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Fox spirits and demons: China's tech giants splash out in cartoon arms race

HANGZHOU, China (Reuters) – Growing up in the Chinese port city of Dalian in the 1990s, Zhang Hongchang spent hours immersed in Japanese cartoons like Dragon Ball and Naruto.

People walk past a booth of NetEase Comics at the China International Cartoon and Game (CCG) Expo in Shanghai, China July 6, 2017. REUTERS/Stringer

China’s home-grown cartoons paled in comparison to the Japanese anime series on television and in comic books that captured the imaginations of Zhang and his generation.

Today, Zhang is one of China’s hottest cartoonists and at the forefront of a new wave of Chinese animation that is being driven by the country’s technology and internet giants. His latest hit comic – which stars a high school student who is also a Taoist priest with secret super powers – has been viewed 160 million times online.

China’s tech firms are engaged in a cartoon arms race to develop or buy Chinese characters in an animation market expected to hit 216 billion yuan ($33.22 billion) by 2020, according to the EntGroup consultancy, trying to emulate the success of Walt Disney Co’s (DIS.N) ensemble, which ranges from Mickey Mouse to Iron Man.

A key to that effort, has been the development of artists like Zhang.

“When I started, I was copying Japanese cartoons, but slowly I got my own style,” Zhang said in the Hangzhou studio where he draws comics that are made available to readers on a platform operated by the local gaming firm NetEase Inc (NTES.O).

“I had to spend a lot time getting to understand the Chinese market and what Chinese comic readers wanted.”

Chinese tech giants like Tencent Holdings (0700.HK), Baidu Inc (BIDU.O) and NetEase are trying to figure out the same thing.

Part of the winning formula has been the use of traditional Chinese religious and cultural themes, and characters. That, and improved quality in terms of art and storytelling, helped China’s comic and animation market reach 150 billion yuan last year, according to EntGroup’s estimates.

China still lags behind the Japanese and American markets, but is catching up. Japan is the top producer of animation, while the United States dominates in terms of sales, taking a nearly 40 percent share of the global industry, estimated at $220 billion in 2016, according to a report from Research & Markets. China had around 8 percent that year.

For Chinese companies, the development of compelling series and characters could also open up new business opportunities that companies like Disney have exploited, like branded theme parks, games, movies, TV shows, lunch boxes and clothes.

“To make it work there have to be good stories, good production, and content that can resonate with consumers,” said Xu Zhiwei, animation and comic copyright senior manager at Tencent in Beijing.

Tencent is already seeing some success that could help the firm maintain rapid growth and a high valuation.

The gaming-to-social media company bought up “Fox Spirit Matchmaker”, which depicts romances between humans and demons, when it was a little-known comic, created by an artist called Xiao Xin.

The comic has been developed into an animation series that’s been viewed more than 3 billion times, Tencent told Reuters, making it one of the hottest hits on its video platform, which has over 60 million paying subscribers.

Tushan Susu, the animation’s main character, has been featured in a commercial for the fast food chain KFC (YUM.N) (YUMC.N). Tencent is now looking to create a television series and a video game using Fox Spirit characters.


China’s tech giants play an outsized role in Chinese entertainment. Tencent, the search company Baidu, and Alibaba, the e-commerce giant, control most of the top online platforms from movies to sport, and are dominant in social media and online gaming.

These firms are looking to latch on to a surging sub-culture being driven by a young generation with a taste for animation, called “dongman” in Chinese. This group is keen for more local-style heroes, according to industry executives.

They are also wealthier than their parents were, and have money to spend.

“Youngsters, especially the post-2000s, are very willing to spend money,” Geng Danhao, senior vice president at Baidu’s online streaming platform, iQiyi, said at an event in Beijing.

Zhang Tuo, a 21-year-old college student in Sichuan, said he had spent more than 7,000 yuan on comic-related merchandise, from plastic figurines to t-shirts. His favorites are local comics like Spiritpact and Monster List. Tao Jie, 20 a student in the southwestern city of Chengdu, said Chinese cartoons had improved in terms of story lines and animation technique. The use of local tales was also an attraction, he said.

“A lot of the Chinese comic and animation are developed from online novels that I have already read. I like them because I’m already a fan of the stories,” said Tao.

That shift has been helped by supportive government policies to ensure that peak-time television slots are kept for domestic animation.

The big tech firms are starting to spend, though not yet at the level of Disney, which bought Pixar Animation Studios for $7.6 billion, as well as Marvel Entertainment, and the Star Wars producer Lucasfilm Ltd for around $4 billion each.

Tencent has invested in more than a dozen comic and animation companies since last year, according to public records, while its film arm launched a “100 animations” project to support domestic productions.

Baidu’s iQiyi (IQ.O), is also splashing out on domestic comics, planning to spend 200 million yuan to sign Chinese artists and develop local characters, which comes on top of an earlier investment in 10 animation projects, the company said in May.

Alibaba and the news aggregator Toutiao have snapped up production companies and launched animation platforms on their own sites. NetEase signed a deal last year with Disney to create Marvel style superheroes, but with Chinese characteristics.

Luo Qiandan, marketing director of NetEase Comics, said the firm was using big data from its platform to analyze what comic consumers wanted and would feed this back to artists.

It was also adopting other elements such as Chinese brush painting techniques and religious themes.

“Everybody is trying to use Chinese elements and Chinese style,” she said.

Reporting by Pei Li in BEIJING, Adam Jourdan in SHANGHAI and Anita Li in HANGZHOU; Editing by Philip McClellan

Apple Admits to Sticky MacBook Pro Keyboards, Will Fix Them for Free

MacBook and MacBook Pro laptop owners with flaky keyboards can get them fixed for free and receive refunds for out-of-warranty repairs they have already made, Apple said today. The company has extended the warranty for keyboards for nine affected models released starting in 2015 to four years from the usual one year.

In a statement provided to Fortune, an Apple spokesperson said, “Today we launched a keyboard service program for our customers that covers a small percentage of keyboards in certain MacBook and MacBook Pro models which may exhibit one or more of the following behaviors: letters or characters that repeat unexpectedly or don’t appear when pressed or keys that feel ‘sticky’ or aren’t responding in a consistent manner.”

The laptop models affected rely on a new key switch design Apple introduced in 2015 with a complete revision of its MacBook laptop and brought to the MacBook Pro in an overhaul in 2016. The so-called “butterfly” keys allowed for a much lower-profile keyboard with reduced travel distance when pressed. Many users disliked the feel compared to standard “scissor” switch laptop keys. Beyond finger feel, the shorter travel distance also increased the likelihood that trapped grit—even small particles of dust—could lodge in place, preventing a key or keys from working.

The cost of out of warranty repair can be as high as $700, as keys can often not be repaired singly. Replacing the keyboard as a whole requires swapping out the entire top side of the main laptop body.

Apple currently faces three lawsuits over the keyboard flaw. Its offer to pay for repairs to the keyboard already performed may affect these suits, but no settlements were announced today.

It has been impossible to date to know how rare the problem is, as Apple doesn’t disclose rates of repair. In October 2017, technology journalist Casey Johnston wrote about her pervasive problem with a MacBook Pro’s keyboard, and said Apple repair technicians (known as Geniuses) repeatedly chalked it up to dust. Johnston spoke to an anonymous source at a company that provides MacBook Pros to its users, who said the problem was extensive but below 5% of laptops.

Apple posted special cleaning instructions for laptops with butterfly key switches in 2017, but no other information. Jason Snell, editor of Six Colors and former editor-in-chief of Macworld magazine, wrote in April 2018, “Apple’s relative silence on this issue for existing customers is deafening.” Snell called for a recall if the problem was pervasive as it seemed.

In April 2018, Johnston wrote a follow-up story that even after a replacement of her first keyboard, problems arose again, and she sold the laptop back Apple. She recommended against purchase of any butterfly-key models. (This reporter owns a 2015 MacBook with the butterfly design, which had its keyboard replaced in 2017 under a three-year paid warranty extension due to the key faces wearing off across all its most-used keys.)

Apple said affected customers can receive service at no charge via a retail Apple Store, through Apple’s mail-in repair program, or through an Apple-authorized service provider. If a laptop has other damage that has to be fixed before the keyboard can be replaced, Apple said in its service program page that a charge may apply.

Amazon Employees Want Jeff Bezos to Stop Selling Rekognition to Law Enforcement, According to Report

Amazon employees are asking CEO Jeff Bezos to stop selling Rekognition facial recognition technology to law enforcement, and to kick the data mining company Palantir from Amazon Web Services, according from a report from Gizmodo.

In the letter circulating the company, which was obtained by Gizmodo, employees wrote that they are “troubled by the recent report from the ACLU exposing our company’s practice of selling AWS Rekognition, a powerful facial recognition technology, to police departments and government agencies.”

Rekognition was released in 2016, and according to an Amazon blog post from that year, Rekognition can scan and recognize images including people, pets, scenes and objects.

“You can use Rekognition in several different authentication and security contexts,” the blog post explains. “You can compare a face on a webcam to a badge photo before allowing an employee to enter a secure zone. You can perform visual surveillance, inspecting photos for objects or people of interest or concern.”

In a May letter to Bezos, the American Civil Liberties Union along with more than three-dozen other organizations demanded that Amazon stop selling Rekognition services to law enforcement agencies. The ACLU also released documents and a report criticizing Amazon’s marketing to law enforcement, and Rekognition’s use at a police department in Orlando, Florida and the Washington County Sheriff’s Office in Oregon.

The letter from Amazon employees to Bezos also cites President Donald Trump’s “zero tolerance” policy at the U.S. border as a cause for consternation.

“In the face of this immoral U.S. policy, and the U.S.’s increasingly inhumane treatment of refugees and immigrants beyond this specific policy, we are deeply concerned that Amazon is implicated, providing infrastructure and services that enable ICE and DHS,” the letter reportedly states.

Amazon employees also called for the company to not provide services to companies — like Palantir — that partner with Immigration and Customs Enforcement. Fortune contacted Palantir for comment.

Employees are not alone in voicing their unease. Earlier this week, 19 Amazon shareholders wrote a letter (which was posted publicly by the ACLU) to Bezos about Rekognition. It reads in part:

“In addition to our concerns for U.S. consumers who may be put in harm’s way with law enforcement’s use of Rekognition, we are also concerned sales may be expanded to foreign governments, including authoritarian regimes. Without protective policies in place, it seems inevitable the application of these technologies will result in Amazon’s Rekognition being used to identify and detain democracy advocates.”

When reached for a comment, Amazon pointed Fortune to a blog post written by Dr. Matt Wood, general manager of artificial intelligence at AWS, following the release of the ACLU report:

“Each organization choosing to employ technology must act responsibly or risk legal penalties and public condemnation.” Wood wrote. “AWS takes its responsibilities seriously. But we believe it is the wrong approach to impose a ban on promising new technologies because they might be used by bad actors for nefarious purposes in the future. “

The Amazon employees’ letter is the latest in a trend of employees at large tech companies sharing ethical concerns about the use of products. Employees at both Google and Microsoft have recently objected to contracts with the Department of Defense and ICE, respectively. Google said it would not renew its contract with the DoD. Microsoft discussed its contract with ICE in an email to employees.

Steam Down: Store Is Having Server Problems For The Summer Sale

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, I write about video games and technology. Opinions expressed by Forbes Contributors are their own.
Credit: Valve

Steam’s Summer Sale.

</div> </div> <p>Unsurprisingly, a lot of people seem to want super cheap PC games. The Steam Summer Sale officially started at 1:00 p.m. Eastern, but at this moment I’m barely able to load a thing on the Steam Storefront, and plenty of other people on Twitter seem to be experiencing&nbsp;a similar thing. The Steam Summer Sale is a major event for the budget-conscious gamer, and it seems that the traffic is just a bit too much for Valve’s servers to handle with grace.</p> <p>My experience right now is running the gamut from &quot;totally down&quot; to &quot;just not all that functional.&quot; I can reliably get the main store page to load, but I’m more or less out of luck from there, whether I’m trying to add filters, look at genres or even just highlight an individual game. In some instances, the sale price doesn’t seem to be appearing for games on the main page, either. I can get some game pages to load, but it usually takes about a minute if it happens at all. And I’d like to be buying games much more quickly than that, thank you very much.</p> <p>I assume this will get sorted in short order: Valve has a lot riding on its technical stability, and a lot riding on the Summer Sale in particular. There’s no evidence of any foul play or anything beyond a massive crush of traffic that’s causing things to move very slowly. The problem may get a little worse before it gets better, though, as people like me keep refreshing as more and more people join up to check in.</p> <p> </p> <p>We’ll keep you posted if the store is back to normal in a little bit, and then let you know about some of the best deals available. There are a ton of great games in this sale every year, but if you’re not too careful you’ll end up broke and with an imposing backlog.</p>” readability=”40″>

Credit: Valve

Steam’s Summer Sale.

Unsurprisingly, a lot of people seem to want super cheap PC games. The Steam Summer Sale officially started at 1:00 p.m. Eastern, but at this moment I’m barely able to load a thing on the Steam Storefront, and plenty of other people on Twitter seem to be experiencing a similar thing. The Steam Summer Sale is a major event for the budget-conscious gamer, and it seems that the traffic is just a bit too much for Valve’s servers to handle with grace.

My experience right now is running the gamut from “totally down” to “just not all that functional.” I can reliably get the main store page to load, but I’m more or less out of luck from there, whether I’m trying to add filters, look at genres or even just highlight an individual game. In some instances, the sale price doesn’t seem to be appearing for games on the main page, either. I can get some game pages to load, but it usually takes about a minute if it happens at all. And I’d like to be buying games much more quickly than that, thank you very much.

I assume this will get sorted in short order: Valve has a lot riding on its technical stability, and a lot riding on the Summer Sale in particular. There’s no evidence of any foul play or anything beyond a massive crush of traffic that’s causing things to move very slowly. The problem may get a little worse before it gets better, though, as people like me keep refreshing as more and more people join up to check in.

We’ll keep you posted if the store is back to normal in a little bit, and then let you know about some of the best deals available. There are a ton of great games in this sale every year, but if you’re not too careful you’ll end up broke and with an imposing backlog.

How iPhone Could Beat Google Pixel 2 At Its Own Game

Apple has been busy developing a radical new camera capable of delivering depth-sensing capabilities with a single lens. In a patent granted earlier this month entitled ‘Image Sensor With In-Pixel Depth Sensing’, Apple has described a new camera device able to achieve portrait-mode-style trickery with only a single lens – much like the one built into Google’s much-lauded Pixel 2.

However, Apple’s patent goes beyond merely creating artificial bokeh. The document describes multiple technologies designed individually to enhance gesture recognition, 3D applications and autofocus capabilities regarding both accuracy and speed.


A simplified cross-sectional view of an example asymmetrical photodetector pair.

One usage example describes a camera sensor capable of operating in three distinct modes: a charge summing mode, a high dynamic range mode and a depth-of-field mode. These would allow the camera to switch between configurations as required to achieve better images in low light, bright sunlight or portrait modes.

In each case, asymmetrical pairs of pixels are used in which one of each pair is filtered or otherwise treated differently to the other to distinguish between light coming from the left and right sides of the image (or from the top and bottom, depending on the orientation of the pixels).

This enables to the camera to create slightly different ‘left’ and ‘right’ versions of the image from which some degree of depth can be calculated.

This small difference alone isn’t enough to generate a convincing illusion of depth, but it does provide enough information for a software solution to calculate a depth map which can then be used to simulate realistic depth effects algorithmically, much like the Pixel 2.


The Google Pixel 2 XL In ‘Just Black’

The patent describes different methods of differentiating the pixel pairs including the use of light shields, colored filters, and multiple photodetectors installed within individual pixels.

Also described is a method of focusing a lens based on the measured difference in output between such asymmetrical pixel pairs. This shows that Apple’s invention can be used for more than creating depth effects. It can also be used to improve focus.

While Apple is already heavily invested in multiple-camera solutions in its flagship iPhones, adding such capabilities to a single-lensed camera would pave the way for depth-based functions like portrait mode to be added to smaller and perhaps less-costly devices as well as improving the capabilities of front-facing ‘selfie’ cameras without the need to add a second lens.


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Doom and gloom in advertising? I don't see it, says IPG boss Roth

CANNES, France (Reuters) – The veteran boss of advertising giant IPG said he does not recognize the talk of “doom and gloom” in his industry, arguing the holding companies are needed more than ever to help clients chart the rapidly changing territory.

The strength of Google and Facebook in online advertising, and the arrival of well-heeled consultants offering advisory work, has sparked fears that the traditional holding companies could lose their grip on client spend during the digital transformation.

But Michael Roth, CEO of IPG since 2005, is having none of it. While he accepts that the industry underperformed from a shareholder point of view last year, he said the range of services he offered could not be beaten.

“I have a slide that says ‘we’re the new disruptors in the industry, the advertising industry is doomed’,” he told Reuters. “That was the headline of the Wall Street Journal 25 years ago.

“I think it is over-rated in terms of fear. I don’t see it.”

Much of the concern about the traditional advertising industry has focused on WPP, the world’s biggest holding company of agencies including JWT and Ogilvy, which suffered a sharp downturn in trading in 2017.

The company, which lost its founder and CEO Martin Sorrell in April, has said the industry is going through structural change, with Google and Facebook enabling clients to reach consumers directly and without an advertising agency.

At the same time, consultants like Accenture and Deloitte are expanding in the sector while some major clients are creating digital content in-house or with independent start-ups. Others still are demanding proof that the millions of dollars they spend online leads to actual transactions.

Roth said that for most of his clients however the sheer scale of change in the industry and the fragmentation of content across the internet meant they relied on IPG, one of the top four holding companies, to make the right decisions.

The holding companies, which also include Omnicom, Publicis and Dentsu, offer everything from adverts for TV, mobile and newspapers to data analytics, media buying, PR and some market research.

Offering a more limited service, the consultancies, he said, were beatable.

“Candidly, we don’t see them very much in terms of who we pitch against and when we do pitch against them we win because we’re able to provide the integrated offering that they don’t.

“The issue of disintermediation, (clients) going to Google and Facebook and not to us, frankly when they do go to Google and Facebook we’re involved because you need an independent arbiter.”

The New York-based owner of McCann outperformed rivals in the first quarter of this year and guided toward the high-end of its 2018 forecast.

While it lifted the shares on the day the stock remains down around 4 percent in the last year, compared with a rise of 14 percent for the broader S&P 500.

Roth said he was concerned by the talk of “doom and gloom” and said a drift to a trade war could knock his clients off their stride. But he reiterated his optimism after spending time with clients in Cannes at the annual advertising festival.

“Clients are looking for solutions and they are looking for a single source that is independent in thinking but has the tools and resources to make a difference,” he said.

“If we’re on our game and clients are willing to spend, the industry is in decent shape.”

Reporting by Kate Holton; Editing by Adrian Croft

Fortnite's Stink Bombs Do Some Pretty Serious Damage

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, I write about video games and technology. Opinions expressed by Forbes Contributors are their own.
Credit: Epic Games

Fortnite: Battle Royale’s new stink bombs.

</div> </div> <p><em>Fortnite</em> got a new weapon today, and while that’s a sentence you can write just about every other week, this week’s feels like it might actually have&nbsp;the potential to change the way the game is played. The stink bomb went live today, and it’s basically a cute name for mustard gas: a brutal, yellowish cloud that forms sulfuric acid in your lungs and melts you from the inside. Despite the aesthetic similarities, Epic want sto&nbsp;be sure that you know the stink bomb is not that. Regardless, it’s just as brutal. Damage was a major question when the stink bomb first released, and I can assure you: the thing hurts.</p> <p>Like most players, my first experience with the legendary-tier stink bomb was on the receiving end. I was playing squads without teammates because I was getting some challenges done and I find they’re easier in squads. So I was already at a steep disadvantage when I came across three opponents by the indoor soccer stadium. Regardless, I built my little 1X1 fort and took aim, like you do. I was immediately pelted by at least two stink bombs, rendering my fort completely&nbsp;unusable. I did the only thing that I could do and hopped out, where I was immediately shotgunned by the players that had been using the stink as a cover for an approach.</p> <p>The stink here does 5 damage&nbsp;every half-second for 9 seconds for a total of 9 seconds, which is just under what it takes to kill an opponent at full health.&nbsp;Despite the two grenades, the damage I received did not appear to stack, meaning I still only received the five damage per half second. Regardless, that was enough to make my life very unpleasant. It means that if I were to have stayed put it would only have taken 10 health damage to put me down for good.</p> <p> </p> <p>I’d expect this to change the game in interesting ways. Right now, explosives and wild firing are the only real area control methods, and neither does so as effectively as the stink bomb. It could really change the way the early moments of an encounter go if one player is able to scare the other out of their fort without losing access to theirs. I’m interested to see what this looks like at the higher levels.</p>” readability=”43″>

Credit: Epic Games

Fortnite: Battle Royale’s new stink bombs.

Fortnite got a new weapon today, and while that’s a sentence you can write just about every other week, this week’s feels like it might actually have the potential to change the way the game is played. The stink bomb went live today, and it’s basically a cute name for mustard gas: a brutal, yellowish cloud that forms sulfuric acid in your lungs and melts you from the inside. Despite the aesthetic similarities, Epic want sto be sure that you know the stink bomb is not that. Regardless, it’s just as brutal. Damage was a major question when the stink bomb first released, and I can assure you: the thing hurts.

Like most players, my first experience with the legendary-tier stink bomb was on the receiving end. I was playing squads without teammates because I was getting some challenges done and I find they’re easier in squads. So I was already at a steep disadvantage when I came across three opponents by the indoor soccer stadium. Regardless, I built my little 1X1 fort and took aim, like you do. I was immediately pelted by at least two stink bombs, rendering my fort completely unusable. I did the only thing that I could do and hopped out, where I was immediately shotgunned by the players that had been using the stink as a cover for an approach.

The stink here does 5 damage every half-second for 9 seconds for a total of 9 seconds, which is just under what it takes to kill an opponent at full health. Despite the two grenades, the damage I received did not appear to stack, meaning I still only received the five damage per half second. Regardless, that was enough to make my life very unpleasant. It means that if I were to have stayed put it would only have taken 10 health damage to put me down for good.

I’d expect this to change the game in interesting ways. Right now, explosives and wild firing are the only real area control methods, and neither does so as effectively as the stink bomb. It could really change the way the early moments of an encounter go if one player is able to scare the other out of their fort without losing access to theirs. I’m interested to see what this looks like at the higher levels.

The Surprising Economic Benefits of Clean Energy

It seems to be a common misconception that environmentalism and economic growth are opposed, but nothing could be further from the truth. The economic power of the green movement is most visibly on display in the clean energy industry, which is rapidly growing and innovating daily.

Clean energy impacts residential, commercial, and industrial properties, so how it is supported and implemented is key to how it impacts both the planet and the economy. Here’s a look at programs that support the development and expansion of clean energy, as well as how clean energy is being integrated with our infrastructure today.

How clean energy impacts businesses

Clean energy might not seem, on its surface, like a business issue for anyone outside of the renewables industry. However, on the contrary, it is a powerful cost-cutting measure that carries with it a huge branding opportunity. Not only can businesses save money by harnessing the power of sun, air, or sea, but they can also demonstrate to a consumer base eager for corporate social responsibility that they care about their environmental impact.

Those benefits are driving adoption by more companies. In 2017, companies acquired more than 4 gigawatts of clean energy, the most of any year on record. And already in 2018 companies have acquired nearly three quarters of last year’s total, putting them on pace to easily surpass 2017’s record-breaking acquisitions of clean energy.

Adoption rates also mean that the branding advantage presented by the opportunity to shift to clean energy will soon turn into an imperative. Changing now means companies are responsible kids on the block, but waiting until later means they run the risk of looking like a lackadaisical polluter. As clean energy becomes more ubiquitous, it will be expected, rather than applauded. Large adopters are clearing the way for smaller companies, and clean energy is moving toward something that feels more like mass adoption.

Regulatory support for clean energy

In 2015, the White House established new Property Assessed Clean Energy (PACE) guidelines through the Federal Housing Administration that should help scale up adoption of clean energy. PACE enables low-cost, long-term financing for a variety of energy efficiency, renewable energy, water conservation, storm protection, and seismic improvements. PACE financing is repaid as a special assessment or tax on the property’s regular tax bill and is processed the same way as other local public benefit assessments like sidewalks and sewers.

Depending on where you live, PACE financing can be used for improvements on commercial, residential, nonprofit, light industrial and agricultural properties. PACE is designed to lower utility bills for homeowners, create jobs and help local governments achieve important environmental goals (although it hasn’t been without its opponents).

Real world implementation of clean energy

Technological development and theory are great things, but they are nothing without real action. How we implement clean energy and the market conditions surrounding it are the most important aspects of transforming the way we obtain our energy.

A number of companies use earth-friendly practices and products to provide the homeowner with energy saving solutions, offering qualifiable PACE improvements and upgrades that can be made to a home or business. Many work with financing companies like Renew Financial, a clean-energy finance company led by CEO Cisco DeVries, the innovator of the PACE finance model, to provide solutions that aim to keep the immediate environment clean and reduce energy waste and costs.

Environmental resiliency is certainly an issue across the country. In Florida in particular, homeowners are concerned due to the risks of flooding, hurricanes, and extreme heat.

One company, Evergreen Homes, says it’s seeing an increase in requests for critical property upgrades such as roofing, wind-resistant windows and other energy-efficiency improvements. CEO Ido Stern says it provides customers with a number of options “to make much-needed weatherization and energy improvements that make their properties hurricane safe, and comparable with new construction, while at the same time saving them money and increasing their property values.”

Every dollar saved by the implementation of green solutions and clean, renewable energies is a dollar that can be used in the local economy, boosting growth and improving the business environment. In this way, economic growth and environmental progress go hand in hand. So, the next time someone says you have to degrade the environment to make money, remember that a large sector of the American economy is driven by finding business solutions to critical environmental problems.

Daymond John: How I Learned to Be a Leader

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Gold Bullish On Fed Hike 3

Gold weathered the Federal Reserve’s 7th rate hike of this cycle this week. Gold-futures speculators and to a lesser extent gold investors have long feared Fed rate hikes, selling ahead of them. Higher rates are viewed as the nemesis of zero-yielding gold. But contrary to this popular belief, past Fed rate hikes have proven very bullish for gold. This latest hike once again leaves gold set up for a major rally in coming months.

The Fed’s Federal Open Market Committee meets 8 times per year to make monetary-policy decisions. These can really impact the financial markets, and thus are closely watched by gold-futures speculators. These elite traders wield wildly-outsized influence on short-term gold price action due to the truly extreme leverage inherent in gold-futures trading. What they do before and after FOMC decisions really impacts gold.

This week’s latest Fed rate hike was universally expected. Trading in the federal-funds-futures market effectively implies rate-hike odds. Way back in mid-April they shot up to 100% for this week’s meeting, then stayed there for 5 weeks. In the last several weeks they averaged 91%. So everyone knew another Fed rate hike was coming. That’s typical, as the FOMC doesn’t want to surprise the markets and ignite selloffs.

The big unknown going into the every-other FOMC meetings followed by press conferences from the Fed chairman is the future rate-hike outlooks. Top FOMC officials’ individual federal-funds-rate outlooks are summarized in a chart traders call the “dot plot”. That was hawkish this week, with 2018’s total expected rate hikes climbing from 3 to 4. More near-term rate hikes projected have really hammered gold in the past.

But on this week’s Fed Day gold didn’t plunge despite these hawkish dots and 7th rate hike of this cycle. Gold was around $1297 as the FOMC statement and dot plot were released that afternoon, and only fell modestly to $1293 after that. Then it started rallying back a half-hour later during Jerome Powell’s post-decision press conference. Gold closed that day at $1299, actually rallying 0.3% through a hawkish FOMC.

Gold-futures speculators usually sell leading into the every-other “live” FOMC meetings with dot plots and press conferences. Incidentally the first thing the new chairman Powell discussed this week is he is going to begin holding press conferences after all 8 FOMC meetings each year starting in January! So the gold-futures-driven gold volatility surrounding the Fed could very well become more frequent in 2019 and beyond.

All that gold-futures selling before FOMC meetings leaves speculators’ positions too bearish. And the Fed tries hard to never majorly surprise on the hawkish side anyway. So after FOMC decisions the very gold-futures speculators who sold aggressively leading into them often start buying back in. This trading dynamic forces gold lower leading into Fed Days, and then drives big rebound rallies coming out of them.

This week a single gold-futures contract controlling 100 troy ounces of gold worth about $130,000 had a maintenance-margin requirement of just $3100! So futures traders can run up to 41.9x leverage to gold, which is mind-boggling. The legal limit in the stock markets has been 2x for decades. At 40x each dollar deployed in gold futures has 40x the impact on the gold price as another dollar invested in gold outright.

So even if you don’t trade gold futures like the vast majority of gold investors, they are important to watch since they dominate short-term gold action. This first chart looks at gold and speculators’ total long and short positions in gold futures over this Fed-rate-hike cycle. Each of these 7 rate hikes is highlighted, showing how gold sells off into them before rallying out of them mostly driven by speculators’ gold-futures trading.

Back in late 2015, the FOMC hadn’t hiked its FFR for nearly a decade. At its late-October 2015 meeting, the FOMC statement warned the Fed was “determining whether it will be appropriate to raise the target range at its next meeting”. That hawkish signal shocked gold-futures traders and they started dumping long contracts while rapidly ramping short sales. Gold was crushed on that, falling 9.1% over the next 7 weeks.

On the eve of that fateful mid-December FOMC decision to start hiking rates again for the first time in 9.5 years, everyone was convinced that was bad news for gold. Gold yields nothing, so surely higher bond yields would divert investment away from gold. It sounds logical, but history has proven the opposite. So just days before that initial Fed rate hike, I wrote a bullish essay showing how gold thrived in past rate-hike cycles.

Gold surged 1.1% the day of that first hike, but plunged 2.1% to a 6.1-year secular low of $1051 the very next day. Foreign traders had fled overnight following that rate hike. But gold started powering higher right after that. By mid-February 2016 gold had roared back up 18.5% on all that post-FOMC-rebound spec long buying and short covering! Gold formally entered a new bull market at +20% a few weeks later.

The Fed’s second rate hike of this cycle came exactly a year after the first in mid-December 2016. Again the Fed telegraphed another hike, so again gold-futures speculators fled longs and ramped shorts. In the 5 weeks leading into that FOMC meeting, gold plunged 11.2%. That was really exacerbated by the extreme Trumphoria stock-market rally in the wake of Trump’s surprise election victory early in that same span.

While everyone saw that Fed hike coming, the dot-plot rate-hike outlook of top FOMC officials climbed from 2 additional rate hikes in 2017 to 3. So spec gold-futures selling exploded, battering gold 1.4% lower that day and another 1.2% to $1128 the next. That hawkish FOMC surprise of more rate hikes faster was the worst-case Fed-decision scenario for gold. The general gold bearishness was epically high.

But gold didn’t plunge from there like everyone expected. Instead it rebounded dramatically higher with an 11.4% rally over the next 10 weeks or so! When speculators’ gold-futures longs get too low and/or their shorts get too high heading into any FOMC decision, these excessive trades have to be reversed in its wake. Any pre-FOMC gold-futures selling directly translates into symmetrical post-FOMC buying.

Since the FOMC spaced out its initial couple hikes of this cycle by an entire year, there was rightfully a lot of skepticism about when the third would come. So up until just a couple weeks out from the mid-March-2017 FOMC meeting, the FF-futures-implied rate-hike odds were just 22%. But Fed officials jawboned them up to 95% by a couple days before that meeting. Gold was again hit on Fed-rate-hike fears, falling 4.7%.

But right after that third rate hike of this cycle, gold immediately caught a bid and surged 7.6% higher over the next 5 weeks or so. That dot plot kept the 2017 rate-hike outlook at 3 total, not upping it to 4 as the gold-futures speculators expected. So again they were forced to admit their pre-FOMC bearishness was way overdone and buy back in. Fed rate hikes aren’t bearish for gold despite traders’ irrational expectations.

After being wildly wrong for three Fed rate hikes in a row, some of the gold-futures speculators started to pay attention heading into this cycle’s 4th hike in mid-June 2017. But gold still fell 2.1% over several trading days leading into it. That hike too was universally expected like nearly all of them, and the dot plot was neutral staying at 3 total hikes in 2017. But the gold-futures selling broke precedent to continue that time.

In the first week or so after that 4th hike last summer, gold fell 1.9%. Those post-hike losses extended to 4.2% total by early July. That particular rate hike was unique to that point in that it came to pass early in gold’s summer doldrums. In June and early July, gold investment demand wanes so it usually just drifts sideways to lower. Thus this decades-old seasonal lull effectively delayed that post-FOMC gold reaction rally.

Once last year’s summer-doldrums low passed, gold again took off like a rocket as specs scrambled to normalize their excessively-bearish gold-futures bets. So gold surged 11.2% higher between early July and early September on heavy gold-futures buying. This gold reaction to last June’s 4th Fed rate hike may be the best template of what to expect after this June’s 7th one. Summer may again delay gold’s rebound.

But whether gold’s usual post-FOMC rally starts now or a few weeks from now is ultimately irrelevant in the grand scheme. The seasonally-weak summer doldrums don’t change the fact that speculators’ gold-futures bets get too extreme heading into telegraphed Fed rate hikes, so they have to be normalized in the FOMC’s wake. This gold-bullish pattern has held true to varying degrees after all 6 previous hikes of this cycle.

The Fed took a break from hiking in September 2017 to announce its wildly-unprecedented quantitative-tightening campaign to start to unwind long years and trillions of dollars of QE money printing. So the rate hikes resumed at that every-other-FOMC-meeting tempo in mid-December 2017. Again the goofy gold-futures traders started fearing another hawkish dot plot, so gold fell 4.0% in several weeks leading in to it.

But that 5th rate hike of this cycle was accompanied by a neutral dot plot forecasting 3 more rate hikes in 2018 instead of the 4 gold-futures traders expected. So again they had to admit their bearishness was way overdone and buy back in aggressively. So over the next 6 weeks after that FOMC meeting, gold shot 9.2% higher to $1358 nearing a major breakout! How can anyone believe rate hikes are bearish for gold?

The 6th hike of this cycle came right on schedule in late March this year, accompanied by a neutral dot plot still forecasting 3 total rate hikes in 2018. But again the gold-futures traders worried leading into that FOMC decision, pushing gold 3.2% lower over the prior month or so. They started buying back in that very Fed Day, so gold sharply rebounded 3.3% higher to $1353 within 4 trading days of that Fed rate hike.

This gold-futures-driven gold price action surrounding Fed rate hikes is crystal-clear. Gold falls leading into FOMC meetings with expected hikes on fears of hawkish rate-hike forecasts in the dot plots. All that pre-FOMC selling leaves speculators’ collective gold-futures bets way too bearish, with longs too low and/or shorts too high. Then once the Fed acts and specs realize gold isn’t collapsing, they quickly buy back in.

The Fed’s again-universally-expected 7th rate hike of this cycle came this Wednesday. And despite the gold-bullish examples of all the prior 6 hikes, gold-futures traders again sold leading into it. Starting back in mid-April, they embarked on a major long liquidation that pushed gold 4.0% lower by this week’s FOMC eve. In their defense that was mostly in response to a US dollar short squeeze, so maybe they are learning.

Gold-futures data is released weekly in the CFTC’s famous Commitments of Traders reports. These are published late Friday afternoons current to preceding Tuesday closes. So the latest data available when this essay was published is from the CoT week ending June 5th. Even then a week before this 7th Fed rate hike, total spec longs at 235.9k contracts were way down at a 2.3-year low! Speculators were all out.

The Fed indeed hiked as expected, and specs’ hawkish forecast seemed to be confirmed by this newest dot plot. Finally at this week’s FOMC meeting the collective rate-hike outlook rose from 3 total hikes in 2018 to 4. That was the perfect excuse for gold-futures traders irrationally terrified of higher rates to sell gold hard! Yet they couldn’t, with their longs among the lowest levels of this bull the selling was already exhausted.

So gold is once again set up with a very-bullish June-rate-hike scenario like last summer. Once again specs need to normalize their collective gold-futures bets after waxing too bearish leading into another Fed rate hike. That big gold-futures buying is inevitably coming, although it may once again be delayed for a few weeks by the summer doldrums. That would simply add to gold’s powerful seasonal autumn rally.

Gold’s resilience this week in the face of that hawkish dot plot was very impressive. Remember the last time the near-term FFR forecast added another hike in mid-December 2016, gold plunged 2.6% in only 2 trading days. The fact gold didn’t suffer another kneejerk plunge this week on adding another hike this year shows considerable strength! Speculators could’ve aggressively short sold gold futures, but refrained.

Thus gold’s post-rate-hike reaction after this 7th one is likely to mirror the strong rallies after the prior 6. They ranged from 3.3% to 18.5% in the weeks and months after hikes, averaging 10.2%. Given we’re in the heart of the summer doldrums, gold’s post-FOMC rally this summer could mirror last summer’s. It didn’t start until early July, but from there gold blasted 11.2% higher into early September. That’s a big deal.

Gold was trading at $1295 this Tuesday before this week’s FOMC decision. That’s a high base relative to gold’s bull-to-date peak of $1365 from early July 2016. A decisive 1% breakout above that happens at $1379. That would change everything for gold psychology, unleashing a major new wave of global gold investment demand. That critical breakout level for sentiment is only 6.4% above this week’s FOMC-eve close!

So there’s a good chance this coming 7th post-rate-hike rally of this gold bull will push gold’s price into major-breakout territory! As long as gold doesn’t slump too deep in the remaining summer doldrums of the next few weeks, that targets a potential breakout span in this year’s autumn rally. Those tend to peak by late September. With gold relatively high and spec gold-futures longs super-low, gold’s setup is very bullish.

For 7 Fed rate hikes in a row now, most traders have believed and argued that higher rates are bearish for gold. This rate-hike cycle is now 2.5 years old, plenty of time for that popular thesis to play out. Yet between the day before that first hike in mid-December 2015 and this week’s 7th hike, gold still rallied 22.4% higher! The US Dollar Index, which was supposed to soar on rate hikes, slipped 4.7% lower in that span.

Conventional wisdom on Fed rate hikes is obviously very wrong. That’s nothing new, as my extensive research has documented. Throughout all of modern history, gold has thrived during Fed-rate-hike cycles. Today’s cycle is the 12th since 1971. During the exact spans of all previous 11, gold averaged a solid 26.9% gain. During the 6 of these where gold rallied, its average rate-hike-cycle gain was a huge 61.0%!

The Fed’s last rate-hike cycle ran from June 2004 to June 2006, dwarfing today’s. The FOMC hiked in 17 consecutive meetings, totaling 425 basis points which more than quintupled the FFR to 5.25%. If rate hikes and higher rates are bad for gold, it should’ve plummeted at 5%+. But instead gold surged 49.6% higher over that exact span! Fed-rate-hike cycles are bullish for gold, regardless of what futures guys think.

Sadly their irrational and totally-wrong bearish psychology even infects gold investors. This next chart looks at gold and the physical gold bullion held in trust for GLD shareholders. That is the world’s largest and dominant gold ETF (GLD). Its holdings reflect gold investment trends, rising when capital is flowing into gold and falling when investors are leaving. That futures-driven gold action around rate hikes is affecting investment!

Unfortunately this essay would get far too long if I dive deeply into this chart. But I couldn’t exclude it from this discussion either. Because of that goofy gold-futures trading action surrounding Fed rate hikes in this cycle, investors have followed suit to varying degrees. They tend to sell gold leading into Fed rate hikes, and that downside momentum often continues in the weeks after hikes. That really weighs on gold.

But after a couple weeks of strong post-FOMC rallying driven by that gold-futures rebound buying, investors once again start warming to gold. They resume buying GLD shares faster than gold itself is being bought, and start amplifying gold’s post-rate-hike rallies after retarding them initially. It is disappointing that investors too are drinking the psychological tainted Kool-Aid poured by gold-futures speculators.

As a battle-hardened speculator myself and lifelong student of the markets, I don’t care which way they are going. We can trade them up or down and make money. But it’s very frustrating when the traders who dominate gold’s short-term price action continue to cling to a myth, distorting signals and misleading everyone else. History has proven over and over again that Fed-rate-hike cycles are very bullish for gold.

Gold has rallied strongly on average after 6 of the past 6 Fed rate hikes of this cycle! Last summer was the only quasi-exception, when gold’s weak seasonals delayed its post-hike rally for a few weeks. There is literally no reason not to expect gold to power higher again after this week’s 7th hike. And with gold at these levels, that next post-FOMC rally should see a major bull-market breakout that will bring investors back.

The last time investors flooded into gold in early 2016 after that initial December rate hike, gold powered 29.9% higher in 6.7 months. The beaten-down gold miners’ stocks greatly amplified those gains, with the leading HUI gold-stock index soaring 182.2% higher over roughly that same span! Gold stocks are again deeply undervalued relative to gold, a coiled spring ready to explode higher in this gold bull’s next major upleg.

The bottom line is Fed rate hikes are bullish for gold, and this week’s is no exception. Gold has not only powered higher on average in past Fed-rate-hike cycles, but has rallied nicely in this current one. Gold enjoyed big rebound surges after all 6 previous Fed rate hikes of this cycle. Gold-futures speculators who sold too aggressively leading into FOMC meetings had to buy back after to normalize their bearish positions.

And gold looks super-bullish in the coming months after this week’s 7th Fed rate hike of this cycle. Those gold-dominating futures traders sold their longs down to levels not seen since the initial months of this gold bull! So they’re going to have to do huge buying to reestablish normal positioning. While gold’s summer doldrums may delay that a few weeks, the coming gold-futures buying could drive a major upside breakout.

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

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

Additional disclosure: I own extensive long positions in gold stocks and silver stocks which have been recommended to our newsletter subscribers.

Four Reasons We Don’t Have Flying Cars—Yet

Electric, vertical-lift air-taxis may someday criss-cross the skies, but the timelines their advocates are proposing are ambitious, to say the least. Uber, for example, predicted at its Elevate conference last month that it would begin deploying its system, UberAIR, in 2023. That’s going to be a stretch: the autonomous control systems that will make such flight practical and affordable are in utero, the air traffic control integration necessary to make it safe and efficient are barely a twinkle in the FAA’s eye, and the regulatory blessing necessary from federal and city governments—well, let’s just say there’s nothing to bless yet.

Then there’s the issue of the aircraft themselves. Uber, the dominant player trying to bring this industry to life, insists that an electric vertical takeoff and landing (e-VTOL) aircraft is the way to go, arguing that nothing else can match it for efficiency, speed, reliability, safety, and quietness. (Picture monster drones, or multiblade insectoid contraptions with passenger pods slung underneath, as shown in Uber’s videos.) Such a craft won’t simply evolve from existing hardware, either. The aviation industry will have to develop entirely new classes of aircraft that fly in new ways, using new means of propulsion, flight control, and situational awareness.

It’s actually an opportunity to rework an industry that’s starting to look a bit crusty. “It’s time to rethink a lot about aviation,” says René Landry, an aviation systems researcher at ETS, a technical university in Montreal. “The avionics we use now are based on a general architecture that was developed during World War II. The hardware, for instance, is duplicated for redundancy, using huge, low-efficiency cables. We could use some game changers in there.”

As an example of one of these game changers, he notes that the software used for flight planning didn’t join the 21st century until the iPad came out. “Ten years ago we would have said the iPad would never be certified for cockpit use,” he says. “But within six months it was certified and more than 400 businesses that made electronic flight bag systems closed their doors. They were no longer necessary—it could all go on the iPad.” But something like flight-planning software, of course, is only the first challenge facing a potential flying-car network.

Challenge #1: Hand off the flying to computers

Our air taxis of tomorrow will have to do most of the piloting work themselves, using autonomous or at least highly automated systems. Uber has stated that it expects its service will start with human pilots, but given the extreme shortage of pilots anticipated by the airline industry over the coming decades, that’s not sustainable. Self-flying systems are already in the works, but they are nowhere close to being ready for widespread adoption.

One interim step, then, would to simply take the edge off. “Work at NASA has demonstrated the viability of what’s called simplified vehicle operation,” says aerospace engineer Brian German, an associate professor at the Georgia Institute of Technology. In this scenario, most of the systems that either manage the act of flying or the processes of navigation and communication are controlled by the computer, with the pilot essentially telling it what to do and where to go. “A pilot can’t be in control of 8 or 10 different rotors and expect to maintain any degree of situational awareness,” he says. “So when you push on the stick in this system, everything that happens to point the aircraft in the desired direction is automated.”

That sort of flying is within reach right now, and is how most drone flying (and certain aspects of many particularly advanced military and commercial aircraft) works. But a safety-certified, passenger-carrying version operated by truly minimally trained pilots in commercial airspace—the system that Uber will need—is still a long way off. This is especially true because the systems will also have to function perfectly in urban canyons and in inclement weather.

Autopilot systems also lack the kind of judgement possessed by human pilots. “It’s really hard for autonomous systems to understand different scenarios,” German says. “Maybe, for instance, you’re flying an airplane and you see a forest fire out of the left window. A human pilot knows immediately that’s it’s probably not a good idea to fly right over it. But how will an autonomous system know that? We’re going to run into ‘failures of creativity’ on the part of the system.”

Challenge #2: Electrify the aircraft

Though plenty of small aircraft—from two-seat helicopters like the Robinson R-22 to any number of conventional airplanes—could theoretically form a fleet of air taxis today, Uber and its partners think electric is the way to go. This is primarily because electric propulsion is simpler, more reliable, and more precisely controllable than combustion engines. Though scientists think that we’re still decades away from the kind of jump in battery energy density required to allow, say, regional aircraft to fly several hundred miles at a time, German thinks that the kinds of short hops an air taxi might make can actually be sustained with today’s technology.

For instance, Uber’s recently announced partnership with electric-aircraft startup Karem, which is developing variable-RPM rotors that can more efficiently modulate the power usage from existing batteries, is just one possible solution. And many aerospace and technology experts argue that short-haul flights of just 10 or 20 miles are possible even with current battery technology. The trick, though, will be achieving the kind of high-speed charging capabilities needed for quick-turnaround flights and overcoming the broader power-supply shortcomings endemic to dense urban environments.

Challenge #3: Build them cheap

Battery technology may not prove to be a limiting factor, but manufacturing likely will—particularly because a sustainable air taxi system that’s dependent on economies of scale will need thousands of aircraft flying as soon as possible. Other industries have solved such manufacturing challenges, but generally over very long periods. The automotive business, for example, has demonstrated in the past 20 to 30 years that modern manufacturing techniques can significantly reduce the costs of making even the most complex modern cars. This includes the integration of new high-tech composites and alloys that each have unique requirements during the manufacturing process. Achieving comparable production numbers in e-VTOL aircraft—i.e., hundreds of thousands per year, which may ultimately prove to be what’s needed to truly flesh out Uber’s global plan anyway—may be unrealistic, but transferring some volume-manufacturing techniques from automotive to aviation would be a start.

On the other hand, these are aircraft, not cars. Manufacturing lightweight, strong, crash-tested, and quiet aircraft made entirely out of composites, as opposed to merely containing composite components, presents yet another challenge. Building aircraft out of composite materials like carbon fiber remains a largely hand-executed process, because manufacturers still need skilled workers to lay up the materials, join elements together, and then scan for and eliminate the structural voids, air bubbles, and other weaknesses that might be acceptable for a car that has all four feet on the ground, so to speak, but not for a flying pod full of people hovering 1,000 feet in the air. “I’ve talked to composite manufacturers, and they don’t see a path to get to the kind of rates we’re talking about,” German says. It’s challenging and costly, and the aviation industry hasn’t been able to do it in significant volumes yet because the demand just hasn’t been there. The demand for hundreds of thousands of eVTOL aircraft might arrive eventually, and manufacturing techniques could very well continue to advance, but it will happen over decades, not a few years.

Challenge #4: Make them quiet

Finally, there’s noise. Air taxis will be operating in urban environments that are already tightly regulated when it comes to helicopter noise and the roar of airplanes at airports on the edge of town. If the vertiports that Uber imagines see hundreds of takeoffs and landings every hour, the aircraft will have to be exceptionally quiet. “Aviation is regulated federally, but a lot of issues are in urban air mobility are local,” German says.

For small vertical-lift aircraft, the challenge will not only be in decibel reduction, but in the acoustic signature as well—that is, how the noise blends in (or doesn’t) against the background of the city. Uber has been researching this, and argues that a reduction of 15 decibels will bring aircraft clatter down to acceptable levels, both in terms of sheer volume as well as its general detectability in urban environments. (Of course, most of the noise in urban environments comes from vehicular traffic, which itself could very well transition to mostly electric propulsion in the coming decades. So the challenges eVTOL aircraft face “blending in” might only get worse as a result.)

Achieving ultra-quiet electric aircraft will require significant innovation, given that the machines will still have to move the same volumes of air through the rotors in order to lift off and touch down. One approach is to reduce the tip speed of the rotor blades, since they get louder as they approach supersonic speeds. To do that, German says, engineers could add blades to each rotor, which would bring down the RPM while still maintaining the same lifting power. So-called distributed-rotor systems—that is, six or eight small rotors instead of, say, just two—will also help. German says he’s optimistic here, too. Indeed, Uber has played recordings comparing the systems at its industry conferences. German does add a final warning about “psychoacoustics.” That’s the tendency for people to find a sound disagreeable, not because it’s actually all that bad, but because it represents something yucky—in this case, wealthy elites flying over regular folk.

Five years doesn’t seem like enough time to conquer these challenges—which don’t even touch upon the broader economic and regulatory issues the plan faces, along with whatever enhancements will be required to integrate air taxis into the notoriously old-school commercial airspace system—but both Landry and German note that all the technology levels are within reach, as long as someone is willing to pay for them. “There is a degree of inevitability to this whole thing,” German says. “All these technologies are continuing to converge and mature. Even things like public perception can be overcome once people become aware of what the tech can do in their lives. Eventually it becomes a cultural phenomenon, where people suddenly rewire their lives around it.”

Kind of like, well, Uber.

More Great WIRED Stories

Puerto Rico's Observatory Is Still Recovering From Hurricane Maria

As Hurricane Maria approached Puerto Rico in late September 2017, planetary scientist Ed Rivera-Valentin knew he needed to get out. His apartment was near the coast, in Manatí, and some projections had the storm passing directly over. “I knew I couldn’t stay there because something bad was going to happen,” he says.

Some people stayed with inland family, or in shelters. But Rivera-Valentin went to work, driving an hour or so into the island’s karst formations, the knobby, tree-covered hills left as water dissolves limestone. Between the peaks sits Arecibo Observatory, the 1,000-foot-wide radio telescope where scientists have, since 1963, studied things up above. Rivera-Valentin grew up in the city of Arecibo, and as an adult, the telescope became his professional home: He got his dream job using Arecibo’s radar to study asteroids. As the hurricane approached, he also thought perhaps the observatory could be his bunker.

The telescope, though, was soon to meet with unusually strong forces of nature. Like the island itself—which was hit with some $90 billion of damage, hundreds or thousands of deaths, and infrastructural failings—the observatory took a beating from Hurricane Maria. Eight months later, with recovery money from the federal government newly available, Arecibo is just beginning to bounce back. While the hurricane didn’t knock Arecibo out, it did leave the telescope a fraction as effective as it once was. And it did so at the same time that the telescope faces decreased funding from the National Science Foundation and a disruptive change in management.

Rivera-Valentin wasn’t the only employee who had decided to retreat to the telescope. At the observatory, most of the employee-evacuees hunkered down in the visiting scientists’ quarters, meant for out-of-town astronomers, and the cafeteria. But Rivera-Valentin stayed in his office. As water seeped through every gap it could find, he put himself on mopping duty. Inside the control room and engineering building, where the main corridor was flooding, another scientist—Phil Perillat—protected the electronics.

As the calm eye of the storm passed over, Perillat snapped a photo of the telescope’s “line feed”—a 96-foot-long radio receiver that looks like a lightning rod. It hangs 500 feet above the dish, pointed toward the ground. You might remember it from Golden Eye, when James Bond dangles from the rod in an adrenaline-filled chase scene. But in Perillat’s picture, the line feed itself is dangling. It had snapped in the wind, which reached 110 miles per hour at the observatory site.

At some point, Rivera-Valentin heard a boom: The dangling line feed, he would later learn, had completely detached, falling hundreds of feet onto the dish and smashing through its surface panels like a meteorite.

After the storm had passed, on September 21, people were stuck at the observatory for days. The two roads leading down from the site were blocked by trees, landslides, and even a newly-formed lake. But observatories, in general, are meant to keep up operations when the grid goes down. They have generators, water. Angel Vazquez, director of telescope operations, was able to contact the outside world with his HAM radio, and let them know everyone was OK.

The radio telescope, however, was not. When employees first attempted to assess the damage, they went to the visitors’ center, where an observation platform overlooks the dish. They couldn’t get as up close as they usually could, by walking underneath it: An eight-foot-deep lake—which lingered till December—now lapped against the telescope’s undergirdle. Eventually, they paddled beneath the massive structure in kayaks, and saw damaged panels hanging below the surface, looking like roof metal twisted in a tornado.

Meanwhile, the observatory itself had morphed into a relief center. When one of the the roads finally opened, about two days after the hurricane’s landfall, local residents arrived for support. “Anyone who walked up to the observatory, they were getting water,” says Rivera-Valentin. “Anyone who came up and said we need to do laundry, they could do laundry.” FEMA helicoptered in supplies to pass out to the community.

On September 29, staff brought the dish back online with generator power. The observing run wasn’t much, just “passive” work; they just held the telescope’s pointing mechanisms in place and simply let the sky drift over as it watched for signals from pulsars. In part, they wanted the scientific data. But they also wanted to run a diagnostic on the scope’s performance.

“The shape of the dish itself had changed,” says Rivera-Valentin. It couldn’t quite focus, like if someone had warped your camera lens. All the receivers still worked—save the one that, you know, crashed into the telescope. The telescope could still function, but its sensitivity was hobbled.

Despite the dish difficulties, which continue today, the observatory slowly began to do more science, in low-power mode. In November, it tracked a fast radio burst, and did a run in cooperation with a Russian radio telescope. And then in December, the region’s electricity flickered on. With that, the observatory could use the diesel generators to run its power-sucking radar. They sent powerful radio waves streaming into space, waited for them to hit an asteroid millions of miles away, and then waited for them to bounce back to their battered antenna.

It worked.

On December 15, they observed the asteroid Phaeton. Rivera-Valentin was glad to have the data (and make little videos from it). It was a piece of normal.

But Arecibo has a long way to go before it’s all the way back. “They have started repairs,” says the National Science Foundation’s Joe Pesce, who until recently oversaw the Arecibo program. “But the vast majority of them are still underway.” It could take a couple of years.

Abel Mendez, who runs the Planetary Habitability Laboratory, has seen the change in the telescope’s performance firsthand. Mendez works at the University of Puerto Rico at Arecibo, training the telescope toward red dwarf star systems that have planets, to understand more about their habitability. After Maria, the telescope’s effectiveness dropped by about 50 percent in the high frequencies he uses, because of alignment, pointing, and panel issues. “Fortunately, the telescope was so sensitive before that that 50 percent—for what we’re doing—is not a big concern,” he says. At lower frequencies, the telescope was about 20 percent less effective post-hurricane. Still, some scientists need every bit of gain they can get. Much of the universe, after all, is far away, and hard to see.

The bipartisan budget act, made law in February, allocated $14.3 million to get the observatory back to full working order. The observatory just got its first allotment of that money, through the National Science Foundation, at the beginning of this month. Getting that federal money has been slow, but now that it’s in hand, the real work can begin.

The initial allowance—$2 million—is for the basics, like removing debris, fixing the fraying roofs, and giving CPR to the generators, three of four of which are having problems. “Work on those is up and going,” says Pesce. “Longer-term, there are the bigger fixes, like repairing the line feed.”

But in February, the NSF announced that Arecibo would soon be under new ownership, which means a leadership transition is taking place at the same time that a scientific rehab is starting. The NSF has historically funded much of Arecibo’s operations. But it had been looking for “partners” for a while. These partners would not only manage the facility, as the previous management team had, but would also pay for some of its operations, taking part of the financial burden from the NSF.

And so a three-organization consortium took over on April 1. The University of Central Florida, under the leadership of Florida Space Institute director Ray Lugo, is at the helm. Lugo used to manage operations and maintenance at Cape Canaveral, and in that role, he contracted with Yang Enterprises, a Central Florida company that provides technical, operational, and logistical services. Yang soon became the second part of the Arecibo partnership. The third entity is Universidad Metropolitana in San Juan, Puerto Rico. Together, the three will run the facility, expand its science, and search for new sources of funding. That hunt for cash comes because NSF is ramping down its funding, which will drop from $7.5 million to $5 million between the first and second years of the new project, and then down to $2 million by the fifth.

The NSF said—on a PowerPoint slide in a town hall meeting at a recent astronomy conference in Denver—that there are “some transition difficulties to be worked out.” Some employees, for instance, have left, which surely presents difficulties for them and for the observatory: For many people who have worked at Arecibo, it’s not just a job. It’s an identity, a home, a community, a place where everyone can do laundry when they need to. And a telescope needs people who have expertise on it.

Yan Fernandez, one of the university scientists leading the collaboration, says UCF will look to scientists beyond their consortium to figure out what cosmic questions Arecibo should pursue. “We want the scientific community to give us info about how Arecibo can keep its place as a cutting-edge observatory in the future,” he says. “The scientific priorities have to come from the scientists who know best.”

With the recovery money, the telescope should be fully restored and able to pursue those priorities, but it won’t ever be the same. And neither will the people who were there for it all. By the time Arecibo was first able to use its radar system in December, Rivera-Valentin had already left the island. His partner had gotten a promotion that took him to Texas, and Rivera-Valentin transferred to the Lunar and Planetary Institute in Texas, which is run by the same organization that co-managed Arecibo until April.

For a while, Rivera-Valentin was able to keep his affiliation with Arecibo Observatory. But when management changed, he became a passive observer. He still plans to use the telescope, as a guest. And while he’ll miss the island where he grew up, and the giant dish nestled into it, there are some positives. “The moment someone says the word ‘hurricane,’ I can drive all the way up to Canada,” he says.

More Great WIRED Stories

Are Flags Just a Piece of Cloth, or Are They a Powerful Symbol of Something Greater?

This week is Flag Day, June 14. To Americans, the US Flag is an evocative image. It’s a symbol of our freedom, and of what others have sacrificed to ensure it. It can also be a symbol of protest. The US Supreme Court famously confirmed the right to burn the flag as an act of free speech, and nearly no one has missed the recent debate over standing versus kneeling during the national anthem at sporting events.

Non-national flags are powerful symbols, too. They represent ideals, movements, and aspirations. Even national flags can come to represent controversial issues, as the recent kneeling controversy in football reminded everyone.

No one can deny that flags are powerful symbols. Here are quotes that reflect on the power of flags to rouse passions, one way or another:

1. “The stars and stripes were fluttering bright against the rain, clear blue overhead, and their minds were saying the words before their ears heard them.” ? Laura Ingalls Wilder

2. “I see Americans of every party, every background, every faith who believe that we are stronger together: black, white, Latino, Asian, Native American; young, old; gay, straight; men, women, folks with disabilities, all pledging allegiance under the same proud flag to this big, bold country that we love.” ? President Barack Obama

3. “I believe our flag is more than just cloth and ink. It is a universally recognized symbol that stands for liberty, and freedom. It is the history of our nation, and it’s marked by the blood of those who died defending it.” ? Senator John Thune

4. “A true flag is not something you can really design. A true flag is torn from the soul of the people. A flag is something that everyone owns, and that’s why they work. The Rainbow Flag is like other flags in that sense: it belongs to the people.” ? Gilbert Baker

5. “I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color.” ? Colin Kaepernick

6. “Every red stripe in that flag represents the black man’s blood that has been shed.” ? Fannie Lou Hamer

7. “I long to be in the Field again, doing my part to keep the old flag up, with all its stars.” ? Joshua Chamberlain

8. “I prefer a man who will burn the flag and then wrap himself in the Constitution to a man who will burn the Constitution and then wrap himself in the flag.” ? Craig Washington

9. “The American flag represents all of us and all the values we hold sacred.” ? Adrian Cronauer

10. “Standing as I do, with my hand upon this staff, and under the folds of the American flag, I ask you to stand by me so long as I stand by it.” ? President Abraham Lincoln

11. “I don’t judge others. I say if you feel good with what you’re doing, let your freak flag fly.” ? Sarah Jessica Parker

12. “There is a strong tendency in the United States to rally round the flag and their troops, no matter how mistaken the war.” ? George McGovern

13. “America has been the country of my fond election from the age of thirteen, when I first saw it. I had the honour to hoist with my own hands the flag of freedom, the first time it was displayed, on the Delaware; and I have attended it with veneration ever since on the ocean.” ? John Paul Jones

14. “I just bought a Jeep painted like an American flag. No one better question how patriotic I am.” ? Blake Anderson

15. “When I see the Confederate flag, I see the attempt to raise an empire in slavery. It really, really is that simple. I don’t understand how anybody with any sort of education on the Civil War can see anything else.” ? Ta-Nehisi Coates

16. “I’m proud of the U.S.A. We’ve done some amazing things. To wear our flag in the Olympics is an honor.” ? Shaun White

17. “Burning the flag is a form of expression. Speech doesn’t just mean written words or oral words. It could be semaphore. And burning a flag is a symbol that expresses an idea – I hate the government, the government is unjust, whatever.” ? Antonin Scalia

18. “I can understand if you think that I’m disrespecting the flag by kneeling, but it is because of my utmost respect for the flag and the promise it represents that I have chosen to demonstrate in this way.” ? Megan Rapinoe

19. “If a jerk burns the flag, America is not threatened, democracy is not under siege, freedom is not at risk.” ? Gary Ackerman

20. “I savored my time on top of the podium by watching the American flag rise up out of the crowd as the anthem played, thinking about how every single second of training I’ve done was for this minute and how many people played a role in my achievement.” ? Hannah Kearney

21. “In most countries, you have a monarch or some other principal person to whom its officers and its military swear their allegiance. Our officials in this country and our military swear allegiance to the Constitution. We say that when we say the Pledge of Allegiance to the Flag”. ? Edwin Meese

22. “For any athlete growing up, the Olympics is the one thing you watch with your family, and it’s the one thing you dream about. Seeing your country’s flag go up as you get a gold medal is the best thing you can achieve.” ? Abby Wambach

23. “I can take the steel guitars and fiddles off, we can make it a little more pop, cover ideas that are a little less cowboy. But you got to look at yourself in the mirror and ask, whose flag you are under? For Garth Brooks, I’m steel, fiddles, red, white and blue.” ? Garth Brooks

24. “If anyone, then, asks me the meaning of our flag, I say to him – it means just what Concord and Lexington meant; what Bunker Hill meant; which was, in short, the rising up of a valiant young people against an old tyranny to establish the most momentous doctrine that the world had ever known – the right of men to their own selves and to their liberties.” ? Henry Ward Beecher

25. “Our flag means all that our fathers meant in the Revolutionary War. It means all that the Declaration of Independence meant. It means justice. It means liberty. It means happiness…. Every color means liberty. Every thread means liberty. Every star and stripe means liberty.” ? Henry Ward Beecher

26. “There is not a thread in it but scorns self-indulgence, weakness and rapacity.” ? Charles Evans Hughes

27. “We identify the flag with almost everything we hold dear on earth, peace, security, liberty, our family, our friends, our home… But when we look at our flag and behold it emblazoned with all our rights we must remember that it is equally a symbol of our duties. Every glory that we associate with it is the result of duty done.” ? Calvin Coolidge

28. “‘Shoot, if you must, this old gray head, But spare your country’s flag,’” she said. ? John Greenleaf Whittier

Artificial Intelligence: The Clever Ways Video Games Are Used To Train AIs

, Opinions expressed by Forbes Contributors are their own.
Adobe Stock

Adobe Stock

</div> </div> <p><strong>The data problem</strong></p> <p><a href="https://www.bernardmarr.com/default.asp?contentID=963" target="_blank" data-ga-track="ExternalLink:https://www.bernardmarr.com/default.asp?contentID=963" rel="nofollow">AI</a> algorithms get smarter and learn to perform tasks by being fed enormous amounts of data. When you’re Facebook, this doesn’t present a huge obstacle. Facebook creates huge data sets daily and also has the financial capability to close any gaps. There are millions of photographs on Facebook that are already labeled which then helps its AI algorithm know who to tag on future images. But aside from huge data-generating companies, the majority of companies don’t acquire the volumes of data required to properly train AI algorithms.</p> <p>In addition, humans just don’t have the time and patience to spend teaching AI algorithms EVERYTHING they need to know. But video games have patience and time in abundance.</p> <p><strong><em>Assassin’s Creed</em></strong><strong> inspires computer scientist to use video games to train AI</strong></p> <p> </p> <p>When<u><a href="https://www.technologyreview.com/s/601009/to-get-truly-smart-ai-might-need-to-play-more-video-games/" target="_blank" data-ga-track="ExternalLink:https://www.technologyreview.com/s/601009/to-get-truly-smart-ai-might-need-to-play-more-video-games/" rel="nofollow"> Adrien Gaidon</a></u>, a computer scientist at Xerox Research Center Europe, saw the trailer for the video game <em>Assassin’s Creed</em> he was fooled into thinking it was a trailer for a movie because of its realistic look. When he realized it was actually computer generated imagery (CGI), he thought if he could be fooled into thinking video games were real, perhaps AI algorithms could be too.</p> <p>Gaidon and his team used<u><a href="https://unity3d.com/" target="_blank" data-ga-track="ExternalLink:https://unity3d.com/" rel="nofollow"> Unity</a></u>, a widely used game development engine for 3-D video games, to create scenes to help train deep-learning algorithms. Not only did they create synthetic environments, but they imported a real scene into the virtual world. This allows them to compare the effectiveness of training algorithms with virtual environments against those trained by real images. His testing continues.</p>

” readability=”40.5809913132″>

Who says you can’t get smart playing video games? Although the idea of spending hours playing video games isn’t usually recommended for humans to increase their intelligence, the realistic 3-D graphics and environments of many video games just might make video games the perfect learning tool for artificial intelligence.

Adobe Stock

Adobe Stock

The data problem

AI algorithms get smarter and learn to perform tasks by being fed enormous amounts of data. When you’re Facebook, this doesn’t present a huge obstacle. Facebook creates huge data sets daily and also has the financial capability to close any gaps. There are millions of photographs on Facebook that are already labeled which then helps its AI algorithm know who to tag on future images. But aside from huge data-generating companies, the majority of companies don’t acquire the volumes of data required to properly train AI algorithms.

In addition, humans just don’t have the time and patience to spend teaching AI algorithms EVERYTHING they need to know. But video games have patience and time in abundance.

Assassin’s Creed inspires computer scientist to use video games to train AI

When Adrien Gaidon, a computer scientist at Xerox Research Center Europe, saw the trailer for the video game Assassin’s Creed he was fooled into thinking it was a trailer for a movie because of its realistic look. When he realized it was actually computer generated imagery (CGI), he thought if he could be fooled into thinking video games were real, perhaps AI algorithms could be too.

Gaidon and his team used Unity, a widely used game development engine for 3-D video games, to create scenes to help train deep-learning algorithms. Not only did they create synthetic environments, but they imported a real scene into the virtual world. This allows them to compare the effectiveness of training algorithms with virtual environments against those trained by real images. His testing continues.

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Don't Let The General Electric Noise Distract You From The Bigger Picture

Calling a spade a spade, all the suggestions that General Electric (GE), could, and probably should, cut its dividend aren’t off base. The company’s a train wreck right now. On a mathematical/GAAP basis, it can’t justifiably afford to maintain its current payout, which is only half of what it was a year ago.

Equally obvious is activist investor Nelson Peltz’s recent suggestion that GE is seriously considering a significant breakup. Nobody really doubted that’s at least one of the things new CEO John Flannery had in mind when in January he said all options were on the table. (Observers weren’t thrilled with the idea then, but have warmed to it now, but that’s a different story.)

And, if we’re being honest, nobody was truly shocked when Flannery said last month that the company’s energy division wasn’t on the road to recovery yet; most investors know there’s no quick fix to what really ails General Electric.

So why all the wild swings to news that really isn’t news? Because the market doesn’t “get” GE right here, and right now. It’s little more than an instrument of speculation, which is anything but normal for the iconic blue chip.

The good news is, the unusual situation the company – the stock – is in actually sets up an opportunity for long-term investors that can look past the headlines d’jour.


It’s maddening how overused the Benjamin Graham axiom “In the short run, the market is a voting machine but in the long run it is a weighing machine” is used, so it’s with great trepidation I invoke it now.

On the other hand, if the shoe fits and the cliché applies… well, you get it. GE shares remain mired in hysteria, and that’s preventing long-term-minded investors from seeing what’s plausibly in store one year from now, let alone three years from now. In the end though, where GE is likely to be three years from now is in better shape than the market’s giving it current credit for.

Analysts think so anyway. Take a look.

Source: Thomson Reuters/image made by author

But cash flow? Yeah, that’s a hang-up, though not as much as one might fear. A closer look at General Electric’s books clarifies that on an operational basis, GE is cash flow positive. It’s just not cash flow positive enough right now to service its pension and debt obligations and also make meaningful, much-needed investments in growth that will supply more cash flow in the foreseeable future.

Maybe that’s in the cards sooner than we’re being led to believe though.

Yes, the power division is a liability. There’s at least a path to profitability in the arena though. Flannery explained during the first quarter call:

“First, we continue to have leading technology, deep domain, digital solutions and broad and deep customer relationships. We continue to be viewed as a go to provider in our industry and we are fighting for every opportunity in the market.

On the cost side, in an industry that clearly has excess capacity, we are aggressively moving to right size our footprint and base cost. We took out $800 million of structural cost in 2017 and an additional $350 million in the first quarter. We are on track to exceed our $1 billion target for 2018 and headcount and sites are coming down….

…We are driving out cost and addressing the quality issues we had last year. The team has introduced a new sales force compensation program specifically aimed at driving transactional services and margins. We have a new leadership team in our supply chain and they are reinvigorating the use of lean and Six Sigma to drive better execution. The H cycle time is down 20%. Ultimately our goal is to cut this another 50% or more…

… we are also exiting non-core assets as we simplify the business.”

OK, it’s not sexy, but it was never going to be. It’s a multi-year project, and a long-term project that becomes increasingly viable each day crude oil prices linger above $60 per barrel. Corporations aren’t fully opening their wallets until they know capital expenditures on GE’s power wares make sense.

In the meantime, aviation and healthcare are still performing well, and growing. The IATA forecasts that air traffic demand will double over the course of the coming 20 years, and the need for healthcare equipment is never going away even if that market is ever-changing. The Centers for Medicare & Medicaid Services reckoned that healthcare spending would grow 5.5% per year through 2026, largely driven by the 10,000 baby boomers that are retiring every day.

Meanwhile, the decision to shed its locomotive business is a big step towards the streamlining of the company that will ultimately unlock the value Flannery and Peltz (among others) have been talking about for a while.

Baby steps.

Green Shoots from GE Stock

To that end, some bulls are occasionally peeking their heads out in the meantime, planting seeds for a few green shots from the stock.

This is where things get interesting, and tricky. All of the technical recovery efforts made thus far have been up-ended. Even the best technical rebound we’ve seen in months – the one from last month – was largely wiped away. Take a closer, second look at the chart though. The tumbles are hurting less and less, and the rallies are making more and more progress.

Source: TradeStation

It’s still a fits-and-starts process, but the tide is turning.

It’s also turning more than you might guess with that second glance. The rising Chaikin line (bottom) says there’s a good amount of volume behind the recovery effort. Those bulls aren’t terribly vocal, but they’re putting their money where their mouth isn’t.

It’s largely a matter of greater confidence that will get – and keep – the stock back on track.

That confidence will be built on someone else being willing to stick their neck out, by the way. Moreover, that confidence will be built on the heels of certainty that the company is indeed going to unlock value by selling pieces of itself. Again though, that’s a multi-year process. The market is slowly starting to digest this reality, which old-school GE shareholders never had to chew on in the past.


It’s still more of a trade than an investment, to be clear. But, it’s one of those trades that could slowly morph into an investment… that rarest kind of stock picks.

Fanning those would-be-bullish flames even more than getting better income out of the company’s revenue-bearing assets will be, as was noted, more apparent progress on the breakup front. As Stifel analyst Robert McCarthy recently put it, GE is only rated a hold “absent a more material, dynamic breakup.”

That stance puts Peltz’s comments from late last week back in the spotlight, reminding investors that Flannery wasn’t just blowing smoke a few months ago when he alluded to the same. It’s coming, even if investors can’t fully see it yet, and even if they can’t fully appreciate the fullness of the prospect. Melius Research estimated late last month, when General Electric shares were priced at $13.28, that such a price “likely undervalues the assets by 25 percent or more” were the company broken into marketable pieces. With a current price of still less than $14, the bulk of Melius’ upside is in front of the stock.

It’s also possible that even Melius’ outlook underestimates how well GE’s aviation and healthcare arms could perform.

As for a target, Melius effectively says a post-breakup value would make GE stock worth around $16.60, at least. The chart wrestled with the $17.35, as support, and resistance, late last year and early this year. The figure is still within Melius’ “or more” range.

The toughest part of such a trade? Sticking with it even when the headlines are terrifying. They’re taking smaller and smaller bites out of the stock, as investors understand the situation better and better. It’s a process though, and GE shares aren’t fully out of perception-purgatory just yet. They’re getting closer though, and may be worth the risk of getting into before it fully happens.

The risk profile plunges dramatically if-and-when GE shares hurdle the converged 20-day and 50-day moving average lines at $14.39.

If you’re looking for stock picks that are less speculative and better-founded investments, take a test drive to The Well-Rounded Investor service. You’ll get top-down sector analysis and bottom-up market analysis that identifies the market’s best bets… names you may have never found on your own.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in GE over the next 72 hours.

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

AT&T: The 6% Yield Window Is Closing

Without doubt AT&T (T) has been generating substantial income for dividend investors. Equally indisputable is the fact that the development of the stock price has been consistently and greatly lagging the overall market. More importantly, with AT&T trading 15% below its 52-week high investors, in the worst case scenario, would currently require around three full years of dividends to just compensate for the capital loss.

The number one rule in investing is always to at least preserve capital and while a 6% yield looks good on paper it does not help if your principal declines almost three times more.


T data by YCharts

I have been caught on the wrong foot with AT&T as well as I quickly grew it into my largest portfolio position, both in terms of income and capital, as I focused too strongly on the former. It’s mind games here. With AT&T paying such a high yield you can easily get double and triple-digit income per quarter with relatively little capital which in turn motivates you to invest even more. What is largely neglected at this stage is that as the yield increases and reaches the illustrious 6% barrier this is also means that the markets place higher risk into the stock.

However, despite all the capital losses I have incurred (but not realized) so far, the stock’s current yield could still be a great long-term opportunity provided the outlook is not as bad as expected. Now that the Time Warner (TWX) trial is approaching its end (outcome remains as uncertain as always) and the proposed Sprint (S) and T-Mobile (TMUS) deal also receiving regulatory scrutiny, this 6% yield window is closing with the stock now trading below 6% for the first time in almost two months. Let’s review the investment case for a dividend investor.

What is going on at AT&T?

Source: AT&T Investor Relations

The stock is currently trading at a lackluster 7 times earnings implying almost no growth whatsoever as the company finds itself right in the middle of a complex and challenging business setup.

The outcome of the Time Warner trial, which is expected to close this week on Tuesday, has been lingering over the stock and the company like a Damocles sword with investors fearing the excessive post-merger debt load of AT&T in a hawkish interest rate environment but equally expecting that AT&T needs some sort of vertical integration in order to compete with one of its fastest growing competitors Netflix (NFLX). Regardless of the outcome investors react as if AT&T will lose either way. Also, if the trial does not get approved AT&T will have spent hundreds of millions on lawyers, bankers and penalty statements and even worse it will cast a big shadow of doubt across the entire M&A sector in a Trump-led U.S. administration.

It is highly subjective to speculate on the stock’s reaction to whatever decision is being taken but given Time Warner’s booming business and vertical integration opportunities I am certainly rooting for the DoJ to approve this deal. Everything else, not only for AT&T but in general for the M&A landscape, should be rather detrimental. AT&T is not building a monopoly here but simply complementing its very own chain of distribution with very useful content.

Speaking in terms of Time Warner, the company is really rocking. Revenues are up 9% in the fourth quarter and EPS came in at $1.60. That strong revenue growth was driven by all segments with Turner up by 22%, HBO up by 13.3% and Warner Bros. growing 10.8%. This has been of the strongest quarters for Time Warner and bodes extremely well for AT&T should the acquisition get approved.

In fact, despite the seemingly high acquisition price of $85B, Time Warner could be worth much more given that despite that impressive growth it is only valued at 14 times sales. On top of that Time Warner also generated strong FCF of $4.4B.

It will probably be painful to watch the court’s decision and investor’s reaction to the verdict but it should help the stock thereafter, possibly after some sort of algo-driven panic sell-off, as uncertainty decreases and the focus returning to fundamentals.

Speaking of fundamentals the first quarter of 2018 was a big disappointment with revenue missing by a whopping $1.27B. Following the completion of the costly DirecTV deal AT&T has grown its top line by more than $30B over the last 8 years but organically growth has been virtually flat. In terms of profitability AT&T has been able to post the obligatory $0.01 to $0.03 EPS increases which helped raise its dividend by $0.04 per share. However, cord-cutting has been a major issue for the company. Its customer base is growing strongly every quarter but so far this growth has come at the expense of cannibalizing customers with a higher customer lifetime value. In Q1 187,000 in the higher-margin linear video business were lost whereas AT&T added 312,000 in the OTT video segment yet overall its margin still declined by roughly 1pp Y/Y or around $1B in sales.

You don’t have to be an expert to recognize this setup is losing money right now but whether it is still a “LOSE” or rather a “WIN” over the long-term is a completely different question. In an earlier earnings call from last year management stated the following on that:

Our wireless customers are really valuable in the extension of their life through the lowering of their churn, and the ability to get entire families or entire groups of phones is really important to us. And so we strongly believe that that is value-accretive to the total operations of the total organization, and we monitor it on a very regular basis.

Source: AT&T Earnings Call Transcript – Q3/2017

What could be even more value-accretive is how millions and millions of connected cars may lead to higher sales.

So we have millions and millions of connected cars out there, over 10 million connected cars out there. So we built this platform, and those are down in our Internet of Things in our connected device category.

But now what we’re finding is that 65% of the people who drive cars aren’t our wireless customers, so we’re finding a real opportunity to connect tens of thousands of those, almost 100,000 this quarter, with a prepaid offering to the connected car. And when they do that, they will pay us. It’s not a $4 or $5, it’s a $15 or $20 connection. And so it not only gives us a really great revenue opportunity and high margin, and that’s a lot better than a resale opportunity at a much lower, but it’s also an opportunity to show them what we can do and then potentially get the rest of their wireless business or get the rest of their video business.

Source: AT&T Earnings Call Transcript – Q3/2017

This is a tremendous opportunity that so far I believe has been more or less completely overlooked by the market which gets easily caught up on sequential and Y/Y comparisons. While that might be important for traders, for long-term investors, it is just noise to be ignored.

An Income Strategy Session

Now that the stock is trading at a 5.9% yield as of its close, long-term oriented investors should really welcome that opportunity to add to their position. In essence, if you are a long-term investor, this is exactly the kind of market reaction you would like to see. It allows you to lower your cost basis while the business is making the necessary transformation steps towards the future. The day-to-day noise with heavily followed stocks like AT&T is tough to ignore, and it may be one of the most difficult challenges to have the conviction to hold and add to your position in these times.

To help cope with these unrealized losses, investors should take a step back and concentrate on the bigger picture. Long-term investors know how powerful dividend reinvesting really is, but in the heat of the moment, it is only natural to temporarily blend this out. If we project the 5-year returns with reinvested dividends of an initial $5,000 investment in AT&T at $33.83, we end up with the following metrics:

  • Initial investment: $5,000 @5.9% yield assuming 2% dividend growth, 15% tax rate, quarterly reinvestment, 0% stock price appreciation, purchases of partial shares
  • Investment value after 10 years: $12,243 or an almost 144% gain with the respective yearly net dividends depicted below, thereof $3,624 in net dividends and $3,619 worth of additional stock from reinvested dividends.

After 5 years the net YoC has already risen to above 6% and after 10 years it has almost reached 10%. This is a very conservative scenario as it does not factor in any stock price appreciation and only minimal dividend growth. In that scenario CAGR would only be 10.5% and is basically a worst-case scenario given that it is unlikely that T’s stock price will remain flat over the next 10 years. And even if it does it is a great way to accumulate reliable and substantial income for long-term oriented dividend investors.

Assuming the stock appreciates by 5% every year over the next ten years with all other parameters being unchanged we would end up with the following metrics:

  • Investment value after 10 years: $15,899 or an almost 218% gain with the respective yearly net dividends depicted below. The total returns breaks down into $3,457 in net dividends received, $4,298 worth of additional stock from reinvested dividends and $3,145 worth of stock appreciation on initial investment. Naturally, as the stock prices rises the yield declines and as such quarterly reinvestment of dividends yields lower net YoC compared to the upper scenario. However, capital appreciation vastly overcompensates this effect.

If you want to easily run these calculations on your own, I’d be happy if you try out this Excel-based long-term dividend projection calculator.

Investor Takeaway

I am still bullish on the stock but as mentioned in a previous article have become a little bit more cautious as well as both the outcome of the Time Warner trial and AT&T’s ambitious 2018 FCF guidance have potential to further weaken the stock.

Still, over the long-run, as the two calculations above show, the prospects are very promising provided investors remain patient and not get overly obsessed about short-term fluctuations. You will probably not get rich with AT&T anymore but you can build up a growing stream of reliable and substantial income over time. Starting with an almost 6% yield appears to be a good opportunity to start and continue this journey.

For investors having been invested into the stock in the mid-to-high 30s patience is required even more but first one has to make up one’s mind as to what one expects from this investment. If you are expecting market-like or even market-beating returns in this environment you should definitely look elsewhere. If you treat the stock as one pillar of your portfolio targeted to generate reliable income this is the highest-yielding Blue Chip stock in America and based on market cap alone probably also around the world.

The 6% yield window of opportunity could close any time and if it does you may have to wait a very long time to get that opportunity again.

What do you think about AT&T and its prospects? Are you investing more on recent price weakness, holding your position or selling out and moving on to other investments?

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How to React to a Really Bad Handshaker

We keep getting handshakes wrong. 

So while I wrote separately about the most important rules to keep in mind when you’re shaking hands, you’re only one half of the handshaking equation. By definition, there’s another person involved.

And to paraphrase Jean-Paul Sartre, Hell is other handshakers. Especially bad handshakers.  

Fotunately, we can categorize most of the world’s leading handshake missteps, and help you put together a reaction plan long before your hands meet. Here’s what to do when you’re on the receiving end of a bad handshake.

1. What to do when someone tries to crush your hand with a handshake.

We’ll address this obvious one first: the guy (it’s always a guy) who wants to crush your hand while shaking it in a pathetic attempt to express dominance.

By the way, this is never done by mistake, although the “hard handshaker” will sometimes profess that he’s just that strong and can’t control himself. That is always a lie, and you should remember that the person who says it cannot be trusted.

Anyway, you have three options:

  1. Do nothing. He’s the pathetic one; let him think his gesture means something.
  2. Crush back. You can do this if you think you can win, although keep in mind you’re sinking to their level. You can also grip the trangressor’s handshake hand with your free left hand to add some extra power. If that feels like cheating, just remember the other guy started it, so anything goes.
  3. Call him out verbally, preferably with a humor-infused put-down. For example, “Wow, what a handshake, you must spend hours alone in your bedroom working on it!”

I’m big on number 3, as it completely undermines the hard handshaker’s M.O. Almost regardless of what happens next, he’s lost the alpha advantage he sought.

2. What to do when your handshake/hug radar is not aligned.

It happens: you go to shake hands; the other person goes in for the friendly hug. Or you’re the hugger and they’re the handshaker. You have to go with what’s natural, but in general, if they want to hug, give ’em a little hug. The fact that you make the second effort to get the gesture right will mean something.

That said, big exception here: If there is any chance that going in for the hug will make either of you feel uncomfortable–especially if the words “sexual harassment” enter into your psyche in any way–stick with the handshake. It’s always better to be remembered as the awkwardly formal guy than to remind someone of a creepy distant uncle.

3. What to do when they pull back or make you stretch to meet them.

This is either another one of those handshake power games, or it’s a matter of obliviousness. Usually, a handshake isn’t worth the contortions. You can beg off, or joke about it–pantomiming like you’re actually shaking hands while pointing out that it would be logistically ridiculous to climb over four people and reach over to shake hands.

Sometimes however, you just have to stretch and reach and do it. I’m thinking of the first time I met my girlfriend’s father, for example. 

4. What to do when the handshake lasts too long.

Pumping is optional in handshakes, but if you do, there’s a firm three pump limit. Anything past that, and you’d better be gripping hands while holding a giant oversized check and posing for a camera. If the other person doesn’t stop shaking hands after three up-and-down motions–five at the absolute tops–it’s up to you to gently release your grip and pull back.

5.  What to do when they shake hands limply.

Nothing really to be done here. Maybe they just don’t have a firm grip; maybe there’s a reason you know nothing about. Just reciprocate with a politely firm grip of your own and get out quickly.

6. What to do when they shake hands while ignoring you.

This is a tough one. To describe the situation further, I’m thinking of the times when someone starts to shake your hand, but in mid-shake turns his or her attention to someone else without letting go. It’s either a show of dominance, or a sign of a person who is at best case distracted, or at worse case, an egotist. 

The good news here is that you hold all the cards. If this is a person you really want to talk with, you literally have them by the hand; they cannot walk away without pulling back.

If it’s someone you aren’t willing to play this game with, just let go as if the handshake never happened. Think of it as a bad relationship that took only a few seconds, and move on with your life.

7. What to do when they have wet or dirty hands.

You can try to beg off–maybe by saying something like, “Sorry for not shaking hands; my hands are wet.” Even if your hands are as dry as a James Bond martini, the other person can’t really call you out on this little white lie without bringing attention to the state of his or her hands.

Or, you can just shake hands anyway, and wash your hands or use a little hand sanitizer afterward. I know a guy who once went for a job interview, and used the men’s room while waiting, where he saw another guy use the facilities but not wash his hands. Minutes later, he met the person who’d be interviewing him: You guessed it: “Mr. Didn’t Wash His Hands.”

What are you going to do in that situation? If you want the job, I guess you shake hands.

Like our guide to how to shake hands like a human being, we can’t cover every situation here. But honestly, handling the overly-hard handshakers alone makes this worth it. Bottom line: Lead by example, it’s not that hard. Just shake hands like a regular human being.

'Game Of Thrones' Season One 4K Blu-ray Review: Stark Difference

The Show

While one or two later series (with bigger budgets) of Game Of Thrones top season one for spectacle and story sophistication, there’s something about Season one’s rawness, introductory brutality, and world-building cleverness that still makes it my personal favorite season to date. Especially as it’s also the only season where we get to spend serious time with Ned Stark, who provides a constant tragic heart to all the mayhem that no other season can boast.

Photo: Game Of Thrones Season 1, HBO

Who’s a pretty dragon, then?

It’s interesting looking back at it now, too, to remember afresh just how groundbreaking it was in 2011 in terms of how far it was prepared to go to ensure that seriously unpleasant stuff happens to the most pleasant people.

In fact, I’d say the 4K Blu-ray release has arrived after just the right time to make revisiting the opening series feel completely fresh again.

One last thing I had to admire as I revisited the series for this review is just how quickly and effectively it establishes the memorable tone that will endure throughout Game Of Thrones’ subsequent six series. By which I mean there are two beheadings in the first 15 minutes.

Release details

Studio: HBO

What you get: Four region-free 4K Blu-ray discs, digital download code

Extra Features: Audio commentary tracks on many episodes by various cast and crew members; ‘Making of’ documentary; Creating the show open featurette; Creating the Dothraki language; 15 character profiles; From the book to the screen; The Knights Watch; Cast auditions; Animated history and lore interactive feature; Anatomy of an episode feature

Best soundtrack option: Dolby Atmos

Video options: HDR10, Dolby Vision

Key kit used for this test: Oppo UDP-203 4K Blu-ray player, Samsung QN65Q9FN TV, Panasonic UB900 4K Blu-ray player, LG OLED77C8 TV

Picture Quality

My very first experience of Game Of Thrones was watching Season One on HD Blu-ray. So I feel reasonably well qualified to say that the step up in picture quality delivered by this 4K Blu-ray release goes way further than I’d imagined possible.

Photo: Game Of Thrones Season 1, HBO

There will be beheadings.

Making this particularly surprising is the fact that aside from a few bits in the pilot apparently being shot on 35mm film, so far as I know the first season of Game Of Thrones was only shot at 1080p. So what we’re seeing on these 4K Blu-ray discs must just be 4K upscales. But I can only report what I see, which is that the picture routinely looks higher in resolution than the HD Blu-ray.

All those outdoor shots of rugged landscapes and dour stone walls look stunningly real and tangible versus the HD Blu-ray, and the extra resolution enhances the sense of depth and scale in these shots too.

Close up work if anything looks even more startlingly full of detail and sharpness. Be it in the pores, blemishes and freckles of the actors’ faces; the rich luster of all the manly leathery coats; the sheen of horses; or the hairs of the series’ endless collection of beards, pony tails and fur collars. It’s honestly like seeing the show again for the first time.

At which point I should say that while the increase in apparent detail is remarkable, the application of HDR to the picture has an even bigger impact.

Photo: Game Of Thrones Season 1, HBO

Jon Snow in, well, snow.

While it’s not the most aggressive HDR upgrade I’ve ever seen, it’s definitely one of the most effective and sensitive. Black levels have been taken down to gorgeously rich, inky levels without shadow detail being crushed, while contrasting bright highlights – candles, reflections on metal and skin tones, beams of sunlight – have been given a beautiful boost in brightness and intensity.

Daylight exteriors look much more life like too – and again this enhancement is delivered sensitively enough to stop the image from looking unnaturally stretched or making dark foreground objects look like empty silhouettes.

Colors have been enriched too, but usually only to the extent that they look more natural; more like they would, in other words, if hit in the real world by the sort of increased amounts of light the HDR regrade has introduced.

Put all these HDR and color-expanding strengths together and you get pictures that often take on an almost painterly beauty – no matter how harrowing their content might be.

Photo: Game Of Thrones Season 1, HBO

Ned Stark gives the first season a heart not consistently found in later series.

This is especially true for anyone able to watch the show in Dolby Vision, which does a lovely job of adding even more dynamism to the show’s many high-contrast shots, while also delivering a more controlled and consistent look to colors – especially skin tones during dark interior sequences.

The picture isn’t quite perfect. A few mid-dark scenes suddenly look a bit grainy for no particularly obvious reason. Also, the occasional exceptionally bright exterior, such as the sequence where Joffrey is bitten by Arya Stark’s direwolf, can look a touch strained, and/or suffer with some very slight color banding in skin tones. Some of the very brightest parts of the picture can look a little bleached of detail, too.

For the most part, though, the picture quality of the Game Of Thrones Season One 4K Blu-ray release is good enough to give you all the excuse you need to start watching this epic show again from the start ahead of the final season hitting our screens later this year.

Sound quality

Although the 4K Blu-ray defaults to a Dolby 5.1 mix, if you head into the Audio menu you can switch to a new Dolby Atmos mix for every episode. And for the most part I strongly recommend that you do this, as these Atmos mixes you a much more full blooded sound stage than the 5.1 originals. Bass extends much deeper, and the sense of height and ambience is clearly increased.

Photo: Game Of Thrones Season 1, HBO

The Starks in simpler times.

That said, while it sounds excellent for a seven-year-old TV show, maybe because of the original tracks they had to work with in putting the Atmos mix together, it’s not exactly a reference grade effort.

Voices sound a little clinical, so that they sometimes sound slightly dislocated from the rest of the mix. The densest parts of the soundtrack – including the opening title track – can sound a little soupy, too. Also, the rear channels aren’t used as much as they might have been for adding ambient effects.

At least when the rears are actually used in anger, though, the effect steering is precise, and can deliver genuinely dramatic effects – such as the way the cawing crow that arrives on Bran’s window in episode three shifts position from the front speaker to the rear right surround as the camera changes its point of view.

Extra features

The extras on this 4K Blu-ray release are the same as those delivered with the previous HD Blu-ray release except that, sadly, they don’t include any ‘in-episode guides’. These let you watch each episode on the HD Blu-ray with a menu down the side offering supplemental information, and I definitely missed having them on the 4K Blu-ray.

Photo: Game Of Thrones Season 1, HBO

Daenerys and her new people.

And before you start thinking you can just watch these in-episode features on the HD Blu-rays, if you didn’t notice earlier in the release details section, you don’t actually get the HD Blu-rays of Season One in the 4K BD package.

The highlight of the features you DO get is the series of commentary tracks delivered by a variety of different cast and crew members. The idea of using people from different aspects of the production for each commentary is a masterstroke, ensuring that each one feels fresh and gives another perspective on the production and story.

The 30-minute ‘making of’ feature is pleasingly substantial too, and while other featurettes – covering such stuff as the creation of the Dothraki language, the opening credits sequence and the process of adapting such a huge story for the screen – are much briefer, they still add up to an informative set of goodies overall.

Photo: Game Of Thrones Season 1, HBO

Game Of Thrones Season One 4K Blu-ray box art.

While the in-episode guides may have gone, there is still one strong interactive feature on the final disc that lets you explore the history, lore, Houses and geography of Westeros.


I honestly hadn’t expected much from this 4K Blu-ray release of Game Of Thrones’ opening season. It wasn’t shot in 4K, after all, and previous experience of this season via broadcast and Blu-ray hadn’t exactly blown me away on the picture quality front.

Somehow, though, the remaster work has delivered transformative results, making the whole show look so fresh you feel like you’re watching it again for the first time. Or at least you would if so much of the show wasn’t so damn unforgettable.

If you enjoyed this review, you might also like these:

‘Red Sparrow’ 4K Blu-ray Review: Dead Parrot

‘Black Panther’ 4K Blu-ray Review: Nice Picture, Shame About The Bass

‘Die Hard’ 4K Blu-ray Review: Yippe-Ki-4K!

‘Saving Private Ryan’ 4K Blu-ray Review: God Of War

Tempted to Drop a Project That Isn't Working? Here's a Quick Way to Know Whether You Should Give Up or Push Through

Have you ever hit a wall in a project and wonder if you should push harder or give up? How do you know if you are facing inner resistance or seeing a sign that you should shift gears and change direction? There may be times when you give up too soon and change strategies before you had given a project a chance to work. The easy guide to the right decision is to gauge your passion about the project.

In established companies, giving up on a project could mean costs burned with printing of unusable marketing materials, loss of time and money in training staff in a new program, advertising dollars and more. Some CEO’s find it almost easier to justify moving forward than abandoning the plan just for the chance to get the investment back. If it fails, the loss can be made up from other divisions and not make or break a company.

Smaller companies face bigger risks when testing new strategies. We do most of our marketing online which makes it is easy to shift gears and test new strategies without much loss of investment. The problem is that it can be too easy to jump ship at the first sign of failure. Many entrepreneurs get caught up in the shiny object syndrome and move from strategy to strategy too quickly without measuring or understanding the results.

In a new start-up, it can be difficult to predict the future and avoid bad mistakes. A fool-proof measurement is looking at the amount of passion you have for the project. When you really believe in a project you will do whatever it takes to make it work. You will use your mind to focus, you won’t give up on a small setback and keep pushing through. The passion will motivate you to overcome the obstacles.

If you don’t have the drive and feel ready to give up at the first sign of resistance, you are not emotionally invested enough to see the project succeed. If you are driven by money alone, you may not feel connected to your personal passion and lack enough energy to break through challenges.

One time we had a project that hit some roadblocks and the program was not selling. We were at a crossroads on whether we should drop it or keep trying to make it work. We checked in and realized that were not too enthusiastic about it to take the extra steps toward getting the sales. When we shifted to something that we were excited about creating, success seemed to follow us effortlessly. Even when small hiccups occurred, they did not stop us and the new project exceeded our expectations.

Most projects worth pursuing have a passionate motivator. Ask yourself if the project is going to help move the company forward in a big way or something that would be challenging and meaningful to test out.

The key question to ask yourself is “If I put myself all in this and it still did not work, would I still be glad I tried?”

Just having a passion toward something does not guarantee a good result. Sometimes the best projects are the ones that you know may fail but there is something driving you to move toward it even if it seems impossible. These passion projects always lead to something more and many times take you to new, unexpected opportunities.

Entrepreneurs, especially in start-ups do a lot more testing than more established companies. You have to face a lot of unknowns and have little data or history to back up decisions. When you don’t have the numbers to measure the risk, you have to rely on measuring your passion. Even if your passionate project does not bear immediate fruit, you will gain more information and data by going all the way that will help you with your next big idea.

The Essential Life Lesson We Can Learn From Anthony Bourdain and 'Parts Unknown'

Anthony Bourdain is dead at 61, of an apparent suicide, while in France filming the next episode of Parts Unknown. Bourdain was already a TV star and bestselling author when he launched his latest series, but it won accolades, and award after award for the fascinating way it brought unknown and possibly scary places, from the Congo River in Africa to Antarctica to the broken-down neighborhoods of Detroit. 

Bourdain once described the show as asking different people around the world some very simple questions: “What makes you happy? What do you eat? What do you like to cook?” Finding the answers to those questions resulted in an equally simple message: Don’t be afraid. Just because a place is remote and completely unlike anyplace you know, just because the people there look different and have different beliefs and everyday lives from you, just because someplace or someone is completely unfamiliar–don’t be afraid. Instead, be curious. Learn more. Take a bite.

To my husband, for whom Bourdain was a beloved figure, who usually leaves Parts Unknown streaming on Netflix from one episode to the next as he prepares meals for us, this fearlessness was Bourdain’s biggest gift to us all. “If I was going to go to Ecuador or someplace I wouldn’t be as afraid because of him,” he says. 

And indeed, from the book that launched him into stardom right through Parts Unknown, fearlessness was the one thing you could always count on from Bourdain. When he flipped over an ATV and had it roll over him during an episode of No Reservations, or when he went to Lebanon but brought along the wound-stopping product Quick Clot at the insistence of the U.S. military, he was perhaps annoyed or embarrassed, but–at least outwardly–he was never afraid.

Look at any image of Bourdain you can find. He’s nearly always standing or sitting square to the camera, looking it (and you) right in the eye, chin up, his expression a combination of an ironic smile and a challenge. The shot that you always see, again and again, in every one of his shows is Tony walking, through some burned-out war zone or lavishly wealthy neighborhood, ambling confidently along, unhurried but unhesitating, shoulders back. The man had incredibly good posture. If anything ever intimidated him, most of us will never know what it was.

That’s the other lesson from the life and untimely death of Anthony Bourdain. However much we may think we know a public figure, however authentic and truly himself he may seem in front of the camera or on the page, and however much we may love him, we can’t ever truly know what’s going on in someone else’s mind, let alone someone we have never actually met. His friends mostly report that he seemed happier than he had in a long time.

But his fellow globe-trotting TV chef and close friend Andrew Zimmern also shared a truth that many successful people know: Having your ambitions fulfilled does not necessarily lead to happiness and relaxation. It usually leads to even longer hours and greater exhaustion as you work at the thing you love, running in place to stay fresh, stay relevant, and keep getting better–and Bourdain did all those things.

Zimmern says that when he and Bourdain met up, they would talk about “wanting to get off this crazy roller coaster, but at the same time knowing that this was our work,” he told The New York Times. “The world has lost a brilliant human being and I’ve lost one of the few people I could talk to about some of this stuff.” Apparently there was a darker side to Bourdain and to the life he lived. It’s an odd coincidence that Bourdain was found dead three days after designer Kate Spade took her own life, also by hanging, and two days after the Centers for Disease Control released a report showing that suicide rates in American have increased throughout this century

Please don’t be part of this growing epidemic! If you feel you need help or just want to talk about the topic, call the National Suicide Prevention Lifeline, at 1-800-273-8255. 

CNN is collecting memories about Bourdain from anyone who cares to share them (you can do so here) and posting many of the responses on its site. Scroll through and read how many people say he inspired them to take a chance–quit a job they hated to travel the world, or write a book, or both. That’s the man’s best legacy and the best way to remember and honor him: by doing something you’ve been afraid to do or going somewhere you’ve been afraid to go, going somewhere you’ve been afraid to go–even if it’s just an ethnic neighborhood in your own home town.

The network is airing a tribute to Anthony Bourdain at 10 pm Eastern tonight and a series of his favorite Parts Unknown episodes through the weekend. Here’s the schedule:

3 Hiring Principles for Building an Award-Winning Company

As we all know, great talent is both hard to find and really expensive. You can’t compete with Google, Apple, or Facebook on compensation.

So, how do you build a powerful team of talented people who share the same values and passion as you? How do you compete with everyone else who can clearly outbid you?

Last year, I met Rajesh Padinjaremadam at a conference. He’s the co-founder and CEO of RapidValue Solutions, an IT services company that’s garnered some impressive accolades (including a couple Gartner awards) since being founded in 2008.

His company has 450-plus employees now, which is impressive: To grow a services company to that size, you have to inherently know something about hiring and training talent. After all, you don’t have a product to sell. You’re selling your team.

Padinjaremadam’s motto: “We have a simple internal rule: Don’t let your job title define what you can’t do.”

As you can tell, I’ve been thinking about how the best companies of hire and train talent, and wanted to get Padinjaremadam’s thoughts–so I called him up. Here are the three lessons I learned from our conversation:

1. The best employees are passionate–not necessarily experienced.

Hiring candidates based solely on their experience almost always ends badly, according to Padinjaremadam. “The candidates that didn’t have the strongest resume or the most number of years of experience, but were deemed to be a cultural fit, almost always turned out to be an invaluable asset in the long term,” he says.

I’m not a big fan of resumes, and that’s exactly why. Your resume only shows an objective professional history. It doesn’t allow you to show what you’re truly capable of.

Instead, I always recommend being active on LinkedIn. It’s one of the few platforms where you can professionally show without looking like you’re showing off. Plus, it’s the first place many employers do their due diligence.

Padinjaremadam recommends trying to get a better feel for their attitude in the interview. The more positive their attitude, the more likely they will succeed in their environment. 

2. The best employees take risks and fail often.

I think every founder needs to embrace failure and make it a known part of the company’s culture. You should make a point of regularly taking on challenges that run the risk of failing, and encourage your employees to take those leaps without hesitation.

Padinjaremadam agrees. Instead of reprimanding mistakes, we encourage our team to learn from them and move on,” he says. “We wanted our team to take risks. This is the only reason we continue to grow.”

At an old job, I remember distinctly one of my old managers telling me, “We don’t fail here. Failure is not allowed.” I almost couldn’t believe my ears. Instead, I took a risk and started a new initiative–and the small failures we suffered along the way eventually led us to better learning and success.

Don’t be like my old manager and try to instill fear of failure.

3. The best leaders get out of the way of their teams.

Padinjaremadam recommends that every team member be able to step out of their comfort zone. Just because your job description says one thing doesn’t mean you can’t do something else.

“My job as a leader is to let them step up and get out of their way,” he explains. “If you can’t get out of their way, they will never step up.”

When it comes to stepping up, I can’t think of a better example than Amazon, which started as a book company and created an entirely new industry by offering cloud computing services. If Amazon’s leadership team didn’t empower its staffers to step outside their job descriptions, I guarantee Amazon would have faded as a mediocre book company.

If you’re building a company, stop using resumes and job experience as your hiring method. Get to know your candidate’s passions and let them take risks without you reprimanding them if they fail. If you hire the best, they will help your company grow.

Google Leak Reveals Massive New Pixel 3

The Pixel 3 and Pixel 3XL are going to divide users. Their new cameras are very exciting, their designs are polarising and there’s a major concern. But one of the world’s most acclaimed leakers has now revealed a new and overlooked consideration:  Google’s new Pixels will be massive… 

Legendary industry insider Steve Hemmerstoffer, aka OnLeaks, states his sources believe the Pixel 3 and Pixel 3 XL will increase their displays to 5.3-inches and 6.2-inches respectively. This doesn’t sound huge compared to their predecessors (Pixel 2: 5-inches, Pixel 2 XL: 6-inches), but it will result in two of the largest smartphones in the world.

This is why:

Concept Creator

Google Pixel 3 concept

The key is their aforementioned polarising designs.

Last year, the 5-inch Pixel 2 was actually longer, wider and thicker than Apple’s 5.8-inch iPhone X due to its substantial top and bottom bezels. Meanwhile, even with reduced bezels, the 6-inch Pixel 2 XL was as tall as the 6.2-inch Galaxy S9 Plus and wider.

Consequently, increasing the size of Pixel 3 and Pixel 3 XL displays will only exacerbate this problem.

Yes, the Pixel 3 will slim down its bezels compared to the Pixel 2, but they will not be anywhere near as thin as the class leaders so the trade-off means it will remain the largest circa 5-inch phone on the market. And while the Pixel 3 XL will switch to a notch design, it is one of the tallest notches ever seen plus the chin bezel remains.

So this big phone is only getting even bigger.


Pixel 3 XL concepts based on leaks shows a very tall notch

Of course, if you don’t mind a large device, you’ll appreciate there are good reasons for Google going against the minimalist design curve here. Both the new Pixels will retain superb front-firing stereo speakers (a real standout these days) and their big top bezels will house potentially game-changing dual front cameras.

Personally, I’m very happy with this trade-off. After all, my recent long-term review of the Pixel 2 and Pixel 2 XL concluded they remain the best smartphones currently on sale. But I appreciate others will be put off.

As for those hoping Hemmerstoffer is simply wrong, I wouldn’t get your hopes up. His track record is impeccable.

Instead, I’d recommend you embrace how Google does things differently because it really works. And if you’re still tempted to stay away, remember there is also an all-new midrange Pixel 3 coming soon…


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The Key to Preventing Burnout Lies in a System You Already Use

One of the most common questions I get about our 100 percent remote workforce structure is “How do you know if anyone’s actually working?” It always makes me chuckle, because I’ve never had a problem with making sure our team is working enough — it’s making sure that they stop working. Workaholism, and the resulting burnout, can wreak havoc on teams — particularly “work from home” ones.

At Greenback, we’ve been battling this issue for the over nine years we’ve been in business. The story goes like this: we hire a talented, bright, thoughtful team member and they work hard.  Things are going well for a year or two until a pattern emerges where, in spite of a generous vacation policy, they rarely take time off. In a world where your computer is your office, it’s easy to take your office with you. So, they do.

Remote work culture only encourages those habits. It’s far too easy to work a few hours on the weekend or when you’re out of town for a wedding. I worked on Christmas morning once, waiting for my family to wake up for Santa. Clearly not what I would’ve done in a typical office job.

The same elements that make someone a terrific remote team member —  proactivity, ability to self direct, a passion for business, an entrepreneurial spirit — also make them particularly prone to burnout, a story most entrepreneurs know all too well.

The critical question becomes: how do you make it possible and better yet, easy for your remote team to feel comfortable taking much needed time off to avoid burnout? Our solution is two-fold:

Document each team member’s responsibilities via Standard Operating Procedures.

Standard Operating Procedures (SOPs) are not just important for remote businesses, of course. But for remote teams, it’s non-negotiable if you want your team to feel they can step away for a week. Remote teams don’t have the luxury of being able to lean across their cubicle to sort things out at the last minute like brick and mortar businesses do. With SOPs in place for our remote business, we feel confident that the team can keep running smoothly even in the absence of a key employee.  

You need to make vacations mandatory.

To ensure people feel comfortable taking time off, we contractually require all of our employees take at least five consecutive business days off of work. That’s not to say they only have one week of holiday time (our team has three weeks to start, plus 14 company holidays —  including a whole team shut down for a week between Christmas and New Years, five sick days, etc).

The point is that every single employee is required to take one full week off at a time. Why one week? While everyone is different, of course, research shows that eight days (which is essentially one week off work, and surrounding weekend time) is the ideal vacation length.

This one, two punch of having SOPs and requiring vacations has multiple benefits for our team:

  1. There is no guilt about taking vacation, it’s required.
  2. Employees don’t stress about the workload when they return because they know someone is covering for them and doing things the correct way.
  3. Holidays are interruption free and their teammates have the playbook.
  4. We reduce the risk of burnout and therefore can retain excellent people for longer.
  5. We know the SOPs are good for an emergency because we “stress test” them during vacations.

If you want to take care of your team, make sure that you build habits and systems like SOPs and mandatory minimum vacation time so that people feel comfortable and confident about taking time off.

Earnings Preview: What To Expect From Broadcom On Thursday

, Opinions expressed by Forbes Contributors are their own.

IRVINE, CA, THURSDAY, MAY 28: Broadcom Corp. offices are shown May 28, 2015 in Irvine, California. The company has agreed to be acquired by Avago Technologies Inc. for $37 billion in cash and stock, creating a giant in the business of supplying the technological infrastructure behind a range of common products, from smartphones to wireless networks to cloud computing. (Photo by Robert Gauthier/Los Angeles Times via Getty Images)

</div> </div> <p><span>Broadcom&nbsp;Inc. is scheduled to report earnings after Thursday’s close. The stock hit a record high of $285.68/share in 2017 and is trading near $256/share. The stock is prone to big moves after reporting earnings and can easily gap up if the numbers are strong. Conversely, if the numbers disappoint, the stock can easily gap down. To help you prepare, here is what the Street is expecting:</span></p> <p><strong>Earnings Preview:&nbsp;</strong></p> <p><span>Broadcom&nbsp;</span>is expected to earn $4.75/share on $5.00 billion in revenue. Meanwhile, the so-called Whisper number is $4.86. The Whisper number is the Street’s unofficial view on earnings.</p> <p> </p>

Company Profile & Various Businesses:

<p><span>Here is a brief company profile courtesy of&nbsp;</span><a href="https://financial.thomsonreuters.com/en/products/tools-applications/trading-investment-tools/eikon-trading-software.html" target="_blank" rel="nofollow" data-ga-track="ExternalLink:https://financial.thomsonreuters.com/en/products/tools-applications/trading-investment-tools/eikon-trading-software.html">Thomson Reuters Eikon</a>:</p> <p>Broadcom Inc., formerly Broadcom Limited, incorporated on March 3, 2015, is a designer, developer and global supplier of a range of semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor (CMOS)-based devices and analog III-V based products. The Company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage and Industrial &amp; Other. It offers a range of products that are used in end-products, such as enterprise and data center networking, home connectivity, set-top boxes (STBs), broadband access, telecommunication equipment, smartphones, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Its product portfolio ranges from discrete devices to complex sub-systems that include multiple device types, and also includes firmware for interfacing between analog and digital systems. Its products include mechanical hardware that interfaces with optoelectronic or capacitive sensors.</p>

<p><strong>Competition:</strong></p>” readability=”43.5805719473″>

IRVINE, CA, THURSDAY, MAY 28: Broadcom Corp. offices are shown May 28, 2015 in Irvine, California. The company has agreed to be acquired by Avago Technologies Inc. for $37 billion in cash and stock, creating a giant in the business of supplying the technological infrastructure behind a range of common products, from smartphones to wireless networks to cloud computing. (Photo by Robert Gauthier/Los Angeles Times via Getty Images)

Broadcom Inc. is scheduled to report earnings after Thursday’s close. The stock hit a record high of $285.68/share in 2017 and is trading near $256/share. The stock is prone to big moves after reporting earnings and can easily gap up if the numbers are strong. Conversely, if the numbers disappoint, the stock can easily gap down. To help you prepare, here is what the Street is expecting:

Earnings Preview: 

Broadcom is expected to earn $4.75/share on $5.00 billion in revenue. Meanwhile, the so-called Whisper number is $4.86. The Whisper number is the Street’s unofficial view on earnings.

Company Profile & Various Businesses:

Here is a brief company profile courtesy of Thomson Reuters Eikon:

Broadcom Inc., formerly Broadcom Limited, incorporated on March 3, 2015, is a designer, developer and global supplier of a range of semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor (CMOS)-based devices and analog III-V based products. The Company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage and Industrial & Other. It offers a range of products that are used in end-products, such as enterprise and data center networking, home connectivity, set-top boxes (STBs), broadband access, telecommunication equipment, smartphones, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Its product portfolio ranges from discrete devices to complex sub-systems that include multiple device types, and also includes firmware for interfacing between analog and digital systems. Its products include mechanical hardware that interfaces with optoelectronic or capacitive sensors.


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Amazon’s Alexa Has A Clear Favorite – and Some Savage Analysis – for the NBA Finals

Amazon’s Alexa voice assistant is a handy, seamless way to listen to music and find out about the weather. As the NBA finals head into tonight’s Game 2 between the Golden State Warriors and the Cleveland Cavaliers, though, the voice assistant is also dabbling in sports analysis.

If you ask Alexa “Who will win the NBA Finals this year,” it gives you the following dissertation:

“Even with both conference finals going to game 7, these playoffs were over before they even started. I think the Warriors will win the playoffs pretty handily, and the rest of the league will spend the off-season trying to figure out what they will do to damper the dynasty.”

Yes, savage. You’d be forgiven for thinking that Alexa is showing some bias – the Warriors’ home base in Oakland is much closer than the Cav’s HQ to both Amazon’s Seattle headquarters and to Silicon Valley, which you might call Alexa’s spiritual home. But Alexa’s stance is also shared by most NBA analysts (and, if the memes are any indicator, LeBron himself).

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Of course, it’s deeply misleading to say that “Alexa” has any opinions at all. While the voice assistant incorporates an array of what are known as “limited” or “weak” artificial intelligence functions, such as search and natural language processing, it doesn’t have any more opinions, emotions, or sports analysis skills than your laptop (or, for that matter, your refrigerator). Those are the realm of human-like “general” A.I., which we won’t see for nearly 20 years, at the very least.

That becomes clear if you ask Alexa a more nuanced or specific question. Ask “Alexa, who will win Game 2 of the NBA finals?” and you get the same spiel about the series as a whole. Ask “Who will be NBA MVP this season?” and the machine draws a blank. Ask “Who will be MVP of the NBA Playoffs?” and you’ll be treated, for some reason, to a summary of Game 1.

Most likely, the scripted pro-Warriors response was plugged in manually by Amazon’s Alexa team. The Game 1 report that Alexa spits out in response to almost any other Finals-related query might have been scraped from news feeds by a more automated process, similar to the way Alexa finds and reads the news or stock reports.

Fortune has reached out to Amazon for more details about their creation’s anti-Cleveland bias. But don’t worry – Alexa won’t be replacing Jeff Van Gundy on the mic anytime soon.

How Unscaled Companies Are Rewriting The Rules Of Business And Policy

In his recently released book, Unscaled, venture capitalist Hemant Taneja writes about the next chapter in the Silicon Valley story.   The book chronicles Silicon Valley’s transition over the last few years from an enterprise software-focused community to one developing platforms for all facets of society.  Taneja, who has been a successful entrepreneur and venture capitalist in Boston and the Bay Area, uses several of his portfolio companies, including Stripe and Snapchat, as examples of the ambitious technology platforms that entrepreneurs are building.

The prequel to this story is the well-chronicled rise of “social, mobile and cloud” – or social media, mobile phones and tablets, and the migration to cloud computing solutions.  Taneja adds two important links to this chain – artificial intelligence and Big Data.  With new tools for AI and analytics, and an already reduced cost of doing business, writes Taneja, even early-stage Silicon Valley startups have been able to compete head-on with large companies in their core business areas.  Instead of just developing software to make business more efficient, startups are becoming platform enablers of commerce using Big Data, analytics and AI to increase the speed of product iteration.  Taneja uses Stripe, Snap and Warby Parker as examples of companies that have remained, by and large, extraordinarily product-focused, and were able to ignore other things that go with being a global company, such as infrastructure, human resources and operations, until they had to.  They “rent” as much as they can for as long as they can.

When speaking with Taneja, he recognizes, as do most Silicon Valley veterans, that this model doesn’t yet work well for more complicated sectors, such as life sciences, space, hard sciences, or anything requiring the management of intellectual property, which defies iteration.  While many scientists are trying to use Silicon Valley principles to speed drug discovery and share knowledge (pre-patent), there are vested interests and government regulations that prevent them from doing so.   Today software for the sciences is still predominantly about efficiency.  It will slowly move towards discovery, and according to Taneja, will help shift the biotech and pharma sectors from the blockbuster model to more narrowly targeted communities and populations.

The recent scandals at Facebook and Uber underline the growing pains facing fast-growing, unscaled companies that are readily embraced by consumers but unprepared for their responsibilities as a corporate actor.    “Move fast and break things” might have been okay in the past, but not in an economy where a small startup is also a household brand.  Taneja cites Warby Parker as an example of a company that has been thoughtful about its growth, and identified the right time to invest in corporate leadership, infrastructure and HR as it moved from a web-based retailer to bricks and mortar stores.

Hemant Taneja

AI and a new generation of startups

The book also provokes some important public policy questions that have yet to be discussed in Washington or state capitals.   Taneja talks about Khan Academy, a non-profit online learning platform used by an enormous number of schools and families around the world. And yet, the tenets of Khan Academy’s successful use of technology to simplify and teach concepts has yet to be embraced in education policy or practice.

Likewise, the unscaled phenomenon and the rise of unicorns presents interesting questions for our oversight of the corporate sector.  Is a unscaled company like Airbnb a monopoly?  It has the largest share of rooms of any hospitality brand, but has minimal assets.  It’s not like Microsoft or ATT – where market share could be measured in traditional ways and anti-competitive practices could be monitored and remedied with oversight.  Its not clear how that our federal agencies or policies are prepared to regulate an Airbnb or Uber in this way.

Taneja talks about the importance of connecting technology, and it’s often-insulated workforce, with the values of society.  He hopes the book leads to a discussion about responsible innovation that focuses on transparency, accountability and plain English explanations about technology and its impact.  He calls for an “algorithmic canary” for bad actors in technology that sounds the alarm for industry and the general public before its too late.

Tencent sues Toutiao for alleged defamation, demands 1 yuan and apology

HONG KONG (Reuters) – Chinese social media giant Tencent Holdings on Friday said it is suing two companies under domestic rival Toutiao for alleged defamation, escalating its growing feud with the firm behind what is currently the world’s most downloaded iPhone app.

FILE PHOTO: A Tencent sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 4, 2017. REUTERS/Aly Song/File Photo

Toutiao, also known as Bytedance Technology, is one of China’s fastest-growing tech start-ups. It has threatened Tencent’s dominance in social media and online entertainment with its hugely popular news aggregator app Jinri Toutiao and short video app Tik Tok, also known as Douyin in Chinese.

Tik Tok, especially popular among young people for its quirky videos, was the most downloaded app in the Apple app store globally in the last quarter.

In a WeChat post, Tencent said it is suing in a Beijing court the two Toutiao units running Jinri Toutiao and Tik Tok, alleging they had repeatedly defamed Tencent in the past month with negative news and damaged its reputation.

Tencent alleged Toutiao had intentionally tweaked a state media report’s headline and sourcing unfavorably in a push alert on Wednesday and seriously damaged its reputation.

Toutiao did not immediately respond to a request for comment.

Demanding compensation of one yuan ($0.16) and public apologies on Toutiao’s social media platforms, Tencent said it is also suspending collaboration with the two companies as their behavior “constituted unfair competition and infringed (Tencent’s) rights”.

Toutiao’s Douyin last month sued Tencent, accusing it of spreading false and damaging information on its WeChat platform and seeking 1 million yuan ($155,000) in compensation and an apology.

Tencent said at the time that it had acted appropriately and would not fear to respond to any lawsuit.

Venture-backed Toutiao, valued at more than $30 billion according to sources, is aggressively emerging as one of the few Chinese tech start-ups independent from the juggernauts Tencent, Baidu Inc and Alibaba Holdings.

Reporting by Sijia Jiang; Additional Reporting by Kane Wu; Editing by Dale Hudson

Performance, Technology, Culture, Brand: Why Lexus Went Back To the Track

I’ve probably seen hundreds of Lexus ads over the years. Given “Lexus TV commercial” as a free association prompt, the “December to Remember” campaign immediately springs to mind.

That’s a good thing, since memorability matters in advertising. 

But that doesn’t mean I’ve ever considered buying a Lexus sedan. All those ads I’ve consumed hadn’t budged my purchase consideration needle from zero — even though, having owned two Lexus SUVs, my brand affinity is well established.

Then I saw a Lexus RC F GT3 racing in the GTD class at the IMSA Rolex 24 in January. (Take a look at this photo and tell me it’s not an awesome-looking race car.) Then I took a tire-smoking, brake-glowing ride in a Lexus GS F driven by an ex-professional racer on the Daytona road course. Then, just one year after entering the series, the program notched its first win at Mid-Ohio last month

Now would I consider buying a Lexus sedan? Oh, hell yeah.

That’s why 17 manufacturers are actively involved in IMSA and 13 of them compete full-time in the WeatherTech Championship. Racing does something for the Lexus brand — at least for potential customers like me — that no of advertising will ever accomplish.

Even so, advertising has the benefit of being relatively simple: Develop a strategy, throw money at a campaign… advertising is easy (although hard to do well.)

To find out why Lexus decided to re-engage in racing I talked with Jeff Bracken, the Lexus Group Vice President and General Manager who oversees all aspects of U.S. automotive operations. (He’s retiring later this year after 40 years with Toyota — awesome for him but less so for me since he offered me a test-ride in a Lexus LFA the next time I’m in Dallas.)

Small business or major brand, there should be a strategy behind every marketing initiative. So: Why racing?

Before I answer, let me ask you a question. When you think of Lexus, what comes to mind?

There are two answers to that question. Until today I would have said Lexus is a definitely a luxury brand… but not necessarily a performance brand. Then I took a ride with one of your pro drivers. I had no idea the car could do that.

That’s the perfect answer: You had no idea. And that’s one of the reasons we’re in IMSA. 

When the general public thinks about Lexus, they think quality, they think styling, they think  dealers who really take care of you… We love that about our brand image. But it’s not enough.

We want to be known for more: For performance, for driving dynamics, for personality… all of the things that truly speak to our vehicles.

We know that gap currently exists. Racing is a great way to help the public understand that there is more to Lexus than what they may be familiar with.

I get wanting to be in racing. But there are a number of series and options. Why IMSA, and why the GTD class?

We wanted a series where people could see a car they’re actually able to buy on the racetrack. We want that natural connection. 

Of course we could have entered the prototype class, but for us that seemed like a less natural market connection. At least for now.

So it’s a little like bicycles. I can buy a Trek road bike that looks like what their pros ride in the Tour de France. 

Yes. And of course it goes beyond the end customer. Our dealers are also customers. 

We can talk about racing at a national dealer meeting, or in smaller meetings… but when we bring them to the track, it’s visceral. They can see and hear and smell… it’s a very exciting environment, and it’s exciting for them to be part of.

That’s why we have a number of our dealers and key opinion leaders here this weekend to see it firsthand.

Do some dealers push back and say, “Wait. Why are we in racing? Why not spend that money on another marketing strategy?” 

We do get that question. One thing we do is assure them the transfer of what we learn on the track to our production vehicles is very, very real.

One example is our design studios. Designers and engineers work on aerodynamics, driving dynamics, etc. The young engineers in Japan that literally designed this race car will eventually design production cars. The knowledge transfer is seamless. 

So, when a dealer expresses concern over, say, whether money is being taken away from general marketing funds, we can walk them through the technology transfer aspect, the image building aspect…

Ultimately, they just want to know money is well spent, and we work extremely hard to make sure it is.

A friend’s bicycle company is involved in racing, but to him participation alone is  enough. For Lexus, how important is winning?

We’re not here to make up the numbers. We’re here to win.

Of course that was hard in our inaugural season. We were starting from scratch and competing with extremely well-established teams. So to not win a race… we’re competitive people. We didn’t like that.

But at the same time, we’re in this for the long haul. Our company culture is to take a long-term view.

We made a lot of progress last year. This year we think our cars are as fast as any out there. But we’ve been away for a decade and there are phenomenally talented competitors that have been at this for a long, long time. So we have high expectations — but not unrealistic expectations.

That’s important whenever you get involved in something new: The balance between high expectations and realistic expectations is key when you’re trying to maintain excitement and enthusiasm… but at the same time not risk your people getting demoralized. 

We talked about the branding gap. Whenever a brand shifts, even slightly, there’s a risk that a certain segment of the core customer base won’t like it.

Absolutely. We have owners that over the years have bought 10 Lexus vehicles, and when they see us taking a more aggressive approach to styling… yes, I do take calls from customers who express concern. 

So I’ll spend 30 or 40 minutes on the phone with them, helping them understand why we’re going down this path.

We never want to lose those baby boomers. We never want to lose the people who have a more traditional view of how our cars should look or perform. But at the same time, if we don’t stretch ourselves, we will never be on the consideration list for Gen X, Gen Y, Millennials… 

But you’re right. That’s a tough balance because, whatever your business, you have a core base… and when you try to extend past that core, the core may start to look sideways at you. (Laughs.) 

But that’s also where brand loyalty comes in.

Clearly the vehicle itself is the primary point of interest. But so much of the Lexus DNA is how we take care of customers. The amount of money we spend on customer goodwill is significant even by comparison to our big brother Toyota.

So we hope that if there is a tiny bit of a disconnect on, say, how a new vehicle is styled… our customers know they will be taken care of.

We know that matters. We’ve seen customers leave… and then come back primarily due to they way they know Lexus treats them. 

You’re a year in to being back on the track. What turned out to be different than you expected? What have you learned?

From a marketing standpoint, we’re definitely building awareness and word of mouth just by being involved in motor sports. That aspect has gone as planned. 

And we’ve definitely learned a lot about working with our race teams. Take 3GT Racing (the team that won the Mid-Ohio race.) We think very, very highly of them. They’re used to maintaining a tremendous amount of control; giving up some of that control goes against their DNA.

That’s not unusual in racing; many teams are used to only getting minimal support from whatever factory they happen to affiliate with.

And while we do have tons of resources we can provide, we needed to make sure there wasn’t a heavy-handed approach from the factory.

There was a learning curve for both organizations, one that we anticipated… and we feel really good about how that relationship has come together.

So in a broader sense, if you’re a company planning to partner with someone, know that it will take effort to build a great relationship.

And know the effort you put building a great relationship will be worth it.

I’m sure that’s true inside Lexus as well. Effort becomes its own reward when it helps build the right culture.

No matter what we’re doing or where we’re doing it… we feel our performance is never, ever good enough. That’s another thing that’s hard-wired into our DNA. 

Being involved in racing provides a constant reminder that whatever makes you successful today just won’t be good enough tomorrow. 

Reinforcing our constant drive for excellence? That’s a “win” that pays off beyond any results on the track.  

Need Another Reason to Head Outdoors? Science Says It'll Give You a Major Productivity Boost

Now that we’re halfway through the year, those new year’s resolutions might be out of commission and a new whiff of inspiration is in order. Whether work or life is bogging you down, you don’t have to take a big trip or drastically change your life to feel new.

In fact, a reset button might just be around the corner (or a day trip away). This summer, I challenge you to step outside of your box and head into nature to get that fresh, new perspective. In fact, science says you should do it. Depending on what kind of reset you need, head to one (or all) of the following three places.

Water: to Lower Stress and Anxiety

What do you think of when you hear water? Beach, lake, river, pond, waterfall, ocean, or maybe something else? Wallace J. Nichols, Ph.D., is a marine biologist and the author of Blue Mind, a book that discusses the benefits of water. No, not just drinking it.

He calls it blue mind, described as, “the mildly meditative state we fall into when near, in, on, or under water.” By surrounding ourselves with water, Nichols has found that your stress and anxiety levels can lower, a perfect way to calm down if you’ve had an especially trying week at work or need to find clarity to a chronic issue.

Forest: To Boot Your Immune System and Improve Mood

In 1982, the Japanese Ministry of Agriculture, Forestry, and Fisheries coined the word “shinrin-yoku,” meaning forest bathing. They were already a hundred steps ahead of me. They discovered that breathing in the fresh forest air meant you were also inhaling phytoncides, a natural and airborne chemical that helps plant fight off disease. By breathing this in, you in turn, would develop a stronger immune system.

In another study also led by Japanese researchers at Chiba University, 168 participants were sent out on a stroll. Half walked through the forest while the other half walked the city streets. Those that went in the forest showed a 16 percent decrease in cortisol (the stress hormone), two percent decrease in blood pressure, and a four percent decrease in heart rate.

Mountains: to See the Same Thing From a New Perspective

Two years ago, I did the famous Half Dome hike in Yosemite National Park. This 16-mile and 12-hour hike was a grueling experience that left me wondering why I was doing it in the first place. The first few miles of the hike runs you through beautiful Vernal Falls, a majestic waterfall that mists you as you hike up its adjacent steps. Beyond this point and to the base of the mountain seems like a dizzying maze of thinking you’re almost done, but no, that’s still Half Dome but from the other side.  

It wasn’t until I ascended up the cables and onto the top of the mountain, taking in a breathtaking view, that I realized it really is all about the journey. Any troubles I had maintained during the hike disappeared as I took in the view from up top. There, I saw all the other domes I had seen from the ground but from here, they sparkled in a way I could have never seen six hours earlier.

To gain a new perspective, you have to move.  

It’s no surprise that getting yourself outdoors is the number one thing to do to feel better. Away from the distraction of noise, people, and problems, you also get the sense of feeling small and that life’s pressures are overrated. Compared to large bodies of water, towering hundred-year-old redwoods, or large granite forms, you are humbly reminded that things are never as they seem.

HP Inc results boosted by PC sales as it waits for 3D manufacturing to take off

HP Inc has reported 13% growth in business for the second quarter of 2018, compared with the equivalent period in 2017, boosted by commercial PC sales.

Its second-quarter 2018 SEC filing showed that commercial PC net revenue increased by 16%, while consumer net revenue rose by 10%. Shipments of both notebooks and desktop PCs increased by 7%.

The company’s printing business also reported growth, of 11%, boosted by an 88% increase in commercial printers shipped.

HP Inc continues to make a big play in the 3D printing market, said its CEO, Dion Weisler, during the earnings call.

In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, Weisler said: “The 3D printing business is a huge opportunity for us and one where we aim to disrupt the $12tn global manufacturing market. The growth trajectory and momentum behind this business continues.

“We are seeing an increase in customers placing repeat orders, upgrading their systems for higher-volume manufacturing and scaling with double-digit unit installations.”

Asked about the progress HP Inc was making in 3D printing, Weisler admitted that the evolution of the technology into mainstream manufacturing is “a long path”, and could take five to 10 years. “We are expanding our adoption across key verticals,” he said.

Weisler said half of the 3D application areas where prospective customers engage with HP Inc involve manufacturing in production. “When a customer is contemplating buying 3D printing, they will give us a file and they say can you make this path and in 50% of the cases, these are production applications, which is really what differentiates us with this technology,” he said.

Weisler said Jabil, a major contract manufacturer, is currently deploying Multi Jet Fusion in the US and Asia as part of its distributor manufacturing strategy. “This quarter, we also continue to grow unit placement across all verticals and geographies, including new customers in the automotive and electronics industry,” he added.