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Activision Blizzard’s annual convention begins next week. Bank of America analysts say investors should look out for these 5 events. (ATVI)

Thu, 10/24/2019 - 1:48pm

BlizzCon 2019 kicks off on November 1, and Bank of America Merrill Lynch analysts laid out what investors should look for from the event.

The convention serves as a platform for Activision Blizzard to announce new games, hold esports tournaments, and offer fans exclusive merchandise related to its first-party titles. The video game company is famous for its World of Warcraft, Overwatch, and Diablo franchises, among others.

This year's convention comes as Blizzard is mired in a Hong Kong-related controversy. The company reprimanded an esports competitor in early October for vocalizing his support for its liberation from China during a tournament. Company employees staged a walkout in support of the player on October 7.

The two-day convention is slated to bring a number of reveals for shareholders to praise or criticize. Here are the five things investors should expect from BlizzCon 2019, according to BAML analysts, and how they could affect the company's bottom line.

Read more: The $120 billion gaming industry is going through more change than it ever has before, and everyone is trying to cash in

Double Diablo reveals

The last Diablo game was released more than nine years ago, and fans were generally disappointed when Blizzard announced last year that the next installment in the franchise — titled Diablo Immortals — would be a mobile game.

The team of analysts led by Ryan Gee expects Blizzard to unveil Diablo 4 at this year's convention as a more traditional sequel in the franchise, and announce a remastered version of Diablo 2 as well.

The remastered game is set for a 2020 release and should "satiate fans" until Diablo 4 launches in 2021, the analysts wrote. Investors surveyed by BAML value Diablo Immortal at roughly $300 million by 2021, the note added.

An Overwatch sequel

Overwatch has been a staple in esports since its 2016 release but has seen its popularity dwindle year-over-year as newer titles snag gamers' interest. BlizzCon 2019 would be the best place for a sequel announcement or major update to the title.

Many investors expect a full-fledged sequel to be released in 2020 with a new player-versus-enemy mode and a greater focus on single-player content, the analysts wrote.

It's also possible Blizzard continues to roll out out free-to-play elements for the game and push a sequel further down the road. This strategy would yield marginal gains in franchise revenue, and far less than if the developers released a sequel, the analysts said.

"A full-priced sequel represents over $500 million in revenue, whereas we are only modeling Overwatch franchise revenue up just 5% year-over-year to ~$400 million," they wrote.

A World of Warcraft expansion

World of Warcraft saw a surge of players join the franchise with the release of WoW Classic, a throwback rendition of the online game identical to the 2004 launch version. The nostalgia-fueled release, coupled with a 2018 expansion to the base game, raised the analysts' expectations for the franchise. 

"We have WoW revenue up 40% year-over-year in 2020 estimates (+$250 million year-over-year) and hte majority of investors we spoke to also expect a WoW expansion in 2020," they wrote.

The BlizzCon stage would be the most likely place for the company to announce a new expansion and keep the franchise momentum strong. The developer could even announce a sort of sequel to the classic release, recycling past expansions to capitalize on the 2004 game's renewed popularity, the analysts said.

"We think WoW Classic has had a positive impact on subs and believe Blizzard will also revisit other past expansions in the future as a way to re-engage older users," BAML said.

An auto-battle game

Blizzard's franchises are massively successful and have proven their staying power in the rapidly evolving gaming industry, but BAML's analysts said a new title in the growing "auto-battle" genre could also raise their expectations for the company's stock.

Auto-battlers gained mainstream popularity in 2019 for their ease-of-use and ability to be played on mobile devices. Some popular entries include Riot Games' Teamfight Tactics and Valve's DOTA Underlords.

Blizzard "is looking at the appeal" of games in the genre and could release a free-to-play extension of one of their existing franchises as an auto-battler, the analysts said.

"Any reveal of a new game in the auto-battle genre would be upside to our 2020/2021 estimates."

Opposing demonstrations

Blizzard's banning of Hearthstone players for supporting Hong Kong's liberation has already prompted backlash from gamers, protesters, and even members of the House of Representatives. One group already plans to protest the decision at BlizzCon, and the widespread disappointment toward the developer's actions could prompt additional demonstrations.

The publicity could harm the company's image and endanger growth of Hearthstone's user base, the BAML analysts said.

"Threats of a boycott on Blizzard games come when year-over-year declines for Hearthstone have begun to stabilize," they wrote. "The commercial impact is unclear."

The team of analysts maintained a "buy" rating for Activision Blizzard stock, with a price objective of $62.

Activision Blizzard traded at $54.65 per share at 3:25 p.m. ET Wednesday, up roughly 17% year-to-date.

These 3 Chase cards are all you need to maximize how you earn rewards points

Thu, 10/24/2019 - 1:48pm

One of the tricks to earning points and miles quickly isn't a trick at all — it's just making sure you use the right rewards cards for the right purchases.

That's because various credit cards offer bonus points on different categories. One card might offer 2x points at restaurants and just 1 point per dollar at grocery stores (and everywhere else), while another might offer 1.5x points at grocery stores, or 3x on flights, and so on.

Keeping track of categories and cards can get confusing, but every time you use the "wrong" card at the wrong category of merchant, you leave rewards — basically free money — on the table. 

The good news is that with most of the major credit card rewards programs, you can pool your points if you have multiple cards in that program. By optimizing your card strategy, you can use various cards with different bonus categories and have all the points drop into one common pool, ready for you to redeem for travel, transfer to frequent flyer programs, or, if you prefer, exchange for cash back (even though that's usually a lower value for your points).

The best thing to do is come up with a simple strategy for which cards to use, and have those ready to go in your wallet. Keep reading to see why the Chase Ultimate Rewards program could be a great option for earning travel rewards, and how you can maximize your earnings with a "trifecta" of Chase cards.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Why Chase Ultimate Rewards?

I'm a fan of the Chase Ultimate Rewards program because it combines a great lineup of cards that help you earn points quickly with valuable ways to redeem your points.

You can transfer your Ultimate Rewards points to partners such as British Airways, Hyatt, United, and Singapore Airlines to book travel, or you can redeem your points directly through Chase for travel as well as for cash back, statement credits, gift cards, and merchandise. Unless you never travel, you're probably best steering clear of the non-travel redemption options, since booking flights and hotel nights is how you'll get the most value from your Chase points.

Other dynamic rewards programs that let you pool points from multiple cards include American Express Membership Rewards and Citi Thank You Rewards. These programs have their own sets of travel partners where you can use your points, so it's worth comparing the options to see which program best aligns with your travel goals. Because Chase Ultimate Rewards offers a good balance of hotel and airline partners as well as the opportunity to get 1.25 to 1.5 cents per point toward travel with certain cards, it can be one of the most convenient and valuable options for award travelers, especially those who don't want to learn the intricacies of foreign airlines' award charts.

The 'Chase trifecta'

If you've decided that Chase Ultimate Rewards is a good program for you, you'll want to arm yourself with Chase cards that earn you maximum points on your spending. This is where the so-called Chase trifecta comes in.

Using the following trio of cards is a great way to maximize your spending, since each card offers bonus rewards on different spending categories. You can pick between the Chase Sapphire Preferred and the Sapphire Reserve depending on which fits your needs best, and then add in the Ink Business Preferred card for bonus points on a diverse selection of categories, and the Freedom Unlimited for a high return on non-bonus spending.

The Chase Sapphire Preferred or Sapphire Reserve

Either the Chase Sapphire Preferred or the Chase Sapphire Reserve should be the linchpin of you Chase points-earning strategy for two reasons.

First is the earning ability. The Sapphire Preferred offers 2x points on all dining and travel, while the Sapphire Reserve earns 3x points on the same. The categories are defined fairly broadly, with dining including things like restaurants, bars, restaurant-delivery services, cafes, and more, and travel including everything from subways, taxis, ride-sharing apps, and buses, to airfare, hotels, cruises, Airbnb, and more.

Second is the redemption ability. The cards both let you transfer points to Chase's partnering frequent flyer and hotel loyalty programs — although transferring points is the most complicated way to use them, it's also the most lucrative. For example, by transferring points from my Chase cards to United Airlines, I was able to fly back from Japan in first class.

If transferring points isn't for you, the next best option is to use them to book travel through Chase's website. The Chase travel portal works just like any other travel-booking website, like Expedia or Priceline. The difference is that you can pay partially or in full with your Chase points. 

Plus, when you use points to book travel through Chase, you'll get a bonus — 25% with the Sapphire Preferred, and 50% with the Reserve. Chase values points at 1 cent each as cash. That means that when you book travel, they'll be worth 1.25 cents each if you have a Preferred card, or 1.5 cents each if you're a Reserve cardholder.

Finally, you can exchange points for cash in the form of a statement credit or direct deposit, or for gift cards to various merchants. Regardless of which card you have, points are worth 1 cent each this way.

Both cards offer hefty sign-up bonuses

The Sapphire Preferred offers a higher bonus: 60,000 points after you spend $4,000 in the first three months. The Reserve offers 50,000 points for the same spending and time requirement. 

Keep in mind that you can't earn the bonus on one card while you currently hold the other, and you can't earn it if you've already received a sign-up bonus on a Sapphire-branded card in the past 48 months.

While the Sapphire Reserve earns more points and gives you a bigger bonus when you book travel, it also has a higher annual fee — $450, compared to the Preferred's $95. It's worth keeping in mind, though, that the Reserve also offers a statement credit on your first $300 of spending on travel each year. When you subtract that credit, the annual fee is actually $150.

Be sure to read our comparison of the Chase Sapphire Reserve and the Preferred for more info on how to decide which card is better for you. You can only have one of these two cards, since they're both in the Sapphire family.

Click here to learn more about the Chase Sapphire Preferred card. Click here to learn more about the Chase Sapphire Reserve card. The Chase Ink Business Preferred

While the Ink Business Preferred is aimed at small business owners, more people qualify for it than you might expect. A ton of different things count as small businesses, including freelancing (in just about any capacity), side gigs, and even selling things on Amazon or eBay. As long as it's something, it counts — you just use your own name as the business name.

The Ink Business Preferred offers 3x points on the first $150,000 you spend each cardmember year on internet, cable, and phone services, shipping and mailing, travel, and advertising purchases with social media platforms or search engines. After that, you earn 1x point on everything.

If you're a business owner, chances are those categories will come in useful. Plus, earning 3x points on utilities like internet and your cell phone is lucrative — I know that I spend more on that category than I wish I did.

Speaking of cell phones — the Ink Business Preferred has the added perk of offering loss and damage protection for your cell phone as long as you use the card to pay your monthly bill (plus you'll earn 3x points).

Best of all, the card offers a massive 80,000-point sign-up bonus when you spend $5,000 in the first three months. If you also have a Sapphire Reserve, that's worth $1,200 on travel — or potentially more transferred to partners. That's more than enough to offset the card's $95 annual fee.

Click here to learn more about the Chase Ink Business Preferred card. The Chase Freedom Unlimited

The final card in the Chase trifecta, the Freedom Unlimited is a simple, no-annual-fee card that earns 1.5% cash back on all purchases, without any caps.

However, that "cash back" actually comes in the form of 1.5 Ultimate Rewards points per dollar spent. If you don't have any other Chase cards, the only real way to use them is for cash back. However, if you also have a card like the Sapphire Preferred or Reserve, or the Ink Business Preferred, you can move points from your Freedom Unlimited to that card, and use them to book travel at the higher rate, or transfer them to partners.

I use the Freedom Unlimited for just about any purchase that isn't covered by the bonus category on another card. That way, I'm never getting less than 1.5 points per dollar spent — that adds up quickly, especially considering that I pool the points on my Sapphire Reserve.

The Freedom Unlimited is currently offering a sign-up bonus of $150 in cash back after you spend $500 in the first three months. If you also have a card that earns Ultimate Rewards points, you can transfer over the cash back to redeem it as rewards, in which case $150 will equal 15,000 points.

Click here to learn more about the Chase Freedom Unlimited card. Bottom line

With three Chase cards in your wallet, you can ensure that you're earning 1.5–3 points on every single dollar you spend. Since those points are worth more than 1 cent each when you use them to book travel through Chase, and potentially more when you transfer them to airline partners, that translates to a fantastic return.

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The highest outdoor observation deck in the Western Hemisphere opens in NYC's Hudson Yards in March 2020 — and you can now buy tickets to it

Thu, 10/24/2019 - 1:31pm

  • The Western Hemisphere's highest outdoor observation deck, which sits 1,131 feet in the air at the top of a New York City skyscraper, is now selling tickets.
  • "Edge," a triangular platform at the top of a brand-new skyscraper in Manhattan's Hudson Yards neighborhood, is expected to open in March 2020.
  • It will be a 60-second elevator ride to the 7,500-square-foot outdoor viewing area, which extends out 80 feet from the 100th floor and overlooks the city skyline and the Hudson River.
  • Tickets cost $36 to $38 for adults and $31 to $33 for children, depending on whether you buy them online or on-site.
  • The world's highest outdoor observation deck is 1,821 feet in the air at the top of Dubai's tallest building, the Burj Khalifa.
  • Visit Business Insider's homepage for more stories.

The Western Hemisphere's highest outdoor observation deck, which sits 1,131 feet in the air at the top of a brand-new New York City skyscraper, is now selling tickets.

"Edge," a triangular platform at the top of a newly built tower in Manhattan's Hudson Yards neighborhood, is expected to open on March 11, 2020. It will be a 60-second elevator ride to the 7,500-square-foot viewing deck, which extends out 80 feet from the 100th floor of 30 Hudson Yards, overlooking the New York skyline and the Hudson River.

Edge will be open seven days a week, year-round from 8:00 a.m. to midnight. A Champagne bar inside on the 100th floor will sell drinks and light bites that visitors can enjoy out onto the sky deck.

Prices to go up to Edge are comparable to those of other observation decks in the city — but it's the cheapest option for NYC residents

Tickets are on sale now on the Edge website at $36 for adults. When bought on-site versus online, an adult ticket is $38. Tickets for children ages 6 to 12 are $31 online and $33 on-site, and children 5 and under are free. Special prices are also available for seniors and active and retired members of the US military.

New York City residents, on the other hand, can buy tickets online for $34, making Edge the most affordable of the city's major observation decks for adult city dwellers.

At the Empire State Building, the 86th-floor outdoor observatory is 1,050 feet high and $38 for adults. A new 102nd-floor observation deck rises 1,250 feet in the air and costs $58 for a ticket — but it's enclosed, not open-air. Going to the Top of the Rock at 30 Rockefeller Center, where the upper decks are 850 feet above street level, is $38 for adults.

One World Trade Center's observatory is 138 feet higher than Edge at 1,268 feet above street level, but it's indoor-only. Tickets to the top are $35.

Edge may be the Western Hemisphere's highest observation deck, but it's almost 700 feet lower than the highest in the world

The highest outdoor observation deck in the world sits at the top of Dubai's tallest building. The Burj Khalifa has an outdoor observation deck on the 148th floor, a staggering 1,821 feet in the air. 

According to the Guinness World Records, the highest observation deck in the world rises 1,841 in the air at Shanghai Tower, an office and hotel building in Shanghai, China, that was finished in 2015. But that one is indoor only.

Edge will be unveiled almost a year to the day that Hudson Yards, the $25 billion development, opened to the public

Since its opening in March 2019, Hudson Yards has become the most expensive neighborhood in New York City, with a median sale price of almost $5 million.

The neighborhood is home to luxury residential towers including 15 Hudson Yards, where the cheapest condo is $2.6 million, and 35 Hudson Yards, which houses a 60,000-square-foot Equinox Fitness Club, an Equinox hotel, retail spaces, and restaurants, in addition to its high-end residences that start at $5 million.

SEE ALSO: Hudson Yards is now NYC's most expensive neighborhood. I toured the first residential building to open in the $25 billion neighborhood — and it was clear it's selling much more than just real estate.

DON'T MISS: I got an inside look at the brand new, 7-story 'vertical shopping experience' in Hudson Yards, which the developers insist is not a mall — here's what I saw on opening day

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The CEO of Harvard's endowment is 'not pleased' with its 6.5% return in 2019

Thu, 10/24/2019 - 12:46pm

Harvard's endowment grew 6.5% in fiscal 2019, and the fund's CEO isn't satisfied with the below-Ivy-League-average performance.

The university's fund is worth approximately $40.9 billion and has struggled to match the returns seen by other prestigious schools as it revamps its portfolio. Harvard Management Company's CEO cited illiquid investments for the drop in yearly growth.

"While we are not pleased with this performance, we are mindful that HMC is an organization in the midst of a significant restructuring and has a portfolio with certain illiquid legacy assets that weigh significantly on performance," CEO N.P. "Narv" Narvekar wrote in a report.

The natural resource assets were the biggest under-performers in the endowment, losing 12.4% of their value year-over-year. The fund was propped up by its real estate and public equity holdings, which saw 9.3% and 5.9% returns, respectively. The university's endowment landed a 10% return in fiscal 2018. 

Read more: Here's exactly what it takes to get accepted into Harvard Business School, according to 5 grads and the managing director of admissions

Narvekar is nearing the halfway point in his plan to shift the portfolio's asset allocations, having already cut jobs in the fund and outsourced more capital to hedge funds and other money managers.

"While some changes will take years to have an impact — and we are keenly aware that we are in a marathon and not a sprint — we can already detect positive indicators of progress," the CEO wrote.

Harvard tied with University of Pennsylvania for third place in a ranking of Ivy League endowment performance in 2019. Princeton fell from its top spot in 2018 to fifth place, and Brown — the Ivy League school with the smallest endowment — took first place with its 12.4% return.

The average Ivy League endowment gain in 2019 was about 6.7%.

Harvard relied on its endowment to pay for more than one-third of its operating costs in fiscal 2019, according to the report. The fund distributed more than $1.9 billion to the operating budget, channeling to financial aid programs, research, and faculty support, among other initiatives.

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A college professor studied 70,000 households and found Americans need emergency savings of only $2,467. Here's why she's suggesting a mere fraction of what other experts recommend.

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Sarah Lacy, the founder of Pando, is selling the blog, quitting journalism, and ditching Silicon Valley after 20 years because she is tired of being sexually harassed and threatened

Wed, 10/23/2019 - 8:18pm

  • Sarah Lacy, the founder and Editor-in-Chief of tech blog Pando, is selling the company, quitting journalism and ditching Silicon Valley after 20 years she announced in a blog post on Wednesday.
  • She says her decision comes from years of sexual harassment and threats in her 20 years of covering Silicon Valley.
  • "I have absorbed so many more stories than I have reported, more than I can ever report, about the dark side of Silicon Valley," she says in the blog post.
  • Visit Business Insider's homepage for more stories.

Sarah Lacy, the longtime tech journalist and founder of Pando, is selling the company and quitting journalism as a result of what she described as a toxic culture in Silicon Valley. 

Lacy, the site's Editor-in-Chief, announced the sale in a scathing blog post on Wednesday lambasting the problems of Silicon Valley.

"It's a place where I've been sexually harassed more times than I can remember," Lacy wrote in the post.

"It's a place where I've been lied about, where VCs have arm-twisted editors to fire me, where billionaires have threatened those doing business with me to cut all ties. It's a place where I've had people turn on me again and again and again simply for doing my job. It's a place I've been betrayed by people I trusted. It's a place where one-time friends threatened my children because I wrote about things they did," she continued.

Some of incidents she mentions are related to Uber threatening her after her reporting of the company's misconduct. 

Lacy said that Pando is being sold to BuySellAds, though she did not share any of the financial terms of the deal.

Lacy started Pando in 2011 while on maternity leave from her previous position at TechCrunch. In addition to experiencing sexual harassment herself, she referenced many stories of women in Silicon Valley being held back because of harassment. 

"I have absorbed so many more stories than I have reported, more than I can ever report, about the dark side of Silicon Valley," she wrote.

Pando's biggest investors include Marc Andreessen, Accel Partners, and Greylock Partners. 

Lacy said that Pando had been working with BSA since 2012.  "I'm also intrigued by BSA's strategy of buying much beloved but somewhat neglected online media brands and reinventing them for a whole new audience while still serving the existing audience with (hopefully) an even better product." 

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Microsoft CEO Satya Nadella lays out the technologies he’s betting on to take it past its $1 trillion valuation (MSFT)

Wed, 10/23/2019 - 7:11pm

  • Microsoft CEO Satya Nadella revealed the technologies the company plans to invest in going forward.
  • The company will continue to advance its apps and infrastructure business, prioritize growing in data and AI, as well as compete in new areas in which Nadella said he sees as long-term growth opportunities such as security and compliance, and workflow cloud.
  • Chief Financial Officer Amy Hood revealed on the call the company's Azure cloud computing business had "material growth" in $10 million-plus contracts.
  • Nadella said Azure AI now has 20,000 customers and more than 85 percent of Fortune 100 companies have used Azure AI in the past 12 months.
  • Hood, Microsoft's CFO, said the company has set up a multiyear plan to invest in areas including security, compliance, communication, workflow and business process reinvention.
  • Microsoft is valued at more than $1 trillion.
  • Click here for more BI Prime stories

Microsoft is one of the few companies in history to fetch a $1 trillion valuation. But Satya Nadella, the CEO who led Microsoft to this astronomical milestone, says he sees plenty of opportunities for new ways to grow the business.

"What's next?" he said on an investor call after Microsoft reported first-quarter fiscal earnings on Wednesday, "What's next for us is in the apps and infra(structure) to go the first inning to the second inning. For data and (artificial intelligence), to start the first innings."

Microsoft, once known primarily as the maker of the software on people's desktop and laptop PCs, is now competing against a much wider range of foes in cutting edge businesses like artificial intelligence and cybersecurity.

Growth in Microsoft's Azure cloud business consistently drives strong financial results for Microsoft, and it's a key strategic area for the company as it competes with cross-town giant Amazon and its market-leading AWS cloud business.

Azure AI now has 20,000 customers and more than 85 percent of Fortune 100 companies have used Azure AI in the past 12 months, Nadella said. "The quintessential characteristic of every application going forward will be AI and we have the most comprehensive portfolio of AI tools, infrastructure and services," he said.

The overall commercial cloud business, which includes Azure plus Office 365 and other cloud services, was up 36 percent year over year to $11.6 billion for the quarter. And Chief Financial Officer Amy Hood said on the call that the company's Azure cloud computing business had "material growth" in $10 million-plus contracts, though she stopped short of sharing additional details.

But Nadella seemed most excited about new areas of focus that he sees as long-term growth opportunities. 

"We built something that didn't even exist a few years ago"

"When it comes to security and compliance, we never participated in this. Guess what? We get to participate now in a fairly competitive way now," he said. "We built something that didn't even exist a few years ago, which is the workflow cloud. That's a huge opportunity for us."

The workflow cloud is an apparent reference to Microsoft Flow, which helps customers automate tasks by combining applications.

Nadella said the company has a "very competitive and growing footprint" in business applications, "even when you think about something like Microsoft 365, we never participated in spite of our past success with all the first-line work and now we get ot participate in it," he said.

Hood, Microsoft's CFO, said the company has set up a multiyear plan to invest in areas including security, compliance, communication, workflow and business process reinvention.

"For us, it has been so important to remain focused on where growth and opportunity exist and to invest in those areas that are large, expansive and durable," she said.

Microsoft on Wednesday reported $10.7 billion in profit on revenue of $33.1 billion in the company's fiscal first quarter, beating Wall Street estimates. Despite strong results, Microsoft stock remained mostly unchanged in after-hours trading, hovering around $137 per share at the time of this writing.

SEE ALSO: Microsoft wants to challenge Amazon and Google’s dominance in search and e-commerce advertising. Read the pitch deck it’s using to snatch a bigger share of marketers' budgets.

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Google employees are raising alarms about a new tool that keeps tabs on their internal meetings, but the company says it's nothing to worry about (GOOGL)

Wed, 10/23/2019 - 6:36pm

  • Google has developed a browser tool for internal use that can detect when employees are scheduling meetings involving large numbers of people, Bloomberg's Ryan Gallagher reported Wednesday.
  • Employees are worried that the tool is a kind of spyware meant to discourage labor activism or organization.
  • But Google's official line is that the tool is benign and was developed in response to an increase in spam.
  • The budding controversy over the browser extension comes in the wake of growing tension between workers and management over a range of issues, including the handling of sexual harassment claims.
  • Visit Business Insider's homepage for more stories.

A browser tool developed by Google to monitor meeting requests made by employees has sparked a controversy at the search giant.

The tool can detect whether employees are scheduling meetings with large numbers of people, Bloomberg's Ryan Gallagher reported on Wednesday. Employees have charged that the software, which is designed to be installed on the bespoke version of the Chrome browser that runs on all employees' computers, as a kind of surveillance tool that the company plans to use to monitor and discourage worker activism, according to the report.

"This is an attempt of leadership to immediately learn about any workers organization attempts," an anonymous company employee wrote in a memo outlining concerns about the tool, Bloomberg reports.

A Google representative denied that claim to Business Insider, saying that the company developed the extension in response to an uptick in spam involving calendar entries.

The tool triggers a pop-up message when employees attempt to auto-add a meeting to the calendars or large numbers of people and serves as a kind of gentle reminder to not abuse the feature, the representative said. The extension does not prevent users from creating such meetings and doesn't collect personal information when it's triggered, the representative said.

"These claims about the operation and purpose of this extension are categorically false," a Google representative said in a statement.

Regardless, concern about the extension has been rising among employees. On internal message boards, workers have been discussing it and mocking Google's leaderships attempts to minimize their worries about it, according to Bloomberg. The tool has become the most-requested topic to be discussed at Google's weekly company-wide meetings, one employee told the publication.

Read this: Google is going through a slow-motion employee revolt, and its cofounders are missing in action

The controversy over the tool follows growing tension between Google's leadership and its rank-and-file. Over the last two years, employees protested Google's contract to work with the defense department on artificial intelligence and to build a censored search engine that would allow it to re-enter the Chinese market. After a report last year that Google's leadership had overlooked claims of sexual harassment against top employees or richly rewarded those accused on their way out, thousands of Google workers staged a massive walkout.

More recently, contract workers in Pittsburgh voted last month to join the United Steelworkers Union. Meanwhile, employees in Switzerland this week defied management and held a meeting on unionization, Bloomberg reported.

Got a tip about Google or another tech company? Contact this reporter via email at, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

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Tesla is unveiling a third version of its solar roof this week, Elon Musk says

Wed, 10/23/2019 - 6:06pm

Tesla plans to unveil a third version of its solar roof product, CEO Elon Musk said on the company's third-quarter earnings conference call Wednesday evening. 

"Tomorrow afternoon we will be releasing version three of the Tesla solar roof," the CEO said at the end of his prepared remarks. "I think this is a great product. Versions one and two we were still figuring things out version three is finally ready for the big time."

The announcement comes as Tesla's other solar-energy product, its more traditional solar panels, are under fierce scrutiny following a lawsuit from Walmart. The retailer claimed Tesla's solar panels caught fire on the roofs of seven stores across the US. Tesla has not responded to requests for comment about the suit since it was filed, but is required to respond to that Walmart by Friday. 

"There's no money down and you instantly save on your utility bill and  there's no long-term contract," Musk said later on the call. "It's really a no-brainer. Do you want something that prints money? And if it doesn't print money we'll fix it or take it back."

Musk also pointed to a recently released study by Zillow, a real-estate website, which said solar panels increase home values by about 4%. 

Since Walmart's suit was filed, Business Insider reported the existence of a Tesla initiative called "Project Titan." The move sought to replace as many faulty Amphenol connectors in previously installed solar equipment as quickly — and quietly — as possible. 

Read more: Tesla solar panels have become a nightmare for some homeowners, especially for one Colorado woman whose roof went up in flames

Tesla told Business Insider at the time that its software-monitoring applications found that a "small number" of the connectors experienced failures and disconnections higher than their standards allowed.

SEE ALSO: Last year, Tesla initiated 'Project Titan' — a stealth nationwide program to replace solar-panel parts that could cause fires

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NOW WATCH: Robots make burgers at this San Francisco start-up backed by Alphabet Inc.

Facebook pledged $1 billion to help fix California's affordable housing crisis one day before Mark Zuckerberg was due to address a claim that Facebook ads were enabling housing discrimination

Wed, 10/23/2019 - 5:58pm

Facebook has pledged to dish out $1 billion in an attempt to combat California's affordable housing crisis.

On October 22, the company said it will spread out an investment of $1 billion over the next decade to create around 200,000 housing units to help professionals such as teachers, nurses, and first responders live closer to the communities they work in, Facebook's chief financial officer David Wehner wrote in a blog post.

According to the blog post, the money will be spread out across various different partnerships and projects. It will be put toward building mixed-income housing on state-owned land in communities where housing is scarce; building affordable housing and housing for the homeless in the San Francisco Bay Area; and building over 1,500 units of mixed-income housing on land already owned by the company in Menlo Park. 

Read more: LIVE: Lawmakers grill Mark Zuckerberg about the big plan Facebook created to upend the way we send money around the globe

The money will also be put toward building housing for teachers and other "essential workers" on public land for school districts in San Mateo and Santa Clara counties, the statement outlines. Funds will be set aside to promote affordable housing in other communities where company offices are located.

Earlier this month, Facebook CEO Mark Zuckerberg told employees that the company plans to expand primarily outside of San Francisco due to reasons including high housing costs and bad traffic

News of the billion-dollar pledge comes after Facebook was sued by the Department of Housing and Urban Development

In March, the Department of Housing and Urban Development filed a claim alleging that Facebook was "encouraging, enabling, and causing housing discrimination" by allowing advertisers to restrict who could see housing ads on the basis of race, color, sex, familial status, and other characteristics.

On Wednesday, Zuckerberg testified in front of the House Financial Services Committee, where lawmakers grilled him on a variety of issues, including the Libra currency Facebook announced earlier this year, and the allegations the company faces of advertising discrimination on the platform.

Notably, the $1 billion affordable housing pledge was announced one day before the hearing.

"This has been a challenging few years for Facebook," Zuckerberg said at the end of his opening remarks in Wednesday's hearing. "I know we have a lot to do, but I also know that the problem of financial under-inclusion is solvable, and I believe that we can play a role in helping to find the solution."

When Zuckerberg was asked whether Facebook would comply with requests for information about how housing companies may have discriminated, he said it would, as Business Insider's Lisa Eadicicco reported. However, when pressed on whether or not the company would provide information about the algorithms it uses to decide which ads users receive, Zuckerberg did not give a direct answer. Instead, he responded by emphasizing that it has always been against Facebook's policies to use its ad platform for discrimination.

Facebook did not immediately respond to Business Insider's request for comment regarding the timing of the two events.

San Francisco's affordable housing crisis

Facebook's $1 billion pledge comes in the midst of San Francisco's increasingly dire housing crisis

As Laura McCamy previously reported for Business Insider, you'll need to earn at least $172,000 a year to afford a home in San Francisco. Meanwhile, the median sales price of a two-bedroom home in the city has increased by 329% since 2000.

The median home value in the city is $1,355,200. That's nearly six times more than the national median home value of $231,000. In fact, one of the cheapest homes in San Francisco is a 480-square-foot "fixer" that sold last December —for a whopping $600,000.

In August of 2018, Business Insider reported that 60% of tech workers in the area felt that they couldn't afford a home

SEE ALSO: Bitcoin falls to its lowest level since June as Zuckerberg testifies on Libra

DON'T MISS: Mark Zuckerberg says Facebook is growing primarily outside of San Francisco because the infrastructure of the city is 'tapped'

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NOW WATCH: The most expensive racing pigeon sold for $1.4 million in China. Here's why people drop millions on these prized birds.

Inside an elite gathering in downtown Manhattan, investors discuss recession fears, yachts, and climate change — 'whether you believe in it or not'

Wed, 10/23/2019 - 5:45pm

  • Inside a bright room lined with exposed brick on the third floor of a downtown Manhattan townhouse, members of the investment community sipped cucumber-and-mint-infused water and discussed recession fears, geopolitical issues, and the yacht market.
  • At this wealth management event held on Wednesday, thrown in part by a lifestyle media company and an asset management firm, the chatter captured what elite investors, economists, and decision-makers are dwelling on.
  • Among the topics that men and at least two women discussed were investing as international trade-relation uncertainty lingers, as well as the family office space.
  • "It's not really quantifiable — it's completely an emotional purchase," said Bianca Nestor, a charter broker for Burgess Yachts, responding to an attendee questioning a yacht investment's practicality.
  • Visit BI Prime for more stories.

Inside a bright room lined with exposed brick on the third floor of a downtown Manhattan townhouse, advisers for the ultra-wealthy congregated to discuss the state of their assets and sip cucumber-and-mint-infused water.

They spoke of global economic recession fears, issues like populism and climate change, public figures like Elizabeth Warren, and the yacht market.

At this wealth management event held on Wednesday, organized in part by a lifestyle media company and an asset management firm, the chatter captured what elite investors, economists, and decision-makers are dwelling on as global growth slows and the US readies for the 2020 presidential election.

Among the issues that men and at least two women discussed were investing as international trade-relation uncertainty lingers as well as concerns particularly to family offices — the private, secretive firms that deal with affluent families' complicated financial lives.

Concerns of a possible recession — something that Nancy Davis, the founder of hedge fund Quadratic Capital, told attendees "is coming" — were not ignored. Still, the event quickly jumped between how the wealthiest people can protect their money in a downturn to how they can spend it right now, with pitches from companies that offer yachts, private jet services, and art sourcing. 

'I may be out of my mind'

There was significant interest in sustainable and impact-oriented investing options, and the conference had several speakers with sharp opinions on the field. 

There was talk of investing in water. Marc Robert, the chief operating officer of Water Asset Management, said investors ought to consider climate change as an investment strategy, "whether you believe in it or not."

Standing next to him was Michael Underhill, the chief investment officer at Capital Innovations, who described a period of "enlightenment" in timber and said that market was on an upswing.

Another presenter, Eric Glass, a portfolio manager at asset manager and event host Alliance Bernstein who runs a fixed income impact investment strategy, told the audience he wanted to convince them to "join a movement" as a slideshow projected lyrics from Pink Floyd behind him.

His strategy invests only in "historically underserved communities" through municipal securities, and Glass cited Boston Medical Center — which helps raise life expectancies in poor communities with preventative care — as an example.

"I may be out of my mind to try this," said Glass, who used to run a homeless shelter, "but it's fun to try."

Glass tried to distinguish his strategies from others in the sustainable space, criticizing his industry for not doing more to match their marketing materials. 

'Let's all go buy a yacht!'

To be sure, the backdrop is dimming. Chief executives' confidence has fallen to the lowest level since the global financial crisis, and a reading of global economic policy uncertainty is near its highest in at least two decades, Goldman Sachs strategists said in a report last week.

But the afternoon's agenda made it clear the advisers in the room are interested in more than just protecting their clients' wealth.

During a lunch of pesto chicken, roasted vegetables, and garlic bread, the World Human Accountability Organization — a group founded in 2016 to "blend charity and corporate investment" according to its chairman Frederick Newcomb — gave a presentation highlighting the need for those in the audience to "solve the global issues" like poverty, education inequality, and environmental protection. 

Read more: A record number of big fund managers are worried governments aren't doing enough to avoid a global recession

Yacht companies, private jet salespeople, and art purveyors followed. 

"It's not really quantifiable — it's completely an emotional purchase," said Bianca Nestor, a charter broker for Burgess Yachts, responding to an attendee questioning a yacht investment's practicality.

Nestor added: "Whatever costs are involved with buying a boat or chartering a boat are completely trumped by the experience."

Questions from the audience came pouring in for the reps from these companies, especially compared to the lawyers and economists that had presented before. 

There was still a focus on professional services — for example, a presentation from McDermott Will & Emory lawyer Steve Eckhaus that included the line "the rich like to avoid taxes whenever they can, of course" was well-attended.

And there was a decent amount of speculation about the tax environment more generally.  "What happens in a populist moment?" Eric Winograd, the chief US economist at AllianceBernstein, wondered in front of meeting attendees. He brought up ta proposed wealth tax from Elizabeth Warren, a Democratic US presidential candidate, as underscoring a global populist wave.

But advisers were noticeably more engaged for the sexier panels. 

As Nestor finished her talk, a conference MC said, "Let's all go buy a yacht!" 

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NOW WATCH: We did a blind taste-test of KFC and Popeyes fried chicken — here's the verdict

This game lets you roleplay as a tech CEO, and it was way harder than expected

Wed, 10/23/2019 - 5:03pm

  • The Financial Times newspaper has created a game that lets you try out being CEO of a tech startup.
  • As founder and CEO, your mission is to "balance profit and purpose," using limited resources to keep investors and stakeholders happy. 
  • The game draws from real life examples, like recently-ousted WeWork CEO Adam Neumann.

Have you ever looked at the decisions of CEOs like Adam Neumann or Elon Musk and thought you could do a better job? Well, here's your chance.

FT, the publisher of the daily business newspaper, created a game that makes you CEO and founder of tech startup FlexBird. Your job is to take the company public in an IPO and to guide the business to success. Along the way, you can choose how you allocate resources to growth and social issues, but make sure you keep stakeholders and investors happy!

You'll also have to deal with other events as they come up, like protests over government contracts and a recession. Do you have what it takes?

Here's what happened when I played.


SEE ALSO: Apple CEO Tim Cook took a chairman position at one of China's top business schools

The game starts by giving you the basics: you're the CEO of FlexBird, and you have to make it through the next 4 years.

You have to keep stakeholders and investors happy.

Before the IPO, you have a chance to set up what kind of company you will run.

You have 10 resources to allocate to 4 possible areas.

I spread my resources pretty evenly. I decided to focus on meeting growth targets and social responsibility, because it seemed like it had something for both groups I was trying to win over.

Let's see how my picks played out.

Growth targets didn't do so well, even though I gave 3 resources.

Social responsibility is off to a good start.

Seems like I didn't pay enough attention to environmental sustainability.

Long term growth is decent, and we're off!

Questions about a startup with government contracts sound familiar.

This could be inspired by many real-life startups. IT automation firm Chef declined to renew its contract with ICE in September. More than 1,200 students around the country pledged not to work with data company Palantir unless it stopped working with ICE.

The majority of players made the same choice as me and dropped the contract.

A trade war is not good news for me.

This year I only have 8 resources, so I gave 2 to each sector.

Short term growth isn't going so well.

Neither is environmental responsibility.

In a very gig-economy move, I hired freelancers to avoid paying for benefits.

And now I have echoes of WeWork, renting out space to other startups.

Now I have to decide whether I should fire the company barista. So many tough calls!

Most players agreed with me and fired the barista, and it worked!

FlexBird needs a little help, so we brought in investor Purposework Capital. Could this be our SoftBank?

SoftBank backed companies like WeWork and Uber, which have faced a failed IPO and a drop in valuation.

This time, I decided to focus more on growth and social responsibility.

Banning meat from company functions is definitely a Neumann reference.

The WeWork founder reportedly ate a giant lamb shank at a company dinner after banning meat.

Some of my earlier investment are paying off.

I didn't put many resources toward environmental responsibility, but I can at least let my employees join the global climate strike.

Investors didn't like it, but stakeholders did.

For my last year, I get to set the tone for my legacy.

I think I won. Investors aren't thrilled with me, but I ended with slightly higher than average investor approval, and more than double average stakeholder approval.

Ford beats on third-quarter earnings but trims full-year profit guidance (F)

Wed, 10/23/2019 - 4:18pm

Ford turned in a good quarter, but it's still dealing with significant challenges.

On Wednesday, Ford posted a lower quarterly profit as it took charges for its global restructuring, and reduced its full-year operating profit forecast due to higher warranty and incentive costs, as well as lower-than-expected sales in China.

Ford reported a third-quarter net profit of $425 million, or 11 cents a share, compared with $991 million, or 25 cents a share, a year earlier. The quarter included $1.5 billion in special charges, mostly for its global restructuring that included the formation of its Indian joint venture with Mahindra & Mahindra.

Excluding one-time charges, Ford earned 34 cents a share, above the 26 cents analysts had expected according to IBES data from Refinitiv.

Revenue in the quarter fell 2% to $37 billion, above the $33.98 billion expected.

Virtually all of Ford's third-quarter pretax profit came from North America, where highly profitable pickup trucks drive margins. Ford said on Wednesday it now expects full-year adjusted operating profit in the range of $6.5 billion to $7 billion, compared with $7 billion last year. In July, it had forecast it would increase, ending in the range of $7 billion to $7.5 billion.

Ford also said it expects adjusted earnings this year in the range of $1.20 to $1.32 a share. Previously, the high end of its forecast had been $1.35.

In an interview with Business Insider, CFO Tim Stone stressed the company strategic outlook and focus on free-cash-flow growth to go along with consistent profitability. He called the guidance downgrade both encouraging because it doesn't project a major decline in Ford's margin, but he also said its was dissatisfying because it falls below Ford's 2018 level.

"Q3 was a good quarter," he said. "Year-to-date is good, as well, and shows the progress we've made. But we have a lot of work to do."

Ford shares slid in aftermarket trading, down 3% to just below $8. Year-to-date, the stock had been up 20%.

FOLLOW US: On Facebook for more car and transportation content!

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NOW WATCH: Amazon invested $700M into an electric vehicle startup. Here's how Rivian is doing exactly what Tesla isn't.

Roku’s $150 million acquisition of adtech firm Dataxu could make it more competitive with Amazon, but advertisers worry it could make Roku more of a walled garden

Wed, 10/23/2019 - 4:07pm

  • Roku announced that it plans to acquire Boston-based adtech firm Dataxu for $150 million in cash and stock to build a bigger OTT advertising platform.
  • Alison Levin, Roku's VP of ad sales and strategy, said Dataxu gives Roku expertise in performance-based marketing from brands that don't typically spend a lot on TV ads.
  • But advertising execs worried that the acquisition would make Roku more of a walled garden for ad buying, measurement and targeting.
  • Dataxu still makes money from selling mobile and digital ads, which Roku could use to handle larger budgets from brands.
  • Click here for more BI Prime stories.

Roku has big advertising ambitions and is betting that adtech firm Dataxu can help it capitalize on the $70 billion TV market.

This week, Roku announced plans to acquire adtech firm Dataxu for $150 million in cash and stock. Roku has been trying to rival Amazon's ad business as marketers shift money from television to OTT advertising.

Business Insider talked to five advertising execs who said Roku's acquisition could help advertisers run connected TV ads and buy display and mobile ads through Dataxu's demand-side programmatic ad platform. Some of them also expressed concern that the deal would shut out Dataxu's competitors like The Trade Desk and Adobe that Roku also works with, though. 

Dataxu has been for sale for a year. Last October, The Wall Street Journal reported that the company hired banker GCA Advisors LLC and was valued at $300 million after raising $87.5 million.

"This acquisition helps us rightsize media spend and consumption," said Alison Levin, VP of ad sales and strategy at Roku. 

Levin said Roku gets a few things out of the Dataxu acquisition:

  • A self-serve advertising platform
  • Dataxu's device graph technology
  • The firm's digital and mobile footprint
  • Expertise in performance-based marketing

Dataxu buys performance-based ads for in-house teams and mid-level agencies while Roku works with big brands that are shifting TV spend into OTT advertising. In theory, the acquisition will help Roku serve small marketers that aren't big TV spenders, Levin said.

Industry watchers question how Roku's plan will all work

A major question is whether Roku will end its partnerships with Dataxu's competitors including Adobe and The Trade Desk. Earlier this year, Roku inked a deal with Adobe's DSP that allows advertisers to match first-party data with Roku's data to serve targeted ads. The Trade Desk also buys Roku's ad space programmatically.

Read more: Roku has inked a deal with Adobe to solve one of marketers' biggest pain points in OTT advertising

Advertisers say that Roku holds back data from advertisers and is a so-called walled garden akin to Google, Amazon and Facebook.

Frank Sinton, president and founder at Beachfront Media, said that Roku could push advertisers to buy through Dataxu, squeezing out competitors over time.

"My hope is that they keep it open," he said.

A consultant to adtech companies also speculated that Roku could control the quality of content that Dataxu's competitors have access to. In theory, Dataxu could get first dibs on selling ads in Roku's premium channels and then let The Trade Desk and Adobe sell remnant inventory. In that scenario, Roku would also cut down on adtech fees that it pays third parties for selling ads.

Roku's Levine pushed back on the idea that Roku is a walled garden, pointing to partnerships the company has with Amazon to distribute content on its platform and its work with measurement firms like Innovid.

Advertisers also wonder how much access Roku will get to ad inventory that Dataxu buys, including a high-profile deal with Amazon Fire.

In July, Amazon inked a deal that allows Dataxu and The Trade Desk to sell ads in some Amazon Fire TV apps through private marketplaces. According to Elgin Thompson, managing director of technology investment banking at JMP Securities, that deal sped up Roku's interest in snatching up Dataxu.

Dataxu made a hard pivot into OTT

Dataxu is one of a handful of adtech firms that capitalized on the boom of programmatic advertising 10 years ago by building a DSP that helps marketers buy ads across hundreds of publishers' sites.

Roku's Levin declined to say to what extent Roku will sell non-OTT ads like digital and mobile but said that the company "is committed to being an omnichannel DSP, inclusive of digital and mobile."

According to the consultant, Dataxu's DSP business is healthy but has leveled off. Dataxu declined to comment for this story but a press release from April said that the majority of the company's revenue was coming from its TV products. 

"The traditional DSP piece of their business is still keeping the lights on but going to market and saying 'I can buy you a better banner ad' doesn't resonate in 2019," the consultant said. "What makes this market difficult to value is that Wall Street loves SaaS revenue."

As competitors like The Trade Desk and Google gain clout with agencies, Dataxu has made a lot of changes over the past year to attract a TV-minded acquirer.

"They were able to smartly separate themselves from just being a DSP to being a strong CTV player," said Will Doherty, evp of global marketplace development at Index Exchange. "Consolidation is a trend, and we'll continue to see more of it."

In April, Ed Montes was promoted from chief revenue officer to president and general manager of Dataxu's TotalTV business.

According to the advertising consultant, a number of telecom and cable broadcasters looked at buying the company. In March, AdExchanger reported that Comcast-owned FreeWheel was reportedly interested in Dataxu though a report from Multichannel News shot down the rumor.

Facebook and Google continue to control the bulk of digital advertising budgets, and Dataxu's story shows how adtech companies are rapidly trying to get into OTT advertising, JMP Securities' Thompson said.

"The walled gardens have basically forced adtech vendors and marketers to look at TV as the savior," he said. "Once the technological capabilities and the consumer interest and demand meet, OTT became viable as a business model."

Sources said Dataxu's exit was smaller than some expected and that it's a sign of ongoing consolidation in adtech.

The consultant said that uncertainty created by privacy laws makes successful adtech exits more difficult.

"We're living in a world that is riddled with consumer privacy issues and legislation that could come down the pike tomorrow and destroy a lot of these businesses," the source said. "$150 million in today's world might be looked at as a slight disappointment, but it is a sign of the times."

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NOW WATCH: Brands can no longer stay away from social and political issues. We asked some of the biggest names in the industry how to do it right.

Tesla returns to profitability and tops Wall Street's Q3 earnings expectations (TSLA)

Wed, 10/23/2019 - 4:07pm

Tesla posted a surprise third-quarter profit on Wednesday, sending shares surging by as much as 17% in late trading.

Here are the key figures:

  • Earnings: $1.91 per share versus estimates of $-0.24 per share
  • Revenue: $6.3 billion versus estimates of $6.45 billion
  • Gross margin: 18.9% versus estimates of 17.7%

The company now says it expects "positive quarterly free cash flow going forward, with possible temporary exceptions" after it sank back to unprofitability earlier this year. "We continue to believe our business has grown to the point of being self-funding," Tesla said.

Despite the return to profitability, quarterly revenues fell compared with the previous year for the first time since 2012. 

Tesla said its progress in ramping up production of vehicles in China was ahead of schedule.

"We are already producing full vehicles on a trial basis, from body, to paint and to general assembly, at Gigafactory Shanghai," it said. "We have cleared initial milestones toward our manufacturing license and are working towards finalizing the license and meeting other governmental requirements before we begin ramping production and delivery of vehicles from Shanghai."

Christopher Eberle, an analyst at Nomura Instinet, said "investors may view this as a turning point in the TSLA story," given the stock's after-hours surge. 

SEE ALSO: One of Tesla's most vocal investors sold more than $39 million of the stock ahead of the company's earnings report

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NOW WATCH: Steve Jobs left Apple to start a new computer company. His $12-million failure saved Apple.

I looked into 'house hacking' to live for free, but there are a few reasons I've decided it's not for me

Wed, 10/23/2019 - 4:05pm

  • When my husband and I looked at buying a home in a suburb of Jacksonville, Florida, we considered setting ourselves up to "house hack," which would cover the costs of our property.
  • House hacking is where you utilize your primary residence to help you earn income, so you can live for free or drastically reduce expenses.
  • But we found that we couldn't find suitable properties for this strategy where we wanted to live. Plus, having a toddler makes it hard to rent space to roommates or do short-term rentals.
  • Read more personal finance coverage.

As someone who's obsessed with optimizing their financial life, I like to take advantage of any opportunity I can to reduce as many expenses as possible. This means spending less on the three biggest categories in my budget: transportation, food and housing costs.

After drastically reducing my food costs by shopping from my pantry once a month and keeping transportation costs down by staying a one-car family, it was time to tackle housing.

When it came time to buy a house, I had read in many FIRE (Financial Independence, Retire Early) blogs about the term "house hacking." It seemed like a great way to reduce costs since many bloggers have successfully slashed their housing costs in half, or altogether.

However, digging deeper and a whole lot of house hunting later, I decided it wasn't the best choice for my family.

House hacking enables people to live for free (or almost free)

House hacking is a way you can live for free (or almost free) in a primary residence. Most commonly, you buy a small multi-unit real estate property (usually a duplex), live in one unit, and rent out the others. The idea is that your tenants' rent will cover your housing expenses. Some people use this as a stepping stone to purchase more properties, perhaps a single-family residence, and rent out all units in the first property.

There are also other ways to house hack. Instead of a multi-unit property, you can purchase a single-family home and rent out the bedrooms. You can even get creative and rent out your yard for some who needs space for their RV or boat. If you're handy (or want to invest a bit of cash for a licensed contractor), you can even build an addition to the house or in your yard to do short-term rentals on platforms like AirBnb.

It doesn't require a lot of money upfront to house hack. Yes, you need to qualify for a mortgage and provide a 20% down payment if you want to avoid private mortgage insurance, but if you can find a way to get someone else to pay for the mortgage, you don't have to constantly worry about how you'll make your monthly payments.

This sounds ideal for many people. But for now, it's just not for me. Here's why:

Where we live, multi-unit homes are hard to come by

I knew that I had to be patient and pounce on the right property if I wanted to purchase a multi-unit house. That I was OK with. However, the area we wanted to live in — a suburb of Jacksonville, Florida — didn't have multi-unit properties. 

Most of the duplexes where we lived centered around the downtown area and it wouldn't have been fair to ask my husband to drive a longer commute just so we could house hack. That could have increased our costs because of a higher gas usage and may have required me to get a second vehicle, furthering increasing the amount we would pay for transportation. Plus, those properties aren't necessarily in the safest neighborhoods.

I have a young child, which doesn't make me the best host

Another option my husband and I could have pursued was to rent out bedrooms in a single-family residence. We looked at many houses that might have worked for this: We could have configured the layout to have a separate entrance, or the bedrooms were far away from each other so a short-term rental or roommates wouldn't be too hard.

However, my husband and I decided we didn't feel comfortable having other people on our house, even if we vetted them. Besides, we have a rowdy toddler and we weren't sure if he was going to act up in front of short-term rental guests, affecting our ratings. Roommates were also out of the question as we didn't want to risk our toddler going into someone's room and accidentally breaking something.

If it was just my husband and I, maybe we would have considered it. Right now, our priority is with our child.

I focused on increasing my income instead

Sure, it's great to save money on major expenses, but that isn't the only part of having a healthy financial life. My husband and I saved as much money as we can without sacrificing our quality of life, and now it's time to focus on increasing our income.

A few years ago, I had a full-time job and my freelance writing was a side hustle. Once I quit my day job, I've been able to more than double my salary. My husband has also switched jobs and negotiated a higher salary. 

Even though house hacking is an excellent way to save money in housing costs, doesn't mean it's for everyone. As long as I watch my expenses closely, spend on things that matter, and set aside a substantial amount for retirement, that's all that matters.

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NOW WATCH: Animated map shows how cats spread across the world

The CEO of Blackstone's massive office portfolio says industry-wide proptech adoption is hinging on strong leadership — and a healthy dose of fear

Wed, 10/23/2019 - 3:36pm

  • Lisa Picard, chief executive of Blackstone's EQ Office, outlined her view of the future of proptech and how real estate companies can put new tech to use at a presentation at a CREtech event last week. 
  • Blackstone purchased the EQ Office portfolio, formerly Equity Office, from Sam Zell in 2007. Picard took the reins in 2016, and it rebranded to EQ Office in 2018 as it began to work more with flex-space providers like Convene, WeWork and Industrious. 
  • Picard called for landlords and operators to adapt "purposeful proptech" that makes people engage with a brand. The goal of spending on proptech should be clear — the tech should attract or retain customers, or else help real estate operators cut costs. 
  • Picard said it's important to treat new tech initiatives as a cultural change instead of just an operational shift. That means management should be early adopters and set an example for the rest of the company. 
  • Click here for more BI Prime stories.

Money has been pouring into tech that is aiming to shake up real estate. Many startups are painting themselves as a way to disrupt an old-school industry — but that still means their success hinges on how existing landlords actually implement the tech and whether they find it useful. 

Lisa Picard, CEO of Blackstone's EQ Office, recently outlined her view of  the future of proptech, and most importantly, how real estate companies can succeed in putting new tech to use.

"I don't know if this general movement would be possible without Lisa Picard," Riggs Kubiak told the crowd assembled as he introduced Picard's proptech presentation at the CREtech New York conference last week

Honest Buildings, the real-estate project management software company that Kubiak founded and ran, appointed Picard to its board last year, and was acquired by construction management company Procore earlier this year. Kubiak is now the the SVP of owners strategy at Procore. 

Blackstone purchased the EQ Office portfolio, formerly called Equity Office, from Sam Zell in 2007. Picard took the reins of the company in 2016. It rebranded to EQ Office in 2018, as it began to work more closely with flexible space providers like Convene, WeWork, and Industrious. 

Picard cited inertia among legacy leadership as an explanation for why a full-blown tech revolution has not yet taken hold among landlords. 

"It takes risk to stick your neck out," Picard said. As more real estate operators adopt tech, and the trends that are driving new tech now continue to heat up, eventually she said that they will eventually be forced to change. 

"In the face of really extreme fear and threat, I think that's when people will change." 

Proptech with a purpose

Picard called for landlords and operators to adapt "purposeful proptech" that makes people want to engage with a brand. The goal of spending on proptech should be clear — the tech should attract or retain customers, or else help the real estate operator cut costs. 

Picard said that today's customers "want everything, everywhere, all the time," and mobile phones have only increased this desire. That could explain the rise of interest in tenant engagement apps that look to marry amenities with the convenience of mobile, as well as the increased popularity of flexible leasing.

Picard said that this has led to customers who are "less sticky," and are looking for shorter leases that they're less likely to re-up with the same provider.

Read more: Venture funds have poured $24.6 billion into proptech so far this year — and there's likely more to come

Other factors are changing the real estate world and creating opportunities for proptech include: rising costs and declining productivity in construction, macroeconomic uncertainty and slowing increases in average rents, and the threat of automation and virtual reality to the future of work. 

These tensions have inspired entrepreneurs and landlords to try to find solutions: construction tech that better tracks progress and costs of construction, short-term rental and flex-office space companies that can squeeze more revenue from a given space, smart home and office technology that can reduce energy usage, and office spaces that include more areas for meetings and collaboration.

Picard zeroed in on the "tsunami of data" that newer technologies can gather and create, especially the so-called internet of things (IoT). Picard said that IoT devices too often collect data with the hope that it will eventually be useful, instead of having a clear purpose to begin with. 

"We have some responsibility with what we collect," Picard said. 

Real estate data has historically been fragmented and hard to manipulate, making it difficult to collect and use, she said. 

That needs to change and "data hygiene" needs to improve to garner good results from tech powered by the information. Companies should also make sure they have good reporting and information dashboards that make it simple for people at all levels to understand what's happening.

Picard said that she uses dashboards to ping colleagues directly, staying much closer to day-to-day operations than she previously could. 

Lessons in rolling out new tech 

According to Picard, failure is guaranteed if an organization's leaders don't use the technology and decide to remain "analog." Similarly, if it adopts new tech but only uses "legacy" features, it won't be making the necessary transformations to adapt.

Picard pointed to video-conferencing app Zoom as an example. Her employees used to use it like an old-school conference line, and turn off their cameras. Without being plugged into the video component, people multi-tasked and focused less on the actual meeting, which defeated the purpose of using the tool. 

Relatedly, Picard warned against letting people "opt out" of using new tech. Picard asks Zoom users in EQ Office to turn on their cameras now.

She said it's important to treat new tech initiatives as a cultural change instead of just an operational shift. That means management should be early adopters and set an example for the rest of the company. 

"Leaders have to use it, and visibly use it in a way that the balance of the organization views it," Picard said while answering one of Kubiak's questions after the talk. 

Read more:Landlords want to bulk up their office amenities, and a rush of startups are selling them tech to do it

Workplace of the future 

Picard referenced Alvin Toffler's The Third Wave, a 1980's book that predicted a societal change from the industrial age to the information age, and theorized that we are now heading towards a fourth wave: the networked economy.

This economy will focus on creativity instead of productivity, and will require more emotional intelligence and critical thinking than today's work. 

This fourth wave will turn existing hierarchies into more "agile" and "adjustable" setups, which will have big implications for what the office of the future will be like, she said. 

"The world is moving too fast, and you can't have one leader know it all," Picard said. 

Picard identified three themes for the future of real estate tech: data integration into one source of truth, bringing the tech world's concept of user experience to physical spaces, and finding new models for construction. 

By data integration, Picard means bringing disparate pieces of proptech information together in order to make it more useful and actionable.

The user experience needs to change both in terms of actual office layout and also in tenant experience apps and other ways customers interact with the space, Picard said. She listed four C's that an office landlord should consider: concentration, collaboration, community, and convenience. 

Construction is typically thought of in terms of projects, each one a separate and distinct building. But Picard is watching as the idea of construction evolves from projects to products, or repeatable buildings with minor differences to fit customers' needs.

Katerra, the SoftBank-backed off-site construction company, is one of the more prominent startups in this area. But research into different materials, construction methods like 3D printing, and other modular or pre-fabricated construction types will likely continue to expand the space.

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5 ways to trade Chase Ultimate Rewards Points for airline miles and get incredible value

Wed, 10/23/2019 - 3:27pm

  • Chase Ultimate Rewards points are one of the best types of points to earn if you want both value and flexibility.
  • Because of their flexibility, you can get great deals on airfare by transferring the points to partner airlines like Southwest, JetBlue, United, or Iberia.
  • Using the Expedia-powered Ultimate Rewards travel portal, you can book essentially any flight that is available for sale, along with everything else Expedia sells, such as hotels and rental cars. This can be one of the best ways to redeem for US domestic travel in economy class.
  • Read more personal finance coverage.

Chase Ultimate Rewards are widely viewed as the most valuable bank-issued loyalty points. This is primarily because of their flexibility, not because of their transfer partners. In fact, Chase has fewer transfer partners than most other flexible points currencies. 

The high degree of flexibility comes from the transfer partners Chase works with, and from the ability to redeem points like cash. With Chase cards such as the Chase Sapphire Preferred Card or the Chase Sapphire Reserve, you can receive 1.25 cents per point or 1.5 cents per point, respectively, in value when redeeming your points on its Expedia-powered travel portal.

This is on the low end of value per point where airline programs are concerned (it's comparable with Delta SkyMiles), but the flexibility is unbeatable: You can book essentially any flight that is available for sale, along with everything else Expedia sells (such as hotels and rental cars). This can be one of the best ways to redeem for US domestic travel in economy class.

Tip: Be sure to comparison shop. Prices for hotels, rental cars, and international airfare on the Chase portal are often higher than available elsewhere online. However, prices for domestic US airfare are usually the same.

In addition to offering opportunities to redeem your points for cash, or a cash equivalent, Chase allows you to transfer them to airline programs. Along with three different flavors of Avios (which can be freely transferred between the different Avios programs), Chase offers six transfer partners. 

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Transfer points to Southwest or JetBlue for greater value and flexibility

Fly: US domestic flights (and the Caribbean) on Southwest or JetBlue at 1.25 cents per Ultimate Rewards point

With most Chase Ultimate Rewards cards, you can book any Southwest or JetBlue fare on the Chase portal at 1.25 cents per Ultimate Rewards point. However, the Southwest and JetBlue loyalty programs both offer "last seat" availability to their loyalty program members, and price seats based on the revenue fare. You will typically get better (sometimes much better) than 1.25 cents per point in value through the airline loyalty programs, so be sure to compare.

What's even better? Southwest allows cancellation of Rapid Rewards bookings up until 10 minutes prior to departure with a full refund. This offers greater flexibility than you'll receive when paying cash (where refunds are in the form of an airline voucher that must be used within one year).

Use Virgin Atlantic Flying Club to get from the US to Europe

Fly: North America to Europe for 50,000 Virgin Atlantic Flying Club points in business class, one-way, with no fuel surcharges

Virgin Atlantic partners with Delta, and you can redeem just 50,000 Virgin Atlantic Flying Club points for flights in Delta One between North America and Europe. For one way or round-trip flights between North America and Europe (except London) there are no fuel surcharges, either.

Availability is limited, but Virgin Atlantic has a friendly call center with excellent agents to help you find it.

United Mileage Plus points are great for short-haul trips

Fly: Short-haul Star Alliance one-way economy class flights under 800 miles for 8,000 United Mileage Plus points

It may not feel all that exciting to be able to redeem 8,000 Mileage Plus points for short-haul flights on United within the US, and it usually isn't.

However, flights of this distance can be incredibly expensive when you're traveling within Africa, some parts of Asia (such as between South Korea and Japan, South Korea and China, or within Japan), Central America, and South America. If you're planning a trip to any of these regions, the short-haul sweet spot offers incredible value.

Singapore Airlines can take you from the west coast to Hawaii or Mexico

Fly: West Coast to Hawaii or Mexico in Alaska Airlines economy class for 12,000 Singapore KrisFlyer Miles one way

Need some sun? You can fly Alaska Airlines' excellent nonstop service in economy class from any West Coast gateway to either Hawaii or Mexico for just 12,000 KrisFlyer miles.

Note that Singapore Airlines charges per flight, so you will need to book nonstop flights to redeem at these award levels. Additionally, you'll need to redeem over the phone, and the Singapore Airlines call center isn't the best.

Finally, points transfers to KrisFlyer aren't immediate, and Singapore Airlines won't put awards on hold. But who says that the best deals are easy? If you're patient and have flexibility, this is an unbeatable value. Alaska Airlines offers free WiFi-based in-flight entertainment and has power at every seat.

Iberia Avios connect the East Coast to Europe at a low price

Fly: East Coast (including Chicago) to Europe off-peak in business class one way for 34,000 Iberia Avios

Iberia offers incredible value for redemptions on Iberia flights, especially between the East Coast and Europe during dates it considers "off-peak."

Eligible flights at these award levels include those between Madrid and Chicago, JFK, and Boston. Iberia's definition of "off-peak" is generous; it excludes the summer and major US and Spanish holidays, but pretty much every other time qualifies. While Iberia does pass along fuel surcharges, they are low (under $100) on these routes.

What's the catch? There isn't one! Iberia offers a standard, European business class cabin with lie-flat seats.

Learn more about the Chase Sapphire Preferred from our partner The Points Guy » Learn more about the Chase Sapphire Reserve from our partner The Points Guy »

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Microsoft reports a huge quarter that blew away expectations, and the stock goes nowhere (MSFT)

Wed, 10/23/2019 - 2:30pm

  • Microsoft beat analyst estimates in fiscal first-quarter earnings, reporting earnings of $1.38 per share on revenue of $33.1 billion.
  • Microsoft's closely watched Azure cloud computing business reported 59 percent revenue growth.
  • Office 365 Commercial surpassed 200 million monthly active users.
  • Despite strong results, Microsoft stock was down less than 1 percent to around $135 per share in after-hours trading immediately following the earnings release. 
  • Visit Business Insider's homepage for more stories.

Microsoft reported fiscal first-quarter earnings after the market closed on Wednesday, once again beating Wall Street estimates propelled by growth in the Redmond-based company's cloud computing business.

Microsoft stock was down less than 1 percent to around $135 per share in after hours trading immediately following the earnings release. The company's shares in regular trading Wednesday closed up less than one percent to about $137 per share.

Here's what the company reported:

  • Revenue: $33.1 billion (compared to analyst's estimates of $32.3 billion), up 14 percent compared to the same period last year.
  • Earnings: $1.38 per share, versus Wall Street's expected $1.24 per share.
  • Profit: $10.7 billion, up from $8.82 billion in the same period last year.

Analysts closely watch Microsoft's cloud computing business as the company attempts to close the gap with the dominant Amazon Web Services.

Microsoft's overall commercial cloud business, in which it also counts Microsoft Azure, Office 365 and other cloud services, reached $11.6 billion in sales for the quarter, up 36 percent year over year. Microsoft said gross margins for the commercial cloud business increased to 66 percent, driven by a "material improvement" in Azure's gross margin.

Microsoft Azure revenue grew 59 percent, but the company doesn't report revenues figure specific to Azure. 

Office 365 for business revenue grew 25 percent and surpassed 200 million monthly active users.

Productivity and Business Processes revenue – the business unit which includes Office products for businesses and customers, LinkedIn revenue and Dynamics products and cloud services  – increased 13 percent to $11.1 billion.

Revenue for the division Microsoft calls "More Personal Computing," including Windows, search, Xbox and Surface, was also $11.1 billion, up 4 percent from this time last year.

Microsoft said revenue generated from the business of selling Windows to PC manufacturers is up 9 percent from the year-ago period — likely because of the end-of-support for Windows 7 and the ensuing rush to Windows 10 for those who were still using it.

The company's Intelligent Cloud business, which includes Azure, server products, enterprise and cloud services, brought in 10.8 billion in revenue, up 27 percent from the same quarter last year.

SEE ALSO: Microsoft's booming cloud business could send the stock soaring 15% over the next year, RBC says

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I got the Chase Freedom for the intro APR offer, but I'm still using the card two years later thanks to its cash-back rewards and purchase protection

Wed, 10/23/2019 - 2:04pm

A little over two years ago, I signed up for a Chase Freedom card because I had a cross-country move approaching and I wanted to use a card with a 0% introductory APR offer. The Chase Freedom met this criteria — it has a 0% APR introductory offer for the first 15 months on purchases and balance transfers (then a variable APR of 16.74% to 25.49%). It also has no annual fee and offered a $150 welcome bonus after I spent $500 in the first three months. I knew I'd spend $500 on the moving company alone, so signing up for this card was a no-brainer.

After I moved, I paid off my balance with my first paycheck from my new job. I was able to absorb my moving expenses easily without paying any interest, due to the fact that I'd negotiated a nice salary increase for myself and had money set aside in savings.

I thought I'd put the Freedom in my desk drawer and forget about it, but it's actually become my preferred card for everyday use — here's why.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Read more: The best cash-back credit cards

The rewards structure works for me

For starters, the most obvious benefit of my Chase Freedom card is the unlimited 1% cash back on all spending. While I used to pay for only major purchases with a credit card, my Chase Freedom card has been the best card for learning about zero-sum budgeting with a credit card to maximize cash-back rewards.

Because I know I'm earning 1% back on everything I buy, I pretty much use my card for everything and track my spending to make sure I stay within my monthly budget. Since my credit limit is well above my monthly budget, I also have wiggle room in the event of an emergency. I breathe easy knowing I earn 1% back on my spending, and I can pay off my balance every month.

Read more: I used a cross-country move to earn 80,000 Chase points and fund my next international adventure

Aside from my unlimited 1% cash back, the Chase Freedom card also offers 5% back on up to $1,500 spent each quarter on rotating categories once you activate. This feature is great for people like me, who have inconsistent behavior when it comes to spending. For example, since I work from home, I don't need to buy gas that much anymore, so a card that earns bonus rewards on gas year-round would not cut it for me.

I've found the rotating rewards categories come at perfect times in the year. For example, in the fourth quarter of the year, Chase usually offers 5% cash back on categories that align perfectly with holiday spending, such as department stores (which is the case this quarter).

This year, the quarterly categories during summer months happened to include gas, which was perfect for my summer road trips to the beach. Since I like variety and rarely stick to one routine, I use the quarterly rewards categories to help give structure my non-essential purchases; if I know a category is coming up in the second quarter, for example, I hold off on making the purchase until then to maximize my rewards.

It offers purchase protection

Speaking of purchases, there are other benefits to my Chase Freedom card that I didn't even know about when I signed up, but now give me peace of mind. Perhaps one of the best lesser-known features is the damage and theft protection in the first 120 days after a new purchase up to $500. For travelers, this is a great security feature for those times you want to buy a collectible and transport it back on the plane. If something valuable is stolen or damaged within three months of purchasing it, Chase Freedom cardholders are covered up to $500 per incident.

And, for purchases like my new couch, I'm automatically eligible for a one-year extended warranty of up to $10,000. This applies to any new purchase when the item comes with a US manufacturer's warranty of three years or less. There are some exceptions, like for boats and automobiles, or for pre-owned items. But generally, this is a nice perk that I may have to rely on one day.

There's trip protection, too

My Chase Freedom card also comes with substantial trip interruption and cancellation insurance. Because of this, I'll never purchase airfare or hotels with a debit card again. When I use my Freedom card to book flights, I can be reimbursed up to $1,500 per person and $6,000 total per trip for all of my non-refundable passenger fares if I ever need to cancel plans for severe weather, sickness, or injury. This definitely takes the stress out of clicking "buy" on those expensive tickets.

For a credit card with no annual fee, my everyday Chase Freedom card has been a solid choice for my lifestyle over the past two years, and I don't plan on closing my account any time soon since my points never expire.

That said, I am starting to research credit cards with primary car rental insurance, since my Chase Freedom card only offers secondary insurance for car rentals — which means I still need to go through my personal insurance first. But all in all, even though it's not the most robust card out there, it's given me a lot of value plus awesome fraud protection, while asking for little in return.

Click here to learn more about the Chase Freedom.

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SoftBank likely had the Vision Fund on its mind when it decided to rescue WeWork

Tue, 10/22/2019 - 9:53pm

  • In deciding to rescue WeWork, SoftBank likely was motivated by more than just the coworking company's potential, business experts told Business Insider.
  • The Japanese conglomerate was almost certainly also trying to defend its $100 billion Vision Fund — and better its chances to attract investors to its second Vision Fund.
  • Some of the Vision Fund's biggest investments have been struggling — Uber and Slack have both fallen below their public offering prices.
  • But WeWork, which has seen its valuation plummet amid a failed initial public offering, has represented the biggest disaster, and SoftBank likely decided it was "too big to fail," one venture capitalist said.
  • Read all of Business Insider's WeWork coverage here.

SoftBank's decision to bail out WeWork was likely prompted by an impaired Vision.

The Japanese conglomerate will reportedly invest another $10 billion or so in WeWork to help prop up the struggling company, buy out some of its existing shareholders, and usher cofounder Adam Neumann out the door.

SoftBank CEO Masayoshi Son may truly believe that doubling down on the coworking giant — after already sinking more than $9 billion into it — is a good bet. But that's almost certainly not his only motivation for making the investment, business and investment experts told Business Insider.

Instead, the investment is almost certainly Son's attempt to shore up the Vision Fund, his company's audacious $100 billion venture capital vehicle that led SoftBank's investments in WeWork, and to better his company's chances of pulling in investors for its announced second Vision Fund, they said.

"If [WeWork] had imploded, it would have tremendous risk for the Vision Fund and whether or not there could be another one," said Robert Siegel, a lecturer in management at Stanford Graduate School of Business. He continued: "They kind of were in a very difficult situation."

In a press release Tuesday evening announcing the bailout, SoftBank didn't mention the Vision Fund as a motivation. Son said the company remained a believer in WeWork's business and that it is leading a change in the way people work.

"It is not unusual for the world's leading technology disruptors to experience growth challenges as the one WeWork just faced," Son said in the statement. "Since the vision remains unchanged, SoftBank has decided to double down on the company ... We remain committed to WeWork, its employees, its member customers and landlords."

WeWork needed a bailout, and SoftBank is stepping in

WeWork was, by all accounts, in dire need of a rescue. The company was reportedly slated to run out of cash within a month. Money was so tight that its co-CEOs reportedly delayed a planned mass layoff, because WeWork didn't have enough money to pay severance to affected workers.

SoftBank's plan will give the company some breathing space. Under the deal, the conglomerate will loan WeWork $5 billion and speed up the hand over of a planned $1.5 billion investment that it wasn't scheduled to make until next year.

Additionally, its plans to spend another $3 billion buying up shares from other shareholders — including, reportedly, as much as $1 billion from Neumann, the former CEO. On top of that, SoftBank reportedly plans to loan Neumann himself $500 million and pay him a $185 million consulting fee, according to a report from The Wall Street Journal.

At first glance, the investment looks dubious. It will reportedly value WeWork at somewhere between $7 billion and $8 billion. That's at least $2 billion less than the additional money SoftBank is sinking into it, and less than half what it will have invested in WeWork in total. In order for SoftBank to make money on the deal, WeWork will have to go public at a valuation of at least $15 billion, The New York Times estimated.

That may be tough to achieve. IWG, WeWork's closest publicly traded rival, which has about the same number of locations, has a market capitalization of just $3.5 billion. In order to stem the massive losses that turned public investors against its planned initial public offering last month, WeWork is widely expected to scale back its operations. That almost certainly will throttle its previously break-neck growth rate, which is what convinced investors like SoftBank to value it at a premium to IWG in the first place.

SoftBank is likely motivated by more than WeWork's potential

Son and his team at SoftBank may well still be believers in WeWork's potential. But its future is likely not the main thing driving the investment, business experts said.

"You have to evaluate this deal in the shadow of the bigger picture of what SoftBank has been doing with their Vision Fund and their hopes of raising a second Vision Fund," said David Hsu, a professor of management at the University of Pennsylvania's Wharton School of business.

WeWork is one of the biggest stakes held by the Vision Fund, the gigantic venture fund that Son set up three years ago. Son created the fund as a way of making what seemed to be sure bets. The fund takes large stakes in more mature startups, ideally ones that already dominate their particular markets or have the potential to. In theory, those bets will pay off when the companies go public and get premium valuations from public investors.

After making high-profile investments in companies, including Uber, Slack, and Didi Chuxing, Son announced plans this summer to raise a second Vision Fund and seemed to have commitments in place to make it even bigger than the first.

But that second fund is now in doubt. Saudi Arabia and the United Arab Emirates — the two biggest outside backers of the first fund — are reportedly planning to reduce any commitments they make to a second fund. Meanwhile, as of a month ago, the second fund only had one committed backer, according to The Wall Street Journal — SoftBank itself.

The Vision Fund's strategy is coming into question

SoftBank's attempt to lure investors to the second fund came as its strategy for the first Vision Fund started faltering. Uber, another one of the Vision Fund's big bets, went public at a valuation far less than anticipated and has since dropped in value. Slack, another Vision Fund bet, did better in its public offering, but has since seen its stock price fall too.

And then there's WeWork. SoftBank itself valued the company at $47 billion in January, and investment bankers pitched the company on the idea that it could go public at a valuation of $60 billion or more.

Instead, public investors balked at its losses, its corporate governance, and a slew of transactions involving Neumann or his family members. The company reportedly tried to go public with a valuation of as low as $10 billion — and still couldn't attract enough investors. WeWork was counting on raising $9 billion or more in the IPO — $3 billion from selling stock and another $6 billion in loans that were contingent on a successful offering. Without the influx of cash, the company was left teetering.

In theory, SoftBank could have let WeWork fail. Investors do that all the time, deciding not to extend a lifeline to struggling companies, even ones they've backed in the past. Many make the decision that the chances or amount of a potential payoff are not worth additional investment; better to write off the amount already invested than to lose even more.

For SoftBank, WeWork was likely 'too big to fail'

But SoftBank almost certainly dismissed that option, because it was too far invested in WeWork already and didn't want the Vision Fund to take that kind of hit, the experts said. SoftBank likely made the call that it was better to try to get some kind of return from WeWork than to write it off entirely.

"Their position is kind of too big to fail. They kind of have to save it," said one venture capitalist, who asked that his name not be used but whose firm isn't involved in WeWork. He continued: "They can't just let the company fail. They'd just screw their fund and their ability to raise capital."

Read this: WeWork could face a cash crunch as soon as February. Industry watchers think SoftBank, its lenders, and the entire industry has too much at stake to let it go under.

Still, the danger for SoftBank is that in protecting its investment today, it will suffer a bigger loss later on. To prevent that, the company should be focusing on doing what it can to help WeWork, beyond just giving it cash, said Dan Malven, a managing director at 4490 Ventures.

SoftBank ought to be making a public show to WeWork's most important stakeholders — its employees and its customers — of its commitment to the business, Malven said. It should be trying to communicate to customers that its latest investment in WeWork is all about maintaining a high-quality service for them, he said. And it ought to be promising retention bonuses to its top employees to convince them to stay.

Instead, the stories about its bailout have focused largely on the golden parachute it's handing out to Neumann.

The rescue plan for WeWork "feels like it's a short-term decision to prop up a position in their portfolio," said Malven, "because they're not indicating that they care about the actual business at all."

Got a tip about SoftBank or WeWork? Contact this reporter via email at, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: WeWork used massive discounts — in some cases, essentially giving away space for 2 years — to try to poach customers from rivals

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