Tesla shares reel as executives quit and CEO smokes pot on webcast

(Reuters) – Tesla Inc Chief Executive Elon Musk was filmed smoking marijuana and wielding a sword on a webcast, just hours before the automaker said its recently-appointed accounting chief would leave, the latest in a string of unusual behavior and executive departures that have stunned investors.

Shares of the electric carmaker tumbled more than 6 percent on Friday to $263.24, with investors on edge after a tumultuous August during which Musk proposed and then abruptly pulled the plug on a go-private deal.

Chief Accounting Officer Dave Morton resigned after just one month in the job because of discomfort with the attention on the company and pace of work during that time, Tesla said in a filing on Friday. It later said that Chief People Officer Gaby Toledano would not return from a leave of absence, just over a year after joining.

Later on Friday, Tesla named a new president of automotive operations, promoting eight-year Tesla employee and former Daimler truck exec Jerome Guillen into the role overseeing all automotive operations and reporting to Musk.

That move, described in a company blog with several other promotions as a result of board and management discussions, gives Musk a seasoned auto industry veteran to lean on at a time when some investors have called for a new chief operating officer. Shares barely moved after hours, when the promotions were announced.

Morton and Toledano, whose departures come shortly after the U.S. Securities and Exchange Commission opened an inquiry into Musk’s aborted privatization plan, join dozens of senior executives who have left Tesla.

“Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations. As a result, this caused me to reconsider my future,” Morton said in the filing.

Late on Thursday, Musk was filmed drinking whiskey, briefly smoking marijuana and wielding a Samurai sword during a 2-1/2-hour live Web show with comedian Joe Rogan that swiftly spread across social media.

Taking a puff from a joint, which Rogan said was a blend of tobacco and marijuana and legal in California, Musk said he “almost never” smoked.

“I’m not a regular smoker of weed,” Musk said. “I don’t actually notice any effect … I don’t find that it is very good for productivity.”

It was the latest in a string of unconventional behavior by the billionaire South African native who is also CEO of rocket startup SpaceX.

Even before Musk’s surprise Aug. 7 tweet that he had funding “secured” for a go-private deal, Tesla had been under scrutiny from investors, analysts and short-sellers as it works to hit production targets and slow its cash burn.

Morton, who is walking away from a $350,000 base salary and a $10 million new-hire stock grant that would vest over four years, said he believed “strongly” in Tesla and that he had no disagreements with the company’s leadership or its financial reporting.

Analysts on Friday reiterated their call for Tesla to bring in another senior leader.

“We have been calling for a co-CEO or COO to assist to codifying the leadership structure and in so doing, the culture at Tesla,” said James Albertine, analyst at brokerage Consumer Edge, speaking before the promotions were announced.

“We think this is further evidence that the time is now for management and the board to address these issues.”

SOBERING EFFECT ON INVESTORS

Tesla’s $1.8 billion junk bond maturing in August 2025 plunged as much as 4 cents on the dollar to below 82 cents, a record low, in Friday trading, pushing the yield above 8.8 percent.

Coupled with an upfront cost of 21 percent of insured value, it now costs an investor around $280,000 to insure $1 million of Tesla debt for a year.

With Tesla’s stock falling to its lowest level since April, short sellers added 810,000 shares to their positions, bringing the total as of Thursday to about 32.6 million shares, according to S3 Partners, a financial technology and analytics firm.

Tesla has told investors it expects to turn a profit in the second half of this year, a forecast the company’s head of investor relations, Martin Viecha, reiterated at a conference earlier this week sponsored by RBC Capital Markets, RBC analyst Joseph Spak wrote in a note on Thursday.

Viecha also restated Tesla’s forecast that it will build 50,000 to 55,000 of its Model 3 sedans in the current quarter, and indicated the company’s working capital will improve as production increases, Spak wrote.

Prominent short-seller Andrew Left has sued Tesla and Musk, saying in his proposed class-action complaint on Thursday that Musk’s issuance of materially false and misleading information related to his abandoned plan harmed both short-sellers and those hoping the stock would rise.

A man walks near a logo of Tesla outside its China headquarters at China Central Mall in Beijing, China July 11, 2018. REUTERS/Jason Lee

Reporting by Nivedita Balu and Ismail Shakil in Bengaluru, additional reporting by Noel Randewich in San Francisco, Joe White in Detroit and Dan Burns in New York; Writing by Meredith Mazzilli; Editing by Matthew Lewis and Rosalba O’Brien

Broadcom sees fourth-quarter boost from data center demand, iPhone launch

(Reuters) – Broadcom Inc (AVGO.O) on Thursday forecast current-quarter revenue largely above estimates on higher demand for components that power data centers, while the launch of Apple Inc’s new iPhones is expected to bolster its wireless business.

A sign to the campus offices of chip maker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake/File Photo

Shares of Broadcom rose 4 percent to $224.90 in extended trading after the chipmaker also reported third-quarter profit that topped analysts’ estimates.

Revenue from enterprise storage business jumped 70 percent in the reported quarter as the acquisition of Brocade helped drive sales gains at the unit.

Its wireless business, which makes chips for Wi-Fi, Bluetooth, and GPS connectivity, reported flat revenue, while its wired infrastructure unit, which makes components used in telecommunication networks, posted a 4 percent rise from a year earlier.

“More than half our consolidated revenue … is benefiting from strong cloud and enterprise data center spending,” Chief Executive Officer Hock Tan said on a post-earnings call with analysts.

“This, coupled with a seasonal uptick in wireless, will drive our forecast revenue in the fourth quarter.”

The company expects a ramp at its North American customer – which analysts identified as Apple – to drive a 25 percent rise in wireless revenue from the previous quarter, although it may be down in single-digit percentage compared with a year earlier.

Apple (AAPL.O) is set to unveil its new iPhones next week.

Tan, who has transformed Broadcom into a $100 billion behemoth through a series of acquisitions, surprised Wall Street in July with his move to acquire software maker CA Technologies for $19 billion.

Explaining his rationale behind the CA acquisition, Tan said he planned to target the company’s enterprise customers with Broadcom’s offerings including server and storage connectivity products.

The CA deal comes after U.S. President Donald Trump blocked Broadcom’s $117 billion offer to buy Qualcomm Inc (QCOM.O) on national security grounds.

Broadcom forecast current-quarter revenue of about $5.40 billion, plus or minus $75 million. Analysts on average were expecting revenue of $5.35 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to common stock rose to $1.2 billion, or $2.71 per share, in the quarter ended Aug. 5 from $481 million, or $1.14 per share, a year earlier.

Excluding items, the company earned $4.98 per share.

Net revenue rose to $5.06 billion from $4.46 billion.

Analysts on average were expecting earnings of $4.83 per share on revenue of $5.07 billion.

Reporting by Sonam Rai and Sayanti Chakraborty in Bengaluru; Editing by Anil D’Silva

Justice Department probes whether social media is 'stifling' speech

WASHINGTON (Reuters) – The U.S. Department of Justice and state attorneys general will meet this month to discuss concerns that social media platforms are “intentionally stifling the free exchange of ideas,” the department said on Wednesday.

Its statement did not name Facebook Inc (FB.O) and Twitter Inc (TWTR.N), whose executives testified in Congress on Wednesday, but the firms have been harshly criticized by President Donald Trump and some of his fellow Republicans for what they see as an effort to repress conservative voices.

The companies deny any such bias.

U.S. Attorney General Jeff Sessions convened the meeting, set for Sept. 25, “to discuss a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms,” Justice Department spokesman Devin O’Malley said.

It was not known which state attorneys general would attend. Representatives for the attorneys general in New York, Connecticut and Iowa said that they had not been contacted.

Shares of social media companies slipped on Wednesday as the executives met skeptical lawmakers, with Twitter off 6.1 percent and Facebook around 2.3 percent lower in late afternoon trading. Shares of Google parent Alphabet Inc.(GOOGL.O) sank about 1 percent.

In the morning, Facebook Chief Operating Officer Sheryl Sandberg and Twitter Chief Executive Jack Dorsey testified at a Senate Intelligence Committee hearing on efforts to counteract foreign efforts to influence U.S. elections and political discourse.

The Senate panel has been examining reported Russian efforts to influence U.S. public opinion throughout Trump’s presidency, after U.S. intelligence agencies concluded that entities backed by the Kremlin had sought to boost his chances of winning the White House in 2016.

Sandberg and Dorsey said the companies had stepped up efforts to fight such influence operations, but lawmakers said there was far more to be done and suggested Congress might have to take legislative action.

“Clearly, this problem is not going away. I’m not even sure it’s trending in the right direction,” said Senator Richard Burr, the committee’s Republican chairman.

Senator Mark Warner, the committee’s top Democrat said, “I’m skeptical that, ultimately, you’ll be able to truly address this challenge on your own. Congress is going to have to take action here.”

Legislation addressing the use of social media for political disinformation could resemble a bill passed earlier this year – and signed into law by Trump – that made it easier for state prosecutors and sex-trafficking victims to sue social media companies, advertisers and others who failed to keep exploitative material off their sites.

Committee members also criticized Google for refusing to send top executives to testify at the Senate hearing, with just weeks before the Nov. 6 congressional elections.

Republican Senator Marco Rubio said the company might have skipped the hearing because it was “arrogant.”

BIAS ALLEGATIONS

Dorsey then testified at a House of Representatives Energy and Commerce Committee hearing focused on the bias issue.

Representative Greg Walden, the committee’s Republican chairman, said Twitter had made “mistakes” that, he said, minimized Republicans’ presence on the social media site, a practice conservatives have labeled “shadow banning.”

Slideshow (7 Images)

“Multiple members of Congress and the chairwoman of the Republican Party have seen their Twitter presences temporarily minimized in recent months, due to what you have claimed was a mistake in the algorithm,” he said.

Dorsey denied any deliberate attempt to target conservatives, or promote liberals, during more than four hours of questioning.

“Recently we failed our intended impartiality. Our algorithms were unfairly filtering 600,000 accounts, including some members of Congress, from our search auto-complete and latest results. We fixed it,” he said.

Ahead of Wednesday’s hearings, Trump, without offering evidence, accused social media companies of interfering in the November elections, telling the Daily Caller conservative website that social media firms are “super liberal.”

Trump was quoted as saying in the interview on Tuesday that “I think they already have” interfered.

Democratic House committee members accused Republicans of calling the hearing for political reasons, noting that Trump had featured accusations of bias in fundraising letters. The mid-terms will decide whether Republicans will keep their majorities in the House and Senate.

“Over the past weeks, President Trump and many Republicans have peddled conspiracy theories about Twitter and other social media platforms to whip up their base and fundraise,” said Representative Frank Pallone, the committee’s top Democrat.

Wednesday’s hearings were attended by conspiracy theorists known as Trump supporters, who have dealt with bans on social media.

The conspiracy theorist Alex Jones, who was temporarily suspended from Twitter, sat in the front row of the Senate hearing, and interrupted Rubio.

The House hearing was interrupted by Laura Loomer, a conspiracy theorist who has been banned from major social media sites. She shouted that Dorsey was lying, accusing him of banning conservatives and saying Twitter was going to help Democrats “steal” the November elections.

Loomer was removed from the room as Republican Representative Billy Long used the droning cadence of his former career as an auctioneer to drown her out.

Reporting by Patricia Zengerle; Additional reporting by Diane Bartz in Washington and Shreyashi Sanyal in Bangalore; Editing by Susan Thomas and Grant McCool

Amazon joins $1 trillion club, on pace to overtake Apple

(Reuters) – Amazon.com Inc (AMZN.O) on Tuesday joined Apple Inc (AAPL.O) to become the second $1 trillion publicly listed U.S. company after its stock price more than doubled in a year as it grew rapidly in retail and cloud computing.

The Amazon.com logo and stock price information is seen on screens at the Nasdaq Market Site in New York City, New York, U.S., September 4, 2018. REUTERS/Mike Segar

If the online retailer’s share gains keep up the pace, it would be a matter of when, not if, Amazon’s stock market valuation eclipses that of iPhone maker Apple, which reached $1 trillion on Aug. 2.

Apple took almost 38 years as a public company to achieve the trillion dollar milestone, while Amazon got there in 21 years. While Apple’s iPhone and other devices remain popular and its revenues are growing, it is not keeping up with Amazon’s blistering sales growth.

Amazon has impressed investors by diversifying into virtually every corner of the retail industry, altering how consumers buy products and putting big pressure on many brick-and-mortar stores.

“It says a lot about Amazon and its ever-increasing dominance of segments of the retailing world as well as the web services business,” said Peter Tuz, President Of Chase Investment Counsel In Charlottesville, Virginia. “They have a tiny share of the worldwide retail sales market so there’s a lot left to capture there.”

Slideshow (4 Images)

(Graphic: Amazon vs. Apple: reut.rs/2PwtdRg)

Amazon also provides video streaming services and bought upscale supermarket Whole Foods. And its cloud computing services for companies have become its main profit driver.

“Amazon’s a little bit more dynamic than Apple because the iPhone has become more mature. Amazon’s cloud business is an extra growth driver that Apple doesn’t have,” said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta, Georgia who describes Amazon’s cloud services as its “crown jewel.”

In the second quarter the unit accounted for 55 percent of Amazon’s operating income and 20 percent of total revenue, according to Morgan.

Apple started trading in December 1980 but its stock did not truly start to take flight for another 25 years, spurred by the iPhone, the breakthrough device that left competitors in the dust.

Amazon – founded as an online book-retailer in Chief Executive Jeff Bezos’ garage in 1994 – started trading on May 15 1997 at $1.50 on a split-adjusted basis.

By October 2009 it had risen to $100 and the stock hit $1,000 for the first time on May 30, 2017. It has held above that level since Oct. 27, 2017.

Just 10 months later, on Aug. 30, Amazon shares hit $2,000 for the first time, just $50 per share away from giving the company a $1 trillion market value.

(Graphic: Analyst Price Targets: reut.rs/2NHwHQq)

Amazon shares were last up 1.4 percent at 2,041.29, pulling back slightly from the milestone level of $2,050.2677.

Amazon’s stock is up 74.5 percent year to date. In comparison, Apple has risen about35.0percent in 2018.

Analysts expect Apple’s revenue to jump 14.9 percent in its fiscal year ending in September, according to Thomson Reuters data, a hefty rise but still far short of Amazon’s expected revenue growth of 32 percent for 2018.

Additional reporting by Noel Randewich in San Francisco and Lewis Krauskopf; Editing by Meredith Mazzilli and Susan Thomas

Twitter chief executive to defend company before Congress

WASHINGTON (Reuters) – Twitter Inc Chief Executive Jack Dorsey will tell Congress on Wednesday the company “does not use political ideology to make any decisions.”

FILE PHOTO: Jack Dorsey, CEO and co-founder of Twitter and founder and CEO of Square, speaks at the Consensus 2018 blockchain technology conference in New York City, New York, U.S., May 16, 2018. REUTERS/Mike Segar

Dorsey will testify before the U.S. House of Representatives’ Energy and Commerce Committee on Wednesday after Republicans raised concerns about how the social media platform polices content.

“From a simple business perspective and to serve the public conversation, Twitter is incentivized to keep all voices on the platform,” said Dorsey’s written testimony, which was made public on Tuesday. He added that a recent company review shows “no statistically significant difference” between how often tweets by Republican and Democratic members of Congress are viewed by Twitter users.

Reporting by David Shepardsonl; editing by Jonathan Oatis

Samsung Q8FN 4K Review: A Pretty But Pricey 4K Television

One of the best perks of the job is that I get to try some tech toys that are simply out of my price range. From high-end cameras to bonkers-expensive pro laptops, I realize I’m pretty spoiled. That’s why when I had the chance to try one of the newest Samsung 4K TVs in my apartment, a sense of dread came over me. Would swapping my dinky, three-year-old 40-inch for an expansive, pricey, 55-inch 4K unit ruin my life? Would I feel compelled to immediately jump onto the higher-def bandwagon and sell one of my kidneys for the pleasure?

Having now returned the Samsung TV to its rightful owners, I’m inclined to say no. This awe-inspiring quantum-dot-packing eye-fatiguingly luminous television didn’t quite make me rethink my entire existence. But why didn’t this luxe flat panel transform my low-contrast, standard dynamic range life into something brighter and happier than my cheap, old Sony? Two words: Frasier Crane.

Out and In

Opening the box and setting up the Samsung Q8FN was a joy. The panel is big, but it wasn’t too hard to wrestle the set out of the box by myself. Thankfully, instead of a complex stand, the two metal feet are held in by clips, and you won’t have to touch a screwdriver to get it onto your entertainment center. Even though I kind of miss the versatility of Samsung’s OneConnect system (which broke out the TV’s ports onto a separate box instead of leaving them all tucked away behind the TV), this year’s Q8FN seems way less cluttered. On its own on my TV stand, it struck a clean, austere profile.

Though they’re not effortlessly accessible, the Q8FN’s ports are at least plentiful. With four HDMI ports and a few USBs, you’ll be able to plug in plenty of inputs, be they PlayStation, Nintendo Switch, Blu-ray, or Apple TV. Because it’s a 4K HDR-capable set, I opted to plug in an Xbox One X, which can play streaming and disc-based media in that high resolution.

The OneRemote clicker is similar to what other high-end Samsung TVs include, eschewing a number pad for a simple iPod-like direction ring, two rockers for volume and channels, and a few other controls. The remote includes a microphone and a voice command trigger for use with Bixby, but I didn’t find it all that useful, since I eschewed the TV’s built-in smart platform and broadcast TV for streaming via the Xbox.

I’m Listening

After giving the set a few hours of break-in (I popped in my 4K Blu-ray of Star Wars: The Last Jedi and ran the film on a loop during an afternoon), I sat down and started checking out what there was on Netflix. I’ve been watching some classic shows recently, mostly switching between stretches of Frasier and Star Trek: Voyager. The problem? Both of these SD shows, no matter how the Samsung’s Q Engine chip tries to upscale, look terrible blown up on this TV. The resolution delta doesn’t help, but the big, 55-inch size made the poor compression and lack of detail so obvious compared to our rinky-dink 40-inch set.

The sound wasn’t so hot either, since the speakers seem to be rear-firing and lacking in bass. Definitely invest in a sound bar.

But then there’s high-def content. The first movie I spent time watching on the TV was the terrific Black Panther in 4K HDR. This movie blew me away on this Samsung. Action scenes like the nighttime car chase in Busan, Korea pushed the TV’s HDR to its limits. Thankfully, the set made short work of the fast-moving action and contrasty visuals, arguably making the movie look better than it did when I saw it in theaters. Even normal HD stuff like Netflix’s Luke Cage was spectacular to watch, bringing the show’s version of Harlem, with its resident baddies and goodies, vividly to life.

Games look great too—I spent hours flying space fighters in Star Wars: Battlefront II and was in awe of the blackness of space, nearly blinded by the glare off of nearby planets and capital ships. Granted, the Xbox One X is geared for high resolution gaming, and when I changed inputs to the connected Nintendo Switch, Super Mario Odyssey was noticeably less crispy—it’s in HD, after all.

While this set’s “QLED” tech won’t give you OLED-level blacks, I was pleasantly surprised at the contrast the TV was able to output. With the full array local dimming turned to the lowest setting, and the TV’s brightness reduced a bit (out of the box, the Q8FN was aggressively bright) did a convincing OLED impression. I didn’t notice weird blooming or lag between when an object appeared on screen and when the closest backlight portion boosted its brightness. For an LCD, this Samsung justifies its premium perch in the QLED lineup.

When my review period was up, I was sad to have to put this gorgeous slab back into its box. Switching back to our old 40-inch Sony took an adjustment period, but, all things considered, I adjusted quickly. I went back to my routine of Frasier and Voyager, and though it isn’t as all-enveloping as our old HDTV, I was happy to watch the low-quality show on a smaller, duller TV. I’ll be shopping for a 4K TV later this year. But maybe I’ll wait until I’m done with my ’90s TV binge.

2 Streaming Amps for Audiophiles: Naim Uniti, Bluesound

Streaming music doesn’t have to mean compromised sound. These hi-fi amps can help you find cloud-connected aural ecstasy.

1. Naim Audio Uniti Star

Best for: Streamcurious audiophiles

With a built-in CD player that rips tracks to a local drive, the Uniti Star eases the pain of parting with your CDs. Naim’s app summons your newly captured tunes and streams hi-res songs from cloud services. The hardware is pricey, but you get premium guts like a 70-watt-per-channel amp and a huge, velvet-­smooth volume knob.

$5,995
Buy Now

2. Bluesound Powernode 2

Best for: Proud digital natives

Bluesound’s more modestly priced streamer can access oodles of cloud music services and radio stations—including hi-res offerings—or play a local library stacked with FLACs. Basic panel controls are supplemented by the excellent BluOS Controller app. The integrated 60-watt-per-channel amp can power any speakers, from tiny to towering.

$799
Buy Now

Styling by Reina Takahashi

This article appears in the August issue. Subscribe now.


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Fleeing White House Lawyers Top This Week's Internet News Roundup

It’s been a week that’s seen us inch ever closer to the collapse of NAFTA, seen the White House seemingly confused about how it collectively feels about the death of John McCain, and seen the official death toll of Hurricane Maria in Puerto Rico raised by almost 3,000, even though the President still claims the official response was “fantastic”. (No wonder his disapproval rating has hit an all-new high.) But what else has been going on this week? I’m glad you asked! Let’s let the internet answer that question, shall we?

You’re Fired (483rd Twitter Edition)

What Happened: Of all the people the President of the United States has pushed out of the White House, perhaps the White House lawyer wasn’t the best choice.

Where It Blew Up: Twitter, media reports

What Really Happened: Elsewhere in the legal worries of the leader of the free world, the reportedly perfectly fine, nothing wrong whatsoever relationship between President Trump and White House lawyer Don McGahn took a bit of a turn early this week, as the President tweeted out a personnel update.

Well, this seems perfectly normal and not something that people were cynically expecting after it emerged that McGahn had multiple meetings with Special Counsel Robert Mueller over the past few months. Still, at least he was given time to prepare for this decision…

On the plus side, everyone in Trump’s orbit must have been happy to see him go…

That’s 84-year-old Republican senator Chuck Grassley there, showing some hey-fellow-kids Twitter chops.

Even as everyone was still coming to terms with the White House lawyer being unceremoniously dismissed without notice, some people had some more thoughts to offer on how this related to the bigger picture:

But as with seemingly every bit of reporting, the President couldn’t resist taking to Twitter to argue against the conventional wisdom in his patented “Nuh-uh, just the opposite!” style, as was obvious on Thursday morning:

As should probably be expected at this point, most people took this as confirmation that just the opposite was actually true. But a third tweet made ears perk up amongst the political watchers:

The replacement in question…? That’s an open question at time of writing, thanks to entirely conflicting reports:

Hey, maybe Rudy Giuliani could moonlight once he’s finished working on that counter-report.

The Takeaway: Curiously, McGahn wasn’t the only lawyer to leave the White House this week, although this departure was seemingly more voluntary:

Alienated Citizens of the World, Unite

What Happened: For those who thought that the current administration couldn’t do anything to get more racist, I introduce to you: Telling U.S. citizens they aren’t really citizens because they’re Hispanic.

Where It Blew Up: Twitter, media reports

What Really Happened: As if there weren’t enough reasons to feel concerned about the administration’s attitude towards immigration (Hundreds of children are still separated from their parents, in case you’re wondering), a new report from the middle of this week brought an additional wrinkle:

The Washington Post’s report alleged that American citizens were getting passport applications rejected in Texas, with “hundreds, and possibly thousands” of Hispanic citizens being accused of using fake birth certificates.

To call this a big deal would be a severe understatement, and the original report was quickly shared by other outlets across the internet. Twitter, too, was shocked by what was happening:

As might be expected, the State Department pushed back on the reports, but there was one obvious problem with that…

Oh, and it’s not just passports or the administration, as it turns out:

The Takeaway: Yeah, this isn’t terrifying in the slightest. Maybe there’s a silver lining to be found somewhere…

From Give and Take and Still Somehow

What Happened: The President and his lawyers have come up with a new plan to combat the special investigation into potential collusion with Russia; release its own fake report. No, really.

Where It Blew Up: Twitter, media reports

What Really Happened: You know what they always say: If you can’t beat them, release your own version of something and just pretend that they’re entirely equivalent. And speaking of the current special counsel investigation into the President of the United States and potential collusion with foreign entities…

There are all manner of obvious flaws in this plan, such as who would believe a report put together by the subject of the investigation? (I mean, sadly, we know the answer, but still.) There’s also this small drawback:

That is a problem. How can you write a rebuttal to a mystery topic…?

Actually, the apparent truth is only incrementally less likely:

Somewhat amazingly, this turns out not to be the first time the subject has been raised publicly by Giuliani, the president’s personal attorney. But, sure, this definitely sounds like a good use of everyone’s time:

If nothing else, he’ll have to work quickly in order to—as the original report put it—release the report within minutes of Mueller’s official, actually researched, report.

Let’s be real: There’s almost no way this could fail.

The Takeaway: Who couldn’t be convinced by a well-reasoned argument from this guy?

Why They Changed It I Can’t Say

What Happened: New York got an unexpected name change this week on certain apps, thanks to an act of anti-semitic “digital graffiti.”

Where It Blew Up: Twitter, media reports

What Really Happened: New York users of Snapchat, the Weather Channel, and other online services with map services received an unpleasant surprise on Thursday morning:

Of course, this quickly went viral, because of course it did. The root, as it happened, was quickly identified—

—and dealt with:

But what caught some people’s attention was the choice of slur city name—and how much of a failure it ultimately was:

Others wondered if New York’s new identity could be an improvement:

Sadly, not everyone was happy with the takeover:

The Takeaway: It wouldn’t be a New York moment without at least one person fondly remembering the good old days…

Slight Return

What Happened: After less than a year away, Louis C.K. has stepped back into the spotlight to return to comedy—and it turns out people aren’t really into that idea so much.

Where It Blew Up: Twitter, media reports

What Really Happened: Hey, remember last November, when comedian Louis C.K. admitted that reports of his sexually harassing several women, including masturbating in front of them, were true? Remember when he issued a statement saying that he was going to “step back and take a long time to listen”?

Well, that was certainly nine months’ worth of listening, I guess. Yes, Louis C.K. returned to the public stage this week (although it turns out he’d actually made a more low-key comeback earlier than that), and it was a return that prompted a very strong response online.

With all kinds of think pieces published in response, the overall feeling about C.K.’s return could be summed up in one simple tweet:

As if to illustrate that last point, an additional fact about C.K.’s set emerged a day later…

The Takeaway: But perhaps we’re being too hard on the comedian…


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We Need To Reengineer Our Organizations For A New Era Of Innovation

In the first half of the 20th century, Alfred Sloan created the modern corporation at General Motors. In many ways, it was based on the military. Senior leadership at headquarters would make plans, while managers at individual units would be allocated resources and made responsible for for achieving mission objectives.

The rise of digital technology made this kind of structure untenable. By the time strategic information was gathered centrally, it was often too old to be effective. In much the same way, by the time information flowed up from operating units, it was too late to alter the plan. It had already failed.

So in recent years, the management mantra has become agility and iteration. Due to pressures from the market and from shareholders, long-term planning is often eschewed for the needs of the moment. Yet today the digital era is ending and organizations will need to shift once again. We’re going to need to learn to combine long-range planning with empowered execution.

Shifting from Iteration to Exploration

When Steve Jobs came up with the idea for a device that would hold “a thousand songs in my pocket,” it wasn’t technically feasible. There was simply no hard drive available that could fit that much storage into that little space. Nevertheless, within a few years a supplier developed the necessary technology and the iPod was born.

Notice how the bulk of the profits went to Apple, which designed the application and very little to the supplier that developed the technology that made it possible.That’s because the technology for developing hard drives was very well understood. If it hadn’t been that supplier, another would have developed what Jobs needed in six months or so.

Yet today, we’re on the brink of a new era of innovation. New technologies, such as revolutionary computing architectures, genomics and artificial intelligence are coming to the fore that aren’t nearly as well understood as digital technology. So we will have to spend years learning about them before we can develop applications safely and effectively.

For example, companies ranging from Daimler and Samsung to JP Morgan Chase and Barclays have joined IBM’s Q Network to explore quantum computing, even though that it will be years before that technology has a commercial impact. Leading tech companies have formed the Partnership on AI to better understand the consequences for artificial intelligence. Hundreds of companies have joined manufacturing hubs to learn about next generation technology.

It’s becoming more important to prepare than adapt. By the time you realize the need to adapt, it may already be too late.

Building a Pipeline of Problems to be Solved

While the need to explore technologies long before they become commercially viable is increasing, competitive pressures show no signs of abating. Just because digital technology is not advancing the way it once did doesn’t mean that it will disappear. Many aspects of the digital world, such as the speed at which we communicate, will continue.

So it is crucial to build a continuous pipeline of problems to solve. Most will be fairly incremental, either improving on an existing product or developing new ones based on standard technology. Others will be a bit more aspirational, such as applying existing capabilities to a new market or adopting new technology to improve service to existing customers.

However, as the value generated from digital technology continues to level off, much like it did for earlier technologies like internal combustion and electricity, there will be an increasing need to pursue grand challenges to solve fundamental problems. That’s how truly new markets are created.

Clearly, this presents some issues with resource allocation. Senior managers will have to combine the need to move fast and keep up with immediate competitive pressures with the long-term thinking it takes to invest in years of exploration with an uncertain payoff. There’s no magic bullet, but it is generally accepted that the 70/20/10 principle for incremental, adjacent and fundamental innovation is a good rule of thumb.

Empowering Connectivity

When Sloan designed the modern corporation, capacity was a key constraint. The core challenge was to design and build products for the mass market. So long-term planning to effectively organize plant, equipment, distribution and other resources was an important, if not decisive, competitive attribute.

Digitization and globalization, however, flipped this model and vertical integration gave way to radical specialization. Because resources were no longer concentrated in large enterprises, but distributed across global networks, integration within global supply chains became increasingly important.

With the rise of cloud technology, this trend became even more decisive in the digital world. Creating proprietary technology that is closed off to the rest of the world has become unacceptable to customers, who expect you to maintain API’s that integrate with open technologies and those of your competitors.

Over the next decade, it will become increasingly important to build similar connection points for innovation. For example, the US military set up the Rapid Equipping Force that was specifically designed to connect new technologies with soldiers in the field who needed them. Many companies are setting up incubators, accelerators and corporate venture funds for the same reason. Others have set up programs to connect to academic research.

What’s clear is that going it alone is no longer an option and we need to set up specific structures that not only connect to new technology, but ensure that it is understood and adopted throughout the enterprise.

The Leadership Challenge

The shift from one era to another doesn’t mean that old challenges are eliminated. Even today, we need to scale businesses to service mass markets and rapidly iterate new applications. The problems we need to take on in this new era of innovation won’t replace the old ones, they will simply add to them.

Still, we can expect value to shift from agility to exploration as fundamental technologies rise to the fore. Organizations that are able to deliver new computing architectures, revolutionary new materials and miracle cures will have a distinct competitive advantage over those who can merely engineer and design new applications.

It is only senior leaders that can empower these shifts and it won’t be easy. Shareholders will continue to demand quarterly profit performance. Customers will continue to demand product performance and service. Yet it is only those that are able to harness the technologies of this new era — which will not contribute to profits or customer satisfaction for years to come — that will survive the next decade.

The one true constant is that success eventually breeds failure. The skills and strategies of one era do not easily translate to another. To survive, the key organizational attribute will not be speed, agility or even operational excellence, but leadership that understands that when the game is up, you need to learn how to play a new one.

This Little Known Program at the Department of Energy Is Helping to Create a New Future In Manufacturing

In the recession that followed the dotcom crash in 2000, the United States lost 5 million manufacturing jobs and, while there has been an uptick in recent years, all indications are that they are never coming back. Manufacturing, perhaps more than any other sector, relies on deep networks of skills and assets that tend to be regional.

The consequences of this loss are deep and pervasive. Losing a significant portion of our manufacturing base has led not only to economic vulnerability, but to political polarization. Clearly, it is important to rebuild our manufacturing base. But to do that, we need to focus on new, more advanced, technologies

That’s the mission of the Advanced Manufacturing Office (AMO) at the Department of Energy. By providing a crucial link between the cutting edge science done at the National Labs and private industry, it has been able to make considerable progress. As the collaboration between government scientists widen and deepens over time, US manufacturing may well be revived. 

Linking Advanced Research to Private Industry

The origins of the Department of Energy date back to the Manhattan Project during World War II. The immense project was, in many respects, the start of “big science.” Hundreds of top researchers, used to working in small labs, traveled to newly established outposts to collaborate at places like Los Alamos, New Mexico and Oak Ridge, Tennessee.

After the war was over, the facilities continued their work and similar research centers were established to expand the effort. These National Labs became the backbone of the US government’s internal research efforts. In 1977, the National Labs, along with a number of other programs, were combined to form the Department of Energy.

I was able to visit the Innovation Crossroads facility at Oak Ridge National Laboratory and meet the entrepreneurs in its current cohort. Each is working transform a breakthrough discovery into a market changing application, yet due to technical risk, would not be able to attract funding in the private sector. The LEAP program offers a small amount of seed money, access to lab facilities and scientific and entrepreneurial mentorship to help them get off the ground.

That’s just one of the ways that the AMO opens up the resources of the National Labs. It also helps business get access to supercomputing resources (5 out of the 10 fastest computers in the world are located at the National Labs) and conducts early stage research to benefit private industry.

Leading Public-Private Consortia

The idea behind these consortia is to create hubs that provide a critical link with government labs, top scientists at academic universities and private companies looking to solve real-world problems. It both helps firms advance in key areas and allows researchers to focus their work on areas that will have the greatest possible impact.

For example, the Critical Materials Institute (CMI) was set up to develop alternatives to materials that are subject to supply disruptions, such as the rare earth elements that are critical to many high tech products and are largely produced in China. It recently developed, along with several National Labs and Eck Industries, an advanced alloy that can replace more costly materials in components of advanced vehicles and aircraft.

“We went from an idea on a whiteboard to a profitable product in less than two years and turned what was a waste product into a valuable asset,” Robert Ivester, Director of the Advanced Manufacturing Office told me.

Technology Assistance Partnerships

In 2011, the International Organization for Standardization released its ISO 50001 guidelines. Like previous guidelines that focused on quality management and environmental impact, ISO 50001 recommends best practices to reduce energy use. These can benefit businesses through lower costs and result in higher margins.

Still, for harried executives facing cutthroat competition and demanding customers, figuring out how to implement new standards can easily get lost in the mix. So a third key role that the AMO plays is to assist companies who wish to implement new standards by providing tools, guides and access to professional expertise.

The AMO offers similar support for a number of critical areas, such as prototype development and also provides energy assessment centers for firms that want to reduce costs.  “Helping American companies adopt new technology and standards helps keep American manufacturers on the cutting edge,” Ivester says.

“Spinning In” Rather Than Spinning Out

Traditionally we think of the role of government in business largely in terms of regulation. Legislatures pass laws and watchdog agencies enforce them so that we can have confidence in the the food we eat, the products we buy and the medicines that are supposed to cure us. While that is clearly important, we often overlook how government can help drive innovation.

Inventions spun out of government labs include the Internet, GPS and laser scanners, just to name a few. Many of our most important drugs were also originally developed with government funds. Still, traditionally the work has mostly been done in isolation and only later offered to private companies through licensing agreements.

What makes the Advanced Manufacturing Office different than most scientific programs is that it is more focused on “spinning in” private industry rather than spinning out technologies. That enables executives and entrepreneurs with innovative ideas to power them with some of the best minds and advanced equipment in the world.

As Ivester put it to me, “Spinning out technologies is something that the Department of Energy has traditionally done. Increasingly, we want to spin ideas from industry into our labs, so that companies and entrepreneurs can benefit from the resources we have here. It also helps keep our scientists in touch with market needs and helps guide their research.”

Make no mistake, innovation needs collaboration. Combining the ideas from the private sector with the cutting edge science from government labs can help American manufacturing compete for the 21st century.