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Shake Shack slips 11% after revenue forecast misses lowest Wall Street estimate (SHAK)

Mon, 02/24/2020 - 6:00pm  |  Clusterstock

  • Shake Shack plunged as much as 11% after reporting lower-than-expected revenue for its fiscal fourth quarter.
  • The restaurant chain's 2020 revenue forecast also disappointed, missing the lowest estimate among Wall Street analysts.
  • Shake Shack could see a dent to near-term performance from its investments in new items and locations, but "the company will ultimately benefit from this strategy," CEO Randy Garutti said in the report.
  • Watch Shake Shack trade live here.

Shake Shack reported 2020 revenue guidance on Monday that fell below Wall Street's lowest estimate.

The restaurant chain's fiscal fourth-quarter revenue fell below expectations, while earnings per share trounced analysts' projection for a quarterly loss. Same-store sales, for locations open for at least two years, fell more than anticipated in the quarter ending December 25.

Shake Shack stock tumbled as much as 11% in late Monday trading, extending the 1.6% fall seen during the day's regular trading hours.

Here are the key numbers:

Revenue: $151.4 million, versus the $153.1 million estimate.

Adjusted earnings per share: $0.06, versus the -$0.01 estimate.

Same-store sales: -3.6%, versus the -2.5% estimate.

2020 revenue guidance: $712 million to $720 million, versus the $735.6 million estimate (range of $722 million to $762 million from analysts surveyed by Bloomberg).

The company attributed its sales miss to the relatively short holiday season in 2019, favorable weather in the year prior, and "less menu innovation."

Shake Shack aims to hit double-digit earnings growth in the near future by investing in new menu items, partnerships, and new locations. The company's CEO warned such upfront costs could lower performance in upcoming quarters but assured investors of their future value.

"We recognize this level of growth and investment, at times, can have a near-term impact on same-Shack sales and other aspects of our financial performance, but we believe the company will ultimately benefit from this strategy over time," CEO Randy Garutti said in the report.

Shake Shack closed at $73.57 per share on Monday, up about 20% year-to-date.

The company has four "buy" ratings, 12 "hold" ratings, and two "sell" ratings from analysts, with a consensus price target of $72.17, according to Bloomberg data.

Now read more markets coverage from Markets Insider and Business Insider:

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Intuit is nearing a $7 billion deal to acquire Credit Karma — here's what the TurboTax owner has to gain from the buzzy startup known for its free credit scores

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Intuit is set to buy Credit Karma for $7.1 billion — here's what the TurboTax owner has to gain from the buzzy startup known for its free credit scores

Mon, 02/24/2020 - 5:54pm  |  Clusterstock

  • Intuit has agreed to acquire Credit Karma for $7.1 billion in a half cash, half stock deal.
  • Credit Karma has long been known for free credit scores, but has since launched a free tax filing platform, high-yield savings accounts, and other personal finance management products.
  • Intuit is the company behind TurboTax, the popular tax filing service, personal finance tool Mint, and credit score-driven personal finance platform, Turbo.
  • The acquisition will give Intuit access to both credit and income data from Credit Karma's 106 million users.
  • But there are concerns that Intuit and Credit Karma's competing tax filing products could raise antitrust concerns should the deal move forward and undergo regulatory review.
  • Click here for more BI Prime stories.

Intuit, the company behind the popular online tax filing service TurboTax and personal finance platform Mint, has agreed to acquire Credit Karma for $7.1 billion in a half cash, half stock deal. 

Credit Karma has long been known for free credit scores. But in the last decade, it's launched several other products including a free tax filing service, identity monitoring, and a high-yield savings account. It has 106 million users and says 1 in 2 millennials are on the platform. 

By acquiring Credit Karma, Intuit will increase its access to consumer financial data significantly. But according to analysts, both companies' competing tax filing products could prove an antitrust concern, should the deal move forward for review by regulators.

When asked on Intuit's fiscal second quarter earnings call, Intuit's CEO Sasan Goodarzi confirmed that Credit Karma and Intuit's tax offerings will remain separate products.

Talks of the deal were first reported by the Wall Street Journal. Under the deal, Credit Karma will operate as an independent unit, continuing to be led by CEO Ken Lin, the companies confirmed on the earnings call.

Goldman Sachs served as Credit Karma's financial advisor on the deal, and Qatalyst Partners served as financial advisor for Intuit. The deal is expected to close in the second half of 2020, according to a press release.

As part of the acquisition, the two companies will look to create personal finance management products, according to a press release.

Valued at $4 billion, Credit Karma has raised around $370 million in VC funding to date — its last round was a $175 Series D in 2015 — from investors including Felicis Ventures, Founders Fund, and Tiger Global Management. In 2018, it sold a $500 million stake to Silver Lake Capital in a secondary share round.

Intuit's stock was up about 2% after earnings were reported on Monday afternoon.

Product overlaps

Since founding the company in 2007, Lin has stressed the importance of keeping Credit Karma's products free for consumers, and that remains the case across all its products, including tax filing, which was launched in 2016.

Instead of charging consumers for its products, Credit Karma makes money with user data. The fintech doesn't sell user data, but instead makes money through referrals. 

Analyzing both credit data and income data from tax filings, Credit Karma can recommend financial products like personal loans and credit cards to its users. It earns a commission from banks and lenders if a user gets approved for a recommended product.

And that data is a key piece of Credit Karma's value.

"In our minds the Credit Karma deal would revolve around a data play, making the company likely the best and largest source of personal financial data that could both dramatically increase the predictive power of the referral business as well as likely lower the cost of customer acquisition for Intuit across its entire portfolio," said Alex Zukin, software equity researcher at RBC, in emailed comments.

An emphasis on free

While Credit Karma doesn't charge its users, Intuit's flagship TurboTax operates a bit differently.

TurboTax offers a freemium model, with a free product offered alongside fee-based options.

Intuit is a member of an industry group known as the Free File Alliance, which partnered with the IRS to provide those with income under $69,000 per year access to free federal tax returns via the Alliance members' platforms. It's worth noting that these platforms can still charge for state returns, and Intuit has come under scrutiny for its lobbying against free government-sponsored tax filings.

Credit Karma, which is not a part of the Free File Alliance, offers both federal and state tax filings for free to all registered users, regardless of income.

The two companies' tax products have been highlighted as a possible antitrust concern if a deal were to be reviewed by regulators.

"Our initial investor conversations have been skeptical though on the basis of potential antitrust scrutiny on the tax side, general lack of business model synergy understanding and fears about cannibalization and execution risk," Zukin said.

In 2018, Intuit launched a personal finance platform called Turbo as an extension of TurboTax. It combines tax-based income data with credit score data to offer consumers a similar level of financial wellness transparency that Credit Karma is known for.

Intuit is also the parent company of Mint, another personal finance startup it acquired in 2009.

Given Credit Karma's scope and scale, the acquisition could help Intuit push further into personal finance management, an already crowded space. 

"We appreciate Intuit's pursuit of growing its consumer finance platform and view the proposed addition of Credit Karma a logical strategic expansion," Oppenheimer analyst Scott Schneeberger said in a statement.

While it may have been "overly ambitious" to see Turbo as a key component of Intuit's flagship products, Schneeberger said, a combination with Credit Karma would add "significant commitment/credibility" to Intuit's personal finance ambitions.

Goodarzi confirmed on the earnings call Intuit has plans to ultimately consolidate Mint and Turbo as one personal finance product, but it will remain separate to Credit Karma's personal finance platform.

"There's a lot of innovation and investment in FinTech, but we don't see anyone, with our collective capabilities, pursuing a personalized financial assistant to help consumers take control of their financial lives," said Sasan Goodarzi, CEO of Intuit, in a press release.

Prior to news of the potential Intuit deal, Credit Karma was pegged as a 2020 IPO likely, according to reports from the Wall Street Journal and CNBC. In December, Lin told Business Insider that launching more financial products were his priority before considering an IPO.

To be sure, public markets have not been so friendly as of late to fast-growing tech companies, especially those that aren't profitable. With high-profile names like Uber and Lyft falling after their IPOs, there is more scrutiny on growth and profitability.

Credit Karma, which has not publicly released information on its earnings, has indicated it is profitable according to past media reports.

SEE ALSO: Credit Karma's CEO is focused on developing new products as the $4 billion fintech does more than just free credit scores

SEE ALSO: Morgan Stanley's $13 billion E-Trade deal is a sign banks are ready to 'open up their pocketbooks' for fintechs, insider says. Here's what that could mean for buzzy startups' valuations.

SEE ALSO: How this woman went from a Pizza Hut employee to a founder of a $4 billion startup

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Cash-strapped Chinese companies say they could collapse within months as coronavirus spreads

Mon, 02/24/2020 - 5:33pm  |  Clusterstock

  • As a deadly viral outbreak halts activity across China, millions of businesses are struggling to stay afloat.
  • In a recent survey of small- and medium-sized businesses across China, a third of respondents said they would only be able to cover fixed expenses for one month. 
  • Another third said they expected to run out of cash within two months, while only 10% said they would be able to hold out through the second half of the year.
  • Visit Business Insider's homepage for more stories.

As a deadly viral outbreak halts activity across China, millions of businesses are struggling to stay afloat.

Efforts to contain the novel coronavirus have led to costly travel and commerce restrictions, creating a crunch that could shut down some of the most vulnerable businesses in the second-largest economy. 

The roughly 30 million small- and medium-sized businesses across China have been hit particularly hard by the outbreak, which has killed more than 2,500 in the nation and sickened tens of thousands more. 

In a February survey of small- and medium-sized businesses in China, the epicenter of the coronavirus, one-third of respondents said they would be able to cover fixed expenses for only one month. 

Another third said they expected to run out of cash within two months, according to the February survey conducted by the Chinese Association of Small and Medium Enterprises. Only 10% said they would be able to hold out through the second half of the year.

"China started returning to work on February 10, but high frequency data suggests the economy is far from running at full capacity," said Mark Haefele, the chief investment officer at UBS Global Wealth Management. 

Against a backdrop of a crackdown on lending and a trade dispute with the US, Chinese businesses not backed by the government were already under pressure before the coronavirus outbreak began to escalate in early 2020. 

The blow could be significant in the second-largest economy, which forecasters said this year could post its first quarterly contraction in decades. Private businesses in China fuel about 60% of gross domestic product, 80% of jobs, three-quarters of technological innovation and more than half of tax revenue, according to internal estimates.

Seeking to soften the blow, the Chinese government has cut interest rates and asked banks to offer more credit. But the moves may not be enough to keep small- and medium-sized businesses up and running.

"China will respond to the coronavirus with extra monetary and fiscal stimulus," Andrea Cicione, the head of macro strategy at TS Lombard, said in a research note this month. "This will matter little in the end unless earnings start growing again."

SEE ALSO: The White House is preparing to ask Congress for emergency funding as coronavirus hits the US

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TurboTax vs. H&R Block: Which tax software should you choose this year?

Mon, 02/24/2020 - 5:22pm  |  Clusterstock

  • TurboTax and H&R Block are the two biggest tax preparation services in the United States.
  • Both TurboTax and H&R Block should give you the same refund results if you enter your information accurately, so the best choice comes down to cost and experience.
  • TurboTax offers a slightly better online experience while H&R Block is best for people who may want to upgrade for in-person support.
  • Try TurboTax or H&R Block before Tax Day 2020 »

It's the peak of tax season. By the end of February, most people have all of their W-2s, 1099s, and other tax forms required to do their taxes. 

If you are about to start and are not sure if TurboTax or H&R Block is a better fit for your needs, here's a look at the key features each tax software offers.

TurboTax vs. H&R Block overview

TurboTax and H&R Block are two of the biggest tax preparation software options in the US. TurboTax comes from Intuit, the company behind popular accounting software QuickBooks and personal finance app Mint. H&R Block is one of the biggest tax preparation services in the US with both physical locations and digital tax-prep software.

TurboTax is the most-used tax preparation software in the US. It comes in both an online, cloud-based version and a desktop version for download. There are different versions based on your unique filing needs. As your taxes become more complex, you'll pay more for additional features. For an added fee, you can get a service with quick access to a tax expert around the clock to answer questions about your own personal tax situation.

H&R Block is a huge tax preparation service that prepared more than 20 million returns for 2018. In addition to online and desktop software, H&R Block has 12,000 locations around the country. This makes it a popular option for either do-it-yourself or professional tax preparation.

Here's a look at the details for each version, what each costs, and what it's like to file your taxes with each service.

TurboTax vs. H&R Block versions and pricing

TurboTax offers four versions: Free, Deluxe, Premier, and Self-Employed. Costs range from free to $120 for a federal return depending on the version you choose. State returns cost extra, typically $45 per state, unless there's a sale.

  • The Free Edition is free for both federal and state returns but only works for the simplest taxes.
  • Deluxe is the most popular version and costs $60 and includes 350 deductions and credits, including mortgage and donation-related deductions.
  • Premier has a $90 price tag and supports taxes for investments and rental properties.
  • The most expensive version, Self-Employed, includes added features for freelancers, contractors, and other small business owners. It costs $120.

H&R Block Online comes in four flavors as well. It is a bit cheaper than TurboTax for a very similar offering. 

  • Free Online works for basics like a W-2 and child-related deductions.
  • Deluxe Online costs $49.99 and includes popular deductions for homeowners and those with HSA accounts.
  • Premium Online costs $69.99 and adds in support for investments and independent contractors.
  • Self-Employed Online handles most business needs at a $169.99 price tag. States are $36.99 extra.

If you are shopping based on price alone, H&R Block is the winner. But as we will see in the next sections, price isn't the only factor to consider.

TurboTax vs. H&R Block: The online experience

The online experience from both TurboTax and H&R Block is a good one. I have used both to file my own taxes and didn't have any serious complaints about either. I did find the TurboTax experience to be a bit easier to navigate, but H&R Block does a very nice job as well.

TurboTax makes it easy to find any form through the search feature, or you can follow its guided tax preparation to enter your forms in the order suggested by TurboTax. You can upload PDF versions of some forms if you have them, or type in the numbers yourself.

H&R Block also makes it easy to navigate through your taxes, add forms, and enter your details. I found it a bit more regimented about finishing things in order than TurboTax. But the forms and questions were very similar. It also offers the option to upload your forms rather than type them in manually for popular forms like the W-2.

While I like the TurboTax experience a little more, it really comes down to personal preference. Both online tax apps offer forms that ask the exact same questions. Looking at the forms above, you can see how similar they look. I'm going to call TurboTax the winner, but just by a hair.

TurboTax vs. H&R Block: Getting help from an expert

H&R Block is the longtime winner in this category, and that's not going to change this year. Thanks to its huge network of locations, H&R Block makes it easier than any other company to get help from a person with your taxes. There are nearly as many H&R Block locations as McDonald's. 

H&R Block has a few ways to get help from a person. These range from upgrading for help from a tax pro online to getting a full second set of eyes to review your taxes in store. The Online Assist program, which gives you access to an expert through chat and screen sharing, drives up the cost by about $40 to $80 depending on which version of H&R Block you use.

TurboTax isn't letting H&R Block get too far ahead, however. It has its own online help service offering access to a professional. TurboTax Live is about $50 to $90 more than the fully DIY option.

The live expert offerings from H&R Block and TurboTax are overall very similar. But, thanks to the thousands of locations around the country, H&R Block remains the winner on this front.

You should get the same results either way

In the years I did my taxes the whole way through with both TurboTax and H&R Block, my results were nearly identical, which is what you would expect with accurate tax returns. That means the difference really comes down to cost, tax prep experience, and access to an expert.

If you want the most polished experience and are willing to pay a few bucks more, TurboTax is the better choice. If you're happy with something that works well and is a bit cheaper, H&R Block is a solid option. If you want the added option of in-person help from an expert, H&R Block is definitely the better choice.

Either way, you're getting a high-quality tax preparation experience. If you follow the prompts and enter all of your details accurately, you should come out on the other side with the same results and your biggest possible refund. What more could you ask for?

TurboTax and H&R Block are both great options for Tax Day 2020 »

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US stocks drop the most in 2 years as coronavirus fears rattle traders

Mon, 02/24/2020 - 5:13pm  |  Clusterstock

  • US stocks were swept up in a global sell-off on Monday as investors grappled with spreading coronavirus fears.
  • The Dow Jones industrial average plummeted as much as 1,080 points — or 3.7% — on Monday. That erased the index's gains for the year.
  • The S&P 500 slid 3.4%, its biggest loss since February 2018.
  • Meanwhile, the Cboe Volatility Index — or VIX, widely known as the stock market's fear gauge — spiked as much as 54% to levels not seen since early 2019.
  • The flight out of risk assets and into safe havens sent the US 30-year Treasury yield to a record low, and gold is trading at the most expensive levels all year.
  • Read more on Business Insider.

US stocks were swept up in a global sell-off on Monday as fears over the spreading coronavirus — and its negative economic implications — rattled investor nerves.

The Dow Jones industrial average fell more than 1,000 points in on Tuesday for a 3.7% decline. That erased the index's gains for the year. The S&P 500 tumbled roughly 3.4%, while the tech-heavy Nasdaq Composite index lost 3.7%.

Meanwhile, the Cboe Volatility Index — or VIX, which is widely known as the stock market's fear gauge — spiked as much as 54% to its highest level since early 2019.

The latest sharp move lower comes as the coronavirus outbreak has spread to more than 30 countries. Over the weekend, delegates at the Group of 20 meeting of major economies warned that coronavirus could undermine global growth. The IMF also cut its yearly growth projection for China by 0.4 percentage points.

Here's how the major US indices closed: 

Dow Jones industrial average: Down 1,032 points, or 3.6% — intraday low down 1,080 points

S&P 500: Down 3.3% — intraday low -3.7%

Nasdaq Composite: Down 3.7% — intraday low -4.3% 

Read more: 'It's a clear bubble': A former Goldman Sachs hedge fund chief sounds the alarm on flailing stocks — and warns the nefarious effects of coronavirus have 'only just started'

Every sector in the S&P 500 traded in the red, with the energy (-4.7%) and information technology (-4.2%) indices leading declines.

Advanced Micro Devices — a semiconductor maker with significant supply chain exposure in China — saw the most active trading in the early market and tumbled roughly 8%.

Fear about how coronavirus could disrupt the supply chains and growth of the world's corporations were also responsible for rattling markets on Monday. Apple, Disney, and Starbucks are some of the highest profile names that have seen disruptions in their businesses because of the virus. 

Meanwhile, investors are fleeing to higher ground: Safe-haven asset gold reached $1,687 Monday, the most expensive all year. The yield on the 30-year US Treasury fell to a historic low of 1.8%, while the yield on the 10-year fell to 1.4%, a low not seen since 2016. Price moves inverse to yield. 

Read more: A Wall Street firm lists its 5 best hedges for an unusual coronavirus-driven market crash — and shares what to do if it's successfully contained

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

The market's favorite recession indicator flashed its starkest warning since October amid the coronavirus outbreak

Mon, 02/24/2020 - 5:12pm  |  Clusterstock

  • On Monday, the curve inversion between 3-month and 10-year US Treasury bond yields fell to its most negative point since October amid concern over the coronavirus outbreak. 
  • The yield on the 10-year US Treasury fell to 1.3% as prices rallied, below the 3-month US Treasury at 1.5%. 
  • "Investors are pretty pessimistic about future US GDP growth and interest rates," Dev Kantesaria of Valley Forge Capital Management said in an interview with Markets Insider. 
  • Read more on Business Insider.

A popular recession indicator just flashed its most serious warning in months amid worry around the coronavirus outbreak. 

The yield curve inversion between 3-month and 10-year US Treasury bonds fell on Monday to its most negative point since October. An inverted yield curve has preceeded all US recessions since 1950. 

A flight to safety amid mounting fears that the coronavirus will slow global growth sent 10-year US Treasury yields plummeting to 1.3% Monday, below the 3-month yield of 1.5%. The 30-year yield also slipped to 1.8%, a historic low. 

"That's pretty remarkable, as it shows that investors are pretty pessimistic about future US GDP growth and interest rates," Dev Kantesaria, a portfolio manager and founder of Valley Forge Capital Management, said in an interview with Markets Insider. 

The bond market is now pricing in two interest rate cuts from the Federal Reserve, even though it said it plans to leave rates unchanged this year. As the virus has spread, it's infected nearly 80,000 people and killed more than 2,600 across 30 countries, sparking fears of a global pandemic. 

If the outbreak continues and does hinder global growth, the US economy could take a hit. On Monday, Goldman Sachs lowered its US GDP growth forecast by 0.2 percentage points amid coronavirus worry. Global stocks tanked Monday as concerns over the virus' spread mounted. The Dow Jones Industrial Average fell more than 1,000 points, and the S&P 500 and the Nasdaq pared losses. 

If US economic growth is impacted, or the country falls into a recession, long-term interest rates could approach zero, Kantesaria said. "If investors can look past the current market, the low interest rate environment is highly bullish for equity investors," he said. 

But that might not happen right away, he said. In the near term, "it could get quite scary in the marketplace," Kantesaria said.

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

A look at the demanding schedule of Elon Musk, who plans his day in 5-minute slots, constantly multitasks, and avoids phone calls

Mon, 02/24/2020 - 4:51pm  |  Clusterstock

  • Elon Musk is so busy running both Tesla and SpaceX that he schedules his day out into five-minute slots.
  • Musk finds time to sleep six hours a night, despite working between 85 to 100 hours each week.
  • The billionaire finds time to spend with his five children during the workweek, but said in 2013 that he still checks his email when he is with them.
  • Visit Business Insider's homepage for more stories.

Elon Musk is one busy guy.

The billionaire CEO of Tesla and SpaceX generally spends a full workweek at each of his two companies, wolfing down lunch in five minutes and skipping phone calls for productivity's sake.

So it's not surprising that his daily life is pretty jam-packed.

Based on previous interviews, Business Insider pieced together an estimation of what an average day looks like for Musk.

SEE ALSO: Robert F. Smith on becoming the richest black man in America, what companies get wrong about diversity, and what he's doing to help mint more black billionaires

DON'T MISS: Elon Musk made almost $12 billion in the past week as Tesla's stock soars. Here's how the eccentric CEO makes and spends his $45.2 billion fortune.

Musk kicks off his day bright and early, rising at about 7 a.m. In a Reddit AMA, he said he usually gets "almost exactly 6 hours on average."

Source: Business Insider

Musk usually skips breakfast. Occasionally, he will slow down long enough to grab a quick coffee and an omelette.

Source: Auto Bild

One thing he always makes time for, no matter what? Showering. He once wrote on Reddit that it had a greater positive impact on him than any of his other daily habits.

Source: Business Insider

Once he's up, Musk launches into a blistering schedule that breaks his time into a series of five-minute slots. The entrepreneur has been known to work 85 to 100 hours a week, and he estimates that 80% of his time at work is spent on engineering and design.

Sources: Inc., The Independent, Y Combinator

No two days are the same for Musk. He spends Mondays and Fridays at SpaceX in Los Angeles. On Tuesdays, Wednesdays, and Thursdays, he heads to the Bay Area to work at Tesla. Quartz estimates that he spends an average of 42 hours a week working at Tesla and 40 hours a week working at SpaceX. He also told Y Combinator that he usually spent about half a day working at the artificial intelligence nonprofit OpenAI.

Source: Quartz, Y Combinator

On the weekends, it's more of a toss-up. Sundays are usually spent traveling or staying at his Bel Air mansion. On Saturday, he either works at SpaceX ...

Source: Business Insider

... or spends time with his five young sons. Speaking about his kids in 2013, he said: "What I find is I'm able to be with them and still be on email. I can be with them and still be working at the same time ... If I didn't, I wouldn't be able to get my job done."

Source: Business Insider, Business Insider

Multitasking is a crucial part of Musk's strategy, which he calls "batching." Musk often works on his phone while sitting in meetings.

Source: Inc.

To keep his work day on track, Musk forgoes most phone calls in favor of email and texts. He also prefers to use an obscure email address to prevent people from spamming his inbox.

Source: Inc.

He doesn't spend much time on meals. Musk usually takes his lunch during a meeting, and he manages to wolf it down in just five minutes.

Source: Auto Bild

He ends up getting most of his calories later in the day. "Business dinners are probably where I eat way too much," he told Auto Bild.

Source: Auto Bild

When it comes to food, one of his favorites is Diet Coke, thanks to "some infernal ingredient." Musk told Auto Bild that he had since cut back on the soda. CBS previously reported on the tech mogul's preference for French food, barbecue, and whiskey.

Sources: Auto Bild, CBS

To stay in shape, Musk usually hits the gym about once or twice a week.

Source: Auto Bild

Despite his busy life, he also carves out enough time to read. Some of his favorite titles include the fantasy classic "The Lord of the Rings," biographies of innovators like Benjamin Franklin and Albert Einstein, and an obscure 87-year-old history book on adventurers called "Twelve Against the Gods."

Sources: Business Insider, Business Insider

Musk may be a bookworm, but that doesn't mean he can't party. The entrepreneur's legendary bashes have included a birthday party at an English castle that turned into a big game of hide-and-seek, and inviting a knife-thrower to pop balloons that he held between his legs.

Sources: Entrepreneur and Business Insider

When all is said and done, Musk usually doesn't crash until 1 a.m. That late bedtime isn't too surprising for a man who's busy trying to send humans to Mars.

Source: Entrepreneur

Emergency rate cuts won't be enough to save the unstable stock market, top market strategist warns

Mon, 02/24/2020 - 4:44pm  |  Clusterstock

  • Traders are boosting their bets on central banks cutting rates as coronavirus deaths spike, but such policy won't do much for stock markets, Seema Shah, chief investment strategist at Principal Global Investors, said Monday.
  • Rate cuts primarily strengthen borrowing and, in turn, demand. Such policy won't insulate markets "against supply-side concerns," Shah wrote in an emailed statement.
  • Investors should pivot to protecting their portfolios and avoid buying stocks at lower prices, she added, as markets have already demonstrated "over-complacent" behavior toward coronavirus news.
  • Shah recommended investors watch European companies for profit warnings, as the export-heavy economy faces great risk from a manufacturing slowdown.
  • Visit the Business Insider homepage for more stories.

Investors looking to buy stock during Monday's dip shouldn't expect much help from central bank policy, Seema Shah, chief investment strategist at Principal Global Investors, said Monday.

Traders are boosting their bets on central banks cutting rates as coronavirus fears roil markets. Lower rates bring cheaper borrowing, and cheaper borrowing often brings increased spending. Investors are betting on two interest rate cuts from the Federal Reserve in 2020, according to Bloomberg, but Shah doesn't think such action would provide markets with the cushion many are looking for.

Rate cuts might provide a small boost to demand, but coronavirus' hit to global supply chains isn't easily averted and can drag stock prices lower, the strategist said. Apple warned on February 17 that its next-quarter revenue will land below initial guidance as "temporarily constrained" iPhone supply and weak demand in China dented sales. Other companies including Tesla, Starbucks, and Nike have alerted investors to earnings risk related to the outbreak. 

The market just learned that rate cuts won't "insulate it against supply-side concerns" and push stocks higher, Shah said in emailed comments.

"While further Fed cuts, and potentially an ECB cut, may be priced in, easier liquidity conditions may be insufficient to prop up equity markets if coronavirus concerns continue to escalate," she wrote. "Monetary policy is not optimized for addressing a shock such as this."

Global stocks tumbled in Monday's trading session after a spike in virus-related deaths outside China fueled new fears that the outbreak will harm global growth. Investors flocked to safe-haven assets, driving gold near $1,700 per ounce and pushing the yield of the 10-year Treasury bond to its lowest-ever level.

Some analysts viewed Monday's drop as a prime buying opportunity before the record-long bull run resumes. US stock prices sat at record highs as recently as last week, already surging higher after investors shrugged off initial reports of the virus' severity. The "over-complacent" reaction seen earlier in February should motivate investors to take defensive positions before another plunge, Shah said.

"Given these over-valuations and market susceptibility to negative news flow surrounding the outbreak, investors should look to protect their portfolios and resist the urge to buy the dip," the strategist wrote.

Shah recommends investors watch for new profit warnings in Europe to signal markets' next step lower. The continent's risk asset valuations "may have peaked," according to the strategist. Europe's economy relies heavily on export activity, and its entire stock market is at risk if coronavirus harms manufacturing activity, Shah said.

Principal Global Investors manages $476.4 billion worth of assets.

The S&P 500 was down about 2.7% as of 3:15 p.m. ET Monday.

Now read more markets coverage from Markets Insider and Business Insider:

Drug developer Gilead soars to 16-month high after WHO official says its experimental treatment is best shot for fighting coronavirus

Fidelity and Charles Schwab say some users ran into technical issues in early trading as stocks tanked the most since August

Intuit is reportedly about to buy Credit Karma for $7 billion, and a Wall Street analyst says it could give Intuit's AI a much-needed boost

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

This is the 19-slide pitch deck two 22-year-olds used to nab $57 million in funding from Silicon Valley

Mon, 02/24/2020 - 4:01pm  |  Clusterstock

Technology is shattering legacy financial systems that can't keep pace with market demand — and Brex is at the forefront. It's one of fintechs buzziest startups, aiming to rebuild B2B financial products starting with corporate cards for technology companies.

The company was quietly launched in 2017 by Henrique Dubugras and Pedro Franceschi, two 22-year-old engineers who previously founded, one of Brazil's largest payment processors.

Brex already has more than 1,000 customers signed up with the help of backing from investors including PayPal co-founders Peter Thiel and Max Levchin, early Facebook investor Yuri Milner, former Visa CEO Carl Pascarella, and esteemed startup incubator Y Combinator.

And we caught a glimpse of the Series B pitch deck Dubugras and Franceschi used to win them over. 

In it, they lay out a clear problem: Technology startups often had trouble securing corporate credit cards — even if they had millions in the bank — because legacy banks and card issuers wanted to see company credit histories, which young institutions simply couldn't produce.

They had a simple solution: Remove the restrictions of legacy technology by giving instant approval to startups based on their available cash balance, including money raised through venture, rather than credit history. 

In the deck, the founders outlined their plans to help startups of all sizes instantly get cards with higher limits, as well as automatic expense management and seamless integration with existing accounting systems.

As part of our coverage of the genesis of today's successful companies, BI Prime received Brex's permission to offer a look into the startup's full 19-slide pitch deck, which includes considerations such as:

  • The startup's mission
  • Key team members and previous backers
  • The size of the market opportunity
  • A step-by-step plan of how to solve credit cards for startups
  • Some of the card's coolest features
  • Data points showing how to scale the business

BI Prime is publishing dozens of stories like this each and every day. Want to get started by reading the full pitch deck?

>> Download it now FREE

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Amex Offers can save you money and earn you bonus points at Cole Haan, Blue Apron, and more — here are some of the offers you can get right now

Mon, 02/24/2020 - 3:45pm  |  Clusterstock


I love the Amex Platinum card for widely known perks like airport lounge access and 5x points on flights booked directly with the airline, but the card also comes with some lesser-known benefits that can save you money.

One of those benefits that's available through virtually every Amex card, but isn't the most widely known, is Amex Offers. In this past year alone, I've used offers to save money on purchases from J.Crew, Instacart, and FreshDirect, and to earn bonus points at Amazon.

What are Amex Offers?

The Amex Offers program provides cardholders with discounts at various stores, restaurants, or services, or, if not a discount, then chances to earn extra points.

The interesting part of the program is that each offer is specifically targeted to individual users and each user's individual cards. That means that you and I might get different offers, and I might even see different offers across my several different Amex cards. That adds a real benefit to having multiple Amex cards — even if you just use them to be eligible for more offers, you have a better chance of getting good ones.

One of the appeals of the Amex Offers program is that the offers continuously change. Offers can be for national brands, but are also targeted based on your billing address — for example, I have a few offers for shops and restaurants that have a New York City location.

Current Amex Offers

Here are some of the particularly interesting Amex Offers currently available. Keep in mind that some of may no longer be available, and some are specifically targeted.

  • Spend $100 or more at FreshDirect, get $30 back (up to 2 times).
  • Get 4 extra Membership Rewards points on every dollar spent at Adidas.
  • Spend $50 or more at Blue Apron, get 2,000 Membership Rewards points.
  • Spend $75 or more at Boxed, get $20 back.
  • Get 6 extra Membership Rewards points on every dollar spent at Cole Haan, up to 10,000 points.
  • Spend $175 or more at, get $35 back.
  • Spend $150 or more at Sunglass Hut, get $30 back.
  • Spend $250 or more with Marriott, get $50 back.
  • Spend $250 or more at Theory, get 5,000 Membership Rewards points.
  • Spend $185 or more at The Wall Street Journal, get $75 back.

If you're interested in opening a new Amex card — in addition to getting access to more Amex offers, you can earn a lucrative welcome offer — take a look at our up-to-date list of best Amex cards.

$550 annual fee: Click here to learn more about the Amex Platinum card » $250 annual fee: Click here to learn more about the Amex Gold card »

More credit card coverage

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These were the 10 most-held stocks in hedge funds last quarter (AAPL)

Mon, 02/24/2020 - 3:00pm  |  Clusterstock

The fourth quarter's disclosures for large investment funds were filed by February 15. For the equities world, they offer insight into how interested the sector is in stocks as an asset overall, and which companies in particular are garnering attention. 

An analysis from Novus that aggregated 13-F filings found that hedge funds collectively hold about the same amount of stocks, by market value, as in the third quarter. And the most attractive companies across firms stayed relatively similar to favorites from the third quarter, with some names gaining ground and some losing, Novus found

There were two names that defied that continuity. First, Alibaba, which became the sixth most-held stock after previously sitting just out of the top 10 in the 11th spot, Novus found. And second, Bristol-Myers Squibb, which skyrocketed to the fifth most-held stock after not even sitting in the top 20 last quarter, Novus found. That's after Bristol-Myers acquired Celgene in a move that could transform the biopharmaceutical firm into a powerhouse, Novus said. 

From mainstays to surprises, here are the top 10 most-held stocks in the hedge fund industry.

10. American Express

Ticker: AXP

Third quarter ranking: 8

Source: Novus 

9. Coca-Cola

Ticker: KO

Third quarter ranking: 6

Source: Novus 

8. Wells Fargo

Ticker: WFC

Third quarter ranking: 4

Source: Novus 

7. Amazon

Ticker: AMZN

Third quarter ranking: 7

Source: Novus 

6. Alibaba

Ticker: BABA

Third quarter ranking: 11

Source: Novus 

5. Bristol-Myers Squibb

Ticker: BMY

Third quarter ranking: Out of top 20

Source: Novus 

4. Facebook

Ticker: FB

Third quarter ranking: 5

Source: Novus 

3. Microsoft

Ticker: MSFT

Third quarter ranking: 3

Source: Novus 

2. Bank of America

Ticker: BAC

Third quarter ranking: 2

Source: Novus 

1. Apple

Ticker: AAPL 

Third quarter ranking: 1

Source: Novus 

Victoria's Secret is plotting a major turnaround as a private company. Here's what went wrong with America's lingerie darling.

Mon, 02/24/2020 - 2:53pm  |  Clusterstock

  • Victoria's Secret is preparing itself for a major turnaround after several years of sliding sales.
  • On Thursday, its parent company L Brands said it would be selling a 55% stake in the lingerie retailer to private-equity firm Sycamore Partners. Under the terms of the deal, Victoria's Secret will go private. 
  • In its heyday in the mid-1990s to mid-2000s Victoria's Secret was considered America's lingerie sweetheart, and it had a powerful role in defining what "sexy" is in the modern day.
  • But a series of product misses and a reticence to update its brand image, among other issues, have taken their toll on sales in recent years.  
  • Here's what went wrong with the brand. 
  • Visit Business Insider's homepage for more stories.

Victoria's Secret is preparing for a major turnaround as a private company under new leadership after years of declining sales and ongoing criticism over its brand image. 

On Thursday, its parent company, L Brands, announced that it would be selling a majority share in the company to private-equity firm Sycamore Partners, which has a history of turning around struggling retailers. 

L Brands founder Les Wexner simultaneously announced his resignation from his long-held role as the company's CEO, though he will stay on the L Brands board of directors as chair emeritus.

In a press release announcing the news, Wexner said that turning Victoria's Secret into a privately held company would be "the best path to restoring these businesses [Victoria's Secret Lingerie, Victoria's Secret Beauty, and Pink] to their historic levels of profitability and growth."

He added that Sycamore, which has acquired a 55% stake in Victoria's Secret, "has deep experience in the retail industry and a superior track record of success" and "will bring a fresh perspective and greater focus to the business."

Wexner's resignation and the news of these changes at Victoria's Secret follow several tumultuous years at the company and its gradual fall from being considered America's lingerie darling. Here's what went wrong. 

Overtly sexualized ads, controversial comments from executives, and sliding sales

Four years ago, Victoria's Secret was the toast of Wall Street. The lingerie giant was on a four-year run of record sales growth under the leadership of longtime CEO Sharen Turney while other mall-based stores were spiraling toward a meltdown

But in 2016, the tide began to turn. Turney abruptly left the company, and Wexner replaced her as interim CEO.

Former executives who held longtime positions at Victoria's Secret previously told Business Insider that Wexner, who hadn't previously been involved in the day-to-day running of the brand, suddenly became a formidable force. These executives wished to remain anonymous in order to speak frankly about their time there, but their identities were verified by Business Insider. They said Wexner made a series of quick and fast changes: killing the catalog and swim and apparel categories to focus solely on lingerie, the core part of the business.

"The biggest mistake [Wexner] ever made was getting rid of Sharen. The stock just tanked," a former employee who worked in a senior management role at Victoria's Secret for over a decade and was laid off told Business Insider. 

"Everything started to crash," another former executive who worked at Victoria's Secret's New York office for nine years and was laid off in mid-2017 told Business Insider. "It was the beginning of the end."

When Business Insider reached out to L Brands for comment on this story and asked whether the company felt it had made mistakes over the years, a spokesperson pointed to the company's investor relations website and presentations discussing its quarterly results and sales issues throughout 2019.

Between 2016 and 2018, sales had begun to falter. Victoria's Secret was slow to adjust to a shift from padded and push-up bras toward bralettes and sports bras, missing out on a major fashion trend. Increasingly, more body-positive brands such as Aerie, ThirdLove, and Lively started to crop up and lure away shoppers. 

Victoria's Secret's US market share dropped from 33% to 24% between 2016 and 2018. And around the same time, the brand started to encounter product issues as shoppers complained that the quality of the lingerie had slipped

Things came to a head in 2018 as the #MeToo movement progressed and Victoria's Secret's marketing and brand image were increasingly criticized as oversexualized and out-of-date.

Teen-centric brand Pink, which as one of Victoria's Secret's lifelines had previously reported strong sales growth, started to be impacted by the oversexualized ads in stores. 

"It's basically pornography," one shopper Jessie Shealy wrote on Victoria's Secret's Facebook page in February 2018, referring to the photos on display in her local store in South Carolina.

And analysts became more critical of the brand for the level of promotions in its stores, highlighting them as evidence that the company was struggling. 

At the end of 2018, L Brands came under intense scrutiny after its chief marketing officer Ed Razek, who was also one of the company's longest-standing employees, made controversial comments about transgender and plus-size models in an interview with Vogue. 

Razek said that he didn't think the company's annual fashion show should feature "transsexuals" because the show is a "fantasy." The interview went viral almost instantly, which led to Razek making a formal apology; he stepped down from the company just under a year later.

In March 2019, L Brands shareholder Barington Capital published a strongly worded public letter to Wexner, which laid out its recommendations to improve growth at the brand.

Barington CEO James A. Mitarotonda described the company's brand image as "outdated and tone-deaf" in the letter and said that it failed to align with evolving attitudes toward diversity and inclusion. He also called for a shake-up of the board.

In the period since that letter was published, Victoria's Secret has made some significant changes, adding two female directors to its board and postponing its annual fashion show. Barington Capital has since become a special advisor to L Brands.

The Epstein connection

In the background to these potentially positive changes, Wexner came under significant scrutiny in the summer of 2019 over his friendship to convicted sex offender Jeffrey Epstein.

Epstein managed Wexner's money for several years and was considered a "close friend" of Wexner's. But as the scandal unfolded, reports emerged that Epstein had used his connection to Victoria's Secret to coerce victims into sexual acts. As a result, L Brands hired an outside law firm to review its relationship with Epstein.

In early 2020, the company faced a fresh scandal after a New York Times report described a culture "of misogyny, bullying, and harassment" at Victoria's Secret, which it said was created by Razek and Wexner. 

The news of Wexner stepping down marks a significant shift for the company. He is is the longest-serving CEO of any Fortune 500 company, reaching a nearly six-decade tenure at L Brands. 

The former executives who held longtime positions at Victoria's Secret's corporate offices told Business Insider in early 2019 that with Razek and Wexner at the helm of the business, it would be difficult for any CEO of Victoria's Secret's brands to make their mark and enact real change.

"They have this antiquated idea of what sexy is," a former executive who worked at Victoria's Secret New York office for nine years said. "It's changing, we are all changing and without making the right adjustments to the product and the voice you put out there, I don't know what their future is."

But now, with Razek out of the company and Wexner out as CEO, and with new leadership in place, analysts are eagerly awaiting what is it come. 

Sycamore "will bring new thinking and ultimately a new positioning for the brand," Neil Saunders, managing director of GlobalData Retail, said in a note to clients on Thursday.

"We expect this to be more authentic, less sexualized, and more attuned to the way most consumers now think," he said. 

SEE ALSO: Former employees reveal what the billionaire head of Victoria's Secret is like as a boss as he faces backlash over his ties to Jeffrey Epstein

Join the conversation about this story »

NOW WATCH: Rare Italian white truffles cost over $4,000 per kilo — here's why real truffles are so expensive

Financial Services: 6 Key Attributes to Attract Gen Z

Mon, 02/24/2020 - 2:04am  |  Clusterstock

Now the largest generation worldwide, Gen Z accounts for nearly 68 million people in the US alone. As Gen Zers age, financial services providers will be increasingly pressed to shift focus to the burgeoning demographic.

As digital natives, Gen Zers are more receptive to influence from friends and family than traditional advertising. For marketers, strategists, and developers, understanding Gen Z's unique needs — and creating and marketing products accordingly — will be critical to reaping their value.

In Financial Services: 6 Key Attributes to Attract Gen Z, Business Insider Intelligence provides a six-point framework that highlights core traits of the demographic, which banks and payments firms can use to attract, engage, and retain Gen Zers.

This exclusive report can be yours for FREE today.

As an added bonus, you'll receive a free preview of our Banking Pro Briefing.

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Tech startups have a new 'exit' strategy. Why private equity firms have started plowing billions into acquiring startups.

Sun, 02/23/2020 - 2:52pm  |  Clusterstock

  • Among startups that don't fail, most are acquired instead of going public.
  • Although most startups that are acquired are still purchased by other independent companies, a growing number and proportion are being snatched up by private equity firms.
  • In the past, private equity firms were largely considered bottom feeders, buying up companies on the cheap for their cash flow, but increasingly, they're buying companies with the intent to help them grow or to combine them with other startups to reach a larger scale — and they're more willing to pay up for them, industry experts say.
  • The trend is being driven by a surge of cash into private equity firms and the growing number of companies that are avoiding the public markets, they say.
  • Click here for more BI Prime stories.

It used to be that the goal of every startup founder was to take their company public.

That may still be the goal for most, but in the last several decades, a much more realistic option for startups that managed to stay afloat was to be acquired by another company in the same sector.

In recent years, though, a third option has emerged for startups — being purchased by a private equity fund or by a company owned by one. Those kinds of buyouts now far outnumber IPOs and account for one out of every five so-called exits for venture capital-backed companies in the US, according to data PitchBook compiled for Business Insider.

The growing influence of private equity on the startup market has "really reshaped the industry," said Wylie Fernyhough, a senior private equity analyst at PitchBook.

The kinds of startups being targeted by private-equity firms likely would have gone public 20 years ago, industry experts told Business Insider. But today, they're generally considered too small or don't have bright enough prospects to hit the public markets.

For such companies, private equity has become "an attractive exit opportunity," said Pete Flint, a managing partner at venture capital firm NFX.

The vast majority of startups that don't fail are acquired

Venture capitalists back startups with the intent of cashing out those investments at some point in the future, either by being able to sell their shares to public investors when or after the companies go public or by selling the startups to other companies.

While initial public offerings get lots of attention, they've become relatively rare. In part that's because many startups never make it to the exit stage at all, because they go out of business first. But also it's because the vast majority of startups that don't go out of business are acquired instead of going public.

Last year, for example, of the 934 startups that had some kind of exit event, 853 — about 91% — were acquired either by another company or as part of a private equity-related deal, according to PitchBook. That rate has been relatively steady over the last 18 years.

"The vast majority of exits that all of us are thinking about are things that are not the public markets," said Sean Foote, a member of the professional faculty at the Haas School of Business at the University of California, Berkeley. Acquisitions, he continued, are "the major way in which companies find their home."

While such deals have long been important, what's changed over the last 20 years is the growing influence of private equity. In that time period, private equity firms have gone from bit players in the startup ecosystem to major actors in it.

In 2003, just 17 startups were acquired by private equity firms or companies owned by them, according to PitchBook's data. That amounted to just 5% of total exits that year. By 2012, 88 startups were snatched up in private equity-related deals, accounting for 10% of all exits. Last year, 186 were acquired in private-equity deals, amounting to 20% of all exits.

Private equity firms are big players in the acquisition market

In 2004, IPOs outnumbered private-equity buyouts by a ratio of 3-to-1, according to PitchBook. But private equity acquisitions have outnumbered IPOs every year since 2008, and for the last three years, there have been more than twice as many of those kinds of deals as public offerings.

What's more, even as startup acquisitions of all kinds have skyrocketed — jumping from 279 in 2002 to 853 last year — private equity-related ones have accounted for a growing portion. They accounted for 22% of all startup acquisitions last year after making up less than 7% in 2002, according to PitchBook.

"I think it's a trend that's going to keep growing," said Lanham Napier, the cofounder of startup investment firm BuildGroup.

The amount of money startups are seeing from selling to private equity firms is still a small portion of the total value of all exits, varying from less than 1% to about 8% annually over the last 10 years. But it's grown significantly, going from just $690 million in 2012 to $6.3 billion last year. And some individual deals have become quite large.

In 2017, for example, private equity-backed PetSmart bought online pet supply retailer Chewy for $3.35 billion. And last year, PE firm Thomas Bravo acquired ConnectWise, a maker of mobile device management software, for $1.5 billion.

Generally, the private-equity firms are snatching up more mature startups. On average, the companies they're acquiring are around 10 years old, according to PitchBook's Fernyhough. By contrast, startups that went public were about 9 years old at the time of their IPO and those that were acquired by other companies were about 7 years old, he said.

But increasingly, private equity firms are backing more mature companies and using them to buy younger startups, creating larger companies or "platforms" that potentially offer better growth or market prospects, the industry experts said.

"You can sell early stage companies to PE-backed platforms," said Dan Malven, a managing director at 4490 Ventures. "I think we're going to see more and more of that."

Fewer companies are going public

Part of what's driven the surge of private-equity buyouts — and acquisitions overall — is that fewer and fewer venture-backed companies are going public. That's a trend that dates back to the 1990s and one that's linked to the growing dominance of small numbers of firms over large sectors of the tech industry, according to research by Jay Ritter, a professor of finance at the University of Florida who has been studying the public offering market since the 1980s.

But that trend has arguably been accelerated over the last 20 years by regulations that added to the costs and burdens of being a public company and, conversely, made it much easier for companies to remain private for far longer periods.

"The public market has evolved to a point where it's not that you couldn't have these companies go public, but there are significant regulatory costs that you can avoid if you stay private," said Robert Hendershott, an associate finance professor at Santa Clara University's Leavey School of Business. "Private equity is a natural way to give someone an exit."

The kinds of startups generally favored by the public markets these days are those that are growing quickly, operate in a large market, and are either profitable or have a clear path to profits, NFX's Flint said. Unfortunately, there are lots of good companies that don't meet all three of those criteria. But they can be a good fit for private equity firms, because such firms can invest in their long-term growth or combine them with other startups to give them the scale they need to be more attractive to public investors, he said.

"They are perfect opportunities for private equity rollup or acquisition," Flint said.

Private equity firms are swimming in cash

The surge in private equity buyouts has also been stoked by a huge gust of money into the industry, particularly in the last 10 years. In 2010, US-based private equity firms raised $59.2 billion, according to PitchBook. Last year, that amount had swelled to $301.3 billion.

While only a portion of those amounts are going to tech-focused funds, that portion has been growing. Tech-focused private equity funds based in North America and Europe raised just $3.7 billion in 2010, according to PitchBook. By last year, that amount was up to $68.3 billion. By contrast, the US venture capital industry raised $46.3 billion in new funds last year, according to PitchBook.

Private equity funds have access to "a staggering amount of capital," said Mike Smerklo, a managing director at Next Coast Ventures.

But another reason why private-equity acquisitions have become increasingly popular for startups and their venture backers is because the deals can be more attractive than either going public or being acquired by another operating company, industry experts said.

It used to be that private equity firms acted kind of like bottom feeders in the startup market, paying relatively small amounts for firms that had few other options and focusing on the cash flow those companies could generate for them. But that's no longer the case. Private equity firms — particularly the tech-focused ones — are increasingly looking at companies that can offer revenue growth and they're often willing to pay top dollar for them, the experts said.

Startups used to see the biggest exits by going public or by being acquired by an operating company, said BuildGroup's Napier.

Now, though, "some of these private equity firms have gotten so good at [buying startups], some of their valuations are just as big as those other things," he said.

PE firms can move quickly and offer fewer restrictions

Private equity firms also tend to be far less bureaucratic than corporate merger-and-acquisition departments, they said. Such firms also can often throw far more resources to bear on analyzing potential deals than corporations can. And the deals they strike typically don't have to go through the kinds of shareholder votes or board approvals that corporate deals often require.

"They're able to move a lot more quickly," said PitchBook's Fernyhough.

What's more, venture investors and founders often confront more obstacles to accessing their promised returns when they sell to corporations or take their companies public than when they sell to private equity firms. Typically in an IPO, there's a lock-up period of up to six months during which early investors are barred from selling the company's stock. Meanwhile, in corporate acquisitions, there often are conditions put in place that allow founders or early investors to see the full value of the buyout only if the startup hits certain financial or performance targets after the acquisition.

"When I sell a company to a private equity firm, it's clean," said Foote, who in addition to his role at Berkeley is a managing director at venture capital firm Transform Capital. "There's often very few strings attached."

It's not unusual for acquirers, whether they are large, independent enterprises, other startups or private equity-backed conglomerates, to pay for their purchases with shares of their own stock. But the private equity-backed roll-ups often are perceived to have greater prospects for growth than big, established corporations, potentially making their shares more desirable.

"We try and analyze that growth potential," said 4490's Malven. They try to figure out if "we want to ride on their equity."

The fast pace can also cut against startup founders and VCs

To be sure, the growing influence of private equity does have some drawbacks for venture capitalists and startups. The fast pace of those firms and their large research teams can go against founders and their backers, Malven said. The private equity firms can have their teams analyzing multiple companies and potential deals at once, he said. If a startup doesn't act on an offer quickly, the firm can threaten to move on to doing a deal with a rival company, he said.

"They can put you in a squeeze," said Malven.

And the firms can have their shortcomings when it comes to evaluating startups, industry experts said. Because they're typically focused on analyzing the financial health of companies, they can be very good at evaluating companies that already have established a market for their products and have a revenue stream, they said. But they're not as good at sizing up companies based on the potential of their technology or their intellectual property or their unproven ideas, they said.

"They're much at better looking in the rear-view mirror than they are in through the windshield," Malven said.

Still, by and large the venture capitalists and other industry experts said the venture ecosystem has benefitted from private equity firms providing more exit options for startups.

Venture capitalists are often looking for home runs with their investments — companies that have the potential to deliver huge returns on their investments. That remains the primary focus of firms like his, said NFX's Flint. But not every startup is going to be a home-run investment, and having the ability to get a modest return on those kinds of companies is a good thing, he said.

"More options for more capital is great for the ecosystem," Flint said. "It's great for founders, it's great for early stage VCs, it's great for customers."

Got a tip about the venture-capital industry or startups? 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: Here are the top 10 best performing venture funds that launched at the turn of the decade, which posted returns as high as 50%

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NOW WATCH: 62 new emoji and emoji variations were just finalized, including a bubble tea emoji and a transgender flag. Here's how everyday people submit their own emoji.

24 products people waste too much money on that you should stop buying immediately

Sun, 02/23/2020 - 2:12pm  |  Clusterstock

  • Some items we're used to buying every day can actually be a huge waste of money.
  • Store-bought greeting cards, physical books, cable TV, and premium gasoline are just a few examples.
  • Bigger purchases, such as a boat or a time-share, often aren't worth the cost either.
  • Visit Business Insider's homepage for more stories.

Waste not, want not.

We make so many purchases that we don't always realize what we are buying — and how we could be saving money. If we take a step back and think about all of our additional costs, we could cut a few out of our lives. 

These 24 products can often be a huge waste of money:

Matthew Michaels contributed to the original version of this article.

SEE ALSO: 15 things you should never skimp on

DON'T MISS: 12 clever ways to save money every day, according to financial experts

Lottery tickets

Many lottery players purchase tickets each day with the hope of striking big, but games of chance are preventing you from having more money, not less. You are expected to lose money if you play the lottery and there is no guarantee you will even keep winnings.


In New York City, someone who smokes one pack of cigarettes a day burns up over $5,000 a year. Smoking can also be a huge cost to your health — medical bills can rack up from the dirty habit even tobacco companies are quitting.

Water bottles

As Americans became more health conscious and started drinking less soda, beverage companies needed a new plan. It worked as Americans now drink more bottled water than soda, even though it costs $1.22 per gallon for a commodity that can be accessed for next to nothing.

Brand name drugs

For most products that are exactly the same, customers would usually choose the cheaper option. This does not hold true for brand name drugs, which consistently outpace sales of their generic counterparts despite having the same ingredients and effects. Save yourself some money and buy the generic ibuprofen instead of Advil. 

Movie theater concessions

Movie theaters don't make profits from film tickets, but instead through food sales. The over-inflated popcorn and pricey candy is a rip off considering you can buy the same products at the supermarket for much cheaper and many theaters don't care if you bring in your own snacks (as long as you clean up after yourself).

Café coffee

Before Starbucks and Dunkin' Donuts were on every street corner, people brewed their own coffee at home. This is still somewhat popular — especially with coffee pods — but coffee shops have taken a lot of the business. With expensive price tags and long waits, it's a wonder why everyone isn't turning to homebrew.


A library is the best way to save money on an expensive hobby. Libraries are free and come with millions of books, DVDs, and other materials for you to borrow.


Timeshares sound too good to be true. They offer low prices for a vacation home that you can use whenever you want. But they can trap you with ever-increasing fees and low resale value, making timeshares an almost guaranteed loss.


One sign of wealth is cruising on a personal yacht, but that may be a better indicator of wasted wealth. Boats are expensive on their own, but as Saltwater Sportsman says, prices for storage, gas, maintenance, and electronic navigation drive up the initial cost.

CDs and DVDs

CDs and DVDs are becoming obsolete, but many people still shell out cash for hard copies of albums and movies. Like books, CDs and DVDs can be rented at libraries, but most people now stream entertainment on apps like Spotify and Netflix for a monthly rate that costs less than a single disc.

Cable TV

Like music and movies, television is moving from more traditional modes to online streaming. Since cable packages make you pay for more than you want, a pick-and-pay model may wind up costing you less. Streaming has the added bonus of no commercials and watching on your own schedule. 

Greeting cards

Make your own — it's more meaningful if you gift a personalized card and you'll save the $5.

Gift cards

Gift cards aren't as popular a present as you may think. Almost one in three gift cards never get used at all, CBS reported in 2014, citing Consumer Reports. And those who do use them tend to spend 20% more than the value of the card, according to Investopedia. Cut your losses and buy something more thoughtful next time.

Gym membership

Gym memberships can be expensive, so if you're not a frequent visitor, you're just wasting money. Thankfully, there are ways to be healthy and exercise outside of a gym.

Premium gasoline

Regular will do just fine. For most cars, there is no need to spend more at the pump for premium gasoline. The extra cost is not worth it, so save up at the tank and pick the most affordable fuel.

The newest gadget

Whenever a new gadget hits market, the older version takes a plunge in price. The old and new version will probably be very similar and the most recent model may have kinks to work out. Save a lot of money by going with a slightly older product that has nearly identical capabilities. 

In-game purchases

Those free games you play on your smartphone have to get money from somewhere. It turns out these games are highly addictive and designed with psychological tricks so you will spend the most money to get to the next level.

Express shipping

Online retailers can make a lot of money charging customers enormous fees for quick shipping. But while the standard option may take a bit longer, the savings is worth it.

Full-priced clothing

Buying clothing full-price can add unnecessary expenses to your monthly budget. Not only do most in-store clothing items eventually go on sale after a few weeks, but there are countless other ways to get new clothes for less. Hit up your local thrift stores, swap clothes with your friends, or check out online second-hand retailers like Poshmark or Depop to save some money.  

Going out to eat

Everyone knows that going out to eat is expensive. According to the Bureau of Labor Statistics, the average American household spends about $3,000 a year dining out. That's a huge expense. According to an article by MoneyUnder30, this number far outweighs how much it costs to prepare food at home. The average price of a meal out is $13. In contrast, the price of buying groceries and making a meal at home is around $4 per plate — a whopping $9 difference. 

Alcoholic drinks in restaurants

While a whole bottle of wine at your local liquor store may cost anywhere between $10 and $15, you can expect to pay at least $8 or $9 for just a glass at a restaurant. Cocktails can cost even more, despite only containing a shot or two of alcohol per serving. Save your pennies and order a soft drink the next time you go out to eat.

Food delivery

Food delivery services are sweeping the nation. Companies like Postmates, Caviar, Seamless, GrubHub, and more allow you to enjoy your favorite restaurants from the comforts of home – for an added fee. Delivery charges can cost anywhere from $2.99 to $8, costing you more money for the same product if you simply went and picked up your food yourself. 

High-end beauty products

Drugstore makeup has come a long way in recent years, to the point where they rival higher-end brands. The actual differences between products you find in CVS and Sephora are almost slim to none — so don't pay more for the luxury brands. 

Off-brand tech accessories and chargers

Off-brand tech accessories and chargers — meaning ones not designed by Apple, Android, Samsung, etc — are usually a waste of your money. They may seem like a cheap and easy fix when you find yourself out and about with a dead device. However, according to the experts at Money, cheap cords can actually end up breaking quickly or even damaging your device. You may end up having to purchase a new phone for the sake of a $9.99 charger. 

The Future of Fintech: AI & Blockchain

Sun, 02/23/2020 - 2:01pm  |  Clusterstock

Sweeping global regulations, the growing penetration of digital devices, and a slew of investor interest are catapulting the fintech industry to new highs.

Of the many emerging technologies poised to transform financial services, two of the most promising and mature are artificial intelligence (AI) and blockchain.

74% of banking executives believe AI will transform their industry completely, and 46% of global financial services employees expect blockchain to improve transparency and data management.

In The Future of Fintech: AI & Blockchain slide deck, Business Insider Intelligence explores the opportunities and hurdles of adopting the two technologies within financial services.

This exclusive slide deck can be yours for FREE today.

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'Sonic the Hedgehog' edges out 'The Call of the Wild' for 1st place at the weekend box office

Sun, 02/23/2020 - 12:32pm  |  Clusterstock

  • "Sonic the Hedgehog" narrowly topped "The Call of the Wild" to win the weekend domestic box office.
  • "Sonic" brought in an estimated $26.3 million while "Wild" earned $24.8 million.
  • "Sonic the Hedgehog" has been number one at the box office for two straight weeks.
  • Visit Business Insider's homepage for more stories.

It's very rare that Disney has to duke it out with any other studio for box office supremacy, but that's what happened this weekend with its 20th Century title "The Call of the Wild" against Paramount's "Sonic the Hedgehog."

The adaptation of Jack London's classic novel starring Harrison Ford and a CGI dog brought in an estimated $24.8 million its opening weekend at the domestic box office. But "Sonic," the classic video game adaptation, topped that with a $26.3 million take in its second weekend in theaters (its domestic total is now over $100 million).

The two movies have been trading blows the whole weekend. On Friday, "Call of the Wild" brought in $7 million to top "Sonic," which brought in $6.2 million. By Saturday night, the hedgehog had passed the gruff Ford movie as it took in $12 million on the day versus $9.9 million. Sunday estimates have "Sonic" edging out "Wild" once the weekend ends.

Many believed "Sonic the Hedgehog" would easily win the box office for a second-straight weekend, but the $25 million take by "The Call of the Wild" is better than industry projections (though it does have a hefty $135 million budget) as Ford's name above the poster seems to have motivated families to check out the movie. And it probably didn't hurt that "Wild" had the Disney marketing muscle behind it.

However, Paramount gets the rare two weekends in a row above the box office heap with "Sonic." The movie scored a rare box office win last weekend for the studio, and to win again is much-needed fuel for Hollywood's oldest studio that only shines these days when it's releasing Tom Cruise's "Mission: Impossible" titles.

Box-office highlights:
  • STXfilms/Lakeshore Entertainment's "Brahms: The Boy II" brought in $5.9 million. The horror starring Katie Holmes hit its projections and is a solid win for STXfilms.
  • But not all horrors are working in theaters. Sony's "Blumhouse's Fantasy Island" took in a minuscule $4.2 million in its second weekend out. Its domestic cume is now at $20.17 million. Thankfully for all involved, the movie was only made for $7 million.

SEE ALSO: The creator of "Hunters" caught the attention of Amazon and Jordan Peele with an 80-page series bible and enough ideas for 5 seasons

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Real estate insiders say these 27 books will help you understand the colorful personalities and powerful forces shaping the industry

Sun, 02/23/2020 - 12:22pm  |  Clusterstock

  • We asked a range of real estate insiders, including agents, executives, VCs, and analysts, to give us recommendations for books to understand the industry. 
  • They came back with a list of 27 selections. 
  • The titles ranged from "Power Broker," a classic biography of New York City planner Robert Moses, to Bill Bryson's history of the home, and even included one novel about a 19th century real estate developer. 
  • Read more BI Prime stories here.

We asked a range of real estate insiders, including agents, executives, VCs, and analysts, to give us recommendations for books to understand the industry. 

They came back with a range of titles, from sweeping histories of cities and biographies and autobiographies of powerful people to "how to" guides for investors and real estate agents. 

We compiled the list into 27 selections, presented below with summaries of their content and, with some selections, commentary about them from their nominators.  

"Am I Being Too Subtle" by Sam Zell

Sam Zell, the controversial and bombastic billionaire real estate investor, published his autobiography in 2017. Zell explains his investment philosophy, using triumphs and failures from his own life as examples. 

One of the biggest takeaways? Business is all about risk

"From Main Street to Mall: The Rise and Fall of the American Department Store" by Vicki Howard

Vicki Howard's 2016 history of American shopping in the 20th century follows the rise and fall of the US department store, explaining how the mall eventually took its place. The study is especially prescient as e-commerce has led to the "retail apocalypse."

"Crabgrass Frontier: The Suburbanization of the United States" by Kenneth T. Jackson

Jackson's 1985 history of the American suburb is a landmark work that examines the causes of suburbanization, from the creation of planned communities like Levittown to "white flight" from the cities. 

The book predicted both the reurbanization of America and the ways that suburbs have lost some of their appeal. 

Nate Loewentheil, senior associate at Camber Creek, told Business Insider that it is a "great read for anyone who wants to understand how the American metropolis took shape."

"How Buildings Learn: What Happens After They're Built" by Stewart Brand

Brand's 1994 illustrated book explains how buildings are able to adapt to different uses over their lifespan. It posits that the best buildings are easily adaptable, and explains how renovations change the character of a building. 

The book was made into a six-episode miniseries by the BBC in 1997.

"Proptech 101: Turning Chaos Into Cash Through Real Estate Innovation" by Aaron Block and Zach Aarons

This 2019 book by two of VC MetaProp's cofounders was our most-nominated book, including a nomination by Building Engines' CEO Tim Curran. The book attempts to catalogue and understand the sprawling world of proptech, touching on everything from construction tech to real-estate focused fintech. 

The book combines a view of what currently exists in real estate with a future view of where proptech is taking the industry.

"Rethinking Real Estate: A Roadmap to Technology's Impact on the World's Largest Asset Class" by Dror Poleg

This 2019 book is the other proptech-focused book nominated by our panel of insiders. Poleg examines how technology will impact all real estate asset classes, and the book explains how a wide range of technological changes, some not easily connected to real estate, are deeply changing the ways that real estate operates. 

The book was nominated by both Building Engines' CEO Tim Curran and flex-office advisor Antony Slumbers. 

"The Devil in the White City" by Erik Larson

This 2003 National Book Award finalist tells two stories: one of Daniel H. Burnham, the architect who designed Chicago's 1893 World Fair, and of pharmacist and serial killer Dr. H.H. Holmes. It is being developed into a TV series by Hulu and will executive produced by Leonardo DiCaprio and Martin Scorsese. 

Bain Capital Venture's Merritt Hummer said that the "holds a special place in any native Chicagoan's heart" for its combination of historical accuracy and "narrative flair."

"Real estate aficionados will learn about Chicago's architectural history as an added bonus," Hummer said. 

"At Home: A Short History of Private Life" by Bill Bryson

Bill Bryson's 2011 book examines the history behind the home, examining its history room by room. Bain Capital Venture's Hummer called it "a playful reflection on the everyday items that fill our homes and private lives."

The book matches its playful tone with a historical touch. 

"The Power Broker: Robert Moses and the Fall of New York" by Robert Caro

This 1974 1336-page Pulitzer Prize winning biography tells the story of influential New York City planner Robert Moses, and through that story, tells the story of the creation of the modern city. 

The book shows how Moses was able to become one of the most powerful people in the country by building a network of bridges, parks, roads and public housing across the New York metro region. 

It is widely-considered one of the best biographies of all time. 

"The Death and Life of Great American Cities" by Jane Jacobs

This 1961 classic of urban planning continues to be widely read in the real estate field. The book looks at cities, and their neighborhoods, as organisms and examines how buildings and roads can change people's behavior. 

Jacobs's book was, in some ways, a reaction to planners like Robert Moses, and is a good companion to "The Power Broker."

"City of Quartz: Excavating the Future in Los Angeles" by Mike Davis

This 1990 history of Los Angeles examines the ways that different forces in the city have impacted its growth over time. A 2006 edition brought the book into the 21st century. 

The book has a reputation for its left-wing point of view, but is invaluable for real estate thinkers looking to understand how a metropolis can be created out of a desert. 

"Miami" by Joan Didion

Didion's 1987 book examines the ways that Cuban exiles have impacted and changed Miami, and how Miami has changed them. The book isn't strictly about real estate, but it does examine how a city can be impacted by its occupants. With a global refugee crisis marring the 2010s and the threat of exponentially more climate refugees, this book is an essential read. 

"Order Without Design: How Markets Shape Cities" by Alain Bertaud

This 2018 book attempts to synthesize urban economics with urban planning, bringing a numbers-heavy lens to the city. The book highlights affordability and mobility as some of the main factors of a city's success, and argues against certain land use regulations. It also suggests that teams of urban planners should work directly with economists. 

"Evicted: Poverty and Profit in the American" by Matthew Desmond

This 2016 Pulitzer Prize winner examines evictions in Milwaukee, focusing on a cast of landlords and renters, with an eye on how evictions impact American society as a whole. The book mixes policy recommendation and a wide-scale view with the actual stories of real people getting evicted. 


"The Color of Law: A Forgotten History of How Our Government Segregated America" by Richard Rothstein

This 2017 history makes a case that the failures of integration wasn't just a case of de facto segregation and personal prejudice, but actual government policies that existed before and long after housing segregation was, supposedly, outlawed. 

The book, bolstered by newly uncovered research, shows how public housing and government subsidies only increased segregation. 

"The Island at the Center of the World" by Russell Shorto

This 2004 history of Manhattan uses a trove of documents from the original Dutch occupants of the island to tell the story of its early days as a colony. The book makes the case that New York, previously New Amsterdam, owes a lot of its current form to the Dutch and to the city of Amsterdam itself. 

The book was recommended by Anthony A. Tortora, Senior Vice President at LCOR. 

"Gotham: A History of New York City to 1898" by Edwin Burrows and Mike Wallace

This massive 1988 book is another deep dive into New York City, which Nate Loewentheil from Camber Creek said "you can argue is the most important real estate market in the world." Loewentheil said that this is one of the best histories of the city. 

The book isn't solely focused on real estate, but gives an accounting of how the real estate market formed over time. 

"What it Takes: Lessons in the Pursuit of Excellence" by Stephen Schwarzman

This 2019 autobiography was one of the biggest business books of the last year, and just like Schwarzman's company, touches on many aspects of the financial world, including real estate. 

Blake Liggio, a partner in Goodwin's Real Estate Industry Group and PropTech initiative, said that the book "provides a playbook of how Schwarzman built Blackstone into the leading global financial institution that it is today, including its success in real estate investment."

"Is Commercial Real Estate for You?" by Greg Biggs

This 2017 book, recommended by David Houck, the Executive Managing Director of JLL Industries was written by Greg Biggs, a Managing Director of JLL's Tenant Representation Group. 

The book outlines the different parts of the commercial real estate industry, and was written to introduce commercial real estate to those who may be interested in it as a career. 

"Why We Buy: The Science of Shopping" by Paco Underhill and "What Women Want: The Science of Female Shopping" by Paco Underhill

Nikki Greenberg, Founder of Real Estate of the Future and Founder of Women in PropTech, recommended both of these books because they were her "go-to guide when I designed shopping centers." 

Underhill examine retail in a way that makes the books both invaluable to actual practitioners and made "Why We Buy: The Science of Shopping" a best-seller. 

"The Book on Rental Property Investing" by Brandon Turner

This 2015 book is a no-nonsense guide to real estate investment to people who are new to owning and renting space. The book is written by Brandon Turner, the host of The BiggerPockets podcast, and is the most direct guide to real estate investment for smaller investors on the list. 

"Skyscraper Dreams: The Great Real Estate Dynasties of New York" by Tom Shachtman

This 1991 book details the history of New York's real estate dynasties and the skyscrapers they've built.

"This book gives an honest and detailed description as to how New York City's skyscrapers were formed and molded by the biggest real estate families in the industry," Robert Rahmanian, principal and cofounder of REAL New York, told Business Insider. 

Will Silverman, managing director at Eastdil Secured, echoed Rahmanian's praise.




"The Millionaire Real Estate Agent: It's Not About the Money...It's About Being the Best You Can Be!" by Gary Keller

This 2004 book by Keller Williams founder Gary Keller is a step-by-step guide for real estate professionals looking to build long-term, sustainable businesses.  It combines elements of Keller's personal story with practical information for agents. 

"I read this book every spring to get back into the right mindset to crush it in the busy summer rental season," Michael Bello, a broker at REAL New York, said. 

"Martin Dressler: The Tale of an American Dreamer" by Steven Millhauser

This 1996 novel is the lone piece of fiction on the list. Nominated by Zach Aarons, whose own book is on this list, the book was a finalist for the National Book Award and won the Pulitzer Prize. 

The book tells the story of Martin Dressler, a son of an immigrant who becomes a hotel developer in the late 19th century.

"House of Outrageous Fortune: Fifteen Central Park West, the World's Most Powerful Address" by Michael Gross

This 2014 examination of one prestigious New York address uses the building as a canvas to explore themes of inequality, power, and fame.

The building has housed many famous and powerful people such as hedge-fund manager Daniel Loeb, Goldman Sachs ex-CEO Lloyd Blankfein, hedge-fund founder Daniel Och, Sting, Denzel Washington, and Jeff Gordon 

"The Big Short: Inside the Doomsday Machine" by Michael Lewis

This 2011 book has been adapted into a hit 2015 movie. The book, by "Moneyball" and "Liar's Poker" author Michael Lewis, examines the cause of the 2008 financial crash. While scores of books have explained the rise and fall of subprime mortgages, this book is the most successful and most widely read of them all. 

"Use What You've Got, and Other Business Lessons I Learned from My Mom" by Barbara Corcoran and Bruce Littlefield

This 2003 book by Corcoran Group founder and Shark Tank star Barbara Corcoran tells her personal story and gives some business tips along the way.

"Real estate isn't just about real estate, it's about connections and real life and this book hones in on just that," Kathryn Landow, broker at Warburg Realty, said.

A startup founder who spent 100 hours interviewing millennials found 3 hangups usually keep them from being good with money

Sun, 02/23/2020 - 12:15pm  |  Clusterstock

  • Sunny Israni, founder of personal finance app Clasp, spent over 100 hours interviewing millennials about their money perspectives and habits. 
  • In his interviews, he found that millennials who aren't good with money don't have a clear vision of what money means in their life. He also found that they tend to over-spend in social situations.
  • And, when millennials fall behind their peers financially, some of them have a tendency to give up. 
  • What separated millennials who are good with money from those who aren't is mindset — they know what role money plays in their lives and have goals, have boundaries on spending, and work to improve their finances. 
  • Want to do better with your money? SmartAsset's free tool can help find a financial adviser near you »

Sunny Israni wanted to know what separated the millennials who are good with money from those who aren't.

So he asked them.

For his new business, a personal finance app called Clasp, the tech entrepreneur and former Wall Street trader spent over 100 hours talking to millennials across the US about their money habits, attitudes, and goals to find out what made millennials good with money. 

"I wanted to target two different groups: people who tend to make really great decisions around their finances, and people who may not have made the best decisions," he told Business Insider. "I wanted to try to understand, 'what are the big factors that drive the quality of our financial decisions? Is it income? Is it geographic location?'"  

He found that what made millennials good with money wasn't either of those factors. Rather, it was how they thought about money. In his research, Israni found that three main psychological hurdles tend to keep millennials from being good with money:

1. They don't know what money means to them

Israni found that nothing had a bigger impact on how millennials manage their money than their mindset.

"I think about it in the terms of identity. As I was speaking to a lot of the participants, I got the sense that when people describe their financial behavior, they're really describing who they are as people," Israni said. "It's like their spending is a declaration of their identity."

Millennials who are good with money tended to have a clear vision of what they want from it, and know their money goals. 

"I spoke to someone from the Midwest who was early in his career and really militant with savings. I got the sense that he was deriving his whole identity from financial freedom. He had crystal clarity on what money represented in his life," Israni said. "People who weren't necessarily making as sound financial decisions had this tension around what money really represented in their life."

This tension tended to mean more than internal conflict for the millennials Israni spoke to — it also led to bad habits. "The people who had that tension the most tended to be the people who didn't necessarily make the best financial decisions," he said. 

2. They don't set limits on social spending

Israni noticed a bad habit that held millennials back: Spending too much on social situations. He also noticed that millennials who are good with money knew where to draw the line on their social spending.

"When you're in social situations, people tend to spend more, and we know this. But when I looked at the people who are doing really well, I've found that almost all of those people had an understanding with their friends and their social circle around activities that made sense for them, and that were not necessarily so expensive," he said. "I got the sense from everyone that the price tag you pay to pursue a social activity almost never really correlated with the joy and happiness and the memories that come out of that."

Meanwhile, the others kept spending, and weren't honest and realistic with their friends about what they could afford. "The people who weren't making sound decisions didn't talk about it with their friends," Israni said.

Israni made it clear that cutting out social spending isn't the answer. Rather, it's about knowing where your boundaries lie. "Have a list of things to do that don't necessarily break the bank," Israni said. "Your friendship with someone shouldn't be expensive."

3. They adopt a 'screw it' mentality and stop trying

Israni found that millennials who were financially behind didn't feel that anything could change for them. He found that eventually, they stopped trying. In his opinion, it all comes back to mindset. 

"After they were past a certain level of circumstances, they got into this whole 'screw it' mentality, where they just felt like they couldn't get a leg up," Israni said. "Oftentimes, it was mental. They felt so behind their peers that they just said 'screw it.'"

"It's exacerbated by the current macro trends, especially around climate change and our political system," Israni said. "People are like, 'well, climate change is going to end the world anyway, so might as well  live it up right now.'"

For a generation that's been behind financially from the start, that's a problem. "It is very much negatively impacting financial behavior, especially for people who are already behind," he said.

For these millennials, Israni said making progress comes down to thinking differently. "If their mindset isn't right, then they're not going to use any budgeting, whether that's a spreadsheet or an amazing app or even just you looking at your bank account," he said. Millennials who are good with money, he found, want to improve their circumstances, and don't let the doom and gloom stand in the way of their money goals. 

SmartAsset's free tool can find a financial adviser to help you get better with money »

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Bernie Sanders just cemented his frontrunner status with a huge victory in Nevada. Here's how his Medicare for All plan would remake the $3.6 trillion US healthcare industry.

Sun, 02/23/2020 - 12:09pm  |  Clusterstock

  • Under "Medicare for All," everyone in the US would receive comprehensive health coverage from the government.
  • The idea has sparked many months of fierce debate between moderate and progressive candidates who agree on expanding insurance coverage, but disagree on the mechanism to do it.
  • Sanders is the frontrunner in the Democratic primary race, and polls conducted in Nevada, New Hampshire and Iowa show his signature plan gaining strong support among voters.
  • Though specifics are missing on how Medicare for All would likely work, we can start gauging the effects some of the proposals could have on insurers, drug companies, employers, patients, providers and hospitals.  
  • Visit Business Insider's homepage for more stories.

The main idea behind Sen. Bernie Sanders's "Medicare for All" plan is straightforward: Everyone in the US would receive comprehensive health coverage from the government.

But the reality of implementing it is far more complex, and it has sparked heated debate among Democratic presidential candidates with dueling ideological visions — since it would represent the biggest reshaping of the $3.6 trillion US healthcare system in over half a century.

Democratic candidates all agree on expanding health insurance coverage, but they disagree on how to do it. Those on the progressive left like Sens. Sanders and Elizabeth Warren envision a government-run insurance system where Americans would get coverage including dental, vision, and long-term care, and private insurers are eliminated or sidelined. 

Sanders is the frontrunner for the Democratic presidential nomination. He just won the Nevada caucus and the New Hampshire primary and scored a near-win in Iowa. Entrance polls conducted by NBC News and the Washington Post showed voters in the first three nominating states to be largely supportive of his signature proposal to reshape US healthcare.

Moderate candidates like former Vice President Joe Biden and former South Bend Mayor Pete Buttigieg would preserve the current system. And they would create an optional government insurance plan — commonly known as the public option — and inject more federal subsidies into the state exchanges set up under the Affordable Care Act.

Candidates have proposed incremental or sweeping healthcare reform plans, but Sanders' Medicare for All bill has been held up as the standard. The legislation would virtually eliminate private insurance and provide care to everyone without co-pays, deductibles, or out-of-pocket spending. Sanders would attempt to achieve it in four years.

The estimated price tag of a government-insurance system on the scale he seeks is around $34 trillion over a decade. 

Warren unveiled her own plan last year that's projected to cost $20.5 trillion over ten years, and mirrors Sanders in many ways. But she has pledged to pursue a public option first and then pass Medicare for All through Congress in the third year of her presidency.

There is a lot of speculation on what would happen to all the key players in the healthcare system if a single-payer plan such as Medicare for All gets passed.

Though specifics are still missing on how Medicare for All would be fully implemented, we can start gauging the effects some of the proposals could have, based on analysis from groups including the nonpartisan Kaiser Family Foundation, conservative-leaning Mercatus Center, and Urban Institute among others.

Read on to see what Medicare for All would mean for every part of the US healthcare system: insurers, drug companies, employers, patients, providers and hospitals.

(This article was published on August 13, 2019 and has been updated.)

SEE ALSO: Democrats are clashing over how to fix US health care. Here are the 7 key terms you need to know.

People living in the US would probably pay higher taxes, but less for their healthcare.

In the Sanders plan, patients would face virtually no costs to get medical care, as the proposal does away with most charges like co-pays, co-insurance, and deductibles. And it would be financed by a blend of new taxes.

The Vermont senator has outlined nine possible ways to cover the plan, including a 4% premium for people earning more than $29,000 a year. So far, he maintains he doesn't need to roll out more details explaining how he'd fully pay for it, making it difficult to fully assess its impact.

By comparison, Warren said she would not raise middle class taxes by "one penny" in her proposal. She's relying instead on redirecting healthcare spending from employers, state government and households onto the federal budget.

Higher income individuals would likely pay more for healthcare while lower-income individuals would generally pay less, Kaiser Family Foundation Executive Vice President for Health Policy Larry Levitt told CNBC. But he pointed out it depends on which taxes are increased.

Sanders has argued that most Americans would be better off because their healthcare savings would offset any tax increase.

Big companies would no longer have to provide insurance for their workers. They could see taxes go up, too.

More than half of Americans get their health insurance through employers, according to the Kaiser Family Foundation. 

In the Sanders plan, employer-sponsored insurance would be eliminated. Sanders has argued that Medicare for All is a cheaper alternative compared to what's already in place and that employers would spend less time and cut administrative costs providing decent health benefits to their workers.

Employers might face new taxes, though. Among the options Sanders has proposed to pay for his Medicare for All plan is a 7.5% income-based premium that's paid by employers, but exempting the first $2 million in payroll.

Under the Warren plan, employers would face a charge equal to 98% of their current health spending. According to the Tax Policy Center's Howard Gleckman, the fee could be "a flat tax" on all workers.

That means a company would spend the same amount for healthcare on a low-wage employee and an executive, possibly leading to lost wages that disproportionately affects those with smaller paychecks.

Sanders previously criticized this element of the Massachussetts senator's proposal.

Doctors might get paid less money.

One concern for doctors is how Medicare for All would affect their pay. If private insurance is eliminated, physicians could make less than they do currently.

Private insurers typically pay more for physician services than Medicare, the federal health insurance program for the elderly, according to the Congressional Budget Office. If Medicare for All was implemented, doctors would get paid government rates for all their patients.

"Such a reduction in provider payment rates would probably reduce the amount of care supplied and could also reduce the quality of care," the CBO report said.

That'd be a hit to pay for doctors treating mostly privately insured patients now, but it could boost compensation for those with many patients covered by the Medicaid program for low income people, particularly in rural communities.

Still, there are concerns that cutting payments to doctors could lead to shortages and longer wait times for medical care under Medicare for All.

"That means there is going to be a substantial increase in demand for healthcare at the same time that you're potentially cutting payments to providers," Katherine Baicker, a healthcare policy expert at the University of Chicago, previously told Business Insider.

The American Medical Association— the largest physician group in the US — opposes Medicare for All, though there are signs that doctors within their ranks may be shifting their views, according to Vox. The group pulled out of an industry group fighting the proposal.

In January, the American College of Physicians, the second-largest doctors' group, endorsed both Medicare for All and the public option as a pathway to universal health coverage in a big win for their supporters.

Hospitals are worried their funding will get cut.

It's likely that many hospitals could see the amount they get paid to take care of patients fall under Medicare for All.

The American Hospital Association and the Federation of American Hospitals, which lobby on behalf of the industry, released a report stating that an option allowing more people to buy insurance coverage via Medicare would cut funding for hospitals by about $800 billion over a decade. The groups oppose Medicare for All.

Hospitals say that government programs like Medicare and Medicaid typically pay them less than the cost of delivering healthcare. Hospitals often charge higher rates to private health insurers.

An analysis from the libertarian think-tank Mercatus Center estimated that payments to providers such as hospitals would decline roughly 40% under a Medicare for All plan.

On the other hand, hospitals that serve low-income or rural populations could benefit under Medicare for All, as Bob Herman at Axios has reported.

Under the Warren proposal, pay for hospitals would rise 10%, the New York Times reported, leading to uneven wins and losses among them depending on their location and the size of their financial cushion.

Pharmaceutical companies could face limits on how much they can charge for their drugs.

Pharmaceutical companies largely oppose a single-payer system in the US, as they'd likely face stricter limits on how much they can charge for their drugs, similar to the systems in other wealthy countries.

Sanders' Medicare for All bill would give the government more power to negotiate with drug companies and secure lower prices. The Vermont senator has visited Canada over the years to highlight that country's cheaper drug prices, which stem from the country's system of government regulation.

Under the Warren plan, the government would reduce spending on generic medications by 30% and spending on brand-name medications would drop by 70%.

Republicans have also criticized the fact that Americans face higher drug prices, and the Trump administration has proposed allowing Americans to import cheaper drugs from Canada, Business Insider previously reported. 

There'd be little role left for private health insurers.

Private insurers would likely have little role to play under the Sanders proposal.

The government would be the sole insurance provider and virtually eliminate the private insurance industry — as employers and private insurers would be barred from providing coverage that overlaps with the government system, according to the Kaiser Family Foundation.

Sanders has said that supplemental insurance would be allowed for things like cosmetic surgery, though it's not clear that there'd be much of a market, as Margot Sanger-Katz has reported in the New York Times.

Other candidates are more guarded in their approach to reform, leaving a bigger role for private health insurers instead of essentially getting rid of them under Medicare for All. Former Vice President Joe Biden's plan would preserve a role for private insurance, for example.

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