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THE VOICE APPS REPORT: The top issues with voice discoverability, monetization, and retention — and how to solve them

Posted: 20 Jan 2019 01:06 PM PST

bii voice app skills growth over time

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 voice app ecosystem is booming. In the US, the number of Alexa skills alone surpassed 25,000 in January 2018, up from just 7,000 the previous January, in categories ranging from music streaming services, to games, to connected home tools.

As voice platforms continue to gain footing in homes via smart speakers — connected devices powered primarily by artificial intelligence (AI)-enabled voice assistants — the opportunity for voice apps is becoming more profound. However, as observed with the rise of mobile apps in the late 2000s, any new digital ecosystem will face significant growing pains, and voice apps are no exception. Thanks to the visual-free format of voice apps, discoverability, monetization, and retention are proving particularly problematic in this nascent space. This is creating a problem in the voice assistant market that could hinder greater uptake if not addressed.

In this report, Business Insider Intelligence, Business Insider's premium research service, explores the two major viable voice app stores. It identifies the three big issues voice apps are facing — discoverability, monetization, and retention — and presents possible short-term solutions ahead of industry-wide fixes.

Here are some of the key takeaways from the report:

  • The market for smart speakers and voice platforms is expanding rapidly. The installed base of smart speakers and the volume of voice apps that can be accessed on them each saw significant gains in 2017. But the new format and the emerging voice ecosystems that are making their way into smart speaker-equipped homes is so far failing to align with consumer needs. 
  • Voice app development is a virtuous cycle with several broken components. The addressable consumer market is expanding, which is prompting more brands and developers to developer voice apps, but the ability to monetize and iterate those voice apps is limited, which could inhibit voice app growth. 
  • Monetization is only one broken component of the voice app ecosystem. Discoverability and user retention are equally problematic for voice app development. 
  • While the two major voice app ecosystems — Amazon's and Google's — have some Band-Aid solutions and workarounds, their options for improving monetization, discoverability, and retention for voice apps are currently limited.
  • There are some strategies that developers and brands can employ in the near term ahead of more robust tools and solutions.

In full, the report:

  • Sizes the current voice app ecosystem. 
  • Outlines the most pressing problems in voice app development and evolution in the space by examining the three most damning shortcoming: monetization, discoverability, and retention. 
  • Discusses the solutions being offered up by today's biggest voice platforms. 
  • Presents workaround solutions and alternative approaches that could catalyze development and evolution ahead of wider industry-wide fixes from the platforms.

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VR isn't just for gamers — here's how Audi, Lowe's and Macy's are using it to boost sales and employee training (M, WMT, AUDVF, LOW, UPS)

Posted: 20 Jan 2019 12:31 PM PST

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. Current subscribers can read the report here.

FORECAST: Global Enterprise VR Hardware and Software Revenue

Virtual reality (VR) offers immersive experiences in which users can hear, see, and interact with 360-degree digital environments using head-mounted displays (HMDs) and handheld motion devices. The technology has been historically associated with consumer-facing gaming, but it's been gaining traction in the enterprise over the past year.

In fact, companies such as Macy's, Lowe's, Walmart, and UPS, among others, have all launched new VR programs since 2017. And as more businesses look to tap the technology, this will drive enterprise VR hardware and software revenue to jump 587% to $5.5 billion in 2023, up from an estimated $800 million in 2018, according to Business Insider Intelligence estimates.

This shows that retailers and brands should look into implementing VR as early as possible to better compete with other industry players who've started to use the tech, especially in three key areas: sales, employee training, and product development. All of the companies mentioned above are using VR to in at least one of these areas, enabling them to increase product sales, reduce product design costs, or speed up employee training processes, for instance.

In the VR In The Enterprise report, Business Insider Intelligence explores how VR can provide value to retailers and brands in three areas: sales, employee training, and product development.

The report begins by discussing potential pain points the technology addresses for each use case, examining in-depth case studies to illustrate how companies have implemented the technology, and outlining the broader takeaways each use case presents for brands and retailers.

Finally, it looks at some of the potential barriers to further enterprise adoption and how both companies and VR incumbents are actively addressing those obstacles.

The companies mentioned in the report are: Audi, Lowe's, Macy's, McLaren Automotive, Walmart, and UPS, among others.

Here are some key takeaways from the report:

  • VR enables consumers in brick-and-mortar stores to make more informed purchases, which could increase sales conversion rates.
  • Brands and retailers looking to ramp up their employees quicker should consider bringing VR into their training processes.
  • The tech can shorten brands' and retailers' product development life cycles by cutting down on the time associated with building expensive physical prototypes.

In full, the report:

  • Identifies key VR vendors and device form factors for businesses to consider.
  • Discusses key benefits the tech brings businesses for their sales, training, and product development processes.
  • Illustrates those key benefits by discussing real-world case studies from companies and the takeaways from those implementations.

 

SEE ALSO: When it comes to VR hardware, consumers are balancing price point and experience

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Walmart exec reveals why it canceled its Amazon Go-like cashierless program in stores — and what the company is working on instead (WMT)

Posted: 20 Jan 2019 10:50 AM PST

Walmart CTO Jeremy King

  • In 2017 and 2018, Walmart pilot tested a program called "Scan & Go" in 125 stores. The program let customers use a smartphone or handheld device to check out items without going to a cashier.
  • The program expanded in January 2018 but ended in April, with Walmart citing lack of customer adoption.
  • Speaking at the National Retail Federation's annual Big Show conference on Sunday, Walmart CTO Jeremy King revealed the company decided to pull the plug on the program due to it being error-prone and difficult to scale.
  • King also expressed interest in computer vision as the technology matures "in a few years."

NEW YORK CITY — A year ago, in January 2018, Walmart expanded its Scan & Go program to 125 stores, calling it a new way to shop with just your phone or a handheld device, and no interacting with cashiers.

By April, that program had all but wrapped up. At the time, a Walmart spokesperson told Business Insider that its ending was due to "low participation" from customers, who found the program difficult to use.

Read more: Walmart just abandoned cashierless checkout, and it reveals a huge challenge in its battle with Amazon

Walmart executive vice president and CTO Jeremy King, speaking at the National Retail Federation's Big Show conference on Sunday, revealed a few more reasons the company decided to pull the plug on the program.

"We found too many errors in the process ... making sure people were scanning things right, multiple quantities, that sort of thing," King said on stage in conversation with the Wall Street Journal's Sara Castellanos.

Walmart

Scan & Go is not completely gone from Walmart. It is still in effect at Walmart's nearly 600 Sam's Club stores, where it was implemented more than two years ago. But at Walmart's more than 5,000 locations in the US, the errors were not tenable, King said.

"At Walmart's scale, you test in 10 stores and see how it goes," King said. "If it's going to be really hard to implement across the board then we usually wait until the technology's better."

King is predicting that that better — or different — technology is coming soon, however. On stage, King listed computer vision — technology that can use cameras and sensors to "see" and understand like a human — as one example of tech he is excited about for 2019.

Computer vision is a natural fit for retail, where it would be able to replace a program like Scan & Go with a more intuitive method that could include technology that automatically tracks customers and what they're buying,  charging them appropriately.

"Computer vision can be a hard thing right now, especially for small items," he said. "It's getting better and better, but I see that improving the next couple of years."

King stopped short of declaring a computer-vision pilot for Walmart, but added that he is "really excited" about its potential.

A similar method has already been implemented by Amazon, which is aggressively expanding its own cashierless prepared-food-and-convenience-store concept called Amazon Go. The chain could have up to 3,000 stores in just a few years, according to a recent report.

Walmart Scan & Go

The stars seem to be aligning for computer vision at Walmart, too. The company's tech division is currently hiring for a "Principal Data Scientist / COMPUTER VISION Engineer," according to a job listing that went up in October.

"Walmart Technology is looking for exceptional research engineers to join our team focused on delivering computer vision-enabled capabilities that can increase revenue, reduce costs and drive a differentiated brand experience that serve 200 [million plus] customers a week," the listing reads.

The job will be based in Walmart's new Dallas-based innovation center focused on computer vision and machine learning, which Walmart's VP of tech modernization, Chris Enslin, announced at VentureBeat's Blueprint conference in March.

In October, Walmart opened a Sam's Club "store of the future" called Sam's Club Now and featuring no cashiers, forcing customers to use the Sam's Club Now app and the Scan & Go functionality.

The store is intended to be used as a playground to test new tech like "computer vision, AR, machine learning, artificial intelligence, [and] robotics," Jamie Iannone, Samclub.com's CEO and executive VP of membership and technology, said in a statement at the time.

SEE ALSO: Walmart is launching its 3rd online grocery test with a self-driving car in just 6 months

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A Harley-Davidson executive reveals the biggest opportunity for its new electric motorcycle (HOG)

Posted: 20 Jan 2019 10:35 AM PST

Harley-Davidson LiveWire

  • Harley-Davidson is preparing to release its first electric motorcycle, the LiveWire, in August.
  • The company hopes the bike will appeal to urban consumers and present a low barrier of entry for people new to motorcycles, Marc McAllister, Harley-Davidson's vice president of product portfolio, said in an interview with Business Insider.
  • Harley-Davidson said in a 2018 investor presentation that it plans to introduce at least two more electric motorcycles by the end of 2022.

Harley-Davidson is preparing to release its first electric motorcycle, the LiveWire, in August. The company hopes the bike will appeal to urban consumers and present a low barrier of entry for people new to motorcycles, Marc McAllister, Harley-Davidson's vice president of product portfolio, said in an interview with Business Insider.

"EV lends itself extremely well to growing the next generation of riders when you think of its ease of entry and its ease of use for non-motorcyclists," he said.

Read more: A former Harley-Davidson executive is attempting one of the biggest challenges in the business — establish a new motorcycle brand in the US

While gas-powered motorcycles require drivers to shift gears, a process that can be difficult to learn for new riders, the LiveWire's electric motor eliminates the need for gear-shifting; riders need only to twist the throttle to make the LiveWire accelerate. The motorcycle will also feature ride modes that can be tailored to the owner's level of experience. An inexperienced owner can opt to have the vehicle's maximum power output reduced, for example.

"It's less intimidating to jump on and learn how to ride," McAllister said.

The LiveWire will also be nimbler and more agile than Harley-Davidson's current offerings, McAllister said, another benefit for urban riders. Appealing to urban consumers is a priority for Harley-Davidson due to the global trend toward urbanization, but the company's gas-powered motorcycles are less suited to urban riders than the LiveWire due to their size and riding styles, McAllister said.

"Getting great at delivering urban riding experiences is something that we see the future needing us to do."

The LiveWire is tailored to urban riders in part by necessity. Harley-Davidson says the LiveWire will have a range of around 110 miles, which is fine for many commutes, but could make road trips difficult.

"[The LiveWire] lends itself to an urban usage because you're going to end up at home," McAllister said. For "most people's normal usage, this vehicle has more than enough range."

For riders who need to charge away from home, Harley-Davidson dealers that sell the LiveWire will have fast-charging stations available once the vehicle is released. Around 150 dealers will sell the LiveWire at first, and the number of charging stations will expand with the number of dealers that carry the vehicle.

Starting at just under $30,000, the LiveWire is priced at the high end of Harley-Davidson's offerings, but McAllister suggested the LiveWire will be among the most expensive electric motorcycles the company will offer in the coming years, the most affordable of which will begin at "a few thousand dollars."

McAllister declined to say if Harley-Davidson planned to make a specific percentage of its portfolio electric in the coming decades, but the company said in a 2018 investor presentation that it plans to introduce at least two more electric motorcycles by the end of 2022.

SEE ALSO: I just got back from the 2019 Detroit auto show — here's all the cool stuff I saw

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Sheryl Sandberg gave an unconvincing speech about privacy just when she needed to sound sincere

Posted: 20 Jan 2019 08:39 AM PST

sheryl sandberg

  • Facebook COO Sheryl Sandberg gave a speech in Munich on Sunday stating that Facebook needed to do better in the wake of the Cambridge Analytica scandal.
  • Sandberg outlined the steps Facebook was taking to earn back users' trust.
  • But audience members criticized her message as over-rehearsed and too polished to be convincing.
  • Sandberg will need to work harder to convince European regulators that Facebook has changed if the company is to avoid punitive regulations and fines.

One of the first rhetorical tricks a public speaker will pick up is repetition.

Theoretically, repetition is a way of ensuring your message really lands. It's a way of persuading your audience into your way of thinking.

Facebook COO Sheryl Sandberg tried to leverage the power of repetition at a speech in Germany on Sunday but, at a crucial time for her company in Europe, it seems to have backfired.

Sandberg appeared at the DLD conference in Munich on Sunday, a kind of warm-up conference for the digital elite before the World Economic Forum in Davos. She also gave an interview to the Frankfurter Allgemeine newspaper.

In a continuation of the Facebook apology tour, Sandberg touched on Facebook's many missteps in 2018, and on other familiar themes in a speech titled: "What kind of internet do we want?"

"At Facebook, these last few years have been difficult," she told the Munich audience. "We need to stop abuse more quickly and we need to do better to protect people's data. We have acknowledged our mistakes."

Sandberg praised Europe's aggressive stance on privacy and announced that Facebook would be funding an AI ethics institute at a German university.

"We know we need to do better," she said, adding that the company was trying to win back users' trust.

If this sounds familiar, it's because she said "we need to do better" in April, June, and in September's Senate Intelligence Committee hearings. CEO Mark Zuckerberg has repeated the phrase through 2018 too.

Jack Dorsey Sheryl Sandberg Twitter Facebook Senate

Sandberg went on: "I, and everyone at Facebook, accept the deep responsibility we have to protect the people who use our services. We know we need to get better at anticipating all of the risks that come with connecting so many people."

But those listening to the speech didn't buy the message.

"After a written interview with @FAZnet and this memorized talk, they missed a huge chance to regain trust. It's time for real conversation & dialogue," wrote digital strategist Daniel Fiene.

Another user wrote: "Amazing to see how they have upgraded Sophia the robot to look and talk like Sheryl Sandberg."

Yet another wrote: "Sheryl Sandberg did a sugarcoated [speech], thanking Germany and praising Data Protection. Why can I not believe and trust these promises? Maybe because I cannot forget the active selling & manipulation of Data, she did not mention."

Read more: Sheryl Sandberg is on the hot seat at Facebook — but ousting her alone wouldn't solve its problems

And users criticized the Facebook exec for not taking questions. "I don‘t agree w/ [Sheryl Sandberg]. #Trustbuilding is not presenting a perfectly read out but distanced speech. Trustbuilding would have been to be authentic and to agree on a Q&A session."

Sandberg should be alarmed by this indication of the temperature in Europe. Germany has been the most aggressive country in regulating Facebook, and is reportedly about to clamp down on the kinds of information the firm can collect. It is one of the most privacy-conscious nations in Europe, and played a key role in the introduction of GDPR, Europe's strict new privacy regulation.

Should Sandberg fail on this trip to convince German regulators and world leaders attending Davos that Facebook can clean up its act, the firm may face stricter rules and fines at home and abroad.

SEE ALSO: The hits keep coming for Facebook — here's why things keep getting worse

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AI 101: How learning computers are becoming smarter

Posted: 20 Jan 2019 08:34 AM PST

artificial intelligence social network eter9

Many companies use the term artificial intelligence, or AI, as a way to generate excitement for their products and to present themselves as on the cutting edge of tech development.

But what exactly is artificial intelligence? What does it involve? And how will it help the development of future generations?

Find out the answers to these questions and more in AI 101, a brand new FREE report from  Business Insider Intelligence, Business Insider's premium research service, that describes how AI works and looks at its present and potential future applications.

To get your copy of the FREE slide deck, simply click here.

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Andreessen Horowitz-backed startup PagerDuty has confidentially filed for an IPO but because of the shutdown no one can review its prospectus

Posted: 20 Jan 2019 08:34 AM PST

JenniferTejada PagerDuty

  • 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'

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This former Cisco exec explains why she was so excited to join $155 million Scalyr as its new CEO (CSCO)

Posted: 20 Jan 2019 08:34 AM PST

AW01327

  • Log-management startup Scalyr announced Thursday that Christine Heckart, formerly a senior vice president at Cisco, will become its new CEO.
  • Scalyr was founded by Steve Newman, who previously founded Writely, the startup that Google acquired and turned into the original Google Docs.
  • Startups like Scalyr that are specifically targeted at developers and help with debugging code are growing quickly, so Newman wanted to find a new CEO with experience in scaling and growth.
  • Heckart was drawn to Scalyr because of its culture and because she believes the company is creating technology that can make an impact.

It took only two meetings for Cisco's former senior vice president, Christine Heckart, to realize that the log-management startup Scalyr was where she wanted to work as CEO.

Scalyr announced Heckart as its new CEO on Thursday, replacing founder Steve Newman.

Newman, who will become chairman, is best known as the founder of Writely, an online word processor that Google acquired in 2006 and used to build the first iteration of Google Docs.

After the acquisition, Newman left Google and set out to create a tool for engineers to help them troubleshoot code, which would eventually become Scalyr. Customers including TiVo, OkCupid, and even us here at Business Insider use Scalyr to help debug and optimize applications — a market that's heating up in the software economy.

"What I go towards is the chance to change the way work gets done, to change the world in some meaningful way," Heckart told Business Insider. "If Scalyr can help engineers around the world, if it can help them do their job quickly, we can provide a value to the world that impacts and touches every person in every way."

Scalyr was most recently valued at $155 million at the time of its $5.5 million funding round in 2018, according to PitchBook. Investors in Scalyr include GV (formerly Google Ventures), Bloomberg Beta, and Shasta Ventures.

A 2nd chance at being a CEO

Last year, Newman started looking for a new CEO, someone with the business acumen to accelerate the company's growth while he redoubled his focus on the technology. Heckart came recommended by a mutual friend of hers and Newman's who knew that she wanted to leave Cisco and try her hand as a CEO for a second time.

"I had run a company before," Heckart said. She was CEO of a company called TeleChoice before her Cisco days. "When I had small kids, it was hard to do that, so I went back to executive positions for a while, but I wanted to go back to being a CEO of a small company."

Heckart had been approached by five or so companies about coming on as CEO, she said, but it took only two meetings for her to know that Scalyr was by far the best fit.

"After I spent time on campus, I was getting a good sense of the culture," she said. "I went home and told my husband, 'This is the one I want. Even if this doesn't work out, that comparison told me that those other companies aren't the right ones for me.'"

When Scalyr approached Heckart, the No. 1 thing that stood out to her was the culture and diversity of the company. She saw that Scalyr was more inclusive and valued cognitive diversity, meaning different styles of problem solving. To her, that was a sign that Scalyr was the right place to be.

"That wasn't an accident. From the very beginning, Steve and the leadership team built it for cognitive diversity," Heckart said. "It makes a huge difference, not only in the employee experience. It also makes a huge difference in the success of the company."

What comes next

Heckart said that although she's run a company before, this will be her first time being CEO of a venture-backed Silicon Valley startup, which comes with its own unique set of pressures, especially since Scalyr offers a niche product for developers. Still, nowadays, there's a lot of money to be made in catering to developers.

"Kind of like how eyes are the window into the soul, logs are the window into performance and applications," Heckart said. "While it sounds esoteric or incredibly tactical, the right log-management tool not only makes the engineer more successful at their job; it helps them get home and see their kids on time. It helps them solve the problem."

Heckart said she isn't planning any dramatic changes to Scalyr's strategy. The company already has plenty of momentum, so she has the good problem of making sure that it continues. From Cisco and the other tech companies she's worked at, she hopes to bring her experience in growth and scale.

"There's so much momentum here already," she said. "My job is to build on it, to help us really connect with those users, to make sure all the users know about this tool and we bring them together in a community. We have the chance to build a really powerful community and ecosystem."

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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)

Posted: 20 Jan 2019 08:34 AM PST

apple johny srouji

  • 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.

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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)

Posted: 20 Jan 2019 08:34 AM PST

Tim Cook China

  • 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.

iPhone XRInstead, 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."

SEE ALSO: Apple's iPhone revenue is set to fall this year for just the second time ever

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NOW WATCH: China made an artificial star that's 6 times as hot as the sun, and it could be the future of energy

8 cloud computing startups to bet your career on in 2019

Posted: 20 Jan 2019 08:34 AM PST

Snowflake

If you're looking to take your career to the next level, it might be time to bet on cloud computing. Startups in the cloud market are garnering massive funding and massive interest. 

That's not surprising. Cloud computing is expected to become a $300 billion market by 2021, according to analyst firm Gartner.

The cloud computing market consolidates around Amazon Web Services, Microsoft Azure and Google Cloud.  Over the last three years, job postings with key words on cloud have skyrocketed, and employer interest for "cloud engineers" has risen 31%, according to Indeed

A growing number of startups are creating tech that helps companies better use the cloud.

We looked at a variety of factors when selecting this list including the experience of leaders and founders, the reputations of investors and the amount of funding raised along with valuations, based on data from online finance database Pitchbook, keeper of such records.

Here are 8 cloud computing startups to bet your career on in 2019:

Zapier: Getting all your web apps to work together

Valuation: Unknown
Total raised to date: $1.3 million
Year founded: 2011
HQ: Sunnyvale, CA

What it does: Zapier connects Web apps together to automate tasks such as automatically copying Gmail attachments into Dropbox and alerting you in Slack.

Why it's hot: This seven-year-old company has raised a total of $2.56 million. This year it revealed it has achieved a $35 million annualized revenue run rate. Oh, and by the way, at Zapier, you can work in pajamas from the comfort of your bedroom, if you really wanted to. This all-remote company even started a delocation package of $10,000 to move away from the pricey San Francisco Bay Area.



Fastly: Making websites and apps faster

Valuation: $925 million
Total raised to date: $220.04 million
Year founded: 2011
HQ: San Francisco

What it does: Fastly calls itself an "edge cloud platform." It helps large websites work faster by moving data and apps closer to their users.

Why it's hot: Fastly has come on strong in this well-established market (also known as a Content Delivery Network) and already powers sites such as Airbnb, GitHub, Alaska Airlines, Pinterest, Vimeo, The Guardian, and The New York Times.

It reportedly broke the $100 million revenue mark in 2017 and this year raised funding that included backing by the investment arm of telecom giant Deutsche Telekom.



Cohesity: a storage startup with a veteran founder

Valuation: $1.1 billion
Total raised to date: $411 million
Year founded: 2013
HQ: San Jose, CA

What it does: Cohesity helps make storage back-ups less expensive, easier to manage, and easier to sift through for big data projects.

Why it's hot: Cohesity is the second act for its founder Mohit Aron, who had previously co-founded Nutanix. And its been growing like mad, so much so that in 2018, Cohesity landed a massive $250 million round of investment from Softbank's Vision Fund. It was only the second enterprise company to be backed by the massive fund.



See the rest of the story at Business Insider

WeWork CEO Adam Neumann has reportedly made millions of dollars by leasing office space to his own company

Posted: 20 Jan 2019 08:33 AM PST

Adam Neumann

  • WeWork CEO Adam Neumann reportedly made millions of dollars by renting office space in buildings that he partially owns to his company, according to a Wall Street Journal report on Wednesday
  • In a filing for prospective investors last year, WeWork reportedly disclosed that it paid $12 million in rent between 2016 and 2017 to buildings "partially owned by officers" of WeWork.
  • Investors told The Journal that they're concerned that the situation creates a conflict of interest — if those buildings were to raise their rents, Neumann could stand to benefit.
  • WeWork told Business Insider that Neumann has a stake in only four properties from which it leases space, out of the 400-plus coworking spaces the company operates globally, and the company said its board and investors are both fully aware of the situation. 

WeWork, the coworking company said to be valued at $47 billion, has been renting space in buildings partially owned by its CEO Adam Neumann, according to a Wall Street Journal report on Wednesday — an arrangement that's netted the executive millions of dollars. 

Multiple WeWork investors told The Journal that the arrangement was concerning to them, as the situation creates a potential conflict of interest for Neumann. For example, if those buildings were to raise WeWork's rent, Neumann could personally profit. WeWork's business model involves leasing large amounts of office space, and then subleasing smaller chunks of that space out to individuals, startups, and smaller groups.  

In a document for prospective investors last year, the company disclosed that it paid $12 million in rent between 2016 and 2017 to buildings "partially owned by officers" of WeWork, and said it will pay more than $110 million over the lifetime of those leases, according to the report.

Neumann has a 50% stake in an 11-story New York City building where WeWork operates a coworking space, according to the report. The Journal also reported that Neumann is the "main investor" in a group that buys multiple properties in San Jose, California, some of which are leasing space to WeWork. 

A spokesperson for WeWork told Business Insider that Neumann has a stake in only four properties from which the company operates, out of its network of 400 coworking spaces globally. Furthermore, the company said everything has been disclosed to investors and approved by the board, adding that it hasn't heard complaints.

"WeWork has a review process in place for related party transactions. Those transactions are reviewed and approved by the board, and they are disclosed to investors," the spokesperson said.

Of note, however, is that, in a 2014 fundraising deal, Neumann was awarded enough equity in the company to exert voting control over its board of directors. While WeWork's board mainly consists of independent directors, Neumann's vote is enough to make or break any proposal.

Read the full Wall Street Journal report here

Earlier this month, the coworking company announced it would be rebranding from WeWork to The We Company, which it said would better reflect company's ambitions of moving beyond providing office space and pushing further into markets such as education or residential living.

Read more: WeWork is changing its name to 'The We Company' as SoftBank invests $2 billion

The day before the rebranding was announced, WeWork lost out on a $16 billion investment from the Japanese tech company Softbank, which decided to downsize its investment to $2 billion. 

Got a tip? Contact this reporter via Signal at +1 (209) 730-3387, email at nbastone@businessinsider.com, or Twitter DM at @nickbastone.

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NOW WATCH: Jeff Bezos is worth over $100 billion — here's how the world's richest man makes and spends his money

Huawei's CEO called Trump a 'great president' in an extraordinary plea to end America's war with his company

Posted: 20 Jan 2019 08:33 AM PST

Ren Zhengfei.JPG

  • Huawei CEO Ren Zhengfei has called Donald Trump a "great president" as he bids to end America's war with his company.
  • In rare public comments, he praised Trump's tax cuts and said he wants to foster an environment of "collaboration and shared success" with the US.
  • Ren's daughter, the Huawei CFO Meng Wanzhou, was arrested in Canada last month and faces extradition to America.

Huawei's CEO Ren Zhengfei has made a rare foray into public life in an effort to calm the growing international hostilities towards his tech company.

In his first comments to journalists since 2015, per the South China Morning Post, Ren appealed to Donald Trump in particular, flattering the US president as his daughter Meng Wanzhou remains in Canada facing extradition to America. The Huawei CFO was arrested in Vancouver last month.

"Trump is a great president," said Ren, according to a number of publications that attended a two-hour roundtable with the Huawei CEO at the firm's newest offices in the industrial city of Dongguan.

According to the Morning Post, he added: "He dares to massively cut tax, which will benefit the business. But you have to treat well the companies and countries so that they will be willing to invest in the US and the government will be able to collect enough tax."

Read more: Here’s why it’s so hard to buy Huawei devices in the US

This could be a reference to the fact that Huawei is effectively blacklisted in the US. The company's phones are difficult and expensive to buy, the US government has banned public contractors from using its technology, and security services have consistently warned that Huawei poses a threat amid fears it is a channel for Chinese spies.

meng wanzhou

Ren said Huawei has had "no serious security incident" and there is "no law in China [that] requires any company to install mandatory backdoors," according to the Financial Times. Nevertheless, it is thought Ren has close ties to China's government after he served as an engineer for the military.

Ren wants to foster a spirit of collaboration with the US, he told journalists.

"The message to the US I want to communicate is: Collaboration and shared success. In our world of high tech, it’s increasingly impossible for any single company or country to sustain or to support the world’s needs."

Ren also sought to downplay Huawei's role as a potential pawn in the ongoing trade dispute between China and the US. "Huawei is only a sesame seed in the trade conflict between China and the US," he added.

SEE ALSO: What you need to know about Meng Wanzhou, a Chinese tech founder's daughter whose arrest could set fire to US-China relations

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NOW WATCH: All smartphones look the same today for 2 key reasons

A Harvard professor says a huge opportunity for disruption has been in front of us all along

Posted: 20 Jan 2019 08:06 AM PST

disney world justin hartley

  • 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

Clay Christensen HeadshotAs 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

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NOW WATCH: Understanding this one cognitive bias may help you better negotiate a pay raise

Trust is the main barrier to smart speaker adoption – here's what companies can do about that

Posted: 20 Jan 2019 08:01 AM PST

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. Current subscribers can read the report here.

trust smart speaker makersSmart speakers comprise one of the fastest-growing device segments in the consumer technology market today. Ownership levels have nearly doubled from early 2017 to summer 2018. 

With this rapid growth, there are a few pivotal questions that both companies looking to develop and sell smart speakers as well as those looking to sell products, deliver media, and offer access to services like banking over these devices need answers to in order to craft successful strategies. In particular, they need to know who is and isn't buying smart speakers, and what consumers who own smart speakers are actually doing with them. 

To offer these stakeholders insight, Business Insider Intelligence asked more than 500 US consumers about their knowledge of smart speakers, the devices they do or don't own and what led them to their purchase decisions, as well as the tasks they're using their smart speakers for.

In this report, Business Insider Intelligence will look at the state of the smart speaker market and outline how each of the major device providers approaches the space. We will then focus on the key factors that affect whether or not someone owns one of these devices. Next, we will use our survey data to outline the reasons why people don't own devices in order to offer guidance for who to target and how. Finally, we will discuss what consumers are actually doing with their smart speakers — specifically looking at how the devices are used and perceived in e-commerce, digital media, and banking — which can help companies determine how well they're publicizing their smart speaker services and capabilities.

The companies mentioned in this report are: Amazon, Google, Apple, Samsung, Facebook, Sonos, LG, Anker, Spotify, Pandora, Grubhub, Netflix, Hulu, Instagram, Snap.

Here are some key takeaways from the report:

  • Despite their growing popularity, nearly half of respondents still don't own a device — which presents a long runway for adoption. Our survey data reveals a number of key factors that impact whether or not someone owns one of these devices, including income, gender, and age.
  • Smart speakers are establishing themselves as a key platform for e-commerce, media, and the smart home.
  • The introduction of a screen to some smart speakers will expand the possibilities for companies developing for the device — but developers will need to resist the compulsion to use speakers to accomplish too much.

In full, the report:

  • Provides an overview of the key players and products in the smart speaker market.
  • Highlights critical adoption rates broken out by key factors that define the segment.
  • Identifies how consumers are using devices in important areas where companies in various industries are trying foster greater use of the voice interface.

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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)

Posted: 20 Jan 2019 08:00 AM PST

iPhone 7-Plus

  • 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

Posted: 20 Jan 2019 07:52 AM PST

Cannabis

  • 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.

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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

Posted: 20 Jan 2019 07:52 AM PST

green cannabis lawyers 2x1

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 »

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It's a fintech frenzy — top venture pros spill why the $11 billion party won't end anytime soon

Posted: 20 Jan 2019 07:50 AM PST

Coinbase CEO Brian Armstrong

  • 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.

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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."

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