Money Priorities

Gizmodo: WeWork Delaying Mass Layoffs Because It Can’t Afford Severance:

WeWork, the company that is either a transformative way of life or a dangerously overleveraged real estate company posing as a cultish tech firm, is planning on laying off thousands of employees.

… Just as soon as it can scrape up the cash for severance costs, anyhow.

Earlier on Monday, reports indicated that WeWork investor SoftBank was preparing a $5 billion bailout package that may give it 70 percent or higher control of the company at a valuation of $8 billion, a catastrophic fall from WeWork’s prior claims to be worth $47 billion. (As of just a few weeks ago, WeWork was still hoping for a valuation in the $20 billion range.) Business Insider later reported that staff received emails indicating there will soon be layoffs at the company; according to another report from the Wall Street Journal, sources say that thousands of people are slated to lose jobs but that the decision had been delayed because WeWork has only “weeks” of money left and can’t afford to pay severance. The paper noted that SoftBank’s offer would cover buying “more than $1 billion of stock from existing investors and employees.”

But wait! What about founder Adam Neumann, the CEO dude who was asked to step down in September? Does he get anything?

I’m glad you asked:

However, the details around Neumann’s payoff were dramatically under-reported as the journal reports that Softbank will provide the former CEO with around $1.7 Billion as part of the deal (and extend a $500 million line of credit to the kabbalah follower).

SoftBank can’t scrounge up the severence cash, but they sure as shit can get founder Adam Neumann $1.7 billion. Got it. Thanks.

Categories:

Business, Finance

Tim Cook & Tariffs

Neil Cybart: Tim Cook Continues to Thread the Needle:

Taking a step back to look at the big picture, Apple is not being targeted by either the U.S. or China. If anything, Apple is being boosted by the U.S. with tariff exemptions and delays.

The tariffs that were set to be placed on Apple’s product line on September 1st have been delayed until December 15th. Looking through the list of products that benefit from the delay (iPhone, MacBook, iPad, iPod Touch, Apple TV), the decision to delay could have very well be renamed the iPhone exemption. It would seem that Tim Cook had a direct role in delaying the tariffs as he apparently talked to Trump about the latest round of tariffs.

Cook made the bet to engage with the current U.S. administration (he has explained his decision numerous times over the years) and it would appear that his bet has contributed to Apple successfully navigating the current environment with just some minor cuts and scrapes here and there.

It is certainly possible that the 15% tariffs will be applied to Apple’s entire product line once December 15th rolls around. However, at this point, it’s probably just as likely that certain exemptions will be granted to Apple as we approach December.

To be human is to make shit up as we go along. Tariffs are tariffs until they aren’t tariffs.

Nothing we make is concrete. Ever.

quote from Above Avalon via Phillip Elmer-DeWitt

“…not with a bang but a stab in the back.”

Billionaire David Koch died today. Malcolm Jones wrote a piece on him over at The Daily Beast.

The last paragraph is a good one:

It is hard to muster much sympathy for a multi-billionaire, but spare a tear for David Koch, who in his last years apparently became the final victim of his own brother’s relentless desire for control. In 2018, Koch Industries announced that David Koch was retiring due to ill health. But two sources close to the family told reporter Jane Mayer that “Charles pushed David out. It was done with a wink, and a nod, and a nudge.” Another family associate confirmed this: “Charles had been pushing him out for quite some time. David kept resisting. It was bad. Charles took control.” And so ended one of the most remarkable careers in American business and American politics, not with a bang but a stab in the back.

Good riddance.

Categories:

Business

“make something good and see what happens”

In an interview with Edge Magazine, Panic co-founder Cabel Sasser revealed Mark Zuckerberg was interested in buying his company (I’m not sure how long ago).

Cabel passed (via Engadget):

“Maybe that’s why we’re put on this planet: to be an example of like, you can move slowly. Make sure you have enough money in the bank, make something good and see what happens. You don’t have to go for world domination.”

The world would be a better place with more Sassers and less Zuckerbergs in it.

Categories:

Business

American capitalism is broken

David Leonhardt writing for The New York Times on American capitalism and Elizabeth Warren’s proposed bill in the Senate:

In the years that followed, corporate America largely followed this prescription. Not every executive did, of course, and management and labor still had bitter disputes. But most executives behaved as if they cared about their workers and communities. C.E.O.s accepted pay packages that today look like a pittance. Middle-class incomes rose faster in the 1950s and 1960s than incomes at the top. Imagine that: declining income inequality.

And the economy — and American business — boomed during this period, just as Benton and his fellow chieftains had predicted.

Things began to change in the 1970s. Facing more global competition and higher energy prices, and with Great Depression memories fading, executives became more aggressive. They decided that their sole mission was maximizing shareholder value. They fought for deregulation, reduced taxes, union-free workplaces, lower wages and much, much higher pay for themselves. They justified it all with promises of a wonderful new economic boom. That boom never arrived.

Even when economic growth has been decent, as it is now, most of the bounty has flowed to the top. Median weekly earnings have grown a miserly 0.1 percent a year since 1979. The typical American family today has a lower net worth than the typical family did 20 years ago. Life expectancy, shockingly, has fallen this decade.

Income inequality is too real.

Free market capitalism sounds great to some, and so does not having speed limits for automobiles, but the truth is we need regulations. They exist for a reason and they serve a real purpose.

A, B, C, D – Always Be Collecting Data

It turns out that Facebook could in fact use data collected from its Portal in-home video device to target you with ads:

Facebook announced Portal last week, its take on the in-home, voice-activated speaker to rival competitors from Amazon, Google and Apple.

The biggest question surrounding the device: Why should anyone trust Facebook enough to put Facebook-powered microphones and video cameras in their living room or kitchen? Given Facebook’s year of privacy and security issues, privacy around the device — including what data Facebook collects and how it’s used — has been an important part of the story surrounding Portal.

That’s why we need to update our reporting.

Last Monday, we wrote: “No data collected through Portal — even call log data or app usage data, like the fact that you listened to Spotify — will be used to target users with ads on Facebook.”

We wrote that because that’s what we were told by Facebook executives.

But Facebook has since reached out to change its answer: Portal doesn’t have ads, but data about who you call and data about which apps you use on Portal can be used to target you with ads on other Facebook-owned properties.

Shocking! A company making money through targeted ads based on the profiles of over 2 billion active Facebook users might use that data to help their bottom line.

The longer Facebook is around the creepier it reveals itself to be.

Donald Trump, self-made liar and thief.

A solid piece of investigative journalism from The New York Times on the “self-made” empire of Donald Trump:

President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents, an investigation by The New York Times has found.

Mr. Trump won the presidency proclaiming himself a self-made billionaire, and he has long insisted that his father, the legendary New York City builder Fred C. Trump, provided almost no financial help.

But The Times’s investigation, based on a vast trove of confidential tax returns and financial records, reveals that Mr. Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day.

Just another reminder that Donald Trump is a liar and a thief.

Categories:

Business, Finance, Tromp

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Logitech Buys Blue

Back on July 30 it was announced Logitech is acquiring Blue Microphones for $117 million in cash:

Logitech is making a big purchase to secure a foothold in high-end audio recording. Tonight, the company announced that it’s acquiring Blue Microphones for $117 million. The all-cash transaction will result in Blue, known for USB condenser microphones including the Snowball and Yeti, joining Logitech’s existing portfolio of brands. Aside from Logitech and Logitech G, the company also owns Astro Gaming, Jaybird, and Ultimate Ears. Yeah, it’s putting together quite the roster.

This seems like a good move.

I’ve been using a Yeti mic by Blue for a few years now to record Weekly Exhaust and I’ve always been a fan of Logitech peripherals, particularly their M705 wireless mouse.(h/t The Wirecutter)

Categories:

Business, Product

“We’re not equipped for it.”

Om Malik on e-cigarette company Juul:

In a CNBC news report, Juul spokesman Matt David said: “Like many Silicon Valley technology startups, our growth is not the result of marketing but rather a superior product disrupting an archaic industry.” First of all, there is nothing technological about this company — unless you count behavioral addiction as a common ground with Facebook and others like them. It is utter bullshit, and reporters should know better than letting this slide without serious questioning.

From Business Insider (which called it iPhone of e-cigarettes) to CrunchBase, everyone seems to marvel over their growth rates, their post-Unicorn valuations, and jaw-dropping success at raising capital. And very rarely have I seen anyone stand up and point out that it is no different than traditional tobacco peddlers like Marlboro and Camel. They are peddling nicotine-based addiction. By focusing on charming founders, their backgrounds, large amount of funds raised and crazy valuations, no one is asking the right question: why are we supporting this company that is essentially Camel 2.0?

Addiction is a profitable and high-growth business. Ask the cartels selling other addictive products. “And is it an ethical business?,” asks Crunchbase. “We can’t answer the latter question here as we’re not equipped for it.” Yes, you are! Any halfway decent person can see that tobacco & nicotine industries are driven by greed and have preyed on human frailty.

Their “we’re not equipped for it” response reminds me of Facebook’s initial response to the use of social media platforms by Russians to manipulate politics in the United States. “We’re powerless! There’s nothing we can do!”

Fast-forward to today when Facebook announced it removed 32 Pages and accounts from Facebook and Instagram because they were involved in coordinated inauthentic behavior:

It’s clear that whoever set up these accounts went to much greater lengths to obscure their true identities than the Russian-based Internet Research Agency (IRA) has in the past.

Rather than be proactive about taking down accounts & pages that violate Facebook policies, they’d rather do nothing until something bad happens. They don’t want anything effecting their bottom line so they’d rather do nothing. It’s shameful.

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Business

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Restaurant as Workspace

Nellie Bowles looks into the rise of restaurants in big cities being converted into co-working spacing during off-hours:

The company that laid the extension cords and power strips across Elite Cafe’s copper tables is called Spacious. Since it was started two years ago, Spacious has converted 25 upscale restaurants in New York and San Francisco into weekday work spaces. Membership, which allows entry into any location, is $99 a month for a year, or $129 by the month. With $9 million in venture capital it received in May, Spacious plans to expand this year to up to 100 spaces. A restaurant makes for the perfect conversion, the Spacious team argues. Bars become standing desks. Booths become conference rooms. The lighting tends to be nicer, less harsh and fluorescent, than an office, and the music makes for a nice ambience.

Originally, the founders of Spacious thought they would have to sell restaurateurs on the idea. Instead, restaurants, struggling to pay rent and wages and frustrated with disappointing lunch traffic, are coming to them, eager to strike deals for a slice of the membership dues. Only 5 percent have made the cut to become Spacious spaces, said the company, which is unprofitable.

It’s interesting to see businesses adapting to the changes in industries and technologies. The idea of using restaurant space when meals aren’t being served makes a lot of sense, but I wonder if this business model is a solution or a band-aid.

This article reminds me of a book on my to-read list, Bullshit Jobs by David Graeber.

Categories:

Business, Career

Essentially Cancelled

From The Verge, The Essential Phone 2 has reportedly been canceled:

Essential has canceled plans to develop a second phone and is exploring selling off the entire company, according to Bloomberg. Much of the details remain up in the air. Talks of a sale sound like they aren’t very far along, and the report says that Essential still has plans for future products.

One thing that does sound certain is that Essential’s second phone — at least as it was originally planned — isn’t going to happen. Bloomberg says the development was canceled and that engineers are now working on a smart home product, which is supposed to be released next year. That may be the Echo competitor that Essential announced a year ago, but which we haven’t heard a word about since.

The Essential Phone shipped months and months after they said it would be available last May, and then when it did launch, they cut the price $200.

Andy Rubin created the Android operating system, and he came to market with a decent phone, but the Android market is very crowded and Rubin clearly was not able to convince people to buy his phone over a Google or Samsung phone.

Categories:

Business, Product

Never go full robot.

“The guy telling everyone to be afraid of robots uses too many robots in his factory”:

Elon Musk says Tesla relied on too many robots to build the Model 3, which is partly to blame for the delays in manufacturing the crucial mass-market electric car. In an interview with CBS Good Morning, Musk agreed with Tesla’s critics that there was over-reliance on automation and too few human assembly line workers building the Model 3.

Earlier this month, Tesla announced that it had officially missed its goal of making 2,500 Model 3 vehicles a week by the end of the first financial quarter of this year. It will start the second quarter making just 2,000 Model 3s per week, but the company says it still believes it can get to a rate of 5,000 Model 3s per week at the midway point of 2018.

You went full robot. Never go full robot.