The Incredible McDonald's With Butlers, a String Quartet and Reservations Required

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

One way of achieving this noble goal is to appear, well, more noble.

If your experience is more pleasurable, the quaint thought process goes, you’ll want to spend more money.

Last week, however, McDonald’s climbed the mountain to veritable poshness.

Naturally, this happened in the home of posh, the (Dis)United Kingdom.

Here was a McDonald’s with white-gloved butlers. It also enjoyed fancy tableware and candelabra. Red velvet abounded.

And of course you needed a reservation.

This attempt at taste was inspired by a snooty British TV personality named Mark Vandelli.

Here he is in this Haute McDonald’s.

Please believe me, he really is snooty.

Why was McDonald’s pushing the boat out so far toward an exotic island of luxury?

Though this was a one-night-only affair, it isn’t even the first time a McDonald’s has required reservations.

This is merely the latest drift toward competing with the likes of Shake Shack, where quality of food and customer experience are rather significant.

But will there ever come a day when you have to make a reservation to get your Big Mac?

That would, indeed, be a very strange day.

Top 6 Career Myths That Make People Miserable

I end up hearing a lot of people complain about their jobs (in general) and specifically about how their career expectations haven’t been met. In almost every case, the complainer has a false belief that is creating the discrepancy between expectation and reality. Here are the most common:

Myth 1: If I skip my vacation, I’ll get a promotion.

Skipping vacation sounds like a great way to impress the boss, but statistically it hasthe opposite effect. According to a recent study of vacation usage, “only 23 percent of those who forfeited their days were promoted in the last year, compared to 27 percent of “non-forfeiters.” 

Rather than skip your vacation, schedule it ahead, and then resist the urge to “check in.” Your ability to separate yourself from work tells your boss that you’re independent and not in the slightest doubt of your value to the firm. 

Myth 2: If I work really hard, I’ll get a raise.

Most people interpret “carrot and stick” as using reward and punishment to motivate. In the original story, though, the carrot was tied to one end of the stick and the other end of the stick was tied to the donkey’s harness. The donkey never gets the carrot. Get it?

The way to get a raise is create more value for the firm, and then documenting that you created that value. But even before that, get a commitment from your boss that if you exceed your goals you’ll get an appropriate raise.  

Myth 3: If I help others, they’ll help me in return.

While humans theoretically value reciprocity, at work you’ll find that often “no good deed goes unrewarded.” If you’re too helpful, you can become a dumping ground where everyone throws tasks they’d rather not do themselves.

This isn’t to say you shouldn’t be helpful, but that it’s wise to temper your helpfulness with a little bit of cynicism. Try negotiating beforehand what the other person will do for you, before you do a favor.

Myth 4: If I’m more accessible, people will value me more.

Just because you’ve got a phone in your pocket and a computer on your desk doesn’t mean you should allow anybody and everybody to monopolize your time based on their convenience.

One of the great truths of marketing is that people place a higher value on resources that are scarce than identical resources that are plentiful. Making yourself available all the time is great way to say “my time isn’t worth much.”

Myth 5: If I turn down a project, my boss won’t like me.

Look, the top priority in your relationship with your boss isn’t to be liked but to be respected. If you accept donkey-work or extra projects when you’re already running at 100%, the boss may be pleased but will secretly think “what a chump!”

As with all work situations, your argumentative watchword should be “what’s best for the team?” It’s almost never good for the team or the company to utilize a high-priced resource (you) to do a low level task.  

Myth 6: If I provide more information, customers will buy.

Contrary to all the biz-blab about the “information economy,” information isn’t valuable. (Everyone has too much already.) What’s valuable is the right information at the right time. And the right time to provide information is when the customer asks for it.

As an aside, this particular myth is responsible for the 90% of marketing campaigns (especially email marketing) that fall flat. Look, the customers are only interested in themselves. So if you’re not talking about them you’re boring them.

How to Master the Art of Giving a Great Virtual Presentation

For online presentations, the first step is to get everyone on video (sometimes you have to insist). No more audio-only calls where all your audience members are just secretly multi-tasking. You can’t make an engaging presentation with slides and their disembodied voice. Get your face on video so people can see you and ideally you can see your audience too. This allows you to really connect with your audience, and see how they are reacting to you.

Also for online presentations, consider your environment. Spotty wifi with an unprofessional background and a poorly-lit face kills your presentation. I literally interviewed a candidate who had pile of dirty laundry behind him – not the best first impression. Zoom works great on wifi right down to 3G, but if you’re giving a big presentation, your best bet is hardwiring in. Then, make sure you are in a quiet space with no distractions. Clean up your background – just use a plain wall, or a nice plant – or try Zoom’s virtual backgrounds (sorry, shameless plug). Consider your lighting. Get there a couple minutes early to make sure it’s not too much or too little lighting. And check that you are lit from the front, not from behind you (i.e. don’t sit with your back to a window). It is distracting when cameras are too high or low or are angled so we’re only seeing part of someone’s face. Check that you are looking straight at the camera and your video feed is framing the upper part of your torso and your head – you want it to look as if you were sitting across the table from your audience.

And for both online and in-person presentations, you have to engage your audience. Don’t droning on for a long time, doing too many text-rich slides, and not matching your abstract to your presentation (this is actually a big one – people want to know what they’re getting in to). Instead, stop regularly to tell a (quick!) story, ask a question, take a straw poll, tell a joke, give your audience a small task, and so forth. Just keep them awake and interested! Also, you need adjust your presentation to your audience’s response. I have multiple large screens in my office so I can see all the participants in my meeting or presentation all at once and read their body language and facial expressions. If I see attention waning or some disagreement, I will switch things up.

Finally, a quick technical recommendation for online presentations. If you’re using Zoom, when setting up your meeting, select the “Mute upon entry” option. This makes sure that your participants join with their sound off, so you don’t get background noise that can disrupt the flow of your presentation.

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Elon Musk's Tesla Tweets Could Spark a Fight With the SEC

Elon Musk is, if nothing else, a warrior. He has battled short sellers. He was waged war against the auto industry and the National Transportation Safety Board. He has scrapped with the media and Los Angeles traffic and, because 2018, Azealia Banks. Now, Musk may be in yet another battle, with the US Securities and Exchange Commissions.

This all started a week ago, when the Tesla CEO tweeted, “Am considering taking Tesla private at $420. Funding secured.” But as Musk revealed in a Monday blog post, that funding may not, in fact, have been all that secured. And for the agency that regulates the securities industry, that may be a problem. One that could hurt Tesla where it counts: its checkbook.

The problem is that securities law requires that public companies make certain sorts of information public to all their shareholders at the same time. And that said information be true. Anything less could be construed by courts (and juries) as fraud or market manipulation. That makes Elon’s tweet problematic. Investigators have reportedly opened a probe into the tweet, and could choose—after collecting facts—to either sue the company in a district court or bring a sanction before an administrative law judge. Tesla declined to comment.

For the SEC, Elon’s tweets have two potentially concerning elements. One is the medium. Sure, anyone investing in Tesla should know Musk says all the juicy stuff on Twitter. And the Commission has allowed companies to disclose information on social media in the past, provided other shareholders are alerted in some other way. In the eight days since Musk tweeted about taking Tesla private, the automaker has not filed paperwork to disclose a material event or disclosure, the kind of big deal happening that all shareholders need to know about.

The second concerning element of Elon’s tweet is the message, especially the “funding secured” part. From the SEC’s perspective, that should be a factual statement: Musk definitely has the $70 billion or so lined up to take Tesla private.

But the CEO’s Monday blog post wasn’t so straightforward. He writes of a July 31 meeting with Saudi Arabia’s sovereign investment fund, which recently took a 5 percent stake in Tesla. He says that the fund’s managing director “expressed regret that I had not moved forward previously on a going private transaction with him,” and that the director “expressed his support for funding a going private transaction with Tesla at this time.” Then Musk hedges: “I understood from him that no other decision makers were needed and that they were eager to proceed.”

Securing take-private funding is not that easy, says John Coffee, Jr., the director of the Center on Corporate Governance at Columbia Law School. It is an intensive process that requires a lot of financial wrangling before anything’s a done deal. “There are enough concessions in the blog post about this being subject to financial and due diligence review and final approvals to determine that Musk didn’t have funding secure,” Coffee says. “He had at best, a hope for it.”

For the SEC—which, like many enforcement agencies, enjoys making headlines with shows of force—this might be an easy win against Tesla. Its investigators don’t even have to prove that Musk meant to lie or mislead investors. “The SEC can just say there was a materially false statement,” says Coffee. “It doesn’t have to prove an intent to defraud.”

If Tesla were smart, Coffee says, it would strike a deal with the feds, and quickly. In rule violations and breaches, federal regulators generally appreciate a touch of diplomacy, or contrition. An easy settlement might only cost the electric carmaker tens or hundreds of thousands—while a loss at court could cost it millions. (Back in 2003, the SEC fined one company $25,000 for a take-private transaction gone foul.)

Fighting the SEC, on the other hand, might get the electric carmaker in to deeper trouble, for more legal headaches lurk. By Tuesday, three Tesla shareholders had filed proposed class action lawsuits against Musk and Tesla, alleging the CEO tweeted to squeeze Tesla short sellers and goose its stock price. (If that was the plot, it worked for a spell—the stock spiked, then settled back to its previous price.) To win their cases (which may be combined), the plaintiffs will have to prove Musk meant to screw with the stock price. That means they’ll have to find a paper trail, or be able to string together enough compelling evidence to convince a jury or judge of what Musk was thinking when he tweeted. But if Tesla loses a case to the SEC, Coffee says, elements of that judgement could be used during a civil case. Bad begets bad.

Musk, and Tesla by extension, have always been scrappers, and unafraid of a fight. For years, the CEO has expressed intense frustration with short sellers, and with the requirements that come with being a public company. (Recall that he called analysts’ questions “bonehead” and “dry” during a May earnings call.) But when it comes to the SEC, some contrition might be wiser. Indeed, Musk seems to have temporarily gone the more conventional CEO route, announcing Monday night that he’s working with serious financial institutions like Goldman Sachs and Silver Lake, and serious law firms, like Wachtell, Lipton, Rosen & Katz, and Munger, Tolles & Olson, on the take private transactions. Now that federal investigators are involved, the well-paid lawyers are here, too.


More Great WIRED Stories

While Elon Musk Pushes to Take Tesla Private, China’s Nio Files for a $1.8 Billion IPO

At a time when Tesla CEO Elon Musk struggles to take his company private, Nio, a Chinese manufacturer of premium elected vehicles, filed to go public in a stock offering that could raise as much as $1.8 billion.

Nio, whose Chinese name translates as “Blue Sky Coming,” began making deliveries in June of its first electric car, the ES8. The company is planning to introduce a lower-cost SUV next year and more models in subsequent years.

In the first half of 2018, Nio reported less than $7 million in revenue and net loss of $503 million. The automaker said that it had delivered 481 ES8 vehicles through July and had “unfulfilled reservations” for more than 17,000 electric vehicles.

Musk, meanwhile, has been expressing his interest in delisting Tesla from the U.S. stock market, after chafing under the pressures of increasing production in a public market. On Monday, Musk wrote on Tesla’s blog that a Saudi sovereign wealth fund approached him about helping to take Tesla private.

Nio’s filing listed Tesla as one of its key competitors. Tesla is investing $5 billion in a new production facility in China, which will be its first outside the U.S.

China is the world’s largest passenger vehicle market. According to Frost & Sullivan, battery-powered electric vehicle sales are expected to increase by more than 40% a year in the country through 2022.

A Passenger Catches a Delta Air Lines Baggage Handler At His Worst (At Least, You Hope It's His Worst)

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

You work hard. You fly hard.

Sometimes, you even have to check a bag because, oh, it’s going to be a long trip. 

Or, perhaps, you’re flying with kids.

There’s a certain level of trust involved. You can’t expect airlines to treat your bags with complete reverence.

Your one true hope is that the bags arrive, they’ve not been tampered with and they’re not damaged.

Yet when Delta passenger Joshua Swain Firth looked out of a window on Wednesday at the airline’s JFK baggage handlers performing their tasks, it wasn’t a joyous sight.

A suitcase was tossed with its handle still up. 

And then there was the stroller. 

I know it’s hard enough for families when they fly with kids, with all the equipment they need just to function.

Here, though, the stroller misses the slide and goes flying over the railing and crashes hard on the tarmac.

I currently have no news of the stroller’s condition. I know it wasn’t treated with intensive care.

I asked Delta for its view of this part of the airline’s service. A spokeswoman told me: 

We apologize for the lack of care demonstrated while handling the stroller in this video and are following up directly with the employee to ensure better handling in the future. This is in no way representative of the great work Delta people do each day as they help thousands of customers and their bags safely reach their destination.

When your bag does arrive damaged, what can you do anyway?

You want to get away. You have things to do. You simply hope your suitcase is still closed and your stroller will open.

Indeed, one commenter on Firth’s video, Monique McCaw-Haskett, offered her own Delta tale: 

Got off a Delta Flight once and my stroller had three wheels…didn’t realize one wheel was missing until I got to baggage claim. Not sure what was worst: my stroller being damaged or me strolling my kid all the way to baggage claim and not realizing I was pushing a stroller with a missing wheel?!?!

Of course, this incident does underline one of the difficulties for airline employees, too.

Because of the nature of modern air travel, they have many customers sitting around observing their every move.

Those customers have phones. Or, rather, cameras with phones attached.

I’m not sure I’d like it if too many parts of my day were not merely under scrutiny, but in danger of being made public at every moment.

How SendGrid Uses AI To Deliver 1.5B Emails Every Single Day (And Kill The Spammers)

Email is 20 years old and everyone claims to hate it … but it still tops the charts as a leading marketing channel. Today’s email, however, is not your grandma’s “You’ve Got Mail.”

For one thing, there’s a lot of AI behind the message.

The reason: to protect the future viability of the medium.

“We have had to invest an incredible amount of time and people and process in protecting email as a channel,” SendGrid chief executive officer Sameer Dholakia told me today at Traction Conference in Vancouver, Canada. “We have numerous AI systems in place to determine are companies a good customer at sign-up, and 100 different variables that tell us if this mail is actually wanted.”

SendGrid has 74,000 paying customers — including Spotify, AirBnB, and and Uber — and sends 1.5 billion messages on an average day. That means the company touches more than three billion unique email recipients every quarter, Dholakia says.

At that scale, eliminating spam and improving email quality is beyond manual processes.

So the company has turned to artificial intelligence.

“It’s a business imperative to us to vet those users before they sign up,” Dholakia says, and the reason is obvious.

If too much spam gets sent from SendGrid servers, the big email conveyors of the world will start treating all email from SendGrid as spam. And that would impact all of its legitimate customers.

So the company uses AI at point of customer sign-up to vet new customers, using data the customers provided as well multiple other data sources. Bad actors tend to attempt multiple sign-ups, and letting even a few in could degrade the experience for other customers.

“Last quarter we signed up 5K new paying customers,” Dholakia says. “You can’t have a human being checking each new customer.”

Sendgrid mostly appeals to SMBs, although it clearly has enterprise-scale clients. 

The interesting thing the company has found is that many medium-sized to larger clients use between two and six email tools to do their marketing and support campaigns.

“Corporate marketing will be using one of the big marketing clouds,” he told me. “But the regional office in Detroit can’t get on the corporate promotion calendar … so they go online and find a small simple tool to help them get their campaigns out quickly.”

Sendgrid’s goal, Dholakia says, is to “to build the worlds most trusted customer communications platform.”

That’s going to move beyond email soon, with the company looking at expansions into other messaging methodologies like in-app, push, SMS, and likely others.

Each of them will likely require some expertise in AI to weed out the spammers.

New York Freezes Ride-Sharing Vehicles, Orders Minimum Wage for Uber, Lyft Drivers

Uber, Lyft, Via, and others won’t be able to add new vehicles to the roads of the five boroughs of New York City following a 39-6 vote by the city council to freeze registrations for one year.

About 80,000 vehicles are currently used for so-called “ride sharing,” in which drivers get a hail through an app. They complete 17 million rides a month. The city licenses for street hailing just under 14,000 yellow cabs and fewer than 4,000 “green” taxis, which can’t pick up fares in the lower two-thirds of Manhattan. The council said it will use the next year to study congestion and other factors.

The council separately voted to require a minimum wage for drivers that work with high-volume ride-sharing services—those that dispatch 10,000 or more rides per day. The regulation didn’t specify a dollar amount, but a report presented to the city’s Taxi and Limousine Commission last month by the Center on Wage and Employment Dynamics suggested $17.22 an hour, which would be $15 plus the overhead costs of operating a vehicle. Right now, only 15% of drivers make at least that much.

The freeze may result in fewer vehicles on the road, as the city won’t allow easy licensing in most cases, and about 25% of drivers exit the services each year. An Uber spokesperson noted, however, that 35,000 for-hire vehicles are licensed and not currently driven, and that many licensed vehicles aren’t driven every day or time of day. That may allow companies to offer incentives for vehicle owners to start driving or lease their vehicles to others.

In a statement, Lyft’s Vice President of Public Policy Joseph Okpaku said the council’s rules translate to “sweeping cuts” that will disproportionately affect “communities of color and in the outer boroughs.” An Uber spokesperson said that the move offers no improvement for congestion or to the subways; the company supports comprehensive congestion pricing.

The rise of Uber and others has caused a complicated set of new alliances and charges of racism and economic servitude from all sides. Rallies were held by proponents and opponents of the new for-hire vehicle rules earlier in the day.

Yellow taxi drivers, subject to regulated pricing, have found themselves working harder for less return, while the value of a required taxi vehicle license, a medallion, has dropped precipitously. Six drivers have committed suicide in recent months. People of color and immigrants predominate among yellow cab drivers. Green taxis, designed to encourage pick ups in underserved areas outside of Manhattan, never took off as the city wanted, and their numbers declined sharply as app-hailed vehicles hit the road.

Meanwhile, drivers for the app-based services have grown dramatically, increasing congestion in dense areas of Manhattan—according to the city council and other government bodies—without providing their drivers with a viable or consistent living wage, either.

Anti-discrimination proponents have backed vehicles dispatched by app as providing a way for people of color to obtain a ride reliably, rather than be illegally ignored by street-hailed cabs, and offering far better access to get picked up or dropped off outside of limited core areas of the city.

Dun & Bradstreet to go private for $5.38 billion

(Reuters) – Data and analytics company Dun & Bradstreet Corp said on Wednesday it would be acquired by a group of investors led by CC Capital, Cannae Holdings and funds affiliated with Thomas H. Lee Partners LP, for $5.38 billion in cash.

Dun & Bradstreet shareholders will receive $145 in cash for each common share, the company said.

The price represents a premium of 18 percent to the stock’s Wednesday close. The deal value is based on 37.1 million shares outstanding, according to Thomson Reuters data.

Including debt of $1.5 billion, the deal is valued at $6.9 billion.

The deal will be financed through a combination of committed equity financing provided by the investor group, as well as debt financing, the company said.

J.P. Morgan is serving as financial adviser to Dun & Bradstreet, and Cleary Gottlieb Steen & Hamilton LLP is serving as its legal counsel.

Reporting by Shubham Kalia in Bengaluru; Editing by Gopakumar Warrier

Microsoft Windows 10 Has A New Monthly Charge

Ever since its creation, Microsoft has described Windows 10 “as a service”. The fear has always been that this meant Microsoft would start charging users a monthly fee to maintain the operating system, and now a new leak has confirmed this is exactly what will happen… 

In a new report, CNet’s well connected Microsoft specialist Mary Jo Foley reports the company will soon launch ‘Microsoft Managed Desktop’ which will charge a monthly fee to configure computers running Windows 10 and keep them running smoothly as new updates are released.

Windows 10 might not be free forever…Microsoft

Foley also notes “Microsoft already has a number of the pieces in place to make this happen” such as a Windows Autopilot automatic device provisioning service, device financing programs like Surface Plus and a ‘Surface as a Service’ leasing program. Microsoft also has a subscription bundle including Windows 10 and Office 365 called Microsoft 365 and Windows 10 Enterprise subscription plans.  

Furthermore, Foley states “One of my contacts said that Bill Karagounis – former Director of the Windows Insider Program & OS Fundamentals team, who last year joined the Enterprise Mobility and Management part of Windows and Devices – is in charge of the coming Microsoft Managed Desktop.”

With Microsoft also publicly hiring for this new division, managed subscriptions for Windows 10 appear to have the green light.

Windows 7 and Windows 8 who did not upgrade are likely to feel vindicatedGordon Kelly

So what’s the good news? At this time, Foley believes Microsoft Managed Desktop will be targeted at businesses. But the obvious question, given the clear direction Microsoft is moving becomes: for how long?

Foley did ask Microsoft to go on the record about Microsoft Managed Desktop, but the company declined to comment.

All of which means those users who chose to stay on Windows 7 and Windows 8 are probably feeling pretty smug right now. As for everyone who upgraded for ‘free’ to Windows 10, the nagging question must be: will it prove too good to be true?

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Three Reasons Microsoft Stopped Free Windows 10 Upgrades

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Google Leak Reveals Massive, Expensive Pixel 3 Problem

Much like Samsung leaking the Galaxy Note 9, Google has done a similarly impressive job ‘accidentally’ revealing its Pixel 3 and Pixel 3 XL details on multiple occasions. Those leaks primarily delivered good news, until now… 

Picked up both on Reddit and by the consistently reliable WinFuture, GeekBench scores have been uncovered for the Pixel 3XL (codename ‘Crosshatch’). The breakdown reveals predictable aspects such as the phone running Android P and using a Qualcomm 845 chipset at its heart. But it also shows Google is going to deliver the new Pixel range with just 4GB of RAM, and this problematic for several reasons.

Pixel 3 XL ConceptConcept Creator

The obvious point to make is rivals have moved on. OnePlus leads the way with the excellent (midrange-priced) OnePlus 6 coming in 6GB and 8GB variants, while even 4GB-holdout Samsung moved up to 6GB back in 2017 with the Galaxy Note 8. For Google’s flagship device, this simply isn’t at the races from a specifications perspective – especially at the high asking price,

But more importantly, 4GB of RAM also isn’t at the races from a real-world performance perspective, as it coincides with multiple reports of Pixel 2 and Pixel 2 XL performance problems as they age.

Triggered by a series of tweets from Android Police founder Artem Russakovskii, and expanded upon by popular YouTuber MKBHD (video below), the issues are very real and I’ve seen it on both my Pixel 2 running Android O and my Pixel 2 XL running Android P beta. Memory management has begun to struggle – particularly on devices 8-10 months old – and this hasn’t happened to similarly aged rivals like the OnePlus 5T carrying more RAM.

As such 4GB makes the Pixel 3 and Pixel 3 XL a tough sell in late 2018. Especially when we already know both phones won’t have dual cameras which, while arguably unnecessary, are a major selling point with consumers.

The Pixel 3 and Pixel 3 XL represent Google’s third generation of premium smartphones and it was the third generation for Apple (iPhone 3GS) and Samsung (Galaxy S3) which saw their ranges take-off. Consequently, as brilliant as Google’s Pixel software optimisation might be, from a hardware perspective the company risks blowing it just as iPhones become cheaper and Samsung gets its groove back

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Google’s Pixel 3 Will Add Wireless Charging

Google Logo Spot Verifies Prototype Pixel 3 XL

Google Leak Reveals Pixel 3 Display Sizes

Pixel 3 Leak Explains Three Camera Design

Google Pixel 2, Pixel 2 XL Long Term Reviews: The World’s Best Smartphones

​Dell XPS 13 now ships with Ubuntu 18.04 Linux

One of the eternal complaints about Linux is that it’s hard to install. Really, Linux isn’t difficult to install at all, but I hear you. Most people never install an operating system in their life. Fortunately for you, there are great companies, such as System76 and ZaReason, eager to sell you a great laptop or PC with Linux ready to run. And, there’s one big-time computer company whose name you know, which also offers ready-to-run Linux computers: Dell.

Dell is now offering its latest and greatest laptop, the Dell XPS 13 Developer Edition 9370 with Canonical‘s newest Ubuntu Linux 18.04 Long Term Support (LTS) edition. That’s not the only Linux desktop Dell has for sale. The Austin, TX-based computer giant also offers many of its Precision line of laptops and desktops with either Ubuntu or Red Hat Enterprise Linux (RHEL) 7.3.

The newest XPS 13, though, is the crème de la crème of Dell’s laptops. Designed for high-end users, the Ubuntu XPS 13 is built by software developers for software developers as part of Project Sputnik, with 13 configurations.

All the models include dual Thunderbolt ports, a USB 3.1 port, an SD card reader, a headset jack, and a 52-watt battery. The top-of-the-line developer edition comes with 16GB RAM, a 1TB SSD, and a UHD (3,840 x 2,160) 13.1″ display. To run your programs it uses an 8th Generation Intel Core i7-8550U Processor. The pricing for this model hasn’t been released yet. It would appear that it will be approximately $2,000.

If that’s too rich for your blood, you can also get the low-end Dell XPS Developer Edition, which is $1,050. This model comes with an Intel Core i5-8250U processor, 8GB of RAM, 128GB SSD, and a full HD display.

I’ve used earlier models of the Dell XPS 13 with Ubuntu. While I loved my high-end ones, you can still get a lot of work done with even the low-end systems.

You see, Dell has been working with Canonical to make great Ubuntu laptops since November 2012. Barton George, Project Sputnik and Linux lead at Dell, said, “When Project Sputnik debuted over five years ago we launched with one config of our XPS 13 developer edition on Ubuntu 12.04. Fast forward to today and thanks to the interest and support of the community, we are able to announce that our seventh generation XPS 13 developer edition now comes with Ubuntu 18.04 LTS. 18.04 represents Project Sputnik’s fourth preloaded LTS. We’re already looking forward to Sputnik’s fifth LTS in 2020.”

Will Cooke, Canonical’s Desktop engineering director, added, “Dell’s superior hardware combined with Ubuntu 18.04 LTS provides an excellent, reliable experience straight out of the box. Building on our longstanding relationship with Dell over the last six years, we look forward to seeing 18.04 LTS roll out on further [Dell] models in the coming months.”

The new Dell XPS 13 Developer Edition 9370 is available today in the United States. Dell’s site, however, is still having trouble displaying the new editions. If you can’t get through on the website, you may need to call Dell at 888-346-2289. The laptops will be available in Canada and Europe in September.

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Why 2018 Is the Year of the Agile Marketer

Agile Marketers reach consumers faster. They hit their ideal consumer with a message that’s exactly what that person needs to hear. They cut through the noise and delight customers with a solution.

In 2018, Agile Marketers are going to catch fire for a number of reasons. Everything these marketers do is a necessary component of successfully marketing and selling a product today.

And more businesses are realizing that they need Agile Marketers to connect with consumers and get their message through. In Version One’s 11th Annual State of Agile Report, 98 precent of respondents said their organization found success with Agile projects. That’s an astounding number. Yet only 11 percent of those respondents said that they had a high level of competency with Agile projects across the organization.

This gives business strong incentives for pursuing an Agile approach in 2018, and allows plenty of room for growth. It’s the perfect environment for an Agile Marketer to thrive.

The Competition Is Stiff

Businesses are faced with an incredible amount of competition for consumers’ attention. Consumers get hit with ads everywhere they look. And it’s not just billboards and neon signs anymore.

We see ads on Facebook newsfeeds, on television, in-between songs when we stream music. We get hundreds of emails every week from companies that use automated mailing lists. We flip on the TV to watch a football game and see sponsors for each part of the game. The pre-game show, the post-game show, the halftime entertainment. It’s all sponsored.

Everywhere we go we see brands, ads, or sponsorships. Companies need to do something different to stand out. They have to truly connect with their customers in a way that was not as necessary before. There are so many messages being directed at consumers that they’ve become experts in tuning them out. The messages that stick are the ones that connect with the ideal customers.

Agile Marketers can accurately identify their ideal customer’s needs, and supply the message that cuts through the noise and connects. They constantly test and adapt their methods to make sure that their message is resonating. They don’t worry as much about the competition because they’re focused on serving their customers.

You Have to Be Relevant

Companies have randomly contacted me before to offer me their service, and my first reaction was to wonder how they got my email or number. But some of them were so on point with their understanding of who I was and what I needed, that I was actually kind of thankful they reached out. Because I needed what they offered and it was a perfect match.

When someone can accurately peg you, and they provide a sincere solution that can help you, they’re going to make sales. And according to a CMG Partners study, 80 percent of CMOs surveyed said that adopting Agile helped them deliver a product that was both better (and more relevant) to their customer.

We Have New Technology at Our Disposal

Technology gives us tremendous opportunities to reach people in new ways. As Agile Marketers, we can find people that have a true need or problem we can solve, and we can reach them faster.

Our ability to target the ideal customer is better than ever. We have accurate, real-time information at our disposal. We can easily place an ad online, use Facebook Manager on the backend, and select a target audience.

Where do they hang out? What are their interests? What books do they read? What shows do they watch? If you’re targeting entrepreneurs, you look for people who watch Shark Tank and The Profit, or buy books on starting their own business.

Every time someone hits a ‘like’ button, they make an action that is trackable online. Agile Marketers can advertise more accurately than ever before with that information. 

You Have to Shift Gears Quickly

Agile is about being flexible and productive with your operations. It’s about reacting quickly to changes in the market. It’s about making decisions that are fast, but data-driven.

In that same CMG Partners study, 93 percent of CMOs said that adopting Agile had helped them switch gears more quickly and effectively than before. That ability to adjust and pivot is critical in an age where decisions are driven by testing and data collection. 

When we do split testing, for example, we ask, “Who truly needs this product?” What are the problems they need solved? How can we add value with our solution and get them to connect with that?

We can’t just turn on a campaign, let it run for months, and expect it to be effective. We have to test, be iterative, and work to find the right message.

An Agile Marketer thrives in that environment, and that’s exactly what we’re going to see happen in 2018.

Table-Pounding Buy For This 15.4% Yielder, Midstream Exposure With No K1s, Strong Sector Recovery Underway

This report has been produced with High Dividend Opportunities author Julian Lin.

Master Limited Partnerships (‘MLPs’) are an asset class which we frequently write about and for good reason: their enticing combination of predictably high distributions and steady cash flows make them important income generators for any dividend portfolio. We believe that valuations for MLPs are very attractive and this coupled with a strong outlook may lead to strong returns moving forward. We are recommending shares of ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B (MLPQ) which is an exchange traded note (‘ETN’) tracking the return of 2 times the Alerian MLP Infrastructure Index (AMLP) – or tracking AMLP at 200%. We believe that shares have the potential to provide strong capital appreciation in addition to a high level of income.

Source

Introduction To MLPs

MLPs historically have fulfilled an important niche in investment portfolios. Because their businesses act essentially like a “toll road,” charging customers such as oil producers a fee for using their pipeline infrastructure for transportation of their refined products, MLPs had their earnings see less correlation risk with the price of oil than typical oil stocks. The idea is that the demand for oil will still be there regardless of the price – and thus will see much less volatility than the price of oil. At the same time, because they typically pay a high proportion of cash flow as distributions to common shareholders, they have earned the love of investors seeking dividend, especially those looking for a steady and growing dividend income stream.

Ridiculously Low Valuations – Same as when the Oil Price was at $30/Barrel

That said, MLPs prices can have some correlation to the price of oil: For example when oil prices rise producers increase production to maximize profits, and when oil prices drop producers are less motivated to produce oil.

Today the oil price has reached over $73/barrel, and the vast majority of the new oil production is coming from the United States.

(CNBC WTI Crude)

It is very surprising to see that while both oil price and oil production have risen dramatically the past year, Midstream MLPs have not only failed to follow through, but have also seen their multiples compress.

(Yahoo Finance)

Very Attractive Sector Valuations

This has led to MLPs becoming attractive based on several historical valuation comparisons.

At 7.9%, the average MLP distribution yield is much higher than the average since 2010:

(Pieces in Place for MLP Rebound in 2018)

AMLP currently trades at a spread of 5.0% versus 10 year U.S. Treasuries.

(Alerian MLP Index)

This is much higher than the historical spread of 4.34%:

(Alerian MLP Index)

We can see that MLPs at 10.2 times EBITDA are also greatly undervalued based on historical EV/EBITDA multiples:

(Pieces in Place for MLP Rebound in 2018)

The tale of the tape says it all – MLPs now see their shares priced near the lows when the price of oil dropped below $30 per barrel in early 2016:

But Outlook Is Strong

As we saw above, valuations for MLPs reflect extreme pessimism. That said, the fundamentals suggest exactly the opposite.

While there have been some distribution cuts in recent quarters, for the most part distributions for the sector have continued to trend higher:

(Alerian MLP Index)

Production for crude oil and natural gas (the two biggest industries for MLPs) are projected to continue to soar higher due to increased demand:

(Goldman Sachs Opportunities Income Fund)

Increased production must lead to increased utilization of pipelines as these products must be transported to their final destinations. This in turn is expected to lead to strong EBITDA growth – 12% compound annual growth rate :

(Goldman Sachs Opportunities Income Fund)

The is a very high growth rate compared to any other sector!

The high expectations stem from anticipation that oil prices can not only sustain current prices but may even have the ability to roar higher. For one, Washington has recently proposed sanctions on Iran which are slated to begin in November. Iran is one of the largest exporters of oil in the world with about 2.2 million barrels per day in the past month, so such sanctions would do more than just move the needle.

This leaves the shortfall in oil production to both OPEC and the United States to make up for the drop in production, but here we are very optimistic given that OPEC only agreed to modest production increases recently. So most of the production increases will continue to be sourced in the United States. Oil production continues to grow at a phenomenal rate especially at Eagle Ford, the Permian, and Bakken:

The problem here is that there is so much production that the demand for additional MLP infrastructure has skyrocketed, especially in the Permian basin.

In fact, in the Permian alone, we are seeing record production in its entire 100 years of production:

This is more than what the current infrastructure can handle. This has also affected the natural gas market, as there aren’t enough pipelines to transport natural gas away from the Permian, prices there have dropped significantly. While there are indeed projects to help transport roughly 8 Bcf/d of natural gas from the area, more demand for pipelines is likely to be seen as Permian natural gas production is projected to reach up to 20 Bcf/d in a few years.

While this “bottleneck” may prove stressful for producers, this has created the perfect environment for MLPs. All this increased demand means that midstream pipelines will be running near capacity, and this of course opens the door for very profitable growth projects moving forward.

Case in point: when Enterprise Product Partners’ (EPD) pipeline from Midland to Sealy came online they were able to charge 25% premiums to market tariffs:

(pgjonline)

According to Oppenheimer Funds, there were a number of additional growth projects announced in May by MLPs:

Reasons For The Valuation Disconnect

The most important development in recent months may have been the policy change back in March 2018 that the Federal Energy Regulatory Commission (‘FERC’) would no longer allow interstate pipelines organized as MLPs to recover income tax allowances in cost of service rates. The issue raised by the FERC was whether income taxes paid somewhere in the system can be taken into account in calculating rate of return for rate regulated pipelines. For MLPs the taxes are paid by unit holders and so the argument of the FERC was at the time that the MLP itself shouldn’t be able to deduct the cost of the taxes.

This announcement alone sent the MLP sector falling as much as 10% that very same day before closing down almost 5%. After MLPs began to give statements as to the impact to projected 2018 EBITDA, it was clear that the fears were overblown. In fact, according to the latest monthly report of the Goldman Sachs Opportunities Income Fund (GMZ), the impact of the FERC decision will only reduce EBITDA by 2.4% for the sector in 2018 (using a weighted average method).

There may also be fears that due to the depressed equity valuations, many MLPs may see a higher cost of capital. To this effort, many MLPs have made commitments towards an end goal of being able to self-fund growth projects without equity issuance. This is reflected in a lower amount of projected capital expenditure expense in relation to EBITDA moving forward:

(Pieces in Place for MLP Rebound in 2018)

Therefore going forward, debt levels will be significantly reduced for the sector.

Furthermore, instead of secondary offerings many MLPs have also been utilizing preferred shares as an alternative source of capital which still provide competitive costs of capital:

(Pieces in Place for MLP Rebound in 2018)

Investors with a long term horizon know to never sell equities in panic of what “may happen” and should instead make decisions based on what “will happen.” We view all of the above as short-term headwinds because management teams at MLPs in general have shown the ability to adapt to this changing environment resulting in a degree of resiliency for their companies.

MLPs continue to see strong demand for their pipelines and this combined with historically attractive valuations lead us to pound the table and call a bottom on MLPs.

Great News for the Midstream Sector!

As a result, the midstream sector took a big hit in March 2018 due to the uncertainty and potential loss of revenues resulting from this ruling. It also contributed to a continued weakness in the sector, despite oil price rallying significantly since March 2018 from $59/barrel to over $70/barrel.

Update on the Ruling

The FERC issued its final ruling last week saying that it will simply reduce the rate used in calculating taxes from 35% to 22% rather than disallow any deduction altogether. This is a big change and a big positive for MLPs.

The new rule limits the effect of the limitation on deductions and will boost income for some midstream MLPs. What is also important to note is that the provision that pipelines operating under negotiated rates (almost all of them do – very few rate filings actually lead to hearings and rulings) do not have to change anything at this time. It is also important that pipelines earning 12% return on equity or less do not have to take action and will not have a new rate case filed by FERC.

As a result, for all pipelines the net effect of the change in the FERC ruling will be much less than previously expected, and for most pipelines, there will be no short-term effect whatsoever. So we expect that the weakness seen since March 2018 to start reversing. This is very bullish for the Midstream Sector!

How We Prefer To Invest In The MLP Recovery

When we have such high conviction on a sector, we find it appropriate to “up the ante” by investing with a bit of leverage. MLPQ is an ETN which allows us to do just that, as it seeks to track the performance of 2 times that of AMLP. This means that it is also passively managed.

Below we can see the full portfolio holdings of MLPQ:

The Top Five

  1. Energy Transfer Partners (ETP) is a name which we have been bullish on for a very long time since June of last year. We wrote about this name just last month and believe that it is just dirt cheap in spite of the fact that many of its growth projects are just now coming online.
  2. Enterprise Product Partners (EPD) is a blue chip MLP which we have also been and continue to recommend. EPD focuses on natural gas and is well capitalized with one of the best balance sheets in the industry with a BBB+ investment grade rating.
  3. Magellan Midstream Partners (MMP) is the other main blue chip MLP in the space which mainly transports refined products and crude oil. MMP also has a very strong balance sheet with a BBB+ investment grade rating.
  4. Williams Partners (WPZ) currently is being pursued by its general partner Williams Companies (WMB). It is worth to note that WPZ’s profitability was projected to be negatively impacted by the FERC initial ruling in March 2018 to the tune of around $150 million per year in “distributable cash flow”. WPZ is set to see a strong recovery after the FERC’s final ruling last week.
  5. Plains All American (PAA) is a former industry darling which after seeing its stock plummet due to excessive leverage, has committed to a disciplined deleveraging program. Furthermore, PAA has a very strong position in the aforementioned Permian Basin.

The 15.4% Yield

MLPQ’s pays distributions on a quarterly basis, but investors should note that they can be lumpy and vary from quarter to quarter. This is because the ETN pays its distributions “as they are received” from the underlying index. UBS lists the distribution yield on their website based on the last quarter paid and annualizing it. However, to have a more accurate figure on the yield, let us look at the distributions paid during 2018.

Source: UBS Website

Therefore using a distribution of $3.7930 for the past 9 months results in a yield of 15.4% annualized.

More About MLPQ

  1. MLPQ has a 0.8% expense ratio, and according to its prospectus supplement, its financing rate is 0.8% plus 3-month LIBOR, which currently is about 2.33%. The low financing costs are a big advantage as this is much lower than what the typical retail investor would be able to attain through most brokers.
  2. Investors should be aware of the nature of exchange traded notes (ETNs). ETNs are simply notes issued by banks. In the case of MLPQ, investors are taking the credit risk of UBS Bank which is one of the most solid global banks with a very high credit rating.
  3. MLPQ is twice leveraged and invests in a sector which has historically been volatile. Therefore, MLPQ is not for everyone. Low-risk investors are better off getting exposure to the non-leveraged ETF AMLP which gives the same exposure.
  4. Although MLPQ seems to be risky because it is twice leveraged, the risks are mitigated by the fact that the ETN is highly diversified into 29 different companies. The risks are further reduced because the sector is trading at attractive valuations.
  5. MLPQ seems to have a low daily volume, but like the vast majority of UBS products, there are always market makers with a bid and ask price which reflect the product’s book value. MLPQ almost always trades at book value which is the value of its underlying securities.
  6. Most of the leveraged products (ETNs and ETFs) that are available in the markets are reset on a daily basis and are meant for daily or short-term trading. These ETNs can carry an extensive level of risk if held over an extended period of time because the gains and losses are magnified due to the daily reset mechanism and leverage slippage. Unlike these leveraged products, MLPQ is reset on a monthly basis, and therefore there is little or no “magnification effect” (including leverage slippage) over the longer term. MLPQ was designed by UBS to be held as a long-term investment rather than a short-term trading vehicle.

Advantages of investing in MLPQ

  • Unlike its MLP constituents, MLPQ does not distribute any K-1 forms, which is a clear advantage come tax season. US investors get the distribution payments taxed as ordinary income and totally avoiding K-1 taxes.
  • A good point to note is that MLPQ does not pay any “Return of Capital” (‘ROC’). It only pays investors what it receives from its underlying index components, and therefore there are never any destructive returns.
  • MLPQ also gives the investor a diversified exposure to the entire sector. There is a tendency for asset managers to experience ups and downs in performance and this may lead large investors to shift funds to “hot” asset managers. By investing in the entire sector, the danger of “betting on the wrong horse” is eliminated. The 2X leverage amplifies the upside (but can also amplify the downside).

30% Upside Potential – Not Counting Growth

As noted above, the sector is currently trading at very attractive valuations, with a spread of 5.0% versus 10 year U.S. Treasuries, versus a historical spread of 4.34%. This is despite a strong growth and a very solid outlook. We believe it will not be long before the sector starts trading at around its historical valuations which would give MLPQ an upside potential of 30% without factoring in any growth, which is estimated at 12% compound annual growth rate. This is also without taking into account the generous 15.4% yield.

Bottom Line

The bull case for MLPs is as strong as it has been in several years as valuations remain near cycle lows. After 4 years of deleveraging, de-risking of operations and moving toward self-funding of capital expenditures, the sector is in its best financial shape since the boom times. It is also a great place to be invested with growth picking up in the US shale business. This is a table pounding recommendation to load up. MLPQ is an attractive way to gain exposure to the sector, for which investors are paid 15.4% to wait for prices to reflect the true underlying value of their earnings. Both final ruling from the FERC and strong earnings results that we are set to see in Q2 2018 should provide the tailwind for a strong sector recovery. At High Dividend Opportunities, we extensively cover the midstream sector, and continuously provide our investors with a list of the best buys in this space.

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

Note: All images/tables above were extracted from the Company’s website, unless otherwise stated.

Disclosure: I am/we are long MLPQ, EPD, ETP.

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.

AT&T: Dropping To New Lows

Article Thesis

AT&T’s (T) second quarter results showed that the company has serious operational problems. Due to weak sentiment, shares dropped to a new multi-year-low following the earnings release.

AT&T has to focus on stabilizing its legacy businesses, while integrating Time Warner and while also investing for the future. That will not be an easy task, but if AT&T succeeds, its total returns over the coming years could be quite strong.

AT&T’s Legacy Businesses Perform Weaker Than Expected, But The Outlook For Warner Media Is Strong

AT&T announced its second quarter results on July 24. The company reported revenues of $39 billion, a decline of two percent versus Q2 2017. Revenues had been declining for a couple of quarters, but since the acquisition of Time Warner closed during Q2 (which boosted results during the quarter) the market was expecting a better performance.

The takeover of Time Warner, which closed on June 14, has positively impacted AT&T’s revenues by roughly $1.1 billion during the second quarter. Without the takeover, AT&T’s revenues therefore would have declined to about $37.8 billion, which would have represented a revenue decrease of about 5%. This would have been the worst revenue performance in a long time, as revenue declines were limited to low-single digits in the past:

Chart

T Revenue (Quarterly YoY Growth) data by YCharts

This relatively weak performance of AT&T’s legacy businesses is not surprising when we take a closer look at the factors that play a role:

Source: Earnings presentation

AT&T’s Mobility business has shown the best performance, despite a very small revenue decline, the segment produced higher profits. This was based on an increase in the segment’s EBITDA margin. AT&T Mobility profits from strong customer count growth, AT&T was able to add 450,000 new prepaid phones during Q2 alone.

Unfortunately, revenues per customer have shrunken slightly, which can be blamed on pricing pressure due to telecoms fighting over market share. It looks like this infighting in the telecom industry could be stopped at least momentarily, though: Cellphone bills in the US started to grow again this summer, for the first time in two years.

If this remains the case AT&T and other telecoms will see their revenues per user increase over time, which would be a major positive for AT&T. With increasing revenues per user, customer count growth thanks to net adds, and tight cost controls AT&T’s mobility segment would be able to generate solid earnings growth.

The outlook for AT&T’s Entertainment group is less promising. The segment saw its sales decline by $1 billion over the last year, margin declines pressured profits further. This comes despite a strong pace of net additions for AT&T’s DTV NOW (340,000 during Q2). At the same time, as DTV NOW continues to grow, AT&T loses customers in its traditional TV business. Revenues per user for traditional TV services are substantially higher than the revenues AT&T can generate via DTV NOW. This is the reason why revenues continue to drop at a substantial pace (8% during Q2) despite the fact that the total customer count is rising.

Going forward things will, in all likelihood, not get better. The declining customer count for AT&T’s traditional TV services is the main problem for the segment, and this trend will, most likely, persist.

Source: cg42.com

cg42, a consulting firm, forecasts that 5.4 million Americans will cut the cord during 2018. Especially Millennials and Gen X consumers are increasingly avoiding traditional paid-TV. As younger generations are avoiding paid-TV, the business environment will not get better for paid-TV offerors such as AT&T.

Main points of criticism of those that cut the cord are high prices and having to pay for channels that are not desired. At least the second point of criticism could be avoided if a-la-carte offerings came into play. If consumers don’t have to pay for a bundle, which includes many channels that consumers are not interested in, but if they can instead choose which channels they want and are willing to pay for, cord-cutting could most likely be slowed down. Even in such a scenario, it seems unlikely that traditional TV will ever become a growth industry again, though.

AT&T’s best-performing segment is Warner Media, former Time Warner. Especially HBO continues to perform very well, both in terms of revenue generation as well as in terms of producing high-quality content. Warner Media received 166 Emmy nominations during 2018, 6 more than during 2017, with two thirds of those Emmy nominations being achieved through HBO. HBO’s revenues during the second quarter totaled $1.53 billion, a 13% increase over the prior year’s second quarter.

HBO’s most famous and most successful series is Game of Thrones. There hasn’t been a new season of GoT this year. The next season of the show will come out during 2019. The fact that HBO was able to grow its subscription revenues by double digits even without a new release of GoT during 2018 is a major positive. It is likely that HBO’s growth will accelerate during the next year when GoT returns with its final season during H1 2019.

AT&T Will Have To Invest To Keep Its Legacy Businesses From Shrinking Further

The outlook for Warner Media is strong, but AT&T will have to invest into its other businesses to stabilize them, as Warner Media will not be enough to generate attractive growth rates for AT&T.

A key point for investment is 5G. AT&T’s 5G Evolution technology, which is an intermediate step between 4G and 5G, with speeds of up to 400 Mbps, is already available in 140 markets. AT&T plans to launch true mobile 5G in a dozen markets towards the end of 2018. If this plan succeeds, and if AT&T keeps investing heavily to build out its 5G network over the coming years, this could provide a much-needed competitive edge.

Smaller telecom players will not have the means to build out a functioning 5G network at scale in the foreseeable future. AT&T and Verizon (VZ) will therefore be able to create a technological edge, which should result in rising market shares for these two players. The competitive advantage of providing faster connections would also justify higher prices, which would drive revenues per user.

In order to be able to focus on the most important tasks, and to free up cash to pay down debt, AT&T should try to sell non-core businesses that are not beneficial for the company. The company’s Latin America business, for example, is not doing much for AT&T’s top or bottom line:

Source: AT&T Earnings

The bottom line contribution is miniscule, and revenues as well as earnings have declined over the last year. AT&T could probably fetch a couple of billions by selling this unit. AT&T would be better off if it sells the Latin American business and uses the cash proceeds to pay down some of its debt. If AT&T does not want to get rid of all of its Latin American businesses, it should at least sell its paid-TV businesses, as the subscriber count stagnates. The Mexican wireless business is not overly profitable either, but generates strong subscriber growth, and could therefore become more profitable in the future.

AT&T’s Guidance Increase Is Nothing To Cheer On, Earnings Growth Is Primarily Based On Lower Taxes

Usually the market reacts positively to guidance increases, but in AT&T’s case, the market sent shares lower despite management’s positive comments: The company now sees profits per share of at least $3.50, which represents an increase of 15% year over year. In the most recent 10-K filing, we see that AT&T paid tax rates of 33%-34% in the past, the tax rate has dropped to 22% during H1 of 2018.

All else equal, the tax rate decline from 33% to 22% would have driven net income up by 16% [0.78 divided by 0.67]. The fact that AT&T is only forecasting a 15% increase in its earnings per share despite the tax rate tailwind is thus not a reason to cheer.

Source: finviz.com

At just above $30, AT&T’s shares are trading at a multi-year low right now, the last time shares were valued at $30 was in 2012. Relative to the forecasted profits, AT&T looks quite inexpensive here, as shares are valued at less than 9 times this year’s earnings.

Shares offer a very compelling dividend yield of 6.6% right here, and due to strong free cash flows, the dividend looks very safe. Due to the dividend yield being so high not much else is needed for 10%+ total returns. If share prices would rise by just above 3% annually investors would see double-digit total returns.

If AT&T can successfully integrate Warner Media, and if its 5G investments start to pay off and its legacy wireless business is stabilized, earnings growth and multiple expansion are not unlikely at all.

Analysts are forecasting a 5% earnings per share growth rate over the coming five years, which seems achievable if AT&T executes well. In this case, no multiple expansion would be required for the company to deliver 11%-12% annual returns, a rising valuation would boost returns further.

Bottom Line

The market reacted negatively to the weak performance of AT&T’s legacy businesses. The outlook for the Entertainment group remains weak due to cord-cutting pressures, but thanks to 5G and ending price wars the wireless business could perform in a solid way going forward.

Despite the fact that earnings growth during 2018 will only be generated via tax rate cuts and the takeover of Time Warner, the outlook over the next couple of years is not bad.

Investors get a high and safe dividend, and share price gains over the next couple of years are relatively likely as well. Shares could remain under pressure in the short term, though.

Author’s note: If you enjoyed this article and would like to read more from me, you can hit the “Follow” button to get informed about new articles. I am always glad to see new followers!

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in T over 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.

Green Energy With 9.4% Yield, Pullback Creates Unique Buying Opportunity

This report has been produced together with High Dividend Opportunities authors Philip Mause and Julian Lin.

Pattern Energy Group (PEGI) is an owner/operator of wind and solar power generation facilities. It traded recently at $17.80 and pays a dividend of 42.2 cents per quarter for an annual yield of 9.4%. PEGI is not an MLP and issues 1099 tax forms, so that investors do not have to cope with K-1 hassles.

Because of the nature of its generating units, changes in the world oil price have no effect on its financial performance. This suggests that this is a good stock for income investors seeking to diversify and reduce correlations to oil prices. PEGI’s share price has pulled back recently for reasons we will explain below, and now trading at a very attractive price. PEGI is also in the middle of an active growth program. Shares are a great buy for a high dividend yield and further potential for dividend growth.

The Green Opportunity

The mounting evidence concerning the impact of carbon emissions on the environment has steadily forced governments all around the world to make a shift towards renewable energy sources a priority.

Global renewable power capacity has compounded at around 8.3% annually since 2011:

(International Renewable Energy Agency)

This doesn’t look like a trend that will end anytime soon, especially considering that the US Department of Energyʼs National Renewable Energy Lab has estimated that by 2050, 80% of all power in the U.S. can come from renewable sources.

Still investing in green energy has been a tricky task. Those investing in solar companies discovered quickly the lack of pricing power and some dependence on government tax credits. Furthermore, many of these green energy companies tend to trade at sky-high valuations and limited earnings. One needs to look no further than at the chart of First Solar (FSLR) to understand how hard investing in this trend has been:

(Yahoo Finance)

The good news is that there is an investable sector which finds itself squarely benefiting from the green energy trend. YieldCos are companies which invest in power generators of renewable energy. As a sort of green energy utility company, they tend to boast extremely consistent revenue streams and in combination with the consistent growth from new projects, are able to pay out a large and growing dividend yield. This sector is very interesting because in many cases companies trade at reasonable valuations despite being in a fast growth macro environment benefiting from the green energy trend.

About PEGI

PEGI’s primary business is the operation of wind and solar electricity generating facilities in the United States and, increasingly, globally. PEGI typically acquires a completed project with a power sales agreement and then operates the project and services project debt.

Source

Many of the projects are partnerships or joint ventures in which PEGI does not have 100% ownership. The power sales agreements are typically long-term contracts with strong counterparties such as electric utilities. These contracts have a long 14-year average remaining term and an A average credit rating:

PEGI has diversified its capacity well among projects:

PEGI is also well-diversified among offtakers (the buyers of the energy production):

The major variable is the amount of electricity generated which varies depending on wind performance. PEGI has mitigated this risk through diversification via geography:

PEGI now has facilities with nameplate capacity of some 4 gigawatts and is targeting much higher levels of capacity and output. Each project is, to a degree, a separate entity with its own debt and ownership structure. The debt is generally non-recourse which limits the danger of one disastrous project impacting the entire company.

PEGI has also recently entered the development side of the business. PEGI now owns some 29% of Pattern Development 2.0 – an entity which organizes, funds and completes new projects for sale to entities like PEGI. Depending on the success of the development process, the profits can be considerable. PEGI has a right of first refusal on Pattern Development 2.0 projects and – because of the relationship – a fairness opinion is obtained at the time of sale.

The Japan Expansion And Long-Term Plan

PEGI made a major step into the international market in Q1 2018 by acquiring a group of Japanese projects. Because the acquisition was made in March, the projects did not significantly contribute to Q1 financial results. Three of the projects are already on line and producing revenue and the other two are in late development. The entry into the Japanese market is a very promising development for several reasons.

First of all, Japan has a strong commitment to renewable energy due in part by its lack of fossil fuels and its caution with respect to nuclear reactors after recent troubles in connection with a tsunami. As per Japan’s Ministry of Economy, Trade and Industry, it has set forth an energy plan for 2030 in which it will generate about 22-24% of energy from renewable sources (excluding hydro-power):

It is likely that there will be a steady stream of projects coming on line in Japan and PEGI will be well-positioned to participate in this growth.

Secondly, the economics of operations in Japan are very attractive. The Japanese electric rates paid to power generators are roughly three times the equivalent rates paid in the United States. The current power purchase agreements (‘PPAs’) are $220-360/MWh with 20-year terms. For roughly the same equipment and maintenance costs, an operator can generate 300% of the equivalent U.S. revenue.

Finally, interest rates are extremely low in Japan and these projects are significantly leveraged. To give an idea, on one of the Japanese projects PEGI has obtained an interest rate of 0.72% and on another of these projects, this came with a loan which matures in 2033 and has an interest rate of 1.07%.

The entry in Japan promises to offer very attractive opportunities to generate cash flow at the operating level and substantial profits at the development level.

Japan is one of its key growth drivers via identifying “Right of First Offer” (‘ROFO’) opportunities. It has already identified via ROFO more than half of the needed capacity to reach its 2020 target of 5,000 MW. This also does not take into account its potential 10,000 MW from its development pipeline:

The path to growth is clear and the growth runway is long – continued ROFO acquisitions will help support future CAFD/share growth.

Recent Financials

PEGI’s first quarter results were solid. PEGI had “Cash Available for Distribution” (‘CAFD’) – a metric somewhat similar to the “Distributable Cash Flow” (‘DCF’) metric used by MLPs – of $43.1 million (or 43.8 cents a share) in Q1. Revenue was up 10% on a year-over-year basis and adjusted EBITDA was up 6% on a year-over-year basis to $104.2 million. Q1 GWH sold attributable to PEGI’s share of projects was up 4% year over year.

PEGI is guiding to CAFD of between $151 million and $181 million for full-year 2018, which would be a 14% increase year over year which is enormous. The mid-point of that range ($166 million) would imply a valuation of Price/CAFD ratio of 10 times.

The Dividends

PEGI has paid a dividend of 42.2 cents for the past three quarters. Prior to that, PEGI had increased its dividend 15 consecutive quarters.

The cessation of the dividend increases may have attributed to some weakness in PEGI’s share. That said, the attractive growth pipeline and ROFO opportunities suggest that more growth may be in store for this 9.4% yielder.

The Big Pullback last week has created a Buying Opportunity

The stock significantly pulled back last week (by 10.5%) based on some negative news coming from Canada.

Ontario Vowed to Nix Clean-Power Projects: The piece of news that significantly affected the price of PEGI last week was related to Ontario’s Premier Doug Ford vowing to cancel and wind down more than 750 contracts for renewable power projects, making good on a campaign pledge to revamp the province’s energy policies. Terminating the early-stage projects, which the government didn’t identify, would save electricity customers in the Canadian province C$790 million ($600 million). How would this affect PEGI?

  • PEGI has 4 operating projects in Ontario with total owned MW capacity of 382 (out of a PEGI total of 2942). Three of these projects have “power purchase agreements” (or ‘PPAs’) running through 2034; the fourth runs through 2035. PPAs are generally firm and binding – otherwise financing could not be obtained. These projects are not likely to be affected. At the end of the PPA in 2034, there will be a different government in Ontario and while it is possible that the purchases will not be continued or will be at a lower price, by that time PEGI will have recovered its costs and results that far off are speculative and do not materially affect valuation.
  • Pattern Development which is now partially owned by PEGI has 3 projects in Ontario (these projects are not owned by PEGI but they are described as projects PEGI is likely to acquire). Two are operating and one is under construction. None could be described as “early stage.” All three have PPAs but we do not have any details on the number of years that these PPAs run. It is likely that they are 20-year deals which commenced in 2017 or so, and thus will run to even later dates than the PEGI-owned projects described in the first bullet point above. It is unlikely that the Ontario government will want to pay the costs of terminating these PPAs.
  • While the Ontario developments are troubling and remove one attractive venue for future development, they also underline the importance of PEGI’s decision to enter the Japanese market.

Therefore, we do not view that the Ontario situation will have any significant impact on the profitability of PEGI and has created a buying opportunity. In fact, we believe that the pullback has also resulted in great buying opportunity which was also shared by Goldman Sachs (NYSE:GS) which issued a statement saying that “PEGI is unharmed by Ontario cancellations” and that PEGI’s risk-reward as one of the more attractive setups in its coverage.

Risks

  • Risks include lower wind flows, public policy changes to the disadvantage of renewable energy, and site-specific operational problems. In this regard, the public policy that is most critical to projects in the United States is not federal government policy but the policy of many states to require higher and higher percentages of electric generation by renewable each year. There is no sign that these policies are being abandoned.
  • Increasing size and geographical diversity will limit the risks of decreased wind flow and site-specific operational issues going forward. The attractive aspect of PEGI from the point of view of a yield-oriented energy investor is that it has no exposure to the impact of the world oil price.

Bottom Line

PEGI’s price decline in the past months is most likely due to the cessation of quarterly dividend increases. PEGI is in the middle of an aggressive growth program and, as we have pointed out in other articles, this can create short-term pressures on cash flow because the expenses of growth show up in financial statements well before the cash flow materializes.

As for the pullback in price by 10.5% last week, it has opened the door for a unique buying opportunity.

PEGI’s full-year CAFD projection is consistent with Q1 numbers and may even be somewhat conservative given the growth projects underway. Trading at a valuation of 10 times current CAFD, PEGI is very cheap given its growth prospects. The growth track record and credible plans for more growth, likely future increases in CAFD and dividends, and no exposure to the world oil prices make PEGI very attractive to yield-oriented investors with its 9.4% yield.

We recommend to use the recent price decline to buy more stock. There may soon be a reassuring press release and/or 8-K about the Ontario situation which would lead the stock to pop. Investors who get in today are also buying before the market “bakes in” the effect of the potentially high profit from the Japan investments which are likely to result in higher share prices.

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All images/tables above were extracted from the company’s website, unless otherwise stated.

Disclosure: I am/we are long PEGI.

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

How Circles.Life Created The Netflix Of Telco In Singapore

The Circles.Life foundersCircles.Life

Since its launch in May 2016, the Singapore-based mobile virtual network operator (MVNO), Circles.Life has been a determined upstart committed to shaking things up in Singapore’s telecoms industry. For a long time, there were only three operators in the island state — Singtel, Starhub and M1.

Now with Circle.Life’s relatively successful 2 year presence, it seems that consumers are opting to leave the old guards of telecomms services and hop on board the young, bold provider. Declining to give exact numbers, Rameez Ansar, co-founder of Circles.Life, shared they are now reaching 3-5% of market share and claim that 24% of Singaporeans are looking to switch to their services. In fact, 43% of their subscribers also come from referrals.

Rameez Ansar, co-founder of Circles.LifeCircles.Life

It wasn’t easy getting to this position though. Consumers doubted that digital telcos are the future or how the company could provide such incredible, low cost data packages. Incumbents were typically offering 3-4GB data plans at much higher costs. For instance, with Circles.Life, you can receive 20GB monthly mobile data for approximately $15 with no additional hidden costs. This seemed too good to be true until consumers had a chance to try it for themselves. As Ansar puts it, “we disrupted the industry through technology to give power back to the customers​.”

Targeting consumers who rely on internet-connected devices, are data savvy and use data as their main currency, the team went forth to “tap into this market segment and offer what they need the most, unlimited data.” This way consumers never have to worry about exorbitant costs when they exceed limits. Besides providing unlimited data, the young upstart prides itself for being fully digital and giving customers flexibility and control over managing their telco needs through an easy-to-use app.

Cost savings also seem to be one of the perks for going digital, with Circles.Life claiming to have saved 95% of operational costs with this model. In fact, the startup partners with one of 3 incumbent operators, M1, and leases their existing network infrastructure thus negating the need to build from scratch.

Analyst, Sachin Mittal noted in a DBS Equity Research report that with Circles.Life, M1 is seeing a growth in revenue. “We think revenue share from Circles.Life could be a big factor here. Fixed revenues rose to approx. $26.3 million (+33% YoY) due to higher fibre customer base and contributions from corporate segment projects and comprised 17% of the total service revenue,” reported Mittal. 

Local influencers, Michelle Lee and Charlotte Tan with their masterpiece for Circles.LifeCircles.Life

However, while their attractive packages and over-the-top advertising campaigns attracted hordes of attention — one publicity stunt included ‘vandalising’ subway walls, an act that’s technically illegal in Singapore — the team are finding it a challenge to stay relevant in this growing market. The need to be agile and constantly evolving is a strong one as they’re always on their toes to “identify rapid growth opportunities across the telco portfolio, including 5G, IoT, and cross-vertical partnerships, such as mPayments,” explained Ansar.

One such growth opportunity the team has identified is an expansion of their services to Indonesia. Considering the sheer penetration of mobile devices (expected to reach 47.6% in 2019) and how it’s the most popular device used to access the Internet there, this expansion made simple business sense for the Circles.Life team. Besides this expansion, Ansar shares that they’re working on opening an R&D center in Bangalore, bringing them closer to becoming a digital lifestyle platform.

Circles.Life teamCircles.Life

Circles.Life has set a standard for innovation and bold moves, heating up the telco industry in Singapore. Now a newcomer, TPG, plans to enter the market end of 2018 and shake things up further. Circles.Life remains undeterred though. Noting that customers are more value sensitive than price sensitive, Ansar assures they “will continue to over deliver through innovation and customer first features, while remaining competitive on price.”

All of which they believe is possible because of Circles-X, a cloud system they created 5 years ago that aligns all the key systems in a nimble manner — network operations, customer service, logistics and delivery, to the consumer facing digital experience. With this system, they are also able to react quickly to customers’ behaviours and launch or change products within weeks — effectively catering to their needs swiftly.

So now by slowing chipping away at the market share in Singapore and offering data-hungry mobile users bigger, bolder plans they can customise at the click of a button, Circles.Life is ultimately doing what Netflix is doing for content-hungry users.

Losing Streak Emerges As NYC, Hired Guns Lose Climate Change Case Against Big Oil

New York City Mayor Bill de Blasio’s climate change lawsuit is, so far, unsuccessful, as a federal judge has thrown it out of court. (AP Photo/Julio Cortez)

Federal judges continue to reject the efforts of private lawyers who hold a financial stake in lawsuits brought by government officials against the oil industry over the alleged effects of climate change.

On Thursday, a New York federal judge dismissed the lawsuit brought by New York City and attorneys at Hagens Berman working on a contingency fee against five of the biggest oil companies in the world, finding that the issue has already been decided by the U.S. Supreme Court.

It’s not the job of the judiciary to regulate greenhouse gases, Judge John Keenan wrote. That task rests with the federal government, says Keenan’s opinion, endorsing the thoughts of the California federal judge who tossed lawsuits from San Francisco and Oakland in June.

It’s another blow to the group of plaintiffs that has climate change cases in federal court.

“Although the City agrees that ‘federal common law has long applied to’ suits against ‘direct emitters of interstate pollution,’ it contends that its claims are not governed by federal common law because ‘the City bases liability on defendants’ production and sale of fossil fuels – not direct emissions of [greenhouse gases],” Keenan wrote.

“However, regardless of the manner in which the City frames its claims in its opposition brief, the amended complaint makes clear that the City is seeking damages for global warming-related injuries resulting from greenhouse gas emissions, and not only the production of Defendants’ fossil fuels.”

Currently, all but one in the recent string of climate change lawsuits are in federal court. Several counties and cities in California kicked things off last year, and a federal judge has remanded their cases to state court to deal with state law issues.

But defendants – Chevron, BP, Exxon, Royal Dutch Shell and ConocoPhillips – have appealed those rulings to the U.S. Court of Appeals for the Ninth Circuit.

However, Judge William Alsup drew the cases of San Francisco and Oakland and asserted federal jurisdiction over them, then threw them out of court.

King County, Wash., is using the same private lawyers, working on a contingency fee, as many of the plaintiffs. Its case is also in federal court.

Boulder, Colo., looked like it was going to be free to litigate its case in state court but recently decided to amend the lawsuit to include a claim for civil conspiracy. Filing an amended complaint allowed defendants Exxon and Suncor to remove the case to Colorado federal court, where it will be heard by a judge appointed by President George W. Bush.

Rhode Island Attorney General Peter Kilmartin’s lawsuit is the only case in state court, though the time period for the many defendants to remove it to federal court has not expired.

New York City Mayor Bill de Blasio used the law firm Hagens Berman for his case, as have many of the other plaintiffs, to push a theory of “public nuisance” on the oil industry.

Unfortunately for the plaintiffs, there exists U.S. Supreme Court precedent that says it is the job of the Environmental Protection Agency to administer the Clean Air Act and regulate greenhouse gases.

“As an initial matter, it is not clear that Defendants’ fossil fuel production and the emissions created therefrom have been an ‘unlawful invasion’ in New York City, as the City benefits from and participates in the use of fossil fuels as a source of power, and has done so for many decades,” Keenan wrote.

“More importantly, Congress has expressly delegated to the EPA the determination as to what constitutes a reasonable amount of greenhouse gas emission under the Clean Air Act.”

Resisting these lawsuits have been several Republican state attorneys general and the Trump administration. Opposition to the cases argues that is the job of the legislative and executive branches to regulate greenhouse gases.

Where these cases have been filed has not been surprising. In Rhode Island, the state previously attempted a similar “public nuisance” theory on the former makers of lead paint. Boulder has a history of addressing climate change, and Washington’s King County is home to Hagens Berman’s headquarters.

And California and New York have reputations as two of the country’s most favorable jurisdictions for plaintiffs lawyers.

“We’re thrilled with Judge Keenan’s decision today to dismiss the City’s baseless climate change lawsuit. New York is already a haven for excessive litigation and this kind of lawsuit only adds to the problem,” said Tom Stebbins, executive director of the New York Lawsuit Reform Alliance.

“Trial lawyers are attempting to politicize the legal system and stretch tort law far beyond its purposes in search of the next litigation jackpot.

“Unelected, profit-seeking trial lawyers should not be pushing public policy through the courts. That is not the role of the civil justice system; it is the domain of Congress and state legislatures – elected officials accountable to the people.”

A final note: Exxon’s defense includes an attack on statements made by the California cities and counties when they presented bond offerings. A Texas judge has found that those municipalities told contradictory stories – alleging near certain, climate change-caused doom in their lawsuits while neglecting to inform potential investors in bonds of those dangers.

The California plaintiffs have appealed that ruling, which could pave the way for depositions of and a lawsuit against government officials and Hagens Berman attorney Matt Pawa.

From Legal Newsline: Reach editor John O’Brien at [email protected]

Russians Found One Use for Bitcoin: Hacking the 2016 US Election

Bitcoin is a pain to spend. It is energy-guzzling, perilously slow and, with the prospect of dazzling returns (at least until recently), perhaps best to HODL ‘til you retire. But Bitcoin can count at least one group of spendthrifts among its users: Russian hackers accused of hacking in the 2016 election.

According to an indictment released Friday by the DOJ, the Russian intelligence officers who orchestrated the 2016 hacks of the Democratic National Committee and Clinton campaign funded their operation using $95,000 worth of Bitcoin and other cryptocurrencies. The hackers allegedly used the funds to purchase the domains, servers, and accounts involved in obtaining and disseminating the stolen materials. Charging “conspiracy to launder money,” the indictment states the arrangement allowed the hackers to “avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”

Bitcoin, however, is not necessarily the most obvious choice for those looking to conceal their transactions. While pseudonymous, payments on the Bitcoin blockchain are far from untraceable, a fact that has inspired competing currencies marketed to true privacy hounds, such as Zcash and Monero. Yet it remains the workhorse of hackers for a simple reason: Bitcoin is, compared to competitors, a breeze to spend around the world.

“The payments of goods and services are going to take place in the most liquid and easy to use environment. Right now that’s Bitcoin, and it’s going to be for a long time,” says Jonathan Levin, co-founder and COO of Chainalysis. The company’s software, which traces connections between entities on the Bitcoin blockchain to detect fraud and money laundering, has been used by agencies including the DOJ to conduct cybercrime investigations.

While Levin couldn’t confirm whether Chainalysis software was involved in the current investigation, blockchain analysis typically focuses on intermediaries such as the exchanges that facilitate cryptocurrency purchases. Those exchanges, which are subject to anti-money laundering regulations, can act as a link to forms of real-world identification, like addresses and bank accounts.

The indictment says that the hackers took additional steps to conceal their tracks, purchasing Bitcoin using prepaid cards and via peer-to-peer exchanges, which facilitate direct transactions between individuals, often unsurveilled. According to the indictment, they also mined their own Bitcoin, using those freshly minted funds to purchase the DCLeaks.com domain, which disseminated the stolen materials, as well as the tools used in the spearfishing campaigns.

“This is a good case in point showing that the types of cases cryptocurrency touches has broadened to the full spectrum between local crimes and national security issues,” says Levin. Increasingly, investigators in the US are catching on. On Wednesday, President Trump signed an executive order forming a Task Force on Market Integrity and Consumer Fraud—which focuses on digital currency fraud and money laundering—to coordinate investigations across federal agencies.


More Great WIRED Stories

Gadget Lab Podcast: Panos Panay on Why Microsoft Made the Surface Go

Microsoft is making a big bet on a tiny-computer future: Earlier this week, the company announced the Surface Go, a 10-inch, 1.15-pound little detachable that runs full Windows 10. It’s not the first time Microsoft has made a 10-inch tablet, but its previous efforts resulted in underpowered machines; whereas now, Microsoft exec Panos Panay says, “it’s time.”

Lucky for you, WIRED had the exclusive sit-down with Panay ahead of the product’s launch, and we’re playing part of the conversation here, on this week’s Gadget Lab podcast. Hear what he has to say when Lauren asks him if Microsoft will ever make a Surface Phone.

Some notes: Read the backstory on the making of the Surface Go, reported from Microsoft’s headquarters in Redmond, Washington. The Surface Go wasn’t the only laptop(ish) news to drop this week: Apple also refreshed its MacBook Pro line, and we’ve got the full story here.

Recommendations this week: Mike recommends Google’s new Podcasts app, which launched last month and is a worthy alternative to Pocket Casts and Overcast. Lauren recommends checking out the work of Janet Iwasa, a molecular biologist and professor at the University of Utah who later learned motion graphics just so she could create visualizations of cellular activity.

Send the Gadget Lab hosts feedback on their personal Twitter feeds. Arielle Pardes couldn’t join this week’s episode, but she’s at @pardesoteric and will be back next week. Lauren Goode is @laurengoode, and Michael Calore is @snackfight. Bling the main hotline at @GadgetLab. Our theme song is by Solar Keys.

How to Listen

You can always listen to this week’s podcast through the audio player on this page, but if you want to subscribe for free to get every episode, here’s how:

If you’re on an iPhone or iPad, open the app called Podcasts, or just tap this link. You can also download an app like Overcast or Pocket Casts, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

If you use Android, you can find us in the Google Play Music app just by tapping here. You can also download an app like Pocket Casts or Radio Public, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

We’re also on Soundcloud, and every episode gets posted to wired.com as soon as it’s released. If you still can’t figure it out, or there’s another platform you use that we’re not on, let us know.

Catalyzing Innovation via Centers, Labs, and Foundries

Industry, government and academia working togetherDepositphotos enhanced by CogWorld

The cornerstone of collaboration is based on knowledge transfer; sharing of research tools, methodologies and findings; and sometimes combining mutual funding resources to meet shortfalls necessary to build prototypes and commercialize technologies.

Collaborations often involve combinations of government, industry and academia who work together to meet difficult challenges and cultivate new ideas. A growing trend for many leading companies is creating technology specific innovation centers, labs, and foundries to accelerate collaboration and invention.

As the development of new technologies continues to grow exponentially and globally, collaboration has more value as a resource for adapting to the rapidly emerging technologies landscape by establishing pivotal connections between companies, technologies and stakeholders.

In the US Federal government, the National Labs (including: Lawrence Livermore, Oak Ridge, Argonne, Sandia, Idaho National Laboratory, Battelle, and Brookhaven, and Federally Funded Research and Development Centers (FFRDC’s), and federally funded Centers For Excellence have been outlets for innovation and public/private cooperation. The benefits of the Labs’ role include experienced capability in rapid proto-typing of new technologies ready for transitioning, showcasing and commercialization. The Labs are a reservoir of specialized skills and capabilities with the best state-of-the art facilities for testing and evaluation of technologies.

Industry has increasingly adapted the innovation centers, labs, and foundries model used by government. They are often focused on areas of specific types of technologies where companies have expertise. Their models often include participation by clients, other companies, academia and government.

The focused innovation concept is not a new one, but it’s a proven one. PARC (Palo Alto Research Center), founded in 1970 as a division of Xerox Corporation transformed in 2002 into an independent, wholly owned subsidiary company, has been dedicated to developing and maturing advances in science and business concepts with the support of commercial partners and clients.

There are a variety of promising and exciting new initiatives in the PARC mold. For example, in the growing area of artificial intelligence and deep learning, Nvidia opened up a lab in Toronto dedicated to the technology. Giants such as IBM, Microsoft, Google, Cisco and many others in the AI ecosphere have all established innovation centers to create, collaborate, and develop in a wide range of technology disciplines, including AI.

Similarly, in defense and aerospace, leading companies such as Lockheed Martin, General Dynamics, Northrup Grumman, and Raytheon all have invested in labs, centers and collaborative projects to develop better solutions for the warfighter.

Dell EMC recently announced the creation of the world-class High Performance Computing Dell EMC HPC Innovation Lab in Austin, Texas. Booz Allen’s IHub will serve as the headquarters for Booz Allen’s Dark Labs team, an elite group of security researchers, penetration testers, reverse engineers, network analysts and data scientists dedicated to stopping cyber-attacks. And, Intel Corp. is opening an Information Technology Innovation Center in Folsom, California to stimulate and attract innovation in IT research and development.

An interesting approach is the global positioning of Foundries. AT&T has established Foundry innovation centers in 6 cities around the world, and since its inception, has started more than 500 projects and has deployed dozens of new products and services. Each Foundry has a specialized research, prototype, and networking area, including IoT, Edge computing, and cybersecurity.

Image credit: AT&T; enhanced by CogWorld

The exponential arrival of new technologies in diverse areas such as genetic engineering, augmented reality, robotics, renewable energies, big data, digital security, quantum computing and artificial intelligence necessitates rapid, comprehensive approaches that innovation centers, labs and foundries can help fulfill. The result of such collaborations will both keep us apprised of new paradigms and contribute to a seismic shift in breakthrough product discoveries. Such cooperation could speed up the realization of the next industrial revolution and bring benefits beyond our expectations.

A Fresh Perspective On Customer Service Outsourcing

The mention of “outsourcing” in customer service brings up an image of a giant call center, in a foreign country, packed with people who work in 12-hour shifts. Companies partner with these centers to provide affordable customer service for their end customers. While these are the norm, a new paradigm of customer service outsourcing is emerging. Customers are outsourcing their own customer service issues to third parties.

Up until now, contacting companies with an issue or complaint has been time-consuming and painful.  Customers have to navigate complex phone menus, wait on hold, and explain their issue to representatives several times. If an airline passenger wants to resolve a lost baggage claim via email, they need to draft emails and search around the web for the right contact information and process to follow. Sound familiar?

These critical pain points led to the creation of several companies (detailed below) which develop mobile apps that take care of service issues on behalf of the customer. In other words, they enable people to outsource their issues and complaints to a third-party service, one that is specifically optimized for resolving customer service issues. From a customer’s point of view, it’s perfect. Just hook it up and a “personal concierge” will take over and bombard the offending company until they resolve the issue or provide a refund.

Companies and contact center leaders need to brace themselves for the rise of this outsourced customer complaint model. While it’s certainly great for customers in terms of speed and convenience, it adds another dimension of complexity to how contact centers will have to operate moving forward.

The On-Demand Economy

The rise of outsourced customer complaints is a byproduct of the On-Demand Economy. People can get a ride in an instant with Uber or Lyft; have something shipped to their house by Amazon, or have someone run their errands through TaskRabbit. As the On-Demand Economy proliferates through more aspects of our daily lives, it’s inevitable that customer service will be quick to follow.

In general, the On-Demand Economy has already changed customer service in many ways. Companies are trying to make their contact centers more efficient through the use of technologies like machine learning and AI.  Yet those technologies, while extremely effective, still assume that an end customer is reaching out with their issue or query. What’s changing now is the fact that customers can simply outsource their complaints to a third party. Need a refund for a delayed flight? Simply ping the third party, and have them contact the company on your behalf while you move on with your life. This is the basic, and extremely powerful, value proposition of the On-Demand economy – and it’s going to have serious consequences for the contact center.

The Apps are Already Here

Outsourced customer complaints are not a thing of the future. These apps and services are already here today, and contact centers need to adjust their strategy accordingly.

Take AirHelp, for example, who are a leader in this space. An app which plugs into your email inbox and automatically scans for all the flights you’ve taken in the last three years. It then runs them through a database to determine if any were delayed or cancelled — automatically identifying possible refunds you could be entitled for. If an eligible delay is found, AirHelp will automatically contact the airline and ensure you get your refund, while keeping a percentage of the funds as a success fee. An amazing deal, considering you would have never even known that airlines owed you refunds for flights you already took during the last few years. You literally have free money sitting in your email inbox, and AirHelp helps you get it without lifting a finger.

“I started AirHelp to save people from the horrible customer service of airlines that has been a race to the bottom since the birth of low cost carriers. We call it Justice-as-a-Service (JaaS),” says Henrik Zillmer, Founder & CEO of AirHelp. “By automating the validation and processing of refund claims we gave travelers a consumer rights lawyer in their pocket, which provides them with instant legal advice on their case.”

Another one is “Service”, which launched in 2015 and has taken a strong hold in the travel industry. Today they offer two key products — one which proactively alerts a traveler if their flight has been delayed and helps them get compensation automatically. The other which monitors your hotel bookings, and if the price drops at any time, will automatically secure the lower price for you. The response from customers has been very positive, with the bulk of customers relying on Service for solutions in the airline and travel industries.

Putting the customer first is just good business sense,” said Michael Schneider, Founder & CEO of Service. “Most travelers don’t want to take the time to complain following flight issues, but that doesn’t mean they don’t want compensation for their inconvenience.”

With apps like AirHelp and Service, contact centers must prepare for an increase in outsourced customer service interactions.

Spike in Volume

The math is simple. The easier it is for customers to offload their complaints to a third party, the more issues contact centers are likely to receive. Customer service teams will have to handle complaints  from these third-party representatives, which are often quite different in nature from a regular customer interaction. These outsourced services will be more efficient, professional, and equipped with all the information they need to get an optimal outcome for the end customer.

Some outsourced services may even be sophisticated enough to invoke legal action, if their customers’ issues are not resolved promptly. To cope, contact centers will need to have technology and data infrastructure in place to handle a rapidly increasing volume of sophisticated interactions in a time-efficient manner.

One key strategy to handle this spike in outsourced customer complaints is to implement an AI solution to work alongside human agents. A customer service agent working in an AI-reinforced contact center is more effective and efficient in their role. Many of the mundane repetitive tasks are solved with machine learning on behalf of the agent. As a result agents have more time for sophisticated interactions, such as those raised through third party customer complaint services.

As third-party services like AirHelp and Service continue to grow in popularity, customer service leaders must get ahead of the trend. Companies need to look at upgrading their agent training programs and investing in AI tools to make sure that every service issue results in a positive outcome – no matter who is on the other end of the complaint.

New Galaxy Benchmarks Uncover Samsung's 'Good' and 'Bad' Note 9 Phablets

, Opinions expressed by Forbes Contributors are their own.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9  (Photo: Lluis Gene/AFP/Getty Images)

</div> </div> <p> </p> <p>The international (Exynos) benchmark shows a lower single-core score and a higher multi-core score compared to the US (Snapdragon) model. These will not be the final scores as the tests will be with pre-release software which is unlikely to be optimized for the final hardware. I would expect both versions to see improvements in their respective scores as the launch arrives, and there’s every chance that software updates through the life of the device will show continual improvement.</p> <p>Because the choice of models will be network dependant, users in a specific region will have no choice which model to pick up. You get ‘good’ or ‘bad’, but I would expect Samsung to follow a similar pattern to previous years and maintain the ‘experience; over the models. That means for Note 9 users the limiting factor will be the Snapdragon architecture. The ultimate power of the Note 9 (at least those using the Exynos chips) will remain a mystery to the average consumer.</p>

<p><a href="http://www.forbes.com/sites/ewanspence/2018/06/27/samsung-galaxy-note-9-launch-release-date-specs-prices-confirmed/" target="_self"><em>Now read more about Samsung’s plans to launch the Note 9, and the effect it has on the S10…</em></a></p>” readability=”29.5410176532″>

As has been the case in previous years, the Galaxy Note 9 will ship in two major chip variants – the Qualcomm Snapdragon model will be available in the USA (notably to accommodate the different LTE frequencies) while the Samsung Exynos variant will head out to the rest of the world.

Both models have now shown up via online benchmarking tools, and once more it looks like some users will have to accept a ‘bad’ Note 9.  Sammobile reports:

The Exynos 9810-powered Galaxy Note 9 model number SM-N960N posted a single-core and multi-core score of 2737 and 9064 respectively. The unlocked Galaxy Note 9 model number SM-N960F with the same chip has posted a single-core and multi-core score of 3716 and 8984 respectively.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9  (Photo: Lluis Gene/AFP/Getty Images)

The international (Exynos) benchmark shows a lower single-core score and a higher multi-core score compared to the US (Snapdragon) model. These will not be the final scores as the tests will be with pre-release software which is unlikely to be optimized for the final hardware. I would expect both versions to see improvements in their respective scores as the launch arrives, and there’s every chance that software updates through the life of the device will show continual improvement.

Because the choice of models will be network dependant, users in a specific region will have no choice which model to pick up. You get ‘good’ or ‘bad’, but I would expect Samsung to follow a similar pattern to previous years and maintain the ‘experience; over the models. That means for Note 9 users the limiting factor will be the Snapdragon architecture. The ultimate power of the Note 9 (at least those using the Exynos chips) will remain a mystery to the average consumer.

Now read more about Samsung’s plans to launch the Note 9, and the effect it has on the S10…

Smartphone Maker HTC To Layoff A Quarter Of Staff After Years Of Losing Money

HTC Chairwoman Cher Wang gives a press conference on the first day of the Mobile World Congress (MWC) on Feb. 26, 2018 in Barcelona, Spain. (Lluis Gene/AFP/Getty Images)

HTC’s plan for another round of job cuts in Taiwan illustrates just how far the once mighty smartphone maker has fallen behind its rivals, and some analysts see few apparent prospects of that changing anytime soon.

The Taipei-based smartphone maker announced on July 2 that it would lay off 1,500 workers from its manufacturing division, about one-fifth of its total workforce, HTC said in a filing to the Taiwan Stock Exchange. The job cuts come as no surprise given its long decline since 2011 when its share of the global smartphone market peaked at 10.7%, according to IDC. The research firm says HTC now only accounts for about 1% of the market.

“This is like a nightmare that keeps dragging on for HTC,” says Bryan Ma, devices research vice president with market analysis firm IDC in Singapore.

String of losses

HTC’s notice to the exchange said the staff cuts would help it achieve “organizational optimization” of its manufacturing units through a “strategic adjustment of human resources.” The company said it could also make further staffing decisions based on seasonal changes in the markets where its products are sold.

The move to reduce its workforce is in line with HTC’s recent shift toward outsourcing more of its factory work to save money, according to an analyst with Taipei-based market research firm TrendForce.

The company had been planning the layoffs as early as last year, says Eddie Han, senior industry analyst with the Market Intelligence & Consulting Institute. But he thinks eliminating workers who are responsible for production rather than engineering will “not significantly affect HTC’s overall survival,” he says.

The last time the company made similar cuts to its workforce was 2015, when 2,300 jobs were lost. It was also the same year that HTC was removed from Taipei’s blue-chip stock index. The smartphone maker reported a net loss of NT$16.9 billion ($560 million) for 2017, which was its third straight year of failing to turn a profit.

HTC also changed its leadership in 2015. Chairwoman Cher Wang replaced her cofounder Peter Chou as the company’s CEO. Chou was said to be focused on developing new products for the company, as part of HTC’s strategic shift toward targeting the mid-tier smartphone market under Wang’s leadership. She also said that she wanted to improve HTC’s image  in overseas markets to help it gain back some of its lost market share.

Wang’s late father was Wang Yung-ching, the chairman of plastics and petrochemicals conglomerate Formosa Plastics. He had with an estimated net worth of $5.5 billion when he died in 2008. Her husband Wenchi Chen is the CEO of VIA Technologies. Their combined wealth peaked at $8.8 billion in 2011.

More on ForbesA New Camera Will Be The Focus Of HTC’s New U12 Plus Smartphone, But That’s Not Enough

In January, HTC formally sold part of its design division to Google. That deal saw 2,000 workers leave HTC to join its long-term partner in software-hardware projects such as the Pixel phones and Nexus tablets.

The crux of HTC’s losses stem from the fact that an early lead in Android phones that began in 2010 was gradually lost to Samsung as well as a slate of Chinese brands that outperformed the company through their marketing and sales channels, analysts have said over the years.

“HTC’s strength has always been in engineering and design, which is what made it successful in the early years. But they got outgunned in terms of marketing, and this is precisely what is still holding them back today,” Ma says. “Its product design is still world-class, but it has struggled to monetize that with its limited presence in such a competitive environment.”

Can virtual reality be real?

More recently, HTC has been turning to virtual reality (VR) gear and other devices beyond smartphones to bolster its revenue. VR equipment, which sells to gamers under the name Vive, appears to offer some hope for a recovery. “We can predict that it will adjust its deployment in the smartphone industry and the importance of VR will likely to increase in the future,” Han says.

A visitor to the Mobile World Congress in Barcelona plays a game using HTC’s Vive on Feb. 28. (Joan Cros/NurPhoto via Getty Images)

Vive’s 500,000 shipments last year accounted for the third largest share of the global market for VR gear, TrendForce says. Sony and Facebook held the top two spots. The Taipei-based research firm says total shipments across all brands came to 3.7 million units in the same period, and it expects the market to grow to 5 million this year.

Although the VR market is showing some promise, TrendForce cautions that it won’t be enough to make up for the decline in HTC’s smartphone sales anytime soon.

Some Samsung Phones Are Randomly Texting Photos to Contacts and It’s Freaking People Out

Samsung phone owners: Think of the most revealing photo stored in the photo library on your smartphone. Now imagine it being sent to your mother, grandfather, or nephew. It could happen.

Gizmodo first reported that on complaints on Reddit and Samsung’s hosted forums that images stored on at least a few models of Samsung smartphones had been sent randomly and without warning to people in users’ contact lists.

Samsung has confirmed that it is aware of the reports, and a spokesperson said in a statement that the company is looking into whether there’s root cause. The company directed owners having issues to call 1-800-SAMSUNG. Sending photos can be disabled entirely via Settings by disabling storage permissions for the Samsung Messages app. Users can also switch to other messaging apps.

There’s no definitive list of Samsung phone models affected yet, and the issue may be related to recent software updates pushed to phones.

Six days ago, one Reddit user noted that his entire photo gallery was sent to his girlfriend overnight from a Samsung S9+, but there was no record on his phone in Samsung’s messaging app. Another user chimed in that it had happened both to him and his wife with the same models. Both they and other Reddit users who reported the same problem found no record of the messages having been sent, either.

User jdrch summed up a common fear: “Do S9s come with divorce lawyers?”

Meituan-Dianping files Hong Kong IPO, said to raise over $4 billion

HONG KONG/SHANGHAI (Reuters) – China’s Meituan-Dianping, an online food delivery-to-ticketing services platform, filed for a Hong Kong IPO on Monday, an offering that aims to raise more than $4 billion, three people with knowledge of the plans said.

The firm, backed by gaming and social media firm Tencent Holdings Ltd (0700.HK), did not detail the amount of funds targeted or a time frame. Meituan-Dianping is likely to list in October, said the people, speaking on condition of anonymity.

It was valued at around $30 billion in a fundraising round last year. It is aiming for a $60 billion valuation with the IPO, though industry insiders said it may have difficulty reaching that target as it’s still money-losing and relies on cash-burning business model to boost growth.

The company declined to comment on the deal size or potential valuation.

Meituan-Dianping was formed in 2015 from the $15 billion merger of Meituan, likened to U.S. discounting platform Groupon Inc (GRPN.O), and Dianping, akin to U.S. online review firm Yelp Inc (YELP.N).

It faces fierce competition from food delivery giant Ele.me, backed by e-commerce firm Alibaba Group Holding Ltd (BABA.N), as well deep-pocketd new market entrants such as ride-hailing app operator Didi Chuxing.

The firm unveiled a 19 billion yuan ($2.9 billion) loss for 2017, steeper than in the previous two years.

But its adjusted net loss – which excludes the impact of fair value changes of convertible redeemable preferred shares and other items – was 2.85 billion yuan, smaller than losses of 5.35 billion yuan in 2016 and 5.91 billion yuan in 2015.

Revenue rose to 33.9 billion yuan in fiscal 2017, sharply higher than the 12.99 billion yuan made in the prior year.

The filing comes as investors ready for a series of Chinese tech-related IPOs. Smartphone maker Xiaomi Corp on Thursday launched a blockbuster Hong Kong IPO, aiming to raise up to $6.1 billion in the biggest tech-related listing worldwide since Alibaba’s record-breaking $25 billion in 2014.

China Renaissance Group, a tech-focused investment bank led by one of the country’s most famed rainmakers, is also planning a Hong Kong IPO, keen to raise as much as $800 million, people with direct knowledge of the matter told Reuters.

Meituan-Dianping’s other backers include venture capital firms Sequoia Capital and DST Global, Singapore sovereign wealth fund GIC Pte Ltd and state-owned investment company Temasek Holdings (Private) Ltd, as well as the Canada Pension Plan Investment Board.

The firm has mandated Bank of America Merrill Lynch, Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) to jointly sponsor its IPO.

Reporting by Aaron Saldanha in Bangalore, , Adam Jourdan in Shanghai, Julie Zhu and Fiona Lau of IFR in Hong Kong and Matthew Miller in BeijingEditing by Christopher Cushing and Edwina Gibbs

Apple iOS Passcode Crack Revealed by Security Researcher. Watch the Exploit in Action

An iPhone can be unlocked with a virtual keyboard pretending to type lots of passcodes, a security researcher revealed Friday. By sending all possible four-digit PIN combinations as if they came from a USB keyboard, the cracking method bypasses Apple’s protections against incorrect passcode entry, ultimately unlocking the phone once the correct combination is entered.

In a video posted mid-day Friday, security researcher Matthew Hickey demonstrates sending a continuous stream of keyboard input—the equivalent of typing keys very very fast—as all the possible combinations of passcodes doesn’t get blocked by Apple’s security features.

Apple has not yet responded to a request for comment. Hickey told ZDNet he reported the flaw to the company.

Apple’s protections against incorrect passcode entry include longer and longer delays between the entry of each wrong code as well as erasing the phone after 10 incorrect password attempts.

But Hickey shows that even with the erasing option enabled on his phone, his crack inputs code after code on an iPhone without that safeguard enabling.

Hickey’s technique may be the method—or one of them—allegedly employed by security firms Cellebrite and Grayshift to crack phones via brute force methods for governments and law enforcement agencies.

Apple recently confirmed an upcoming version of its iOS operating system for iPhones and iPads would have a USB timeout feature enabled by default. After an hour had passed since a user had unlocked their phone (via passcode, Touch ID, or Face ID), the iPhone Lightning port used for USB connections would no longer accept data. This would lock out current cracking tools.

The company also said it has made changes in the low-level software used to allow interaction with peripherals via USB, like keyboards, to fix security exploits and weaknesses it had found. Hickey’s demonstration only showed it in action against a recent release of iOS, version 11.3, while the current version is 11.4, and version 12 will be out later this fall.

In Hickey’s demo, the phone processes codes at a rate of about three to five seconds each. For a four-digit code and 10,000 possibilities, that would take days to iterate through every combination. For years, Apple’s iOS recommended that users employ six-digit security codes, which would take weeks to hack via Hickey’s method. But security researchers and malicious parties alike have tables of the most likely codes employed by most people, and prioritize their entry for faster cracking.

10 Top Talents that Effective Innovators Possess

While Bezos never acted in blockbuster movies and Alba never launched a car into space, these three powerhouse innovators share key talents and skills across the board.

So, what are the top talents and skills that effective innovators like Musk, Bezos, and Alba possess? Let’s take a look.

When you’re leading a company or trying to bring an idea to life, confidence is absolutely essential. You need to believe in yourself, believe in the product, and believe in the possibility of a bright future. This is what will draw others to your cause-;from key investors to potential customers.

Also known as “determination,” grit is often what separates the wheat from the chaff. Pioneering psychologist Angela Duckworth even wrote a fascinating book on this topic that’s definitely worth the read. But one of the biggest takeaways from that book was that Duckworth discovered talent usually takes a back seat to resilience and drive. Grit is what pushes innovators forward.  

When you go out on a limb to create something, you’re often alone in the process. Even Jessica Alba stated she felt alone in the early stages of building The Honest Company. There were some decisions she made that forced her to draw a line in the sand and stand her ground against other stakeholders in the company.

If you’re going to build the company or product you want, a strong independent streak will help carry you through the tough times.

Famous copywriter and art collector Eugene Schwartz once stated that creation isn’t bringing something completely new into existence. Instead, creativity is when you bring together separate entities that have never been joined before. Uber is a great example of this in action. This startup didn’t invent the idea of ride sharing, but it was the first to connect this concept with the latest digital technologies.

Without the drive to explore and learn new things, you’ll never know what concepts can be joined together to create something truly revolutionary and groundbreaking.

The status quo is never good enough for innovators. They often shake things up-;and sometimes just to see what the reaction will be. But in doing so, they can find ways to work smarter, not harder. And this is what enables them to do more with much less.

While smart innovators tend to be fiercely independent, they don’t try to do everything themselves. It’s an inefficient system and they know it. Instead, they find the right people for the right positions and empower them to do their job as best as they can. This enables them to focus on the areas in which they excel.

Cash is king. No question. The last thing you want to do is create a great product or company that’s great in theory but struggles to make a profit of any sort. Truly great innovators find a way to strike a balance between keeping an eye on the profits while blazing new paths forward.

You cannot be a successful innovator without a solid network. Whether it’s from a personal or professional standpoint, you’ll need support and partnerships to make real change.

You’re rolling the dice when it comes to anything you build or create. The effective innovators are the ones who know when to take a big risk and when to hold back. They also know to listen to their gut even when the data might be telling them otherwise. Sometimes, you have to take a leap of faith and trust it will all work out in the end.

If you want your business or product to take off, then you need to be able to sell it. You’ll need to make a convincing pitch to investors and persuade customers to make a purchase. The successful innovators are the ones who can sell their innovations in their sleep.

Possessing these skills and talents will help you take your innovations-;whether it’s a new company or a book you wrote-;to new heights. However, don’t feel discouraged if you don’t possess all 10. These talents-;like any other talent-;can be honed and developed over time. All you need to do is practice.

Cyber Saturday—When Ireland Rebooted Civilization

Happy Bloomsday, Cyber Saturday readers.

I had the pleasure of spending the week in Dublin, where Bloomsday festivities—the annual celebration of Ulysses, that modernist masterstroke of a novel by 20th century literary luminary James Joyce—are taking place. While I did not stay through the weekend, I did explore the city, retrace some of Bloom’s fictional footsteps, and generally ponder the Irish literary tradition—including the peculiarly essential role the Celtic island played in stewarding and disseminating a body of scholarship that would eventually serve as a foundation for western civilization.

Ireland’s importance to the world of letters extends well before Joyce. Look no further than the Book of Kells. This national treasure is stored a floor beneath the Long Hall library at Trinity College, where the illuminated, bound-vellum pages lay splayed under a glass-capped dais in a darkly-lit room. The relic exemplifies the extraordinary monastic movement that in ages past swept Ireland and kept alive texts, classical and otherwise, in the face of the Roman Empire’s collapse.

Were it not for the Irish, many Latin texts might have been lost to time—or burned in barbaric bonfires. In a sense, Ireland served as a restore point, a reboot for the inherited wisdom and writings of the ancient world. One Thomas Cahill, in fact, argued just this in his two-decade-old bestseller, How the Irish Saved Civilization. (It’s an engaging read, though it admittedly lacks nuance.)

In Dublin, I could not help but consider the country’s heritage in the context of information security. What is cybersecurity but the preservation and protection of data? The safeguarding of valuable info assets? Long before computer servers and machines, there were monks and monasteries. Before hackers there were Vikings and Visigoths. Ireland and its scribes were a rare beacon at the onset of the Dark Ages.

Today devices do much of the rote work for us—replicating and reproducing our silicon-inscribed knowledge—but the ever-present threat of data loss and corruption is no less real. Raiders swarm the wires.

On this Bloomsday, we can learn a valuable lesson by Ireland’s example: Always have a backup plan.

Robert Hackett

@rhhackett

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’sdaily 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.

Senators Demand Answers From Amazon CEO Jeff Bezos About Alexa Mishap

Senators Jeff Flake (R-AZ) and Chris Coons (D-DE) have sent Amazon CEO Jeff Bezos a number of privacy-related questions about Amazon’s Echo voice-controlled speaker, reflecting the growing concern about how the device records and retains users’ conversations, according to Wired.

The senators, who serve as chair and ranking member of the Judiciary Subcommittee on Privacy, Technology and the Law, specifically referenced a widely reported incident last month in which a Portland couple had their conversation recorded by the Alexa voice-recognition software used in the Echo. The device then sent the recording as an attachment to one of their contacts without them requesting it.

Amazon confirmed that the event occurred, and explained that it was caused by a series of unlikely triggers. In their letter to Bezos, the senators demanded action that would prevent the same thing from happening again, said Wired, which obtained a copy of the still unreleased correspondence.

Wired reported that the letter contained almost 30 questions, including about some of the nitty-gritty of Alexa’s data management like when Alexa sends data to Amazon’s servers, how often it does so, how long that captured data is stored, and what period of time after someone says “Alexa” (which cues the technology to perk up) does an Echo record a conversation. The senators also asked whether consumers can delete recordings.

All voice-recognition devices—whether those from Apple, Amazon, Google, or startups—must listen continuously in order to know when its trigger is hit. (On smartphones, a user may opt to use a different trigger.) While Amazon and Google have characterized their respective systems’ privacy components relatively thoroughly, with Apple erring on the side of sending relatively little voice data off of devices, Amazon’s particulars are less well known.

Sen. Coons tweeted a link to the Wired story about their letter shortly after it appeared, and both senators are quoted in the article.