News

• European stocks open lower as China posts slowest growth in nearly three decades
  European stocks opened lower on Monday, after fresh data from China showed its economy grew at its slowest pace since 1990.
• Millions of Chinese tourists are spurring the growth of mobile pay overseas
  In just a few years, mobile pay has become so ingrained in the lives of Chinese people that they are driving stores in overseas tourist destinations to adopt the technology.
• THE DATA BREACHES REPORT: The strategies companies are using to protect their customers, and themselves, in the age of massive breaches
  This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Over the past five years, the world has seen a seemingly unending series of high-profile data breaches, defined as incidents in which unauthorized parties access and retrieve sensitive, secure, or private data. Major incidents, like the 2013 Yahoo breach, which impacted all 3 million of the tech giant’s customers, and the more recent Equifax breach, which exposed the information of at least 143 million US adults, has kept this risk, and these threats, at the forefront for both businesses and consumers. And businesses have good reason to be concerned — of organizations breached, 22% lost customers, 29% lost revenue, and 23% lost business opportunities. This threat isn’t going anywhere. Each of the past five years has seen, on average, 1,704 security incidents, impacting nearly 2 billion records. And hackers could be getting more efficient, using new technological tools to extract more data in fewer breach attempts. That’s making the security threat an industry-agnostic for any business holding sensitive data — at this point, virtually all companies — and therefore a necessity for firms to address proactively and prepare to react to. The majority of breaches come from the outside, when a malicious actor is usually seeking access to records for financial gain, and tend to leverage malware or other software and hardware-related tools to access records. But they can come internally, as well as from accidents perpetrated by employees, like lost or stolen records or devices. That means that firms need to have a broad-ranging plan in place, focusing on preventing breaches, detecting them quickly, and resolving and responding to them in the best possible way. That involves understanding protectable assets, ensuring compliance, and training employees, but also protecting data, investing in software to understand what normal and abnormal performance looks like, training employees, and building a response plan to mitigate as much damage as possible when the inevitable does occur. Business Insider Intelligence, Business Insider’s premium research service, has put together a detailed report on the data breach threat, who and what companies need to protect themselves from, and how they can most effectively do so from a technological and organizational perspective. Here are some key takeaways from the report: The breach threat isn’t going anywhere. The number of overall breaches isn’t consistent — it soared from 2013 to 2016, but ticked down slightly last year — but hackers might be becoming better at obtaining more records with less work, which magnifies risk. The majority of breaches come from the outside, and leverage software and hardware attacks, like malware, web app attacks, point-of-service (POS) intrusion, and card skimmers. Firms need to build a strong front door to prevent as many breaches as possible, but they also need to develop institutional knowledge to detect a breach quickly, and plan for how to resolve and respond to it in order to limit damage — both financial and subjective — as effectively as possible. In full, the report: Explains the scope of the breach threat, by industry and year, and identifies the top attacks. Identifies leading perpetrators and causes of breaches. Addresses strategies to cope with the threat in three key areas: prevention, detection, and resolution and response. Issues recommendations from both a technological and organizational perspective in each of these categories so that companies can avoid the fallout that a data breach can bring. Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More Purchase & download the full report from our research store  Join the conversation about this story »
• Fee drag on retail fund performance comes into focus
  Chart of the week: Bogle’s fight to win a better deal for savers remains unfinished
• Movers and shakers, January 21
  Edith Siermann becomes head of fixed income and responsible investing at NN IP
• Stocks trim gains, forex steady as China GDP slows
• China GDP growth slips to 6.4% in fourth quarter
  Rate is lowest since the global financial crisis, but full year growth of 6.6% exceeds target
• This is how insurance is changing for gig workers and freelancers
  This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. The gig economy is becoming a core element of the labor market, pushed to the fore by platforms like Uber and Airbnb. Gig economy workers are freelancers, such as journalists who don’t work for one publication directly, freelance developers, drivers on platforms like Uber and Grab, and consumers who rent out their apartments via Airbnb or other home-sharing sites. Gig economy workers are not employed by these platforms, and therefore typically don't receive conventional employee perks, such as insurance or retirement options. This has created a lucrative opportunity to provide tailored insurance policies for the gig economy.  A number of insurtech startups — including UK-based Dinghy, which focuses on liability insurance, and US-based Slice, which provides on-demand insurance for a range of areas — have moved to capitalize on this new segment of the labor market. These companies have been busy finding new ways to personalize insurance products by incorporating emerging technologies, including AI and chatbots, to target the gig economy. In this report, Business Insider Intelligence examines how insurtechs have begun addressing the gig economy, the kinds of policies they are offering, and how incumbents can tap the market themselves. We have opted to focus on three areas of insurance particularly relevant to the gig economy: vehicle insurance, home insurance, and equipment and liability insurance. While every consumer needs health insurance, there are already a number of insurtechs and incumbent insurers that offer policies for individuals. However, when it comes to insuring work equipment or other utilities for freelancers, it's much more difficult to find suitable coverage. As such, this is the gap in the market where we see the most opportunity to deploy new products. The companies mentioned in this report are: Airbnb, Deliveroo, Dinghy, Grab, Progressive, Slice, Uber, Urban Jungle, and Zego. Here are some of the key takeaways from the report: By 2027, the majority of the US workforce will work as freelancers, per Upwork and Freelancer Union, though not all of these workers will take part in the gig economy full time. By personalizing policies for gig economy workers, insurtechs have been able to tap this opportunity early.  A number of other insurtechs, including Slice and UK-based Zego, offer temporary vehicle insurance, which users can switch on and off, depending on when they are working. Slice has also developed a new insurance model that combines traditional home insurance with business coverage for temporary use. Other freelancers like photojournalists need insurance for their camera, for example, a coverage area that Dinghy has tackled. Incumbent insurers have a huge opportunity to leverage their reach and well-known brands to pull in the gig economy and secure a share of this growing segment — and partnering with startups might be the best approach.  In full, the report: Details what the gig economy landscape looks like in different markets. Explains how different insurtechs are tackling the gig economy with new personalized policies. Highlights possible pain points for incumbents when trying to enter this market. Discusses how incumbents can get a piece of the pie by partnering with startups. Get the insurtech and the gig economy   SEE ALSO: These were the biggest developments in the global fintech ecosystem over the last 12 months Join the conversation about this story »
• Cartoon, January 21
  The Mega Files: global pressures, equity trends and strategies
• Asia-Pacific stocks gain ahead of China GDP
• Banks embrace fintech to exploit disrupter expertise
  Barclays and Santander lead £26m investment into UK-based lender MarketInvoice
• UK dividends hit high thanks to pound and profits
  Yields pushed to ‘extraordinary heights’ that could lead to collapse in payouts
• Barclays-backed online lender MarketInvoice gets $72 million in funding
  MarketInvoice lets SMEs sell their unpaid invoices through an online platform to gain access to working capital loans.
• A look at the global fintech landscape and how countries are embracing digital disruption in financial services
  This is a preview of the “Global Fintech Landscape” premium research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence,  click here. Since sprouting in the US and UK around 10 years ago, fintech has spread globally. Now, after years of proliferation, countries around the world are starting to see their fintech industries mature. Additionally, we continue to see the emergence of new hotbeds for fintech. This indicates that the space is still far from being fully developed, and that there are many new ways in which startups and their technologies continue to change financial services. The fact that many new players are emerging in the space also suggests that attention is shifting away from the main countries where fintech is prevalent, and that investors are seeing the potential of newer, conventionally untapped markets. The spread of fintech can be largely seen in the emergence of fintech hubs — cities where startups, talent, and funding congregate — which are proliferating globally in tandem with ongoing disruption in financial services. These hubs are all vying to become established fintech centers in their own right, and want to contribute to the broader financial services ecosystem of the future. Their success depends on a variety of factors, including access to funding and talent, as well as the approach of relevant regulators. In this report, Business Insider Intelligence compiles various fintech snapshots, which together show the global proliferation of fintech, and illustrate where fintech is starting to mature and where it is just breaking onto the scene. Each snapshot provides an overview of the fintech industry in a particular country, and details what is contributing to or hindering its further development. We also include notable fintechs in each geography, and discuss what the opportunities or challenges are for that particular domestic industry. Here are some of the key takeaways from the report: Besides the US and UK, there are plenty of other countries developing strong fintech hubs. Australia, Switzerland, and China, which are profiled in this report, have managed to leverage their stable financial centers of Sydney, Zurich, and Shanghai, respectively, to spur fintech development and attract funding. There are also a number of emerging fintech markets, including Brazil, Israel, and Canada, that are likely to play a big part in the global fintech ecosystem in the future. These countries have nascent but rapidly developing fintech hubs, as well as supportive regulatory environments, that could help them cement strong positions in the broader fintech scene. Many more fintech hubs will likely morph into big fintech players. This could push investors to increasingly wake up to the opportunities in new markets, leading fintech funding to become more diversified in the future, particularly outside of the UK and US.  In full, the report: Outlines how the fintech industry has changed over the past 10 years. Details which cities are the most likely to succeed as fintech hubs at present and going forward. Highlights notable fintech startups in each of these markets. Discusses the potential opportunities and challenges these countries are facing today and in the future. Interested in getting the full report? Here are two ways to access it: Purchase & download the full report from our research store. >>Purchase & Download Now Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Fintech. SEE ALSO: Latest fintech industry trends, technologies and research from our ecosystem report Join the conversation about this story »
• THE DIGITAL EVOLUTION OF WEALTH MANAGEMENT: How emerging technologies can improve the user experience, while cutting costs and boosting revenue
  This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. An increasing number of wealth managers are using new technologies to make their operations more efficient and to increase customer satisfaction. The technologies they are implementing include robotic process automation (RPA), chatbots, machine learning, application programming interfaces (APIs), and explainable AI. In this report, Business Insider Intelligence analyzes how emerging technologies like RPA and AI are transforming the wealth management industry, on both the front and back end, by increasing efficiency and opening up the space to new demographics. We explain how both incumbents and startups are applying these technologies to different business areas, and how successful they've been at implementation. Additionally, we take a look at the challenges wealth managers are facing as they look to revamp their businesses for the digital age. Here are some of the key takeaways from the report: Startup wealth managers and digitally savvy technology suppliers are bringing emerging technologies to the fore to make wealth management more time- and cost-efficient. These include RPA, machine learning, and AI. Big players in the space are also beginning to wake up to those opportunities. The technologies can improve consumer-facing elements of wealth management, like onboarding and customer service, to increase customer satisfaction. Machine learning and APIs can help wealth managers improve functions like portfolio management and compliance, and help them better stay on top of regulations, and increase customer satisfaction by offering improved and additional services. However, there are some challenges wealth managers are facing when implementing these tools, ranging from a lack of customer trust in emerging technologies to difficulty finding appropriate talent.  In full, the report: Outlines how the wealth management industry is implementing emerging technologies. Details which technologies they are using, and what their specific benefits are.  Discusses the potential challenges wealth managers are facing when implementing new technologies. Highlights what wealth managers need to do to stay relevant in the field. Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More Purchase & download the full report from our research store Join the conversation about this story »
• Fast Asia Open: China GDP, Thailand trade data
• The market's win streak is no fluke: A Wall Street bull sees record gains ahead
  Yardeni Research's Ed Yardeni sees a secret buy sign in the market.
• Whitney Tilson: Avon Is A Scam Will Herbalife Be Next?
  Whitney Tilson’s email to investors in which he pays tribute to John Bogle; calls Avon a scam; and talks about Herbalife; Chico’s; Tilray; Signet Jewelers; Goldman Sachs. 1) The investing world lost a giant – a true warrior for average […] The post Whitney Tilson: Avon Is A Scam Will Herbalife Be Next? appeared first on ValueWalk.
• India’s Royal Enfield bets on global sales push
  Eicher Motors hopes to appeal to US and UK riders to offset sputtering revenues
• FDA May Ban Candy Cigarettes – But Too Little And Much Too Late
  Nicknamed Candy Cigarettes Are Addiction Danger, Health Threat to Kids, Well Known For Over a Decade WASHINGTON, D.C.  (January 19, 2019) –  FDA Commissioner Scott Gottlieb has announced that sales of e-cigarettes and other vaping products could be banned, but […] The post FDA May Ban Candy Cigarettes – But Too Little And Much Too Late appeared first on ValueWalk.
• Bitcoin 101: Your essential guide to cryptocurrency
  Bitcoin is everywhere. The cryptocurrency is seemingly in the news every day as investors and businesses try to understand the future of this digital finance. But what is Bitcoin all about? Why is it suddenly on every financial news program? And what does it mean to you? Find out the answers to these questions and more in Bitcoin 101, a brand new FREE report from Business Insider Intelligence. To get your copy of the FREE slide deck, simply click here.Join the conversation about this story »
• Everyone Else Is Selling Stocks, So Is It Time To Buy?
  After a difficult few trading days in the beginning of the year, U.S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by […] The post Everyone Else Is Selling Stocks, So Is It Time To Buy? appeared first on ValueWalk.
• 'Glass' had a strong box office opening during the MLK holiday weekend, but it could have been bigger
  Universal and M. Night Shyamalan's "Glass" earned $40.6 million since Sunday and looks to make around $47 million by Martin Luther King Jr. Day on Monday. It was a strong opening, but the movie had the potential to earn more. Pre-release industry projections had the movie's four-day opening between $60 million and $70 million. The latest Shyamalan movie suffered from a low Rotten Tomatoes score. However, Shyamalan is laughing all the way to the bank. "Glass" is his third-straight movie to make a profit. Universal had everything set up to have a big Martin Luther King Jr. holiday weekend with its latest M. Night Shyamalan release, "Glass," which marks the close of the director's "Unbreakable" trilogy. And though the movie did make more than its $20 million budget, self-financed by Shyamalan, everyone involved was hoping for a lot more. "Glass" brought in $40.6 million as of Sunday and is projected to earn around $47 million by Martin Luther King Jr. Day on Monday. That would make the movie, the latest collaboration between Shyamalan and Blumhouse Productions ("Get Out"), the third-biggest opening ever for the MLK Day four-day weekend. But industry projections had the movie's four-day opening eyeing between $60 million and $70 million, causing the other studios to stay away from the holiday weekend. In 2016, "Split," Shyamalan's surprise sequel to his 2000 comic book-focused cult hit "Unbreakable," became an unexpected box-office darling. However, the performance by "Glass" is the latest example that you can never predict how audiences (and critics) will react to an M. Night Shyamalan movie. You can't blame Universal for its excitement. "Split" won over critics (76% Rotten Tomatoes score) and earned more than $278 million worldwide at the box office on just a $9 million budget. Its reception made it the most successful movie for Shyamalan critically and at the box office since 2002's "Signs," which made over $400 million worldwide. The "Split" success led to the rare occurrence where two studios were willing to work together on a movie. It was agreed that Universal would release "Glass" domestically and Disney would handle the movie's international release. Though the movie was incredibly hyped and is the first major release of 2019, people became less excited when critical reaction spread online and social media. With a current score of 35% on Rotten Tomatoes, and word beginning to spread of the movie's disappointing ending, the movie suddenly was not going to hit its projections.  But in no way is this a failure for Universal. The hype allowed the studio to have the MLK weekend for itself. By Monday the movie will pass 2008's "Cloverfield" ($46.1 million) to become the third-biggest opening over the holiday weekend, with 2014's "Ride Along" ($48.6 million) and 2015's "American Sniper" ($107.2 million) still in second and first, respectively. Having already earned more than its budget, "Glass" will mark the third straight Shyamalan movie to make a profit. All of them while working with Jason Blum's Blumhouse Productions — "The Visit" ($5 million budget), "Split" ($9 million), and "Glass" ($20 million). And all three were self-financed by the writer-director.SEE ALSO: We watched Netflix's and Hulu's docs about the doomed Fyre Festival, and one gives you a better look inside the fiasco Join the conversation about this story » NOW WATCH: Watch the extreme workout regimen of a professional ballerina
• Andreessen Horowitz-backed startup PagerDuty has confidentially filed for an IPO but because of the shutdown no one can review its prospectus
  PagerDuty, an IT incident response startup, has reportedly filed confidentially for an IPO. PagerDuty was last valued at $1.3 billion in funding round backed by Silicon Valley VCs like Andreessen Horowitz and Accel. Despite filing the paperwork, PagerDuty isn't likely to get comments from the SEC anytime soon since the Securities and Exchange Commission is closed with the rest of the federal government. The hot developer-focused startup PagerDuty has confidentially filed for an IPO, Bloomberg reported Tuesday. PagerDuty was last valued at $1.3 billion in its $90 million Series D, which closed in September. It's backed by big Silicon Valley venture capital firms including Andreessen Horowitz, Accel, and Bessemer Venture Partners. Morgan Stanley will lead the IPO, according to Bloomberg. PagerDuty helps companies quickly respond to IT incidents and alerts the best people to respond to any given incident, giving information about what happened and providing analysis. It's a vital tool in a DevOps workflow, where incidents have to be resolved quickly so the pace can continue. DevOps got a vital boost in 2018 after Microsoft acquired the venture-backed GitHub for $7.5 billion in June. PagerDuty CEO Jennifer Tejada leveraged investor excitement into a unicorn funding round at the end of last year, representing an impressive step up from its $650 million valuation a year earlier, in 2017.  While filing with the SEC puts PagerDuty in a good place for an early 2019 IPO, the company faces a major roadblock heading into its IPO. So long as the SEC and federal governement remain closed, IPO-ready companies aren't getting feedback on the paperwork they file, leaving most IPOs on hold.  PagerDuty did not immediately return a request for comment.  Read more: 2019 was supposed to be a banner year for IPOs, but now it's turning into a 's---show'SEE ALSO: 2019 was supposed to be a banner year for IPOs, but now it's turning into a 's---show' Join the conversation about this story » NOW WATCH: 7 science-backed ways to a happier and healthier 2019 that you can do the first week of the new year
• Apple's $24 million chip executive is reportedly on Intel's short list for new CEO, but it's not clear if he'd be willing to make that jump (INTC)
  It's been six months and Intel still hasn't found a new CEO. Intel has reportedly put Apple senior VP of hardware technologies, Johny Srouji, on its wish list. If Intel could convince Srouji to become its new CEO, it would be a big win for the company. But that's a big if. If there's one sure-fire way for Intel to turn the fiasco of its six-month vacant CEO slot into a big win for the company, it's this: lure Apple senior vice president of hardware technologies, Johny Srouji, into becoming the new CEO. Axios's Ina Fried reports that Srouji is on Intel's short list for chief executive. This follows Bloomberg reporting Monday that several talked-about candidates are no longer in the running, including former Motorola CEO Sanjay Jha and two former Intel executives, Anand Chandrasekher (who a former Qualcomm president) and Renee James. As we previously reported, James is now CEO of her own chip company, Ampere. She worked like mad to get her company off the ground and says she's incredibly happy working for herself at the moment. Bloomberg reported that some of the candidates turned Intel down. Srouji would be a stroke of genius — and a stroke of luck — for Intel, if they could lure him away from Apple. That's a big if. Read: Microsoft CEO Satya Nadella describes 2 new kinds of software that will change everything for businesses He leads Apple's in-house chip development, which has caused Apple to withdraw ever more of its business away from Intel. The latest industry scuttlebutt is that Apple is on track to ditch Intel chips for its Mac PCs by 2020. In all fairness, though, similar rumors have circulated annually for years about Apple ditching Intel completely. So nabbing Srouji could potentially help Intel shore up its relationship with one of its biggest customers. And even if Apple still left Intel, Srouji may be just the genius Intel needs to help it get through its endless manufacturing issues. Under former CEO Brian Krzanich, Intel suffered through one missed mass-production deadline after another, having difficulty retooling its production lines to crank out its latest, greatest, smallest chips. Apple, on the other hand, under Srouji seems to crank out its own new homegrown chips for its iPhones like clockwork.  And Srouji also cut his teeth at Intel, working at its Israel facility from 1990 to 2005, Fried points out. But, if Srouji is Intel's dream hire, he may also be out of Intel's league, even for the CEO job. Apple recently gave Srouji a big raise to keep him sticking around. Srouji joined Apple in 2008, and when he was promoted to senior vice president of hardware technologies in 2015, Apple gave him $10 million of restricted stock that vested over four years. Right before the four years was up and all $10 million was free to land in his pocket, Apple doubled-up on him. Srouji made $24,162,392 in total compensation in 2017, including new stock packages on a vesting schedule. And he became, for the first time, a named officer at Apple, meaning that he's so important and so highly paid that Apple had to disclose his compensation in SEC filings. As we previously reported, that handsome pay package made him the second highest-paid executive at the company after retail chief, Angela Ahrendts. She made a tad more at $24,216,072. CEO Tim Cook, in comparison, earned the least of Apple's executive exec team in 2017, at just under $13 million. So Intel would need to convince Srouji the challenge and prestige of being its next CEO would be worth giving up the challenge and prestige of developing Apple's chips and hardware. And they'd have to pay him handsomely to make the risk worth taking, too. Krzanich resigned from Intel in June after the company learned that he had an affair with an employee. He is now the CEO of CDK Global, a car dealer software maker in the Chicago area. Intel's acting CEO is CFO Bob Swan, who says he does not want the CEO role permanently.Join the conversation about this story » NOW WATCH: China made an artificial star that's 6 times as hot as the sun, and it could be the future of energy
• Here's why Apple's China situation is at 'code red,' and why it needs to take dramatic action to plug up a key weakness in the business (AAPL)
  Apple needs to cut the price of its iPhone XR in China by as much as 20%, Wedbush analyst Dan Ives said in a research note Monday. The phone costs about $960 in the country, an example of Apple's "pricing hubris," he said. The danger for the company is that iPhone customers there will buy cheaper phones from rivals instead of paying Apple's price, Ives said. Apple needs to maintain its customer base to drive sales of its services, he said. When it comes to China, Apple might be facing a "code red" situation and may need to respond to it equally dramatically with something it rarely does — cutting prices on recently launched products. For Apple to successfully transform itself into a services company, as CEO Tim Cook has been talking about, it needs to maintain its base of customers, Dan Ives, an analyst who covers the company for Wedbush, said in a new research note. But it risks losing a significant chunk of its customer base in China because it priced its new iPhone XR too high, he said. To right its ship, Apple is going to need to "significantly" cut the price of the XR in coming months — perhaps by as much as 20%, Ives said. "Apple needs to make sure that over the next few quarters they do not lose any current iPhone customers, and thus speaks to the more significant price reductions on the way in China, in our opinion," Ives said. "This is a smart and necessary strategy." Apple representatives did not respond to an email seeking comment about Ives' report. Read more: Hey Tim Cook, there's a simple solution to your iPhone sales problem Some thought the XR would be a big hit Apple introduced the XR last fall as a lower-cost alternative to its flagship XS models. It has many of the same features, but it has a less costly screen and a lower price. While the XS models start at $1,000, the XR starts at $750. When it launched, some observers expected the XR to be a breakout hit. Instead, many consumers appear to be rejecting the XR as too costly. Apple has reportedly cut back on production of the XR repeatedly since it launched. Earlier this month, the company warned that its holiday-quarter sales would fall short of its forecasts and blamed weak iPhone sales, particularly in China. Ives pointed a finger at the XR for that shortfall. There the device has a base price of RMB 6,499, which is about $960. "As we have discussed with investors, it has been Apple's pricing hubris on iPhone XR that was the major factor in the company's December earnings debacle," said Ives, who remains a bull on Apple's stock, with an "outperform" rating and a $200 price target. Many analysts, including Ives, believe that the future for Apple is in selling services to owners of its devices. The company's services segment has been one of its fastest-growing businesses in recent years and such offerings as Apple Music, iCloud storage, and the money Google pays Apple to be the default search engine for the iPhone. For its services segment to continue to grow, Apple will need to at least maintain its user base, Ives said. Apple needs to sell iPhones to drive demand for its services That's a chronic challenge. Smartphone owners tend to replace their devices every two to three years, and some use it as an opportunity to switch the kind of device they own from an iPhone to an Android device, or vice versa. Apple's customers have tended to be very loyal, but its pricing mistake for the XR could test those ties, particularly in China, Ives said. Some 350 million iPhones are due to be replaced within the next year to 18 months, he said. Of those, about 60 to 70 million are owned by Chinese consumers, he said. The danger for Apple is that those customers, because of its high prices, don't wait longer to buy their next device, but they buy a cheaper device from a competitor instead. That's why it's crucial for the company to cut its prices, he said. "If the installed base declines in China, Apple will face an uphill battle in the region for years," Ives said. He suggested that Apple could boost sales of the XR by cutting the price to about RMB 5,200, or about $768. Reports out of China in recent days indicate that some retailers are already slashing their prices on the XR and other iPhone models. The price cuts could worry already nervous investors, Ives acknowledged. Some may fret that Apple will take a further revenue hit from such reductions or that it would lose its image as a luxury brand. But such considerations aren't as important as maintaining its user base, he said.  Cutting prices "is a smart and necessary strategy for Apple as this is an installed base story going forward," he said. The growth of its services business, he added, "will be driven off that premise for the next decade, with China a key ingredient in Apple's future recipe for success." Read more about Apple: Hey Apple, what happens on iPhones doesn't stay there, and your 'clever' CES ad is promoting a dangerous illusion Longtime Apple analyst Gene Munster thinks the company should be valued less like a tech company and more like Coca-Cola. Here's why that could be good for shareholders. Longtime Apple analyst Gene Munster thinks the iPhone maker will reclaim its crown as the best tech stock in 2019. Here's why. These 5 charts show why Apple's big bet on services just doesn't make any sense SEE ALSO: Apple's iPhone revenue is set to fall this year for just the second time ever Join the conversation about this story » NOW WATCH: All smartphones look the same today for 2 key reasons
• Here's exactly how many direct reports each manager should have for peak productivity
  A boss who has between eight and 10 direct reports typically sees the lowest turnover on their team. That's according to a new report from human-resources software company Namely. Experts and executives have long disagreed on the optimal number of direct reports. For example, former General Electric CEO Jack Welch said 10 to 15. Being a manager necessarily means being pulled in different directions, constantly having to decide which person or project most deserves your time and attention right now. But just how many people and projects should you be responsible for at once? Human-resources software company Namely set out to answer that question (among others) in a recent survey. According to the findings, managers who have between eight and 10 direct reports see the lowest turnover. Managers with more or fewer direct reports see higher turnover, independent of the overall company size. Namely surveyed roughly 1,200 companies that use its services. The average number of direct reports was nine, suggesting that many organizations are doing things right. In an interview with Business Insider, Eric Knudsen, people analytics manager at Namely, said Namely used employee turnover as a proxy for a productive work environment, and acknowledged that the optimal number of direct reports depends on a particular boss' management style. Indeed, McKinsey & Company outlined five "managerial archetypes" and the optimal number of direct reports for each one. The "supervisor" archetype has some individual responsibility and has their own bosses; an example is an accounting manager or a senior vice president of finance. According to McKinsey, a supervisor typically has eight to ten direct reports. A "player/coach," on the other hand, has a lot of individual responsibility and it takes years for people in their field to develop self-sufficiency; an example is a functional vice president. A player/coach typically has just three to five direct reports. Experts and execs disagree on how many direct reports a manager can reasonably handle Management experts and executives have different opinions on the ideal number of direct reports. For example, Hal Gregersen, the executive director of the MIT Leadership Center, previously told Business Insider the optimal number of direct reports was somewhere between six and 12, whether you're the CEO or a lower-level manager. It's a question of how many people a leader can have a constructive conversation with when everyone is in the same room, Gregersen said. Read more: A former Facebook HR exec says many bosses are too uncomfortable to ask people a hugely important question Meanwhile, Jack Welch, former CEO of General Electric, said in an 1989 interview with the Harvard Business Review that a manger should have between 10 and 15 direct reports. "This way you have no choice but to let people flex their muscles, let them grow and mature. With 10 or 15 reports, a leader can focus only on the big important issues, not on minutiae." McKinsey suggests a number of questions to consider when determining how many reports a manager can reasonably handle, including "How much actual time is the manager spending on her or his own work versus time spent managing others?" and "How much experience and training do team members' jobs require?"SEE ALSO: Apple CEO Tim Cook now has 17 direct reports — and that's probably too many Join the conversation about this story » NOW WATCH: Here's why we give better advice to our friends than we give to ourselves
• A Harvard professor says a huge opportunity for disruption has been in front of us all along
  Disney World is ripe for technological disruption. That's according to Clayton Christensen, an author of "The Prosperity Paradox." Someone could create a more affordable, local version of Disney World so more people people can experience it. Economic development works much the same way, Christensen says: An innovation makes a product or service available to a broader swath of the population. This article is part of Business Insider's ongoing series on Better Capitalism. The happiest place on earth is ripe for disruption. "Disruption" has become something of a buzzword in entrepreneurial circles, but if you ask the Harvard Business School professor who coined the term, it has a highly specific meaning. According to Clayton Christensen, the author of the 1991 classic "The Innovator's Dilemma" and an author, along with Efosa Ojomo and Karen Dillon, of the brand-new book "The Prosperity Paradox," disruptive innovation describes the process through which a smaller company with fewer resources challenges an established business. It does that by targeting overlooked potential consumers and offering something similar, typically at a lower price. The newer company then moves upmarket and mainstream consumers start using the product or service. Read more: Clay Christensen says everyone misunderstands his theory of disruption — here's what it really means In an interview with Business Insider, Christensen said, "Somebody needs to go out and create an entertainment system that would disrupt Disney." Specifically, Christensen suggested  technology that would allow a larger population to partake in the experience. These are would-be consumers who would love to feel their stomach drop on Splash Mountain, but don't have the resources to trek to Orlando and spend a week in the parks. According to the Disney World website, it costs $109 for one person over age 10 to visit one park for one day. If you've got a family of four flying across the country, and you plan to spend a few days at the parks, you might easily wind up spending thousands. "Right now in America, if you have a family and you want to have an experience together that people will remember forever, everybody has to go to Disney to get it," Christensen said. "But, boy, that's expensive and you go into debt and ... in your whole life, you can only go to Disney once or twice." Christensen said it might be possible to synthesize that visit to Disney, making it "affordable and accessible for many more people to experience the product." He suggested a space where customers could sit down with some fancy gear and, say, go on a Cinderella or Star Wars ride. In other words, Christensen said, "find some class of people who are trying to do something that the wealthy can do." Economic development works much the same way as disrupting Disney world As it turns out, Disney's potential for disruption holds a powerful lesson about economic development. The (as-yet nonexistent) virtual Disney experience is an example of what Christensen calls a "market-creating innovation." This type of innovation caters to would-be consumers for whom a certain product or service is either unaffordable or inaccessible. They also create tons of local jobs. Electric cars in China, Christensen said, are prime examples of market-creating innovations; they're small and cheap, so that regular (i.e. not super rich) people can use them to make deliveries in crowded cities. The "prosperity paradox" refers to the idea that countries typically don't see improvements in their economic, social, and political well-being when other nations flood them with resources to "fix" poverty. Instead, these improvements often happen as a result of market-creating innovations being introduced. It's possible to improve people's well-being and create new business opportunities at the same time In a blog post on the Christensen Institute website, Subhajit Das writes that the current Disney World is an example of a "sustaining innovation," meaning it offers better performance (or more family fun, as the case may be) at a higher price point and a higher margin. Das adds that simply building new, less expensive parks isn't a viable solution, partly because the business model would be the same: adding new attractions to get more people to visit. "A useful alternative would be one that enables everyone in the family to have fun together at a place that they can access easily," Das writes, using the example of a local mall. The idea here is to simultaneously enable more families to have the Disney experience and to create opportunities for new businesses to emerge and thrive. A magical combination, if there ever was one.SEE ALSO: A Harvard professor has a tip for entrepreneurs looking for the next big thing: Check out the electric-car market in China Join the conversation about this story » NOW WATCH: Here's why we give better advice to our friends than we give to ourselves
• I know I am part of Apple's iPhone problem but even after doing all my research, I still don't feel the need to upgrade (AAPL)
  At the beginning of January, Apple announced that its holiday quarter revenue would be 7% lower than expected due to weakening iPhone sales.  Not having upgraded my 7 Plus for over two years, I know I am part of Apple's iPhone problem.  So, I made a trip to my local Apple Store and did some research to see if I should finally upgrade to an iPhone XR or XS. Here's what I decided.  I am part of Apple's iPhone problem.  You see, I own a perfectly fine iPhone 7 plus that I've had for over two years, and I feel no pressure to upgrade.  My screen isn't cracked. All the apps I need are running smoothly (despite the occasional crash). And I like to think that my photos still stand up to my friends' who shoot with their new, notch-laden iPhone XR and XS.  Bah humbug! I'm sticking with my 7!  I was curious, though, how much it would cost to upgrade and would that cost be justified?  The Face ID feature to open a locked screen seems nice (my thumbprint only works 50% of the time when it's sunny out and 0% when it's raining). And maybe having Portrait Mode on the front facing camera would help make me look less awkward in selfies. Maybe not.  Anyways, I headed to my local Apple store in San Francisco's Union Square to figure out if I should finally upgrade or not.  Here's what I found: SEE ALSO: 33 of the best and wackiest photos from the biggest tech convention of the year If I were to buy the cheapest of Apple's new phones — the 64 GB iPhone XR — my monthly fee would be $37.41 through its financing program. That $37.41 is exactly what I was paying per month for my 7 Plus.  But since I haven't upgraded my phone for over two years, my monthly payments are no longer. Starting last September, I owned my phone outright and have been paying $0 to Apple since.  So, if I were to upgrade, I'd have to get used to a monthly payment again.  If I traded in my 7 Plus (which is in good condition), I would receive a $300 credit through Apple's GiveBack program. That credit could be used for future monthly payments and paying taxes on my next phone.  Shoot! I always forget about the taxes. Let's figure that out real quick.  The 64 GB XR retails for $749, and the sales tax in San Francisco is 8.5%. So to walk out the door with my new XR, I would have to pay $63.67 in taxes.      After taxes, I would have $236.33 left from my trade-in credits, which would be enough to cover my first six months of fees on my new XR. That's not bad! See the rest of the story at Business Insider
• A $200 million marijuana VC breaks down how he picks what companies to invest in
  The dealmaker behind one of the most active marijuana venture capital funds describes his outlook for the industry in 2019. Canopy Rivers, the venture arm of Canopy Growth, announced a $6.8 million investment into Greenhouse Juice Company on Monday, on top of participating in a $12 million funding round for marijuana analytics startup Headset earlier in January. He gives his outlook on the cannabis industry and explains the investment themes he's watching.  It's been a hot few weeks for venture capital deals in the marijuana industry, and one firm has been behind most of the headlines. Canopy Rivers, the venture arm of marijuana cultivation giant Canopy Growth, has so far participated in a $12 million funding round for marijuana analytics startup Headset, invested $6.8 in convertible debt into Greenhouse Juice Company to develop CBD beverages, and landed an $80 million loan from two of Canada's largest banks for a joint venture — all in the last two weeks. The firm has raised $200 million so far, but some of that has already been deployed, a Canopy Rivers spokesperson confirmed. The Greenhouse deal, announced on Monday, falls into what Canopy River's VP of business development Narbe Alexandrian calls "wave three" of the nascent cannabis industry. "We look at the cannabis industry as coming in waves," Alexandrian, a veteran of OMERS Ventures, Canada's largest VC fund, said in an interview. "Wave number one was cultivation, wave two is ancillary technology, wave three is CPG [consumer packaged goods], wave four is pharma, and wave five is mass-market, where you have your Coke and Pepsi-type oligopolies in play." 'If you talk to a beer company, they don't own any hops farms' Right now, it's all about CPG, Alexandrian said.  "We're really looking for brands in this new wave of cannabis," said Alexandrian. It comes down to simple supply-and-demand economics: being only a cultivator doesn't cut it — wholesale marijuana prices will eventually fall, and margins will collapse. "If you talk to a beer company, they don't own any hops farms," said Alexandrian. "What they've developed is a strong marketing presence, and created a product that commands a premium because of the brand." Read more: Marijuana could be the biggest growth opportunity for struggling beverage-makers as millennials ditch beer for pot That's what led to the Greenhouse deal. Nominally an organic juice company, Greenhouse owns 15 brick-and-mortar stores as well as an e-commerce platform. But Alexandrian said they can easily plug CBD products into their suite. "The technology behind how they develop their products is what really got us going," said Alexandrian. CBD or cannabidiol is a non-psychoactive compound in marijuana that's become a trendy ingredient in food and beverages. The company aims to market CBD-containing products across Canada — and eventually, in every jurisdiction where the substance is legal.  "They've done a fantastic job of creating a brand locally, and we think that can be replicated over and over again," said Alexandrian. Creating the 'Nielsen' of cannabis In order to make decisions about what products to develop, or what new markets to enter, they need data. That's where Canopy Rivers' Headset investment comes into play.  "Our thesis behind that was: there's a lot of companies out there in the industry right now that are posting large growth and high revenue numbers, but they don't follow the same DNA as traditional CPG companies where you do two years of R&D before pushing out a product," said Alexandrian. Because the cannabis industry is so new, there are scant data to base decisions off of, so companies just push out product and "hope someone buys it," said Alexandrian. Headset wants to provide that data — what Alexandrian calls the "Nielsen" of cannabis — to help brands and manufacturers understand trends, customer habits, and what the market looks like before making costly decisions about developing new products. Overall, Alexandrian says it's "such a greenfield" for investing in marijuana. "If you believe like I do, that legalization is going to spread and the end of prohibition is inevitable in a lot of the industrial countries in the world, it's very early in the game and you can get a lot of value for both companies and shareholders," said Alexandrian. Read more: Marijuana M&A is already hot in 2019, with a pot tech-vape tie-up worth $210 million And that data is going to be crucial as more traditional CPG companies look to either make strategic investments or acquire marijuana companies outright as more markets open up. Expect these companies to become Headset's clients, the startup's CEO, Cy Scott, told Business Insider. "We're getting a lot of interest right now from consumer-packaged-goods industry companies like beverage/alcohol, tobacco, pharma, and even financial services who are all interested in the cannabis industry," said Scott in an interview. Already major food-and-beverage companies have either pursued joint ventures or taken equity stakes in marijuana companies. Bill Newlands, the incoming CEO of Constellation Brands — the beverage maker behind Corona — said on the company's earnings call earlier in January that marijuana "represents one of the most significant global growth opportunities of the next decade and frankly, our lifetimes." Last year, Constellation closed a $4 billion investment into Canopy Growth, paving the way for other major corporations to move into the industry. Molson Coors entered a joint venture with Hexo in August, and Heineken's Lagunitas Brand has developed a hoppy, marijuana-infused sparkling water beverage for the California market. Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals. Read more: Canada's largest banks are betting big on weed Aurora Cannabis is gearing up to break into the $1.6 billion CBD industry in the US Meet the bigshot lawyers who are turning weed into a $194 billion industry These execs are leaving behind careers at companies like Coke and Victoria's Secret to tap into the $194 billion marijuana industry Join the conversation about this story » NOW WATCH: The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy
• Check out our exclusive list of the top lawyers working on the biggest deals in the booming marijuana industry that's set to skyrocket to $194 billion globally
  Business Insider compiled a list of the top lawyers who've worked on the biggest M&A transactions in the marijuana industry to date. Check out our exclusive, subscribers-only list here.  With the rapid spread of marijuana legalization in the US, lawyers are discovering that the tangled web of regulations guiding the rapidly growing industry is a boon for business. After last year's midterm elections, some form of cannabis is now legal in 33 states, and many in the industry say it's only a matter of time before legalization sweeps the nation. Big money — and big law — has followed. The opportunity could be huge: some Wall Street analysts say marijuana could become an $80 billion market in the US alone in the next decade, with the global market hitting close to $200 billion.  There are several key reasons lawyers are attracted to the marijuana industry. For one, as cannabis companies grow, merge, and start getting the attention of Fortune 500 corporations as acquisition targets, they need more sophisticated advice on financing, tax planning, corporate structure, and M&A. Publicly traded cannabis companies were on a dealmaking tear in 2019, scooping up competitors and signing multibillion-dollar tie-ups with pharmaceutical, alcohol, and tobacco corporations. It's a trend heating up this year. Read more: Big law firms are building out specialized pot practices to chase down a red-hot market for weed deals In addition, many marijuana companies still directly flout US federal law, despite being publicly traded and posting multibillion valuations. That's an opportunity to a select group of lawyers who have cut a trailblazing path into the industry. Once reluctant, some of the biggest law firms, like Duane Morris, Baker Botts and Dentons, are building out specialized cannabis practice groups as the industry continues to grow in profitability and complexity. And even some of the most world's most prestigious law firms, like Sullivan and Cromwell, have gotten in on the marijuana mergers-and-acquisitions action. Business Insider has pulled together a list of the top lawyers who've worked on the largest deals in the past year in the growing marijuana industry. Subscribe to read our exclusive story here: Meet the top lawyers who've worked on some of the biggest deals in the booming marijuana industry that's set to skyrocket to $194 billion » Read more: The top 12 venture-capital firms making deals in the booming cannabis industry that's set to skyrocket to $75 billion One of the world's largest law firms poached a senior partner to build out a marijuana practice — and he's hiring Big asset managers like BlackRock are sitting on the sidelines of the $75 billion US marijuana industry because of one big pain point The rising stars of marijuana's investment scene that everyone from Wall Street to Silicon Valley should know Join the conversation about this story » NOW WATCH: The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy
• 3 Marks, 2 Robs, one Rich: Meet the 6 potential successors to replace Larry Fink as head of the world's largest asset manager
  Six BlackRock executives are in line to replace chief executive officer Larry Fink – who has made no public plans to retire.  One of these potential successors, Mark Wiedman, was promoted to a new role last week. This prompted speculation about who could eventually take over for Fink.  Depending on how long Fink plans to stay at BlackRock, some top executives may not want to wait for years, one industry observer noted.   Larry Fink isn't going anywhere.  The chief executive officer of BlackRock is too busy trying to solve America's retirement crisis and turn the world's largest asset manager into a technology company, among other priorities. But the 66-year-old is planning for his successor, and a major promotion announced last week fueled speculation about his eventual successor. In a memo, Fink hinted at more personnel changes to come, which sources say includes further executive shuffling beyond the 500 staff BlackRock said on Thursday it would lay off. BlackRock insiders identified six men who could eventually replace Fink.  Besides common names – three Mark's and two Rob's, with one Rich as the outlier – the men share longtime tenure at the firm. They've led the firm's highest growth areas, including exchange-traded-funds and technology, and all sit on BlackRock's global executive committee. A spokesperson for BlackRock declined to comment on succession planning. One industry insider cautioned that the list could change over the years, as executives may tire of waiting for their chance to be considered CEO and look elsewhere for leadership opportunities.  In a 2016 memo about leadership changes at the time, Fink and president Rob Kapito wrote "We regularly review, with the Board, leadership and succession planning for all of our businesses and seek to ensure we are developing leaders with broad experience across the entire firm."  See also: The power behind the throne at Morgan Stanley: Here's who insiders say is in line to replace CEO James Gorman As Wall Street has grappled with how to replace founders and longtime leaders, having multiple options is not uncommon. Blackstone, for example, elevated former real estate head Jon Gray to president last year after grooming multiple leaders to run the world's largest private equity firm. Goldman Sachs had two co-presidents under CEO Lloyd Blankfein, before one retired this spring, leaving David Solomon to replace Blankfein this fall. Here's who could replace Fink: Mark Wiedman, head of international and of corporate strategy Wiedman, 47, moved up last week from head of the firm's wildly successful exchange-traded-funds and index investing businesses iShares to an even more visible role that reports to Fink directly.  In his new role, Wiedman will focus on "high-growth markets" in Europe, the Middle East, Africa, and Asia-Pacific. He'll also oversee marketing, which is led by former BuzzFeed chief marketing officer Frank Cooper, who will report to both Wiedman and Fink. Wiedman has overseen explosive growth in ETF platform iShares, which saw a record $44 billion in new money in December. He left a previous role overseeing corporate strategy in 2011 to lead iShares, which has since expanded its assets by 14.8% annually on average. He joined BlackRock in 2004 to help start what became the Financial Markets Advisory Group, advising financial institutions and central banks on capital markets exposures.  Before BlackRock, he was senior advisor for the Under Secretary for Domestic Finance at the US Treasury, and a management consultant at McKinsey.  Mark Wiseman, global head of active equities; chairman of alternatives Wiseman, 47, also chairs the firm's global investment committee. He's the most recent entrant of the bunch, joining BlackRock in 2016 with the critical perspective of a longtime institutional investor.  Before BlackRock, Wiseman was president and CEO of the $368 billion Canadian Pension Plan Investment Board since 2012, where he worked in investments since 2005. Previously, he worked at the Ontario Teachers’ Pension Plan. Earlier in his career, he had private markets experience as an officer at a Canadian merchant bank, and as a lawyer with Sullivan & Cromwell in both New York and Paris.  In addition to his leadership in active equities, Wiseman is helping BlackRock tap into the explosive growth of the alternatives industry, with platforms including real assets, hedge funds, and private credit. The strategies produce higher fees than passively-managed investments and capture capital that's locked up for longer. Fink has called the $140 billion alternatives business "a strategic growth priority."  Mark McCombe, head of Americas McCombe, 51, has hopped around the world's financial centers in his career. He has worked out of the firm's San Francisco office since 2017, as part of his remit to expand the Americas business outside of New York since he became Americas head that year. While other regions are growth focuses, the Americas continues to constitute the vast majority – 67% – of the firm's assets under management, according to third-quarter earnings.  McCombe joined BlackRock in 2011 to lead Asia Pacific, and has also served as chair and global head of BlackRock Alternative Investors, as well as global head of the institutional client business. Before BlackRock, he spent more than 20 years with HSBC in global roles ranging from CEO of the bank's asset management division in London to CEO of its Hong Kong business.  Rob Kapito, co-founder, president  Kapito, 61, met Fink years ago working at investment bank First Boston. He left in 1988 to join a group founding what would become BlackRock and now focuses on the day-to-day operations.   Kapito became president in 2007, a role that includes oversight of the firm's key business platforms, including investment strategies, client businesses, technology and operations, and risk and quantitative analysis. He's also a director of iShares and chairman of the firm's global operating committee.  Before he was president, Kapito was head of the firm's portfolio management business, overseeing groups including fixed income, equity, liquidity, and alternatives.  Rob Goldstein, chief operating officer, global head of BlackRock Solutions Goldstein, 44, has long been a rising star at BlackRock. He started at the firm in 1994 as an analyst in the portfolio analytics group and later worked as a risk advisor to mortgage and insurance clients.  Goldstein also led the firm's institutional client business, then took over as COO in 2014.  As COO, he helps oversee day-to-day global business. He also leads the BlackRock Solutions business, underpinned by the wildly successful Aladdin operating system. That investment platform is used by over a 200 institutional investors, such as the California State Teachers' Retirement System and touches $18 trillion of assets – and, showing its commitment, BlackRock is the biggest user. Though technology services makes up just 6% of the firm's revenue, which is largely dependent on fees paid for assets under management, the segment jumped 18% year-on-year for the third quarter, to $200 million. See more: The COO at BlackRock explains why the $5.7 trillion investment giant is a 'growth technology company' Rich Kushel, head of multi-asset strategies and global fixed income Kushel, 51, can fly under the radar – he prefers to stay out of the public view – but the BlackRock veteran should not be dismissed as a Fink successor, insiders said. In his current role, Kushel oversees $2.4 trillion, according to the firm's third-quarter earnings.  Kushel joined BlackRock in 1991, and his responsibilities since then have included running alternatives and wealth management. In 2009 and 2010, he moved to London to chair the firm's international businesses, and from 2010 to 2012, he led the BlackRock's portfolio management group. Before his current role, he was the chief product officer and head of groups for strategic product management and stewardship, as well as for the BlackRock Investment Institute. Read more: There's one clear winner in the asset-management business in 2018, and it shows how the industry's changing BlackRock is buying a stake in a financial technology company to reach more than 90,000 money-managers BlackRock CEO: US and China are headed toward a 'full-fledged' trade war See the rest of the story at Business Insider
• It's a fintech frenzy — top venture pros spill why the $11 billion party won't end anytime soon
  Venture-capital firms invested $11 billion into fintech companies in 2018, the highest figure in eight years. Venture investors don't expect the fintech frenzy to slow down anytime soon, despite stock-market volatility and economic uncertainty in the US. It's never been a hotter time to be a fintech company looking to raise cash. Venture-capital firms in the US poured $11 billion into fintech firms in 2018, the most in eight years, according to a combined report by PwC and CB Insights. Funding surged 38% from a year prior, with big deals including crypto exchange Coinbase's latest $300 million round and payments firm Stripe raising funds at a $20 billion valuation. In total, 627 deals were completed, up from 571 in 2017. And even with a volatile stock market, a trade war with China, and a US government shutdown, venture investors don't expect a fintech slowdown anytime soon. "I'm actually bullish that it might even speed up," said Angela Strange, a general partner at Andreessen Horowitz who spearheads fintech investments. Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals. Why is Strange so bullish? First off, there are plenty somewhat-niche industries ripe for disruption, such as the loan-servicing industry. She says that's a space with a large number of incumbents but very few fintech underdogs who can really transform the industry. "When you start digging into financial services, you start seeing just more and more of large pockets that have potential for new entrance," she said. In addition, there's a new crop of companies trying to use financial technologies in their business, and they're in turn looking for the right type of infrastructures to support these firms. "For fintech there's still a lot of heavy lifting that needs to be done in terms of finding a sponsor or setting up with a payment processor," she said. "They'll be a trend of companies that are going to make that easier." Mark Goldberg, a general partner at Index Ventures, agrees that 2019 will be a blockbuster year, particularly as areas of the financial-services sector, such as the insurance industry, move from offline to online. "Huge year last year, but I think this year is going to be bigger," he said. "The environment now is more exciting than it was last year." Others disagree. Chris Sugden, a managing director at Edison Partners, says there's too much money going into fintech and some startups are overvalued. Sugden believes this is because venture firms have certain amounts of capital that they need to invest in companies, and they may be driven to dangle huge checks in front of entrepreneurs who might not need that much cash. "I saw that fund sizes were decided by general partners dictating how much they asked the companies to take rather than entrepreneurs coming out to market," he said. "So I think there's a little bit of the tail wagging the dog." But that doesn't mean venture funding in the fintech space will slow down by any means, Sugden said. The only two factors that might hurt these companies would be either an economic recession or a blowup from a highly valued tech company. Goldberg holds the opposite view. He thinks the fintech space is growing so quickly that some of these companies need even more money. "Some of the early winners from the last five to 10 years are starting to build such large and loyal user bases that they are going to start launching new products and services," he said. "We will absolutely see some mega rounds."Join the conversation about this story »
• The CMO of $998 billion asset manager Nuveen explains how the brand is trying to stand out in an increasingly crowded field
  The chief marketing officer of Nuveen, one of the US's oldest asset managers, is eyeing how to stand out in an increasingly commoditized business.  The long-term differentiator is not good performance or interesting content, as most companies can tout both. Instead, Marty Willis said Nuveen will focus on experience for its customers – financial advisers and institutions.  Good performance and interesting content is no longer enough to lure customers to one of the US's oldest asset managers, Nuveen chief marketing officer Marty Willis told Business Insider in a recent interview.  Nuveen, which managed $998 billion as of September 30, was founded in 1898. Its parent company, Andrew Carnegie-founded TIAA, rebranded the asset manager in 2017 to Nuveen's founder's name. Willis joined Nuveen two years ago from fund manager Oppenheimer, with an immediate mandate to work on Nuveen's name change. After that, she worked on building the company's digital capabilities – before her, there was no social media – and overseeing content development.  See more: 'Big agencies with a lot of overhead are not going to work': The CMO of Bank of America explains how ad agencies are going to have to change  In these efforts, Nuveen joins other some of its peers that are trying to position themselves as digitally agile, more consumer-friendly companies. BlackRock, the world's largest asset manager, launched the first phase of a digital rebrand in late October, CMO Frank Cooper explained to Business Insider, with plans to go beyond a new website and onto platforms such as Amazon's voice-enabled assistant, Alexa.  While this digital evolution is important, Willis said that in the long run, interesting content cannot make asset managers stand out. Neither can performance, as consumers become "numb" to similar returns across managers. Now, her next area of focus is what she calls "the long-term differentiator for asset managers:" experience.  "You have to have performance to be in the game. It’s like a baseline. People are now providing content and thought leadership. That’s becoming baseline," she said. "It’s almost like every other business – it pivots towards, ultimately, the customer. When you become commoditized with products and there’s not that much differentiation, it’s the experience. People want to feel valued, that they’re unique."  Like BlackRock, Nuveen caters largely to institutional investors and intermediaries, such as financial advisers who ultimately recommend products to customers and help construct their portfolios. While Willis could not yet reveal any specific plans to improve those groups' experiences, she said Nuveen's work includes helping financial advisers better understand their customers. Nuveen is focused on the "changing face of customers," as more millennials and women manage their families' money. Internationally, emerging markets continue to see increases in middle class wealth.  "Those will be the keys and where the money is going in the future," she said. Nuveen's role is "helping [financial advisers] think through some of the areas about the changing face of customers and how that’s changing for financial advisers going forward."  A coming wealth transfer will see millennials inherit $24 trillion from baby boomers – which BlackRock chief executive officer Larry Fink highlighted in his annual letter on Thursday – and many millennials plan to manage their money much differently than older generations.  Sign up here for our weekly newsletter "Wall Street Insider," a behind-the-scenes look at the stories dominating banking, business, and big deals.Join the conversation about this story »
• Prepaid card transactions will hit $396 billion by 2022 — and new players like Apple, Amazon, and Venmo are trying to gain share
  This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. The US prepaid card ecosystem is huge, with 10.7 billion prepaid card transactions made in 2016 reaching $290 billion. And it’s shifting focus from low-income, un- and underbanked consumers toward millennials and higher-income adults. But as the market evolves, legacy prepaid issuers, like Green Dot, are under threat. The market is becoming more competitive as tech companies like Apple, Square, and Venmo develop their own prepaid offerings, likely as part of a push to drive customers to engage with their core peer-to-peer (P2P) transfer or digital wallet apps. These players’ robust digital offerings and ability to offer prepaid services for lower, or no fees are undercutting legacy businesses. And on top of crowding, the Consumer Financial Protection Bureau (CFPB) is implementing regulations next year that could impact some issuers’ monetization strategies. As a result, the US prepaid card market is becoming an increasingly complicated space for issuers to navigate, so prepaid issuers need to rethink their strategies to best attract consumers. Companies can attract a bigger user base if they target younger users from both low-income and high-income segments. They should also provide convenient offerings, that integrate digital features to make account information accessible, to cater to young consumers’ preferences. Business Insider Intelligence has put together a detailed report that explores the evolving prepaid card industry, identifies how issuers can maintain profitability in a market that’s being challenged by new players and impending government regulations, and evaluates various paths to success. Here are some key takeaways from the report: There were 10.7 billion prepaid card transactions worth $290 billion in 2016, according to The Federal Reserve. Business Insider Intelligence expects that to grow to $396 billion by 2022.  The prepaid space has historically been filled with incumbents like Green Dot. But new players, like Apple, Amazon, and Venmo, are trying to gain share, which is pushing large prepaid firms to merge or acquire one another to grow. Issuers can adapt to the change in the space, and grow their share of the market, by providing convenient, multichannel access, and doing so in a way that facilitates profitability. Targeting younger consumers, both from the underbanked and high-income segments, as well as accessing users from physical as well as digital channels, can help facilitate this growth. In full, the report: Sizes the US prepaid card market and estimates its future trajectory. Identifies industry leaders and the newcomers to prepaid that are threatening their market share. Evaluates growth factors and inhibitors that are increasing competition in the space. Issues recommendations and strategies that issuers can implement to stay ahead in such a rapidly shifting space. Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More Purchase & download the full report from our research store Join the conversation about this story »
• A top Silicon Valley VC firm avoided investing in prescription drugs for a decade. Here's why Andreessen Horowitz is changing its mind.
  When Andreessen Horowitz was founded in 2009, the venture-capital firm didn't expect to invest in healthcare. That changed in 2015 when the firm launched its $200 million bio fund, which focused on investing in software companies in healthcare. The firm, which is now on its second bio fund, has historically avoided investing in therapeutics. That's beginning to change, general partner Jorge Conde told Business Insider. Conde told Business Insider he's on the hunt for companies using technologies that are "new to the world" to make better bets on drug development. Initially, the plan was to steer clear of healthcare. Andreessen Horowitz, a top Silicon Valley venture-capital firm known for investing in tech startups like Facebook and Instagram, changed its tune in 2015. That year, it launched its first bio fund, focused on backing biotech-based software companies after dipping its toes into the area in 2014 with an investment in Omada Health. The venture firm is famous for its slogan "software is eating the world," and it found that was increasingly the case in healthcare too. Still, Andreessen Horowitz planned to stick to investments in areas like artificial intelligence and machine learning and wasn't ready to jump into the world of developing new medical treatments, Andreessen Horowitz general partner Jorge Conde told Business Insider in an interview last week in San Francisco. Now, as the firm invests $450 million in its second bio fund, Andreessen Horowitz is looking to make more investments in therapeutics, particularly ones that have "superpowers," Conde said. In all, about $650 million of Andreessen Horowitz's $7.1 billion is invested in the two bio funds. Read more: 6 top VCs give their best 2019 predictions for healthcare, from a biotech correction to a 'shadow cash economy' stepping into the light Why Andreessen Horowitz wants to invest in therapeutics Conde pointed to two changes in the past few years that make therapeutics a more worthwhile investment area for the firm. The first is the better understanding we have of biology. "We can make more sense out of biology now because we can do biology at a higher scale, a higher resolution and higher breadth than has been possible," Conde said. The second is the changing way we think about what a drug is. At first, it was all about chemicals that could be used to manipulate the body to treat diseases. Then, a few decades ago, came protein-based drugs made of living cells. Now, with cell- and gene-based treatments, that opens up the potential to be more iterative when it comes to developing new treatments. "You're not taking on single-pathway risk, single-target risk, or molecule risk," Conde said. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare. The idea is to invest in broad new approaches to drug development that might have many uses over time. That way, if the first idea or trial doesn't pan out, there's still hope that another approach or use might work. So far, Andreessen Horowitz has invested in companies including synthetic-biology company Asimov, but it's planning to do more on the therapeutics end. To date, it's kept its investments to healthcare companies including Omada Health, an online platform that helps people manage chronic conditions including Type 2 diabetes, and Devoted Health, a startup that wants to reinvent how we care for aging Americans. 'One gives you a superpower' Conde sees some drugmakers as developing new therapeutics, while others are developing entirely new toolkits or platforms that allow for innovative new approaches to medical treatments. "One gives you knowledge; one gives you a superpower," Conde said. Conde is on the hunt for superpowers. As an example, he pointed to CRISPR, the gene-editing technology that's enabled everything from gene-editing babies to designing experimental ways to treat rare eye conditions. "In a world when you're increasingly able to program medicine, having these new-world capabilities can have an outsized impact," Conde said. Read more: CVS Health just revealed a key piece of its plan to change how Americans get healthcare A revolutionary drug that could treat a rare and devastating disease is prohibitively expensive. But one state has a plan to pay for its potential $5 million price tag. A biotech is proposing a plan to pay for its pricey rare-disease treatment the same way you'd buy a TV or dishwasher. Here's the inside story. A top investor who just made $470 million on buzzy biotech Loxo's $8 billion takeover told us where he might place his next bets Join the conversation about this story » NOW WATCH: What will happen when Earth's north and south poles flip
• Biotech companies looking for cancer and Alzheimer's treatments are hoping to raise $422 million amid treacherous markets and a government shutdown
  Despite much uncertainty, biotechs aiming to go public are pressing forward, with four new filings so far in 2019. The companies aim to raise a combined $422 million by entering the public markets, their filings show. Going into 2019, some healthcare experts had expected a slowdown as the initial-public-offering markets have started to look more uncertain because of a volatile stock market. The biotech initial-public-offering slowdown that some on Wall Street were expecting this year hasn't happened. Going into 2019, some investing experts had expected a slowdown as the IPO market started to look more uncertain amid a tumultuous public market. The government shutdown has brought additional challenges. Companies in 2018 raised more than $6.3 billion in 58 deals, according to Renaissance Capital. It was the highest number of initial public offerings in a year since 2014, when there were 71 biotech IPOs that raised a combined $5.2 billion. In the first few days of 2019, several biotechs laid out their plans to go public in the coming months. Read more: Companies hunting for new ways to tackle cancer and Alzheimer's raised $6.3 billion going public in 2018 — here are the 10 biggest deals of the year "It's going to be really interesting to see what the pricing action is on those IPOs," Steve Elms, a managing partner of the venture-capital firm Aisling Capital, told Business Insider in early January. If you "look over the last couple of years, a lot of very early-stage companies went public," Elms said. "I don't know that pre-clinical companies are going to be able to continue going public in this kind of treacherous market." Going forward with IPOs, however, has been made more difficult by the ongoing partial government shutdown — the longest in US history — which has largely shuttered the Securities and Exchange Commission. As a result, lawyers can't get crucial paperwork for IPO filings approved, Business Insider previously reported. In the meantime, here are the biotech companies starting off 2019 with a plan to go public: Harpoon Therapeutics, a cancer-drug maker that's looking to harness the power of the body's T cells to go after cancerous cells, filed on January 4. The South San Francisco company is looking to raise $86.2 million. Alector, a startup trying to harness the body's immune system to treat neurologic diseases like Alzheimer's, filed on January 7. The Bay Area biotech aims to raise $150 million. Kaleido Biosciences, which is using the microbiome to treat metabolic conditions, filed on Friday. The company, in Lexington, Massachusetts, aims to raise $100 million. Cirius Therapeutics, which is developing treatments for liver conditions including NASH, a type of liver disease in which liver fat builds up in people, filed on Friday. The San Diego company is looking to raise $86.3 million. Read more: Big drugmakers are sitting on billions of cash — and top pharma executives are hinting about big M&A to come in 2019 A top investor who just made $470 million on buzzy biotech Loxo's $8 billion takeover told us where he might place his next bets 2019 was supposed to be a banner year for IPOs, but now it's turning into a 's---show' Andreessen Horowitz is starting to invest in an area of healthcare that the firm has historically avoided SUBSCRIBE: Dispensed: A weekly dose of pharma, biotech, and healthcare news. Join the conversation about this story » NOW WATCH: Bed bug infestations are only getting worse — here's why they're so hard to kill
• A 237-year-old Japanese drug company just combined with a rival halfway around the world. Here's how they're confronting the challenge of merging 2 cultures.
  The drugmakers Takeda and Shire just finished up their $59 billion merger this month. The deal combines a 237-year-old Japanese company with a drugmaker known for ADHD medications like Adderall that has its roots all over the US and Europe. As part of the integration, Takeda has been introducing Shire employees to the term "Takeda-ism," referring to the company's goal to put patients first and business last. Takeda and Shire finalized their $59 billion merger this month, creating one of the biggest pharmaceutical companies in the world. The deal combines a 237-year-old Japanese drugmaker with a UK-listed drug company known for ADHD medications like Adderall. Shire has offices spread out across the US and Europe, the result of decades of combinations with other pharmaceutical companies. The way Takeda's chief medical officer, Andrew Plump, sees it, the deal gives the company financial stability to carry out some of the longer-term research projects it has underway and also keeps the organization on its toes. "It kind of shakes us up a little bit," Plump told Business Insider. "Sometimes it's good when you're in a groove to shake things up a little bit, and it gives us a chance to trim a little bit of what we didn't trim before." For example, Takeda is closing its Deerfield, Illinois, office, and the US operations for the two companies are consolidating into the Cambridge, Massachusetts, area, where Shire has had a big presence. Takeda also moved its stock listing from London to the New York Stock Exchange in December. Read more: Healthcare deals hit a record in 2018. See the 7 biggest tie-ups that could change how we buy drugs and treat diseases. Culturally, the two companies are very different. Takeda, with its centuries-long history, has a strong national tie to Japan and only recently started growing its global presence. Shire, on the other hand, for years had been acquiring companies, including Baxalta for $32 billion in 2016, which helped grow its presence in hemophilia and rare diseases, and NPS Pharmaceuticals for $5.2 billion in 2015, beefing up its presence in gastroenterology. The deals left the company geographically scattered across Ireland, the UK, Massachusetts, the Chicago area, and Switzerland. Plump said that through the merger process he'd observed that while Shire employees were committed to their regional groups and projects, there wasn't much of a unifying force connecting the company. "It lacked a story and a narrative people could rally behind," Plump said. So as part of the integration, Takeda has been introducing Shire employees to the term "Takeda-ism," referring to the company's goal to put patients first and business last. Why Takeda bought Shire One of the reasons Takeda could acquire Shire, Plump said, was that that lack of corporate identity was leading to a high attrition rate at Shire. The company's rate of voluntary departures was 15%. "The lack of a narrative has not just affected their own internal culture but also how they value the company," Plump said. Initially, Takeda wasn't looking for a big deal. "We knew where we were in terms of our pipeline," Plump said. "Our margins were taking eight, 10 years getting to where we wanted to. We knew that doing something could accelerate where we were already headed." It started by looking at Shire's gastrointestinal drugs and considered acquiring those treatments alone. At the start, however, it was too expensive. Then Shire's valuation started to drop, and Takeda CEO Christophe Weber decided to buy the company outright. There were some "hiccups," Plump said, particularly around figuring out how to incorporate the hemophilia business Shire had or its plasma-derived therapy treatments the company had picked up through its Baxalta acquisition in 2016. With the deal, Takeda is cementing itself as a global player, an ongoing transition. For instance, about 80% of Takeda employees are based outside Japan after the deal. Takeda's Japan revenue used to make up about half of its business. Before the Shire deal, that had dropped to between 40% and 45%, and now with Shire in tow, it's closer to 15% to 18%. Read more: Drug giant Pfizer isn't ready to abandon neuroscience — here's its $150-million ‘star cluster’ strategy for betting on promising brain drug startups CVS Health just revealed a key piece of its plan to change how Americans get healthcare A top investor who just made $470 million on buzzy biotech Loxo's $8 billion takeover told us where he might place his next bets A revolutionary drug that could treat a rare and devastating disease is prohibitively expensive. But one state has a plan to pay for its potential $5 million price tag. Join the conversation about this story » NOW WATCH: Mistletoe is actually a tree-killing parasite — here's how it became a Christmas icon
• Student debt has prevented hundreds of thousands of millennials from buying homes, Fed says
  Student debt has risen to $1.5 trillion, surpassing loans for cars and credit cards. That has led to fewer young Americans buying homes, according to a new Federal Reserve report. Loans have reduced recipients' ability to afford down payments and to secure mortgages. Mounting student debt has weighed on homeownership among young Americans, Federal Reserve economists said in a new report. Homeownership among those ages 24 to 32 fell to 36% in 2014 from 45% in 2005, according to the report. While student loans were not the main factors influencing the housing market, the Fed said that about a fifth of the decline was directly linked to student loans. Pew Research defines a millennial as someone born from 1981 to 1996, or those ages 23 to 38. About 400,000 borrowers would have owned a home if it weren't for climbing debt, the researchers Alvaro Mezza, Daniel Ringo, and Kamila Sommer estimated, as high levels of student loans reduced people's ability to qualify for mortgages and to save for a down payment. "We found that a $1,000 increase in student loan debt causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during their late 20s and early 30s," the researchers said. Outstanding student-loan balances have more than doubled to $1.5 trillion over the past decade, outpacing levels of those for vehicles and credit cards. A recent poll from Politico and the Harvard T.H. Chan School of Public Health found that the majority of Americans, both Republicans and Democrats, saw lessening student debt as an "extremely important" goal for Congress. Among a list of priorities, 79% listed cutting student debt as the most important. "While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits," the researchers said. "As policymakers evaluate ways to aid student borrowers, they may wish to consider policies that reduce the cost of tuition." The researchers suggested increasing state government investment in public institutions and easing the burden of student-loan payments, such as through use of income-driven repayment. "The study provides a nice run-down of policy implications," said Josh Wright, an economist at iCIMS. "To support homeownership, our government could look into: debt forgiveness programs, slowing the growth of tuition, and mortgage delinquency prevention programs." Now Read: MORGAN STANLEY: Global stocks just had their most chaotic start to a year since the financial crisis — here's what it means for investors and how they should trade Forget FANG — a $135 billion investor says a new group of stocks is poised to dominate the market going forwardSEE ALSO: A married couple in their 20s explains how real-estate investing is helping them pay back over $170,000 in student-loan debt Join the conversation about this story » NOW WATCH: 7 science-backed ways to a happier and healthier 2019 that you can do the first week of the new year
• The inside story of Eli Lilly's 18-day race to secure an $8 billion deal in time for the 'Super Bowl' of healthcare (LLY, LOXO)
  Drugmaker Eli Lilly & Co. first approached the biotech Loxo Oncology about an acquisition on December 20, just weeks before it wanted to announce the agreement at a major industry event.  Loxo's board of directors thought about soliciting other takeover offers, but didn't.  Both companies' teams worked through the holiday season to seal the deal, including on Christmas Eve and New Year's Day.   This is the inside story of how it happened. The acquisition of the biotechnology firm Loxo Oncology by pharma giant Eli Lilly & Co., announced at the year's biggest healthcare conference, started 2019 off with a bang.  That was Lilly's goal from the start, according to a new financial filing that reveals key details about how the giant deal came together. Lilly approached Loxo in late December about a transaction, which Lilly wanted to announce at a high-profile spot: the J.P. Morgan Healthcare Conference, the "Super Bowl of healthcare," which was set to start 18 days later. Lilly got its wish, though it required bankers and executives to work through weekends and nearly all of the holiday season. Negotiations even took place on Christmas Eve and on New Year's Day, according to the filing (though everyone apparently got a break on Christmas). The filing also revealed a few key details that might give Loxo investors pause. Loxo got Lilly to boost its takeover offer by only $5 a share, from $230 to $235. The startup also decided against soliciting third-party offers, fearing it might put the Lilly proposal at risk. Loxo negotiated down the amount it would have to pay Lilly if the biotech decided to accept a better offer from another company after the deal was announced. Here's how the deal came together. 'Unattractive' terms from other potential partners Loxo wasn't looking to get acquired when it reached out to 15 other drugmakers last spring. Loxo works in a cutting-edge area of oncology, developing drugs that target gene mutations in cancers. It would be presenting early research results from its most important drug, Loxo-292, that summer, and wanted to talk with other companies about licensing deals. The biotech already had a "terrific" global agreement with the drugmaker Bayer for its first drug, Loxo-195, and was similarly interested in a "product-oriented deal," Steve Elms, who chairs Loxo's board and is a managing partner of venture-capital firm Aisling Capital, a founding investor in Loxo, told Business Insider last week.  Read more: A top investor who just made $470 million on buzzy biotech Loxo's $8 billion takeover told us where he might place his next bets Loxo's CEO, Joshua Bilenker, also met that spring with Eli Lilly senior vice president Levi Garraway at an annual cancer-research meeting in Chicago, where each talked about their respective businesses.  Loxo announced its new data that June, and then met with more than five companies about licensing opportunities, according to the filing. Conversations with four of those companies continued on through December, "but the terms that were proposed, including for global licensing partnerships, remained unattractive," the company said in its filing.  Eli Lilly enters the picture On December 20, Eli Lilly senior management met with Loxo at the biotech's Stamford, Connecticut, offices, a meeting arranged about 10 days prior. The pharma giant came with an enticing pitch: $230 a share — far above the $138 per share that Loxo was trading at that day — and a major announcement, at the J.P. Morgan Healthcare Conference just weeks away.  Due diligence and a definitive agreement would have to get hammered out in time for the January conference, Lilly told the biotech. Loxo came back asking for more, saying the proposal was "not adequate." Loxo's board of directors also considered asking other drugmakers for acquisition proposals, but decided against it.  Lilly and its legal and financial advisers spent a full week poring over an "online data room" with information about  the company's research, plans to bring its products to market, and business agreements.  Meanwhile, on Christmas Eve, Loxo's board and its financial and legal advisers were mulling how to get a better offer from Lilly, including whether they should reach out to other companies for a proposal. A pause for Christmas, and then a final offer The negotiations appear to have been paused for Christmas, according to the Loxo financial filing, but resumed the next day.  On December 30, the next-to-last day of the year, Lilly presented its new, and final, offer: $235 per share, with a deal financed entirely with cash and external financing. Lilly would not go any higher, the pharma giant's CEO, David Ricks, told Bilenker.  Read more: Pharma giant Eli Lilly just made an $8 billion bet on a cutting-edge scientific approach that uses DNA to treat cancer The Loxo board yet again considered whether to reach out to other companies for a bid, but thought doing so would pose risks to the Lilly offer. The likelihood of getting another bid also seemed dim, according to the filing. Why Loxo decided to accept Eli Lilly's takeover offer The biotech had met with potential partners earlier that year about a licensing deal for Loxo-292, which it considered its most valuable product, and none of those companies had suggested an acquisition. Those partner proposals, meanwhile, "brought significantly less value" than the deal Lilly proposed, according to the financial filing. Loxo decided to go ahead with the offer and not reach out to any other companies.  The prospect of paying a "reasonable, non-preclusive termination fee" to Lilly if they got another offer was also part of the board's considerations. More materials were added to the online data room, which Lilly and its team kept reviewing through early January.  Negotiations continued New Year's Day through January 5, when the merger was finally executed, just barely two days before it was announced. One topic covered in those final days of negotiations: bringing the termination fee down below what Lilly had initially proposed. The companies eventually settled on a $265 million termination fee, or 3.3% of the deal's equity value. Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare. Join the conversation about this story » NOW WATCH: The worst thing people do to wake up in the morning, according to a sleep scientist
• The CEO of a startup aimed at harnessing the benefits of young blood shares his real plan to beat aging
  For $8,000, a startup called Ambrosia plans to sell transfusions of young blood for anti-aging purposes. Another longevity company called Alkahest is also focused on blood. But it's taking a very different approach. Instead of opening up a clinic to perform transfusions of young blood, Alkahest researchers aim to develop drugs for age-related diseases which are inspired by their work with plasma.  Blood gets a bad rap. The idea of sharing blood with another person for anything other than a life-saving procedure makes a lot of people squeamish. That's probably why, shortly after word got out that a startup called Ambrosia aimed to sell transfusions of blood from young people to help older people fend off aging, people began to freak out. Some likened the procedure to the activity of vampires (who, for the record, drink — not transfuse — blood). Others simply said it "raised questions."  Read more: A controversial startup that charges $8,000 to fill your veins with young blood is opening its first clinic It turns out, though, that there's some solid science behind the idea of studying blood — if not necessarily for linking the bodies of older and younger volunteers, then for identifying key proteins that change with age and could be further tested in drug candidates. A startup called Alkahest is focused on this kind of work. Alkahest scientists are also studying the potential benefits of an advanced type of blood transfusion in publicly documented clinical trials for age-related diseases including Alzheimer's and Parkinson's, but it is not looking to open up a clinic or connect the bodies of young and older people. "There have been some really hilarious representations of this, where people get conjoined in order to provide some regenerating activity, but that's not doable," Alkahest CEO and ex-Genentech neuroscientist Karoly Nikolich told Business Insider at a meeting during the J.P. Morgan Healthcare Conference. In fact, while the science of rejuvenating an older organism by connecting its veins to a younger one is foundational to Alkahest's research, it has little to do with the majority of work it's doing now, Nikolich said. How linking the veins of an old and a young mouse jump started a quest for longevity Founded in 2014 by Tony Wyss-Coray, the codirector of the Alzheimer’s research center at Stanford University Medical School, Alkahest has received funding from the Michael J. Fox Foundation, which focuses on developing treatments for Parkinson's, as well as from the Hong Kong-based biotech fund Nan Fung Life Sciences and the Spanish pharmaceutical company Grifols. More than a third of Alkahest's management team hail from biotech giant Genentech. In early experiments in mice, Wyss-Coray used a technique called parabiosis to learn that swapping old blood plasma for young blood plasma appeared to provide some limited cognitive benefits to the older organism. The 150-year-old surgical technique involves exchanging the blood of two living organisms; its name comes from the Greek words para, or "beside," and bio, or "life." After Wyss-Coray's mouse experiments, he and a team of Alkahest researchers took a big leap and in 2017 completed a month-long study in which they transfused a standard unit of blood plasma from young and healthy human volunteers into nine older adults with mild-to-moderate Alzheimer's disease. Their results were published this month in the journal JAMA Neurology. Because the study was small and short, the authors were fairly limited in drawing conclusions about what kind of benefits the plasma offered. They wrote that the "treatment was safe, well tolerated, and feasible," and that the findings should be explored further in larger trials. In the interview with Business Insider, Nikolich described some observed cognitive boons in the older study participants,  as tested by a standard screening tool called the Mini-Mental State Examination. Those benefits included an improved sense of self and recognition of one's environment and location, he said. Read more: Researchers whose work inspired a controversial young blood startup warn that the procedure they're offering is dangerous Working with blood plasma presents serious challenges. Exchanging the liquid between individuals requires an experienced clinician who must run several complicated and time-consuming tests to ensure there are no serious ill effects. To get the right mixture of plasma for a single recipient, as many as 10 donors may be required. So although the company is still analyzing the potential benefits of plasma in people with Alzheimer's and Parkinson's, its researchers are also studying drug candidates that don't involve plasma at all. 'The goodies go down and the bad actors go up' One of the projects that Alkahest researchers are most enthusiastic about involves an oral drug for age-related macular degeneration, a leading cause of vision loss in people over 50. To identify the central therapeutic ingredient in that drug, Alkahest scientists did years of research on blood plasma in partnership with Spanish pharmaceutical company Grifols. The company also funds a big portion of Alkahest's work in plasma and in 2015 gave Alkahest $50 million, Nikolich said. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare. After running thousands of tests on plasma that Grifols had collected from 18-70 year old donors, Alkahest researchers identified roughly 1,000 proteins that appeared to change with age. The proteins linked with positive effects seemed to fade away over time, while the proteins tied with negative effects (like vision loss) built up with age. "Unfortunately the goodies go down and the bad actors go up," said Nikolich. Testing an eye drug that's based on blood research Based on that work, Alkahest researchers homed in on a protein that appeared to provide benefits to people with age-related macular degeneration, or AMD. Using that protein, they developed a drug called AKST-4290 which is currently in the second phase of clinical research. Nikolich said that Alkahest plans to launch several larger studies of the drug in people with AMD as well as with Parkinson's later this year. AMD damages a tiny round area that's part of the eye region responsible for letting us see objects straight ahead. The current standard of care for AMD involves injecting medicine into the eye with a small needle. Although the procedure isn't typically painful, it's inconvenient and can be expensive — especially in places with limited resources such as in many parts of the developing world.  "An oral molecule for AMD would be fantastic," Elizabeth Jeffords, Alkahest's chief commercial and strategy officer and the former vice president of Genentech's ophthalmology franchise, told Business Insider. Having spent more than a decade at the biotech giant, Jeffords said she found it frustrating that people weren't treating Alkahest as a serious biotech company and were instead focusing on the blood factor. "We're looking at plasma proteins, and just like any other target in biotech, they're proteins," Jeffords said. SEE ALSO: A controversial startup that charges $8,000 to fill your veins with young blood is opening its first clinic DON'T MISS: We'll get you caught up on all the news you missed at the year's biggest healthcare investor conference Join the conversation about this story » NOW WATCH: Saturn is officially losing its rings — and they're disappearing much faster than scientists had anticipated
• A $72 billion Canadian investor is poised to start making venture-capital bets in Silicon Valley
  The $72 billion Canadian pension fund OMERS is expanding into Silicon Valley to make venture investments in US startups. OMERS Ventures hired Michael Yang as a managing partner from Comcast Ventures to lead the effort. He's planning to staff up and open offices in San Francisco and Palo Alto. US venture-capital funding has been climbing, with almost $100 billion invested last year, an 18-year high. Yang is planning to invest in industries such as healthcare, transportation, and media. A huge Canadian pension fund is plotting to expand into Silicon Valley, seeking to place bets on hot US tech startups. OMERS, which manages more than 95 billion Canadian dollars, or $72 billion, on behalf of municipal workers in the province of Ontario, hired Michael Yang as a managing partner of OMERS Ventures to open the venture arm's first US offices in San Francisco and Palo Alto. OMERS Ventures oversees about 880 million Canadian dollars invested in 35 companies, mainly in Canada. The goal of expanding to the Bay Area is to gain better access to investment opportunities in innovative startups, Yang said in an interview. OMERS itself has been opening offices outside Canada to broaden its investment opportunities. "Just look at where the deals are, the dollars are, where the innovation is," he said. "As they look to deploy more dollars, invest in more and more interesting projects, they need to expand their geographic horizons." Venture-capital investment in the US reached the highest level in nearly 2 decades last year Yang, 47, was previously a managing director at Comcast Ventures based in the Bay Area. Michelle Killoran of OMERS Ventures will also move to the Bay Area to help with the expansion, and the group plans to make additional hires over time, Yang said. Read more: 6 top VCs give their best 2019 predictions for healthcare, from a biotech correction to a 'shadow cash economy' stepping into the light Venture-capital investment in the US is soaring, increasing valuations and raising questions about whether another bubble is emerging. About $99.5 billion in VC funds were invested last year in the US, the highest total since 2000, according to the PwC/CB Insights MoneyTree report. That helped boost the valuations of 53 startups to over $1 billion, making 2018 a record year for the creation of so-called unicorns. Yang said he was hoping that if funding were to become more scarce as other VCs pull back or market turbulence increases, that could create better opportunities for him to invest. "There's been a lot of high-burn-rate companies that had access to easy capital that benefited from that and developed bad operating habits," he said. "A lot of people are hoping for a little bit of a pause in valuations and pricing." OMERS Ventures will target startups in fields like healthcare, transportation, and media Over time, Yang's group plans to focus its investments in five main areas: healthcare, transportation, the future of work, retail innovation, and new forms of media. The group has the flexibility to make investments ranging from seed stage (less than $1 million) to later-stage rounds where checks could be $40 million. At Comcast Ventures, Yang invested in and served on the board of the healthcare startup Accolade, and more recently he helped found the financial-wellness firm Brightside. Other investments included the virtual-reality firm Felix & Paul Studios, the autonomous-vehicle company Pony.ai, and Precision Hawk, which helps businesses use drones. Read more: 16 billion-dollar startups revolutionizing healthcare that you should be watching in 2019 Yang said he might bring the strategy of helping founders start companies — rather than simply investing in startups — to OMERS Ventures. OMERS Ventures already offers its startups services to help them grow. Yang said he's mindful of the responsibility he's taking on to the roughly half-million people who rely on the OMERS plan to fund their retirements. "We want to be good stewards of their future, of their capital," he said. "We want to make the right bets." Read more Billions from VC companies like Lerer Hippeau and Lightspeed fueled the rise of digital media and stoked crazy expectations for growth — here's why insiders say that approach is killing companies 6 top VCs give their best 2019 predictions for healthcare, from a biotech correction to a 'shadow cash economy' stepping into the light 2019 was supposed to be a banner year for IPOs but now it's turning into a 's---show' Uber, Lyft, China, and more — top tech investment bankers share their biggest hopes and fears for IPOs in 2019 Join the conversation about this story » NOW WATCH: Sea cucumbers are so valuable that people are risking their lives diving for them
• The internet's 'father' says it was born with two big flaws (GOOGL)
  Vint Cerf, one of the creators of the internet, said the network had two big flaws when he launched it. The internet didn't have room for all the devices that would eventually be connected to it, said Cerf, now Google's chief internet evangelist. It also didn't have any built-in security protocols. Even though both shortcomings proved problematic, Cerf's not certain he would have fixed them if he had to do it all over again. The internet was born flawed. But if it hadn't been, it might not have grown into the worldwide phenomenon it's become. That's the take of Vint Cerf, and if anyone would know, it's him. He's widely considered to be one of the fathers of the international network and helped officially launch it in 1983. When the internet debuted, Cerf, who is now a vice president at Google and its chief internet evangelist, basically didn't set aside enough room to handle all the devices that would eventually be connected to it. Perhaps even more troubling, he and his collaborators didn't build into the network a way of securing data that was transmitted over it. You might chalk up the lack of room on the internet, which was later corrected with a system-wide upgrade, to a lack of vision. When Cerf was helping to set up the internet, it was simple experiment, and he couldn't really imagine it getting as large as it became. The security flaw, on the other hand, can be chalked up, at least in part, to simple expediency, Cerf said in a recent interview with Business Insider. "I had been working on this for five years," he said. "I wanted to get it built and tested to see if we could make it work." Read this: The 'father of the internet' says that Google employee backlash to its defense work was just 'a lot of misunderstanding' The internet had a space problem The lack of room on the internet has to do with the addressing system Cerf created for it. Every device connected directly to the network must have a unique numerical address. When Cerf launched it, the internet had a 32-bit addressing system, meaning that it could support up to 4.3 billion (2 to the 32nd power) devices. And that seemed plenty when he was designing the system in the 1970s. That number "was larger than the population of the planet at the time, the human population of the planet," he said. But after the internet took off in the 1990s and early 2000s, and more and more computers and other devices were connecting to the network, it became clear that 4.3 billion addresses weren't going to be nearly enough. Cerf and other internet experts realized relatively early that they needed to update the internet protocols to make room for the flood of new devices connecting to the network. So, in the mid-1990s, the Internet Engineering Task Force started to develop Internet Protocol version 6, or IPv6, as an update to the software underlying the network. A key feature of IPv6 is its 128-bit addressing system, which provides room for 2 to the 128th power unique addresses.But it's taken years for companies and other organizations to buy into, test, and roll out IPv6. The standard didn't officially launch until 2012. And even today, Google estimates that only a little more than a quarter of users accessing its sites from around the world have an IPv6 address. Even the United States only has about a 35% adoption rate, according to Google. "Now that we see the need for 128-bit addresses in IPv6, I wish I had understood that earlier, if only to avoid the slow pain of getting IPv6 implemented," Cerf said. But hindsight is 20-20, and he acknowledges that it's highly unlikely that he could have pushed through a 128-bit addressing system at the time, because it would have seemed like overkill. "I don't think ... it would have passed the red-face test," Cerf said. He continued: "To assert that you need 2 to the 128th [power] addresses in order to do this network experiment would have been laughable." Security was an afterthought Security was also something Cerf skipped for his experiment. Transmissions were generally sent "in the clear," meaning they could potentially be read by anyone who intercepted them. And the network didn't have built-in ways of verifying that a user or device was who or what it attested to be. Even today, some data is still transmitted in the clear, a vulnerability that has been exploited by hackers. And authentication of users remains a big problem. The passwords that consumers use to log into various web sites and services have been widely compromised, giving malicious actors access to plenty of sensitive data. One of the most widely used security methods on the internet was actually developed around the time that Cerf was putting together the protocols underlying the network. The concept for what's called public-key encryption technology was described publicly in a paper in 1976. The RSA algorithm — one of the first public-key cryptographic systems — was developed the following year. But at the time, Cerf was head deep in trying to finalize the internet protocols so that after years of development, he could launch the system. He needed to get them ported to multiple operating systems and needed to be able to set a deadline for operators of the internet's predecessor networks to switch over to the new protocols. "It would not have aided my sense of urgency to have to ... have to stop for a minute and integrate the public-key crypto into the system," he said. "And so we didn't." The lack of security may have helped boost usage Even with the benefit of hindsight, Cerf doesn't think it would have been a good idea to build security into the internet when it launched. Most of the early users of the network were college students, and they weren't likely to be very "disciplined" when it came to remembering and maintaining their password keys, he said. Many could easily have found themselves locked out of it. "Looking back on it, I don't know whether it would have worked out to try to incorporate ... this key-distribution system," he said, continuing: "We might not have been able to get much traction to adopt and use the network, because it would have been too difficult." The security situation on the internet ended up being somewhat easier to address than its lack of space, Cerf said. It was relatively easy to add on public-key cryptography to the internet later on through various services and features, and several are now widely used. For example, the protocol that web sites rely on to secure the transmission of web pages — HyperText Transfer Protocol Secure, or HTTPS — relies on a public-key cryptographic system. Other types of security features have also been bolted on after the fact, he noted, such as two-factor authentication systems, which typically require users to enter a randomly generated code in addition to their password when logging into certain sites. Security "is retrofittable into the internet," he said.SEE ALSO: The 'father of the internet' gave a thumbs up to the Google employees who walked out to protest sexual misconduct policies Join the conversation about this story » NOW WATCH: How Apple went from a $1 trillion company to losing over 20% of its share price
• Trump is going to dominate Davos – even though he won't be there
  Whether it's the U.S.-China trade dispute, Trump's reported wish to withdraw from NATO, or the government shutdown threatening the world's biggest economy, it'll be hard to avoid discussing Trump at the Davos.
• Precious stones add sparkle to HK’s exports to China
  Territory’s third month of outperformance comes as mainland economy cools
• Trump said tax cuts would be 'rocket fuel' for the US economy. Here's why they weren't.
  President Donald Trump said tax cuts would be the "rocket fuel our economy needs to soar higher than ever before."  A little over one year after the Tax Cuts and Jobs Act was signed into law, that expectation hasn't panned out, a new Bank of America Merrill Lynch analysis has found. One reason for this is growth expectations are a bigger driver of capital expenditures than the actual cost of capital — which tax cuts theoretically lowered. The analysis of the disconnect between what Republican lawmakers expected and what has transpired comes amid the longest government shutdown on record and calls for slowing growth. "The investment boom that wasn't." That's how Bank of America Merrill Lynch economists categorized what's happened in the US economy since the Tax Cuts and Jobs Act was passed a little over a year ago. What was theoretically supposed to be a boon for US companies — and by extension, the broader economy — has not had its intended effect. The analysis comes against a backdrop of fresh calls for an economic slowdown, an unprecedented government shutdown, and uncertainty surrounding US-China trade relations. Indeed, the current economic picture stands somewhat in contrast to what Trump said upon the release of House Republicans' tax reform bill in late 2017 —  that tax cuts would be the "rocket fuel our economy needs to soar higher than ever before."  On the heels of the tax package that gave a boost to the country's wealthiest, corporations returned much of their tax-cut-fueled earnings back to shareholders in the form of stock buybacks and juicier dividends. Goldman Sachs said $1 trillion in buybacks, a record, were authorized in 2018. More granularly, S&P Dow Jones Indices estimated in May that corporations spent $564 billion on buybacks and $428 billion on dividends in one year through that month. The "tax cut story" has always seemed overdone, Bank of America said, as expectations of future growth are a bigger driver of capital expenditures than the actual cost of capital — which corporate tax cuts theoretically lowered. And investors have indeed soured on growth expectations, the firm has found. "Leading indicators of capex have been weakening for a year now, and in the fall US indicators started to turn down as well," global economists Ethan Harris and Aditya Bhave told clients Friday. "Falling growth expectations are undercutting capital spending growth, with more weakness ahead." The duo also pointed out that as the partial government shutdown, trade war, and Brexit uncertainties loom, risks to both growth and capital spending will increase.  "In the past year our biggest fear has been that policy shocks would undercut confidence and growth expectations, undercutting a potential capital spending recovery," they wrote. "The evidence is building that fear is reality."  Read more: Americans are worried Trump's tariffs and the government shutdown will hurt the economy Other big-money managers are pointing out the tax cuts' impact, not too long ago cited as a reason to be optimistic on stocks, has waned.  "The two factors that drove US outperformance in 2018 — fiscal stimulus and business investment — are set to fade this year, in our view," said Philipp Hildebrand, Jean Boivin, and Elga Bartsch of the BlackRock Investment Institute in a note to clients on Friday. "The growth kick from fiscal stimulus — an unusual late-cycle booster via corporate tax cuts and greater government spending — has likely peaked and should fade over the course of 2019." Now read: One of the most negative Netflix analysts on Wall Street explains what would make him change his tune GOLDMAN SACHS: Earnings are drying up as a recession looms — but you should still buy these 17 stocks to profit from their exploding margins Join the conversation about this story » NOW WATCH: Japanese lifestyle guru Marie Kondo explains how to organize your home once and never again
• Snap is losing its CFO after less than a year, and the stock is plummeting (SNAP)
  Tim Stone, the CFO of Snapchat parent company Snap Inc., is quitting. Stone, who came to Snap from Amazon, only took the job in May 2018. He is walking away from most of a $20 million pay package. Snap has said that Stone will be sticking with the company through at least its quarterly earnings call on February 5th.  The company's stock has cratered around 8.5% on the news. Snap says that it's Q4 2018 financial results are likely to be "slightly favourable to the top end of our previously reported quarterly guidance ranges." Tim Stone, the CFO of Snapchat parent company Snap, is quitting. On Tuesday, the exec notified the beleaguered messaging app company of his intention to quit "to pursue other opportunities," Snap said in a SEC filing, becoming the latest in a growing line of Snap execs to part ways with the company. Snap's stock price is down around 8.5% in after-hours trading following the news.  Snapchat has struggled in recent years as Facebook-owned Instagram has aggressively cloned its features, siphoning off users and stifling the app's growth. Stone, a former Amazon executive, had joined Snap less than a year ago, in May 2018, following a disastrous quarter for the company He replaced the company's first CFO, Andrew Vollero. It's not clear exactly why Stone is leaving now, though Snap says it is "not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices." Stone was brought on with a $20 million pay package, scheduled to vest over four years — most of which he's now forfeiting. $1 million in "sign-on" grants vested six months after he came on board, meaning the money is his, but he's leaving well before the rest of the $19 million vested.  His exit is the latest of a growing line of Snap execs to jump ship from the company in recent months. On Monday, Business Insider reported that the company's HR head Jason Halbert was leaving. Head of global strategic partnerships Elizabeth Herbst-Brady left earlier in January. Chief Strategy Ifficer Imran Khan bailed in September 2018. Other high-profile departures include communications VP Mary Ritti, product head Tom Conrad, and sales head Jeff Lucas. Later on Tuesday, Cheddar's Alex Heath reported that Kristin Southey, the company's VP of investor relations, also quietly left in November 2018. Here's what Snap said in its SEC filing: "On January 15, 2019, Tim Stone, our Chief Financial Officer and principal financial officer, notified us of his intention to resign to pursue other opportunities. Mr. Stone has confirmed that this transition is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise). Mr. Stone’s last day has not been determined. Mr. Stone will continue to serve as Chief Financial Officer to assist in the search for a replacement and an effective transition of his duties, including through our scheduled full year 2018 financial results announcement." Reached for comment, Snap spokesperson Russ Caditz-Peck sent Business Insider the following statement, which was sent from CEO Evan Spiegel to the whole company: Hi Team, I wanted to let you know that Tim Stone, our CFO, has decided to leave Snap. Tim has made a big impact in his short time on our team and we are very grateful for all of his hard work. I know we have all benefitted from his customer focus and the way he has encouraged all of us to operate as owners. Tim will remain at Snap to help with the transition, including through our Q4 and full year earnings call on February 5th. Tim’s transition is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise). Please join me in wishing Tim all the best in his future endeavors! Also in the SEC filing, Snap said that it expects to report financial results for Q4 2018 are "slightly favorable to the top end of our previously reportedly quarterly guidance ranges." This story is developing...Join the conversation about this story » NOW WATCH: Apple forever changed the biggest tech event of the year by not showing up
• Leaked memo spells out Facebook's new 'ground rules' restricting employee discussions about politics and religion (FB)
  Facebook is bringing in new rules about how employees can discuss politics and religion internally. In an internal memo obtained by Business Insider, chief technology officer Mike Schroepfer said the company has drawn up fresh guidelines for internal discussions. Much of the rules apply to Workplace, Facebook's internal communication app, which the company is investing in stronger moderation tools for. The changes come amid falling employee morale and some employee criticism of Facebook's political culture. Read the full memo below. Facebook is introducing new rules limiting the types of discussions about politics and religion allowed within the workplace as the company continues to grapple with the fallout from a string of company scandals and the increasingly fractious political climate emerging within many Silicon Valley companies. In an internal memo to employees seen by Business Insider, Facebook's chief technology officer, Mike Schroepfer, said on Monday that the company has developed "a set of ground rules for open and respectful communication at work, and a central moderation model." These rules prohibit bullying, ban attempts to change other employees' politics or religion, and outlaw harassing speech. "We're keeping it simple with three main guidelines: Don't insult, bully, or antagonize others," Schroepfer wrote. "Don't try to change someone's politics or religion. Don't break our rules about harassing speech and expression." For internal communications, Facebook uses a modified version of the Facebook app called Workplace (which it also sells as an enterprise product to other companies), and employees use it for everything from discussing projects to finding colleagues with common interests and sharing sightings of foxes on campus. The changes indicate that as Facebook attempts to reform itself, it is taking a stronger approach to its historically open employee-communication platform and is investing in new moderation controls. "These guidelines apply to all work communications including Workplace, email, chat, tasks, posters, whiteboards, chalkboards, and face-to-face," Schroepfer wrote. "Since Workplace is where most of these discussions happen, we are investing engineering resources there." "We are making it easier to report posts and comments, and those reports will go straight to a trained moderator who'll moderate as needed," he wrote. "We're also developing more tools to help proactively." 'Our openness is our superpower' Facebook officials emphasized that the rules were not intended to chill the kind of self-expression and creativity considered core to its success as an internet consumer service. "Great ideas, we know, can come from anyone. Our openness is our superpower," Schroepfer began the memo. Facebook spokesman Anthony Harrison said the new rules were not intended to restrict what employees discuss but simply to guide behavior. He said the company didn't previously have an explicit policy on respectful communications. In a statement he said: "Openness is one of the best things about working at Facebook. And respect is core to who we are as a company. This policy is designed to encourage everyone who works here to keep sharing, debating, and questioning — with some simple guidelines to assure communication is respectful." The changes come amid a tumultuous period for the Silicon Valley giant. It has been buffeted by successive scandals, from Cambridge Analytica to its role in spreading hate speech that fueled genocide in Myanmar, and employee morale has nosedived, according to internal data leaked to The Wall Street Journal in November. In 2018 Facebook also weathered political discontent from some employees. A politically conservative engineer, Brian Amerige, wrote a memo in August decrying what he called Facebook's "political monoculture," sparking debate over the company's famously liberal culture. Workplace became a hub for these discussions, with hundreds of employees joining a group called "FB'ers for Political Diversity" and posters appearing around offices to promote it. Amerige subsequently left Facebook in October, Business Insider reported. The new rules have gone into effect in a pilot scheme while the company solicits feedback. It remains to be seen how the rules will affect employees' internal discussions in the weeks and months ahead. CNBC recently reported that some employees believe Facebook has a "cult-like" workplace and that dissent or criticism is discouraged by its performance-review system. Do you work at Facebook? Got a tip? Contact this reporter via Signal or WhatsApp at +1 (650) 636-6268 using a non-work phone, email at rprice@businessinsider.com, Telegram or WeChat at robaeprice, or Twitter DM at @robaeprice. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop. Here's the full memo obtained by Business Insider: For 15 years we have build a culture of openness. In person and on Workplace and other channels, we support people expressing their true selves and thoughts. Great ideas, we know, can come from anyone. Our openness is our superpower. But this open culture is at risk when people don't feel safe, or respected. They can't be themselves. They can't do the work they came here to do. We've heard this from you on the Pulse survey, in focus groups, and in check-in conversations. So how can we be both open and respectful? On the Facebook app, the best large groups have clear rules and attentive moderation. Learning from that, we've come up with a set of ground-rules for open and respectful communication at work, and a central moderation model. Before we finalize these we want your feedback. We're keeping it simple with three main guidelines: - Don't insult, bully, or antagonize others. - Don't try to change someone's politics or religion. - Don't break our rules about harassing speech and expression. These guidelines apply to all work communications including Workplace, email, chat, tasks, posters, whiteboards, chalkboards, and face-to-face. Since Workplace is where most of these discussions happen, we are investing engineering resources there. We are making it easier to report posts and comments, and those reports will go straight to a trained moderator who'll moderate as needed. We're also developing more tools to help proactively. Stay tuned as we explore ways to make Workplace the best place to both do work and build our community. We hope to finalize this by early February, so please give us feedback! Reply here or email [email address redacted] with your thoughts. We'll have an FYI live tomorrow if you want to ask questions in person. We'll notify everyone when the 1.0 policy takes effect, with a post at the top of your Workplace feed. Thank you!SEE ALSO: Here are the Facebook execs who insiders think might leave next Join the conversation about this story » NOW WATCH: All smartphones look the same today for 2 key reasons
• HSBC: These 5 market forces will determine whether stocks regain their footing or plunge into a free fall
  There's ample uncertainty about whether stocks are on the cusp of a rebound to new highs or whether the December 2018 sell-off was part of a more sustained move lower. HSBC has compiled a list of five factors that will determine the market's next direction and what investors should be paying attention to. The question of how much longer the bull market in stocks will run is heavy on investors' minds. They recognize the danger of wrongly timing the market and missing out on late-cycle gains, but they're being bombarded with signs that the end is near. Amid this uncertainty, equity strategists at HSBC have compiled a list of five catalysts that will determine whether the market will retake its highs and live another day or relapse deeper into a bear market. Their overall outlook is positive, as they expect four of the five items on the list to work out in the market's favor. Here they are: 1. A dovish Fed After some seemingly mixed messages late last year, Federal Reserve Chair Jerome Powell has managed to convince investors that the central bank will not raise interest rates on a preset timetable. In October 2018, Powell scared markets with his remark that the Fed was a long way from the neutral interest rate that neither speeds up nor slows down the economy. He has since tweaked his tune, saying last week that the Fed had the ability to be patient and watch how the economy evolves. Such a wait-and-see approach would avert a policy mistake, said Ben Laidler, the head of Americas research at HSBC. Fewer or no rate hikes would also support equity valuations that have faced competition from higher-yielding fixed-income securities. 2. US earnings Slower earnings growth is one of the market's biggest concerns, and analysts have promptly slashed their estimates for 2019 growth. But there's no cause for alarm on this front, Laidler said. That's because the expected earnings slowdown has been overstated when you factor in the boost companies got from the corporate tax cuts that were signed into law last year. The consensus forecast for 7.8% earnings growth is a step down from last year, but it's broadly in line with historical averages, according to Laidler. Additionally, the weak expectations for profit growth mean companies have a lower bar to climb. As the most important earnings season in recent memory heats up, it will be crucial to watch how companies perform relative to expectations, and what executives say in terms of forward guidance. 3. US-China trade Laidler is also optimistic on this crucial market driver. For starters, stocks have already priced in much of the damage of an escalated trade war, in his view. HSBC's screen of 40 US and Chinese stocks sensitive to tariffs is trading at a 2.5 standard deviation valuation discount to history, he said. The companies that are hit by trade disputes can offset the damage by passing on at least a portion of their higher costs to consumers. Laidler further said it would be wrong to underestimate how much China could concede in its fight with the US over intellectual-property rights. 4. Global growth China and the US are the key drivers of concerns about a slowdown in global growth. Once again, Laidler views this with a glass-half-full lens. He believes that China's corporate tax cuts and credit easing are sufficient enough to counteract the headwinds generated by the trade war. One word of caution, though: The economic data out of China could be noisy in the near term because of the Lunar New Year holiday on February 5. In the US, he expects a slowdown in gross-domestic-product growth towards its trend level, down to about 2.5% this year. 5. Europe This is the only factor that has HSBC cautious. 2019 is a big year for the continent, with so much uncertainty surrounding Brexit, a crucial EU parliamentary election in May, and possible leadership transitions in several countries. When HSBC surveyed investors, a second Eurozone crisis emerged as one of the biggest risks for 2019. There's ample evidence that the continent is in an economic slump three weeks into the year. Germany and Italy, the continent's No. 1 and No. 4 economies, are on the brink of recessions. With growth already slowing, it may be too late to enact any structural reforms, Laidler said.SEE ALSO: Investors are paying a record price to safeguard against a stock-market meltdown — but a more efficient strategy is hiding in plain sight Join the conversation about this story » NOW WATCH: Saturn is officially losing its rings — and they're disappearing much faster than scientists had anticipated
• Warren Buffett might be looking to buy these 12 stocks, Wells Fargo says
  Warren Buffett, the chairman and CEO of Berkshire Hathaway, has long been known as a value investor. "Value" can be measured many different ways — from "price-to-book" to "price-to-earnings" — to gauge a stock's valuation. Wells Fargo published a list of 12 stocks that it says Buffett, by a handful of valuation measures, might be interested in now. Markets Insider has listed them here, with a breakdown of the measures Wells Fargo analyzed to come up with its collection. Warren Buffett, the chairman and CEO of Berkshire Hathaway, is known for many things — his fast-food-heavy diet, his philanthropy, his business acumen as one of the wealthiest people in the world, and his investing style. Buffett has long been known as a value investor. In other words, he likes to invest in companies with underlying fundamentals he finds strong, and can hold for the long-run. He might find those qualities in Apple, since the iPhone giant is Berkshire Hathaway's largest company holding. His style is in contrast with growth investors, who tend to invest in companies showing signs of above-average growth, even if the stock price appears to be expensive or classic "value" metrics are high. In a new note examining several valuation measures that Buffett might utilize, Wells Fargo came up with 12 names he might be interested in now. Here's a breakdown of the different indicators Wells Fargo considered. Five-year average return on equity (ROE) greater than 15% Five-year average return on invested capital (ROIC) greater than 15% Debt-to-equity (D/E) less than or equal to 80% of the industry average Five-year average pretax profit margin (PM) 20% higher than the industry average Current price-to-earning ratios (P/E) below ten-year historical and industry average P/E ratios (by consensus) Current price-to-book value multiples (P/B) below historical and industry multiples Current price-to-cash flow (P/CF) ratios below the industry average And here are the 12 companies that Wells Fargo believes Buffett could target, based on these qualifications:Altria Ticker: MO Industry: Tobacco 5-Year Average ROE: 139.8% 5-Year Average ROIC: 37.6% D/E versus Industry D/E: 76.8% vs. 160.8% 5-year average pretax PM versus 5-year average industry PM: 57.8% vs. 30.0% Current P/E versus Industry P/E: 12.1 vs. 13.9 Current P/B versus Industry P/B: 5.9 vs. 6.6 Current P/CF versus Industry P/CF: 12.5 vs. 33.4 Market Cap: $90.6 billion   Source: Wells Fargo Cboe Global Markets Ticker: CBOE Industry: Financial exchanges 5-Year Average ROE: 61.3% 5-Year Average ROIC: 60.0% D/E versus Industry D/E: 29.0% vs. 166.6% 5-year average pretax PM versus 5-year average industry PM: 42.5% vs. 34.4% Current P/E versus Industry P/E: 19.0 vs. 23.2  Current P/B versus Industry P/B: 3.3 vs. 14.0 Current P/CF versus Industry P/CF: 20.5 vs. 20.8 Market Cap: $10.3 billion   Source: Wells Fargo CNX Midstream Partners Ticker: CNXM Industry: Oil and gas 5-Year Average ROE: 22.0% 5-Year Average ROIC: 17.7% D/E versus Industry D/E: 139.0% vs. 287.0% 5-year average pretax PM versus 5-year average industry PM: 52.2% vs. 24.1% Current P/E versus Industry P/E: 9.7 vs. 18.8 Current P/B versus Industry P/B: 3.5 vs. 4.1 Current P/CF versus Industry P/CF: 6.4 vs. 7.3 Market Cap: $1.1 billion   Source: Wells Fargo See the rest of the story at Business Insider

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