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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Doctors in Benin-Based Private Hospital -Celltek Healthcare Medical Centre- Perform Stem Cells Transplant

Wed, 08/28/2019 - 9:13pm  |  Timbuktu Chronicles
From the Vanguard:
Doctors at a private hospital in Benin City, Edo State, Celltek Healthcare Medical Centre, have successfully performed stem cells transplant on a 62-year-old patient with multiple myeloma.

Leader of the medical team that carried out the operation, Prof. Godwin Bazuaye, told journalists in Benin City that the cell transplant was carried out in collaboration with Sudabelt, Terumo BCT and Global Blood Funds...[more]

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

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

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

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

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

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

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

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

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

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

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

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

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

There could be more problems that are yet to be discovered

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

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

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

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

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

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

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

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

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

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

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NOW WATCH: Mexico has just one store where you can legally buy a gun and it's located on a heavily-guarded military base

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

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

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

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

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

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

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The story so far

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

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

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

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

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

Why it matters

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Bank: Citi 

Investment: Led $28 million Series C in March

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



Bank: Goldman Sachs

Investment: Participated in $260 million Series E in May

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




Bank: Goldman Sachs 

Investment: Participated in $300 million Series E in May

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



Second Measure

Banks: Goldman Sachs, Citi 

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

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


Bank: Citi 

Investment: Led corporate round for undisclosed amount in May

Area of focus: Applications for financial charting and desktop interoperability



Bank: JPMorgan

Investment: Led $5.5 million seed round in April

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


Bank: JPMorgan

Investment: Participated in $17 million Series C in May

Area of focus: Desktop applications for financial firms

Global PayEx

Bank: JPMorgan

Investment: Undisclosed amount in May

Area of focus: Accounts receivable processing 



Bank: JPMorgan 

Investment: Led corporate round for an undisclosed amount in August

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


Bank: Goldman Sachs

Investment: Participated in $8 million Series A in February

Area of focus: AI-powered construction finance software

Banks: Goldman, Citi 

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

Area of focus: Digital mortgage lending  


Built Technologies

Bank: Goldman Sachs

Investment: Led $31 million Series B in April

Area of focus: Cloud-based construction lending software


Bank: Goldman Sachs

Investment: Participated in $20 million Series A in February

Area of focus: APIs to connect bank data to apps


Bank: Goldman Sachs

Investment: Led $55 million Series E in January

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


Bank: Goldman Sachs

Investment: Led $28 million venture round in July

Area of focus: Deposits marketplace for customers and banks 


Bank: Goldman Sachs

Investment: Led $30 million Series B in April

Area of focus: Automated retirement plan creation and administration 



Bank: Citi

Investment: Participated in $35 million Series C in July

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



Bank: Goldman Sachs

Investment: Led venture round for an undisclosed amount in May

Area of focus: Digital asset and wealth management platforms

wefox Group

Bank: Goldman Sachs

Investment: Participated in $125 million Series B in March

Area of focus: Digital insurance marketplace 



Bank: Citi 

Investment: Participated in $20 million Series B in January

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


Bank: Goldman Sachs

Investment: Led $22 million Series A in April

Area of focus: Coding-free application development

Bank: Goldman Sachs

Investment: Led $72.5 million Series D in August

Area of focus: Platform for creating AI tools

A look at the nonbank and alternative lending industry in 2019 (WFC, BAC, C, JPM, USB, PYPL)

Wed, 08/28/2019 - 4:38pm  |  Clusterstock
  • Business Insider Intelligence is launching its brand new Banking coverage in early September.
  • To obtain a free preview of our Banking Briefing, please click here.

Nonbanks and alternative lending institutions are making their way into the banking industry – posing a major threat to incumbent banks. Alt lenders' ability to utilize technology and provide efficient and effective lending services to underserved businesses and individuals is allowing them to penetrate the market and find success.

Below we break down what alternative lending is, list the top alt lenders in the industry, and detail how alternative financial institutions are threatening the dominance of incumbent banks.

What is alternative lending?

Small businesses typically struggle when attempting to receive financing, so oftentimes they turn to alternative lending – where funds are provided outside of traditional banking. Nonbanks – financial institutions that do not have a full banking license – also offer different lending options to smaller businesses. 

Nonbanks can engage in typical bank-related services like credit card operations and various lending services, such as mortgage lending. These lenders provide users with easier access to obtaining loans — especially for consumers who may not have the best credit.

Nonbank and Alternative lending industry trends

The presence of alternative lenders and digitally advanced nonbanks is continuing to grow in the banking industry – pressuring traditional financial institutions to digitize their own lending options.

According to Oracle's Digital Demand in Retail Banking study of 5,200 consumers from 13 countries, over 40% of customers surveyed think nonbanks can better assist them with personal money management and investment needs, and 30% of respondents who haven't tried a nonbank platform said they're open to trying one.

Alt lenders are also garnering attention, particularly from small- and medium-businesses (SMBs). According to data reported by SME Finance Forum, in 2018 there was funding gap of $5 trillion between the financing needs of SMBs and the institution-based financing available to them — causing SMBs to seek alternative funding options. 

Alt lenders use technology like artificial intelligence and machine learning to gather data and onboard customers, and Business Insider Intelligence's SMB Lending Report explains that if incumbents don't explore technology advancements, alt lenders could begin taking a larger share of the market.

Types of nonbank alternative loans

Nonbanks offer customers and businesses a variety of loan options including: mortgage loans, small business alternative loans, and peer-to-peer loans. 

Nonbank mortgage loan

Due to the regulation of mortgages, it can be difficult for incumbents to digitize the lending process, and the inability of traditional banks to adapt to the digital landscape has lead to an increase in alt lenders supplying mortgage loans to consumers. 

Business Insider Intelligence's Online Mortgage Lending Report found that the top five US banks – Wells Fargo, Bank of America, and JPMorgan Chase, US Bancorp, and Citigroup – only accounted for 21% of total mortgage originations, which is a huge decline from their 50% combined market share in 2011.

Alt lenders are a threat to incumbents because they can provide traditional financial products, like mortgage loans, to consumers at a lower cost with more relaxed eligibility criteria. This combined with their technological offerings allows alt lenders to provide mortgage loans in a more attractive way. 

Small business alternative loan

Loan applications from microbusinesses and small businesses are commonly rejected by traditional financial institutions. Due to the looser regulations for alt lenders, they can capitalize on the high demand of smaller businesses. 

According to a survey from the Federal Reserve Bank of Richmond, in 2016 only 58% of loan requests from small businesses were approved by incumbent banks, compared to 71% approved by alt lenders that same year. 

Alt lenders have the ability to leverage a broad set of data and machine learning — allowing them to reach further into the small business lending market than incumbent banks. 

Peer-to-Peer (P2P) loan

Peer-to-Peer loans – one of the most popular forms of alternative lending – bring together a borrower, an investor, and a partner bank through an online platform. Leveraging metrics, like credit scores and social media activity, P2P platforms can link borrowers to lenders at suitable interest rates.

P2P lending platforms facilitate interactions without actually owning the loans – allowing them to keep costs low. This quality is particularly attractive to customers looking to refinance existing debt at the lowest rate possible. 

Top nonbank and alternative lenders
  • SoFi: This startup initially focused on student loan refinancing, but has expanded to include mortgage loan refinancing, mortgages, and personal loans. In 2019 SoFi closed a $500 million funding round led by Qatar Investment Authority — posing a threat to incumbent banks.
  • Quicken Loans: This established nonbank is known for its Rocket Mortgage, an online mortgage application that takes less than10 minutes to complete. In Q4 2017, Quicken Loans became the largest US residential mortgage originator by volume — even beating out Wells Fargo.
  • Kabbage: This was one of the first online lending platforms and uses third-party data to avoid SMBs submitting wrong information. The startup offers both direct-to-consumer business as well as business-to-business operations, and in July 2019 it secured $200 million revolving credit facility after already receiving a $700 million securitization agreement three months prior. 
  • PayPal: PayPal is a popular P2P lending service poised to grow at a 42.7% five-year compound annual growth rate to hit $574 billion by 2023. PayPal also owns Venmo, a P2P lending app commonly used by millennials, and is on pace to drive $100 billion in volume in 2019.
Alternative lending market

Even though traditional banks still hold the largest market share for business lending, growth has continued to slow – suggesting an increased demand for alt lending platforms. Through technology that uses AI and machine learning, alt lenders are able to efficiently onboard customers.

According to Business Insider Inteligence's SMB Lending Report, SMBs make up nearly all of private sector businesses in the US and employ 60% of all workers in the country. However, SMBs usually have trouble when applying for loans at incumbent banks and instead turn to alternative lending platforms. 

Due to the massive SMB market size, alternative lending companies are positioned to threaten to incumbent banks, and unless traditional banking institutions update their lending practices, alt lending technologies could potentially overhaul legacy processes and gain a greater percent of the overall market share.

Banking Industry Analysis

With the integration of digital technology, so many facets of the banking industry are undergoing constant change, and it's critical for top decision makers to stay informed on the rise of alternative lending trends. That's why Business Insider Intelligence is launching Banking, our latest research coverage area that will keep you up to date on how nonbanks and alternative lending are impacting the banking industry.

Click here to obtain an exclusive FREE preview of Banking!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And the largest decliners:

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

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

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

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

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

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

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

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

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

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

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

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

Mark Matousek contributed to this report. 

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

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

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

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

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

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

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

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

What is the yield curve?

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

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

What does an inversion in the curve mean?

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

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

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

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

Why does Wall Street care so much?

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

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

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

What happens after the curve inverts?

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

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

What are some other recession indicators?

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

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

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

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

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

Why private label banking apps and products are on the rise

Wed, 08/28/2019 - 3:50pm  |  Clusterstock
  • Business Insider Intelligence is launching its brand new Banking coverage in early September.
  • To obtain a free preview of our Banking Briefing, please click here.

Private labeling has long been a pervasive strategy in retail, where products are made by third party manufacturers and sold under a retailer's name. The cost to manufacture is often much lower than reselling another brand name, resulting in higher margins and increased revenue for sellers.

Retailers who implement this strategy also maintain wholesale control of the brand, including packaging and pricing, which generates product exclusivity as well as promotes customer recognition of and loyalty to the brand.

Possibly the biggest benefit of private labels, however, is that they eliminate the pains of having to design and build a new product — especially when entering a new market. By outsourcing the entire process and leaving those details to the experts, sellers can instead focus on what they excel at: branding and marketing the finished product.

Because the benefits of this strategy are so multifaceted, it's no wonder private labeling is moving beyond consumer goods and gaining traction in service-based industries. Businesses looking to develop new offerings and product functionalities can now easily outsource entire technology stacks and tedious regulatory administration.

As tech giants like Apple, Amazon, and Google deepen their financial services plays, banking and personal finance tools have become a prime opportunity for fintechs and smaller firms to leverage private labeling to compete, and for established players to unlock new revenue streams.

Here's a look inside how private labeling is transforming the banking industry— and which products are on the rise.

What is white label banking?

White label banking is another term for private label banking or banking-as-a-service (BaaS), in which banks open up their application program interfaces (APIs) to let third parties build their own financial products with existing infrastructure. White label banking accelerates the builder's go-to-market strategy by removing regulatory, legal, and technical obstacles.

White label banking services

White label banking services enable fintechs and third parties to showcase a sleek, company-branded frontend, while leveraging an established bank's license, regulatory compliance, and technology on the backend to offer core banking features that rival major institutions'. 

Common white label banking services include:

  • Savings and checking accounts
  • Current accounts
  • Debit and credit cards
  • Simplified bill payments
  • Online payment transfer systems
  • Personal loans
  • Mortgages
  • Insurance
  • Bank statements with transaction details
  • Balance notifications
White label banking apps

Some examples of mobile banking apps built with white label features include:

  • ADIB
  • Albaraka Mobil
  • Azlo
  • Börse Stuttgart App
  • Chime
  • Compte CO2
  • Digit
  • Dozens
  • Knotist business banking
  • MoneyLion
  • Nationwide Mobile
  • Qapital
  • Qonto
  • Score Kompass 
  • Simple
  • Spendesk
  • Stash
  • Tomorrow
  • Trade Republic
  • Van Lanschot
  • Vitesse Mobile
  • Xero Accounting & Invoices
Future of white label banking services

Across industries, digital technologies are democratizing information to spur more competition and innovation. Because of this, the trend towards "open access" will only become more pervasive. In the banking industry, particularly, the open banking movement has been unfurling from its epicenter in the UK and stretching across the globe for the past few years.

White label banking and BaaS technology are no longer brand new technologies in the industry, but firms that get involved now will still be ahead of the curve by the time regulation becomes mainstream. The UK's Competition and Markets Authority has already enrolled the nine biggest banks and building societies in its Open Banking Directory, and others are coming soon. After that, it won't be long before other countries follow suit with their own regulations.

Per Accenture estimates, €61 billion ($70 billion) or 7% of total banking revenue in Europe will be associated with open banking-enabled activities by 2020. Incumbent banks around the world that invest in open banking platforms now – before it's mandated – will be rewarded with new revenue streams, an early boost in demand, partnerships with tech-savvy fintechs, and an overall competitive advantage against newcomers in the space.

To stay ahead of trends like white label banking, Business Insider Intelligence is launching a Banking coverage area in September. Tailored for top decision-makers in the financial services industry, this vertical covers digital transformation across the industry, including open banking and BaaS, consumer and business banking, mobile and online banking, digital account opening, and neobanks. 

Click here to obtain an exclusive FREE preview of Banking!

Join the conversation about this story »

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

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

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

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

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

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

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

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

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

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

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

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

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

Join the conversation about this story »

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rokke is worth an estimated $3.3 billion.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The journey is expected to take 30 to 35 days.

The vessel is set to be completed sometime in 2020.

Source: REV Ocean

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

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

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

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

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

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

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

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

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

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

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

Read the review »

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

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

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

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

A 10-speed transmission handles the shifting duties.

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

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

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

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

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

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

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

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

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

Read the ZR2 review here and the ZR1 review here »

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Apple CarPlay and Android Auto are available.

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

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

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

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

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

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

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

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

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

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

This startup wants to turn the cloud software business on its head with a new site that encourages customers to share how much they're paying

Wed, 08/28/2019 - 2:58pm  |  Clusterstock

  • This week, the startup company, Capiche (pronounced kuh-peesh), launched in the hopes of bringing more transparency to the enterprise software industry and changing how businesses get their information about SaaS pricing. 
  • "The more information we can share [about pricing], I think it will help nudge the industry towards fairer and more transparent policies," Austin Smith, Capiche founder and CEO, told Business Insider in a recent interview. 
  • Smith likens his vision for Capiche to what the job review site, Glassdoor, created for job seekers —shedding light on company culture and average wages. 
  • Smith said that so far, in-depth, stories have proven to be more useful than trying to aggregate pricing data into charts and graphs since normalizing the data for SaaS products can be extremely difficult.
  • Within eight hours of its website going live on Tuesday, Smith said, already 300 people had submitted pricing stories. 
  • Capiche raised a $450,000 angel round, which closed this June, with participation from the likes of CEO and serial angel investor Jason Calacanis and HubSpot cofounder and CTO Dharmesh Shah. 
  • "I think there's clearly a flywheel that can happen here," Smith said. "People like to share this stuff." 
  • Visit Business Insider's homepage for more stories.

Pricing for enterprise software is notoriously opaque.

Instead of listing their prices online, most software-as-a-service (or, SaaS) companies will simply say, "Call us." And unfortunately, that approach — which on the outset, may seem more personal — has created some major problems. 

This week, the startup company, Capiche (pronounced kah-peesh), launched in the hopes of bringing more transparency to the enterprise software industry and changing how businesses get their information about SaaS pricing. 

"The pricing for most SaaS products that's done over sales calls comes down to, 'How much can we get out of this customer?' It's not just, 'Here's what we charge,'" Austin Smith, Capiche founder and CEO, told Business Insider in a recent interview. "The more information we can share [about pricing], I think it will help nudge the industry towards fairer and more transparent policies." 

To start, Capiche will focus on collecting reviews, or what Smith calls "pricing stories," from its users about their sales experiences with particular SaaS companies, especially regarding information about costs. Smith likens his vision for Capiche to what the job review site, Glassdoor, created for job seekers. 

"Before Glassdoor was around, it was really, really hard to know, "Is this offer I have in front of me good?" Smith said. "Now anyone across pretty much any company can see — Am I getting paid the right amount and how does that compare with other people in my industry?" 

Smith said that so far, in-depth, stories have proven to be more useful than trying to aggregate pricing data into charts and graphs since normalizing the data for SaaS products can be extremely difficult. Two companies that are using Salesforce, for example, will rarely have the exact same add-on features enabled, and so comparing what each is paying would be like comparing "apples to oranges," Smith said. 

Instead, pricing stories give businesses a sense for what others are paying, while offering helpful insights. Already, one user shared that by simply calling and speaking to a sales rep at the email marketing company Sendgrid, they were offered $250 off per month compared to the self-serve price available online. Also, they said, by "holding out" until the end of the month to sign a contract, their Sendgrid sales rep offered them an additional $250 off per month to help close the deal. In the end, the user said they were able to get their Sendgrid pricing down from $2,000 to $1,500 per month for a company that sends five million emails per month.

Popular software review sites — like G2 and Capterra — exist today, though Smith said those sites often charge companies to make their landing pages look snazzier and rank higher. As a result, it's not always the best or most popular products that users will see, but those who paid review sites the most money. Smith said he hasn't decided on a definite monetization strategy for Capiche, but it will likely not include SaaS companies paying for placement. 

Also, Smith said, reviewers for sites today are often incentivized by things like Visa or Amazon gift cards in exchange for writing about a product. With Capiche, Smith hopes he can create more of a "community" of experts who leave reviews on their own accord. In fact, to access the information on Capiche today, users need to submit their own reviews for at least three products they currently use. Within eight hours of its website going live on Tuesday, Smith said, 300 people had submitted pricing stories. 

"I think there's clearly a flywheel that can happen here," Smith said. "People like to share this stuff." 

"Obviously there's a pricing problem"

For the longtime entrepreneur — who was previously the president of, an email newsletter company — trying to figure out the best pricing for enterprise software has been a major pain point for him over the years. It's also an issue he's seen first hand for other startup founders.

"I see it all the time on VC listserves where someone will send a question to the other founders in a portfolio and say, 'What's everyone else paying for Salesforce?'" Smith said. "And then, people are really happy to share it." 

Read more: Here's the pitch deck that helped this Boston-based entrepreneur raise over $11 million to help sales reps form better relationships with clients through gifts

To help finance his early endeavors with Capiche, Smith raised a $450,000 angel round, which closed this June, with participation from the likes of CEO and serial angel investor Jason Calacanis, HubSpot cofounder and CTO Dharmesh Shah, and Half Court Ventures partner Rob May. 

"When consumers have to make a considered purchase they do a lot of research online," Calacanis told Business Insider, regarding the reasons he decided to invest in Capiche. "If you're going to travel or buy a car or pick a college, anything that's super considered, where you're investing a lot of time or money, you're going to want to make a good decision." 

Calacanis said there are other review sites out there, like Capterra, but none are taking Capiche's approach of in-depth reviews, focused on price. And pricing, he says, is one of the leading considerations when companies are considering a new SaaS product. 

"You need only look at the Google searches," Calacanis said, in reference to typing in popular SaaS products like Slack or Salesforce or Zendesk into Google. Pricing, he said, is typically at the top of the list of suggested searches. 

"People want to understand the pricing," Calacanis said. "Obviously there's a pricing problem." 

SEE ALSO: PITCH-DECK LIBRARY: The pitch decks that helped hot startups raise millions

Join the conversation about this story »

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WeWork replaced 43 million of CEO Adam Neumann's stock options with special 'profits interests,' and a compensation expert calls it 'unsettling'

Wed, 08/28/2019 - 2:25pm  |  Clusterstock

  • WeWork restructured twice in 2019, and each time it changed a big portion of its compensation plan for its cofounder Adam Neumann.
  • Neumann single-handedly controls the company. As such, WeWork's S-1 filing says the company doesn't conform to typical good-governance practices, such as having independent board members craft executive compensation plans.
  • A compensation expert says the cancellation of his stock-option plan, replaced by something called "profits interests," is a source of concern and indication of "self-dealing" by the CEO.
  • The company flat out warns investors that if they don't like the way Neumann is paying himself or running the company, there will be little they can do about it.
  • Visit Business Insider's homepage for more stories.

Coworking giant WeWork, now doing business as We, plans to become a publicly traded company.

One of the most bizarre parts, of many bizarre things in We's S-1 form, is the compensation disclosure for WeWork founder and CEO Adam Neumann.

"It certainly raises concerns. It is one of many aspects of this S-1 that raises concerns," said Rosanna Landis Weaver, a corporate-governance and compensation expert from the nonprofit shareholder-advocacy group As You Sow. She called all the disclosures about We's loans, payments, and compensation to Neumann "unsettling."

What Neumann has is "an irrevocable proxy to vote" nearly all the class B and class C shares, even if he doesn't own them, the S1 says. Each of those shares carries 20 votes per share. (Most super-voting shares at tech companies carry 10 votes per share.)

So he controls the voting rights over shares he doesn't even own, such as the super-voting-rights shares owned by his cofounder Miguel McKelvey. 

This means that he will control the vast majority of votes, regardless of how many class A shares the company sells to the public, at one vote per share. 

That kind of control means that Neumann can dispense with typical corporate-governance standards, the S-1 says.

He can, for instance, approve any kind of compensation plan for himself that he wants to. The S-1 says (emphasis added): 

Because Adam will control a majority of our outstanding voting power, we will be a 'controlled company' under the corporate governance rules for listed companies. Therefore, we may elect not to comply with certain corporate governance standards, such as the requirement that our board of directors have a compensation committee and nominating and corporate governance committee composed entirely of independent directors. For at least some period following completion of this offering, we intend to take advantage of these exemptions.

And one of the things he's done with that power is grant himself 42.5 million shares of the soon-to-be-public company. But even that wasn't straightforward because as soon as he got this giant package, he found a way to make it even better.

More to the story 

In April, WeWork created the entity We and promptly issued to Neumann 42.5 million stock options, each with an undisclosed strike price. We then loaned Neumann $362.1 million in order to buy those shares. It carried an interest rate of 2.89%, and he had about 10 years to pay the loan back. 

But in June, about two months later, We changed its mind about its corporate structure and reorganized again. This time, it became an "Up-C" corporation, a collection of LLCs. We became a holding company that owned some portion of those LLCs. When We goes public, it will be shares in this holding company that it sells. 

So the board, controlled by Neumann, canceled all of his stock options and replaced them with something called "profits interests." 

Profits interests are typically used as ownership shares in LLCs. Neumann's new profits interests were also grants, not options, meaning Neumann doesn't have to buy them. There's no risk to him if the company's stock price doesn't rise.

And the company tied a bow on it all by allowing him to give back all the options and canceling its $362.1 million loan to him. 

We has actually stopped offering all employees options and now just offers them grants. Again, that's nice for the employee, since they don't have to pay for the shares or worry about the stock price.

The structure could let Neumann receive cash payouts

Neumann's "profits-interest" shares carry the same performance restrictions as the stock options, the S-1 says.

That is, about one-third of them, nearly 19 million, vest over five years after the IPO, provided Neumann remains at the company. (He'll get half of them over five years even if the IPO never happens). He also gets another 7.1 million over three years if the company hits a market cap of $50 billion, another 7.1 million over three years if it hits $72 billion, and another 7.1 million over three years if it his $90 billion.

But, Landis Weaver said, such compensation plans are typically nonbinding, meaning the board, controlled by Neumann, can change its mind and the conditions of these stock awards.

So if We doesn't hit those valuation numbers, it may find another reason to reward him.

On top of that, the S-1 says, "Holders of vested profits interests may also be entitled to limited catch-up distributions."

So from time to time, the company may offer these holders cash in some form. In some partnerships, distributions are made only when the partnership sells assets. In other organizations, they are more akin to a dividend. (We asked We for more information about it, but the company declined comment.)

The S-1 doesn't clarify under what circumstances We would be handing over cash to the people that own these profits shares, which also includes, to a much lesser extent, the company's two other named officers.

But Landis Weaver called the whole situation an area of concern.

"There are so many indications that this is outside the norm of accepted corporate governance," she said. "In the context of all of that, how can a shareholder have faith and confidence that any component of this is not self-dealing?"

Meanwhile, We has also warned would-be investors that if they don't like how Neumann is paying himself, or any other aspect of how he's running the company, they won't be able to do anything about it.

"Even if Adam were to sell a significant number of his shares of our voting stock, the voting power of our outstanding capital stock may continue to be significantly concentrated and the ability of others to influence our corporate matters may continue to be significantly limited," it said.

Are you a WeWork insider with insight to share? We want to hear, DMs on Twitter @Julie188 or on Signal.

SEE ALSO: Peloton is paying its two top execs $21.4 million apiece, even as its losses quadrupled to $245 million in its most recent fiscal yea

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Right now, some Amex cardholders can earn up to an extra 1,500 points shopping at Amazon. Here's how to see if you qualify.

Wed, 08/28/2019 - 2:22pm  |  Clusterstock

  • Amex Offers are deals for Amex cardholders — they get you cash back or bonus points on purchases with select retailers. Amex cards from the Platinum Card® from American Express to the Blue Cash Preferred® Card from American Express are eligible.
  • One current offer gets eligible cardholders 2 additional Amex points per dollar at Amazon.
  • The offer is available until September 30, and you can earn up to 1,500 Amex points.
  • Not everyone will be eligible for this offer — these deals are targeted, so everyone will see different options in their account.

If you have an Amex card and you shop at Amazon, you should check your account to see if you're eligible to earn bonus points.

Offer details

Until September 30, eligible Amex cardholders can earn 2 bonus Membership Rewards points per dollar spent at Amazon, either via or the US Amazon mobile app.

This Amex Offer limits you to earning 1,500 Amex Membership Rewards points — but that's in addition to the points you'd earn for regular spending with your eligible Amex card.

Most Amex Membership Rewards cards earn 1 point per dollar on Amex purchases, so with this offer you'd earn 3 points per dollar on up to $750 in spending at Amazon. The exception is the Blue Business® Plus Card from American Express, which earns 2x points on the first $50,000 spent each year (then 1x). With that card, you could earn up to 4x points on the first $750 spent at Amazon if you're eligible for this offer.

How Amex Offers work

Amex Offers are targeted, which means that not everyone will see the same deals when they log in to their account. The more Amex cards you have, the better your chance at having a certain offer. 

You need to add the offer to your Amex account before you make the purchase in order to get the bonus Amex points. Here's how you do that: 

  1. Log in to your online Amex account.
  2. You'll see icons in the top right for each of the cards you hold. Click which one you want to find offers for.
  3. Once you're viewing the correct card, scroll down on the main account page. Keep scrolling and click "View All" to see all available offers on that card.
  4. When you find one you want to use, click "Add to Card." If you want to confirm that it's been activated, click the
  5. "Added to Card" tab.
  6. Repeat for each card you have.

Read more: How Amex Offers work to help you save money and collect bonus points

Amex Offers aren't the only reason to consider an Amex credit or charge card, but they're a valuable perk, especially since offers change all the time and you can find deals from brands like Levi's, Starbucks, Adidas, and Best Buy.

If you don't have an Amex card, here are some great ones to consider:

  • The Platinum Card from American Express It has a $550 annual fee, but more perks than just about any other rewards credit card. Get up to $200 in Uber credits each year, up to $200 in airline incidental fee credits each year, and up to $100 in Saks credits each year. You'll earn 5x points on flights booked directly with the airlines or Amex Travel, and get access to various airport lounges.
  • American Express® Gold Card If you eat out, this card can be a very rewarding option, because it earns 4x points at restaurants. You also get up to $10 each month in the form of statement credits when you make a purchase at GrubHub, Seamless, The Cheesecake Factory, Ruth's Chris Steak House, Boxed, and participating Shake Shacks. There's a $250 annual fee.
  • Blue Cash Preferred Card from American Express If cash back is more up your alley, the Blue Cash Preferred is a great choice thanks to 6% back at US supermarkets (on up to $6,000 per year, then 1% back) and on select US streaming services, and 3% back on transit and at US gas stations (and 1% on back everything else). There's a $95 annual fee.

Read more: The ultimate guide to current Amex Offers

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

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CongoEats @CongoEats #DRC founded by @MohRahemtulla

Wed, 08/28/2019 - 8:50am  |  Timbuktu Chronicles
Founded by Mohamed Rahemtulla:
CongoEats aims to provide you with a meal to accompany every moment. A first of its kind in DR Congo, the CongoEats platform connects you to your favorite restaurants. Not only is this platform accessible via mobile and desktop devices, it is also the easiest and most convenient way to reserve a table or to order your next meal straight to your door.via Disrupt

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

Tue, 08/27/2019 - 11:18pm  |  Clusterstock

  • Peloton, the maker of smart stationary bikes and treadmills, publicly revealed its IPO paperwork on Tuesday, giving investors their first peek at its financials
  • Business Insider previously spoke to the company's early investors and to industry experts to get a sense of the most important issues facing the company ahead of its IPO.
  • The company's valuation and sales have skyrocketed since it was founded in 2012.
  • Peloton is hoping to be something like an Apple or Tesla for the fitness world, offering an all-inclusive package that includes both hardware and a subscription service.
  • But it faces a growing number of rivals and challenges, including the relatively high price of its equipment.
  • Visit Business Insider's homepage for more stories.

Michael Duda knew from the first time he met John Foley that he wanted to make a bet on Foley's fitness equipment startup, Peloton.

Duda liked Foley's idea of trying to make a stationary bike that looked like a piece of art and pairing it with a subscription service that would stream fitness classes and instructors straight to users' homes. He also thought Foley's timing was right: When they met in 2012, SoulCycle and Flywheel were both starting to make names for themselves in the fitness market with programs built around groups exercising together on stationary bikes.

But mostly what impressed Duda was Foley himself.

"He had a drive, had a passion, and what certainly has been shown to be an insatiable focus on disrupting a category," said Duda, a managing partner at Bullish, a startup accelerator and investment firm that has also backed the online mattress firm Casper and the eyeglass retailer Warby Parker.

Duda's bet is looking pretty smart these days. Peloton's valuation has skyrocketed from $17.5 million when it completed its first venture round that year to $4.2 billion when it got its most recent round of financing in August.

Read more: The inside story of Peloton, a fitness media company that was rejected over 5,000 times by investors but is now worth $4 billion

And the company's value could soon jump even higher, perhaps as high as $8 billion, if public investors are anywhere near as bullish on it as their private counterparts. After confidentially filing its IPO paperwork in June, Peloton publicly revealed its S-1 on Tuesday. When Business Insider spoke to Dudas and other industry experts in June, they flagged some of the key opportunities and challenges facing the company as it prepares for its public markets debut.

Peloton is trying to be a combination of Apple and Gillette

Peloton is technically a fitness-equipment manufacturer. It now makes a treadmill to go with its fitness bike. But from the beginning, Foley and his team have strived to offer more than just run-of-the-mill exercise equipment.

The company is trying to do something that had rarely been done in the fitness market before it came along. Like Apple or Tesla, it offers a complete package of goods and services. It not only makes its equipment, but it also provides the service that's streamed to its devices, and it sells its gadgets through its own chain of retail stores.

"I don't know anyone else who's come close to that, and he's done it," Duda said.

But it has also taken a page from the likes of Gillette — its business model is similar to the classic razor-blade model. Although it sells its equipment at high prices — its stationary bike starts at $2,245, including delivery charges, while its treadmill goes for $4,300 and up — its subscription service is what actually generates fat profits for the company.

The company charges customers $39 a month, but that service costs it only about $4 per user to provide, said Andrew Mitchell, a general partner at Brand Foundry Ventures, which was an early investor in Peloton but later sold its shares. Better yet, Peloton-equipment owners frequently stick with the service for the long term.

They "sell the bike into your house [at] barely any profit, but reap the benefit of a software ... margin and on retention," Mitchell said in an email.

The company's streaming service, which allows customers to participate in live workouts or stream recorded ones, has been one of the keys to its success, said David Minton, the founder of the Leisure Database Co., a market-research firm. Those programs have added an element of fun and interactivity to its equipment that rival gadgets typically haven't had, he said.

"Traditionally people have purchased gym equipment for the home that then becomes a clothes horse," Minton said. "The reason why Peloton has revolutionized that particular market is because you get so engrossed in the programs that you're streaming."

Business is booming

Peloton doesn't disclose detailed financial reports to the public, at least not yet. But the indications are that its business is booming.

Its sales went from $160 million in 2016 to $400 million in 2017, the company told The New York Times last year. It expected to bring in $700 million in sales in its most recent fiscal year, which ended in February, according to The Times.

Meanwhile, the company's share of the US gym-equipment market is in the process of rising from basically 0% in 2014 to an expected 6.2% by the end of its fiscal year this coming February, according to IBISWorld, a market-research firm.

"Peloton has been a complete disrupter in the at-home fitness equipment space," Marisa Lifschutz, an analyst with IBISWorld, said.

Company representatives declined to comment, citing the company's IPO-related quiet period.

But its products could have limited mass-market appeal

As quickly as the company has grown, and as much success as it's had thus far, it could face challenges expanding its market in the future. It's largely focused on selling equipment to individual customers to use in their homes. That segment represents about 26% of the market for US-manufactured gym equipment, according to IBISWorld. But it leaves out another huge segment — gyms and health clubs, which represent another 24% of the market.

What's more, the relatively large size and limited selection of Peloton's equipment will likely rule out purchases by many consumers.

It's hard to fit a treadmill or even a stationary bike in many apartments or even houses. Treadmills and stationary bikes are two of the most popular categories of equipment made by US manufacturers, but they represent only about 41% of the total market. Peloton doesn't make a stair stepper, a category that's nearly as popular treadmills.

Peloton's market could be limited further by the cost of its equipment. Many consumers simply can't afford to spend $39 a month on an exercise subscription, much less $2,000 or even $4,000 on a piece of exercise equipment. Other manufacturers charge high prices for similar equipment, but they often get a large portion of their sales from gyms and fitness centers that can afford to pay those prices.

And while Peloton has had success selling home-based equipment, it's going against the prevailing trend in the market. People are increasingly exercising in gyms rather than at home, Lifschutz said in a report for IBISWorld in April. Consumers recognize that they get access to a more varied selection of equipment and classes in a gym or club than they could get at home, she said in the report.

"The increasing popularity of gyms and health clubs suggests a shrinking demand for home gym equipment among the broader population, the exception being affluent consumers, who are the primary market for home exercise equipment," Lifschutz said in the report.

Competition is increasing, but Peloton is responding

While Peloton helped pioneer the market for smart fitness equipment, it's seen increasing competition. Flywheel now sells a smart stationary bike of its own that allows owners to tune in live and prerecorded spinning classes.

Life Fitness and Amer Sports, two of the biggest fitness-equipment makers, offer their own lines of fitness equipment with tabletlike screens that allow users to stream classes or run apps. With some of these devices, owners can track their workouts using their Apple or Android smartwatches. Indeed, the fitness industry could go in the direction of the car industry, in which automakers have been able to upgrade their in-car entertainment systems by working with Google and Apple and linking them to owners' smartphones, Minton said.

If the same trend plays out in the fitness market, consumers may not see a need to pay up for a specialized stationary bike kitted out with proprietary equipment. 

"The big tech companies all have fitness teams," he said. "They've seen an industry that's ripe for disruption."

Peloton has been working to address some of these challenges. It now offers a financing program that allows customers to pay for its equipment in monthly installments, rather than up front. Under the plan for its entry-level stationary bike, consumers pay $59 a month for 39 months. Customers pay $179 a month for 24 months under its plan for its treadmill.

The company also offers customers a way to get into its ecosystem without having to shell out big bucks for one of its machines. People without a Peloton device can subscribe to a version of its streaming service for $20 a month.

While the company remains focused on the home market, it's been selling a commercial version of its bike to hotels, opening up a secondary market for the company and a way to introduce its service to new consumers. Customers can get on a Peloton bike and tune in to its exercise programs in dozens of hotels around the country.

And it may broaden its lineup. Peloton President William Lynch indicated that the company is interested in developing a rowing machine next, Medium reported earlier this year.

Duda is optimistic about the company's future. It has already far exceeded his expectations. It has benefited from being more than just a fitness-equipment maker and likely will continue to do so, he said.

"There's a lot of upside left in this company," he said.

SEE ALSO: This VC and his firm don't focus on particular technologies or sectors. Instead, they look for startups with a kind of network potential. Here's why.

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