Posted on Sun, 23 Nov 2014 01:02:00 GMT
Posted on Sat, 22 Nov 2014 23:12:00 GMT
Earlier this week, New York Times technology columnist Farhad Manjoo wrote a column about an app called "Luxe" that helps people park their cars.
The way it works is simple: You punch your driving destination in to Luxe. It estimates when you're going to arrive. Then, a Luxe employee greets you. The Luxe employee takes your car and finds somewhere to park it.
In San Francisco, where Manjoo lives, parking is a giant pain. Luxe only charges $5 per hour, or $15 per day. The daily rate is half the price it normally costs to park in the city all day. The hourly rate isn't too bad if you value your time properly.
Still! This seems like a silly, frivolous app.
Manjoo and I do a weekly podcast, and we talked about the app. He thoroughly defended it. He says it's not frivolous, and that it is in fact one of the great, hidden benefits of living in San Francisco.
Here's what he said about living in San Francisco. He's being slightly jokey, but only slightly:
"San Francisco is this amazing place where there are many, many kinds of services that are enabled by smartphones and they just do stuff for you like this. But it's not like they're 1%-er apps, they're cheaper than previous models, and they're cheaper in some way because they are being funded by VCs. We in San Francisco get to — first of all, we have to pay higher real estate prices, but the benefit is that we get all these services at cut rate. So you get all these services that aren't making a profit, you're not paying for them to make a profit, VCs are funding them. But, on the other hand you have to pay real estate prices."
He also said, that there are going to be competitors to this, so they are going to collectively lower the price of parking in San Francisco, which solves a huge dilemma in San Francisco. Lots of people drive to work in the city, and they used to have to pay $30 a day, so Luxe has cut the price of parking in half.
This is a small hidden benefit to living in San Francisco. It's super duper expensive to live there, but new mobile services are cutting down slightly on other costs, and making life better.
I doubt people who are protesting rising rents really care, but it's an interesting counter view.
Here's the podcast. We talk about this around the 17:18 mark.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 23:11:00 GMT
The demographics of who's on what social network are shifting — older social networks are reaching maturity, while newer social messaging apps are gaining younger users fast.
In a new report from BI Intelligence, we unpack data from over a dozen sources to understand how social media demographics are still shifting.
Access The Full Report By Signing Up For A Trial >>
Here are a few of the key takeaways from the BI Intelligence report:
- Facebook still skews significantly female. Women in the U.S. are more likely to use Facebook than men by about 10 percentage points, according to a 2013 survey of social network adoption.
- Facebook remains the top social network for U.S. teens. Nearly half of teen Facebook users say they're using the site more than last year, and Facebook has more daily teen users than any other social network.
- That said, Instagram has edged out Facebook and Twitter in terms of prestige among young users. U.S. teens now describe Instagram as "most important," while Facebook and Twitter lost ground on this measure, according to Piper Jaffray's twice yearly teen survey. The survey also found that 83% of U.S. teens in wealthy households were on Instagram.
- LinkedIn is actually more popular than Twitter among U.S. adults. LinkedIn's core demographic are those aged between 30 and 49, i.e. those in the prime of their career-rising years. Not surprisingly, LinkedIn also has a pronounced skew toward well-educated users.
- Twitter has begun to lean worryingly toward male users, whereas previously it was a more gender-balanced social network. Pew found that 22% of men use Twitter, while only 15% of women do.
- YouTube reaches more adults aged 18 to 34 than any single cable TV network. Nearly half of people in this age group visited YouTube between December 2013 and February 2014, according to Nielsen. It was rated by millennials as the top place to watch content, ahead of digital and TV properties like Facebook and ESPN.
- Snapchat is the youngest social network of all. More than six out of 10 Snapchat users are in the 18-to-24 age group, compared to 28% of Instagram users, according to a survey by Informate.
The report is full of charts (over 20 charts) and data that can be downloaded and put to use.
In full, the report:
For full access to all BI Intelligence reports, briefs, and downloadable charts on the digital media industry, sign up for a two week trial.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 23:00:00 GMT
The technology industry is known for having been created by college dropouts like Steve Jobs, Bill Gates, and Larry Ellison, but that doesn't mean these innovators didn't have meaningful undergraduate experiences.
Bill Gates became friends with Steve Ballmer at Harvard, Larry Ellison learned he was a pretty good computer programmer at the University of Illinois, and Steve Jobs considered his time at Reed College among the most valuable experiences of his life.
Meanwhile, Peter Thiel actually graduated from Stanford, but today he thinks college is such a waste of time that he offers $100,000 scholarships to students who want to drop out.
What can we say, everyone's experience is different.
Larry Page, University of Michigan
Google cofounder and CEO Larry Page had been a quiet child growing up in East Lansing, Michigan, but he began to find his footing socially while attending the University of Michigan during the early 90s.
There, he made friends with other students who loved technology and became editor of a newsletter put out by Eta Kappa Nu, an electrical and computer engineering honor society, according to a Business Insider story earlier this year.
BI's Nicholas Carlson reports that Page also developed a reputation for prescient predictions about the future — such as when he realized that cheaper hard drives would make PCs a lot more useful — and a desire to solve big problems regardless of whether the technology existed to do so.
Elon Musk, University of Pennsylvania
PayPal cofounder and Tesla CEO Elon Musk studied physics and business at the University of Pennsylvania, transferring from Queen's University in Canada following his sophomore year.
Musk's housemate at the University of Pennsylvania, Adeo Ressi, recalls at a 2010 event held by TheFunded.com that Musk did not drink and was "the biggest dork I've ever met."
Meanwhile, The New Yorker reports Musk loved first-person shooter video games, and he was so focused on his schoolwork that his mother would check on him to make sure he was eating and changing his socks every day, according to a 2012 Forbes story.
But in addition to all that studying and gaming, Penn's alumni magazine reports that Musk and Ressi made money by charging other students to attend parties they threw at their house.
Marissa Mayer, Stanford University
Yahoo president and CEO Marissa Mayer was already an overachiever by the time she enrolled at Stanford in 1993, having served as president of her high school's Spanish club, treasurer of its Key Club, and captain of both the debate team and pom-pom squad.
This intense focus on achievement continued in Palo Alto, where a former classmate describes her as having been "very smart and very serious," according to Business Insider's Nicholas Carlson.
Carlson reports that Mayer wavered from her initial plan to become a doctor, finding that she preferred the problem-solving skills used in computer programming to the rote memorization needed to succeed in pre-med classes.
As an upperclassmen, Mayer excelled teaching younger students in her symbolic systems major, a course of study that combines linguistics, philosophy, cognitive psychology, and computer science classes. See the rest of the story at Business Insider
Posted on Sat, 22 Nov 2014 21:53:22 GMT
Posted on Sat, 22 Nov 2014 21:46:00 GMT
Posted on Sat, 22 Nov 2014 20:14:00 GMT
Investor watchdog organization Institutional Shareholder Services (ISS) caused a stir last week by telling Microsoft investors that Satya Nadella's pay package was too high.
It advocated that they vote no on the "say on pay" advisory vote during Microsoft's shareholder meeting December 3.
As part of his promotion, Nadella was granted a starter kit of stock valued at about $65 million which won't begin to vest until 2019. Plus, he got another one-time stock grant worth $13.5 million in August 2013 to keep him around during the CEO search process. It vests over seven years.
In 2014, his base salary is $918,917 for a role he assumed in February. (ISS calculates his full year base at $1.2 million) and a cash bonus of $3.6 million.
But Nadella isn't like the two previous CEOs. Both Bill Gates, the founder, and Steve Ballmer, one of Microsoft's earliest employees, owned massive stakes from the get-go. With Nadella, Microsoft has crafted a brand new pay-for-performance model.
So Nadella will be eligible for an annual $13.2 million stock award, with a complicated vesting schedule, that he'll unlock if he hits certain performance targets.
"Over 80% of the reward opportunity is performance-based measured by our total shareholder return (“TSR”) relative to the S&P 500. To earn the target value of this award, Microsoft’s TSR must exceed the 60th percentile of the S&P 500 over each of three overlapping five-year performance periods that extend to 2021," chairman John Thompson wrote in a letter to shareholders about the pay plan.
ISS calculates the whole starter package to be worth $90 million and complains that the performance targets he's supposed to hit are too vague ("lacks a strong connection to objectively measured company performance"). That's why they think his pay is too high, according a report shared with Business Insider.
A Microsoft spokesperson tells us this is misleading because a good chunk of that stock won't begin to available to him for five years. Plus, the value of another chunk is based on performance targets and isn't known yet. It depends on how well the company is doing.
By Microsoft's calculation, Nadella is being paid $25.1 million for 2014 (without his one-time $65 million stock grant that he can't touch until 2019.) Microsoft tells investors they are aiming for his annual pay to be $18 million, $13 million of it as stock awarded based on performance. (This excludes that $65 million as it vests and the $13 million chunk issued in 2014 as it vests).
By the way, Microsoft also agreed to a $17.4 million golden parachute.
How does that compare to others?
- Oracle is paying its new co-CEOs Safra Catz and Mark Hurd $37.7 million apiece for their first year. That was a pay cut from $44 million the year before. (Larry Ellison is making $67 million in 2014).
- Tim Cook was granted a staggering $378 million one-time stock grant when he took over as CEO, which has vastly grown in value. Between a $4 million salary and about $70 million of his stock options that vested, he made $74 million in 2013.
- Marissa Mayer was paid $36.6 million her first year as the CEO of Yahoo.
A Microsoft spokesperson tells us that when adding in their one-time stock chunks, Tim Cook’s annualized pay is $40.4 million, Eric Schmidt’s annualized pay is $32.9 million, and Marissa Mayer’s annualized pay is $24.3 million.
When looking at it that way, Microsoft feels that Nadella isn't overpaid at all.
Of course, if all of this goes as planned, and Microsoft's stock continues to rise, his pay will be much higher in the next seven years. On the other hand, we doubt that any investor advocacy group will complain about that.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 20:13:42 GMT
When Andreas Raptopoulos and his team got stuck in a 20-truck convoy completely marooned in mud while navigating between villages in Papua New Guinea, it was incredibly frustrating. It was also a validation of his work.
Raptopoulos is the cofounder and CEO of a startup called Matternet, which makes drones, though he refuses to use that word. He prefers to call them small unmanned aerial delivery vehicles, or UAVs.
He started the company after having a "eureka moment" three years ago. He realized one billion people around the world live in areas lacking reliable road systems and that drones could provide a more reliable way to deliver critical supplies, like medicine.
That's why Raptopoulos was in tuberculosis-ravaged Papua New Guinea in September, entrenched in mud. Matternet had connected with the international aid organization Doctors Without Borders to test whether its aerial vehicles could provide a good way to transfer TB diagnostics between villages. During the two weeks Matternet conducted its trials, multiple trucks got trapped.
"We had to do that trip four times and every time there was an element of fear," Raptopoulos tells Business Insider. "We thought, 'Will we make it?' We talk a lot about the problem, but it became very real for us. What it really means, and all the emotions that go with it."
Matternet's trucks may have gotten lodged in mud between launch sites, but its drones navigated their routes without a hitch. Controlled completely via an app, a UAV bearing a spittle sample would take off, fly through the air, and land at a hospital as far as 25 kilometers away.
For Raptopoulos, it felt like a series of "pinch me" moments. Every time the team prepped a drone for a take-off, anywhere from 50 to 70 people would surround them. These were often people who live without running water or reliable electricity in their homes, and yet the drones seemed to make sense to them almost immediately.
"Most of these people have never seen one of these things, at least in the flesh," Raptopoulos says, "But it’s amazing, the amount of joy it generates. It basically breaks with all your assumptions."
That's one of the underlying principles that Matternet builds upon: that its drones be so dead-simple to operate, that someone without significant technological training could instinctively figure out how to send one on a flight. That someone who had even the most minimal knowledge of how to operate a smartphone could direct the drone to deliver medicine, food, or other supplies from one location to another.
For that reason, Raptopoulos likes to describe Matternet's UAVs as the Apple products of the drone space.
"We want this company to be at the intersection of the best technology and excellence in design," he says. "We want to sell a vehicle to you that you can operate with an unprecedented ease of use."
Right now, drones — and delivery drones in particular — are a buzzy topic, but when Matternet first got started, people mainly thought of them in terms of the military or security.
Today, they're being used to deliver medicine in Germany and the Federal Aviation Administration recently approved them for use in shooting movie and TV scenes in the US.
"Things are changing fast in this space," Raptopoulos says. "A year ago, there was no Amazon drone announcement. A month ago there was no Google drone coming out."
Matternet's early start combined with its powerhouse-team has it poised to take the drone space by storm and become one of "the next billion-dollar businesses," according to Matternet investor Ravi Belani, managing director of Alchemist, the startup accelerator Matternet graduated from.
Raptopoulos' vision for Matternet first hit him when he was attending Singularity University, a non-traditional, future-focused school that aims to empower its students to apply "exponential technologies to address humanity's grand challenges."
Working as part of a larger team, Raptopoulos got hung up on the fact that one-seventh of the Earth's population lacked access to all-seasons roads and that developing a traditional, reliable transportation infrastructure in those places would take crazy amounts of money and upwards of 50 years.
He took a map of Africa and overlaid an internet-like network onto it. If he could build machines that could carry cargo short distances, each trip would be small, but the scale could be incredible. He says he got chills:
Raptopoulos says when he and co-founder Paola Santana, previously a lawyer in the Dominican Republic, first started pitching the idea around, he got a lot of polite but confused responses. A lot of people thought they was crazy, Raptopoulos says. But the founders of Singularity University — futurist Ray Kurzweil and entrepreneur Peter Diamandis — loved the idea. After graduating from the University, they accepted Matternet into SU Labs, the school's innovation accelerator.
Since then, Raptopoulos and Santana have built a lean team of 10 people who specialize in skills ranging from rocket science and engineering to law and regulation. The company has raised $2 million to date from the likes of Andreessen Horowitz, Alchemist Accelerator, and even the rapper Nas, but is eyeing a more significant Series A round in the near future.
Matternet's plan is to create a full stack product, handling both the hardware and the software themselves, while simultaneously making sure to stay abreast of every new legal hurdle in the drone space.
Right now, the FAA bans the use of commercial drones, but it is supposed to release rules for small drones under 55 pounds later this year, in line with its complete plan for “safe integration” of commercial drones by September 2015. Meanwhile, a team at NASA led by Dr. Parimal Kopardekar is developing a drone traffic management program of its own to advise the FAA.
Matternet is one of the many UAV-focused companies that has met with Kopardekar's NexGen technology team to discuss different ways to provide a structure to drone traffic.
The startup plans to announce its first product in the first quarter of 2015, and start shipping a few months later. The goal is to have concrete agreements with the likes of Doctors Without Borders and the World Health Organization, which it tested with in Bhutan, by the time Matternet's UAVs get launched. Raptopolous couldn't name a concrete price point, but guesses that the Matternet system will go for between $2,000 and $5,000.
By launching in areas like Papua New Guinea and Bhutan — where its drones are sometimes flying over swaths of jungle or sparsely populated desert and where there isn't a strict existing aerial infrastructure — Matternet has fewer barriers to entry.
"The risk needs to be low if the UAV falls," NASA's Kopardekar tells Business Insider, noting that low-density areas make the most sense for drone testing and operations. "You need to be able to demonstrate the risk is very low and the benefits are high: That's where you will see implementation happening."
Although Raptopoulos landed upon the idea for Matternet because of a motivation to provide a transportation solution to parts of the world that lack access to all-season roads, the company has its sights set beyond humanitarian causes. After all, Matternet isn't a service company; it's a product company.
"We are pioneering this technology by helping partners find ways to put it in the field now, but our vision is that we should be putting this type of technology into everybody's hands," he says, "Whether their purpose is in Papua New Guinea or Rio or Istanbul or Mexico City or in Palo Alto, San Francisco, and LA."
"Sometimes mission-driven entrepreneurs get so hung up on their mission that they're missing the commercial opportunity, which they probably don't emotionally care that much about," Pascal Finette, who heads SU Labs, explains. "I think this duality — the dance between these two worlds — is something social entrepreneurs sometimes get wrong. But Andreas is just perfect. He's phenomenal because he understands, 'Hey, if we get this at scale and we can do this in the US and we become a big company, we can use all this as a force of good to do even more in the world.'"
Raptopoulos sees Walgreens using Matternet's drones to deliver prescriptions, or grocery stores using them to deliver milk. Because the startup is small, lean, and fast-moving, he thinks it has a leg up on giants like Google or Amazon.
"I think Andreas is a beautiful, bi-focal CEO," says Belani from Alchemist. "He is a true visionary who is always motivated by fundamentally changing the world. But he's very practical in the near term what's required to get things done. He's not a head-in-the-clouds type of visionary. He's incredibly practical with a strong street sense of business."
Finette agrees: Raptopoulos and Santana dream big, but know how to actually move steadily forward. He laughs recalling how nonchalantly the team will talk about passing amazing, major milestones.
"They talk about it as if it's nothing," he says. That speaks to their capacity as entrepreneurs, he says, because they understand that every achievement is just a small stepping stone towards the big idea.
Right now, Matternet's drones weigh well under 5 kilograms, can carry cargo over 0.5 kilograms, and fly over 25 kilometers on a battery charge. Their geo-fenced routes take into consideration weather data and terrain. They are equipped with cameras to help them navigate onto landing pads at their destinations. The entire system gets controlled by a smartphone app.
Raptopoulos calls it the "Apple II" of the drone industry: the "most easy to use, desirable, and safest personal flying vehicle" out there.
Not that Matternet is the only company trying to achieve that. Besides giants like Amazon and Google, there are other delivery drone companies out there, like Bizzby and Aria.
"A drone delivery network will be the most disruptive thing to hit the delivery space," says Brody Buhler, partner at consulting firm Accenture, who focuses on postal issues. "If you don’t have drones on your five-year roadmap, you’re probably too far out."
Talking to Raptopoulos, that future feels even closer. He gets almost electrically bright-eyed when he talks about the moments he's had on trials in the Himalayas or Papua New Guinea. But his passion really radiates off him when he talks about what's yet to come.
"I’m going to keep on having these 'pinch me' moments," he says. "When we see our first big deployment in a city. When I’m able to see 20-30 crafts doing routine missions. When I’m able to actually see our drones in the sky and nobody will be paying attention, because they’re just an establishment. And we can't wait."
SEE ALSO: Why The Guy Behind The Most Popular Smartwatch In The World Isn't Scared Of Apple
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 19:44:54 GMT
I have a confession to make: I have an embarrassing addiction to a freemium game.
Three years ago, I downloaded "The Simpsons: Tapped Out." One of my favorite shows of all time is “The Simpsons,” and as a proud owner of a new iPhone 4S at the time, I wanted to own this game.
In the end, it ended up owning me.
The gist of the game is that Homer Simpson caused the town of Springfield to blow up, and now you, the "Sky Finger," must recreate the town and bring back all its residents. You make money by collecting rent from buildings and making characters do various jobs, which all take time to complete.
I have witnessed how this game has grown through the years, with the load times and overall quality improving with each new iPhone release. I’ve been there for every new character, new building, holiday and special promotion. My Springfield is immaculate. It's gorgeous. You wish you lived there.
I want to quit. I do. I'm maxed out at Level 47, as high as Electronic Arts will allow me to go, and have all the current characters and buildings you can own through normal gameplay.
But I don't have it all. And I'll never have it all.
That's what makes this a "freemium" game and not a "free" game. (Also why Apple needed to subtly change the App Store recently.)
Getting the premium items requires a special kind of currency, which can only be attained through either time or money. In the case of “The Simpsons: Tapped Out,” donuts are your “premium” currency, which you can collect by leveling up, or simply when the Electronic Arts developers feel charitable.
I've saved — no, hoarded — donuts for years, but my 458 donuts will only get me two or three quality items. I’m not kidding: I can’t even afford all four of these characters.
And there’s the rub: Even after spending three years collecting donuts, I would still have to spend money to achieve “100% completion.”
But in mobile games like “The Simpsons: Tapped Out,” 100% completion doesn’t even exist; EA regularly adds new characters and premium items each month. If you truly want to own everything, you’ll need to shell out money regularly.
The idea that you can get all the items through time and patience is just a red herring.
The freemium model has gained momentum on mobile, thanks to early popular games like “Angry Birds,” but now it’s spreading elsewhere. While watching a review of “LittleBigPlanet 3,” a new game for the PlayStation 4, I learned that in order to collect some really fun costumes for your characters, you need to spend money in addition to the $60-plus you’ve already spent on the game.
These gaming companies are smart to implement freemium into their titles: The game teases you with its best rewards, which can only be attained by a spending an inordinate amount of time in the game — each day, and consistently over time — or by spending money. And there are plenty of people who will spend thousands of dollars to progress through their favorite games, just ask the lead singer of the Sex Pistols.
So freemium works out great for these gaming companies. But for the consumer, it’s downright cruel.
And yet, I can’t stop playing.
SEE ALSO: How Flip Phones Could Return In A Big Way
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 19:36:42 GMT
Ben Horowitz, the co-founder and general partner of Andreessen Horowitz, is one of the most experienced tech leaders in Silicon Valley.
He played a major role in creating Netscape in the 90s, and was the CEO of Opsware, a company that was later sold to HP for $1.6 billion in 2003.
His VC firm Andreessen Horowitz has invested in some of the hottest startups, including Facebook, Twitter, Airbnb, and Lyft.
With so much experience, Horowitz has many interesting stories to tell, which he often shares through his personal blog. He even published a book titled, “The Hard Thing About Hard Things,” based on his own experience.
Last week, Horowitz spoke at Stanford for “How to Start a Startup,” a course run by Y Combinator’s Sam Altman, and explained the importance of having “one management concept.”
We pulled out some of the slides from Horowitz’s presentation and put together his advice on how to deal with employee demotion and what to do when someone asks for a raise.
“This management concept is the thing I see CEOs mess up more consistently than anything else…It’s the easiest thing to say and the most difficult to master.”
“When making critical decisions, you have to be able to see the decisions through the eyes of the company as a whole…Otherwise, your management decisions could have potentially dangerous consequences.”
For example: How do you whether to demote or fire someone? See the rest of the story at Business Insider
Posted on Sat, 22 Nov 2014 19:34:00 GMT
Every month, some of Silicon Valley’s biggest power players meet at the Palo Alto home of Chamath Palihapitiya, an early Facebook executive who now runs his own venture capital firm Social+Capital. The guest list reads like a who’s who of Silicon Valley’s true elites: from Yammer founder David Sacks, SurveyMonkey’s Dave Goldberg and Inside.com’s Jason Calacanis to professional athletes and poker players, including the World Series of Poker champion Phil Hellmuth.
But this isn’t for some networking or investment opportunity of a hot startup. They meet for something much more fun: a game of poker.
“It was meant to basically put together 9 or 10 of the most competitive people in Silicon Valley and play poker,” Palihapitiya, who’s been hosting home poker nights for a few years now, told Business Insider. “Once you get this competitive group of people together on the same table, it’s super fun.”
The level of play is far beyond regular amateur tables. For example, Palihapitiya, who often walks off with the most chips, has played in some of the highest stake poker tournaments, including the World Series of Poker, where he finished 101st out of more than 7,000 contestants in 2011.
In fact, according to Hellmuth, a 12-time world champion in Texas Hold’em, the skill level is so high that he was only able to hit break-even in the first three years he played there. “In general, great businessmen are great poker players. There’s a reason these guys made so much money in the real world. Those skills translate to poker,” Hellmuth tells us.
“In general, great businessmen are great poker players. There’s a reason these guys made so much money in the real world. Those skills translate to poker,” Phil Hellmuth says.
Once the game starts, the intensity could easily turn up in a matter of seconds. They play for hours, well past 2AM on some occasions. And while the stakes remain relatively modest, $10,000 bluffs do happen in the most heated moments.
But Palihapitiya says the cash part of the game is mostly irrelevant. It’s rather about the thrill of playing and winning against highly competitive people, and just trying to master every nuance of a game that, he says, “you can learn so easily, but never master.”
Poker has relatively simple rules. In traditional Texas Hold’em poker, each player is first dealt a set of two cards, which are not shown to others, and then a shared pile of five cards on the table. The first three of the five shared cards are dealt at once, and after a round of betting, the fourth card is shown. The fifth card is uncovered after another round of betting.
But, in between each round of betting, there’s intense strategy and mind-games involved that requires a lot of intellect and discipline throughout the game.
That’s what makes poker such a complex — and fascinating — game, Palihapitiya says. There’s a chance of overcoming a poor hand, if you play it smart. Or you could lose everything with a single mistake, just when you thought you were going to win a big hand.
In that sense, Palihapitiya says, there’s a certain element of poker that almost “mirrors life and running a startup.” It’s why so many entrepreneurs love the game. He sums up the similarities in six distinct points:
Depending on how you play each round of betting, you could completely change the outcome of the game — regardless of what cards you are dealt at first. It’s just like being born into terrible circumstances in life but finding ways to overcome that and succeed. Palihapitiya relates to it personally, as he is a classic “rags-to-riches” story, having grown up on welfare as an immigrant in Canada to become one of the most successful tech entrepreneurs around. “That’s a characteristic of this game that very few games have,” he says.
Learning from mistakes:
You make plenty of mistakes in poker. The point is learning from those mistakes and fixing it in the future. “When you misplay your cards and lose a big hand, it’s an unbelievable moment of learning,” Palihapitiya says. It’s one thing not to repeat the same mistake, but it’s also important to know when you win by sheer luck. “Sometimes you just do something and it completely works, and you think to yourself, ‘I must be really good.’ The takeaway should be the exact opposite — you may have just gotten really lucky,” Palihapitiya says.
Knowing how to fake it:
Pretending like you have a strong hand, or “bluffing,” is a huge part of poker; all good players know how and when to use it properly. Palihapitiya says he doesn’t even look at his hand 90% of the time before placing his first bet. Similarly, in startups, it’s important to act confident at all times and believe in your product/vision, as he says, “In a startup, you have to fake it 'till you make it.” This is the same point Salesforce.com’s Marc Benioff says in his book, “Behind the Cloud”: “You have to act confident, even when you’re not.”
Being a "good loser":
There are moments in poker when you lose big just when you thought you were going to win. It often causes huge emotional tilt and impacts your subsequent decision-making power. “If you can’t keep a clear head, you’re going to start making worse decisions and those decisions will compound,” Palihapitiya says. “Poker’s great because it teaches you how to be mentally disciplined in the face of adversity.”
Getting a better read of people:
The best poker players have an exceptional ability to sense others’ emotional energy. They can read how people feel or think by just looking at their reactions to certain moves or body gestures. Palihapitiya says that ability can help you in everyday life, too, as you become “more emotionally attuned to the people around you.” In other words, you can start understanding others better, coaching people better, and even negotiating better.
Making quick decisions and taking risks:
An average person’s life spans 80 to 90 years. Most startups are on a five-to-seven-year trajectory. A single round of poker, however, happens in a matter of just a few minutes. “Every hand in poker is a microcosm of that entire struggle (of life or a startup),” Palihapitiya says. You have to make quick decisions — and take risks — in a short period of time, with very limited information, and those decisions could have a huge impact on the outcome of the game. It’s why good poker players know how to make the right decisions quickly and take risks when needed.
Palihapitiya, who at age 26 was the youngest VP in AOL’s history, says he doesn’t have enough time to play poker as much as he used to anymore. But he still tries to tell others how great the game is through charity events, which many of his Silicon Valley friends join in together. For example, he donated all of his winnings from the World Series of Poker to the Boys and Girls Club, while he’s been hosting a number of different charity poker games that generate roughly $6 million a year.
“It’s really not about trying to make money - it’s about ‘Can you beat this guy?” Palihapitiya says. “Poker’s just a fascinating game of skill that’s exceptionally difficult to master. It really helps you disambiguate a lot of skills.”
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 19:33:00 GMT
A former ZocDoc employee says the company is a "frat house" where men casually discuss their female co-workers' body parts, women sleep with upper-management, and there is a rodent infestation.
She says she is suing the company.
ZocDoc provided Business Insider with the following statement: "As a company, we pride ourselves on being a great place to work, and we have a long-standing policy against any forms of unlawful harassment or discrimination."
ZocDoc is a site you can use to find and make appointments with doctors. It's based in New York and Arizona.
This summer, reports said the company was seeking to raise $152 million at a $1.6 billion valuation.
The former employee alleges:
- "There were things the men who worked there could get away with saying like 'you aren't bubbly enough', 'you look hot today', "That secretary is a c---' etc. It was just accepted."
- "There was a distinct difference between the way upper management talked to and treated the women in the company. Male employees were at a great advantage and very buddy buddy with each other and the women (who weren't sleeping with someone in upper management) were on their own."
- "I would often overhear managers say some of the girls dressed slutty, when I brought it up one gentleman even jokingly saying 'there's nothing wrong with that' while laughing it off."
- "Words like 'tits,' and 'pussy,' were common phrases heard on the sales floor."
- " They have several mice who run around the office during the day and late at night, defecate in mugs kept in the kitchen. Cleaning mice feces out of your desk was a daily routine."
The employee says she has documents to prove her allegations, but that her lawyer is saving them for trial.
The former ZocDoc employee published an anonymous rant about the company on Kinja and forwarded the link to Business Insider this morning. Business Insider has since learned the former employee's name and confirmed her employment.
The former employee asked us to keep her anonymous because of the "shame" she has been made to feel by ZocDoc. She says the company is aware of her identity because of her pending lawsuit.
Here is the former ZocDoc employee's allegation in full:
Weeks prior to working at ZocDoc I was excited by the prospect of working for an amazing company called ZocDoc who prides itself on hiring " great people", who has an image of being one of the "best places to work in NYC" voted by Crains NYC three times in a row. The company boasts an image of being seen as a company where employees were valued, and the success of those around you would aid the overall success of the company. After doing research for the first time I was impressed. I saw a nurturing, growing, and fantastic opportunity to be a part of a team that was like none other. So I starting at ZocDoc and took an entry level position as a Sales Origination Associate and I was thrilled.
I was soon quickly disillusioned:
The following is an example of some of the things I was subject to while working at ZocDoc:
I was subject to sexual harassment by members of my training class on a daily basis via the company's internal communication system "HipChat", and immediately felt thrust into a very "frat house" like atmosphere where there were things the men who worked there could get away with saying like "you aren't bubbly enough", "you look hot today", "That secretary is a c---" etc. It was just accepted. Mostly because most of the people who work there are fresh out of college and have never had a real job, and do not know how to behave in the work place.
There was a distinct difference between the way upper management talked to and treated the women in the company. Many employees expressed concerns that were ignored. Some were told "this a sales floor", it was brushed it off as just being part of the job. The male employees were at a great advantage and very buddy buddy with each other and the women (who weren't sleeping with someone in upper management) were on their own.
I would often overhear managers say some of the girls dressed slutty, when I brought it up one gentleman even jokingly saying "there's nothing wrong with that" while laughing it off. Words like "tits", and "pussy", were common phrases heard on the sales floor. Coworkers would explicitly talk about sexual encounters out loud on the sales floor management would hear it and not say anything. After bringing this to the attention of upper management I was assured they would talk to him, but instead he took him out for drinks after work.
People were constantly cheated out of sales, and for a company who has a core policy to "Speak up" when anyone brought up anything they were labeled as a "complainer" To "Speak up" was the worst thing you could do if you cared about your job.Even bringing concerns to the attention of Human resources was pointless as they told you to talk to someone else about it. Um what is their role?
The company had a in house happy hour with wine and beer every Friday. Which was an awesome perk. Except for the fact that employees fresh out of college snuck in their friends who were still in college around 20 year old (even sneaking in dates) to partake in the company's complimentary beverages.
The most interesting part of working there was as a health company who compares itself to hospitals like Kaiser Permanente they are disgusting. They have several mice who run around the office during the day and late at night, defecate in mugs kept in the kitchen. Cleaning mice feces out of your desk was a daily routine. There were even mice in the the snack room, where they served us free and loose nuts, dried fruit, and other treats that mice love. All of this was just accepted.
As a sales representative I was told to blatantly lie to Dr.'s and I overheard people around me lie to them on a consistent basis. ZocDoc was even recently sued by a bund of doctors in a class action lawsuit brought forth by a group of Doctors.
I would like to point out that I am not a malicious person, I have numerous years of work experience. I have never been treated so disrespectfully, improperly, and unprofessionally by someone I was working for. I am certain that I am not the first person to experience these things by the hand of ZocDoc. This is evident by the fact that the people who did this to me believed that they could get away with what they did. And, ZocDoc as a company allowed them to by ignoring their actions.
ZocDoc does not care. This speaks volumes about who they truly are. You may view this as a letter coming from a disgruntled employee, but I assure you that I am not disgruntled, I just believe that for a company whose motto is "Patients First" I am a bit baffled by how they can treat their employees that way. Where do the employees come in? I wasn't asking to be 2nd 3rd 4th or 5th, I was merely hoping that I could have been acknowledge as a human being whose sole intentions were to help a potentially great startup find success.
Not to mention the constant workplace bullying I was subject to creating a toxic work environment. ZocDoc prides itself on being a company that is dedicated to improving the health of millions of people around the world, what about the health of their employees? What about their employees to are subject to draws full of mice excrement? What about your employees who are subject to running into at least 24 mice on a daily basis who defecate everywhere, and carry disease?
Cyrus stated in an interview that he has "a really high bar." when it comes to the type of people who are employed by ZocDoc. By what is this measured? Please define this, because in the simplest sense I was Bamboozled.
When I initially went to Human Resources (or People Ops) with my concerns instead of expressing concern or interest in what I was saying about my ongoing treatment they asked "Do you have proof?". This taught me that no one cares about what happened to you, not your manager, not the director of the department, not the company you work for, not your lawyer, not your significant other, not the judge, not the press, not even Jesusunless you can prove it. ZocDoc taught me to be prepared, so to answer that question: Yes I do.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 19:04:54 GMT
OnePlus, the Chinese tech startup that created the super hard-to-find OnePlus One, is already planning to launch a new phone next year.
The company's global director Carl Pei confirmed as much in a thread on Reddit in September, but now we've learned a few small details about the phone, rumored to be called the OnePlus 2.
A source familiar with the situation told Business Insider the following about OnePlus' next phone:
- It will probably be more customizable, since the company is aiming to produce more of its StyleSwap back covers around the time the phone launches, our source said. OnePlus released a Bamboo-style back cover for its One phone, but discontinued it in September due to manufacturing issues. OnePlus sold a few of those covers earlier this month, but since they were so limited you need an invitation to buy them. The company previously said it would release its StyleSwap backs in different materials such as wood, denim, and Kevlar, but we have yet to see any of these launch. There's no guarantee manufacturing issues won't arise this time around, but based on what our source says it sounds like the company is trying to produce more to coincide with the phone's launch.
- The next OnePlus phone will likely still be cheaper than other off-contract Android phones. We're hearing that the phone will likely cost less than $500 even if there are significant hardware improvements since OnePlus wants to keep its margins thin.
- There will be some "surprises in store when it comes to hardware." We have no idea what this means, but our source wouldn't elaborate any further.
OnePlus launched its One smartphone in April, and it turned out to be one of the most highly regarded phones of 2014 by both reviewers and consumers. There are two main reasons everyone's been talking about the OnePlus One: it's super cheap and extremely hard to find.
The OnePlus One costs $350 off contract, which is a pretty unheard of price. Without a carrier subsidy, phones like the Galaxy S5 usually cost around $600 off contract. With its OnePlus One, the company was able to include some of the best components, an attractive design, and a bright, sharp screen for about half the price of your standard Android flagship.
Since demand has been so high, you can only order the One if you have an invite from someone who already owns the phone. OnePlus also rolls out preorders to the general public in limited time blocks, and the most recent one took place on Nov. 17.
SEE ALSO: A Chinese Startup Just Made The Thinnest Phone In The World, And It Looks Gorgeous
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 17:51:00 GMT
Posted on Sat, 22 Nov 2014 17:21:00 GMT
Posted on Sat, 22 Nov 2014 15:36:00 GMT
As regular readers know, I am increasingly worried about the level of stock prices.
So far, this concern has seemed unwarranted. And I hope it will remain so. (I own stocks, and I'm not selling them.)
But my concern has not diminished.
On the contrary, it grows by the day.
I've discussed the logic behind my concern in detail here. Today, I'll just focus on the primary element of it:
Stocks are now more expensive than at any time in history, with the brief (and very temporary) exceptions of 1929 and 2000.
Importantly, today's high prices do not mean that stock prices can't go even higher. They can. And they might. What it does mean is that, at some point, unless it is truly "different this time," stock prices are likely to come crashing back down, likely well below today's levels. Just as they did after those two historic market peaks.
(I unfortunately know this especially well. Because I was one of the people hoping it was "different this time" in 1999 and 2000. For many years, it did seem different — and stocks just kept going up. But then they crashed all the way back down, erasing three whole years of gains. This was a searing lesson for me, as it was for many other people. It was also a lesson that cost me and others a boatload of money.)
Anyway, here are three charts for you...
First, a look at price-earnings ratios over 130 years. The man who created this chart, Professor Robert Shiller of Yale, uses an unusual but historically predictive method to calculate P/Es, one that attempts to mute the impact of the business cycle. Importantly, this method is consistent over the whole 130 years.
As you can see, today's P/E, 27X, is higher than any P/E in history except for the ones in 1929 and 2000. And you can also see how quickly and violently those P/Es reverted toward the mean:
Second, a chart from fund manager John Hussman showing the performance predictions for 7 different historically predictive valuation measures, including the "Shiller P/E" shown above. Those who want to remain bullish often attack the Shiller P/E measure, pointing out that it is useless as a timing tool (which it is). Those folks may also want to note that the 6 other measures in the chart below, including Warren Buffett's favorite measure, same almost exactly the same thing.
Third, a table from the fund management firm GMO showing predictions for the annual returns of various asset classes over the next 7 years.
As you can see, the outlook for all stocks, but especially U.S. stocks, is bleak. Specifically, GMO foresees negative real returns for U.S. stocks for the next 7 years. Even after adding back the firm's inflation assumption of 2.2% per year, the returns for most stocks are expected to be flat or negative. The lone bright(er) spot is "high quality" stocks — the stocks of companies that have high cash flow and low debt. Those are expected to return only a couple of percent per year. (Returns for international stocks are expected to be modestly better, but still far below average).
The real bummer for investors, as GMO's chart also makes clear, is that no other major class offers compelling returns, either. The outlook for bonds and cash is lousy, too. This puts investors in a real predicament. The only asset class forecasted to provide compelling returns over the next 7 years is... timber. And most of us can't go out and buy trees.
To be crystal clear:
There is only one way that stocks will keep rising from this level and stay permanently above this level. That is if it really is "different this time," and all the historically valid valuation measures described above are no longer relevant.
It is possible that it is different this time.
It is not likely, however.
And one thing to keep in mind as you listen to everyone explain why it's different this time is that one of the things everyone does when stocks get this expensive is attempt to explain the high prices (and justify even higher ones) by looking for reasons why it's different this time.
That's what most of us did in 1999 and 2000.
For a while, we seemed "right," and we were heroes because of it.
But then, suddenly, without much warning, we were drastically, violently wrong.
And we — or me, at least — learned that searing lesson that I referred to above: That it's almost never "different this time."
SEE ALSO: People Get Mad When I Say Stocks Might "Crash," So I Won't Use That Word, But...
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 14:14:00 GMT
Posted on Sat, 22 Nov 2014 14:00:00 GMT
There's a notion that some people become successful company founders because they have the right "Startup DNA."
The DNA is comprised of characteristics like "resilience" and "ability to accept risk."
Another characteristic many top entrepreneurs share is arrogance. Or worse, just being a huge jerk.
While reporting a long profile of Travis Kalanick last winter, Business Insider found a lot of people who thought Kalanick was a legendary CEO.
Friends compared him to Steve Jobs and Larry Ellison.
But some who were in awe of Kalanick also said he was a jerk.
"Sometimes," one acquaintance said of Kalanick, "a--holes create great businesses."
Inside Silicon Valley, arrogance runs rampant and investors seem to reward ruthless behavior with piles of cash.
There are numerous examples of founders who have had moments of terrible behavior that later became infamous. The founders might not be jerks all the time, of course. Everyone has moments when they behave boorishly. But sometimes the stories are so unbelievable, it can leave a lasting negative impressive of the person — that whether criticism is deserved or not.
For instance, Mark Zuckerberg, who is now worth tens of billions, famously ousted his friend Eduardo Saverin from Facebook. He also stole his business idea from the Winklevoss twins. "Yah, I'm going to fuck them," he told a friend over IM about the pair. "Probably in the ear."
Snapchat CEO Evan Spiegel wrote a number of misogynistic-sounding emails when he was in college to his fraternity brothers. Once, Spiegel was so angry with his parents, he reportedly cut himself out of family photos.
Twitter's co-founders back-stabbed each other repeatedly: Founder Noah Glass was booted out of the company. Ev Williams and Jack Dorsey were both given, and then stripped of, the CEO title. And Jeff Bezos, who runs Amazon, wreaks havoc in his organization by sending a single-character email: "?"
Even Steve Jobs, one of the world's most-praised entrepreneurs, was said to have two sides. Jobs' biographer, Walter Isaacson, portrayed the late Apple CEO as "Good Steve" and "Bad Steve." An example: Jobs once stormed into a meeting and called everyone "f---ing dickless a--holes."
Robert Sutton spent a lot of time conducting research for his book, "No a--hole Rule: Building a Civilized Workplace and Surviving One that Isn't," What he found was disappointing.
"Even people who worked with Jobs told me that they'd seen him make people cry many times, but that 80 percent of the time he was right, " Sutton said. "It is troubling that there's this notion in our culture that if you're a winner, it's okay to be an a--hole."
It is troubling that there's this notion in our culture that if you're a winner, it's okay to be an a--hole.
The Atlantic's Tom McNichol agrees. He wrote an article titled: "Be a Jerk: The Worst Business Lesson from the Steve Jobs biography."
Here's an excerpt:
The ease with which people can possess astonishingly contradictory qualities is one of the mysteries of human nature; indeed, it's one of the things that separates humans from, say, an Apple computer. Every one of the components that makes up an iPad is essential to the work it produces. Remove one part and the machine no longer performs its job, and not even the Genius Bar can fix it. But humans are full of qualities that are in no way integral to their functioning in the world. Some aspects of personality have little or no bearing on whether a person performs well, and not a few people succeed in spite of their darker qualities.
So, is it possible to be nice and to be wildly successful in business? And in Silicon Valley, where people praise Steve Jobs' bad habits and founders rag on the homeless, can you be financially rewarded if you're nice?
One venture capitalist whose firm implemented a "no a--holes policy" passed on an investment in Uber. This person said Kalanick didn't click with any of the partners and that he acted like he was "God's gift."
Other investors struggle with the decision to invest in personalities over returns.
"I want not to invest in jerks," says former Silicon Valley investor, Eileen Burbidge. Burbidge is now a VC at London's Passion Capital, which has invested in startups like Lulu and Go Cardless. "Personally I believe life is too short. [But] I have wondered if this is actually a bad philosophy as an investor. I'd like to think not but I'm supposed to back founders for the best ROI, not personality."
I want not to invest in jerks ...But I have wondered if this is actually a bad philosophy as an investor. I'm supposed to back founders for the best ROI.
Mark Suster, a Los Angeles-based investor, also isn't sure what to make of jerks in business. He lists "integrity" as a bonus characteristic when it comes to top entrepreneurs' DNA.
"I believe that integrity and honesty are very important to most venture capital investors," he wrote on his blog, Both Sides of the Table. " Unfortunately, I don’t believe that they are required to make a lot of money."
Many agree that being an overly-aggressive entrepreneur tends to pan out.
"As much as [Travis] is inspirational, he is controversial," a former colleague of Kalanick's said. "If he were less brash, I don't think he would get half as far as he did."
Adds another Kalanick acquaintance: "There is absolutely no way [Uber] would have gotten where it is without Travis and his arrogance. Not without him being like, 'I'm going to take over the world.' He has the Steve Jobs mentality that 'It's my way or the highway.'"
One person who firmly believes you can be nice and succeed is Paul Graham. He runs top startup accelerator Y Combinator and he's made Sutton's "no a--hole" rule popular in tech. He has backed billion-dollar startups such as Dropbox and Airbnb.
Graham says well-known founders like Jobs and Bezos can't be judged by their terror tales. "Famous founders who seem to be a--holes might not be," Graham told Business Insider via email. "I'm not saying they are or they aren't, just that it is extremely hard to tell what a famous person is really like. You can't judge them based on anecdotal evidence, which is all you ever have."
Graham chooses not to invest in jerks because he doesn't want to be around them. Investors and founders end up spending a lot of time together. Getting rid of one or the other can be more difficult than getting a divorce from a spouse.
"The reason we tried not to invest in jerks initially was sheer self-indulgence," says Graham. "We were going to have to spend a lot of time with whoever we funded, and we didn't want to have to spend time with people we couldn't stand. Later we realized it had been a clever move to filter out jerks, because it made the alumni network really tight. We've funded over 630 startups now, and when founders of different startups meet there is an automatic level of trust and willingness to help one another. Much more than alumni of the same college for example."
His take: Be nice and you can find success.
"It's certainly possible to build a multi-billion dollar startup without being a jerk," Graham says. "We've funded several, and the founders are all good people. In fact, based on what I've seen so far, the good people have the advantage over the jerks. Probably because to get really big, a company has to have a sense of mission, and the good people are more likely to have an authentic one, rather than just being motivated by money or power."
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 13:37:00 GMT
Posted on Sat, 22 Nov 2014 13:10:26 GMT
I've tested several smartwatches over the last year and change. I don't think any of them are must buys for most people.
A lot of that is because they share a common theme. They only act as mirrors of what's already happening on your smartphone.
That means every new notification — a new email, tweet, Facebook message, whatever — translates to a buzz and a flash on your wrist. It's annoying and completely ruins the concept that a wearable computer should be an extension of the smartphone that adds to the experience, not mimics it.
While we still don't know for sure how much control the Apple Watch will give you over notifications, Apple gave a promising hint on Wednesday with the release of Watchkit, the tool developers will use to bring their apps to the Apple Watch when it launches early next year.
By default, the Apple Watch will be able to deliver the same kind of app notifications you get on your phone. But developers have the opportunity to change that with two new notification types instead.
Take a look:
The above screenshot shows the American Airlines app running on the Apple Watch. The left screen shows an incoming notification called Short Look. The right shows screen shows another type of notification called Long Look.
If developers use these tools, they can quickly display bite-sized notifications designed specifically for the Apple Watch's smaller screen. In this case, it's an alert that the user's flight is boarding. But if the user keeps her arm raised, the notification shifts to Long Look and provides more details like the gate number and original boarding time.
That may sound like a small feature, but it has big implications in the grand scheme of things. It gives developers the opportunity to make notifications on the wrist much smarter than what we've seen on other smartwatches. Keep in mind you're spending at least $350 for the Apple Watch, which needs a $650+ iPhone to work. It'll need to do a lot more than just display the same notifications you're getting on your phone.
And that's probably going to be one of the key differentiators between the Apple Watch and rival platforms like Google's Android Wear. Developers have the opportunity to make notifications smart and unique to the watch form factor. Rivals can't do that yet.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 00:19:49 GMT
Slack an app that lets coworkers chat with one another has been taking the enterprise world by storm.
Launched to the public in February, Slack has nabbed more 300,000 people as users, 73,000 of them paid users, and recently raised $120 million in investment, making the startup worth $1.12 billion.
You'd think that its popularity would be validating to the man responsible for it, Stewart Butterfield who, prior to Slack, was best known as a cofounder of Flickr.
In an interview with MIT Technology Review, when asked about if he was working to improve Slack, he answered with refreshing honesty:
Oh, God, yeah. I try to instill this into the rest of the team but certainly I feel that what we have right now is just a giant piece of shit. Like, it’s just terrible and we should be humiliated that we offer this to the public. Not everyone finds that motivational, though.
Disclosure: The Business Insider tech team uses Slack every day. We probably wouldn't describe the app in quite so salty of terms, but he's right that it's just a basic chat room that could be improved a lot. We have to warn him, though, the basic-ness of it is what we like. Too many layers would turn Slack into something like a Yammer (in other words, spoil it).
Still, Butterfield tells MIT the Slack folks are working on some things that could be awesome: the ability to "favorite" comments, and something that helps you manage chat overload (too many comments and missing the important ones).
The fact that Slack emerged almost by accident might protect it. Butterfield and his then-company Tiny Speck invented Slack when they were working on a game called Glitch. Glitch was a flop, but the tool the team built to talk to each other became winner.
So if the team continues to use Slack to communicate about building Slack, that would be a winning combination.
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 00:14:00 GMT
Tesla CEO Elon Musk has responded to critics of his plans to build a battery "gigafactory" in Nevada.
And he's not pulling any punches.
Musk defended his company's plans in a blog post entitled "The House Always Wins," a reference to casino gambling.
"There have been several articles recently implying that Tesla, through clever machinations, maneuvered Nevada into providing an overly large incentive package for the Gigafactory," said Musk. "I love backhanded compliments as much as the next person, but this is untrue."
Musk was presumably referring to an investigative report in Fortune that detailed how several states competed to build the factory by offering various incentives.
Musk noted that the state incentives for Tesla's factory were approved unanimously by Nevada's legislature.
"The deal is not merely slightly good for the people of Nevada, it is extremely good," said Musk.
The Tesla CEO denied receiving any cash from the state, but did acknowledge that his company had recieved a parcel of land from the deal.
"If you have been to Nevada, you will notice that there is quite a lot of extra land with nobody on it," he said. "This is not in short supply."
Musk said Nevada's contributions would only cover a small portion of the Gigafactory's cost.
"Of the $5 billion investment needed to bring the Gigafactory to full production in five years, state incentives will cover about 5%," he said.
That would value Nevada's contribution at about $250 million. The Fortune article said the "tally" for Nevada was $1.4 billion.
Musk also revealed that Nevada didn't write Tesla a blank check, so to speak.
"All of the incentives approved by the legislature are performance based," he said. "We must execute according to plan to receive them, meaning that, while the state and Tesla both share the upside, only Tesla suffers the downside."
Tesla has huge plans for this enormous facility in Nevada, and the company is making some major "forward-looking" claims about what it will be able to do.
Tesla put together a pdf with its future plans for the facility, claiming some major figures by 2020, including a vehicle volume of around half a million per year.
The company also provided this telling chart of where it thinks it will be in relationship to the competition. It says that "The Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013."
Here's Musk's entire blog post responding to his critics:
There have been several articles recently implying that Tesla, through clever machinations, maneuvered Nevada into providing an overly large incentive package for the Gigafactory. I love backhanded compliments as much as the next person, but this is untrue.
Nevada is the entertainment capital of the world, home to the most sophisticated casinos on Earth. As everyone knows, the money to build those resorts arises because the casino houses generally tend notto lose. Even were they to lose, the state of Nevada, through the taxes it collects, would still win – it is the house to the house. They really know what they are doing.
Moreover, when the incentive proposal went to the Nevada legislature, it received approval from every member of the Senate and House with no dissenting votes. This includes every Republican and Democrat representative from every part of the state. Following passage of the bill, the debt ratings agency Moody’s assessed the deal as credit positive for both the Reno area and Nevada as a whole.
The reason is that it is a no-lose proposition for the state. The deal is not merely slightly good for the people of Nevada, it is extremely good.
To understand why, one must look closely at the terms of the deal. A casual reader of stories about the Gigafactory might assume that the $1.3 billion number in the headlines means that the state wrote Tesla a huge check for that amount. In fact, Tesla has received no money from the state at all. We did receive land through a swap the state did with our developer, but, if you have been to Nevada, you will notice that there is quite a lot of extra land with nobody on it. This is not in short supply.
Of the $5 billion investment needed to bring the Gigafactory to full production in five years, state incentives will cover about 5%. Compared to the operational and upgrade costs over a 20 year period, expected to be approximately $100 billion, state incentives will constitute just over 1%. This makes sense: the $1.3 billion in incentives mostly consists of alleviating a few percent of annual property and use tax on a huge amount of equipment over the course of 20 years, an average of about $50 million per year after initial construction.
However, the 20 year mark is simply when the last of the incentives expires. The Gigafactory itself will continue contributing economically to Nevada for much longer. Our automotive plant in California has been in operation for over 60 years with no foreseeable end in sight.
It stands to reason that the beneficiaries of a project should also contribute to its creation. Given that Nevada will have the largest and most advanced battery factory in the world and a very large number of high-paying direct and indirect jobs, contributing about 5% to the initial construction cost and a few percent to costs thereafter seems pretty fair.
Finally, with the exception of the land conveyance, all of the incentives approved by the legislature are performance based. We must execute according to plan to receive them, meaning that, while the state and Tesla both share the upside, only Tesla suffers the downside.
At Tesla, we believe in doing deals where both parties benefit, and, when there is an asymmetry or underperformance on our part, interpreting that in the other party’s favor. This is true for big deals like the Gigafactory and for everyday transactions. For example, if you buy or lease our car and don’t like it (within a reasonable amount of time), you can automatically give it back, accounting only for usage and damage. Tesla will absorb loss of the new car premium when reselling it as a used vehicle.
Our goal in doing so is to build long-term trust. If people know that we will not take advantage of them and aspire to fairness, even at our own expense, then they are much more likely to want to work with us in the future.
The article below about our vehicle factory in California gives a sense of what we expect of the Gigafactory in Nevada.
SEE ALSO: How Elon Musk Cleverly Manipulated 7 States To Compete For Tesla's Huge Factory
Join the conversation about this story »
Posted on Sat, 22 Nov 2014 00:03:00 GMT
Tina Fey's newest show has a new home before it even aired. "Unbreakable Kimmy Schmidt" was set to air on NBC in as a midseason show but has been sold to Netflix, according to Deadline.
In an unprecedented move, the streaming service picked up the series for two seasons.
The comedy will debut in March on Netflix, which is around the same time it was supposed to air on NBC.
“The very construct of Unbreakable Kimmy Schmidt — its offbeat premise, hilarious and rich characters and serialized storytelling — make it a perfect Netflix comedy series,” Cindy Holland, VP of Original Content at Netflix told Deadline. “Tina and Robert’s unique comic voice and sensibility come through in this series and we could not be more excited to present Unbreakable Kimmy Schmidt exclusively to Netflix members around the world.”
Deadline describes the series:
"After living in a cult for fifteen years, Kimmy decides to reclaim her life and start over in New York City. Armed with just a backpack, light-up sneakers, and a couple of way-past-due library books, she’s ready to take on a world she didn’t even think existed anymore. Wide-eyed but resilient, nothing is going to stand in her way. She quickly finds a new job (working for 30 Rock’s Jane Krakowski), a new roommate (Tituss Burgess, 30 Rock), and a new beginning. The cast also includes Lauren Adams, Sara Chase, Sol Miranda and Emmy winner Carol Kane (Taxi, The Princess Bride)."
Tina Fey and Robert Carlock created the series.
Join the conversation about this story »
Posted on Fri, 21 Nov 2014 23:55:34 GMT
The European parliament is thinking about making a ruling that Google split off its search engine from other parts of its business, according to a report today in the Financial Times.
But we were wondering: how can Europe order an American company to break apart? How would that even work?
"I don't know," answered Herbert Hovenkamp, a law professor at the University of Iowa who is considered one of the leading American experts on European antitrust law.
"I think it’d be very difficult for Google to disaggregate all its own assets and interests from Google Search just in Europe. I'm not saying it couldn’t do it, but it would be costly. You’d get a lot of squawking from European consumers because it would deteriorate the quality of Google search quite a bit."
That's because Google uses its own products to provide quick answers to certain kinds of queries.
(It must be noted that Hovenkamp did some work for Google in 2010 during its dispute with the American Federal Trade Commission, but hasn't worked for them since.)
Keith Hylton, an law professor at Boston University, agrees. "The European Parliament has no authority to break up Google – and I’m surprised that this sort of legislation isn’t considered unfair, since it targets one entity for punishment."
However, Hylton thinks Google would be wise to take the threat seriously.
"Expect a much harsher deal than Google worked out earlier with the previous EC competition commissioner Almunia. That earlier deal was a laughable outcome in which Google was poised to make more money from the remedy than it would have made without EC intervention."
Regulators in Europe have been looking at Google closely for a few years now, concerned that the company is using its search dominance to guide users to its own products and away from competing products, as well as generally playing unfair in the advertising market.
But both professors think that the American Federal Trade Commission had the right idea when it looked at Google, found no wrongdoing, and closed its investigation.
The reason? Unlike the case with Microsoft in the 1990s, where consumers paid for Windows on new PCs and faced some technical barriers in switching to a new operating system, using Google search is free and it's easy for people to switch search engines.
"If a customer doesn’t like a particular search engine they can switch to different one," says Hovenkamp. "The thing about bias with respect to Google assets or interests, that problem can be addressed by requiring Google to post a note or symbol" — for instance, YouTube results could be clearly marked as coming from Google.
"My view is this is problem that can be addressed with something much more modest and less reactionary," he added.
SEE ALSO: Here's Why Europe Is Thinking Of Splitting Google Up
Join the conversation about this story »
Posted on Fri, 21 Nov 2014 22:47:29 GMT