The Biggest Mistake Companies Make When They Go Digital

These days every company is a technology company. Even the stodgiest old-line industrial companies are embracing digital strategies to stay competitive. But that doesn’t mean they’re good at it.

Speaking at Fortune‘s Brainstorm Reinvent conference in Chicago, Aaron Levie, the co-founder, chairman, and CEO of online storage giant Box, explained how many firms misfired when they embraced digital four or five years ago.

“Many companies’ first forays into digitals didn’t work. They acquired companies and started labs or added ping-pong tables in hopes of being like Google,” said Levie, adding they nonetheless missed the point.

Levie’s fellow panelist Melanie Kalmar, who is the corporate vice president, chief information officer, and chief digital officer at 110-year-old Dow Chemical, shares Levie’s view. And both executives cited the same reason for the stumbles.

The crucial mistake, said Kalmar, is treating digital as something to add on to a company’s existing operations.

“A lot of ill-fated strategies occur when they say, ‘We’ll take the existing things we do and apply the Internet to it,’” added Levie.

In doing so, companies fail to harness the main promise of digital technology, which is to be more agile and to get closer to their customers.

The temptation to treat digital as an additional branch of their existing business—rather than as a new type of process—is understandable given the strategies many industrial companies used to become successful in the first place. That strategy involved owning lots of physical property and directing large numbers of employees in a command-and-control environment.

Today’s successful businesses, said Levie, rely on using small teams that interact directly with customers in order to iterate and constantly improve. He added that so much of the complexity in big companies’ operations stems from different silos hoarding information.

This doesn’t mean, of course, that every old guard industrial company is going to fade away. Indeed, Kalmar noted how Dow has reinvented itself multiple times in its history and is currently doing so again. Right now, she says, Dow is learning to be “agile at scale.”

Levie and Kalmar also reflected on the famous “software is eating the world” axiom coined by venture capitalist Marc Andreessen. Both agreed that the observation is prescient but that it has not meant, as some supposed, that the future belonged only to software startups. Instead, the winners are turning out to be the companies—including large incumbents—that deploy digital best.

Why You May Love an Amazon Alexa Microwave

Amazon is all-in on Alexa, and this week, it revealed a new set of voice-enabled products ranging from a a wall clock to a doodad that goes in your car. The star and symbol for this bold new wave of Alexa devices? The AmazonBasics Microwave.

At a glance, it looks identical to every other 700W microwave, but it has some new tricks. By touching the Alexa button on it, you can ping a nearby Echo speaker, which will let you tell the microwave what you want to cook. In demos, Amazon showed how you could ask to cook “one potato,” commanding the microwave to heat a potato like only a microwave can.

OK, OK, so asking Alexa to cook a potato doesn’t sound all that profound. Many Twitter users poked fun at the idea, and some publications have suggested it’s “unnecessary” or wondered if “we really need” a smart microwave.

Of course, the answer is no. But if Amazon gets it right, a voice-controlled microwave could bring this dated device into the 21st century.

Fixing the Microwave

Regular old microwaves still work as well as they did in the 1970s, when they first became a thing people put in their kitchens. That’s the problem. It’s an appliance that’s hardly changed in half a century.

Most households own a microwave oven, but sales peaked in the mid-2000s and haven’t grown since. In 2014, Quartz dug into what it saw as the slow death of the microwave oven, pinning the lack of growth on a lot of possible culprits, from healthy eating to toaster ovens. But a lack of innovation has also contributed.

Microwave oven interfaces are deceptively complex, full of annoying button combinations. If you have a modern microwave, it probably came with 10 power levels and a bunch of pre-programmed modes to defrost, heat from frozen, melt or soften items, and cook a variety of foods. These handy presets can make the cheese on a slice of pizza melt rather than go rubbery, or heat two cups of frozen vegetables just right.

Most microwaves already know how long to cook something based on food type and portion. Unfortunately, they’re really difficult to remember how to use. Sometimes there’s a chart behind the door; other times, you have to keep the user manual handy to fully operate your microwave.

Here’s an example: To heat frozen vegetables in my microwave, you have to press the “cook” button, wait, then press 5, wait, then press 2. There are more than 80 button combinations that you have to memorize to use it precisely. A lot of microwaves are like this. It’s no wonder that most frozen meals just say “heat on high for three minutes.”

Every microwave has different presets with different button combinations that do different things. It’s more difficult than memorizing attack combos in Street Fighter II. No one should have to remember all that.

If Amazon gets its new microwave right, it could really improve the experience. Instead of using those horrible button combos, we could begin to tell our microwave the gist of what we want it to do—”defrost two cups of frozen peas”—and let it do the heavy lifting. The company says that at launch, the microwave should be able to defrost several types of foods, like vegetables or chicken, by varying the microwave’s power level, as well as adjust the cook time. It could mean a lot fewer undercooked potatoes and far less exploding tomato sauce in our future.

Standard microwaves can’t learn new tricks, but Alexa can. Amazon could continually refine the software with new foods, meaning a voice-connected microwave may actually get better over time. It’ll be no time before Google introduces one of its own.

Better Nuking Ahead

Of course, Amazon’s microwave may not live up to its potential. We weren’t all that impressed with GE’s Smart Countertop Microwave, which also comes with Alexa compatibility. In that device, Alexa doesn’t actually vary the power level or do all that much.

And talking to the microwave isn’t always convenient. It takes less time to press the “add 30 seconds” button than to press the Alexa button, then ask Alexa to add 30 seconds. You can command Alexa to stop the microwave, but why would you do that when you could just push a button yourself? You have to open the door to get your food, after all.

Then there are the privacy pitfalls. Do we really want Amazon to keep a detailed log of all our microwave use? Overzealous data logging is a problem with almost every new connected device—and a microwave might not benefit us enough to make the privacy tradeoff worth it.

Amazon hopes the extremely low price will ward off those concerns. At $60, the AmazonBasics Microwave is nearly half the price of some competitors. That alone will convince some people to try it.

Microwaves are imperfect tech, and voice control alone can’t make your frozen dinner taste better. But there’s a good chance you’re not making use of the helpful presets already built into yours. If Alexa succeeds, and I can forget how long it takes to cook a potato or the mind-numbing button combination I need to defrost veggies in the microwave, count me in.

The Stubborn Bike Commuter Gap Between American Cities

Cycle commuting is hot.

Warm, at least.

Depending on where you’re living. Each year, the League of American Bicyclists, a nationwide cycling advocacy organization, takes a look at the annual commuting numbers out of the American Community Survey. The ACS is a product from the US Census Bureau, and if you’re a cycling advocate, it asks one particularly helpful question every year: “How did this person usually get to work last week?” The League of American Bicyclists took last year’s respondents’ answers to these questions—as they have for the past five years—and broke them out by city to answer another helpful question: Where is American cycling growing?

Some quick caveats. The ACS data doesn’t capture the number of folks who are cycling for fun or to run errands. (Note: the number of bike-share trips were up dramatically last year.) People who cycle to a bus or train station might only report the public transit leg of their commute. The data might not take into account those who cycle to work one or two times a week, instead of every day. And because it limits respondents’ answers to a single week, it might not capture people who cycle seasonally, strategically avoiding a bicycle commute at the sweaty height of summer or frozen depths of winter. (The Census Bureau solicits survey responses from about 3.5 million Americans throughout the year.)

All that said: In 2017, according the ACS, the share of commuters cycling to work actually dipped by 4.7 percent compared to the year previous. Less than one percent of American commuters regularly use their bicycles to get to work. But 84 percent of the seventy largest cities in the US have seen an upward cycle commute trend over the past twelve years.

The most interesting trend in these numbers—and certainly not a new one—is the uncovering of a profound cycle commuting gap. In the five US cities with the highest share of cycle commuters (Davis, Santa Cruz, and Palo Alto, California, plus Boulder, Colorado, and Somerville, Massachusetts), an average 11.7 percent took bicycles to work last year. But in the next five (Cambridge, Massachusetts, Berkeley, California, Miami Beach, Florida, Portland, Oregon, and Ames, Iowa), just 7 percent cycle commutes. Take cities 20 to 25 (Redwood and San Francisco, California, Bloomington, Indiana, Portland, Maine, and Salt Lake City), and just 3.1 percent of those cities take bikes to work. You’re either a cycling city, one that opens its arms wide to welcome the two-wheels—or hardly one at alll.

“I shouldn’t be surprised, but I’m always a little bit surprised by the difference between the regions and just how far ahead western cities tend to be compared to every other region,” says Ken McLeod, the League of American Bicyclists’ policy director, who wrote the report. In the West’s top 20 cycling cities, an average 5.9 percent of commuters cycle to work. But just 2.2 percent of workers pedal to the office in the Midwest’s top twenty cities. It’s 2.1 percent in the South. Maybe most surprising of all: the American East, known for its dense, urban places that should be hospitable to cycling, just 2.5 percent of those in the region’s top 20 cycling cities actually cycle to work.

The chasm seems to be a function of city investment. “In most, if not all places that have have sustained increases in bicycling commuting, there have been investments in bicycle infrastructure—roadways that account for people on bikes and people walking,” McLeod says. “Those places have tried to reduce speeds and make driving safer, too, so people feel safer while biking.”

In Washington, DC, for example, where cycle commuting grew more than doubled between 2006 and 2017, the city has added about 80 miles of bike lanes since the turn of the century. It wants to build at least 50 miles more by 2020—and it wants most of those to be protected (i.e., more than a strip of paint). In fact, DC is the fastest-growing cycle commuting town in the country. Infrastructure works.

Of course, spreading the cycling revolution will take more than kindly asking cities to pretty please emulate DC or others with fast-growing cycle commuting populations, like Portland, Oregon, New Orleans, San Francisco, and Philadelphia. Cycling advocates say it’s a matter of making bicycle-friendly street design standards, well, standard, across many cities.

Some good news on that front: As Streetsblog first reported this week, the American Association of State Highway and Transportation Officials—the macher of American transportation design, which puts out highly influential engineering manuals used the country over—is revamping its bike guide. For the first time, the guide might include more cycling-safe infrastructure, like protected intersections and parking protected bike lanes. Engineering manuals may sound boring, but they’re how even understaffed cities can justify putting in different sorts of infrastructure. So they could be the key to getting more people cycling, everywhere. Way more than one percent.


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First North Carolina Got a Hurricane. Then a Pig Poop Flood. Now It’s a Coal Ash Crisis

After the storm comes the flood. Hurricane Florence poured 8 trillion gallons of rain onto North Carolina, and now the landscape between the Cape Fear River and the barrier islands of the Carolinas is a waterworld. Because ecological disasters happen in irony loops, that means long-recognized hazards have now become add-on catastrophes. First the floodwaters found thousands of literal cesspools containing the waste of 6 million hogs, and on Friday the waters reached a pool of toxic coal ash.

The water has breached the cooling lake at the LV Sutton natural gas plant on the Cape Fear River, forcing it to shut down. Also onsite are two coal ash basins, at least one of which—containing 400,000 cubic yards of the stuff, according to the owner of the facility, Duke Energy—may already be leaking coal ash into the River.

Coal ash is the irony part. Coal-fired power plants had to be located near the mountains that harbored the coal, and near the waterways that the power plants needed for coolant and water to boil to spin the turbines. “One of the consequences of burning coal is you get ash, and then you have to have something to do with it,” says Stan Meiburg, director of graduate studies in sustainability at Wake Forest University and a former EPA deputy administrator, both in DC and the Southeast. “The earliest practices were to put the ash right near the power plant.”

Coal use has been tailing off in the US, but as recently as 2011 the country was generating 130 million tons of coal combustion residue, or CCR, every year. More irony: Better air quality management technology captured more fly ash before it could leap out of smokestacks, raising the amount of CCR. Dry, the ash flies all over the place and can be a toxic inhalant. But get it wet, like mud, and it stays still and is easier to transport to landfills.

After the carbon in coal gets oxidized, what’s left is a list of metals that you hope are not present in jewelry: lead, mercury, selenium, arsenic, cadmium, chromium and a bunch of other bad actors. For decades people suspected that the gunk in the pools might leach into groundwater, or that a storm could breach the walls of a pool and the ash slurry would get into a river or lake. There were indications that they might cause problems—the fish and amphibians in the lakes and streams near coal ash ponds had reproductive problems, organ damage, higher metabolic rates indicating some kind of physiological stress. Metals accrued in the animals that ate them. In one particularly disturbing outcome, researchers found tadpoles with scoliosis and mouth deformations—they were missing not just teeth but whole rows of teeth.

Hilariously, none of the more than 1,000 coal ash ponds in the US were regulated in any way at all. And then in 2008, one of them broke open and poured a billion gallons of slurry all over eastern Tennessee. Meiburg says he recalls estimates that it would have cost the pond’s owner, the Tennessee Valley Authority, $50 million to remediate; it cost over $1 billion to dig the ash-mud out of the river bottoms.

In 2014 it happened again. Two stormwater drain pipes beneath a Duke Energy coal ash pond in North Carolina collapsed, spilling 39,000 tons of ash and 27 million gallons of slurry into the Dan River. North Carolina passed regulatory laws. The EPA got some regulations together. By 2015, there was at least a schedule for utilities to get their coal ash put into safer landfills. “What the public interest community called for was closure of the unlined, dangerous ponds. The 2015 rule from the Obama administration didn’t go that far,” says Lisa Evans, senior counsel for the environmental group Earthjustice. “It improved the situation immensely, but it didn’t get the job done.”

Irony again: One of the first things the EPA did under President Trump was re-weaken those coal ash regulations.

And irony yet again: The coal ash at the Sutton plant? “The basins are slated to be closed by the middle of next year,” says Paige Sheehan, a spokesperson for Duke Energy. “Some of the material was taken by train to a lined structural fill. The remainder is being moved to a new lined landfill on site.” But Duke knows the situation is dicey. Another coal-burning byproduct the company stores at Sutton, cenospheres—microscopic, hollow spheres made of silica and alumina sometimes recycled into concrete or other composite materials— “are flowing into the Cape Fear River,” she says. “We cannot rule out that coal ash might also be leaving the basin.”

LV Sutton isn’t the only plant that’s a potential problem. Another site, the closed Grainger Generating Station near the Waccamaw River in South Carolina, has 200,000 tons of coal ash within reach of rising floodwaters. Sheehan says Duke’s also watching pools at another plant called HF Lee, in Goldsboro. “This is like a natural experiment going on down there right now, because the possibility of more pool systems like this failing and releasing their waste, combined with all the other waste from pig farm operations?” says Christopher Rowe, a biologist at the University of Maryland Center for Environmental Science. It’s hard to wrap your head around.”

How complex? The immediate risk depends on the volume that actually gets released, and the next couple of days at the high water mark will determine that. Living things in the waters downstream can absorb that wide spectrum of heavy metals suspended as solids, to varying effects. But then those solids sink to the bottom.

But it still could be dangerous. “Even if the water in the river becomes very clear, and you can’t find any traces of contaminants,” says Avner Vengosh, a water quality and geochemistry researcher at Duke University. “The coal ash buried at the bottom slowly but surely releases contaminants into the ambient environment.”

The source is “pore water,” water mixed into the coal ash sediments in the top five inches or so of the riverbed. There’s no oxygen down there, so that dirt becomes the electrochemical opposite of oxidizing, what chemists call “reducing.” The heavy metals behave very differently, becoming more bioavailable to any critters at the bottom. “In an oxidizing form, it would tend to be absorbed into the sediment. In a reduced form it tends to be soluble in the water,” Vengosh says.

So you have to clean that mud out—a dangerous process in itself. At least 30 people who worked on cleaning up the 2008 spill are dead and, reports say, 200 more are sick; a lawsuit is ongoing.

And time is a factor, because climate change means hurricanes will, like Florence, be more intense and drop more rainfall, some of them right onto the Carolinas. There’s the final irony: A major contributor to the greenhouse gases that cause climate change were, of course, all those coal-fired power plants.


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Airbnb Just Revealed 3 Statistics That Will Change the Way You Lead

The surprising results

The Airbnb Plus survey had three key findings noteworthy for entrepreneurs and leaders:

  • People would rather have more comforts, such as super soft sheets, than an Internet connection. 59 percent in the U.S., 46 percent in Australia and 39 percent in Italy said air conditioning was the most important indoor amenity, beating WiFi and full kitchens.
  • Functionality is the highest valued amenity trait (43 percent), followed by thoughtfulness (e.g., leaving guests a bottle of wine) (29 percent).
  • Even though people will put the Internet aside, the “cool factor” matters to millennials (12 percent), with 58 percent saying social-media-worthy accommodations are a major factor when booking a stay.

Amber Cartwright, Global Design Lead for Airbnb Plus, translates the data and dissects what’s driving the findings.

“When traveling, people want to escape their everyday lives of emails and notifications and immerse themselves in a new place far from reality. Instead of connectivity, they prefer a comfortable place to call home with thoughtful touches that represent the local community, which are both amenities Airbnb Plus hosts provide.”

Cartwright also interprets the desire for shareworthy locations as more than just the desire to keep up with the Joneses.

“Though the shareability factor with friends and family is a motivation,” Cartwright says, “it’s no surprise that amenities that look incredible on social media–like infinity pools with a view or a kitchen fit for a chef–also make for an exceptional stay.”

In other words, it all ties back to the trend for an emphasis on memorable experience. Travelers blow up their Instagram feed with pictures of material stuff not to show off, but because the amenities affect the story of the trip, shaping what the travelers do and remember.

The big picture

So what can you take away from all this as people on your team start calling airlines and hotels?

  • For real vacations, leave. People. Alone. Workers are desperate to simplify and get away from responsibilities for a little while. Stop sending emails or asking them to get on your chat platform.
  • If employees are traveling for their jobs, they’ll appreciate you finding accommodations where they’re treated better than robots. Make the effort to find locations where people can feel welcome and at home, as that makes them happier and more relaxed so they actually can be productive for you. As Cartwright summarizes, “never underestimate the power of a personal touch”, whether that’s for your partners, employees or customers.
  • Don’t be surprised when team members tell you they’re going to locations that don’t immediately come to mind as vacation destinations. According to Cartwright, because people are willing to unplug, they’re increasingly booking stays in more remote places where they can fully reset. They’ll appreciate it if you do a little research to suggest some more far-flung possibilities to your team so they see what’s out there. Maybe you could even offer incentives or a contest for employees who go somewhere they’ve never been. While you don’t necessarily want to insist they do word-of-mouth advertising for you while they’re away, encourage them to make connections wherever they visit that could grow your business later on.

As you chew on this data, take to heart that the majority of people in the United States still struggle to use the vacation time given to them. Even though they want to get away and perhaps even recognize the mental and physical benefits of doing so, they still feel pressured to stay nose-to-the-grindstone 24/7. If you can model breaks yourself, if you can work mandatory time off into policy to show vacations are safe, do it. Use the information above not only to provide amazing, restorative trips, but to expand your company, too.

Published on: Sep 21, 2018

Cool Tech Isn't Just for Big Brands

Last week Betaworks hosted an event in New York called Future Tech for Brands. Four industry leaders shared their points of view largely oriented around building for the curve.  The dialogue included Suzana Apelbaum, Head of Creative at Google, Dan Bennett, Worldwide Chief Innovation Officer, Grey Group, Alex Magnin head of revenue at GIPHY and Richard Ting, R/GA’s global experience design lead.

The introductory remarks focused on the plague of synthetic media and fake news. This quickly led to reveal that Venmo is rapidly becoming the best, and most trusted social network.  While neural networks creating synthetic memes and deep fake videos might be a turn off, Venmo offers candor and transparency as users put their money where their mouth is.  But what about trends as far as how brands are engaging with tech today?

The first is around the rise of live formats like HQ and Twitch.  Arguably brands are still struggling to work out the best ways to integrate onto these channels, but is there a way for entrepreneurs​ to play in this space?  Suzana from Google placed her bets on assisted experiences and voice experiences, citing the success of Aiden, the chat bot created for Westworld and HBO. You can talk to Aidan via Google home from the comfort of your sofa.  From Aiden to the Johnny Walker guided tasting experience, voice will become the most natural way brands are communicating.  How are you leveraging it?

Giphy’s Alex Magnin celebrated the notion of searching for gifs and sending gifs to your friends as a force in the cultural zeitgeist.  With Giphy, this allows brands large and small to target based on sentiment and translates into gif search.  Incidentally, 70% of all giphy usage is through 1:1 messaging apps. On New Years the Facebook user community sent over 400 million GIFs.  Could this be a fun way to communicate with or respond to your customers?  After all, Giphy is a visual search engine reaching 300 million people per day.

Richard from RGA was emphatic about computer vision and chat bots.  Clarify, a computer vision company, incubated by RGA connects computer vision to objects in the real world such as sneakers, clothing, cars, etc…This is one of many firms making computer vision more accessible. Best-in-class chatbots recognized were, the rose bot, for Cosmopolitan Hotel in Vegas and, Erica, Bank of America’s chatbot.  Beyond computer vision, chatbots, and voice, Apply.AI was also mentioned. This company, in private beta, was designed to help developers of applicant tracking systems (ATS), human capital management software (HCM), and job boards manage their prospects and applicants using AI.

Dan from Grey was enthusiastic about ambient computing, and a world where everything has sensors in it.  The ambient offers an example of products and services in this space along with what to use them for.  While Dan’s mentions of near field radiation technology and 5th Wave computing may be irrelevant to your business, it might be time to consider how your company is using technology to engage both internally and externally.  

10 Reasons Why You Aren't Growing As a Leader (and Why You Should Still Try)

There’s no shortage of leadership content available. As you’re reading this article, millions of other people around the world are gaining knowledge on how to become better leaders via YouTube, blogs, audiobooks, and podcasts. But the alarming part is, the improvement to content consumed ratio is near non-existent.

If you’re a student of leadership, here are 10 reasons why you may not be getting better:  

1. You stop at “consume.”

Reading and listening to learn are fantastic, but if we don’t put what we take in into practice rather quickly that effort can be for not.  Think of it like a golfer who just hits a lot of golf balls on the driving range but can’t take their practice to the course. Find ways to quickly apply what you learn, no matter how small or insignificant it feels.

2. You view leadership as a title, not a journey.

Got a promotion into a management role? Hate to break it to you, but the title change is not going to make you a leader. Leadership is about action, not a position. View your development into a leader as a long-term journey instead of short-term accomplishment and you’ll earn your position over time.  

3. You’re not as good as you think you are.

Generally speaking, people in management roles aren’t the most self-aware people. In over 80 percent of the 360° Welder Leader Assessments we’ve administered, the leader rates themselves higher than their team rates them. Additionally, research shows 80 percent of people think they are better than average leaders.

Regardless of whether you think you are the best leader ever, self-awareness is a critical component to improving, and there’s no place better to gain the knowledge from than your team.  

4. You focus on words more than action.

I know we all love the famous movie speeches that motivate and inspire a group. One speech or one motivational conversation isn’t going to make a huge impact on your team. I have great news, especially if you’re not into public speaking. What will move the needle long-term are your actions and behaviors because that’s what people remember most. There is nothing more powerful in leadership than your example.

5. You think leaders are born not made.

The age-old debate about whether leaders are born or made has been settled.  Research by Leadership Quarterly found 24 percent of our leadership comes from DNA, while 76 percent is learned or developed. Whether or not you think you have the DNA, everyone has to work hard to develop the skills and anyone can become a better leader.

6. You are glued to your screen.

The choices for entertainment on our phones and television screens are endless. Consuming content at the expense of building real relationships with people is a big problem. Take a step back and ask yourself if you’re using your screen as an escape from reality instead of a way to connect with others. Also, consider what content you’re spending time-consuming. Many of today’s content creators or main characters in popular programs aren’t the best examples of leaders.

7. You default to thinking about results.

Everyone in business knows the results are important. In fact, without results, there are no jobs. But the best leaders focus on the process and the behaviors that produce the best results versus. solely focusing on the outcome. Direct your attention to doing the right things every day that produce the results and then the results will follow.

8. You’re constantly giving advice.

When you’re as smart and experienced as you are, it’s really tempting to offer advice at every turn. But your advice can actually hurt your people, especially if it’s doled out often. Instead of jumping to offering a solution or “advice,” stop and ask questions to better understand the situation. Oftentimes, a little bit of coaching can help an individual uncover the answer for themselves.

9. You’re too hard on yourself.

Leading other people is one of the hardest things you will ever do in your career.  No matter how good you get, you will never be immune to errors or making a wrong decision. There will be times when things don’t go according to plan, and that’s okay. It’s called life. Can come to terms with it and treat yourself to some grace.

10. You focus on the wrong things.

I know you like the sexy things that come with being a leader, but when you boil it down there are a few essentials:   

  • Understand the fundamentals by focusing on relationships built on trust

  • Get the foundation right by having a vision and core values

  • Simplify lives and improve performance by setting standards and holding people accountable

If you found yourself relating to this list, first, congratulations on being self-aware enough to admit your shortcomings.  Second, keep in mind one of my favorite Latin phrases, “nunc coepi” which means “today I begin.” Start fresh today and know leadership is a journey and not a destination.  

IBM Debuts Tools to Help Prevent Bias In Artificial Intelligence

IBM wants to help companies mitigate the chances that their artificial intelligence technologies unintentionally discriminate against certain groups like women and minorities.

The technology giant’s tool, announced on Wednesday, can inspect AI-powered software for unintentional bias when it makes decisions, like when a loan might be denied to a particular person, explained Ruchir Puri, the chief technology officer and chief architect of IBM Watson.

The technology industry is increasingly combating the problem of bias in machine learning systems, used to power software that can automatically recognize images in pictures or translate languages. A number of companies have suffered a public relations black eye when their technologies failed to work as well for minority groups as for white users.

For instance, researchers discovered that Microsoft and IBM’s facial-recognition technology could more accurately identify the faces of lighter-skin males than darker-skin females. Both companies said they have since improved their technologies and have reduced error rates.

Researchers have pointed out that some of the problems may be related to the use of datasets that contain a lack of diverse images. Joy Buolamwini, the MIT researcher who probed Microsoft and IBM’s facial-recognition tech (along with China’s Megvii), recently told Fortune‘s Aaron Pressman that a lack of diversity within development teams could also contribute to bias because more diverse teams could be more aware of bias slipping into the algorithms.

In addition to IBM, a number of companies have introduced or plan to debut tools for vetting AI technologies. Google, for instance, revealed a similar tool last week while Microsoft said in May that it planned to release similar technology in the future.

Data crunching startup Diveplan said at Fortune’s recent Brainstorm Tech conference that it would release an AI-auditing tool later this year while consulting firm Accenture unveiled its own AI “fairness tool” over the summer.

Read More for an In-Depth Look: Unmasking A.I.’s Bias Problem

It’s unclear how each of these AI bias tools compare with one another because no outside organization has done a formal review.

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Puri said IBM’s tool built on the company’s cloud computing service is differentiated partly because it was created for business people and is easier to work with than similar tools from others that are intended only for developers.

Despite the flood of new AI-auditing tools, the problem of AI and bias will likely continue to persist because rooting out bias from AI is still in its infancy.

Meet Yusaku Maezawa, the Japanese Billionaire Elon Musk Says He's Sending to the Moon (Plus a Surprise Nobody Really Expected)

Yusaku Meazawa will be the first paying passenger aboard a SpaceX rocket going to the moon, Elon Musk announced last night.

The 42-year-old Meazawa, billionaire founder of the largest Japanese online clothing retailer, Zozotown, won’t actually land on the moon, but he’ll fly around it. The mission is set for 2023, if all goes well.

Meazawa said he plans to bring between six and eight artists along with him–the idea being that they’ll be inspired to share the trip with people on Earth in ways the less-artistic among us never could.

“Ever since I was a kid, I have loved the moon. … I want to share this experience and things with as many people as possible. So, I choose to go to the moon with artists,” he said.

Musk said Maezawa, who is worth an estimated $3 billion, is paying a “non-trivial” amount of money for the 4 to 5-day trip, but didn’t disclose the exact amount. But, he said he’s already made a substantial down payment on the flight, and that the cost will significantly offset the cost to SpaceX to make it happen.

The mission will use SpaceX’s BFR spacecraft — short for Big Falcon Rocket — essentially a massive booster rocket with a detachable spaceship attached. The BFR is expected to begin testing next year.

Maezawa and whoever flies with him will join an exclusive club — only two dozen astronauts have ever visited the moon, and no one has been to the moon since the last Apollo mission in 1972.

Interestingly, we’re about to enter a roughly 10-month period that will mark the 50-year anniversary of not just the lunar landing, but a series of five Apollo launches in quick succession that led to the most famous, Apollo 13.

Next month brings the 50th anniversary of Apollo 7, which included the first live television broadcast from space, while December marks 50 years since Apollo 8, which was the first human mission to fly around the moon (without landing)–basically the same route Maezawa and his crew will take.

One fascinating different between then and now?

The attitudes of Maezawa and Musk, versus American astronaut Frank Borman, who commanded Apollo 8. In a recent episode of This American Life, he said he was entirely unmoved by the concept of space travel, the idea of traveling to the moon, and what those of us on Earth might think of as the beauty of space.

“I was there because it was the Cold War. I wanted to participate in this American adventure of beating the Soviets. But that’s the only thing that motivated me. Beating the damn Russians,” Borman said. “The dearest things in life were back on Earth: my family, my wife, my parents.”

Back then it was all about the science and politics. Now, perhaps it’s about the next stage in human spaceflight–and maybe, the beauty.

Exclusive: Bonobos Co-Founder and CEO Andy Dunn Steps Down

Bonobos has named co-president and chief marketing officer Micky Onvural as its new CEO, the company told Inc. Her first day in her new role was Monday. 

“You sell your business and you don’t think you’ll work as hard,” Dunn said, “but I’m working harder–just without the stress of wondering if we will make payroll.”

Onvural joined Bonobos as co-president and CMO in 2016. She was previously the vice president of consumer marketing at real estate information website Trulia for three years. Prior to Trulia, she held similar positions at cloud computing company TokBox and eBay. At Bonobos, Onvural will report to Dunn and Marc Lore, the head of Walmart’s e-commerce division. Her promotion to CEO makes her one of the few women to serve as chief executive of a menswear brand. 

“It’s certainly not where I’d expected to be,” Onvural said in an interview with Inc. She added that Bonobos does not have plans to expand into women’s clothing. One of Onvural’s goals for the company is to continue making its clothing more inclusive in terms of sizing. The company currently has 195 fit combinations.

Dunn said the decision to name a woman as CEO of a menswear brand is illustrative of a sea change in corporate decision making. “It’s proof that the world we are moving toward is not one where your gender defines you or the work you can do,” he said.

Bonobos has 55 stores across the U.S. and employs about 500 people. Prior to being acquired by Walmart, the company raised $128 million from investors including Accel Partners and Lightspeed Venture Partners. Bonobos started out selling men’s chino pants online before expanding to become a full menswear brand with physical showrooms where customers could try on clothes before ordering them. A spokesperson for the company declined to disclose revenue data or say whether Bonobos has reached profitability.

A mother of three, Onvural says she hopes her promotion will reinforce the idea that women can have a family and a successful career. “You can do this and it doesn’t have to be at the expense of your personal values or personal life,” she said. “It requires the support of an incredible partner.”

Published on: Sep 18, 2018

5 Great Routes for Self-Driving Trucks—When They're Ready

Say you wake up tomorrow morning and there’s a robo-truck just sitting in your driveway. It’s yours. What do you do? Where do you go?

Today, no one really has a self-driving truck yet—though plenty are working on it. There’s Peloton Technologies, Kodiak Robotics, and Waymo, Daimler and Volvo, Embark and Starksky Robotics. Even the US Army is in on the act. Their advances—and testing operations in states like Nevada, California, Florida, Arizona, and Georgia—are impressive, but not there yet.

Still, the tech should arrive one day, which is why that thought experiment is helpful. Especially if you’re a government official trying to determine how self-driving trucks might help—or hurt—the economy. The technology promises to reduce road deaths, cut labor-related shipping costs, maybe even slice congestion by upping efficiency. But who needs to prepare for this change, coming 10, 20, or 30 years down the line?

Today, the traffic analytics company Inrix gives them at least part of an answer. Using its own traffic data, collected all over the US from over 1.3 billion vehicle trips between early June and early August of this year, it crunched the numbers to determine where automated trucks might be most helpful.

The results weren’t necessarily the most bumping commercial corridors. The stretch of I-80 and I-90 between Eastern Ohio and Cleveland, for example, is one of the more well-trafficked by human truckers in the US, but doesn’t make Inrix’s list of top 10 places to deploy the robots. That’s because Inrix used a melange of freight data, road incident numbers, and traffic congestion to come up with their top five routes.

You want roads carry a lot of freight, sure, but also roads plagued by frequent traffic accidents, and those that don’t have the kind of pesky congestion that makes AV developers nervous. That’s where taking the human out of the loop could make the biggest difference.

According to Inrix’s data, these are the top 10 US corridors for commercial returns, due to their high freight volumes but low traffic congestion.

Inrix

Thus, their top five: The I-5 from the Canadian border to Northern California, which is nice and long and has an unfortunate number of truck-related crashes. The I-95 between Jacksonville and Miami, Florida, which carries a nice amount of freight with little traffic. The I-75 between Valdosta, Georgia, and Miami, which is shorter but used by lots of haulers. The I-70 between Utah and Kansas, the most dangerous stretch of roadway in the ranking. And the I-85 between Georgia and Greensboro, North Carolina, which carries the most freight out of all five.

According to Inrix’s analysis, the top five US corridors for automated trucking deployment include stretches of I-95, I-5, and I-70.

Inrix

“We hope public sector and private sector take note of this sort of data-driven scenario,” says Avery Ash, who heads up Inrix’s autonomous mobility efforts. “This is an opportunity for the two to work together to open up test corridors”—that is, places to test and develop self-driving trucks. And with this data, places where the tech can have a real impact.

This data might be helpful to officials. But Ash admits that Inrix doesn’t consider what the tech developers really work about—where these vehicles will work best. For example: weather. Autonomous vehicle technology hates the snow for its lidar- and camera-confusing properties. It also hates pot holey roads, and ice and freezing rain don’t help that picture. That’s why you see most companies testing in places like Atlanta, Texas, and southern California—the places where the sun tends to win out.

“The southern half of the US is super effective,” says Stefan Salz-Axmacher, the CEO of Starsky Robotics. “A lot of freight moves through there, and the weather conditions are good.” (Good thing robots don’t mind a damp heat.)

The second is labor. Companies know they’ll be more welcome in places with trucker shortages, like the US and Australia.

The third is regulations. Right now, it’s up to states to make their own rules. Some have welcomed the tech. Arizona, Florida, and Texas have become some of the top places to test. At this point, it doesn’t make sense for companies to go anywhere without a favorable regulatory climate—no matter how much freight is shooting down its roads.

So when it comes to testing a big, intuitively scary, and possibly world shaking technology like self-driving trucks, data is a good guide. But for now, it’s far from the only metric in town—or on the highway.


More Great WIRED Stories

Cyber Saturday—Massachusetts Gas Fires, Credit Freezes, Snowden Reassessment

On Thursday evening, 60 suspected gas fires broke out in three Massachusetts towns north of Boston. Naturally, people wondered about the cause.

Some accounts on Twitter began to speculate, baselessly, that the explosions were the result of hacking. One hacker-activist with a large following stoked the rumor mill by asking whether anyone else suspected the fires “might be some kinda of cyber attack targeting SCADA systems?” (SCADA systems, or supervisory control and data acquisition systems, refer to industrial control hardware often used in power plants.) Another Twitter account followed this up with an unsupported claim that U.S. agencies were “looking for traces of weaponzied stuxnet virus,” referring to a malware program, widely attributed to U.S. and Israeli intelligence agencies, that knocked out Iranian nuclear centrifuges in the aughts.

Industry professionals swiftly tamped down on the unsubstantiated gossip. Rob M. Lee, CEO and founder of Dragos, a startup that specializes in industrial cybersecurity, approached the incident with characteristic level-headedness. “[T]hese events sadly happen and cyber is often the least likely answer,” he wrote in a tweet. “[T]he folks involved will be focused and thorough to find the root cause. I.e. wait.”

Kudos to the cooler heads, like Lee, who urge caution while officials sort this mess out. I tend to agree with Kevin Mandia, CEO of cybersecurity firm FireEye, who told a Senate committee this week that frequent talk of an impending “cyber Pearl Harbor”—a theoretical attack that could cause national power outages—distracts from the real threat. As Mandia put it, “I believe that our nation is more likely to face an enduring, more protracted cyber campaign akin to ‘cyber trench-warfare.’”

Indeed, and so often that trench warfare takes the form of disinformation run amok online.

***

The ransacking of Equifax has had at least one positive outcome. Next week a federal law kicks in that will force the big three credit bureaus—Equifax, Experian, and TransUnion—to provide fee-less “security freezes,” hold orders on credit files that help prevent identity theft. Starting on Sept. 21, the credit bureaus will no longer be allowed to charge for the service—a long overdue reform. Brian Krebs, an investigative cybersecurity journalist, has a nice write-up of the upcoming policy change on his website.

Have a great weekend.

Robert Hackett

@rhhackett

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

Bill Gates Buys China: CEF Yields 8.4%, Trades At 11% Discount To NAV, Priced For Significant Upside

Co-produced with Julian Lin of High Dividend Opportunities.

Templeton Dragon Fund (TDF) is a closed-end fund from Franklin Templeton Investments which seeks to invest in attractively valued equities in “Greater China” stocks, which in addition to China also includes Hong Kong and Taiwan. TDF issues 1099 tax forms (no K1s). TDF is run by a management team which has proven itself to be extremely aligned with shareholders. Furthermore, we are not the only ones who believe China is cheap as Bill Gates recently disclosed a 5% position in TDF. TDF is a strong buy and offers a high yield way to play the recovery in the Chinese stock market.

Why China, And Why Now

Investors have a history of overreacting and allowing emotions to influence their investment decisions. This sometimes manifests in “over-bought” fervor, as seen in the historic stock run of the 2000s dot-com bubble:

This also is seen when “over-sold” pessimism leads to seemingly-uncontrolled selloffs, as seen in the gruesome aftermath of the “popping” of the aforementioned dot-com bubble:

When the dust settles, investors have a choice to make. Do they continue to sell in fear or do they take a courageous stand and buy what they know to be cheap? Warren Buffett has a famous quote which applies well in this context, “be fearful when others are greedy and greedy when others are fearful.”

There’s great reward for bravery – investors who have the courage to buy would be acquiring stocks at extremely opportunistic valuations.

We believe we have found such a similar opportunity right in front of us: That opportunity is China.

The ongoing trade war conflict between the U.S. and China has sent Chinese equities in a free fall:

Yes, the trade war will negatively impact many Chinese markets and has significantly raised uncertainty moving forward. But with prices this low, is the selloff overdone? We have the opinion that contrarian value investors must buy, not sell, when there’s blood on the streets, and in China, the streets are bleeding red.

Opportunistic Valuations

At our marketplace service High Dividend Opportunities, we have been recommending to overweight U.S. equities since January 2018 and underweight European and Asian equities for many reasons which include:

  • A healthy and growing GDP growth rates, at a time when many emerging economies are seeing decelerating growth.
  • Low tax rates and a friendly tax environment.
  • Relatively higher population growth rates than most large economies.
  • A safe-haven status – as compared to Europe and the Far East.
  • Finally, the U.S. is a service-oriented economy and is much less prone to political uncertainties on the other side of the globe, such as the turmoil in Turkey today.

For the time being, the U.S. regained its crown as the most favored region for stocks for the first time in five years, according to fund managers surveyed by Bank of America Merrill Lynch. In fact, it was reported that fund managers have recently pushed their allocation to U.S. stocks to near all-time highs.

This has proven to be a profitable call as during the past three months the S&P 500 index has returned 3.6% compared to a negative return of 7.3% for emerging market stocks, and a negative return of 11.4% for European stocks.

However, the recent underperformance in emerging markets and China especially has however led us to change our views as China has become too cheap to ignore.

The price to earnings multiple (P/E) of Chinese equities, as reported by TDF, was just under 14 for the trailing 12 months. That represents a huge 44% discount to the 25 times trailing earnings seen in the S&P 500. We should note that the S&P 500 has not itself seen such a low multiple since the 2012 correction – it has more than doubled since then. As we will argue next, this valuation is just “dirt cheap” for one of the strongest economies in the world.

The Market Is Too Pessimistic On China’s Outlook

The trade war has seen significant tariff escalations on both sides. The U.S. has imposed $34 billion in tariffs on mainly agricultural products, upon which China has retaliated with its own $34 billion in tariffs on things like soy beans, beef, whiskey, and off-road vehicles – both took effect on July 6th. On July 10th, President Trump released a list identifying a further $200 billion in potential tariffs, upon which China has indicated it would “introduce counter measures to defend the country’s dignity.” Every market selloff begins with a reason and it appears that investors are concerned that the back and forth will lead to long-term negative consequences for China’s economy.

We believe however that investors have become overly pessimistic. China has seen very strong growth rates to GDP in the past decade as it has sought to transform itself into a global superpower:

(World Bank)

With its population at a staggering 1.4 billion, China also presents a very compelling consumer base which naturally draws strong demand from retailers seeking to tap such a large market.

Possible Catalyst for Chinese Equities to Strongly Outperform

There’s reason to believe that the trade war should be ending sooner than later. On August 27th, the U.S. and Mexico reached an agreement to overhaul the North American Free Trade Agreement (NAFTA). The new deal would rewrite parts of NAFTA in a three-country trade deal that includes Canada. We expect that Canada also will sign on the agreement and this will remove a lot of economic and political uncertainties that the recent trade war escalations have brought. This news is significant because it’s a good indication that President Trump’s trade war escalations have been more of a negotiating tool rather than protectionist behavior that many have accused him of. In fact, this strategy has proven to be successful so far. This also opens the door for the possibility that a trade deal could be struck with China soon, which also will be bullish for global and Chinese equities.

Furthermore, President Trump is set to meet his Chinese counterpart President Xi Jinping in a G-20 summit in Argentina, which begins on November 30. This raises hopes that the two countries might find a solution to end the dispute. We should note that the two have not met since late 2017. There is a good chance that some sort of agreement, or de-escalation of tensions could occur, and this could result in higher equity prices for emerging markets.

While we have no crystal ball, we can conclude from the trade war thus far that no one seems to be really benefiting as any new tariffs imposed from the U.S. are just met with an equal amount of tariffs from China. We believe that the political drama will eventually end, perhaps soon, and that Wall Street will then give appreciation to the Chinese economy which is clearly firing on all cylinders.

Getting To Know The Fund

TDF aims to invest at least 45% of assets in Chinese stocks – and most recently had more than 77% of assets invested in China with the rest divided mainly between Hong Kong and Taiwan:

TDF is very diversified among industries, and is particularly overweight financials, technology, and semi-conductor stocks:

Readers should note that TDF does not currently utilize any leverage. This makes their performance (as we will see in a moment) particularly impressive. The top 10 holdings of TDF are seen below:

Fee Structure

TDF has a very reasonable 1.35% expense ratio which is on the low side among CEFs. The fee rate is dependent based on net assets and decreases as net assets increase, as seen below:

Performance History

TDF has performed very well both in its own right and as compared to its index, the MSCI Golden Dragon Index. As we can see below, TDF has outperformed both in the near term (one year by NAV and three year by share price) and long term (10 year by both NAV and share price):

China Is Rising: The Top Holdings

While the steep undervaluation of China is reason enough to get one excited on shares, it was a close look at the top holdings that really opened our eyes to the high level of innovation taking place in Greater China. In particular, the three largest positions in TDF are most important to discuss as they comprised a nearly 30% combined allocation as of last month.

Tencent (OTCPK:TCEHY) was TDF’s largest holding before its underperformance this year. TCEHY is most well known as the “Facebook (FB) of China.” This is because they own the social network app WeChat which has more than 1 billion users which as of 2016 used the app on average 66 minutes per day.

(WeChat)

With about $4 billion in social networking advertising revenues in 2017, WeChat clearly has a long growth runway ahead of it, as Facebook reported nearly $40 billion in advertising revenues in 2017.

But that’s not all – while investors wait for TCEHY to continue monetizing WeChat, they also are investing in a company which has established itself as arguably the No. 1 video game company in the world. TCEHY owns many of the most well-known games globally, including League Of Legends:

(League of Legends)

They own a 48% stake of Epic Games, the creator of the smash hit Fortnite which is considered one of the most popular games of all time with more than 125 million players. TCEHY also owns stakes in the developer of PlayerUnknown’s Battlegrounds (PUBG) and Activision Blizzard (ATVI), meaning that they have their hands in all of the top four PC games in North America and Europe:

(NewZoo)

In spite of proving itself to be one of the greatest growth stories coming out of China, TCEHY trades at only 40 times trailing earnings. TCEHY is likely to have a significant multiple re-rating upwards as investors once again warm up to the name.

(TSMC 2017 10-K)

Taiwan Semiconductor (TSM) is currently the fund’s largest position. TSMC is the world’s largest semiconductor foundry and is headquartered in Taiwan. In short, TSMC manufactures semiconductor products for its customers, who then sell those products. TSMC held the leading market share in 2017 in the foundry segment of the global semiconductor industry, with an estimated market share of 56%. TSMC has customers all over globally, and prides itself in never selling its own semiconductor product, meaning that it never competes with its customers. This has allowed them, in their own words, to be “everybody’s foundry.” As the industry leader and innovator, TSMC is well positioned to take advantage of the tailwinds from “increasing semiconductor content in electronic devices, continuing market share gains by fabless companies, gradual increases in IDM outsourcing, and expanding in-house application- specific integrated circuits (OTC:ASIC) from systems companies. (2017 TSMC 10-K). Furthermore, with the “internet of things” (‘IoT’) technologies being included in more and more applications including smart watches, smart light bulbs, and self-driving cars, the market for semiconductors should continue to grow for the long future, and TSMC finds itself as a primary beneficiary of such a movement.

Alibaba (BABA), the fund’s third largest holding, is perhaps the most well known Chinese stock to American investors. BABA is known as the “Amazon (AMZN) of China” because of its e-commerce platforms, known as Taobao and Tmall.

(2017 Investor Day)

BABA has executed perfectly in capturing the e-commerce market as according to recent studies their platforms already account for 58% of all e-commerce transactions in China as of 2018. Basically, if companies want to sell to the Chinese consumer, then they pretty much have to go through BABA.

In addition to their e-commerce business, BABA also has a strong cloud computing business, payment processing business through their 33% stake of Ant Financial and social networking exposure through their 31% stake in Sina Weibo (WB), known as the “Twitter (TWTR) of China.” As a result of their strong execution, BABA has in turn seen very strong revenue growth:

(March Quarter 2018 Presentation)

Readers may find it interesting to know about BABA’s push into the grocery business through its stores “Hema grocery.”

(HEMA Grocery)

These stores aim to revolutionize the grocery shopping experience by reducing the need for customers to wait in lines. If you forget your smartphone, then no worries! Their stores are able to use facial recognition (link includes a video) to identify the customer and complete checkout. We really do recommend watching the video linked above. AMZN does have one store with a similar concept, but get this – BABA already has more than 20 such stores in China and aims to continue rolling out this concept aggressively. Interested readers can see more by viewing this video.

BABA trades at only 56 times trailing earnings which compares very favorably with AMZN, which trades at over 150 times earnings yet does not have as many of the additional business segments that BABA does.

Quick take: By taking a look at some of the growth companies in China and their potential, it’s clear that many Chinese equities have been unfairly punished in spite of arguably being just as exciting as their U.S. counterparts. Many of these companies are comparably in the earlier stages of their growth trajectories yet do not trade at the same multiples that their U.S. counterparts did back then. Consequently, we see tremendous opportunity here for multiples to be revalued upwards.

Dividend History

Based on recent prices, TDF trades at a 8.4% yield based on its recently announced 2018 payout of $1.6114. TDF pays its distributions based on the dividends received from the underlying holdings and realized capital gains:

(Chart by Authors, data from CEFConnect)

These distributions are usually paid once or twice annually (in September, December, or in both). As seen above, these distributions can widely vary from year to year, and therefore cannot be relied upon as a stable source of income. Because the performance of Chinese equities has been flat in the past 12 months, this year’s yield is slightly lower than last year’s payout of $1.7105. The main attraction in buying into TDF is the future performance which should result in solid capital gains and a higher distribution in the year 2019.

Valuation

Most CEFs, especially equity CEFs, tend to trade at discounts to NAV. TDF is no exception as it has historically traded at double-digit discounts:

(CEFConnect)

The discount has narrowed slightly very recently from around 14% to 11%, probably due to the announcement of Bill Gates investing in the fund, as discussed below:

(CEFConnect)

The one-year Z-score is still at 0.4, suggesting that TDF trades 0.4 standard deviations higher than its historical NAV discount for the past 12 months. Still, the 11% discount to NAV is very deep which is entirely undeserved. Unlike other CEF management teams, TDF is actually run by one which actively takes advantage of the discount.

Unusually Aligned Management Team

When we look for strong management teams in our CEFs, the main important factor aside from strong performance, which we have already seen above, is their alignment with shareholders. Because CEF managers are typically paid based on a percentage of net assets, this means that management teams often are in no hurry to close any discount to NAV through share repurchases, because doing so may cause net assets to decrease, in turn potentially decreasing their associated salaries. This is not the case with the management team at TDF. TDF has an outstanding share repurchase authorization in place of up to 10% of shares outstanding, which is in addition to an initial 10% previously authorized. TDF has not been shy about making use of this program, recently retiring 209,534 shares in 2017, 435,156 shares in 2016, and 116,708 already this year. At the same time, they did not issue any shares in these two years as all shares issued from dividend reinvestment programs were accounted for in their repurchase program. Considering that there were 34.2 million shares outstanding as of the end of 2017, these are clearly very large share repurchase amounts. What’s more, since the inception of their share repurchase program, TDF has repurchased an astounding 8.9 million shares. TDF easily has one of the most aligned CEF management teams we have ever seen and we expect them to continue repurchasing shares moving forward.

Bill Gates Is Buying, Are You?

(Bill Gates, co-founder of Microsoft)

We are not the only ones who believe that China is getting cheap. As of August 8, 2018, the Bill and Melinda Gates Foundation Trust owned 1,697,739 shares, or 5% of the shares outstanding of TDF, making the trust the fourth-largest shareholder according to S&P Capital IQ. Microsoft (MSFT) co-founder Bill Gates and his spouse Melinda French Gates are co-trustees of the trust. Readers are probably well aware of Gates’ legendary investment track record and we believe that it’s no surprise that they have chosen TDF with its large exposure to Chinese equities and extremely shareholder-friendly management.

Risks

  • As we discussed earlier, there’s great uncertainty moving forward as to how the trade war will progress. There’s still possibility of further downside if trade negotiations between the U.S. and China are unable to find common footing. However, the already depressed valuations suggest that there’s little further downside as expectations have effectively been “reset.”
  • As with all equity CEFs, TDF is especially exposed in the event that the Chinese economy experiences a slowdown or recession. This however does not appear likely as the economy continues to grow at torrid rates – and besides, equity valuations are effectively priced as if such a meltdown already has occurred. Such is the beauty of targeting deeply discounted securities.
  • The recently announced distribution may lead to short-term volatility from investors focused on the dividend income. We however believe that investors with a longer term mindset may be rewarded with an outsized distribution in 2019 if Chinese equities are able to recover.

Bottom Line

TDF is an attractive way to invest alongside shareholder friendly management while waiting for the Chinese economy to rebound. TDF trades at a double-digit discount to NAV, which we expect management to continue to take advantage of with share repurchases. China itself is trading at a material discount to the U.S. stock market, in spite of an economy continuing to grow GDP at impressive rates and having companies continuing to push the limits of innovation. TDF is a strong buy for the next two years as we anticipate investor sentiment to improve, leading to a higher dividend payout in 2019 and capital gains.

A note about diversification

To achieve an overall yield of +9% and optimal level of diversification, at High Dividend Opportunities, we recommend a maximum allocation of 2-3% of the portfolio to individual high-yield stocks, and a maximum of 5% allocation to high-yield exchange traded products (such as ETF, ETNs and CEFs) such as TDF. For investors who depend on the income, diversification usually results in more stable dividends, mitigates downside risk, and reduces the overall volatility of their portfolio.

If you enjoyed this article and wish to receive updates on our latest research, click “Follow” next to my name at the top of this article.

Source note: All tables and images from Templeton Dragon Fund’s website, unless otherwise stated.

Disclosure: I am/we are long TDF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Facebook's AI Can Analyze Memes, but Can It Understand Them?

Billions of text posts, photos, and videos are uploaded to social media every day, a firehose of information that’s impossible for human moderators to sift through comprehensively. And so companies like Facebook and YouTube have long relied on artificial intelligence to help surface things like spam and pornography.

Something like a white supremacist meme, though, can be more challenging for machines to flag, since the task requires processing several different visual elements at once. Automated systems need to detect and “read” the words that are overlaid on top of the photo, as well as analyze the image itself. Memes are also complicated cultural artifacts, which can be difficult to understand out of context. Despite the challenges they bring, some social platforms are already using AI to analyze memes, including Facebook, which this week shared details about how it uses a tool called Rosetta to analyze photos and videos that contain text.

Facebook says it already uses Rosetta to help automatically detect content that violates things like its hate speech policy. With help from the tool, Facebook also announced this week that it’s expanding its third-party fact checking effort to include photos and videos, not just text-based articles. Rosetta will aid in the process by automatically checking whether images and videos that contain text were previously flagged as false.

Rosetta works by combining optical character recognition (OCR) technology with other machine learning techniques to process text found in photos and videos. First, it uses OCR to identify where the text is located in a meme or video. You’ve probably used something like OCR before; it’s what allows you to quickly scan a paper form and turn it into an editable document. The automated program knows where blocks of text are located and can tell them apart from the place where you’re supposed to sign your name.

Once Rosetta knows where the words are, Facebook uses a neural network that can transcribe the text and understand its meaning. It then can feed that text through other systems, like one that checks whether the meme is about an already-debunked viral hoax.

The researchers behind Rosetta say the tool now now extracts text from every image uploaded publicly to Facebook in real time, and it can “read” text in multiple languages, including English, Spanish, German, and Arabic. (Facebook says Rosetta is not used to scan images that users share privately on their timelines or in direct messages.)

Rosetta can analyze images that include text in many forms, such as photos of protest signs, restaurant menus, storefronts, and more. Viswanath Sivakumar, a software engineer at Facebook who works on Rosetta, said in an email that the tool works well both for identifying text in a landscape, like on a street sign, and also for memes—but that the latter is more challenging. “In the context of proactively detecting hate speech and other policy-violating content, meme-style images are the more complex AI challenge,” he wrote.

Unlike humans, an AI also typically needs to see tens of thousands of examples before it can learn to complete a complicated task, says Sivakumar. But memes, even for Facebook, are not endlessly available, and gathering enough examples in different languages can also prove difficult. Finding high-quality training data is an ongoing challenge for artificial intelligence research more broadly. Data often needs to be painstakingly hand-labeled, and many databases are protected by copyright laws.

To train Rosetta, Facebook researchers used images posted publicly on the site that contained some form of text, along with their captions and the location from which they were posted. They also created a program to generate additional examples, inspired by a method devised by a team of Oxford University researchers in 2016. That means the entire process is automated to some extent: One program automatically spits out the memes, and then another tries to analyze them.

Different languages are challenging for Facebook’s AI team in other ways. For example, the researchers had to find a workaround to make Rosetta work with languages like Arabic, which are read from right to left, the opposite of other languages like English. Rosetta “reads” Arabic backwards, then after processing, Facebook reverses the characters. “This trick works surprisingly well, allowing us to have a unified model that works for both left to right and right to left languages,” the researchers wrote in their blog post.

While automated systems can be extremely useful for content moderation purposes, they’re not always foolproof. For example, WeChat—the most popular social network in China—uses two different algorithms to filter images, which a team of researchers at the Univeristy of Toronto’s Citizen Lab were able to successfully trick. The first, an OCR-based program, filters photos that contain text about prohibited topics, while the other censors images that appear similar to those on a blacklist likely created by the Chinese government.

The researchers were able to easily evade WeChat’s filters by changing an image’s properties, like the coloring or the way it was oriented. While Facebook’s Rosetta is more sophisticated, it likely isn’t perfect either; the system may be tripped up by hard-to-read text, or warped fonts. All image recognition algorithms are also still potentially susceptible to adversarial examples, slightly altered images that look the same to humans but cause an AI to go haywire.

Facebook and other platforms like Twitter, YouTube, and Reddit are under tremendous pressure in multiple countries to police certain kinds of content. On Wednesday, the European Union proposed new legislation that require social media companies to remove terrorist posts within one hour of notification, or else face fines. Rosetta, and other similarly automated tools, are what already help Facebook and other platforms abide by similar laws in places like Germany.

And they’re getting better at their jobs: Two years ago CEO Mark Zuckerberg said that Facebook’s AI systems only proactively caught around half of the content the company took down; people had to flag the rest first. Now, Facebook says that its AI tools detect nearly 100 percent of the spam it takes down, as well as 99.5 percent of terrorist content and 86 percent of graphic violence. Other platforms, like YouTube, have seen similar success using automated content detection systems.

But those promising numbers don’t mean AI systems like Rosetta are a perfect solution, especially when it comes to more nuanced forms of expression. Unlike a restaurant menu, it can be hard to parse the meaning of a meme without knowing the context of where it was posted. That’s why there are whole websites dedicated to explaining them. Memes often depict inside jokes, or are highly specific to a certain online subculture. And AI still isn’t capable of understanding a meme or video in the same way that a person would. For now, Facebook will still need to to rely on human moderators to make decisions about whether a meme should be taken down.


More Great WIRED Stories

Strong Buy 6.16% Yield Won't Be On Sale Forever

This research report was produced by The REIT Forum with assistance from Big Dog Investments.

Tanger Factory Outlet Centers (SKT) is a solid REIT with a great dividend track record.

Source: SKT

Management has been prudent in protecting their balance sheet and keeping leverage low.

Source: SKT

They are very firmly within the investment grade credit rating and have significant excess cash flow even after paying the common dividend.

The bears on SKT must be ignoring a few simple fundamental factors.

SKT fundamentals

If SKT’s net operating income is simply flat over the next several years, SKT would still be a very reasonable investment. If net operating income was flat, we would expect very minimal pressure on total FFO as interest rates increase and a portion of the debt is refinanced.

The impact to total FFO should be quite small. Since SKT has so much excess cash flow after all of their operating expenses, common dividends, and capitalized expenditures for the properties, they are free to repurchase shares. By our estimate, they could reasonably shrink the number of shares outstanding by around 2% per year. That means even with flat FFO or an extremely minor decline in total FFO, the FFO per share would still be increasing. This also assumes SKT would continue to raise their dividend and maintain a similar payout ratio on FFO per share.

We see the above as the bear case scenario.

More likely scenario for SKT

It is more likely that we will see same-store NOI growth in 2019. Pressure on NOI in 2018 was tied to the Toys “R” Us bankruptcy. SKT knew the bankruptcy was coming but expected more of the impact to occur in 2019 rather than 2018. Because the Toys “R” Us bankruptcy hit earlier than expected, the weakness in earnings shows up for 2018 instead of 2019. With an expectation for moderate growth in same-store NOI on average over the next several years, we would expect total FFO to grow modestly. Given the expectation for a declining share count, we would expect FFO per share to grow a little faster.

If FFO per share and dividend per share grew at 1%, we would expect long-term returns to the buy-and-hold investor to run around 7% with 6% from yield and 1% from growth. In a more bullish scenario, we would be looking at FFO per share and dividend growth running in the 3% to 4% range which combines with the 6% yield for 9% to 10% in total returns. It is important to point out that this is forecasting the return from the dividend and the growth rate rather than speculating on the price movement over the next month.

Some short-term investors will be focused on the change in share price. We view the most likely direction as up over the next 12 months. However, predicting precisely where the share price will end is not a reliable indicator of long-term results.

Buyout potential

We’ve seen a few buyouts on REITs so far in 2018, including one in the mall space. While these are outlets, it is still classified as a mall REIT (sometimes a strip center).

There is an enormous amount of private capital looking for entry into real estate. This private capital is driving valuations on real estate. Ironically, the funds managing it are benefiting from the lack of transparency in their structure. Investors want real estate, but they are terrified by the day to day price movements in the stock. The price movement in the underlying asset, the real estate, is dramatically smaller. Consequently, investors are occasionally more comfortable with simply getting an appraised value a few times per year rather than seeing the daily fluctuations in market price. It seems absurd that investors would pay a premium for less liquidity and less transparency, but that is precisely what is happening in the real estate market today with an enormous amount of wealth.

A prudent manager in this structure might look to buy a REIT this way and then report the net value of the assets to investors. For instance, Blackstone (BX) recently acquired another REIT for their portfolio of real estate. Prologis (PLD) acquired another REIT. Buyers exist with the capital to swallow entire REITs. General Growth Properties (GGP) was recently swallowed by Brookfield Property Partners (BPY).

It would be sad to see SKT go right after hitting 25 years of dividend growth, but management indicates that they are willing to pick up for the phone for anyone who wants to make an offer. Generally, that would be on one property or a few properties, but a bid could be made for the entire company.

SKT’s confidence

Management of SKT had good things to say on the Q2 2018 earnings call (parts bolded for emphasis):

In terms of our balance sheet and capital position, we’re in great shape. We have a largely unencumbered portfolio, maintained solid interest coverage and have no significant debt maturities until 2021. We are committed to sustaining a stable and flexible financial position. We plan to continue to deliver a very strong level of cash flow and remain disciplined in our capital allocation decisions with a singular focus on creating value. The cash we generate covers our capital needs for investing in our assets, paying our dividends, repurchasing our common shares and deleveraging our balance sheet. Our dividend, which remains a priority, is secure and well covered. We have also continued to execute on our share repurchase program.

Going forward, we do not anticipate any new developments in 2018 and ’19. But we’ll continue to evaluate our priority uses of cash and long-term opportunities for growth. While we recognize the challenges we have discussed related to select overleveraged retailers, we believe industry sentiment surrounding fashion retailers is improving. According to recent reports, nearly 7,000 stores closed in all retail properties were announced in 2017. And slightly less than half of that number is slated to close this year. Importantly, offsetting those closures, approximately 2800 stores are scheduled to open this year. This all suggests a healthier retail outlet.

Our confidence in the long-term growth of the outlet distribution channel remains unwavered. In particular, relative to other retail channels, we don’t believe that outlets have been overbuilt. So the need to right-size and the competition among landlords is minimized. Furthermore, we are increasingly hearing the conviction among retailers that brick-and-mortar is a critical element of their omni-channel brand strategy. While the positive sales are encouraging and our conversations with tenants and prospects are constructive, we know there’s still much work to be done. We continue to employ a strategic approach that has proven effective and successful over the last 37 years, which includes keeping the tenant mix of our centers dynamic and giving Tanger shoppers the brands and designers they want. With this long-term view, we have proven we can successfully adapt to evolving consumer preferences and align those with tenant needs.

Final thoughts

We believe SKT is still attractively valued and expect it to perform well on the basis of higher expected FFO per share next year and continued dividend growth. The payout ratio is excellent and there is plenty of FFO leftover after paying the dividends. The balance sheet and debt maturities are great. SKT has raised its dividend for 25 consecutive years and is currently trading at a large discount to the net value of their assets. We believe the net value is around $30.00 per share.

If you enjoyed reading this article and want to receive updates on our latest research, click “Follow” next to my name at the top of this article.

Disclosure: I am/we are long SKT, BPY.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

AMD: Winter Is Coming

If you walk away with only one thought, it needs to be this – the total addressable market (aka TAM) for servers took a massive leap up. TAM went from $18.5 billion to $22.5 billion. That is a rising tide that will raise all server-related ships, be it AMD (AMD), Nvidia (NVDA), or Intel (INTC) providing the hardware.

EPYC is the Spark, Rome is the Fire, Winter is Coming for Intel

To travel down memory lane, AMD was a much different company before Ryzen was released. The company was struggling to stay alive and selling off various parts. Ryzen changed everything. Let that sink in. Ryzen put AMD back on the road map and gave the company a pulse again. AMD’s server chip EPYC is the spark for AMD. EPYC is starting to ramp.

According to AMD CTO Mark Papermaster, “We expect to be able to end the year at about 5 percent of the market and grow to double digit next year.”
The server followup chip Rome is going to be the fire. Winter is coming for Intel. AMD is going to take its chunk of the server market with time.

Winter Intel

Big Growth in Server TAM

Estimates place the server market at $22.5 billion. According to IDC, the market is broken down as follows:

“Volume server revenue increased by 42.7% to $18.4 billion, while midrange server revenue grew 63.0% to $2.5 billion. High-end systems grew 30.4% to $1.7 billion.” That is quite the TAM for AMD to attack. Assuming AMD takes 4.5% to 5.5% of that market by Q4 with ramping going to 10%-plus by the following Q3… you get the picture.

https://static.seekingalpha.com/uploads/2018/9/12/4206551-15367765571490183.jpg

Looking above, we see some very nice growth in server units sold. Prices are rocketing up. According to Nextplatform.com “our guess is that half of the increase in revenues in Q2 2018 was due to rising component costs.”

This bodes well for AMD since EPYC gives performance at reduced component costs for AMD partners, while providing AMD with very high gross margins. As EPYC ramps, we can expect to see a corresponding rise in margins.

Too Much Demand

Current rumors paint a picture of demand exceeding supply for Intel chips.
Per DRAMeXchange: “TrendForce has adjusted its 2018 global notebook shipments projection downwards due to the worsening shortage of Intel CPUs” and “TrendForce now estimates that this year’s total notebook shipments will drop by 0.2% YoY, and the CPU shortage may further impact the entire memory market as well.” That’s an interesting projection, but if I were a laptop maker such as Dell you can bet I would be considering an alternative CPU supplier such as AMD to replace those chips that Intel is unable to supply.
Supply Gap

Lastly DRAMeXchange leaves us with this paragraph concerning the supply gap:

“The precise reason behind the shortage of Intel CPUs is currently unclear because the problem simultaneously affects the newly arrived CPU product lines and product lines that have been in the market for some time. The affected products include the improved version of 14nm++ and product lines based on the 14nm+ Coffee Lake platform, which has been in mass production for half a year and is one of the solutions for mainstream models in the notebook market. The lack of supply for existing CPU product lines is having a significant impact on the notebook market as a whole. TrendForce estimates that the CPU supply gap in the notebook market has increased from around 5% in August to 5-10% in September. There is a possibility that the supply gap may extend to over 10% in 4Q18, and the shortage is expected to be resolved rather later in 1H19.”

HPE Recommends AMD

Semiaccurate recently published a story that HPE was telling customers to buy AMD EPYC chips since Intel Xeon was MIA due to demand. Why so much demand for Intel? Well, no one ever got fired for buying Intel. AMD is the underdog, but “every dog has its day” and that day gets closer when HPE is recommending clients buy AMDs’ EPYC. Short term, Intel will benefit from the demand but its part of the server pie will shrink given time.

Conclusion

To wrap, the TAM is growing fast and the rising tide bodes well for AMD. AMD has run very fast and we personally consider the stock dangerous, but it’s also dangerous to be on the sidelines missing a spectacular run.

Thus, we are using options to place less capital on the firing line. However, the capital we use has far more risk associated with it. If AMD were to pull back, the options would suffer. Given the time decay things could get rather nasty. The takeaway is that if you want to gamble, gamble smart.

Our Play

While cautious of any fast rise, we do need skin in the game. Currently, we are sitting on our January 2019 $30 calls, February $30 calls, April $30 / $31 calls. We have opened February $35 calls as a very speculative position (in case the run continues).

Do note: These are dangerous positions (due to the nature of options), but in our opinion we prefer this to buying large swaths of common stock. These options should be viewed as simply ideas to explore. Due to the fast nature of options, they should not be viewed as something to mimic (as the data will be stale for the reader). If you require more help, please consult your broker.

Lagniappe
In case you missed it – here’s the interview w/ Dr. Lisa Su.

Disclosure: I am/we are long AMD, NVDA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Where in the World is Apple AirPower?

Arguably the biggest day of the year for Apple came and went on Wednesday without a single mention of AirPower, the wireless charging mat that the company showed off in 2017 and said would go on sale sometime this year.

It was supposed to free Apple customers from having to plug in their iPhones, Apple Watches and AirPods to charge their batteries. And AirPower would let customers charge several devices at once on the same mat.

That alone brought something new to the technology, which is already available for Android devices. Apple also showed how AirPower could be integrated into Apple software by showing the battery percentage of each charging device on a single screen so users would know how much charge they had.

And yet, a year later iPhone owners are still waiting. The product still has no release date and there is no word on where it is in development.

While it’s not unusual for Apple to keep quiet ahead of any official announcements, AirPower has been missing from the rumor mill despite repeated leaks about other Apple products, including the iPhone and Apple Watch. Apple also removed all mention of AirPower from its website just a few days ago.

AirPower wasn’t the only product left out of Apple’s annual event on Wednesday, where it showed off several new iPhones. The iPad, HomePod and AirPods didn’t see any updates either.

6 Reasons to Multitask Starting a New Venture With Your Current Employment

One of the big decisions every aspiring entrepreneur has to make is when to quit your current job to devote yourself fulltime to your new startup.

Some of you are so committed to the new passion that you quit your day job early, and dedicate all your time and resources to the new venture. Others wait until the new business starts to generate revenue and profit before making the move.

Which is right? I’m definitely a proponent of the multitasked approach, since every new venture is inherently risky, and startups usually take longer to ramp up than you imagine.

In my experience as a startup advisor, I find the minimum time to revenue is at least a year. Break-even and profit may not happen for a couple of years after that. And investors are hard to find in these years.

On the other hand, many investors, including billionaire entrepreneur and “Shark Tank” co-host Mark Cuban, essentially demand an all-in early approach as a pre-requisite to funding, making it clear that a total commitment is expected if you want outside money.

Of course, you might be able to pay yourself a salary from the investment, but this will be minimal and critically watched.

While there is no right or wrong here, I believe there are some good arguments for not quitting your day job too soon. Here are some of the key ones I would suggest to every aspiring entrepreneur who doesn’t have a rich uncle, or isn’t sitting on a large nest egg:

1. Make sure this new lifestyle is really for you.

I hear from aspiring entrepreneurs all the time who can’t wait to ditch the corporate lifestyle, make all their own decisions, and be in control of their destiny. Later, half of these come back to admit that their day job was not all that bad, less stressful, the work predictable, with others to lean on for hard decisions.

2. Current job income keeps family and creditors satisfied.

The alternative of living off credit cards and borrowed money, while waiting and hoping for your startup to kick in, will drag down your motivation and kill your support system just when you need it most.

Even the most successful startups can’t sustain founder salaries for the first couple of years.

3. Multitasking is the norm for everyone these days.

With all the pushes and pulls on our lives already, adding a new startup effort as one more activity should not be seen by anyone as breaking the bank.

The challenge is to keep all your priorities, personal and business, in balance. Anyone running their own business needs to learn that anyway.

4. Starting a company fulltime is stressful and lonely.

Having another job is a good way to get the balance you need for visible accomplishments, interactions with other people, and certainly a regular paycheck.

Of course, you must not short your day job, so you need the passion of your new idea to keep you energized enough to excel in both.

5. Keep your startup efforts “below the radar” until proven.

No matter how much passion you feel for your idea, not all friends and family will be positive or accepting of the major risks and commitment involved.

By maintaining your startup activities as supplementary with future payback, your efforts will look visionary rather than perilous.

6. Be able to learn from failure without embarrassment.

Historical and current statistics still show the chances of failure on any given idea are better than even.

Even with all the help resources available to entrepreneurs, there is still no better way to learn than trying an experiment that doesn’t work. Working in parallel minimizes the pain and visibility.

I recognize that all aspiring entrepreneurs are unique, with different levels of risk tolerance, energy, and motivation. I do find that the entrepreneur lifestyle is more fulfilling for many than traditional business.

Thus I encourage everyone to ignore the pundits and take a hard look at your own goals and drivers, and proceed with caution. Your happiness and legacy depend on it.

What Serena Williams Can Teach Us About Staying Focused

By now, I’m sure many of you have seen, heard or read about the epic U.S. Open Women’s Final between Serena Williams and Naomi Osaka. Many will remember the history-making win of Naomi Osaka, who became the first Japanese player to receive a Grand Slam title, but none of us will forget the heated battle between Williams and umpire Carlos Ramos. After receiving a code violation for coaching, a penalty point for racket abuse and a game penalty for calling the umpire a “liar” and a “thief,” Williams didn’t waiver in her determination to achieve justice for what she felt was unfair and sexist.

It was clear that Williams was rattled throughout the remainder of the competition, and many have discussed whether that aided in her loss to Osaka. We’ll never know, but Williams’ reaction got me thinking about how easy it is to get side-tracked when something doesn’t go the way we planned. When we’re faced with opposition on something we have worked tirelessly for whether it’s a presentation landing differently than expected or the report we put together didn’t resonate with our clients, it’s all too common to tap into our fight or flight modes and lose focus. And when we lose focus we forget our purpose and, ultimately, what we were working towards in the first place.

Below are four ways to remain engaged, energized and focused when we’re thrown a curve ball during a pivotal point in our days or careers:

Acknowledge your thoughts and feelings

Many times we try and distance ourselves from our feelings. We push those thoughts away or pretend we’re not really feeling anger or sadness. But doing that only intensifies those emotions and prevents us from moving forward. Rather than burying those feelings, try acknowledging their existence. Acknowledging those feelings doesn’t mean you agree with them, but it allows you to not resist their presence, which makes it easier to let go and stay focused on the current task. Serena did a good job of acknowledging her thoughts and feelings and then having the courage to express them.

Don’t let your emotions drive your behavior

Similar to acknowledging your thoughts and emotions, it’s important to try and not react directly from your emotions. Emotions can take you on a roller coaster, and it’s important to allow yourself to calm down, get into your rational mind and then ask yourself, “how is this going to affect me?” “What are the consequences?” “Will this affect me a year or two from now?” If you realize that yes, this will affect me, then try and remove yourself from the situation. Try seeing yourself as a representative of your company instead of a participant, for example. By adjusting your mindset, you’ll resist being a victim to your emotions so you can make better decisions going forward. This was probably Serena’s biggest mistake, although as a new mother myself I can empathize with her. Your emotions are as powerful as a big mac truck. If she reeled in her emotions and got into her rational mind, it would have allowed her to move on, get back in the game and address the violations afterwards in a more rational manner.

See the situation as an opportunity to learn

When push comes to shove though, no matter what situation you find yourself in, there is always something to learn. Failures and disappointments are often our greatest teachers. In fact, learning to manage yourself through failures is a key component of Grit, something Angela Duckworth has found to be essential for long-term success. We don’t know what’s going on with Serena now, but given her dedication to excellence, there is no doubt she is already starting to see this situation as something she can learn and grow from. Every failure is a gift in some way. 

Remember your purpose 

Remember the impact you want to have on your colleagues and clients. Staying focused on your why will keep you motivated to move forward, and you’ll be less likely to react in a negative way. This is another thing that Serena seemed to lose sight of that could have helped her. She allowed the decision of one umpire to pull her away from the big picture of her mission and dreams. This requires some mental maneuvering in the moment, but once you remember your purpose, you can prevent almost any complete derailment.

SEC halts trading in two cryptocurrency products, citing market 'confusion'

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission said on Sunday it was immediately suspending trading in two investment products that track cryptocurrencies, citing confusion in the markets over whether the products are exchange-traded funds (ETFs).

FILE PHOTO – High-end graphic cards are installed in a cryptocurrency mining computer at a computer mall in Hong Kong, China January 29, 2018. REUTERS/Bobby Yip/File Photo

The SEC said in a statement that trading in Bitcoin Tracker One CXBTF.PQ CXBTF.PK and Ether Tracker One CETHF.PQ CETHF.PK would be halted in the United States until at least Sept. 20.

The products promise to track the price of the cryptocurrencies, less fees. They are both listed on a Nasdaq Inc (NDAQ.O) exchange in Stockholm, but trade “over the counter” in transactions that occur off exchanges within the United States.

“It appears … that there is a lack of current, consistent and accurate information,” the SEC said in a notice posted on its website. “Application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as ‘Exchange Traded Funds.’”

The issuer of Bitcoin Tracker One and Ether Tracker One, XBT Provider AB SE0010296574.ST and its parent company, did not immediately respond to emailed requests for comment. Nasdaq declined to comment.

The SEC has taken a strict stance against letting ETFs tracking bitcoin and other cryptocurrencies come to market.

But investment firms have been pushing other types of investments that attempt to make it as easy to trade cryptocurrencies as a regular stock.

Those products are sometimes called ETFs, but that term generally refers to a different and often more stringently regulated product. Some industry experts, including the largest ETF provider BlackRock Inc (BLK.N), have called for regulators to standardize the terms used to describe ETFs and other kinds of investment products.

Virtual currency, including bitcoin and ether, can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.

Reporting by Trevor Hunnicutt; Editing by Peter Cooney and Will Dunham

Trump tells Apple to make products in U.S. to avoid China tariffs

(Reuters) – U.S. President Trump tweeted on Saturday that Apple Inc (AAPL.O) should make products inside the United States if it wants to avoid tariffs on Chinese imports.

FILE PHOTO: An attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. REUTERS/Thomas Peter/File Photo

The company told trade officials in a letter on Friday that the proposed tariffs would affect prices for a “wide range” of Apple products, including its Watch, but it did not mention the iPhone.

Trump, speaking on Friday aboard Air Force One, said the administration had tariffs planned for an additional $267 billion worth of Chinese goods.

Trump tweeted that “Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now.”

Apple declined to comment.

The technology sector is among the biggest potential losers as tariffs would make imported computer parts more expensive. Apple’s AirPods headphones, some of its Beats headphones and its new HomePod smart speaker would also face levies.

“The burden of the proposed tariffs will fall much more heavily on the United States than on China,” Apple said in its letter.

Reporting by Christopher Bing; Editing by Richard Chang

AI Can Recognize Images, But Text Has Been Tricky—Until Now

In 2012, artificial intelligence researchers revealed a big improvement in computers’ ability to recognize images by feeding a neural network millions of labeled images from a database called ImageNet. It ushered in an exciting phase for computer vision, as it became clear that a model trained using ImageNet could help tackle all sorts of image-recognition problems. Six years later, that’s helped pave the way for self-driving cars to navigate city streets and Facebook to automatically tag people in your photos.

In other arenas of AI research, like understanding language, similar models have proved elusive. But recent research from fast.ai, OpenAI, and the Allen Institute for AI suggests a potential breakthrough, with more robust language models that can help researchers tackle a range of unsolved problems. Sebastian Ruder, a researcher behind one of the new models, calls it his field’s “ImageNet moment.”

The improvements can be dramatic. The most widely tested model, so far, is called Embeddings from Language Models, or ELMo. When it was released by the Allen Institute this spring, ELMo swiftly toppled previous bests on a variety of challenging tasks—like reading comprehension, where an AI answers SAT-style questions about a passage, and sentiment analysis. In a field where progress tends to be incremental, adding ELMo improved results by as much as 25 percent. In June, it was awarded best paper at a major conference.

Dan Klein, a professor of computer science at UC Berkeley, was among the early adopters. He and a student were at work on a constituency parser, a bread-and-butter tool that involves mapping the grammatical structure of a sentence. By adding ELMo, Klein suddenly had the best system in the world, the most accurate by a surprisingly wide margin. “If you’d asked me a few years ago if it was possible to hit a level that high, I wouldn’t have been sure,” he says.

Models like ELMo address a core issue for AI-wielding linguists: lack of labeled data. In order to train a neural network to make decisions, many language problems require data that’s been meticulously labeled by hand. But producing that data takes time and money, and even a lot of it can’t capture the unpredictable ways that we speak and write. For languages other than English, researchers often don’t have enough labeled data to accomplish even basic tasks.

“We’re never going to be able to get enough labeled data,” says Matthew Peters, a research scientist at the Allen Institute who led the ELMo team. “We really need to develop models that take messy, unlabeled data and learn as much from it as possible.”

Luckily, thanks to the internet, researchers have plenty of messy data from sources like Wikipedia, books, and social media. The strategy is to feed those words to a neural network and allow it to discern patterns on its own, a so-called “unsupervised” approach. The hope is that those patterns will capture some general aspects of language—a sense of what words are, perhaps, or the basic contours of grammar. As with a model trained using ImageNet, such a language model could then be fine-tuned to master more specific tasks—like summarizing a scientific article, classifying an email as spam, or even generating a satisfying end to a short story.

That basic intuition isn’t new. In recent years, researchers have delved into unlabeled data using a technique called word embeddings, which maps how words relate to each other based on how they appear in large amounts of text. The new models aim to go deeper than that, capturing information that scales up from words up to higher-level concepts of language. Ruder, who has written about the potential for those deeper models to be useful for a variety of language problems, hopes they will become a simple replacement for word embeddings.

ELMo, for example, improves on word embeddings by incorporating more context, looking at language on a scale of sentences rather than words. That extra context makes the model good at parsing the difference between, say, “May” the month and “may” the verb, but also means it learns about syntax. ELMo gets an additional boost by gaining an understanding of subunits of words, like prefixes and suffixes. Feed a neural network a billion words, as Peters’ team did, and this approach turns out to be quite effective.

It’s still unclear what the model actually learns in the process of analyzing all those words. Because of the opaque ways in which deep neural networks work, it’s a tricky question to answer. Researchers still have only a hazy understanding of why image-recognition systems work so well. In a new paper to appear at a conference in October, Peters took an empirical approach, experimenting with ELMo in various software designs and across different linguistic tasks. “We found that these models learn fundamental properties of language,” Peters says. But he cautions other researchers will need to test ELMo to determine just how robust the model is across different tasks, and also what hidden surprises it may contain.

One risk: encoding biases from the data used to train them, so doctors are labeled as men, and nurses as women, for example, as word embeddings have previously done. And while the initial results generated by tapping ELMo and other models are exciting, says Klein, it’s unclear how far the results can be pushed, perhaps by using more data to train the models, or by adding constraints that force the neural network to learn more effectively. In the long run, AI that reads and talks as fluently as we do may require a new approach entirely.


More Great WIRED Stories

Shortseller Citron files lawsuit against Tesla, Musk

(Reuters) – Shortseller Andrew Left of Citron Research filed a securities fraud lawsuit against Tesla Inc and its Chief Executive Officer Elon Musk, alleging he had manipulated the stock price by issuing false and misleading information.

FILE PHOTO: A Tesla logo is seen in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson

Musk stunned the markets on Aug. 7 with tweets about taking the Palo Alto, California-based company private and that funding had been “secured.”

The billionaire entrepreneur later abandoned the plan on Aug. 24.

The lawsuit was filed on behalf of all persons who purchased, sold or transacted in Tesla shares between Aug. 7-17, the filing bit.ly/2MVzZmG showed.

Reporting by Sweta Singh in Bengaluru; Editing by Anil D’Silva

7 Tips for Building the Right Relationships in the Workplace

In startups and big business alike, I’ve found one constant: Your success is closely tied to your ability to build and maintain relationships. Often, it’s more important than hard work or how many hours you give.

Not all relationships are the same, and your ability to distinguish between positive and negative–or casual versus committed–can make or break your future. I find that the most successful entrepreneurs have mastered the art and skill of building and managing relationships.

For example, we all know people who really believe that everyone in the world is their supporter, when in fact many are actively working against them. The reasons may be emotional or fact based, but the key is understanding and dealing with relationship realities.

In my role as a mentor to business professionals and entrepreneurs over the years, I have found that it’s important to take a hard look at the relationships around you on a regular basis. If you have very few, or the wrong relationships, or your assessment abilities need tuning, your impact and your career may be limited.

Relax. All is not lost. You can learn from these priorities:

1. Everyone benefits from active mentoring.

The most productive business relationships involve mentoring, or active sharing of knowledge and experience, with the intent to improve communication, cooperation, and impact. This is a powerful and positive relationship that benefits both careers, as well as the business.

It works at all levels inside an organization, as well as outside the company. Most successful entrepreneurs and business executives admit to having mentor relationships, including Bill Gates with Warren Buffett, and Mark Zuckerberg with Steve Jobs. We all have our strengths and weaknesses, and can benefit from an external perspective.

2. Provide and seek coach and advocate relationships.

The best coaches are people who care about you as a person, without any ulterior motives, and intend to inspire you to be the best that you can be. With their advocacy and guidance, your morale, skills, and thus productivity will go up, benefiting both the company and your career.

A good coach is not a critic. Beware of relationships with people who constantly put you down, highlight your flaws, or discuss your shortcomings with other team members.

3. Establish relationships with people in the know.

Some peers are always researching the big picture and latest details, and can keep you in the loop on what’s happening in the organization and why. I’m not talking about gossip or negative information–just positive insights that will help you spend your time to the best advantage in your career.

These people are easy to recognize if you keep your eyes and ears open. They typically share insights early that prove to be productive, and have good relationships themselves with executives and other leaders.

4. Actively court relationships with people you aspire to be.

If your friends are all people in lesser experience, it’s unlikely that you can learn new things from them. Supplement the scope of your relationships with trailblazers you respect.

You’ll feel closer to people you professionally admire, which will make you more inspired by their results and motivated to follow in their footsteps. Keep your ego in check.

5. Expand work relationships into personal friendships.

Personal friendships between peers is always good for business, even between managers and team members. Personal friendships will improve communications and trust, and will definitely improve your personal satisfaction and life balance, between work and play. 

6. Make it a point to get to know other teams and customers.

Just knowing more people both inside and outside your organization, if only as acquaintances, is still a good thing. It keeps you from becoming isolated in your views, improves trust all around, and generally leads to more cooperation and sharing. Even with all our technology, business is still people-to-people. 

7. Above all else, don’t create enemy relationships.

Things change rapidly in business, and enemies have a way of resurfacing in a position to damage your career or your project. Don’t burn your bridges with anyone on the team, and use your initiative to engage people directly to improve communications, rather than cutting them off or instigating a personal battle.

Even the best technology and business model can’t succeed without positive relationships all around on the team. As an angel investor, I learned this the hard way, and now I’m a believer that smart investors invest in people with the right relationships, not just ideas and skills.

Work to make your ability to manage relationships your sustainable competitive advantage.

U.S. Congress grills Facebook, Twitter over foreign bids to tilt politics

WASHINGTON (Reuters) – Executives from Facebook Inc (FB.O) and Twitter Inc (TWTR.N) faced threats of legislative action from skeptical U.S. lawmakers on Wednesday over what many members of Congress see as a failure to combat foreign efforts to influence U.S. politics.

Shares of social media companies fell after the start of the hearing when Senator Mark Warner, the committee’s Democratic vice chairman, said the companies and Alphabet Inc’s(GOOGL.O) Google have not done enough to slow the spread of disinformation, and threatened “action.”

Facebook Chief Operating Officer Sheryl Sandberg, who testified alongside Twitter Chief Executive Jack Dorsey, acknowledged that the company was too slow to respond to Russian efforts to interfere in the 2016 U.S. election, but insisted it is doing better.

“We’ve removed hundreds of pages and accounts involved in coordinated inauthentic behavior – meaning they misled others about who they were and what they were doing,” Sandberg told the Senate Intelligence Committee.

“When bad actors try to use our site, we will block them,” she said.

Dorsey, sporting a straggly beard, nose ring and open-collared shirt, insisted Twitter’s monitoring has tightened, including notifying law enforcement last month of accounts that appeared to be located in Iran.

The committee also asked Google to testify, but declined an offer to hear from Chief Legal Officer Kent Walker rather than Alphabet Chief Executive Larry Page.

Facebook, Twitter and other technology firms have been on the defensive for many months over political influence activity on their sites as well as concerns over user privacy.

Their stocks fell as the hearing progressed, with Twitter down 4.5 percent and Facebook around 1.2 percent lower. Shares of Alphabet sank 1.4 percent.

Investors are concerned “about how government and policies could pose as a threat to these growth stocks,” said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

Senator Richard Burr, the committee’s Republican chairman, said, “Unfortunately, what I described as a ‘national security vulnerability,’ and ‘unacceptable risk,’ back in November remains unaddressed.”

“Clearly, this problem is not going away. I’m not even sure it’s trending in the right direction,” he added.

Warner said social media companies were doing better at combating disinformation, but their efforts were insufficient.

“I’m skeptical that, ultimately, you’ll be able to truly address this challenge on your own. Congress is going to have to take action here,” Warner said.

Republican Senator Susan Collins said she had learned from a university report that she had been targeted some 270 times by Russian-linked trolls on Twitter, asking Dorsey why the company does not tell users when they have been attacked.

Dorsey said it was “unacceptable” that she was not told.

Before the hearing, President Donald Trump, without offering evidence, accused the companies themselves of interfering in the upcoming U.S. mid-term elections, telling the Daily Caller that social media firms are “super liberal.”

Trump told the conservative outlet in an interview conducted on Tuesday that “I think they already have” interfered in the Nov. 6 election. The report gave no other details.

Executives from the companies, which have repeatedly denied political bias, have traveled to Washington several times to testify in Congress, including 10 hours of questioning of Facebook Chief Executive Mark Zuckerberg over two days in April.

Slideshow (6 Images)

Senate Intelligence has been looking into Russian efforts to influence U.S. public opinion throughout Trump’s presidency, after U.S. intelligence agencies concluded that Kremlin-backed entities sought to boost his chances of winning the White House in 2016.

Moscow denies involvement, and Trump – backed by some of his fellow Republicans in Congress – has repeatedly dismissed investigations of the issue as a partisan witch hunt or hoax.

REPUBLICANS CHARGE BIAS

Some Republicans have also charged social media companies with bias against Trump and other conservatives.

Conspiracy theorist Alex Jones held a press conference outside the Senate hearing room as the testimony began to criticize the social media companies for banning him and his website Infowars from their platforms.

Twitter’s Dorsey was to follow his Senate testimony with an appearance at an afternoon hearing looking at that issue in the House of Representatives.

Trump faulted Twitter on July 26, without citing any evidence, for limiting the visibility of prominent Republicans through a practice known as shadow banning.

In the Senate, both Burr and Warner pressed the social media companies to do more.

Many senators expressed anger at Google, which was represented in the hearing room by an empty chair next to Sandberg. Republican Senator Marco Rubio said the company might have skipped the hearing because it was “arrogant.”

Google did release written “testimony” from Walker ahead of the hearing, even though he was not expected to appear. Walker said Google takes foreign interference in politics very seriously.

A committee spokesperson said Walker’s “commentary” was not testimony, adding, “We wish his enthusiasm for participating in the company’s public hearing extended to his company’s senior leadership, and that they were willing to answer the committee’s questions.”

Additional reporting by Diane Bartz in Washington and Shreyashi Sanyal in Bangalore; Editing by Chris Sanders, Lisa Shumaker and Susan Thomas

Why Silicon Valley Remains Unbeatable the Center of Innovation

This article first appeared in Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

The Economist has published a lucid, well-reasoned, and interesting reported essay on why Silicon Valley, relatively speaking, is finished. Aaron linked to it last week and I, too, encourage you to read it.

I also think it’s wrong. Indeed, though well-argued and backed up both by compelling facts and impassioned quotes, the article is what journalists call an “evergreen” and also a bit of a “thumbsucker.” In short, I’ve read—and heard—it all before. Silicon Valley is too expensive, its people are too obnoxious, the traffic is too horrible, and other regions are hungrier. In its own finely honed words: “The cost of living and operating a firm will drive more people away. The dominance of the companies that have generated its current wealth will change the paths to success for those who stay. And unfavorable governmental policies will further harm the Valley’s dynamism.”

This is all true and then some. For all its phoniness and obsession with money, this region can be tough to take. But these truths may be beside the point. I’m no cheerleader for Silicon Valley. But its unique attributes—the concentration of wealth and talented people, a risk-taking and meritocratic culture, the proximity to great universities, the weather—make it unbeatable, at least in any sustained way, by any other region.

One tell of an argument gone sour was the sheer number of people around my age quoted in the article. These are Silicon Valley veterans, sources of mine for years, that have fewer years in their careers ahead of them than behind them. They have wisdom in spades. But it’s no surprise that they’re tired of the Valley. I’d rather hear what the hungry youngsters think about their prospects here. (One was quoted convincingly, but isolated anecdotes do not a thesis make.)

One person quoted in the article, scholar AnnaLee Saxenian, gave me pause. She wrote the definitive explanation of Silicon Valley’s success, particularly compared with the ossified tech industry in Boston. Her monumental work, Regional Advantage, which I’ve frequently cited to explain Silicon Valley’s staying power, came out in 1994. She believes Silicon Valley has become more like Boston, a damning assertion if ever there was one.

It’s tough, but not impossible, to dethrone the king. Despite its many problems, Silicon Valley still reigns.

***

Chip Bergh, CEO of apparel company Levi Strauss & Co., has a sharply worded essay on Fortune.com today about what his company is doing to stop gun violence. It’s a three-part corporate action plan to live up to the values Levi Strauss stands for. I recommend it, too.

Amazon hits $1 trillion market value milestone

(Reuters) – Amazon.com Inc (AMZN.O) on Tuesday joined Apple Inc (AAPL.O) in the $1 trillion club, becoming the second member of the group after its stock price doubled in 15 months.

The Amazon.com logo and stock price information is seen on screens at the Nasdaq Market Site in New York City, New York, U.S., September 4, 2018. REUTERS/Mike Segar

If the online retailer’s share price continues at its recent pace, it will be a matter of when, not if, Amazon’s market valuation eclipses that of iPhone maker Apple, which reached $1 trillion on Aug. 2.

Apple took almost 38 years as a public company to achieve the trillion dollar milestone, while Amazon got there in 21 years. While Apple’s iPhone and other devices remain popular and its revenues are growing, it is not keeping up with Amazon’s blistering sales growth.

Amazon has impressed investors by successfully diversifying its business into virtually every corner of the retail industry, altering how consumers buy products and putting major pressure on many brick-and-mortar stores.

Slideshow (4 Images)

It also provides video streaming services and bought upscale supermarket Whole Foods. And its cloud computing services for companies have become a major driver of earnings and revenue.

“Amazon’s a little bit more dynamic than Apple because the iPhone has become more mature. Amazon’s cloud business is an extra growth driver that Apple doesn’t have,” said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta, Georgia who describes Amazon’s cloud services as its “crown jewel.”

In the second quarter the unit accounted for 55 percent of Amazon’s operating income and 20 percent of total revenue, according to Morgan.

Apple started trading in December 1980 but its stock did not truly start to take flight for another 25 years, spurred by the iPhone, the breakthrough device that left competitors in the dust.

Amazon – founded as an online book-retailer in Chief Executive Jeff Bezos’ garage in 1994 – started trading on May 15 1997 at $1.50 on a split-adjusted basis.

By October 2009 it had risen to $100 and the stock hit $1,000 for the first time on May 30, 2017. It has held above that level since October 27, 2017.

Just 10 months later, on Aug. 30, Amazon shares hit $2,000 for the first time, just $50 per share away from giving the company a $1 trillion market value. That milestone, just a month after it reached a $900 billion valuation threshold.

Amazon shares were last up 1.1 percent at $2,035.69, pulling back slightly from the milestone level of $2050.2677.

Amazon currently trades up 74.0 percent for the year to date. In comparison, Apple has risen about34.7 percent year to date.

Analysts expect Apple’s revenue to jump 14.9 percent in its fiscal year ending in September, according to Thomson Reuters data, a hefty rise but still far short of Amazon’s expected revenue growth of 32 percent for 2018.

Additional reporting by Noel Randewich in San Francisco; Editing by Meredith Mazzilli

2 Streaming Amps for Audiophiles: Naim Uniti, Bluesound

Streaming music doesn’t have to mean compromised sound. These hi-fi amps can help you find cloud-connected aural ecstasy.

1. Naim Audio Uniti Star

Best for: Streamcurious audiophiles

With a built-in CD player that rips tracks to a local drive, the Uniti Star eases the pain of parting with your CDs. Naim’s app summons your newly captured tunes and streams hi-res songs from cloud services. The hardware is pricey, but you get premium guts like a 70-watt-per-channel amp and a huge, velvet-­smooth volume knob.

$5,995
Buy Now

2. Bluesound Powernode 2

Best for: Proud digital natives

Bluesound’s more modestly priced streamer can access oodles of cloud music services and radio stations—including hi-res offerings—or play a local library stacked with FLACs. Basic panel controls are supplemented by the excellent BluOS Controller app. The integrated 60-watt-per-channel amp can power any speakers, from tiny to towering.

$799
Buy Now

Styling by Reina Takahashi

This article appears in the August issue. Subscribe now.


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Uber, Tesla, Electric Scooters, and More Folks Who Made Car News This Week

August would be slow, they promised. Catch up on sleep, leave work a little early on Fridays, start tackling those long-term projects you’ve been pondering. It was not to be. This month—and this week!—have been full of transportation action. Of companies (and cities) making deals and decisions. Of public figures backtracking and tweeting about it. Of dreamers making amazing, slightly nutty things, like post-market tech that might help helicopters drive themselves, or full-sized sportscars made of tiny plastic bricks. It was a fast-paced week. Let’s get you caught up.

Headlines

  • Just look at this Bugatti Chiron made entirely of Lego.
  • Last last week, after a fortnight of questioning and upheaval, Tesla suddenly reversed course, with CEO Elon Musk announcing the electric carmaker would stay public after all. But legal experts say the move won’t save Tesla from the Securities and Exchange Commission, which is reportedly very interested in the nature of Musk’s initial take-private tweet. Nor from class action lawsuits by shareholders. Stay tuned.
  • Flying cars sound great, but they’re still a bit of a moonshot. But being a distant reality means there’s still plenty of time to make incremental engineering improvements. For example, the startup SkyRyse spoke to senior writer Jack Stewart about its plans to modify helicopters with cameras and computers so they can start to steer themselves.
  • Uber’s autonomous vehicle division this week announced a big $500 million investment from Toyota. The ride-hailing company has worked with the automaker on various projects since 2016, but that’s a big, expensive bet on self-driving tech. Uber doesn’t want to be a robo-taxi operator, and neither does Toyota, but clearly the two companies see value in each other.
  • Jack thoroughly enjoyed his test drive aboard Jaguar’s all-electric i-Pace, which included unsupressable giggles, a melting chocolate chip ice cream cone, and an efficient enough battery to evaporate most range anxiety.
  • Scooters are back, baby! Three months after ordering them gone from city streets, San Francisco announced that just two companies, Scoot and Skip, will receive permits to operate e-scooter-share during a year-long pilot project. Not among the winners: Bird, Lime, and Spin, all of which launched scooter service in March. The scooters made by Uber and Lyft were also shut out.
  • On August 25, it happened again: A Tesla Model 3 slammed into the back of a stopped firetruck. It’s unclear whether the driver was using Autopilot when the crash occurred. But it’s a good time to remind yourself why Tesla’s semiautonomous feature can’t “see” halted vehicles.
  • If your mind is occasionally boggled by the complexity of transportation systems, you’ll want to check out architect Candy Chan’s latest series of illustrations: 3-D depictions of New York City subway stations. Subway stations can feel like waiting rooms you just have to tolerate, but Chan argues these are places to be examined critically and thoughtfully, too.
  • In-house WIRED physicist Rhett Allain calculates how fast a Tesla has to move to go airborne.

Tesla Graph of the Week

Transpo editor Alex Davies set aside a chunk of time to go through Tesla CEO Elon Musk’s tweets. There are…a lot of them—the man loves Twitter. But Alex was after something very specific: How do Musk’s tweets affect Tesla’s stock price? Depends on the tweet, it turns out! Musk’s April Fool’s joke that Tesla was “bankwupt” did not play well on the markets. His tweet about taking Tesla private, however, led to a dramatic spike. Check out the graph:

Required Reading

News from elsewhere on the internet

In the Rearview

Essential stories from WIRED’s pastThat Bugatti’s got us a little Lego-mad, so take some time with this 2015 piece on why it’s so hard to build a totally sustainable plasticy brick.

Fleeing White House Lawyers Top This Week's Internet News Roundup

It’s been a week that’s seen us inch ever closer to the collapse of NAFTA, seen the White House seemingly confused about how it collectively feels about the death of John McCain, and seen the official death toll of Hurricane Maria in Puerto Rico raised by almost 3,000, even though the President still claims the official response was “fantastic”. (No wonder his disapproval rating has hit an all-new high.) But what else has been going on this week? I’m glad you asked! Let’s let the internet answer that question, shall we?

You’re Fired (483rd Twitter Edition)

What Happened: Of all the people the President of the United States has pushed out of the White House, perhaps the White House lawyer wasn’t the best choice.

Where It Blew Up: Twitter, media reports

What Really Happened: Elsewhere in the legal worries of the leader of the free world, the reportedly perfectly fine, nothing wrong whatsoever relationship between President Trump and White House lawyer Don McGahn took a bit of a turn early this week, as the President tweeted out a personnel update.

Well, this seems perfectly normal and not something that people were cynically expecting after it emerged that McGahn had multiple meetings with Special Counsel Robert Mueller over the past few months. Still, at least he was given time to prepare for this decision…

On the plus side, everyone in Trump’s orbit must have been happy to see him go…

That’s 84-year-old Republican senator Chuck Grassley there, showing some hey-fellow-kids Twitter chops.

Even as everyone was still coming to terms with the White House lawyer being unceremoniously dismissed without notice, some people had some more thoughts to offer on how this related to the bigger picture:

But as with seemingly every bit of reporting, the President couldn’t resist taking to Twitter to argue against the conventional wisdom in his patented “Nuh-uh, just the opposite!” style, as was obvious on Thursday morning:

As should probably be expected at this point, most people took this as confirmation that just the opposite was actually true. But a third tweet made ears perk up amongst the political watchers:

The replacement in question…? That’s an open question at time of writing, thanks to entirely conflicting reports:

Hey, maybe Rudy Giuliani could moonlight once he’s finished working on that counter-report.

The Takeaway: Curiously, McGahn wasn’t the only lawyer to leave the White House this week, although this departure was seemingly more voluntary:

Alienated Citizens of the World, Unite

What Happened: For those who thought that the current administration couldn’t do anything to get more racist, I introduce to you: Telling U.S. citizens they aren’t really citizens because they’re Hispanic.

Where It Blew Up: Twitter, media reports

What Really Happened: As if there weren’t enough reasons to feel concerned about the administration’s attitude towards immigration (Hundreds of children are still separated from their parents, in case you’re wondering), a new report from the middle of this week brought an additional wrinkle:

The Washington Post’s report alleged that American citizens were getting passport applications rejected in Texas, with “hundreds, and possibly thousands” of Hispanic citizens being accused of using fake birth certificates.

To call this a big deal would be a severe understatement, and the original report was quickly shared by other outlets across the internet. Twitter, too, was shocked by what was happening:

As might be expected, the State Department pushed back on the reports, but there was one obvious problem with that…

Oh, and it’s not just passports or the administration, as it turns out:

The Takeaway: Yeah, this isn’t terrifying in the slightest. Maybe there’s a silver lining to be found somewhere…

From Give and Take and Still Somehow

What Happened: The President and his lawyers have come up with a new plan to combat the special investigation into potential collusion with Russia; release its own fake report. No, really.

Where It Blew Up: Twitter, media reports

What Really Happened: You know what they always say: If you can’t beat them, release your own version of something and just pretend that they’re entirely equivalent. And speaking of the current special counsel investigation into the President of the United States and potential collusion with foreign entities…

There are all manner of obvious flaws in this plan, such as who would believe a report put together by the subject of the investigation? (I mean, sadly, we know the answer, but still.) There’s also this small drawback:

That is a problem. How can you write a rebuttal to a mystery topic…?

Actually, the apparent truth is only incrementally less likely:

Somewhat amazingly, this turns out not to be the first time the subject has been raised publicly by Giuliani, the president’s personal attorney. But, sure, this definitely sounds like a good use of everyone’s time:

If nothing else, he’ll have to work quickly in order to—as the original report put it—release the report within minutes of Mueller’s official, actually researched, report.

Let’s be real: There’s almost no way this could fail.

The Takeaway: Who couldn’t be convinced by a well-reasoned argument from this guy?

Why They Changed It I Can’t Say

What Happened: New York got an unexpected name change this week on certain apps, thanks to an act of anti-semitic “digital graffiti.”

Where It Blew Up: Twitter, media reports

What Really Happened: New York users of Snapchat, the Weather Channel, and other online services with map services received an unpleasant surprise on Thursday morning:

Of course, this quickly went viral, because of course it did. The root, as it happened, was quickly identified—

—and dealt with:

But what caught some people’s attention was the choice of slur city name—and how much of a failure it ultimately was:

Others wondered if New York’s new identity could be an improvement:

Sadly, not everyone was happy with the takeover:

The Takeaway: It wouldn’t be a New York moment without at least one person fondly remembering the good old days…

Slight Return

What Happened: After less than a year away, Louis C.K. has stepped back into the spotlight to return to comedy—and it turns out people aren’t really into that idea so much.

Where It Blew Up: Twitter, media reports

What Really Happened: Hey, remember last November, when comedian Louis C.K. admitted that reports of his sexually harassing several women, including masturbating in front of them, were true? Remember when he issued a statement saying that he was going to “step back and take a long time to listen”?

Well, that was certainly nine months’ worth of listening, I guess. Yes, Louis C.K. returned to the public stage this week (although it turns out he’d actually made a more low-key comeback earlier than that), and it was a return that prompted a very strong response online.

With all kinds of think pieces published in response, the overall feeling about C.K.’s return could be summed up in one simple tweet:

As if to illustrate that last point, an additional fact about C.K.’s set emerged a day later…

The Takeaway: But perhaps we’re being too hard on the comedian…


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Turning Points For The Week Of August 27-31

The purpose of the Turning Points newsletter is to look at the long-leading, leading, and coincidental economic indicators to determine if the economy is changing from expansion to contraction – to determine if the economy is at a “Turning Point.”

Today, let’s start with the manufacturing sector. The ISM index has been in the upper 50s/lower 60s for the last 12 months. The Markit manufacturing number was lower but still positive. Both these readings are positive – the ISM more so. Here are some numbers that confirm the strength of the sector:

The chart above shows the average weekly hours of production employees, which is near a multi-year high. This is one of the first things an employer will either cut (which lowers costs at the margins but keeps the labor force employed) or increase (which allows the employer to increase overall production). This is a very positive development. It’s occurring because orders are high:

New orders for non-defense capital goods is at an absolute 5-year high (left chart). The Y/Y pace of growth is high as well (right chart).

While not at 5-year highs, the absolute number of new orders for consumer goods is climbing (left chart). It is, however, at a 5-year high on a Y/Y basis (right chart).

Turning to the labor market, we see a very strong picture:

The top chart shows the 5-year number for the 4-week initial unemployment claims, which is near a 5-year low. The bottom chart places this number into historical perspective, showing that it’s currently near a multi-year low.

Leading Indicator Conclusion: There is nothing in these numbers pointing towards a recession anytime soon.

Let’s turn to the coincidental numbers. This week, the BEA released the second estimate of 2Q18 GDP. Rather than looking at those numbers, let’s look at the national income figures which are less often reported but which yield important information about the source of funds for spending.

Total GDI (left chart) is just shy of $18.6 trillion. On a Y/Y basis, it’s increasing slightly more than 2% and has been growing between 2% and 2.5% since early 2017.

Compensation of employees comprises the largest portion of GDI. The left chart shows that this has been steadily increasing over the last five years. The right chart puts the number into a Y/Y perspective; that growth rate is slightly more than 4.5%.

Operating surplus for private enterprises is basically the income earned by entrepreneurs. While this number moved lower from mid-2014 to late-2015, it’s been increasing since on an absolute basis (left chart). The Y/Y growth rate is slightly below 5% (right chart).

Finally, we have corporate profits. These declined between mid-2014 and late 2015 as a result of the oil market decline. But they have been rising steadily since (left chart). The pace of Y/Y growth (right chart) is near a 5-year high.

Next Friday, the BLS will release its latest employment report. Let’s take a look at the Atlanta Fed’s Labor Market Spider Chart to place the report into context:

The gold band is the latest information from the labor market; the dark green band is the height of the last expansion. With the exception of wages, the current labor market is stronger than the last time the economy was growing.

Coincidental indicators conclusion: There is no reason to think we’re at/near a recession.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.