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Stephen Ross, the developer behind NYC's $25 billion Hudson Yards neighborhood, says a housing market slowdown 'has to happen' and that the city needs 'a lot of affordable housing'

Thu, 08/29/2019 - 3:53pm

  • Billionaire real-estate developer Stephen Ross believes the housing market "is probably in the eighth inning," he told Yahoo Finance on August 25.
  • Ross is the chairman of Related Companies, which has invested in New York's Time Warner Center and Hudson Yards developments, and fitness brands Equinox and Soul Cycle, Business Insider previously reported.
  • Ross drew widespread criticism in early August for hosting a fundraiser for President Trump's reelection campaign, Business Insider previously reported.
  • Visit Business Insider's homepage for more stories.

A connection to President Trump isn't the only thing threatening the bottom line of the New York real estate developments owned by Stephen Ross, the billionaire himself told Yahoo Finance.

"I mean, I think real estate today is probably in the eighth inning, you know?" Ross said in an interview with Yahoo Finance that was published August 25.

When asked if the country is in a housing bubble by Yahoo Finance's Andy Serwer, Ross replied, "You know, we're at a point now where I think there will be a slowdown because it has to happen."

Ross, 79, built a $7.7 billion fortune as a real-estate developer in New York, Business Insider previously reported. Ross' firm, Related Companies, is responsible for the City's Time Warner Center and Hudson Yards developments. Ross has also invested in the Miami Dolphins, feminine care line Lola, and upscale gym chain Equinox, which is the owner of Soul Cycle and Blink Fitness. 

Read more: In the 1940s, you could rent a Brooklyn apartment for $20 a month. Today, the median rent has skyrocketed to $3,000.

Several of those businesses found themselves in hot water with their customers in early August when media reports said that the billionaire planned to host a fundraiser for President Trump's reelection campaign. Equinox members and Soul Cycle riders threatened to boycott the brands over their connection to Ross, Business Insider's Kate Taylor reported.

Ross subsequently released a statement about his relationship with Trump, saying that "while we agree on some issues, we strongly disagree on many others, and I have never been bashful about expressing my opinions," Business Insider previously reported.

"I always have been an active participant in the democratic process," Ross said in the statement. "While some prefer to sit outside of the process and criticize, I prefer to engage directly and support the things I deeply care about."

The developer behind 'billionaire playground' Hudson Yards calls for more affordable housing.

Ross's developments were a source of controversy in New York long before his support of the president was made public, however.

Hudson Yards, where apartments range from $4.3 million to upwards of $32 million in price, was criticized for being a "playground for billionaires," Business Insider previously reported. Hudson Yards is currently home to 107 affordable apartments with rents starting at $858 that will be leased through a lottery, according to Curbed.

Ross did not immediately respond to a request for comment on his beliefs about the housing market from Business Insider.

Major real estate markets including New York, Miami, and Los Angeles are currently over-saturated with luxury properties, while affordable housing remains in short supply, Business Insider's Hillary Hoffower previously reported. Ross has suggested that government subsidies could be used to solve the problem.

"I think we need certainly, a lot of affordable housing and [need to figure] out ways we can provide for that," Ross told Yahoo Finance

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Raising a Series A round used to be a victory lap for startups. Thanks to Softbank, it’s become one of the most competitive rounds with the highest stakes.

Thu, 08/29/2019 - 3:50pm

  • Mega-funds like Softbank's billion-dollar Vision Fund are pressuring early-stage firms to make bigger deals with bigger returns, several investors told Business Insider, which increases the competition among a handful of firms competing for Series A deals.
  • Many investors pointed out that taking institutional funding for Series A comes with a certain set of expectations that founders might not be aware of, and so they struggle to meet those expectations once the round has closed.
  • "The Series A is becoming professionalized," Sridhar Tayur, a professor at Carnegie Mellon University's Tepper School of Business, told Business Insider.
  • Notion, a productivity startup popular among venture investors, made waves in July when it apparently skipped over a traditional Series A in favor of individual investors in an uncommon $10 million angel round. It's the latest example of a buzzy startup passing up traditional funding in favor of angel investors.
  • Click here for more BI Prime stories.

Closing a Series A funding round has always been seen as something of a graduation for Silicon Valley startups.

At that point, the founder has probably found a business model, and hired some of her first employees  — what was once just an idea is turning into an organization that somewhat resembles a real company.

But, in true Silicon Valley fashion, graduation is starting to lose some of its luster for founders hoping to move fast and break things. The Series A round, historically a smaller round to help take a company through its first pang of growing pains, is now a major fundraising event in its own right, as even young startups cash checks worth hundreds of millions of dollars.

"The Series A is becoming professionalized," Sridhar Tayur, a professor at Carnegie Mellon University's Tepper School of Business, told Business Insider.

And the trend has an instigator: mega-funds like Softbank's infamous $100 billion Vision Fund, which hasn't hesitated to write massive Series A checks like its $1.15 billion investment in Chinese Ping An Healthcare Management, or the $300 million it put into US-based robotics startup Automation Anywhere.

Tayur explained that Softbank's massive Vision Fund has started to pressure early-stage investors to make bigger bets, earlier than they might have otherwise.

Read More: Anna Khan is only the third woman GP in CRV's 50-year history. Now, she has a plan to close the 'lost' gap between early- and late-stage investing.

With the likes of Softbank making nine-digit investments in early-stage startups, founders are taking more money, attached to higher valuations. But those higher valuations also come with higher expectations, several investors we spoke to pointed out — nobody invests that much money without looking for a sizable return.

"If you know what you are doing and are ready to get on the treadmill, it's fine, but once you take institutional money, you are on the clock," Tayur said. "A VC wants a return in a timely manner, so the minute they put money in, the clock starts for them and then the entrepreneur."

Under pressure

There's a lot of mystery that an go into a Series A round, several investors told Business Insider.

Founders and investors have a mutual interest in the future of a startup, but it's hard for each to assess the other. A newer startup may not have enough data to prove to investors that it has a bright future ahead, and first-time founders may not have the experience to accurately and responsibly vet would-be VCs. 

"We are often the first partner for the companies we invest in," Greylock partner Sarah Guo told Business Insider. "There won't be traction, data, other investors or other validation at that early of a stage."

Some founders might also find the process disorienting. Before the Series A round, many startups survive on angel or seed investments — smaller sums of cash that traditionally don't come with huge chunks of ownership, meaning more freedom for the founders. This means that Series A rounds can come as something of a shock, as founders have to give up a considerable chunk of equity to investors, and the control that comes with it.

"Two of my friends that just went through their Series A were concerned about losing control," partner Brian Rothenberg told Business Insider. "They've spent the last few years building their baby and now they have to contend with a board member. It's the first step of relinquishing that control, and that's scary."

How founders can protect themselves

Still, there are steps a founder can take to make sure they're not biting off more than they can chew with a Series A round.

Many founders are looking to the Series A to give their company credibility, and can easily be persuaded to sign their lives away to get a big-name investor on board. If a small company is able to score a major VC firm early on in the company's history, the thinking goes, it becomes that much easier to attract even more prominent investors later on.

A founder needs to be careful about what they offer to investors, says Adam Struck, founder and managing partner of Struck Capital. He said that founders need to consider what their cap tables look like before starting Series A conversations to avoid overpromising ownership in their company.

"They end up agreeing to terms that make it difficult to raise a Series A when they should be creating a precedent for their company," Struck said. "If you give people crazy coverage or shares or liquidation preferences, you complicated your cap table and put yourself into a position that makes it harder for you to close the Series A."

An alternative route

So while it's arguably never been easier for a young company with some traction to raise a jumbo-size Series A round, the headaches attached to that money are actually causing some startups to look for alternatives.

Case in point: Notion, a productivity startup popular among venture investors, made waves in July when it said that it had raised $10 million, not in a Series A round raised from traditional venture capital firms, but rather as the result of several smaller investments from a lineup of individual angel investors. 

The startup, which is now valued at $800 million, wasn't forced into skipping the traditional venture funding route  — in fact, some of Silicon Valley's biggest venture firms were reportedly knocking down Notion's door to get in on the round. It just actively decided that it didn't need the stress that comes with taking more VC money. 

"We're not anti-VC," Notion CEO Ivan Zhao told Business Insider in February. "It's more about helping us focus on product and less on meetings."

To that point, the investors we spoke with said that control and focus are going to be big sticking points for startup founders. There's no shortage of investor money to be found, as evidenced by Softbank and its monster rounds, so would-be VCs have to prove to a founder that they bring more to the table than just a check and a meeting to attend.

"If you're an entrepreneur and you're taking the time to meet with someone, you should get value out of them," founder and partner Trae Vassallo told Business Insider. "Every touch with someone you have should bring value, so that's what we try to do. We want to prove our value."

SEE ALSO: Less than 3 months after its blockbuster IPO, CrowdStrike is launching a $20 million VC fund to invest in early-stage security startups, and it's partnering with Accel

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The Trump administration is looking into a plan to cut taxes by the amount it's taking in from China tariffs

Thu, 08/29/2019 - 3:34pm

  • The Trump administration is looking into a proposal that would lower taxes by the same amount it has taken in from tariffs, according to a congressional aide.
  • The proposal comes as the US's trade war with China threatens to put pressure on American businesses and consumers.
  • The White House falsely claimed for much of the past year that tariffs are paid by foreign exporters, particularly in the case of China.
  • Visit Markets Insider for more stories.

The Trump administration is looking into a proposal that would lower taxes by the same amount it has taken in from tariffs as its trade war with China threatens to put pressure on American businesses and consumers.

Republican Sen. Rick Scott of Florida introduced the tax cuts, which would be equal to the revenue the Treasury Department received from tariffs on thousands of Chinese products over the past year. The plan was first reported by The Washington Post on Thursday.

Sarah Schwirian, a press secretary for Scott, said the senator had discussed the plan with administration officials including the White House economic adviser Larry Kudlow. The White House did not immediately respond to an email requesting comment.

"Senator Scott supports the president's efforts to get tough on China, but any revenue brought in to the federal government should be returned to the taxpayers," Schwirian said, adding that a policy proposal could be ready within the next few weeks.

Any such proposal would require congressional approval, which could be a tall order as frustration over protectionism mounts on both sides of the aisle. The US and China dramatically escalated tensions this month, increasing duties on each other's products and vowing to raise them again on September 1 and December 15.

Those actions have raised costs and cast a thick cloud of uncertainty on the economy, which flashed a key recession warning earlier this month for the first time since before the global financial crisis. President Donald Trump has maintained that the economy is strong at the same time that he has sought measures to boost growth.

The White House falsely claimed for much of the past year that tariffs are paid by foreign exporters, particularly in the case of China, despite evidence from economists and businesses that those costs fall on Americans. In a reversal this month, however, Trump acknowledged that tariffs could hurt the holiday shopping season.

The White House has since delayed a portion of its planned escalations until the end of the year and floated other tax-cut proposals that were walked back a day later.

The US collected $63 billion from tariffs in the 12 months that ended June 30, according to the latest Treasury Department data. Scott first floated the tax-cut proposal on CNBC earlier in August.

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SEE ALSO: Trump says his trade team will talk with China days before planned tariff escalation

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Uber has proposed a new minimum wage for drivers after years of protests, but it comes with a catch (UBER, LYFT)

Thu, 08/29/2019 - 3:23pm

  • Uber has offered a $21 minimum wage for drivers as it fights against a California bill that could devastate its business. 
  • But there's a catch: the wage floor would only apply while drivers are on a ride, which is less than half of their time. 
  • Assembly Bill 5 as it's currently drafted could classify drivers as employees — not contractors — meaning Uber and Lyft would be required to provide certain protections like overtime and collective bargaining rights. 
  • Uber and Lyft say they're not opposed to these benefits, but note that many drivers could lose the flexibility they value in working for the platforms. 
  • Visit Business Insider's homepage for more stories.

As a California bill that could devastate Uber and Lyft's businesses inches toward becoming law, the ride-hailing companies are ramping up lobbying efforts to destroy it once again. 

In an email to drivers and riders in the state on Wednesday, Uber laid out its own proposals to give drivers the benefits and protections they've been asking — and demonstrating and striking — for over recent years:

Here's the key part of the email:

Uber is advocating for a brand-new policy that would strengthen protections for rideshare drivers by

  • Ensuring drivers would earn a minimum of approximately $21 per hour while on a trip, including the costs of their average expenses
  • Providing drivers access to robust new benefits, such as paid time off, sick leave, and compensation if they are injured while driving with Uber
  • Empowering drivers to have a collective voice with rideshare companies, and the ability to influence decisions about their work

The email echoes Uber's previous comments since the bill, sponsored by California Assemblywoman Lorena Gonzales was first drafted earlier this year, but adds a new specific with the minimum wage figure.

However, that number applies to a very specific portion of time, and would only apply while a driver has a passenger in their car or is in route to pick someone up. That's only about 60% of the time, research by a former New York City transportation official found in 2018. The rest of the drivers' time is often spent between fares, when the minimum wage would not apply, based on the email.

The Independent Drivers Guilt, which represents Uber and Lyft drivers across the country and organized a rally in San Francisco this week, said there are other parts of Uber's proposal that are misleading as well. 

"The devil is in the details when it comes to calculating pay and expenses and the real take home pay being offered here is much, much lower than $21 per hour.  California drivers are right to view this pay rate offer with heavy skepticism," a representative for the group said. 

New York City, the United States' largest and most important ride-hailing market, tried to address the "while on a trip" problem when it instituted a pay scale based on how much time a driver spends actually providing a ride. This formula was met almost immediately by backlash from Lyft, which argued Uber, through its larger size, could easily game this ratio higher and therefore pay drivers less.

(The company did, however, say it's committed to a minimum wage calculated other ways — and eventually lost its lawsuit against the city.)

Read more: Uber and Lyft rides are down in New York City thanks to a minimum-wage rule that drove up prices. Analysts say it could have been even worse.

Assembly Bill 5 is was passed by the legislative body in May, and now depends on the Senate's appropriates committee to bring it before a full vote of the second chamber, The Verge reported.  The bill would enshrine a current three-part test as law when determining a workers status as a full-fledged employee or independent contractors. These are the parts:

(A): The worker is "free from the control and direction" of the company that hired them while they perform their work.

(B): The worker is performing work that falls "outside the hiring entity's usual course or type of business."

(C): The worker has their own independent business or trade beyond the job for which they were hired.

Uber and Lyft have been open in admitting it could be disastrous for their bottom lines, as discussed by three executives in a high-profile op-ed published in the San Francisco Chronicle in June. Wall Street analysts agree, noting legislation of this kind is one of the biggest potential headwinds to the entire industry.

"We agree with the bill's goal to protect workers, but we don't agree that this protection should come at the cost of the flexibility our community relies on to supplement their income, support their families, and set their own schedules," Lyft said in a blog post sent as a push notification to riders and drivers on Wednesday. 

"After talking with thousands of California drivers and listening to experts in labor laws, we're proposing a revision that protects driver earnings and the flexibility to earn when and how you want. Our proposal includes additional workplace protections for drivers and a minimum earnings floor."

Read more:

SEE ALSO: A former Uber and Google executive has been indicted on accusations of stealing self-driving-car tech

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Altria sinks on report that the FTC is investigating whether Juul's marketing is deceptive and targets minors (MO)

Thu, 08/29/2019 - 3:09pm

  • Altria Group sank as much as 5% Thursday after The Wall Street Journal reported the Federal Trade Commission is investigating Juul Labs for dubious ads.
  • Altria purchased a 35% stake in Juul for $12.8 billion in December. The FTC investigation began before the acquisition was made, according to WSJ.
  • Juul's advertisements have fallen under scrutiny for portraying its vaping device as a lifestyle accessory, complete with appealing flavors and popularity among people in their 20s and 30s.
  • Teen vaping grew 78% from 2017 to 2018, according to federal data. Photos of young people using Juul's product flooded social media after sales skyrocketed in 2017, WSJ said.
  • Watch Altria trade live here.

Altria Group shares fell as much as 5% Thursday after The Wall Street Journal reported the Federal Trade Commission is investigating Juul Labs for deceptive marketing.

FTC investigators are looking into whether Juul's advertising campaigns targeted minors by using young people and attractive flavors. The commission is also deciding whether to seek damages against Juul, WSJ reported.

Altria purchased a 35% stake in Juul for $12.8 billion in December. The cigarette maker's acquisition valued Juul at about $38 billion. The FTC began its investigation before the December acquisition, according to the report.

Juul has been scrutinized for ads that tout flavors like "Cappuccino" and "Mango." It also ran ads in 2015 that showed images of people in their 20s and 30s using the device as trendy accessory.

The Food and Drug Administration and some state attorneys general are already investigating Juul's ads. The FDA held an unscheduled inspection of Juul's headquarters in October to seize documents related to its marketing practices.

Juul has previously said its products are intended for adults who have already smoked cigarettes, and that it never marketed to young consumers. Juul CEO Kevin Burns told nonsmokers not to use the company's products in a "CBS This Morning" interview aired Thursday. It's "true" the long-term health effects of vaping are unknown, he added.

"Don't start using nicotine if you don't have a preexisting relationship with nicotine," he said. "Don't use the product," Burns said. "You're not our target consumer."

Altria shares continued to fall later Thursday after Bloomberg reported an FDA investigation into whether vaping causes seizures was initiated by reports from individuals who used Juul devices. Three reports named Juul, though the agency was unable to verify if the devices were truly from the company or if the name was simply used as a stand-in for a different vape product.

"No proof of causality, but at a minimum, an association with Juul," Mitch Zeller, the FDA's Center for Tobacco Products director Mitch Zeller, said in an October email.

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Teen vaping has grown 78% from 2017 to 2018, according to federal data. Photos of young people using Juul's e-cigarette product flooded social media platforms after sales skyrocketed in 2017, according to WSJ.

The news comes after Philip Morris International confirmed reports Tuesday it was discussing a potential all-stock merger with Altria. The deal would reunite the two tobacco giants after they split more than a decade ago. The combined company would be worth more than $200 billion.

Altria traded at $44.03 per share as of 2:25 p.m. ET Thursday, down about 10% year-to-date.

The company has 10 "buy" ratings, six "hold" ratings, and two "sell" ratings from analysts, with a consensus price target of $56.63, according to Bloomberg data.

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Preferred vs Reserve: How the Chase Sapphire credit cards stack up

Thu, 08/29/2019 - 3:00pm

The Chase Sapphire Preferred has been one of the most popular credit cards among rewards experts and travelers alike for years, and it's easy to see why. On top of the 2x points earned on all dining and travel purchases, the card comes with class-leading benefits, including primary rental car insurance, trip delay and baggage delay coverage, robust purchase protections, and fantastic customer service. 

On top of all that, Chase offers Sapphire Preferred cardholders great options for redeeming points; You can exchange them for cash back at 1 cent per point, or you can use them to purchase travel thorough Chase's booking portal with a 25% bonus. Best of all, you can can transfer points to Chase's frequent flyer partners.

Chase Sapphire Preferred vs. Sapphire Reserve: the biggest differences

In addition to offering some of the same benefits as the Chase Sapphire Preferred, the Chase Sapphire Reserve packs on a few extra features for serious travelers.

The Sapphire Reserve earns 3x points on travel and dining instead of 2x on the Sapphire Preferred, and comes with a $300 annual travel credit, access to select airport lounges through the Priority Pass network, a trip delay insurance policy that takes effect after shorter delays, and elite benefits with a few car rental agencies.

With the Sapphire Reserve, you can also redeem points the same way as with the Preferred — with one difference. When using them to purchase travel through Chase, you'll get a 50% bonus, instead of 25% with the Preferred.

Along with the added perks, though, the Reserve comes with a higher annual fee. While the Sapphire Preferred only costs $95 per year, the Sapphire Reserve has an un-waived annual fee of $450. When you subtract the $300 travel credit, which is essentially applied to the first $300 of travel-category spending each cardmember year, the effective fee is only $150 per year, a $55 increase over the Preferred.

So what makes the Sapphire Reserve worth the higher annual fee compared to the Sapphire Preferred? Which one is right for you? Here are a few questions to ask yourself when deciding between the two cards.

Click here to learn more about the Chase Sapphire Preferred card from our partner The Points Guy. Click here to learn more about the Chase Sapphire Reserve from our partner The Points Guy. How much do you spend on travel and dining?

To start, let's keep it simple and focus solely on the points earning.

Without considering any other perks or benefits, the deciding factor between the two cards should be whether you spend enough on dining and travel that earning an extra point per dollar is worth the Sapphire Reserve's higher annual fee.

The Sapphire Preferred's fee is $95, while the Sapphire Reserve's fee is $450. However, if you factor in the $300 travel credit that the Sapphire Reserve includes each year — which is good on everything from taxis, parking, tolls, and subway fares to flights, cruises, and hotels — the card's fee is effectively only $150. The difference between the Preferred's fee ($95) and the Reserve's (effectively $150) is $55.

For argument's sake, let's assume you value your points at 1.5 cents each (that's the value of points used to purchase travel through Chase, with the 50% bonus if you hold the Sapphire Reserve). That means you would need to earn 3,660 points each year to make up the $55 annual fee difference between the two cards. 

So if you spend at least $3,660 on dining and travel each year, the extra point earned per dollar will add up to the difference in fees and make it worth getting the Sapphire Reserve card. That's without factoring in the other benefits of the card.

Of course, this will still require you to pay the $450 annual fee every 12 months. Even though you'll get the travel credit applied to the first $300 of relevant spending each cardmember year, that can be a lot of money to pay up front. Whether you want to front $450 is entirely a personal decision, make sure you weigh the cash outlay (and the fact that the fee isn't waived the first year) against the higher earning potential. Moving on from points earning.

Read more: 6 reasons the Chase Sapphire Reserve's high annual fee is easy to justify — and why the card is ultimately a better value than Chase's cheaper Sapphire Preferred

How do you value the higher sign-up bonus?

The 10,000 extra points you'd get from the Sapphire Preferred's sign-up bonus is worth at least $100 as cash back, $125 as travel through Chase, or more transferred to airline partners.

Put another way, you'd have to spend an extra $3,333 on the Sapphire Reserve to earn 10,000 points. It could be worth earning the higher bonus with the Sapphire Preferred, then converting it to the Reserve after your first year.

Read more: 7 reasons the Chase Sapphire Preferred is worth it — even though the card doesn't come with as many flashy perks as the Sapphire Reserve

How much do you value the trip delay insurance?

A lot of discussion around the Sapphire Reserve focuses on the points and more obvious perks, like lounge access, but personally, I think the trip delay insurance is one of the most valuable features. I live in New York, where delays are fairly frequent, whether because of mechanical issues, intense weather, or other problems. 

That's why I like the extra layer of security added by the Sapphire Reserve. The card's trip delay coverage becomes effective after just six hours, or if you end up stuck overnight. The Sapphire Preferred's coverage is also activated when there's an overnight delay; if the delay is entirely during the day, the coverage takes effect after 12 hours.

If the trip delay insurance activating sooner is worth the higher annual fee, then you should consider the Sapphire Reserve. After a seven-hour delay this summer, I was able to submit a claim for a number of expenses including lunch, a phone backup battery, and even a pair of headphones I needed. However, any stay that incurs major expenses, like a hotel room and a change of clothes, would probably involve an overnight stay and therefore be covered by the Sapphire Preferred's insurance.

Click here to learn more about the Chase Sapphire Preferred card from our partner The Points Guy. Click here to learn more about the Chase Sapphire Reserve from our partner The Points Guy. Will you use the lounge access?

Airport lounges are the best. Even when they're relatively lively (read: crowded), it's much better than the main terminal and gate areas. I love having a place to sit down, relax, charge my phone, and have a few drinks or a snack while I wait for my flight; or, other times, to hunker down with my laptop and take advantage of the lounge Wi-Fi to do some work. Sometimes, airport lounges can be downright luxurious and include amenities like complimentary spa treatments.

The Chase Sapphire Reserve includes a free Priority Pass Select membership for as long as you have the card. Priority Pass is a network of more than 1,000 airport lounges around the world. A Select membership grants access to member lounges for you and any travel companions. While amenities vary by lounge, most of them tend to offer private Wi-Fi, free hard and soft drinks, snacks, and comfortable seating. Some lounges also feature heartier food options, sometimes included or sometimes for an additional charge.

You can take a look at Priority Pass's full network of lounges by clicking "Find a Lounge" on the upper-left corner of this page to gauge whether the membership will be useful for you. The network is more robust abroad; the amount of US locations is relatively limited, and they tend to be found in international terminals, so you may not always be able to access lounges before domestic trips. 

Several airports also have restaurants which are part of the Priority Pass network. At these restaurants — including the Grain Store at London's Gatwick airport — you'll get a certain amount credited on the bill for you and each guest. At the Grain Store, each guest is entitled to a £15 credit.

If your home airport has a Priority Pass lounge in a terminal you can generally access, or you travel internationally even once or twice a year, then the Priority Pass membership can be great to have, especially if you ever find yourself bored and waiting out a delay. If you don't think you'll have much use for the Priority Pass membership, you might prefer the Sapphire Preferred and its lower annual fee.

Do you already have Global Entry/TSA PreCheck?

First thing's first; if you don't have Global Entry and TSA PreCheck, you should really get it. With PreCheck, you can use special security lines at most US airports. In those lanes, you can keep your shoes, belt, and light jackets on, leave your laptop in your bag, and only go through a metal detector instead of a full body scanner. The process is much quicker than regular security, and it's much less uncomfortable.

With Global Entry, you can skip the immigration line when returning from the US and scan your passport at an unmanned kiosk instead. It prints a receipt which you bring to the customs stop after baggage claim, and just like that: you're good to go. Immigration at a busy terminal can take hours; with Global Entry, I've gotten through at JFK in four minutes.

You can apply to either program, but Global Entry usually includes TSA PreCheck and the $100 application fee is only a bit more than the $85 you'd pay to just apply for PreCheck. Plus, the Chase Sapphire Reserve offers a credit for either program. If you aren't enrolled in one of these programs yet, you may want to consider the Reserve. Otherwise, the Sapphire Preferred might be your best bet, unless you're due to renew your membership soon.

Will you add any authorized users to your account?

If you're looking to add authorized users, like a spouse or child, keep in mind that the Sapphire Reserve charges an annual fee of $75 to add anyone to your account, Each authorized user gets their own Priority Pass Select membership, at least. There's no fee to add an authorized user to your Sapphire Preferred account.

The bottom line

Ultimately, the two biggest things to consider when deciding between the cards is whether or not you're willing to pay the higher annual fee for the Sapphire Reserve, and whether you spend enough on dining and travel to make it worth that higher fee. Beyond that, take a look at the difference in perks and see which is best for you.

Click here to learn more about the Chase Sapphire Preferred card from our partner The Points Guy. Click here to learn more about the Chase Sapphire Reserve from our partner The Points Guy.

SEE ALSO: All our credit card reviews — from cash-back to travel rewards to business cards — in one place

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The $610,000 Lamborghini Aventador SVJ is the most insane supercar money can buy

Thu, 08/29/2019 - 2:57pm

  • I test drove a $610,000 Lamborghini Aventador SVJ, a track-optimized version of Lamborghini's top-of-the-line supercar.
  • The Aventador starts a little north of $500,000, but my tester received many thousands of dollars in options.
  • The Lamborghini Aventador SVJ is incredibly expensive, but it pulls off a cool trick: it joins the "Big Lambo" virtues of a 770-horsepower, V12 engine with modern aerodynamics and all-wheel-drive to produce a track weapon.
  • Visit Business Insider's homepage for more stories.

I've driven a lot of Lamborghini Huracáns in the past few years, but no Aventadors. I've enjoyed the "Little Lambos," but I longed for the "Big Lambo."

The Huracáns, while brilliant, have been a bit too subdued, for the most part — supercars that can handle everyday driving. 

Not so the Aventador, which reminded me of Lambos of old. My tester car also had the "SVJ" high-performance treatment, intended to make the Aventador a proper track warrior rather than just a very loud, very fast, and very flamboyant example of what the good people of Modena think of when they think supercar.

Here's how it went:

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Say hello to the Lamborghini Aventador SVJ, in a "Rosso Mimir" matte-red paint job.

The Aventador is the "Big Lamborghini," versus the smaller Huracán. The Aventador arrived in 2011. The supercar is named after a fighting bull.

The SVJ logo is— brace yourself — $8,400 extra. SVJ stands for "Superveloce Jot." Superveloce means "superfast" in Italian, and Jota is a designation used for Lambos geared towards track performance.

The base Aventador is about $517,000, but my SVJ tester car — the second-most expensive vehicle Business Insider has sampled, behind the Rolls-Royce Phantom — benefited from many thousands of options and upgrades, taking the price to $610,000.

The Aventador's upswinging doors are a dramatic feature.

The doors look cool, but in practice they're a bit difficult to use.

The Big Lambo is, relatively speaking, rather small (And low!) as cars go. The mid-engine layout pushes the driver's position forward, close to the front wheels. Fully fueled, it weighs in at just under 4,000 lbs.

Just 900 SVJ's will be produced in Modena; my tester car was numero uno.

Lamborghini Aventador SVJ that I tested differs from the stock Aventador thanks to an "Ad Personam" custom exterior and exterior, as well as additional carbon-fiber aero elements and a beefed-up engine.

The Aventador's land-shark design comes through, nevertheless.

The all-wheel-drive Lamborghini Aventador SVJ also has rear-wheel steering. The upshot is that handling is exceptionally stable, despite the incredibly stiff suspension.

This supercar is a wind-cheating wedge. The 0-60 mph passes in 2.8 seconds, on the way to a top speed of over 217 mph.

The Aventador SVJ isn't exactly a fuel-economy champ. You can expect about 11 mpg, using premium petrol.

The SVJ's rear is dominated by a massive rear wing, part of the "ALA 2.0" or Aerodinamica Lamborghini Attiva, package.

The wing is really a wing, complete with winglets and an airfoil design that manages turbulence and increases downforce.

I didn't get the car moving fast enough to take advantage of it ...

... But ALA is a compelling system, if you intend to track your SVJ.

The aero extends to the front end, as well ...

... Where a "floating" front splitter adds downforce and improves airflow.

Side scoops also contribute to airflow efficiency and engine cooling.

The shark-nosed front is also where you'll find the Lambo's raging-bull badge, in snarling gold.

The headlights are bi-xenon units, and the grand scheme of the Aventador's aesthetic, they could be more flamboyant.

If you can manage to look below the wing ...

... You'll notice that the Aventador has a pair of pretty massive exhaust pipes. Not to mention a major-league diffuser.

These are the end point of the Lambo's legendary growl, bark, blurp, and shriek.

Carbon-ceramic brakes are a necessity on a car this fast. As are Pirelli P-Zero tires.

A little more carbon fiber can't hurt, right? The Lamborghini Aventador SVJ has it for the side-view mirrors!

The Lamborghini Aventador's front trunk or "frunk" is ...

... Too small for even a hat. For some supercars, there are trade-offs.

Beneath this louvered carapace is the cruel heart of the Aventador SVJ: a 6.5-liter V12.

It produces 770 horsepower and 720 pound-feet of torque, with a redline at 8,700 rpm.

Let's slip inside the "Nero Cosmus" interior.

The Aventador door sill lights up at night.

Operating the doors is tricky. Here's the inside latch.

And once the door is raised, you can pull it down with this red strap.

It's easy to spot in a sea of carbon fiber.

The Aventador's steering wheel is Alcantara and perforated leather, with long paddle shifters and a digital instrument cluster.

The cluster changes its look depending on the drive mode.

The modest, Audi-derived infotainment screen sits atop the center console. It's handles is duties quite well, but it's a little awkward to navigate using the multipurpose knob-and-buttons interface.

The starter button is hidden beneath a small red hatch, fighter-plane style.

Flip it up and fire it up! The sounds of a Lambo coming to life is one of the world's great auditory pleasures. The Aventador's "anima" buttons offer Strada (road), Sport, Corsa (track), and an individual "Ego" mode.

But the premium sound system isn't too bad by comparison.

Lamborghini callouts are where they usually are ...

... As well as on the headrests ...

... And there's an SVJ nod on the seat bolsters.

The interior is nice, but this thing is a race car, so don't expect cupholders. or even storage compartments. I'm not even sure this depression in the armrest is really intended to hold the key fob.

The Lamborghini Aventador SVJ looks cool, but it isn't terribly comfy inside.

And you can forget about using the rear backlight.

So what's the verdict?

With the Huracán, Lamborghini moved decisively away from the signature combination of crude and flashy that had previously defined the brand. The Huracán is, depending in configuration, the easiest-to-drive Lambo ever created.

That's all well and good, but some Lamboistas crave that old-time terrifying Lamborghini experience. And for them, the Aventador SVJ is just what il dottore ordered. 

The Aventador SVJ is, of course, the already insane Aventador optimized to ravage racetracks. As such, it offers effectively no compromises. The SVJ is, without a doubt, the most difficult-to-drive supercar I've ever gotten behind the wheel of. For example, with a redline at 8,700 rpm, even in theoretically benign Strada mode, getting the seven-speed single-clutch transmission and the V12 engine to stop kicking you in the tush is a tall order.

Tickling that redline and thereby mitigating the more F1-aspects of driving the SVJ is impossible. You could perhaps get there in third gear, but you'd be afraid that the motor would burst through the firewall and kill you, and also you'd be going 1oo mph in a red Italian supercar on public roads and raising a wail that could back off a starving Tyrannosaurus Rex.

To be honest, it usually isn't the overt supercars, the automotive big boys, that terrify me like this. Rather, it's the wild little machines that punch miles above their weight. I consider myself fairly accomplished at getting some satisfying real-world supercar performance out of these four-wheeled aristocratic savages. Not so the Aventador SVJ. This is the Big Lambo that shredded the Nürburgring in just over six minutes and 42 seconds, claiming the title of fastest production car to lap the German Nordschleife circuit.

What we have here is a majestic throwback, modified to be a modern-day track weapon, with enough aerodynamic extras to impress a US Navy fighter jock. The Lamborghini SVJ is, however, at base, a simple idea: take a huge amount of engine displacement, add gas and air, and use that alchemy to produce shattering, noisy velocity. What the SVJ treatment does is refine this familiar Lambo quality to be altogether better around corners and into curves.

That's great, but let's be real — this Big Lambo is still insane in a big way. In fact, it's perhaps the most insane Lambo I've driven lately. And it's definitely the most insane Lambo money can buy.

We talked to the top scientist at $340 billion Johnson & Johnson about its 'transformational' new HIV treatment

Thu, 08/29/2019 - 2:56pm

  • A promising new treatment from US drug giant Johnson & Johnson could allow patients with HIV to trade in their daily pills for injections as infrequently as once every two months. 
  • Right now, the regimen is experimental, meaning it isn't currently sold. Johnson & Johnson partner ViiV Healthcare plans to submit an application with US drug regulators in the next few months. 
  • "For patients, not having to think about their disease every day, it's like a whole different world if you can do this," Chief Scientific Officer Dr. Paul Stoffels told Business Insider. 
  • Johnson & Johnson is one of a number of drugmakers working to change the paradigm in the lucrative HIV market, which is expected to bring in nearly $23 billion in sales by 2027, according to data from Datamonitor Healthcare
  • Click here for more BI Prime stories.

About a decade ago, scientists at US drug giant Johnson & Johnson first tried out a new HIV drug in humans. 

They were in for a surprise. Results from that study were far better than they had expected, J&J Chief Scientific Officer Dr. Paul Stoffels told Business Insider. 

Today that effort has matured into a promising treatment for HIV that could be administered as infrequently as once a month or once every two months. The new experimental regimen could upend the current treatment paradigm for the 37 million people around the world who live with HIV and must take daily pills to suppress the virus.

"While once every month is a strong result, I think once every second month is almost transformational for HIV," Stoffels said. "For patients not having to think about their disease every day, it's like a whole different world if you can do this." 

So far, the therapy is experimental and not currently available for sale. But it's already being reviewed by US drug regulators for use as a once-a-month injection. J&J partner ViiV Healthcare plans to ask the Food and Drug Administration to review the bimonthly regimen in the next few months.

If approved, the regimen would be the first-ever long-acting injectable treatment for adults with HIV, J&J said

Lately, other parts of J&J's business have been the subject of scrutiny. The company has been sued by customers who say that its iconic baby powder caused their cancers, citing the link between talc, which is used in baby powder, and cancer-causing asbestos. J&J has denied that baby powder causes cancer and said there is no asbestos in its products. 

This week, in an Oklahoma case accusing J&J of fueling the US opioid crisis, a judge ruled against the drugmaker and ordered it to pay the state $572 million. The fine was lower than expected, and J&J shares rose after the verdict. In a statement, J&J said that it did not cause the opioid crisis in Oklahoma and said it would appeal the recent decision. 

Drug companies move to develop longer-term HIV drugs that let patients go more time without pills

HIV, which is spread by bodily fluids like blood and semen, gradually damages an individual's disease-fighting immune system and, with rare exceptions, has no cure. 

But thanks to major medical advances, it's now possible both to suppress the virus and to reduce one's risk of getting it in the first place, though access to these medications can vary dramatically. 

Longer-term drugs that allow for more infrequent dosing are the next step, experts say, with efforts in the works from drugmaker like Merck, ViiV Healthcare, which is majority-owned by GlaxoSmithKline, and Gilead.

In addition to this regimen, Johnson & Johnson is also developing a vaccine to prevent HIV that will be tested out in a late-stage study later this year.

There's a lucrative market at stake: HIV drug sales came to about $18 billion last year and could reach nearly $23 billion in 2027, according to data on spending in the US and other wealthy nations from Datamonitor Healthcare.

Read more: We got an inside look at pharma giant Merck's strategy to upend the $20 billion HIV drug market using tech borrowed from birth control

Nanocrystal tech makes bimonthly HIV treatment possible, but it's 'not for everybody'

J&J's regimen combines two drugs: one called rilpivirine that's made by the US drug giant itself, and another called cabotegravir from the HIV-focused ViiV Healthcare.

Crucial to making those two medicines work for the duration of a month or two are tiny particles known as "nanocrystals." After those nanocrystals are injected, "the body picks up these molecules in its system and releases it slowly back into the bloodstream," Stoffels explained.

Johnson & Johnson has been studying this type of controlled-release mechanism for more than 20 years, he said. The company has also used it for antipsychotic medications that are dosed monthly. 

Not all patients will be eligible. The regimen is specifically intended for those who, thanks to existing medications, have what's known as an "undetectable" amount of HIV in their blood. 

A doctor or nurse also must administer the monthly or bimonthly injections into a patient's backside. The two drugs have to be given separately, which translates to one injection per buttock each time. 

"Many people may not change to make a monthly injection in the buttock. That's not that easy," Stoffels said. "That's the hurdle and the burden for the people."

But the regimen could have particular potential in emerging markets where there's stigma around HIV, he said. 

Johnson & Johnson also won't be studying this regimen with any longer-term dosing timelines. That decision was based on the results of pharmacology testing as well as concerns about causing resistance to HIV medications, Stoffels said.

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A biotech's drug was supposed to revolutionize cancer treatment. Instead, it was a $5 billion flop that's now being abandoned. (ABBV)

Thu, 08/29/2019 - 2:29pm

  • AbbVie acquired the buzzy cancer drug Rova-T in a 2016 deal valued at $5.8 billion in cash and stock.
  • But Rova-T has turned out to be a failure since then. AbbVie said in its 2018 annual report that the deal was worth about $5.1 billion less than it had thought. 
  • Now the drugmaker is ending its work on Rova-T, speaking to the high stakes and risky nature of developing new drugs. 
  • Click here for more BI Prime stories.

AbbVie bought the cancer drug dubbed "Rova-T" in a high-profile deal valued at $5.8 billion in cash and stock in 2016. 

The deal has looked more and more like a failure ever since. Now AbbVie says it's ending its work on Rova-T.

The roughly three-year-long saga speaks to the high stakes and risky nature of developing new drugs, but it also represents a major blow to the drugmaker in its quest to find the next lucrative cancer drug, which has become a major goal for many big pharma companies

AbbVie acquired buzzy biotech Stemcentrx with a focus on Rova-T, a crucial cancer drug

Rova-T, also called rovalpituzumab tesirine, was developed to target a protein called DLL3 that is expressed in most of the tumors of patients with small-cell lung cancer but not in healthy tissue, according to AbbVie.

AbbVie bought Rova-T as the lead product of Stemcentrx in 2016, highlighting the drug's potential alongside four other cancer drugs for diseases like breast cancer and lung cancer.

The drugmaker was also testing Rova-T in other types of lung cancer and in neuroendocrine tumors.

In addition to the deal's about $5.8 billion in cash and stock, investors were eligible for up to $4 billion more if the company met certain terms. 

Read more: AbbVie spent billions on a buzzy Silicon Valley cancer drug company. Now Wall Street's calling the deal a 'dud.'

But last year, things began looking worse and worse for Rova-T. In March, AbbVie said it wouldn't try for faster-than-usual approval of the drug in a specific type of lung cancer. 

A data release in June also left Wall Street analysts less than impressed, Business Insider previously reported, though company executives said then that they remained encouraged about Rova-T's potential in small-cell lung cancer and other areas.  

By the end of the year, AbbVie reported that, in a late-stage trial, patients with lung cancer who took Rova-T stayed alive for a shorter time than those who were treated with standard chemotherapy, and AbbVie decided to stop enrolling patients into the research trial.

AbbVie would end up taking a $5.1 billion charge related to the deal, according to a financial filing — essentially saying that the deal is worth $5.1 billion less than it had thought. AbbVie also said that it was monitoring a remaining $1 billion in assets, in case it has to reduce the value further.

On Thursday, AbbVie ended another late-stage research trial for Rova-T and the entire research and development program for the drug.

The research in question had been testing Rova-T in advanced lung cancer. But during an interim analysis of the results, AbbVie found that patients on Rova-T were not surviving any longer than patients taking a placebo, the company said. 

This story was first published in late 2018. It has been updated.

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Peloton boosted its marketing spend by 114% ahead of its IPO in its quest to win over a young, affluent audience

Thu, 08/29/2019 - 2:06pm

  • On Tuesday, the fitness company Peloton released the documents it had previously filed confidentially for an initial public offering.
  • It's not just the buzzy bike maker's losses that have been on the rise — its advertising expenses have been on the upward trajectory as well, up by 114.1% from 2018 to 2019.
  • Peloton is arguably the first direct-to-consumer brand that has filed to go public — and has gone down this path by prioritizing not only performance but also brand marketing.
  • Peloton's rise has been aided by a specific demographic of customers, namely people 44 and under that the trade group IAB has identified as the target audience for DTC brands like Peloton. 
  • Click here for more BI Prime stories.

On Tuesday, the fitness company Peloton released the documents it had previously filed confidentially for an initial public offering, revealing spiraling losses of $245.7 million on sales of $915 million in its most recent fiscal year. 

But it's not just the buzzy internet-connected stationary bike maker's losses that have been on the rise — its advertising expenses have been on the upward trajectory as well.

Peloton's sales and marketing expenses increased 114.1% in 2019

Peloton shelled out $324 million on sales and marketing in fiscal 2019, the company reported in its filing, up by 114.1% year over year from $151.4 in 2018. This increase in sales and marketing expenses is in line with other companies that have recently gone public, such as the office-coworking company WeWork, which has spent $378.7 million in the run-up to its IPO in 2019, and Uber, which spent $3.2 billion in 2018.

Read more: WeWork boosted its advertising spend by a whopping 164% on its way to one of the most anticipated IPOs of 2019

Sales and marketing spending has also increased as a share of Peloton's revenue, the company's filing revealed. In 2019, sales and marketing accounted for 35.4% of revenue, up from 34.8% the year before. 

Peloton has invested in both performance and brand marketing 

While brands like Dollar Shave Club have been acquired, and the mattress direct-to-consumer brand Casper recently attained unicorn status, Peloton is arguably the first DTC brand that has filed to go public.

Peloton's aided brand awareness in the US was 67% as of April, according to its filing, something it attributed to "a broad mix of marketing and other brand-building measures." The brand has invested in not just performance marketing on platforms like Facebook, Twitter, Instagram, and over-the-top channels to generate sales, but it also branched out to traditional channels like TV more recently, like other DTC upstarts.

Read more: Direct-to-consumer brands that built their businesses without traditional advertising are now embracing it in key ways to fuel growth

"As television advertising, online, and social media platforms continue to rapidly evolve or grow more competitive, we must continue to maintain a presence on these platforms and establish a presence on new or emerging popular social media and advertising and marketing platforms," the company wrote in its S-1.

Carolyn Tisch-Blodgett, Peloton's senior vice president of brand, has helped the brand stand out in a crowded fitness landscape by using a mix of TV, digital, radio, and even billboards. She recently oversaw the launch of the connected treadmill Peloton Tread, Peloton Yoga, and even led its UK expansion with an ad blitz worth £7 million.

Peloton's rise has been aided by a specific demographic of customers

According to a recent report by the advertising trade group Interactive Advertising Bureau and Cassandra, part of the holding company Engine Group, DTC brands have exploded on the back of a specific audience — who are younger and richer than those that buy only from traditional consumer packaged goods companies. 

The report found that 68% of people who buy DTC products along with traditional ones are age 44 and under. That seems to be squarely in Peloton's sweet-spot. According to the company's filing, its fastest growing demographic segments included members under the age of 35, along with those making under $75,000 in annual household income.

Peloton positioning itself as a media company, among other things, is also likely to have been a draw for this audience. Almost a third of this segment actively creates, shares, or reposts content about these brands, about twice as many as those who buy only traditional brands. 

Peloton, like other DTC brands, also said that it conducts frequent tests in its sales channels, which have allowed it to further optimize marketing spend. One such test is incrementality testing, Business Insider previously reported.


Read more about Peloton's IPO:

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'Shark Tank' judge Kevin O'Leary involved in Ontario boating crash that left 2 dead

Thu, 08/29/2019 - 12:23am

  • The "Shark Tank" judge Kevin O'Leary was involved in a boating crash on Lake Joseph in Ontario, Canada, that killed two passengers on another boat. 
  • According to TMZ, O'Leary's boat crashed into the bow of a larger boat on Saturday at about 11:30 p.m. local time. A male passenger on the larger boat was killed in the crash and another woman was critically injured. She died from her injuries in hospital on Tuesday. 
  • "Late Saturday night I was a passenger in a boat that had a tragic collision with another craft that had no navigation lights on and then fled the scene of the accident," O'Leary told TMZ. "I am fully cooperating with authorities."
  • Ontario Provincial Police Staff Sgt. Carolle Dionne said on Wednesday that the crash left a 64-year-old Florida man dead and a 48-year-old Canadian woman with fatal injuries.
  • The police say they are investigating the cause of the crash.
  • Visit Business Insider's homepage for more stories.

The "Shark Tank" judge Kevin O'Leary, also known by his nickname "Mr. Wonderful," was involved in a boating crash on Lake Joseph in Ontario, Canada, that left a 64-year-old Florida man dead and a 48-year-old Canadian woman fatally injured.

TMZ first reported on Tuesday that O'Leary's boat was involved in an accident on the lake on Saturday about 11:30 p.m. local time in which it crashed into the bow of a larger boat. A man aboard the larger boat was killed and a woman was said to be critically injured.

O'Leary confirmed to TMZ that he was a passenger aboard a boat involved in the crash.

"Late Saturday night I was a passenger in a boat that had a tragic collision with another craft that had no navigation lights on and then fled the scene of the accident. I am fully cooperating with authorities," he told TMZ.

"Out of respect for the families who have lost loved ones and to fully support the ongoing investigation, I feel it is inappropriate to make further comments at this time," he continued. "My thoughts are with all the families affected."

A representative for O'Leary told TMZ that his wife, Linda, was driving the boat at the time of the crash. The representatives said she passed a DUI test that was administered that night. The representative added that a third passenger was aboard O'Leary's boat and obtained minor injuries in the crash.

According to TMZ, a person connected with the larger boat claims that O'Leary's boat fled the scene. O'Leary's rep, however, told TMZ it was the larger boat that left.

Ontario Provincial Police Staff Sgt. Carolle Dionne confirmed on Wednesday that a crash occurred on Lake Joseph. Florida man Gary Poltash, 64, was killed in the crash, while Canadian Susanne Brito, 48, was fatally injured and later died from her injuries in the hospital on Tuesday.

Canada's Global News reported that a boating crash took place Saturday about 11:30 p.m. local time near Emerald Island. 

The local news station My Muskoka Now reported that police are investigating the cause of the crash and are questioning whether alcohol played a role in the incident.

Both boats were described by the police as "pleasure craft." The larger boat was described as a 13-person vessel that had been out on the lake for an evening cruise.

Detective Inspector Martin Graham told My Muskoka Now that the smaller vessel was a "tow-boat" and that those aboard had been returning back to their residence after going out for the evening. Graham said one of the boats was "definitely moving" during the crash, though it's unclear whether both were in motion.

According to Graham, the deceased man was visiting the Muskoka area and had been staying at a friend's cottage.

The reports from the Global News and My Muskoka Now did not confirm whether O'Leary or his wife were involved in the crash.

O'Leary and the West Parry Sound OPP did not immediately respond to requests for comment.

SEE ALSO: Barbara Corcoran's brother died in a Dominican Republic hotel room in April

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In its IPO documents, Peloton warned it's got some particular shortcomings as a business that could lead to fraud or financial restatement

Wed, 08/28/2019 - 9:12pm

  • Peloton, which is planning to go public, disclosed in its IPO paperwork that it had discovered problems with its internal controls
  • Internal controls are the processes, rules, and checklists companies put in place to ensure the accuracy of their financial statements and to prevent fraud.
  • The fitness equipment maker said it found internal controls weaknesses in at least four different areas, including in its accounting processes.
  • The company hadn't fully fixed the problems by the end of June and warned that there may be other problems about which it's unaware, because it hasn't done a full audit of its controls.
  • Click here for more BI Prime stories.

There's something important potential investors should know before getting on the treadmill with Peloton.

The hot fitness equipment manufacturer that's heading toward an initial public offering is likely at higher risk than the average company of misstating its financial reports or being the victim of, or even perpetrating, fraud.

Peloton on Tuesday made public its IPO paperwork. Like all such documents, the filing included a list of risk factors, which are typically a long catalogue of boilerplate items. But buried within that list was an unusual admission by the company — it had discovered significant flaws in its internal controls. Internal controls are the processes, rules, and checklists companies put in place to ensure their financial reports are accurate and to prevent fraud, among other things.

Read this: Exercise-bike startup Peloton filed for IPO and revealed a long list of risk factors that investors should know

Peloton isn't saying that the financial numbers in its S-1 are wrong. It's saying there's a possibility they could end up being wrong. 

When a company admits it has a weakness in its internal controls, it's kind of like someone admitting they left their backdoor unlocked while they were away on vacation. It doesn't mean that anything was stolen while they were gone — and they may not yet know if anything was stolen — but the risk of discovering that something was taken is now much greater.

"We have identified material weaknesses in our internal control over financial reporting," the company warned in its IPO document. "If our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting," it continued, "our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired."

Peloton discovered the problems with its internal control while putting together its financial statements for its 2018 fiscal year, which ended in June of last year, it said in the filing. As of the end of June of this year, it hadn't fixed the weaknesses.

The fact that Peloton found these accounting weaknesses "should be a concern" to investors, said Albert Meyer, president and chief portfolio officer at Bastiat Capital and an accounting expert. 

And that's especially so for a company that, according to some reports, could seek an $8 billion to $10 billion valuation in the public markets. 

There could be more problems that are yet to be discovered

Peloton found flaws in its processes in at least four different areas: its controls over its information technology systems, the way it separates different accounting duties, how it reviews unspecified "journal entries," and how it reconciles and analyzes particular important accounts. It blamed the shortcomings on the fact that it's been a private company and, to this point, didn't need to have in place the kinds of accounting and other controls that are legally required of public companies.

Worse, there may be more problems than just the ones it already discovered. Because of a loophole in current law, the company and its auditors aren't required yet to do a complete audit of its internal controls, and they haven't done one, Peloton acknowledged in its document.

"Accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses," the company said.

To address the weaknesses it has found, Peloton said it has been hiring people with accounting and finance expertise who have worked at public companies and put in place new processes and controls over its IT systems and accounting operations. Still, it hasn't fully addressed all the problems it found, it acknowledged.

"We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time," Peloton said in its filing.

The impact of these kinds of weaknesses is not purely theoretical. A study by Utica College last year found that one of the top five reasons fraud occurs at companies was because of inadequate internal controls.

Peloton's disclosure was likely just an attempt to protect itself in case it later has to restate its revenue for the periods in which it found weaknesses, said Bastiat Capital's Meyer. He reckons the result of the flaws in controls described by Peloton could potentially represent a miscalculation of as much as 10% or 15% on its bottom line — anything larger would have been caught in its financial audit.

Even at that level, Wall Street will need to calculate that risk into the company's valuation.

"I think the market will discount it in some way or another," Meyer says. 

SEE ALSO: Peloton, the fitness startup with a cultlike following, could go public at an $8 billion valuation. Insiders reveal why its business seems set to explode.

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The world is talking about Donald Trump's relationship with Deutsche Bank. Here's why it's drawing intense scrutiny. (DB)

Wed, 08/28/2019 - 5:40pm

  • Deutsche Bank responded to a congressional subpoena Tuesday, revealing it holds tax returns tied to President Trump.
  • The letter marks the next step in a complex investigation into Trump's tax returns, history of loans with the bank, and ties with foreign financiers.
  • Here's what the letter means for ongoing investigations, and why Trump's relationship with Deutsche Bank is attracting new criticism. 
  • Visit the Markets Insider homepage for more stories.

Deutsche Bank confirmed in a letter Tuesday that it holds tax returns tied to President Trump in response to a congressional subpoena.

Trump bucked historical precedent when he refused to make his tax returns public while running for president, and Democrats have long sought the documents' release. They also believe such documents could clarify business partnerships that may have influenced his actions in office.

The Deutsche Bank letter, which revealed that it possesses some of the tax records Congress is seeking, marks a major step forward in investigations into Trump's finances and ties to Russia. Here's why Trump's relationship with the bank has made recent headlines and drawn new scrutiny from regulators and investigators alike.

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The story so far

Deutsche Bank has a three-decade-long relationship with Trump, as the bank helped finance several of the Trump Organization's real estate projects.

The New York Times reported in March that Trump received about $2 billion in loans from Deutsche over roughly 30 years, with the president starting to borrow from Deutsche in the 1990s. The bank was reportedly one of the few on Wall Street willing to lend to Trump, as his casino bankruptcies signaled risk in lending money to his business endeavors.

The president's relationship with Deutsche soured over the years, reaching a climax in 2008 when he sued the bank before a loan he owed them came due. Trump blamed his inability to repay the loans on the bank, claiming Deutsche was among the institutions responsible for the financial crisis.

Trump later secured a personal loan from Rosemary Vrablic, a private banker with Deutsche, in order to repay previous loans from Deutsche.  The act — taking out a personal loan to repay a loan given by the same bank — was deemed "an extraordinary act of financial chutzpah" by The Times.

Trump reportedly continued to receive loans from Deutsche as late as 2015, taking out a $170 million loan for the renovation of the Old Post Office building in Washington DC. The Financial Times reported earlier in 2019 that Trump's debt to the bank reached $300 million after the Old Post Office loan.

Why it matters

Trump has worked to keep financial documents related to him and his family from being made public. His lawyers tried to block the subpoena sent to Deutsche, but the House of Representatives declined the motion.

Trump has been mostly successful in keeping his more recent tax returns away from the public eye. A New York Times report on leaked tax records from 1985 to 1994 detailed $1.17 billion in reported losses from Trump's businesses. The documents also suggested Trump may have skirted federal income tax requirements for two decades.

The report mirrored a 2016 piece by The Times that showed Trump claimed $916 million losses in his 1995 personal tax filing. The piece was published ahead of a presidential debate, during which Trump said paying no taxes made him "smart."

House Democrats have long coveted Trump's tax returns. As Emily Stewart at Vox recently wrote, "Trump's tax returns have been treated as a Holy Grail that would unlock the secrets of his wealth and, depending on where you fall on the political spectrum, potentially reveal him as a fraud or as having unsavory ties to foreign interests."

But as The Washington Post recently reported, Democrats had become resigned to the idea that they might not get access to the returns before the election. 

So in revealing that it possesses some of the tax records Congress is seeking, Deutsche Bank marked a step forward in investigations into Trump's finances, even as the bank did not identify whose records it has.

MSNBC's Lawrence O'Donnell claimed later on Tuesday he heard from a source "close to Deutsche Bank" that Trump's loan documents with Deutsche Bank reveal Russian oligarchs as co-signers. He added the Russian billionaires "are close to Vladimir Putin."

"If true, that would be a significant factor in Vladimir Putin's publicly stated preference for presidential candidate Donald Trump over presidential candidate Hillary Clinton," O'Donnell said.

The host did not claim to be able to corroborate the source's statement, and later walked it back.

JPMorgan, Goldman Sachs and Citi, are Wall Street's most active fintech investors. Here are the 22 startups they poured money into this year.

Wed, 08/28/2019 - 4:52pm

  • Goldman Sachs, Citi, and JPMorgan have been the most active US banks in fintech investing since 2012, according to CB Insights data. 
  • The trio have invested in a total of 22 startups so far this year. 
  • Click here for more BI Prime stories.

It has been a busy year for fintech investing as money continues to pour into the space. But it's not just venture capital firms making big bets — three of Wall Street's largest members are also in on the action.

Since 2012, Goldman Sachs, Citi, and JPMorgan are the US banks that have made the most investments in fintechs, according to data from CB Insights. This year proved no different, with the trio investing in 22 fintechs so far. 

The banks' interest should come as no surprise. Goldman and Citi both run separate investment arms for such deals — Goldman Sachs Strategic Investments and Citi Ventures. And JPMorgan has the largest reported tech budget of US banks at $11.4 billion in 2019. 

Read more: VC firms have poured $2.5 billion into fintechs like Chime and Varo this year. It's the latest threat to disrupt Main Street banks.

And while all three aggressively pursue fintechs, their approaches vary.

In 2019, Goldman Sachs showed significant interest in real estate and wealth management, making three deals in each space. JPMorgan has leaned heavily into accounting and tax, funding three startups in that area. Meanwhile, Citi's investments are spread more evenly, touching everything from payments and financial charting to data aggregation. 

Find the list below of the startups Wall Street's three biggest players have put money into this year. 


Bank: Citi 

Investment: Led $28 million Series C in March

Area of focus: Project management and billing software geared towards entrepreneurs 



Bank: Goldman Sachs

Investment: Participated in $260 million Series E in May

Area of focus: Payments for e-commerce and retail companies 




Bank: Goldman Sachs 

Investment: Participated in $300 million Series E in May

Area of focus: Software to help private companies manage their equity



Second Measure

Banks: Goldman Sachs, Citi 

Investment: Goldman led and Citi participated in $20 million Series A in February

Area of focus: Alternative data analytics for debit and credit card transactions


Bank: Citi 

Investment: Led corporate round for undisclosed amount in May

Area of focus: Applications for financial charting and desktop interoperability



Bank: JPMorgan

Investment: Led $5.5 million seed round in April

Area of focus: Cloud platform to help companies analyze the data and understand cash positions 


Bank: JPMorgan

Investment: Participated in $17 million Series C in May

Area of focus: Desktop applications for financial firms

Global PayEx

Bank: JPMorgan

Investment: Undisclosed amount in May

Area of focus: Accounts receivable processing 



Bank: JPMorgan 

Investment: Led corporate round for an undisclosed amount in August

Area of focus: Cloud-based accounting for small and medium businesses 


Bank: Goldman Sachs

Investment: Participated in $8 million Series A in February

Area of focus: AI-powered construction finance software

Banks: Goldman, Citi 

Investment: Both participated in a $160 million Series C in August

Area of focus: Digital mortgage lending  


Built Technologies

Bank: Goldman Sachs

Investment: Led $31 million Series B in April

Area of focus: Cloud-based construction lending software


Bank: Goldman Sachs

Investment: Participated in $20 million Series A in February

Area of focus: APIs to connect bank data to apps


Bank: Goldman Sachs

Investment: Led $55 million Series E in January

Area of focus: Digital wealth manager with individual savings accounts and personal pensions


Bank: Goldman Sachs

Investment: Led $28 million venture round in July

Area of focus: Deposits marketplace for customers and banks 


Bank: Goldman Sachs

Investment: Led $30 million Series B in April

Area of focus: Automated retirement plan creation and administration 



Bank: Citi

Investment: Participated in $35 million Series C in July

Area of focus: AI-based aggregation to help customers pick financial products



Bank: Goldman Sachs

Investment: Led venture round for an undisclosed amount in May

Area of focus: Digital asset and wealth management platforms

wefox Group

Bank: Goldman Sachs

Investment: Participated in $125 million Series B in March

Area of focus: Digital insurance marketplace 



Bank: Citi 

Investment: Participated in $20 million Series B in January

Area of focus: Blockchain platform to build smart contracts for finding financial products


Bank: Goldman Sachs

Investment: Led $22 million Series A in April

Area of focus: Coding-free application development

Bank: Goldman Sachs

Investment: Led $72.5 million Series D in August

Area of focus: Platform for creating AI tools

Stocks gain as traders await cues on US-China trade developments

Wed, 08/28/2019 - 4:17pm

  • Stocks rose on Wednesday as investors waited for signs of progress toward a trade deal between the United States and China. 
  • Traders appeared to shrug-off a slump in the pound that was sparked by UK Prime Minister Boris Johnson's request to suspend Parliament ahead of Brexit. 
  • A boost in oil prices fueled a jump in energy stocks, which led the S&P 500 index with a gain of 1.4%. 
  • Visit the Markets Insider homepage for more stories. 

Stocks gained on Wednesday as traders awaited a signal on any advancements in the trade spat between the US and China. 

Energy stocks led the S&P 500 as a jump in oil prices fueled a 1.4% gain. WTI crude climbed 1.8%, while brent crude rose 1.6%. Financial stocks jumped 0.9%, rebounding from a loss on Tuesday prompted by another inversion of closely-watched segment of the so-called yield curve

"It's a day where you have a little bit up across the board and you don't have anything hurting too badly," JJ Kinahan, the chief market strategist at TD Ameritrade, said in an interview with Markets Insider.

Kinahan also pointed out that there weren't any big stocks experiencing significant sell-offs, which can sometimes lead to losses in specific sectors and the major indexes.

US markets appeared to shake-off a slump in the pound provoked by UK Prime Minister Boris Johnson's motion to suspend Parliament, which stoked fears of no-deal Brexit. 

Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.

The twists and turns in the alleged communication between China and the US regarding a trade deal has kept investors on edge over the last few days as well. On Monday, President Trump claimed Chinese officials made phone calls to members of his administration over the weekend seeking to restart negotiations for a trade deal.

China's Foreign Ministry spokesman said on multiple occasions that he wasn't aware of the phone calls Trump was referring to, and the country has yet to confirm the communications oc cured. 

Here's a look at the major indexes as of the 4 p.m. close on Wednesday:

Shares of Tiffany & Co. rose as much as 4.7% after the company posted a stronger profit than analysts expected for the second quarter. The luxury jeweler said its global revenue fell about 3% as international tourists spent less on high-end goods while visiting the US due to a strengthening dollar. 

Purdue Pharma is reportedly considering paying-out between $10 billion and $12 billion to settle more than 2,000 opiod crisis lawsuits in a deal that would bankrupt the company. The news comes a day after Johnson & Johnson was ordered by an Oklahoma judge to pay a $572 million penalty for its contribution to the opiod crisis. 

Within the S&P 500, these were the largest gainers:

And the largest decliners:

In addition to gains in financials and energy stocks, consumer discretionary and industrials increased by more than 1%. Utilities posted the only loss in the S&P 500 on Wednesday, sinking about 0.3%. 

Join the conversation about this story »

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Tesla says its insurance is now available in California (TSLA)

Wed, 08/28/2019 - 3:59pm

Tesla on Wednesday said that its long-awaited insurance product for owners was available.

"Starting today, we're launching Tesla Insurance, a competitively priced insurance offering designed to provide Tesla owners with up to 20% lower rates, and in some cases as much as 30%," the company said in a blog post.

"Tesla Insurance offers comprehensive coverage and claims management to support our customers in California, and it will expand to additional U.S. states in the future."

Owners can sign up in a little as one minute, the company said, using the VIN from their Tesla vehicle.

On the company's first quarter earnings call in April, CEO Elon Musk said the company planned to launch an insurance product in " about a month."

"We have direct knowledge of the risk profile of customers and based on the car and then if they want to buy a Tesla insurance, they would have to agree to not drive the car in a crazy way," he told analysts, "they can, but then their insurance rates are higher."

Tesla owners have dealt with high insurance costs due in part to the relative difficulty of finding replacement parts and qualified body shops. AAA raised insurance rates for Tesla vehicles in 2017, though Tesla argued that AAA's decision was "severely flawed" because it compared Tesla's Model S sedan and Model X SUV against dissimilar competitors.

Tesla's have long been a question mark for insurance companies, Business Insider Intelligence analysts say, due to their built-in sensors and Autopilot software. In 2017, AAA said that Tesla owners should pay more than traditional vehicles due to "abnormally high claim frequencies," Automotive News reported in 2017. 

Tesla owners can still insure their vehicles through third-party insurance, Tesla said, noting that :we believe Tesla Insurance provides a compelling offer for new and existing owners." The product cannot be used for commercial services like ride-hailing, and call into question the company's planned launch of a robo-taxi network as soon as next year. 

Mark Matousek contributed to this report. 

Join the conversation about this story »

NOW WATCH: Watch the Samsung Galaxy Note 10 event in 6 minutes

The yield curve is inverted. Here's what that means, and what the implications are for the economy.

Wed, 08/28/2019 - 3:51pm

  • An inverted yield curve for US Treasury bonds is among the most consistent recession indicators.
  • An inversion of the most closely watched spread — between two- and 10-year Treasury bonds — has preceded every recession since 1950.
  • Here's what you need to know about the yield curve, why Wall Street cares so much about it, and why it's been so dependable.
  • Watch Treasury bonds trade live here.

Since 1950, all nine major US recession have been preceded by an inversion of a key segment of the so-called yield curve.

Defined as the spread between long- and short-dated Treasury bonds, the yield curve turns negative when near-term Treasurys yield more than their long-term counterparts. The most closely watched section of the curve is the difference between two- and 10-year sovereign debt.

The movement is viewed as one of the most reliable recession indicators. And though it can take up to 34 months for a recession to hit after the curve inverts, it's among the first signs an economy is shrinking.

Analysts and investors alike place great value in the yield spread, but for those unfamiliar with the indicator, headlines can be confusing and vague.

Here's everything you need to know about yield-curve inversions, why people place such importance in them, and what they signal about the US economy.

What is the yield curve?

US Treasury bonds measure their value in yield, a metric that represents how much an investor will make over the time they hold the bond. Typically, bonds with longer maturities — or those that require investors to wait longer before redeeming them — pay more in periodic coupon payments than those with shorter maturities.

The collection of all Treasury bond yields is measured with an upward-sloping curve that represents bond yields and maturity rates rising in tandem. Investors who think the economy will expand well into the future believe they can get a higher return on investment with a 10-year bond than with a two-year bond.

What does an inversion in the curve mean?

The yield curve is considered inverted when long-term bonds — traditionally those with higher yields — see their returns fall below those of short-term bonds.

Investors flock to long-term bonds when they see the economy falling in the near future. This increased demand drives long-term bond prices higher and pushes yields lower accordingly. The higher the initial price of the bond, the less profit one makes when it reaches maturity.

Inversely, the lack of demand for short-term bonds — caused by investors fearing an upcoming economic downturn — drives prices lower. Lower prices bring higher yields.

The most commonly feared inversion is when 10-year bond yields fall under two-year bond yields. This inversion leads the yield curve to slope downward from the three-month bond to the 10-year bond.

Why does Wall Street care so much?

A "2-10" inversion is regarded as one of the most consistent recession indicators for the US economy. It has preceded every recession since 1950.

Investors turn to bonds when stocks see increased volatility. But if too many investors are moving into long-term bonds, the collective sentiment measured with a yield-curve inversion serves as a threshold for how Wall Street thinks the economy will perform.

Inverted yield curves arrive when long-term debt is deemed riskier than short-term debt. Though many investors try — and fail — to time the exact moment to buy or sell assets to maximize their returns, the consensus represented by an inversion has historically been correct and foreshadowed economic woes to come.

What happens after the curve inverts?

While yield-curve inversions have successfully signaled recessions for the past 50 years, the economic downturns can come anywhere from 14 to 34 months afterward, according to a Credit Suisse report. On average, markets rally about 15% after the yield-curve inversion.

While inversions tend to spark market sell-offs the day they happen, the indicator often arrives many months before the economy falls into a recession. The downturn tends to hit hardest about 22 months after a "2-10" inversion, according to Credit Suisse.

What are some other recession indicators?

A yield-curve inversion is among the most consistent recession indicators, but other metrics can support it or give a better sense of how intense, long, or far-reaching a recession will be.

For example, the Great Recession stemmed from the collapse of the US real-estate market and a financial crisis tied to mortgage-backed assets. It led to widespread foreclosures, loss of life savings and, eventually, global economic crisis.

But not every recession is the same, and there's no guarantee that the next downturn will cause foreclosures or another kind of financial loss.

To predict what recessions will look like, economists look at numerous metrics, including the unemployment rate, home starts, wage growth, consumer confidence, GDP, job quits, and consumer debt.

Some figures will hint as to when, where, and how a recession will hit, while others may change only after an economic contraction begins. It's even possible the most dependable indicators haven't been found. Keeping an eye on a select number of popular metrics can help investors weather the storm if a recession grows increasingly likely.

Peloton, which sells $2,000 exercise bikes, just filed for an IPO — but cofounder and CEO John Foley has said that finding good talent is what keeps him up at night

Wed, 08/28/2019 - 3:39pm

Potential investors were shocked to see home fitness giant Peloton (which sells $2,000 exercise bikes) reveal that it had sustained a $245.7 million net loss in fiscal year 2019 when the company released its IPO paperwork on Tuesday. But there has been another aspect of the company bugging CEO and cofounder John Foley, he said during an April episode of NPR's "How I Built This with Guy Raz."

"What keeps me up at night is how do we scale our culture?" Foley told NPR. "How do you go from 2,000 people to 50,000 people in the next five to six years and still have the fun, .com energy, the trust, the transparency? Having a fantastic culture where you're able to recruit and retain the best people in the world is what keeps me up at night."

Foley also revealed that he'd struggled with anxiety throughout Peloton's early days, telling NPR he was "a shell of a human being for several years, for two years in particular."

At the time, Peloton was burdened by financial problems so severe that Foley cleaned their office's bathrooms himself because the company could not afford to hire both office support staff and the engineers needed to work on its Wifi-connected exercise equipment.

Read more: Peloton's sales are surging as it gears up for an IPO. Insiders and analysts think it may only be getting started.

"I was masquerading as running a great company and we were trying to put on a happy face and you know, sell to the team and the investors' optimism," Foley told NPR, "and the truth be told, for two or three years we were about to collapse and we didn't have the money and it was stressful. I'm not the first entrepreneur to have gone through it, but it was the first time I've gone through it. It was very tough." 

Foley was in his 40s when he got the idea to build a stationary bike that offered in-home spin classes on demand, he told NPR. A graduate of Harvard Business School, he had previously been an executive at both Mars Inc. and Barnes and Noble's e-commerce division, according to the Peloton website. Foley and his wife both loved boutique fitness classes, but Foley couldn't get into classes taught by his favorite instructors at the most convenient times because he didn't like to book in advance.

Thus, his multimillion-dollar business idea was born — thought it hasn't been an easy road from there.

"I used to be a jolly guy," Foley told Business Insider in 2018 about the toll the company had on his mental health. "I'm still a happy-go-lucky guy, but after the years and the scars of the early days at Peloton, I've become slightly more cynical, more callous. It was rough."

SEE ALSO: The Chobani billionaire who turned a $3,000 loan into a yogurt empire calls himself an 'anti-CEO' and thinks other CEOs should do the same

DON'T MISS: Meet Rebekah Paltrow Neumann, the former actress who cofounded WeWork, is cousins with Gwyneth Paltrow, and is CEO Adam Neumann's 'strategic thought partner'

Join the conversation about this story »

NOW WATCH: Meet the photographer behind the 'I Spy' books that captured millions of readers' imaginations

A sleek black yacht that just launched is now the world's largest superyacht. Take a look at the 600-foot vessel owned by a Norwegian billionaire.

Wed, 08/28/2019 - 3:03pm

  • The world's largest superyacht, a 600-foot vessel owned by a Norwegian billionaire, just launched in Romania.
  • The REV Ocean was designed to carry out scientific research expeditions with the goal of safeguarding the oceans.
  • It will also be available to charter to help support the costs of the scientific research missions.
  • A publicist for the REV Ocean said the vessel's billionaire owner, Kjell Inge Rokke, would also use the yacht but pay to rent it like any other customer.
  • The REV Ocean dethroned the 590-foot Azzam, which held the record of largest yacht in the world for six years.
  • Visit Business Insider's homepage for more stories.

The world's largest superyacht, a 600-foot vessel owned by a Norwegian billionaire, just launched in Romania.

The REV Ocean dethroned the 590-foot Azzam, which held the record for largest yacht in the world for six years.

Unlike most superyachts, the REV Ocean wasn't designed only for luxury cruising. It was built to be a research vessel, carrying out scientific expeditions with the mission of safeguarding the world's oceans.

The yacht will, however, be available to charter to help support the cost of its scientific missions, a publicist for the REV Ocean told Business Insider.

The REV Ocean, which is on its way to Norway to be outfitted, is set to be completed in 2020.

Take a look at the record-breaking 600-foot superyacht.

SEE ALSO: The 10 countries with the most superyachts in the world: RANKED

DON'T MISS: Jeff Bezos partied on billionaire David Geffen's $590 million superyacht in the Balearics — here's a look at the yacht, which has hosted everyone from Oprah Winfrey to Barack Obama

At 600 feet (182.9 meters) long, the REV Ocean is the world's largest superyacht.

It dethroned the 590-foot Azzam, which held the record for more than six years.

After 18 months of construction, the vessel was lowered into the water at the Vard Tulcea shipyard in Romania on August 24.

The REV Ocean was commissioned by the billionaire Norwegian businessman Kjell Inge Rokke.

Rokke is worth an estimated $3.3 billion.

He owns almost 67% of Aker, a publicly traded shipping and offshore drilling conglomerate, according to Forbes.

Rokke also started and funds a nonprofit foundation, also called REV Ocean, that's dedicated to safeguarding and preserving the oceans.

The Norwegian businessman is one of more than 200 wealthy people who have signed the Giving Pledge, promising to give away at least half of their fortune to charity.

The REV Ocean had "an extensive and complicated build period," according to the foundation.

The yacht was designed by Espen Oeino, who has designed some of the world's most famous yachts, including the late Microsoft cofounder Paul Allen's 414-foot Octopus.

The REV Ocean was built to be a scientific vessel in addition to a cruising yacht. REV stands for Research Expedition Vessel.

According to the REV Ocean foundation, scientists can use the superyacht for research into plastic pollution, unsustainable fishing, and the impact of CO2 emissions on the ocean.

"REV Ocean will strive to fill critical knowledge gaps, develop innovative solutions, and bridge science, business and policy sectors to achieve positive change," the foundation said.

The REV Ocean will be able to hold 55 scientists and 35 crew members, the foundation says.

The vessel's onboard equipment will include "scientific trawls, sonar systems, laboratories, auditorium and classrooms, moonpool, AUV and submarine, an ROV with 6000 meters depth capacity, and advanced communication equipment."

The superyacht will also be available to charter to help fund its scientific missions.

Rokke will also use the yacht, but he'll pay to rent it like any other customer, said REV Ocean's communication manager, Lawrence Hislop.

"The primary focus, branding, and emphasis, however, is on science," Hislop told Business Insider.

As a charter vessel, the REV Ocean could carry 28 guests and 54 crew members.

According to its website, the superyacht will be available for "private individuals, companies and institutions seeking to improve their awareness of the ocean."

The price hasn't been finalized, but REV Ocean is negotiating a contract with a yacht-chartering company, Hislop told Business Insider.

Next, the ship will go to Norway to be fully outfitted.

In the coming weeks, the REV Ocean will be towed down the Danube River and into the Black Sea, then pass through the Bosporus Strait in Istanbul, cross the Mediterranean, traverse the Strait of Gibraltar, and travel up to the Vard shipyard in Brattvag, the foundation said.

The journey is expected to take 30 to 35 days.

The vessel is set to be completed sometime in 2020.

Source: REV Ocean

The Ford Ranger and the Chevy Colorado battle it out in a contest of mid-size pickup trucks (F, GM)

Wed, 08/28/2019 - 3:00pm

  • The Ford Ranger and Chevy Colorado are the two biggest competitors from the major pickup-truck makers in the US.
  • I've tested three Colorado trucks in different trims, and one all-new Ford Ranger.
  • The Colorado truck eked out a win this time over the Ranger, but the truth is that both pickups are outstanding.
  • Visit Business Insider's homepage for more stories.

The Ford-Chevy rivalry is a familiar one to pickup-truck customers. In the full-size segment, the mighty F-150 has been the bestselling vehicle in the US since Ronald Reagan was president, while the Chevy Silverado has usually been No. 2.

Decades ago, there was robust competition in the compact-pickup segment as well. But more recently, the Detroit automakers have all but abandoned the market in the US.

That all changed when Chevy rolled out the Colorado in 2014. Suddenly, the old compact segment became a midsize battleground. (The trucks were larger than the entry-level, stripped-down pickups I drove when I was in college.) Toyota was well established, but with the Colorado and its GMC sibling, the Canyon, General Motors offered more plush, high-tech, yet still versatile and robust small pickups.

Honda revamped its Ridgeline to be more pickup-like, and just like that, Ford looked as if it had fallen behind the curve in its bread-and-butter realm.

Not to worry, however, as the Ranger midsize was on sale outside the US, so all the Blue Oval had to do was bring the vehicle back to America. In the first three months of 2019, Ford sold almost 9,500 Rangers, a respectable debut. Colorado sales tallied about 33,500 for the same period.

I love midsize pickups. They're the ideal vehicles for suburban weekend home-improvement duty, and if you're an outdoorsy person who doesn't need to tow a large boat or horse trailer, they're great for getting out into nature (as long as you go for the 4x4 versions). When equipped for off-roading, they can be comfort-challenged, but you can also opt for a cheaper, rear-wheel-drive base model that will provide easier driving dynamics.

Having driven several Colorados in the past four years — coming away impressed with them all — I recently enjoyed the new Ranger. So, naturally, it was time to compare pickups. Read on to find out how they matched up.

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First up is the newcomer. The 2019 Lariat SuperCrew four-wheel-drive Ranger was nicely equipped and stickered at almost $45,000. The base-price pickup is a little more than $24,000.

Read the review »

The SuperCrew configuration sports a 5-foot bed, but the Ranger can be had with a two-door cab and a 6-foot bed. The Ranger is a handsome pickup, especially in "lightning blue."

You could call the Ranger's front end "snouty," but it's also pretty truck-like for a midsize.

The 2.3-liter EcoBoost four-cylinder engine is a turbocharged power plant that cranks out 275 horsepower and 310 pound-feet of torque. Towing capacity is 7,500 pounds — enough to tow just about anything owners of the Ranger would want to.

Ford's EcoBoost engine tech uses turbocharging to retain power with good fuel economy. In this case, the truck gets 20 mpg city/24 highway/22 combined. The 0-60 mph run is achieved is about 6.5 seconds.

A 10-speed transmission handles the shifting duties.

I didn't get to go all down-and-dirty with the FX4 setup, an extensive 4x4 rig that even offers off-road cruise control.

Our tester came with stout off-road rubber. Most pickups we test are lifted 4x4s.

I put the Ranger to a more serious hauling test than the Colorado, making a run to Costco and loading up some furniture. The bed is big enough to handle these typical suburban tasks, and it could also easily handle mountain bikes and outdoor gear.

The interior of our tester was a no-nonsense "ebony," but the upholstery was leather. The front seats are heated.

The rear bench seats, as one might expect with a smaller pickup, were snug.

The leather-wrapped steering wheel felt premium, and you'll notice that the cluster presents a speedometer — no traditional tachometer, and that's fine. Old-school tachs aren't very useful on pickups.

Ford's Sync 3 infotainment system runs on an 8-inch touchscreen. Sync 3 is one of the best in the industry, providing superb navigation, easy Bluetooth connectivity, and AUX and USB device-connection options.

The 10-speaker Bang & Olufsen audio system in the Ranger I tested is a terrific extra. It sounds too good for a truck this small! Apple CarPlay and Android Auto are also available.

On to the Chevy Colorado. I've sampled the truck in three trims. Here we see a $43,475 ZR2 that was well equipped and ready for off-road action. But I've tested a closer-to-base version ($21,300) and an aggressive Z71 version.

Read the ZR2 review here and the ZR1 review here »

The 2018 ZR2 came with a fetching "Cajun red tintcoat" paint job. The truck had a crew cab and a "short box" bed. Some folks don't much like short boxes, but I think for most owners it's ideal.

The ZR2 has a moderately more aggressive front end than the Ranger, and that gold bow-tie badge really pops against the blacked-out grille.

On paper, the 308-horsepower 3.6-liter V6 could be construed as underpowered. But in my hands, it was anything but. This pickup has nice pop.

Fuel economy is 17 mpg city/24 highway/19 combined — not great, but also not bad given the oomph provided by the V6.

The Colorado ZR2 can tow up to 5,000 pounds. That's not massive for a pickup, but the nonperformance Colorado and ZR2 aren't really intended for customers who will be hauling horse trailers. More likely, they'll attach a small trailer to pull an ATV, some JetSkis, or a modest camper.

The ZR2's 0-60 mph run has been clocked at a respectable six seconds, while the Z71 can haul 7,000 pounds.

A smaller, four-cylinder power plant is also available for the Colorado.

The eight-speed automatic handles the Colorado's power without straining. Shifts are smooth.

The 4x4 capabilities aren't advertised by the Colorado's stickers. But a sturdy 4x4 it is.

With the Colorado ZR2, you have electronic-locking differentials, front and rear, so it's ready for serious off-roading. The front underbelly and rear transfer case are also shielded, so rock-busting won't cripple your pickup.

As far as the bed goes, there isn't much difference between the Colorado and the Ranger. Both trucks should satisfy the hauling needs of midsize buyers.

The Chevy's "jet black" interior is on par with the Ford's. It's a nice environment, nearly premium without being luxurious. That's by design. This isn't a truck meant to be babied, so the interior has to be able to endure some punishment.

The driver gets a pretty typical Chevy setup as far as the steering-wheel controls and gauges are concerned. There's a small info screen between the speedometer and the tachometer.

Beyond heated seats, cruise control, and a nicely appointed leather-wrapped steering wheel, you don't get a lot of driver-assist features with the Colorado.

The 8-inch touchscreen runs Chevy's Intellilink infotainment system.

Bluetooth device pairing is a snap, and there are USB and AUX options for plugging in gadgets. Like all GM vehicles, the Colorado has 4G LTE WiFi connectivity.

Apple CarPlay and Android Auto are available.

And the winner (for now) is the Chevy Colorado!

To be completely honest, I had the Ranger as my winner when I started this comparison. I drove the Ford more recently than the Colorado and was extremely impressed. I also tend to think that Ford knows trucks and knows them well, so I give the Blue Oval the benefit of the doubt.

However, with three Colorado trims in my backstory — and yet another coming soon, the ZR2 Bison — I've simply spent too much quality seat time in the Chevy. The ZR2, in fact, is one of the best pickups I've ever tested, period.

That said, this contest was TIGHT. In the end, I think I favored the ZR2/Z71 V6 engine and the Chevy infotainment system over the Ranger's four-banger and Sync 3. But not by much.

In truth, the consumer is officially spoiled for choice in the once forlorn midsize-pickup market, with excellent offerings from not just Ford and Chevy but stalwart Toyota with the robust Tacoma, niche-y Honda and the Ridgeline, Chevy's sibling GMC and the Canyon, and even Nissan and the aging Frontier.

When it comes down to Colorado versus Ranger, you can't lose. And I'm assuming Ford will offer a more performance-oriented Ranger Raptor to US buyers, as it does in other global markets, so the Ranger will better match up with the Colorado line, which has been on sale in the US longer.

If you're an off-roader, the ZR2 is worth a close look. But what about the Z71 package? It does add thousands to the price tag, and when all is said and done, the $42,000 Z71 I sampled isn't much cheaper than the top-of-the-line, $43,500 ZR2. If you have plans for your Colorado that might be more on the brash side, and if you don't mind the menacing appearance, the Z71 trim is at least worth a gander.

The Lariat SuperCrew Ranger I tested was a few thousand bucks more expensive than even the ZR2, but I'd say it was ever so slightly better appointed and thus worth the extra cost. The Ranger has also been on sale outside the US for a while, so it's not as if this is an unproven truck.

There has to be a winner in these comparisons (well, most of the time — I could have declared it a tie). For me, and for now, that's the Colorado. But the Ranger is already close to being neck and neck, so in addition to a good old-fashioned pickup-truck war between Detroit rivals Ford and Chevy in the full-size segment, we now have a compelling undercard bout with midsize pickups.

I think that's great — and if you're a buyer, so should you.

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Value is the only commonality in an increasingly complex, challenging and interdependent world.
Laurance Allen: Editor + Publisher

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