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Charlie Javice, the founder of a startup company that promised to revolutionize the way college students apply for financial aid, was sentenced Monday to more than seven years in prison for cheating JPMorgan Chase out of $175 million by greatly exaggerating how many students it served.Javice, 33, was convicted in March of duping the banking giant when it bought her company, called Frank, in the summer of 2021. She made false records that made it seem like Frank had over 4 million customers when it had fewer than 300,000.Addressing the court before she was sentenced, Javice, who was in her mid-20s when she founded the company, said she was “haunted that my failure has transformed something meaningful into something infamous.”Sometimes speaking through tears, she said she “made a choice that I will spend my entire life regretting.”Judge Alvin K. Hellerstein largely dismissed arguments by Javice’s lawyer, Ronald Sullivan, that he should be lenient because the negotiations that led to Frank’s sale pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world.”Still, the judge criticized the bank, saying “they have a lot to blame themselves” after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.”Javice was among a number of young tech executives who vaulted to fame with supposedly disruptive or transformative companies, only to see them collapse amid questions about whether they had engaged in puffery and fraud while dealing with investors.Her prosecution drew comparisons to the case against Elizabeth Holmes, the founder of a blood testing company, Theranos, that collapsed amid fraud allegations.Javice, who lives in Florida, has been free on $2 million bail since her 2023 arrest. The judge said she could remain free while she appeals the verdict. She was convicted of conspiracy, bank fraud and wire fraud charges. Her lawyers had argued that JPMorgan went after Javice because it had buyer’s remorse.A graduate of the University of Pennsylvania’s Wharton School of Business, Javice founded Frank to launch software that promised to simplify the arduous process of filling out the Free Application for Federal Student Aid, a complex government form used by students to apply for aid for college or graduate school.Frank’s backers included venture capitalist Michael Eisenberg. The company said its offering, akin to online tax preparation software, could help students maximize financial aid while making the application process less painful.The company promoted itself as a way for financially needy students to obtain more aid faster, in return for a few hundred dollars in fees. Javice appeared regularly on cable news programs to boost Frank’s profile, once appearing on Forbes’ “30 Under 30” list before JPMorgan bought the startup in 2021.Sullivan told Hellerstein that his client was very different from Holmes because what she created actually worked, unlike Holmes, “who did not have a real company” and whose product “in fact endangered patients.” Sullivan said the bank rushed its negotiations because it feared another bank would acquire Frank first.A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.”Fergenson said Javice was driven by greed when she saw that she could pocket $29 million from the sale of her company.“Ms. Javice had it dangling in front of her and she lied to get it,” he said.And in seeking a long prison sentence for Javice, prosecutors cited a 2022 text she had sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison in the Theranos case.Prosecutors added that the message was “desperately needed” because of “an alarming trend of founders and executives of small startup companies engaging in fraud, including making misrepresentations about their companies’ core products or services, in order to make their companies attractive targets for investors and/or buyers.” Larry Neumeister, Associated Press
Category:
E-Commerce
Shares of Spotify Technology SA were put on the spot this morning as the Swedish audio-streaming company announced that CEO Daniel Ek will be transitioning out of the role at the end of the year. He will be replaced by two new co-CEOs: Gustav Söderström, Spotifys current copresident and chief product and technology officer, and Alex Norström, copresident and chief business officer. Ek will remain with the company and oversee its long-term strategy and capital allocation, and provide guidance in his new role as chairman of the board. Kicking and streaming Investors may take some time to absorb the news. Spotify stock, listed in the U.S. and trading on the New York Stock Exchange, was down nearly 4% as of 8:30 a.m. during premarket trading. However, shares are up almost 6% over the past month and a whopping 60% year-to-date as Spotify has reported consistent user growth and its first full profitable year in 2024. I always believed that Spotify could play an important role in revolutionizing listening around the world, and with more than 700 million users, weve truly charted a new course bringing creativity to every corner of the globe, Ek said in a company statement. The CEO also announced his departure on Instagram. The 42-year-old Ek cofounded Spotify in 2008 and has been with the company ever since, seeing it grow from a small Swedish startup to become the top music streaming platform in the world, with almost 700 million users worldwide along with 276 million subscribers in 180 markets. More recently, the company has leaned into the burgeoning audiobook segment, rolled out new features like Mix mode, and more. ‘Can’t wait to get started’ With a lot of momentum, Spotifys new CEOs said in a joint statement that theyre confident theyll take the company forward. Weve worked together a very long time and have seen Spotify through many different chapters,” Söderström and Norström said. “Nearly three years ago, when we stepped into our role as co-Presidents, we charged our teams with relentlessly focusing on building the best and most valuable experience available anywhere and that ambition hasnt changed.”
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E-Commerce
Shares of Beyond Meat slumped to a record low on Monday after the maker of plant-based meat launched an exchange offer for convertible bonds to cut more than $800 million in debt. The stock was last down 32.1% at $1.93, after falling as low as $1.23. The company last month posted a revenue drop and a wider-than-expected loss, citing weak U.S. consumer demand. It said it was still facing “an elevated level of uncertainty” and will not provide any full-year estimates. Consumer spending has been affected by economic uncertainty and consumer tastes have been shifting in the plant-based meat market. The company will exchange its $1.15 billion 0% convertible notes due 2027, with up to $202.5 million of new convertible payment-in-kind 7% notes due 2030, along with 326 million shares of its common stock, according to a filing on Monday. Payment-in-kind means Beyond Meat will be able to pay interest with additional debt instead of cash, with the payment-in-kind notes paying interest at a 9.50% annual rate. The exchange offer is meant to sharply reduce leverage and extend maturity to support Beyond Meat’s long-term vision of being a global plant protein company, President and CEO Ethan Brown said in a statement on Monday. The filing showed about 47% of holders of the 2027 notes have already agreed to the exchange offer, while other creditors have until October 28 to accept the offer. Following Beyond Meat’s results, TD Cowen analysts said in an August note that the management and board have recognized the “existential threat facing the business and are taking steps to preserve cash and stabilize sales.” However, they recommended selling the stock, noting that the company’s fragile financial situation and weak demand for meat alternatives create too much risk. Of the nine analysts who cover Beyond Meat, three have a “hold” rating on the stock and six have a “sell” or “strong sell” rating, according to LSEG. Beyond Meat’s stock is down about 50% for the year to date. Additional reporting by Lance Tupper Caroline Valetkevitch, Reuters
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E-Commerce
When the clock strikes midnight tonight, the U.S. government could shut down. If that happens, it will be because Congressional Republicans and Democrats could not reach an agreement on a new funding bill, which is required to keep the government running. As noted by CBS News, one of the key sticking points between Democrats and Republicans involves healthcare provisions in the proposed bill. Democrats want provisions in the bill that would help fund healthcare for millions of Americans across the country. They also want restrictions on President Trumps ability to withhold such healthcare funding. Republicans have so far refused to entertain these provisions. If a deal cant be reached, the federal government will shut down on Wednesday, October 1. The shutdown will impact Americans in different ways, depending on their livelihoods and the services they rely on. Heres how a government shutdown could affect three large groups of Americans, including Social Security recipients, travelers, and federal workers. What if I’m a Social Security recipient? The good news is that if you currently receive Social Security payments, the government shutdown will not stop those payments from being sent to you, reports CBS News. This is no doubt a relief for the 74 million Americans who get Social Security checks every month. The reason Social Security checks will continue to come is that Social Security spending is mandatory and therefore does not need to be renewed on a yearly basis. However, some administrative tasks of the Social Security Administration (SSA) could be impacted due to federal workers being furloughed during the shutdown. This could include benefit verifications, earnings record corrections and updates, overpayments processing, and replacing Medicare cards, Max Richtman, CEO of the National Committee to Preserve Social Security & Medicare, told CBS News. Will a government shutdown delay my flight? If the government does shut down, not all federal employees who work in travel-related positions will be furloughed. This is because some of these workers are considered essential, so federal law says they must continue workingalbeit without pay in many cases. Essential federal workers include those who work for the Transportation Security Administration (TSA) and Customs and Border Protection (CPB). It also includes those who work for the Federal Aviation Administration (FAA), including air traffic controllers, as noted by USA Today. However, while these workers will continue to perform their roles, it’s possible that if the shutdown continues for a long time, some of them could attempt to strike over a lack of pay. If a strike occurs, it could cause delays at airports. And then there are the non-essential federal employees who work in travel-related positions, such as those in the National Park Service. Many of these workers will be furloughed, which could lead to the closure of national parks or their understaffing. How will a government shutdown affect federal workers? Without a doubt, the most immediate impact of a federal shutdown will be felt by Americans who work for the federal government. If a shutdown occurs, most federal employees who are considered non-essential workers will be furloughed. During the time they are off work, they will not be paid, which could have devastating financial consequences for them and their families. A law passed in 2019 states that federal workers who are furloughed during a shutdown have a right to back pay once funding is restored, but that law does nothing to help those workers while the shutdown is in place. What’s more, things could be worse for federal workers this time around when compared to previous government shutdowns. That’s because the Trump administration has stated that if the government is shut down, federal agencies should prepare to permanently lay off federal workers whose jobs dont align with President Trumps priorities, CNN reports. If the Trump administration goes through with those plans, it could mean that when some federal workers leave their jobs on Wednesday, if there is a shutdown, they may never return to those roles again. Will a federal government shutdown happen? Congress has less than 24 hours to avert a federal government shutdown. And as of the time of this writing, there are no signs that the Republicans and Democrats are close to an agreement to pass the funding needed to avert a shutdown. If the government shuts down, it will not be unprecedented. As CBS News notes, government shutdowns have occurred 14 times since 1980. The most recent shutdown was in Trumps first term in 2018-2019, when the federal government shut down for 34 daysthe longest shutdown on record. Whether the average American who isnt a federal worker feels the immediate impact of any shutdown depends on their situation, but most should experience a limited impact if the shutdown doesnt last long. As noted above, this is because Social Security checks will continue to arrive, planes will remain in the air, and mail will continue to be delivered (since the United States Postal Service is a self-funded institution). To see how a shutdown may affect other aspects of life, its worth checking out the various 2025 Federal Government Shutdown FAQs that are being posted by some members of Congress on their websites.
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E-Commerce
For decades, the baby food aisle has been dominated by big players like Nestlé, which makes Gerber brand products, and Danone, whose brands include Happy Family. Angela Vranich and Ben Lewishigh school sweethearts turned entrepreneurswanted to change this. Even though they didn’t yet have children, they believed that millennial parents were looking for new sources of food for their growing families. “Millennials had spent their twenties drinking fresh-pressed juices and eating salads,” Vranich says. “When they started having kids, they were looking for food that was more nutritious than what they grew up eating.” [Photo: Little Spoon] In 2017, the pair launched their direct-to-consumer startup, Little Spoon. They used their previous experience in the food industry to develop a line of baby food that uses organic, non-GMO ingredients, and abides by EU standards of quality, which are higher than those in the United States. Customers could order products on the brand’s website and have them delivered, saving them regular trips to the grocery store. According to the company, since that launch Little Spoon has delivered 80 million meals to families across the country, and now feeds more than 3% of babies in the U.S. It has expanded beyond baby food, creating developmentally appropriate food all the way into preschool, including a large selection of products for toddlers that are designed to be nutritious and fun to eat (like nuggets in the shape of spoons to better scoop up sauce!). Little Spoon’s full-plate meals and school lunches have been particularly popular. [Photo: Little Spoon] As of September 30, the brand is available at Target locations across the country. The brand’s 23 products will be spread out across five aisles, from fresh baby food in the fridge section to shelf-stable snacks in the grocery section to frozen chicken nuggets in the freezer aisle. Little Spoons redesigned packaging provides more insight into its products nutritional content. “While some parents love getting food delivered, many others prefer shopping in stores,” says Lewis. “As we grow, we want to make sure we’re meeting the needs of all our customers.” Vranich and Lewis believe that for Little Spoon to scale, its crucial to go beyond the direct-to-consumer model. And they’re not alone. [Photo: Little Spoon] Designing for Retail Little Spoon is among a number of food startups that got their start in the DTC boom of the mid-2010s and are now graduating into grocery stores to reach a broader market and tap into customers shopping habits. In their effort to appeal to millennial consumers whose tastes are different from those of their parents, these innovative companies are beginning to change the food industry (think Brightland and Graza olive oils, Fly by Jing and Brooklyn Delhi sauces, Magic Spoon cereal, and Olipop soda). All of these brands offer a fresh take on the category, using more nutritious ingredients than their incumbent counterparts. Some have incorporated more protein. Others have focused on more diverse, global flavor profiles. [Photo: Little Spoon] Much like Little Spoon, these brands connected with consumers on social media and grew slowly at first, but expanded production as they started to scale. Building a food brand involves complex logistics and extensive quality-control checks. “It’s not just about developing a really compelling product,” Lewis says. “We needed to find factories that we could trust and that would make our food up to our specifications.” Nearly a decade after the DTC boom, many startups realize that the direct-to-consumer model can only take a brand so far. Only 3% of U.S. shoppers get their food exclusively online; the other 97% shop in a physical store at least monthly. That’s why you can now find Graza and Fly by Jing at Whole Foods, and Daily Harvest, Magic Spoon, and Olipop at Target. [Photo: Little Spoon] Hitting a new target Launching at a major retailer is no small task. While many DTC food brands have grown large customer bases through their e-commerce websites, stocking shelves at a national retail store involves producing at a much larger scale. And for startups, this involves working closely with their network of suppliers and factories. Lewis says revving up Little Spoon for the Target launch involved a substantial increase in production. “It took us a long time to get our production up to the scale that Target requires,” Lewis says. “We had to work with our existing factories and find new ones so we could deliver trucks and trucks of food to meet Target’s demands.” Vranich says they also had to rethink the companys packaging for retail. For one thing, many customers will not be familiar with the brand. So to increase brand awareness, Little Spoon made its logo much bigger. [Photo: Little Spoon] Then there’s the issue of what’s inside each package. When customers visit the Little Spoon website, they can scroll through images of the food; when a package arrives at their doorstep, its not covered with images of food but rather cartoons that will appeal to kids. For instance, in Little Spoon’s line of toddler school lunches, the website features images of chicken nuggets and sauces, but the exterior packaging has a funny picture of a cartoon nugget wearing sunglasses and getting dunked in sauce. “Shopping for food in store is a very different customer experience than shopping online,” Vranich says. All of these food startups are still a fraction of the size of the larger incumbents, but their growing popularity is sending a jolt to the food industry, prompting larger players to create similar offerings. For instance, Trader Joe’s has been accused of ripping off startups, creating copycats of Brooklyn Delhi and Fly by Jing sauces. And Little Spoon appears to have prompted other baby food brands to focus on reformulating their products to make them organic and more nutritious. For Vranich, the key to staying ahead is to continue innovating on every aspect of the product. For example, she says shes very proud of being the only kids brand that makes squeezable yogurt and smoothies in packages with fun ridges on the edges that are both pleasant to look at and easy to hold. Little Spoons food development team also works hard to create fun meals that kids will actually eat, like a “brunch lunch that features little chicken maple sausages, crunchy granola, a zucchini muffin, and an organic smoothie bowl. “We’re constantly coming up with new products,” Vranich says. “It’s a way to keep our existing customers coming back for more, but it also means we’re ahead of the rest of the market.”
Category:
E-Commerce
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