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Almost one in five of India’s future unicorns drop off the race as funding winter bites

<p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Deliveroo</span></p><p class="caption">Deliveroo CEO Will Shu.</p></div><p></p></div></div></strong></p><ul class="summary-list"><li><strong>The CEO of $2 billion food delivery startup Deliveroo has backed calls for a new "unicorn" tech visa that would allow fast-growing British businesses to hire foreign talent.</strong></li><li><strong>Will Shu wrote in The Telegraph that the UK should be ambitious to create more $1 billion-plus companies.</strong></li><li><strong>The UK's departure from the EU threatens the country's access to international talent, and the tech sector is especially reliant on foreign developers and operators.</strong></li><li><strong>The floated unicorn visa would give the fastest-growing businesses a queue jump when it comes to hiring foreign workers.</strong></li><li><strong>The UK's digital minister told Business Insider that the government had to ensure its post-Brexit visa system remained "friendly" to the tech industry.</strong></li></ul><p>The chief executive of one of Britain's most prominent and valuable startups has backed calls for a brand new type of UK visa: The "unicorn" visa.</p><p>Will Shu, CEO of $2 billion food delivery startup Deliveroo, backed the idea for a dedicated visa category designed to lure highly skilled foreign workers into fast-growing technology businesses. Startups worth $1 billion or more are described as "unicorns."</p><p><a href="https://www.telegraph.co.uk/technology/2019/03/03/britain-must-seize-opportunity-lead-tech-talent-revolution/">Writing in The Telegraph</a>, Shu said he now spent half of his time as CEO interviewing candidates to help him scale Deliveroo globally. He said: "As a tech company the skills we need are changing, increasingly specialist, and of course we want excellence.</p><p>"The UK has 15 [unicorns], which is great but it's not enough and nor is it guaranteed to continue in such a competitive global marketplace. So we should all be ambitious for Britain and want to see the next generation of unicorns founded and grown right here."</p><p><em><strong>Read more</strong></em>: <em><a href="https://www.businessinsider.com/brexit-killed-promising-venture-capital-fund-2018-8?r=US&amp;IR=T">How Brexit killed an entrepreneur's vision to invest in British tech talent</a></em></p><p>The unicorn visa was floated in <a href="https://www.cps.org.uk/files/reports/original/190301101443-CPSHerdingUnicornsFINAL.pdf">a report by the Centre of Policy Studies</a> (CPS), a pro-free market think-tank cofounded by Margaret Thatcher. The idea is that the fastest-growing British startups should be given special treatment when it comes to hiring foreign workers, skipping the line to scoop up talent.</p><p>The UK <a href="https://technation.io/news/international-talent-in-uk-tech-visa-options-as-we-stand/">already has a number of specialist visas</a> available to tech workers, entrepreneurs, and investors. But, the CPS wrote, a dedicated unicorn visa would send a message about the UK's commitment to high-growth companies, especially as Brexit threatens the influx of foreign talent.</p><p>It appears that a fast-growing business wanting to apply for this floated new visa wouldn't necessarily need to be a unicorn, but instead show that it could become one.</p><p>The CPS wrote that companies would need an average, annualised turnover or employee growth of 40% over three years, and a minimum turnover level of £25 million. It suggested that the Department of Business, Energy and Industrial Strategy and the Home Office should be responsible for setting the criteria and overseeing the visa process.</p><p>It isn't clear how this would work in practice.</p><p>Most fast-growing startups keep their financials and growth metrics private, only publishing limited reports to the UK's Companies House once a year. But a company would need to prove that it is genuinely fast-growing to qualify for unicorn visas. Multiple startups in the UK have claimed to be unicorns, such as <a href="https://www.businessinsider.com/blippar-the-inside-story-of-the-collapse-2018-12?r=US&amp;IR=T">Blippar</a>, <a href="http://uk.businessinsider.com/inside-the-crash-of-londons-payment-unicorn-powa-technologies-2016-4">Powa</a>, and <a href="https://ftalphaville.ft.com/2017/05/26/2189109/ve-interactive-the-rise-and-fall-of-a-tech-unicorn/">Ve Interactive</a>, only to collapse as journalists and backers raised doubts.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Jake Kanter/Business Insider</span></p><p class="caption">Margot James, the UK digital minister.</p></div><p></p></div></div></p><p>Asked how Deliveroo would prove its fast-growth status to the government, a spokesman told Business Insider: "We already provide figures in our yearly accounts but I'm sure we would be happy to work with [the government] to ensure that the scheme would work."</p><p>Digital minister Margot James told Business Insider in an interview that the government needed to ensure the UK's visa system remained "friendly" to the startup and tech industry after Brexit. She added that the UK wasn't in a position to fill every tech job with British-born workers just yet.</p><p>"It's really important that they know that we're serious about making sure they've got continued access to global talent, be it in Europe or anywhere else," she said.</p><p>"And that's not to downgrade the huge importance we attach to digital skills and the need to train people in this country and the responsibilities of tech companies to train people. But the tech industry is growing at two and a half times the rate the rest of the economy, and there's no way we can fill all the skills gaps through our own investment in skills and in the short term."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/amazon-hq2-canceled-plans-new-york-city-headquarters-2019-2">Why Amazon canceled HQ2 in New York City and what it means for everyone involved</a></h3>        <div>                    </div>    </div>

The CEO of $2 billion startup Deliveroo backs a new 'unicorn visa' to hire talent after Brexit

<ul class="summary-list"><li>Documents obtained <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">by the Financial Times</a> reportedly show that WeWork's new co-chief executives Artie Minson and Sebastian Gunningham would each earn $8.3 million if they get fired or leave otherwise.</li><li>WeWork's chief legal officer Jennifer Berrent would <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">also receive</a> $1.5 million if ousted and would not have to repay $12 million of retention bonuses, which could have been retrieved under her previous contract.</li><li>The new exit packages were negotiated after WeWork <a href="https://www.businessinsider.com/how-softbank-made-wework-an-offer-it-had-to-accept-2019-10">was acquired</a> by SoftBank, following the company's founder and CEO Adam Neumann stepping down in September.</li><li>Neumann received a <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">$1.6 billion exit package</a>, although the company itself has had to scale back its global expansion and let thousands of employees go.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories.</a></li></ul><p><a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">The Financial Times reports</a> that WeWork would pay out nearly $17 million to its new co-chief executives if they were fired or left under circumstances that include diminution of their duties, cuts to their pay, or involuntary relocation.</p><p>Documents reviewed <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">by the Financial Times</a> and sources familiar with the matter also said the company's chief legal officer Jennifer Berrent would receive $1.5-million if ousted under the same circumstances. The exit packages were negotiated under <a href="https://www.businessinsider.com/how-softbank-made-wework-an-offer-it-had-to-accept-2019-10">SoftBank's acquisition</a> of the venture real estate company, which has laid off thousands of employees and scaled back its global expansion following a <a href="https://www.businessinsider.com/wework-ipo-fiasco-adam-neumann-explained-events-timeline-2019-9">disastrous initial public offering attempt</a>.</p><p>Co-chief executives Artie Minson and Sebastian Gunningham took over WeWork after its founder and former CEO Adam Neumann stepped down, receiving a <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">$1.6 billion exit package</a> on the way out. </p><p>Neumann could continue to earn hundreds of millions under a revised agreement that altered the terms of his remaining financial interests in the company. Berrent's revised contract also means she will not <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">have to repay $12 million</a> of retention bonuses, something she could have had to do previously.</p><p>Details of the revised exit packages were sent to shareholders and employees, and the substantial sums are surprising given that the company's board has considered alternate candidates for all three executives. The documents <a href="https://www.ft.com/content/4b581546-25d6-11ea-9a4f-963f0ec7e134">also said</a> WeWork "may continue to experience [a] significant amount of turnover of senior management."</p><p>Minson and Gunningham initially took $1.5 million salaries in September, and now report <a href="https://www.businessinsider.com/the-fabulous-life-of-self-made-mogul-softbanks-marcelo-claure-2019-10">to Marcelo Claure</a>, a SoftBank executive who was appointed executive chairman of WeWork. Berrent downgraded from a salary of over $871,000 to $600,000.</p><ul class="read-more-links"><li>Read more:</li><li><a href="https://www.businessinsider.com/silverton-morgan-flager-30-of-unicorns-will-see-valuation-cuts-2019-12">WeWork and other top startups were cut down to size in 2019. This VC thinks 30% of the more than 400 other unicorns will soon see their valuations slashed too.</a></li><li><a href="https://www.businessinsider.com/liontree-founder-says-markets-still-like-startup-ipos-2019-12">A top tech banker warns that growth-at-all-costs startups won't cut it anymore after this year's unicorn IPO flops</a></li><li><a href="https://www.businessinsider.com/wework-peloton-contribution-margin-sec-non-gaap-measures-2019-12">The SEC's patience is running thin with an accounting measure that WeWork, Peloton, and Uber are fond of</a></li><li><a href="https://www.businessinsider.com/goldman-jpmorgan-tech-bankers-share-2020-ipo-market-predictions-2019-12">Top tech bankers say this year's IPO flops don't spell doom for the entire market, and enterprise software companies are lining up for 2020 debuts</a></li></ul><p class="tagline"><a href="https://www.businessinsider.com/intelligence/40-big-tech-predictions-for-2019?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=wework&amp;itm_campaign=40-big-tech-predictions-for-2019-2"></a></p>

New WeWork co-chiefs would reportedly each receive an $8.3-million golden parachute if they were fired or choose to leave

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Reuters</span></p><p class="caption">Adam Neumann, former CEO of WeWork</p></div><p></p></div></div></p><ul class="summary-list"><li><strong>WeWork bonds traded at record lows Wednesday and are now among the most expensive to short in the US corporate market. </strong></li><li><strong>$67 million of The We Company debt is on loan, around 10% of the total, demonstrating that investors have moved to short the flailing startup, according to IHS Markit data. </strong></li><li>"The company has atrocious corporate governance and now that investors are finally doing credit work on the name, they aren't liking what they see," <strong>said Christian Hoffman, a portfolio manager at Thornburg Investment Management, in an interview with Business Insider.</strong><strong> </strong></li><li><strong> <a href="https://www.businessinsider.com/prime?module=article&amp;area=summary">Click here for more BI Prime stories</a>.</strong></li></ul><p>Another day, another dollar against WeWork. </p><p>Investors have piled into short positions against the beleaguered unicorn's high yield junk debt to make the startup's bonds some of the most expensive to borrow in US corporate history. </p><p>Some $67 million or 10% of the company's outstanding $669 million of corporate debt was on loan, a proxy for short activity, according to data provider IHS Markit. The We Company's debt hit record lows Wednesday trading at 85 cents on the dollar. Credit ratings agency Fitch Ratings downgraded the company further into speculative or non-investment grade territory earlier this week. </p><p>"This is indicative of the persistent reach for yield which has pushed people into companies which don't belong in high yield," John McClain, a portfolio manager at Diamond Hill, a US investment firm that manages fixed-income funds, told Business Insider in an interview.</p><h2>Knock-on effect</h2><p>"This house of cards failing could have a knock-on effect for SoftBank and other unicorn IPOs as people start to focus more on cash flow than simply growth."</p><p>The debt is now among the most expensive to short in the $9.5 trillion US corporate debt market, according to Sam Pierson, a director at IHS Markit's securities lending division. It now costs 5.5% plus the cost of new borrowing to borrow WeWork debt, which now yields almost 12%.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>IHS Markit</span></p><p class="caption">We Company bond prices</p></div><p></p></div></div></p><p>"The company has atrocious corporate governance and now that investors are finally doing credit work on the name, they aren't liking what they see," said Christian Hoffman, a portfolio manager at Thornburg Investment Management, in an interview with Business Insider. "'Fake it till you make it' sometimes works, but it is a terrible underwriting strategy."</p><p>"WeWork was, and continues to be, a speculative investment and demonstrates that the market isn't always efficient in pricing risk," he added. </p><p>WeWork previously issued $702 million in unsecured bonds in 2018, at a hot point in fixed-income markets. Now it's CEO Adam Neumann has been removed and its IPO plans shelved. </p><p>The company's inaugural junk bonds yielded 7.875% and attracted plenty of investor interest, <a href="https://www.businessinsider.com/giant-tech-firms-like-uber-tesla-are-lapping-up-junk-debt-and-demand-is-growing-2018-11?r=US&amp;IR=T">following in the path</a> of other fast-growing tech companies like Uber, Tesla, and <a href="https://www.businessinsider.com/netflix-heres-why-investors-are-lining-up-to-buy-the-companys-bonds-2019-4?utm_medium=ingest&amp;r=US&amp;IR=T">Netflix</a> in tapping the high-yield market. Investors have become increasingly wary, however, of cash-burning companies piling on leverage amid dubious financials.</p><p><a href="https://www.businessinsider.com/wework-return-to-junk-bonds-isnt-working-ipo-valuation-fears-2019-9?r=US&amp;IR=T">WeWork's recently mooted plans of issuing yet more junk debt was met with derision from investors. </a></p><p>Business Insider has reached out to WeWork and SoftBank for comment. </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/wework-ipo-scott-galloway-impact-jp-morgan-softbank-2019-9">Scott Galloway explains who gets hosed from WeWork's IPO disaster</a></h3>        <div>                    </div>    </div>

Traders are piling in to short WeWork's 'house of cards' junk bonds - and the cost of the bets are some of the of the priciest on record

<p class="source"><span>Thomson Reuters</span></p><p class="caption">Buildings surround the Old Street roundabout dubbed "Silicon Roundabout" in London</p><ul class="summary-list"><li>Venture capitalists have warned a recession brought on by coronavirus could have a serious impact on the UK's startup scene. </li><li>The UK's Office for Budget Responsibility has warned a recession is 'quite possible' in 2020 as COVID-19 pandemic approaches its peak in the coming months.</li><li>Matt Clifford, chief executive of Entrepreneur First, told Business Insider some founders had learned 'very quickly' how brutal business could be. </li><li>One senior investor source said they expected companies' valuations to be downgraded, while a recession was 'inevitable'. </li><li><strong><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary">Click here for more BI Prime stories</a>.</strong></li></ul><p>Venture capitalists have warned an impending recession caused by the coronavirus pandemic will severely dent the growth prospects of startups in Europe.</p><p>Experts are rushing to diagnose the global economic risk posed by the outbreak, with many companies already <a href="https://markets.businessinsider.com/news/stocks/coronavirus-outbreak-stock-guidance-outlook-cuts-microsoft-apple-mastercard-companies-2020-2-1028947433?utm_source=markets&amp;utm_medium=ingest#mastercard3?utm_source=msn.com&amp;utm_medium=referral&amp;utm_content=msn-slideshow&amp;utm_campaign=bodyurl">lowering near-term revenue expectations</a>. On Sunday, <a href="https://markets.businessinsider.com/news/stocks/economic-recession-forecast-coronavirus-fuel-us-gdp-contraction-market-goldman-2020-3-1028999426">Goldman Sachs</a> warned a US recession was on the way, with economic growth set to stall in the first quarter before contracting 5% in the second.</p><p>In the UK, the Office for Budget Responsibility has warned a recession this year is "quite possible" as the COVID-19 outbreak reaches its peak in the coming months.</p><p>Speaking to Business Insider, a number of prominent VCs explained their concerns about the looming crisis, with many echoing the sentiment that the city's startups looked unprepared for a global recession.</p><p>Rob Kniaz is a partner at Hoxton Ventures, which has backed European unicorn startups including Babylon Health and Deliveroo. He said: "This will undoubtedly cause a recession - the major question is how quickly can we recover.</p><p>"The next few weeks and months will be essential. The shorter the period of shutdown the easier the recovery will be, but no matter how long there will be legions of people without income [...] and that's bad for the economy."</p><h2>It's been a bull market up to now</h2><p class="source"><span>Entrepreneur First</span></p><p class="caption">Matt Clifford (right) of Entrepreneur First, along with cofounder Alice Bentinck.</p><p>"We've had a 12-year bull market now, in which it was quite easy for investors to be founder-friendly, and it looked like there was an abundance of cash to go around," said Matt Clifford, CEO of Entrepreneur First, an organization which puts together pre-investment founder teams.</p><p>"But for many, this is the first week in a long time in which people have entered a scarcity mindset," he added. "And some founders are learning very quickly how brutal business can be."</p><p>Clifford said some venture capitalists were using the stress of the present moment as cover to take "pretty unusual steps".</p><p>"I won't name any names, but I know of at least two cases in the last week in which investors either withdrew funding or quite disingenuously tried to introduce new terms.</p><p>"Some start from a position of partnership and will try to build on that... Others will turn adversarial pretty quickly."</p><h2>Crazy valuations are done</h2><p class="source"><span>Beringea</span></p><p class="caption">Karen McCormick, CIO at Beringea</p><p>Karen McCormick, chief investment officer of tech investor Beringea, said the economic impact of coronavirus would likely "change the rules of the game" for investors and entrepreneurs alike. </p><p>"The days of growth at all costs, sky-high valuations, and endless funding are clearly numbered," she said. </p><p>"Overall, we expect it to be a rough period for most sectors and companies simply because of the unknowns and general slowing down as a result. While software companies may not have supply disruption, we expect sales cycles to be longer, and decisions to be deferred." </p><p>One leading fintech investor, who spoke to Business Insider on condition of anonymity, said the coming weeks would "be the straw that breaks the camel's back" for some companies.</p><p>"I think late-stage and growth financing for bigger startups is definitely going to slow down this year, compared to 2019," the person said. "And I think you could expect to see some valuations get downgraded as part of the overall market slowdown... A recession is inevitable."</p><h2>No one knows how long this will last</h2><p>Dawn Capital, the early-stage software investor whose portfolio included payments firm iZettle, struck a more optimistic note. Several European investors told BI that software startups, with their recurring revenue model, would likely survive the crisis.</p><p>"It is fairly certain that there will be one or two soft quarters which is not surprising after 10-plus years of a bull market," the firm said. "There will be delays in closing and ensuing lower growth. However, open opportunities are unlikely to disappear completely so we are encouraging everyone to continue working on the pipeline to move these along."</p><p>Hussein Kanji, partner at Hoxton Ventures, said it "wasn't clear" how easily London's startup scene would recover from a recession.</p><p>"None of us know how serious this will be, how long it will last or how quickly we'll come back from it," he said. Kanji highlighted the dual threats to supply and demand posed by the coronavirus.</p><p>"Most of our founders have no experience handling these kinds of shocks." </p><p>One thing Kanji is sure about?</p><p>"Startups die when they run out of cash."</p><p class="tagline"><a href="https://www.businessinsider.com/intelligence/10-up-and-coming-fintechs-2019?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=finance&amp;itm_campaign=10-up-and-coming-fintechs-2019-2"></a></p>            <h3>NOW WATCH: <a href="https://www.businessinsider.com/salomon-recycles-shoes-ski-boots-2020-2">How running shoes can be recycled into ski boots</a></h3>

'A recession is inevitable': European investors and startups brace for cash drought and lower valuations amid coronavirus slowdown

<p><div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div></p><ul><li><strong><a href="https://markets.businessinsider.com/stocks/f-stock">Ford Motor Company</a> announced a joint venture with the Indian carmaker Mahindra &amp; Mahindra on Tuesday.</strong></li><li><strong>The goal is to boost Ford sales in India and other emerging markets. </strong></li><li><strong>Shares of Mahindra climbed as much as 3.5% on the news, while Ford traded slightly higher.</strong></li><li><strong>As part of the $275 million venture, Ford will transfer all India operations to Mahindra. The move comes amidst a massive $11 billion restructuring at Ford. </strong></li><li><strong><a href="https://markets.businessinsider.com/stocks/f-stock">Watch Ford trade live on Markets Insider</a>.</strong></li></ul><p><a href="https://markets.businessinsider.com/stocks/f-stock">Ford Motor Company</a> has teamed up with Indian carmaker <a href="https://markets.businessinsider.com/stocks/mahindramahindra_3/company-profile">Mahindra &amp; Mahindra</a> to stem the company's losses in the merging nation, the company <a href="https://shareholder.ford.com/investors/news-and-events/" target="_blank" rel="noopener">announced</a> Tuesday.</p><p>Ford will transfer all of its India operations to Mahindra in the joint venture, valued at $275 million. Mahindra will own 51% of the venture, which Ford expects to  be operational by mid 2020. </p><p>Shares of Ford gained roughly 0.5% in early trading Tuesday on the news. Mahindra's <a href="https://finance.yahoo.com/quote/M&amp;M.NS?p=M&amp;M.NS&amp;.tsrc=fin-srch" target="_blank" rel="noopener">stock</a> climbed as much as 3.5%.</p><p>The move is a continuation of a strategic partnership with Mahindra that began in September 2017. It builds on CEO Jim Hackett's work to make Ford a leaner, more profitable company. Since taking the top job in 2017, Ford has announced it will close five plants in Europe and <a href="https://www.cnbc.com/2019/06/27/ford-to-slash-12000-jobs-in-europe-by-2020.html">slash 12,000 jobs there</a>. It is also cutting <a href="https://www.businessinsider.com/ford-to-cut-jobs-as-part-of-global-restructuring-effort-2018-10">7,000 global salaried employees</a> - about 10%- in an $11 billion restructuring plan. </p><p><em><strong>Read more</strong>: <a href="https://www.businessinsider.com/dan-fuss-buffett-of-bonds-on-investing-strategy-credit-risks-2019-9" target="_blank" rel="noopener">Dan Fuss is revered as 'the Warren Buffett of bonds.' He walked us through the investing approach that's delivered market-beating returns and turbocharged his 61-year career.</a></em></p><p>The joint venture will help grow Ford's brand in India and other high-growth emerging markets. India is the fourth-largest automobile market, and Ford has failed to take a meaningful stake there for two decades, <a href="https://www.bloomberg.com/news/articles/2019-09-24/ford-to-put-struggling-india-business-into-venture-with-mahindra">Bloomberg reported</a>.</p><p>"Strong alliances like this play a crucial role in assuring we continue to achieve our vision while at the same time staying competitive and delivering value to our global stakeholders," Hackett said in a statement. </p><p>The joint venture will introduce three new Ford vehicles that will have a combination of Ford branding and Mahindra technology. The venture will also be responsible for developing electric vehicles and supporting "the growth of sustainable mobility across emerging markets," the company said. </p><p>The company has had a rocky year. In July, it announced it would step up its global alliance with Volkswagen, to use VW technology and invest further in self-driving cars. Then, In September, Moody's downgraded its shares <a href="https://markets.businessinsider.com/news/stocks/moodys-downgraded-ford-to-junk-status-and-stock-is-set-to-tank-2019-9-1028511833">to junk status, citing its weak financial outlook</a> after second quarter earnings <a href="https://www.businessinsider.com/ford-second-quarter-profit-falls-on-restructuring-charges-2019-7">largely disappointed.</a> </p><p><a href="https://markets.businessinsider.com/stocks/f-stock">Ford is up 18%</a> year to date.</p><p><em><strong>Read more</strong>: <a href="https://www.businessinsider.com/wework-ipo-fiasco-marks-top-for-unicorns-tech-stock-trouble-2019-9" target="_blank" rel="noopener">Morgan Stanley says WeWork's failed IPO marks the end of an era for unprofitable unicorns - and explains why it leaves the market's tech kingpins vulnerable</a></em></p><p><div class="KonaFilter image-container display-table"><div><div class="image"><a href="https://markets.businessinsider.com/stocks/f-stock"></a></div></div></div></p><p class="tagline">Get the latest Ford stock price<a href="http://markets.businessinsider.com/stock/f-Quote"> <strong>here.</strong></a></p>

Ford announces $275 million joint venture with Indian automaker Mahindra

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters/Romeo Ranoco</span></p><p class="caption">Protesters burn a cube effigy with a face of President Rodrigo Duterte during a National Day of Protest outside the presidential palace in metro Manila, Philippines.</p></div><p></p></div></div>Here is what you need to know. <strong><a href="http://e.businessinsider.com/join/ci/finance-insider-social-first&amp;hash=36afac95fa844948a9f363295d512fca">Sign up here to get "10 Things" delivered directly to your inbox.</a></strong></p><p><strong><a href="http://www.businessinsider.com/kim-jong-un-responds-to-trump-north-korea-un-2017-9">North Korea responds to Trump's UN speech</a>. </strong>Moments after North Korean leader Kim Jong Un called Trump "mentally deranged," <span>Ri Yong Ho, minister of foreign affairs, said his country may consider testing a hydrogen bomb in the Pacific Ocean.</span></p><p><strong><a href="http://www.businessinsider.com/ap-the-latest-sp-cuts-hong-kong-rating-after-cutting-chinas-2017-9?r=UK&amp;IR=T">Hong Kong loses its AAA rating</a>. </strong>On day after downgrading China, S&amp;P downgraded Hong Kong one notch to AA+, citing the close ties between the two places, Reuters says. </p><p><strong><a href="http://www.businessinsider.com/ubs-survey-eu-companies-move-all-staff-out-of-uk-brexit-2017-9?r=UK&amp;IR=T">A UBS survey found 15% of eurozone companies plan to move everyone out of the UK</a>. </strong>A UBS survey of 1,200 major corporations across the eurozone found that 15% plan to move everyone out of the United Kingdom following Brexit, and another <span>28% say they will remove "a large amount" of capacity.</span> </p><p><strong><a href="https://www.businessinsider.com.au/goldman-sachs-bear-market-stocks-risk-indicator-2017-9">Goldman Sachs doesn't see a bear market for US stocks</a>. </strong>Goldman's Bear Market Risk Indicator sits a 67%, a level that has acted as a lead indicator for past bear markets, but the bank says, "Without monetary policy tightening much, concerns about a looming recession - and therefore risks of a 'cyclical' bear market - are lower."</p><p><strong><a href="http://www.businessinsider.com/wall-street-league-tables-goldman-sachs-slips-2017-9">JPMorgan retains the crown as king of Wall Street</a>. </strong>JPMorgan ranked first in <span>investment banking and FICC (fixed income, currencies, and commodities) and tied for first in equities with Morgan Stanley, according to data-analytics company Coalition. </span></p><p><strong><a href="http://www.businessinsider.com/mongodb-files-for-ipo-2017-9">MongoDB files to go public</a>. </strong>The database startup, which was recently valued at $1.6 billion, will become the seventh "unicorn" to go public in 2017. </p><p><strong><a href="http://www.businessinsider.com/report-hpe-to-lay-off-5000-workers-in-latest-restructuring-2017-9">Hewlett Packard Enterprise is reportedly laying off 5,000 employees</a>. </strong>The job cuts will impact about 10% of Hewlett Packard Enterprise's workforce and are part of a wider effort to slash costs, Bloomberg reports. </p><p><strong><a href="http://www.businessinsider.com/alice-walton-richest-woman-2016-1">Alice Walton becomes the world's richest woman</a>. </strong>The Walmart heiress, worth an estimated $38.4 billion, reclaimed the title as world's richest woman following the death of L'Oreal heiress Liliane Bettencourt.</p><p><strong><a href="http://markets.businessinsider.com/indices">Stock markets around the world trade mixed</a>. </strong>Hong Kong's Hang Seng (-0.82%) lagged in Asia and Germany's DAX (+0.27%) leads in Europe. The S&amp;P 500 is set to open little changed near 2,501.</p><p><strong><a href="http://markets.businessinsider.com/economic-calendar#date=09/22/2017&amp;name=&amp;countries=us&amp;eventtypes=&amp;tab=1,2,3">US economic data is light</a>. </strong>Markit US Composite PMI will be released at 9:45 a.m. ET. The US 10-year yield is down 2 basis points at 2.25%. </p>

10 things you need to know before the opening bell

<div style="float: right; margin: 15px 0 20px 20px;"><table border="0" cellspacing="0" cellpadding="0"><tbody><tr><td colspan="2"><a href="https://static-ssl.businessinsider.com/category/chart-of-the-day"> </a></td></tr><tr><td><a href="http://www.businessinsider.com/category/chart-of-the-day"></a></td><td><a href="http://www.businessinsider.com/gender-equality-in-tech-companies-2016-3"></a></td></tr></tbody></table></div><p>Yesterday, news broke that office space provider <a href="http://www.businessinsider.com/wework-raising-780-million-2016-3">WeWork is raising a new round</a> that will value the company at $17 billion. This flies in the face of recent talk about a popping tech bubble and dying billion-dollar "unicorns."</p><p>But perhaps this isn't a bubble popping, as happened in the dot-com era, but simply a reshuffling. Startups that can convince investors that their growth prospects are still good and that they have a path to profitability may still find it easy to raise money. It's the struggling companies with slowing growth and no clear path to profits that could find a harder time. </p><p>With that reshuffling in mind, <a href="http://www.statista.com/">Statista</a> has charted the most valuable venture-backed private companies in the world, based on the valuation at their last round (this does not include reported downgrades by big institutional investors).  WeWork is now in 7th place.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Statista</span></p></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/this-woman-is-building-terrible-robots-2016-2">This woman is getting famous for building hilariously terrible robots</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="4wa2RhMTE62z0P1rMU2fq9jkjL9BXP-x" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

WeWork is now worth as much as Snapchat

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="http://www.gettyimages.com/license/495497836">Justin Sullivan / Getty Images</a></span></p><p class="caption">Charles Schwab CEO Walt Bettinger has added a Silicon Valley-style subscription pricing model.</p></div><p></p></div></div></p><ul class="summary-list"><li>Charles Schwab rolled out subscription pricing at the end of March for its robo-advisor's premium service, replacing the traditional fee scale that charges a percentage of assets invested.</li><li>The robo-advisor said it has added $1 billion in assets since making the pricing change, with a 25% increase in account openings.</li><li>While banks like Goldman Sachs have started looking at subscription-like services for things like data, Schwab's early success has been the clearest of example of Silicon Valley's influence in financial services.</li><li><a href="https://www.businessinsider.com/prime">Click here for more BI Prime stories</a>. </li></ul><p>Goldman Sachs has long been public about its desire to be the <a href="https://www.businessinsider.com/goldman-sachs-wants-to-become-the-google-of-wall-street-2017-4">Google of Wall Street</a>, while JPMorgan Chase CEO Jamie Dimon <a href="https://www.businessinsider.com/theres-a-subtle-shift-underway-at-jpmorgan-and-it-shows-how-amazons-influenced-the-banking-giant-2018-4">has lauded Amazon Prime's structure</a>. And by experimenting with subscription pricing, Charles Schwab seems like its angling to be the Netflix of asset management.</p><p>The discount brokerage and manager of hundreds of billions of dollars of mutual fund and ETF assets said its robo-advisor's premium service, which also includes human advice, saw assets jump by 25%, or $1 billion, after switching to Silicon Valley-style subscription pricing from a traditional fee on assets.</p><p>Flat subscription pricing has long been common for companies like Netflix, Spotify, and Hulu, but is uncharted territory for many financial services companies.</p><p>Goldman has begun to <a href="https://www.businessinsider.com/goldman-sachs-developing-subscription-service-around-data-2019-3">hire for a subscription service</a> for analytics and data around risk, and BlackRock has long licensed its Aladdin risk platform. But giving up asset-based pricing means wealth managers will earn less from their wealthiest customers, so some are skeptical about how widely the model can be deployed.    </p><p>The premium Intelligent Portfolios service, which charges a one-time $300 initial planning fee and a quarterly $90 subscription fee, also had a  37% increase in new households, meaning it attracted people who had never used Schwab before.</p><p>"The move to subscription-based financial planning came as a direct result of client feedback about the appeal of this pricing approach, and it's clear from these early results that we've struck a chord," said Cynthia Loh, Charles Schwab's VP of digital advice and innovation, in a recent statement. "Today's consumers expect simplicity, transparency and value - and how they invest should be no different."</p><p><em><strong>See more</strong>: <a href="https://www.businessinsider.com/leaked-memo-deutsche-bank-research-layoffs-2019-7">Leaked memo shows how Deutsche Bank spared its research department, even as the industry braces for a brutal future</a></em></p><p>The most basic version of the robo-advisor, which does not give clients access to any personalized advice, still charges a fee of 0.30% of assets invested. Comparable hybrid robos, which automate the portfolio but provide some kind of financial planning or advice, charge between 0.30% and 0.40% of assets and have a required minimum investment. </p><h2>Moving beyond 'old white people' </h2><p>David Goldstone, a research analyst at BookenD Benchmark and an author on a report on roboadvisors, said "pretty much anyone with over $200,000 is going to reduce the amount they're paying for financial planning" with Schwab's new premium pricing. "People will always be interested in a way to reduce the fees they're paying for financial services," he said. </p><p>The switch to subscription pricing may have indeed lured a wealthier clientele, since Schwab said there was a 40% increase in the average household income for customers using the robo-advisor since the change.</p><p>"We've seen many new clients sign up who knew they needed help with financial planning but hadn't found an advisory model that fit them - either because they prefer a more digital approach, are cost-conscious, or find traditional planning services overly complex," Loh said in the release.</p><p><em><strong>See more: <a href="https://www.businessinsider.com/hedge-funds-competing-with-startups-for-talent-2019-4">Silicon Valley has made top data-science talent too expensive for many hedge funds, so they're getting creative to compete</a></strong></em></p><p>This subscription-type service may also be easier to shop and help lure in new customers without advisors having to go out and recruit them.</p><p>Alan Moore, co-founder of XY Planning that helps connects advisors with customers, said that subscriptions can help broaden the community of those offering and using financial advice beyond "old white people."</p><p>"The subscription model has actually allowed us to work with non-white clients, which is therefore attracting non-white advisors, which is exciting because it allows us to bring financial planning to everyone," Moore said at the InVest conference in New York Wednesday. </p><p><em><strong>See more</strong>: <a href="https://www.businessinsider.com/slack-employees-have-sold-stakes-in-the-company-private-market-2019-6">Employees of unicorns are cashing out before their start-up goes public. It shows how rocky this year's big IPOs have been.</a></em></p><p>But a flat-fee pricing revolution for robo-advisors may not spread overnight, Goldstone said. Too many wealth management companies rely on the higher fees generated by their wealthiest clients to "subsidize" their other accounts.</p><p>"Flat-fee pricing forces companies to prove they're efficient and can provide good service across all types of clients," he said. </p><p>Schwab's robo platform manages $41 billion as of the end of June across the premium and standard options. Despite the growth in robo-advisor assets, analysts from Bank of America and Keefe, Bruyette and Woods recently downgraded Schwab's <a href="https://seekingalpha.com/news/3477379-schwab-loses-two-bulls-updated?dr=1#email_link">stock</a> on concerns about margin pressures.</p><p>Schwab shares rose on Tuesday, though, <a href="https://www.cnbc.com/2019/07/15/schwab-is-reportedly-in-talks-to-buy-usaas-wealth-management-brokerage-units-for-2-billion.html">on the news that it is purchasing</a> USAA's brokerage and wealth management divisions for $2 billion.  It is expected to hold a call on its second-quarter earnings on Friday.</p><p class="tagline"><a href="https://www.businessinsider.com/intelligence/future-of-fintech?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=finance&amp;itm_campaign=future-of-fintech"></a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/kylie-jenner-kardashian-youngest-self-made-billionaire-forbes-net-worth-fortune-2019-3">Kylie Jenner is the world's second highest-paid celebrity. Here's how she makes and spends her $1 billion.</a></h3>        <div>                    </div>    </div>

Charles Schwab is experimenting with Netflix-style pricing. It's the clearest example yet of finance trying to imitate Silicon Valley.

<p><em></em></p><em><p class="source"><span>Thomson Reuters</span></p><p class="caption">Traders work on the floor of the NYSE in New York</p></em><em><strong>Welcome to Finance Insider, Business Insider's summary of the top stories of the past 24 hours. </strong></em><p>Some of the biggest players in trading sat side by side at the <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=402034">House Financial Services Committee's US Equity Market Structure hearing</a> on Tuesday, and it got pretty heated. </p><p><span>Ari Rubenstein, CEO of high-speed market-maker Global Trading Systems, <a href="http://www.businessinsider.com/wall-st-tech-ceo-on-battle-between-americas-stock-market-behemoths-2017-6">took aim at Bats Global Markets</a>, which has proposed <a href="http://www.businessinsider.com/bats-proposes-new-closing-auction-model-2017-5">an alternative to the closing auction at the end of the trading day</a>. IEX, </span>America's newest stock exchange, said a popular practice on Wall Street causes "<a href="http://www.businessinsider.com/iex-there-is-clear-and-significant-harm-to-investors-2017-6">clear and significant harm to investors</a>." And Chris Concannon, president and chief operating officer at Chicago Board Options Exchange, said <a href="http://www.businessinsider.com/exchange-boss-ultra-high-priced-stocks-are-hurting-investors-2017-6">u</a><span><a href="http://www.businessinsider.com/exchange-boss-ultra-high-priced-stocks-are-hurting-investors-2017-6">ltra-high-priced stocks are hurting investors</a>. </span>Elsewhere in market infrastructure and fintech news:</p><ul><li><a href="http://www.businessinsider.com/opendoor-securities-has-raised-10-million-2017-6">A trading startup tackling a key problem in the world's most important market has raised $10 million</a></li><li><a href="http://www.businessinsider.com/blockchain-digital-trade-chain-ibm-hyperledger-deutsche-bank-hsbc-soc-gen-2017-6">IBM landed a big win in the race to sell blockchain to Wall Street</a></li><li><a href="http://www.businessinsider.com/blackrock-buys-tech-firm-cachematrix-holdings-2017-6">The world's largest investor just struck another tech deal</a></li><li><a href="http://www.businessinsider.com/visa-invests-in-swedish-fintech-unicorn-klarna-2017-6">Visa is investing in Swedish fintech unicorn Klarna</a></li></ul><p>In markets news, <span>Warren Buffett's </span><a href="http://markets.businessinsider.com/news/stocks/stor-stock-price-warren-buffett-newest-investment-downgrade-2017-6-1002128272">newest investment got downgraded on Wall Street</a>. In other news:</p><ul><li><a href="http://www.businessinsider.com/tourbillons-jason-karp-this-market-doesnt-make-any-sense-2017-6">$3.7 BILLION HEDGE FUND: This market doesn't make any sense</a></li><li><a href="http://www.businessinsider.com/r-us-stock-market-running-on-fumes-fed-policymaker-says-2017-6">FED'S WILLIAMS: The US stock market is "running pretty much on fumes"</a></li><li><a href="http://www.businessinsider.com/cracks-emerging-in-the-calmest-low-volatility-overcrowded-market-in-years-2017-6">There are "cracks emerging" in the calmest market in years</a></li><li><a href="http://www.businessinsider.com/stock-market-relying-more-than-ever-on-etf-investment-2017-6">The stock market is relying more than ever on the world's hottest investment product</a></li></ul><p>Elsewhere, the Russian bank whose boss met with Jared Kushner <a href="http://www.businessinsider.com/what-is-veb-putin-bank-that-jared-kushner-met-2017-6">keeps popping up as the Trump-Putin story unfolds</a>. Miranda Kerr has returned <a href="http://www.businessinsider.com/r-miranda-kerr-returns-jewelry-gifted-in-alleged-malaysian-scheme-2017-6">millions of dollars worth of jewelry that may have been part of a money laundering scheme</a>. One of China's largest <a href="http://www.businessinsider.com/one-of-chinas-largest-real-estate-buyers-investigated-for-corruption-2017-6">real estate buyers is being investigated for corruption</a>.</p><p>And a damning new IMF report <a href="http://www.businessinsider.com/imf-sows-doubts-on-trump-agenda-us-growth-prospects-2017-6">pours cold water on the entire Trump agenda</a>, according to Business Insider's Pedro da Costa. </p><p>There's a ton of news in the healthcare sector:</p><ul><li><a href="http://www.businessinsider.com/chris-collins-backed-innate-immunotherapeutics-stock-price-drops-90-2017-6">House Republicans' favorite biotech investment just plunged by 90%</a></li><li><a href="http://www.businessinsider.com/senate-republican-healthcare-bill-bcra-trumpcare-vote-count-2017-6">The Senate Republican healthcare bill is collapsing</a></li><li><a href="http://www.businessinsider.com/cbo-medicaid-cuts-772-billion-for-senate-health-bill-obamacare-repeal-2017-6">The CBO has debunked a key Republican talking point on the Senate health bill</a></li><li><a href="http://www.businessinsider.com/cbo-score-senate-republican-healthcare-bill-trumpcare-2017-6">The CBO says the Senate GOP healthcare bill would leave 22 million more without insurance</a></li><li><a href="http://www.businessinsider.com/cbo-report-senate-healthcare-bill-premium-costs-2017-6">The CBO report shows how the Senate healthcare bill could crush low-income Americans</a></li><li><a href="http://www.businessinsider.com/fda-list-of-drugs-without-generic-competition-to-prevent-price-gouging-2017-6">The FDA just made a move that could prevent the next drug price gouger</a></li></ul><p><span>Nestlé, the Swiss food and candy company that </span><a href="http://www.businessinsider.com/nestle-announces-share-buyback-after-loebs-third-point-reveals-stake-2017-6">has been targeted by an $18 billion activist fund</a><span>, says it will buy back roughly $21 billion of its shares. In related news:</span></p><ul><li><a href="http://www.businessinsider.com/apple-watch-swiss-watch-swatch-2017-6">Apple is crushing the Swiss watch industry - and one brand is particularly vulnerable</a></li><li><a href="http://www.businessinsider.com/amazon-effect-grubhub-delivery-downgrade-morgan-stanley-2017-6">MORGAN STANLEY: GrubHub could get "Amazoned"</a></li><li><a href="http://markets.businessinsider.com/news/stocks/kroger-ceo-whole-foods-is-a-great-fit-for-amazon-2017-6-1002128583">KROGER CEO: "Whole Foods is a great fit" for Amazon</a></li><li><a href="http://www.businessinsider.com/hedge-funds-shorting-uk-retail-a-key-sector-affected-by-brexit-2017-6">Hedge funds are taking big bets against the UK shops that are feeling the heat from Brexit and online competition</a></li></ul><p>The big tech news of the day is that Google has been hit with a record-breaking <a href="http://www.businessinsider.com/eu-fines-google-record-breaking-antitrust-shopping-case-2017-6">€2.4 billion fine by the EU over its antitrust case</a>. Elsewhere:</p><ul><li><a href="http://www.businessinsider.com/verizon-wants-t-mobile-and-vodafone-consumer-data-to-take-on-facebook-2017-6">Verizon wants to borrow T-Mobile and Vodafone's consumer data to take on Facebook and Google</a></li><li><a href="http://www.businessinsider.com/sprint-talks-with-charter-communications-comcast-to-boost-wireless-2017-6">Sprint is in talks with Charter Communications and Comcast to boost their wireless offerings</a></li><li><a href="http://www.businessinsider.com/tesla-stock-price-music-streaming-elon-musk-2017-6">MORGAN STANLEY: Here's why it makes sense for Tesla to become the next big music-streaming service</a></li><li><a href="http://www.businessinsider.com/nvidia-partners-with-volvo-zf-to-power-self-driving-cars-2017-6">Nvidia just got closer to cornering a key part of the self-driving car market</a></li><li><a href="http://www.businessinsider.com/drive-ai-50-million-self-driving-roof-kits-2017-6">A startup born out of Stanford just raised $50 million to make the brain for self-driving cars</a></li></ul><p>In other news, a new private <a href="http://www.businessinsider.com/what-is-surf-air-2017-6">jet service offers unlimited flights to Europe</a>. And a futuristic, flying taxi <a href="http://www.businessinsider.com/volocopter-flying-taxi-dubai-tests-2017-6">will shuttle passengers in Dubai later this year</a>.</p><p>Lastly, here's the most important skill every leader needs to succeed, <a href="http://www.businessinsider.com/tour-de-france-team-boss-most-important-skill-leaders-need-to-succeed-2017-6">according to a Tour de France team manager</a>.</p>            <h3>NOW WATCH: <a href="http://www.businessinsider.com/henry-blodget-tech-market-nowhere-near-dotcom-days-2017-6">HENRY BLODGET: Tech market is nowhere near the dotcom days</a></h3>                                    Please enable Javascript to watch this video

What you need to know on Wall Street today

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="https://www.flickr.com/photos/carbonquilt/15287257162/in/photolist-phTbXm-qyZVR7-fbTMue-5vWrWn-gcbGgQ-fbTMic-gcbzdy-81zmGT-81zmsR-81zmpc-81CvA3-81Cv3h-81zmAk-81zmVK-81zmwX-81zn54-dMJbGY-dMCBUr-81CLcG-81CLBA-81zBJr-81CLvS-81CLkb-81zBTB-81CLt1-81zBxv-81zuyV-81CDZm-afaiDZ-p1rftn-phTo1J-p1rdSh-p1qshs-p1qagc-p1qrr9-p1qqmo-phTnG7-phDhit-p1qapi-p1qanz-bTd72F-ciaHRG-5vMRHc-aZag1p-aZafWz-jvszbc-5L7pxk-9eLTzz-bqpBwV-7XfEV7/">Flickr/Carbon Visuals</a></span></p></div><p></p></div></div>Stocks fell and oil collapsed to start the week, which is an opening sentence to this post it feels like we've written a dozen times in 2016 alone. </p><p>First, the scoreboard:</p><ul><li><strong>Dow:</strong> 15,885.2, -208.3, (-1.3%)</li><li><strong>S&amp;P 500:</strong> 1,877.1, -29.8, (-1.6%)</li><li><strong>Nasdaq:</strong> 4,518.5, -72.7, (-1.6%)</li><li><strong>WTI crude oil:</strong> $29.75, -7.6%</li></ul><p><span style="line-height: 22.5px;">And now, the top stories on Monday:</span></p><ol><li>We only had one economic data point cross the wires on Monday but fortunately it was exciting report (though bad for Texas). The latest <a href="http://www.businessinsider.com/dallas-fed-manufacturing-survey-2016-1">manufacturing report from the Dallas Federal Reserve</a> was released Monday with the business activity index falling to a remarkable -34.6, the lowest reading in over six years and another sign that the oil rich state is struggling in the wake of the oil price crash. Expectations for the economy in Texas "weakened notably" in January's survey with one executive saying, "Demand slowed more quickly than is typical in December. Early demand is weaker in January, leading to the belief that growth in 2016 may be elusive."</li><li>A note passed our way from Neil Dutta at Renaissance Macro on Tuesday <a href="http://www.businessinsider.com/manufacturing-employment-in-texas-2016-1">highlighted</a> that while much has been made about the loss of manufacturing jobs and the general slowdown seen in the sector over the last year, the impact is really all being felt in Texas. <div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Renaissance Macro</span></p></div><p></p></div></div></li><li>And of course when we talk about Texas, again, we're really just talking about oil. Over the weekend The Telegraph's <a href="http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12118594/Saudis-will-not-destroy-the-US-shale-industry.html">Ambrose Evans-Pritchard was out</a> with a report on why the Saudi's will not kill the US shale industry. What stood out on our end was a <a href="http://www.businessinsider.com/how-shale-oil-contributed-to-oil-crash-2016-1">quick two-sentence quote</a> Evans-Pritchard pulled out of a talk at Davos, with energy expert Daniel Yergin explaining why US shale is in control and traditional oil powers are simply outmatched today. "It takes $10 billion and five years to launch a deep-water project," Yergin said. "It takes $10 million and just 20 days to drill for shale." This is not dissimilar in spirit from <a href="http://finance.yahoo.com/news/only-america-save-oil-market-110700244.html">Akin Oyedele's report out this weekend</a>, citing Citi's Ed Morse, that argued the fate of the oil market is in the hands of the US (read: shale producers). If these more nimble US shale producers simply decline to cut production then there's really no reason to think supply will come down, and as a result, prices should remains stubbornly low. </li><li>The price of oil fell over 7% on Monday to around $29.75, <a href="http://www.businessinsider.com/crude-oil-bull-market-2016-1">though as the folks over at Bespoke noted</a>, we'd need to see WTI prices fall back below $25.75 to officially enter a new bear market. Of course, the <em>old</em> bear market is more or less still in place - technical definitions be damned - because prices are still near 12-year lows and off about 70% from their highs reached back in June 2014. </li><li>In related commodities news, <a href="http://www.businessinsider.com/goldman-downgrades-caterpillar-to-sell-2016-1">Goldman Sachs downgraded their outlook on shares of Caterpillar</a> - cutting their rating on the stock to "Sell" from "Neutral" - arguing that there's about 13% of downside in the current stock price as the "extended commodity deflation cycle" continues to take its toll on Caterpillar's customers. Shares of Caterpillar fell about 5% on Monday.</li><li>Twitter shares also took it on the chin on Monday, <a href="http://www.businessinsider.com/twitter-shares-following-news-of-executive-shakeup-2016-1">falling about 4%</a> after a series of reports out on Sunday detailed that several high-level people would be leaving the company. The company's head of product, head of engineering, and head of media all departed in a big shakeup that will also see the company appoint two new people to the board of directors in the coming days. The best part: Business Insider has been told at least one of these people will be a "big media name." So we'll see how big, I guess. </li><li>In tech earnings news, Apple is reporting earnings <em>tomorrow</em> after the closing bell and this is the quarter that we're all supposed to be scared of. Business Insider executive editor Jay Yarow - fresh off a stint in Davos - <a href="http://www.businessinsider.com/apple-earnings-preview-2016-1">has the full preview here</a>, but the thing to know is that iPhone sales look likely to decline when compared to the same quarter last year. That will be the first time this happens (if it happens, of course) in the product's history. Now, obviously, iPhone sales were not going to increase forever, but if these forecasts come to pass it isn't much of a leap to assert that this will in fact be the start of a new era for the company. </li><li>Speaking of things that seem to go up forever, <a href="http://www.businessinsider.com/new-cirp-amazon-prime-numbers-2016-1">Amazon Prime memberships now total 54 million</a> according to the latest report from Consumer Intelligence Research Partners. This is a 35% increase from the same time last year, though since Amazon itself doesn't disclose membership totals for its $99-per-year loyalty program, we're not 100% sure. Amazon reports earnings on Thursday, and while its Prime service is extremely convenient and the company is often thought of as a retailer, the big story at Amazon now is the growth of its Web Services business. </li><li><a href="http://www.businessinsider.com/baupost-group-2015-results-2016-1">Seth Klarman had a bad year in 2015</a>. Klarman's notoriously secretive Baupost Group posted a "mid-single-digit decline" as Klarman tells it in an investor letter, though a separate update seen by Business Insider's Julia La Roche puts some numbers on that: the fund's public investments portfolio fell 6.7% while the private investments gained 2.4%. The average hedge fund fell 3.6% last year.</li><li>But of course the real interesting part of these letters is not the performance figures but what these hedge funds types have to say about the world. Klarman, for his part, <a href="http://www.businessinsider.com/seth-klarman-on-unicorns-2016-1">is worried about unicorns</a>. "<span>A voracious appetite for tech startups has driven prices sky-high, giving rise to the term 'unicorn,' meaning privately held firms worth $1 billion or more," Klarman wrote. "In today's overheated environment, 'unicorns' are no longer a rare breed: there were an estimated 143 extant at year-end, up from 45 two years ago." Klarman added that these unicorns are awfully hungry, requiring tons of cash just to feed the beast and enable a chance at the spectacular growth rate needed to justify these valuations. As a result, Klarman writes, "<span>Recently there have been downward revisions in the valuations of several of the unicorns held by major mutual funds, a sign, perhaps, that excesses in that sector are in the process of being corrected, that the herd is about to be thinned."</span></span></li><li><span><span><a href="http://www.businessinsider.com/blood-in-the-water-90-of-the-billion-dollar-unicorn-startups-are-in-trouble-2016-1">This is what the people in Davos were saying, too</a>. </span></span></li><li><span><span>Another investment that has a less exciting name but is also making people nervous is high-yield debt, also known as junk bonds. And reportedly junk bond investors are now set to learn more about these assets. A <a href="http://www.bloomberg.com/news/articles/2016-01-25/junk-bond-investors-to-get-lessons-on-covenants-as-risks-mount">report from Bloomberg</a> on Monday said that junk investors in Europe are set to attend a series of seminars in February that will give investors more information about the protections they have in the event the company they're invested in begins to face financial distress. These seminars will specifically deal with covenants, which is basically the agreement made between a borrower and a lender. A lot of the stuff contained in covenants, it seems, isn't fully understood by investors (or else why would there be seminars about how to understand them!). So I guess going through all the paperwork isn't, like, <em>absolutely</em> required or encouraged or expected before investing. And so here we are. </span></span></li><li>Bucking recent trends, it seems like BlackRock's clients are <em>not</em> worried about bond market liquidity even though <em>the biggest thing people have been worried about</em> has been bond market liquidity. <a href="http://www.businessinsider.com/category/liquidity">Or just liquidity generally</a>. Either way. A <a href="http://www.bloomberg.com/news/articles/2016-01-25/blackrock-sees-clients-shifting-to-illiquid-assets-from-stocks">Bloomberg report on Monday said</a> more than half of the 170 respondents to a recent BlackRock survey indicated the firm's institutional investors were building positions in real estate and private credit in an effort to generate higher returns and combat market volatility. Which, sure, fine. But getting away from market volatility by basically running away from an entire market - like stocks, for example - and heading into something uncontroversially<em> more </em>illiquid, like real estate, is a weird way to go about tamping down volatility. </li><li><a href="http://www.ecb.europa.eu/press/key/date/2016/html/sp160125_1.en.html">Mario Draghi spoke</a></li></ol>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/walmart-closing-stores-worldwide-retail-supercenter-express-neighborhood-texas-2016-1">Find out if you live near one of the 153 US Walmart stores that are closing this month</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="d0bW83MDE6hsoCBXLICH4MLVrvyUNweQ" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

STOCKS FALL, OIL TUMBLES: Here's what you need to know

<p class="p1"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Michael Seto/Business Insider</span></p><p class="caption">Phil Libin stepped down as Evernote's CEO in July.</p></div><p></p></div></div>In 2012, the note-taking app Evernote became one of the first "Unicorn" startups, joining the exclusive club for private tech companies worth $1 billion or more.</p><p class="p1">That year, Evernote passed 30 million registered users, brought its total funding to $270 million, and seemed like a sure-fire candidate to hit the public market in the coming years.</p><p class="p2">Fast forward three years, and the tables have turned.</p><p class="p2">Despite reaching 150 million registered users this year, Evernote has been slow to develop the revenue side of its business and is grappling with departures and cost-cutting, according to interviews that Business Insider conducted with more than a half dozen current and former employees of the company. </p><p class="p2">Evernote has laid off roughly 18% of its workforce in the past nine months, and said it will shut down three of its 10 global offices last week. Earlier this year it <a href="http://www.businessinsider.com/evernote-ceo-phil-libin-steps-down-2015-7">replaced its long-time CEO Phil Libin</a> with former Google exec Chris O'Neill. </p><p class="p2">"It's going to be a tough road ahead," one source familiar with the matter told us. "They want to go public, and to do that, the focus on revenue now has to be a ruthless prioritization on things that make money."</p><p class="p2">Depending on where you stand, Evernote is either a sinking ship or a maturing company going through a normal transition cycle. But most people we spoke to seem to agree that the company has failed to take advantage of its red-hot growth and make enough money from much of its huge user base - and is starting to show early signs of being an ailing unicorn.</p><p class="p2">It's a sobering reality check about the business challenges that can derail even the hottest tech sensations. </p><h2 class="p2">Wrong priorities</h2><p class="p1">Several former employees believe a lack of focus hampered Evernote's growth. Instead of focusing on its core note-taking product and on converting users to the paid service, Evernote spent more time releasing a bunch of new products and features that only helped it grab news headlines, they said.</p><p class="p2">For example, in early 2014, TechCrunch published <a href="http://jasonkincaid.net/2014/01/evernote-the-bug-ridden-elephant/">a scathing blog post</a>, hammering Evernote's glitch-filled product. Libin quickly <a href="https://blog.evernote.com/blog/2014/01/04/on-software-quality/">addressed the issue</a>, even personally reaching out to the writer and vowing in an all-hands meeting to focus on improving "quality" that year.</p><p class="p2">But six months later, Evernote was back to pumping out new releases that often didn't live up to expectations.</p><p class="p2">"There was a feeling that we were working on the wrong priorities," a former employee said. "It was clear the motive was to just continually drum up press. They had no idea how to optimize and improve growth."</p><p class="p2">This person said Evernote didn't have a formal market research or usability testing team as robust as what companies of its scale have until earlier this year.</p><p class="p2">Another source said that until last year A/B testing was not always taken seriously, referring to a standard web company technique in which two different versions of the same product are tested in the market.</p><p class="p2"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Screenshot</span></p></div><p></p></div></div></p><p class="p2">That resulted in inferior products with lots of bugs, drawing bad reviews and heavy criticism from its users. PenUltimate, a handwriting app Evernote acquired in 2012, received <a href="http://techcrunch.com/2014/11/22/evernote-penultimate-update/">a lot of complaints</a> when it rolled out an updated version for the first time in 2014, causing the company to issue an apology and another update within a week.</p><p class="p2">Skitch, an app that lets you add captions or mark ups to photos, has a 3-star rating (out of 5) on the Apple App Store, while Work Chat, the new messaging feature it released last year, is seeing a lot of negative feedback <a href="https://discussion.evernote.com/topic/73743-how-to-turn-off-work-chat/">on its own forum</a>. Evernote Food, a standalone app that lets users share recipes and food photos, entirely <a href="https://blog.evernote.com/blog/2015/08/26/evernote-to-end-support-for-evernote-food-apps/">shut down last month,</a> as did other experimental products like Evernote Hello and Peek.</p><p class="p2">"It was kind of like move on to the next shiny thing, let's just talk about the next thing we're going to do," another former employee said. "There was no prioritization circled down, none of that structure existed at all."</p><p class="p2">But another former employee notes that the seemingly scattershot approach was not as random as it appeared. "Everything was done with intent," he said. The messaging feature, which was criticized as being a naked attempt to mimic hot messaging upstart Slack, was conceived as a way to draw more people into Evernote's "ecosystem" and ultimately to boost paying subscribers. </p><p class="p2">And elements of some shuttered products, such as the structured data technology used in Evernote Food, have since been incorporated into the core Evernote product.</p><h2 class="p2">Failure to convert "free" users</h2><p class="p2"><div class="KonaFilter image-container display-table float_left float_right"><div><div class="image on-image"><p class="source"><span>Evernote</span></p><p class="caption">New Evernote CEO Chris O'Neill (left) with former CEO Phil Libin.</p></div><p></p></div></div>Evernote originally grew users quickly by following the "freemium" model, in which the product is offered for free in the hopes of eventually turning those users into paying customers.</p><p class="p2">The problem is most of those users haven't converted to the paid service, taking a toll on Evernote's overall business - last year, TechCrunch pegged <a href="http://techcrunch.com/2014/08/26/evernote-goes-to-town-on-its-market-e-commerce-portal-with-retro-pfeiffer-office-gear/">the company's revenue at around $36</a><a href="http://techcrunch.com/2014/08/26/evernote-goes-to-town-on-its-market-e-commerce-portal-with-retro-pfeiffer-office-gear/"> m</a><a href="http://techcrunch.com/2014/08/26/evernote-goes-to-town-on-its-market-e-commerce-portal-with-retro-pfeiffer-office-gear/">illion</a>, and while revenue has increased, we've heard the numbers are still short of internal expectations.</p><p class="p2">Evernote recently began adding new pricing tiers, designed to offer more options for non-paying users to give the company money.</p><p class="p2">That move is long overdue, say some people close to the company, who say the company spent too much time experimenting with random products instead of refining its monetization efforts. </p><p class="p2">An Evernote spokesperson said the number of paying users is currently in the "millions," that 20,000 businesses use the company's business version of the product, and that the number of users paying Evernote for the first time is up 40% from the same time last year. But she declined to provide specific revenue figures, as the company is privately held and does not disclose its financials.  </p><h2 class="p2">Tightening the belt</h2><p class="p2">With the greater focus on revenue growth, Evernote is becoming more disciplined with its spending, according to multiple sources.</p><p class="p2">The layoffs were the first signs, but cost-saving is showing up in perks too.</p><p class="p2">Evernote used to provide house cleaning services every two weeks to all employees, but that's gone now. Most people could easily request to work in overseas offices for 3 weeks, fully covered by the company, but that's more tightly controlled, a former employee said. Any new requests for the monthly electric car charging stipend has been suspended too. Some offices say their food has been downgraded from specialized delivery service to a mix of vendors catering food. </p><p class="p2"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Amanda Edwards/GettyImages</span></p><p class="caption">The hosts of "MythBusters" were invited to last year's EC4.</p></div><p></p></div></div>But perhaps the biggest savings will come from canceling its annual developers conference called Evernote Conference, which has been held in San Francisco for the past 4 years. Last year's conference featured celebrities like the hosts of "MythBusters" and LinkedIn cofounder Reid Hoffman.</p><p class="p2">"If someone cancels a developers conference, it's usually a sign that there's stress around cash management," said Jason Lemkin, a veteran tech entrepreneur and venture investor. "It doesn't mean the company's going under, but it's usually one of the first things to go."</p><p class="p2">Evernote appears to be downsizing the team in charge of the platform it provides for developers. Among the employees let go in the recent round of layoffs were its director of developer relations, Chris Traganos, as well as several members of his team. </p><p class="p2">But contrary to recent rumors of Evernote closing off its API, the company said it's still open, and we've heard its platform integrations could get even stronger in the coming weeks. </p><p class="p2">Evernote also told us it never intended to have its annual developers conference in the Bay Area this year, because 75% of its users come from outside of the US. Instead, it recently held a 1,500 person event in South Korea and large events in other cities as well.</p><p class="p2">All of the changes are causing some employees to leave the company, according to various insiders. One former employee said companies like Uber, Twitter, and Dropbox have been poaching a lot of its talent. One of the floors at its Redwood City headquarters is like a "ghost town," said one insider. </p><p class="p2">"There's been a fair number of people who left, not necessarily because they're disgruntled or unhappy. People are just making decisions to figure out if this new version of Evernote is for them or not."</p><h2 class="p2">A respectable move</h2><p class="p2">Despite all the troubling signs, the fact that Evernote is taking the initiative to try to fix its problems is encouraging, said <span class="s1">Byron Deeter, partner at Bessemer Venture Partners. </span></p><p class="p2">"They could have probably BS'd around a little longer. But if you actually want to build a great company and try to make a run at the big vision, then you do need to take a step back when things aren't working optimally, and then try to take the two steps forward," said Deeter, <span>whose firm has investments in Evernote competitors such as Box. </span></p><p class="p2">"I suspect what they're doing is cutting now so they can control their own destiny later," he added.</p><p class="p2">Lemkin also agreed, pointing out that new CEOs could often bring renewed energy to the company. "Having a new CEO can often reinvigorate a company, especially if he or she can bring in good management team. [O'Neill's] got a huge customer base and a great brand," he said.</p><p class="p2">One former employee said the team at Evernote has been excited about O'Neill's arrival about two months ago. "I really think Chris O'Neill is making some smart decisions, and I would say most people in the office, even though it's pretty painful, thinks this guy has a good plan," the source said.</p><p class="p2">Evernote isn't in dire straits yet. It still has a large user base, and as most subscription-based software companies do, it could probably improve its cash flow by cutting back on some of its investments. But being a billion dollar "unicorn" and being truly worth its perceived value is another story - and Evernote may be quickly drifting away from the glorified "unicorn" status.</p><p class="p2">"It's not a fundamentally flawed business. It's just not working as well as people expected it to," Deeter said. "They're still likely worth hundreds of millions of dollars. They're just probably not worth billions today."</p><p class="p2">Some VCs we spoke to anticipated Evernote will have to show substantial improvement in the next 12 to 18 months, or otherwise, it could even be sold off to others. But the real damage, perhaps, may not be in its business: it's that Evernote is losing its edge as a cool company in the Valley, making it harder to recruit talent and form partnerships for the future.</p><p class="p2">As one of the former employees told us, "It's a shame because Evernote used to be the place you wanted to go. It was the top tier company where you pretty much did cutting edge stuff. And little by little, that faded away."</p>

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