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Here's exactly how to figure out when you should start investing

Thu, 05/09/2019 - 3:07pm

Investing is one of the best ways to build wealth. But before jumping into the market, make sure your financial house is in order.

Rebecca Rothstein, a top wealth manager whose firm RVR Group manages $3.8 billion in assets for Bank of America Merrill Lynch's private banking and investment business, previously told Business Insider that too many young people head to the market in hopes of earning big returns before they should.


"A lot of these young people come and see me and they've got school debt, they've got car debt, and they've got credit-card debt," she told Business Insider's Marley Jay. Rothstein said she once recommended that a client's daughter with a high-paying job and $180,000 in student loans with an 8% interest rate focus on paying down the loans before investing directly in the stock market.

"I said, 'You're far better off investing in your 401(k), so you get some deferred income, and paying off your school debt,'" Rothstein said. "'Any excess capital you have, use it to hunk down your school debt and try to get out from underwater that because the cost of that debt is cumulative and it's extremely expensive.'"

While there isn't a specific interest rate the industry agrees on, Business Insider's Hillary Hoffower reported, a well-diversified investment portfolio should return about 6% annually, Sallie Krawcheck, CEO of Ellevest, told Erin Lowry in her book, "Broke Millennial Takes on Investing." Based on that, any student-loan debt with an interest rate above 7% should be paid off first, Krawcheck said.


It's also crucial to establish an emergency fund — a pot of cash equal to three to six months of expenses — before investing, because it's not a question of if you'll need the money, but when, and pulling it out of the market isn't favorable. The best place to keep this money is typically in a high-yield savings or money-market account, where it can remain safe and liquid, and earn a small amount of interest.

Whether you're juggling other financial priorities or not, contributing to a tax-advantaged workplace retirement plan is one of the best ways to get started investing, according to Ryan Cole, a certified financial planner and private wealth advisor at Citrine Capital. Your money is deferred before taxes and taken automatically from each paycheck, which makes it effortless and reduces your taxable income. 

When your money grows tax-free, you have the potential to earn even more. Some companies will even match an employee's contribution up to a certain amount, so making it a priority to hit that limit is a good starting point to investing. But fees can eat into your returns, so be sure to check what your plan provider and the investment fund charge.

Want to help your money grow in the market? Check out these offers from our partners: 

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AmEx is making a play for millennials with 6% back on Netflix and Hulu on its most popular cash-back card

Thu, 05/09/2019 - 2:56pm

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  • One of the best cash-back AmEx cards is getting a facelift — making it even better at earning rewards for millennials.
  • Starting today, May 9, the Blue Cash Preferred® Card from American Express will begin offering 6% back on US streaming services, and 3% back on all transit.
  • That's in addition to 6% back at US supermarkets (on up to $6,000 per year — 1% after that), 3% at US gas stations, and 1% on everything else. It will no longer earn 3% at US department stores, though — that category drops to 1%.
  • Also new: The welcome bonus on the card has increased from $200 to $250 when you spend $1,000 in the first three months. 

American Express announced big changes to one of its most successful cash-back cards, and they've just gone live.

Starting today, May 9, the Blue Cash Preferred Card has two new bonus categories: US streaming subscriptions, which earns 6% back, and transit, which earns 3% back.

Those categories are in addition to US supermarkets (6% back on up to $6,000 per year, then 1%) and US gas stations (3%). Select US department stores, at which the Blue Cash Preferred currently offers 3% back, will only offer 1% back, along with all other non-bonus-category purchases.

The streaming services category is exceptionally broad, and includes less-obvious providers like Amazon Prime Video and YouTube, as well as Netflix, Hulu, HBO Go, Apple Music and Spotify, Amazon Kindle Unlimited, and Audible.

Liz Bergman, AmEx's VP of US lending product, told Business Insider that the transit category will cover virtually every form of ground in the US transportation, including subways, buses, taxis and rideshares (like Uber and Lyft), tolls, parking, commuter and long-distance rail, and parking.

According to Bergman, the changes come as AmEx refocuses its products to target millennials who are "growing up."

"'Everyday' spending is different today than it was in 2011, when the card launched," she said. "It's the card for cord cutters."

The card's welcome bonus will be also see a change: A hefty increase.increasing. You'll earn a $250 statement credit after you spend $1,000 in the first three months. Previously, the bonus was just $200 for the same amount of spend in the same timeframe.

Anyone who already had the card will automatically start earning cash back at the new rates — the 3% rate at US department stores will continue for those members until July 31.

The card is also getting a redesign — existing cardholders will receive the new version when their current cards expire, or they can call the number on the back of their cards to request the new version. Alongside the design changes, the new card features contactless payment.

The Blue Cash Preferred has a $95 annual fee, which can be offset by the amount of cash back earned depending on your spending habits.

Click here to learn more about the Blue Cash Preferred at Business Insider's partner: The Points Guy.

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

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Denver just became the first city in the US to decriminalize magic mushrooms. Here's what they do to your body and mind.

Thu, 05/09/2019 - 2:48pm

In a slender and surprising victory for supporters of hallucinogenic or "magic" mushrooms, the psychedelic drug better known to scientists as psilocybin, Denver, Colorado yesterday voted to decriminalize the drugs.

Once portrayed as illegal ways to "drop out" or "tune in," psychedelic and semi-psychedelic drugs like psilocybin and ecstasy are beginning to turn into federally-regulated medicines. Part of the reason: scientific evidence is building that the substances may have the potential to help staunch symptoms of psychiatric diseases that are difficult to treat with existing therapies. Those diseases include severe depression, for example.

Here's how psilocybin impacts the brain and body and produces its effects:

SEE ALSO: Evidence is mounting that psychedelic drugs can help treat diseases. Here are the most promising uses.

DON'T MISS: Why psychedelics like magic mushrooms appear to kill the ego and fundamentally transform the brain

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PayPal's CFO believes AI can save the company $25 million a year by automating one area of customer service

Thu, 05/09/2019 - 2:36pm

  • PayPal customers sometimes reach out to the payments platform to get more information on a transaction that shows up on their bank statements. 
  • Those calls cost the company roughly $25 million annually, John Rainey, PayPal's chief financial officer, told Business Insider.
  • Rainey is pushing to use AI technology to automatically respond to those requests. 

You decide to check your bank account when you come across a transaction simply labeled "PayPal." You pause, as you can't quite remember what you purchased. 

If it's a meaningful amount of money, you might be inclined to reach out to PayPal to find out exactly what you bought using the payments system.

You wouldn't be alone in your curiosity. John Rainey, the chief financial officer of PayPal, told Business Insider roughly 11% of the 60 million customer inquiries the company gets every year are simply about getting the details of a transaction. 

With every customer phone call costing PayPal about $4, those questions added up to about $25 million a year, according to Rainey. That's a significant cost to the business for something he said should be automated.

"There is no reason they need to speak to us about that," Rainey said. "We have all that information."

Issues like that, Rainey said, could be handled by a chatbots powered by artificial intelligence that would interact with clients via PayPal's app or website pulling the necessary data.  

Read more: PayPal is investing $500 million into Uber as part of the ride-hailing firm's $90 billion IPO

To be clear, Rainey isn't looking to completely stop customers from calling PayPal. He understands there will always be circumstances where a customer will want to get on the phone to talk through a problem.

"We don't want to force people into an experience that they don't want," Rainey added. "When you are dealing with money, people need some clarity."

However, Rainey is keen to improve PayPal's customer service through the usage of artificial intelligence. As it stands now, Rainey said the percentage of customer inquiries PayPal's chatbots, which are relatively new, handle is "in the high single-digits, but growing significantly."

Ideally, he'd love to get to the point where a majority of customer requests are automated. As opposed to aiming for small improvements every year, Rainey said PayPal is pushing for faster change. 

Checking on transactions isn't the only area Rainey sees opportunity. AI and machine-learning techniques can help predict what PayPal has dubbed the "BNA" — best action next — for the customer. 

If a customer is calling because they are having trouble adding a credit card to their PayPal wallet, the employee assisting could find out if he or she was trying to purchase something and how they could help them do so.

"Let us take the next step to actually predict what you want to do and help you with that," Rainey said. "Rather than you call back a second time when you have another issue."

Read more: PayPal hits $164 billion in total payment volume

Follow-up calls are a particularly sore subject for Rainey. Currently, 25% of PayPal's customer inquiries result in a repeat call, a figure Rainey said he is "ashamed" of. Improving what Rainey calls "first contact resolution" is a top priority. Employees are no longer incentivized for how quickly they can get off the phone with customers, as was the case previously. 

AI can help in that regard, too, pulling up relevant data based on similar inquires to help employees handling the request completely resolve the issue and address potential follow-up problems.

All of these efforts aren't just about reducing the amount PayPal spends on customer service either, Rainey added. 

"What we see is that your level of engagement — post a service experience — can be appreciably different depending upon how we resolve that," he said.

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Trump's tweet about Workhorse sent its stock soaring on news the electric-truck company is in talks to buy a GM assembly plant in Ohio (WKHS)

Wed, 05/08/2019 - 9:22pm

  • Workhorse, the electric-truck company negotiating a deal to buy an Ohio assembly plant from General Motors, got a sizable boost in its stock price on Wednesday after President Donald Trump sent a tweet about the deal.
  • Shares of Workhorse Group Incorporated finished the day at $2.65, nearly 215% above the previous day's close at $0.84 per share. The stock settled at $3.47 in after-hours trading.
  • Workhorse shares have floated around $1 or less for most of 2019.
  • Trump apparently preempted an official announcement about the deal between GM and Workhorse on Wednesday, forcing GM to correct the president's remarks.
  • Visit Business Insider's homepage for more stories.

The electric-truck company Workhorse is talking to General Motors about buying its assembly plant in Lordstown, Ohio.

President Donald Trump apparently preempted an official announcement about the deal on Wednesday, after a conversation with GM CEO Mary Barra. The two companies are still in the negotiation phase, according to GM.

The automaker swooped in after Trump celebrated the pending deal on Twitter. GM said the "discussions" with Workhorse were ongoing, and that Workhorse founder Steve Burns would buy the plant "upon final agreement."

Markets had a strong reaction to the news, sending the Workhorse stock up nearly 215% to $2.65 per share. The stock climbed even higher in after hours trading, where it landed at $3.47.

Read more: It looks like Trump just announced GM's plan to sell its Ohio car factory to an electric-truck company — before GM could

"We remain committed to growing manufacturing jobs in the US, including in Ohio," Barra said in a statement about the Workhorse deal, "and we see this development as a potential win-win for everyone."

"Workhorse has innovative technologies that could help preserve Lordstown's more than 50-year tradition of vehicle assembly work."

That would be welcome news for the Midwest manufacturing sector hit hard by auto-plant closures — which themselves are due in part to shifts in demand for certain types of vehicles.

Trump has also interpreted the pending deal between GM and Workhorse as a victory for his policy agenda, and a potential boost to his 2020 reelection campaign in Ohio. He won the generally purple state in 2016, taking 51.3% of the vote, after President Barack Obama won the state in 2012.

SEE ALSO: Uber is reportedly set to price its IPO at the midpoint of its target or below, giving it a valuation of as much as $86 billion

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Nest's product boss says it's time to rethink what it means to 'own' a tech product: 'We're not going to allow the owner dictate how our products work' (GOOG, GOOGL)

Wed, 05/08/2019 - 8:44pm

  • As technology increasingly shifts from the smartphones in our pockets to smart devices all around us, Google foresees privacy protocols will need to evolve as well. 
  • "It's not like you can sign a TOS (Terms Of Service) when you enter someone's house," Nest's VP of Product Rishi Chandra told Business Insider in a recent interview. "So we have to be very upfront about how our products work." 
  • In response, the company released a set of privacy commitments on Tuesday for its smart home devices and services that it says it will follow, starting with Nest Hub Max — which was announced at Google's annual developer's conference on Tuesday. 
  • Chandra said part of earning users' trust in an ambient computing world will be creating a consistent experience across its suite of products. 
  • "Part of this is making us rethink decisions we've made in the past," Chandra said. "[Moving forward] we're not going to allow the owner dictate how our products work." 
  • Visit Business Insider's homepage for more stories.

As technology evolves from the smartphones in our pockets into a realm of scattered devices that listen, watch and interact with us, Google expects privacy to go through a big change.

For one thing, says Google hardware executive Rishi Chandra, a world of ubiquitous smart devices located in homes, offices and streets means a different relationship between a user and a product. 

"We're trying to clarify, whether you're the owner or a friend or a guest — what our products do from a privacy standpoint. How do they work? Why do we have sensors in them? What do the sensors do?" Chandra said in an interview with Business Insider. "It's not like you can sign a TOS (Terms Of Service) when you enter someone's house. So we have to be very upfront about how our products work." 

Chandra is the VP of Product at Nest, Google's line of home appliances such as smart thermostats, video cameras and the Nest Hub Max that was unveiled at the Google I/O developers conference this week. His products exist in the world of "ambient computing" — a term coined by tech journalist Walt Mossberg to describe the growing array of technology that exists outside our personal devices. 

Read more: Google's new $229 'smart hub' device has a built-in Nest camera that can recognize your face

With ambient computing, much of the decision making power that users have today on their computers or smartphones will be stripped, Chandra says. For instance, when someone walks into a friend's home who has a smart speaker, that person doesn't have control over what information is collected from the conversation — the power lies with the company making the speaker. 

"Because it's a communal experience, the bar is very different," Chandra said. "Now all of a sudden, the commitment to privacy isn't just to me, but to anybody that actually walks into my house." 

Chandra told us that Google recognized this paradigm shift and the problems it could introduce. In response, the company released a set of privacy commitments on Tuesday for its smart home devices and services that it says it will follow moving forward, starting with the Nest Hub Max. 

Consistency will be key

To gain users' trust in a world of ambient computing, Chandra said consistency in product design will be key. 

With the Nest Hub Max, for example, anytime the camera is recording, a green status light will shine. That same green light should illuminate on all Nest products when the camera is on so users can make the association, according to Chandra.

But today, that's not the case. 

On current Nest cam products, users can turn the status light off — even if it's recording — so that the camera becomes less noticeable. In the future, those kinds of product tweaks will not be allowed. 

"Part of this is making us rethink decisions we've made in the past," Chandra said. "[Moving forward] we're not going to allow the owner dictate how our products work or how people understand how our products work." 

Gaining consumer trust will be essential for Google's efforts to spread its lineup of smart home devices, but could be an uphill battle given the company's recent track record. In February, Business Insider was the first to report that Google admitted to making an "error" in not disclosing an embedded microphone in its home security and alarm system, Nest Secure. 

"It was a strong reminder that if we screw up, it erodes trust," Chandra said of the incident. "It forced us to double down on how we are going to institute these [privacy] commitments."

'It's one team now'

Beyond its new commitment to privacy, the Nest Hub Max also signifies a meaningful internal development for Google's home hardware division. The company said on Tuesday that moving forward, all of its new and updated products will be branded with the "Nest" name. 

The cohesion of brands is a long time coming for Google, which acquired Nest for $3.2 billion in 2014. When Google reorganized into Alphabet in 2015, Nest became a standalone company and wasn't folded back into Google until 2017

"It's one team now. One roadmap across the entire organization," Chandra told us. "A lot of it was breaking the silos — that's the work we've been doing over the past year." 

To start, the Google Home Hub (the original hub product without a camera) will change its name to "Nest Home Hub." In the future, when hardware products like Google Wifi come out with new versions, their names will change as well. 

"I'm super excited about the roadmap that we have now," Chandra said. "But it took us some time to get there because we are changing the vision of where we want to go." 

Don't call it a 'smart home'

That change of vision, Chandra said, comes from the team's decision to focus its product efforts to build a "helpful home," not simply, a "smart home." 

To Chandra and his team, that means making products that are simple — anyone from five to ninety-five years old should be able to understand how to use their products. It also means, that when Nest products are used in conjunction with one another, they should deliver a better experience. "Better together" is the feel-good phrase Chandra likes to use. 

The mantra of building a more helpful Google was echoed on stage by Google's CEO Sundar Pichai during his keynote speech at I/O on Tuesday, and seems to be how the company hopes to evolve its product offering across the board. 

"In the end, our mission [at Google] is about help," Chandra said. "If we focus on the tech, I think, if we follow that path, we'll fail as an industry. If we focus on help and the benefits we give to our users, then I think we have opportunity and upside."

SEE ALSO: Google's CEO took a subtle swing at Apple in a new op-ed: 'Privacy cannot be a luxury good'

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A Slack director is in hot water with the SEC for saying the company, which just filed to go public, 'will be one of the most important tech companies in the world' (SK)

Wed, 05/08/2019 - 6:37pm

  • Slack director Chamath Palihapitiya made "unauthorized statements" in a TV interview, the company disclosed in an SEC filing related to its IPO.
  • Palihapitiya shared his insights into the Slack IPO in a CNBC interview, saying the office-messaging tool "will be one of the most important tech companies in the world."
  • Visit Business Insider's homepage for more stories.

A Slack director who said the company will be "one of the most important tech companies in the world" is in hot water with the Securities and Exchange Commission for making "unauthorized statements" ahead of the company's IPO.

Slack, which filed to go public last month, disclosed in an SEC filing on Monday that director Chamath Palihapitiya's remarks in a television interview with CNBC were not endorsed by the company.

His comments appeared to violate "quiet period" rules that govern companies that have filed to go public.

Slack announced that it plans to list on the New York Stock Exchange under the ticker symbol "SK" through a direct listing, in which private shareholders, including investors and employees, will be able to sell shares directly to the public.

In an April 30 interview, Palihapitiya shared his insights into Slack's IPO, heaped praise on Slack CEO Stewart Butterfield and declared that the office-messaging company is on track to becoming a major player in tech.

"You know, one of our biggest investments is a company called Slack, and I still think to myself, why did we not just lead every single round and write the entirety of the fund into that company," he said. "It was obvious from day one that Stewart Butterfield is an iconic CEO, and that Slack is going to be one of the most important tech companies in the world."

CNBC host Scot Wapner also asked: "You brought up Slack, so let's go there. You own 10% of the company? You're on the board. I know you're limited about what you can say as a result of all of that, but when can we expect it, and why the direct listing, and do you agree with that decision?"

"I love it," Palihapitiya said. "I mean, I think that the decision making that Stewart has taken is incredible, both in the way that he's built the company." 

"He is transforming the culture," he added. "He understands the product to a level of sophistication that I have not seen since Facebook."

Palihapitiya then elaborated on the strengths of Facebook and of another startup that just went public, Zoom.

"You know, when I was in the bowels of Facebook building that machinery, what I saw was a team that really understood product market fit, and the power of network effects, and why that created an incredibly subsidized business, a thing that could expand all over the world at marginally zero cost," he said.

"The only company in the world that looks like that today that is not yet public is called Slack, and it will be soon. And so, from that perspective I think it is the most incredible business that we have seen probably the next closest thing to it is a company that just went public recently, which is Zoom."

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A woman who studied 600 millionaires says the same traits helped them get rich — and there are 2 key ways anyone can develop them

Wed, 05/08/2019 - 6:30pm

Millionaires are often cut from the same cloth — they're disciplined, have focus, are resilient, and practice perseverance.

These are all qualities that help them build wealth, according to Sarah Stanley Fallaw, co-author of "The Next Millionaire Next Door: Enduring Strategies for Building Wealth" and the director of research for the Affluent Market Institute. But these traits aren't necessarily innate — there are two ways anyone can develop them.

The first way, according to Stanley Fallaw, is to understand where you are today.

"If you know that you're prone to make emotional decisions, it's first being aware of that and kind of taking stock of that and asking yourself, okay, when is it that I'm making decisions that are really not in my best interest?" she said in an Afford Anything podcast with writer Paula Pant

Once you've built awareness, you should then build new behaviors around typical behaviors, Stanley Fallaw said. She referenced Charles Duhigg's book, "The Power of Habit," for an understanding of building new behaviors around things you don't often give thought to.

Read more: A researcher who studied more than 600 millionaires found the same 2 qualities helped them get rich

"The example he gives is the chocolate chip cookies that he's always eating at a certain time of day and all of a sudden he's gained all this weight," she said. "It's replacing some of those behaviors and you can do that with finances as well."

She added: "I think that it's first acknowledging that maybe you have a shortcoming related to some of those things. Which is hard for some of us to do. And then, replacing some of those behaviors with others that are more conducive to achieving your goals long term."

The benefits of measuring progress towards a goal

When building new habits, there's one thing you should watch out for: measurement.

According to James Clear, author of "Atomic Habits," measuring your progress towards a goal has three benefits: It can make the behavior more obvious, create an additive effect, and add immediate gratification.

However, if you obsess about the measurement too much, it loses its benefits as it becomes the target — a concept known as Goodhart's Law, Clear said. By becoming so focused on the measurement, he explained, you can pull yourself off course; overemphasizing quantifiable victories can cause you to miss the emotional signals of progress.

So if you over-focus on a target number to get rich, it may sidetrack you from the qualities — like resilience and perseverance — that can help get you there.

SEE ALSO: A woman who studied 600 millionaires found 5 major differences in how they spend their time and energy compared with the average American

DON'T MISS: A woman who studied 600 millionaires found how rich you can get boils down to 6 'wealth factors,' no matter your age or salary

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China threatens to hit back at the US if Trump follows through with his plan to escalate the trade war

Wed, 05/08/2019 - 6:25pm

  • Beijing on Wednesday said it would take countermeasures if the Trump administration followed through with planned trade-war escalations.
  • The Office of the US Trade Representative filed paperwork Wednesday to increase the tariff rate on $200 billion worth of Chinese goods this Friday.
  • The world's two largest economies just days ago were widely viewed as being close to wrapping up a trade deal. Instead, the trade war now seems days away from a major escalations.

China on Wednesday said it would retaliate against the US if President Donald Trump followed through with scheduled trade-war escalations.

In a statement, Beijing said it would take "necessary" countermeasures if Washington more than doubled rates on a tranche of tariffs on Friday. The US on Wednesday filed official paperwork that would increase the tariff rate on $200 billion worth of Chinese goods to 25% from 10%.

Trump has also said he plans to levy 25% duties on about $325 billion worth of Chinese products not already subject to tariffs. For rationale, US officials have accused China of reneging on pledges from a draft trade agreement.

"Escalating the trade conflict is not in the interest of the people in both countries and the world," the Chinese Commerce Ministry said in a statement. "China deeply regrets the move." The Office of the US Trade Representative declined to comment.

Top trade delegations from the two countries are scheduled to meet in Washington later this week. Just days ago, before Trump threatened escalation, the two sides were thought to be close to reaching a deal. Earlier Wednesday, before China's announcement, Trump said China wanted to "make a deal" but also accused the country of stalling in hopes of waiting out his presidency.

"The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come," the president wrote on Twitter.

"Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers...great for U.S., not good for China!"

It wasn't immediately clear what countermeasures China planned to take. Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, said Wednesday's announcement appeared to suggest economic penalties could extend beyond import taxes.

"Gone is the word 'equal' ... from previous statements," he said. "Means tariffs, investment all on the table."

Here's a timeline of the US-China trade war so far:
  • March 1, 2018: President Donald Trump announces tariffs on all imports of steel and aluminum, including metals from China.
  • March 22, 2018: Trump announces plans to impose 25% tariffs on $50 billion worth of Chinese goods. China announces tariffs in retaliation to the steel and aluminum duties and promises a response to the latest US announcement.
  • April 3, 2018: The US trade representative announces a list of Chinese goods subject to the tariffs. There is a mandatory 60-day comment period for industries to ask for exemptions from the tariffs.
  • April 4, 2018: China rolls out a list of more than 100 US goods worth roughly $50 billion that are subject to retaliatory tariffs.
  • May 21, 2018: After a meeting, the two countries announce the outline of a trade deal to avoid the tariffs.
  • May 29, 2018: The White House announces that the tariffs on $50 billion worth of Chinese goods will move forward, with the final list of goods released June 15. The move appears to wreck the nascent trade deal.
  • June 15, 2018: Trump rolls out the final list of goods subject to new tariffs. Chinese imports worth $34 billion would be subject to the new 25% tariff rate as of July 6, with another $16 billion worth of imports subject to the tariff at a later date. China retaliates with an equivalent set of tariffs.
  • June 18, 2018: Trump threatens 10% tariffs on another $200 billion worth of Chinese goods.
  • July 6, 2018: The first tranche of tariffs on $34 billion worth of Chinese goods takes effect; China responds in kind.
  • July 10, 2018: The US releases an initial list of an additional $200 billion worth of Chinese goods that could be subject to 10% tariffs.
  • August 1, 2018: Washington more than doubles the value of its tariff threats against Beijing, announcing plans to increase the size of proposed duties on $200 billion worth of Chinese goods to 25% from 10%.
  • August 3, 2018: China says it will impose tariffs of various rates on another $60 billion worth of US goods if Trump moves forward with his latest threat.
  • August 7, 2018: The US announces that the second tranche of tariffs, which would hit $16 billion worth of Chinese goods, will take effect August 23.
  • August 23, 2018: The US imposes tariffs on another $16 billion worth of Chinese goods, and Beijing responds with tariffs on $16 billion worth of US goods.
  • September 7, 2018: Trump says the tranche of tariffs on $200 billion worth of Chinese goods is coming "soon" and threatens to impose tariffs on another $267 billion worth of Chinese goods.
  • September 17, 2018: The US imposes tariffs on $200 billion worth of Chinese goods, and the tariff rate is scheduled to increase to 25% from 10% on January 1.
  • December 1, 2018: Trump and Chinese President Xi Jinping sit down at the G20 summit in Argentina, where the two leaders hash out a trade truce, delaying the escalation of US tariffs until March 1.
  • December 4, 2018: Despite the truce, Trump tweets that he is still a "Tariff Man" and says a deal will get done only if it is in the best interest of the US.
  • February 24: After a series of negotiations, Trump announces that US tariffs will not increase on March 1. He delays the increase indefinitely.
  • May 5: After apparent progress in talks, Trump suddenly threatens to raise tariffs to 25% within the week and threatens new tariffs on another $325 billion of Chinese goods.

SEE ALSO: Trump said his trade war would pay off. But so far, experts see little evidence of meaningful change.

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Facebook is loosening its ban on crypto ads as rumors swirl about its blockchain project (FB)

Wed, 05/08/2019 - 4:51pm

  • Facebook is loosening up its ban on crypto-related ads.
  • Advertisements on the social network about blockchain technology and industry news will no longer require pre-approval.
  • The company clamped down on blockchain and bitcoin-related ads a year ago amid a wave of scams.
  • The change comes as the company is rumoured to be preparing to announce its own cryptocurrency to power payments.

Facebook is relaxing its ban on crypto-related ads.

On Wednesday, the social networking giant announced that it was loosening its rules around blockchain and digital currencies. Some types of ads will remain banned, or, at the very least, require pre-approval. But users will now be able to run ads "related to blockchain technology, industry news, education or events related to cryptocurrency" no approval required, Facebook said.

The change comes 16 months after Facebook first banned all ads for bitcoin, cryptocurrencies and ICOs amid a wave of scams and shady schemes in the industry. It subsequently allowed some ads related to the tech, but only if they were pre-approved.

And the change of heart arrives as rumours swirl about Facebook's own ambitions in the crypto space, and news leaks out about the efforts of its secretive blockchain team.

On Wednesday, Bloomberg came out with a new report that said the company could announce its own cryptocurrency to power payments in the third quarter of 2019, and that project head David Marcus (former PayPal president) is quietly building a 50-strong team comprised in part of ex-PayPal employees.

Facebook has thus far stayed mum about the direction its blockchain team is taking, and it was conspicuously absent from F8, Facebook's major developer conference, earlier this month.

On the ads side, Facebook says it will still require pre-approval for advertisements that directly promote cryptocurrencies or cryptocurrency exchanges, and that ads for ICOs (initial coin offerings, a form of crypto-powered fundraising) will remain banned. 

"We're committed to preventing misleading advertising on our platforms, especially in the area of financial products and services. Because of this, people who want to promote cryptocurrency and closely related products like cryptocurrency exchanges and mining software and hardware, will still have to go through a review process," the company said in a blog post announcing the change.

"This process will continue to take into account licenses they have obtained, whether they are traded on a public stock exchange (or are a subsidiary of a public company) and other relevant public background on their business."

Do you work at Facebook? Got a tip? Contact this reporter via encrypted messaging app Signal at +1 (650) 636-6268 using a non-work phone, email at rprice@businessinsider.com, Telegram or WeChat at robaeprice, or Twitter DM at @robaeprice. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

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This 29-year-old VC helped start Microsoft's investment fund. Now, she's joining the 50-year-old Mayfield Fund to help it invest in 'unhyped' markets. (MSFT)

Wed, 05/08/2019 - 4:43pm

  • Priya Saiprasad will join Mayfield Fund on May 14 after helping found M12, Microsoft's independent investment fund.
  • Saiprasad told Business Insider that, because she lived in 12 countries when she was growing up and had to remake friends each time, she admires entrepreneurs that have to "create something out of nothing."
  • At M12, she led investments in Series A and Series B enterprise artificial intelligence and machine learning companies. She also launched the firm's first female founders competition to overcome the misperception of a lack of women in the enterprise tech space. 
  • Saiprasad is one of the youngest partners in Mayfield's 50-year history. She plans to continue investing in early stage enterprise startups in her new role.
  • Visit Business Insider's homepage for more stories.

Priya Saiprasad is a millennial. She teaches hip hop dancing at her alma mater, University of California, Berkeley. She has a distaste for buzzwords, a love for math, and is a Yelp Elite member.

She's also Mayfield Fund's newest partner.

The 50-year-old Silicon Valley institution brought on 29-year-old Saiprasad to lead the firm's early-stage enterprise investments starting May 14. Before joining Mayfield, she was a founding team member at M12, Microsoft's independent investment fund, where she led Series A and Series B investments in startups that created artificial intelligence and machine learning products for industries that have historically shied away from tech. 

Read More: Many traditional VCs are hesitant to buy into cannabis startups, but these investors are taking the plunge

In a conversation with Business Insider, Saiprasad said she hopes to dispel the myth that women do not create enterprise tech companies. At M12, she launched the firm's female founder competition for women in enterprise tech, which received an overwhelming response.

"It's just a personal passion of mine," Saiprasad told Business Insider. "I just want women, and men, to have equal amount of access to capital and statistics show that that is not true today. So I want to do whatever is in my power and ability to be able to move that statistic to a more fair and equitable manner."

Math is a universal language

Saiprasad was born in Chennai on Indian's southeastern coast. Her father worked for an oil company, and the family moved between 12 countries before Saiprasad turned 12. With each move, Saiprasad said she learned a new language, attended a new school, and made new friends.

"The only thing that was constant for me was math," Saiprasad told Business Insider. "Math is kind of the same in every country. Math was something that always drove me and I've always been really analytical; numbers just come very naturally to me. That's been one constant in my life."

Saiprasad's father eventually accepted a job in the Bay Area, and the family settled into a routine. Her mother was a macroeconomist, and worked primarily from home while she and her sister were growing up.

"Growing up in my household, the dinner table conversations were, well, you could either think of them as really riveting or really boring," Saiprasad said. "I always just wanted to find out what makes successful companies successful and unsuccessful companies not achieve that same degree of success, and I thought maybe an undergraduate degree in business could help me further explore that."

Read More: Carta, the startup building a stock exchange for startups, says its own valuation increased nearly $1 billion in 5 months

Not keen on another move, Saiprasad attending UC Berkeley's Haas School of Business with a minor in math. After graduating in 2010, she went into investment banking before landing at payments startup Square, ahead of her career at Microsoft's M12.

Analyzing Silicon Valley

Early enterprise tech startups struggle most with a clear path to profitability, Saiprasad told Business Insider. She is on the board of three enterprise software startups and believes an analytical approach to funding what she calls next-generation founders is key to bringing new ideas to the enterprise tech market.

"I think it's very obvious, but first-time entrepreneurs bring a non-jaded perspective, and they bring that raw enthusiasm and scrappiness that really can help accelerate at the early stage," Saiprasad said. "And that sort of glee that you see in those first time entrepreneurs, especially the younger generation of entrepreneurs, is fantastic."

According to Crunchbase, Mayfield counts 116 exits in its 50-year history, a majority of which were enterprise startups. As Saiprasad looks to join the team, she thinks her approach will help the firm continue its successful streak.

"I think, as a younger VC, there's a lot of perceptions that [other investors] have about Millennials," Saiprasad told Business Insider. "I don't think [Millennials want] entitlement, I think we want equity and fairness. It's actually a positive where we will fight so hard for our entrepreneurs to have fairness in every stage of the process."

Saiprasad is planning to focus on startups working in "underhyped" industries that have not traditionally embraced technological innovation, such as real estate, construction, manufacturing, and legal technology.  

"It's not necessarily the most exciting spaces but there's actually so much innovation over there because there's a data moat that exists," Saiprasad said. "Whenever there's a data moat, there's so much opportunity to optimize and build an optimization engine on top of it."

SEE ALSO: Meet the 7 VC investors getting rich off of this year’s parade of 'unicorn' IPOs

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Sumo Logic, the startup helping Airbnb and the Pokémon Company secure their cloud software, raised $110 million in a round valuing it above $1 billion

Wed, 05/08/2019 - 4:34pm

  • Cloud analytics platform Sumo Logic has raised $110 million in a round led by Battery Ventures, the company announced Wednesday. This round values the startup above $1 billion.
  • Sumo Logic helps developers secure their cloud software. It gives them visibility into cloud platforms, including Amazon Web Services, Microsoft Azure and Google Cloud.
  • This makes Sumo Logic the latest unicorn in enterprise tech — a space that saw two major IPOs in April with PagerDuty and Zoom.

Cloud analytics startup Sumo Logic has raised $110 million in a Series G round led by Battery Ventures, giving it a valuation over $1 billion, the company announced Wednesday

Sumo Logic is a platform for developers working to secure their cloud software. It provides real-time visibility into the various cloud platforms including Amazon Web Services, Microsoft Azure and Google Cloud. Its customers range from Airbnb to the Pokemon Company.

"We have proven that we are the platform of choice for not only cloud-native companies, but also enterprise companies and their cloud migration initiatives," Ramin Sayar, CEO of Sumo Logic, said in a statement. "It's great to have such a powerful set of leading investors and ecosystem partners as we accelerate our category leadership."

Read more: UiPath raises $568 million in new funding at a mega $7 billion valuation, making it the most valuable artificial intelligence startup in the world

While the average consumer many not know or use Sumo Logic, it's been a hit with venture capitalists.

The company is backed by an all-star cast of Sand Hill Road investors, including Accel Partners, DFJ, Greylock, IVP and Sequoia, as well as Sapphire Ventures and Sutter Hill Ventures. With its latest round, Tiger Global Management and Franklin Templeton also joined the mix.

The company said it surpassed $100 million in revenue in fiscal year 2019, and has over 2,000 customers.

With a valuation exceeding $1 billion, Sumo Logic joins a growing cohort of enterprise tech companies gaining strong positions in the market as more and more companies move onto the cloud.

PagerDuty, a platform that lets IT professional monitor networks and notifies them when something has gone asque, went public last month with a $1.76 billion valuation. The company now has a $3.6 billion market cap.

Another enterprise tech favorite, the video conferencing company Zoom,went public one week later with a $9.2 billion valuation. Zoom now has a market cap just under $20 billion.

SEE ALSO: The investor behind companies like eBay and Allbirds says IPOs give startups the freedom to escape domineering VCs

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Lyft craters to a record low after its first quarterly report disappoints, Uber IPO looms (LYFT)

Wed, 05/08/2019 - 4:07pm

  • Lyft shares fell nearly 11% to a record low on Wednesday after reporting quarterly results for the first time as a public company.
  • Lyft did not break out gross bookings data in its report, which disappointed analysts looking for further detail on its growth.
  • Uber, Lyft's biggest rival, is expected to price its initial public offering on Thursday and begin trading on Friday.
  • Watch Lyft trade live.

Lyft plunged nearly 11% to a record low on Wednesday after the ride-hailing company unveiled its first quarterly results since going public.

Shares closed on their session low of $52.91 a share, bringing their post-IPO loss to 26.5%.

While Lyft handily topped Wall Street's expectations for its first-quarter sales and second-quarter outlook, Lyft left out some key details, according to analysts.

Read more: Lyft is whipping around after delivering earnings for the first time as a public company

On Lyft's conference call Tuesday evening, management was optimistic about the competitive landscape, which was a positive indicator about eventual profitability, according to Asad Hussain, an emerging technology analyst at PitchBook.

"However, Lyft withdrew providing gross bookings data, which complicates the ability of investors to understand pricing trends," Hussain said in an email.

While the market doesn't typically appreciate those kinds of "data pull-backs," Hussain said, he wouldn't be surprised if Uber were to make a similar move when the time comes for its own quarterly reports.

Judging by the market's severe reaction, Thursday's report did little to quell the investment community's long-term concerns about Lyft's growth prospects. Shares have fallen 23% from where they priced in late March.

Lyft offered encouraging results in its report, but still has "a lot to prove," Guggenheim analyst Jake Fuller said in a note to clients Wednesday morning. Fuller, who has a "neutral" rating on Lyft, said the report was light on details.

"Limited detail from LYFT around core metrics like number of rides, bookings and take-rate make it more difficult to decipher trends in unit economics and competitive dynamics," he wrote.

In a bright spot, management announced a new partnership with Waymo, which PitchBook's Hussain sees as a win for Lyft given the "long-term existential threat posed by autonomous vehicles." 

The report comes ahead of Uber's expected public market debut later this week. Lyft's much-larger competitor is expected to price its initial public offering Thursday and begin trading Friday. Analysts have long cited Uber as a major threat to Lyft.

At an expected market value of between $80 billion and $86 billion — Uber would be the third-largest US-listed IPO on record, according to Dealogic. Only Alibaba and Facebook's debuts were larger.

Read more Lyft coverage from Markets Insider and Business Insider:

Lyft says 2019 will be its 'peak loss' year

Lyft went public at a $24 billion valuation. Here's how that compares to other high-profile tech companies dating back to the dotcom bubble.

Uber and Lyft drivers are striking in over a dozen cities around the world on Wednesday. Here's the full list of where demonstrations are planned.

Lyft plunges below its IPO price

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These 8 Lyft investors are taking a big hit on their holdings (LYFT)

Wed, 05/08/2019 - 3:25pm

  • Ride-sharing app Lyft has suffered through volatile trading since its March initial public offering.
  • Shares have plunged 23% from their IPO price of $72, with investors recording paper losses. 
  • Watch Lyft trade live.

Lyft investors have had a rocky road since the initial public offering on March 29. The ride-sharing company's shares are down 23%, well below the initial-public-offering price of $72, wiping nearly $5 billion off the company's market cap.

These developments have important implications for the valuation of Uber's IPO, widely expected to be the largest of 2019. Uber is expecting to go public as early as Friday.

While every Lyft investor who got in ahead of the IPO has seen their Lyft holdings decline in value, Markets Insider picked out eight to highlight. 

To be clear, it is unclear at what price these investors originally purchased shares, and some or all could still be up significantly on their original investment. Also, these are paper losses, and Lyft's shares could yet rebound.

Rakuten

Description: Largest Japanese e-commerce and internet company

Shares: 31.4 million

Stake: 11.5%

Paper loss since IPO: $518 million

 



General Motors

Description: Largest US auto manufacturer, selling 3 million vehicles in 2018.

Shares: 18.7 million

Stake: 6.8%

Paper loss since IPO: $308 million

 



Fidelity

Description: Largest privately held mutual-fund company, managing $2.5 trillion.

Shares: 18.5 million

Stake: 6.8%

Paper loss since IPO: $305 million

 



See the rest of the story at Business Insider

Uber is reportedly set to price its IPO at the midpoint of its target or below, giving it a valuation of as much as $86 billion

Wed, 05/08/2019 - 2:52pm

Uber is set to price its initial public offering at the midpoint of its target range or below, according to a Wednesday report from The Wall Street Journal that comes ahead of the ride-hailing giant's expected Thursday pricing and Friday stock-market debut.

If Uber's stock were to price at the midpoint of its expected range, at $47 a share, its valuation on a fully diluted basis would be about $86 billion, The Wall Street Journal's report said, citing people familiar with the matter.

Uber last month said it planned to sell 180 million shares in its public offering at a price between $44 and $50 a share, which would value the company at $80 billion to $90 billion.

These numbers are well below the initial valuation expectations floated in earlier reports. Uber had sought a valuation as high as $120 billion, sources told Reuters last month.

The lower pricing was influenced by the disappointing stock-market performance of its competitor Lyft, according to The Wall Street Journal. Some investors said they were waiting for Lyft to report earnings on Tuesday before placing their orders for Uber's IPO.

Lyft shares have tumbled 23% from their IPO price in March and 37% from where they first traded. The dismal performance comes after enthusiastic investor appetite for Lyft's shares, according to Reuters.

Put another way, Lyft's rapid decline in its first month of trading was the second-worst opening-month performance of a large US-listed IPO, according to Dealogic. Only Facebook's 21% decline in 2012 was worse than Lyft's 20.5% drop. 

Still, Uber's expected valuation ranks among the largest US IPOs on record.

If Uber priced at the midpoint of its range between $44 and $50 a share, it would be the third largest, trailing only Alibaba and Facebook, according to a Dealogic analysis.

The San Francisco-based company's offering also comes at a delicate moment in the US stock market. Stocks have gotten whipped around all week by developments in the US-China trade war, though equity markets are within striking distance of their all-time highs.

Uber did not respond to Business Insider's request for comment on Wednesday afternoon.

Read The Wall Street Journal's story here.

Now read more Uber and Lyft coverage from Markets Insider and Business Insider:

Morgan Stanley, Goldman Sachs, and all 27 other banks working on Uber's mega-IPO

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Lyft plunges to an all-time low amid reports Uber is seeking a valuation of up to $100 billion

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Silicon Valley startup uBiome raised $105 million on the promise of exploring a 'forgotten organ.' After an FBI raid, ex-employees say it cut corners in its quest for growth.

Wed, 05/08/2019 - 2:32pm

  • In April, the FBI raided the offices of the microbiome-testing startup uBiome, reportedly as part of an investigation into questionable billing practices.
  • On the heels of the raid, uBiome placed co-CEOs Jessica Richman and Zac Apte on administrative leave.
  • Interviews with insiders revealed concerns at the company that extended beyond billing issues, however.
  • They said a quest for growth drove the company to cut other corners as well, including on its science.
  • Visit Business Insider's homepage for more stories.

The Silicon Valley healthcare startup uBiome is in hot water over its reportedly questionable billing practices, but insiders say problems at the company extend beyond issues tied to insurance claims.

After an FBI raid last month and reports of an investigation into how the startup charges customers for some of its tests, uBiome suspended sales of two of its tests and placed its co-CEOs on administrative leave. The company runs lab tests that provide information about the bacteria in your body, called the microbiome. Most of the tests work by having customers use a swab to take a sample of their poop from recently used toilet paper.

The microbiome is a growing area of scientific interest. It has been dubbed the "forgotten organ" thanks to its apparent role in affecting everything from your mood to your risk of disease. uBiome has raised $105 million from investors such as the Silicon Valley tech accelerator Y Combinator and Bryan Johnson's OS Fund, achieving a valuation of $600 million, according to PitchBook.

Read more: I tried a test that let me peek inside my microbiome, the 'forgotten organ' that scientists say is the future of medicine — and what I learned shocked me

Problems at uBiome have been brewing for at least a year, according to internal documents and interviews with three former employees. The interviews, with people who worked in uBiome's science, billing, and marketing departments, suggest a company that started out with a strong emphasis on science but then may have cut corners in a quest to show faster growth.

Two former employees said that the company billed individuals and insurers repeatedly as a way to boost revenue figures that it showed investors. Both people said that in some cases, uBiome would run a test multiple times on the same sample to generate extra bills, even in cases where that wasn't needed. The people asked not to be identified because they signed agreements not to reveal company information publicly.

"We'd get people to unwittingly sign up for six tests and then hound them over email to repeat them," one former employee said. "Then we'd have the opportunity to bill people for six tests instead of one. It wasn't necessarily in the patient's best interest."

Additionally, one of the former employees said the bulk of the company's billing department was in Argentina, meaning that people who worked in billing at the company's US offices had less oversight and involvement in what was going on, in that employee's view.

Although uBiome initially prided itself on putting research first, not all aspects of all of its tests were backed by the same level of rigorous science, Elisabeth Bik, uBiome's former science editor, told Business Insider. Beyond that, the company used questionable tactics to encourage doctors to sign off on the tests, the two other former employees said.

"It felt like the science became less and less important to them over time," Bik said.

uBiome declined to comment for this article.

uBiome started as a science project, then raised its profile

uBiome began as a citizen science project that sought to create a large public database on the microbiome, the rich assortment of bacteria that thrive in our bodies and appear to influence everything from our mood to our risk of certain diseases.

In recent years, uBiome had been raising its profile. The San Francisco-based company collected thousands of samples, published cutting-edge science, and signed research partnerships with major brands, such as L'Oréal.

Last month, the FBI raided its offices in what The Wall Street Journal said was part of an investigation into questionable billing practices. After the raid, the company placed cofounders and co-CEOs Jessica Richman and Zac Apte on administrative leave, naming John Rakow, uBiome's general counsel, its interim CEO. The company said it would undertake an independent investigation into its billing practices and cooperate with inquiries from the government and health insurers.

uBiome sold four different tests, three of which had to be ordered by a doctor. The company portrays those three tests as covered by health insurance, but statements and complaints viewed by Business Insider suggest that insurance companies often don't pay for them. Anyone can order uBiome's fourth test, called the "Explorer," which is portrayed as a fun way to learn more about the microbiome and costs $89.

The fact that insurance doesn't cover the doctor-ordered tests wasn't clearly communicated to customers, in two former uBiome employees' view.

Complaints start to stream in

Problems started to crop up at uBiome in fall 2018, all three former employees said, when complaints from customers and insurance companies turned from a trickle into a steady stream.

At that time, the insurance company Aetna flagged uBiome's billing practices and put uBiome on notice, according to a former employee at uBiome and another source familiar with the matter.

Business Insider has previously reported on complaints from customers who received unexpected bills after using the company's tests. Some of them had signed up under uBiome's pilot program, which told potential test takers in big letters "No cost to you."

If the health insurers didn't pay, the individuals thought they wouldn't be on the hook for the costs. But instead, the people said in the complaints that they were left with bills of as much as $3,000.

Read more: Customer complaints show $600 million health startup uBiome has been surprising patients and insurers with bills for years

Also, patients were often billed multiple times for the same test. That was often based on the premise that the science in uBiome's database had been significantly updated, according to two former employees and internal documents viewed by Business Insider. But they said that this wasn't always true. In many cases, the science was only incrementally altered, if at all, they said.

The employees also raised concerns about the process uBiome was using to have doctors sign off on the tests. Two said that customers were essentially diagnosing themselves with a disease like irritable bowel disease — often online, based on things they read on uBiome's website — and ordering a test. Then, uBiome would send the order to a list of doctors who were likely to approve it, the employees and the internal documents suggested.

CNBC previously reported on uBiome putting pressure on clinicians to approve tests with minimal oversight and dismissing at least one doctor who did not green-light tests fast enough.

A test that may not belong in doctors' hands

Beyond the issues raised by employees about the ordering process for uBiome's tests, Bik said there were scientific reasons that one of the tests was not ready to be used in the way it was portrayed.

uBiome sells doctor-ordered tests, including SmartGut, which looks at the gut microbiome to test for gut conditions and metabolic disorders, and SmartJane, a test that looks at the vaginal microbiome to test for sexually transmitted diseases and chronic vaginal infections. The company placed the most marketing and research emphasis on its SmartGut test, two former employees said.

Bik, a molecular biologist and former Stanford researcher who served as uBiome's science editor between October 2016 and December 2018, was responsible for helping uBiome publish research papers, vet the science behind its products, and edit the text that appeared on uBiome's website.

She said there were components of the SmartGut test with solid scientific backing that she felt could reasonably be covered by insurance. But other parts of the test offered a less-clear benefit to customers, in her view. As a result, she said she did not think there was a strong argument for insurers to cover the complete cost of the SmartGut test.

Bik said the test is not diagnostic, meaning it can't tell patients with certainty whether they have a serious condition such as inflammatory bowel disease. Despite this, promotional materials from uBiome suggest that the SmartGut test helps diagnose these conditions. Materials on uBiome's website for the SmartGut test read: "detects beneficial and pathogenic microorganisms associated with gut conditions like irritable bowel syndrome (IBS), and inflammatory bowel disease (IBD), including ulcerative colitis and Crohn's Disease."

"We cannot even come close to the diagnosis of a disease," Bik said.

Still, there were parts of the SmartGut test that Bik said made sense for insurers to cover. One component of the test, for example, could identify the presence of an infection, such as salmonella, by testing for bacteria linked with that infection.

Billing tactics driven by a desire to show Silicon Valley growth

The SmartGut test was a lot more lucrative for uBiome than its other tests, two former employees said.

uBiome encouraged customers to take up to six SmartGut tests under the premise that those tests would help track a person's well-being over time, according to those former employees and internal documents. In some cases, uBiome would repeatedly reach out via email to encourage people to order another test.

uBiome was not up front with customers about the fact that it would bill them for each test, the former employees said.

Meanwhile, the financial figures uBiome shared with investors were based on billing tied to running multiple tests, according to the former employees and internal documents.

"They just wanted to see that graph that showed it going up and to the right," one former employee said.

Additionally, the scientific updates that uBiome would perform on the tests in order to rebill customers were not always warranted or significant, one former employee said. Instead, leadership from inside the company was pushing the rebilling practices as a way to make up for slowdowns in sales, according to the employee.

"People were trying to find any reason why we should bill the samples that were already in-house again," the person said.

Bik said she could understand why a clinician might want someone with a serious disease such as Crohn's to take the test multiple times as a way of getting a better hold on what's going on in someone's gut over time.

Still, she agreed with the other former employees that uBiome may not have been clear in communicating to patients when or why they should take multiple tests — although she was not heavily involved in the billing practices and couldn't say for sure. She also said she didn't believe that kind of use justified coverage from insurers.

Although Bik questioned the strength of the science behind the SmartGut test, she said she stands strongly behind other uBiome products in which the science is more solid. For the SmartJane test, for example, which looks at vaginal health and must be ordered by a doctor, Bik said there was a "very clear relationship" between the kinds of bacteria the test could identify and vaginal health.

"If I had to choose one test that I'd consider being doctor-prescribed, that test is a much better candidate," Bik said.

She also still believes the company's Explorer test, the one test uBiome offers that is not doctor-ordered, is a great way to help people learn about their microbiomes in a fun, non-risky way.

But "we made very clear that's not a diagnostic test," Bik said.

Lydia Ramsey contributed reporting.

Want to tell us about your experience with uBiome? Email the author at ebrodwin@businessinsider.com.

SEE ALSO: I tried a test that let me peek inside my microbiome, the 'forgotten organ' that scientists say is the future of medicine — and what I learned shocked me

DON'T MISS: As Silicon Valley tech giants like Facebook and Juul push into healthcare, they see revolution. Outside experts see red flags.

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Billionaire real-estate investor Sam Zell says now is 'the time to accumulate capital' for future real-estate buys as a glut approaches

Wed, 05/08/2019 - 2:27pm

  • The real-estate investor Sam Zell told attendees of this week's SALT conference in Las Vegas that there would be a chance to buy discounted real estate in a couple of years, specifically apartments and office buildings.
  • While prices are less "speculative" now than they were four or five years ago, Zell said, he still suggested now was the time to be adding to your cash reserves, not pushing it into the real-estate market.
  • The controversial billionaire investor, who made headlines last year for using vulgar language when talking about hiring more women in the investment industry, also called President Donald Trump's $2 trillion infrastructure plan "a lot of bullshit."

The billionaire real-estate investor Sam Zell is building up his pool of cash, planning to put it to use in a couple of years.

Compared with four or five years ago, prices for real estate have become "less speculative" but are still too high for Zell's taste, the founder of Equity International told attendees of this week's SALT conference in Las Vegas.

"I think there's going to be an opportunity" in the next few years, Zell said, to buy cheap apartment and office buildings because of oversupply.

"We've seen a lot of apartments built in the last years, we've seen a staggering amount of office space," he said, saying he didn't believe the demand matched the new construction.

Because of this coming opportunity, Zell said "this is the time to accumulate capital."

Read more: Big-money investors are piling into 'opportunity zone' funds in lower-income neighborhoods, but there are a bunch of reasons to be cautious

The billionaire investor, who was uninvited to UCLA last year because of vulgar comments he made about hiring women and his controversial ownership of the Los Angeles Times, also described the $2 trillion infrastructure plan recently proposed by President Donald Trump and top Democratic leadership as "a lot of bullshit."

"I don't think it's real," Zell said, while also acknowledging that the country needed infrastructure upgrades.

"Public and private partnerships, unless there's a specific project in mind, don't work," he said.

Zell also pushed back on his fellow real-estate developer, saying Trump's immigration stances would not help the country.

"I don't think anyone in this room thinks this country is full," said Zell, whose parents immigrated to the United States from Poland at the beginning of World War II.

"We don't have enough competent, qualified, educated people."

Read more: Democrats say Trump has agreed to work on a $2 trillion infrastructure plan, but there's a big catch

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Trump's threat to sharply increase tariffs would hit China's economy like a sucker punch

Tue, 05/07/2019 - 9:47pm

  • If the US hikes tariffs on $200 billion worth of Chinese goods to 25%, as President Donald Trump and his trade representatives have threatened, the result would be sudden and devastating.
  • While the Chinese economy appears stable, that only happened after a number of measures policymakers enacted in the first quarter.
  • More stimulus would likely mean impacting China's already frothy property market, which could make a delicate situation even more precarious.
  • "It's not clear to me that the old playbook — infrastructure investment and tax cuts — it's not clear if that's going to be enough to cushion this,"  analyst Charlene Chu of Autonomous Researchshe told Business Insider.
  • Visit Business Insider's homepage for more stories.

If the US's tariffs on Chinese goods increase to 25% on $200 billion worth of goods on 12:01 am on Friday, as President Donald Trump and his top trade advisers have threatened, it will hit China like a sucker punch — an unexpected, devastating blow that will leave policymakers reeling, at least for a moment.

"I did not see it coming," said Charlene Chu, a senior analyst at Autonomous Research dubbed the 'rockstar of Chinese debt analysis.'

"If we think about what happened over the last year we have a credit induced slowdown... there's a straight forward fix [to that], just increase credit. But this is a very different type of shock... It's not clear to me that the old playbook — infrastructure investment and tax cuts — it's not clear if that's going to be enough to cushion this."

Believe it or not

You may recall what was happening to the Chinese economy earlier this year. Indicators were flashing red. Small and medium sized enterprises (SMEs) were struggling to get credit. Consumers were getting crushed under debt servicing costs. 

Chu says that business owners she talked to were looking at moving their operations to Vietnam or Burma. The currency continued to slide  and sentiment was dark. To stabilize the economy the government stepped in with a package of credit easing and tax cuts that undid all of the tightening it had done since 2016, according to Chu's research. The economy came back to life and the world was happy. Stocks rallied.

This 25% tariffs threat though — that's another animal. When this correspondent talked to Wall Street China watchers on Monday morning, no one thought the Trump administration would go through with it. It would be too devastating for China, the world, and the US (in that order).

By Tuesday, after Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer made statements backing up Trump's declaration, people started changing their tune.

Analysts at Morgan Stanley told clients that the tariff increase is more likely now that they know the US and China are fighting over fundamental changes the Chinese economy.

"It now appears that the impasse is over more critical and numerous issues than previously thought, and the delay in talks this week leaves little time for resolution before 12:01 am Friday," they wrote. 

But there's still time. Chinese Vice Premier Liu is still headed to Washington on Thursday to try to talk things out, but if he fails the tariffs could go into effect while he's in the US capital.

What 25% can do

China's last slowdown was not caused by Trump's trade war, but rather by the country's addiction to credit. In 2018 the government pulled back from credit stimulus measures it took in 2016, and the results were more damaging than policymakers imagined. 

That isn't to say that tariffs were insignificant. As it stands there are 10% tariffs on $200 billion worth of goods and 25% on $50 billion worth of goods. According to analysts at Societe Generale the one-two tariff punch knocked 0.1-0.2 percentage points off China's real GDP growth since it went into effect last September.

What's more interesting is what happened to that $50 billion worth of goods. Exports of those goods contracted by 30% year-over-year from February of this year to last, according to the analysts.

"Should the US decide to raise the tariffs on $200 billion goods to 25% on Friday, we estimate the hit to growth would be an extra 0.2-0.3 [percentage points]. If the US were to impose 25% tariffs on all Chinese exports, there would be another 0.5 [point] drag on growth, thus bringing the total damage to 1 [point]," the analysts wrote. 

The International Monetary Fund sees an even uglier picture, estimating that all US tariffs taken together could shave 1.6 points off Chinese GDP in 2019. 

Mayday

If this happens China does have options, according to Leland Miller of China Beige Book, a survey of the Chinese economy. Policymakers could continue cutting reserve requirement rates, as they did recently for small and medium sized banks. They could conduct wider easing too. All of this will be helped by the fact that rates around the world are so low.

But Chu says it's unlikely that playbook will be enough, and so it will be hard to stabilize the economy without touching a massive, frothy sector: the property sector.

"They could pull that lever and it would make a difference but it's the one area they themselves worry about," she said. "We're talking about a very imbalanced property market becoming more imbalanced."

Restrictions on the property market vary from locality locality, but, in short, the Chinese government could enact regulatory changes to incentivize real estate transactions. Those tweaks could in turn boost the Chinese economy and blunt some of the tariff impact.

If the tariffs hike happens, concerns about the property market overheating will have to wait. The Chinese stock market will need help, and the yuan will need support as well.

When the 10% tariff was put on $200 billion worth of goods, the yuan slid. That wasn't such a bad thing, though, because it offset the impact of the tariffs. Chu says that can't happen this time. The 25% tariffs is too large to expect the yuan to offset it. It could force the yuan past its psychological barrier of 7 yuan to $1.

"If the yuan crosses through 7, 7.2, 7.4 [per dollar]... believe that global markets will start freaking out," she warned. "Asian currencies will start moving, global equities will be tanking, bond yields will spike, the whole world will feel this."

Now the Chinese government could retaliate, but the US doesn't sends far fewer exports to China than China sends to the US. That means China could retaliate by hurting US companies in China (think: boycotts, protests).

"We [the US] are in a much better position but there's no doubt that there will be pain over here," Chu said. "This is the manufacturing center of the world, and you're talking about the largest trading relationship that they have going very bad... that has huge ramifications."

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There hasn't been this much risky corporate debt in years. The Fed is sounding the alarm about what that could mean for the economy.

Tue, 05/07/2019 - 9:40pm

  • In 2018, the amount of leveraged loans increased by 20% to above recent peaks in 2007 and 2014. 
  • The Federal Reserve this week flagged the sharp rise as a risk to the financial system.
  • But institutions appear more resilient than before the financial crisis. 

A rapid rise in levels of risky corporate debt has emerged as a top vulnerability in the world's largest economy.

Leveraged lending in the US jumped by one-fifth to $1.1 trillion in 2018, above peaks seen during the financial crisis, the Federal Reserve said in a semiannual report out Monday.

That was particularly concerning because the largest increases were concentrated among the riskiest firms, which have lower credit ratings and large amounts of debt. Credit standards for business loans appear to have loosened over the past six months.

Default rates in leveraged lending remain relatively low, but officials cautioned that this could change in the case of a slowdown.

"Even without a sharp decrease in credit availability, any weakening of economic activity could boost default rates and lead to credit-related contractions to employment and investment among these businesses," the report said.

While the economy grew at a far faster pace than was expected in the first quarter, forecasters said underlying trends pointed to cooler growth in the coming months. Officials highlighted a series of strains that could lead growth to falter, including global trade tensions and slowing activity in Europe and China.

Collateralized loan obligations, which are bundles of leveraged loans sold in tranches, reached record levels in 2018 and accounted for more than half of outstanding leveraged loans. But the Fed said that this type of loan has become far more stable than in the run-up to the Great Recession a decade ago.

"Compared with the investment vehicles associated with subprime mortgages in the financial crisis, CLOs are structured in a way that avoids run risk," the report said.

It's not unusual to worry about a boom-and-bust situation at this point in the business cycle, Ryan Sweet, an economist at Moody's Analytics, said. The expansion that began in 2009 is set to become the longest in history this July.

"While there are significant differences between leveraged lending and subprime mortgage lending, the similarities are eerie," he said.

In November, the Fed flagged similar risks to nonfinancial corporate borrowing.

"The good news is that because everyone is talking about the leverage loan market, including regulators, odds are this won't kill this expansion," Sweet said.

SEE ALSO: Trump's top trade negotiator confirms the China tariffs will increase on Friday, accuses Beijing of walking back on trade deal

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Trump's tax records show his businesses lost so much money over a decade, he didn't have to pay income taxes for 8 of those 10 years

Tue, 05/07/2019 - 8:43pm

  • President Donald Trump's tax information covering the years 1985 to 1994 show a business empire nearly in ruin, according to financial information obtained by The New York Times.
  • Trump's negative adjusted gross income allowed him not to pay any income tax for eight of those years, according to the records.
  • The filings show that in 1985, Trump lost $46.1 million from his casinos, hotels, and apartments. These businesses kept losing money annually for a total loss of $1.17 billion over 10 years, according to The New York Times.
  • Visit Business Insider's homepage for more stories.

President Donald Trump's tax information covering the years 1985 to 1994 show a business empire nearly in ruin, so much so that his negative adjusted gross income allowed him not to pay any income tax for eight of those years, according to The New York Times.

The tax information, first reported by The Times on Tuesday, revealed that Trump's businesses were not as successful as the future president made them out to be:

  • In 1985, the filings show Trump lost $46.1 million from his casinos, hotels, and apartments. These businesses kept losing money annually for a total loss of $1.17 billion over 10 years, The New York Times reported.
  • In 1986, his businesses had a loss of $68.7 million, according to The Times.
  • In 1987, Trump purchased a $29 million yacht and a $407 million hotel despite the stock market taking a plunge. He reported his businesses lost $42.2 million in 1987 and $30.4 million in 1988.
  • Trump's business losses between 1990 and 1991 totaled more than $500 million.
  • Citing Trump's tax filings and publicly available data from the IRS, The Times reported Trump "appears to have lost more money than nearly any other individual American taxpayer" when compared with other wealthy individuals.
  • The losses meant that Trump avoided paying income tax for eight of the 10 years documented in the tax information cited by The Times.
  • Additionally, Trump's income shifted annually. In 1988, he earned a more than $67 million salary, and he received a "mysterious" $52.9 million in interest income in 1989.
    • Trump's $67 million salary was 90% of his total regular wage during the 10-year period.
    • Trump's interest income shifted dramatically. In 1990, he reported $18.7 million, and in 1992, he reported $3.6 million.
  • Between 1986 and 1988, Trump suggested he would buy out numerous companies. The suggestions earned him millions of dollars, but the gains were short-lived after investors stopped taking him seriously, The Times reported.
  • In 1989, Trump's businesses reported a loss of nearly $182 million, according to The Times.
  • The Times said Trump borrowed $10 million for his Mar-a-Lago resort in Florida. But this investment appears to have been fruitful — financial disclosures from 2017 claimed the estate is worth over $50 million, according to The Sun-Sentinel.

Trump portrayed himself as a wealthy business mogul before his presidential campaign and has continued to do so throughout his presidency.

"There is no one my age who has accomplished more," Trump told Newsweek in 1987.

Trump's attorney Charles Harder said the tax information The Times cited for its report is "demonstrably false" and "highly inaccurate."

"IRS transcripts, particularly before the days of electronic filing, are notoriously inaccurate," Harder said, without offering any evidence to support that assertion.

Read more: Democratic lawmaker asks IRS for 6 years of Trump's tax returns

The Times' reporting does not answer lingering questions about Trump's more recent tax returns, which have been a contentious topic during his presidency. Democrats have questioned Trump's financial dealings and have asked for six years of his tax returns.

Democratic Rep. Richard Neal of Massachusetts, the Ways and Means Committee chairman, previously demanded that Treasury Secretary Steve Mnuchin direct the IRS to release the returns for a select group of lawmakers.

Mnuchin rebuffed the request, citing a lack of a "legitimate legislative purpose."

Trump defied decades of precedent as a presidential candidate by refusing to release the tax documents and has continued to keep them from the public as president. Trump said he could not release his returns while he is under audit by the IRS.

It is unclear if Trump is being audited by the IRS. There is no law that prohibits a tax filer from releasing his tax returns during an audit.

SEE ALSO: 'It must really suck to be that dumb': Republican senator says Democrats aren't 'fooling anybody' with Trump tax-return request

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