Amazon Has Over 100 Million Prime Members

Amazon Prime has over 100 million subscribers worldwide, Amazon CEO Jeff Bezos said on Wednesday, marking the first time that the company has disclosed such detailed information about its increasingly important subscription service.

The online retail giant debuted Prime 13 years ago as a way for people to get free two-day shipping and access to the company’s video streaming library.

In the past, Amazon has only disclosed vague information about the number of Prime subscribers, such as it having “tens of millions of members.” The updated number highlights the growth of the company’s subscription service, which Amazon has pushed heavily over the years as a way to retain customers that in turn fuel its core retail business with each purchase. Still, Amazon stopped short of full disclosure of its Prime subscriber service, like how much revenue it generates.

In addition to membership numbers, Bezos said in a letter to shareholders that the company had shipped over 5 billion items in 2017 as part of its Prime service and that “more new members joined Prime than in any previous year.” However, he didn’t say how many people signed up in past years.

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Bezos also bragged about Amazon’s recent marketing campaigns, including its Prime Day event in July. He said that the company’s Prime Day for 2017 was its “biggest global shopping event ever” until it was soon eclipsed by Cyber Monday, the day of online shopping deals following the Thanksgiving holiday weekend.

“Prime Day 2017 was our biggest global shopping event ever (until surpassed by Cyber Monday), with more new Prime members joining Prime than any other day in our history,” he said.

As for sales of some of Amazon’s other heavily promoted products and services, Bezos remained typically vague.

Amazon sold “tens of millions” of its Internet-connected Echo speaker; its online streaming music service “Amazon Music” now “has tens of millions of paid customers;” and its “Amazon Fashion” online retail portal now “has become the destination for tens of millions of customers.”

From Bezos’ shareholder letter:

Congratulations and thank you to the now over 560,000 Amazonians who come to work every day with unrelenting customer obsession, ingenuity, and commitment to operational excellence. And on behalf of Amazonians everywhere, I want to extend a huge thank you to customers. It’s incredibly energizing for us to see your responses to these surveys.

One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. I see that cycle of improvement happening at a faster rate than ever before. It may be because customers have such easy access to more information than ever before – in only a few seconds and with a couple taps on their phones, customers can read reviews, compare prices from multiple retailers, see whether something’s in stock, find out how fast it will ship or be available for pick-up, and more. These examples are from retail, but I sense that the same customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries as well. You cannot rest on your laurels in this world. Customers won’t have it.

Exclusive: Facebook to put 1.5 billion users out of reach of new EU privacy law

SAN FRANCISCO (Reuters) – If a new European law restricting what companies can do with people’s online data went into effect tomorrow, almost 1.9 billion Facebook Inc users around the world would be protected by it. The online social network is making changes that ensure the number will be much smaller.

Facebook members outside the United States and Canada, whether they know it or not, are currently governed by terms of service agreed with the company’s international headquarters in Ireland.

Next month, Facebook is planning to make that the case for only European users, meaning 1.5 billion members in Africa, Asia, Australia and Latin America will not fall under the European Union’s General Data Protection Regulation (GDPR), which takes effect on May 25.

The previously unreported move, which Facebook confirmed to Reuters on Tuesday, shows the world’s largest online social network is keen to reduce its exposure to GDPR, which allows European regulators to fine companies for collecting or using personal data without users’ consent.

That removes a huge potential liability for Facebook, as the new EU law allows for fines of up to 4 percent of global annual revenue for infractions, which in Facebook’s case could mean billions of dollars.

The change comes as Facebook is under scrutiny from regulators and lawmakers around the world since disclosing last month that the personal information of millions of users wrongly ended up in the hands of political consultancy Cambridge Analytica, setting off wider concerns about how it handles user data.

The change affects more than 70 percent of Facebook’s 2 billion-plus members. As of December, Facebook had 239 million users in the United States and Canada, 370 million in Europe and 1.52 billion users elsewhere.

Facebook, like many other U.S. technology companies, established an Irish subsidiary in 2008 and took advantage of the country’s low corporate tax rates, routing through it revenue from some advertisers outside North America. The unit is subject to regulations applied by the 28-nation European Union.

Facebook said the latest change does not have tax implications.

‘IN SPIRIT’

In a statement given to Reuters, Facebook played down the importance of the terms of service change, saying it plans to make the privacy controls and settings that Europe will get under GDPR available to the rest of the world.

“We apply the same privacy protections everywhere, regardless of whether your agreement is with Facebook Inc or Facebook Ireland,” the company said.

Earlier this month, Facebook Chief Executive Mark Zuckerberg told Reuters in an interview that his company would apply the EU law globally “in spirit,” but stopped short of committing to it as the standard for the social network across the world.

In practice, the change means the 1.5 billion affected users will not be able to file complaints with Ireland’s Data Protection Commissioner or in Irish courts. Instead they will be governed by more lenient U.S. privacy laws, said Michael Veale, a technology policy researcher at University College London.

Facebook will have more leeway in how it handles data about those users, Veale said. Certain types of data such as browsing history, for instance, are considered personal data under EU law but are not as protected in the United States, he said.

The company said its rationale for the change was related to the European Union’s mandated privacy notices, “because EU law requires specific language.” For example, the company said, the new EU law requires specific legal terminology about the legal basis for processing data which does not exist in U.S. law.

NO WARNING

Ireland was unaware of the change. One Irish official, speaking on condition of anonymity, said he did not know of any plans by Facebook to transfer responsibilities wholesale to the United States or to decrease Facebook’s presence in Ireland, where the social network is seeking to recruit more than 100 new staff.

Facebook released a revised terms of service in draft form two weeks ago, and they are scheduled to take effect next month.

Other multinational companies are also planning changes. LinkedIn, a unit of Microsoft Corp, tells users in its existing terms of service that if they are outside the United States, they have a contract with LinkedIn Ireland. New terms that take effect May 8 move non-Europeans to contracts with U.S.-based LinkedIn Corp.

LinkedIn said in a statement on Wednesday that all users are entitled to the same privacy protections. “We’ve simply streamlined the contract location to ensure all members understand the LinkedIn entity responsible for their personal data,” the company said.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File photo

Reporting by David Ingram in San Francisco; Additional reporting by Joseph Menn in San Francisco, Padraic Halpin and Conor Humphries in Dublin and Douglas Busvine in Frankfurt; Editing by Greg Mitchell and Bill Rigby

Why Netflix Stock Jumped as Much as 8% to an (Almost) All-Time High

Growth at big companies chasing mature markets is supposed to slow down. Think about wireless phones or cable TV. But that rule doesn’t seem to apply to Netflix, at least not yet.

Even after more than 20 years in business, the world’s biggest streaming video service experienced some of its fastest growth ever in the first quarter, helping to give its stock a big lift.

Netflix shares, which hit an all-time high of $333.98 last month before selling off in the recent stock market decline, jumped as much as 8% in after hours trading on Monday. That put the stock price just pennies below the all-time high. But as CEO Reed Hastings and other executives answered an analysts’ questions on one of Netflix’s famously dull quarterly calls for investors, the after hours gain shrunk to a 5% gain to $324.32.

Netflix’s overall revenue increased 40% to $3.7 billion in the quarter, but excluding the aging DVD rental business, streaming video service revenue rose 43% to $3.6 billion, the company’s fastest quarterly growth rate ever, Netflix said. That was due to the combination of adding 7.4 million new subscribers, the most ever for Netflix in a first quarter, plus the price hikes the company pushed through last year, leading to a 14% increase in the average monthly subscription price.

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Investors and analysts were most impressed by the subscriber gains, which came in well ahead of the company’s own forecasts. Netflix added 1.96 million new members in the United States, after forecasting a gain of 1.45 million, and another 5.46 million in other countries, after forecasting 4.9 million. Netflix’s forecasts for the second quarter for subscriber and revenue growth were also better than analysts expected.

“We think investors will likely push NFLX stock higher after this earnings report,” UBS analyst Eric Sheridan wrote after the results came out. “We see investors focused on the widening moat that NFLX is creating with its business (faster subscriber growth on the back of original content push).”

Netflix’s head of programming, Ted Sarandos, did use the call Monday evening to shoot down one frequent rumor about the company, while declining to address another.

“Our move into news has been misreported over and over again and we’re not looking to expand into news beyond the work that we’re doing in short form and long form feature documentaries,” he said, when asked about rumors of a bigger push into news.

Recent talk shows from the likes of David Letterman should be considered entertainment, not news, he stressed. “David Letterman is a great talk show host—not a newscaster,” Sarandos said.

And about those rumors that former president Barack Obama or his wife Michelle is in talks to host such a show?

“I can’t comment on the Obamas or any other deals that would be in various states of negotiation right now,” he replied.

CEO Hastings was also asked whether the data privacy problems hounding Facebook (fb) and other tech companies could hurt Netflix (nflx), particularly if new laws limited data collection. Last week, some members of Congress raised the possibility during hearings in which Facebook CEO Mark Zuckerberg testified about his company’s data collection and data sharing practices.

“Well, I’m very glad that we built the business not to be ad-supported,” he said. “I think we’re substantially inoculated from the other issues that are happening in the industry…Just objectively, we’re much more of a media company in that way than pure tech. Of course we want to be great at both but, again, we’re really pretty different from the pure tech companies.”

The Airline Whose Planes Are Said to Break Down In Mid-Air More Often Than Anyone's Is About To Have a Big PR Problem

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

They say you should get out ahead of a bad story.

Present your version before the story hits, so that people can have good feelings about you before aspersions are cast.

I wonder, therefore, what Allegiant Air might do this weekend.

I wrote about this airline a couple of years ago, after it had been accused of having planes that break down four times more often than those of other airlines.

In mid-air, that is.

Of the airline’s 86 planes, it was said that 42 of them had broken down in mid-air the previous year.

The airline fought back and claimed that the accusations were “incendiary.” Indeed, its stock went up 24 percent soon after the original Tampa Bay Times article was published.

Now, though, Allegiant might have a bigger PR problem. 

On Sunday, it’ll be featured in a 60 Minutes segment, one that CBS teases will be twice the usual length.

Here’s the teaser.

Just those 48 seconds suggest that Allegiant should brace for something of calm, considered skewering.

I asked the budget airline what it thought of the upcoming exposé. A spokeswoman told me Allegiant would wait until the segment airs before offering a rebuttal.

One of the main issues with Allegiant’s record of breakdowns is that it flies old planes. Very old planes, some 22 years of age.

Recently, though, it has begun to replace these planes with Airbuses. Indeed, last May was the first time that Allegiant enjoyed the experience of fitting out a new(ish) plane.

The question, then, is how much Sunday’s 60 Minutes piece will reflect the whole current scenario.

The problem for the airline’s PR department, though, is that Allegiant will surely come out looking not so good on one of the most respected news programs in America, one that’s watched by 12 million people.

It’s inevitable, then, that it will instantly be associated with the sort of bad reputation that plagued United Airlines over the last year. 

Worse, perhaps, is the idea that instead of a brutal lack of customer sensitivity — as in the United case — Allegiant might be tarred with the notion that it’s simply an unsafe airline.

On Friday, the airline’s stock began to drop. What might happen to it on Monday?

AT&T economist argues Time Warner merger is good for consumers

WASHINGTON (Reuters) – AT&T’s (T.N) proposed merger with Time Warner Inc (TWX.N) would save consumers money because the marriage of a pay-TV provider with a movie and TV giant would create a more efficient company, an economist testifying for AT&T said in court on Thursday

FILE PHOTO – An AT&T logo is seen at a AT&T building in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo

Dennis Carlton, from the University of Chicago, sought to rebut testimony on Wednesday from an economist for the government, Carl Shapiro of the University of California at Berkeley, who said the $84.5 billion deal would cost American consumers some $286 annually in higher prices.

The government filed a lawsuit in November to block the deal, citing antitrust concerns. U.S. District Judge Richard Leon will order the deal stopped if he determines it would raise prices for pay TV consumers or threaten the development of online video.

Shapiro had argued that the proposed deal would spur AT&T, which owns DirecTV, to charge its pay TV rivals more for Time Warner content, in particular the Turner family of news and sports shows.

He also said the combined company would have an incentive to decline to offer content to cheaper online video services.

Carlton attacked the assumptions in Shapiro’s testimony and used newer data to show that by his tally, the deal would provide a net benefit to consumers of 52 cents per pay TV subscriber a month.

“There is an efficiency from vertical integration,” argued Carlton. The proposed transaction is considered a vertical deal since AT&T, which owns satellite television company DirecTV, is buying a content supplier, Time Warner.

Carlton said Shapiro underestimated how many people were dropping pay TV altogether and overestimated how many people would leave their pay TV provider if they lost access to Turner’s channels.

On cross-examination, government attorney Craig Conrath sought unsuccessfully to push Carlton to concede that a previous vertical deal, Comcast’s purchase of NBCU, led to more expensive TV shows and movies when NBCU negotiated new contracts with other pay TV companies.

The trial, which began in mid-March in U.S. District Court in Washington, is expected to wrap up this month.

In a sign of the high stakes of the trial, the head of the Justice Department’s antitrust division, Makan Delrahim, sat at the government counsel’s table on Thursday, prompting a reaction from Leon, who said: “My goodness gracious,” when Delrahim introduced himself.

Reporting by Diane Bartz; Additional reporting by David Shepardson; Editing by Peter Cooney

China lays out self-driving rules in global race: China Daily

SHANGHAI (Reuters) – China has laid out national guidelines for testing self-driving cars as it looks to keep pace with the United States in a global race to develop autonomous vehicles, the China Daily newspaper reported on Friday, citing the country’s industry ministry.

FILE PHOTO: A Baidu’s Apollo autonomous car is seen during a public road test for self-driving vehicles in Beijing, China March 22, 2018. REUTERS/Stringer

The rules lay out requirements that vehicles must first be tested in non-public zones, that road tests can only be on designated streets and that a qualified person must always sit in the driver’s position, ready to take over control.

China is making a major push into autonomous smart vehicles, keen to have its own national champions in self-driving to compete with global leaders such as Waymo, the self-driving arm of Google parent Alphabet Inc, and Tesla Inc.

Xin Guobin, the country’s vice industry minister, said China would slip behind rivals like the United States if it did not “firmly seize” initiative in the sector, which he called a key plank of Beijing “Made in China 2025” push.

“We will accelerate to build a strong manufacturing country, a strong country in science and technology with strong networks and transportation,” he said in comments posed on the Ministry of Industry of Information Technology website.

Chinese cities including Beijing and Shanghai have previously announced local guidelines for self-driving tests, while internet giant Baidu Inc already has approval to test self-driving vehicles on city streets.

In the wake of two high-profile crashes in the United States involving Uber Technologies [UBER.UL] and Tesla, MIIT vice minister Xin said China would emphasize safety as the “top priority” in testing for autonomous vehicles.

“To ensure the safety of road tests, we will not only not only require that road tests take place on prescribed streets, but also that the test driver sits in the driver position throughout, monitoring the car and the surrounding environment and ready to take control of the car at any time,” he added.

“This is a lesson that we have learned from the accidents faced by Uber and Tesla.”

Fatal crashes last month involving the two U.S. firms have raised scrutiny on self-driving globally and ramped up pressure on the industry to prove its software and sensors are safe.

Xin added China should also push forward other technologies needed to support smart vehicles, including next-generation 5G communications networks and intelligent roads.

Reporting by Adam Jourdan; Editing by Shri Navaratnam

Facebook CEO Mark Zuckerberg Wins Would-Be Congressional Grilling

Facebook CEO Mark Zuckerberg remained calm under pressure during five hours of questioning by U.S. senators about a series of recent crises culminating with the latest involving Cambridge Analytica, a political consulting firm that gained access to data about up to 87 million Facebook users.

Overall, Zuckerberg appeared to win the day by avoiding any major stumbles and appearing open to the idea of limited privacy regulation. For their part, the senators were generally gentler with Zuckerberg than expected during the hearing, which risked being a dramatic grilling broadcast live to millions of people at home.

Zuckerberg, wearing a suit and tie instead of his signature grey t-shirt, and looking somber throughout, responded to lawmakers without becoming flustered. He readily apologized for the privacy dust up, saying “It was my mistake. I’m sorry,” and that Facebook had failed to take a “broad enough view” of the possible misuse of its service and developer tools by bad actors.

Much of what Zuckerberg reiterated was what he and his lieutenants have been explaining for the past couple weeks of intense criticism and a falling stock price. But saying it on a national stage, under scrutiny of lawmakers, raised the stakes for the CEO, who had never previously given testimony in Congress.

Zuckerberg’s performance stood in sharp contrast to some public appearances earlier in his career, during which he stumbled with answers while perspiration glistened on his forehead. Since then, he’s grown more polished on stage and able to respond at length to questions as if he’s gone through a crash course in public speaking.

When Zuckerberg didn’t know the answer—and that was often—he told senators that his staff would provide more details later. It had the effect of diffusing some more detailed questions that could have opened Facebook to further scrutiny.

Several times during Tuesday’s hearing, Zuckerberg explained that an academic, Aleksandr Kogan, had misled Facebook about his true intentions in creating a personality quiz app on the social network that harvested user data. Kogan then sold that data to Cambridge Analytica, in violation of Facebook policies.

A few years ago, Facebook changed its terms of its service so that developers could no longer access as much data as before. But for many critics, it was too little, too late.

During the hearing, Zuckerberg directed blame away from Facebook to Cambridge Analytica, saying that his employees had been duped. Indeed, several senators questioning Zuckerberg seemed to take his side and expressed more anger at Cambridge Analytica than Facebook, which had such lax data sharing policies that it’s developer platform essentially operated on an honor system.

A few questions caught Zuckerberg off guard, including one by Sen. Maria Cantwell of Washington, who asked him if data analytics company Palantir scraped Facebook user data to allegedly aid Cambridge Analytica. Zuckerberg seem flustered by Cantwell bringing up Palantir, whose co-founder Peter Thiel is a Facebook board member, and responded, “I’m really not that familiar with what Palantir does.”

Ultimately, Zuckerberg apologized repeatedly for failing to foresee the Cambridge Analytica scandal, and promised that his company is working to prevent similar problems.

Investors appeared to be pleased with Zuckerberg’s performance on Capitol Hill after sending its shares down 15% over the past few weeks for its missteps. On Tuesday, the company’s shares rose 4.5% to $165.04.

Zuckerberg helped his case by reassuring senators that he’s willing to work with them on relatively low-impact legislation that would regulate how online companies handle user data and privacy. Tech companies are notorious for their opposition to regulation, but a small dose would give the industry cover while letting it avoid harsher oversight. Facebook has friends in several Republican senators, who repeated their party mantra that too much regulation would hamstring the next Facebook.

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If anything concrete comes out of Tuesday’s hearing, it may be that Facebook trims its terms of service, which a number of senators complained is too long and confusing. Zuckerberg replied that Facebook tries “to be exhaustive in the legal documents,” but that the company doesn’t “expect that most people want to read a full legal document.”

On Wednesday, Zuckerberg has another appointment with a House committee, where he will likely answer many of the same questions. If Tuesday was any guide, he’ll be able to avoid any major blows unless the representatives come armed with sharper questions and demand answers from him instead of his staff.

​How many Linux users are there anyway?

I was talking to a friend the other day when he said there were no more than 0.0001 percent Linux users. So, so wrong.

True, desktop Linux has never taken off. But, even so, Linux has millions of desktop users. Don’t believe me? Let’s look at the numbers.

There are over 250 million PCs sold every year. Of all the PCs connected to the internet, NetMarketShare reports 1.84 percent were running Linux. Chrome OS, which is a Linux variant, has 0.29 percent. Late last year, NetMarketShare admitted it had been overestimating the number of Linux desktops, but they’ve corrected their analysis.

You see, NetMarketShare doesn’t simply count PCs, which connect to its network of over 40,000 websites using HitsLink Analytics and SharePost. Its methodology is to “collect data from the browsers of site visitors and it then weights the data by country. “We compare our traffic to the CIA Internet Traffic by Country table, and weight our data accordingly. For example, if our global data shows that Brazil represents 2% of our traffic, and the CIA table shows Brazil to represent 4% of global internet traffic, we will count each unique visitor from Brazil twice.”

Another analysis company, which is frequently cited for operating system numbers, is StatCounter. By its count desktop Linux has 1.48 percent, with Chrome OS coming in at 1.03 percent. StatCounter claims its numbers are derived from raw browser hits from racking code, which is installed on more than 2 million sites.

Perhaps the most unbiased numbers are from the federal government’s Digital Analytics Program (DAP). DAP’s numbers come from the billion visits over the past 90 days to over 400 US executive branch government domains. That’s about 5,000 total websites. These visitors appear to be largely US citizens. You can see this from the most popular websites: The US Postal Service, the IRS, and Medline Plus.

By DAP’s count, Linux is bundled in with 0.6 percent other. Chrome OS, according to DAP, has more users: 1.3 percent.

Still, while desktop Linux is a minority desktop operating system, it still has millions of users, and that’s a lot more than a mere fraction of 1 percent.

And, when it comes to overall end-user operating system, Linux-based Android has 70.96 percent of the mobile market by NetMarketShare’s count. By DAP’s reckoning, Android has 19.9 percent of all end-user systems, while StatCounter shows Android as even more popular than Windows by 39.49 percent to 36.62 percent.

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Zuckerberg to meet with U.S. lawmakers Monday: sources

WASHINGTON (Reuters) – Facebook Inc Chief Executive Officer Mark Zuckerberg will hold meetings with some U.S. lawmakers on Monday, a day before he is due to appear at Congressional hearings over a political consultancy’s use of customer data, two congressional aides said on Sunday.

FILE PHOTO – Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam

The planned meetings at Capitol Hill are expected to continue through Monday afternoon and include some lawmakers from committees before whom Zuckerberg is due to testify, said the aides, who asked not to be identified because the meetings have not been made public.

Facebook declined to comment.

Zuckerberg is scheduled to appear before a joint hearing of the U.S. Senate Judiciary and Commerce committees on Tuesday and the U.S. House Energy and Commerce Committee on Wednesday.

Facebook has come under fire in recent weeks after it said that the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica.

A Facebook spokesman said on Sunday that the company plans to begin telling affected users on Monday.

London-based Cambridge Analytica, which has counted U.S. President Donald Trump’s 2016 campaign among its clients, has disputed Facebook’s estimate of the number of affected users.

Zuckerberg is expected in his testimony to recognize a need to take responsibility and acknowledge an initial failure to understand how many people were affected, a person briefed on the matter, who asked for anonymity, said on Sunday.

Zuckerberg said in a conference call with reporters last week that he accepted blame for the data leak, which has angered users, advertisers and lawmakers, while also saying he was still the right person to head the company he founded.

On Friday, Facebook backed proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying “issue” ads.

The steps are designed to deter the kind of election meddling and online information warfare that U.S. authorities have accused Russia of pursuing, Zuckerberg said on Friday. Moscow has denied the allegations.

In February, U.S. Special Counsel Robert Mueller charged 13 Russians and three Russian companies with interfering in the 2016 U.S. presidential election by sowing discord on social media.

Zuckerberg, on the call with reporters, said Facebook should have done more to audit and oversee third-party app developers like the one hired by Cambridge Analytica in 2014.

Reporting by David Shepardson, Editing by Rosalba O’Brien

Facebook CEO Mark Zuckerberg Admits ‘Huge Mistake’ But Will Not Step Down

Facebook CEO Mark Zuckerberg admitted to making a “huge mistake” by failing to sufficiently consider how bad actors could abuse the social networking service, but he said that he has no plans to step down.

Zuckerberg said during a press briefing on Wednesday that he takes responsibility for a series of crises plaguing his service over the past year. These include the spread of fake news by Russian trolls and the alleged exploitation of Facebook user data by political consulting firm Cambridge Analytica to influence the 2016 U.S. presidential election.

“I think life is about learning from the mistakes and figuring out what you need to do to move forward,” Zuckerberg said. “The reality of a lot of this is, when you’re building something like Facebook that is unprecedented in the world, there are going to be things that you mess up.”

Despite the high-profile stumbles, Zuckerberg says he remains the best person to lead Facebook. When asked whether Facebook’s board has discussed whether he should step down, Zuckerberg said, “Not that I’m aware of.” He added that no Facebook employee has been fired in light of the Cambridge Analytica scandal, which the company said could impact up to 87 million Facebook users—an increase from earlier reports of 50 million.

“I started this place, I run it, I am responsible for what happens here,” Zuckerberg said. “I’m not looking to throw anyone under the bus for mistakes that we made here.”

But the fact that the question about his tenure even came up shows how embattled the one-time Silicon Valley darling is. For example, angry users are campaigning to get others to delete their Facebook accounts, which Zuckerberg said on Wednesday has had little impact.

“But look, it’s not good,” he conceded. “We don’t want anyone to be unhappy with our services.”

Meanwhile, the Federal Trade Commission has started investigating Facebook’s data handling policies while some lawmakers are calling for tougher privacy laws. Next week, Zuckerberg is scheduled to appear at a likely testy Congressional hearing that will cover Facebook’s privacy problems.

On Wednesday, Facebook added fuel to the fire by disclosing that “malicious actors” had abused a feature to likely scrape the public profile information of the company’s two billion users. Facebook said it has now disabled that feature.

For the past year, Zuckerberg said that Facebook has been undergoing an internal reckoning over its growing influence on world affairs. While the company has long focused on the benefits of its social network like connecting family members and helping small businesses grow, Facebook executives mistakenly overlooked its platform’s negative effects, he said.

“It’s clear now we didn’t focus enough on abuse,” Zuckerberg said. “We didn’t take a broad enough view in what our responsibility is.”

He added, “That was a huge mistake, that was my mistake.”

Zuckerberg reiterated a series of changes Facebook has made to deal with a number of its current controversies. They include partnering with news organizations to fact-check news articles before major elections and further limiting the amount of data third-party developers can obtain by building apps on Facebook.

He also said that Facebook plans to increase the number of staff working on security issues to 20,000 people by the end of the year, to do things like ferret out fake accounts created by Russian trolls. However, Zuckerberg conceded that addressing Facebook’s many problems won’t be a quick fix, and that Facebook is “probably a year into a massive three-year push” to implement changes.

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“I wish that I could snap my fingers and in three months or six months have solved all of these issues,” Zuckerberg said. “But, I just think the reality is given how complex Facebook is and how many systems there are, and how we need to rethink our relationship with people about our responsibility there across every single part of what we do, I do think this is a multi-year effort.”

He described it as a “big shift” for Facebook to take “more responsibility” for how bad actors use its service. “My hope is by the end of this year, we’ll have turned a corner on a lot of these issues and people see things are getting a lot better,” he said.

NYSE sets Spotify reference price at $132

(Reuters) – The New York Stock Exchange on Monday set the reference price for shares of music streaming service Spotify Technology SA at $132.

FILE PHOTO: Headphones are seen in front of a logo of online music streaming service Spotify, February 18, 2014 REUTERS/Christian Hartmann/File Photo

Spotify is pursuing an unusual direct listing to reach the public markets in place of an initial public offering, and shares are expected to start trading on Tuesday.

The reference price is not an offering price for the shares, nor is it the opening public price for shares of the Swedish technology company.

The opening public price will be determined by buy and sell orders collected by the NYSE from broker-dealers, the exchange said. Based on those orders, the opening price will be set based on a designated market maker’s determination of where buy orders can be matched with sell orders at a single price.

But the reference price will play a part in Spotify’s eventual pricing.

Though Spotify has not hired traditional underwriters – a move that will save it millions of dollars in fees – it has hired Citadel Securities as a market maker to set the opening price on the NYSE, with help from Morgan Stanley.

While their roles will be limited, the reference price will be used while building the order book. Early on Tuesday, Citadel and Morgan Stanley will analyze investors’ buy and sell orders and then set an opening price for the stock.

Reporting by Stephen Nellis in San Francisco; Editing by Sandra Maler and Himani Sarkar

Facebook Starts Fact Checking Photos and Videos in This Country

Facebook has started to fact-check photos and videos to thwart the spread of fake news.

The social media giant said Thursday that it has partnered with the Agence France-Presse (AFP) news service to scrutinize photos and videos in France for accuracy in addition to conventional news stories distributed on its service.

Facebook did not describe how it and the AFP would determine whether a certain picture or video warrants a fact check or how many people would be involved in the effort. Although the new fact-checking is limited to Facebook’s French users, the company said it would eventually debut similar initiatives in other countries with the help of other partners.

While Facebook (fb) did not say what type of photos or videos it would scrutinize, they are likely to be manipulated pictures or videos involving current political or global affairs, rather than baby pictures.

Facebook has been criticized for not doing enough to prevent users from sharing misleading news on its service, particularly in prelude to the 2016 presidential election.

Some of Facebook’s recent steps to curtail misleading information includes reducing the amount of news on its service —whether fake or real— and asking users to list the news sources they trust.

In March, Facebook began enlisting the help of news outlets to help its efforts to flag fake news, and partnered with the Associated Press to fact-check news related to U.S. midterm elections in each state.

The Wall Street Journal reported earlier this year about the difficulty companies like Facebook and Google have detecting manipulated photos that are designed to mislead citizens and stir discord.

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In an illustration of the difficulties Facebook faces, researchers were able to use artificial intelligence technologies to create doctored videos of politicians like one involving former President Barack Obama giving a convincing looking speech. Some human rights activists, prominent universities, and AI researchers are worried that more people will use cutting-edge technology to create propaganda that is difficult or impossible to distinguish from reality.

Forget Paid Ads–This Marketing Tactic Brings Your Audience to You

When advertising as a small business, it’s easy (and important) to keep in mind the mantra of “go where the audience lives.” This often means targeting social media circles and promoting paid ads in places where your prospective customers are most likely already spending their time. And while this is important, it is only one piece of the marketing puzzle.

A truly comprehensive marketing program also needs to draw an audience to you, building an engaged community around your brand. Content marketing and organic search, the method of associating your brand with relevant topics in order to boost your search engine rankings and attract prospects that are looking for your goods and services, is the perfect complement to a robust paid strategy.

Best of all, content marketing is an affordable method even when outsourcing, and of course doing it in-house keeps costs down even more. Here are a few basics of content marketing that can help get you started boosting your brand right away.

Converting highly motivated leads

While paid advertising tends to be aimed at determining where to reach your customers, content marketing is focused on bringing your customers to you. By creating a blog or content relevant to your audience, you can attach keywords to attract traffic to your website and enter the conversion pipeline.

“Brands that are providing content are putting themselves in the best possible position for growth. Providing your consumer with value in the form of content is one of the best ways to attract audiences,” said Michael Berean, CEO of Grace Innovation, a marketing agency. “However, it is important that brands provide content from a place of sincerity because consumers can see right through you if you don’t. You have to really give in order to receive.”

The leads that encounter your content are likely already highly motivated, or at least interested in learning more. By presenting these leads with content, you’ve now presented your brand as a potential solution, and created an opportunity for a qualified lead to engage with your brand further.

Cultivating loyalty and prestige

Content marketing is more than just a conversion tactic, though. It’s also a brand-building method. By crafting and deploying high-level, intelligent content, you don’t just attract motivated leads, but you project your brand as an authority in the space. In content marketing, it’s as much about prestige and image as it is about capturing leads.

A content marketing strategy is comprehensive and complex. It takes more than a standalone piece of content to execute an effective content marketing strategy, but one good piece of content will reflect upon your brand. In addition to boosting your reputation as an authority on the topic, a solid content marketing strategy will cultivate customer loyalty amongst those who have already successfully partnered with your brand. They will continue to see you as the unequivocal expert of your craft.

A word on highly regulated industries

Content marketing is also extremely useful in highly regulated industries that do not have every conventional avenue of advertising available to them. Consider the rapidly growing cannabis industry in the U.S. Companies are generally highly restricted (if not outright prohibited from) directly advertising on radio or television, especially when a significant part of the audience might be children.

Luckily for these industries, content marketing skirts those restrictions. Because the users finding your content have searched for it, and there’s nothing illegal about creating informational material, companies in sensitive industries are able to successfully drive traffic despite the advertising restrictions they might face.

Content marketing is a very particular strategy, and it takes a great deal of planning and labor. However, if you partner with an experienced content marketing firm, or you develop an effective strategy in-house, it can deliver a high return on investment while also contributing to brand building efforts. Best of all, content marketing is focused on capturing leads that are already interested in your product or service, rather than casting a wide net and hoping a few pairs of intrigued eyes land upon your costly paid advertisement. With a strong content marketing strategy, all roads lead back to your webpage.

10 Things I Learned About Writing From Ryan Holiday

In August of 2016, I emailed Ryan Holiday and asked if he would help me write my first book proposal. I paid him $1,000 an hour for his time. He probably costs a lot more now.

Over the following three months, I would have a 1-hour phone call with him, once per month. And he would review what I developed. He started by helping me craft the idea, then helped me structure it.

After getting his help, I was able to get an agent and in January of 2017, a nearly quarter million dollar deal with one of the biggest publishers in the world. I then hired Ryan and his team to help me write and market the book itself.

Here’s some of the lessons I learned:

1. Write The Proposal For “Them” And The Book For “You”

If you want to go the “traditional” publishing route, you need to have a marketable concept. The publisher needs to trust that you can sell this thing, and that the book concept has merit.

  • The purpose of the proposal is to get the publisher to care.
  • The purpose of your book is to write the book you need to write, and that your audience needs to read.

2. The Book Proposal Has 3 Parts

There are three parts to a book proposal:

  1. What is this book?
  2. Who are you to write it?
  3. How can you sell it?

3. Get Blurbs For The Book Before It’s Even Written

For your proposal, you should get as many blurbs for the book as you can for the book that you are proposing… which hasn’t yet been written. 

Get people to provide testimonials of the book and about you as a writer. This can create extremely high expectations for the people reviewing your proposal, which is exactly what you want. You need to get them ready to have their minds blown. And then you need to make good on that built-in expectation.

4. Never Lower Your Standards For Your Work

It doesn’t matter how good of a publisher or editor you have, you need to hold yourself to the highest possible standard. More than that, you need to surround yourself with people who hold you to an even higher standard than you hold yourself. 

What blew me away during the writing process of WILLPOWER DOESN’T WORK  is that, every time I’d send a draft to Ryan, he’d rip it to shreds and say, “You can write so much better than this.”

I didn’t take it as an offense. It wasn’t even just about the writing. It was about the whole process. “Do I really care about what I’m doing?” was the question I had to ask myself after getting Ryan’s feedback. It was just what I needed.

5. The Title Of Your Book Really Matters

When I sold my book proposal, I had the idea and an initial title. But it wasn’t the right title. The book was originally going to be called, “The Proximity Effect.”

I couldn’t come up with a better title. For months, no one could. But Ryan would never let me settle. Even after I told him I was completely settled internally on the matter. He continued to push back. 

Eventually, with the help of Joe Polish and Joe’s copywriter, JR, I was able to get the right title for the book, WILLPOWER DOESN’T WORK. 

The title needs to stand on it’s own. It needs to create a statement or polarize or create an experience.

Ryan’s books are a great example of this. Some of his titles include:

  • THE OBSTACLE IS THE WAY
  • EGO IS THE ENEMY
  • TRUST ME, I’M LYING

6. Write Something Perennial

Don’t just write a book to write a book. Don’t just write a book to become a flash-in-the-pan bestseller.

Write something that can withstand the test of time. Write something that will continue to sell long into the future. 

I’m grateful Ryan held me to this standard throughout the writing process. Too many people write a book just for the sake of having a book. They don’t hold themselves to the standard of writing something they can be proud of… something that will be expected to sell and reach new audiences for decades.

7. Spend The First 3 Months Doing An Insane Amount Of Research (“Find stuff no one else has found.”)

When you first start writing, spend the first several months digging digging digging. Find stuff no one else has found. That’s what Ryan told me to do. And that’s what I did. 

I was able to find some fascinating stuff that I believe made WILLPOWER an innovative book. If you’re not pushing your own limits through the creation process, you’re probably not making new connections. Writing a book (or creating anything, for that matter) should change YOU in the process. The level of transformation you experience should reflect the level of transformation you hope your readers will experience. 

8. “If The Story Wasn’t About You, Would You Use It?”

In the first several drafts of my book, I had a ton of stories about myself. Ryan called me out on that.

“If this story was about someone else, would you use it?” he asked me.

“Probably not,” I responded.

Then don’t use it. Make this book worth reading. It’s much better to create something that’s amazing than to write about yourself. The content will always be king. 

9. Even After You Have Done Something Big, You Can Always Do Better (the student’s mindset)

After I finished the final draft of WILLPOWER, I got some humbling feedback from Ryan.

“You can do much better than this,” he told me.

I remember being somewhat put off. Then I thought about it for a day or two and knew exactly what he was saying. There is no such thing as a perfect book. And I know that, given this experience, I can absolutely write a better book than what I just created. 

Another friend and mentor of mine, Richard Paul Evans, who has written 38 New York Times Bestsellers, told me that every book he writes, he tries to make it the best book he’s ever written. 

I recently had dinner with Alice Cooper and he told me that he believes, after 50 years of making music, that his “best song” is still in him. He told me that if he believed he had already written his best song, he wouldn’t continue writing music.

10. The Best Way To Market A Book Is To Write The Next One

After WILLPOWER’s publication date, Ryan emailed and congratulated me. Then he swiftly said, “Write the next one.”

He told me the best marketing you could do for a book is write the next one. The success of every book spills-over into the success of the other books. I learned that writing several viral articles. When one’s doing well, you want to write more. The traffic compounds. 

Conclusion

Writing a book could change your life. It could change the way you see the world. And more than that, It could change the way you work. 

I now hold myself and my writing to a much higher standard. 

Uber agrees to sell Southeast Asia business to Grab after costly battle

SINGAPORE/SAN FRANSICO (Reuters) – Ride-hailing firm Uber Technologies Inc [UBER.UL] has agreed to sell its Southeast Asian business to bigger regional rival Grab, the firms said in a statement on Monday, marking the U.S. company’s second retreat from an Asian market.

A ComfortDelgro taxi passes Uber and Grab offices in Singapore March 26, 2018. REUTERS/Edgar Su

The deal marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on Indonesia’s Go-Jek, which is backed by Alphabet Inc’s (GOOGL.O) Google and China’s Tencent Holdings Ltd (0700.HK).

As part of the transaction, Uber will take a 27.5 percent stake in the Southeast Asian company and Uber CEO Dara Khosrowshahi will join Grab’s board.

Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier this year when Japan’s SoftBank Group Corp (9984.T) made a multi-billion dollar investment in Uber.

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SoftBank is also one of the main investors in several other big ride-hailing firms including Grab, China’s Didi Chuxing, and India’s Ola.

Ride-hailing companies throughout Asia have relied heavily on discounts and promotions, driving down profit margins.

Uber, which is preparing for a potential initial public offering in 2019, lost $4.5 billion last year and is facing fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.

“It will help us double down on our plans for growth as we invest heavily in our products and technology,” Khosrowshahi said in a statement.

Grab said it will take over Uber’s operations and assets in eight countries in the region, and will expand its food delivery services.

Reporting by Aradhana Aravindan in Singapore and Heather Somerville in San Fransisco; Writing by Miyoung Kim; Editing by Edwina Gibbs

​FOSSA: Open-sourcing open-source license management

No one ever became a programmer so they could mange open-source licenses. But, that’s what many developers must do these days. Black Duck Software, the open-source software logistics and legal solutions provider, and North Bridge found in 2015 that 66 percent of companies create open-source software. That’s great, but all that code comes with a wide variety of licenses, each with its own set of requirements. What’s a developer or company to do?

There have long been corporate programs, such as those from Black Duck Software, White Source Software, and Sonatype, which provide code scanning and open-source licensing management. This isn’t a small job. According to Sonatype, the average application contains 106 open-source components.

Kevin Wang, CEO of FOSSA, has a different approach. The 22-year-old founder told me at Open Source Leadership Summit in Sonoma, CA: “Code scanning is not enough anymore. FOSSA’s approach to dependency scanning leverages both static and dynamic code analysis. Dynamic analysis allows FOSSA to get an accurate, live view of what dependencies are pulled into builds. Static analysis supplements the results with metadata on how dependencies are included to power deep intelligence features and recommendation engines. Both these approaches are used to build the most accurate, performant, and intelligent infrastructure for managing your open source.”

That’s all well and good, but by open-sourcing its dependency analysis infrastructure, the company is taking an interesting step forward. FOSSA is using open source to automatically manage open-source licensing. I like this plan.

The program supports over 15 languages and environments. These include JavaScript, Java, Ruby, Golang, and PHP. FOSSA today is a web service, written in Go, that you import from GitHub.

FOSSA works by analyzing your project for dependencies after your build system has built your project. This provides much more precise dependency information than just reading package manifest files. This is a real problem. As FOSSA points out:

  • Some build tools are non-deterministic, so two builds with the same configuration may result in different dependencies being used.
  • Many ecosystems use semantic versioning to specify dependency ranges, so running the same build at different points in time may cause different dependencies if a new version was published.
  • Some build tools will execute external commands or arbitrary code which is impossible to statically analyze.

So, instead of trying to guess at your build system’s behavior, FOSSA runs locally using your build tools to determine a list of exact dependencies used by your binary.

There’s a real need for this. Despite the commercial tools that are already available, Wang said, most people still use a spreadsheet to track licensing requirements manually.

So, why open source FOSSA’s approach? Wang explained, “At the end of the day everyone uses open source differently. Even though in many languages there’s some conventions and structure towards dependencies, you will always have plenty of edge cases due to the breadth of ways people share code. That’s why it’s critical that this is an open and collaborative project.”

FOSSA itself is licensed under the Mozilla Public License 2.0. To make money from this plan, Wang explained that while the command-line interface (CLI) version is free and open source, the web-based dashboard and support will provide the revenue needed to keep FOSSA’s doors open.

I think Wang’s on to something here. Managing open-source licenses is a necessary evil, and FOSSA addressing it head on with an open-source approach may be just what’s needed to bring it to heel.

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7 Excuses You Use to Put Off Starting Your Business

I have talked with hundreds of people about starting a business. People often tell me would love to start a business–then follow up with a list of reasons why they aren’t able to take the first step. From “I’m not good enough” to “not enough savings” and everything in between, there are many reasons starting a business can feel impossible.

And I understand. Starting a business feels overwhelming. Though I knew from my first lemonade stand that startup life was for me, it took me years of hesitating before I finally took the plunge. Here are the seven common reasons you might be hesitating–and seven ways to overcome these fears.

1. I don’t know how.

The beauty of business is that you can learn everything as you go from web resources, books, and peers. Most libraries have a business desk staffed with knowledgeable librarians who specialize in helping people just like you get started with business planning. Many libraries have free online access to the Lynda.com training database so you can learn online free and at your own pace. When I first started my company, Google was my best friend–anything I didn’t know was only a few clicks away. 

With increasing numbers of people working for themselves, chances are you know at least one person who is self-employed. Take them for coffee, ask them how they got started. It doesn’t have to be in the same industry. Ask for introductions to other entrepreneurs they know.

2. I’m too young or too old.

I hear twentysomethings say they’re too young and sixty somethings say they’re too old. But it doesn’t matter. The average American will change careers 5-7 times. That’s careers, not jobs. Age is truly one of the most meaningless measures of readiness. You can learn new things, you can adapt to change, and you can start a business at any age. You’re never too young or too old do change your life and start something you’re proud of.

3. What if I fail?

I fail frequently and you will, too. Get comfortable with the reality that 99 percent of everything you do won’t work. But the 1 percent that does work is magical.

4. My parents don’t support my startup dreams.

There are a lot of difficult dynamics at play when discussing your life choices with parents. But unless you’re asking your parents to bankroll your startup, it’s not really up to them. You only have one life, build one that you’re proud of without worrying about the opinions of others.

5. I don’t have the cash.

It’s a common misconception that you need a lot of capital to start a business. If you have access to a computer and the internet, you can start any number of businesses. I started my business with a $500 credit card loan and a hefty chunk of student loans. A lot of the software you need is available free and there are a variety of businesses you can start small.  As you start collecting payments, you can grow your business.

6. What will my friends or partner think?

If your friends or partner don’t support your dreams, get new ones. Seriously. It’s hard to let friends and lovers go, but if they are only contributing negatively to your dreams, it’s time to let them go. Practice now by telling your friends about your business idea–they might surprise you.

7. I’m not good enough.

Stop it. You know you’re wrong about that. It’s going to be scary, but no one else is better equipped to make your ideas and dreams into reality.

Running your own business is a lot work and there are many stressful moments. But the real rewards of building something you’re proud of far outweigh the imagined obstacles. Now you’re ready to start a business–no excuses!

Zuckerberg apologizes for Facebook mistakes with user data, vows curbs

SAN FRANCISCO (Reuters) – Facebook Inc Chief Executive Mark Zuckerberg apologized on Wednesday for mistakes his company made in how it handled data belonging to 50 million of its users and promised tougher steps to restrict developers’ access to such information.

The world’s largest social media network is facing growing government scrutiny in Europe and the United States about a whistleblower’s allegations that London-based political consultancy Cambridge Analytica improperly accessed user information to build profiles on American voters that were later used to help elect U.S. President Donald Trump in 2016.

“This was a major breach of trust. I’m really sorry this happened. We have a basic responsibility to protect people’s data,” Zuckerberg said in an interview with CNN, breaking a public silence since the scandal erupted at the weekend.

Zuckerberg said in a post on Facebook the company “made mistakes, there’s more to do, and we need to step up and do it.” (bit.ly/2DHAlUJ)

He said the social network planned to conduct an investigation of thousands of apps that have used Facebook’s platform, restrict developer access to data, and give members a tool that lets them to disable access to their Facebook data more easily.

His plans did not represent a big reduction of advertisers’ ability to use Facebook data, which is the company’s lifeblood.

Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress if he was the right person.

“I’m not sure we shouldn’t be regulated,” he told CNN. “I actually think the question is more what is the right regulation rather than yes or no, should it be regulated? … People should know who is buying the ads that they see on Facebook.”

Zuckerberg said Facebook was committed to stopping interference in the U.S. midterm election in November and elections in India and Brazil.

INVESTOR FEARS

Facebook shares pared gains on Wednesday after Zuckerberg’s post, closing up 0.7 percent. The company has lost more than $45 billion of its stock market value over the past three days on investor fears that any failure by big tech firms to protect personal data could deter advertisers and users and invite tougher regulation.

Zuckerberg told the New York Times in an interview published on Wednesday he had not seen a “meaningful number of people” deleting their accounts over the scandal.

Facebook representatives, including Deputy Chief Privacy Officer Rob Sherman, met U.S. congressional staff for nearly two hours on Wednesday and planned to continue meetings on Capitol Hill on Thursday. Facebook was unable to answer many questions, two aides who attended the briefing said.

Facebook founder Mark Zuckerberg speaks during the Alumni Exercises following the 366th Commencement Exercises at Harvard University in Cambridge, Massachusetts, U.S., May 25, 2017. REUTERS/Brian Snyder

Zuckerberg told the website Recode that fixes to protect users’ data would cost “many millions of dollars.” (bit.ly/2IJbYJS)

The whistleblower who launched the scandal, Christopher Wylie, formerly of Cambridge Analytica, said on Twitter he had accepted invitations to testify before U.S. and UK lawmakers.

The German government said Facebook must explain whether the personal data of the country’s 30 million users were protected from unlawful use by third parties, according to a report in the Funke group of German regional newspapers.

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‘SCAPEGOAT’

On Tuesday, the board of Cambridge Analytica suspended its Chief Executive Alexander Nix, who was caught in a secret recording boasting that his company played a decisive role in Trump’s victory.

However, the academic who provided the data disputed that on Wednesday.

“I think what Cambridge Analytica has tried to sell is magic, and they’ve made claims that this is incredibly accurate and it tells you everything there is to tell about you. But I think the reality is it’s not that,” psychologist Aleksandr Kogan, an academic at Cambridge University, told the BBC in an interview.

Kogan, who gathered the data by running a survey app on Facebook, also said he was being made a scapegoat by Facebook and Cambridge Analytica. Both companies have blamed Kogan for alleged data misuse.

Only 300,000 Facebook users responded to Kogan’s quiz, but that gave the researcher access to those people’s Facebook friends as well, who had not agreed to share information, producing details on 50 million users.

Facebook has said it subsequently made changes that prevent people from sharing data about friends and maintains that no breach occurred because the original users gave permission. Critics say that it essentially was a breach because data of unsuspecting friends was taken.

Analysts have raised concerns that the incident will reduce user engagement with Facebook, potentially lessening its clout with advertisers. Three Wall Street brokerages cut their price targets.

“Investors now have to consider whether or not the company will conclude that it has grown in a manner that has proven to be untenable,” said Pivotal Research Group analyst Brian Wieser.

The company has risen more than 550 percent in value in the past five years.

Reporting by David Ingram; Additional reporting by Dustin Volz and David Shepardson in WASHINGTON and Kate Holton in LONDON; Writing by Susan Thomas; Editing by Bill Rigby, Lisa Shumaker and Paul Tait

The Problem With Drug Development Isn’t Regulation

LAGUNA NIGUEL, Calif.—The cost of failure for drug development is rising. The productivity gains seem elusive. And of course there are the economics, a pressure on drug pricing that won’t let up.

The “pipeline”—that is, the drug development process—is under fire at a time when medical science seems to be making leaps and bounds. What gives? Experts gathered over lunch here at Fortune’s Brainstorm Health conference to discuss.

“The efficiency of the industry in converting cash into drugs is terrible,” said Bernard Munos, a senior fellow at FasterCures, a Washington, D.C. think tank focused on accelerating medical research. There’s $160 billion spent on research by public companies in the pharmaceutical/health industry, Munos said. And yet there are just 35 to 45 notable drugs created per year—and it’s getting worse.

“Part of the problem is of our own making,” Munos explained. How do you measure innovation? The number of drugs a company produces is only “part of the story”—commercial success should be evaluated, too. But: “The picture isn’t pretty,” he said. Of the companies that produce largest number of drugs, the percentage of revenue from recently developed drugs is in the high 20s, low 30s. In other words, most pharma revenue comes from products that are out of patent. “That changes the culture of the company to focus on keeping old drugs performing,” Munos said.

Paul Rejto, executive director and head of Oncology Translational Research at Pfizer, pushed back slightly. There is good reason that it takes so much time and effort to discover new drugs, he said. “We are not trying to solve an engineering problem where all the parameters are known,” Rejto said. “We’re really trying to discover a lot of new biology and leverage that new biology to come up with new therapeutics.”

Plus, companies are not competing in a vacuum. They’re competing against all alternative therapies as well as with each other. “The pace of technological change is incredibly exciting,” Rejto said.

Besides—the problem isn’t failure, but how it’s managed, said Lesley Stolz, head of the Bay Area location of Johnson & Johnson’s JLABS unit. “There are a lot of roads that we go down where we fail,” she acknowledged. “You need to fail fast. But a lot of researchers are not incentivized to fail fast.” The key is teaching them how to fail “so that we’re not wasting as many dollars per day.”

Udit Batra, CEO of lab chemicals company MilliporeSigma, agreed. “Science is difficult,” he said. “It’s difficult to scale up. And engineering is also difficult.” The good news, he added: We can develop things in far less space—and with far less capital—than we used to.

The key, said David Humphreys, head of U.S. healthcare for the Economist Intelligence Unit, is being able to understand true impact so that organizations have a better sense of direction. “Sustainability is not just for the industry,” he said of drug development. “It’s for patients, it’s for health systems also going through radical changes.” There is a lot of promise for innovations, he added. But what are the barriers?

Fortune editor-in-chief Clifton Leaf then took the opportunity to ask the room which barriers were stopping a better drug development process. “A show of hands,” he said. “How many people say regulatory barriers?”

Only a few hands went up.

“And how many people believe it’s cultural barriers?”

Most of the room’s hands went up.

For more coverage of Fortune’s Brainstorm Health conference, click here.

Facebook critics want regulation, investigation after data misuse

SAN FRANCISCO (Reuters) – Facebook Inc faced new calls for regulation from within U.S. Congress and was hit with questions about personal data safeguards on Saturday after reports a political consultant gained inappropriate access to 50 million users’ data starting in 2014.

FILE PHOTO: Facebook logo is seen at a start-up companies gathering at Paris’ Station F in Paris, France on January 17, 2017. REUTERS/Philippe Wojazer/File Photo

Facebook disclosed the issue in a blog post on Friday, hours before media reports that conservative-leaning Cambridge Analytica, a data company known for its work on Donald Trump’s 2016 presidential campaign, was given access to the data and may not have deleted it.

The scrutiny presented a new threat to Facebook’s reputation, which was already under attack over Russians’ alleged use of Facebook tools to sway American voters before and after the 2016 U.S. elections.

“It’s clear these platforms can’t police themselves,” Democratic U.S. Senator Amy Klobuchar tweeted.

“They say ‘trust us.’ Mark Zuckerberg needs to testify before Senate Judiciary,” she added, referring to Facebook’s CEO and a committee she sits on.

Facebook said the root of the problem was that researchers and Cambridge Analytica lied to it and abused its policies, but critics on Saturday threw blame at Facebook as well, demanding answers on behalf of users and calling for new regulation.

Facebook insisted the data was misused but not stolen, because users gave permission, sparking a debate about what constitutes a hack that must be disclosed to customers.

“The lid is being opened on the black box of Facebook’s data practices, and the picture is not pretty,” said Frank Pasquale, a University of Maryland law professor who has written about Silicon Valley’s use of data.

Pasquale said Facebook’s response that data had not technically been stolen seemed to obfuscate the central issue that data was apparently used in a way contrary to the expectations of users.

“It amazes me that they are trying to make this about nomenclature. I guess that’s all they have left,” he said.

Democratic U.S. Senator Mark Warner said the episode bolstered the need for new regulations about internet advertising, describing the industry as the “Wild West.”

“Whether it’s allowing Russians to purchase political ads, or extensive micro-targeting based on ill-gotten user data, it’s clear that, left unregulated, this market will continue to be prone to deception and lacking in transparency,” he said.

With Republicans controlling the Senate’s majority, though, it was not clear if Klobuchar and Warner would prevail.

The New York Times and London’s Observer reported on Saturday that private information from more than 50 million Facebook users improperly ended up in the hands of Cambridge Analytica, and the information has not been deleted despite Facebook’s demands beginning in 2015.

Some 270,000 people allowed use of their data by a researcher, who scraped the data of all their friends as well, a move allowed by Facebook until 2015. The researcher sold the data to Cambridge, which was against Facebook rules, the newspapers said.

Cambridge Analytica worked on Trump’s 2016 campaign. A Trump campaign official said, though, that it used Republican data sources, not Cambridge Analytica, for its voter information.

Facebook, in a series of written statements beginning late on Friday, said its policies had been broken by Cambridge Analytica and researchers and that it was exploring legal action.

Cambridge Analytica in turn said it had deleted all the data and that the company supplying it had been responsible for obtaining it.

Andrew Bosworth, a Facebook vice president, hinted the company could make more changes to demonstrate it values privacy. “We must do better and will,” he wrote on Twitter, adding that “our business depends on it at every level.”

Facebook said it asked for the data to be deleted in 2015 and then relied on written certifications by those involved that they had complied.

Nuala O’Connor, president of the Center for Democracy & Technology, an advocacy group in Washington, D.C., said Facebook was relying on the good will of decent people rather than preparing for intentional misuse.

Moreover, she found it puzzling that Facebook knew about the abuse in 2015 but did not disclose it until Friday. “That’s a long time,” she said.

Britain’s data protection authority and the Massachusetts attorney general on Saturday said they were launching investigations into the use of Facebook data.

“It is important that the public are fully aware of how information is used and shared in modern political campaigns and the potential impact on their privacy,” UK Information Commissioner Elizabeth Denham said in a statement.

Massachusetts Attorney General Maura Healey’s office said she wants to understand how the data was used, what policies if any were violated and what the legal implications are.

Reporting by David Ingram; Editing by Peter Henderson and Chris Reese

Green Energy Stock Yields 10%, Opportunistic Buy With 50% Return Potential

This research report was jointly produced with Seeking Alpha Author Long Player.

Pattern Energy (PEGI) is a renewable energy company that generates a fair amount of cash and is growing. The stock recently traded at $17.2/share and its most recent dividend was $0.422 which provides an annualized yield of 9.8%.

Understanding the Business

PEGI is in the business of owning and operating renewable energy projects. So far, these projects are dominantly wind farms. This involves a number of advanced wind turbines located in a desirable area to harvest wind energy. The projects all have long-term Power Supply Agreements (PSAs) – typically with local utilities. The counterparties to such agreements have, in almost every case, very solid credit ratings. There is, thus, very little market risk or price risk associated with the projects. The main variables are the wind itself and downtime due to malfunction or other factors. The relatively low level of risk provides a strong basis for a yield-oriented investment.

PEGI operates its projects (some of which are partially owned by other companies) as somewhat independent entities. Each project is a separate limited liability corporation (‘LLC’), and has substantial debt financing but almost all of the debt is non-recourse (some of it is partial recourse). Thus, the impact of a failure at any one project is limited. PEGI’s 25 existing consolidated projects are in the United States, Canada, Chile, and Japan. PEGI’s PSA contracts average a term of 14+ years with 90% using Siemens and GE equipment. Its fleet of wind turbines is relatively young and has an average age of less than four years. Counterparties to PSA agreements include utilities like PG&E (NYSE:PCG), SDG&E, and Westar (NYSE:WR) and non-utility entities like Morgan Stanley (NYSE:MS), Citigroup Energy, and Amazon (NASDAQ:AMZN).

A Defensive Stock

PEGI provides electricity, which is a basic necessity. Therefore, the company is unlikely to be affected by economic cycles. As an alternative or “green” electric producer, that company stands out for its profitability as well as the growth of that profitability. PEGI is also part of a group of companies that is trying to bring more “green” electricity to the world. As costs for this technology continue to drop, they may succeed with this wind technology far more than many would have foreseen.

Source: PEGI December 2017 Presentation

The company has invested in countries that are relatively stable and value renewable energy sources. As such, political upheaval is generally not a concern. Successful ventures in Japan could yield some long-term competitive advantages. Japan tends to be a notoriously hard market to penetrate. Therefore, the information shown above is a big deal. Japan would like to avoid importing oil and gas to some extent. Wind technology promises the hope of reducing the energy import bills.

Above all, this technology is not dangerous should a volcano erupt or a major earthquake hit the area. A few years back a major earthquake caused all kinds of problems with a nuclear reactor. The cleanup from that earthquake continues. The nuclear reactor may never go back into service. Wind technology has no such issues. In some ways, wind technology to generate electricity is a blessing in a land where mother nature is very active.

A Beaten Down Stock

The stock has tanked recently for two main reasons:

  1. Investors’ fears that U.S. Tax Credits for renewable energy will expire in a few years.
  2. The stock got beaten down some more (down by another 10%) after the company declared that its quarterly dividend will not increase. As a reminder, PEGI had hiked its distribution every quarter for the past 16 quarters prior to this announcement.

Based on 2018 “Cash Available for Distribution” (or CAFD) guidance, PEGI’s is currently trading at just 10 times CAFD (using midpoint CAFD guidance of $166 million and 95.1 million shares outstanding). The yield is now close to 10%. These valuations are bargains for a growing cash flow and distribution. Mr. Market appears to have tossed away everything but a select group of companies. Companies not in that select group keep getting cheaper.

Interestingly, the company is far larger now and has a better yield than at the time of its initial public offering in September 2013 when the stock was trading at $22/share.

Today, the stock is trading at $17.2/share and the distributions have grown by 35% since the IPO, making it a very attractive investment.

Yet, Mr. Market couldn’t care less. Mr. Market is busy sending the stock to new lows. Sooner or later the growth should outweigh the market disdain. The investor is being paid nearly a 10% distribution to wait for that attitude change.

Source: PEGI December, 2017 Presentation

As long as management continues to make only accretive acquisitions, this company should continue to be an attractive investment.

Risks of ‘tax credit’ expiration are overblown

The finalization of the tax bill last December brought greater clarity to Pattern Energy’s future as it has preserved the critical credits for wind and solar for the time being. Still, this did not calm investors’ fear that tax incentives remain at risk in the longer term. Here is our take on this:

  1. A great deal of PEGI’s planned expansion is outside the US and will be completely unaffected by any potential future change in tax benefits.
  2. Within the United States, should tax credits expire, the effects would be primarily on the development side of the business rather than on existing facilities on the operational side. PEGI is primarily an operating company although it has now some participation on the development side. The point to note here is that the profitability of the existing facilities of PEGI in the United States should not be impacted.
  3. In the U.S.A., most states now have renewable portfolio requirements (and in some cases targets) for their utilities which require that certain percentages of power be generated by renewable sources by certain deadlines. So with or without subsidies, wind farms have to be built. They will just cost more to the end user, but they will still have to be built and to operate to meet the minimum required targets.
  4. Renewable energy is growing rapidly, and the cost of producing wind and solar technology is dropping every year. So in a few years, renewable energy operators will be able to compete with other forms of energy without the need of any subsidies.

2018 Guidance

While PEGI did not raise its distribution in the last quarter, a very important aspect is the analysis of next year’s guidance that management has provided:

  • PEGI is expecting a very strong year in 2018 with “Cash Available for Distribution” (or CAFD) to be in the range of $151 million to $181 million, or 14% higher than the 2017 CAFD using the midpoint of the range.
  • During the year 2017, PEGI agreed to acquire 206 MW of owned capacity in 5 Japanese projects which represent the company’s entry into one of the most robust renewable markets in the world. PEGI is now expanding internationally and the income from these projects will kick in during the year 2018.
  • The 2018 guidance includes 24 projects expected to be operating and contributing during 2018, including 4 new projects in Japan and Canada which were not operational during the year 2017. This is encouraging, as we have been saying all along that the growth in PEGI’s earnings will come from outside of the United States.

Price Target

As of March 11, 2018, there are 15 banks and analysts who cover the stock with a consensus rating of “Overweight” on the stock, and an average consensus price target of $24.67, suggesting a ~43% potential upside from the current price (source: wsj.com).

At $24.67/share, this would put the valuation of PEGI at 14 times cash flow, which is very reasonable. We should note that PEGI traded well above $24.67/share in September 2017, just a few months ago.

Conclusion

The shares of this company are in the bargain bin. With a solid outlook and cash flow growth for 2018, combined with a very low valuation, PEGI is set to greatly outperform within the next 12 months. With a 9.8% yield and +40% upside potential, PEGI could very well generate returns of over 50% in the next 12 months. The pullback provides a unique buying opportunity.

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.

Disclosure: I am/we are long PEGI.

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.

Theranos Didn't Nuke the Diagnostics Business

It took ten years to build the Maverick, a dorm-fridge-sized box that takes in a cartridge with a little bit of blood—more than a drop but, you know, not a pint, either—and spits out new knowledge. On the cartridge is a silicon chip carved with antibody-lined channels; if any of a range of molecules that signal things like celiac disease are floating around, they stick to the antibodies, changing the way the channel reflects infrared light. The machine goes ping. (Not literally.) “We have chips with up to 16 different tests,” says Cary Gunn, Genalyte’s CEO. “Eventually we’ll have a chip with 128 tests at once.”

So, wow. Just a little bit of blood, 10 microliters or so, and you can test for 128 different diseases or markers? And it’s being tested right now, in doctors’ offices? Hmm. There’s something familiar about this, you are thinking.

Ohhh. Right. That. A couple of years ago, Theranos, a company claiming to be able to almost magically do all sorts of medical tests on a single drop of human blood, fell apart. A brilliant Wall Street Journal investigation showed that its technology didn’t work; this week the Securities and Exchange Commission brought fraud charges against its founder. Diagnostics start-ups extracted a few lessons: Have actual, peer-reviewed data and, like, don’t lie to investors. But the Theranos debacle didn’t stop their work. That game has been on since at least 2000, and doctors, patients, and insurers are still clamoring for those tests. Nominally they might reduce health care costs, but more than that they promise new, faster diagnoses and better care.

To be clear, Genalyte is no Theranos. Published papers and preliminary tests have validated the Maverick’s ability to test for a variety of signals, and the company is now evaluating its use in a handful of San Diego doctors’ offices. Theranos might not have been unique—overpromises and underdeliveries are as inimical to Silicon Valley as PowerPoint decks on laptops—but real diagnostics companies are making headway. “Theranos was the first time I had people with nothing to do with this industry telling me about it,” says Bruce Carlson, publisher of Kalorama Information, a health care and diagnostics market analysis company. “But none of my analysts considered it to be a real company.”

So what’s real? Well, as early as the start of the century there was Abbott, whose i-Stat device is now in a third of all US hospitals. It’s a handheld unit the size of a universal remote control; put a couple drops of blood onto a SD-card-like cartridge that fits into the unit and it’ll tell a physician or EMT whether someone with chest pain has, for example, elevated levels of a protein called troponin-I. Too high means you’re having a heart attack; low and it’s probably just gas. “You can run the blood and get results in 10 minutes,” says Narendra Soman, director of R&D for point-of-care diagnostics at Abbott. “That happens right at the patient’s side, as opposed to having to draw blood and send it to a lab.” i-Stat uses the electrical properties of its targets to get a reading, and other iterations can determine blood oxygenation and clotting ability.

The i-Stat remains the biggest player in what’s called point-of-care diagnostics. That’s home tests like for glucose or pregnancy, tests you might take at a pharmacy or clinic, and tests administered in hospitals. Even after two decades in service, i-Stat’s half-dozen or so possible tests still don’t come anywhere near matching the 1,000 or so tests a big lab can run. Though of course a big lab can’t do those tests in 10 minutes.

So what Theranos promised, and what dozens of companies are still chasing, is a greater number of blood tests on very small amounts of blood. Large, centralized labs like LabCorp and Quest use giant robotic systems, mostly working with 2 to 6 milliliter samples (about a sip, if that’s what you’re into). They can be expensive, but more than that they take days to produce a result—and when doctors order labs, people sometimes simply fail to go get them. Point-of-care on small volumes of blood could potentially solve that problem by doing the test right there in an office.

Could. “In order to do that, a bunch of things all along an analytical chain need innovations, all the way from collecting the sample to transferring a small quantity of blood into a high-performance analyzer,” says Eugene Chan, president of the DNA Medicine Institute. And once it’s in there, moving teeny tiny volumes of liquid—more prone to hinky concentrations of what you’re looking for and what you’re not—through teeny tiny channels or containers that surface tension wants to make all sticky, doing not just one but many kinds of analyses, ain’t easy.

If your company is trying to work with microsamples, it’s probably taking them from fingertips—but, as one good article about blood diagnostics points out, those capillary blood measurements can kind of stink. The number of red and white blood cells isn’t constant over the same volumes, and samples also include the guts of ruptured cells and “interstitial fluid,” the juice that’s between cells.

Chan has been working on this since at least 2014, when his DNA Medicine Institute won a $2.5 million X Prize competition to build a Star Trek-like “tricorder” analysis device. Their gadget puts 10 microliters of blood through a “spiral vortex micromixer” to separate out blood cells, and uses test strips that can read classic hematology—like CBC (“complete blood count”) and markers for hemophilia. The company has regulatory approval on one of its tests. “The next step would be the test together with the device for professional use,” Chan says. “The next hurdle is in the next two or three years. That’s the time frame that regulatory approval will happen.”

In the last decade, a recent report from Kalorama shows, the number of applications for approvals of molecular-based tests to the US government and the Europeans has risen. Devices that can download results directly to an electronic medical record are more common, and tests that use analytes other than blood—saliva, urine, or even breath—are coming on line. It was a $19.6 billion market in 2017, headed to $24.5 billion in 2022.

Theranos’ implosion revealed more obstacles, though. There’s a difference among tests someone does to themselves at home, tests that a non-specialist can conduct reliably, and tests that an expert (like a phlebotomist) has to run. People testing themselves might mess up, for one thing. Physicians might not trust POC results. And in addition to having enough data to convince investors, companies hoping to get into the business have to convince regulators—a somewhat confusing regime in the US that can mean getting approval from the Food and Drug Administration, but more often involves something called a Clinical Laboratory Improvement Amendments waiver. And that latter category, usually called CLIA, hasn’t expanded to include many of the newer tests, according to Kalorama.

Those test technologies are changing quickly. In 2015 Alere—now owned by Abbott—got a CLIA waiver for a test for influenza based on extracting genetic material from a nasopharyngeal swab (way, way up your nose). More molecular tests have followed, and as the Kalorama report notes, lots of researchers are working on the microfluidic problem of moving small volumes of liquid. That’s what’s behind all the cartridges, containers, and cards lots of diagnostics companies use. An article in Nature Bioscience last year listed a dozen small-sample technologies in development and in use, from Abbott’s electrochemistry to antibody-coated magnetic nanoparticles and a device that can literally do polymerase chain reaction on a chip, growing genetic material from a few drops of blood to detect Ebola, hepatitis C, and HIV.

So even though Theranos seems to have been microfluidic snake oil, the concept that made the company seem so magical actually looks more solid. “Theranos sparked the idea of decentralizing diagnosis,” says Genalyte’s Gunn. The company is just beginning its conversations with the FDA, and still working on a second round of funding. And the landscape has shifted. “People definitely ask us to see the data,” Gunn says. As they should.

Bloody Mess

  • Catch up on Theranos’s many misdeeds here.

  • The company’s saga is representative of Silicon Valley’s “fake it til you make it” culture.

  • But it also reveals serious problems in medical regulation; loopholes in the system help companies like Theranos hide their data.

Simple Ways to Boost Your Company's Press Profile

You may expect your life to magically change after a guest blog post or a few minutes on local TV news. Wrong! 

Public relations efforts can help build awareness of and credibility for your brand, yourself, your product, or service. PR can help your SEO rankings and, when people look for your company name or your name, they may find a third party mention rather than just what you’ve written about yourself. 

However those eyeballs don’t necessarily translate into sales. After the ego rush, you might feel a wave of what I call “post-PR depression.” Your colleagues, friends, and family may all congratulate you within the first 24 hours. But then what? Here are some great ways to get more mileage from your mentions.

  • Add them to your website (perhaps even through a pop-up), your social media sites, and (in the case of TV) your own YouTube, Vimeo, or Wistia channel. If you work with a professional PR firm or freelancer, encourage them to post on their sites as well.
  • When you post on social media, tag the media outlet and the people who helped you prepare for your media mention. Gratitude is always good.
  • Share on Google Plus. It sometimes boosts your search rankings.
  • Start a separate Pinterest and/or Instagram board of all your “clips.” Not only will that increase your visibility, you’ll be able to refer to all your press all in one place. (I also recommend using Dropbox or Google Docs to archive media mentions)
  • Use an app like WiseStamp (tailored to small businesses) or Sigstr (for enterprise-level companies) to add your media mentions to your e-mail signature.
  • Be sure to include the mention in your  company’s regular e-newsletter or send out a separate e-blast.

Rather than just re-posting your clips, offer readers/viewers a little something extra — a tip you didn’t mention in the article, a special deal as a thank-you for viewing your link.

Remember, building a portfolio of media mentions takes time and patience. But, above all, you need to have something newsworthy or helpful to share. Regardless of whether you’re dealing with conventional or digital media, your insights need to be unique to break through the media clutter.

What Keeps Egg-Freezing Operations From Failing?

On March 4, an embryologist at Pacific Fertility Center was doing a routine walk-through of the clinic’s collection of waist-high steel tanks, each one filled with thousands of liquid nitrogen-bathed vials of frozen sperm, eggs, and embryos. The San Francisco-based clinic offers cryogenic cold storage and in vitro fertilization services for patients throughout the Bay Area, many of whom work for tech companies with hefty fertility benefits packages—Apple, Google, Facebook, Pinterest, LinkedIn. PFC charges its patients $600 a year for storage alone, which covers the personnel required to maintain the tanks, according to its website. Every day someone has to do a physical inspection of the equipment, and staff are on-call 24/7. But that Sunday, the embryologist discovered that in one tank, Tank No. 4., the liquid nitrogen levels had slipped to dangerously low levels.

PFC staff immediately began transferring the threatened tissues to a spare storage tank filled with liquid nitrogen. They then spent the next five days sorting through records to figure out which patients had been affected—about 500 in total. Calls and emails began going out over the weekend. Bill Taroli, though, found out on the nightly news.

This past Sunday night, he was watching at home in California’s Castro Valley when a story came on about a tank malfunction at a fertility clinic in Cleveland. At first, he almost didn’t notice when the letters “PFC” popped up on a corner of the screen. He had to roll it back and rewatch the segment three more times before he realized the reporter was indeed saying that another failure had also taken place at Pacific Fertility Center, on the same day. Taroli’s stomach knotted up. That was the clinic where he and his husband had four frozen embryos—three boys and a girl—waiting to one day join their family.

The couple had worked with PFC to bring their son into the world five years ago, and had always planned on having another child. So on Monday, Taroli emailed the clinic and in the evening got a call from their physician, Dr. Eldon Schriock. He was kind, but frank. All of their embryos had been stored together in the same vial, in the tank that had failed. They were going to thaw one of them to see if it was still alive. If one was gone, they’d all be gone. It would take a week or two to know for sure.

“We’re kind of in a holding pattern right now, like a weird limbo state,” says Taroli. PFC told him they’ve already tested some tissues and found them to be viable. But it could be months before every patient has a concrete answer. “Having been through this before there’s a part of us that knows it was never a sure thing,” he says. “But having the door completely closed on you is very different. The only thing buoying me up right now is the hope that we may still find there was no damage. At this point we just don’t know.”

Even though more than 5 million babies have been born thanks to IVF since the ’70s, egg and embryo freezing is by no means a sure path to parenthood. According to a 2014 study by the British Human Fertilization and Embryology Authority, IVF is only successful about a quarter of the time. Women who used their own frozen eggs fared even worse—with 14 percent success rates. The science is pretty straightforward; patients are injected with drugs to stimulate the ovaries, the eggs are then removed to be either fertilized and frozen, or frozen straight away with a process called vitrification. Think of it as a flash-freeze, a massive rapid temperature drop that keeps water crystals from forming and damaging the cell. But every processing stage introduces risk.

Taroli and his husband started out with 18 eggs from their donor. Twelve were successfully fertilized. Eight made it past the three-day inspection. On the seventh day, each ball of 100 cells was tested and scored for chromosomal abnormalities; five were considered viable. One became their son. The other four went into Tank No. 4.

Taroli says he was made aware of these risks, and others that arise during the freeze-thaw cycle, when he and his husband signed their contracts with PFC. Storage in liquid nitrogen, on the other hand, has been considered pretty fool-proof, provided you have enough of it. The tanks are quite simple, just metal welded into an inner and outer tank to create a vacuum seal—no moving parts. As long as they stay full, you’re fine. “I’ve been doing this since 1983 and I’ve only ever seen one slow leak that was easily rectified,” says David Ball, laboratory director of Seattle Reproductive Medicine and a past president of the Society for Assisted Reproductive Technology. “I’ve never seen a total loss situation.”

There are, of course, best practices to make sure that never happens. Ball says the simplest—and most foolproof—is a daily physical evaluation. Using a yardstick-like instrument, you measure how much liquid nitrogen is in the tank, and then graph that out to track your evaporation rate. If it starts accelerating suddenly, something’s probably wrong with the tank. The next level up from that is an electronic monitoring system; probes in the tank that trigger an alert if the temperature rises above a specific threshold. These are useful for round-the-clock control, but also subject to calibration errors and failures in the event of a power outage.

According to PFC’s website, its San Francisco facility has all of these systems in place. Each tank is topped off daily; if not filled regularly, the nitrogen would evaporate entirely in about a week. And two separate alarm systems, when triggered by tank sensors, will send out calls to the clinic’s staff over and over until somebody enters the lab and cancels the alarm. It’s not yet clear why they didn’t work for Tank No. 4. PFC’s President and medical director, Carl Herbert, told ABC News that in the wake of the tank failure they’ve since ordered a third alarm system.

While Pacific Fertility declined to answer any specific questions, it did send WIRED a statement through a spokesperson confirming the details of the March 4 incident and the existence of viable tissue from the affected tank. The statement went on to say that PFC has brought in a third party for a full investigation and that in addition it has “completed a physical inspection of all of the lab equipment and have also thoroughly reviewed all cryo-preservation protocols with staff. We are truly sorry this happened and for the anxiety that this will surely cause.”

The American Society for Reproductive Medicine said it plans to review the incidents with both clinics and their equipment suppliers this week. In the meantime, Ball says clinics all across the country are going over their own protocols with a fine-toothed comb. There aren’t any laws in the unevenly-regulated fertility industry that safeguard against cryo failure events. And how often frozen eggs or cells are damaged is unclear, because there is no central reporting mechanism.

The Food and Drug Administration and the Centers for Medicare and Medicaid Services do oversee certain aspects of fertility clinics, and the Centers for Disease Control and Prevention collects IVF data. But they don’t do site visits to inspect storage tanks or track reports of damaged tissues. The College of American Pathologists, which accredits more than 400 fertility labs, conducts bi-annual inspections, but their checklists for best practices are pretty generic—there aren’t standards for alarm systems, for example. “The vagary is there on purpose to allow programs enough room to maneuver around a system that works for them,” says Ball. “Each facility may not be amenable to a one-size-fits-all approach.”

Oversight also differs by state. California requires clinics be accredited; Ohio does not. Patients are already mobilizing for a class-action lawsuit against the University Hospitals Ahuja Medical Center’s Fertility Center in Cleveland, the other center whose systems failed. According to ASRM, no legal action was underway against Pacific Fertility Center, yet. It’s hard to know how strong a case for negligence they’ll have until the formal investigations are completed. But cryogenic experts outside the fertility field say some details of the incidents raise red flags.

“It’s really quite sad the samples weren’t split up,” says Nahid Turan, who directs laboratory operations at the Coriell Institute for Medical Research, one of the oldest and largest biobanks in the US. “They were literally putting all the eggs in one basket.” In addition to having samples in multiple tanks at their New Jersey facility, Coriell also has back-up sites in multiple locations around the country. And its software engineers built real-time monitoring systems to flag any tanks trending in a troubling direction, before they fail.

For Taroli, hope for his family’s future wasn’t just in one tank, it was in a single tube. And for now at least, like Schrodinger’s Cat, it’s still alive.

Frozen Futures

The Kinder Morgan Dividend Story Is About To Resume

By the Sure Dividend staff

Kinder Morgan (KMI) has been a favorite dividend growth investment for many retail investors, until the company cut its payout by three quarters two years ago. After two years of low payouts, during which the company focused on reducing debt levels and finishing projects, things are about to change soon. Kinder Morgan is one of 294 dividend stocks in the energy sector. You can see all 294 dividend-paying energy stocks here.

Kinder Morgan has aggressive dividend growth plans for the coming years, but unlike in the past, this time they look very achievable. The company is about to increase its dividend meaningfully soon, and investors will very likely benefit from ongoing strong dividend growth rates over the coming years.

Since Kinder Morgan is not trading at an expensive valuation at all, shares of the pipeline giant are worthy of a closer look right here.

Company Overview

Kinder Morgan is proud of its huge asset base, and rightfully so:

(company presentation)

The company operates a giant pipeline network spanning North America, with the focus being put on natural gas pipelines. Kinder Morgan also owns terminals, pipelines and oil production assets on top of its natural gas pipeline network.

(company presentation)

The vast majority of Kinder Morgan’s revenues are fee-based, which means that there is very low commodity price risk. The company’s revenues, earnings and cash flows do not depend highly on the price of oil and natural gas. The only segment with a bigger exposure to the price of oil is Kinder Morgan’s CO2 business. Kinder Morgan is hedging its revenues from that segment, though, thus the short-term price swings for WTI do not matter very much.

Due to the fact that Kinder Morgan is much less impacted by commodity price swings than other companies in the oil & gas industry, its cash flows are not cyclical at all.

(company presentation)

During 2018 Kinder Morgan plans to increase its EBITDA as well as its distributable cash flows slightly. Distributable cash flows are operating cash flows minus the portion of capex that is needed to keep the assets intact (maintenance capex). Distributable cash flows are thus the portion of the company’s cash flows that are not needed to maintain the business, those can be spend in several ways:

– Growth capex, which expand Kinder Morgan’s asset base and lead to higher earnings / cash flows in the future.

– Shareholder returns via dividends & share repurchases.

– Debt reduction, which leads to lower interest expenses and thereby positively impacts the company’s earnings and cash flows.

A couple of years ago Kinder Morgan has paid out almost all of its DCF in dividends and financed growth capex by issuing new shares and debt. That did not work very well once its share price collapsed, which was the reason for the dividend cut, as Kinder Morgan had to finance its growth projects organically from that point.

Right now Kinder Morgan is using its DCF for a combination of growth capex, dividends and share repurchases. The company has brought down its debt levels meaningfully already, but doesn’t plan to reduce its leverage further this year.

Kinder Morgan Has Announced Aggressive Dividend Growth Plans Through 2020

In the last two years Kinder Morgan has produced about $2.00 per share in distributable cash flows, but paid out only $0.50 each year. This has allowed the company to finance billions in growth projects with excess cash flows whilst also paying down debt.

The company has stated that it wants to increase the dividend meaningfully this year as well as in 2019 and 2020:

– The dividend will be $0.80 for 2018 (which means a 60% raise year over year)

– The dividend will be $1.00 for 2019 (which means a 25% raise yoy)

– The dividend will be $1.25 for 2020 (which means a 25% raise yoy, again)

This looks like a very compelling dividend growth rate, especially when we factor in that Kinder Morgan’s current dividend yield is not low at all: Based on a share price of $16.10, Kinder Morgan’s shares yield about 3.1% right now. The forward dividend yields are thus 5.0%, 6.2% and 7.8% for 2018, 2019 and 2020, respectively.

A closer look at the company’s dividend growth plans and cash flow generation shows that those plans are not unrealistic at all:

Year

DCF per share

Dividend

Payout ratio

Excess DCF after dividend payments

2018

$2.05

$0.80

39%

$2.8 billion

2019

$2.10

$1.00

48%

$2.4 billion

2020

$2.15

$1.25

58%

$2.0 billion

Assumption: DCF grows by two percent a year

Even in a rather conservative scenario where distributable cash flows grow by only two percent annually, Kinder Morgan’s payout ratio stays below 60% through 2020. At the same time the company would generate $7.2 billion in cash flows that are not needed to pay the dividends. Those cash flows could thus be utilized for growth capex, share repurchases or for paying down debt.

Kinder Morgan Has Significant Growth Potential

The scenario laid out above (2% annual DCF growth) is rather conservative due to the fact that Kinder Morgan plans to invest heavily into new assets over the coming years:

(company presentation)

Management has identified $12 billion of potential investments which fit the company’s strategy and which promise attractive returns. The company could complete a meaningful amount of these projects in the coming years, as high after-dividend cash flows allow the company to spend on growth investments heavily.

According to management these assets could add $1.6 billion to the company’s EBITDA, which means a 21% increase over 2017’s level. When we assume that distributable cash flows would grow by 21% as well, Kinder Morgan’s DCF per share could hit $2.40 in 2022. This calculation does not yet include the positive impact share repurchases would have on the DCF per share growth rate.

Kinder Morgan has recently started a $2 billion share repurchase program and has already bought back more than 27 million shares since December. At that pace Kinder Morgan’s share count would drop by almost five percent a year, this alone would drive DCF per share up by mid-single digits each year, without any underlying organic growth.

Due to its focus on natural gas pipelines Kinder Morgan is well positioned for the future. Natural gas consumption will, according to most analysts, continue to grow for decades, as natural gas combines several positives: The commodity is significantly more environmentally friendly than oil and coal, it is inexpensive and it is available in North America in large quantities. Through LNG terminals natural gas can even be exported to other markets (primarily in Asia).

All the natural gas that gets used in the US or exported to foreign countries needs to be transported through the US by pipelines. Kinder Morgan as the provider of the vastest pipeline network should benefit from that trend, which will lead to ample cash flows for decades.

(eia.gov)

The US Energy Information Administration expects that global consumption of natural gas will grow from 130 quadrillion Btu to 190 quadrillion Btu through 2040. Since proved reserves of natural gas in the US are growing, it seems opportune to assume that the US will remain a major producer of natural gas going forward. This, in turn, means that Kinder Morgan’s asset base will not only exist for a very long time, but will remain very profitable through the coming decades.

Kinder Morgan Is Trading At A Discount Price

KMI EV to EBITDA (Forward) data by YCharts

Kinder Morgan is trading at the lowest valuation the company’s shares have traded for over the last couple of years right now. With a forward EV to EBITDA multiple of about ten Kinder Morgan is also not looking expensive at all on an absolute basis.

When we focus on the cash flows the company generates, we see that Kinder Morgan trades at eight times trailing DCF and at slightly less than eight times forward distributable cash flows. This means that shares can be bought with a distributable cash flow yield of 12.7% right now. Kinder Morgan is a non-cyclical company which has a solid growth outlook, and at the same time its size and diversified asset base mean that there isn’t a lot of risk. Based on those facts the current valuation looks pretty low.

Investors can currently acquire shares of the company with a forward dividend yield of 5.0% (the dividend increase announcement should come next month) at a DCF multiple of slightly below 8. For long term focused investors who seek an investment that provides a growing income stream that looks like an attractive investment case.

Final Thoughts

Kinder Morgan’s failed dividend growth plans hurt many retail investors in the past, but management has learned from its mistakes. This time the dividend growth plans are well thought out and look very achievable.

Thanks to high cash flows and a big growth project backlog Kinder Morgan should be able to provide a steadily growing income stream over the coming years. This, combined with a low valuation, makes shares of the pipeline giant worthy of a closer look right here.

Disclosure: I am/we are long KMI.

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.

Apple finds supplier problems as its audits expand

(Reuters) – Apple Inc (AAPL.O) said on Wednesday it had found a higher number of serious violations of its labor and environmental policies for suppliers, such as falsifying work hours data, as it expanded the scope of its annual audit of conditions of workers making its iPhones and other products.

FILE PHOTO: The Apple logo is pictured inside the newly opened Omotesando Apple store at a shopping district in Tokyo June 26, 2014. REUTERS/Yuya Shino/File Photo

But the overall trend among 756 suppliers in 30 countries was toward higher compliance with Apple’s code of conduct, according to a new report by the company, which has been carrying out the audits for 12 years. The latest annual supplier responsibility report includes 197 suppliers audited for the first time.Apple runs one of the largest manufacturing chains in the world, mostly factories owned by contractors.

Apple said in the report that the proportion of “low performers,” or suppliers scoring less than 59 points on its 100-point scale, fell to 1 percent in 2017 from 3 percent in 2016 and 14 percent in 2014. “High performers” with scores of more than 90 rose to a record high of 59 percent from 47 percent the year before.

Apple found 44 “core violations” of its labor rules in 2017, double the previous year. Those included three instances of employees forced to pay excessive fees for a job, a practice Apple banned in 2015.

In one case, over 700 foreign contract workers recruited from the Philippines were charged a total of $1 million to work for a supplier. Apple said it forced the supplier to repay the money.

Compliance with Apple’s 60-hour work week fell to 94 percent of suppliers from 98 percent in 2016. Apple said it uncovered 38 cases of falsification of working hours data in 2017, up from nine cases the year before.

When Apple finds such falsifications, it notifies the chief executive of the supplier, puts the supplier on probation until a fix is implemented and conducts reviews to make sure the fix prevents future violations.

“We’re committed to raising the bar every year across our supply chain,” Apple’s chief operating officer, Jeff Williams, said in a release.

Apple said the increase was driven by the fact that it brought on a number of new suppliers in 2017 and started tracking the working hours data of 1.3 million supplier employees, 30 percent more than in previous years.

In the report, Apple also said it was launching a women’s’ health initiative at its supplier plants, with a goal of reaching 1 million women by 2020. It said it had launched a program in China to train workers to become factory line leaders, who often make 20 percent to 30 percent more than line workers.

On Wednesday, Apple also issued its conflict minerals report, which is required by United States securities regulators. The report lists suppliers of sensitive metals such as tin and gold.

Apple said 16 smelters and refiners left its supply chain in 2017, 10 of which were dropped because they would not participate in a third-party audit of their practices. Six left of their own accord.

Apple also outlined new rules on student labor after a discovery last year that some Chinese students were working more than 11 hours a day assembling the iPhone X.

Reporting by Stephen Nellis; Editing by Peter Henderson and Leslie Adler

1 Personality Trait Every Entrepreneur Naturally Possesses and Must Get Rid of

Building a successful company is one of the most challenging things an entrepreneur can do. There are the obvious challenges of building the product, analyzing the market, targeting your audience, raising funding, facilitating partnerships, and achieving profitability, but enough has been written on those topics. I want to address one small psychological element that is somewhat inherent to the process of entrepreneurship.

This personality trait is something I have seen thousands of times over the past decade. Some people display more intense signs while others are a bit more subtle about it, but push hard enough, and you’ll discover that most entrepreneurs possess elements of this personality trait. I am referring to defensiveness.

Here is why being defensive is detrimental to the very mission every entrepreneur is hoping to accomplish.

Product feedback is your friend.

I cannot tell you how many times I jumped on a call with an entrepreneur who contacted me for advice and as soon as I began to provide some, I was shut down because they were convinced their product was perfect.

Here is the thing with building a startup. There is approximately zero chance of succeeding if you don’t truly believe your idea and product are the best thing since sliced bread. You need to be all in and without that passion, you can forget success.

This presents a problem. If your product is so amazing, then how could you possibly accept criticism and be willing to accept that it needs work? This is the balance you need to strike and it is not easy to do.

The reality is though, the more feedback you acquire, the more open-minded you are to implementing that feedback, the higher your chances of success. Of course, not all feedback is valuable but every entrepreneur should be open minded enough to listen to all feedback, internalize it, then decide whether to accept or reject it. 

Investors aren’t “Yes” men.

Investors have one goal, and one goal only. To generate the maximum returns on their investment. If an investor writes a check without challenging you on, well, everything, then perhaps you need to reconsider taking that person’s money.

When an investor asks annoying questions like “What is preventing Google from putting you out of business tomorrow?”, “How are you different than the other 50 companies in the space?”, or “What makes you think you are capable of pulling this off?”, it is your job to take a deep breath, fight that instinct to be defensive and argumentative, put aside emotion, and answer those questions with facts and data.

Beyond your actual answers, the way you respond emotionally to an investor poking at you is something you are being tested on as well. It takes maturity to let your personal feelings aside and answer in a calculated manner when your baby is being poked like that. You know what else takes maturity? Building a company that will generate a return on that investor’s money.

Competition equals validation.

Your first instinct as an entrepreneur, well as a human being, is to believe you are one of a kind. After all, your mom has been telling you that since before you could pronounce the word competition. This is a natural instinct. It is also your worst enemy.

When someone asks you who your competitors are, fight that temptation to say “I am alone in this landscape. No one is like me. My mom told me that.” Come prepared with 50 names of players in your space. 

The fact that you have competition is not a bad thing, it is a healthy thing, a necessary thing. Without competition, your vision lacks validation and your market is not educated. When someone asks you who you’re competing with, don’t be defensive, be professional. 

Pivoting is natural.

This point is pivotal. See what I did there? If you are defensive and unwilling to accept that others can help you improve, you are denying yourself the flexibility to change directions if and when it is necessary.

Most successful companies have pivoted in one way or another and that is ok. You might be brilliant, your idea might be magnificent, but there are approximately a million other things that need to align for your idea to become a sustainable business. Most of those things depend on you being open minded and willing to listen, implement, and pivot the company based on circumstances that arise.

The problem with telling someone to not be defensive is that, well, they are defensive so they won’t even hear your criticism. As an entrepreneur, self awareness is imperative to your success and defensiveness is your kryptonite.

Why the Government Is After a Unique Wu-Tang Clan Album (And How It Can Be Yours)

The short history of the Wu-Tang Clan’s 2014 album “Once Upon a Time in Shaolin has been weird and fraught. Now it’s getting even weirder.

Only one copy of the double album exists, which was sold at auction in 2015 for $2 million to one Martin Shkreli.

If that name sounds familiar, it’s because Shkreli has been in the news in recent months and is currently in jail awaiting sentencing after being convicted of securities fraud (it turns out he’s doing quite well there). Shkreli is also known as America’s most hated CEO or the “pharma bro” who jacked up the price of a drug used to treat malaria, cancer and AIDS by over 5,000 percent.

Yea, this is the same guy you’ve heard about.

Now the latest is that a federal judge has ordered that Shkreli forfeit over $7 million worth of his possessions as part of his sentence, including the world’s only copy of “Once Upon a Time in Shaolin.”

The appeals process may prevent the actual transfer of the album to the feds for awhile, but if the current rulings against Shkreli are affirmed, he’ll have to hand it over and one federal judge will be able to throw some of the most sought after listening parties ever.

Just kidding, no ethical judge would ever do such a thing. 

What’s actually most likely to happen is that the album will instead spend a period of time in a vault somewhere until it can again be auctioned off in what will certainly be one of the hippest government auctions ever. Because, you know, cash rules everything around us; dollar dollar bills, y’all.

But until that fateful day when a different rich person bids a crazy amount of money to possess the secrets of Shaolin, it will briefly be the property of the people.

Not that we can expect to demand access to the one-of-a-kind album by rolling up to a courthouse and flashing a U.S. passport, but for a period of time it will technically be a ward of the state.

If we want to keep it that way, perhaps we the people ought to start a crowdfunding campaign to raise some cash for the winning bid to take possession and then release the album into the public domain.

Of course, this might not be all that exciting if you’re not into Wu-Tang. If you consider yourself more high brow, the pharma bro’s collection may still be of interest. Shkreli’s tastes turned out to be diverse; he’s also being forced to give up a rare Pablo Picasso painting.

Washington State Enacts Net Neutrality Law, in Clash with FCC

Washington state Governor Jay Inslee Monday signed the nation’s first state law intended to protect net neutrality, setting up a potential legal battle with the Federal Communications Commission.

The law bans broadband providers offering service in the state from blocking or throttling legal content, or from offering fast-lane access to companies willing to pay extra. The law doesn’t stop providers from imposing data limits, and doesn’t address the practice of allowing certain content to bypass data limits, known as “zero rating.”

The FCC attempted to pre-empt any such state laws when it voted to repeal its own net neutrality rules in December, setting up the potential legal clash. Legal experts are unsure how such a dispute will play out.

The Washington bill enjoyed bipartisan support in the state legislature, with dozens of Republican lawmakers voting in favor of the new rules last month. The bill passed with a vote of 93 to 5 in the state House, and 35 to 14 in the Senate.

“This is not a partisan issue,” Norma Smith, a Republican who co-sponsored the bill in the House, said in a statement last month. “This is about preserving a fair and free internet so all Washingtonians can participate equally in the 21st century economy.”

The governors of Montana, New York, New Jersey, Hawaii, and Vermont have signed executive orders banning state agencies from doing business with broadband providers that don’t promise to uphold the principles of net neutrality. But Washington is the first state to pass rules that ban network discrimination.

At least 25 other states are considering net neutrality bills, including California, Illinois, and New York. Both houses of Oregon’s legislature have passed a bill that, like the executive orders, bans state agencies from doing business with broadband providers that don’t follow net neutrality. Governor Kate Brown plans to sign it within 30 days.

The FCC did not immediately respond to a request for comment. The agency’s order repealing its net neutrality rules cites a long history of preempting state law. For example, in 2007, a federal court ruled that the FCC had the authority to block the state of Minnesota from regulating internet phone services like Vonage the same way it regulates traditional landline phone services. But net neutrality advocates point to a 2016 federal court ruling that the Obama-era FCC didn’t have the authority to pre-empt certain state laws concerning municipal broadband.

Marc Martin, a former FCC staffer who is chair of law firm Perkins Coie’s communications practice, says the law on pre-emption is unsettled. But he thinks the executive orders banning state agencies from doing business with non-neutral broadband providers are more likely to withstand legal challenges. “I wonder if anyone will even fight it,” Martin says.

Meanwhile, net neutrality advocates are pushing a Senate proposal that would force the FCC to keep its net neutrality protections. The proposal has garnered the support of 50 senators, including every Senate Democrat plus Senator Susan Collins (R-Maine). But even if supporters of the proposal can get one more Republican senator to vote in favor of the proposal, it would still need to pass the House and be signed by President Donald Trump.

Longtime opponent of net neutrality rules Representative Marsha Blackburn (R-Tennessee) has proposed a bill that would ban broadband providers from blocking lawful content, but would allow throttling and fast lanes while banning states from passing their own net neutrality rules and curbing the FCC’s authority over broadband.

Net Neutrality

  • The end of net neutrality will likely make broadband packages look more like the mobile internet, where favored content providers are exempt from data caps.
  • This app can help consumers, watchdogs, and regulators check for potential violations of net neutrality principles.
  • Read the WIRED Guide to Net Neutrality.

This Business Charged White People More Than Twice As Much As Minorities. Here's How Customers Reacted

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

Many businesses are being drawn into socio-politics.

Some have been there for a while but always wanting to operate behind the scenes. (Translation: buying politicians.)

Recently, though, public neutrality has been hard to achieve. 

Just ask Delta Air Lines.

A business in New Orleans, however, took its public stance on socio-politics one step further.

The owner of Saartj, a food stall in New Orleans, decided to charge white people two-and-a-half times the amount he charged minorities.

Tunde Way explained to NPR that the price difference accurately reflected the income disparity between African-Americans and whites in the city.

It’s not as if Way just charges the disparate amounts and doesn’t say why.

There’s a board outside that raises the issue. 

Moreover, when people come up to his stall, Way engages them in conversation and explains why the requested price is $12 for minorities and $30 for those who identify as white.

The price for white people sn’t compulsory. Way explains that if they choose to pay it, he will redistribute the difference among the minorities who come to his stall.

Surely, though, he’s had to face outrage from white people who think this discrimination.

“Some of them are enthusiastic, some of them are bamboozled a bit by it. But the majority of white folks, nearly 80 percent, decided to pay,” he told NPR.

This wasn’t just Way’s way of seeing what would happen. 

His partner in the experiment was Anjali Prasertong, a graduate student in public health at Tulane University.

She said she was surprised at how people reacted and how many white people paid the inflated price.

And not just by how white people reacted.

The vast majority of the Latino, African-American and Asian people who were offered the redistributed money declined.

Prasertong suspects this is because most of the customers were from relatively higher income brackets.

The experiment does, though, underline how strongly some businesses might choose to respond to socio-political issues that they — or, perhaps more importantly — their customers and employees care deeply about. (Enormous legal issues notwithstanding, of course.)

Both customers and employees have come to increasingly examine companies’ ethical and social stances. 

Whether it be on the subject of climate change or racial and gender equality, they want to know what a company’s management believes and what they’re prepared to do about it.

In Way’s case, he was very upfront about what he wanted to do about it and at least some people understood and, it seems, even appreciated his stance.

It was just an experiment. 

But society is in something of an experimental phase these days. 

Old certainties are dissolving. New questions are being asked. 

How much this will change the way companies do business will be fascinating to watch.

After all, one of the main reasons they’re being dragged into these issues is that many have lost faith in governments. 

Some see corporations as harboring more social common sense than those who have been elected to do sensible things.

It’s quite a burden for managements whose heart has, for the longest time, just been in making as much money as they can.