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A new Intuit survey says 68% of SMBs use an average of four apps to run their businesses — here's how they're choosing payment providers

13 hours 14 min ago

In an increasingly digitized world, brick-and-mortar retailers are facing immense pressure to understand and accommodate their customers’ changing needs, including at the point of sale (POS). 

More than two years after the EMV liability shift in October 2015, most large merchants globally have upgraded their payment systems. And beyond upgrading to meet new standards, many major retailers are adopting full-feature, “smart” devices — and supplementing them with valuable tools and services — to help them better engage customers and build loyalty.

But POS solutions aren’t “one size fits all.” Small- and medium-sized businesses (SMBs) don't usually have the same capabilities as larger merchants, which often have the resources and funds to adopt robust solutions or develop them in-house. That's where app marketplaces come in: POS app marketplaces are platforms, typically deployed by POS providers, where developers can host third-party business apps that offer back-office services, like accounting and inventory, and customer-retention tools, like loyalty programs and coupons.

SMBs' growing needs present a huge opportunity for POS terminal providers, software providers, and resellers. The US counts roughly 8 million SMBs, or 99.7% of all businesses. Until now, constraints such as time and budget have made it difficult for SMBs to implement value-added services that meet their unique needs. But app marketplaces enable providers to cater to SMBs with specialized solutions. 

App marketplaces also alleviate some of the issues associated with the overcrowded payments space. Relatively new players that have effectively leveraged the rise of the digital economy, like mPOS firm Square, are increasingly encroaching on the payments industry, putting pricing pressure on payment hardware and service giants. This has diminished client loyalty as merchants seek out the most affordable solution, and it's resulted in lost revenue for providers. However, app marketplaces can be used as tools not only to build client loyalty, but also as a revenue booster — Verifone, for instance, charges developers 30% of net revenue for each installed app and a distribution fee for each free app.

In this report, Business Insider Intelligence looks at the drivers of POS app marketplaces and the legacy and challenger firms that are supplying them. The report also highlights the strategies these providers are employing, and the ways that they can capitalize on the emergence of this new market. Finally, it looks to the future of POS app marketplaces, and how they may evolve moving forward.

Here are some of the key takeaways from the report:

  • SMBs are a massive force in the US, which makes understanding their needs a necessity for POS terminal providers, software providers, and resellers — the US counts roughly 8 million SMBs, or 99.7% of all businesses.
  • The entrance of new challengers into the payment space has put pricing pressure on the entire industry, forcing all of the players in the industry to find new solutions to keep customers loyal while also gaining a new revenue source.
  • Major firms in the industry, like Verifone and Ingenico, have turned to value-added services, specifically app marketplaces, to not only build loyalty but also giving them a new revenue source — Verifone charges developers 30% of net revenue for each installed app and a distribution fee for each free app.
  • According to a recent survey by Intuit, 68% of SMBs stated that they use an average of four apps to run their businesses. As developers flock to the space to grab a piece of the pie, it's likely that increased competition will lead to robust, revenue-generating marketplaces.
  • And there are plenty of opportunities to build out app marketplace capabilities, such as in-person training, to further engage with users — 66% of app users would hire someone to train and educate them on which apps are right for their businesses. 

In full, the report:

  • Identifies the factors that have changed how SMBs are choosing payment providers.  
  • Discusses why firms in the payments industry have started to introduce app marketplaces over the last four years.
  • Analyzes some of the most popular app marketplaces in the industry and identifies the strengths of each.
  • Breaks down the concerns merchants have relating to app marketplaces, and discusses how providers can solve these issues.
  • Explores what app marketplace providers will have to do going forward in order to avoid being outperformed in an industry that's becoming increasingly saturated. 
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A fintech that lets investors own pieces of a high-priced art collection just shook up its business model, and it could be a game-changer for the digital token industry

Wed, 01/16/2019 - 11:59pm

  • Technology platform Swarm announced a new pricing model that requires no-upfront fees for groups looking to issue security tokens, digital securities backed by real-world assets.
  • It may be a game changer for young companies looking to raise money via the model, which until now has fees as high as $200,000. 

Everyone wants to invest in private equity, that is, without the high expense. 

There's a new way to do just that, and it's now even more affordable. 

Swarm, a technology platform that creates digital tokens for real-world assets, announced a new pricing model that requires no up-front fees from groups looking to issue security tokens.

Security token offerings (STOs) offer partial ownership of assets such as buildings, businesses or hedge funds. Not to be confused with initial coin offerings, which rose in popularity in 2017 before drawing a wave of subpoenas from regulators in 2018, STOs have garnered increased attention over the past year as an alternative investment method. The digital securities have stricter regulatory oversight and are tied to actual assets.

STOs serve multiple purposes. They offer a way to create a liquid market for assets traditionally difficult to trade, such as real estate. They can also serve as an alternative funding avenue for a startup rather than traditional methods like venture capital. And they offer the ability for small investors to gain access to traditionally exclusive investments like private equity or hedge funds. 

Despite STOs increased popularity, Swarm chief operating officer Chris Eberle told Business Insider the fees associated with initially tokenizing assets could be as high as $200,000, he said. This has curbed the number of companies that may look to raise money via this model. 

“The models that these various players, ourselves included, were looking at put up a bunch of barriers to people actually getting involved,” Eberle said. "Either in terms of cost, efficiency and scalability, or both."

Swarm has been weighing different pricing plans since launching the platform in January 2018. Eberle said the company chose to not charge the initial funds it set up in order to move fast and learn as it built. 

Last year roughly 20 security tokens were issued in the industry globally, according to Eberle. That's a minuscule amount compared to the ICO market, which launched 1,075 coins in 2018, according to ICO listing portal CoinSchedule.  

Swarm specializes in tokenizing assets into digital securities. Other players in the space include Polymath, Securitize and Harbor, which is backed by investor Andreessen Horowitz and launched a token for a luxury student-housing complex near the University of South Carolina late last year.

Under Swarm’s no-fee model, STOs aren’t required to provide any money upfront. Instead, the issuer of the STO sets a funding goal that needs to be reached before issuance begins. Once that's achieved, the issuer takes a stake of between .5%-1% of what it raised in Swarm’s own utility token, SWM, with a minimum amount of $10,000 and a maximum of $250,000. By taking a stake in Swarm's token, Eberle said issuers are essentially investing in the technology and ecosystem backing their digital security.

The issuers’ SWM tokens are secured and held for the lifespan of its digital security, after which the entire stake is returned to the issuer. The stake of SWM also generates money for the issuer every month that can be collected. 

Eberle compared the process to putting money in a savings account while still being able to withdraw the interest the deposit generates.

As for Swarm, the infrastructure provider will make money off the trading fees created from trading the security tokens in the secondary market. Swarm is currently partnered with OpenFinance, a US-regulated trading platform for digital assets.

"Pushing the value transfer into the transfer/transaction of digital securities pushes us to access and liquidity for everyone faster, and sets the stage for everyone in the ecosystem to be incentivized to deliver value," Eberle said.

Swarm has already tested the new model, completing one successful issuance. TheArtToken, a digital security backed by a portfolio of art, surpassed its minimum funding goal of $16 million.

Eberle said 12 other issuers are planning to launch or relaunch a security token under the new model for a variety of assets, including shares of a soccer club, a massively multiplayer online role-playing game and a distressed real estate fund.

To be sure, the market for security tokens is in the early stages, and there's no guarantee of their success. Trading venues are still being established as they go through the necessary regulatory requirements in order to allow the trading of securities on their platform. 

But Eberle is optimistic of the potential of the market, and the impact a no-fee issuance can have to push the industry forward.

“We think there is a ton of value in legitimate assets being brought to market,” Eberle said. “It doesn't make the entire process free. There are still barriers. The largest ones are legal. We just dramatically reduce the friction from bringing these things to market.”

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Latest fintech industry trends, technologies and research from our ecosystem report

Wed, 01/16/2019 - 10:06pm

This is a preview of a research report from Business Insider Intelligence,  Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

In recent years, we've seen a ballooning of activity in fintech — an expansive term applied to technology-driven disruptions in financial services. And 2018 has been no different, with fintechs' staggering influence on the market evidenced by record funding levels for the industry — by Q3 2018, overall funding was already up 82% from 2017’s total figure, according to CB Insights.

Additionally, this year marked a watershed moment for the industry, with the once clear distinction between fintechs and financial services proper now blurred significantly. Virtually every incumbent financial institution (FI) is now looking inward and engaging in an innovation drive, spurred on by competition from fintechs. As such, incumbents are now actively investing in, acquiring, and collaborating with their fintech rivals.

In this report, Business Insider Intelligence details recent developments in fintech funding and regulation that are defining the environment these startups operate in. We also examine the business model changes being employed among different categories of fintechs as they strive to embed themselves further in mainstream finance and prove sustainability. Finally, we consider which elements of the fintech industry are rapidly rubbing off on incumbent financial services providers, and what the future of fintech will look like.

The companies mentioned in this report are: Funding Circle, GreenSky, Transferwise, Ant Financial, Nubank, Cellulant, Oscar Health, Stripe, One97, UiPath, LianLian Pay,, Gusto, Toast, PingPong, Flywire, Deposit Solutions, Root, Robinhood, Atom, N26, Revolut, OneConnect, PolicyBazaar, WeCash, Zurich, OneDegree, Dinghy, Vouch Insurance, Laka, Cleo, Ernit, Monzo, Moneybox, Bud, Tandem, Starling, Varo Money, Square, ING, Chase, AmEx, Amazon, Monese, Betterment, Tiller Investments, West Hill Capital, Square, Ameritrade, JPMorgan, eToro, Lendy, OnDeck, Ripple, Quorom, Chain, Coinbase, Fidelity, Samsung Pay, Google Pay, Apple Pay, Bank of America, TransferGo, Klarna, Western Union, Veriff, Royal Bank of Scotland, Royal Bank of Canada, Facebook, ThreatMetrix, Relx, Entersekt, BNP Paribas, Deutsche Bank, Gemalto, Lloyd's of London, Kingdom Trust, Aviva, Symbility LINK, eTrade, Allianz, AXA, Broadridge, TD Bank, First Republic Bank, BBVA Compass, Capital One, Silicon Valley Bank, Credit Suisse, Ally, Goldman Sachs.

Here are some of the key takeaways from the report:

  • Fintech funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.
  • Some new regions, including South America and Africa, are emerging on the fintech scene.
  • We've seen considerable scaling in older corners of the fintech ecosystem, including among neobanks and alt lenders.
  • Some fintechs, including a number of insurtechs, have dipped into new markets to escape heightened competition.
  • Emergent areas like blockchain and distributed ledger technology (DLT), as well as digital identity, are gaining traction.
  • Many incumbents are undertaking business transformations that aim to reimagine everything from products and services to front-end systems and back-end processes.

 In full, the report:

  • Details the funding and regulatory landscape in the US, Europe, and Asia.
  • Gives an overview into a number of fintech segments and how they've changed over the past year.
  • Discusses how incumbents are reacting to fintechs in order to stay relevant in the changing financial services sector.
  • Evaluates what the future of fintech will look like and what trends to look out for in the coming year.
Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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SEE ALSO: How the largest US financial institutions rank on offering the mobile banking features customers value most

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Texas man allegedly paid for deep-tissue massages and nightclub dances using campaign donations meant for Trump, Clinton, and Bernie Sanders

Wed, 01/16/2019 - 9:05pm

  • Kyle Prall, from Austin, Texas, has been indicted for allegedly spending campaign contributions reportedly meant to support then-presidential candidates Donald Trump, Hillary Clinton, and Sen. Bernie Sanders on things like massages and nightclub "entertainers."
  • In 2015, Prall began soliciting contributions through political committees with names like "Feel Bern," "Trump Victory," and "HC4President."
  • The political committees claimed the funds would be spent in ways to support the candidates — including transporting voters to the polls, training costs for volunteers, and direct contributions to the candidates themselves.
  • Prall allegedly used the funds on personal indulgences from hotel room service to international flights.

A Texas man who allegedly devised a scheme to collect over $500,000 in campaign contributions for then-presidential candidates Donald Trump, Hillary Clinton, and Sen. Bernie Sanders funneled the funds to his personal bank accounts according to court filings released by the US District Court of Western Texas on Tuesday.

In 2015, Kyle Prall allegedly began soliciting contributions through political committees with names like "Feel Bern," "Trump Victory," and "HC4President." The political committees claimed that the funds would be spent in ways that supported the candidates — including costs to transport voters to the polls, training costs for volunteers at phone banks, and direct contributions to the candidates themselves.

Prall allegedly used the funds to pay for his salary and used debit cards registered by the political committees' bank accounts to pay for numerous personal expenses, including:

  • $1,167: Two-night stay at a hotel in Miami Beach, Florida
  • $3,101: Food, bottle service, and hookah at a Miami nightclub
  • $1,470: Nightclub dances "performed by entertainers"
  • $1,073: Three-night stay at Texas resort
  • $728: Room service, mini-bar charges, deep-tissue massage, and pet cleaning fees at the Texas resort
  • $952: Flights in Florida for Prall and his girlfriend
  • $812: Flight to Belize in Central America

Through online advertisements on social-networking websites and search engines, Prall intentionally made an effort to "make them appear legitimate" in order to deceive donors, the Justice Department said.

The websites, such as "" and "" now appear to be defunct.

"We are volunteers helping [Bernie Sanders] win the US Presidential election and usher in a new government for the people by helping raise awareness with voters," Prall's website said.

"The donations will be used primarily to charter buses for transportation to voting polls ... This money will go directly to chartering buses and paying for fuel to transport voters ...," the website pledged.

Over $300,000 was raised in the alleged campaign for Sanders between December 2015 and July 2016. Less than $4,000 went toward "political causes," none of which were used for transportation costs, according to the Justice Department.

The political committee that purportedly supported Clinton raised over $73,000, less than $1,100 of which went toward its stated causes.

"Trump Victory," which was later renamed to "Make America Great," raised over $165,000. The committee claimed it would channel the contributions "directly" to Trump and supportive organizations, but made no such donations.

Prall never intended for the funds to support the candidates, and instead, funneled it through sham limited-liability companies for "purely personal" expenses, according to the Justice Department. At the end of the election, most of the bank accounts were then closed.

Political committees are regulated by the Federal Election Commission, whose duties include overseeing campaign donations and expenditures that are over $200. Around 38 campaign finance analysts each review anywhere between 200-400 committees each year.

SEE ALSO: This graph shows 90% of political donations from Google workers went to the Democrats

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The CEO behind 'Pokémon Go' says the company is cash-flow positive as it becomes worth almost $4 billion

Wed, 01/16/2019 - 7:32pm

  • Niantic, the developer of "Pokémon Go" and the forthcoming "Harry Potter: Wizards Unite," announced that it's raised $245 million in a deal valuing it at "almost $4 billion."
  • CEO John Hanke tells us that Niantic is cash-flow positive, but the money helps it bunker down for a possible venture capital crunch as it starts the years-long road towards a possible IPO.
  • The funding round brings in Samsung and Axiomatic Games as strategic investors — two companies that Hanke says are very important for helping Niantic realize its dream of bringing tech closer into the real world.
  • Meanwhile, Niantic is also investing in the Real World Platform, which will see it license big pieces of its tech to other developers. Hanke says that Niantic can be both a gaming studio and a developer tools company. 
  • "Pokémon Go," still Niantic's flagship game, has generated more than $2 billion in revenue since launch, says Hanke, and will see a further investment in real-world events for players.


Niantic, the developer of "Pokémon Go" and the forthcoming "Harry Potter: Wizards Unite," says that it's now valued at "almost $4 billion," following a $245 million funding round led by IVP, with participation from strategic investors Samsung and Axiomatic Gaming.

John Hanke, the CEO of Niantic, tells Business Insider that the company didn't need the money, strictly speaking: "Pokémon Go," revitalized by a plethora of fan-requested features, has brought in over $2 billion of revenues since its 2016 launch, says Hanke. Furthermore, he says, Niantic is cash-flow positive, and still has lots of cash in the bank from previous investment rounds. 

Still, Hanke says, the time was right, as he foresees a crunch coming, where it'll be harder for companies like Niantic to raise investment capital amid a possible economic downturn. He's not necessarily against Niantic getting acquired, he says, and indeed, Niantic itself spun out of Google. Still, it's hard to guess how much control a would-be buyer would exert, and staying independent is the best way to ensure that Niantic gets to do what it wants to do. 

So while Niantic doesn't plan to IPO for "many more years," the cash helps make sure the company can weather any storms between now and then as an independent company.

“The best way to invent the future is to be around to build it," Hanke said.

Why these investors?

Beyond the money, Hanke says that those strategic investors were a big reason why Niantic chose to go after new funding, serving to "cement relationships that were already in place." Now that these companies have a financial stake in Niantic, the lines of communication are much more open, and the company can benefit from their expertise.

Samsung, Hanke notes, is an expert at Android phones, and has made big investments in augmented reality — the technology for overlaying digital imagery over the real world, largely introduced to the mainstream by "Pokémon Go" itself. Otherwise, Hanke says that he sees promise in using Samsung's investments in smart sensors to bring augmented reality closer to the real world, as physical objects can have presences in the real world. 

Axiomatic, for its part, is an entertainment and sports management firm with a controlling stake in Team Liquid, a well-known esports organization, as well as an investment in "Fortnite" maker Epic Games. Co-chaired by Peter Guber, Bruce Karsh, Ted Leonsis, and Jeff Vinik — all of whom own one or more professional, major league sports teams — Hanke believes Axiomatic can bring a lot of expertise about how to engage fans and throw live events. 

Combined, Hanke says, these partners can help Niantic come up with ways to make real-world gaming events "much more fun." He notes that Niantic has been encouraged by the success of Community Day, a series of events thrown by the company to encourage "Pokémon Go" players to hit the streets en masse, and that the company is prioritizing figuring out ways to do more big events, indoors and outdoors — which dovetails with the company's goal of using tech to get people on their feet and exploring the world around them. 

Read more: The CEO behind 'Pokémon Go' explains why it's become such a phenomenon

“We will attempt to expand and continue to invest in events," Hanke says.

Here comes Harry Potter

The next big game launch for Niantic is "Harry Potter: Wizards Unite," developed in conjunction with Portkey Games, a subsidiary of Warner Bros. Interactive Entertainment. All we know is that it's expected to launch this year, and Hanke was tight-lipped about sharing any details. 

He says that there's a simple reason why the stewards of "Pokémon" and "Harry Potter," two of the most valuable franchises on the planet, have chosen to go with Niantic: Nobody else puts the same level of polish or care into a smartphone game, let alone one that involves exploring the real world, and the extra effort pays off in fan engagement, he says. 

When the likes of The Pokémon Company or Warner Bros. come to Niantic, they're saying "let’s do it big, let’s do it right, let’s invest in it," says Hanke. “There’s no comparable companies."

Otherwise, Hanke hints that Niantic has more games coming, even as it invests further in its existing lineup, including "Pokémon Go" and "Ingress Prime."

The cloud connection

The other facet of Niantic's business is the Real World Platform, which the company teased in the middle of last year. 

Essentially, the Real World Platform will enable software developers to take advantage of the technology Niantic created for its own games. Developers will be able to use Niantic's augmented reality tech, as well as the company's secret sauce for multiplayer gaming and for connecting gameplay to real-world locations. 

"You put so much tech into those games, it makes sense to leverage it," says Hanke. 

However, Hanke also sees it as having a variety of other uses, which nobody has yet foreseen. That could be in business software, or consumer software, or even robotics — but not necessarily in gaming, entirely. The company has announced a $1 million contest for early developers on the Real World Platform.

He says that while the Real World Platform is a major focus for Niantic going forward, he thinks that it can be both a gaming studio and a developer tools company.

"We really want to be both," says Hanke. 

As he points out, Epic Games is both the developer of mega-phenomenon "Fortnite," and the proprietor of the popular Unreal Engine software for game developers. 

Pokémon, go on

For Hanke, 2018 was a pivotal year for "Pokémon Go," which he says has finally become the game Niantic envisioned all along.

In the last year, Niantic has introduced long-awaited features to "Pokémon Go," including Pokémon battling and trading with friends. In November, too, Nintendo launched "Pokémon: Let's Go" for the Nintendo Switch, which offers an integration with "Pokémon Go."

All of this has led to Pokémon Go seeing a resurgence in popularity. But it took a great deal of effort within the company.

Niantic spent the months after its rocky 2016 launch "on our heels," trying to patch the game up on the fly.

He says that 2017 was characterized by taking a step back, making new hires, and building a plan. But 2018 was when the team achieved a "regular pace of updates," which he says will carry into 2019. Player engagement, for instance, was way up in 2018 from 2017. And that's giving Hanke optimism for the new year.

As it continues this goodwill tour with fans, Hanke says that Niantic keeps up with the "Pokémon Go" community via Reddit. While Hanke says that Niantic tries not to let fan feedback drive its overall product strategy, he says that it's very useful in fine-tuning an idea once it's out. When Pokémon trading and battling came out, Hanke says, fans highlighted all kinds of little problems that Niantic had missed in-house, guiding it to solutions.

Finally, Hanke says that Nintendo and the Pokémon Company — the Nintendo joint venture that owns the trademark — have been very pleased with both "Pokémon Go" and "Pokémon: Let's Go," and are looking for more "synergies" between the game and the core franchise. That's good news for Niantic, too, Hanke says. 

"We've benefitted in a lot of ways," says Hanke.

SEE ALSO: Apple is about to have a big year — here's what to expect it to launch in 2019

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Airbus CEO reveals why the company would be protected during an economic downturn

Wed, 01/16/2019 - 6:59pm

  • Airbus CEO Tom Enders told reporters that the company's large order backlog will serve as a buffer against many of the ill effects of an economic downturn.
  • According to Enders, the company's 7,577-plane backlog will give Airbus the flexibility to move around production slots so deliveries aren't negatively affected.
  • The Airbus CEO was in Mobile, Alabama to celebrate the groundbreaking of the company's new Airbus A220 assembly plant. 

MOBILE, ALABAMA —With the potential of an economic slowdown on the rise, businesses around the world have been in preparation for such an event. 

Airbus CEO Tom Enders told reporters at the company's assembly plant in Mobile, Alabama on Wednesday that the success of past Airbus sales campaigns functions as a sort of a barrier against the ill effects of an economic downturn. 

"Obviously we follow very closely what's happening politically and economically around the world. We are a global business," Enders said at a press briefing. "But different from any other businesses, we have a huge order backlog in most of our products and that serves as a buffer in terms of regional and national downturns."

According to Enders, Airbus has experienced so many past years where the company's order intake far exceeded the number of aircraft it could build. As result, the long-time executive says that people shouldn't "sound the alarm" if Airbus has a year or two when they sell fewer planes than they build. 

At the end of 2018, Airbus Commerical Aircraft had a global backlog 7,577 planes which will require more than half a decade to work through. Of the backlog, 925 planes are from US customers. 

Instead, Enders says the focus should be on the company's ability to deliver aircraft. After all, it's when the airplane maker actually gets paid. 

Even though an airline's ability to pay may be hindered by an economic slowdown, Airbus has enough financially stable clients that deliveries shouldn't be greatly affected. 

"If you look at the Airbus A320, for instance, we have so much overbooking already on the delivery slots," Enders told Business Insider. "During the last big downturn in 2008-2009, we had to shift a lot of delivery slots and postpone into the future for weaker airlines, on the other hand, we had a lot of airlines who were eager to get those earlier slots.

Read more: The amazing story of how the Airbus A320 became the Boeing 737's greatest rival.

"Today we are in a situation where if someone orders (a narrow body) Airbus Aircraft they have to wait in a queue for five years and that's not what people like," he added.

As a result, during an economic downturn, financially strong carriers with an immediate for airplanes will be able to get them in a more timely fashion while those who are less stable can delay delivery. 

However, Enders went on to clarify that this buffer doesn't exist for all sectors of its commercial aircraft business. The A380 superjumbo program, for example, does not have an overbooking issue. 

Enders was in Mobile for the groundbreaking of the new Airbus A220 production line. It will be located next door to the company's existing Airbus A320-family assembly plant. 

Wednesday will likely Ender s's last big event in Mobile as Airbus CEO. The company announced last October that he will step down from the top job in October 2019 with current Airbus Commercial Aircraft president Guillaume Faury taking over as the new chief executive. 

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Apple is putting the brakes on hiring for certain groups because of slowing iPhone sales (AAPL)

Wed, 01/16/2019 - 6:15pm

  • Apple plans to reduce hiring in certain groups, according to a Bloomberg report.
  • CEO Tim Cook informed employees about the hiring changes during an internal meeting earlier this month, but said it was not decided which groups would be affected.
  • Cook stressed that Apple was not implementing a broad-based hiring freeze, and noted that some groups, like its artificial intelligence team, would not be affected. 

Apple will cut back on hiring for certain divisions as the company re-adjusts its plans in the face of slowing iPhone sales, according to a Bloomberg report on Wednesday.

CEO Tim Cook told employees during a meeting earlier this month that Apple would reduce hiring for certain unspecified groups, but said the company would not impose a hiring freeze, Bloomberg reported citing anonymous sources. 

Cook said he still had not fully decided which groups within Apple would be affected. 

The comments were reportedly made at an all-hands meeting the day after Apple's surprise disclosure that sales in its holiday quarter fell billions of dollars short of its expectations. Apple blamed the slowing Chinese economy and weaker-than-expected smartphone demand for the shortfall in iPhone sales.

During the all-hands meeting Cook said singled out Apple's artificial intelligence group as one area that would not be affected by the hiring slowdown. And he said that plans to open offices in Austin and Los Angeles would also not change, Bloomberg reported.

Apple had 132,000 full-time employees as of September 29. That number includes employees at Apple's Cupertino Calif. headquarters and its various offices, as well as the staffers that work at Apple's network of retail stores around the world.

Apple did not immediately return a request for comment.

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Southwest just announced an unheard-of deal for its credit cards — you'll get the coveted Companion Pass simply by opening one

Wed, 01/16/2019 - 6:06pm

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  • When you open a new personal Southwest credit card, you can earn the best-ever sign-up bonus offered for the cards: 30,000 points and an unlimited Companion Pass, which is valid for travel through 2019.
  • The Companion Pass lets you book a free ticket for a companion whenever you travel — all you'll have to pay is taxes and fees (which are typically as low as $5.60 each way).
  • The offer applies to all three of Southwest's personal cards, but it ends in a few short weeks on February 11.
  • Our pick for the best Southwest card to open is the Southwest Rapid Rewards Priority Credit Card; however, read on to see which is best for you. 

Southwest and Chase announced Thursday that, for a limited time, people who apply for any of their co-branded credit cards will be able to earn Southwest's coveted Companion Pass as a sign-up bonus.

The new sign-up bonus is effectively the best deal ever offered on any of Southwest's credit cards. In addition to the Companion Pass, which will be valid through 2019, new cardholders can also earn 30,000 Southwest Rapid Rewards points. 

To earn the sign-up bonus, new cardholders must spend $4,000 on the card within the first three months of opening it. The bonus is available only until February 11.

The surprise promotion — coming just one day after a previous limited-time offer ended — represents what can arguably be described as the best-ever sign-up bonus offered by Southwest and Chase.

The Southwest Companion pass is often seen as the "holy grail" of travel for points-and-miles aficionados and self-described "travel hackers." When you earn the Companion Pass, you can select a designated friend or family member to travel with you for free, as long as the pass is valid.

Normally to earn the Companion Pass, one has to earn 110,000 qualifying points with Southwest within a calendar year. The pass will then be valid for the remainder of that calendar year, as well as the entirety of the following one.

Typically, you may be able to earn some of those qualifying points by opening a credit card and earning the normal sign-up bonus, but as Chase has added restrictions on who is eligible — for instance, you can't just open two consumer cards at once, earn the bonuses, and use those points to qualify — it's become harder to earn unless you're a very frequent business traveler.

The ability to earn the Companion Pass purely as a sign-up bonus makes it significantly easier to acquire. Should new applicants hit the minimum spend requirement quickly, signing up for one credit card can equal 11 months of buy-one-get-one flights. Coupled with competitive fares on Southwest, the pass can be used for everything from longer vacations to easy, affordable weekends away. While taxes and fees are still charged on Companion tickets, these start at $5.60 for domestic flights, and rarely exceed $20 to $25.

In order to receive the bonus, you can't currently hold a personal Southwest credit card, and you can't have earned a sign-up bonus from a Southwest card in the past 24 months. If you currently hold a card, but earned the bonus from it longer than 24 months ago (or never earned the bonus), you may be able to close that, wait a week or so, and apply for a new card.

Southwest and Chase offer three personal credit cards. The Southwest Priority Card is the best option for most people because, even though it has the highest annual fee of the three cards at $149, it offers annual credits and anniversary bonus points that are together worth at least $150, meaning the card pays for itself.

However, if you're dead set against an annual fee in the three-digit range, the other cards are compelling options — especially with the Companion Pass as a sign-up bonus.

Read on to learn more about the three personal Southwest cards.

Keep in mind that we're focusing on the rewards and perks that make these cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

Southwest Rapid Rewards Plus credit card

The Rapid Rewards Plus is the base level of the three Southwest cards. However, just because it's a bit less featured than its bigger siblings doesn't mean it's a bad option.

The card earns 2 times points per dollar spent on Southwest purchases, and one point per dollar on everything else. You'll also get 3,000 bonus points each year on your card-membership anniversary.

That's essentially the gist of this card — there's not too much to it. There are, however, a couple of things worth noting.

It has a $69 annual fee that isn't waived the first year. Of course, the sign-up bonus — the Companion Pass for 2019 and 30,000 points — goes a long way toward making up for that, while the anniversary points help each year after.

All in all, while the Plus card has the lowest annual fee, it doesn't offer a ton of value after the first year. If you want to earn Southwest points on your credit card, but absolutely want to pay the lowest possible annual fee, then this card is probably the best option. However, if you're ok with paying a higher annual fee, knowing that you'll get more value from the card than you'll pay for that fee, you're better off considering one of the other two.

Click here to learn more about the Southwest Plus card from Insider Picks' partner: The Points Guy.

Southwest Rapid Rewards Premier credit card

The Premier card is similar to the Plus, with a few enhancements.

The sign-up bonus is the same, but it offers 6,000 anniversary points each year instead of 3,000.

It also offers the ability to earn tier-qualifying points, which count toward the elite "A-list" status. You'll earn 1,500 tier points each time you spend $10,000 within a calendar year, up to $100,000 (or 15,000 tier points) per year.

Otherwise, the biggest appeal of the Premier over the Plus is that it doesn't have foreign-transaction fees — if you use your Plus abroad, you'll be charged an extra 3% on every purchase.

The Premier's annual fee is $99, compared with the $69 fee on the Plus, but the extra anniversary points should generally cover that increase.

Click here to learn more about the Southwest Premier card from Insider Picks' partner: The Points Guy.

Southwest Rapid Rewards Priority credit card

Generally, though, the Priority is the best option if you're a Southwest flyer.

That's because, even though it has the highest fee at $149, it offers at least $150 in value each year, effectively cancelling out the fee.

The Priority offers 7,500 bonus anniversary points each year, as well as an annual $75 Southwest travel credit, which can be applied to purchases like flights. Assuming that Southwest points are worth $0.01 each — although you can usually get more value than that — that means that you're getting $150 of value each year just from these two benefits, which cancels out the annual fee.

The card also has a few other benefits, including up to four Upgraded Boarding certificates each year, meaning you can board earlier and choose your seat. You'll also get 20% back on in-flight purchases, and the same ability to earn tier-qualifying points as the Premier card.

Ultimately, as long as you're willing to front the money for the annual fee, the Priority card pays for itself.

However, if you're absolutely set against the higher fee, the Plus and the Priority can be good options as well.

Click here to learn more about the Southwest Priority card from Insider Picks' partner: The Points Guy.

SEE ALSO: The best credit card rewards, bonuses, and perks of 2019

Join the conversation about this story »

NOW WATCH: 6 airline industry secrets that will help you fly like a pro this holiday season

The government shutdown is in day 26 and has set the record for the longest shutdown in history

Wed, 01/16/2019 - 5:46pm

  • The government shutdown is now in its 26th day, well surpassing the record for the longest of the modern era.
  • This is the 21st time the federal government has had a funding lapse since the modern budgeting process began.
  • Most of those times, the shutdown has been short and not involved employees being sent home, but that has changed in recent years.

President Donald Trump and Democratic leaders have yet to come to an agreement to reopen the government, pushing the government into a historic 26th day.

No shutdown ever lasted past the 21st day, with the 1995-1996 as the previous standard bearer. But the current, drawn out shutdown fight has eclipsed the record and shows no signs of ending.

The trouble started just before Christmas when Trump's sudden reversal on a bipartisan funding extension forced a sizeable portion — but not all — of the government into a partial shutdown.

Read more: Here's what the government shutdown means for federal agencies and employees»

This is 21st time since the modern budget process began with the Budget Act of 1974 that the federal government has entered a shutdown or had a funding lapse.

On average, the 20 previous shutdowns lasted eight days, though they have been longer in recent decades. The six shutdowns since 1990 have lasted nine days on average. And removing the short, nine-hour funding lapse caused by Sen. Rand Paul in February, recent shutdowns have averaged 11 days.

Most of these shutdowns weren't severe, with 11 of the 20 lasting five days or fewer, and seven lasting three days or fewer.

By making it passed the 25th day on Tuesday, Trump also surpassed Ronald Reagan and Bill Clinton for second-most days with a funding lapse during one presidency. Trump gets 26 for the current shutdown, three for the January 2018 shutdown, and — despite the short nature — one for the February 2018 lapse, bringing the total to 29 days during which the government did not have funding. Reagan and Clinton were tied for second with 28.

Read more: The effects of the shutdown are only going to get exponentially worse as the fight drags on»

The current shutdown also bears some major differences from the past because federal employees aren't working. Around 380,000 federal employees are now on furlough, meaning they do not report to work or get paid. In 11 of the previous shutdowns, employees were not placed on furlough.

Sending employees home has become more frequent in recent shutdowns, with furloughs occurring during five of the last six funding lapses (the only exception being the short Rand Paul lapse).

Another newer wrinkle is the fact that this is just the second shutdown during which employees were placed on furlough while one party controlled both chambers of Congress and the White House, which was the case for the beginning of the shutdown. The other instance was the three-day shutdown in January 2018.

Additionally, with the changeover to the 116th Congress, which has a Democrat-controlled House, this is the first shutdown in which control of a chamber of Congress changed parties during the funding lapse.

The current shutdown also means the president has set some historic firsts as well.

Trump is the only president to furlough employees while his party controlled both chambers of Congress, the only one to achieve that dubious feat multiple times, and is second in total shutdowns for a president whose party controls chambers of Congress. Jimmy Carter presided over five shutdowns while Democrats controlled both the House and Senate, none of which resulted in furloughs.

The latest shutdown also moved Trump into third place with three total funding lapses during his presidency, behind Carter's five and Ronald Reagan's eight.

2018 also became just the second year of the modern era to have three funding lapses, tying 1977's record.

Here's a breakdown of all the previous shutdowns:

SEE ALSO: From airport lines to food inspections, here are all the ways the government shutdown is impacting the lives of average Americans

Join the conversation about this story »

NOW WATCH: MSNBC host Chris Hayes thinks President Trump's stance on China is 'not at all crazy'

Switzerland's Veeam Software just scooped up half a billion dollars in funding and the cofounder says he's ready to start buying companies

Wed, 01/16/2019 - 5:33pm

  • Veeam Software announced Wednesday that it has raised $500 million in funding from Insight Venture Partners.
  • With the additional funding, Veeam is looking at companies to possibly acquire this year, especially in cloud management, data management, artificial intelligence, or machine learning.
  • Veeam is capitalizing on the cloud wars because as more customers shift to the cloud, Veeam can help customers with moving and managing their data.

Data management company Veeam Software raised $500 million in venture funding on Wednesday and signalled plans to bulk up with acquisitions this year.

The 12-year-old company, which is based in Switzerland, raised the money from Insight Venture Partners, with "strong participation from" the Canada Pension Plan Investment Board. Veeam did not disclose the company's valuation in the latest round of funding but said the capital will be used for product development, global expansion and M&A activity.

"We're looking at a few opportunities so might have one [acquisition] this year in 2019 and are evaluating different companies," Ratmir Timashev, Co-Founder and Executive Vice President of Veeam told Business Insider.

The next two to three years are going to be packed with major potential for Veeam, Timashev said. He predicts that the coming years will determine who will be the leader in cloud.

Veeam generates about $1 billion in annual revenue and has over 320,000 customers, according to the company. Timashev says that it has had 40 quarters in the last 10 years with double digit growth, and out of those, 30 were profitable.

Read more: Wall Street says Amazon and VMware are teaming up to take down Microsoft in the cloud wars

"We've seen this company perform exceptionally well," Michael Triplett, managing director at Insight Venture Partners, told Business Insider. "It's very rare within a ten year time frame for a company to go from 0 to 1 billion in sales. We made this further investment because we see Veeam continue to be the number one software vendor in its market segment."

Time to go shopping

Veeam cofounder Timashev said he's looking for technology companies in cloud management, data management, artificial intelligence, or machine learning -- technologies that will complement Veeam's data management abilities. Just last year, Veeam acquired N2W Software, which provides a cloud backup solution for AWS workloads.

"There's more companies growing pretty fast," Timashev said. "We believe we will need to accelerate and are looking to acquire some innovative technologies, primarily in the area similar to what we've done with N2WS."

Veeam previously focused on data management on premises, but it's been expanding into cloud. And as more companies move onto the cloud, Veeam is well-positioned to help them do that.

"The next ten years are about multi-cloud and hybrid cloud," Timashev said. "The next two to three years are the most important. We've got the capital and resources to accelerate our growth."


SEE ALSO: Hot data backup startup Rubrik is now valued at $3.3 billion. The CEO tells us what to expect in the 'second chapter' of the company

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NOW WATCH: North Korea's leader Kim Jong Un is 35 — here's how he became one of the world's scariest dictators

The 15 American cities where competition to buy a home is fiercest right now

Wed, 01/16/2019 - 4:49pm

  • The US housing market is finally starting to cool off, but competition among buyers is still fierce in some cities.
  • Those in the best position to buy a home typically have mortgage financing in place, a credit score above 680, and a down payment above 15%.
  • But many markets, like San Francisco and San Jose, have an oversaturation of these buyers, leading to heightened competition.

It may get easier for some Americans to buy a home this year as prices finally level off, but several markets are still competitive.

In a recent report, LendingTree identified the most competitive markets for buyers right now based on 2018 mortgage loan data. LendingTree looked at 1.5 million mortgage requests for new home purchases and then ranked the 50 largest metros based on three criteria:

  1. The share of buyers who shop for a mortgage before they find the house they want. It's more appealing to sellers when a buyer is pre-approved for financing well before making an offer.
  2. The average down payment as a percentage of the purchase price. A high down payment can help buyers qualify for an even larger mortgage amount or a lower interest rate on the loan.
  3. The percentage of buyers who have a credit score above 680. Someone with a prime credit score has more financing options available to them.

The cities where the most buyers have financing in place, a down payment above 15% of the purchase price, and a prime credit score were ranked by LendingTree as the most competitive.

Below, check out the 15 most competitive places to buy a home in the US right now:

SEE ALSO: Middle-class Chinese people are buying property in the US as a 'safe harbor' for their money

DON'T MISS: The top 10 cities for buying a house in 2019, where jobs are plentiful, construction is booming, and young people are moving in

15. New York, New York

Average down payment: 17%

Buyers with prime credit: 58%

Buyers pre-shopping for a mortgage: 55%

14. San Antonio, Texas

Average down payment: 14%

Buyers with prime credit: 55%

Buyers pre-shopping for a mortgage: 63%

13. Milwaukee, Wisconsin

Average down payment: 14%

Buyers with prime credit: 52%

Buyers pre-shopping for a mortgage: 63%

See the rest of the story at Business Insider

Tech giants like Facebook have moved beyond beer and ping-pong to the next office must-have, and other companies are following their lead

Wed, 01/16/2019 - 4:45pm

  • Rooftop parks and gardens are becoming an increasingly popular office perk for urban companies, according to a New York Times report.
  • The trend stems from the health benefits provided by exposure to the outdoors.
  • Studies have shown contact with nature reduces stress and fatigue and can help combat depression and anxiety.

In recent years, companies have tried to lure potential hires with all kinds of office perks, including beer fridges, arcade games, and ping-pong tables.

But according to a recent report, a new perk is catching on that could not only keep workers happy, but change the way office buildings are designed.

The New York Times' Jane Margolies reported on Tuesday that developers and owners of urban office buildings are turning their rooftops into park-like spaces where employees can work and relax in an outdoor setting.

The trend stems from increased awareness of the health benefits that come with exposure to the outdoors, The Times reported. Several studies have shown that contact with nature reduces stress and fatigue and can help combat depression and anxiety. Exposure to the sun can make us feel more awake and happy, too.

All that means is affording workers more chances to get outside is becoming a top priority for companies.

"There's not a developer or forward-thinking building owner today that doesn't have this top of mind," Paul J. Amrich, a vice chairman at CBRE, a New York real estate services company, told The Times.

Read more: 16 mind-blowing job perks that real companies offer

The Times attributed the trend to tech companies like Facebook, whose Bay Area headquarters boasts a nine-acre park on its roof.

In a more urban environment, like New York City, retrofitting outdoor terraces onto existing office buildings isn't so easy — or cheap. Amrich said landlords can charge tenants 10% to 15% more rent for offices with outdoor areas. 

But the benefits may outweigh the costs. In Brooklyn, employees of Kickstarter maintain a rooftop garden that provides the office with fruits, vegetables, and herbs. According to the Times report, United Airlines employees frequently relax and eat lunch in their Houston office's 12th-floor terrace.

"Access to outdoor space is a critical component of a healthy work environment and a vital part of sustainable development, as well as a major recruitment tool," Jordan Barowitz, spokesman for the real-estate company the Durst Organization, told the New York Post in 2017.

Read the full report at The New York Times »

SEE ALSO: The progression of office culture from the '50s to today

Join the conversation about this story »

NOW WATCH: Here's why we give better advice to our friends than we give to ourselves

China's economy is slowing, and it's taking Hong Kong's once-booming housing market down with it

Wed, 01/16/2019 - 4:31pm

  • Hong Kong was ranked the most expensive housing market in the world for eight consecutive years.
  • But property values have fallen sharply in recent months.
  • A slowing mainland economy, trade tensions, and rising interest rates have helped drag prices lower.

One of the world's most expensive housing markets is facing a major slowdown.

Analysts at HSBC dimmed their outlook for Hong Kong's real-estate market on Wednesday, according to a research note. Previously forecasting activity would plateau, they now estimate prices will fall from 10% to 15% over the next six months.

"We expect the first half of 2019 to be a challenging period for the Hong Kong housing market," the analysts said. "Prices have already corrected 8% from the recent peak in August 2018 due to macro uncertainties and several events occurring in the property market that concerned investors."

Hong Kong was ranked the most-expensive housing market in the world for eight consecutive years, benefitting from capital controls in mainland China that incentivize real-estate investments closer to home. But activity has slowed sharply in recent months, with property values falling by the most since the global financial crisis in 2008 in November.

With China's economy expected to continue to lose steam in coming months, the housing market looks poised to fall further. The second-largest economy has seen sharp drops in recent manufacturing and trade activity, and companies across the world have warned that consumer demand there is waning.

"We suspect that China's economy will continue to weaken this year," said Oliver Jones, an economist at Capital Economics. "Stimulus efforts are not likely to be enough to spark a revival this time around."

Also helping to bring prices down from August highs, a vacancy tax aimed at discouraging investors from holding empty Hong Kong homes was introduced last year.

Still, some are confident residential real estate activity will start to recover despite a slowing economy, with HSBC predicting annual price drops to shrink to between 5% and 10% by the end of the year.

Chinese policymakers have vowed to pursue stimulus measures that could help stave off a downturn. Additionally, the Federal Reserve is expected to increase interest rates at a slower pace than previously expected, which would reduce upward pressure on monetary policy and Hong Kong.

Now Read:

A turbulent market led to one 'big surprise' last quarter that gave the world's biggest asset manager a huge boost

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A Harvard professor has a tip for entrepreneurs looking for the next big thing: Check out the electric-car market in China

Wed, 01/16/2019 - 3:33pm

  • In China, the electric-car market is "booming."
  • That's according to Clayton Christensen, a Harvard Business School professor and an author of "The Prosperity Paradox."
  • Christensen said low-speed electric cars in China are examples of "market-creating innovations," in that they make a product affordable and accessible to a broader swath of the population.
  • This article is part of Business Insider's ongoing series on Better Capitalism.

In his new book, "The Prosperity Paradox," coauthored with Efosa Ojomo and Karen Dillon, Harvard Business School professor Clayton Christensen provides a framework for marrying successful entrepreneurship with effective economic development. That's exactly what electric-car makers in China have done.

Christensen is the author of the 1997 classic "The Innovator's Dilemma," in which he popularized the term (and the idea) of "disruptive innovation." But more than two decades before that, Christensen was a Mormon missionary in South Korea, which, as he and his coauthors write in "The Prosperity Paradox," was one of the poorest nations in Asia. Today, it's among the richest countries in the world.

The authors argue that most any country can undergo a similar shift — and it's not necessarily a matter of receiving billions of dollars in aid. It has more to do with thoughtful innovation. In fact, the "prosperity paradox" refers to the idea that countries typically don't see improvements in their economic, social, and political well-being when other nations flood them with resources to "fix" poverty. Instead, these improvements often happen when new markets are created within these countries.

That means there's an opportunity for ambitious entrepreneurs around the world to simultaneously start a thriving business and bolster the economy.

Electric cars in China are a 'market-creating innovation'

A prime example of that kind of innovation is the electric-car market in China, Christensen told Business Insider. He explained that low-speed electric cars in Beijing are narrow and made of plastic. That's because many people in Beijing work on narrow streets and need a vehicle to deliver products to their clients.

Low-speed electric cars in China fall under the category of what Christensen labels "market-creating innovations." In the book, Christensen and his coauthors write that market-creating innovations have served "as a foundation for many of today's wealthy economies, and have helped lift millions of people out of poverty in the process."

The key to market-creating innovation is spotting would-be consumers who are unable to use a particular product either because it's unaffordable or because it's inaccessible. "In a sense," the authors write, "market-creating innovations democratize previously exclusive products and services." Not only do they make products available to more people; they also create many new local jobs.

"The market-creating innovation in China is to make this little vehicle affordable and accessible," Christensen said. The people delivering products on those narrow city streets can do their job more easily, and the companies making those vehicles thrive. "The market is just booming," Christensen said.

(To be sure, tiny electric cars in China have their downsides. The Wall Street Journal reported that they tend to use cheap lead-acid batteries, which are bad for the environment and have no crash protection.)

Electric cars in China are also a disruptive innovation

Compare these car companies to Tesla. Christensen previously told Business Insider's Matt DeBord that Tesla is not, as is commonly believed, a disruptive innovator. That's largely because Tesla is working backward. DeBord reported that, instead of making a desirable product more accessible to more people, Tesla started out making a product that was inaccessible to most consumers and is now trying to make it more accessible.

Christensen told DeBord that electric cars in China, on the other hand, are an example of a disruptive technology. "They enable access for a larger population who historically didn't have access," Christensen told DeBord.

Read more: Clay Christensen says everyone misunderstands his theory of disruption — here's what it really means

In a 2015 Harvard Business Review article, Christensen, along with Michael Raynor and Rory McDonald, wrote that "disruptive innovation" has become a vague buzzword. But it really describes the process through which a smaller company with fewer resources challenges an established business "by successfully targeting … overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price." The newer company then moves upmarket, and mainstream consumers start using the product or service.

That's what electric-car companies have done in China. In the United States, on the other hand, electric cars are sustaining innovation, meaning they offer better performance at a higher price.

In Mexico, there could be another huge opportunity for electric cars

Christensen said low-speed electric cars could revolutionize the Mexican economy the same way. That's because Mexican cities tend to be similarly crowded and people have a hard time making deliveries.

What's more, Christensen said, there might be an opportunity to make electric cars an "experience" for consumers. "If you make an electric car affordable, it becomes a jukebox for teenagers," he said, and they'd take the car on short trips to visit friends.

"If a company in Mexico would come to the bottom of the market making electric products affordable and accessible for a new population, boy, I think it would really be creating exciting potential."

SEE ALSO: Tesla isn't disrupting the auto industry, according to the expert who created the theory of disruptive innovation

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We got a look at hedge fund Carlson Capital's returns, and they're solid in a brutal year

Wed, 01/16/2019 - 3:26pm

  • Carlson Capital's two biggest multistrategy funds, Black Diamond and Double Black Diamond, returned 2.4% and 2.6%, respectively, in 2018.
  • That was after finishing down in the prior year, according to a document seen by Business Insider.
  • Clint Carlson's 25-year-old firm was able to bounce back from a poor 2017 despite a difficult environment that knocked many other funds.

A year after its biggest funds lost money, Carlson Capital bounced back in 2018 with solid performance in its two flagship funds, Black Diamond and Double Black Diamond.

According to a document seen by Business Insider, the $530 million Black Diamond fund returned 2.4% in 2018 after a nearly 6% loss the year prior. Carlson's $3.2 billion Double Black Diamond fund, meanwhile, returned 2.6% in 2018 compared to a 4.5% loss in 2017.

The firm's overall assets, which dropped by roughly a billion in the second half of 2017, fell slightly from $8.2 billion at the start of the year to a little less than $8.1 billion at the end of 2018.

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Carlson's returns would have been higher if not for the fourth quarter of 2018, when many hedge funds' gains for the year were wiped out by market volatility. Out of Carlson's five strategies, only the event-driven $675.4 million Black Diamond Arbitrage fund had positive returns in the fourth quarter.

The fund that had the worst performance in 2017 was the manager's long-short equity strategy, Black Diamond Thematic, which lost 22.1%. The strategy finished 2018 down less than 1%.

2018 was a brutal year for the hedge-fund industry, with the average fund declining by more than 4%. Traditional stock-picking strategies were hit hard by outflows and performance woes, which have already pushed several fund managers to pull the plug on their equity offerings this year.

A spokesperson for Carlson declined to comment on the fund's performance.

Join the conversation about this story »

THE EVOLUTION OF THE US NEOBANK MARKET: Why the US digital-only banking space may finally be poised for the spotlight (GS, JPM)

Wed, 01/16/2019 - 3:04pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Neobanks, digital-only banks that aren’t saddled by traditional banking technology and costly networks of physical branches, have been working to redefine retail banking in major markets around the world.

Driven by innovation-friendly regulatory reforms, these companies have especially gained traction in Europe over the last three years. While the US is home to some of the oldest neobanks — including Simple, which set up shop in 2009, and Moven, which was founded in 2011 — the country's neobank ecosystem has lagged behind its European counterpart.

That’s largely because of an onerous regulatory regime, which has made it very difficult to obtain a banking license, and the entrenched position incumbents hold in the financial lives of US consumers. Navigating the tedious and costly scheme for obtaining a banking charter and appropriate approvals has been a major stumbling block for the country’s digital banking upstarts. However, developments over the past year suggest these startups are finally poised for the spotlight in the US. 

In this report, Business Insider Intelligence maps out the factors contributing to this shifting tide, examines how key players are positioning themselves to take advantage, and explores how incumbents can embark on their own digital transformations to stave off disruption.

The companies mentioned in this report are: Aspiration, Chime, Goldman Sachs' Marcus, JPMorgan Chase's Finn, N26, and Revolut. 

Here are some of the key takeaways from the report:

  • Despite lagging behind Europe, recent developments suggest that neobanks are finally ready for the spotlight in the US.
  • Three distinct influences are responsible for creating the fertile ground for this evolution: regulation, shifting consumer attitudes, and the activity of incumbent banks.
  • Among those driving this evolution in the US are foreign neobanks including Germany’s N26 and UK-based Revolut.
  • Meanwhile, two notable incumbent-owned outfits have deployed amid great fanfare: Marcus by Goldman Sachs and Finn by Chase. 
  • In this increasingly competitive landscape, incumbent banks have a range of strategic options at their disposal, including overhauling their entire business for the digital era.

 In full, the report:

  • Details the factors contributing to a shift in the US' neobank market.
  • Explains the different operating models neobanks in the US are deploying to roll out their services and meet consumer demands.
  • Highlights how incumbent banks are tapping into the advantages offered by stand-alone digital outfits. 
  • Discusses the key strategies established players need to deploy to remain relevant in the US' increasingly digital banking landscape.

Interested in getting the full report? Here are two ways to access it:

Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Fintech.

SEE ALSO: Latest fintech industry trends, technologies and research from our ecosystem report

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Experts explain what to do with your money right now, whether or not a recession is looming

Wed, 01/16/2019 - 3:02pm

  • With the stock market in a volatile state and speculation that a recession could be coming, what should you do with your money right now?
  • Experts shared the worst and best case scenarios for four different options: investing in index and mutual funds, stock-picking, storing money in a high-yield savings account, or leaving it in a checking account.
  • The overall conclusion among the experts is that if you don't need your money soon, you should still invest in the stock market despite potential short-term losses — but if you need it in a year or two, you might want to be more conservative.

At the end of 2018, stocks were teetering on the brink of a bear market — the Dow and S&P 500 were both on track for the worst losses in ten years, Business Insider's Callum Burroughs reported.

While the market has been on the rebound in the past few weeks, it's enough of a scare to make investors wonder what they should be doing with their money right now.

"While a pullback is inevitable, markets don't work on clear timelines," Dan Egan, a market volatility expert and director of behavioral finance at Betterment, told Business Insider. "With talk of an impending bear market, it is easy for investors to listen to all of the noise and get nervous, but market drops are an expected part of investing."

He added: "Accepting risk is how you earn returns."

Keep in mind that experts generally advise against moving money in and out of the stock market according to highs and lows, otherwise known as timing the market. That's because while experts often make predictions about future market activity based on past performance, no one actually knows what will happen. Instead, experts usually recommend investing for the long term and letting market fluctuations ultimately recover any losses.

But keeping your money under the mattress probably won't cut it, no matter what happens to the market. Here are some of your options for handling your money in a volatile market, along with the worst case and best case scenario for each.

If you invest in index funds

If you don't need cash soon, you should still invest in the stock market, Sean Gould, certified financial planner (CFP) and wealth strategist with Waddell & Associates, told Business Insider. Index funds, mutual funds whose holdings track a particular index like the S&P 500, are a straightforward way to do it.

"If you have extra cash that's not earmarked for a specific short-term goal (i.e. upcoming home repair or a child's wedding), then investing in the stock market after a correction is not a bad answer," Gould said. "It's almost impossible to perfectly time a stock market bottom, so investing after a market correction can be a good entry point for long-term investors."

The best-case scenario: "For long-term cash that's invested right now, the best case would be the recent correction was temporary and the markets rally, therefore you purchased stocks on sale," Gould said.

The worst-case scenario: If the market remains unchanged or down for the year, holding index funds won't offer gains and your portfolio will remain stagnant, Ken Mahoney, registered investment adviser and CEO of Mahoney Asset Management, told Business Insider. But while a portfolio with little growth isn't ideal, it's not the worst-case scenario.

The worst situation would be if the economy entered a recession and the market immediately fell for an extended period, losing money in the short term.

If your money is in the market, "think about hard stops that you are unwilling to see your portfolio go below, as a substantial loss can and usually does take multiple years to fully recover from," Rebecca Walser, wealth strategist and CFP, told Business Insider. 

Read more: We're entering the most important earnings season in recent memory, and the fate of the stock market hangs in the balance

If you invest in individual company stocks

Experts typically advise against the average investor choosing to buy stock in individual companies, as opposed to through index or mutual funds. Even pros like Warren Buffett and John Bogle recommend index funds, which are diversified by design, for individual investors.

However, if you do own individual stocks, you still need to make diversification a priority, Gould said.

"Investing in individual company stocks is fine as long as you're owning numerous companies across different industries and geography," he said. "Concentration risk can be detrimental to a portfolio." He said investors shouldn't have more than 5% to 10% of their portfolio in any one company — with their fate tied to that of specific companies, they can still lose money, but this strategy will reduce overall portfolio risk.

The best-case scenario: Mahoney said that several economic issues — like a reversal of the partial government shutdown, a China trade war truce, and more Brexit stability — need to be resolved in the short term for a best-case scenario.

In this scenario, "companies' earnings beat analysts' estimates, as we have seen with a few of the big banks. These events drive confidence into the market, increasing demand and hopefully continue to push these early year gains higher and higher," he said.

The worst-case scenario: Again, the worst case scenario is losing a significant amount of portfolio value. If you're heavily invested in stocks from individual companies, the value of your portfolio will fluctuate with those companies rather than with the market as whole. That's not to say that stock-picking removes you from the volatility of the larger market — even a selection of diversified stocks can suffer big losses if the whole market takes a tumble, Mahoney said.

If you keep your money in a high-interest savings account or CD

If you need your money in the next year or two, Gould suggests investing the cash in a high-yield savings account or certificate of deposit (CD). Both of those products can pay up to 3% interest.

The best-case scenario: Your money will keep growing steadily despite market fluctuations, although the growth will be slow.

The worst-case scenario: You miss out on potential growth. "The markets rally while you're sitting in cash," Gould said, "but it was still the responsible investment."

Read more: 6 warning signs an investment is too good to be true

If you keep your money in a checking account 

A traditional checking account offers a lower savings rate (usually nothing at all, or a fraction of a percent) than a high-interest savings account or CD but offers easy access to your money. It's the digital equivalent of keeping it under your pillow. Traditionally, experts advise against keeping your savings in a checking account because of the missed opportunity for potential growth found in riskier investments.

The best-case scenario: "You'll have liquid cash and experience no loss if the market experiences a significant downturn," Walser said.

The worst-case scenario: "The last two months were just a hiccup, President Trump gets a great deal with China, the market rejoices and goes through the roof, and you prematurely took your cash out and missed the upside," Walser said.

SEE ALSO: There are only 2 things you need to do to survive when stock prices are falling, according to Warren Buffett

DON'T MISS: Stocks are teetering on the brink of bear-market territory, and Trump reportedly says it's a 'tremendous opportunity to buy'

Join the conversation about this story »

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A controversial startup that charges $8,000 to fill your veins with young blood now claims to be up and running in 5 cities across the US

Wed, 01/16/2019 - 2:40pm

  • A startup called Ambrosia that charges $8,000 to fill your veins with the blood of young people is now accepting PayPal payments for the procedure online.
  • Jesse Karmazin, a Stanford graduate who founded Ambrosia, told Business Insider this week that the company was up and running in five US cities.
  • Ambrosia recently completed its first clinical trial designed to assess the benefits of the procedure, but it has yet to publish the results. Karmazin previously told Business Insider the company wanted to open the first clinic in New York City, but that didn't happen.

To Jesse Karmazin, a startup founder and Stanford Medical School graduate, blood is the next big government-approved drug.

Roughly three years ago, Karmazin launched Ambrosia, a startup that fills the veins of older people with blood from younger donors, hoping the procedure would help conquer aging by rejuvenating the body's organs. As Business Insider previously reported, there's little to no evidence to suggest this would work.

Read more: A controversial startup that charges $8,000 to fill patients' veins with young blood is opening a clinic in NYC — but researchers whose work inspired it warn that it's dangerous

The company is now up and running, Karmazin told Business Insider on Wednesday. Ambrosia recently revamped its website with a list of clinic locations and is now accepting payments for the procedure via PayPal. Two options are listed: 1 liter of young blood for $8,000, or 2 liters for $12,000.

In the fall, Karmazin — who is not a licensed medical practitioner — told Business Insider he planned to open the first Ambrosia clinic in New York City by the end of the year. That didn't happen. Instead, he said, the sites where customers can get the procedure include Los Angeles; San Francisco; Tampa, Florida; Omaha, Nebraska; and Houston, Texas.

In 2017, Ambrosia enrolled people in a clinical trial designed to find out what happens when the veins of adults are filled with blood from younger people. While the results of that study have not been made public, Karmazin told Business Insider in September that they were "really positive."

There's no scientific evidence to suggest that the treatments could help anyone, and several experts who spoke to Business Insider have raised red flags.

But because the Food and Drug Administration has approved blood transfusions, Ambrosia's approach has been able to continue as an off-label treatment.

There appears to be significant interest. A week after putting up its first website in September, the company received roughly 100 inquiries about how to get the treatment, David Cavalier, Ambrosia's chief operating officer at the time, told Business Insider in the fall. That led to the creation of a waiting list, Cavalier said.

In January, Cavalier told Business Insider he'd left Ambrosia, leaving Karmazin as the company's only public employee.

Before departing from Ambrosia, Cavalier worked with Karmazin to scout several potential clinic locations in New York and organize talks with potential investors, he said.

Ambrosia's first clinical trial

Because blood transfusions are already approved by federal regulators, Ambrosia does not need to demonstrate that its treatment carries significant benefits before offering it to customers.

As of September, the company had infused close to 150 people, ranging in age from 35 to 92, with the blood of younger donors, Cavalier said. Of those, 81 participated in its clinical trial.

The trial, which involved giving patients 1.5 liters of plasma from a donor between the ages of 16 and 25 over two days, was conducted with David Wright, a physician who owns a private intravenous-therapy center in Monterey, California. Before and after the infusions, participants' blood was tested for a handful of biomarkers, or measurable biological substances and processes thought to provide a snapshot of health and disease.

Trial participants paid $8,000, the same price as one of the procedures now listed on Ambrosia's website.

"The trial was an investigational study," Cavalier said in September. "We saw some interesting things, and we do plan to publish that data. And we want to begin to open clinics where the treatment will be made available."

Karmazin added in September that he believed the trial showed the treatment to be safe.

Young blood and anti-aging: Are there any benefits?

Karmazin is right about the safety of blood transfusions and their capacity to save lives.

A simple blood transfusion, which involves hooking up an IV and pumping the plasma of a healthy person into the veins of someone who's undergone surgery or been in a car crash, for example, is one of the safest life-saving procedures available. Every year in the US, clinicians perform about 14.6 million of them, meaning about 40,000 blood transfusions happen on any given day.

But the science remains unclear about whether infusions of young blood can help fight aging.

In early experiments in mice, Tony Wyss-Coray, a director of the Alzheimer's research center at Stanford University Medical School who founded a longevity startup focused on blood plasma called Alkahest, found that swapping old blood plasma for young blood plasma appeared to provide some limited cognitive benefits. The 150-year-old surgical technique he used, parabiosis — whose name comes from the Greek words "para," or "beside," and "bio," or "life" — involves exchanging the blood of two living organisms.

Read more: The CEO of a startup aimed at harnessing the benefits of young blood shares his real plan to beat aging

After Wyss-Coray's mouse experiments, he and a team of Alkahest researchers took a big leap and in 2017 completed a monthlong study in which they transfused a standard unit of blood plasma from younger, healthy human volunteers into nine older adults with mild to moderate Alzheimer's disease.

Their results were published this month in the journal JAMA Neurology. Because the study was small and short, the authors were fairly limited in drawing conclusions about what kind of benefits the plasma offered. They described the treatment as "safe, well tolerated, and feasible" and said the findings should be explored further in larger trials.

In a January interview with Business Insider, Alkahest CEO Karoly Nikolich described seeing cognitive boons in the older participants, including an improved sense of self and recognition of one's environment and location, as tested by a standard screening tool called the Mini-Mental State Examination.

But Alkahest's work is very different from Ambrosia's.

As Business Insider previously reported, Alkahest researchers want to develop drugs for age-related diseases that are inspired by their work with plasma; they are not looking to open a clinic.

'The results looked really awesome'

Nevertheless, Karmazin is optimistic that blood has a range of benefits. He got the idea for his company as a medical student at Stanford and an intern at the National Institute on Aging, where he watched dozens of traditional blood transfusions performed safely.

"Some patients got young blood, and others got older blood, and I was able to do some statistics on it, and the results looked really awesome," Karmazin told Business Insider in 2017. "And I thought this is the kind of therapy that I'd want to be available to me."

So far, no one knows whether young blood transfusions can be reliably linked to lasting benefits.

Karmazin said that "many" of the roughly 150 people who had received the treatment described benefits including renewed focus, better memory and sleep, and improved appearance and muscle tone.

However, it's tough to quantify these benefits before the study's findings are made public. There's also the possibility that simply traveling to a lab in Monterey and paying to enroll in the study could have made the people feel better.

But Karmazin remains hopeful that the benefits he said he's seeing are the result of young-blood transfusions.

"I'm really happy with the results we're seeing," he said in September.

SEE ALSO: A controversial startup that charges $8,000 to fill your veins with young blood is opening its first clinic — but it has no idea if the treatment has any benefits

READ MORE: The CEO of a startup aimed at harnessing the benefits of young blood shares his real plan to beat aging

Join the conversation about this story »

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Evidence is mounting that we're hurtling head-first into a recession

Wed, 01/16/2019 - 2:35pm

  • An increasing amount of evidence is piling up to suggest we're headed for an economic recession.
  • UBS estimated in September that there was a record $4.3 trillion in lower-quality corporate loans and high-yield bonds.

Economic data is pointing downward and investor sentiment is turning negative.

Driving the news: Perhaps most worrisome is the massive pile of highly leveraged debt that continues to grow. Bank of America-Merrill Lynch's monthly survey of fund managers finds that, for the first time since 2009, corporate leverage is the top concern among investors surveyed.

  • 52% of investors said they expect global profits to deteriorate — the most since 2008.
  • 60% surveyed say global growth will weaken in the next 12 months, levels not seen since the financial crisis.
  • U.S. manufacturing activity dropped in December by the most since October 2008.
  • 2018's Treasury auctions saw the weakest demand since 2008, Bloomberg reported earlier this month.
  • The yield spread between 2- and 10-year U.S. Treasury notes is the thinnest since 2007, and the yield on 2- and 3-year notes has already risen above that of 5-year notes, meaning a curve inversion.

UBS estimated in September that there was a "record $4.3 trillion in lower-quality corporate loans and high-yield bonds — up from $2.4 trillion in 2010 — that could ... see rising defaults if the healthy U.S. economy starts to wobble," USA Today reports.

  • “I view this as the most severe threat to the economy and financial system,” Mark Zandi, chief economist of Moody’s Analytics, told USA Today in response to the UBS figures.
  • Former Fed Chair Janet Yellen warned in a recent interview, “I am worried about the systemic risks associated with these loans. There has been a huge deterioration in standards; covenants have been loosened in leveraged lending.”

Still, there seems to be a consensus among many in the market that it's not yet time to panic.

  • “Investors remain bearish, with growth and profit expectations plummeting this month,” said Michael Hartnett, BAML's chief investment strategist. “Even so, their diagnosis is secular stagnation, not a recession, as fund managers are pricing in a dovish Fed and steeper yield curve.”

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PG&E's imminent bankruptcy would put it in rarefied air alongside Enron and Lehman Brothers

Wed, 01/16/2019 - 2:29pm

  • PG&E's impending bankruptcy would put it in notorious company, at least in terms of size.
  • The company would join the ranks of "failing angels," or companies whose debt goes straight from investment grade to default.

If PG&E follows through on plans to file for bankruptcy before the end of the month, it will be the biggest utility bankruptcy since 2001...which was the first time PG&E filed for bankruptcy.

By the numbers: PG&E's planned filing would be the ninth largest bankruptcy since at least the mid-1980s — falling just below the likes of Lehman Brothers, WorldCom and General Motors.

  • Bonus stat: It's incredibly rare that companies default within one year of holding an investment grade credit rating, Bank of America-Merrill Lynch notes.
  • If PG&E does file for bankruptcy, they will become a part of a super exclusive "Failing Angels" club — companies that fall from investment grade, skip the high yield or junk market and go straight to default.
  • The other members of the "Failing Angels" club: Enron, Lehman and MF Global.

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