Tesla's Model 3: Unprecedented Price Performance Means Unprecedented Sales

Tesla’s (TSLA) all-electric Model 3 sedan is receiving glowing reviews. The Drive’s Alex Roy spent 50 hours with the car over four days and had this to say: “…it’s far more than a car. It’s a work of art, a concept car come to life, more revelatory than the Model S, and historically even more important. “

Jalopnik and Doug DeMuro echoed the view that the Model 3 is a unique car — futuristic and exciting. Road & Track called it an “unexpected delight” to drive. Motor Trend called it “magic.”

But here’s the kicker: the base model of the Model 3, priced at $35,000, is estimated to have an unsubsidized five-year total cost of ownership only $4,200, or 13% more than a base model Toyota (TM) Camry. For over a decade, the Camry has been the best-selling sedan in the United States. The Camry is generally regarded as a utilitarian vehicle rather than “magic” or a “work of art.”

Photo by Carl Quinn.

The Model 3’s unprecedentedly low total cost of ownership

In my somewhat subjective estimation — backed up by several impartial car reviewers — the Model 3 offers greater quality than an ordinary entry-level luxury car like the BMW (OTCPK:BMWYY) 3 Series at a total cost of ownership not far from a utilitarian, mass market car like the Toyota Camry. This is an unprecedented level of price performance.

Total cost of ownership includes the full costs of owning a vehicle, including energy costs (i.e. electricity or gasoline), service and maintenance, and insurance. It’s a better apples-to-apples comparison of the cost of an electric car vs. a gasoline car than sticker price due to the considerably lower costs of running an electric vehicle.

The comparison to the Toyota Camry comes from Loup Ventures partner Gene Munster, known for betting on Apple (AAPL) as an analyst at Piper Jaffray. Another comparison by YouTubers Two Bit da Vinci produces similar results. They compare the Model 3 to the Honda (HMC) Civic. They find that the unsubsidized five-year total cost of ownership for the Model 3 is only $3,400 or 14% higher than for the Honda Civic, a much more utilitarian car.

They also compare the Model 3 to the BMW 330i, a car with a similar level of luxury, at best equal driving performance, and inferior technology. They estimate the 330i’s total cost of ownership at $17,450 higher than the Model 3s. That’s 62% higher for a car that is about the same or worse.

Two Bit da Vinci notes that beyond their fifth year, the maintenance cost for gasoline cars increases significantly with several parts requiring replacement. Not so for electric cars. Over a seven-year or eight-year timeframe, the cost comparison is likely even more favorable to the Model 3.

A newer gasoline car can survive for 200,000 miles before it needs to be scrapped. Data from the Tesla Model S shows that an electric car can drive 150,000 miles with minimal battery degradation. One taxi driver drove 250,000 miles in his Model S and lost only 7% of his original battery life. Based on this data, electric cars are expected to have much longer lifetimes than gasoline cars, perhaps as much as 500,000 miles.

This makes the total cost of ownership comparison extremely favorable over a 15-year timeframe. After 15 years, a Model 3 may still be running smoothly while a gasoline car is long gone. The same goes for cases of high utilization such as taxis or ride-hailing services. Looking ahead to autonomous ride-hailing, self-driving electric cars will savagely outcompete self-driving gasoline cars.

Photo by Seungho Yang.

Low cost of ownership means high sales

The Model 3 offers a BMW-like experience for a Toyota Camry-like cost. For this reason, I believe that demand for the Model 3 will be like nothing the automotive industry has seen in recent decades. Research has shown that consumers are responsive to the total cost of ownership of vehicles, not just sticker price.

Venture capitalist Chamath Palihapitiya argues that BMW 3 Series sales will be decimated by the Model 3. Gene Munster speculates that Tesla could sell 2.75 million Model 3s per year by 2025. I don’t know if these predictions are correct, but they are certainly not unreasonable given the unprecedented level of price-performance the Model 3 offers. Many consumers will wonder why they would want to buy any other car.

Some analysts are gravely underestimating the level of consumer enthusiasm specifically for this car, and not for lackluster electric compliance cars like GM’s (GM) Chevy Bolt or future me-too offerings. Tesla has advantages in software, design, and battery pack economies of scale that competitors show no signs of overcoming.

Most recently, Tesla stores in San Francisco and LA were swarmed when the first Model 3s were put on display. Some waited over an hour in line just to see the car up-close for a few minutes. This did not occur for the Chevy Bolt, or any other car in memory for that matter.

The best advertising for the Model 3 will be knowing someone who drives one, especially someone as enthusiastic as the 455,000 people who held a reservation as of August 2. I expect that demand will greatly increase over time as more people learn about the car. Another factor driving increased demand will be the development of Enhanced Autopilot and more advanced autonomy features.

Photo by Andrew Wilder.

Revenue and market cap implications

If Gene Munster is correct in his speculation that Tesla will sell 2.75 million Model 3s per year by 2025, the company will generate $105 billion in annual revenue from that one vehicle alone. Assuming an equal amount of revenue from the Model Y crossover, that would be $210 billion between the two vehicles, plus $9 billion for the Model S and X.

At an auto industry average 0.52 price/sales ratio, $219 billion in revenue would yield a market cap of $114 billion, up 42% from September’s all-time high of $65.5 billion. At an S&P 500 historical average 1.47 price/sales ratio, Tesla’s market cap would be $322 billion. That’s an increase of over 490% from the all-time high. Remember, these calculations exclude revenue from all other vehicles and lines of business, including solar and energy storage.

I think the 2025 timeframe is too long for two reasons. First, by 2025 there is a good chance that autonomous ride-hailing will affect overall vehicle demand in a way that Munster is not accounting for. Second, it doesn’t help us to think about what sales will be like in the Model 3s first few years on the market. What factors prevent sales from reaching 2.75 million per year in three years, rather than in seven?

The bottom line is that although it is difficult to predict the future in much detail, I can say with high confidence that the Model 3 will break sales records as soon as the limiting factor is demand, not production. Once production ramps to meet demand, I would be surprised if it is not the best-selling sedan in the United States.

An alternative way to model future revenue and market cap is through the autonomous ride-hailing business. Suppose Tesla produces just 5 million cars with self-driving hardware over the seven years from 2018 to 2025, an average production of 714,000 cars per year. Suppose that each self-driving vehicle replaces five conventional vehicles. Given 1-2 billion passenger vehicles on the road globally (estimates vary widely), that means there is a need for a 200 million to 400 million self-driving vehicles. 5 million cars would be only a 1.25% to 2.5% share of the eventual install base.

Source: ARK Invest.

I’m assuming that each self-driving car will replace the driving of five people, putting average annual paid miles per vehicle at 82,750. Using ARK Invest’s estimated price of 35 cents per mile, that’s about $29,000 in revenue per vehicle per year. Assuming the same net margin on this revenue as the taxi and limousine industry’s 31%, that’s about $9,000 in net profit per car per year. Across 5 million cars, that comes to about $45 billion in annual net profit. The historical price/earnings ratio of the S&P 500 is 15.7. At this ratio, $45 billion in earnings would yield a market cap of $706 billion. That’s over 10x growth from Tesla’s all-time high.


The main obstacle to the Model 3 achieving a high sales volume is achieving a high production volume. Product risk is low and execution risk is moderate or high. In my view, Tesla is unlikely to run out of cash due to its large cash balance ($3.5 billion as of the end of Q3), improving cash flow from Model 3 production, and its proven historical ability to raise funds in a second offering when needed.

Motor Trend calls the Model 3 “the most important vehicle of the century.” Many observers fail to see what is new about the Model 3. It’s not just another electric car like the Chevy Bolt. It’s not just another entry-level luxury car like the BMW 330i. It’s a breakthrough in price-performance that will generate unprecedented consumer interest, and that breakthrough will be hard for competitors to replicate.

Disclosure: I am/we are long TSLA.

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.

Private cloud storage 101: Key components and hardware options

Private cloud is an infrastructure deployment methodology that looks to deliver services typically seen in public cloud to internal IT customers. These features echo public cloud’s attributes of on-demand delivery and service-based charging.

Private cloud storage evolves the process of deploying storage resources into the datacentre in a way that enables users to consume resources on demand.

In this article, we discuss what features to expect from private cloud storage and the existing products offered by suppliers.

Cloud definition

As already mentioned, private cloud storage echoes the offerings we see in the public cloud. The classic definition of cloud was set by the National Institute of Standards and Technology (NIST) many years ago, and we can use this definition as a framework for private cloud storage.

Self-service: Users (in this case, the business) should be able to request storage resources and have them provisioned with as little impact as possible. A self-service storage architecture needs automation in the form of application program interfaces (APIs) and command line interfaces (CLIs), which is integrated into the application provisioning process.

Elasticity: Users shouldn’t be concerned with scaling storage resources up or down. In effect, private cloud storage should appear infinite and be available on demand. In the public world, this requirement is pretty clear, because public cloud service providers (CSPs) continue to see continuous growth in volume of new customers (for now at least). In private cloud, budget constraints and business growth means IT has to put much more effort into being efficient with storage resources, while providing the illusion of elasticity.

Resource pooling: Rather than islands of storage, deployments should be pooling resources and getting the benefits of economies of scale. This represents a challenge to implement, because hardware isolation offers better security and performance management. As a result, features like quality of service (QoS) and multi-tenancy become important to deliver private cloud storage.

Billing: Typically this is seen within public cloud as delivering a measured service, or charging for usage. Charging for usage can be an issue for many IT organisations that have evolved to implement IT resources using project-based deployments.

Performance: Although not strictly a NIST definition, in private cloud performance is more significant than for public cloud. Applications in private deployments tend to be monolithic and latency sensitive, which makes input/output (I/O) performance all the more important.

Service-levels: For service-based deployments, we need to have service levels, if not service level agreements in place. Service levels form the basis of a service catalogue – a list of offerings and their descriptions.

Private cloud transformation

Moving to a cloud-based deployment for storage has many advantages.

Users can be abstracted away from needing specific hardware, allowing IT to optimise the products they buy. IT can choose the most efficient refresh-and-replace cycles, choosing whether to replace hardware or extend maintenance. This is done without impacting the end user financial model as charging is typically done on a consumption per-month basis.

The on-demand nature of private cloud means businesses can be more agile, because the “human factor” can be removed from deploying storage for new and existing applications. This is where API-based management becomes critical.

But, moving to a private cloud model is not without its challenges. Business process for application deployment may be based around projects and not structured to handle ongoing payment for resource usage. This may mean significant changes to the process of budgeting for IT within the business.

Building a cost model for IT also changes. Where previously the business may have been charged simply for the cost of infrastructure, now a more complex model needs to be developed that considers all the costs (capex and opex) and translates that into a recurring (opex) monthly charge. If the business doesn’t need as much storage from one month to another, how will this shortfall be made up? This is an issue for many IT organisations and one that is a significant factor in not adopting a private cloud model.

Private cloud building blocks

In putting together a strategy for private cloud storage, here are the main considerations.

Service catalogue: A service catalogue puts in place generic definitions of the requirements of the user, without being hardware-focused. The catalogue references service levels, like tiering, performance and availability, without discussing specific products.

Multi-tenancy: Storage will be shared to get economies of scale. Multi-tenancy features mitigate risks like “noisy neighbour” and to segregate applications from a security perspective.

QoS: Quality of service is important to ensure users get the resources they pay for. The ability to dynamically change QoS settings is a real benefit for private cloud and a differentiator over public cloud, where customers are generally expected to repurpose or reprovision their application to increase I/O performance.

APIs: This has already been stated, but needs to be re-emphasised to highlight the quality and specific implementation of APIs or CLIs. Some storage suppliers have added APIs as an afterthought, making it difficult to manage storage from multiple interfaces (for example, GUI, CLI and API together). APIs should be native and inherent to the platform.

Analytics and monitoring: Inevitably, performance and configuration problems can occur. Most IT organisations will have tools already in place, but these may need revisiting with a private cloud perspective. This can mean building out better reporting/billing, establishing thresholds with automated responses and a long-term capacity planning strategy.

Process: The term “process” seems very generic, but there are a lot of traditional tasks which would impact storage that are not seen in the public cloud. This includes, for example, maintenance and downtime for patching and upgrades and hardware replacement. Ensuring 100% uptime with minimal or no maintenance means implementing processes for live workload migration, including working with server and virtualisation teams to build joined-up solutions.

Private cloud products

HCI: Hyper-converged infrastructure integrates the functions of storage into the virtualisation platform, providing one scale-out deployment model for compute and storage. Typically, the HCI storage component is highly integrated, with little or no work needed by a storage administrator to manage the solution.

VMware provides HCI in the form of Virtual SAN, which can be enabled through a software licence on each vSphere host. The customer is responsible for managing the hardware itself and any associated internal server storage. Dell EMC solutions use Virtual SAN to build HCI appliances that come in a range of configurations.

HPE offers HCI in the form of SimpliVity appliances. Storage is integrated tightly into the architecture, with dedicated hardware that implements performance and storage capacity optimisation features. HPE also offers solutions build around the Synergy architecture.

Nutanix offers HCI solutions that implement a scale-out storage layer across a multi-node configuration. Storage offerings include block-based devices integrated into the hypervisor, external block-based storage and file services.

NetApp recently introduced an HCI range of products, based on the SolidFire storage technology. Solutions scale both storage and compute independently, which fits an architecture between HCI and converged offerings. The SolidFire platform offers native features like QoS and API-based management.

Converged: These are solutions that integrate storage into a hardware “stack”. Typically, converged offerings provide good automation features, but are weaker on scale-out, due to the pre-configured nature of converged infrastructure products.

Hitachi Vantara offers a range of converged solutions based UCP and Hitachi Storage. These products are strong in their software components for private cloud, including Hitachi Cloud Automation Suite and Automation Director. Hitachi also offers hyper-converged solutions based on VMware Virtual SAN.


Storage appliances provide another way to implement private cloud storage. Examples of suppliers in this area include:

Tintri, which offers a range of appliances designed to work with virtual machines. Features such as QoS, replication and data protection are implemented at the VM level. Tintri management solutions provide automation via API and CLI, as well as federation, making it easy to balance resources across multiple appliances.

HPE 3PAR has many features that implement private cloud, including QoS, API management and storage capacity optimised features. HPE has extended the ease of management for 3PAR to the storage fabric, with simple device discovery and provisioning for Fibre Channel storage networking.

Pure Storage offers FlashArray appliances with native automation via APIs and CLI. Maintenance and management of multiple arrays can be achieved with 100% availability using ActiveCluster. Financially, Pure offers customers the ability to upgrade systems without the cost and disruption of traditional “forklift upgrades”.


Finally there are software-defined offerings entering the market that provide features of scale-out and automation. SDS suppliers like Portworx, Hedvig, StorMagic and Starwind offer storage that can be deployed on-demand and in an automated fashion to build scale-out solutions.

We’ve only presented a snapshot of the storage solutions on the market today. Most suppliers are adding cloud-based functionality to their platforms as they recognise the benefits of enabling customers to implement a much more service-based consumption model.

Spotify IPO: What You Need to Know About This Unusual Event

The initial public offering of Spotify, the music-streaming service, is almost here.

What is expected to be the largest tech IPO of 2018—it’s certainly the most anticipated—will likely take place in late March or April.

Spotify plans to list on the New York Stock Exchange—but there’s a catch. Instead of a traditional IPO that makes shares available to the general public, Stockholm-based Spotify will opt to directly list on the exchange, making its shares available only to institutional investors and eliminating the need for underwriters, a.k.a. the banks that set an initial price, connect sellers and buyers, and provide the cash necessary to stabilize the stock. Some people have already called it a “non-IPO.”

The move could shake up Wall Street. IPOs are usually a lucrative business for investment banks, but in the last few years revenues from equity capital market (ECM) fees have dropped.

Spotify paid just $30 million in ECM fees to three banks: Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. Those institutions will perform some of the traditional tasks expected of them, but in a less prominent way.

Why the novel strategy? Spotify can buck tradition because, though it’s not yet turning a profit, it is earning cash, and it is not planning on raising more revenue from investors. Spotify, as measured by either its subscription service or its ad-supported free version, is the most popular music streaming service, according to the New York Times.

Commentators say it’s a good time for Spotify to go public. The company has 60 million paying subscribers, just renegotiated long-term licensing deals with three major record labels, and is valued at about $15 billion. (It is, however, facing a copyright suit from Wixen Music Publishing, filed in late December 2017.)

The Wall Street Journal says that due to other companies’ need for cash, “it is far from guaranteed” that more will follow Spotify’s lead. However, according to Bloomberg, Spotify “could create a new model for growth companies in which they raise all their money in private markets and do all their trading in public ones, with some small variations.”

Whatever the case, Wall Street will be watching.

End of a chip boom? Memory chip price drop spooks investors

SEOUL (Reuters) – After a blistering year-and-a-half long surge, a sudden drop in some memory prices, followed by Samsung Electronics Co’s disappointing profit estimate, is causing jitters among investors who had bet the chip boom would last at least another year.

Amid news that the market has started losing some steam – prices of high-end flash memory chips, which are widely used in smartphones, dropped nearly 5 percent in the fourth quarter – some analysts now expect the industry’s growth rate will fall by more than half this year to 30 percent.

That led shares in Samsung to dip 7.5 percent last week, while its home rival SK Hynix fell 6.2 percent. But analysts say that there is unlikely to be a sudden crash, and that 2018 should be a relatively stable year for chipmakers.

The $122 billion memory chip industry has enjoyed an unprecedented boom since mid-2016, expanding nearly 70 percent in 2017 alone thanks to robust growth of smartphones and cloud services that require more powerful chips that can store more data.

Supply also has become more disciplined following years of consolidation that reduced the number of manufacturers to a handful from around 20 in mid-1990s.

“Memory chips will likely see a gradual price decline in 2018 if demand remains strong and appetite from servers holds,” said Lee Jae-yun, analyst at Yuanta Securities Korea.

But growth of 30 percent is a strong gain in an industry known for volatility, and the market is still on course for its longest ever boom after shrinking 6 percent in 2016.

Last year’s explosive growth gave chipmakers cash to reinvest and boost output, analysts said. The supply of NAND flash memory chips, in particular, will grow 43 percent this year, up from last year’s 34 percent, causing prices to drop by about 10 percent, brokerage Nomura estimates.

Nomura expects growth in output will be largely led by the likes of Western Digital, Toshiba Corp and Micron Technology Inc as they seek to catch up with top-ranked Samsung, which controls about 40 percent of the flash memory chip market.


Smartphone vendors have been including more memory in their phones and charging more for them, allowing them to weather last year’s price surge, analysts say.

Average DRAM memory of new models launched last quarter increased by 38 percent from the second quarter of 2016, while NAND content measured by gigabyte jumped 84 percent, according to an analysis by BNP Paribas.

Such solid demand will keep the industry’s margin healthy this year, and chipmakers’ investment in more advanced technology will help them cut production costs and stay profitable even as prices ease, analysts say.

Macquarie estimates Samsung’s chip division’s operating profit margin jumped to 47 percent last year from 26.5 percent in 2016, and will rise further to 55.5 percent this year.

While the NAND flash market may soften somewhat, the DRAM memory chip market, which is about $20 billion bigger than the NAND industry, is seen as much tighter. Prices are expected to gain nearly 9 percent because of a severe supply shortage.

With DRAM manufacturers’ rushing to ramp up production – they are likely to nearly quadruple capital spending for 2017 and 2018 combined to $38 billion from 2016’s $10 billion – prices may decline as much as 18 percent next year, according to Nomura.

That gives some investors confidence in the industry’s long-term future.

”Besides some minute adjustment, I am currently holding Samsung shares almost without change,” said Kim Hyun-su, fund manager at IBK Asset Management. “I don’t think the share price is expensive as they have recently been increasing dividends a lot – and as of now, the expected profit levels are very high.”


Smartphone makers account for about one-third of global memory chip demand, and many have been pressing suppliers to lower prices.

In late December, state-run China Daily reported China’s National Development and Reform Commission (NDRC) was paying close attention to a surge in the price of mobile phone storage chips and could look into possible price fixing by Samsung and others that make them.

More than 50 percent of Samsung’s 2017 memory business revenue came from China, according to chip price tracker DRAMeXchange.

“Although supply-demand dynamics are still solid, clients’ pressure to lower prices make it hard to predict” what will happen, said MS Hwang, an analyst at Samsung Securities, which is an affiliate of Samsung Electronics.

Reporting by Joyce Lee; Editing by Miyoung Kim and Gerry Doyle

How To Overcome The Most Common App Pitfalls

Have you considered starting a mobile app? Or does your company already have one in progress? There are thousands of successful mobile apps on the market, but tens of thousands of failed starts to balance them out. Building a mobile app isn’t a get-rich-quick-scheme; instead, it’s a trial by fire that only a small percentage of candidates survive.

Survival and Failure

Of all paid apps, about 90 percent are downloaded less than 500 times per day, earning less than $1,250 per day. Considering the high upkeep costs of applications, that can hardly be considered a success.

In the words of Shmuel Aber, “with over a million apps on the market, consumers have lots of choices, and they won’t download or pay for your app unless you’re truly exceptional. There are a lot of moving parts to the average consumer’s decision, so you need an in-depth understanding of the market if you want to survive.”

So what are the main reasons most mobile apps fail?

Main Reasons

These are some of the most influential factors driving mobile app death:

1. Improper audience targeting. According to Andrew Daniels, “Apps will often fail because they’re not meeting the needs of the target audience or because they’ve not researched simple things like the most used devices of the target audience. If your customers are predominantly Android users and your app is only on iOS or vice versa, you have an immediate problem. We also sometimes have businesses come to us with an idea for an application concept, but no real data suggesting whether the market needs or wants it or whether anything like it is already available.” You need to define your target audience, and be sure they’re going to use and enjoy your app. Research is your greatest asset here.

2. Poor user interfaces. According to Britt Armour, “There are a lot of components involved in building an app that offers a great user experience, but at the basest level, your app needs to be intuitive. If a user struggles to perform basic functions on your app and can’t figure out core functionalities easily, the result is very poor usability.” Your app design should make the app so approachable, even a novice could figure it out.

3. High levels of competition. The app market is saturated, so even if you have an original idea, you’ll likely face significant competition from at least two or three other companies. If you’re caught unprepared by a dominant competitor, you might not be able to survive. You can gain an advantage by reducing your prices, offering better functionality, or avoiding competition entirely by focusing on a different niche.

4. A lack of a marketing strategy. In the words of Juned Ahmed, “These days, by building a great app you have just done half the work. Until you market the app and make it discoverable to the audience, the whole effort will not get its due. Many mobile apps do not make enough to sustain as a business principally because of a poor or half-hearted marketing strategy. Just writing a great App Store description is not enough.” Make sure you work with a professional and diversify your tactics.

5. No brand consistency. Without a consistent brand, you’ll struggle to increase your customer retention. You’ll need to start with solid brand guidelines outlining the character, image, and voice of your company, and make sure those standards are enforced on all platforms.

6. Lackluster support and follow-up. If a user has an issue with the app, who are they going to turn to? If you don’t offer solid customer service, or follow up with your customers to make sure they’re having a good experience, your app could fail. Fortunately, this is one problem that doesn’t take much investment to solve; just listen to your customers and give them what they’re asking for.

7. A poor monetization strategy. There are many ways to monetize an app, whether it’s through a paid download, paid extra content, or displayed ads. If you choose the wrong strategy, or implement it inefficiently, you might cut your revenue stream in half. Look to your competitors, and don’t be too greedy with your profits initially, or you could scare away potential customers.

8. No plan to scale. In the words of Artem Petrov, “Mobile app development failures aren’t something the top players on the market have no idea about. The successful developers gather data, make well-informed decisions and adapt their apps, while others just wait for downloads… and fail.” If you want to be successful long-term, you need some plan to improve your app over time, and grow your user base. If you stand still for too long, a competitor will easily be able to improve upon what you’ve built, and poach your users away from you. Keep your app updated, and aim to keep expanding.

It’s certainly possible to make a mobile app successful, even in a market as diverse and competitive as this one. But if you’re going to survive, you first need to learn from the failures of the untold thousands of apps that came before you. Do your research, plan everything you can, and tread carefully, especially in your first few months of operation.

How the Government Hides Secret Surveillance Programs

In 2013, 18-year-old Tadrae McKenzie robbed a marijuana dealer for $130 worth of pot at a local Taco Bell in Tallahassee, Florida. He and two friends had used BB guns to carry out the crime, which under Florida law constituted robbery with a deadly weapon. McKenzie braced himself to serve the minimum four years in prison.

But in the end, a state judge offered McKenzie a startlingly lenient plea deal: He was ordered to serve only six months’ probation, after pleading guilty to a second-degree misdemeanor. The remarkable deal was related to evidence McKenzie’s defense team uncovered before the trial: Law enforcement had used a secret surveillance tool often called Stingray to investigate his case.

Stingrays are devices that behave like fake cellphone towers, tricking phones into believing they’re pinging genuine towers nearby. By using the device, cops can determine a suspect’s precise location, outgoing and incoming calls, and even listen-in on a call or see the content of a text message.

McKenzie’s lawyers suspected cops had used a Stingray because they knew exactly where his house was, and knew he left his home at 6 a.m. the day he was arrested. The cops had obtained a court order from a judge to authorize Verizon to hand over data about the location of Mckenzie’s phone. But cell tower data isn’t precise enough to place a device at a specific house.

The cops also said they used a database that lets law enforcement agencies locate individuals by linking them with their phone numbers. But the phone McKenzie was using was a burner, and not associated with his name. Law enforcement couldn’t adequately explain their extraordinary knowledge of his whereabouts.

The state judge in the case ordered police to show the Stingray and its data to McKenzie’s attorneys. They refused, because of a non-disclosure agreement with the FBI. The state then offered McKenzie, as well as the two other defendants, plea deals designed to make the case go away.

The cops in McKenzie’s case had ultimately failed to successfully carry out a troubling technique called “parallel construction.”

First described in government documents obtained by Reuters in 2013, parallel construction is when law enforcement originally obtains evidence through a secret surveillance program, then tries to seek it out again, via normal procedure. In essence, law enforcement creates a parallel, alternative story for how it found information. That way, it can hide surveillance techniques from public scrutiny and would-be criminals.

A new report released by Human Rights Watch Tuesday, based in part on 95 relevant cases, indicates that law enforcement is using parallel construction regularly, though it’s impossible to calculate exactly how often. It’s extremely difficult for defendants to discern when evidence has been obtained via the practice, according to the report.

“When attorneys try to find out if there’s some kind of undisclosed method that’s been used, the prosecution will basically stonewall and try not to provide a definitive yes or no answer,” says Sarah St. Vincent, the author of the report and a national security and surveillance researcher at Human Rights Watch.

In investigation reports, law enforcement will describe evidence obtained via secret surveillance programs in inscrutable terms. “We’ve seen plenty of examples where the police officers in those reports write ‘we located the suspect based on information from a confidential source;’ they use intentionally vague language,” says Nathan Freed Wessler, a staff attorney at the ACLU’s Speech, Privacy, and Technology project. “It sounds like a human informant or something else, not like a sophisticated surveillance device.”

Sometimes, when a savvy defense attorney pushes, an unbelievable plea deal is offered, or the the case is dropped entirely. If a powerful, secret surveillance program is at stake, a single case is often deemed unimportant to the government.

“Parallel construction means you never know that a case could actually be the result of some constitutionally problematic practice,” says St. Vincent. For example, the constitutionality of using a Stingray device without a warrant is still up for debate, according to the Human Rights Watch report. Some courts have ruled that the devices do violate the Fourth Amendment.

Hemisphere, a massive telephone-call gathering operation revealed by The New York Times in 2013, is one of the most well-documented surveillance programs that government officials attempt to hide when they use parallel construction. The largely secret program provides police with access to a vast database containing call records going back to 1987. Billions of calls are added daily.

In order to create the program, the government forged a lucrative partnership with AT&T, which owns three-quarters of the US’s landline switches and much of its wireless infrastructure. Even if you change your number, Hemisphere’s sophisticated algorithms can connect you to your new line by examining calling patterns. The program also allows law enforcement to have temporary access to the location where you placed or received a call.

The Justice Department billed Hemisphere as a counter-narcotics tool, but the program has been used for everything from Medicaid fraud to murder investigations, according to documentation obtained in 2016 by The Daily Beast.

“What Hemisphere’s capabilities allow it to do is to identify relationships and associations, and to build people’s social webs,” says Aaron Mackey, staff attorney at the Electronic Frontier Foundation (EFF). “It’s highly likely that innocent people who are doing completely innocent things are getting swept up into this database.”

The EFF filed Freedom of Information Act and Public Records Act requests in 2014 seeking info about Hemisphere, but the government only provided heavily redacted files. So the EFF filed a lawsuit in 2015. It’s currently waiting for a California judge to decide whether more information can be made public without impeding law enforcement’s work.

“[The government] is obscuring what we believe to be warrantless or otherwise unconstitutional surveillance techniques, and they’re also jeopardizing a defendant’s ability to obtain all the evidence that’s relevant,” says Mackey.

Parallel construction can also involve a simple event like a traffic stop. In these instances, local law enforcement follows a suspect and then pulls them over for a mundane reason, like failing to use a turn signal. While the stop is meant to look random, cops are often working on a tip they received from a federal agency like the DEA.

“Sometimes when tips come through, the federal authorities don’t even tell the local authorities what they’re looking for,” says St. Vincent. The tip could be as simple as to watch out for a car at a specific place and time.

These stops are referred to as “wall off” or “whisper” stops, according to the Human Rights Watch report. In these instances, local law enforcement has to find probable cause for pulling the suspect over to avoid disclosing the tip. The tip is then never mentioned in court, and instead the beginning of the investigation is said to be the “random” stop.

The Human Rights Watch report concludes that Congress should pass legislation forbidding the use of parallel construction because it impedes on the right to a fair trial. Some representatives, like Republican Senator Rand Paul, have also called for banning the practice.

Opponents of parallel construction believe it should be outlawed because it prevents judges from doing their jobs. “It really gives a lot of power to the executive branch,” says St. Vincent. “It cuts judges out of the role of deciding whether something was legally obtained.”

One of the most concerning aspects of the practice is it shields government surveillance technology from public scrutiny. Stingrays, the cellphone-tracking device used in the Florida robbery case, have existed for years, but they’ve only recently been disclosed to the public. Lawyers and legal scholars haven’t yet conclusively decided whether their use without a warrant violates the Fourth Amendment, in part because so little is known about them. That means many people may have been convicted using techniques that violated their rights.

In the future, if the government hides new surveillance technology like facial recognition, the public will be unable to discern if it’s biased or faulty. Unless judges and citizens understand how surveillance techniques are used, we also can’t evaluate their constitutionality.

The public needs to determine if hiding surveillance programs is something it’s comfortable with at all. On one hand, keeping certain techniques secret likely helps authorities apprehend criminals. But if we don’t know how at least the basic contours of how a program works, it’s hard to have any discussion at all.

Lack of cloud skills and training begin to take a toll

According to a recent report by cloud and datcenter vendor Rackspace, “Nearly three quarters of IT decision-makers (71 percent) believe their organizations have lost revenue due to a lack of cloud expertise. On average, this accounts for 5 percent of total global revenue, or $258,188,279 per organization.”

That’s a pretty good hunk of cheddar! This is a real issue and it’s starting to get noticed by enterprises leadership, and even by the stockholders.

Truth be told, these sorts of opportunity costs are rarely considered. Think of the cost of using subpar data analytics, substandard networks, even bad automation itself.  There is always a difference between what enterprises do and what they should do to maximize revenue. Or, more to this case, what they can’t do because their staff lacks the skills.

While my personal experiences are not exact metrics, I’ve been getting about four requests per week from enterprises that want a training plan, skilled people, or me.  This was a once-a-month occurrence just two years ago.

Nobody in these organizations saw this kind of demand coming, and when lost-revenue numbers are put next to not being able to fill this demand, the enterprises begin to react. Although some enterprises were proactive with cloud computing skills acquisition, most have beenreactive and now in a panic, with 25 to 50 open positions chasing one qualified candidate.

There’s not much you can do about the shortage, or its impact to the bottom line.  Years ago, I was one of many voices that urged Global 2000 companies to begin training and hiring for cloud computing. On the other hand, having consulted with that Global 2000, I do understand the many priorities that businesses have to consider and why preparing for emerging trends tends to get deferred for later.

But my advice today is the same as it was years ago: Get a training plan in place ASAP to coach the current IT staffers on cloud computing technology, from specific technology to general configuration and architectural concepts. Hire when an opportunity presents itself, but don’t lower standards just to put butts in seats and fill positions.

Google Spent Years Studying Effective Teams. This Single Quality Contributed Most to Their Success

The best companies are made up of great teams. You see, even a company full of A-players won’t succeed if those individuals don’t have the ability to work well together.

That’s why not too long ago, Google set out on a quest to figure out what makes a team successful. They code-named the study “Project Aristotle,” a tribute to the philosopher’s famous quote, “the whole is greater than the sum of its parts.”

To define “effectiveness,” the team decided on assessment criteria that measured both qualitative and quantitative data. To do this, they analyzed dozens of teams and interviewed hundreds of executives, team leads and team members.  

The researchers then evaluated team effectiveness in four different ways:

1. Executive evaluation of the team

2. Team leader evaluation of the team

3. Team member evaluation of the team

4. Sales performance against quarterly quota

So, what did they find?

Google published some of its findings here, along with the following insightful statement:

The researchers found that what really mattered was less about who is on the team, and more about how the team worked together. 

What Mattered Most

So what was the most important factor contributing to a team’s effectiveness?

It was psychological safety.

Simply put, psychological safety refers to an individual’s perception of taking a risk, and the response his or her teammates will have to taking that risk.

Google describes it this way:

“In a team with high psychological safety, teammates feel safe to take risks around their team members. They feel confident that no one on the team will embarrass or punish anyone else for admitting a mistake, asking a question, or offering a new idea.”

In other words, great teams thrive on trust.

This may appear to be a simple concept, but building trust between team members is no easy task. For example, a team of just five persons brings along varying viewpoints, working styles and ideas about how to get a job done.

In my forthcoming book, EQ, Applied: The Real-World Guide to Emotional IntelligenceI analyze fascinating research and real stories of some of the most successful teams in the world. 

Here’s a glimpse at some of the actions that can help you build trust on your teams:

Be authentic.

Authenticity creates trust. We’re drawn to those who “keep it real,” who realize that they aren’t perfect, but are willing to show those imperfections because they know everyone else has them, too.

Authenticity doesn’t mean sharing everything about yourself, to everyone, all of the time. It does mean saying what you mean, meaning what you say, and sticking to your values and principles above all else.

Set the example.

Words can only build trust if they are backed up by actions.

That’s why it’s so important to practice what you preach and set the example: you can preach respect and integrity all you want; it won’t mean a thing when you curse out a member of your team.

Be helpful.

One of the quickest ways to gain someone’s trust is to help them.

Think about your favorite boss. Where they graduated from, what kind of degree they have, even their previous accomplishments–none of this is relevant to your relationship. But how about the time they were willing to take out of their busy schedule to listen, help out, or get down in the trenches and work alongside you?

Trust is about the long game. Help wherever and whenever you can.

Disagree and commit.

As Amazon CEO Jeff Bezos explains, to “disagree and commit” doesn’t mean ‘thinking your team is wrong and missing the point,’ which will prevent you from offering true support. Rather, it’s a genuine, sincere commitment to go the team’s way, even if you disagree.

Of course, before you reach that stage, you should be able to explain your position, and the team should reasonably weigh your concerns.

But if you decide to disagree and commit, you’re all in. No sabotaging the project–directly or indirectly. By trusting your team’s gut, your people gain confidence, and you give them room to experiment and grow.

Be humble.

Being humble doesn’t mean that you lack self-confidence, or that you never stand up for your own opinions or principles. It does mean recognizing that you don’t know everything–and that you’re willing to learn from others.

It also means being willing to say those two most difficult words when needed: I’m sorry.

Be transparent.

There’s nothing worse than the feeling that leaders don’t care about keeping you in the loop, or even worse, that they’re keeping secrets.

Make sure your vision, intentions, and methods are clear to everyone on your team–and that they have access to the information they need to do their best work.

Commend sincerely and specifically.

When you commend and praise others, you satisfy a basic human need. As your colleagues notice that you appreciate their efforts, they’re naturally motivated to do more. The more specific, the better: Tell them what you appreciate, and why.

And remember, everyone deserves commendation for something. By learning to identify, recognize, and praise those talents, you bring out the best in them.

Two Major Shareholders Push Apple to Study Harmful Effects of Smartphone Addiction in Children

Two big shareholders of Apple (aapl) are concerned that the entrancing qualities of the iPhone have fostered a public health crisis that could hurt children—and the company as well.

In a letter to the smartphone maker dated Jan. 6, activist investor Jana Partners LLC and the California State Teachers’ Retirement System urged Apple to create ways for parents to restrict children’s access to their mobile phones. They also want the company to study the effects of heavy usage on mental health.

“There is a growing body of evidence that, for at least some of the most frequent young users, this may be having unintentional negative consequences,” according to the letter from the investors, who combined own about $2 billion in Apple shares. The “growing societal unease” is “at some point is likely to impact even Apple.”

“Addressing this issue now will enhance long-term value for all shareholders,” the letter said.

An Apple spokesman declined to comment on the letter, which was reported earlier by the Wall Street Journal.

Parental Controls

It’s problem most companies would kill to have: Young people liking a product too much. But as smartphones become ubiquitous, government leaders and Silicon Valley alike have wrestled for ways to limit their inherent intrusiveness.

France, for instance, has moved to ban the use of smartphones in its primary and middle schools. Meanwhile, Android co-founder Andy Rubin is seeking to apply artificial intelligence to phones so that they perform relatively routine tasks without needing to be physically handled.

Apple already offers some parental controls, such as the Ask to Buy feature, which requires parental approval to buy goods and services. Restrictions can also be placed on access to some apps, content and data usage.

The activist pressure is the latest in a series of challenges for the tech giant. Last week, Cupertino, California-based Apple said that all of its Mac computers and iOS devices, which include both the iPhones and iPads, faced security vulnerabilities due to flawed chips made by Intel (intc). At the tail end of 2017, the company apologized to customers for software changes that resulted in older versions of its iPhones running slower than newly introduced editions.

GoPro Lays off Hundreds of Workers In Its Karma Drone Unit

GoPro’s new year has begun with a round of layoffs, primarily affecting the company’s Karma drone business unit.

Around 200 to 300 workers were laid off this week, according to a report Thursday by tech news site TechCrunch that cites unnamed sources. The report highlights an internal letter to laid off workers that said the cuts were intended to “to better align our resources with business requirements.”

The layoffs highlight GoPro’s ongoing struggle to turn itself around after a turbulent past few years in which its stock has plummeted 91% from a high of $93.70 in Aug 2014 to $7.52 on Friday.

The company has attempted to expand beyond its core video camera business by creating a media and entertainment unit and making drones. But those efforts have failed to catch on, and the company has implemented multiple rounds of layoffs and shuttered its media business.

Investors were particularly hopeful that GoPro’s Karma drone would help lift sales, but the push encountered trouble from the get-go. Shortly after debuting the drone in the fall of 2016, it recalled thousands of them because of a glitch that caused them to abruptly turn off and fall from the sky.

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Even after fixing the technical error, GoPro’s (gpro) drone never appeared to be a big seller. Although CEO Nick Woodman would say he was optimistic about the drone business, he avoided saying when he thought drone sales would eventually lift the company’s overall sales.

GoPro never released sales numbers for its drone, but the numbers are likely to be small compared to Chinese rival DJI, which analysts currently say dominates the drone market.

Fortune contacted GoPro for more information and will update this story if it responds.

Blockchain Takes a Shot at Redefining the Sports Betting Experience

In 2018, hundreds of sports betting sites and apps allow bettors to gamble discretely from just about anywhere through their smartphones. This convenience has attracted more users to participate in the action.

Traditional payment services like banks and digital wallets have been wary of supporting online gambling, leaving room for specialized payments gateways to facilitate bankroll funding and payouts. There’s also no shortage of handicapper sites and services that offer paid analyses to less savvy gamblers.

Unfortunately, the involvement of these parties brings enhanced risk of fraud and failure. Gambling payment gateways are constantly under threat from cyber-criminals. Handicappers also don’t quite produce the wins that they promise to bettors. As such, there are opportunities for blockchain – a technology that promotes shared trust – to address these issues.

Several blockchain efforts have set their sights on bettors’ needs. For example, emerging digital currency Electroneum envisions its token to be used by online gambling services. BlitzPredict provides bettors trustworthy insights through its aggregation service. Platforms like HEROcoin even aim to decentralize sports betting.

Success of these efforts could all help create better betting experiences. Here are three ways how these blockchain services can accomplish that goal.

1 – Easier Funding and Payouts

Payments using blockchain can be completed quicker compared to traditional means. Tokens do not have to be routed through different financial institutions and clearing houses. Winnings can either be readily credited to the user’s bankroll or to a token wallet. Since tokens are now fungible assets, bettors also have the option to transfer tokens to exchanges and trade them for other crypto or fiat currencies.

However, crypto tokens aren’t without their quirks. For instance, it can be hard to tell how much a bet made in Bitcoin is actually worth in fiat currency. For ordinary people, it’s easier to discern the value of “$50” compared to “0.003 BTC.” Interestingly, Electroneum addresses this by limiting its token to two decimal places just like fiat currencies. This way, users could have an easier time estimating or converting mentally making use of crypto tokens for gambling more bettor friendly.

2 – Trustworthy Insights

Blockchain startup BlitzPredict aims to provide insights by aggregating sportsbooks and prediction markets much like a stock market ticker. This helps bettors determine which sportsbook provides them with the best possible outcomes for a given bet. The platform also enables bettors to use blockchain smart contracts to automatically place bets when certain conditions are met.

Alternatively, bettors can subscribe to handicapper services that could supposedly point them to better odds. However, the credibility of many of these so-called sports “experts” have been called to question. Many offer tips and promise sure wins for a fee even if they don’t have the credentials to back their “expertise” or the data to support their picks.

In order to promote quality insights, BlitzPredict also allows analytics enthusiasts to share their prediction models to other users. High-performing models are rewarded with the platform’s own token which could then be used to place bets using the platform. Such a rewards mechanism encourages bettors to make data-driven decisions rather than settle for hunches or bad advice.

3 – Transparent Betting

Sportsbooks are often set up so that the house always wins. Even the reputable ones will have to make money by taking a cut from transactions. Without aggregation and advanced analytics, bettors are not only likely to lose in the long term, but they may also have to absorb the cost of these cuts and fees for all the transactions they conduct.

Platforms such as HEROcoin challenge this system by offering decentralized peer-to-peer betting. Through smart contracts, bettors are free to define the conditions of wagers. Blockchain’s transparency lets users trace the flow of money and the terms.

Fair Wagers

Sports betting is still a growing market and the expansion of betting to other segments such as esports is bringing in new participants. In esports alone, studies predict that more than $23 billion will be wagered by 2020. New services should strive to create easier and more positive experiences for the benefit of these new bettors joining the scene.

Fortunately, blockchain startups are already bringing transparency and trust into such activities. The use of crypto tokens could help address the lengthy and costly funding and payout processes. Better analytics and aggregation could also aid discerning bettors in making effective picks. Smart contracts can provide secure mechanisms for parties to enter and execute wagers.

This 5-Star Hotel Just Ruined Its Online Reputation By Getting the Police to Help Kick Out a Guest (He's Famous)

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

You’d think that five-star hotels would be used to catering to the famous.

You’d even think that they research their guests beforehand to make sure they can surprise them with personal touches.

But then there were the peculiarly personal touches offered by the Boca Raton Resort, a Waldorf Collection Hotel to one of its New Year guests.

Vitaly Zdorovetskiy is a very well-known YouTube star. He makes prank videos. People like them.

However, once the Boca Raton Resort discovered who he is, it decided it didn’t like him after all.

All we currently have is Zdorovetskiy’s explanation. 

Well, that and the video, in which hotel personnel arrive with two police officers to have him removed on New Year’s Eve. 

It seems, though, unclear what he’d done wrong, other than be who he is. 

He says he wasn’t going to film anything in the hotel. Indeed, he had his girlfriend with him, rather than his equipment.

Still, watch and listen to his story and see what you think. (Warning: His language isn’t pristine.)

It seems that it all started with a phone call from the hotel to his room, which Zdorovetskiy didn’t want to take.

But can it be that the next step was for management knock on his door to check whether he intends to make prank videos in the hotel?

Now YouTube stars aren’t like you and me. Zdorovetskiy’s own admission is that he may have told the manager to go away in a rather rude-imentary manner because he wanted to sleep.

Within the hour, though, he says a manager broke into his room with a couple of police officers to have him removed.

He claims they ordered him and his girlfriend, who was naked at the time, to get dressed in front of them.

A man who appears to be a manager accuses him of posting a prank video the day before — but not one at the hotel.

The manager seems, indeed, to have no idea what the video was. 

Still, some might wonder whether the hotel thought through its strategy as thoroughly as it might have done. 

Naturally, being a YouTube star, Zdorovetskiy encouraged his 9 million followers to post poor reviews of the hotel. 

He encouraged them to go to Expedia, Hotels.com and Priceline. These weren’t affected.

He also encouraged them to go on Yelp.

At the time or writing, the Boca Raton Resort has sunk to a one-and-a-half star rating on Yelp.

Perhaps Yelp doesn’t matter — it certainly doesn’t to me — but a general flow of online ill-will toward a hotel is rarely a good thing.

And, in this case, surely it could have been avoided.

The senior manager explained to Zdorovetskiy that “due to the nature of your postings, we reserve the right as a private company to have you removed from the property and not do business with you.” 

Some might find this explanation odd, as the very same manager admitted he had no idea what Zdorovetskiy had posted.

Worse, he then told him that he’s being “trespassed” for one year. This means that if he returns in that time, he’ll be arrested. 

And all for, well, what?

I contacted the Waldorf Astoria to wonder what it thought of its staff’s behavior and will update, should a response be forthcoming.

Zdorovetskiy does have something of a reputation. 

He was arrested last year after climbing the HOLLYWOOD sign. 

He was also charged with criminal trespass after streaking during the World Series.

I can’t say I warm to his public charm at all.

But some famous people are very different in private.

It’s odd that the hotel didn’t seem to know who he was when it accepted his booking.

Moreover, if the manager had told him he’d done something — behaved rudely toward a member of staff, for example — it would have been entirely understandable that he’d be removed.

Yet to expressly look a guest in the face and say they’re being kicked out and banned for a year — just because of the videos they make — seems exactly like the haughty half-wittery many might expect from one or two snooty establishments.

But only one or two, surely. 

Some will say that the mere chance that the hotel might suffer damage of some sort justifies its stance.

To which I wonder: So how do rock stars ever get into a hotel?

Now, what are the chances that members of Zdorovetskiy’s team will pay a secret visit to the Boca Raton Resort and really have a good time?

High, I’d say.

Here Are 3 Things That Perpetuate Dishonesty, and 3 Ways to Thwart It

It’s a dog-eat-dog world out there. In the race to make it to the top, some values often get dropped along the way. Among these stands out one; namely, honesty.

Car salesmen. Stock investors. Overzealous entrepreneurs. We all know the cliches, and we’ve all heard the stories of scams and cover-ups.

But what is it that drives people to cross boundaries to the point of deceiving customers, employees, and the world at large? Additionally, knowing all the risks associated, why would anyone resort to fraud or cheating to succeed in business?

The answer is that people don’t think too much. We’d prefer to remain blind and be able to follow temptations. But do a bit of investigation, and you’ll quickly learn how to re-frame your mind to stay on the straight path of honesty. Below are a few points to get your gears turning.

1. We think honesty slows us down.

Come on, when was the last time anyone actually read all the terms and conditions? This world runs on a fast pace, and people simply don’t have patience to go through the motions of every task. When we can cut corners, we will.

But when you’re running a company, your decisions have a ripple effect on the market you’re serving. According to an October 2014 study by Cohn & Wolfe, a global communications and public relations firm, honesty is the number one thing consumers want from brands.

So if you don’t want your startup to become a statistic of the 90 percent that fail, on average, make sure to stick to the truth when it comes to your brand. It’ll set you up for success in the long run!

2.  We think we won’t get caught.

It’s midnight on a desolate rural road — who will see you run through a red light? Similarly, who would notice if you slipped an extra unlisted ingredient into a product, or told a customer half the truth, being that they wouldn’t be shrewd enough to pick up on it anyway?

These moral quandaries can be paralleled to the famous riddle: “If a tree falls in a forest where no one is around, does it make a sound?” Perhaps it makes a sound, perhaps it doesn’t, depending on who you ask.

But the tree fell, that’s for sure.

We’re beyond kindergarten. We shouldn’t be living our lives in fear of punishment from legal authorities; and conversely, in celebration of victories acquired through dishonest means. That’s a pretty juvenile mindset, and no corporation can stand on the feet of those tenets for long.

Maybe you won’t get caught at first. But repeat dishonest practices will ultimately stain your reputation, because people aren’t stupid and eventually things come to light. All it takes is one small suspicion and you’re doomed. At best, you lose a customer; at worst, you’ll wind up in jail, like Martha Stewart did in 2004.

3.  It’s the norm.

It’s the sad truth, According to a University of Massachusetts study led by psychologist Robert S. Feldman, 60% of people lied at least once during a 10-minute conversation and told an average of two to three lies.

However, just because everyone else is doing it doesn’t mean it’s right. Everyone can hold themselves up to higher standards — it just takes a conscious awareness, and a lot of effort to train oneself to be honest.

Honesty is (indeed) the best policy.

But refreshingly, it’s also quite common to find businesses that run according to the principle of honesty as the best policy.

Companies all over the world are starting to not just recognize the values of honesty, but live by them. “In our business, honesty and transparency is the oxygen of our existence,” states Mati Cohen of Pesach in Vallarta, a holiday hotel program.

This echoes of the founding principles of Buffer, a social media company that embraces the coined term ‘radical transparency’; all its salaries are public and there are no secrets amongst employees, which eliminates much of the animosity that is ever-present in many workplaces.

Tirath Kamdar, co-founder and CEO of jewelry and watch company TrueFacet, says that his company runs by these standards. “The alarmingly opaque nature of the luxury watch and jewelry market motivated us to create TrueFacet. Our goal is to bring transparency back to consumers. We set the standard for jewelry and watches at market value, allowing customers to obtain these products for the most fair price. This is why our customers return time and again.”

Developing Honesty.

Nurturing this character trait requires hard work and patience. Make it a point to recognize how often you utter even little white lies, and correct yourself when you slip.

Because, after all, honesty is the best policy.

***Liba Rimler contributed to this article

Analysis Of Berkshire Hathaway's Equity Holdings

On December 20, 2017 we gave the subscribers to our Seeking Alpha Marketplace offering an early Christmas present, and that was our new Friedrich Portfolio Analyzer. The analyzer takes our Friedrich Algorithm, which can by itself only analyze one company at a time and incorporated it into a new analyzer format, using Google Sheets. By introducing this new functionality, the combined union can now analyze up to 500 stocks at a time. Once we successfully added this new ability, the next logical step was to have it analyze entire stock portfolios, ETFs or Mutual Funds.

In this article, I plan to introduce the Portfolio Analyzer to the Seeking Alpha Community and show how any subscriber can simply type in the following for each holding will, in minutes, have one’s entire stock portfolio analyzed.

  1. Ticker
  2. Shares Owned
  3. Cost per share

After doing so, the subscriber can then get a more complete picture of where one’s portfolio stands in real time. Since many in the Seeking Alpha community are big fans of Warren Buffett and Berkshire Hathaway, I thought I would demonstrate the power of our algorithm and Portfolio Analyzer tool by analyzing Berkshire Hathaway’s most recent holdings, that you can find below:

Berkshire Hathaway Holdings

This list comes from the Form 13-F filed each quarter with the SEC (Securities and Exchange Commission).

Explaining the Algorithm

But before doing so I first need to give everyone a small introduction in how our system works by explaining what our algorithm does and what its key output, the “Main Street” price means. Friedrich is the name given to our algorithm for analyzing companies that trade on the global stock markets. In creating it, we concentrated on analyzing each company’s Main Street operations through various established ratios, along with our own unique ratios that we developed over the last 30 years. What we came up with is a final “Main Street” price per share based on Generally Accepted Accounting Principles (GAAP) financial results, which is a framework of accounting standards, rules and procedures defined by the professional accounting industry adopted by publicly traded U.S. companies. We feel that our Main Street price result is a valuation at which each company would be attractive to a businessperson on Main Street looking to buy the entire company at a bargain.

Since the only constant in the universe is change, the results for each company fluctuate by varying degrees. No company is an island unto itself, but each operates in a world of constant change and at times in areas where Chaos is the norm. By analyzing a company’s Main Street operations over time, Friedrich is able to give our subscribers a decade long analysis (opinion) as well as offering a TTM (Trailing Twelve Month) analysis, as well. Therefore, our subscribers will not only get as close to a real-time view of operations on Main Street as is possible, but then can measure the consistency of the company’s operations over time to determine if s/he should invest or not.

Through our algorithm we can analyze ten years of Balance Sheet, Income and Cash Flow Statement data for each company (five years for international stocks) and then generate one final result (Main Street Price) in seconds. Our Algorithm uses quantitative and qualitative analysis in doing so (using our unique ratios) to find elite companies on Main Street. It is our belief that if one can successfully find such elite companies on Main Street that Wall Street will eventually notice and not be far behind in rewarding our efforts.

Each Datafile and Quantitative Chart we produce also acts as a backtest of our system. Here is an example of both for Apple (AAPL), which Berkshire Hathaway itself owns 134,092,782 according to its most recent 13-F filing.

The multi-colored example above we call our “Datafile” and the chart below it is not a technical chart, but is a Qualitative Analysis chart using fundamental analysis instead of just pricing data. After Berkshire Hathaway (BRK.A) (BRK.B) released its 13-F SEC filing of its most holdings and we analyzed each using our Quantitative Charts and later using our Datafiles. From those articles realized the we needed to come up with a way to analyze the whole portfolio at one time as clearly doing it one stock at a time did not give us a complete picture. With the Analyzer we were able to get not only a clear picture that allowed us to generate results for each stock but also allowed us to come up with a result for the whole portfolio at once and track it in real time throughout the market day.

Berkshire Hathaway Top 30 Holdings Analyzed

The following is what anyone tracking Berkshire Hathaway’s holdings would see anytime they wanted to by simply accessing their Google My Drive (where all portfolios created are stored and where subscribers to our system can create unlimited portfolio analyzers).


Google sheets does not allow sheets to be copied in their entirety so here are the top 30 or so holdings in the Berkshire Hathaway equity portfolio. The cost basis was not available in the 13-F filing with the SEC, so we left that blank, but our analyzer allows our subscribers the ability to constantly track such data continuously when ever they want in their own portfolios.


This part gives our subscribers an instant view of what the Total Market Capitalization is for each company The standard PE Ratio, our Algorithm’s Bargain Price for each company, how much the total portfolio is over or under the bargain price (bargain price is 33% below the Main Street price), our Algorithm’s Main Street Price for each company, how much the total portfolio is over or under the Main Street Price, our Algorithm’s Sell Price for each company, how much the total portfolio is over or under the sell price (sell price is 66% above the Main Street price), the Super Six Score for each stock, the weighted portfolio average score. The Super Six Score consists of the score for the Six most powerful ratio’s in our system and ranks each from 6 being the best to SHORT being the worst. The Friedrich Final Four Score is included for each stock as well as the weighted portfolio average score. To achieve the ideal Final Four Score a company must achieve the following: company must have a Super Six score of six, must have a Price to Bernhard Buffett Free Cash Flow Score of less than 15, must have a Price to Mycroft Free Cash Flow Score of less than 15, and must have a Mycroft Yield of greater than 9%


1) Sell below its bargain price

2) FROIC ratio greater than 20%

FROIC = Free Cash Flow Return on Invested Capital

3) CAPFLOW less than 33%

CAPFLOW = Capital Expenditures/Cash Flow

CAPFLOW is a Management Effectiveness ratio that tells us how much cash flow is spent by management, in the form of capital expenditures, in order to run its company. A result of 33% or less is ideal and means that management has a great deal of money left over to buy back shares, invest in other firms and grow the company.

4) Badwill to Price less than 33%

BADWILL = Is a way in which Friedrich catches manipulators. When companies do a lot of Mergers and Acquisitions they tend to book a lot of Goodwill.

BADWILL = (Goodwill + Intangible Assets)/ Diluted Shares Outstanding.

When the Badwill to Price is 33% or greater than the stocks market price then the algorithm considers it is a bad thing.

5) Friedrich Cash Machine greater than 20%


This tells us how much Free Cash flow is generated for every dollar of revenue. A company that generates 15% or more for this ratio is a CASH MACHINE.

6) Friedrich Equalizer greater than or equal to the Friedrich Cash Machine

FRIEDRICH EQUALIZER = FRIEDRICH CASH MACHINE + REVENUE GROWTH RATE . If the result is greater than or equal to the result for the FRIEDRICH CASH MACHINE then that is a good thing. Two years in a row where the result is below signals an automatic sell. Here is a perfect example of company with great numbers, but is actually a sell as its FRIEDRICH EQUALIZER is lower than its FRIEDRICH CASH MACHINE for two years in a row.

In IBM’s case it is even worse (5 years) and you would have gotten an automatic sell signal in 2013 @ $187.57 despite the strong fundamentals. This is because you never want to own anything with declining revenues. This example also clearly explains the mystery as to why Mr. Buffett’s investment in IBM did not work out so well and forced him to recently liquidate a large percentage of his original investment in the company.


This segment of the analyzer gives us the total market value of each holding as well as the total portfolio value, the total bargain value of each holding, the total portfolio bargain value, the total Main Street value for each holding, the total Main Street portfolio value, the total sell price value for each holding and the total sell price for the portfolio.

The cumulative change is the potential profit per holding and for the total portfolio but since we were not supplied with a cost basis by Berkshire Hathaway. the analyzer simply gives us a total of zero cost.


This final section gives us:

1) Percentage needed to reach each stocks Bargain Price or how much a stock must fall or rise in order to achieve it.

2) Percentage needed to reach each stocks Main Street Price or how much a stock must fall or rise in order to achieve it.

3) And probably the most important indicator that the Analyzer generates is the percentage upside potential that a subscriber can hope for in the future for each holding. As you can see from this final table, that the split is basically 50-50 for both positive vs. negative potential upside for the holdings listed.

Going forward you will notice that Mr. Buffett rarely sells once he buys a stock for his Berkshire Hathaway and that these days most of his portfolio is in its five top core holdings.

Kraft Heinz (KHC)

Wells Fargo (WFC)

Apple (AAPL)

Coca-Cola (KO)

Bank of America (BAC)

So how those five companies will perform in the future will determine how Berkshire Hathaway’s equity portfolio will perform.

Berkshire Hathaway itself is overbought but Friedrich is not able to incorporate the Buffett and Munger premium, which has always been there with the Woodstock for Capitalists. But when the great majority of Berkshire Hathaway’s holdings are overbought, it is easy to understand why Friedrich comes up with this result for (BRK.A).

Obviously, there is a premium incorporated in the stock that Friedrich cannot quantify as the stock has many permanent generational holders who are not going anywhere.

Schwab US Dividend Equity EFT Top Holdings

In Conclusion our Friedrich Portfolio Analyzer allows our subscribers to take apart the current holdings of any Portfolio, ETF or Mutual Fund and analyze each as a whole portfolio as well as analyze the individual holdings. Another example of the power of our algorithm/analyzer is a brief analysis for the top 20 holdings of the Schwab US Dividend Equity ETF (SCHD)

As you can see the Dividend ETF has a lot more percentage upside potential than the holdings of Berkshire Hathaway do.

Friedrich Model Dividend Portfolio

We do not just provide research for our subscribers, but also create Model Portfolios. For those who love investing in dividend stocks we have recently launched our Friedrich Dividend Portfolio and below is that portfolio’s performance vs. the Schwab Dividend ETF since the inception of our portfolio. We are the red line.

The reason that we have been able to outperform the Schwab ETF is because we have created our Dividend Portfolio based on Main Street analysis and have filled it will strong dividend payers that also have strong percentage upside potential. In the end all that matters is Main Street and how each company is performing there.


If you can find elite companies with elite management at the helm on Main Street, that can also be picked up at fair valuations, then eventually Wall Street will notice and reward you. Being able to sift through the thousands of stocks in minutes like our algorithm allows us to do each month helps us save time while missing fewer bargains and avoiding stocks that are overvalued. This is basically what Warren Buffett has done his entire career and why we have modeled our Algorithm on his successful approach.

If you have any questions, please feel free to ask them in the comment section below and don’t forget to hit the “Follow” button next to my name at the top of this article.

Want to know more about why we changed our tune from cautious to raging bulls? Check out this other recent article that explains why we believe the Dow could hit 50,000 in the next 6-7 years. The article includes highlights from our year-end subscriber letter.

Disclosure: I am/we are long AAPL, V, MA.

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.

Additional disclosure: DISCLAIMER: This analysis is not advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from our research. Factual material is obtained from sources believed to be reliable, but the poster is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.

Apple Responds to iPhone Battery Controversy: ‘We Apologize’

It’s not unheard of for Apple, that shining, glass-and-metal modernist beacon in the night, to apologize.

The company’s late CEO and cofounder Steve Jobs famously did after the so-called Antennagate controversy surrounding the iPhone 4. Tim Cook, who replaced him, published a signed letter on the company’s website after its Maps app left much to be desired.

Corporate apologies don’t happen often, especially in the at-arm’s-length technology industry, but they do happen. And there’s a cold-blooded calculation behind most of them.

The latest mea culpa from the folks in Cupertino, Calif. concerns batteries in the company’s most popular product in history: the iPhone. After much hullabaloo (and a few lawsuits) over complaints that the company was deliberately slowing its older devices down—the conspiracy theory being that Apple was forcing upgrades to its newer models—the company admitted: Yes, we do slow them down. But it’s complicated.

On Thursday, Apple issued a formal apology.

“We’ve been hearing feedback from our customers about the way we handle performance for iPhones with older batteries and how we have communicated that process. We know that some of you feel Apple has let you down. We apologize,” it wrote in an unsigned letter. “We have never—and would never—do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades. Our goal has always been to create products that our customers love, and making iPhones last as long as possible is an important part of that.”

The company also offered an explanation for its actions relating to the chemical makeup of its rechargeable batteries.

“We delivered a software update that improves power management during peak workloads to avoid unexpected shutdowns on iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus, and iPhone SE,” it said. “With the update, iOS dynamically manages the maximum performance of some system components when needed to prevent a shutdown. While these changes may go unnoticed, in some cases users may experience longer launch times for apps and other reductions in performance.”

To quell the outrage, Apple reduced the price of an out-of-warranty iPhone battery (from $79 to $29 for customers with an iPhone 6 or newer, starting in late January) and promised another software update offering more transparency into their battery’s condition.

The fuss will likely do little to negatively impact iPhone shipments, which continue to reach new highs despite some evidence that customers are waiting longer to upgrade older devices. But it is a moment that steals a little bit of shine from one of the world’s most valuable brands and its CEO, which Fortune named the world’s greatest leader in 2015.

Apple faces lawsuits after saying it slows down aging iPhones

SAN FRANCISCO (Reuters) – Apple Inc (AAPL.O) defrauded iPhone users by slowing devices without warning to compensate for poor battery performance, according to eight lawsuits filed in various federal courts in the week since the company opened up about the year-old software change.

The tweak may have led iPhone owners to misguided attempts to resolve issues over the last year, the lawsuits contend.

All the lawsuits – filed in U.S. District Courts in California, New York and Illinois – seek class-action to represent potentially millions of iPhone owners nationwide.

A similar case was lodged in an Israeli court on Monday, the newspaper Haaretz reported.

Apple did not respond to an email seeking comment on the filings.

The company acknowledged last week for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge.

Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said.

The disclosure followed a Dec. 18 analysis by Primate Labs, which develops an iPhone performance measuring app, that identified blips in processing speed and concluded that a software change had to be behind them.

One of the lawsuits, filed Thursday in San Francisco, said that “the batteries’ inability to handle the demand created by processor speeds” without the software patch was a defect.

“Rather than curing the battery defect by providing a free battery replacement for all affected iPhones, Apple sought to mask the battery defect,” according to the complaint.

The plaintiff in that case is represented by attorney Jeffrey Fazio, who represented plaintiffs in a $53-million settlement with Apple in 2013 over its handling of iPhone warranty claims.

The problem now seen is that users over the last year could have blamed an aging computer processor for app crashes and sluggish performance – and chose to buy a new phone – when the true cause may have been a weak battery that could have been replaced for a fraction of the cost, some of the lawsuits state.

“If it turns out that consumers would have replaced their battery instead of buying new iPhones had they known the true nature of Apple’s upgrades, you might start to have a better case for some sort of misrepresentation or fraud,” said Rory Van Loo, a Boston University professor specializing in consumer technology law.

But Chris Hoofnagle, faculty director for the Berkeley Center for Law & Technology, said in an email that Apple may not have done wrong.

“We still haven’t come to consumer protection norms” around aging products, Hoofnagle said. Pointing to a device with a security flaw as an example, he said, “the ethical approach could include degrading or even disabling functionality.”

The lawsuits seek unspecified damages in addition to, in some cases, reimbursement. A couple of the complaints seek court orders barring Apple from throttling iPhone computer speeds or requiring notification in future instances.

Reporting by Paresh Dave; Editing by Leslie Adler

Apple Is Now Facing Eight Lawsuits After Admitting to Slowing Down Old iPhones

Apple (aapl) defrauded iPhone users by slowing devices without warning to compensate for poor battery performance, according to eight lawsuits filed in various federal courts in the week since the company opened up about the year-old software change.

The tweak may have led iPhone owners to misguided attempts to resolve issues over the last year, the lawsuits contend.

All the lawsuits—filed in U.S. District Courts in California, New York and Illinois—seek class-action to represent potentially millions of iPhone owners nationwide.

A similar case was lodged in an Israeli court on Monday, the newspaper Haaretz reported.

Apple did not respond to an email seeking comment on the filings.

The company acknowledged last week for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge.

Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said.

The disclosure followed a Dec. 18 analysis by Primate Labs, which develops an iPhone performance measuring app, that identified blips in processing speed and concluded that a software change had to be behind them.

One of the lawsuits, filed Thursday in San Francisco, said that “the batteries’ inability to handle the demand created by processor speeds” without the software patch was a defect.

“Rather than curing the battery defect by providing a free battery replacement for all affected iPhones, Apple sought to mask the battery defect,” according to the complaint.

For more about Apple, watch Fortune’s video:

The plaintiff in that case is represented by attorney Jeffrey Fazio, who represented plaintiffs in a $53-million settlement with Apple in 2013 over its handling of iPhone warranty claims.

The problem now seen is that users over the last year could have blamed an aging computer processor for app crashes and sluggish performance – and chose to buy a new phone – when the true cause may have been a weak battery that could have been replaced for a fraction of the cost, some of the lawsuits state.

“If it turns out that consumers would have replaced their battery instead of buying new iPhones had they known the true nature of Apple’s upgrades, you might start to have a better case for some sort of misrepresentation or fraud,” said Rory Van Loo, a Boston University professor specializing in consumer technology law.

But Chris Hoofnagle, faculty director for the Berkeley Center for Law & Technology, said in an email that Apple may not have done wrong.

“We still haven’t come to consumer protection norms” around aging products, Hoofnagle said. Pointing to a device with a security flaw as an example, he said, “the ethical approach could include degrading or even disabling functionality.”

The lawsuits seek unspecified damages in addition to, in some cases, reimbursement. A couple of the complaints seek court orders barring Apple from throttling iPhone computer speeds or requiring notification in future instances.

UPS Office Staff Called Up to Deliver Packages In Last-Minute Christmas Rush

Faced with unexpected holiday volume in some areas, UPS this year had to draft hundreds of office workers to deliver packages at the last minute.

According to the Wall Street Journal, the staffers included accountants and marketers, who suddenly found themselves hefting boxes. Such switches aren’t uncommon during the company’s hectic holiday season, but they’re usually voluntary and coordinated well in advance.

A UPS spokesman confirmed to the Journal that several hundred office employees have been called on to deliver packages. Some of them reportedly used personal vehicles. Most of the reassignments, according to the spokesman, are now wrapped up.

At least part of the problem was the tight labor market across the U.S., which made it harder for UPS to hire its usual bevy of seasonal workers. Another factor is online shopping, which has grown every year for more than a decade, and peaks sharply in the days before Christmas. This year, in certain locations, the number of packages exceeded even UPS’s projections.

Get Data Sheet, Fortune’s technology newsletter.

The unpredictability of that volume has been a challenge for UPS and other delivery services for years, and they’ve experimented with various solutions. Temporary staffing can increase throughout, but expensive overexpansion during the 2014 holiday season highlighted its downside risk.

On the other side of the equation, UPS has floated various approaches to raising prices during the holidays, in part to encourage customers to send packages earlier and spread out demand. This year, the shipper added peak surcharges, mostly under a dollar per package.

Those modest surcharges don’t appear to have done much to encourage customers to plan ahead this year. UPS could make them higher, but then the problem becomes competition — FedEx didn’t implement a holiday surcharge for most packages this year.

That leaves a nearly insoluble problem, as the delivery industry searches for ways to scale massively for a short period every year. Calling up the accountants doesn’t seem like a very sustainable solution.

Amazon Acquires Security Camera and Video Doorbell Maker Blink

Highlighting its growing ambitions in Internet-connected home devices, Amazon has acquired wireless security camera startup Blink.

The deal, announced on Friday, gives Amazon a rising star in the emerging and highly competitive field of connected home devices that includes Alphabet’s Nest. In addition to a wireless security camera, Blink makes a video doorbell that lets homeowners glance at their smartphones to see a live feed of who is at their door.

Financial terms of the acquisition were not disclosed.

Blink’s security cameras, first introduced in 2016, are known for their ease of setup and for not needing a plug because they can operate on batteries. The video doorbell, which costs $99, is also battery powered

Amazon push into connected home devices started in 2014 with the Echo, the smart speaker that relies on voice recognition to answer questions and do things like order Uber rides. The company expanded its connected home lineup earlier this year with the Cloud Cam, a security camera that has since become an integral part of Amazon Key, a connected lock that lets Amazon’s delivery workers enter homes to drop off packages when homeowner are away.

Blink said Thursday it would continue to operate as part of Amazon and sell the same products it already does. The companies provided no other information about their plans.

This Company Published All Its Employees Salaries 4 Years Ago. Here's What They Learned.

“Robbie, how much do you make?”

Someone asked me this question at a recent job, and I admit, I was thrown off. The reason they asked wasn’t to be nosy, but to find out if they were getting underpaid or not.

Most salaries are private, so my coworker couldn’t find out without asking. It’s a constant issue.

Well, Buffer, a social media management platform company took salary transparency to another level four years ago.

Their salaries are transparent, both internally and publicly. You heard that right. You can go to this Google doc to find out exactly how much everyone in the company makes, including the CEO. They’ve really embraced salary transparency head on.

I was intrigued by this and reached out to Buffer with a few questions about what they’ve learned so far.

The biggest challenges

Buffer’s biggest challenge was its own insecurity, according to Hailley Griffis, PR manager at Buffer. “The team was on board because of our value of defaulting to transparency,” she says. “We already had salaries live internally, so it was just switching it to a larger audience. There were a lot of what-ifs floating around at Buffer.”

What if the made it easy for anyone to poach Buffer employees because they knew exactly how much more they had to pay them? Or what if new people refused to join because they didn’t want their salaries online? None of those what-ifs came to fruition, Griffis says.

I find this really interesting. They were already sharing salaries internally, which is a massive first step for any organization. I’d honestly be happy with just internal sharing.

Taking it public is another story.

The positives and negatives

I can’t imagine that full salary transparency would be be entirely positive. Still, I was curious to see what the impact has been.

Griffis mentioned three positives:

  1. A jump in applications as soon as they went transparent.

  2. The accountability of being held to a higher standard, and the ability to pay people fairly and without bias.

  3. Increased trust among their team.

And negatives?

“We do get negative feedback, comments and such, from the public when we share updates to our salary formula or our pay,” Griffis says. “Pay is something that everyone will always have strong opinions about and we can’t please everyone.”

Based on comments from several social media sites, Buffer receives negative feedback that the salary formula doesn’t account for the individuals who operate at a higher level than their peers in the same category.

Additionally, job searchers are used to negotiating, so when they can’t negotiate, they don’t feel like they’re getting a good deal. This is a common issue for high performers.

Salary transparency isn’t for everyone. My stance is that people should be paid unfairly. If you’re are performing ten times better than your colleagues, then a formula to calculate your salary will leave you disappointed.

What I do admire about Buffer embracing salary transparency is that they really own it. It’s not like the salary spreadsheet is hard to find. They actively market it.

I also appreciate that they created a salary formula–so you can understand what your true worth should be. It’s not foolproof, of course, but I think it’s a start in the right direction.

How would you feel if your salary was not only available to your colleagues but to anyone with an internet connection?

In Silicon Valley, much-feared tax bill pays dividends for workers

SAN FRANCISCO (Reuters) – The U.S. tax overhaul is a boon to Silicon Valley technology companies like Apple Inc (AAPL.O) and Alphabet Inc (GOOGL.O), which will enjoy big tax cuts and the chance to bring back billions of dollars from overseas at a reduced rate.

And contrary to the dire warnings of California officials, a large swath of Bay Area workers and their families stand to get a tax break as well, even with new limits on state and local tax deductions.

California has the highest state income tax in the nation, and Governor Jerry Brown has called the new tax bill “evil in the extreme.”

Nonetheless, many in Silicon Valley stand to benefit. Startup employees, freelancers and venture capital investors are among those who will get new tax benefits or keep those they already have, tax experts said.

Even some of the middle- and upper-income professionals who form the core of the technology industry workforce will still get significant tax cuts, while most others will see little change, they said.

The new $10,000 cap on state and local tax deductions will have a less dramatic effect than feared because such deductions in many cases had already been rendered moot by the alternative minimum tax (AMT), a mechanism for assuring that the well-heeled pay at least 26 percent of their income in taxes.

“There is a lot of noise about workers in California, New Jersey, New York and Illinois (facing higher taxes), but 80 percent of our clients there were already paying the alternative minimum tax so they don’t benefit from the state and local deductions,” said Jack Meccia, a tax associate at financial planning firm Vestboard, which works with several hundred individuals in tech.

The new law alters the AMT in a way that vastly reduces the number of people who have to pay it, from more than 5 million to an estimated 200,000 next year, according to the Tax Policy Center. The AMT dynamics, combined with reduced overall tax rates and the doubling of the standard deduction to $24,000 should hold most Bay Area tax bills steady, said Bob McGrath, tax director at accounting firm Burr Pilger Mayer.

Estimates by three experts, using roughly similar assumptions, show that a home-owning couple earning a combined $250,000 in Silicon Valley would likely see an increase or decrease in their tax bill of a few hundred dollars.

A married couple with no children who rent a home and make a combined $150,000 would see a $3,900 tax cut, estimated Annette Nellen, who directs the master’s degree in taxation program at San Jose State University.

Low-income workers will see tax cuts too, though the dollar amounts are small.

Bob Emmett, a single, 73-year-old security officer who lives in San Jose, criticized the bill as “designed to help the rich.”

Nellen estimated that Emmett, who rents an apartment, has no children and earns $16 an hour in addition to some social security income, would see a $546 cut in taxes.

FILE PHOTO – The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake/File Photo

Critics of the tax bill note that the individual tax cuts will disappear after 2025, and that most of the benefits flow to the corporations and the wealthiest individuals, even if lower-income people get some tax relief.

Health insurance premiums for Californians are also likely to rise substantially as a result of the repeal of fines for those who refuse to obtain health coverage under the Affordable Care Act. And even if Bay Area residents mostly enjoy some tax cuts, they gain much less than those in low-tax states.


Employees in Silicon Valley, the world’s startup capital, scored two major victories in the tax bill.

First, startup employees can hold off on paying taxes related to stock options they exercised. That can be a big help if a company is still private, since in that situation employees have to pay tax even before they can earn cash from selling shares.

Startup employees will also have more opportunity to exercise what are known as “incentive stock options” with less chance of being on the hook for the alternative minimum tax, according to Mark Setzen, a long-time certified public accountant in Silicon Valley.

Also coming out ahead are independent contractors, ranging from engineers to marketers to caterers, who stand to benefit from a new 20 percent deduction of business income.

Arun Sood, a freelance software engineer in San Francisco who makes about $150,000 annually, said he accrues few deductions because he rents his home, holds no debt and has no children. Now he gets a big new deduction and a lower tax rate.

“Looking at this selfishly, it’s going to be a positive impact,” said Sood, who has freelanced for Axios, Cisco and Macy‘s.

The tax plan mostly preserves a tax break for venture capitalists that had been in jeopardy. The so-called carried interest provision lets venture capitalists book the 20 percent fee they typically take on a profitable investment as a capital gain, which carries a lower tax rate than ordinary income, even though the venture investors do not put up any of their personal capital.

Now the capital gains rate will apply only to investments held at least three years — a limitation that venture capitalists said would come into play only occasionally.

Silicon Valley executives with high salaries will take home extra money, too, because language in the current tax law known as the Pease Limitation had already limited their deductions, said Andrew Mattson, a tax partner serving technology industry clients at accountancy Moss Adams.

Executives also may see base pay rise in coming years. The tax bill removes corporate tax breaks for performance bonuses, which is already leading companies to reconsider pay packages for chief-level executives, lawyers said.

Reporting by Paresh Dave, Heather Somerville, Jeffrey Dastin and Salvador Rodriguez; Editing by Jonathan Weber and Lisa Shumaker

Bitcoin: Coinbase Users Get ‘Cash’ Windfall

Coinbase, the most popular U.S. crypto-currency exchange, released “Bitcoin Cash” — a new currency created this summer and currently worth around $3,000 — into many customer accounts on Tuesday evening.

The decision came as a surprise since Coinbase had previously said it would deliver the Bitcoin Cash, which is owed to anyone who held bitcoin on or before August, early in 2018.

The move caused the price of bitcoin, which started the day around $19,000, to drop sharply. Shortly after Coinbase announced the news, the price fell below $16,000 but has since risen closer to $17,000 according to Coindesk.

Bitcoin Cash, meanwhile, has soared nearly 50% in the last 24 hours, from around $2,100 to a brief high of around $3,600, and is now the third most valuable digital currency after bitcoin and Ethereum.

Here is what the announcement looked like on Coinbase:

While the arrival of Bitcoin Cash amounts to a windfall for Coinbase customer, it also has the potential to create a nightmare when it comes to dealing with the IRS. As Fortune explained last month, some lawyers think Bitcoin Cash could amount to a taxable event like a dividend while others believe the tax obligation will only arise when they sell it.

A schism in bitcoin

The creation of Bitcoin Cash took place this summer following a bitter schism between bitcoin insiders. It’s essentially a clone of the original currency, which was created in 2009, but with “blocks” that are twice are as big. (Blocks are the units that make up a blockchain, a type of software that contain a permanent ledger of transactions).

When it arrived, Bitcoin Cash replicated every record found on the original bitcoin blockchain — including the existing distribution of bitcoin wealth. As such, everyone who possessed bitcoin received an equal amount of Bitcoin Cash.

Coinbase initially said it would not distribute the Bitcoin Cash, in part because it was wary of recognizing “forked” versions of the original currency. But following an outcry, and a threatened class action suit, the company relented.

Meanwhile, others who did not rely on a third party custodian like Coinbase to hold their bitcoin had immediate access to the Bitcoin Cash, and have been trading it in the market.

In the short term, the widespread distribution of Bitcoin Cash is likely to intensify the speculative mania surrounding crypto-currency, which some are warning is a bubble. In the longer term, Bitcoin Cash will also be a test of the viability of “forks” from the original bitcoin, including whether their proliferation will pose a threat to the larger market (one longtime bitcoin advocate notably called Bitcoin Cash a “dangerous trick“).

For companies like Coinbase, the arrival of forks also present engineering and security challenges that they must accommodate. In its blog post, Coinbase explained its decision to support Bitcoin Cash as follows: “We have been monitoring the Bitcoin Cash network over the last few months and have decided to enable full support including the ability to buy, sell, send and receive. Factors we considered include developer and community support, security, stability, market price and trading volume.”

China's Tencent, JD.com invest $863 million in online retailer Vipshop

BEIJING (Reuters) – Chinese social media firm Tencent Holdings Ltd (0700.HK) and e-commerce platform JD.com Inc (JD.O) on Monday said they will jointly invest $863 million in Chinese discount online retailer Vipshop Holdings Ltd (VIPS.N).

Tencent will invest $604 million in exchange for a 7 percent stake in Vipshop, while JD.com will invest $259 million for 5.5 percent. The investment amounts represent a 55 percent premium over Vipshop’s closing share price on Friday of $8.44.

“We look forward to providing Vipshop with our audiences, marketing solutions, and payment support to help the company provide branded apparel and other product categories to China’s rising middle class,” Tencent President Martin Lau said in a statement.

The deal represents a major alliance in China’s e-commerce market, where competition for retail brands between JD.com and Alibaba Group Holding Ltd (BABA.N) has grown increasingly fierce.

A JD.com sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 4, 2017. REUTERS/Aly Song

It also comes as Tencent, which derives most of its profit from gaming and social media, pushes into retail, leveraging its relationship with JD.com and popular app WeChat. Last week it said it would buy five percent of Chinese department store operator Yonghui Superstores Co Ltd (601933.SS).

Tencent, Asia’s most valuable company with a market capitalization of $473 billion, is a major stakeholder in JD.com, and the two have recently upped cooperation on data and payments to better compete with Alibaba.

JD.com Chief Executive Richard Liu recently said roughly 100 Chinese apparel merchants had left the firm’s platform in the last quarter due to what he called “coercive” tactics by competing platforms.

“The strength of Vipshop’s flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us,” Liu said in the statement.

After the Vipshop deal closes, Tencent will allow Vipshop to capture traffic from WeChat, and JD.com will integrate Vipshop features into its own app and assist the firm in reaching sales targets, the companies said.

Reporting by Cate Cadell; Editing by Christopher Cushing

Here's Why Tony Robbins Starts Every Day With 'Priming' (and You Should Too)

Tony Robbins starts each day with the same routine– he calls it priming. It’s a cool mixture of breathing exercises, meditation, and relaxation that gets you primed for your day. It reminds me very much of the self-fulfilling prophecy, or the “Pygmalion Effect,” which basically states that whatever you believe will happen, will.

Mr, Robbins really knows how to drive people to be motivated. Including me. I buy into priming just like I buy into the self fulfilling prophecy.

Let me explain the self fulfilling prophecy before we get back to priming. The prophecy, for example, is when you go to bed, stressed, bitching, and moaning about how difficult life is and what a horrible day you will have tomorrow. Sure enough, tomorrow comes and you’re in a bad mood, stressed, and bitching and moaning. It also goes the other way though– you go to bed thinking tomorrow is going to be great, and then the next day– you feel great.

As I teach to my students, the self fulfilling prophecy applies to management as well. If a manager in their heart of hearts believes his or her workers are lazy, misguided, or simply incompetent, then your natural communications and action with the employees sets this tone, and eventually the employees behave as if they are lazy, misguided, and/or incompetent. The prophecy comes true.

To me, self fulfillment is at the heart of Tony Robbins priming routine. It’s pure positivity through breathing and thought. You are priming yourself to be positive and productive for the day.

The act of positive priming is self fulfilling for yourself– after you do the priming you feel positive, robust, thankful, and energized. These attributes surely will lead you to be more productive each and every day.

I especially am fond of two certain parts of Tony’s priming routine: 

First, the simple touch of your chest and your heart beating with your breathing is strangely calming and exhilarating simultaneously. There is a hybrid mix in my head when I do this part, as I get a little freaked out listening and feeling my heart beat, but at the same time there is a feeling of calmness knowing I am alive, breathing, and beating.

Another aspect of priming that’s appealing to me is the thankful thoughts of three things. Tony recommends at least one of these three to be a simple thankfulness, such as a smiling child. This is where I tend to think of family and being grateful to be a teacher. It creates warmth for me. The gratitude that flows out is sincere and deep. You are only sharing this with yourself, to contemplate and rejuvenate. There is no b.s. involved. It’s sincere because you are only addressing yourself.

I highly recommend priming and urge you to read more about it, maybe watch a demo, and give it a try.

Meet the Publicly Traded Company Paying Employees in Bitcoin

What if your paycheck for this December could be worth more than ten times its face amount next December? That’s the scenario that many employees of Japan’s GMO Internet Group who opt to be paid in Bitcoin will no doubt be hoping for when taking payment in the cryptocurrency becomes an option starting in March of 2018.

You may have seen some headlines flying around this week about the new company paying salaries in crypto bucks, but it’s not necessarily a sign that the Bit-revolution is swamping everything just yet. 

Getting paid in Bitcoin isn’t unheard of for employees in the Blockchain and crypto world, but GMO is a large, publicly traded company with thousands of employees. Some industry watchers see it as yet another sign Bitcoin is making baby steps into the mainstream. 

The problem, of course, is that Bitcoin’s stratospheric rise in value from less than $1,000 in 2016 to over $17,000 today is certainly not guaranteed to continue and could be a bubble ready to pop at any moment. Typically, you want employees with a stable and positive cashflow situation, so paying them in one of the most volatile currencies around can be problematic to say the least.

This is why it would be technically illegal if GMO employees were given no choice but to be paid via Bitcoin. The company’s program instead gives workers the option of having a portion of their pay deducted and used to purchase Bitcoin at current rates. Obviously, any worker could just as easily be paid in Japanese yen and exchange a portion of their salary for Bitcoin on their own; GMO is just offering to automate the process of investing in Bitcoin for workers.

It’s all a clever means of promoting a few of GMO Internet’s latest ventures in to Bitcoin trading, mining and mining hardware development. So getting paid in Bitcoin at GMO is really a way to show that you’re with the company program, not to mention that more circulating Bitcoin in the world is now also good for the company bottom line. 

When major companies not engaged with the Bitcoin universe in any other way start to conduct payroll and other big transactions with cryptocurrency, I’ll definitely take notice.

Until then, the bigger indicator of Bitcoin gaining mainstream acceptance is the steady stream of headlines about the currency during 2017 and the numerous new exchange accounts being opened everyday. 

However, this only indicates Bitcoin’s growing acceptance as a viable investment. Mainstream acceptance as an actual currency to purchase goods and services still seems a ways off, even for those working at GMO Internet.

Toyota, Panasonic to hold news conference at 1.30 a.m. ET

TOKYO (Reuters) – Toyota Motor Corp and Panasonic Corp on Wednesday said they would hold a joint news conference in Tokyo at 3:30 pm (0630 GMT).

The Toyota logo is shown at the Los Angeles Auto Show in Los Angeles, California, U.S., November 30, 2017. REUTERS/Mike Blake

The two companies did not give details on the content of the news conference.

The Nikkei business daily reported earlier on Wednesday that Toyota and Panasonic were forming a tie-up to establish standards for batteries used in electric vehicles which could help reduce manufacturing costs and establish recycling options for used batteries.

Panasonic manufactures batteries used in Toyota’s gasoline hybrid and plug-in hybrid vehicles, and Toyota is developing battery-electric vehicles (EVs) which it plans to market in the early 2020s.

A Toyota spokeswoman declined to comment on the Nikkei report. Panasonic also supplies Tesla Inc with EV batteries.

Reporting by Naomi Tajitsu; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.

Google launching artificial intelligence research center in China

BEIJING (Reuters) – Alphabet Inc’s Google said on Wednesday it is opening an artificial intelligence (AI) research center in China to target the country’s local talent, even as the U.S. search firm’s products remain blocked in the country.

The Google logo is pictured atop an office building in Irvine, California, U.S., August 7, 2017. REUTERS/Mike Blake

Google said in a statement the research center is the first of its kind in Asia and will comprise a small team operating out of its existing office in Beijing.

Chinese policy makers have voiced strong support for AI research and development in the country, but have imposed increasingly strict rules on foreign firms in the past year, including new censorship restrictions.

Google’s search engine is banned in the Chinese market along with its app store, email and cloud storage services. China’s cyber regulators say restrictions on foreign media and internet platforms are designed to block influences that contravene stability and socialist ideas.

While tightening restrictions are likely to hamper a re-entry to the Chinese market for Google, the firm has increasingly focused on exposing its AI products in China.

This year Google held a Go tournament in cooperation with local authorities in eastern China, pitching its AI against Chinese world champion Go player Ke Jie. The event was highly publicized overseas but local media was muted.

Earlier this month Google CEO Sundar Pichai made an appearance at a conference run by the Cyberspace Administration of China, the country’s top cyber regulator, where he steered away from market access issues to discuss the potential of AI.

Google said the new Chinese AI research center will join a list of similar overseas centers operating in New York, Toronto, London and Zurich.

Reporting by Cate Cadell; Editing by Muralikumar Anantharaman

Our Standards:The Thomson Reuters Trust Principles.

Bitcoin Futures Launch to a Dramatic Start

The eagerly anticipated launch of futures trading of the world’s largest cryptocurrency bitcoin got off to a positive start on Sunday, with the price nearly 9% ahead after briefly slipping below its opening level.

The launch of futures trading gives bitcoin the potential to win long-awaited legitimacy and a more widespread usage, but experts have worried that the risks associated with the currency’s Wild West-like nature could overshadow the debut.

The price action was unlike the wild swings seen in past weeks. The first bitcoin future trades kicked off at 6 p.m. (2300 GMT) on CBOE Global Markets Inc’s CBOE Futures Exchange, with January futures opening at $15,460, briefly dipping to a low of $15,420, and were last at $16,800, with 1,006 contracts traded.

“Even if there is an institution or institutional-sized trader out there, they are going to want to make sure that the mechanics work first, just for the futures,” said Ophir Gottlieb, chief executive officer of Los Angeles-based Capital Market Laboratories.

“I think the excitement will come when the futures market is established. That can take a few days,” Gottlieb added.

The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.

“It has been plain sailing so far for bitcoin futures trading,” said Naeem Aslam, chief market analyst at Think Markets in London. “Looking at the contract volume traded, we believe that there is a decent demand and this is driving up the price of bitcoin,” Aslam added.

On Sunday, bitcoin was up 4.83% at $15,400 on the Luxembourg-based Bitstamp exchange.

While bitcoin’s price rise mystifies many, its origins have been the subject of much speculation. It was set up in 2008 by someone or some group calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Many investors have stood on the sidelines watching its price rocket. However, it is possible to buy bitcoin without having to spend the full price of one coin. Bitcoin’s smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency.

So far in 2017, bitcoin is up more than 1,400%. Somebody who invested $1,000 in bitcoin at the start of 2013 and had never sold any of it would now be sitting on around $1.2 million.

Heightened excitement ahead of the launch of the futures has given an extra kick to the cryptocurrency’s scorching run this year.

The launch may indeed have caused an outage of the CBOE’s website. The exchange said that due to heavy traffic on the CBOE Global Markets website on Sunday, the site “may be temporarily unavailable.”


Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet. Others, however, caution that risks remain for investors and possibly even the clearing organizations underpinning the trades.

“You are going to open up the market to a whole lot of people who aren’t currently in bitcoin,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The launch has so far received a mixed reception from big U.S. banks and brokerages, though.

Several online brokerages, including Charles Schwab Corp and TD Ameritrade Holding Corp, did not allow trading of the new futures immediately.

The Financial Times reported on Friday that JPMorgan Chase & Co, Citigroup Inc would not immediately clear bitcoin trades for clients.

Goldman Sachs Group Inc said on Thursday it was planning to clear such trades for certain clients.

Bitcoin’s manic run-up this year has boosted volatility far in excess of other asset classes. The futures trading may help dampen some of the sharp moves, analysts said.

“Hypothetically, volatility over the long run should drop after institutions get involved,” Gottlieb said. “But there may not be an immediate impact, say in the first month.”

This post has been updated.

The 1 Question You Need to Ask About Your Social Media Content in 2018

We all have seen, firsthand, how fast social media moves. With each passing year, it seems new platforms arise, old trends die out, and best practices become outdated. While 2018 will be no different in terms of change, by asking yourself the following question, you’ll put your brand in a terrific position to “win” in the game of social media:

Is my brand building community on social media?

The days where consistency and high quality content almost guaranteed a loyal following are long behind us. If you aren’t building community on social media, your brand will fall behind faster than ever before in 2018.

The Rise of the Algorithm on Social Media

The catalyst here has been the rise and rule of social media algorithms. Simply put, the algorithm tailors a platform’s news feed based mostly on engagement rather than general chronology. 

The algorithm is a natural progression and reaction to the increased volume of content across social media. Social media apps need to maximize the amount of time users spend on their platforms in order to maximize advertising dollars, and the algorithm is the most efficient way to do that.

Due to the success of the algorithm, it’s likely organic reach on social media will only continue to decrease over time. So, what’s the answer then? Well, the easiest way to ensure others remain highly engaged with your content is to build a community of loyal followers. 

How to Build Community on Social Media

1. Start a Facebook Group. 

Facebook’s primary mechanism for building community is Facebook Groups. Facebook has also been explicit in sharing that one of their main objectives going forward is to encourage community building on their network. For this reason alone, starting a Facebook Group centered around your brand’s interests wouldn’t be a bad idea. 

Keep in mind that your Facebook Group doesn’t have to be directly linked to your business. For instance, if you own a pizzeria in Jacksonville called Grandma Jo’s Pizza, your Facebook Group wouldn’t have to be (and shouldn’t be) named “Grandma Jo’s Pizza”. Instead, consider a title like, “Pizza Lovers of Jacksonville” or something along those lines.

2. Give your community members a name.

Giving the members of your audience a label will, whether consciously or subconsciously, reinforce the existence of the community your company is building. Additionally, it’ll allow your customers to know they’re a part of a movement, a club, as opposed to them just exchanging money for goods. 

Musicians like Justin Bieber use this practice by calling his fans, “Beliebers”, while brands like Starbucks do it in a more subtle way by catering to their “Gold members” within their rewards program.

3. Show your audience some love and recognition. 

The point of having a community is to facilitate relationships between the members. Customers and community members alike want to know you appreciate their time and money, so make sure you show them some love. Here’s a few ways to do it:

  • Post user-generated content (photos customers took while at your business, etc.) to your social media channels.
  • Showcase and commend fans who are doing wonderful things in the community (military service, volunteers, non-profit organizers, and more).
  • Have a weekly segment where you publish a top-rated testimonial or comment on your social media to get followers actively engaged in your content.

The list goes on and on here, but the important thing is to make sure your customers know they’re being recognized by you as the company.

4. Start a meetup.

Nothing beats face-to-face, human interaction when it comes to building relationships, and a meetup is an ideal medium for you to begin making those connections possible. Much like a Facebook Group, your meetup doesn’t have to be directly affiliated with your company. In fact, starting a local meetup in conjunction with your Facebook Group, “Pizza Lovers of Jacksonville” (to continue with the above example) would be a seamless way to build community both virtually and online.

By building a loyal core of fans around the mission your brand has, you’ll be in a terrific position to overcome the algorithm on social media. Going into 2018, ask yourself whether or not you’re taking the necessary steps to build community on social. When it comes to marketing, it could be very well be one of the most important questions you ask yourself this year.

Uber to Settle Lawsuit Filed By India Rape Victim

Uber has agreed to settle a civil lawsuit filed by a woman who accused top executives of improperly obtaining her medical records after a company driver raped her in India, according to a court filing on Friday.

In a criminal case in India, the Uber driver was convicted of the rape, which occurred in Delhi in 2014, and sentenced in 2015 to life in prison.

The Indian woman also settled a civil U.S. lawsuit against Uber in 2015, but sued the company again in June in San Francisco federal court saying that shortly after the incident, a U.S. Uber executive “met with Delhi police and intentionally obtained plaintiff’s confidential medical records.” Uber retained a copy of those records, the lawsuit said.

The woman was living in the United States when she filed the lawsuit.

Terms of the settlement were not disclosed in the court document on Friday. Representatives for Uber and an attorney for the woman could not immediately be reached for comment.

The lawsuit cited several media reports which said former Uber CEO Travis Kalanick and others doubted the victim’s account of her ordeal.

“Uber executives duplicitously and publicly decried the rape, expressing sympathy for plaintiff, and shock and regret at the violent attack, while privately speculating, as outlandish as it is, that she had colluded with a rival company to harm Uber’s business,” the lawsuit said.

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In a prior statement, Uber said: “No one should have to go through a horrific experience like this, and we’re truly sorry that she’s had to relive it.”