An American Airlines Passenger Was Stuck Next to a 'Screaming and Kicking' Toddler. His Stunning Reaction Went Viral

Imagine your happy place. Now, imagine that in order to get to your happy place, you first have to sit next to a screaming toddler in economy on American Airlines for a few hours.

(Related: We Took Our 2-Year-Old on United and JetBlue. Here’s What We Learned)

We’ve seen this kind of thing happen a lot lately–with bad results and viral videos. There’s the New York state employee who reportedly yelled at a baby on a Delta flight and lost her job (at least temporarily) as a result. There’s the flight attendant who simply kicked a passenger and a fussy toddler off a plane.

And there’s the guy whose response was to record a video of a screaming child on a flightpost it to YouTube, and bask in the social media notoriety.

But perhaps there’s another way to respond. And a passenger on American Airlines who made that choice recently, went viral himself as a result.

Meet Todd Walker, a father of two who just celebrated 30 years with his employer, and who flies as often as four times a month from Kansas City to North Carolina for work.

He’d boarded an American Airlines flight recently on that route, getting seat 33A toward the back of the plane, only to find that the passengers sitting next to him were a mom named Jessica Rudeen, and her two kids: four-month-old Alexander on her lap, and three-year-old Caroline.  

After some chaos in the boarding area, Rudeen hadn’t had a chance to feed the four-month-old–and he started reacting the way hungry four-year-olds are known to do. Then, her three-year-old daughter changed her mind about the whole idea of flying.

That meant Walker was about to get what we might call, “whole toddler experience.” I’ll let Rudeen herself describe the maelstrom, as she did in a post (embedded at the end of this article):

My 3 year old, who was excited before boarding the plane, lost her nerve and began screaming and kicking, ‘I want to get off the plane! I don’t want to go!’ I honestly thought we’d get kicked off the plane. So with two kids losing their minds, I was desperately trying to calm the situation. 

Walker responded in a way that seemed completely unremarkable to him, he told me in a phone conversation this weekend. He just decided to help. As Rudeen explained further, Walker…

reached for the baby and held him while I forced a seatbelt on Caroline, got her tablet and started her movie. Once she was settled and relatively calmed, he distracted her so that I could feed Alexander. Finally, while we were taxiing, the back of the plane no longer had screams. During the flight, he colored and watched a movie with Caroline, he engaged in conversation and showed her all the things outside.

By the end of the flight, he was Caroline’s best friend. I’m not sure if he caught the kiss she landed on his shoulder while they were looking out the window.

Walker also was on the same connecting flight in Charlotte that Rudeen planned to take. He walked her daughter through the terminal to the new gate, and then asked to have his seat reassigned to he could sit next to the family and help out on the second flight, too.

I talked with both Walker and Rudeen this weekend, after Rudeen’s Instagram/Facebook post–which she originally put up because she hadn’t gotten Walker’s last name or contact information, and wanted to connect with him again–got so much traction. As of this writing it has more than 5,000 shares, and it’s been featured in media around the world.

The Walker and Rudeen families say they think their meeting was a result of divine intervention, and that they plan to meet again next month.

“I wasn’t expecting it to get to places like Brazil or Ireland or Australia or the U.K.,” Rudeen told me. “I’m just a stay-at-home mom in northwest Arkansas. But, I’m glad that it highlights the importance of what it means to be kind.”

Walker said he hadn’t thought his conduct had been a big deal, either, and but he welcomed the attention if it inspires other people to offer help, or to notice kindness around them.

“When I walked away in Wilmington, I never thought I’d hear from or see them again,” he said, reiterating that it hadn’t seemed like a big deal to him to respond to the family with kindness.

He also praised Rudeen for being willing to admit she could use the assistance, even in a world where people often have good reason to be wary of strangers. “Part of the reason this worked is that Jessica was willing to accept the help. That’s not always the case today, and I get it.” 

Here’s Jessica Rudeen’s Facebook post:

Is Amazon Slipping? Uncovering a Dirty Secret About Their Seller Policy (by Accident)

Every month, I have a ‘what I need to re-stock on from Amazon’ day. This month, it was time to replace my water filter, so off to Amazon I went. I searched for ‘water filter’, scanned through the first page of results (because who goes to the second page … seriously) and found what appeared to be a winner. 

Amazon Best Seller: Check

Amazon Prime: Check 

Price Point: Surprisingly low (but how?)

Usually, the lower the price, the happier I am. However, ever since I wrote about price gauging and what seemed to be suspicious Amazon activity, I’ve been particularly interested in exploring anything that raised an eyebrow, even if the price was favorable to a consumer. So, I loaded up on the coffee and got to work. 

It might sound like a conspiracy theory worthy of Chinatown, but don’t break out your tinfoil hats just yet. Look at the Waterdrop water filter. It’s a hot product from an Amazon Top 500 seller, a company called EcoLife Technologies LLC. But, it’s totally going against Amazon’s rules.

The Epic Policy Contradiction

Last year, Amazon added strict requirements for water filters sold on its platform. The e-tailer said it would suppress any item listings that didn’t fulfill its standards. Any suppressed item Fulfilled by Amazon (FBA) was liable to be destroyed or returned at the seller’s expense. 

Each product “must be certified to at least the NSF/ANSI-42 standard (including Material Safety, Structural Integrity, and System Performance).” The key point here is “System Performance.”

Here’s where things get interesting. If you look at the NSF’s website, you’ll find that EcoLife’s products don’t adhere to Amazon’s System Performance standards. As quoted on the NSF’s site:

“Conforms to the material and structural integrity requirements only.”

Does this mean that Amazon is selling us water filters that are underperforming? Not necessarily, no, but I do know that Amazon apparently let this company slip through their filter (pun intended).

Oh, but the fun doesn’t end there. I did a little more research and found some surprising facts. First. EcoLife Technologies LLC is registered in both California and Colorado (the official website says they are in California). 

Okay, not a big deal — but I also found out that EcoLife gets their water filters imported from China through a company called Qingdao Ecopure Filter Co., which produces EcoAqua filters. Further, there’s a UK company called Waterdrop Filters whose website is registered to someone at VYAIR, another manufacturer which sells EcoAqua filters on Amazon.

Hmmm…curious

What’s going on here? Well, it’s a possibility that EcoLife isn’t from the US and is just using the system for their own gain. The NSF site shows that EcoLife has a Nevada area code, a Colorado address, but that the facility is in China. It’s also likely that EcoLife is both the manufacturer and seller as there’s not enough markup to indicate reselling.

Don’t get me wrong. I love Amazon and all its great deals. But I think criticism should be given when it’s due and such curious behavior shouldn’t go unnoticed. It’s not the first time, either. Last year, I chastised Amazon for blaming its algorithm when it allowed sellers to hike up water prices during Hurricane Irma.

Others have criticized the platform for wooing Chinese vendors which produced counterfeit goods. A t-shirt designer named Matthew Snow found that 15-20 sellers in Hong Kong and China were duplicating his products. To fight this, Snow was required to “test buy” all 1,500 counterfeited items and send them, along with his legitimate items, to Amazon for testing – something which would’ve cost him $40,000.

What I’m trying to say is this:

A company as big as Amazon needs to enforce their protocol better. They need to make sure all sellers are playing fair and adhering to the same standards. They can no longer turn a blind eye to such offenses. Both consumers and sellers should be aware of the policy and what is being done to actionably reinforce collective best & fair practice.  

I’ve reached out for an official comment from Amazon and will keep this post updated with their response accordingly.

AMD And Intel Had A Baby! And It's A Beast!

In early February of 2018 we published an article about the cooperation between AMD (AMD) and Intel (INTC), or as we dubbed it, AMD’s hidden strategy against Nvidia (NVDA). Please read the original article for more background, but we will summarize some of the key points here.

AMD is now cooperating with Intel. Yes, indeed, hell just may be frozen over at the moment. AMD is selling Intel its Vega GPUs in silicon form, no IP transfer. Intel then packages these Vega GPUs on the same substrate with one of its CPUs to make what AMD calls an Accelerated Processing Unit (APU).

(Image of Intel CPU and Vega GPU attached to a single CPU socket board from Intel.com.)

The GPU communicates with the CPU via an 8x PCI-E bridge and shares power circuitry to create better efficiency.

Ok, so that sounds good for Intel, but aside from shifting more GPU cores, which AMD already has no problems doing, what is the benefit for AMD? Ah, but that’s the “hidden strategy!” You see, one of the biggest hurdles AMD has to deal with at the moment is software support. Nvidia, AMD’s GPU rival, has a stranglehold on the higher end gaming market at the moment. As a result, most of the games coming out on the market are optimized for Nvidia’s GTX GPUs first, and are only later tweaked to perform well on AMD’s hardware.

By partnering with Intel, AMD is able to push Vega GPUs into more mainstream computers. The Intel-AMD APU uses standard AMD graphics drivers and software, though the software bit is skinned with Intel branding. The more AMD equipped computers are out there capable of playing AAA game titles, the more likely are those games to be optimized for AMD first. AAA is an informal classification for top tier games from major studios, and those studios are likely to go for the largest possible market first and foremost. Now it’s Nvidia, but in the future the market mix may shift to AMD thanks to the strategy outlined above.

We just recapped the strategy we think AMD is pursuing, now let’s take a look at the first fruit of that strategy.

AMD and Intel had a Baby, and it’s a Beast!

(Photo of Intel Hades Canyon NUC from cnet.com.)

Meet Intel’s Hades Canyon Next Unit of Computing, or NUC for short. Hades Canyon NUC is a follow up to Skull Canyon NUC released in 2016. Skull Canyon was a big success for Intel sparking many similar small form factor gaming oriented living room computers from other manufacturers. However, it’s biggest downside was its lack of dedicated graphics. Hades Canyon NUC addresses that shortcoming in a spectacular way.

Hades Canyon features Intel’s I7 CPU combined with Radeon RX Vega powered graphics from AMD, all on a single chip, communicating over an 8x PCI-E bridge built directly into the substrate. This gives Hades Canyon enough horsepower to play real VR games or drive up to six monitors. Here is a quote from Sean Hollister from CNET.com who had first hand experience with Hades Canyon at the 2018 CES.

I can attest to that, because I strapped on an Oculus Rift connected to the Hades Canyon myself. The game Echo Arena looked butter-smooth on the system I tried on the CES show floor. I even got Intel to open up the back of its demo station, to prove it was running on this tiny box instead of a hidden gaming rig. Sure enough. How is this sorcery possible? It’s thanks to one of the most surprising and unlikely pairings in silicon history: a new Intel processor with built-in AMD Radeon graphics inside.

Devindra Hardawar from Engadget tested Hades Canyon NUC with various game titles and found performance to be excellent for such a tiny device. According to the article:

Doom 3 ran between 50 and 60 frames per second with High graphics settings in 1080p. [..] It also had no trouble keeping up with a fast-paced game like Overwatch, where I saw between 60 and 90FPS in 1080p with Ultra settings. […] I was also blown away by how well it handled Hellblade: Senua’s Sacrifice, a cinematic indie game that really taxes the GPU. Even with very high settings, it ran between 30 and 40 FPS, which is still playable. Knocking that down to high-quality graphics boosted performance to a smoother 50 to 60 FPS. Overall, the Hades Canyon NUC proved to be a capable 1080p gaming machine.

Devindra also tested the Hades Canyon NUC with Oculus Rift and found that games like Superhot, Duck Season, and Serious Sam VR ran flawlessly with no lag or dropped frames. On top of being a very capable living room gaming PC Hades Canyon NUC might be perfect for large scale VR experiences where players put on backpacks that carry computing hardware for tether free gameplay.

(Photo of a WALKER VR Backpack from Play3r.net.)

Investor Takeaway

Above we described AMD’s hidden strategy of cooperating with Intel in order to further penetrate the gaming market and talked about the first fruit of that cooperation, the Hades Canyon NUC. According to CNET the new Intel-AMD APU is already slated to appear in the 15-inch HP Spectre X360 and Dell XPS 15 2-in-1 laptops later on this year, and we think it’s just a start. This might just be the beginning of AMD GPU domination in the laptop and small form factor market. As AMD penetrates the gaming market more and more games will be optimized for AMD architecture first and foremost which should lead to performance improvements for the discrete AMD GPUs as well.

At the time of writing AMD is trading right around $10.08 down 2.7% for the day on a completely unrelated news coming out of Taiwan Semiconductors Manufacturing Company (TSM). TSM reported weakness due to softer than expected high end cellphone market, but they also reported that they expect high-performance computing chips to make up 40% of the company’s growth over the next five years, from an initial estimate of 25%. TSM is a contract manufacturer for 7nm Vega GPUs and we believe that on a whole this is good news for AMD. We also think that panic selling exhibited today in Micron (MU) is completely unwarranted. If TSM sees growth in the high-performance computing market, that market will also need high performance memory to go along with those processors. But such is the market.

On a whole we are still very optimistic about AMD’s prospects in 2018 and 2019, and still have $20 price target for AMD. Our optimism is bolstered by the industry reception of Hades Canyon NUC. We believe that soon OEMs will recognize the performance and efficiency advantage of Intel-AMD APU, and then they just might start wondering, if Intel-AMD APU is so good, how good is an all AMD APU?

Disclosure: I am/we are long AMD,AAPL,MU.

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.

Amazon Has Over 100 Million Prime Members

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

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

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

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

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

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

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

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

From Bezos’ shareholder letter:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In mid-air, that is.

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

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

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

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

Here’s the teaser.

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

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

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

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

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

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

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

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

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

3 Proven Strategies Every Startup Should Use to Partner With a Bigger Company

Wrangling a partnership with Uber can’t be easy. Large companies can already be difficult to work with–and Uber’s recent history has been, well, tumultuous.

On Wednesday, San Francisco-based car-rental startup Getaround pulled it off. Uber and the startup, which landed on Inc.’s 30 Under 30 list in 2016, have teamed up to create “Uber Rent,” a service that allows users to rent vehicles from Getaround’s fleet through Uber’s app. 

The way the deal came together is perhaps the more interesting news. It’s instructive for any entrepreneur looking to partner with an industry behemoth.

Getaround first approached Uber about a potential partnership several years ago through a mutual investor, says co-founder and CEO Sam Zaid, and talks went nowhere. In the ensuing years, Getaround started gaining traction in the Bay Area. When the company reached out again in late 2016, Uber employees were using the service themselves–and were more willing to engage in conversations. “It wasn’t like we were pitching a pitch deck,” Zaid says. “Everyone knows what Getaround is, everyone in the room knows what Uber is, so let’s talk.”

Then, 2017 hit. For Uber, that meant sexual harassment allegations, lawsuits, regulatory fights, and boardroom power struggles. The Getaround deal stalled.

After a few months of patient negotiations, a pilot program launched in May 2017. The following month, Uber founder Travis Kalanick resigned as CEO–but the program survived, and Uber Rent is now live. Zaid attributes overcoming those roadblocks to three strategies, which every startup should use when striking a partnership:

1. Don’t be afraid to push back.

In classic Silicon Valley fashion, the early conversations around Uber Rent were heavily strategic and guarded. Neither company wanted to reveal its agenda. Zaid says the teams started communicating more transparently after he encouraged his employees to push back against the larger company, earning Uber’s respect. “When you have a smaller company working with a bigger company, a lot of the time, the smaller company is afraid to say ‘no’ or ‘this doesn’t work for us’ or ‘let’s do it a different way,'” Zaid says. “That’s what fostered this degree of trust.”

2. Treat everyone as one team.

Uber dispatched just a handful of staffers to examine a potential partnership. Getaround’s “team” included most of its company. The difference in scale stopped mattering once the parties started viewing the employees involved as a single team, regardless of who paid their salaries. “Obviously, there’s always going to be some tension there,” Zaid admits. “That’s where the transparency, trust, and communication balance it out.”

3. Align your goals.

Any partnership will feature competing priorities and goals. Zaid wishes he had worked more intentionally to make sure Getaround and Uber’s visions were aligned from the beginning. “Early stages, it’s probably not as necessary,” he says. “But then things start snowballing. There could be product issues, engineering issues, operational issues, legal questions that come up throughout.” Being aligned from the start could save you months of back-and-forth–and could keep the partnership from falling apart.

Within Facebook, a Sense of Relief Over the Zuckerberg Hearings

About two hours, or 20 percent, into Mark Zuckerberg’s marathon testimony before Congress this week, the Facebook CEO had a slightly awkward exchange with senator John Cornyn (R-Texas). Cornyn wanted to know what happens to people’s data when they delete their accounts. Zuckerberg responded that Facebook deletes their data. But Cornyn continued, “How about third parties that you have contracted with to use some of that underlying information, perhaps to target advertising for themselves?”

To Zuckerberg, this must have been exasperating. As he has said over and over, Facebook doesn’t sell data to advertisers. Doing so could allow outsiders to build competitive ad-targeting products that would undermine Facebook’s business. And so Zuckerberg patiently explained, yet again, how Facebook works. “We do not sell data to advertisers. We don’t sell data to anyone.”

Before the hearings, Zuckerberg’s colleagues in Menlo Park had been nervous. The company had been battered, insulted, and mocked for weeks. The stock price had collapsed. And now Zuckerberg, who isn’t known for his charisma or quick-witted stage presence, would be grilled by professional grillers. The whole thing felt to Facebook roughly like watching the father of the bride at a tense wedding, refilled glass of chardonnay in hand, slide up to the microphone to give a toast. It could go OK. It should go OK. But it might also go horribly wrong.

Once the hearings started, though, according to numerous Facebook employees asked about their reactions, everyone at headquarters started to calm down. For one, it became immediately clear that many of the senators didn’t actually know what Facebook does. “I was personally surprised by how ill-prepared the members were,” one Facebook executive told me. “Once it was clear how bad it was and how mismatched they were, everybody had this awakening: We have made some mistakes, but these guys know even less.” Numerous people at the company passed around a meme in which Chuck Grassley (R-Iowa) putatively asked Zuckerberg, “Mr. Zuckerberg, a magazine I recently opened came with a floppy disk offering me 30 free hours of something called America On-Line. Is that the same as Facebook?”

After Zuckerberg finished his session with Cornyn, John Thune (R-South Dakota) interjected that it was time to take a break. Thune may have had the most power over Facebook in the room—he oversees the Senate Commerce Committee, which in turn helps oversee the Federal Trade Commission—and he may also have the best jawbone. But Zuckerberg responded that, actually, no, he was fine to keep going. “You can do a few more,” Zuckerberg said. He wasn’t worn down.

In Menlo Park, there were cheers from some employees. According to one who was watching a TV nearby, “It was like magic.” At another spot in Facebook’s offices where senior executives had gathered, people started laughing and smiling. The toast was going just fine. Nothing was going to go horribly wrong. Meanwhile, employees had their eyes on the stock ticker, which, for the first time in a while, had started to turn upward.

Shortly thereafter, Dean Heller (R-Nevada) asked a question without an easy answer. “Do you believe you’re more responsible with millions of Americans’ personal data than the federal government would be?”

Zuckerberg had a choice: He could weasel his way out and say the answer is hard. He could throw out something patriotic and muddled. But he decided to do something simple. He just said, “Yes.” Then he paused and moved on to talking about something else.

It was another moment of magic, a Facebook employee said. “The mood totally changed internally.”

Some Bad Reviews

Zuckerberg didn’t impress everyone this week. The New York Post dubbed him “The Social Nitwit.” At the TED conference, Facebook was hammered repeatedly, and one speaker, Jaron Lanier, declared, “I don’t think our species can survive unless we fix this.” People made fun of him for sitting on what was dubbed a booster seat. Those perhaps seeing Zuckerberg for the first time were surprised that he can appear like a humanoid. Trevor Noah said Zuckerberg must “have sent a robot version of himself.” Jimmy Kimmel declared that he “almost even managed to replicate a human smile.”

It’s unlikely, though, that Zuckerberg cared much about the cheap shots and the jokes. He surely noticed that the value of the company rose by about $17 billion during the hearings, making him more than $2.5 billion richer. And in some ways, the most important part of the hearings was to calm his restive employees. In recent weeks, working at Facebook has come to seem a bit like working at Goldman Sachs in 2008. The most important challenge for Facebook is employee retention: Despite the billions the company makes and the kombucha shots it serves on the corporate roof, competition for engineers in Silicon Valley is severe. In recent weeks, Facebook has seemed weak and easy to raid. One employee even boasted publicly of quitting.

And if your metric is employee morale, Zuckerberg’s testimony was a success. Early in the Senate hearings, Orrin Hatch (R-Utah) pushed Zuckerberg on why the company doesn’t have a subscription model. Zuckerberg responded carefully and cautiously. Hatch then asked, “Well, if so, how do you sustain a business model in which users don’t pay for your service?”

Zuckerberg responded, again, with a smile: “Senator, we run ads.”

Since then, in Menlo Park, numerous Facebook employees have repeated the mantra in meetings, joking, “Senator, we run ads.”

How the Ad Business Works

That isn’t to say the hearings went over perfectly, even at home. One mystifying thing to employees was that Zuckerberg frequently seemed to come up short when asked for details about the advertising business. When pressed by Roy Blunt (R-Missouri)—who, Zuckerberg restrained himself from pointing out, was a client of Cambridge Analytica—Facebook’s CEO couldn’t specify whether Facebook tracks users across their computing devices or tracks offline activity. He seemed similarly mystified about some of the details about the data Facebook collects about people. In total, Zuckerberg promised to follow up on 43 issues; many of the most straight-ahead ones were details on how the ad business works. It’s possible, of course, that Zuckerberg dodged the questions because he didn’t want to talk about Facebook’s tracking on national TV. It seemed more likely to some people on the inside, however, that he genuinely didn’t know.

Why was this? Inside Facebook it was simply seen of a sign of something that many of his colleagues know: Zuckerberg is much more interested in product and engineering than he is in the business. His former speechwriter Kate Losse told me that she thinks he did well. But she too was struck by his inability to answer questions about the details of the way Facebook makes most of its money. “I genuinely believe that he doesn’t care about ads.”

Zuckerberg’s marathon testimony also didn’t close out questions about some of his company’s biggest threats. Zuckerberg did not give thorough answers (and the congressmembers did not ask thorough questions) about the extent of Russian operations on the platform. It is still entirely possible that we will, in due course, see the threads of the Cambridge Analytica and Russia stories converge. If that happens, the company will have to deal with something much darker than even the mess of the past few weeks. It will mean, in short, that the data—and even the private messages—of trusting Facebook users ended up in the hands of a foreign adversary trying to manipulate a presidential election.

And there is still the looming issue of the 2011 FTC consent decree, and whether Facebook violated its terms by not acting reasonably to protect people’s privacy after it learned about Cambridge Analytica’s data gathering. An investigation is ongoing, which Zuckerberg did little to put to rest. It could cost the company billions.

Still, back at home, the troops were happy. On Thursday, the day after the hearings ended, Sheryl Sandberg was supposed to address the staff in a company-wide Q&A. Instead, Zuckerberg returned to Menlo Park and answered questions in person. “It was a Mark lovefest,” one employee said.

Facing Up

​Linux is under your hood

Way back in 2004, Jonathan Schwartz, then Sun’s chief operating officer, suggested that cars could become software platforms the same way feature phones were. He was right. But, it’s Linux, not Java, which is making the most of “smart cars”.

That’s because Linux and open-source software are flexible enough to bring a complete software stack to any hardware, be it supercomputer, smartphone, or a car. There are other contenders, such as Blackberry’s QNX and Microsoft IoT Connected Vehicles, but both have lost ground to Linux. Audi is moving to Linux-based Android and Microsoft lost is biggest car customer, Ford, years ago.

Today, as Dustin Kirkland, then Canonical product VP and now Google Cloud product manager, told me recently, “Ubuntu is in the Tesla and we support support auto manufacturers, but Tesla has gone on its own way. Tesla was so far ahead of the curve it doesn’t surprise me that they did their own thing. But, Canonical expects most car manufacturers will work with Linux distributors to build operating systems that scale out for cars for the masses.”

Much of that work is done via the Automotive Grade Linux (AGL). This Linux Foundation-based organization is a who’s who of Linux-friendly car manufacturers. Its membership includes Ford, Honda, Mazda, Nissan, Mercedes, Suzuki, and the world’s largest automobile company: Toyota.

“Automakers are becoming software companies, and just like in the tech industry, they are realizing that open source is the way forward,” said Dan Cauchy, AGL’s executive director, in a statement. Car companies know that while horsepower still sells, customers also want smart infotainment systems, automated safe drive features, and, eventually, self-driving cars.

I have two young grandsons. I seriously wonder if they’ll learn to drive. Just like many people who no longer know how to drive a stick-shift, I can see people in the next 20 years never bothering with driving classes.

The AGL is helping this next generation of smart cars arrive with its infotainment source code and software development kit (SDK) AGL Unified Code Base (UCB) 4.0.

UCB, in turn, is based on Yocto 2.2, a set of tools for creating images for embedded Linux systems. AGL is expanding beyond infotainment to develop software profiles using the UCB for telematics, instrument cluster, and heads-up-display (HUD).

To support these new projects, AGL has formed a new Virtualization Expert Group (EG-VIRT) to identify a hypervisor and develop an AGL virtualization architecture that will speed up Linux car time-to-market, reduce costs, and increase security.

The ASL is also now working on car Speech Recognition and Vehicle-to-Cloud connectivity. Led by Amazon Alexa, Nuance and Voicebox, the Speech Expert Group will provide guidance for voice technologies including natural language, grammar development tools, on-board vs cloud based speech, and signal processing for noise reduction and echo cancellation.

Tesla, however, continues to go its own way. That said, under the hood, Tesla is moving forward. With the 8.1 update (17.24.30), Tesla upgraded its Linux kernel from the archaic 2.6.36 to 4.4.35.

The AGL isn’t the only group working to integrate Linux and cars. The SmartDeviceLink (SDL) Consortium, which includes Ford, Toyota, Mazda, and Suzuki, is working on Linux-based open-source software for getting smartphones and cars to work together smoothly.

At the same time, Google has its own Linux for cars: Android Auto. Google is supporting this with the Open Automotive Alliance. Google is hoping to recapture the Open Handset Alliance magic, which led Android to smartphone dominance, in smart cars. This new alliance supporters include Acura, Audi, Cadillac, Ford, GMC, Honda, Hyundai, and many other car manufacturers.

And it’s not just cars running on Linux. Lyft, the ride-sharing service, has been “running Ubuntu since day one across the board from server to desktop to cloud,” said Kirkland. The company is also using Ubuntu in its autonomous vehicle team.

Kirkland added, “Top car equipment manufacturers, like Bosch and Continental Auto Parts, increasingly use Ubuntu IoT in their components.” In addition, the GPS device company “TomTom uses Ubuntu on its back end.”

Looking ahead, Kirkland can see a world where bitheads instead of gearheads will be modifying their car’s software. But, “How much can you legally modify it? Gearheads have been molding for cars for years, but it still has to be street legal. I don’t think we have the infrastructure for a shade-tree software engineer to pass inspection.” Not yet anyway.

So, whether you’re driving a car, riding in one, or working on its software, Linux is in your automotive future.

Related Stories:

Porsche's 919 Hybrid Evo Wallops F1's Fastest Cars

In most motorsports, the engineer’s cruelest foe isn’t the rules of physics or the driver’s inability to wring every crumb of power from their vehicle. It’s the rules. Rules laid down by overbearing governing bodies, imposing limits on weight, dimensions, power output, tire choices, aerodynamics, braking, and whatever else they can think to control. Usually the point is to keep the drivers safe or make racing more entertaining with evenly matched machines, but that doesn’t mean the engineers like it.

So when Porsche gave its people the chance to break free and show what their machines can do, they overdelivered. They started with the 919 Hybrid, the car Porsche used to win the 24 Hours of Le Mans the past three years. Then they did everything that could make the car faster, the things that would break the rules for the rest of the time. They call the result the 919 Evo.

And then they took it to Belgium’s Spa Francorchamps, the legendary Formula 1 track that’s home to what may be the toughest corner in motorsports. The Evo lapped the course in 1:41.77 minutes, 12 seconds faster than the race-legal 919. In a sport measured by the millisecond, that’s a stupendous improvement. It even beat the all-time track record, set by Formula 1 champion Lewis Hamilton, by 0.783 seconds.

“The 919 Evo is brutally impressive,” says Neel Jani, the driver who lapped Spa. “It is definitely the fastest car I ever drove, the grip level is at a fully new dimension for me, I couldn’t imagine this amount beforehand.”

The Evo carries the same two-liter, turbocharged V4 engine as the Le Mans-winning car, minus the fuel flow meter that limits how much gasoline goes kaboom.

Porsche

Turns out, when you get to ignore the rules that govern the World Endurance Championship (which includes Le Mans), there’s a lot you can do to go faster. Porsche’s engineers cut the weight of the carbon fiber and aluminum car by 86 pounds, to 1872 pounds, by dropping useless frills like the windshield wipers, lights, air conditioner, electronic race controls, and the pneumatic jack. They also tweaked the exterior aerodynamics, generating 53 percent more downforce, the all-important stuff that keeps the car stuck to the pavement when it’s clocking jumbo jet takeoff speeds. They upgraded the suspension and tires to deal with the extra loads.

The Evo carries the same two-liter, turbocharged V4 engine as the Le Mans-winning car, minus the fuel flow meter that limits how much gasoline goes kaboom. Combined with a software tweak, that upped its output from 500 horsepower to 720 horsepower. The car uses two energy recovery systems, generating electricity from braking and the exhaust. That’s stored in a liquid-cooled lithium ion battery, and then used to drive an electric motor on the front axle while the engine drives the rear, for maximum all-wheel-drive acceleration. Without imposed limits, that motor now adds another 440 horsepower (as much as the total power of a BMW M3), up 10 percent.

This record setting lap is part of a farewell tour for the Le Mans winning car. Porsche is pulling out of the World Endurance Championship so it can focus on all-electric Formula E racing. Next stop for the 919 Evo is what Porsche is calling a “demo lap” at the legendary Nurburgring in Germany. Porsche previously set a race car record there in 1983 with its 956, which still stands. Then it’s on to the Goodwood Festival of Speed, and the Festival of Porsche at Brands Hatch, in the UK, before coming to California’s Laguna Seca in California.

Like so many retired folks, the 919 is finally ready to ignore the rules and have some fun, on its terms.


Mastering Motorsports

How to Watch Facebook CEO Mark Zuckerberg Testify Before Congress

After finally agreeing to testify before Congress last week, Facebook CEO Mark Zuckerberg heads to Capitol Hill Tuesday and Wednesday to answer for his company’s recent troubles. Expect him to address Facebook’s privacy policies, the Cambridge Analytica fiasco that ensnared the data of 87 million users, and Russia’s repeated, ongoing efforts to use the platform to disrupt US democracy. And that’s just for starters. Here’s how to watch.

Zuckberg’s testimony will take place in two chunks. Tuesday, he’ll sit before before a joint hearing of the Senate Judiciary and Senate Commerce, Science, and Transportation committees, scheduled to start at 2:15 pm EDT. On Wednesday, the House Energy and Commerce Committee gets a turn, kicking off at 10 am EDT.

If you’re a few minutes late tuning in, no worries; the House committee already released his prepared testimony. It hits a lot of the same notes as his recent call with reporters, with a healthy dose of contrition thrown in. “It was my mistake, and I’m sorry,” Zuckerberg wrote. “I started Facebook, I run it, and I’m responsible for what happens here.”

The rest mostly provides a timeline of how Facebook got to this point, dating back to 2014, when researcher Aleksander Kogan created an app that 270,000 Facebook users installed, through which he accessed the data of up to 87 million. He then passed that data along to Trump-affiliated political data firm Cambridge Analytica, lighting a fuse that would go off years later. Zuckerberg will also detail how Russia’s Internet Research Agency reached millions of Americans with its propaganda efforts, despite a relatively small amount of money spent on actual ads.

All of that territory by now is well-trod, so best to dispense with it in a statement. The real interest lies in whether Congress can adequately probe Facebook not just on its recent past, but on the underlying philosophy—connection at any cost—that caused the issues to begin with, and persists today. Watch, too, for indications of how members of Congress might weigh regulation, and whether Facebook’s recent efforts have done enough to stave off legislative solutions to its deeply rooted issues.

“Our joint hearing will be a public conversation with the CEO of this powerful and influential company about his vision for addressing problems that have generated significant concern about Facebook’s role in our democracy, bad actors using the platform, and user privacy,” said senator John Thune of South Dakota in a statement.

And don’t expect Facebook to be the only tech giant feeling the heat; senators Mark Warner and Amy Klobuchar have already turned some of the spotlight toward Google and Twitter, two platforms who have enjoyed relative calm while Facebook gets pummeled, despite similar business practices and vulnerabilities. The legislators sent letters to the CEOs of both companies Monday urging them to implement similar political advertising restrictions to what Facebook has already announced.

So! Exciting times. We’ll update as soon as possible with embedded videos that you can watch within this post, but in the meantime:

You can watch Tuesday’s Senate hearing at the Judiciary Committee’s website here.

For Wednesday’s action, head to the House Energy and Commerce Committee’s page here.

WIRED will be live on the scene covering both days, so be sure to check back for news and analysis.

Buy This Oversold Blue-Chip Bank With A 5.4% Dividend

On April 4th, Bloomberg reported that HSBC (HSBC) is considering an exit or sale from smaller consumer operations such as Bermuda, Malta, and Uruguay. In addition, the bank plans to expand its asset management division and is currently looking at a potential merger with a rival.

In our view, the news confirms that the group’s management will remain committed to transforming HSBC into a more focused and more efficient banking institution. More importantly, even though HSBC’s operations in Bermuda, Malta, and Uruguay are small compared to the group’s total assets, we believe a potential sale of these units would have a positive impact on the bank’s capital position, supporting stock buybacks and special dividends.

The recent rise in LIBOR should support HSBC’s NIM

LIBOR has grown by more than 130bps since the beginning of the year. Such a notable increase is currently among the most widely discussed topics. Several analysts suggest that this is an early indicator of a bear market or even a severe financial crisis. In our view, the increase has been driven by idiosyncratic reasons, in particular, higher supply of short-term Treasuries and lower demand from corporates due to the US tax reform.

Source: Bloomberg

With that being said, despite the reasons of the rise in LIBOR, HSBC should benefit from higher short-term rates. As shown below, the bank discloses its NII (net interest income) sensitivity to a shift in yield curves. However, this analysis is based on a parallel shift, while yield curves in most global economies continue to flatten.

Source: Company data

What is important here is that HSBC has a variable-rate loan book. More importantly, a significant part of its credit portfolio is priced off short-term rates. This suggests to us that the rise in LIBOR should be a positive for the bank’s asset yields and its NIM.

Source: Company data

One may argue that higher short-term rates will also affect HSBC’s funding costs, especially given that wholesale sources and corporate deposits are generally tied to the short-end of the yield curve. The caveat here is that HSBC has a unique funding position. As shown below, the bank has one of the lowest LtD (loans-to-deposits) ratios among European banks. In other words, HSBC does not need expensive deposits in order to fund its loan growth. HSBC had been struggling from abundant liquidity for many years as a low interest rate environment has virtually crippled its NIM. Given that rates have started rising, the bank’s excessive liquidity is gradually turning into a positive that will protect HSBC’s NIM in a rising interest rate environment.

European banks: Loans-to-deposits ratio

Source: Bloomberg, Renaissance Research

Saudi Aramco’s IPO

Saudi Aramco (Private:ARMCO) has appointed HSBC as an adviser on its much-awaited IPO. JPMorgan (JPM) and Morgan Stanley (MS) will also act as consultants. As such, HSBC is the only non-US bank that will have a crucial role in Aramco’s IPO.

Anecdotal evidence suggests that while many US and UK investors are skeptical on Saudi Aramco’s IPO, as state-owned oil companies have been underperforming their private peers for quite a while now, Chinese investors would be interested in Aramco’s shares. Hong Kong Exchanges and Clearing (OTCPK:HKXCF) (OTCPK:HKXCY) plans to introduce the so-called Primary Connect program, which would allow mainland Chinese investors to participate in initial public offerings on the HKEX.

We believe Aramco’s IPO would strengthen HSBC’s position in the region. In our view, it would also underpin the fact that HSBC is a global banking group with unique access to Chinese investors.

Buybacks and dividends

HSBC pays a $0.51 dividend per ordinary share or $2.55 per ADR. That corresponds to a 5.4% dividend yield, based on the current ADR price. We believe that a 5.4% dividend from a global blue-chip bank with a strong presence on Asian markets looks very attractive.

Additionally, it is also worth noting that the bank has temporarily suspended its buyback program due to technical reasons related to the issuance of additional Tier 1 capital. We expect HSBC to announce a new buyback in the second half of 2018.

Final thoughts

The shares have fallen by almost 15% since January, and we believe this sell-off represents a great opportunity to buy a global bank with an attractive dividend yield. HSBC has excess capital, thanks to its US unit, and, as a result, we expect the bank to announce a new buyback program in the second half of the year.

If you would like to receive our articles as soon as they are published, consider following us by clicking the “Follow” button beside our name at the top of the page. Thank you for reading.

Disclosure: I am/we are long HSBC, JPM.

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.

Facebook's Election Safeguards Are Still a Work in Progress

Nearly three years after a Russian propaganda group infiltrated Facebook and other tech platforms in hopes of seeding chaos in the 2016 US election, Facebook has more fully detailed its plan to protect elections around the world.

In a call with reporters Thursday, Facebook executives elaborated on their use of human moderators, third-party fact checkers, and automation to catch fake accounts, foreign interference, fake news, and to increase transparency in political ads. The company has made some concrete strides, and has promised to double its safety and security team to 20,000 people this year. And yet, as midterm races heat up in states across America, and elections overseas come and go, many of these well-meaning tools remain a work in progress.

“None of us can turn back the clock, but we are all responsible for making sure the same kind of attack on our democracy does not happen again,” Guy Rosen, Facebook’s vice president of product management said on the call. “And we are taking our role in that effort very, very seriously.”

Facebook provided some new details about previously announced strategies to counter election meddling. The company announced, for instance, that its long promised advertisement transparency tool, which will allow people to see the ads that any given Facebook page has purchased, will be available globally this summer. In addition to that public portal, Facebook will require anyone seeking to place political ads in the United States to first provide a copy of their government-issued ID and a mailing address. Facebook will then mail the would-be advertiser a special access code at that address, and require the advertiser to disclose what candidate or organization they’re advertising on behalf of. Once the ads are live, they’ll include a “paid for by” label, similar to the disclosures on televised political ads.

While this process may prevent people from purchasing phony ads that are explicitly about an election, however, it doesn’t apply to issue-based ads. That leaves open a huge loophole for bad actors, including the Russian propagandists whose ads often focused on stoking tensions around issues like police brutality or immigration, rather than promoting candidates. This process is also currently exclusive to the United States.

“We recognize this is a place to start and will work with outside experts to make it better,” Rob Leathern, Facebook’s product management director said on the call. “We also look forward to bringing unprecedented advertising transparency to other countries and other political races.”

The executives also detailed their approach to spotting fake accounts and false news before their influence spreads. One strategy involves partnering with third-party organizations that can vet suspicious news stories. Facebook has already announced a partnership with the Associated Press in the United States. When stories are flagged as potentially false, either by Facebook users or the company’s own technology, they’re sent to the fact-checkers. When the story is deemed to be false, Facebook lowers its likelihood of appearing in people’s News Feeds; Facebook product manager Tessa Lyons says a “false” rating reduces a story’s News Feed distribution by 80 percent.

Critically, this process applies to photos and videos, not just text. The company has also begun notifying people who have shared the stories that the contents are suspect. Those who continue to see the story in their feeds will also see related articles that fact check the piece. Facebook currently has these fact-checking partnerships in six countries, with plans to expand.

This is a long way from Facebook executives’ past claims that they should not be the “arbiters of truth,” a common refrain among tech giants. But as international regulators bear down on Facebook to acknowledge its past mistakes and prevent them in the future, the company is reluctantly taking more responsibility for monitoring the information on its platform—if only to ward off government intervention.

There’s some evidence it’s working. Facebook is now on the lookout for foreign meddling in elections around the world, in part by automatically looking at the country of origin creating a given Facebook page, and analyzing whether that page is spreading “inauthentic civic content.” Those pages get manually reviewed by Facebook’s security team. The strategy has already proven effective; Facebook discovered during last year’s special election in Alabama that Macedonian hoaxers were setting up pages to disseminate fake news, a practice that country became known for during the 2016 election.

“We’ve since used this in many places around the world, such as in the Italian election, and we’ll deploy it moving forward for elections around the globe, including the US midterms,” said Samidh Chakrabarti, a Facebook product manager.

These approaches are promising, but far from comprehensive. They also don’t address the simultaneous scandal engulfing Facebook right now: The company has historically done little to prevent its users’ data from falling into the wrong hands. That valuable information can be used to target people in ways that Facebook has no control over.

Perhaps the most worrisome part of Facebook’s plan to defend democracy, though, is that it has yet to be battle tested. If it fails, we may not know until it’s too late.

Facebook 2018

Under Armour says 150 million MyFitnessPal accounts breached

(Reuters) – Under Armour Inc (UAA.N) (UA.N) said on Thursday that data from some 150 million MyFitnessPal diet and fitness app accounts was compromised in February, in one of the biggest hacks in history, sending shares of the athletic apparel maker down 3 percent in after-hours trade.

The MyFitnessPal app is seen on a smartphone in Golden, Colorado in this February 5, 2015 photo illustration. REUTERS/Rick Wilking

The stolen data includes account user names, email addresses and scrambled passwords for the popular MyFitnessPal mobile app and website, Under Armour said in a statement. Social Security numbers, driver license numbers and payment card data were not compromised, it said.

It is the largest data breach this year and one of the top five to date, based on the number of records compromised, according to SecurityScorecard.

Larger hacks include 3 billion Yahoo accounts compromised in a 2013 incident and credentials for more than 412 million users of adult websites run by California-based FriendFinder Networks Inc in 2016, according to breach notification website LeakedSource.com.

Under Armour said it is working with data security firms and law enforcement, but did not provide details on how the hackers got into its network or pulled out the data without getting caught in the act.

While the breach did not include financial data, large troves of stolen email addresses can be valuable to cyber criminals.

Email addresses retrieved in a 2014 attack that compromised data on some 83 million JPMorgan Chase customers was later used in pump-and-dump schemes to boost stock prices, according to U.S. federal indictments in the case in 2015.

Under Armor said in an alert on its website that it will require MyFitnessPal users to change their passwords, and it urged users to do so immediately.

“We continue to monitor for suspicious activity and to coordinate with law enforcement authorities,” the company said, adding that it was bolstering systems that detect and prevent unauthorized access to user information.

Under Armour said it started notifying users of the breach on Thursday, four days after it first learned of the incident.

Under Armour bought MyFitnessPal in 2015 for $475 million. It is part of the company’s connected fitness division, whose revenue last year accounted for 1.8 percent of Under Armour’s $5 billion in total sales.

(This story has been refiled to correct byline to Nivedita Balu instead of Nivedita Bhattacharjee)

Reporting by Nivedita Balu in Bengaluru and Jim Finkle in Toronto; Editing by Leslie Adler

10 Things I Learned About Writing From Ryan Holiday

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

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

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

Here’s some of the lessons I learned:

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

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

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

2. The Book Proposal Has 3 Parts

There are three parts to a book proposal:

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

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

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

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

4. Never Lower Your Standards For Your Work

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

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

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

5. The Title Of Your Book Really Matters

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

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

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

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

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

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

6. Write Something Perennial

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

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

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

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

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

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

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

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

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

“Probably not,” I responded.

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

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

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

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

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

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

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

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

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

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

Conclusion

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

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

​FOSSA: Open-sourcing open-source license management

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

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

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

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

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

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

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

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

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

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

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

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

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How to Regulate Facebook

(This is a guest post by my coauthor on Modern Monopolies, Nicholas Johnson.)

What a mess.

Facebook once again finds itself at the heart of a media firestorm after revelations that Cambridge Analytica had unauthorized access to data on 50 million users.

To some extent, this issue has been massively blown out of proportion. This story sits at the intersection of two things much of the media loves to hate – Trump and Facebook.

It’s arguable if this would ever have become a major news story if the subtext weren’t that this data had been used to, allegedly, elect Trump. Nobody seemed to care when President Obama’s campaign used the same loophole to get data on and target tens of millions of voters. (Note: I am not a Trump supporter and I voted for Obama).

And when you combine that with Facebook, which the media loves to hate given its major dependence on the platform, you have the perfect storm.

Still, where there’s smoke, there’s fire.

Facebook finds itself in the interesting intersection between private companies and public governance. As noted in our book Modern Monopolies, long ago a more naive Zuckerberg used to talk about Facebook’s governance standards as akin to making public policy. Former Twitter Head of Platform Ryan Sarver has expressed a similar view. Facebook’s platform is both a private company and a public good. In other words, to use a familiar term, Facebook has become systemically important.

Facebook fixed years ago the original loophole in its developer program that allowed Cambridge Analytica to gain access to this data. But when one company can open up tens of millions of users to losing control of their data with an intentional design choice, that’s a serious issue.

Data and the Brave New Online World

What the news cycle gets wrong is that this isn’t just an issue about Facebook. If you “delete Facebook,” you’ve still effectively changed nothing. Unless you stop using the Internet, you will still be exposed to the same problems almost everywhere you go.

Data security isn’t a challenge that’s unique to Facebook or platform businesses. As Equifax and Yahoo showed, any online business needs to take data security seriously. Most don’t do so because there is little oversight, standards or enforcement around the issue.

With platforms though, the issue is scale. They have much more data about users than smaller linear companies like Equifax and Yahoo – this is in fact the same thing that attracts advertisers to them. Not only do they have account level meta data, they have a seemingly endless amount of behavioral data on every user. Again, this is the same thing that enables the microtargeting that advertisers love.

Facebook had every incentive to be as open as possible with user data. The more data it could collect on users and share with advertisers, the more money it could make. Facebook may not have intentionally turned a blind eye to abuses like the one that’s occurred with Cambridge Analytica, but it certainly was incentivized not to look to closely if it didn’t have to.

This data ‘breach’ (even though Facebook is determined not to call it that) illustrates an important issue for all online businesses – the asymmetry in information between the business in its users, particularly regarding user data. Again, for platforms their scale just pours gasoline on the fire. For modern monopolies like Facebook and Google, they effectively own the supply of information for hundreds of millions of users.

When the concerns of the platform don’t’ align with those of its users, as has often been the case with user privacy, users have little effective recourse. For Facebook, its cavalier attitude toward user privacy, with the default user sharing setting almost always being “open,” has been great for its bottom line but, as is becoming clearer, not so great for users. It opens them up to issues of misuse and manipulation with this very same data, a problem that Facebook is now being forced to deal with.

Should Facebook Be Regulated?

As with any systemically important company, the question isn’t really should it be regulated but how. Even Mark Zuckerberg acknowledged this fact last week in his very belated mea culpa to Facebook users.

So where should regulations start. Number one would be transparency around how data is used. Users should be able to see who has what data on them online. Most would likely be shocked by the sheer amount of data about them that exists digitally. The challenge is that the private sector is unlikely to ever enforce this effectively. Time and again, users have shown that while they may voice concerns about privacy, they almost never act on them in reality. There’s a serious mismatch between what people say and what people do when it comes to online privacy.

However, there are good public policy reasons to want to protect user data online. The issue of election interference is only one example, but it’s a case in point. The idea of a “data protection agency” has been floated around social media. This may be a good place to start. This agency would regulate all online businesses, the same way the SEC regulates investment banks. But as with banks, most of the focus will likely start with the systemically important companies.

Data is the “capital” of the online world, and modern monopolies like Facebook probably deserve closer monitoring and tighter restrictions on what they can do with user data.

As declining user growth shows, Facebook may not be “too big to fail,” but it can certainly create a big mess whenever it does.

Tumblr Confirms That Russian Trolls Spread Misinformation On Its Service

Tumblr confirmed on Friday that Russian trolls spread misinformation on the blogging service in prelude to the 2016 U.S. presidential election.

Tumbler, part of the Verizon Communications’-owned Oath media group, said it discovered last fall that 84 accounts were linked to the Internet Research Agency. This Russian propaganda outfit was one of the groups identified in a recent Justice Department indictment alleging the Kremlin’s role in spreading fake news through popular social media services to increase division among Americans and interfere with the 2016 presidential elections.

Tumblr’s confirmation that Russia-linked groups misused its service follows a similar admission by social media forum operator Reddit in early March. The IRA and other Russian-linked entities were also alleged by the DOJ to have spread fake news and misleading online advertising on social networks like Facebook (fb) and Twitter (twtr).

Tumblr said that after discovering the questionable accounts, it contacted U.S. law enforcement, terminated the accounts, and deleted the posts, the contents of which Tumblr did not describe. The Russian-linked Tumblr accounts spread misinformation via “organic content,” or conventional postings, rather than online ads, Tumblr said.

The blogging service said it worked “behind the scenes” with the DOJ and provided information that led to the Justice Department’s indictment, revealed in February.

“Remember, the IRA and other state-sponsored disinformation campaigns play off our zero-sum politics,” Tumblr said in a statement. “They want to drive a wedge between us so that we spend our time fighting with each other instead of building towards the future. We’ll be watching for signs of future activity, but the best defense is knowing how they operate and how to judge the content you see.”

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Tumblr said it would notify users who interacted with any of the IRA-linked accounts and that it would keep a public record of usernames associated with those accounts. Some of the IRA-linked usernames include 1-800-gloup, best-usa-today, ricordio, and stopropaganda, according to a separate Tumblr post.

7 Excuses You Use to Put Off Starting Your Business

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

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

1. I don’t know how.

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

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

2. I’m too young or too old.

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

3. What if I fail?

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

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

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

5. I don’t have the cash.

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

6. What will my friends or partner think?

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

7. I’m not good enough.

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

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

Why Business Is Booming in These 6 Unlikely European Cities

Pawel Kulon’s family was part of a movement in the late 1980s that led nearly one million Poles to immigrate to Chicago. Despite growing up in the U.S., Kulon recently decided to move back to his native city of Kraków, Poland, where he now runs operations for the entrepreneur network, OMGKRK. 

As Kulon sees it, a growing number of founders and investors are looking to the Eastern European country as a good place to launch a business. “There’s a new generation of leaders developing in Poland who are trying to build companies,” Kulon tells Inc., nodding to firms such as CallPage, a software startup that converts website visitors into sales calls. “A lot of people with some Polish history are seeing limited and even shrinking opportunities in places like Chicago and London, and are now looking at Poland as a place with opportunity.” 

The city of Kraków is one of a number of emerging startup hubs across Central and Eastern Europe, which are benefiting from what analysts are calling the “decentralization” of the entrepreneurial ecosystem. In fact, a large share (41 percent) of business owners surveyed as part of the annual Inc. 5000 Europe list anticipate that no one city will serve as the dominant tech center in years to come–especially after the U.K. breaks from the European Union, a move often referred to as “Brexit.”

That’s left the door open to a raft of cities looking to take some of the heat away from London, Europe’s reigning entrepreneurial hot spot. Using insight from Inc.‘s annual list of the fastest-growing private companies in Europe, as well as from venture firm reports, cost of living indexes, and recent notable exits, here is a list–in no particular order–of six surprising technology hubs to watch in 2018:

1.  Lisbon

Lisbon, Portugal.

CREDIT: Shutterstock

The Portuguese capital is home to dozens of fast-growing startups, including 26 on Inc.‘sannual Europe list. Those include Decskill, an IT services firm that generated €3.9 million ($4.79 million) in 2016 sales, landing on the Inc. 500 Europe at No. 336. There’s also Portspar Retail, an e-commerce company that grew revenue by 924 percent over three years, generating €20 million ($24.6 million) in 2016 alone. Analysts note that startups in Lisbon benefit from relatively inexpensive rent, as compared with cities such as London and Paris, which has led more entrepreneurs to set up shop there. Indeed, Lisbon tech companies leased 28 percent more office space between 2016 and 2017 than the 10-year average, according to research from the Chicago-based real estate services firm JLL.

The city is also drawing plenty of interest from entrepreneurial tourists. Last year, the annual Web Summit conference drew more than 60,000 investors, entrepreneurs, and technologists from dozens of countries worldwide, with speakers including Al Gore, Waymo CEO John Krafcik, and Reddit co-founder Steve Huffman.

2. Kraków

Krakow, Poland.

CREDIT: Shutterstock

In Kulon’s native Kraków, startups benefit from a rich history of technology outsourcing. Home to development hubs for major international firms such as IBM, UBS, Epam Systems, and the French outsourcing firm Capgemini, Kraków is awash in tech talent, and entrepreneurs enjoy relationships with these more established companies. The trend is set to continue: Just last month, the Provo, Utah-based software giant Qualtrics set up a new office in the Polish city, where it intends to hire as many as 200 additional engineers.

Kulon notes that Polish companies get a fair amount of financial support from the local government, and–similar to Lisbon–enjoy lower-than-average rents. “It’s still sort of a deal economically,” says Kulon of launching in Poland. “You know money goes further in Kraków, while the access to talent is still relatively high.”

In addition to entrepreneurship networks like OMGKRK, founders can also tap the resources of the Kraków Technology Park, a 20-year-old incubator program and venture fund aimed at fostering innovation in the greater Malopolska region.

3. Edinburgh

Edinburgh, Scotland.

CREDIT: Shutterstock

The Scottish capital has risen in the shadow of nearby London, quietly attracting investment, entrepreneurs, and talent from across the U.K. Indeed, Edinburgh recently ranked as having the third-largest number of “unicorn” companies per capita, after San Francisco and Provo, Utah, according to research from the University of Edinburgh. The report notes that this is due in large part to universities’ longer-term investment in the city’s research infrastructure.

Also telling, business tenants leased more than 950,000 square feet of office space in the first three quarters of 2017–more than all of 2015 and 2016 combined, according to research from the commercial real estate company CBRE. The city is home to five companies on the Inc. 5000 Europe list, including Vegware (No. 3,646), an ecofriendly packaging service that booked €17.6 million ($21.6 million) in 2016 sales, and Ecometrica, a €2.5 million ($3 million) software firm that ranked No. 2,747. Meanwhile, Edinburgh has fostered a number of high-profile exits, including from Skyscanner, that Scottish travel website that in 2016 was acquired by the Chinese travel giant Ctrip for £1.4 billion ($1.95 billion). 

4. Vilnius

Vilnius, Lithuania.

CREDIT: Shutterstock

Lithuania may not have the most exciting startup reputation, but try telling that to Google and Uber. The technology behemoths recently opened offices in the capital city of Vilnius, which–similar to Kraków–has long served as an outsourcing hub for international firms. With a large pool of data scientists and engineers, stemming from schools including Vilnius University and the Vilnius Gediminas Technical University, the city is fast becoming a hub for fast-growth private companies.

That includes UAB Htr1, a freight transportation service that roped in €5.1 million ($6.27 million) in 2016 sales; and Jet MS, an aircraft maintenance company that generated €12.3 million ($15.11 million) in 2016 revenue. UAB and Jet MS rank No. 129 and No. 2,856 on the Inc. 5000 Europe list, respectively. In total, Vilnius is home to 12 companies on Inc.‘s annual tally. Here, startups are bolstered by some of the fastest internet speeds in Europe, as well as a relatively low cost of living. Vilnius was recently ranked the lowest-cost European vacation destination, according to The Telegraph.

5. Moscow

Moscow, Russia.

CREDIT: Shutterstock

Russian startups have seen a surge of activity in recent months, even as business owners face challenges including U.S. and EU sanctions and a caustic political environment. Indeed, Moscow emerged as the No. 2 city for fast-growing private companies, according to the Inc. 5000 Europe list, accounting for as many as 171 of those firms. That includes Varmega, a Moscow-based manufacturer that saw revenue jolt by 1,990 percent between 2013 and 2016, bringing in €9 million ($11 million) in 2016 alone. “If it weren’t for political risks, Russia could become a global startup powerhouse,” noted William Courtney, a retired diplomat and executive director of the nonprofit policy firm Rand Business Leaders Forum, in an earlier phone call with Inc.

With a population of more than 12 million, and engineering talent stemming from Moscow State University, Moscow Engineering Physics Institute, and the National Research University of Electronic Technology, analysts say Moscow is simply too big–and full of too much talent–to ignore. It helps that companies have access to major accelerator programs, including the DI Telegraph co-working space in the heart of the city. These and other resources have helped local entrepreneurs vault to success–even as U.S. venture capitalists are increasingly leery to invest in the controversial ecosystem.

6. Barcelona

Barcelona, Spain.

CREDIT: Shutterstock

The Spanish city has seen recent success with services that target domestic consumers, including GetYourHero and Deliberry.com, the on-demand cleaning and grocery-delivery startups, respectively. Sebastian Muller, the director of the Barcelona-based Impact accelerator, suggests that it’s comparatively easy to set up a business in Barcelona, which is a major reason why more and more international entrepreneurs are coming to Spain. “Spain is one of the most young, energetic startup ecosystems in the EU,” Muller tells Inc. “You can open a company in just 24 hours.” 

Indeed, Barcelona is home to as many as 43 companies on the annual Inc. 5000 Europe list. And though many respondents to Inc.’srecent CEO survey said they don’t expect any one city to dominate the entrepreneurial world after Brexit, those that did name an alternative listed Barcelona as the top contender. Spanish startups also benefit from public financial support; the Barcelona government organizes the mobile technology conference Mobile World Congress each year, for instance.

Privacy issues emerge as major business risk for Facebook

SAN FRANCISCO/ FRANKFURT (Reuters) – Facebook faces substantial business risks from new European Union privacy rules set to take effect in May, a looming reality that came into stark relief over the weekend with revelations that a controversial political consulting firm had improperly obtained personal data on 50 million Facebook users.

The Facebook application is seen on a phone screen August 3, 2017. REUTERS/Thomas White

Privacy experts said the disclosure that a researcher had sold Facebook data collected via a personality quiz to the consulting firm Cambridge Analytica is a prime example of the kinds of practices that the new General Data Protection Regulation, or GDPR, is supposed to prevent or punish.

The danger faced by Facebook going forward is two-fold: Complying with the rules means letting European users opt out of the highly targeted online ads that have made Facebook a money machine. Violating GDPR mandates could subject the California company to fines of up to 4 percent of annual revenues.

Had the Cambridge Analytica incident happened after GDPR becomes law on May 25, it “would have cost Facebook 4 percent of their global revenue”, said Austrian privacy campaigner and Facebook critic Max Schrems. Because a UK company was involved and because at least some of the people whose data was misused were almost certainly European, GDPR would have applied.

Shares in Facebook fell on Monday by 7 percent, their biggest drop since 2014, wiping nearly $40 billion off the value of the firm founded in 2004 by Mark Zuckerberg.

Schrems first raised concerns in 2011 about how easy it would be for third-party apps to harvest data from the unwitting friends of Facebook users. Facebook says it has tightened its controls on such practices since it discovered the alleged abuses by Cambridge Analytica in 2015.

Schrems has founded a non-profit, called None Of Your Business (NOYB), that is hiring lawyers and exploring avenues for “strategic litigation” over GDPR privacy violations.

According to whistleblower Christopher Wylie, who formerly worked with Cambridge Analytica, the consulting firm used the data to help then-U.S. presidential candidate Donald Trump to predict and influence choices at the ballot box.

“The fact of the matter is that Facebook lost control of the data and wasn’t adequately monitoring what third-parties were doing,” said Scott Vernick, a partner and an expert in privacy and data security at the Philadelphia law firm Fox Rothschild.

Vernick said the maximum GDPR fine could come into play in an incident like this because of the number of users affected and what appears to have been inadequate monitoring of third-party data practices.

Facebook said it changed its policies in 2014 to “to give much less data, especially about friends,” Facebook Vice President Andrew Bosworth said in a Facebook post on Monday.

“We conduct a robust review to identify potential policy violations and to assess whether the app has a legitimate use for the data,” the company said on Monday. “We actually reject a significant number of apps through this process.”

Compliance with GDPR rules could cost Facebook a significant amount of money. Deutsche Bank analysts in January estimated that Facebook’s overall revenue could be lowered by 4 percent in a scenario in which 30 percent of EU users opt out of targeted ads, reducing the effectiveness and likely price of ads shown by 50 percent.

The EU represents 24 percent of Facebook’s ad revenue, so multiplying those figures, the bank said the regulations could have a 4 percent impact on overall Facebook revenue.

“If this regulatory approach spreads to other countries or if GDPR ever becomes more onerous over the medium or long term, it would pose more risk,” Deutsche Bank warned.

The firestorm over Cambridge Analytica has prompted a furious response from lawmakers on both sides of the Atlantic, raising the prospect of just such an expansion of privacy protections.

Pivotal Research analyst Brian Wieser reiterated his ‘sell’ rating on Facebook after the weekend reports. Wieser expressed concerns that the company’s regulatory risks would intensify and that its sophisticated use of data in advertising was in jeopardy.

A December 2017 survey found that only 21 percent of European consumers know what GDPR is. But after the regulation was explained, 82 percent of respondents said they plan to exercise their new rights, according to the survey of 7,000 Europeans conducted by Cambridge, Mass.-based Pegasystems Inc, which makes sales and marketing software.

PageFair, an Irish startup that helps website deliver non-targeted ads and avoid ad-blocking, estimates that only 3 percent of European social media users will opt-in to targeted ads, a potentially “devastating” blow for Facebook and other platforms, says Johnny Ryan, PageFair’s head of ecosystem.

GIVING CONSUMERS CONTROL

The quandary for Facebook is readily apparent from a video it began showing customers in February: it teaches people how to delete their accounts.

GDPR gives users the right to access their data, delete it or transfer it to competing companies. Social networks will also need to regain Europeans’ consent every time they want to use their data in new ways, including for targeted advertising.

Lawmakers had social networks in mind when drafting GDPR, said Helen Dixon, the data protection commissioner of Ireland, which is the lead GDPR regulator for numerous tech companies including Facebook, Twitter and LinkedIn.

“There was very big consideration of these newer types of platforms,” she told Reuters.

Tough European rules stand in sharp contrast to the lack of privacy regulation in the United States and many other countries, raising the prospect that Facebook will begin to look much different from one country to the next.

For example, the social media giant in 2017 released new artificial intelligence features that detect when a user is at risk of suicide or when someone else uploads a picture of their face.

The company did not make those features available in Europe. Facebook did not specify a reason. But heightened scrutiny in Europe over such practices with GDPR looming may have been a factor.

Another challenge for social networks are GDPR provisions mandating how companies must obtain permissions. The regulation demands that requests for consent be presented “in an intelligible and easily accessible form, using clear and plain language.”

In other words, the days of extensive “terms of service” agreements written in small text will no longer pass muster in Europe, numerous data privacy lawyers told Reuters.

In practice, social network users may find themselves seeing more “permissions screens” and being asked to check boxes every time a social network rolls out a new feature.

That could depress usage, Facebook Chief Financial Officer David Wehner said at an investor conference last month.

“Whenever you walk people through permission screens, there’s some potential that people decide they’re not going to use the product,” Wehner said. “We don’t think it will be big, but there could be some implication there.”

Additional reporting by Foo Yun Chee in Brussels, and Paul Sandle and Eric Auchard in London; Editing by Jonathan Weber and Marla Dickerson

The Problem With Drug Development Isn’t Regulation

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

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

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

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

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

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

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

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

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

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

Only a few hands went up.

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

Most of the room’s hands went up.

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

Facebook critics want regulation, investigation after data misuse

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Simple Ways to Boost Your Company's Press Profile

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

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

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

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

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

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

Amazon's Jeff Bezos Just Proved That All Those Rich And Famous Do-What-I-Do Stories Are Nonsense

Sometimes, luck wins.

“How to be successful” returns 843 million results on Google. “I will teach you to be rich” is an actual website. And we can’t go a day without seeing how four habits will make us successful, or seven things the most successful people are always doing, or, from the astonishingly loquacious and for the above-average attention span, 37 secrets only successful people know.

All of it is nonsense.

Don’t get me wrong: there’s a lot of good advice, and there’s a lot that can help people. Go ahead: read one of these every day. Just don’t believe that they will make the entire difference between you living on $45,000/year and building the next Facebook.

Because … luck.

Don’t take my word for it. Listen to Amazon founder, new richest person on Earth, and currently a billionaire 130.5 times over. (Hold your breath for a moment, and if Amazon stock goes up, it’ll be 135 times.)

“The price of admission to space is very high,” Bezos recently said as he accepted a Buzz Aldrin exploration award. “I’m in the process of converting my Amazon lottery winnings into a much lower price of admission so we can go explore the solar system.”

There’s only two things you need to pay attention to in that statement.

One, it takes a lot of money to be a space explorer.

And two, Bezos acknowledges that his extraordinary success and stupendous wealth are, at least to some degree, the result of an incredible streak of luck.

There’s no doubt that Bezos is smart.

There’s no doubt that Bezos is visionary.

There’s no doubt that Bezos is a super-talented technologist and leader and business person and manager.

Even so, in his own words, his tremendous fortune is the result of “Amazon lottery winnings.” That might just be seen as simple politeness, downplaying his own role in amassing the modern world’s biggest fortune. But I don’t think so.

I think Bezos gets it.

Even super-smart and super-successful people rely on a lot of luck (and the help of friends) to get where they’ve gone. Where would Amazon be without the internet? Where would Amazon be if Bezos couldn’t find investors? Where would Amazon be if stock markets hadn’t been so forgiving of its lack of desire to show quarterly profits for almost two decades? And where would Amazon be today if a wonderful confluence of natural language processing, artificial intelligence, cloud technology, device manufacturing, and massive distribution power hadn’t made its Echo line of products one of the most successful in recent years?

Much of that required seizing opportunity by the horns and running with it.

But much of it required sheer, blind, luck. And thanks to Jeff Bezos’ comments, we can see that in operation from one of the most successful persons in the entire world.

Remember that next time you see a “5 steps to instant success” article on the internet.

7 Lessons That Will Give Your Business That 1 Percent Edge

No company or entrepreneur gets it right every time. As an angel investor, I have found that people claiming a perfect record are either lying to themselves, or they are not taking enough risk to enable a big payback.

In the long run, your ability to thrive in business today is more about how you prepare for and handle the inevitable exceptions and failures, than shooting for perfection.

In trying to put a practical edge on this message, I found some help in a new book, The One-Percent Edge, by Susan Solovic. She has been there, as a serial entrepreneur, internet pioneer, attorney, and media personality.

She offers some good lessons for every modern business and entrepreneur that I can paraphrase here, with insights from my own experience:

1. Not every customer is predictable, so expect exceptions.

Of course, it’s important to put standard processes in place for all transactions, returns, and service requests, but a policy of “no exceptions” is not competitive today.

A special case handled individually can be your best advertising, through social media and this world of instant communication. 

For example, when a grieving customer informed a T-mobile customer representative that her husband had just passed away with a $2000 overdue bill, with all funds frozen, the customer’s account balance was forgiven. She was even offered unlimited minutes for the following two months. She shared her joy online, with over 29 thousand views and likes.

2. Train customer support personnel for complex situations.

By the time a customer decides to reach beyond a front-line employee, the situation is already complex. The age-old approach of putting marginal or new employees in support is a recipe for disaster.

Put your best employees in support, and continually enhance customer support satisfaction. 

3. Give employees the authority and incentives they need.

Above all, employees must have your trust and empowerment to make exceptions where appropriate, and solve problems on the spot. One of the best approaches I have seen is managers providing rewards for problem solving, including visible public recognition for their peers to see.

For example, the transport staff at the Staten Island University Hospital Radiology Lab has the tough and tiring job of wheeling patients around for testing.

When an employee witnessed another solving a problem or going the extra mile, they would nominate them for a Go the Extra Mile (GEM) certificate. These make everyone more empowered. 

4. Respond to customer special requests in real time.

For better or for worse, the Internet and social-media-based customer access have made consumers expect virtually immediate responses to their issues.

I still regularly hear from customers that wait for days or weeks after submitting a web form, or get stuck in telephone queues for an hour.

5. Offer a great customer experience, not just a product.

Today lasting customer loyalty requires an experience that goes far beyond the initial product or service.

This includes marketing, social media, the buying experience, as well as service. If that experience falls short of the mark, your business will suffer, no matter how great your service is.

Many negative customer experiences can actually be turned into positives, if you quickly acknowledge the problem, resolve it, and spread the positive message before the negative one gets amplified. Don’t repeat the United Breaks Guitars experience, which now has been published as a book on what not to do.

6. Be accountable, and admit and correct mistakes quickly.

Successful leaders and businesses are humble and transparent enough with themselves and others to admit mistakes and correct them quickly. In this way, those around them, including customers, can benefit from their learning, and feel a positive relationship and trust.

7. Learn from the companies that get it right.

Etsy is an example of a company that has a tremendous reputation with customers. Every user gets a unique experience, and this gives them a feeling of being special and well-cared for.

The team works hard to personalize the customer journey so that users feel more connected with the experience.

Remember, you don’t have to be perfect to outperform the competition. Only one percent above the rest is still the top. No quantum leap is required to get there – just make small incremental improvements in all areas of your business, and you too can avoid the pain of a radical overhaul (when it may be too late anyway), while increasing your agility and resilience.

Defense Department Is Using Google’s AI Tech to Help With Drone Surveillance

Google is helping the military use artificial intelligence to analyze video from drones to more quickly identify objects like trucks.

The deal is part of the Defense Department’s Project Maven initiative to use technology and automation to sift through huge amounts of data, according to tech publication Gizmodo, which reported on the partnership on Tuesday.

A Google (goog) spokesperson confirmed to Fortune that the search giant is working with the Defense Department and said that the company has “long worked with government agencies to provide technology solutions.” The spokesperson added that Google’s technology “flags images for human review, and is for non-offensive uses only.”

Anonymous Google employees expressed concern in the Gizmodo article that Google is helping the U.S. government improve drone surveillance operations and that the project highlights “important ethical questions about the development and use of machine learning.” The Google spokesperson acknowledged that the “military use of machine learning naturally raises valid concerns.”

“We’re actively discussing this important topic internally and with others as we continue to develop policies and safeguards around the development and use of our machine learning technologies,” the spokesperson wrote in an email.

As part of the partnership, the Defense Department is using Google’s free, open source TensorFlow software, used by developers to create powerful software that rely on machine-learning and can quickly recognize objects in photos like cats. For this project, the Google spokesperson said that the military would only use the technology to recognize images “on unclassified data.”

In July, the Defense Department described Project Maven as an initiative to explore how cutting-edge AI technologies could eventually be used in warfare.

“People and computers will work symbiotically to increase the ability of weapon systems to detect objects,” Marine Corps Col. Drew Cukor said in a statement. “Eventually we hope that one analyst will be able to do twice as much work, potentially three times as much, as they’re doing now. That’s our goal.”

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The Defense Department had said that it would be undergoing “a competitive selection process to find vendors that can provide algorithms against DoD data.”

“You don’t buy AI like you buy ammunition,” Cukor said. “There’s a deliberate workflow process and what the department has given us with its rapid acquisition authorities is an opportunity for about 36 months to explore what is governmental and [how] best to engage industry [to] advantage the taxpayer and the warfighter, who wants the best algorithms that exist to augment and complement the work he does.”

Scality Zenko 'multi-cloud controller' offers hybrid cloud boost

Scality will release a commercially supported version of its “multi-cloud data controller” Zenko at the end of March.

The product from the object storage maker promises to allow customers increased hybrid cloud operations; to move, replicate, tier, migrate and search data across on-premise, private cloud locations and public cloud, although it’s not that clear how seamless those operations will be.

Zenko was launched last year as an open source product, but will be commercially available in March 2018.

Zenko is based on Scality’s 2016 launch of its S3 server, which provided S3 access to Scality Ring object storage. The key concept behind Zenko is to allow customers to mix and match Scality on-site storage with storage from different cloud providers.

Initially access will be to Amazon Web Services, Google Cloud Platform and Microsoft Azure public could services as well as Scality Ring-based private clouds. “More are coming,” said Scality product management vice-president Paul Speciale.

Scality Ring software runs on commodity hardware and uses object storage to scale as a single distributed system across multiple sites and potentially thousands of standard x86 servers. Its architecture provides concurrent access to data.

Scality and other object storage suppliers use the representational state transfer (Rest) protocol to store very large amounts of data in a flat system where files are identified solely by metadata.

This contrasts with traditional file systems that use a tree-like hierarchical structure. This places limits on file systems because performance overheads increase as the file system grows towards billions of files.

Bloomberg is a Zenko beta customer. It wanted access to three clouds – AWS, Google and Azure – so that it maintained choices about where to put data and to be able to operate high availability between clouds, said Speciale.

“Bloomberg uses Zenko to manage video files,” said Speciale. “It puts shows in the cloud, carries out transcoding processing in Amazon EC2, then puts files on multiple clouds to provide customer access.”

“Data is readable natively to the format of the cloud, so it can be used by apps in that cloud. What you get is an interface between clouds. It neutralises APIs,” he said. “A bucket, for example [in AWS], specifies where it lives, and you can create policies such as replication between clouds.”

Zenko Orbit

Zenko Orbit, a point and click interface for use with Zenko, will be released at the end of March.

Zenko is a further manifestation of a trend towards multi-site – private datacentre and public cloud – operations. It is one of several file systems and object storage schemes that can operate across locations, between on-premise datacentres and public cloud services, such as those from Qumulo, Cloudian, Weka etc. These bring the possibility of hybrid cloud operations in which data portability issues are solved.

“On-premise is not going away and some enterprises are building new datacentres, but multi-cloud is real,” said Speciale.

It is not completely clear, however, to what extent Zenko will allow for data portability between clouds. Will customers be able to drag and drop between clouds in Zenko?

“Simplified data migration between clouds is on the Zenko roadmap, but in the first release we are providing a solution for two-other use-cases: Cloud media workflows and cloud disaster recovery,” he said.

The next version of Scality Ring, the company’s core object storage platform, will be released in mid-2018, with an appliance version available by the end of the year.

Netflix Shares Just Crossed a Major Milestone to a New Record High

Netflix’s shares crossed the $300 mark for the first time on Friday to reach a new record high.

The video streaming video giant’s stock closed at $301.05, up 3.67%.

Netflix’s market value of $130.6 billion puts it within reach of other entertainment and media powerhouses like Disney (market cap $154.7 billion) and Comcast (market cap $169.5 billion), as Hollywood business publication Variety noted.

Netflix shares have skyrocketed 1,000% over the past five years, propelled by the huge growth of its video streaming service. In Mar. 2013, Netflix share’s were trading at around $26.

In the most recent quarter, Netflix(nflx) reported solid earnings that included adding 8.3 million subscribers, far higher than the 6.3 million that Wall Street had expected. Netflix has over 117 million total streaming subscribers, as of the end of Dec. 2017.

One of the ways Netflix has grown its subscriber base is by creating original programming that’s been a hit with viewers. As Fortune’s Tom Huddleston noted in January, two of Netflix’s most popular original shows—the science fiction series Stranger Things and the historical drama The Crown—premiered in the company’s fourth quarter, which could have prompted more subscribers to sign up.

Netflix plans to spend $8 billion in 2018 on original programming, including movies, teen dramas, and even anime. The company is hoping to create enough compelling content to keep viewers glued to watching shows on its service—and undercut the potential of broadcasting networks like Disney (dis) pulling their shows from Netflix’s library.

Disney, for example, plans to debut its own streaming video service in 2019 that will feature Disney’s own collection of animated films and movies, and has previously said it will stop making available new movies on Netflix.

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Daniel Ives, an analyst from GBH Insights, wrote in a research note in February that while media giants like Disney pose a “clear competitive worry” to Netflix, he’s optimistic about the company’s prospects. One of Netflix’s core advantages, Ives cites, is its original programming, which he said will continue to lure new subscribers.

From the GBH Insights research note:

With more consumer dollars shifting away from traditional cable with cord cutting and towards streaming delivery, we believe Netflix has a long runway of growth and opportunity ahead of itself and clear first mover advantage despite intense competition from larger media players (Disney), pure play competitors, and new potential entrants (e.g. Apple).

Spotify plans to list shares, fend off Apple and Amazon

(Reuters) – Music streaming service Spotify on Wednesday filed for a direct listing of its shares, laying out financial data for the first time that cheered some analysts but led others to question how it could turn a profit from its growing subscriber base.

Spotify, which wants to trade as SPOT on the New York Stock Exchange, is taking an unusual path to the U.S. public markets, with a direct listing that will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.

Because the company will not issue any new shares, it did not specify a listing price. Based on private transactions, it is valued at roughly $19 billion, according to Reuters calculations.

Spotify, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc‘s< GOOGL.O> Google as its main rivals.

RISING SALES, COSTS IN CHECK

In the filing, Spotify laid out detailed financial data for the first time, showing rising revenue and relatively steady operating costs, which analysts took as a positive.

Revenue rose 39 percent to 4.09 billion euros ($4.99 billion) in 2017, from 2.95 billion euros a year earlier. Its operating loss widened to 378 million euros in 2017 from 349 million euros.

Its net loss ballooned 129 percent in 2017, driven mostly by financing costs related to a 2016 deal in which Sweden-based Spotify raised $1 billion in debt that would convert to shares upon an initial public offering.

“The revenue continues to grow but in particular their costs are growing slower than revenue, which is exactly what you expect in a business like this,” said Jay Ritter, an expert in initial public offerings and professor at the University of Florida.

Spotify compared its aspirations to the reach of Facebook (FB.O) and YouTube. “We believe the universality of music gives us the opportunity to reach many of the over 3.6 billion internet users globally,” it said.

With 71 million premium subscribers globally, Spotify has about twice as many paying customers as music streaming runner up Apple, with 36 million. Including those who listen to advertising-supported streams, Spotify has about 159 million monthly average users.

Amazon Music Unlimited has 16 million paying subscribers, and Pandora Media Inc (P.N) has 5.48 million total subscribers.

Google has not said how many subscribers it has to Google Play, its music streaming service.

Spotify’s premium subscription costs $9.99 a month, but it said it saw great potential in its ad-supported service, which Apple does not offer.

“With our ad-supported service, we believe there is a large opportunity to grow users and gain market share from traditional terrestrial radio,” Spotify said.

The net proportion of subscribers who left Spotify’s paid-for service, or churn, fell to 5.1 percent of paying customers at the end of 2017, from 6.9 percent at the start of 2016, the company said.

“This has been a question we’ve been wondering for a long time: how sustainable is Spotify’s model? This is the very first time we’re seeing public disclosure about churn, and the news there is really good,” said Larry Miller, head of the music business program at New York University’s Steinhardt School.

Spotify calculated that customers brought in 3.6 times more revenue over their life as a user than the company spent on marketing to attract them, as of the end of 2017, helping boost free cash flow to 109 million euros by the end of last year.

Still, in going head to head against Apple, Amazon and others, Spotify is “competing against companies that never need to make a dime on music as a standalone business and that in fact use it to drive other aspects of their business,” Miller said.

Apple and Alphabet also control the two main operating systems used by smartphones, iOS and Android. They and Amazon are all developing computer assistants, such as Amazon’s Alexa and Apple’s Siri, that could give the bigger companies advantages.

“Many of our competitors enjoy competitive advantages such as greater name recognition, legacy operating histories, and larger marketing budgets, as well as greater financial, technical, human, and other resources,” Spotify said in its filing.

Apple has launched massive marketing campaigns around its service and added subscribers rapidly in the last three years. “I don’t think there’s any doubt that the pace of competition this year has quickened,” Miller said.

Spotify has a powerful ally, in the music arm of China’s Tencent Holdings Ltd (0700.HK). The companies in December said they would buy minority stakes in each other, helping increase exposure to each other’s core markets.

STOCK COULD BE VOLATILE

A direct listing does not dilute ownership, as would happen with a conventional initial public offering, and saves hundreds of millions of dollars in underwriting fees. But it also frees existing owners from any lockup period restricting them from selling their shares following the listing.

Underwriters that provide price stability for new listings are not used in a direct listing, which could mean a volatile start for Spotify shares in public.

Shares trade privately in a wide band. Spotify is valued between $16.8 billion and $22.5 billion, based on recent ordinary share prices between $95 and $127.50 in the private markets in February and 178 billion shares estimated outstanding by the end of February, according to its filing.

Synovus Trust portfolio manager Dan Morgan described Spotify as “interesting,” but questioned how quickly it might become profitable.

“How can Spotify monetize its user base beyond a $5-$15 monthly subscription fee?,” Morgan asked.

Reporting by Nikhil Subba and Nivedita Bhattacharjee in Bengaluru, Stephen Nellis and Noel Randewich in San Francisco and Greg Roumeliotis and Jessica Toonkel in New York; additional reporting by Subrat Patnaik in Bengaluru; Editing by Peter Henderson, Meredith Mazzilli and Rosalba O’Brien