An Open Letter from Steve Jobs to Tim Cook

Time passes quickly and the WiFi is spotty here in Trāyastriṃśaso I apologize for taking so long to check out how you’ve been doing with our company.

Of course, truth be known, Apple was already on that trajectory when I handed you the company, but props anyway.

Beyond that, though, I feel I must ask: Is that ALL you could manage with that money and talent? Seriously?

OK… Let me calm down… Deep breath… Nam Myoho Renge Kyo… Nam Myoho Renge Kyo.. That’s better.

Look, Tim, I don’t want to go all heavy on your case, but here’s what you need to do to make Apple great again:

1. Invest in new technology.

You let our cash on hand get all the way up to $245 billion??? Earning maybe 3% interest? Are you out of your mind?!?!  With those deep pockets, we should be making huge investments and acquisitions in every technology that will comprise the world of the future. You’ve let that upstart Musk make us look like IBM. That’s just plain wrong. 

2. Attack and cripple Google.

Google is our new nemesis, remember? They attacked our core business model with that Android PoC. But, Tim, c’mon… Google is weak. They can’t innovate worth beans and most of their revenue still comes from online ads, which are only valuable because they constantly violate user privacy. You could cut their revenues in half if you added a defaul 100% secure Internet search app to iOS and Mac OS. Spend a few billion and make it faster and better than Google’s ad-laden wide-open nightmare. This isn’t brain surgery.

3. Make the iPad into a PC killer.

WTF? The iPad was supposed to be our big revenge on Microsoft for almost putting us out of business. All it needed was a mouse and could have killed–killed!–laptop sales. Sure, it would have cut into MacBook sales, but that’s the way our industry works. I let the Macintosh kill the Lisa, remember? And the Lisa was my personal pet project. The iPad could have been the next PC… and it still might not be too late.  

4. Give our engineers private offices.

I get it, Tim. You’re not a programmer. You built your career in high tech but it was always in sales and marketing, which are the parts of the business where a lot of talking and socializing make sense. But if you’d ever designed a product, or actually written code, you’d know engineering requires concentration without distractions. Programmers and designers don’t belong in an open plan office. Give them back their private offices before it’s too late.

5. Don’t announce trivial dreck.

A credit card? Seriously? Airbuds with ear-clips? A me-too news service? Is that best you can do? And what was with Oprah And Spielberg at the event? Hey, the year 2007 called and wants its celebrities back. Look, when you gin up the press and the public up for a huge announcement and it’s just meh tweaks to existing products or me-too stuff, it makes us look lame and out of touch. If we don’t have anything world-shaking, don’t have an announcement!

6. Stop pretending we’re cutting edge.

There was a time–I remember it well–when people would line up for hours just to be the first to get our innovative new products. Heck, we even had “evangelists” who promoted our products to our true-believers. But that’s history. Until we come out insanely great new products that inspire that kind of loyalty, dial down the fake enthusiasm. 

7. Make Macs faster, better, cheaper–more quickly.

I’m honestly embarrassed what you’ve done with the Mac. You’ve not released a new design in years. Sure, MacBooks were cool back in the day, but now they’re just average. And where’s our answer to the Surface? Tim, you actually let Microsoft–Microsoft again!–pace us with a mobile product. That’s freakin’ pitiful.

8. Diversify our supply chain out of Asia.

Tim, Tim, Tim…  I love Asia, but you’ve bet our entire company on the belief that there will never be another war (shooting or trade) there. Meanwhile, China has become more aggressive and there’s a madman with nuclear weapons perched a few miles from our main supplier for iPhone parts. Wake up! We need to sourcing our parts in geographical areas where war is less likely.

9. Fix our software, already.

This was the one that surprised me the most. I knew that iTunes, iBooks, Music, and AppStore was a crazyquilt but I figured we could fix that in a future release. But here we are, ten years later, and we’re still asking people to suffer through this counter-intuitive bullsh*t? And what’s with the recent instability with our operating systems? And that wack Facetime security hole? 

10. Make some key management changes.

Delete your account.

Beatifically,

How to Recover From a Huge, Fireable Mistake

A reader asks:

Yesterday another coworker and I made a careless mistake that may have huge results. Among other things, our company may lose a contract because of our error. Our mistake was probably a fireable offense and certainly one that merits being written up. I think the only reason neither of those things has happened (yet…) is because we have both been stellar employees otherwise. I’ve made smaller mistakes here and there during my two years at this job (basically the ones everyone makes) but never one with such big consequences.

I had my annual review two weeks ago with my supervisor and it was nothing but praise and an unexpectedly large salary bump. Among other things, I was told that I’m very consistent and dependable. I’m devastated and disappointed in myself for proving otherwise. How can I recover from this mistake and make my supervisor think of me as a great employee again?

Green responds:

When I’m managing someone who makes a major mistake, here’s what I want to know:
* that they understand that the mistake was truly serious and what the impact could be
* how it happened, and that they understand how it happened (which are two different things)
* what steps they’re taking to ensure nothing similar happens again

If the person makes all of this clear on their own, there’s not a whole lot left for me to do. I don’t need to impress upon them the seriousness of the mistake if they’ve already made it clear that they get that. I don’t need to put systems in place to prevent against it in the future if they’ve already taken care of it.

But if they don’t do those things themselves, then we need to talk through each of them — and I’ll probably be left even more alarmed that I needed to say it, that they didn’t realize it on their own.

So the thing to do here is to talk to your manager. Make it clear that you understand what a huge mistake this was, what the potential impact could be, and how serious the situation is. Say that you’re mortified that it happened. Explain — briefly, and not defensively — where you went wrong and what steps you’re taking to avoid it ever happening again.

Then see what your manager says. There’s a decent chance that you’re going to hear that while your manager obviously isn’t thrilled, people are humans and mistakes happen. (And the chances of hearing that go way up when you take the approach above.) Or, yes, you might hear that what happened was so serious that the above isn’t enough and your manager has real doubts about your fit for the role. But as unpleasant as that is, it’s still better to talk about that explicitly than not to have it surfaced.

As for how to recover from there, simply taking responsibility in this way is a big part of it. You also, of course, should be extra careful in your work going forward, find opportunities to do unusually fantastic work, and generally counteract any worries that the mistake might have created (e.g., that you’re careless or prone to poor judgment or whatever might be concluded from the mistake).

You’ve noted that you’ve been a stellar performer otherwise, so I think you’ll be able to do this. (Panicking will make it harder though, so to the extent that you can, try to put this behind you mentally. That’s easier said than done, I realize.)

Note to Tesla: Stop With the Annoying Upsell Already

This practice, called “upselling,” is common in industries where customers buy a big-ticket item they’ll use for a long time. Examples in B2C would be cars, boats and homes; in B2B it’s stuff like capital equipment, facilities/infrastructure, and “mission critical” software.

Salespeople upsell because they understandably want a higher commission. What’s in the salesperson’s best interest, however, isn’t necessarily in the best interest of the vendor.

While upselling both increases revenue and reduces cost of sales (since much of the cost lies in new customer acquisition), it also creates ill will, even (especially!) when it works. Customers who’ve been upsold are more likely to have buyer’s remorse.

Worst case, vendors can end up being seen as similare to car dealerships. According to V12, a Florida-based research firm, “87% of Americans dislike something about car shopping at dealerships and 61% feel they’re taken advantage of while there.” 

As Scooby Doo would say: “Ruh-roh.”

This dislike of car dealerships drives an increasing number of buyers online, with a corresponding drop in foot traffic, rendering brick and mortar locations less profitable. It also makes customers less likely to social-share their purchase or recommend a dealership to friends and family.

That even Tesla dealerships try to upsell illustrates the futility of trying to change car dealership culture. Tesla eventually plans move all sales online and will probably only have locations where prospects can test drive. (The only thing buyers like about dealerships!)

In other industries, though, it’s possible to get the benefits of upselling without the liabilities by adjusting the compensation scheme.

If salespeople are paid commission based upon the dollar value of the sale, you’ll always get upselling.

However, if salespeople are paid a flat commission on each big-ticket item with a commission bump based on customer satisfaction, salespeople will attempt to make the best match between customer and product.

In some cases, this means the customer will end up purchasing something more expensive (an upsell, technically) but just as often will end up purchasing something less expensive (a downsell?).

Either way, the customer will have a positive experience, which means more referral sales. Referrals are the cheapest way to get new customers, with the added bonus that referred customers are by far more likely to buy than walk-ins or online shoppers.

In other words, if you want profitable growth, rather than worrying about leaving money on the table, focus on satisfying the customer’s needs. It’s really very simple.

China's Huawei posts 25 percent rise in 2018 profit on smartphone sales

FILE PHOTO: The Huawei logo pictured inside the Ox Horn campus at Songshan Lake in Dongguan, Guangdong province, China, March 25, 2019. REUTERS/Tyrone Siu/File Photo

SHENZHEN/HONG KONG (Reuters) – China’s Huawei Technologies, the world’s third-largest smartphone maker, reported a 25 percent jump in 2018 net profit, buoyed by a solid performance in its home market and a booming smartphone business.

Shenzhen-based Huawei raked in a net profit of 59.3 billion yuan ($8.8 billion), compared to a 28 percent rise in 2017 and a big rebound from a 0.4 percent increase in 2016.

The outlook for Huawei is clouded by U.S. accusations that its telecoms network equipment could be used for spying by the Chinese government and calls to allies from Washington to ban Huawei from building next-generation mobile networks.

Huawei has repeatedly said Beijing has no influence over it.

Huawei’s revenue grew 19.5 percent 721.2 billion yuan last year, in line with what it had earlier flagged.

That marked the fastest pace of business growth in two years for Huawei, despite heightened scrutiny of its activities.

A senior company executive said earlier this week that the U.S. campaign against Huawei was having little impact on the company’s sales and that it was unlikely many countries would heed the U.S. call to ban its gear.

The company expects revenue to jump to $125 billion in 2019.

Reporting By Anne Marie Roantree in SHENZHEN and Sijia Jiang in HONG KONG; Editing by Himani Sarkar

Amazon Web Services to open infrastructure location in Colombia

FILE PHOTO: The logo of Amazon Web Services (AWS) is seen during the 4th annual America Digital Latin American Congress of Business and Technology in Santiago, Chile, September 5, 2018. REUTERS/Ivan Alvarado

BOGOTA (Reuters) – Amazon Web Services (AWS), a unit of Amazon.com Inc, said on Thursday it will open a Latin America infrastructure location in Colombia and help train 2,000 students in cloud technology.

The company will team up with Colombia’s public technical education institute to train students in cloud computing, Jeffrey Kratz, AWS’ general public sector manager for Latin America, the Caribbean and Canada, said in a government statement.

The company’s so-called Edge location, the fourth in Latin America, will help deliver data, videos and applications at higher speeds to end-users.

Kratz, in Bogota for a technology conference, said Amazon wants to support the development of digital infrastructure and help entrepreneurs create large-scale projects. He said the company would continue to invest in Colombia, though he did not provide further details.

“We are excited to continue investing in Latin America’s success,” Kratz told Reuters. “This investment will ensure that customers have the tools and services to continue innovating for a positive user experience.”

Last August Amazon, the world’s largest online retailer, announced that it would open its first customer service center in Colombia later this year and employ 600 people.

The service center will serve customers worldwide in Spanish, English and Portuguese.

Reporting by Helen Murphy and Julia Symmes Cobb; editing by Grant McCool and Subhranshu Sahu

India’s Anti-Satellite Test Wasn’t Really About Satellites

The modern battlefield has extended to space. Although we’re not conducting laser battles in orbit (yet), satellite systems are regularly used to guide missiles and drones to their destination, facilitate communication between soldiers on the battlefield, and spy on adversaries. Given how critical space assets are for national security, it’s hardly surprising that militaries spend a lot of time developing ways to destroy their enemies’ satellites.

On Wednesday, the Indian Defense Research and Development Organization (DRDO) launched a missile that destroyed one of the country’s own satellites in low Earth orbit. The successful anti-satellite demonstration, dubbed Mission Shakti, was revealed during a live televised address from Indian Prime Minister Narendra Modi, who claimed that “India has no intention to threaten anyone.”

“The main objective of our space program is ensuring the country’s security, its economic development, and India’s technological progress,” Modi said. “India has always been opposed to the weaponization of space and an arms race in outer space, and this test does not in any way change this position.”

Mission Shakti made India just the fourth country to successfully destroy a satellite in orbit, following the United States, the Soviet Union, and most recently, China. Compared to the international backlash that followed China’s anti-satellite demonstration in 2007, however, the response to India’s test has been relatively subdued.

Daniel Porras, the space security fellow at the United Nations Institute for Disarmament Research, says this is likely because the debris from the Indian anti-satellite test poses less of a hazard to other satellites. “The Chinese demonstration was carried out at 800 kilometers and was widely condemned because of the resulting space debris, which will likely stay in orbit for decades or longer,” says Porras. “India’s demonstration was conducted at 300 kilometers, so the debris will likely be out of orbit in months. For this reason, the reaction has been much less.”

Anti-satellite missiles are generally touted as a deterrence mechanism, rather than a primary attack vector. The idea is basically to send a message to other space-faring nations: ‘If you destroy our space assets, we’ll destroy yours.’ The problem, of course, is that the debris created by a missile ramming into an adversary’s satellite makes operating in space more dangerous for everyone, including the country that launched the missile. In this sense, every successful anti-satellite missile attack is a Pyrrhic victory.

“One thing to keep in mind about knocking out satellites with military weapons is that it creates a debris field that all commercial and military satellites of every country will have to avoid for years to come,” says Daryl Kimball, the executive director of the Arms Control Association. Things are even worse if an anti-satellite missile is deployed during a conflict with a nuclear armed nation. If that were the case, Kimball says, the anti-satellite missile would be seen as an “extremely provocative step because it could potentially mean that one side is trying to blind the other from detecting a nuclear attack.” This could, in theory, escalate the conflict toward nuclear war.

Yet this is precisely why experts like Vipin Narang, an associate professor of political science at MIT, think that India’s anti-satellite test probably didn’t have much to do with satellites. From India’s perspective, its two greatest military adversaries are Pakistan and China, both of which have nuclear weapons, but only China has a robust military presence in space. Thus, Narang says, India’s anti-satellite test is difficult to make sense of because it is “both more dependent on satellites than Pakistan and it’s also less capable in a relative sense than China.”

“If Pakistan starts hitting Indian satellites, India can knock out Pakistan’s very few satellites,” says Narang. “China can knock out all of India’s satellites whereas India cannot do the same to China. So it’s kind of a weird balance for India if it’s interested in getting into the anti-satellite deterrence game [because] it doesn’t really have an advantage in either of its dyads.”

For this reason, Narang says that the anti-satellite test was more a demonstration of India’s ballistic missile defense system, rather than its ability to challenge its adversaries in space. Although the DRDO didn’t explicitly name the type of missile used in the anti-satellite test, Narang said it was likely a modified version of the Prithvi missile, which India has been developing for more than a decade as a way to intercept incoming ballistic missiles from its adversaries.

Even as a demonstration of the country’s ballistic missile defense system, however, Narang says the significance of India’s achievement was way overhyped by Modi. Blowing up a satellite is much easier than intercepting a ballistic missile, which India successfully demonstrated in 2011, especially at such a low altitude. Most medium and long-range ballistic missiles reach apogees well above 300 kilometers during their flight and have more complicated trajectories.

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“In a lot of ways an anti-satellite test is a baby ballistic missile defense test,” Narang says. “It’s very easy to hit a satellite [because] its orbit is very predictable. A ballistic trajectory is harder because it’s coming at an angle so you have vertical and horizontal differentials you need to deal with.”

Despite its limited effectiveness as an anti-satellite weapon or a ballistic missile defense system, both Narang and Kimball pointed to the test as a potent political symbol as India prepares for general elections. “You can’t divorce it from the domestic politics in India,” Narang says. “It’s very provocative to do an ASAT test. It seems like this is an effort to brandish [Modi’s] security credentials with the general election coming up and in the wake of the crisis with Pakistan.” Indeed, India’s opposition party has called for a review of Modi’s announcement of the ballistic missile test to examine whether it violated election rules.

Nonetheless, Kimball says the anti-satellite demonstration must be taken seriously as a space weapon. Indeed, Defense Secretary Patrick Shanahan condemned the test, but also said it shows why the United States needs to develop a Space Force. So far there has been no official statement from the US government, however, a silence that Kimball says is “deafening.”

“This is a problem, whether its a friend or an adversary that conducts a ballistic missile test that destroys an Earth-orbiting satellite,” says Kimball. “We need to be aware that when a country conducts a test of a satellite-killing technology, it’s a dangerous step. It underscores the urgent need to discuss some common sense rules of the road for space behavior.”


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Huawei sues U.S. government saying ban on its equipment is unconstitutional

HONG KONG/WASHINGTON (Reuters) – Chinese telecoms equipment maker Huawei Technologies Co Ltd on Thursday confirmed it is suing the U.S. government over a section of a defense bill passed into law last year that restricted its business in the United States.

FILE PHOTO: People walk past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song/File Photo

Huawei said it had filed a complaint in a federal court in Texas challenging the constitutionality of Section 889 of the National Defense Authorization Act (NDAA), a section signed into law by the U.S. president in August that banned federal agencies and their contractors from procuring its equipment and services.

“The U.S. Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products. We are compelled to take this legal action as a proper and last resort,” Huawei Rotating Chairman Guo Ping said in a statement.

“This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming U.S. consumers. We look forward to the court’s verdict, and trust that it will benefit both Huawei and the American people.”

While Huawei had very little market share in the U.S. telecoms market before the bill, it is the world’s biggest producer of telecoms equipment and is seeking to be at the forefront of a global roll-out of fifth generation (5G) mobile networks and services.

“Lifting the NDAA ban will give the U.S. Government the flexibility it needs to work with Huawei and solve real security issues,” Guo said.

In its lawsuit, Huawei said its “equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used.”

The privately owned firm has embarked on a public relations and legal offensive as Washington lobbies allies to abandon Huawei when building 5G mobile networks, centering on a 2017 Chinese law requiring companies cooperate with national intelligence work.

Founder and Chief Executive Ren Zhengfei has said Huawei, the world’s biggest telecoms gear maker, has never and will never share data with China’s government.

NO PROOF

The NDDA bans the U.S. government from doing business with Huawei or compatriot peer ZTE Corp or from doing business with any company that has equipment from the two firms as a “substantial or essential component” of their system.

In its lawsuit, filed in U.S. District Court in the Eastern District of Texas, Huawei argues that the section of the law is illegal because it could sharply limit the company’s ability to do business in the United States despite no proof of wrongdoing.

Separately, the lawsuit also alleges that Huawei has been denied due process and that Congress, by stripping Huawei of U.S. commercial opportunities, has violated the “separation of powers” portion of the constitution by doing the work of the courts.

UPHILL BATTLE

Some legal experts, however, said Huawei’s lawsuit is likely to be dismissed because U.S. courts are reluctant to second-guess national security determinations by other branches of government.

The lawsuit “will be an uphill battle because Congress has broad authority to protect us from perceived national security threats,” said Franklin Turner, a government contracts lawyer at McCarter & English.

In November 2018, a federal appeals court rejected a similar lawsuit filed by Russian cybersecurity firm Kaspersky Lab, which was challenging a ban on the use of the company’s software in U.S. government networks.

The Texas court hearing Huawei’s case will not be bound by that decision, but will likely adopt its reasoning because of the similarities in the two disputes, said Steven Schwinn, a professor at the John Marshall Law School in Chicago.

“I don’t see how (Huawei) can really escape that result,” said Schwinn.

If a judge decides Huawei has a plausible claim the case will proceed to the discovery phase, in which internal documents are shared and U.S. government officials could be forced to provide testimony and lay out their national security concerns.

RETRIBUTION

The legal action and public relations outreach compare with a more restrained response in December emphasizing “trust in justice” when its chief financial officer, Sabrina Meng Wanzhou, was arrested in Vancouver at U.S. request.

The United States has accused Meng – Ren’s daughter – of bank and wire fraud related to breaches of trade sanctions against Iran.

Meng appeared in court on Wednesday during which her lawyer expressed concern that the allegations have a political character, raising U.S. President Donald Trump’s comments on the case.

Separately, Meng, who is fighting extradition, is suing Canada’s government for procedural wrongs in her arrest.

The case had strained relations with China, which this week accused two arrested Canadians of stealing state secrets in a move widely seen as retribution for Meng’s arrest.

While Meng is under house arrest in Vancouver, it is unclear where the two Canadians are being detained in China. Sources previously told Reuters that at least one of the Canadians did not have access to legal representation.

CHANGE OF TUNE

Ren met international media for the first time in several years in mid-January, calling U.S. President Donald Trump “great” and refraining from commenting directly on Meng’s case. Shifting tone, Ren in mid-February said Meng’s arrest was politically motivated and “not acceptable”.

Long before Trump initiated a trade war with China, Huawei’s activities were under scrutiny by U.S. authorities, according to interviews with 10 people familiar with the Huawei probes and documents related to the investigations seen by Reuters.

Reporting by Sijia Jiang in HONG KONG and Jan Wolfe in WASHINGTON; Additional reporting by Twinnie Siu in SHENZHEN and Diane Bartz in WASHINGTON; Editing by James Pomfret and Christopher Cushing

Mark Zuckerberg on Facebook's Future and What Scares Him Most

On Wednesday afternoon, Mark Zuckerberg, the CEO of Facebook, described a sweeping new vision for his platform. “The future of communication,” he wrote, “will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure.” The post raised all kinds of questions about Facebook’s business model and strategies, as well as the tradeoffs the company could face. And so after the post went live, Zuckerberg spoke with WIRED about his vision.

Nicholas Thompson: Mark, thank you for letting me talk to you for a few minutes.

The 3200-word memo you wrote almost sounds like a manifesto for a new social network. You say, “this privacy-focused platform will be built around several principles.” Is the idea that you will eventually launch a new platform that goes on top of what you have? Or is this just the new direction in which all your products will evolve?

Mark Zuckerberg: The thinking is that there needs to be two types of platforms in the world: one is a more public platform, like the digital equivalent of a town square where you interact with lots of people at once. That’s largely what Facebook and Instagram are. And the other platform is the private space, the digital equivalent to the living room. And the foundation that we have for WhatsApp and Messenger, is going to be the starting point for developing those platforms.

But if you look at what we’ve done over the last 15 years, we’ve taken Facebook and then Instagram and really built out whole social platforms around them. So on Facebook, for example, you’re not just posting things at this point. You can join different communities, you can create a page for your small businesses, you can create fundraisers, you can find people to date through the dating service. There are all these different kinds of utilities for basically all the different things that you would want to do with everyone you know. And we basically built this whole platform around the town square. And it’s really a concept of the whole platform around all the private and intimate interactions that you would want to have. And I think that’s really the opportunity here, on top of WhatsApp and Messenger, and what I’m trying to lay out is a privacy-focused vision for this kind of platform, that starts with messaging and making that as secure as possible with end-to-end encryption, and then building all of the other kinds of private and intimate ways that you would want to interact—from calling, to groups, to stories, to payments, to different forms of commerce, to sharing location, to eventually having a more open-ended system to plug in different kinds of tools for providing the interaction with people in all the ways that you would want. So that’s the basic vision for what we’re trying to do.

NT: Does News Feed still exist then, whenever this is fully built?

MZ: Yes, yes. I mean, Facebook and Instagram and the digital equivalent of the town square will always be important. I actually think that they will continue to grow in importance. At the same time though, the things that we see growing the fastest in terms of what people want to do, are private messaging, stories that are ephemeral and don’t stick around, small groups…

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So, I think that this idea of the digital living room is under-built out today. Right now we have messaging apps where we can send messages, but there should be a whole, deep platform built around all the ways that people want to interact in these private and intimate ways, similar to what you have Facebook and Instagram today. So it’s not that Facebook and Instagram are going to be less important for what they’re doing, it’s just that people sometimes want to interact in a town square, and sometimes they want to interact in the living room, and I think that that’s the next big frontier.

NT: But will people walk from the town square, from Facebook, into the living room? Will this be part of the Blue App on my phone, part of the Instagram app on my phone, or will this be a new app?

MZ: Well, probably some of each. The foundation of this will be the messaging experience that we built with Messenger and that we’ve started building on top of WhatsApp as well. But this is partially what I was trying to explain in the note around interoperability, is that there are these artificial walls today where if you want to message someone who you see on Facebook, you have to use Messenger, if you want to message someone on Instagram you have to use Direct, if you want to message someone on WhatsApp you have to use WhatsApp, but I think people tend to have one of the messaging apps that they prefer the most. So giving people the choice to say, “Hey, I want to use WhatsApp because I prefer that as my service where I can not only message people on WhatsApp, but I can message people on Facebook or Instagram as well and have those services connect…” I think that that will unlock a lot more convenient and seamless experiences. So connecting the services in that way I think will be valuable. But people have to choose to do that, it’s not going to be something that we can just do. And you’ll always have the option to keep the accounts separate if you want.

NT: Got it. And then how will the business model work with this new system? Because Facebook’s current business model is based upon collecting lots of data and then building targeted ad experiences. That would be much harder with disappearing data and end-to-end encryption.

MZ: So yes, parts of this will be harder. But the basic way that we’ve approached things is first to focus on building the consumer service that people really want. Then focus on making it so people can organically interact with businesses, and then focus on paid ways that businesses can grow and get more distribution. So we’re still in the phase on this private messaging platform, of phase one, where we’re really focused on nailing the consumer experience. You know, a lot of countries, we are the lead messaging app. But in a lot of important ones, especially really important for the business, like the US for example, we’re not yet the leading messaging app. So there’s still a huge amount of work just in building the consumer experience that people love, and that will be the foundation. If we do that well, the business will be fine. Well, you know, depending on how well we execute it, it could be better or worse, but it will be fine as long as we focus on building something that’s good for people.

It is true that if we have access to less information, then that makes a lot of our ranking in filtering systems, it makes them somewhat less effective. That’s something that we’re going to have to deal with across everything that we want to do, so not just on ads—I’ll get back to that in a second—but safety, our security, and safety, and spam systems. The work there will be harder if we only rely on detecting patterns of activity rather than being able to have the security systems see the content of messages themselves. So that’s something that will get harder. Certainly, ad targeting can benefit from having access to as much content or signal as possible.

You know, I’m more optimistic about this for a few reasons. One is that we aren’t really using the content of messages to target ads today anyway. So we weren’t planning on doing that. So it’s not like building a system and making it end-to-end encrypted and now we can’t see the messages is really going to hurt ads that much because of the way we were already thinking about that. Keeping metadata around for less time will have some impact, although I’m optimistic that we’ll build systems that can basically deliver most of the value with a fraction of the amount of data. But there’s a lot more to learn there, which we need to figure out over the coming years as we build this out.

NT: So you’re not so worried about the ads and the business side, but you do sound worried about safety and the spread of misinformation. What most keeps you up at night as you think about the new tradeoffs Facebook will be facing?

MZ: Yeah, I think that’s right. I actually, in working through this, I am much more worried about those tradeoffs around safety. There is just a clear tradeoff here when you’re building a messaging system between end-to-end encryption, which provides world-class privacy and the strongest security measures on the one hand, but removes some of the signal that you have to detect really terrible things some people try to do, whether it’s child exploitation or terrorism or extorting people. And those are things that we take really seriously. They’re areas where we just learned a lot in the last couple of years, where going into the last couple of years, we underestimated the importance and severity of some of these issues, and we’ve really reoriented the company to care a lot more about that and focus on that.

So, you can see that in the approach here. Even though we came out on the side of prioritizing privacy in building end-to-end encryption, we’re also committed to taking all of 2019 to build the safety systems to do as well as we can within the framework of an encrypted system before we roll out end-to-end encryption, which is a pretty different way from how we operated five years ago. And not just on taking the time to make sure we roll out and fully build out the safety systems, but we’re really going about this in a way where we’re going to publicly consult with experts around the world, and governments including law enforcement and regulators and safety advocates, and I just think at this point we understand that there’s a lot more context that we don’t know, that we will benefit from engaging with these folks, and it’s just really critical that we get the detail and nuances of these safety systems right as we move towards rolling this out, which will probably be next year sometime.

NT: OK. And then shifting the priorities of a company as big as Facebook are really hard, and beyond writing this, what are you going to do to guarantee that this vision is implemented?

MZ: You have no idea how hard it is. Yes, there’s a lot of work that goes into getting the teams aligned and getting the right leaders in place who believe in these priorities, and being able to execute on that. And even the process of writing something like this is really helpful because you can talk about a lot of things in the abstract, but it’s not until you actually put it down on paper and say, “Yeah, here are the tradeoffs. We’re going to focus on reducing the permanence of how much data we have around and that’s going to make these things harder.” Then you get all these teams inside the company that come out of the woodwork with all the issues that that’s going to cause for other things that we really care about. You know, whether that’s research that was surfaced about how much people care and value making a record of their lives over time, so making it so that more of the content would be archived automatically would be problematic for them, or different kinds of things.

But that whole process has been really helpful for figuring out and distilling the vision of where we want to get. And it basically got us to this point where we feel like we’re ready to put a flag in the ground and say, “This is where we want to go.” This isn’t a product announcement, it’s a statement of the principles that we think are necessary to build this privacy-focused social platform. But now I think we’re going to really start the harder process over the next year or so of flushing out what all these things mean as the aspects of this start to get rolled out in the different products.

NT: So what happens tomorrow?

MZ: Well, I think pretty quickly you’re going to see public engagement and consultation on some of these things. Now that we’ve put a flag in the ground and said we want to go toward end-to-end encryption, we want to go toward reducing the permanence of messaging, and that kind of data, we want to move towards interoperability, not only within our apps but hopefully over time including with SMS or the new telecom standard RCS as well, figuring out how that can work, given that that’s not an encrypted protocol. I mean these are all things that we care about that we now need to engage with. And then there will be a bunch of work inside the company to make sure that we have the right folks in the right roles. And this should be a massive effort of prioritizing this in all of the different work streams.

NT: One thing I’ve written about and that I care a lot about is that the US tech sector becomes more integrated with the Chinese tech sector. It seems like maybe these changes you’re talking about will make it harder to go into China. Is that something you worry about?

MZ: Well, I think that— yes, I do. I’ve talked about in the past how I think US–China relations are really important. I think enabling more cross-border communication and building empathy would be important for the world. But, this isn’t really about China specifically, but I just believe that an important part of building this kind of privacy and security infrastructure for the Internet is that you need to be really sensitive about where you build data centers and where you store people’s sensitive data. And that’s something that we’ve only become more sensitive to over time as our services have gotten to scale.

I referenced one of the examples that really shaped my thinking a couple of years ago where we had this case in a country—this wasn’t in China—where one of our employees was put in jail because we were ordered to turn over data that we didn’t have, because it was encrypted. And that just was a really—that moment really shifted my views because it shows if you put a data center in a place, or you store people’s information in a country, then you’re giving that government the ability to use force to get that data. So I just think that that puts a huge responsibility in companies’ hands to make really careful decisions about where they believe it is appropriate to do that. And that’s just something that I’ve really cared about in the decisions that we’ve made as we built the global infrastructure around what we do.

NT: And then the last one. This is a pretty big philosophical change, it’s one of the more interesting philosophical documents you’ve put out. It comes after a crazy last 12 months for Facebook. I’m wondering what was the moment during the last 12 months that you think was most important in shaping this new philosophy?

MZ: You know, I don’t think it was one moment. I spent a lot of the last couple of years focused on understanding and trying to address the biggest issues facing Facebook and the Internet overall. And I wrote notes on our efforts on content enforcement and governance and on election integrity and protecting the civic process. And when I sat down at the end of last year to write this note on what I felt like we’ve learned about privacy going through this process, and what people wanted for the future given that private messages and stories and small groups are the fastest growing way that people are interacting online—much faster than any of the more public ways that people interact—so when I sat down to write this thing, my biggest takeaway was “Wow, in a lot of ways, this is a completely new platform that needs to get built.” And people clearly really want this because of what they’re doing and what we’re seeing people do in our products.

And this is a big opportunity but it’s going to mean adopting and taking some positions on some of these big issues that involve some really big tradeoffs, and are frankly different from what we may have prioritized historically. We’ve always cared about giving people privacy controls, but going so far as to say the data is going to be end-to-end encrypted in messaging, so we’re not even going to be able to see it and do some of the things that we believe lead to better services in other ways, that’s a big shift. And I think it is a reflection over the last couple of years of all of the issues that we’ve faced and how to make tradeoffs across them. It’s not one single moment.

NT: OK, great. Thank you so much for taking the time to talk with me.


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The NSA Makes Ghidra, a Powerful Cybersecurity Tool, Open Source

The National Security Agency develops advanced hacking tools in-house for both offense and defense—which you could probably guess even if some notable examples hadn’t leaked in recent years. But on Tuesday at the RSA security conference in San Francisco, the agency chose for the first time demonstrated Ghidra, a refined internal tool that it has chosen to open source. And while NSA cybersecurity advisor Rob Joyce called the tool a “contribution to the nation’s cybersecurity community” in announcing it at RSA, it will no doubt be used far beyond the United States.

You can’t use Ghidra to hack devices; it’s instead a reverse engineering platform used to take “compiled,” deployed software and “decompile” it. In other words, it transforms the ones and zeros that computers understand back into a human-readable structure, logic, and set of commands that reveals what the software you churn through it does. Reverse engineering is a crucial process for malware analysts and threat intelligence researchers, because it allows them to work backward from software they discover in the wild—like malware being used to carry out attacks—to understand how it works, what its capabilities are, and who wrote it or where it came from. Reverse engineering is also an important way for defenders to check their own code for weaknesses, and confirm that it works as intended.

“If you’ve done software reverse engineering what you’ve found out is it’s both art and science, there’s not a hard path from the beginning to the end,” Joyce said. “Ghidra is a software reverse engineering tool built for our internal use at NSA. We’re not claiming that this is the one that’s going to be replacing everything out there—it’s not. But it helped us address some things in our work flow.”

Similar reverse engineering products already exist on the market, including a popular disassembler and debugger called IDA. But Joyce emphasized that the NSA has been developing Ghidra for years, with its own real-world priorities and needs in mind, which makes it a powerful and particularly usable tool. Products like IDA also cost money, whereas making Ghidra open source marks the first time that a tool of its caliber will be available for free—a major contribution in training the next generation of cybersecurity defenders. (Like other open source code, though, expect it to have some bugs.) Joyce also noted that the NSA views the release of Ghidra as a sort of recruiting strategy, making it easier for new hires to enter the NSA at a higher level, or for cleared contractors to lend their expertise without needing to first come up to speed on the tool.

The NSA announced Joyce’s RSA talk, and Ghidra’s imminent release, in early January. But knowledge of the tool was already public thanks to WikiLeaks’ March 2017 “Vault 7” release, which discussed a number of hacking tools used by the CIA and repeatedly referenced Ghidra as a reverse engineering tool created by the NSA. The actual code hadn’t seen the light of day, though, until Tuesday—all 1.2 million lines of it. Ghidra runs on Windows, macOS, and Linux, and has all the components security researchers would expect. But Joyce emphasized the tool’s customizability. And it is also designed to facilitate collaborative work among multiple people on the same reversing project—a concept that isn’t as much of a priority in other platforms.

Ghidra also has user interface touches and features meant to make reversing as easy as possible, given how tedious and generally challenging it can be. Joyce’s personal favorite? An undo/redo mechanism. It allows users to try out theories about how the code they are analyzing may work, with an easy way to go back a few steps if the idea doesn’t pan out.

The NSA has made other code open source over the years, like its Security-Enhanced Linux and Security-Enhanced Android initiatives. But Ghidra seems to speak more directly to the discourse and tension at the heart of cybersecurity right now. By being free and readily available, it will likely proliferate, and could inform both defense and offense in unforeseen ways. If it seems like releasing the tool could give malicious hackers an advantage in figuring out how to evade the NSA, though, Dave Aitel, a former NSA researcher who is now chief security technology officer at the secure infrastructure firm Cyxtera, says that that isn’t a concern.

“Malware authors already know how to make it annoying to reverse their code,” says Aitel. “There’s really no downside” to releasing Ghidra.

No matter what comes next for the NSA’s powerful reversing tool, Joyce emphasized on Tuesday that it is an earnest contribution to the community of cybersecurity defenders—and that conspiracy theorists can rest easy. “There’s no backdoor in Ghidra,” he said. “Come on, no backdoor. On the record. Scout’s honor.”


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Exclusive: Grab eyes more funding, after raising $4.5 billion in SE Asia's largest financing round

SINGAPORE (Reuters) – Grab is considering raising more funds from strategic investors, the president of Southeast Asia’s top ride-hailing firm said, after raking in over $4.5 billion in the region’s largest private financing round that included SoftBank’s Vision Fund.

A Grab motorbike helmet is displayed during Grab’s fifth anniversary news conference in Singapore June 6, 2017. REUTERS/Edgar Su

The Singapore-based firm continues to see strong interest from global investors after securing nearly $1.5 billion from the Vision Fund in a year-long round, Ming Maa told Reuters.

The financing round kicked off shortly after ride-hailing giant Uber surrendered its Southeast Asian operations to Grab in March 2018 after a costly battle and in return took a 27.5 percent stake in Grab’s business.

“We continue to see a tremendous amount of investor interest around the world, and may consider upsizing this financing in the future,” said Maa, a former SoftBank executive, who was instrumental in SoftBank’s earlier investments in Grab before joining the startup in 2016.

Maa, 42, said Grab was keen to tie up with more partners that could provide it with a complementary set of technologies or services to help it expand its offerings.

Citing a valuation of $11 billion, research firm CB Insights had ranked Grab among the top 15 unicorns globally before SoftBank’s latest funding.

Maa said Grab is not focused on an IPO even as U.S. ride-hailing companies Uber and Lyft kicked off the process to list this year. “It is accurate to say we are absolutely not focused on an IPO or an IPO timeline right now,” Maa said.

“For now, we are all heads down focused on growing the market, growing the business as opposed to a capital markets transaction,” he said.

EXPAND SUPER-APP

Grab said its latest funding round drew in investments from the likes of Toyota Motor Corp, Microsoft and Hyundai Motor Co. Sources say it has raised about $8 billion since it was founded in 2012 as it seeks to fuel its expansion in Southeast Asia – home to about 650 million people.

“We will be investing the vast bulk of this capital we have raised into expanding our super-app platform and providing new services to our customers, particularly in Indonesia,” Maa said.

Focus areas include financial services, food delivery and last-mile logistics through which it caters to businesses such as Tokopedia, Indonesia’s largest online marketplace.

Grab says it is the only platform with access to e-money licenses in six of the region’s major countries.

The payments opportunity is critical as “this is the real infrastructure glue that ties everything together”, Maa said.

EYES MORE GROWTH

Grab, whose app has been downloaded on to over 138 million mobile devices, across its eight markets, has faced regulatory obstacles after Uber exited the region.

Grab’s expansion in Indonesia, home of rival Go-Jek, comes as both companies are raising billions of dollars to bring banking, ride-hailing, food-delivery and e-commerce to every corner of Southeast Asia, attracted by consumers using smartphones to shop, commute and make payments.

“We certainly do not see a slowdown in growth in any of our core businesses and if anything, as we continue to see more services being launched, we expect the growth from those relatively newer services to continue to be much higher than some of our more mature services,” Maa said.

Grab doubled its revenues to more than $1 billion in 2018 from the start of the year.

Both Grab and Go-Jek started out as ride service players and have rapidly amassed millions of users with cut-rate prices in low-income countries. Go-Jek counts Temasek Holdings, Tencent Holdings and Google among its backers.

Grab has plans to roll-out, through its open platform, on-demand video services in partnership with HOOQ, digital healthcare through a tie-up with Ping An Good Doctor and hotel bookings in partnership with Booking Holdings

Maa said Grab is profitable in the ride-sharing segment in some of its most mature markets, but did not give a timeframe for when the company would turn profitable as a whole.

(GRAPHIC: Car companies buy stakes, sign partnerships with ride-hailing firms – tmsnrt.rs/2OghNFf)

Reporting by Anshuman Daga and Aradhana Aravindan; Editing by Himani Sarkar

Republicans in Congress Are Talking Net Neutrality, at Least

Three Republican members of Congress introduced net neutrality-related bills Thursday, but Congress is still a long way from a bipartisan deal to restore rules banning broadband providers from blocking, throttling, or otherwise discriminating against lawful content.

During a hearing of the House Energy and Commerce Committee, Representatives Cathy McMorris Rodgers (R-Washington), Greg Walden (R-Oregon), and Bob Latta (R-Ohio) all said they had proposed net neutrality bills. None has released the text of their bills yet, but their speeches and previous legislation indicate suggest their proposals will fall far short of the sweeping protections passed by the Obama-era Federal Communications Commission in 2015.

During the hearing, lawmakers from both parties repeatedly agreed on the need for basic net neutrality protections. That represents some progress on the issue. Many GOP lawmakers have questioned the need for such rules for years, and the now-Republican-led FCC voted to repeal its net neutrality rules in late 2017. As the issue has become more mainstream in recent years and polls show both Democratic and Republican voters favor net neutrality protections, Republicans have at least started paying lip service to the idea of net neutrality. But many House Republicans remain opposed to some of the key provisions of the 2015 rules.

The Democratic takeover of the House in last year’s elections has changed the political calculus for net neutrality, pushing both sides toward a bipartisan deal even as a federal court considers a lawsuit challenging the legality of the FCC’s decision to jettison its rules. Thursday’s hearing, though, suggested that there’s still a big gap between the mainstream positions of the two parties.

The Obama-era reclassified broadband as a “Title II” telecommunications service, similar to telephone services. It also imposed a “general conduct” rule that said broadband providers must not “unreasonably interfere with or unreasonably disadvantage” lawful content, and gave the FCC authority to intervene on issues like carriers excluding preferred content from customers’ data use, and “interconnection” deals that internet providers make with each other on a case-by-case basis.

McMorris Rodgers said her bill is based on a state law passed last year in Washington that includes “bright line” rules against blocking, throttling, or creating paid “fast lanes.” She also said her bill would overturn state laws, including the Washington law and the more robust California law passed last year. The Washington state law that McMorris Rodgers based her bill on doesn’t include a general conduct rule and doesn’t cover data caps or interconnection rules. Walden said his bill would be similar to a bill proposed by Senator John Thune (R-South Dakota) and Representative Fred Upton (R-Michigan) in 2015 that included bright line rules but didn’t include a general conduct rule or cover data caps or interconnection. The Thune-Upton bill also banned the FCC from classifying broadband as a Title II service, as did a 2014 bill proposed by Latta.

Even before the FCC voted to overturn the Obama-era rules, major mobile internet providers were throttling video on certain unlimited plans unless customers paid to upgrade to more expensive plans. It’s not clear yet if the new bills would ban this practice. The representatives did not respond to WIRED requests for comment.

Last year, Representative Mike Coffman (R-Colorado) proposed a more comprehensive net neutrality bill that would have created a new Title III classification for broadband. The bill never advanced and Coffman lost his reelection bid last year.

Despite ample evidence to the contrary, Republicans said during the hearing that the Obama FCC’s net neutrality regime led internet providers to decrease their investment in broadband infrastructure. “Do we want to regulate the internet as a 1930s-style utility, one where burdensome regulation and price controls stifle innovation?” McMorris Rodgers asked.

Some broadband providers, like Comcast and Charter, actually increased investment in 2015 and 2016. Others, like AT&T, decreased investment, but told shareholders years before the FCC adopted its rules that they planned to slash infrastructure spending after completing network upgrades.

In a statement Thursday, the industry group USTelecom touted increased spending from the six largest US broadband providers in 2018 as evidence that ditching the net neutrality rules had boosted broadband investment, despite decreased spending by Comcast and Verizon. But even US Telecom admits that these numbers don’t tell the whole story. “The important question for policymakers is not what happens to broadband investment from one period to the next, but what long-term investment would look like under a different regulatory regime,” the organization statement says.

Many Democrats maintain that the “Title II” protections are crucial in order for the FCC to protect consumers. Tom Wheeler, who was the FCC chair when it adopted the net neutrality rules, said if the agency is limited to enforcing “bright line” rules, it wouldn’t be able to police bad behavior not explicitly defined in the rules.

“Consumers don’t have anywhere to turn when they are wronged by these large corporations because the FCC took itself off the beat entirely,” said Representative Frank Pallone (D-New Jersey). “Consumers are left watching the internet slowly change in front of their eyes.”

One particular incident has become a flashpoint in the debate. During the Mendocino Complex Fire in 2018, Verizon throttled the mobile internet speeds for firefighters, according to a brief filed by the county of Santa Clara, California as part of the federal suit against the FCC. The county paid for “unlimited” plans for the firefighters, but the plan limited connection speeds to 1/200th of their usual speeds after exceeding 25GB of data. “This throttling has had a significant impact on our ability to provide emergency services,” the brief says. The county was only able to restore full speeds after contacting Verizon’s billing department and switching to a new plan that cost twice as much.

“In supporting first responders in the Mendocino fire, we didn’t live up to our own promise of service and performance excellence when our process failed some first responders on the line,” Verizon executive Mike Maiorana said in a statement last year. The company created a new plan in response. Maiorana said.

The California incident, which was raised repeatedly by Democrats during the hearing, isn’t a classic net neutrality issue because Verizon was throttling all content, not favoring particular content or types of content. But Verizon’s behavior might have fallen under the general conduct rule against unreasonably interfering with connections, and the incident does demonstrate the types of enforcement problems that can emerge when the FCC isn’t empowered to protect consumers.


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Sony stock perks up after first-ever share buyback announcement

TOKYO (Reuters) – Sony Corp announced its first-ever share buyback on Friday, worth 100 billion yen ($910 million), helping its stock recover somewhat from the hammering it received earlier in the week when the technology firm reported lacklustre earnings.

FILE PHOTO – Journalists wait for Sony Corp’s new President and Chief Executive Officer Kenichiro Yoshida’s news conference on the company’s business plan at Sony’s headquarters in Tokyo, Japan May 22, 2018. REUTERS/Toru Hanai/File Photo

The announcement marked Japan’s second major buyback this week after technology investor SoftBank Group Corp said it would repurchase 600 billion yen worth of stock on Wednesday, sending its share price soaring.

Both stocks had been under pressure prior to the announcements reflecting investor unease over the outlook for the global technology industry amid falling demand in China.

Sony said its buyback, its first-ever aimed at boosting shareholder returns, will be equivalent to 2.36 percent of its outstanding shares and will be conducted through March 22.

“Our financial health has improved enough to conduct the repurchases,” a Sony spokesman said, adding that recent share prices were also a factor in its decision.

Hiroyasu Nishikawa, senior analyst at IwaiCosmo Securities, said the buyback showed how much Sony had changed over the years, responding more to shareholders.

“This announcement was well timed, and it shows they are watching the market very well,” he said. “Sony’s gradually been recovering in the past few years.”

Until a few years ago, Sony had been struggling with losses as its consumer electronics business lost market share to Asian rivals. It has since reinvented itself as an entertainment company with stable revenue from music content and gaming.

But its shares had plunged 14 percent this week to their lowest in more than a year after the company reported lower-than-expected profit as its previously thriving gaming business sagged – though a one-off gain related to its acquisition of EMI nevertheless pushed the quarterly result to a record high.

Sony also cut its profit outlook for imaging sensors, citing weakness in the global smartphone market.

The buyback announcements also come as Japanese companies have been increasing share repurchases amid growing calls for higher shareholder return. Instruments maker Yamaha Corp and trading house Itochu Corp also announced buybacks along with their quarterly earnings in the past week.

Sony has been steadily increasing shareholder return through higher dividends over the last couple of years. It paid 7.09 percent of its profit in dividend in the last fiscal year, compared with 22.5 percent at U.S. tech giant Apple Inc, according to Refinitiv data.

Reporting by Makiko Yamazaki and Ritsuko Ando; Editing by Chang-Ran Kim and Christopher Cushing

A Passenger on an American Airlines Flight Asked For an Irish Coffee. Then, a Horrific Escalation

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

Anyone can have a bad day.

How bad, though, does it have to be to justify what appears to have happened on an American Airlines flight from Long Beach to Phoenix last weekend?

The story is told by one of the passengers, who presented a detailed account on the FlyerTalk forums.

It all began, he says, with a First Class passenger asking for an Irish coffee while the plane was still on the ground.

At first, it seemed as if the Flight Attendant — the flight was operated by Mesa Airlines under the American Eagle banner — would oblige. Then she came back and said she couldn’t, after all.

When asked why — apparently politely — things began to take a detour.

Said the onlooking passenger: 

She came unglued. Voice raised, ‘Because the FAA won’t let us serve hot beverages on the ground. Are you going to have a problem with that?’ Politely he responded, ‘No, Are you having a good day?’ She responded with something along the lines of, ‘I have to get everyone boarded, and you aren’t my priority. You are holding up boarding. Do you think I’m being combative or simply trying to do my assigned job?’

I fear, should this story be accurately told, that many would think there’s a touch of combativeness going on here.

Next, it seems, the passenger kept trying to be conciliatory while the Flight Attendant reached a new altitude of anger.

Until, the onlooking passenger says, the Flight Attendant declared: 

If you don’t settle down, I’ll have you taken care of. I’m going to speak to the captain now.

Ah, that sweet moment when a Flight Attendant becomes law enforcement.

Soon, the infamous line emerged: 

Are you going to cause problems? if you are, I’ll have the captain come back and take care of you.

This would be care in the not-so-caring sense.

You’ll be stunned into choosing boats for your next vacation when I tell you that the onlooker’s wife tried to intervene. 

It didn’t go well.

The captain arrived and asked for things to be “taken outside.” Which, at least in the bars I occasionally visit, means fisticuffs.

Ultimately, it seems that no one was removed from the flight, though the Flight Attendant kept her distance and even allegedly turned her name tag over, so that her name wouldn’t be noted.

When you’re working in customer service, some days can be hard. You’re simply not in the mood and you have to work. Personally, I find it hard to be pleasant on such days.

But when your job is in the public eye, when you’re supposed to be offering hospitality and when the issue is a mere Irish coffee, perhaps it’s best to walk away for a moment, take several breaths and realize that expressing your frustration isn’t likely to help. 

Perhaps even get someone else to look after the customer, if you feel you might suffer an exploding gasket.

Of course, it could be that the passenger had a difficult look in his eye. So many minute things occur when humans try to communicate with each other. 

The onlooker says he’s now filed a complaint with American Airlines.

I contacted American to ask for its view and will update, should I receive a reply.

How to Write Emails That Super Busy People Will Actually Read

Apart from traffic, stubbed toes and spoiled milk, there are few things in life more frustrating or discouraging than cold email outreach. More often than not, you’ll either rejected outright or receive no response at all.

These outcomes become even more likely when reaching out to key decision makers, public figures or any other busy person , with no reply almost being a guarantee. Yet, while getting a hold of high-profile people is difficult – whether they’re the top influencers in your industry or the publisher you’ve been trying to connect with for years –it certainly isn’t impossible. 

In fact, by applying a handful of simple, battle-tested tips and strategies to your outreach emails and messages, your chances of reaching your prospect will sky rocket.

Here are six of them.

1. Get to the point.

A friend of mine who worked in the sales department at Oracle showed me the sales template they typically use for cold outreach. To my surprise, it was only four sentences long. The same was true for a buddy of mine who works in sales at a well-known Fortune 500 company.

In short, these emails have a quick intro, a sentence explaining why they’re reaching out to the target, a blurb on the value their product or service can bring to their business and wraps up with a question asking to hop on a quick phone call, with a few suggested days and times included.

This was a game-changer for me. Before seeing these templates, I felt compelled to close the deal all within the email itself. Instead, by waiting to do the “selling” on your initial phone call, once you’ve built trust and rapport, my average response rates increased threefold.

2. Prove your the “real deal” right off the bat.

One of my most successful email campaigns (in terms of open rates) included my title as an Inc.com Columnist in the email subject line itself, and read: “Quick Question From an Inc.com Columnist”.

No matter if you’re a CEO of a fast-growing startup, an author or someone who’s just getting started, we all have something of value to offer, some form of social proofing, so be sure to make it known right away.

Additionally, include a link to what I call your “home run proof point”. If you’re a blogger trying to get on a top notch publication, this could be an article that drove a ton of comments and shares. By proving you’re not just another spammer, you’ll instantly start to build trust between you and the prospect. 

3. Personalize it.

Remember: busy people are always on the prowl for reasons not to respond to an unsolicited pitch. 

Did this cold email get my name wrong? Is this cold email relevant to my business at all? Was this cold email clearly copy and pasted?

If there’s any semblance of you not doing your due diligence when it comes to research, editing and more, your chances of getting a response are close to nothing. 

The solution? Show you did your homework by personalizing and tailoring your message to fit specifically to the person you’re reaching out to.

4. Timeliness and relevance is key.

Wherever possible, be sure to include some sort of relevant reason as to why you’re reaching out to the person. 

Has your target recently published a book, secured venture capital or received a noteworthy award? Then congratulate them on it. Show them you care. This will warm them up and increase the chance they’re more receptive to what you’re proposing.

5. Self-serving people finish last.

This might be the most important point of all – stay out of it. Meaning, make the email and the reason you’re reaching out all about the contact person. Make sure it’s crystal clear how taking the action with what you’re proposing will add nothing but value to their lives. 

No matter how busy a person is, if there’s enough value at stake, they’ll make the time to respond.

6. Make the options simple.

Within consumer psychology, a common practice to drive customers to take action is to eliminate the number of options they can make in the first place. The same applies to email outreach. By decreasing the number of decisions your target has to make, they’ll be more likely to make the leap.

Is your call-to-action hopping on Skype? Then use a tool like Calendly to eliminate any back-and-forth and streamline the scheduling process.

Is your call-to-action subscribing to your newsletter? Then link it, in bold, at the bottom of your email. 

Getting no response from a noteworthy person can get discouraging – believe me, I’ve been there. Yet, by applying the tips laid out in this article to your outreach, you’ll dramatically increase the chances of reeling them in. Best of luck.

Cyber Saturday—Challenging Facebook’s ‘#10YearChallenge,’ Tim Cook’s Privacy Plea, Mega Password Leak

Dumpster diving. A huge trove of data spilled onto the web and has been helpfully uploaded to HaveIBeenPwned, a leaked password-checking database for consumers, by security researcher Troy Hunt, the site’s proprietor. The leak, dubbed “Collection #1,” contains nearly 773 million unique email addresses and more than 21 million unique passwords—making it Hunt’s largest-ever upload. It’s unclear where exactly the data originated, although the anonymous person(s) who posted them online claim they came from many different sources. Best use the opportunity to clean up your password hygiene.

Be yourself. Facebook is still combatting disinformation. Nathaniel Gleicher, Facebook’s head of cybersecurity policy, said the media giant booted two Russian operations—including one involving Sputnik, a Moscow-based news agency—off Facebook and Instagram on Thursday. Facebook suspended hundreds of accounts and pages that he said engaged in “coordinated inauthentic behavior.” He noted that the fight against fakers is “an ongoing challenge.”

Chinese finger trap. Federal prosecutors are probing Huawei for allegedly stealing intellectual property from U.S. companies, including components from a T-Mobile phone-testing robot called “Tappy,” reports the Wall Street Journal. The investigation is “at an advanced stage and could lead to an indictment soon,” the Journal’s unnamed sources said. Add this development to the mess of controversies entangling the Chinese company.

Demand a recount. The Financial Times said it discovered evidence of “huge fraud” in the Democratic Republic of Congo’s December presidential election. The paper claims that its own independent tally of votes, based on data leaked by an unnamed source close to Martin Fayulu, the contest’s loser (but actual winner?), exposes the fraud. The report corroborates the view of the Catholic Church, which earlier denounced the election’s “results” after conducting its own audit.

Look; don’t touch. A California judge recently ruled that police officers are not authorized, even in possession of a search warrant, to force suspects to unlock their phones using biometrics, like a fingerprint or facial scan, Forbes reports. Judges had already ruled that passcodes were protected against such coercion, meaning people could refuse to supply them, thereby preventing self-incrimination. The judge, who called the original law enforcement request “overbroad,” wrote, “If a person cannot be compelled to provide a passcode because it is a testimonial communication, a person cannot be compelled to provide one’s finger, thumb, iris, face, or other biometric feature to unlock that same device.”

Just your friendly neighborhood NSA

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Ford Shuts Down Its Chariot Shuttle Service

Chariot has crashed. On Thursday, five years after launching and two and half years after being acquired by Ford for a reported $65 million, the app-based shuttle service announced it is rolling to a permanent stop. Transportation technology companies have never been sexier than in the past decade, but this stumble is a potent reminder that creating a profitable transportation business can be far harder than it seems.

When Chariot launched in 2014, it joined a wave of Uber-inspired “microtransit” tech companies hoping to disrupt transportation services by providing faster, more efficient options for riders sick of—and underserved by—traditional public transit.

Less than half a decade on, most have gone the way of the Hawaiian tree snail. San Francisco-based, elitist-wooing Leap Transit closed up shop just three months after its March 2015 launch, amid a regulatory fight with California. Bridj, which promised on-demand shuttle services, ceased American operations in early 2017. Shared rides company Via still operates in Chicago, New York, and Washington, DC, but has diversified—it also runs a software business. Meanwhile, Uber itself continues to burn through millions and millions in funding every year, even as it preps for an IPO in 2019.

Chariot struggled with ridership, spokesperson Erin Simpson says. Its 14-seat commuter shuttle services, which run limited, public routes in Austin, Chicago, Denver, Detroit, and the San Francisco Bay Area, as well as in London, will shut down February 1. Chariot’s newer initiative, running vans for specific companies, will end in March. Some of its 625 employees could be offered positions within Ford.

Turns out transporting people really is very hard. In dense cities, it’s competitive: Riders might choose to use public transit, ride-hail, or even the bike- and scooter-share networks that now blanket so many city sidewalks. In less dense places, the transportation business is pricey: Dispatching vehicles to retrieve far-flung passengers takes time and plenty of fuel. And transportation firms generally must contend with regulators, another oft-expensive hurdle. In October 2017, California briefly shut down Chariot’s operations in the state after discovering some drivers did not have proper licenses.

Chariot, which in San Francisco was charging $3.80 for off-peak rides and $5 during rush hour, always had a difficult road ahead. In fact, it hadn’t expanded its public commuter transit options in at least a year. “The microtransit companies would never say this, but you could see from their actions that a market for a public transit service paid for through fares was, at best, very limited,” says Bruce Schaller, a former New York City transportation official who now runs a transportation consultancy.

Furthermore, Chariot could only fit so many fare-paying riders into its vans. It owns those vehicles, and its drivers are unionized. “Running a van cheaper than a bus, per passenger, is a daunting idea,” adds Schaller.

As Chariot put it in a blog post announcing its death: “In today’s mobility landscape, the wants and needs of customers and cities are changing rapidly. As those changes continue, it has become clear that the mobility services delivered by Chariot over the past five years will not be a sustainable solution going forward.”

In recent months, the Ford subsidiary had tried to adjust its business to fit customers’ needs. Though it continued to run its San Francisco-based commuter network, open to any member of the public, it had focused its business on enterprise solutions, signing contracts with private businesses that wanted to give its employees other options for getting to or from work. As recently as December, Chariot CEO Dan Grossman told WIRED that the company was focusing on solving first mile/last mile problems—helping companies connect their offices to major commuter train or bus lines. Grossman also said the company had thought about growing the size of some vans, perhaps up to 28 seats. “We don’t want to put all our eggs in one basket,” he noted then.

Ford spokesperson Karen Hampton says lessons learned from Chariot’s run will inform the automaker’s larger mobility business. That includes “routing, dispatch, customer interfaces” at Ford Commercial Solutions, its fleet telematics and data arm; GoRide, its nonemergency medical transportation division; Ford Pass, its mobile application for vehicle owners; and “even the self-driving businesses we are building,” according to Hampton. The company has said that it will have a fully automated vehicle in commercial service by 2021.

While Chariot’s demise proves the transit business is a tricky one, tech-enabled shuttle services aren’t dead. Public transit agencies—including Los Angeles’ Department of Transportation—are still experimenting with on-demand options, which riders beckon with a call or tap of an app. Agencies hope these sorts of services might help them cut down the costs of providing public transit in areas with little demand. Flexible van services and jitneys continue to operate in US cities too, including New York City’s robust, decades-old dollar van system.

Ford, meanwhile, already has its hands in the latest transit hotness. In November, it acquired startup Spin. The Detroit stalwart has joined the scooter game.


More Great WIRED Stories

General Electric Will Be A Penny Stock In 2019

General Electric (GE) is our current play:

(Source: Nasdaq)

Much to GE investors’ chagrin, current future cash flow models state that the stock is fairly priced at the $7 mark:

(Source: Simply Wall St)

If the stock drops another couple of dollars, however, it is then officially in penny stock territory. And then it drops off many investors’ watch lists (including mine).

I wanted to check this evaluation with my own discounted cash flow ((DCF)) model. My model emphasizes the annual trend of the DCF valuation rather than the point value and is thus useful for understanding the drift of the underlying financials of the company over a longer time horizon. Let’s start with some of the important metrics used in this model.

Free cash flows are rather chaotic:

(Source: Damon Verial; data from Yahoo Finance)

The trend becomes clear when you take a rolling average:

(Source: Damon Verial; data from Yahoo Finance)

Free cash flows have been on the decline since 2015. If this continues over 2019, GE could easily run out of cash and find itself unable to pay down debt to continue its trend of sinking debt-to-equity:

(Source: Simply Wall St)

If the company is experiencing growth, however, debt becomes less of an issue. However, this is not the case. Cash returned on invested capital has been hovering around zero:

(Source: Damon Verial; data from Yahoo Finance)

When smoothing this metric with a rolling average, we see a trend similar to that of cash flows:

(Source: Damon Verial; data from Yahoo Finance)

My model has given a valuation that has front-run the price of the stock consistently:

(Source: Damon Verial; data from Yahoo Finance)

It flashed a sell signal in 2016, right before the stock crashed. I will be able to update this model in March with annual data. For now, just note that the valuation’s trend has not slowed to where a reversal is likely; if this continues, we should see a sub-$5 valuation in 2019.

The company is clearly having hard times. At the same time, it claims to be reinventing its business. For now, few results of such reinvention are palpable; for the most part, “reinvention” seems to be a euphemism for “Don’t sell just yet!” directed at investors.

All companies eventually die. As companies age, they become more convoluted and stuck in their ways. Note that GE was born in 1892, which is impressive but not a reason to put your faith in this stock.

Many are displeased with the new CEO, as the stock has sunk since his arrival. But GE investors seem to forget that the last CEO wasn’t a rock star either; his retirement announcement boosted the stock price. No, this company has problems unrelated to who’s sitting on the CEO throne – problems perhaps unfixable, even with a strong leader.

GE’s capital allocation has not paid off. Its recent acquisitions have been some of its most expensive (e.g., Alstrom, the French turbine company – and former GE competitor) yet they have been unable to bring GE back to its glory years.

GE has also been aggressively engaging in buybacks. Buybacks make sense when you have excess capital, wish to reduce outstanding shares, and want to bolster the stock price – and only when the stock is objectively cheap. However, we find GE spending most of its $90B buyback budget near the recent peak.

The last decade was for GE a story of wasted capital. Its goal of a $2 EPS for 2018 was not nearly reached. In fact, it was negative: -$3.65:

(Source: Simply Wall St)

I like my chart better because it does not put rose-colored glasses on investors due to it not including highly optimistic analyst estimates:

(Source: Damon Verial; data from Yahoo Finance)

Perhaps Larry Culp should take a note from George Costanza and set a goal of -$2 EPS for 2019. He might end up making some profitable acquisitions. Or perhaps GE is beyond saving at this point.

On a more serious note, notice that the analyst range of EPS estimates have historically been above the actual EPS. For this reason, GE’s earnings reports have been statistically reliable short trades. The reason for my interest in trading GE this quarterly earnings lies in its quarter-to-quarter EPS trend.

Analysts’ consensus for EPS in the coming earnings report is $0.18. This is highly unlikely. Consider the following.

The consensus for last quarter (FQ3) was $0.21. The actual EPS was $0.14. The consensus for this quarter is $0.18, lower than that of FQ3 – but FQ4’s actual EPS is consistently lower than FQ3, implying that the estimated EPS should be lower than $0.14.

GE’s post-earnings movement should be easy to predict, as statistically it falls into the group of stocks that react strongly to EPS movements. If you’ve been in Exposing Earnings long enough, you know that about half of the stock market moves after earnings because of EPS; the other half is uncorrelated – and this is not a quarter-to-quarter phenomenon but related to individual companies. GE is easier to predict than most because the stock price is highly correlated to EPS:

(Source: Damon Verial; data from Yahoo Finance)

When the company was doing well, this stock was seen as a defensive holding. In 2018, GE finds itself delisted from the DOW. The next step is its graduation to a penny stock: The EPS line is gently pointing to where GE needs to park itself.

I asked my machine learning algorithm if it agrees with the penny stock valuation. It said GE will likely drop another 6.6% from here, which is not penny stock territory. So in fact, this robot of mine is less bearish than I – and more subjective – however, it only cares about historical patterns and has none of the information I presented above:

(Source: Damon Verial; data from Yahoo Finance)

I’ll spare you the other quant results, most of which support a bearish earnings trade, and give you a summary instead. Here’s my quick take on this play:

  • Direction: Short
  • Probability: 83%
  • Payoff curve*: Concave
  • Options strategy:
  1. Sell 1x Feb19 $8.5 put
  2. Buy 1x Feb19 $8 put
  3. Buy 1x Feb19 $7 put

At the current prices for these options, this play is opened at zero cost. Should GE’s CEO release an amazing turnaround plan and report an EPS surprise, GE could rally, but we would lose nothing. I doubt a rally will happen, but we should always be prepared with a contingency plan, such as the above options strategy.

Happy trading!

Notes:

Probabilities are Bayesian and weight historic earnings patterns along with AI pattern recognition.

Risk/reward measured without respect to probability and weights upside/downside.

*Linear: Equal risk/reward.

*Convex: Reward > risk

*Concave: Risk > reward

*BMO: Before market opens

*AMC: After market closes

Warning: Most earnings trades produce a gap. Determining when to close your position upon seeing the gap is imperative. Review my gaps guide.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Silver Lining in Apple’s Very Bad iPhone News

Apple on Wednesday warned investors that its revenue for the last three months of 2018 would not live up to previous estimates, or even come particularly close. The main culprit appears to be China, where the trade war and a broader economic slowdown contributed to plummeting iPhone sales. But CEO Tim Cook’s letter to investors pointed to a secondary thread as well, one that Apple customers, environmentalists, and even the company itself should view not as a liability but an asset: People are holding onto their iPhones longer.

That’s not just in China. Cook noted that iPhone upgrades were “not as strong as we thought they would be” in developed markets as well, citing “macroeconomic conditions,” a shift in how carriers price smartphones, a strong US dollar, and temporarily discounted battery replacements. He neglected to mention the simple fact that an iPhone can perform capably for years—and consumers are finally getting wise.

As recently as 2015, smartphone users on average upgraded their phone roughly every 24 months, says Cliff Maldonado, founder of BayStreet Research, which tracks the mobile industry. As of the fourth quarter of last year, that had jumped to at least 35 months. “You’re looking at people holding onto their devices an extra year,” Maldonado says. “It’s been considerable.”

A few factors contribute to the trend, chief among them the shift from buying phones on a two-year contract—heavily subsidized by the carriers—to installment plans in which the customer pays full freight. T-Mobile introduced the practice in the US in 2014, and by 2015 it had become the norm. The full effects, though, have only kicked in more recently. People still generally pay for their smartphone over two years; once they’re paid off, though, their monthly bill suddenly drops by, say, $25.

The shift has also caused a sharp drop-off in carrier incentives. They turn out not to be worth it. “They’re actually encouraging that dynamic of holding your smartphone longer. It’s in their best interest,” Maldonado says. “It actually costs them to get you into a new phone, to do those promotions, to run the transaction and put it on their books and finance it.”

Bottom line: If your service is reliable and your iPhone still works fine, why go through the hassle?

“There’s not as many subsidies as there used to be from a carrier point of view,” Cook told CNBC Wednesday. “And where that didn’t all happen yesterday, if you’ve been out of the market for two or three years and you come back, it looks like that to you.”

Meanwhile, older iPhones work better, for longer, thanks to Apple itself. When Apple vice president Craig Federighi introduced iOS 12 in June at Apple’s Worldwide Developers Conference, he emphasized how much it improved the performance of older devices. Among the numbers he cited: The 2014 iPhone 6 Plus opens apps 40 percent faster with iOS 12 than it had with iOS 11, and its keyboard appears up to 50 percent faster than before. And while Apple’s battery scandal of a year ago was a black mark for the company, it at least reminded Apple owners that they didn’t necessarily need a new iPhone. Eligible iPhone owners found that a $29 battery replacement—it normally costs $79—made their iPhone 6 feel something close to new.

“There definitely has been a major shift in customer perception, after all the controversy,” says Kyle Wiens, founder of online repair community iFixit. “What it really did more than anything else was remind you that the battery on your phone really can be replaced. Apple successfully brainwashing the public into thinking the battery was something they never needed to think about led people to prematurely buy these devices.”

Combine all of that with the fact that new model iPhones—and Android phones for that matter—have lacked a killer feature, much less one that would inspire someone to spend $1,000 or more if they didn’t absolutely have to. “Phones used to be toys, and shiny objects,” Maldonado says. “Now they’re utilities. You’ve got to have it, and the joy of getting a new one is pretty minor. Facebook and email looks the same; the camera’s still great.”

In the near term, these dynamics aren’t ideal for Apple; its stock dropped more than 7 percent in after-hours trading following Wednesday’s news. But it’s terrific news for consumers, who have apparently realized that a smartphone does not have a two-year expiration date. That saves money in the long run. And pulling the throttle back on iPhone sales may turn out to be equally welcome news for the planet.

According to Apple’s most recent sustainability report, the manufacture of each Apple device generates on average 90 pounds of carbon emissions. Wiens suggests that the creation of each iPhone requires hundreds of pounds of raw materials.

Manufacturing electronics is environmentally intense, Wiens says. “We can’t live in a world where we’re making 3 billion new smartphones a year. We don’t have the resources for it. We have to reduce how many overall devices we’re making. There are lots of ways to do it, but it gets down to demand, and how many we’re buying. That’s not what Apple wants, but it’s what the environment needs.”

Which raises a question: Why does Apple bother extending the lives of older iPhones? The altruistic answer comes from Lisa Jackson, who oversees the company’s environmental efforts.

“We also make sure to design and build durable products that last as long as possible,” Jackson said at Apple’s September hardware event. “Because they last longer, you can keep using them. And keeping using them is the best thing for the planet.”

Given a long enough horizon, Apple may see a financial benefit from less frequent upgrades as well. An iPhone that lasts longer keeps customers in the iOS ecosystem longer. That becomes even more important as the company places greater emphasis not on hardware but on services like Apple Music. It also offers an important point of differentiation from Android, whose fragmented ecosystem means even flagship devices rarely continue to be fully supported beyond two years.

“In reality, the big picture is still very good for Apple,” Maldonado says. Compared with Android, “Apple’s in a better spot, because the phones last longer.”

That’s cold comfort today and doesn’t help a whit with China. But news that people are holding onto their iPhones longer should be taken for what it really is: A sign of progress and a win for everyone. Even Apple.


More Great WIRED Stories

It's Now Or Never For The Bulls

In April of this year, I wrote an article discussing the 10 reasons the bull market had ended.

“The backdrop of the market currently is vastly different than it was during the ‘taper tantrum’ in 2015-2016, or during the corrections following the end of QE1 and QE2. In those previous cases, the Federal Reserve was directly injecting liquidity and managing expectations of long-term accommodative support. Valuations had been through a fairly significant reversion, and expectations had been extinguished. None of that support exists currently.”

It mostly fell on “deaf ears” as the market rallied back to highs. But the “worries” of the market have continued to mount despite the speculative rally. As Barbara Kollmeyer penned yesterday morning:

“The markets have enough to worry about these days, right? With major U.S. indexes in or near bear territory, a government shutdown underway and the White House falling over itself to assure us no one is firing Fed Chief Powell, Treasury Secretary Steven Mnuchin gobsmacked market participants by revealing that he made a weekend call from a beach in Mexico to the country’s six biggest banks, presumably to assure Wall Street that there’s ample liquidity sloshing around in the financial system.”

I can only presume the phone call between President Trump and Steve Mnuchin went something like this:

Trump: Hey, Steve. This market is bad. I mean it’s really bad… really bad. You need to do something to make it go up. I mean really go up.

Mnuchin: No problem. I’ll just call my buddies and tell them they need to start buying. You know, we can always hit up the “Plunge Protection Team” if we need too.

Trump: The what? Oh yeah… I’ve heard of those guys. Yeah, you do that. We need this market to go up really big. I mean really big. I got a whole big pile of s*** going on here, my ratings are down, and I need the market to go up. I mean go up a lot. You make that happen, okay. Cuz that a**hole Powell ain’t helpin’ me one bit.

Mnuchin: Check… I’m on it.

Of course, the only real reason that you would call the 6 major banks, and meet with the “Plunge Protection Team,” would be in the event there was a real concern about the financial stability of the markets. It didn’t take long for the markets to figure out there may be a real liquidity problem brewing out there (aka Deutsche Bank) and as Mark Decambre penned Monday afternoon:

“The S&P 500 index fell by 2.7% Monday, marking the first session before Christmas that the broad-market benchmark has booked a loss of 1% or greater – ever.”

That’s the bad news.

My Christmas Wish

If we take a look back at the markets over the last 20 years, we find that our weekly composite technical gauge has only reached this level of an oversold condition only a few times during the time frame studied. Such oversold conditions have always resulted in at least a corrective bounce even within the context of a larger mean-reverting process.

What this oversold condition implies is that “selling” may have temporarily exhausted itself. Like a raging fire, at some point the “fuel” is consumed and it burns itself out. In the market, it is much the same.

You have always heard that “for every buyer, there is a seller.”

While this is a true statement, it is incomplete.

The real issue is that while there is indeed a “buyer for every seller,” the question is “at what price?”

In bull markets, prices rise until “buyers” are unwilling to pay a higher price for assets. Likewise, in a bear market, prices will decline until “sellers” are no longer willing to sell at a lower price. It is always a question of price, otherwise, the market would be a flat line.

Again, what the weekly composite indicator suggests is that “sellers” have likely exhausted themselves to the point that “buyers” are likely starting to outnumber “sellers” to the point that prices will rise, at least temporarily.

This also highlights the importance of long-term moving averages. Again, as noted above, given that prices rise and fall due to participant demand, long-term moving averages provide a good picture of where demand is likely to be found. When prices deviate too far above, or below, those long-term averages, prices have a history of reverting back to, or beyond, that mean.

Currently, the market has started a mean reversion process back to the 200-week (4-year) moving average. As you will notice, with only a couple of exceptions, the 200-week moving average has acted as a long-term support line for the market. When the market has previously confirmed a break below the long-term average, more protracted mean-reverting events were already in process.

Currently, the bulls remain in charge for the moment with the market sitting just a few points above the long-term average. A weekly close below 2,346 on the S&P 500 would suggest a deeper decline is in process.

The same goes for the 60-month (5-year) moving average. With the market currently sitting just above the long-term trend support line, the “bull market” remains intact for now.

Again, a monthly close below 2,251 would suggest a more protracted “bear” market is underway.

How Much Of A Bounce Are We Talking About

Looking at a chart of weekly closes, the most likely oversold retracement rally would push stocks back toward the previous 2018 closing lows of 2,620-2,650.

On a monthly closing basis, however, that rally could extend as high as 2,700.

From yesterday’s closing levels, that is a 12.7% to 14.8% rally.

A rally of this magnitude will get the mainstream media very convinced the “bear market” is now over.

It likely won’t be.

The one thing about long-term trending bull markets is that they cover up investment mistakes. Overpaying for value, taking on too much risk, leverage, etc., are all things that investors inherently know will have negative outcomes. However, during a bull market, those mistakes are “forgiven” as prices inherently rise. The longer they rise, the more mistakes that investors tend to make as they become assured they are “smarter than the market.”

Eventually, a bear market reveals those mistakes in the most brutal of fashions.

It is often said the religion is found in “foxholes.” It is also found in bear markets where investors begin to “pray” for relief.

Very likely, there are many investors who have learned of the mistakes they have made over the past several years. Therefore, any rally in the market over the next few weeks to a couple of months will likely be met with selling as investors look for an exit.

Here is the other problem, there is currently no supportive backdrop for stocks on the horizon:

  • Earnings estimates for 2019 are still way too elevated.
  • Stock market targets for 2019 are also too high.
  • The Federal Reserve is still targeting higher rates and continued balance sheet reductions.
  • Trade wars are set to continue
  • The effect of the tax cut legislation will disappear and year-over-year comparisons revert back to normalized growth rates.
  • Economic growth is set to slow markedly next year.
  • Chinese economic growth will likely weaken further
  • European growth, already weak, will likely struggle as well.
  • Valuations remain expensive
  • The collapse in oil prices will weigh on inflation targets and economic activity (CapEx)

You get the idea.

There are a lot of things that have to go “right” to get the “bull market” back on track. But there is a whole lot more which is currently going wrong.

As I wrote in “The Exit Problem” last December:

“My job is to participate in the markets while keeping a measured approach to capital preservation. Since it is considered ‘bearish’ to point out the potential ‘risks’ which could lead to rapid capital destruction; then I guess you can call me a ‘bear.’

Just make sure you understand I am still in ‘theater,’ I am just moving much closer to the ‘exit.'”

After having sold a big chunk of our equity holdings throughout the year, and having been a steady buyer of bonds (despite consistent calls for higher rates), my “Christmas Wish” is for one last oversold rally to “sell” into.

The most likely outcome for 2019 is higher volatility, lower returns, and a still greatly under-appreciated risk to capital.

But, for the bulls, it’s now or never to make a final stand.

Just remember, getting back to even is not the same as growing wealth.

This Brilliant Holiday Gift Guide Shows Us How Advertising Should Be Done

Every year, my inbox fills up with holiday gift guides, predicted buying trends, and everyone’s list of the “best of the best” stocking stuffers. I even follow suit at times, and create my own gift guides to help consumers navigate the ever-changing tech options… But this year, if there was an award for holiday gift guides, Digital Trends would be winning big, because their genius holiday campaign has everything and then some.

Expertly Targeted Content

The guide Digital Trends put out depicts products featured and told as stories in miniature scenes, thanks to a partnership with animation studio HouseSpecial. The stories and scenes offer gift ideas for the tech savvy, but in several different categories, like audiophile and foodie. Each scene holds tremendous attention to detail, and draws in the attention of the viewer for several different reasons. Not only are the scenes visually appealing, they are perfectly targeted, and feature products without the products being the actual focus of the scene.

Size Matters

MediaPost pointed out that the figures for the guide were designed in H0 scale. This is the traditional scale for model railroads (Hello Christmas trains and villages!), and this time of year, that is a genius touch, that proves 1) size matters, and 2) attention to detail on every level feels luxurious because we rarely see or experience that in advertising.

What + How + Where

It’s not only WHAT they are saying about the product(s) but HOW they are saying it that has determined the efficacy of their guide. This guide is intentional. It’s clear that the creators went in with a strategy, with intentions, and with clearly defined tangibles as outcomes. This is important because it’s so much easier to get it right when you have the what, how, who, and where answered before you begin.

This Guide Is So “Instagram-able”

This unique “Instagram-able” product advertising campaign is unique and perfectly targeted in the following ways:

  1. It’s visually impactful and easily shared. The scenes are done so well, they have feelings to them of nostalgia and something unique, and they are easily shareable, which allows consumers to easily create buzz for them.

  2. They are tapping into the nod to collectable holiday villages and model railroads, hitting right to the type of consumers they want to attract.

  3. They feature products without being product shots and really separate out and make products that are me-too, and available anywhere, special enough to be clicked and bought to reward the creativity. Point blank: the guide makes people want to buy items they may have scrolled past on Amazon more than once, because of the emotion and connection they feel to the scenes and campaign.

With more than 30 million unique monthly visitors, I’m happy to take notes from Digital Trends. Alana Wolfman, their director of production, who shared their strategy of using SEO search queries to stay in front of exactly what users are searching for during the holiday season. In addition to that, the scenes themselves were created by a team that has worked on campaigns for major players like Chipotle, Planters, noosa, and Dish Network.

Rising Above the Noise

The reason I really love this campaign, other than the adorable perfectly executed miniature displays, besides the fact that it is everything an advertising campaign should be in its ability to be shared and to capture attention, aside from it’s near perfect timing and magnificent attention to detail… is how the creators went outside of the box, to create something unique. That might not sound like much, but to be unique with intention, in a place where everyone is trying everything to be relevant, is a big deal.

The thought put into creation speaks for itself, and should push your goals for future product advertising. Don’t be afraid to be unique, to go big (or small!), and to pay so much attention to the details that your attention feels like luxury to the consumers experiencing your campaign.

3 Coaching Strategies To Help Your Employees Overcome Uncertainty

To keep a business running smoothly, managers need to train their employees on how to perform pre-prescribed duties on a consistent basis. It’s also every leader’s responsibility to hold their team accountable to a high standard of quality and to work with them on streamlining their processes to increase efficiency.

A big challenge, however, is in preparing teams to excel when circumstances take an unexpected turn. Uncertainty is a given in business interactions, whether with clients, partners or colleagues, and leaders must take steps to coach their employees on best practices for handling uncommon situations well.

At my company Amerisleep, we encourage our staff to approach unfamiliar problems with an inquisitive mind. Rather than get flustered by the introduction of new variables, our team members are expected to ask questions to identify the key issue, diagnose the cause, and research the best solution.

Below are three things other leaders can do to ensure their team is comfortable dealing with uncertainty — and that they are capable of thriving too.

1. Create contingency plans teams can use to guide next steps.

When you anticipate the possibility of alternative scenarios, you can pre-plan different ways to respond.

In sales, for instance, one of the most dependable strategies is creating a script that features curated response patterns a salesperson can use to guide conversations based on each client’s reaction. This reduces the negative impact of resistance and rejections because it gives the salesperson a model for how they can best overcome the situation.

When negotiating with vendors, too, you may encounter obstacles that could derail the deal. To prepare our managers for those situations, we walk them through the most common sticking points such as price and timeline. If the costs are too high, we seek ways to cut back on expected deliverables to decrease the overall scope and rework the engagement so that it fits our budget. If the delivery schedule is longer than expected, we dissect the process to discover which steps we can expedite.

As a regular part of the training process, department leaders should provide their team members with guidance for how they should process uncertainty and proceed with a solutions-based approach.

2. Train staff to identify elements under their control and act accordingly.

The unknown can be quite jarring for some people. It often causes those unprepared to abandon all hope of influencing the situation and to accept whatever happens. But participants always have some measure of control, even when the expected outcomes seem less likely to manifest.

Teach your employees to look for elements they can leverage — such as historical data, rapport with other team members or participants, and available tools and technology — to allow them to reestablish their composure. Otherwise, they may view new variables as an obstacle instead of an opportunity. This will also help them become more self-reliant, empowering them to independently push more projects through to completion.

Our employees at Amerisleep take this to heart. When website outages occur, rather than panic, our development team follows a pre-defined process for troubleshooting and resolving the issue. Additionally, they take this opportunity to identify ways to further strengthen the reliability of our online experience, mitigating the risk of future failures. Although it’s impossible for us to predict when our site may experience a bit of downtime, what’s certain is the fact that our engineers are both skilled and process-oriented enough to find the perfect solution in a timely manner.

3. Promote strong analytical and critical thinking skills.

When unforeseen circumstances disrupt a plan, it’s common for people to immediately begin thinking about the ramifications of the uncertainty on their future. In these instances, they’re focusing too heavily on the consequences when they should exert more energy finding meaningful solutions.

Those who excel at dealing with the unknown stay in the moment and follow a successful roadmap: prepare as much as possible beforehand; anticipate the unexpected; look for ways to make a difference; and act decisively.

By taking a structured and strategic approach to addressing unfamiliar scenarios, you maintain your ability to think through the problem rationally rather than reacting emotionally.

Micron sales, profit miss estimates as chip glut hurts prices

(Reuters) – U.S. chipmaker Micron Technology Inc (MU.O) gave on Tuesday quarterly sales and profit forecasts well below Wall Street estimates, citing a market glut of memory chips as consumer and business demand for phones and computers is weakening.

Memory chip parts of U.S. memory chip maker MicronTechnology are pictured at their fair booth at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach/File Photo

Micron said it expected industry output, including from South Korean rivals Samsung Electronics Co Ltd (005930.KS) and SK Hynix (000660.KS), to outstrip demand from the makers of phones, PCs and servers, pushing down Micron chip prices.

Samsung had already warned of a slowdown in demand and drop in chip prices, flagging an end to a two-year boom in memory chips as global demand for mobile and other electronics devices wanes and fresh supplies from Hynix and Toshiba Corp (6502.T) hit the market. Hynix has also offered a downbeat outlook.

Micron Chief Executive Sanjay Mehrotra told investors on a conference call on Tuesday that the company was taking “decisive actions in terms of reducing our production output” to hold the line on prices.

“We are always reviewing how to best align our output with market demand to focus on delivering healthy profitability,” Mehrotra said in an interview.

But the glut will hammer Micron in the short term, with the company estimating revenue of $5.7 billion to $6.3 billion for its fiscal second quarter and gross margins of 50 to 53 percent, compared to analysts’ estimates of $7.3 billion and 55 percent, according to I/B/E/S data from Refinitiv.

Shares of the Boise, Idaho-based company fell as much as 8.5 percent in extended trading after the forecast, before paring losses to 2.8 percent.

Asked about Micron’s comments, Hynix told Reuters that in the short term, the memory chip sector would struggle through a period of relatively low growth due to weak demand in the smartphone and PC markets, but the outlook would brighten in the long term.

Hynix shares were down 1.6 percent in late morning trading in South Korea. Samsung shares were up slightly.

“The worse may not be over yet if the end-market demand weakens further,” said analyst Kinngai Chan of Summit Insights Group.

Micron is responding to the oversupply of DRAM and NAND memory chips by investing more in its next generation of chips. Major suppliers to smartphone makers such as Apple Inc (AAPL.O) have lowered their sales forecasts, citing weak demand from device makers.

Data centers, which have been a boon for Micron as cloud computing providers like Amazon.com’s (AMZN.O) Amazon Web Services have become massive businesses, were a weak spot in Micron’s earnings. On the post-earnings call, Mehrotra cited “inventory adjustments” at data centers for the pressure on revenue.

Several chipmakers have cited strong demand in the months before U.S. tariffs were imposed on some Chinese goods, leaving analysts wondering if data center owners had tried to get in orders ahead of the levies.

“We expect this headwind will persist for a couple of quarters. We are seeing some cloud customers go through a digestion period following very strong growth over the last two years,” Mehrotra said.

Stifel analyst Kevin Cassidy said Micron was making the right move by slashing output instead of cutting prices to gain market share as it had in the past.

“We see today’s announcements as prioritizing profitability over market share gains,” he said.

Micron’s gross margin was 59 percent for the fiscal first quarter, and executives said U.S. tariffs on Chinese goods cut its gross margins by about half a percentage point, at the lower end of the negative impact it told investors in September.

Micron is ahead of schedule in addressing the expected impact of U.S. tariffs on its products, Manish Bhatia, Micron’s executive vice president of global operations, said in an interview.

“We made very good progress across multiple sites in our (factory) network taking the products that were being made in China and destined for the United States and quickly transferring them to other sites outside of China,” he said.

Net sales rose 16 percent to $7.91 billion, short of analysts’ expectations of $8.02 billion.

Excluding items, Micron earned $2.97 per share, narrowly beating the analyst average estimate of $2.96, according to I/B/E/S data from Refinitiv.

Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; additional reporting by Heekyong Yang in SEOUL; Editing by Richard Chang and Muralikumar Anantharaman

If Your Business Strategy Looks Too Complicated, It Probably Is. Here's Why

Once a year, I spend two days with my client companies developing their annual plan. While we continuously review strategy throughout the year, the annual plan is a chance to do a deeper dive into the internal and external factors that inform how to go to market.

Getting this strategy right, and keeping it right, is key to long-term growth and success. However, many teams get it wrong. They don’t get it wrong because the strategy they develop won’t work, but because it’s impossible to explain it in simple terms. If it’s not easy to explain, it will be impossible to execute.

Your employees, your partners, and your customers are the ones who will actually be implementing your strategy. If it’s too complicated to understand, they won’t understand it.

After you’ve decided on all of angles you’re going to play and all of the moves you’re going to make, set to work developing a simple, clear, and effective way to communicate it to everyone on the team. Here are three things every strategy must communicate easily and effectively to all stakeholders.

1. Set a clear (and limited) set of focused priorities.

In essence, strategy is about choice. And the first objective is to set a clear and decisive set of priorities for the organization. The fewer the better. These need to be above and beyond the day-to-day work and focused on long-term goals and key moves needed to get there.

Strategic moves include things like creating new products or services, developing new capabilities, entering new markets, scaling up capacity, or even researching technology. While all of these might help the organization, trying to do all of them at once won’t. Pick three to five for the year, max.

Another trick I often employ is to list all of the strategy options that the team  eliminated or de-prioritized. By publishing these strategies as well, you’re making specifically clear what you’re NOT doing in the coming year.

2. Set a clear definition of success and a timeline.

Beyond direction, a good strategy needs a clear desired outcome and definition of success. Too many strategies stop at big ideas without nailing down specifics. The devil lies in the details. Too often, I see a team of people agree to a high level strategic priority, only to discover they are on vastly different pages when the details are fleshed out.

For each strategic direction, create a set of specific goals that are both measurable and time bound. It should be clear to everyone what constitutes completion, and it ideally should include a handful of objective criteria. I generally suggest a simple checklist or short description of the outcome or product.

3. Create a compelling vision of future success.

Now that you have a clear set of priorities and a definition of success, it’s time to paint a vivid picture of success. As humans we’re wired to be compelled by stories and visual images. Turn the goals you’ve selected into a narrative  explaining why you’ve chosen these objectives, why they are the most important ones, and how achieving these will lead to organizational success.

If someone on your team has a creative bent, try illustrating your desired future with photos and illustrations. If you’re developing a new product or service, find images that reflect the impact you want to create on your customer. If you’re expanding into a new geography, create a slideshow highlighting the city or region and explain why it’s such an attractive market.

Having a strategy with a clear set of priorities and objectives with actionable outcomes will increase your stakeholder alignment. By creating a rich vision for future success you’ll drive engagement and motivation. When in doubt, keep it simple, clear, and compelling. A basic strategy, well-executed, will always beat a brilliant one whiffed.

How Dense Does a Body Have to Be to Break a Concrete Floor?

I often miss some cool stuff the first time I watch a movie. This is probably a good thing—it shows that I’m focused on the story and not the small details. In this case, the movie is 2016’s Captain America: Civil War and the scene involves the density of a character named Vision.

OK, I am going to give a SPOILER ALERT—but if you haven’t seen this movie yet, I have a feeling you won’t be upset about spoilers. Anyway, this scene doesn’t reveal any huge plot points.

So here’s the deal. Vision is trying to keep Wanda (Scarlet Witch) safe in the Avengers’ headquarters. Hawkeye comes to help her leave, but Vision catches them. Although Vision could easily defeat Hawkeye, the same cannot be said for the powers of Scarlet Witch. Scarlet Witch has some ability to control matter—and in this case it appears that she can activate Vision’s powers. One of Vision’s primary powers is his ability to change his density.

So with a bit of magic, Scarlet Witch increases Vision’s density up to the point were he becomes too massive to move. He grows so massive that he breaks through the floor. With Vision out of the way, Wanda and Hawkeye are free to leave and finish the rest of the movie.

Density and Mass of Vision

Now for the fun part. What was the density and mass of Vision when he crashed through the floor? How about a quick review of density? Take a look at these five objects.

Rhett Allain

These blocks are all different, but there is something similar about them. If you took the three blocks on the left, they all have the same mass (about 45 grams). The three blocks on the right all have the same volume (I’m disappointed that they are almost exactly 1 cubic inch—they should have some value in cm3). But wait! What if you take the mass of each block and divide by its volume? This is how we define density. The density is a property that doesn’t depend on the size of the object, just its material. So the two white objects (on the ends) have different volumes and different masses, but the same density. The same is true for the two black objects.

To estimate the mass and density of Vision, I need some particular event that gives a hint about his mass since you can’t “see” the mass of an object. Yes, you guessed it: I can use moment that Vision breaks through the floor to estimate his mass.

Here is what I’m going to do. I’m going to assume the floor is made of concrete and that the gravitational force on Vision (due to his large mass) is enough to exceed the compressive strength of concrete to initiate the break.

What is “compressive strength”? This is the pressure a material can withstand before breaking. Yes, it’s the pressure and not the force (remember that pressure is the force divided by the contact area). This is why you can more easily break a material with a sharp pointy object than you can with a big flat object. The pointy object has a smaller area and therefore you get a bigger pressure for the same amount of force.

But what about the compressive strength of concrete? It’s perhaps between 20 and 40 mega Pascals (MPa) where a Pascal is the same as one Newton per square meter. This means that if the floor breaks, I know the pressure from the force between Vision and the floor. If I estimate his contact area, I can then calculate the force and next his masses.

Really, the only thing left to estimate is the contact area. I could perhaps do a more detailed analysis, but I think it’s fine to just get a rough value. What about a contact area that is a rectangle with a length of 1 meter and a width of 0.5 meters? That would put the area at 0.5 m2. I’m going with that.

Oh, one more thing. If I want to calculate the density of Vision, I also need his volume. He looks like a normal human—at least in terms of size. Humans have a density close to 1000 kg/m^3 (the density of water). If a human has a mass of 75 kg, the volume would be around 0.075 m3. I’m going with that value.

Let’s crunch the numbers. I’m including the calculations in this python script so that you can put your own values in (if you don’t like mine). Just click the “pencil” to edit and “play” to run it if you change any of the values.

Just to be clear, that is massive. The density is extreme (it’s not neutron-star-level density though). Actually, it’s sort of difficult to visualize a mass that large. How about this? What would be the size of a spherical asteroid of that same size? If the asteroid is made of normal stuff, it might have a density of 3,000 kg/m^3. With the same mass as Vision, a spherical asteroid would have a diameter of around 10 meters (30 feet). That’s one big old rock.

Homework

You know (or you should know) that I can’t just stop there. There are many questions left unanswered. I would normally just assign these as homework, but let me answer two of these questions for you.

Would there be a noticeable gravitational force between Vision and Hawkeye due to the large mass?

There is a gravitational interaction between all objects with mass. Normally on the surface of the Earth we only deal with the gravitational force between an object and the other. Interactions between two objects (like people) are usually so small that you would never be able to measure them. In this case, however, one of those people has a giant mass.

The magnitude of the gravitational force depends on both the masses of the objects and the distance between them. If you assume the objects are point masses (not true but an OK approximation), then the following equation calculates the force.

The G is just the universal gravitational constant with a value of 6.67 x 10-11 Nm2/kg2. If I assume a distance of 1.5 meters between Hawkeye and Vision, the gravitational force between them would be 0.0034 Newtons. That is a pretty tiny force. In fact, if you put a paperclip on top of Hawkeye’s head, the weight of this paperclip would be more than twice the gravitational pull from Vision. I don’t think Hawkeye would notice it.

Assuming Scarlet Witch increases Vision’s density at a constant rate, how long will it take for him to have a mass equivalent to the Earth?

If you watch a clip of the scene, it seems clear that Scarlet Witch starts influencing Vision’s mass when his head gem turns from yellow to red. Vision drops to his knees 13.9 seconds later. The floor also starts to crack at this point. Finally, after 20.4 seconds, Vision crashes through the floor.

Assuming a constant rate for the increase of mass (and thus density), the mass increases at 100,000 kilograms per second. If this mass increase rate stays constant, it would take 5 x 1019 seconds to get up to the mass of the Earth (6 x 1024 kg). Hint: that time is super, super, super long. It’s not going to happen. But it was still fun to calculate.

Here are a few more homework questions for you:

  • How long (assuming a constant mass increase rate) until Vision’s mass reaches the point where Hawkeye gets pulled to Vision?
  • If you consider the relationship between mass and energy (E = mc2), how much energy would it take to increase Vision’s mass? What about the power? How does this compare to the power output of the Sun?
  • How large would Vision’s mass need to get before he became a black hole?

More Great WIRED Stories

‘123456’ Is 2018’s Worst Password, Study Says. But This Year, ‘donald’ Joined the List

“Donald” has joined a new list. Not of world leaders, but of “worst passwords.” The password-management firm SplashData released its annual list of the 100 worst character combinations it found among leaks of about five million passwords.

“Donald” entered the list at position 23. You’ll also find “qwerty” (#9), password (#2), and baseball (#32). The worst of the worst passwords? “123456,” which has been sitting on top of the worst password chart for five years running.

Bad passwords are short, easily guessed, often contain words or common abbreviations, and are used by many other people. If one of yours is on the list, the right time to change it is right now.

What’s a strong password? It’s uniquely created for each site, it’s relatively long, and it’s not a common phrase or sequence. Many experts now recommend a password made up of a few words that are picked at random, a technique popularized by Diceware. While this may seem counter-intuive—couldn’t automated software just try all those words?—the large number of combinations and the length of the password in total makes it as hard to break as a shorter, impossible-to-type or remember sequence.

Password-management software can generate strong passwords according to any desired recipe, and it’s one reason SplashData promotes its list. Competitors abound, including built-in support across Apple’s and Google’s hardware, software, and browsers—iOS, Safari, and iCloud for Apple and Android, Chrome, and other apps for Google—as well as 1Password, Dashlane, and LastPass.

With over 5.6 billion accounts leaked over the last several years, according to the password-breach notification site Have I Been Pwned, researchers have been able to take a good look at the problem.

Security experts recommend that Web sites not allow users to create easily cracked password, but some sites prefer not to deter account creation by requiring something strong.

However, other sites have complex password-formulating requirements—like a mix of upper and lower case, one number, and one symbol—that can lead people to pick “Password1!”, which is only slight harder for intruders to decipher as “password”.

In many databases, about 50% of users rely on one of a handful of passwords. Hackers can crack those simple password and easily gain access to log into millions or tens of millions of accounts. With many users sharing the same, weak password across multiple services, that single breach can jeopardize their accounts at many different sites and services.

Truly Proud of Where You Work? Apply for the 2019 Inc. Best Workplaces List Today

In partnership with Quantum Workplace, a leading software platform for employee engagement and performance, Inc. is on the lookout for remarkable companies to feature in the fourth annual Best Workplaces issue. 

While company-sponsored trips to Jamaica are certainly enticing, great perks aren’t the sole–or most important–criteria. Is the culture egalitarian and supportive? Do you feel like your ideas matter and that there’s a clear path for career advancement? We want to hear about those less-tangible benefits too. 

Upon nominating your company, you’ll need to survey all employees using Quantum’s methodology, which includes topics such as trust in senior leadership, career development, change management, and benefits and perks. Quantum also takes into account financial elements of corporate culture. 

In May, winners will be notified via email and in June, Inc. will publish the list of the best places to work online and in print. If your company made the cut, you’ll be able to see how it lines up in comparison to similarly-sized businesses in your industry. How’s that for competitive intelligence?

To access the early rate of $195, applications are due by January 10. The rate goes up to $245 for applications received after that date and until February 14, which is the deadline to apply.

Published on: Dec 12, 2018

Japan rules out asking private firms to avoid telecoms gear that could be malicious

FILE PHOTO: Japan’s Chief Cabinet Secretary Yoshihide Suga attends a news conference at Prime Minister Shinzo Abe’s official residence in Tokyo, Japan May 29, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) – Japan’s government has no plan to ask private companies to avoid buying telecommunications equipment that could have malicious functions, such as information leakage, its top spokesman, Yoshihide Suga, said on Thursday.

The comment suggests Japan does not intend, for the moment, to extend to private firms a policy of not buying such equipment for the government, after it issued a policy document on Monday on the need to maintain cybersecurity during procurement.

While China’s telecoms equipment supplier Huawei Technologies, and ZTE (0763.HK) are not explicitly named, sources said last week the change aimed at preventing government procurement from the two Chinese makers.

Reporting by Chang-Ran Kim and Sam Nussey; Editing by Clarence Fernandez

Marriott Says It Will Pay for Replacement Passports After Data Breach. Here’s Why That’s Likely Baloney.

As you have no doubt heard by now, Marriott disclosed a massive data breach that exposed up to 500 million customer records. Hackers accessed information in the company’s Starwood reservation system, which affected brands such as W Hotels, St. Regis, Sheraton Hotels & Resorts, Westin Hotels & Resorts, and other properties in the Starwood portfolio, the company said. The intrusion apparently began in 2014, two years before Marriott acquired Starwood. This oversight in the M&A process calls to mind another recent, post-acquisition hacker-surprise: Yahoo, whose two mega-breaches remained undetected when the company sold to Verizon last year. Coincidentally, Marriott’s hack is the biggest suffered by a corporation, second only to those at Yahoo.

After news of the Marriott breach came out, Sen. Charles E. Schumer (D-N.Y.) called on the hotel chain to foot the bill and replace people’s passports which were potentially compromised as part of the breach. Marriott quickly promised to cover the cost for as many as 327 million people whose passport numbers may have been exposed. At a fee of $110 per passport, that would put Marriott on the hook to pay up to $36 billion—a price tag equivalent to the value of the entire company, per its market capitalization. A devastating payout.

Here’s the thing though: While seemingly noble, Marriott’s promise is a bunch of baloney. The company said it will follow through on reimbursement only in instances where it “determine[s] that fraud has taken place.” What this caveat conveniently excludes is that Marriott’s hack likely had little to do with fraud and everything to do with espionage. In other words, if you’re a victim, don’t expect remuneration.

As Reuters reported, investigators believe the perpetrators of this attack were Chinese spies. The breach used tools, tactics, and procedures that matched Beijing’s style. The intrusion is said to have begun shortly after a breach of the government’s Office of Personnel Management, which government officials have attributed to China. The Starwood database represents a massive trove of potential intelligence: information on who is staying where, when—a bonanza for building up profiles of targets and tracking people of interest.

Geng Shuang, China’s Ministry of Foreign Affairs spokesperson, issued a statement saying the country “opposes all forms of cyber attack,” per Reuters. He said the country would investigate the claims, if offered evidence. Meanwhile, Connie Kim, a Marriott spokesperson, said “we’ve got nothing to share” about the Chinese attribution claim.

The Marriott breach—which took place quietly over years, as spies prefer—does not appear to have been a cybercriminal score. That’s why the passport payment pledge is probably bunk; nevertheless, if you think you might have been affected, it won’t hurt to follow these steps to refresh your cybersecurity hygiene and better protect yourself.

A version of this article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter Data Sheet. Sign up here.

Cyber Saturday—Marriott’s Data Breach Baloney, Quora Hack, Aussie Encryption Law

Happy weekend, Cyber Saturday readers.

I’m back stateside after a week-and-a-half stay in China, where I helped host Fortune‘s 2018 Global Tech Forum. I hope you understand the absence of last weekend’s dispatch; following the event, I took an impromptu vacation in Hong Kong. Thankfully, I did not stay at a Marriott hotel. Speaking of which.

As you have no doubt heard by now, Marriott disclosed a massive data breach that exposed up to 500 million customer records. Hackers accessed information in the company’s Starwood reservation system, which affected brands such as W Hotels, St. Regis, Sheraton Hotels & Resorts, Westin Hotels & Resorts, and other properties in the Starwood portfolio, the company said. The intrusion apparently began in 2014, two years before Marriott acquired Starwood. This oversight in the M&A process calls to mind another recent, post-acquisition hacker-surprise: Yahoo, whose two mega-breaches remained undetected when the company sold to Verizon last year. Coincidentally, Marriott’s hack is the biggest suffered by a corporation, second only to those at Yahoo.

After news of the Marriott breach came out, Sen. Charles E. Schumer (D-N.Y.) called on the hotel chain to foot the bill and replace people’s passports which were potentially compromised as part of the breach. Marriott quickly promised to cover the cost for as many as 327 million people whose passport numbers may have been exposed. At a fee of $110 per passport, that would put Marriott on the hook to pay up to $36 billion—a price tag equivalent to the value of the entire company, per its market capitalization. A devastating payout.

Here’s the thing though: While seemingly noble, Marriott’s promise is a bunch of baloney. The company said it will follow through on reimbursement only in instances where it “determine[s] that fraud has taken place.” What this caveat conveniently excludes is that Marriott’s hack likely had little to do with fraud and everything to do with espionage. In other words, if you’re a victim, don’t expect remuneration.

As Reuters reported, investigators believe the perpetrators of this attack were Chinese spies. The breach used tools, tactics, and procedures that matched Beijing’s style. The intrusion is said to have begun shortly after a breach of the government’s Office of Personnel Management, which government officials have attributed to China. The Starwood database represents a massive trove of potential intelligence: information on who is staying where, when—a bonanza for building up profiles of targets and tracking people of interest.

Geng Shuang, China’s Ministry of Foreign Affairs spokesperson, issued a statement saying the country “opposes all forms of cyber attack,” per Reuters. He said the country would investigate the claims, if offered evidence. Meanwhile, Connie Kim, a Marriott spokesperson, said “we’ve got nothing to share” about the Chinese attribution claim.

The Marriott breach—which took place quietly over years, as spies prefer—does not appear to have been a cybercriminal score. The passport payment pledge is probably bunk; nevertheless, if you think you might have been affected, it won’t hurt to follow these steps to refresh your cybersecurity hygiene and better protect yourself.

Have a great weekend.

Robert Hackett

@rhhackett

[email protected]

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