancer survivor James Golding, who is a former professional cyclist, and he now is aiming to be the first Brit to win the Ride Across America, the RAAM Challenge. And so we're going to be joining him on a Wattbike from the office in real time, tracking what he's doing alongside lots of other companies. Across the City of London. For context, what James is doing is absolutely incredible. He is going to aim to ride for 22 hours a day for 9 days in a row, covering 3,100 miles. It's just absolutely bonkers. But, you know, why is what he's doing so important? And he dedicates now his life to raising money for Great Ormond Street is because they are looking to build a new critical care unit with on-site accommodation. They're increasing access to clinical trials. They're trying to acquire new imaging technology, and they're establishing a new hospital school with really cool outdoor spaces that they've got planned here in London. So, anything that you can give at all, no matter how small— I know how big our community is, so if everyone was to give just £1 or $1, for example, that would really make a huge difference to actual people's lives. So support the cause, get involved, listen to me on the bike on the next episode, and grab the link in the show notes. And any help or support will be greatly appreciated by everyone.

I love this. And is it just you that's going to be on the Wattbike as you're recording the episode? In my mind, you're going to be on a Wattbike facing off against Piers, also on a Wattbike, and you're going to be competing not only verbal jousting, as you tend to do, but also competing on your output, which is going to be streamed live onto your YouTube channel. Is that— or is it a little bit more analog than that?

If people want to see me go head-to-head with Piers as we're recording the next episode, then look, we're— we've at the moment, we've just got the fundraising page up. Um, in the last day or so, and we're at £450. If we get to £5,000— if we get to £1,000 by the time we get to the end of Monday, then I will for sure twist his arm hard enough to get him on the bike. And we'll fight— we'll put the bikes facing each other and we'll go head to head. Let's do it.

Yeah, love it, love it. I'm, uh, I will contribute £550. There you go, £1,000 done. Worth watching that. All right, look, I'm looking forward to it. I'm looking forward to getting in, getting in a bit of exercise, all in a, all cause and we're quite competitive at Amplify. So I'd want to, yeah, I want to do the corporate finance team a service.

Yeah. And I did see Morgan Stanley and a few other banks on the list. So we've got to prove what we're worth in that competition. So yeah, but look, let's dive into this episode and let's start, I guess, by setting the scene. Let's have a look at the history of Shein.

Yeah. So I've wanted to do a bit of a deep dive on Shein for a while. It's been a company that's been hovering around the the news and one that we've covered sporadically on the podcast over the last few months. And one of the reasons why I've wanted to cover it is because I am a millennial. Anthony, you're a millennial as well. Is that correct? Yep.

Just about.

Just on the edge. And it is a company that has started and has become a favorite synonymous with Generation Z, Generation Zed. And therefore I wanted to spend a little bit of time looking into the fundamentals of this company, more out of ignorance than anything. So I can imagine as I go through this episode, ask a few quiz questions, look at its business model, there might be some comments that you have that you want to put in the chat, maybe put me in my place. Let me know where I'm heading off track, especially if you're a frequent podcast listener and user of Shein as well. So really up for discovering more about this company as it potentially IPOs in London. So let's start off with the history of the company. Some amazing statistics in here. So the company in its first iteration was founded in 2008. Founder was a guy called Chris Zhu. And he's American-born graduate of Washington University. He left the Nanjing Aodao Information Technology to start this affordable fashion online retailer. He actually started by selling wedding dresses, realized it was a bit of a gap in the market. And actually up until about 2013, this was a glorified— well, in fact, it was just a dropshipping company. So dropshipping, as many of you will know, effectively is a zero inventory broker, retail broker service. So you advertise the products, a consumer buys the product, then you go and source that particular product from a supplier. Light industry is the kind of thing that anyone, in inverted commas, anyone can set up and start their own dropshipping business. Started to gain a little bit of traction. They rebranded the company. So one of the worst names I've ever heard, SheInside, either SheInside or SheInside. I mean, it's awful. SheInside.com. Glad they changed that name. Don't think, don't think it would've become the multi-billion dollar company had it got that name. And it actually ended up changing to Shein by about 2012. And this is where the company as we know today was founded. So Shein, 2012, had about 100 employees, uh, had— it was based in Guangzhou in China, acquired a company called Romwe in 2014, a Chinese e-commerce retailer, and then went on this explosive growth journey out of dropshipping into manufacturing of garments in a really, really lean, fast-paced, reactive way to the— and my gosh, think about this. It's 2014 when it acquired Romwe and 2014 when it started its growth journey. That is 10 years ago. Between 2014 and now it's gone from a couple of hundred million of revenue to $22.7 billion of revenue in 2022. Now that is a hockey stick. Unlike many hockey sticks we've seen before. And in fact, it was the 2020 lockdown that really saw Shein enter, well, experience its explosive growth, not only because it was an online retailer, online retailers all tended to do pretty well, but it had cracked the code. As we'll discuss in the business model section, it had cracked the code of social media influencer-based marketing. And learning from the trends that were going on in social media. So it was winning both ways. And by the end of '22, it had a manufacturing and supplier network of over 3,000 suppliers operational in serving 150 countries worldwide. Actually launched its global marketplace, which meant that it was actually selling third-party retailers in 2023, and it's set up for this massive IPO that we're going to talk about later on. It has been an unbelievable growth story, taking advantage of a number of overlapping macroeconomic factors combined with what we'll talk about in a second, a pretty interesting business model.

So who put their money in, in, when was it, 2015? Oh, when they went from like certain size to then pivoting strategy, some, I'm assuming someone came in and pivoted it rather than the founder or, yeah.

So, so there were, there were technically 4 founders to the 2020, 2012 Shein model, and they did raise some money, money, a very early stage funding round at that point. I think the business was probably washing its face over the next 6 or 7 years. Some of the big guys from VC came in, the likes of Sequoia, China General Atlantic, and Mubadala, the Abu Dhabi sovereign wealth fund. They came in and started to give this company that was onto a good thing, some fuel for the fire. And that's when I'm just looking in 2016, its revenue was $600 million. By 2021, it was $15.7 billion.

That's just 5 years. That is insane.

For anyone that has analyzed normal boring businesses, those numbers will blow your mind. Absolutely blow your mind.

So with that kind of statistic, then I'm absolutely eager to know this business model. How can they switch it on that fast given what they're doing as a business?

Okay. So I'm going to talk about the 3 elements of the business model that really stand out to me. The first is spotting trends, testing and iterating. The second is a vertically integrated supply chain. And the third is social media mastery and viral advertising. Before I go into those individually, just going to start with their mission. Always good to have a highfalutin mission. So on their website, SHEIN's mission is to make the beauty of fashion accessible to all, reimagining fashion by leveraging our small batch on-demand production model. This innovative customer-driven model allows for more choice at more affordable prices while minimizing waste by measuring customer preferences. In fact, their vision is, our vision is to offer every customer exactly what they want. So what does this mean in reality? So Shein has been absolutely brilliant in this lean, iterative manufacturing and reacting to trends process, which they have started and they've mastered. So we think of fast fashion, we think of maybe ASOS and Zara that within 3 months or within 6 months or within 12 months, they are bringing out a new line, reacting to certain trends. Shein does this on overdrive. And what I really like about this is we talk a lot in the startup world about being a lean startup. It's a very famous book, The Lean Startup, Eric Ries, about iterating quickly, testing, ditching things that don't work, doubling down on things that do. This is what Shein's done. So they spot trends in the market through social media, through their analysis, and really, really deep understanding of social media trends. It might be a fabric, it might be a cut or a design or something that someone's worn. And then they'll go, hey, we're going to create an initial batch of 100 to 200 items, whatever the number is, very, very small. And it will evaluate the feedback in real time. Who's clicking? Who's converting the click into a purchase? Who sends that product back? And as soon as there's a kind of tick, let's go, this thing is going to go off to the races. Then they go into full manufacturing process and they go into full boost mode, which means almost like a bit like a VC model, which means that they can back the winners and very nicely just shove the losers to the side, having only wasted a very, very little bit of money. It's what they say. They say they're ensuring our supplier partners make what our customers want whilst minimizing overproduction. So better value for money. That's the goal. And it's a bit, I mean, this sounds, this sounds obvious when you say it, but A, super innovative, B, really, really hard to do. They've actually created this whole new system called the Large-Scale Automated Test and Reorder system that effectively feeds in information from social media. Picks out trends, sends, sends commissions to its manufacturer, to its supplier base saying we want 200 of this type of shirt, manufacturers bid to order to create it. The bid is won by a particular manufacturer, they create 1 to 200, it gets put up on Shein, Shein gets the immediate reaction from the audience base. And if it's a tick, then that turns from 1 to 200 into 10 to 20,000. All automated. And here's a stat. In 2021 alone, it created 20 times more new products than both H&M and Zara. Wow. So the reason why it can do this is number 2 in its business model, the vertically integrated supply chain. So it has got, Shein's got a huge supplier base. It operates on a subcontractor model. Where, as I've mentioned before, you send— Shein sends out requests for production to a huge network of small workshops. Just put a little asterisk in the small workshops. This is going to come back potentially later on and bite Shein because a lot of these small workshops are not particularly good places to work. Increasingly, They have centralized some of these logistics centers and they've created a lot of customer service centers and they're starting to move out of being more of a through flow and into a proper business with lots of offices and logistics centers and things like that. Finally, and this is where unfortunately my knowledge starts to wane, social media mastery and viral advertising. Clearly Shein has nailed the way, A, that it interacts with potential customers on the likes of Instagram and TikTok, and also B, the way that it learns from trends, from comments on these different platforms in order to create that feedback loop and create that kind of virality. So it will use major influencers, but it will also focus more on micro-influencers. Have you heard of the, have you heard of the Shein haul? Have you heard of this?

I know that I know of fast fashion hauls that people do.

Yeah. But I don't know the Shein haul one. So 140 million Shein haul posts on TikTok so far. And this is again where you get a load of load of clothes from SHEIN, you take a video of it, and you try them on, and everyone gets very excited. Again, people watch that. And that's, that's, that is a way of advertising the product, right? It's absolutely genius in the way that SHEIN is just all over social media, all over TikTok, creating its own memes, creating its own virality, and kind of self-replicating with that business model. So 3 elements, vertically integrated supply chain, spotting trends, testing and iterating, and then that mastery of social media. That is what's putting Shein out ahead of the more traditional, I say traditional, but the more traditional fast fashion innovators. One thing to note, and this is super interesting, So innovation is context dependent, right? And innovation is technology dependent. So Inditex, the owner of Zara, Zara and H&M, extremely innovative in the context of the internet and in the context of global supply chains. They absolutely mastered fast fashion in that context, but they haven't mastered fast fashion in the context of social media. And Instagram and TikTok. So Shein's come along just at the right time in terms of really doubling down in 2013, '14, '15, '16 to be a social media native company in the way that a lot of other fast fashion companies are trying to be now. It's much harder to change a business model to suit a technology than to come into existence with this massively, massively important technology.

A couple of questions then. I've got, I actually noted 4 quickly while you were explaining some of this. So I'll keep them, I'll keep them brief. One, do you have any information about where the concentration of buyers are, the consumers, by geographic breakdown?

Yeah. So the US is its biggest market. Okay. By quite some way. It actually, this is super interesting because it's a originally a Chinese company that moved its headquarters to Singapore. It doesn't sell into China. So it's US followed by Europe, followed by East Asia, but the US is by far its biggest market. Okay. And what's interesting about that, sorry, very, very quickly, I'm going to add this as a fourth limb to its business model. Again, this is very, very clever. When a US customer orders a product from Shein, it gets shipped directly from China to their door. Therefore, there are no import taxes to be paid because you do not pay import taxes on items worth under $135. If Shein had a fulfillment center in the US and it brought in shipping containers worth of stuff, then they were paying import taxes. 'cause it's multimillion dollars worth of bulk imports. So they've got around the import tax thing by shipping directly from source, directly from China. Super interesting. That might be a loophole that closes, by the way.

Is there not major environmental considerations though, by doing these little small individual packets going from China to everywhere else on planet Earth?

Yeah, I mean, if you want the Shein line, The Shein argument is, hey, we are not— our waste is low, our inventory waste is low single digits, whereas the average retailer's inventory waste is about 20% because we can try and see whether something works. If a line of 100 or 200 garments items don't work, then we'll just cut it off. The flip side, and probably the more prevalent flip side is you've got a centralized manufacturing center in China and your majority, and the majority of your customers are in the US, the sheer transportation cost and the environmental impact on that transportation, I would say far outweighs the low waste nature of the business model. So yes, the environmental impact of Shein is huge.

Two other, my final two then. One is about, you mentioned small workshops. Anthony Cheung: And when you say that, that's like the politically correct way of saying something that's probably not good working practices. So if you get listed in London, when you get listed in somewhere like London, is there any type of regulatory compliance, or does listing in a Western developed exchange bring in further Western investment and therefore Again, you have to meet certain conditions, like it's fine being a Chinese company shipping it out, but now you're becoming an international company with international investors potentially. Does that change?

Yeah, my gosh, there's so much to talk about here. So there's the letter of the law and then there's the reality of investor demand. So the letter of the law says if we have, if you have filed a prospectus and if appropriate legal controls are put in place and things are signed off to the extent that we know that this is a business that is not committing fraud and is not being illegal in its very business model, then you should be able to go through the IPO process. Right now, that is very different from will this IPO be a success? And what the talk of London is at the moment is to use Andrea Felsted's, who's a Bloomberg opinion columnist's phrase, the UK should not be accepting the US's sloppy seconds. So the US has kind of rejected, pushed back on the Shein IPO, to which London is welcoming it with open arms. We'll talk about that later. The massive concern from the investor community is the ESG considerations around Shein. There's a load that we can talk about, but the sustainability from an environmental perspective, the extremely poor working conditions of a lot of its suppliers. There is an issue around their cotton production and whether that's being done by the Uyghur minority in Western China. So there's lots of very concerning ESG elements which are turning off a lot of the anchor investors, the UK anchor investment managers that would be underpinning this IPO. And when we talk about IPOs, when we're teaching, we use Deliveroo as an example of a failed IPO, which is a UK listed IPO. But there was so much concern about the treatment of their workers and the dual class listing share structure and the governance structure. That the ESG-inclined asset managers just didn't touch it. So it's this really weird dynamic going on about the excitement of Shein listing on the London Stock Exchange, and then we're all a bit kind of holding our noses thinking, ooh, is this where we want to be going?

It feels like there's just too much money on the table. 50 billion evaluation. I mean, it's going to be the biggest IPO like ever. So I can imagine Rules will be bent but not broken. But anyhow, my final point is about— you mentioned briefly, and one thing that came to mind was copyright infringement. Now, I guess two sides of this, one being the fact that because they're churning out so many so quickly, and it's so— I mean, obviously, I, you know, naively, we all know the game. It's kind of like, let's get as close to the original piece as we can. As timely as we can without actually— but if you're doing so high volume, and also now that the company is going to be public, so it's so much more visible, and they're almost like a victim of their own success. So you mentioned, like, um, say Zara, who's been a dominant force in that fast fashion space, they can't react so quickly on the social media side. So aren't they more incentivized to go after them for these sorts of things?

It's super interesting. So Donald Tang, who is the Shein executive chair, came out fighting earlier on this week talking about the IPO process. And he said the primary objective of the IPO was not raising cash or giving early investors an exit or creating a currency for acquisitions. Instead, its priority was to prove skeptics that it operated Transparently. So he's kind of almost saying, bring it on. So you are concerned about copyright, you're concerned about working conditions, you're concerned about environmental impact. We are going to go through this IPO process, open up the kimono, and still prove that we are a company to back and the company that should be valued at 50 million pounds on its listing. Now with regards to copyright infringement, I think Shein's always sailed close to the wind and there's probably more of an ask for forgiveness, not permission approach, which might need to be slightly watered down, but it's going to still test the boundaries. It's still going to keep doing what it's doing. Just making sure that it's operating within the framework of basically an increased share price, which is what it's going to start looking out for on a daily basis. I've got a quiz. I've been excited about this quiz because you mentioned before the pod, your knowledge of SHEIN is maybe not, well, maybe what we would expect it to be. Let's say, have you ever bought anything on SHEIN?

No.

Neither have I, but that's not to say that we won't after this podcast. Maybe you'll be convinced to do a, do a, do a Shein haul.

Maybe we could do a haul on the podcast, summer sale haul.

Summer sale haul while cycling, whilst interviewing Piers. Let's just do the whole lot, why not? Um, so question number 1, this is a, this is our question. Do you know the name of Shein's men's fashion label? It's only got one fashion label. I only, I only ask because I like the name, so feel free to say you don't know.

He's in.

Not bad. Manfinity.

Sorry, is this aftershave or is it specifically?

I was thinking back to our episode on Douglas, the aftershave company, thinking Manfinity sounds like something Johnny Depp would advertise. But anyway, so Manfinity is the name of its fashion label. I was checking it out earlier on today. How, and actually what I did was I typed in Qian men's shirt and I wanted to look at the price cost of the first result that came up when I typed in Qian men's shirt. And I think I sent it to you as a photo. It's a lovely short-sleeved, it looks like it's kind of ribbed white shirt, which is the first result that came up. Manfinity Om loose fit medium. How much do you reckon this costs?

I'm going to have a guess because it goes against my Japanese Swedish dressing principles of buy expensive, high-quality items and have very few of them. I'm assuming this is the opposite. So I'm going to say £9.99.

Oh, you get a point for that. £10.19. Oh, there you go. And you would've saved £1.80 as well on that in the summer sale.

So packet of crisps on the side.

So look, I mean, so obviously we all know that Shein's extremely inexpensive. One of the interesting things about its sustainability circular business model, as it claims, is that it's just launched the Shein secondhand marketplace where you can put your secondhand Shein clothes on the marketplace. There's a lot of skepticism because these clothes are not very good quality. Whether it lasts 2 sets of wearings, you know, 2 people's wearings, I'm not entirely sure. So who knows? All right. Question number 3. How many times was the Shein app downloaded in 2023?

I'm trying to recall how many app downloads, and we must have covered this when we were talking TikTok. In general, like global universe of all apps. So they've got to be a large portion of it. So how many global downloads of the Shein app? Uh, 50 million?

238 million. 238 million. It's downloaded more than, than Amazon's app. So it's the most downloaded retail app of 2023.

Is it?

Quite remarkable.

Wow.

It's an amazing— well, look, you know, this is why we're speaking about the company. It is stratospheric in terms of how it's taken advantage of social media and the app generation. All right, last question. Which one am I going to go? So how many pieces does it produce a day? How many new pieces? So, you know, remember those small batch, 100 to 200 pieces runs per day, how many new pieces do you think that it launches and tests on its, on its retail storefront?

On a daily basis?

On a daily basis.

So what subsections of the 100, 200 things? So you could be like, yeah, for example.

Correct. Okay.

So how many per day? 25?

700 to 1,000.

Oh my God.

Every single day, new iterations, new tweaks on designs, new designs, new products, 700 to 1,000 every single day.

So I'm guessing it goes up on the storefront and sometimes it doesn't get filled at all. Like you get the buyer on the platform or the producer say yes, it goes up on the site. And I guess there's what, a number of orders that's got to get hit for it to go to production. So you just throw up anything up there, see what sticks, give it 30 minutes, pull it, next.

Yeah, I think that is now the case. I think previously they would have a production run of physical 100 or 200 and see whether those 100 or 200 got sold. But looking at the website and looking at some of the CGI, the computer-generated images of some of the clothes, you're thinking, are these things real? By just clicking on something that might get made or might not get made. And again, that's part of its efficiency drive, right?

Yeah. All right, come pump me up then. If you're still CGI, give me a bit of my pecs and give me some guns.

I mean, after your cycle next week, maybe we can help you out. Should we discuss some financials?

Yes, because like this $50 billion figure feels a bit abstract without your breakdown.

So again, this is a private company, so we don't know everything and it hasn't yet, as of filming this podcast, it hasn't yet announced or launched its prospectus. So we don't know everything, but in 2022, its revenue was $22.7 billion. And which is comparable to Inditex, the owner of Zara, 44% rise, uh, relative to 2021. 44% year-on-year growth for a non-Nvidia type company is pretty good, right? They're projecting that revenue's going to be up at $58 billion by 2025. In 2023, it made a $2 billion profit on what's called gross merchandise value. So the amount of value that's flowing through the store of $45 billion. Again, to put that into context, the Zara owner Inditex made a profit of $5.8 billion, but it's also valued— its market capitalization is $160 billion. So think about that. So if it's $2 billion of profit in 2023, let's assume that it's $3 billion of profit in 2024 on a kind of forward-looking basis. If it IPOs at $60 billion, maybe 50 billion pounds. That's a 20 times price earnings ratio, which is kind of the same as Zara. So this isn't like your Nvidia 100, 150 times price earnings. This is still non-stratospheric, even though the numbers are very big. It will launch at about a 3 times revenue, which again isn't shocking. Quite frankly. And interestingly enough, in 2021, it raised money from some of the VCs that I mentioned earlier on. It raised $1.5 billion in 2021 at a valuation of $99 billion. In 2023, it actually had a down round and raised $2 billion at $66 billion valuation. So it's kind of rationalized the exuberance of 2021, has kind of calmed down and we're now thinking $60 billion valuation for a company that is growing at 45% every year and has generated $24 billion of revenue doesn't seem so crazy.

So to be clear, it's not that the business in itself has got worse or changed, it's just the valuation, the principles that were being deployed in that boom period were just radically different.

Exactly. I think everyone's sobered up a bit from a VC community and realized that $99 billion was a little bit excessive. $66 billion sounds about right. But the other thing worth noting in terms of its overall fundraising, remember, this is a private company, mainly fundraised through venture capital. It's received $4 billion, $4.1 billion of total fundraising. Now just compare that to the two other mega private companies that we talk about a lot. OpenAI has raised $11.3 billion and SpaceX has raised $10 billion. Understandable because SpaceX, my gosh, you need a lot of CapEx to build the rockets and OpenAI, you need a heck of a lot of brainpower and compute power to build the LLMs. So actually Shein's got to the $60 billion valuation on a much lower funding base. And maybe that, I don't know what the cap table looks like, but maybe that means that the owners have had to give away slightly less of their company in order to get where they are today. Hence why they're very excited about an IPO, because an IPO, despite what Donald Tang says, is a great opportunity for a liquidity event. For early founders to sell some of their shares.

Okay. So have we talked about all of the risks yet? We've talked about a few. Is there more?

Yeah, I think we've spoken about most of them and it's really, really interesting to see whether this IPO kicks off and pops on day one or whether it bombs. And so we've spoken a lot about the conditions in the workshops of the suppliers. We've spoken about environmental issues. We've spoken about the concerns over the Uyghur minority in Jiangxi. But there's a couple of other bigger, maybe more concerning structural elements to the business model. So fast fashion in general, right? As a business, as a unit, as a sector, as an innovation within fashion, So the products that are going to, that are being put out by Shein are by their very nature, poor quality. They use polyester, nylon, other synthetic fabrics that are not disposable, not recyclable, very, very, very environmentally intensive as a fundamental business model. So there are some things that a company can change in order to become ESG compliant. It can do, and it has done full audits of its supplier base. It can make sure that it's whiter than white with regards to wages and things like that. But if your fundamental business model, fast fashion, comes under scrutiny, which it does and is, then that's harder to get out of the very essence of your company. So there are real concerns whether the investment community like, appreciate fast fashion. Interestingly enough, taking a look at some comparable company share prices, Inditex, their share prices has been on a bit of a, has been on a really good charge over the last year or so. If you look at ASOS or Boohoo or any of the UK versions, their share prices have absolutely tanked in part because of fast fashion. Now the other thing The other thing that I would definitely think about when thinking maybe about whether I invest in this company is, will Shein stay in fashion? It's a company that started effectively in 2012 and started becoming big in the West in 2015, 2016. It has taken advantage of the current way that we interact with social media. And it's been excellent at it. Who knows what the next iteration of how we interact with retail channels is going to be? And who knows whether Shein is going to be the one to dominate that future, that future iteration. And there's a great lesson from a company called Wish. I never heard of this company, but I was looking it up earlier on today. A company called Wish. It was a once fast-growing discount marketplace. Which combined bargain hunting with Wheel of Fortune style games. Now the owner, ContextLogic, listed at a valuation of $14 billion about 5 years ago. It was sold earlier this year for $173 million because it just got out of the zeitgeist. It was no longer the thing to spend your time and your money and your attention on. Shein is a little bit more kind of institutionalized or embedded in Gen Z shopping habits, but that's not to say that it still will be in 5 or 10 years' time. So I've got a couple of big business model concerns about a company that has made its name through being in the zeitgeist. Compare that to the likes of Nvidia. As I mean, obviously it's extremely highly valued, But that's a sticky business. Once you get into bed with Nvidia, you probably stay there for 5, 10, 15, 20 years, and they are at the cutting edge of something that's extremely important and will be for the next 5, 10, 15 years. This is a very different business model.

Okay. Then finally, let's talk a little bit about the IPO, because when I saw the news break about their prospectus for the IPO in London, one of the things here was about it being a much-needed win for London. We just, 4, I couldn't believe the stat, 4 firms had floated on the LSE since the opening months of this year. So give me some context here. There's been 4 in London. How many in New York?

Yeah. So in New York, there's been 78 IPOs so far this year, 78 versus 4. Think about that. And we've spoken about it so often and on the podcast, and I don't want to be a downer for the UK, but it really hasn't attracted the capital and the IPOs and the exciting companies that we wanted. And it's had a couple of big losses, right? We spoke about UK-listed firms relisting in the US over the course of '22 and '23. Spoken about Arm. Arm was a UK success story, then it was bought by SoftBank, and then it listed in the US instead of coming back home to the UK. So we've had a lot of misses. And this would be a hit. Now the dampener on the hit is the U— 6 months ago, Shein was filing its initial prospectus in the US. So 6 months ago, they definitely wanted to list in the US, but there were pushback from regulators, pushback from legislators. Saying, look, we are not sure about the links here with China. And Shein have done all they can to say, look, you know, we are not connected with China at all. There is no data transfer. We've spoken a lot about TikTok, quite similar context, but they didn't do enough to convince the US government that this is going to be something that would launch, that would IPO and would be a success. So the backup plan is the UK. Other ideas, Hong Kong, Singapore, not quite as attractive. Singapore's actually, the IPO market's even worse than here in the UK. And I think the goal from a Shein perspective is to IPO in the UK. They really want to do it. They really want to become this transparent, legitimate company and also raise a bunch of money. But that will open itself up to a secondary listing. You can list in more than one place at once, a secondary listing in the US, take advantage of the asset management and investment community over in the US. Now this is, again, although slightly controversial, this would be the biggest IPO by some way ever in the UK. I think it was Glencore that was the next biggest at about £35 billion market capitalization. And we're rolling out the red carpet, right? So, Jeremy Hunt's been speaking to executives, our UK Chancellor of the Exchequer, saying, look, come over here. This is a great place to IPO. I think there's a view that if it does IPO just before the election, that might be a bit of a filip to the Tories. I don't think it will do enough to save them. But so there's, look, money talks. Yes, there are significant concerns over ESG. But if this is an IPO that launches in the UK and is to some extent a success, maybe this is just what the London Stock Exchange needs. Yeah.

Just educate me in terms of the ESG component. If I'm an asset manager, how, I mean, is it the ESG component? Does that just come in ESG baskets or does it come in in a more umbrella fashion for all of the portfolio investments?

Different for different companies, different for different asset managers. Sorry. So some asset managers will have a central ESG team. In fact, all asset managers will, all major asset managers will have central ESG teams that are providing data research advice guidance to individual portfolio managers and individual funds. But usually that is advice and guidance as opposed to you cannot invest in this and you can invest in that. So within, let's say, an Aberdeen in the UK, within an Aberdeen, you will have the ESG team that's basically saying, look, portfolio managers, we don't really like this from an ESG perspective. I would steer clear, but you don't have to. And then there are specific ESG funds whose very mandate is to invest in X, Y, and Z company and not invest in certain industries and certain companies that don't score very well from an ESG ratings perspective. And I would suggest that Shein would not make any ESG fund list. I don't think that an ESG fund would invest in Shein, but would a normal portfolio manager or a normal fund manager look at Shein despite some ESG concerns? Probably. So we'll see.

Okay. What I'll do is I'm going to put a poll on this episode. The poll option is only on Spotify. So if you're listening there, then it will be, where will Shein's share price be in 3 months after its first day listed? What do you reckon? Higher or lower?

Lower.

Okay. Well, look, Steven has spoken. You don't have to agree.

Everyone on the poll. Not to influence everyone on the poll, but I think lower.

Okay. Well, yeah, put, put a vote and let us know why you think higher or lower. We'd love to know. All right, Stephen, really fascinating stuff as always. Thank you very much. And yeah, have a great week ahead.

Thank you, Ant.