When life gives you lemons

Quote of the Day

This was a careless and reckless attack. It affected individuals, industry, governments.”

Market Snapshot

• U.S. markets closed lower ahead of the Senate’s vote on the tax bill.
• Apple shares sank 1% after an analyst downgraded it from "buy" to "neutral."
• Capital raised through bond issuance has totaled $6.8 trillion in 2017.
• Bitcoin futures fell 9% to $18,500.

Lemonade Squeezes $120 Million From SoftBank

Lemonade Inc. got some sweet news today. The insurance company raised a $120 million Series C with the lion's share coming from Masayoshi Son's tech giant, SoftBank.

SoftBank joins a star-studded roster of investors including Allianz, Alphabet's Google Ventures, Sequoia Capital, Thrive Capital, and Tusk Ventures.

Lemonade spent 2017 acquiring licenses to offer renters’ insurance in 25 states, including its home base New York, as well as California, New Jersey, and Nevada. The early Christmas gift will be used to expand its Lemonade stand globally in 2018.

So, what makes this Lemonade so special?

For starters, it uses AI and peer-to-peer behavioral economics to offer both renters and homeowners insurance. Now, robots aren't just in your home. They're also insuring it by minimizing paperwork and speeding up the claims process on both sides.

Lemonade differentiates itself from the traditional insurance model by taking a fixed fee out of monthly payments, instead of swallowing your whole premium. It also buckets its users based on the common causes they support. So with the remainder of those monthly premiums, donations are made to customers’ nonprofits of choice during the annual 'Giveback.'

But with great investments, come great strings

SoftBank, specifically its managing director David Thevenon, now has a seat on Lemonade's board. And it’s a front-row seat for a company that’s flipping insurance on its head.

Since its launch late last year, Lemonade's "growth has been in excess of our expectations since our last [$60 million] round," said co-founder and CEO Daniel Schreiber. "We'll end this year around 90,000 customers, and our target for the year was 13,000."

And since Lemonade's marketing efforts aren’t made from concentrate, it's been able to keep customer acquisition costs low through greater-than-expected word of mouth. Some of those mouths are also sharing rumors that the company's (undisclosed) valuation could be climbing past $500 million.

Not a bad recipe.

The GOP’s Tax Fantasies Become A Reality (Almost)

The GOP-led Congress put its internal differences aside for a moment to pass the largest tax overhaul since the ‘80s. Or so they thought. Because of a few minor procedural violations, the House will need to vote again today.

But with the final bill mostly in hand, we're left with some clarity after more revisions than the Declaration of Independence.

Here’s how things shook out on the corporate side:

Corporate income tax: Slashed to 21% from the current rate of 35%, and that’ll start on January 1.

Pass-throughs: So they won’t feel uninvited to the corporate tax Christmas party, sole proprietorships, LLCs, S corps, and the like will get a 20% deduction. For couples, this will phase out after the first $315,000 in income.

Multinationals: Companies stashing cash abroad (you know who you are) will be able to bring it back to the U.S. for a one-time rate of 15.5%. And moving forward, they’ll barely be taxed on foreign profits.

Carried interest: The bill preserves a provision that allows hedge fund managers to tax their share of investment profits (of more than three years) at lower capital gains rates. This despite President Trump’s pledge to remove it.

What now: The bill will head to the president’s desk for his signature.

YouTube Gets Signed to More Labels

You can skip this ad in 4...3...2...1...

Large music labels like Universal, Sony, and Warner, are signing long-term contracts with YouTube after years of copyright infringement and subpar ad revenue royalties.

Which is why this contract will enforce...you guessed it...stronger content policing and a standard royalty rate for song uploads.

What’s in it for YouTube? A way to monetize its music offerings by stripping ads.

Hopefully, listeners will love paying for Kanye as much as Kanye loves Kanye. YouTube’s responsible for 25% of music streamed globally, yet can’t seem to make much money off of it.

So it’s starting up a new subscription service and caving to music industry demands. With any luck, a little bit of T-Swift, Adele, and Coldplay will be enough to convert music lovers into premium subscribers.

And if not? Chris Martin will find you and sing “Clocks” on repeat until you pay him.

Humana Is Buying Kindred Healthcare, Doctor’s Orders

The nation’s fourth largest health insurance provider, Humana (-0.50%), threw on its hospital gown and purchased home-health and hospice operator Kindred Healthcare (-3.70%) for $783 million. $4.1 billion if you count debt...

But it won’t be cutting the check alone—PE shops TPG and Welsh Carson will be dropping in for a 60% stake, leaving Humana with 40%.

All things considered, that’s still a sizeable chunk as Humana begins marrying its insurance business with actual healthcare services. A wedlock that offers tighter control over the costs of its Medicare patients. We don’t need Doris missing any more of her Lipitor.

The itch for integration is all too real in healthcare right now, as this announcement comes on the heels of CVS’ $69 billion acquisition of insurance provider Aetna.

And if this particular deal pays off for Humana, it could give it the staying power it desperately needs: Aetna wasn’t successful with a takeover, but Cigna might pick up where it left off.

What Else Is Happening…

• The SEC suspended trading on Crypto Co. stock on suspicion of manipulation after it surged more than 17,000% in fewer than three months.
• UPS (+0.16%) pre-ordered 125 Tesla electric semi-trucks, the largest order yet.
• “Silicon Valley” star T.J. Miller is the latest to be accused of sexual assault.
• Boeing (+0.37%) and Bombardier (-1.29%) are taking their battle for the skies to court.
• ICYMI, here’s our definitive list of the top 10 business stories of the year.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: Housing Market Index (+)

• Tuesday    Earnings: FedEx (+)

                  Economic Events: No Events

• Wednesday    Earnings: Bed Bath & Beyond, General Mills

                        Economic Events: Existing Home Sales

• Thursday   Earnings: Accenture, Nike, The Finish Line

                   Economic Events: GDP, Jobless Claims, Corporate Profits

• Friday       Earnings: No Events

                 Economic Events: Durable Goods, New Home Sales, Consumer Sentiment

From the Crew

Yesterday, we asked you, Brew Sharks, to say whether you were IN or OUT on Chinese face recognition startup SenseTime. And you delivered. Let’s look at the results from hundreds of fascinating responses:

* 60.5% of you would invest
* 39.5% said "I'm out"

What you liked about a SenseTime investment:

* “From OS’s to government there is a desire to use facial recognition. The company who is first to market with such a high level of confidence is worth throwing a little money at.”
* “The future is here. Giddy up.”

Why you hesitated:

* “Spectacular 'internal metrics' from a Chinese firm give me a hard pause. I'd like to see external testing before I throw any scratch behind it.”
* “Sounds like beginning of a dystopian novel.”

We love trying new things. And, since you’re never afraid to give feedback, don’t hold back now. How did you like this section? Are there any other weekly sections that you think the Brew community would enjoy? Let us know...just hit “reply” and spill the beans.

Finally, a quick preview of what’s brewing in 2018

* New branding (and a new logo!). We’ll unveil a clean, sleeker look. Don’t worry though, we’re keeping the mug. That means get all your vintage Brew swag before it’s out.
* Growing the team. We’re at seven (!), and more on the horizon.
* More content. Not sure if you’ve noticed, but we revamped our website and the writers are hammering the keys, writing kickass business stories to supplement the newsletter.

The Breakroom

Question of the Day

How can you take 1 away from 29 and be left with 30?

(Answer located at the bottom of newsletter)

Business Trivia

Each week nearly one-third of the U.S. population visits which place?
Starbucks, Walmart, Mobil gas station

(Answer located at the bottom of newsletter)

Stat of the Day

7x—The increase in wine glass capacity in England from 1700 (66 mL) to 2017 (449mL). Does the same go for wine bags?

Breakroom Answers

Question of the Day: Use Roman numerals for 29, XXIX. Take the I away from it and you have XXX, or 30.

Business Trivia: Walmart