"Fear City," "Shameless," and "Dark Desire" are all popular on Netflix this week. Netflix introduced daily top lists of the most popular titles on the streaming service in February.Streaming search engine Reelgood keeps track of the lists and provides Business Insider with a rundown of the week's most popular TV shows on Netflix.Visit Business Insider's homepage for more stories.

The longrunning Showtime series "Shameless" debuted new episodes on Netflix recently, propelling it up Netflix's popularity rankings. 

Netflix introduced daily top 10 lists of its most viewed movies and TV shows in February (it counts a view if an account watches at least two minutes of a title).

Every week, the streaming search engine Reelgood compiles for Business Insider a list of which TV shows have been most prominent on Netflix's daily lists that week. 

ESPN's "Last Dance" docuseries about Michael Jordan and the Chicago Bulls continues to be a hit on the streaming giant.

Below are Netflix's 9 most popular TV shows of the week in the US:

Original author: Travis Clark

Sheila Bair is worried that the current economic and health crisis will turn into a financial calamity.Bair, who was a key player in the government's response to the financial crisis a decade ago as the head of the Federal Deposit Insurance Corporation, is concerned that regulators are focusing on the wrong things.Regulators, at the urging of the big banks, are moving to loosen capital requirements for financial institutions at the same time that the banks ought to be shoring up their balance sheets to protect themselves from a potential wave of corporate debt defaults, she said.Corporate debt is at record levels and huge chunks of it are held by US banks.Visit Business Insider's homepage for more stories.

Sheila Bair is intimately familiar with what a financial crisis looks like and how devastating it can be.

So when she says she's worried that we may be heading toward one, it's probably a good idea to pay attention.

Bair, who was a key player in the federal government's response to the financial crisis a decade ago, sees plenty of danger signs of another such calamity, much of it in the form of corporate debt and the collateralized loan obligations that debt gets sliced and diced and reassembled into. She also worries that the big banks are pushing hard to loosen capital requirements right now — and regulators are accommodating them.

"I think the regulators are focusing on the wrong things," Bair told Business Insider in an interview Tuesday. "My worst fear," she continued, "is that what is now a health and economic crisis turns into financial crisis.
And that's what the regulators should be focusing on."

Bair headed up the Federal Deposit Insurance Corporation from 2006 to 2011. While there, she was part of the small group of policymakers that were trying to respond to the emerging crisis. Her job was to oversee the takeover and resolution of the numerous FDIC-backed banks that failed during that period. She also tried and failed to persuade then Treasury Secretary Tim Geithner to use a similar process to deal with the biggest financial institutions at the time, the ones that were later dubbed "too big to fail."

It's perhaps no surprise then that she's again worried about the health of the banks.

Banks are pushing for looser capital requirements

Part of what concerns her is that the big banks are using the pandemic to persuade lawmakers and regulators to address one of their pet peeves: the amount of capital they have to keep on hand. In the wake of the Great Recession, in an effort to prevent another financial crisis, policymakers required banks of all stripes to increase the amount of capital they had on hand as proportion of their total assets, which include loans, investments, and real-estate holdings. Those institutions have been pressing ever since to lighten those requirements, claiming in part that the rules restrict their ability to make loans.

This spring the Federal Reserve announced new regulations that temporarily allow big banks to ignore certain assets when calculating the amount of capital they need to have on hand. The move essentially allows them to keep less capital in reserve or, with the capital they already have on hand, to make more loans or buy up more assets.

But the big banks are also pushing Congress to rewrite the section of the Dodd-Frank financial industry reform law that sets the capital requirements. The change, which Senate Republicans are reportedly planning to include in their next coronavirus stimulus bill, would allow the Federal Reserve to alter an alternate method of calculating the amount of capital banks need to have on hand than the one it already tweaked. The move would have a similar effect — giving banks a freer hand.

Bair, who saw what happened when the big banks had a similarly free hand before the last financial crisis, thinks such changes are both bad and unnecessary. Research shows that well-capitalized banks not only are better for financial stability, they do a better job of continuing to offer credit through economic downturns such as the one the US is going through now, she said.

"I don't want to lower anyone's capital requirements," Bair said.

Looser rules won't necessarily lead to more lending

And lowering the amount of capital the big banks have to keep on hand, won't necessarily spur more lending to consumers and small businesses, she said. 

The banks that typically make loans to those kinds of customers are the regional and local institutions, she said. Those banks wouldn't be affected by the proposed changes.

Meanwhile, the big banks that would be given more freedom could simply use that to do something like invest in US Treasury notes, pocketing the difference between what the government is paying in interest and the paltry amounts they pay their depositors, she said. Indeed, because the new rules the Fed put in place allow banks to exclude Treasury notes when calculating their assets, the regulations essentially encourage them to just park their money there during this and future crises, she said.

"You could do that trade all day long," she said. "I'm not saying it would go to that extreme," she continued, "but I think that's going be the tendency now."

And regulators have and had a much better way to encourage banks to do more lending, Bair said. Rather than allowing the institutions to weaken their balance sheets, they could have ordered them to stop paying dividends to their holding companies during the coronavirus crisis. FDIC-backed banks paid out $32.7 billion in dividends in the first quarter — nearly twice what they earned in the period — just as the pandemic was starting to get into full swing, the Financial Times reported last month. That money could have supported more than a half a trillion dollars in additional deposits, which in turn could have been used to make new loans.

The danger is that with looser capital requirements, the big banks are going to make risky investments or understate the risks they're taking. Either way, the moves could blow up in their faces and pull down the financial system along with, just like what happened 10 years ago.

The huge amount of corporate debt is a jumbo-sized danger sign

And there's already plenty to worry about in terms of existing stresses on the financial system, Bair said. Her biggest concern is the tremendous amount of corporate debt. The total amount of debt held by non-financial companies hit a record $10.5 trillion in the first quarter, according to data from the Federal Reserve Bank of St. Louis. It's unclear exactly how much of that amount is held by banks, but it's almost certainly a large chunk.

As part of its response to the coronavirus crisis, the Fed stepped in to backstop the corporate debt markets, buying up bonds from hundreds of companies. That move helped sparked a new wave of corporate debt issuance this spring.

The Fed can't prop up that market forever, Bair said. If the economy continues to falter, the institution risks impeding structural changes that need to take place and keeping in business companies that are essentially zombies and have no real chance of making a comeback.

Even if the Fed does continue to intervene for the time being in the corporate bond portion of the market, the big banks have other exposure to corporate debt that could hurt them. Many companies, for example, have credit lines with banks or other kinds of lending relationships.

And then there are leveraged loans and the related collateralized loan obligations, or CLOs. Leveraged loans are those made to companies that are already highly indebted or are considered poor credit risks. CLOs are similar to the notorious collateralized debt obligations, or CDOs, that blew up in the financial crisis a decade ago. But instead of being amalgams of mortgages that are then sliced and sold by layers, according to assessed risk, CLOs are collections of leveraged loans, that are similarly sold by layers. 

Banks hold a lot of leveraged loans and CLOs

Both kinds of instruments could prove dangerous for the financial system if the economic situation forces companies to start defaulting en masse.

As of 2018, US banks and their holding companies held more than $110 billion in CLOs that were issued just in the Cayman Islands alone, according to a study last year by the Fed. Its quite likely their overall exposure to those derivatives is much greater than that, as Frank Partnoy pointed out in a recent piece in The Atlantic.

US banks also directly held some $760 billion in leveraged loans, mostly in the form of revolving lines of credit, at the end of 2018 and another $65 billion in such loans that they were in the process of turning into CLOs, according to a report at the end of last year by the Financial Stability Board. All told, for the average big bank in the major financial markets, the combination of CLOs and leveraged loans they held amounted to 60% of their capital.

"If [corporations] start getting into trouble, that could cause a lot of problems for the banks," Bair said.

The fact that regulators are focusing on loosening capital requirements right now instead of taking meaningful steps to shore up bank's balance sheets to help them weather a potential storm of defaults, indicates the degree to which their mindset has been warped, Bair said. They're essentially identifying and empathizing with the companies they're supposed to be keeping in check. Regulators have to recognize that what's in the banks' interest is not necessarily in the public interest, she said.

Banks are in the business of increasing their return on equity. Looser capital requirements helps them do that — but could also get them in trouble.

It's the job of Congress and regulators to protect the broader public from the risk of a financial collapse, Bair said.

"Those [interests] are inherently at odds," she said.

But she's particularly frustrated that the big banks are pushing for such looser regulations right now. With the pandemic still raging, millions unemployed, and jobless benefits running out, Congress in particular has a lot more to worry about than addressing the banks' pet issues.

"I do think a lot of it is cynical," she said. "I think they're using the pandemic to get things that have been on their wish list for a long time. And shame on them."

Got a tip about corporate America? Contact Troy Wolverton via email at This email address is being protected from spambots. You need JavaScript enabled to view it., message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

 

Original author: Troy Wolverton

The $43 billion Australian software giant Atlassian has stayed resilient through the coronavirus pandemic, as its catalog of collaboration software drove thousands of new customers during the remote work boom.One of Atlassian's top priorities is investing aggressively in its cloud products, as well as making sure they work well with each other.Atlassian faces some competition from Microsoft, but Gregg Moskowitz, managing director at Mizuho, says Atlassian has a stronger product portfolio and a different way of gaining customers.Visit Business Insider's homepage for more stories.

Atlassian began as an idea by college friends Scott Farquhar and Mike Cannon-Brookes in 2002: A company dedicated to making tools for their fellow software developers.

Eighteen years or so later, Atlassian is now Australia's biggest tech success story, valued at $43 billion, with its stock price growing sixfold since its 2015 IPO. As the world continues to turn to software to power everything from finance to fitness, Atlassian has grown accordingly, adding 3,000 new customers in its most recent quarter, and 6,000 the quarter before — even amid the coronavirus pandemic. 

In that quarter, the company reported on Thursday, it booked some $430 million in revenue, up 29% from the same period last year. Its stock is up 44% from the beginning of the year, putting it well ahead of the turbulence that's rocked the stock market.

It all speaks to the momentum that Atlassian has built in the industry: Its flagship product Jira, which is used for tracking software projects, is much stronger than its competitors, says Gregg Moskowitz, managing director at Mizuho Financial Group, who watches Atlassian closely. He expects that its business will only grow more over time, even if Atlassian faces some coronavirus-related impact on smaller customers or customers in travel and hospitality.

Plus, customers will prioritize continuing to pay for Atlassian's products since it helps employees work together remotely, Moskowitz says.

"There can be additional challenges although we really think Atlassian will be more resilient than most software companies," Moskowitz said.

The one company that could possibly pose as a threat over time is Microsoft, as the tech titan gets more into the developer space, Moskowitz says — though he's not too concerned about it, given Atlassian's lead in the specific niches in which it plays. 

"There's a very large technology gap that exists in the market where Atlassian plays," Moskowitz said. "Microsoft has been here longer than Atlassian. There certainly hasn't been anything to derail Atlassian's growth. Customers will unquestionably view Atlassian as a superior offering."

Meet the 15 executives leading Atlassian's growth, even amid the coronavirus pandemic:

Original author: Rosalie Chan

Companies have a growing need for tools to help them store, analyze, and manage massive amounts of data.Business Insider asked venture capitalists to name the top startups in the big data space — including ones that they have no relationship to — and why they think the company will boom in 2020. Here are the 29 startups they named, plus how much they've raised.Visit Business Insider's homepage for more stories.

Data operations and data engineering have taken off, investors say.

Companies are increasingly collecting vast swathes of data, though it's often fragmented across the silos of their business. This makes tools for processing that data — and staying in line with regulations to keep it private and secure — more necessary than ever, says Derek Zanutto, general partner at CapitalG (formerly Google Capital).

"It's a pretty interesting space now given the pain points you're seeing from large enterprise accounts," Zanutto told Business Insider. 

To glean value from their data, companies are also turning to tools to analyze and process data using AI and machine learning, which can have a "pretty dramatic impact" on an organization, says Louisa Xu, partner at IVP.

"Data science budgets aren't going away anytime soon," Xu told Business Insider.

Zanutto, Xu, and more than a dozen other investors recommended the top 29 data startups they believe will thrive this year and why (all funding data from PitchBook unless otherwise noted):

Original author: Rosalie Chan, Ashley Stewart and Benjamin Pimentel

In the car business, it's often said that brands are grand, but products pay the bills. In other words, you can capture or retain customers with what your company stands for, but long-term, if you don't have great vehicles, you're going to have a problem.

For almost its entire history, more than 15 years, Tesla has inverted that wisdom. A few years ago, the carmaker was barely selling any vehicles relative to its global competitors. Last year, Tesla delivered only about 250,000 vehicles, while General Motors sold almost 8 million.

Investors have decided that this means Tesla should be worth $300 billion in market capitalization, more valuable than GM, Ford, and Fiat Chrysler Automobiles combined — and topping Volkswagen and Toyota, the two biggest automakers on Earth.

Vehicle sales obviously don't add up to $300 billion in value; Tesla's quarterly revenue remains far below a Detroit Big Three car company. It's a bet on the future, and a prediction that Tesla should be able to expand its near-monopoly of the EV market as that market grows from a currently tiny basis, merely 1-2% of worldwide sales.

Investor optimism is that Tesla will maintain a dominant share, increase it scale, and notch enviable profit margins, perhaps more than 10% (high-volume luxury carmakers operate at that level, while mass-market companies run in the single-digit range). 

But for now, the Tesla brand is mighty. Here's how that happened:

Original author: Matthew DeBord

Wednesday's highly-anticipated antitrust hearing featuring Amazon CEO Jeff Bezos, Google and Alphabet CEO Sundar Pichai, Facebook CEO Mark Zuckerberg, and Apple CEO Tim Cook has officially come and gone.Now, Congress will consider the testimonies delivered during the hearing as well as other meetings and hearings made in the last year as part of its investigation into online competition.Lawmakers will also take into account hundreds of thousands of internal company emails, memos, and other documents submitted to Congress as part of the investigation.Congress will release a report outlining its findings of the investigation in the coming weeks.The report could be another step toward eventually creating new antitrust laws, or revising the original ones, that would better apply to 21st-century big tech and could more efficiently keep the industry in check.Visit Business Insider's homepage for more stories.

Wednesday's nearly six-hour tech antitrust hearing was quite a spectacle.

Republican lawmakers used the opportunity to question the execs on anticonservative bias they say is prevalent on the online platforms. One of them, Rep. Jim Jordan, asked the CEOs for their opinion on cancel culture. Some subcommittee members mispronounced Google CEO Sundar Pichai's name incorrectly (peek-eye.) Amazon CEO Jeff Bezos forgot to unmute himself before talking at one point and took a snack break or two. 

Though highly-anticipated and star studded, Wednesday's Big Tech hearing was just one part of an ongoing congressional investigation into competition in the digital market. And some of the most striking revelations so far come not from the CEO questioning, but from the hundreds of thousands of internal company emails and other documents gathered by Congress.

As Business Insider has reported, the unguarded discussions among company leaders in the emails reveal a pattern of cutthroat actions to snuff out or leapfrog emerging rivals. 

Now it's up to the members of Congress to roll up their sleeves and — taking into account the trove of emails, the CEO's answers at Wednesday's hearing, and the hundreds of hours of other meetings and hearings — reach an agreement about what kind of ground rules are preprepared for the new breed of corporate juggernauts that control powerful and borderless digital platforms.

The antitrust subcommittee is expected to release a report of its investigation in the coming weeks. The end goal is to create new laws, or approve revisions to the original century-old ones, that are better tailored to 21st-century tech companies. The laws as they stand now aren't updated to apply to modern tech business. For example, US anticompetitive laws have to show that consumers are being harmed, and that's more difficult to do in big tech than in other industries in the past, like oil.

As Rep. David Cicilline, the chair of the House Judiciary's antitrust subcommittee, said in his closing statements Wednesday, "This hearing has made one fact clear to me: These companies as they exist today have monopoly power. Some need to be broken up, all need to be regulated and held accountable."

But blanket regulation may not be feasible, since each of the four companies present different concerns with regards to competition. Amazon is primarily being investigated over claims that it gives special treatment to its own brands over third-party sellers. Google is under scrutiny for its dominance in digital ads. Facebook is in the spotlight for acquiring would-be competitors like WhatsApp and Instagram. And lawmakers are looking into Apple's App Store commission rates and whether or not they hurt developers.

So Congress would not only have to lay the groundwork for better antitrust regulation in the tech world but design it in a way that encompasses a broad scope of anticompetitive business practices. That won't be easy, but the hearing and the antitrust subcommittee's upcoming report is a step in that direction.

Original author: Katie Canales

 

Welcome to Wall Street Insider, where we take you behind the scenes of the finance team's biggest scoops and deep dives from the past week. 

If you aren't yet a subscriber to Wall Street Insider, you can sign up here.

With coronavirus cases still spiking in areas throughout the country and the US this week reporting a record second-quarter GDP slump, there's a growing concern among borrowers and private-equity firms that cash raised in the spring won't be enough to ride out the economic fallout.

And Houlihan Lokey, Wall Street's top adviser to distressed companies, has changed up its outlook: Instead of the sharp but quick downturn the firm initially anticipated, it's now predicting a deeper, prolonged crisis that pushes many more firms to bankruptcy.

"This pandemic is not a short-term blip, and it's going to be something much longer and probably more damaging to the economy," Houlihan CEO Scott Beiser said on an earnings call this week. And as Alex Morrell writes, companies that piled on debt in the early stages of the pandemic may have set themselves up to struggle as the crisis drags on. 

Read the full story here: 

Keep reading for a look at 24 quant power players; WeWork's new strategy to fill space; must-know financial adviser recruiters; and an interview with Betterment's president of retail that sheds light on how the robo is thinking about the Robinhood effect. 

Have a great weekend,

Meredith 

What's next for Carlyle

Conversations with execs who have worked with Lee paint a portrait of a dealmaker who is decisive, energetic, and doesn't suffer fools gladly. Getty Images

Kewsong Lee became sole CEO of The Carlyle Group last week after two-and-a-half years running the $221 billion private-equity firm alongside Glenn Youngkin.

Casey Sullivan and Meghan Morris spoke with 20 people who have worked with him, and they painted a picture of a change agent who is unafraid to challenge conventional thinking. During his seven years at Carlyle, he's already wound down underperforming strategies, revamped pay for some execs, and built up new businesses.

Read the full story here:

Must-know financial adviser recruiters

Recruiters Louis and Mindy Diamond, Jodie Papike, and Jeff Feldman are on our list. Diamond Consultants; Cross-Search; Financial Recruitment Partners; Yuqing Liu/Business Insider

Financial adviser moves in the wealth-management industry haven't slowed during the pandemic — recruiters and consultants say it's just the opposite.

"When you look at the numbers, it's really during tougher times that we see the most movement," one San Diego, California-based recruiter said. Rebecca Ungarino rounded up nine US-based recruiters who are at the center of all the action. 

Read the full story here:

Quant power players

From left to right: Point72's Matthew Granade, Two Sigma's David Siegel, AQR's Cliff Asness, and DE Shaw's Eric Wepsic. Point72; Misha Friedman/Getty Images; Neilson Barnard/Getty Images; DE Shaw; Yuqing Liu/Business Insider

Quants have gone from a niche practice to a dominant player: the largest and most important hedge funds in the world are heavily influenced by, or completely committed to, computer-run strategies. 

But a growing group of experts have been calling for more machine-learning techniques to be incorporated in a move away from the models that made so many people successful. And 2020 has not been kind to quants, as the volatility caused by the pandemic earlier in the year slammed many systematic funds that couldn't keep up.

Bradley Saacks took a look at long-time players, under-the-radar heavy-hitters, and entrepreneurial founders with serious pedigrees who will be guiding quant investing into its next phase.

Read the full story here:

Betterment eyes ways to tap the retail-trading frenzy

Original author: Meredith Mazzilli

Two of the world's most powerful CEOs, Elon Musk and Jeff Bezos, have been locked in a heated rivalry for the past 15 years. While the two mainly feud over their respective space ambitions — Musk runs SpaceX, while Bezos launched Blue Origin — they also compete for talent, and Musk has taken public issue with Bezos on several occasions. Musk called Bezos a copycat over some of Amazon's business ventures, said Amazon is a monopoly that should be broken up, and appeared to make digs about Bezos' age.For his part, Bezos has made veiled critiques of Musk's main goal, which is to send humans to Mars. As both CEOs grow their wealth and power, their feud will likely continue on. These days, both SpaceX and Blue Origin are designing lunar landers for a NASA mission to return humans to Mars.Visit Business Insider's homepage for more stories.

Over the last 15 years, two of the world's most high-profile CEOs, Elon Musk and Jeff Bezos, have been engaged in a simmering rivalry. 

The two execs have sparred over their respective space ambitions — Musk runs SpaceX, while Bezos owns Blue Origin — but it hasn't stopped there: Musk has called out Bezos for running what he deemed a monopoly, and has called Bezos a copycat for his self-driving car interests. 

Musk and Bezos are two of the most powerful CEOs in the world. Bezos is currently the wealthiest living person and runs Amazon's sprawling empire while also involving himself in Blue Origin's quest to send people to the moon. Musk is a dual CEO, manning the ship at both Tesla and SpaceX. Over the years, their not-so-subtle rivalry has even given way to Twitter spats and name-calling. 

Here's how Musk's and Bezos' rivalry began and everything that's happened since. 

Original author: Avery Hartmans

Gumroad CEO and early Pinterest employee Sahil Lavingia will announce details of his new VC fund next week.Lavingia is creating a "rolling fund," a new type of fund operated by AngelList that allows investors to pay up on a quarterly basis and cancel if they're dissatisfied.Lavingia said he was drawn to the rolling fund model because it requires little effort, allowing him to keep his CEO job while operating a fund on the side.Rolling funds were introduced by AngelList earlier this year to allow new VCs to depart from the fundraising methods of traditonal venture firms that raise large amounts from fund investors over an extended time period.Visit Business Insider's homepage for more stories.

Sahil Lavingia never considered getting into venture capital until AngelList introduced its new "rolling fund" model earlier this year. As the CEO of e-commerce site Gumroad, he never had time.

"I'm sort of gainfully employed," Lavingia told Business Insider. "So that was just never on the table for me. I'd really never considered being a VC for that purpose."

But Lavingia was intrigued by the rolling fund model, which allows investors to "subscribe" to a fund, paying relatively low amounts into it on a quarterly basis. New investors can start a subscription at any time. That's different from the fundraising path for traditional venture firms, which often take long periods of time to raise large sums from their investors, who are called limited partners.

Lavingia wouldn't need the substantial operational infrastructure of a big VC firm. For a fee from his rolling fund, AngelList would handle all the legal and regulatory busywork for him. All he had to do was let them know who was investing.

Now he's the latest tech figure to create their own rolling fund. Earlier in July news leaked that former Facebook employee Dave Morin was starting his own fund, Offline Ventures.

Lavingia said his fund will wrap up its investment period this Saturday and he will announce further details next week, including how much it raised and how much he plans to invest per startup. 

The startup CEO said he won't have strict rules about what he invests in, but he wants it to be a mix of his own esoteric personal interests and physical products that make the world better.

"When I look at my phone, there's been so much innovation in the last forty years," Lavingia said. "It's like this crazy window. But when I look out my actual window, it looks the same as it probably did a bunch of years ago, which I think is kind of strange."

People are drawn to the rolling fund model for various reasons. For Lavingia, it's convenience. But the end result is an alternative to the way traditional venture firms raise and announce large new funds every few years. 

"VC's say they like disruption," Lavingia said. "But we'll see how much they like disruption when they're the ones getting disrupted."

The limited partners in traditional venture funds commit to making periodic payments into the fund for as long as a decade, and to wait for the VC's startup investments to pay off. But investors in a rolling fund can bow out. 

The ability of investors to stop paying into a rolling fund could put pressure on the person running the fund to perform, quickly. That's why Lavingia is asking investors in his fund to commit for a year.

"I've told folks to think longer-term," Lavingia said, "So I'm hopeful they'll be understanding."

But Rich Wong, a partner at prominent traditional venture firm Accel, said he approved of the shortened timeframe of the rolling fund, seeing it as a heightened version of the pressure that he faces at his own firm.

"That's called discipline," Wong said. "That means if you're kicking butt, of course there'll be tons of interest. But if you aren't, that is actually the system working. "

Lavingia said he doesn't have to travel to persuade people to invest in his fund. He doesn't need to take people out to dinner. He doesn't have to make any significant investment of time into fundraising other than asking people who already know him if they're interested. That's why he says most of his investors are friends, coworkers, and colleagues.

"One of the things that I'm excited about is that there's people who have never been LPs before," Lavingia said.

He can even raise money in unorthodox ways, like sounding the horn to his sizable Twitter following to invest. Under some circumstances, that public appeal would be a violation of SEC rules, but Lavingia is operating under SEC Rule 506(c). The rule allows him to advertise his fund provided he only takes on "accredited investors," people or businesses that verifiably have large incomes or a large net worth, and so are less likely to be financially ruined if their investment doesn't pan out.

The nature of rolling funds means that there's a low barrier of participation — both for the people who run them, and the people who invest in them. The W Fund, a rolling fund focusing on early-stage tech companies created by women, has a minimum quarterly investment of just $6,250. Lavingia also set his minimum at $6,250, but allowed some investors to go as low as $1,250.

Lavngia hopes that means opening up the famously homogeneous VC world to "more diverse LPs, more diverse GPs, and more diverse founders eventually as well."

"There's going to be a broader base of fund managers, hopefully," Lavingia said. Those managers could be "scattered all across the country and the world, eventually, (and) that will bring varied sets of experience to use," Lavingia said.

Original author: Max Jungreis

SPACs are on the rise, and they have developed an interest in "hype'' sectors: cannabis, space travel, electric cars, and sports gambling.Some hyped-up companies demonstrate a potential for growth, but remain unprofitable, whereas other hyped-up companies belong to industries that investors generally avoid, like gambling.But hype is actually a powerful creative force in the longer arc of tech innovation, says one VC, and funding hyped-up ideas can draw in fresh talent and lead to further innovation.Elon Musk launched Tesla in 2003 in response to the failure of General Motor's hyped-up electric cars, which were all recalled from the streets earlier that year.Visit Business Insider's homepage for more stories.

What do cannabis, space travel, electric cars, and sports gambling all have in common? 

For one thing, startups in these industries have grabbed the attention of SPACs. 

But more importantly, these adventurous fields have also generated what some investors call hype, says VC Duncan Davidson. 

That hype factor hasn't deterred SPACs, the so-called blank check companies that give startups a quick route to the public markets by acquiring them.

But for many reasons, more conventional investors are hesitant to back hyped-up companies like Virgin Galactic and Nikola: While both demonstrate a serious potential for growth, they remain unprofitable. It might be a while before Virgin Galactic actually makes money by sending eager travelers into space. 

Given that industries like space tourism have never proven to be profitable, it's easy to see why hyped-up companies get a bad reputation, in and out of Silicon Valley. 

But hype is actually a powerful creative force in the longer arc of tech innovation, Davidson said. The seasoned VC said that SPACs can take a chance on far-out tech prospects and put new ideas on the tech industry's radar. 

Even if overstated, the early rush of enthusiasm over a new sector like AR/VR or space travel draws in fresh talent and capital that helps pave the way for a new crop of entrepreneurs and startups, even if the sector's earliest players fail spectacularly.

After the 1990s, in the era that saw the dot-com boom and bust, some investors believed that there was no money to be made from the internet, Davidson said.

While the dot-com experiment imploded, the boom cycle nevertheless got investors and entrepreneurs to start paying more attention to the internet. That paved the way for the tech-focused startup ecosystems that have emerged in Silicon Valley and other corners of the world. 

In recent years, one area that has generated a lot of hype, but not a lot of everyday users, has been AR/VR. 

When the coronavirus pandemic struck, augmented reality and virtual reality technologies were touted as possible tools to help with treating coronavirus-related anxiety, training employees, enhancing distance learning, and watching live sports. "But the average person likely doesn't have access to a virtual reality headset," Business Insider's Caroline Hroncich has previously reported. 

What AR/VR represent, then, is untapped potential. Around the globe, consumers have purchased just 26 million VR headsets, and it remains to be seen whether the coronavirus pandemic will help to transform AR/VR products into household consumer goods.

But even if AR/VR technologies don't take off soon, history tells us that the initial hype from 2017 and 2018 could clear the way for future innovation. 

To see how that could play out, one need look no further than the history of hype and the electric car. 

In the 1990s, GM launched its own pioneering electric car, General Motors EV1, long before Tesla's Elon Musk became a Twitter personality. GM failed to popularize the electric car and make it profitable, and the company officially canceled the program in 2003, after losing millions and recalling every single one of its electric cars. 

As it turns out, GM's decision to gut and shutter its electric car initiative prompted Elon Musk to launch Tesla in 2003. Now, the electric car company is also venturing into electric trucks and SUVs, as well as solar-powered panels and batteries. 

So if tech history is to teach us anything, it's that innovation emerges out of the rubble of boom and bust cycles. 

Sure, more VCs and startups will be looking into the option of going public through SPAC mergers than ever before. But, investors and entrepreneurs alike should also be thinking about what may emerge if and when the SPAC bubble bursts. 

Original author: Alexander Torres

Original author: Taylor Nicole Rogers

With the pandemic increasing the amount of food delivery and hurting restaurants' bottom lines, buzzy ghost kitchens see an opportunity to grow. The category had already attracted a lot of interest, notably from Uber co-founder and former-CEO Travis Kalanick, who launched CloudKitchens in 2016. We compiled 14 of the biggest players in the ghost kitchen world to show the international scope of the budding space.Visit Business Insider's homepage for more stories.

The pandemic has closed thousands of restaurants, many for good, while food delivery volume is increasing substantially. Much of the country reopening indoor dining, but Opentable is reporting that the amount of seated diners continues to substantially underperform last year. 

Ghost kitchens, a buzzy class of startups, were already betting that delivery would grow in market share, attracting founders including billionaire Uber ex-CEO Travis Kalanick, but the rapid increase in delivery demand has accelerated their growth. 

These companies operate a kitchen that hosts multiple restaurants or menus, from which they only do delivery orders (or sometimes pick up). Some run their own food brands, while others partner with local chefs or established delivery brands. 

While American startup hotbeds like Silicon Valley and New York have seen multiple ghost kitchen startups, this trend is worldwide, with Dubai, India, and Western Europe emerging as other areas that have spawned multiple startups. 

"Every single restaurant globally became a ghost kitchen overnight," Corey Manicone, CEO and cofounder of Zuul Kitchens, told Business Insider. He said that the pandemic has accelerated the concept by three to five years, but that there's a lot of growth ahead. 

"We're at the same place as e-commerce in the early 2000s," he said. 

Money continues to flow into the space: both Zuul and hotel-focused ghost kitchen Butler Hospitality raised money in July, $9 million and $15 million respectively. Karma Kitchen, a UK based kitchen, recently raised $318 million as well. 

In a time of economic contraction, the model makes a lot of sense for restauranteurs. Real estate and labor costs can be pooled across multiple restaurants, lowering the amount of square footage and the number of employees a restaurant needs. Less overhead, with the same amount of income. 

Read more: Bond, which has raised $15 million from investors including Lightspeed, wants to become the Shopify of logistics by turning vacant retail space into warehouses

The pandemic's impact on retail space, including restaurant space, has also been a boon for the industry. Firms convert restaurant space, underutilized retail space, and occasionally industrial space into ghost kitchens. Two of those three categories, retail and restaurants, are having an outsized negative effect from the pandemic, which leads to a glut of supply for ghost kitchens.

While real-estate firms may not have originally planned to bring ghost kitchens into their space, the bottoming out of demand from traditional tenants has opened many up to the business. 

"A lot of these development companies, larger landholders, and real-estate firms are taking a forward-looking, reset view of what is the best way to optimize their holdings for the future," Jim Collins, founder and CEO of Kitchen United, told Business Insider. 

We've created a list of 14 of the hottest startups in the space, highlighting where they've received money and what's different about their concept. 

Original author: Alex Nicoll

Mark Zuckerberg is warning that restricting Facebook's ad targeting will hurt small businesses.The Facebook CEO and other senior execs say the social network was a "lifeline" for many companies during the pandemic.During a call with analysts on Thursday, they argued that heavy-handed regulation on Facebook risks negative "macro-economic" effects.The remarks highlight how the company is using the pandemic to defend itself amid mounting political and regulatory scrutiny.Facebook has rolled out extensive new products in response to coronavirus, including new ways for businesses to connect with customers and new tools for users to talk to one another.

Facebook has previously warned that attempts to curtail its power would be a gift to China, which is building giant tech companies that don't share the same democratic values it does. Now Facebook has a new reason it says regulators should leave it alone: What's bad for Facebook is bad for small businesses.

The Silicon Valley-headquartered social networking firm is facing unprecedented political and regulatory pressure — from antitrust concerns that culminated in a historic hearing on Wednesday to advertiser concerns around content moderation, and perennial calls for greater privacy protections for users.

The company is now putting fresh emphasis on its positive impact on the economy during the coronavirus crisis, arguing that its advertising tools present a "lifeline" to small businesses and that attempts to restrict its ad tools could have "macro-economic" effects.

On Thursday, Facebook reported its second quarter financial results for 2020. It was a resounding success across the board, handily beating Wall Street's expectations on everything from revenues to user numbers, sending its stock climbing 8%.

The company's senior executives used a subsequent call with analysts to reinforce Facebook's economic importance — offering a look at how Facebook is using the pandemic to bolster its political defenses. 

First, CEO Mark Zuckerberg warned that regulation around online advertising could impact the entire economy. Here's what he said (emphasis added): 

"That's why I am often troubled by the calls to go after internet advertising, especially during a time of such economic turmoil like we face today with Covid. It's true that making it more difficult to target ads would affect the revenue of companies like Facebook. But the much bigger cost of such a move would be to reduce the effectiveness of the ads and opportunities for small businesses to grow. This would reduce opportunities for small businesses so much that it would probably be felt at a macro-economic level. Is that really what policymakers want in the middle of a pandemic and recession? The right path, I believe, is regulation that keeps people's data safe while allowing the benefits of this kind of personalized and relevant advertising."

It's a line that was echoed by COO Sheryl Sandberg, who described Facebook as a "lifeline for businesses" during COVID-19:

"Along with our free tools, personalized advertising is a lifeline for businesses – especially small businesses who can't afford broad campaigns aimed at mass audiences. For just a few dollars, now more than 9 million advertisers use our platforms to reach audiences interested in their products – and we enable this in a way that protects people's privacy and produces measurable results. In today's economy when businesses are struggling and customers aren't physically walking into their stores or restaurants, this is more important than ever.

Facebook has poured considerable resources into its coronavirus response efforts — building new tools like Shops to help businesses build online profiles during pandemic lockdowns around the world, as well as major grant programs to small businesses. 

The company has seen business continue to grow by double-digit percentages, despite the economic crisis that has devastated so many other sectors of the economy. Facebook's revenues grew by 11% year-over-year in Q2 of 2020, up to $18.69 billion. And user numbers for Facebook similarly grew by 12% year-over-year, as people flocked to its online services to communicate with friends and family they couldn't meet with physically.

CFO Dave Wehner took a similar tack in his comments — also singling out changes Apple is making to protect users privacy in the upcoming iOS 14 as similarly troubling. "Our view is that Facebook and targeted ads are a lifeline for small businesses, especially in a time of COVID," he said. "And we are concerned that aggressive platform policies will cut at that lifeline at a time when it is so essential for small business growth and recovery."

In this telling, Apple and privacy advocates aren't just out to get Facebook, then, but a risk to the health of the high street and mom-and-pop businesses — a line of argument that matches Facebook's interests with those of the broader economy.

It remains to be seen if regulators buy it.

Got a tip? Contact Business Insider reporter Rob Price via encrypted messaging app Signal (+1 650-636-6268), encrypted email (This email address is being protected from spambots. You need JavaScript enabled to view it.), standard email (This email address is being protected from spambots. You need JavaScript enabled to view it.), Telegram/Wickr/WeChat (robaeprice), or Twitter DM (@robaeprice). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by standard email only, please.

Original author: Rob Price

Earlier in July, US-based dental tech startup OrthoFX raised a $13 million Series A led by new investor SignalFire.OrthoFX uses a combination of dentral brace, or clear aligner, technology and online consultation and tracking to enable dentists to treat patients remotely.We got an exclusive look at the pitch deck OrthoFX used to bring investors on board.Visit Business Insider's homepage for more stories.

US-based dental tech startup OrthoFX raised a $13 million Series A led by VC firm SignalFire in July.

This bring total funding for the startup, which says it has been called the "Tesla for teeth" by some practitioners, to $17 million.

OrthoFX offers what it bills as state-of-the-art dental aligners, the clear, plastic teeth straighteners that fit tightly over a patient's teeth. Patients are offered a suite of extras, including a connected case, teeth scans, and direct and digital support from doctors and the OrthoFX team. Its services start at $2,950, but can drop to $950 with insurance.

As part of its orthodontic treatment the startup says it offers a bluetooth-connected case that monitors how long the patient wears it, algorithm-driven smile tracking, and rescue aligners that can correct a month's worth of missed treatment. 

"We are rethinking this category and not just as a dumb plastic delivery mechanism but as a smart connected device that takes into account all the health and wellness of the patient and putting the doctors and dentists ... in power," said cofounder Ren Menon.

In 2019 the startup received approval from the US Food and Drug Administration, and recently got clearance to sell in Canada and Europe, where it hopes to launch in the next few months. 

Menon said OrthoFX has a waiting list of over 700 doctors across the US and has treated "well over 1,000" patients so far. Over the past few months, interest has picked up as lockdown has made in-person dental treatment more problematic. 

The raise will be used to scale OrthoFX's existing tech infrastructure, create a new sales team, and expand its network of doctors. It also wants to continue R&D investment into its polymer innovations and remote care platform, which Menon says is what sets it apart from its competitors. 

"We are just scratching the surface when it comes to the possibilities of this category," he says. "We are developing so much more into the clear aligner platform than just straightening teeth."

Check out the pitch deck OrthoFX used to bring investors on board below:

Original author: Amy Borrett

The COVID-19 pandemic has prompted a fresh wave of online conspiracy theories around fears of a future 'cashless society'. Cashless payments more than tripled in the US between March and April – accounting for 8% to 31% of all transactions. It fell to account for 20% of transactions in June. One social media post claiming the decline in cash payments has "nothing to do with the virus" has been repeatedly shared on Facebook and Twitter, potentially reaching millions of users. Social media expert Tristan Hotham told Business Insider such conspiracies consist in a "grey area [that risks] sending users down the rabbit hole". Visit Business Insider's homepage for more stories.

The COVID-19 pandemic has prompted a fresh wave of online conspiracy theories around fears of a future "cashless society."

Cashless transactions have spiked amid the pandemic, according to research from payments firm Square, more than tripling between March and April in the US – from 8% to 31% of all payments – before leveling off at 20% in June. 

Earlier in July, Mississippi resident Wendy Singleton shared a lengthy post on Facebook, claiming to outline what "NO CASH ACTUALLY MEANS" for wider society. 

The 700-word post – which has so far been shared 344,000 times – claims there will be "no more money in birthday cards ... no more charity collections ... banks [will] have full control of every single penny you own [and] the government will decide what you can and cannot purchase". 

Prior to Singleton's own version of the post, it had previously been reposted on Twitter by a user named Louise Fallon, where it received 18,000 retweets and 56,000 likes, and before that by Colorado resident David Tweedy, again on Facebook, where it received 219,000 shares. 

It reads: "If you are a customer, pay with cash. If you are a shop owner, remove those ridiculous signs that ask people to pay by card ... Banks are making it increasingly difficult to lodge cash [and] that has nothing to do with a virus...

"Politics [and] greed is what is wrong with the world, not those who are trying to alert you to the reality in which you are blindly floating along whilst being immobilised by irrational fear."

The World Health Organization was forced to clarify its position on cash payments in March, claiming British media reports had misrepresented its position on the issue. The Daily Telegraph, a British broadsheet, previously cited the WHO in an article suggesting dirty bank notes could be spreading the coronavirus.  

But a WHO spokesperson told MarketWatch the organization's guidance had been "misrepresented" in news articles suggesting bank notes could spread COVID-19, adding: "We said you should wash your hands after handling money, especially if handling or eating food." 

The idea of a "cashless society" has been in circulation for decades, with Sweden among those regularly touted as most likely the first nation to do away with bank notes altogether. 

Even so, there remains a host of pros (speedy transactions, better economic data, reduced business risks) and cons (limited privacy, centralized control, digital fraud) which remain hotly debated. 

Tristan Hotham, founder of the Social Media Research Centre, told Business Insider conspiracies such as these "thrive" through their combination of truth and fake information. 

"We have known for a long time that society as a whole could eventually operate without physical cash," he said. "But these kinds of conspiracies gain traction by mixing that with total nonsense." 

As the pandemic swept the planet, social media platforms have taken steps to counter misinformation around COVID-19, fearing the immediate consequences of letting conspiracies circulate unchallenged. 

Hotham said: "It's interesting because, while this does make reference to the pandemic, it's sort of in that grey area, where it might not immediately put anyone in danger, in the way that anti-mask posts do.

"But it could certainly send someone down the rabbit hole." 

Original author: Martin Coulter

NOW WATCH:

Original author: Shona Ghosh

Amazon wants to launch 3,236 internet-beaming satellites in an effort called Project Kuiper, which would directly compete with SpaceX's growing fleet of Starlink spacecraft.Despite heated competition, Amazon managed to trounce the opposition of its competitors and win US Federal Communications Commission approval to deploy Kuiper in space.SpaceX's Starlink project appears to be years ahead of Amazon's Kuiper, having already launched hundreds of satellites and started a beta test program for consumers.However, Amazon has committed to invest "more than $10 billion" to realize Kuiper and blanket Earth with affordable web access.Visit Business Insider's homepage for more stories.

Amazon, founded by Jeff Bezos in 1995, just claimed a major victory by getting regulatory approval to create Kuiper, a planned fleet or constellation of 3,236 of internet-beaming satellites.

If realized, Kuiper would compete with Starlink, a similar yet potentially much larger fleet of 12,000 to 42,000 satellites — many times the number of spacecraft humanity has ever launched — being formed by SpaceX, the aerospace company founded by Elon Musk.

On Wednesday, the FCC's five commissioners unanimously voted to permit Amazon to launch its Kuiper fleet into space and communicate with Earth-based antennas, giving the project the paperwork it needs to get off the ground.

"We conclude that grant of Kuiper's application would advance the public interest by authorizing a system designed to increase the availability of high-speed broadband service to consumers, government, and businesses," the FCC wrote in its order, released on July 30.

In a subsequent announcement by Amazon on Thursday, the company pledged to invest "more than $10 billion" in its effort to provide "reliable, affordable broadband service to unserved and underserved communities around the world."

"A project of this scale requires significant effort and resources, and, due to the nature of [low-Earth orbit] constellations, it is not the kind of initiative that can start small. You have to commit," Amazon said.

That amount, incidentally, is precisely what SpaceX COO Gwynne Shotwell estimated in May 2018 as the cash it may take to complete Starlink.

In his descriptions of Starlink to reporters in May 2019, Elon Musk has said SpaceX is attempting to claim just 1-3% of a roughly trillion-dollar-a-year global telecommunications business. He also said the project could net SpaceX between $30 billion to $50 billion a year — about 10 times what it takes in for launching rockets. (This has prompted some analysts to value the company upwards of $100 billion.)

The same market access and capture is likely true of Amazon, which has prompted heated regulatory battles with SpaceX and other companies, at one point even prompting Musk to call Bezos a copycat. However, with Amazon's growing and lucrative digital entertainment divisions, bringing affordable high-speed internet to populated and remote areas alike stands to expand its customer base and bottom line.

Like SpaceX, though, Amazon had to go through the FCC first.

The federal regulator is in charge of divvying up the wireless spectrum and assigning permission to use certain frequencies for specific purposes — in the case of Kuiper, Starlink, OneWeb, and other planned providers, shuttling web data to and from space to blanket America (and other parts of the world) in high-speed, low-lag broadband. Amazon asked for the FCC's permission in 2019, engaging the company in a heated competition with similar providers.

Now, with the FCC's authorization, Amazon can launch its planned satellites, which would circle the planet at altitudes ranging from about 367 miles (590 kilometers) to 391 miles (630 kilometers), a region called low-Earth orbit (LEO) or even very low-Earth orbit (VLEO). Such distances are more than 50 times closer than traditional geostationary internet satellites, enabling them to shuttle data at fiber-optic-like spaces.

The FCC order states that Amazon plans to launch Kuiper in five phases and that its not-yet-existent internet service is supposed to come online after 578 satellites.

How big those satellites will be, what they will look like, and which rocket or rockets will launch them into orbit is not yet clear. But Bezos in 2000 founded an aerospace company called Blue Origin that is working to — as SpaceX has successfully done — develop reusable rockets. Blue Origin's forthcoming planned heavy-lift rocket is called New Glenn, and it may have the potential to deploy dozens or hundreds of satellites at once.

SpaceX, for its part, seems potentially years ahead of Amazon, having already deployed more than 500 Starlink satellites, built user terminal and ground stations, and even launched a private beta that could lead to the first public service later this year.

An illustration of Blue Origin's reusable New Glenn rocket launching toward space. Blue Origin

The FCC's order didn't grant everything Amazon wanted, but the company nevertheless emphasized its importance by announcing its massive planned investment in the scheme.

"We have heard so many stories lately about people who are unable to do their job or complete schoolwork because they don't have reliable internet at home," Dave Limp, a senior vice president at Amazon who previously developed its Kindle product and is now overseeing Kuiper. "There are still too many places where broadband access is unreliable or where it doesn't exist at all. Kuiper will change that. Our $10 billion investment will create jobs and infrastructure around the United States that will help us close this gap."

In addition to its goals of serving up internet to home consumers, schools, businesses, emergency responders, medical establishments, Amazon said it also plans to "provide backhaul solutions for wireless carriers extending LTE and 5G service to new regions" to bring internet to hard-to-reach areas by other means.

Late last year, Amazon unveiled plans to open a giant factory to develop, test, and build Kuiper satellites in Redmond, Washington.

The clock is ticking for Amazon to execute. The FCC requires 50% of its satellites to be operational by July 30, 2026, and the rest of its fleet to launch before July 30, 2029, or the company could lose its permission to operate the network.

The government's decision only obliquely addressed the threat and growing impact of low-flying fleets of satellites to astronomy, and especially to radio astronomers. In its decision, the FCC noted avoiding such disruption is "not a condition" for its authorization, but that Amazon "should be aware of these facts" and work with the National Science Foundation to mitigate the problems.

Original author: Dave Mosher

In the congressional hearing Wednesday into antitrust concerns in the tech industry, the four CEOs who testified all touted their companies American roots, and Facebook's Mark Zuckerberg warned of competition from China.The appeal to patriotism and nationalistic sentiments is a familiar tactic; the tech companies have used it repeatedly in recent years as they've come under increasing scrutiny.But it also has a long history — giant companies routinely tout their all-American roots and the threat of foreign competitors when their market power gets questioned.Policymakers should ignore such appeals, because they're meant to distract from the real harms the companies are causing, and the best way to compete with foreign rivals is through innovation, which monopolies throttle.Visit Business Insider's homepage for more stories.

Patriotism, as Samuel Johnson observed some 245 years ago, is the last refuge of the scoundrel.

Making an appeal to national sentiments — or, relatedly, warning about the dire threat from foreign competitors — is also a time-worn tactic of corporate leaders who seek to evade scrutiny of their companies' behavior or shed what they see as onerous regulations.

And so, on Wednesday, with Big Tech under the harsh glare of a Congressional antitrust investigation, the CEOs were quick to dust off the old playbook. 

The success of Facebook, Google, Apple and Amazon — four companies with a combined market value of roughly $5 trillion — is the epitome of the American Dream, their CEOs told lawmakers at the House of Representatives antitrust hearing.

The success of these four tech giants is something to be cheered; the result of the American system, not any nefarious actions or problems in the market's rules, they insisted.

Apple, CEO Tim Cook said, is "a uniquely American company whose success is only possible in this country." 

Amazon's Jeff Bezos discussed the lessons in self-reliance and ingenuity that he learned being the son of a high-school aged single mother and the adopted son of an immigrant father. And on it went.

Most importantly, the CEOs implied or said directly, the US needs national champions like their companies to lead the internet age, because without them, foreign competitors — most worryingly, Chinese ones — will take over.

"China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries," warned Mark Zuckerberg, the CEO of "proud American company" Facebook.

"We believe in values — democracy, competition, inclusion and free expression — that the American economy was built on," he said.

If it sounds familiar...

These types of arguments aren't new. Sheryl Sandberg, Facebook's chief operating officer, deflected questions about her company's power by pointing at the threat from Chinese competitors in an interview with CNBC last year.

In fact, these types of arguments long predate the scrutiny of the tech giants. They've been used for decades by all stripes of American corporations to evade concerns about their power.

China's national flag is raised during the opening ceremony of the Beijing 2008 Olympic Games at the National Stadium, August 8, 2008. The stadium is also known as the Bird's Nest. Jerry Lampe/Reuters

Financial services companies made similar arguments in the 1980s when they sought the repeal of regulations that limited their size and ability to operate across states lines, arguing that they needed to grow large to be able to compete against giant foreign banks. IBM and AT&T made such appeals when they faced antitrust scrutiny in the 1970s and 1980s, arguing that they were needed to help defend the US from the rising threat of competition from Japanese tech companies.

Indeed, such patriotic or nationalist arguments go back as far as the 1910s, during some of the first efforts in the US at breaking up monopolies, said Matt Stoller, the author of "Goliath: The 100-Year War Between Monopoly Power and Democracy."

"This is a long-standing trend," he said. He continued: "It's always, 'give us more power, we'll defend you.'"

Every US company has an all-American story

The problem with such arguments is they're banal, irrelevant, and misleading.

Pretty much any US company big or small has an all-American story to tell. At a basic level, the success of Amazon or Apple is no more or less impressive than that of the corner grocery that was founded by immigrants fleeing war or oppression. Nearly all founders and entrepreneurs have to overcome challenges and hardships, and the American system has led to outsized success for lots of companies past and present. Amazon, Apple, Alphabet, and Facebook weren't the first, and they won't be the last, regardless of whether regulators seek to limit their power.

What's more, many of the companies that are being quashed by the tech giants have American stories too. We shouldn't ignore, for example, how Amazon used underhanded tactics to undermine Quidsi, the owner of Diapers.com, or how it allegedly throttled the business of a small company that sold books through its site just because Amazon has lots of American workers and Jeff Bezos was born to a single mother. While Americans may benefit from the services Amazon offers and the jobs it fills, they're hurt when it throttles competition. Prices can go up and employees of the competitors Amazon has stymied lose their jobs.

A woman shops for bargains at a Shoe Pavilion store that is going out of business in the Financial District in San Francisco Thomson Reuters

There's little doubt that China and Chinese companies have a different vision for the internet than US companies. There are legitimate concerns about Chinese companies spreading the kind of surveillance and censorship that are endemic in China to other countries. But the best way to meet such international challenges is through encouraging innovation and competition here at home — not by giving the US tech giants a free pass to trample on their smaller domestic rivals.

Giant monopolies tend to stop innovating. They become sclerotic and have trouble adapting as markets and fashions change. But breaking up said monopolies can spur innovation and the creation of whole new markets.

Concentrated power destroys companies

History bears this out, repeatedly. The worldwide dominance of the Big Three automakers in the 1950s and 1960s left them wholly unprepared for the oil shocks of the 1970s and the onset of competition from more nimble Japanese companies. Likewise, Boeing's troubles in recent years are attributable to its ability to wipe out all US competitors in the commercial airline market, said Stoller.

"When you concentrate power, you destroy companies," he said.

On the flip side, the antitrust actions against IBM and AT&T opened up the tech industry for Microsoft, Apple, and Intel and for the internet itself. And the later antitrust case against Microsoft allowed Google, Facebook, Netflix, and other companies to emerge.

"It's pretty obvious that those companies wouldn't exist" if the Microsoft antitrust case hadn't happened," Stoller said.

So ignore the patriotic appeals and the grim warnings about Chinese competition from the desperate CEOs. We'll all be better off if we break up Big Tech.

Got a tip about Big Tech? Contact Troy Wolverton via email at This email address is being protected from spambots. You need JavaScript enabled to view it., message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

Original author: Troy Wolverton

Amazon doubled its profit to a record $5.2 billion in the second quarter.Amazon CFO Brian Olsavsky shared a few reasons that may have contributed to the increased profits during his call with analysts on Thursday.Amazon saw huge lockdown-driven sales, but also scaled back its marketing and video production spend, while improving the profitability of its international business.Visit Business Insider's homepage for more stories.

Amazon surprised investors on Thursday when it reported record profits for the second quarter, which exceeded Wall Street expectations by almost 600%.

The $5.2 billion in net profit, which doubled from last year, was all the more impressive because Amazon had previously warned it would spend all of the $4 billion it was projected to make in quarterly profits on COVID-related responses, including wage increases for warehouse workers and the development of an in-house testing lab.

Amazon

Calling it a "highly unusual quarter," Amazon CFO Brian Olsavsky shared a few factors that may have contributed to the improved bottom line during his call with Wall Street analysts on Thursday, according to a transcript provided by Sentieo:

Lockdown driven sales: The significant increase in customer demand that started in early March remained high throughout the quarter, Olsavsky said. As a result, Amazon reported a whopping 40% sales growth to $88.9 billion for the quarter. He said Prime members led the growth, spending more and buying more frequently on Amazon. Online groceries tripled in sales, he said.Sold more profitable products: Due to the pandemic, Amazon had expected the bulk of its sales to come from essential products, like face masks, which have slim margins. But the mix of products sold started shifting in early May to include more non-essential — and profitable — products, Olsavsky said. At the same time, demand remained "super high," leading to higher-than-expected profits.Scaled-back spending: Amazon cut its marketing spend by a third during the quarter to reduce the demand it was seeing, Olsavsky said. It also slowed its investments in its Studios business, delaying productions of some shows to protect the actors and filming crew amid COVID-19. In fact, Amazon's sales and marketing spend was roughly flat from last year at $4.3 billion, while its total operating expense of $30 billion grew just 29%, much slower than the 40% sales growth rate.International growth: Amazon's international business, whose growth rate had slowed to the lower teen numbers in recent years, bounced back to 38% in the second quarter for $22.7 billion in revenue. Most important, it eked out $345 million in operating profits, recording a rare profit for the first time in years. Olsavsky said that's a "great sign," and credited the rate of Prime adoption in some of the more "established" overseas markets, like the UK, Germany, and Japan.Higher-margin businesses: Amazon's higher margin businesses, like its cloud and advertising units, continued to show growth. Although Amazon's cloud business reported its slowest growth ever, at 29%, it still had a profit of $3.3 billion on $10.8 billion of revenue. Advertising growth remained over 40%, while Amazon's third-party seller service, which includes the high margin fees it collects for providing shipping and storage services, also grew 53% (it's hovered around a 30% quarterly growth rate in the previous year).

Original author: Eugene Kim

Hi! July has been a busy month for Business Insider's advertising and media team with lots of deep reporting on a wide breadth of companies. As we hit the middle of the summer slump, today's Insider Advertising newsletter highlights our most popular stories from the past month.

These stories are part of Business Insider's subscription service that helps fund our reporting. If you'd like to subscribe to Business Insider, here is a 20% discount code for an annual subscription. There is also a one-month trial for $1. And to get this newsletter in your inbox daily, sign up here.

Here are the can't-miss stories that our readers loved in July:

Original author: Lauren Johnson